10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         

Commission file number 001-11981

MUNICIPAL MORTGAGE & EQUITY, LLC

(Exact name of registrant as specified in its charter)

Delaware	52-1449733
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

621 East Pratt Street, Suite 300

Baltimore, Maryland 21202-3140

(Address of Principal Executive Offices)

(443) 263-2900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Shares	New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None

Title of Each Class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  þ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  þ

The aggregate market value of the common shares, no par value per share (“common shares”), of the registrant held by non-affiliates of the registrant was approximately $950,000,000 based upon the closing price of $25.99 on the New York Stock Exchange composite tape on the last business day of the Company’s most recently completed second fiscal quarter.

As of May 26, 2006, there were 38,511,098 common shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents have been incorporated by reference into this Form 10-K as indicated:    None.

Municipal Mortgage & Equity, LLC

TABLE OF CONTENTS

Part I			4
	Item 1.	Business	4
	Item 1A.	Risk Factors	9
	Item 2.	Properties	23
	Item 3.	Legal Proceedings	23
	Item 4.	Submission of Matters to a Vote of Security Holders	23
Part II			24
	Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
	Item 6.	Selected Financial Data	25
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	51
	Item 8.	Financial Statements and Supplementary Data	52
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	52
	Item 9A.	Controls and Procedures	52
	Item 9B.	Other Information	57
Part III			58
	Item 10.	Directors and Executive Officers of the Registrant	58
	Item 11.	Executive Compensation	62
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	70
	Item 13.	Certain Relationships and Related Transactions	71
	Item 14.	Principal Accountant Fees and Services	77
	Item 15.	Exhibits and Financial Statement Schedules	78
Schedule II			79
Signatures			S-1
Index to Financial Statements
	Report of Independent Registered Public Accounting Firm		F-1
	Consolidated Balance Sheets as of December 31, 2005 and 2004		F-6
	Consolidated Statements of Income for the Years Ended December 31, 2005, 2004 and 2003		F-7
	Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2005, 2004 and 2003		F-9
	Consolidated Statement of Shareholders’ Equity for the Years Ended December 31, 2005, 2004 and 2003		F-10
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003		F-11
	Notes to Consolidated Financial Statements		F-13
Exhibit Index			E-1

RESTATEMENT

Municipal Mortgage & Equity, LLC is restating its historical financial statements for the years ended December 31, 2004 and 2003; for the first three quarters in 2005 and for each quarter in 2004; and other selected financial data for the years ended December 31, 2002 and 2001. For additional information relating to the effect of the restatement, see the following items:

Part II:

Item 6—Selected Financial Data

Item 7—Management’s Discussion and Analysis of Results of Operations and Financial Condition

Item 8—Financial Statements and Supplementary Data

Item 9A—Controls and Procedures

Part IV:

Item 15—Exhibits and Financial Statement Schedules

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The disclosure in this Annual Report on Form 10-K (this “Annual Report”) contains forward looking statements intended to qualify for the safe harbor contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can generally identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “may,” “will,” “should,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Examples of forward-looking statements in this Annual Report include, among others, (a) the statement that our policy is to pay quarterly distributions on our common shares; (b) our belief that accomplishing our stated goals will provide long-term value to our shareholders and clients; (c) our belief that the portion of our distribution that is tax-exempt will continue to decrease from historic levels; and (d) our expectations as to the amount and sources of new net capital that we will require to meet our 2006 production targets.

Any or all of these forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in this Annual Report will be important in determining future results. Consequently, no forward-looking statement can be guaranteed, and actual future results may vary materially. Factors that may cause our plans, expectations, future financial condition and results to change include, but are not limited to:

• changes in demographic, general economic and business conditions, both nationally and in the regions in which we operate;

• the performance of the real estate market, generally, and the multifamily housing market specifically;

• changes in tax laws or other regulatory systems affecting us or our operations or our failure to comply with applicable tax laws;

• unavailability of sufficient access to capital, either due to macroeconomic or company-specific factors; and

• any of the other risk factors described in our current and periodic filings with the Securities and Exchange Commission (the “SEC”) including those set forth in Part I, Item 1A of this Annual Report.

PART  I

Item 1. Business.

Except as expressly indicated or unless the context otherwise requires, the “company,” “MuniMae,” “we,” “our” or “us” means Municipal Mortgage & Equity, LLC, a Delaware limited liability company, and its subsidiaries.

Overview

We are a leading provider of debt and equity financing to real estate developers (of both multi-family and commercial properties) for both our own investment and on behalf of others. We also provide real estate investment management services, tax credit equity syndication services, asset management services and mortgage loan servicing. We seek to provide steady growth, strong dividends and attractive return on equity to the holders of our common shares.

MuniMae was organized in 1996 as a Delaware limited liability company and is classified as a partnership for federal income tax purposes. MuniMae has the same limited liability, governance and management structures as a corporation, but it is treated as a “pass-through” entity for federal income tax purposes. Thus, our shareholders include their distributive share of our income, deductions and credits on their tax returns. This information is provided to our shareholders through a Schedule K-1 rather than a Form 1099. We conduct our business activities primarily through two wholly-owned subsidiaries:

• MMA Financial, Inc., (“MMAF”), a corporation that generates taxable income that operates our tax credit and certain of our real estate finance activities; and

• MuniMae Holdings, LLC, (“MMH”), a limited liability company and a pass-through entity for federal income tax purposes that holds the majority of our investments in tax exempt bonds.

This organizational structure is designed to allow us to “pass through” tax-exempt interest income to our shareholders.

Our principal offices are located at 621 E. Pratt Street, Suite 300, Baltimore, MD 21202. Our telephone number is (443) 263-2900. Our corporate website is located at http://www.munimae.com, and our filings pursuant to the Exchange Act, are available through that site. The information contained on our corporate website is not a part of this Annual Report.

Our Business

We operate through four business segments:

• Through our debt segment we (1) invest in tax exempt bonds and bond securitizations; (2) make taxable construction, supplemental and permanent loans; (3) provide loan servicing; and (4) originate loans that are ultimately sold to government sponsored enterprises (“GSEs”), such as the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Government National Mortgage Association (“Ginnie Mae”) or insured by agencies such as the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development (“HUD”).

• Through our tax credit equity segment we provide tax credit equity syndication and asset management services

• Through our structured finance segment we invest in other real estate-related securities, including equity investments in real estate operating partnerships, tax exempt and taxable bonds, bond securitizations and taxable loans.

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• Through our fund management segment we (1) provide loan origination, loan servicing, investment advisory, asset management and other related services and (2) invest in real estate operating partnerships.

Our Debt Segment

Through our debt segment, we engage in a variety of real estate finance activities, including:

• Investing in tax exempt bonds and bond securitizations;

• Originating taxable construction, supplemental and permanent loans; and

• Originating, selling and servicing loans that we sell to GSEs.

Tax Exempt Bonds and Bond Securitizations

We purchase tax-exempt bonds issued by state or local governments or their agencies or authorities that are issued primarily to finance multi-family housing projects. These bonds are secured by an assignment of the related mortgage loans and a general assignment of rents of the underlying multi-family housing projects. No government is liable under these tax-exempt bonds, and government taxing power is not pledged to the payment of principal or interest under these tax-exempt bonds. Accordingly, the revenue derived from the operation of the properties and amount derived from the sale, refinancing or other disposition of the properties serve as the sole source of funds for payment of principal and interest due to us on the tax-exempt bonds we own.

We finance these investments through securitization transactions where we will sell senior interests in our assets (including tax-exempt bonds) and retain subordinate interests. In a typical securitization transaction, we or a third party deposit bonds into a trust. The trust then issues both senior and subordinate certificates that represent interests in the bonds held by it. We typically retain the subordinate trust certificates, and the senior trust certificates are typically sold to third parties. To increase the attractiveness of the senior certificates to investors, we may obtain credit enhancement on the senior certificates or the bond underlying the senior certificates. The residual interest we retain receives the residual interest on the bond after the payment of all fees and the senior certificate principal and interest.

By engaging in these securitization transactions, we are able to enhance our overall return on equity and generate proceeds to purchase additional investments.

Taxable Loans

We make construction, supplemental and permanent loans to developers of multi-family and commercial real estate projects. These loans are generally secured by some combination of a lien on the real estate, an assignment of cash flows from the property or personal guarantees from the real estate developer. We sometimes retain such investments for our own investment purposes.

We generate cash flow from these investments based on the spread between the interest rates that we charge to the developer and the cost of capital used by us to finance such loans.

GSE Business

We originate loans on behalf of and sell loans to various GSEs. We are a FHA/HUD Multi-family Accelerated Processing-approved lender, a FHA Traditional Application Processing lender, an approved seller and servicer of Ginnie Mae mortgage backed securities, an approved seller and servicer of Fannie Mae Delegated Underwriting and Servicing (“DUS”) loans and an approved seller and servicer of Freddie Mac mortgage loans. Typically, the loans originated in conjunction with these programs are underwritten and structured in accordance

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with strict financial requirements set by the sponsoring entity that we must abide by, including maintaining a minimum net worth, liquidity and insurance coverages, and collateral pledges. Certain of these programs require us to bear a portion of losses incurred on underlying loans. We typically hold these loans for less than 90 days before selling them to the applicable GSE. When we sell these loans, we retain a right to service them over their term for which we receive mortgage servicing fees. Through these programs, we generate cash flows through gains recorded at the time of the sale, and over the term of the loans, through our mortgage servicing fees. Thus, these programs provide us with an important source of short-term and long-term liquidity.

Our Tax Credit Equity Segment

We are one of the nation’s largest syndicators of low income housing tax credits (“LIHTCs”). As of December 31, 2005, we had over $6.8 billion of tax credit investments under management, representing 1,760 properties.

The LIHTC program was created by the Tax Reform Act of 1986. The act created a program of tax credits for the production of rental housing targeted to lower income households. Under the LIHTC program, the states were authorized to issue federal tax credits for the acquisition, rehabilitation, or new construction of affordable rental housing. The credits can be used by property owners to offset taxes on other income, and are generally sold to outside investors to raise initial development funds for a project. To qualify for credits a project must have a specific proportion of its units set aside for lower income households and the rents on these units are limited to 30% of qualifying income. The amount of the credit that can be provided for a project is a function of development cost (excluding land), the proportion of units that is set aside, and the credit rate (which varies based on interest rates, type of development and financial sources). Credits are provided for a period of ten years.

The tax credit equity syndication business involves:

• acquiring or making arrangements to acquire interests in partnerships (the “lower-tier partnerships” or the “Project Partnerships”) that are developing affordable housing projects expected to generate a stream of LIHTCs;

• organizing a partnership (a “fund” or an “upper-tier partnership”) to hold the investments in the lower tier partnerships;

• identifying investors to acquire a limited partnership interest in the fund/upper tier partnership;

• making arrangements for the fund to purchase, from us or others, interests in the lower tier partnerships; and

• providing asset management services over the term of the fund.

The purchasers of the limited partnership interests in the funds are typically corporations who are able to benefit from the LIHTCs and the operating tax losses generated by the affordable housing projects held in the lower tier partnerships. We act as the general partner of these funds with ownership interests ranging from 0.1% to 1.0%.

Since we generally acquire interests in the lower-tier partnerships in advance of receiving investments from the ultimate investors in the funds, we finance these acquisitions using our lines of credit. This enables us to take advantage of investment opportunities as they become available in the marketplace and provide better investment options to the funds we sponsor when the investment capital is ultimately available. Once we have organized a fund and identified the investors in that fund, the fund will pay us an amount sufficient to repay our credit line draws with respect to the acquisition of interests in the lower-tier partnerships and the fund becomes the holder of the lower tier partnership interests.

As sponsor, we receive syndication fees for organizing the fund, coordinating the capital raising, and arranging the fund’s investments in lower-tier partnerships. In certain instances, we may provide investment

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yield guarantees to the fund investors, for which we earn additional fees. We also receive asset management fees associated with the ongoing administration of the funds which we typically receive, to the extent of available cash flow, over the term of the fund.

Our Structured Finance Segment

Similar to our debt segment, the structured finance segment also invests in tax-exempt bonds and uses securitization transactions to finance these investments. The structured finance segment invests in tax-exempt bonds issued by community development districts (“CDD”) to finance the development of community infrastructure supporting single-family housing, and mixed use and commercial developments. These bonds are secured by specific payments or assessments pledged by the local improvement district that issues the bonds. At times, the structured finance segment invests in tax-exempt bonds or interests in bonds secured by student housing or assisted living developments. In addition, the structured finance segment invests in other housing-related debt and equity investments, including taxable bonds and loans and equity investments in real estate operating partnerships.

Our Fund Management Segment

Through our fund management segment, we provide loan origination, loan servicing, asset management, investment advisory and other related services:

• We have well-established relationships with several pension funds for which we manage direct and pooled investments in real estate assets. Pooled investments for these pension funds are made through Midland Multifamily Equity REIT (“MMER”), our affiliate that invests in income-producing real estate through limited partnership interests originated by us, and Midland Affordable Housing Group Trust (“MAHGT”), an affiliate of ours that invests primarily in real estate backed debt investments originated by us.

• Through the legacy business of MONY Realty Capital, Inc. (“MRC”) (discussed immediately below under “—Recent Developments”), we provide real estate advisory services for several funds that hold investments in a broad range of property types, including office, industrial, apartments, retail, hotels, condominiums, condominium conversions and student housing and we originate loans, provide asset management services and loan servicing primarily for institutional investors, for which we earn fees.

Recent Developments

Acquisitions

In February 2005, we acquired MONY Realty Capital, Inc. (“MRC”) from AXA Financial, Inc. for a total purchase cost of $10.9 million, including assumptions of certain liabilities of MRC. For a complete discussion of the acquisition of MRC, see Note 4, “Acquisitions, Goodwill and Intangible Assets” in the notes to our consolidated financial statements included in this Annual Report. MRC sources, underwrites, structures, closes, and manages commercial real estate investments. At the time of the acquisition, MRC had over $2.0 billion in assets under management, and since 1997, had (together with its predecessor organization) originated approximately $3.2 billion in commercial debt investments, including $1.2 billion in high yield or structured transactions (consisting of construction loans, bridge loans, mezzanine investments and B-notes), and augmented the investment advisory business conducted through our fund management segment.

In July 2005, we acquired Glaser Financial Group, Inc. (“Glaser”) in a stock purchase transaction for a total purchase cost comprised of: (1) an initial cash payment of $50.8 million; (2) three deferred payments of $4.0 million due at each of the three anniversary dates of the closing; (3) contingent consideration of approximately $5.0 million due on the third anniversary of the closing provided certain operating performance thresholds are achieved; and (4) transaction costs of approximately $0.6 million. For a complete discussion of the acquisition of Glaser, see Note 4, “Acquisitions, Goodwill and Intangible Assets” in the notes to our consolidated financial

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statements included in this Annual Report. Glaser was a full service commercial mortgage banker for multi-family, senior housing and commercial real estate predominately in the upper Midwest. At the time of the acquisition, Glaser had a servicing portfolio of approximately $3.5 billion comprised of approximately 64,000 units including both insured and uninsured taxable loans and tax-exempt bond issues, which added scale to the mortgage banking business performed through our debt segment, strengthened our relationship with Fannie Mae and Freddie Mac, and provided a geographic complement to our existing servicing portfolio.

Competition

In seeking out attractive tax credit, multi-family and other housing-related investment opportunities, we compete directly against a large number of syndicators, direct investors and lenders, including banks, finance companies and other financial intermediaries and providers of related services (such as portfolio loan servicing). While we have historically been able to compete effectively against such competitors on the basis of service, access to investor capital, longstanding relationships with developers and a broad array of product offerings, many of our competitors benefit from substantial economies of scale in their business and have other competitive advantages.

We compete directly with other syndicators in raising investor capital for tax credit investments. While we have historically been able to compete effectively against such competitors on the basis of service, track record, and access to high-quality investments, several of our competitors benefit from the ability to: (a) use large amounts of tax credits themselves, and (b) more effectively guarantee tax credit investments because of their size.

Employees

As of May 26, 2006, we had approximately 450 employees. We are not a party to any collective bargaining agreement.

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Item 1A. Risk Factors.

Holding our common shares involves various risks and uncertainties. You should be aware that should any of the risks described in this section, or elsewhere in this Annual Report, materialize, it could have a material adverse effect on our business, financial condition, results of operations and the value of our common shares.

General Risks Related to Our Business

Economic conditions adversely affecting the real estate market could have a material adverse effect on our financial condition and results of operations.

Since we own and finance investments directly or indirectly secured by real estate, and primarily multifamily real estate, the value of our investments and the performance of the properties financed by us may be materially adversely affected by macroeconomic conditions having an adverse impact on the real estate market, generally, and the multifamily real estate market, specifically. These factors include, among others:

• High levels of unemployment and other adverse economic conditions, regionally or nationally;

• Decreased occupancy and rent levels due to supply and demand imbalances;

• Changes in interest rates as discussed in greater detail below under “—Changing interest rates may have an adverse effect on our financial condition and results of operations”; and

• Unfavorable local or national regulatory conditions, including tax law changes, rent control legislation or tenant income restrictions, affecting the multi-family housing market.

Any of these factors could depress the value of our investments, impact the ability of our developer clients to fulfill their commitments to us or decrease the demand for our financing products.

Changing interest rates may have an adverse effect on our financial condition and results of operations.

We have exposure to changes in interest rates both as a function of the effect of interest rate changes on our business and industry, generally, and as a result of specific debt and securitization transactions to which we are a party. At December 31, 2005, we had $1.2 billion of aggregate floating interest rate exposure, including exposure related to our bond securitizations and our credit arrangements. At December 31, 2005, $226.0 million of our floating-rate exposure related to our bond securitizations, including off-balance sheet securitizations, was not hedged by interest rate swaps or investments in floating-rate senior interests in securitizations. Most of our floating-rate exposure related to our credit arrangements is mitigated by investing in matching floating-rate investments; however, this type of structure could be impacted by rising interest rates. Although we have established reserves to protect us in the event of margin calls, we may reserve too little (resulting in the need for unanticipated cash outlays) or too much (reducing profitability). We enter into economic hedging transactions for limited time periods that are typically substantially shorter than the term of our interest rate exposure. At December 31, 2005, the weighted average maturities of our floating rate securitization trusts, credit arrangements and interest rate hedges were approximately 9.37, 1.13 and 2.55 years, respectively. There can be no assurance that we will be able to enter into new hedges at favorable rates, or at all, when the existing arrangements expire, a risk that is increased by our use of a strategy that requires us to enter into new arrangements often. In addition, while we have historically hedged most of our securitization-related floating rate exposure using interest rate swaps, we may reevaluate our interest rate risk management policies and determine to hedge less of our securitization-related floating rate risk as we continue to grow and diversify our product lines. There is a significant risk that we could be required to liquidate investments to satisfy margin calls if interest rates rise or fall dramatically. In addition, certain hedging activities involve transaction costs. If we hedge against interest rate risks, we may substantially reduce our net income or adversely affect our financial condition.

In addition to its effect on our debt and securitization transactions, a change in interest rates may adversely affect our financial condition and results of operation as a result of the corresponding effects on the multifamily

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and other real estate markets generally. A decrease in market interest rates may result in our borrowers’ redeeming, prepaying or refinancing our bonds or taxable loans prior to their stated maturity. In such event, we may be unable to reinvest the proceeds at an attractive rate of return or in an investment that otherwise satisfies our investment criteria. Additionally, lower mortgage interest rates may make home ownership more economically appealing and reduce the demand for rental housing, thereby decreasing productions levels across our business units. Conversely, an increase in market interest rates could: reduce new multifamily housing starts (and consequently reduce origination income); cause a decrease in the value of some of our investments (including on a sale of such investments); increase our borrowing costs; cause investors to find alternative investments that are more economically attractive than our products; or reduce, possibly to zero, interest distributions on our residual interests in securitization programs. These occurrences would adversely affect the amount of cash that we have available to make distributions to holders of our common shares and could adversely affect our financial condition and results of operations.

Our operations are expected to result in higher income for us in the second and fourth fiscal quarters than in the first and third fiscal quarters.

Our operating results from our tax credit equity business are expected to fluctuate based on seasonal patterns and are generally less predictable than revenues from our other real estate finance activities. Although, we anticipate that our highest revenues from our tax credit equity business, and thus overall, will occur in the second and fourth calendar quarters, there can be no assurance that this will be the case. These fluctuations could result in a decrease in cash flow and could be perceived negatively and, therefore, adversely affect the market price for our common shares.

The federal government has historically supported investment in affordable multifamily housing through regulatory incentives, and changes or modifications to the regulatory environment could adversely affect our results of operations.

Federal tax law

Our business prospects are directly impacted by tax policies, which affect demand for our debt and equity financing products as well as investor demand for our common shares, and by the availability of tax credits, which affect the supply of our product. The federal income tax laws are constantly under review by participants in the legislative process and by the IRS and the Treasury Department. Changes to the federal income tax laws and administrative interpretations thereof (which changes may have retroactive effect) could adversely affect our shareholders. It cannot be predicted whether, when, in what forms, or with what effective dates the federal income tax laws applicable to us or our shareholders will be changed. Although there is a history of affordable housing subsidies by the federal government, changes in tax policies could have a significant and material effect on us. In 2003, legislative changes provided for the taxation of “qualified dividend income” received by non-corporate domestic taxpayers at long-term capital gains rates, the maximum of which was reduced to 15%; these change were recently extended through 2010. The reduced rate of tax on dividends generally applies only to dividends paid out of earnings and profits realized by the corporate payor. We arrange for corporations to make investments in exchange for tax credits (that are available under various federal programs) and losses (that reduce the earnings and profits of the corporate investor). In connection with this business, we receive fees for selling the tax credits, make loans to and earn interest on those loans from developers and receive fees for managing assets. Since losses produced by the typical tax credit investment reduce an investor’s capacity to pay qualified dividends, legislation favoring the payment of qualified dividends could decrease the value of tax credits to corporate investors and the tax credit syndication industry could be harmed.

The 2003 legislation also diminished the importance of a primary advantage of investing in tax-exempt bonds under prior law—that interest received on these bonds was tax exempt while dividend income from investments in corporate equity was taxed at ordinary rates. Legislation that makes taxable investments more attractive can increase the cost of tax-exempt financings if interest rates offered by municipal and other eligible borrowers rise to compensate investors for the reduction in the tax advantage. This could lead to a decrease in

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tax-exempt borrowing activities, which would reduce our opportunities to originate, structure and invest in tax-exempt financings. Such legislation could adversely affect our operations and could negatively affect our net income. While the tax-exempt portion of our distributions is, and under the 2003 legislation will remain, excludable from gross income, the 2003 legislation discussed above or similar future legislation could cause the after-tax returns available from other investments to increase, and cause shares in other companies to become more attractive relative to our shares. These changes could also reduce the value of our existing investments, since tax-exempt bond income would not enjoy the same degree of tax advantage as provided under the previous law.

Community Reinvestment Act

Demand for our products may be impacted by the Community Reinvestment Act, which requires financial institutions to invest in affordable housing. As a supplier of investment products backed by affordable housing, we benefit from the demand for investments that help financial institutions meet Community Reinvestment Act requirements. Changes in the Community Reinvestment Act could have a significant and material effect on us by reducing demand for our products.

Events adversely impacting the GSEs that provide liquidity to the market for investments in affordable housing could materially adversely affect our business.

Recently, Fannie Mae and Freddie Mac have been under heavy scrutiny by the Office of Federal Housing Enterprise Oversight, Congress and the SEC. Both have experienced accounting problems and changes in top management. It is possible that the on-going scrutiny of Fannie Mae and Freddie Mac could result in changes in their regulatory oversight, accounting practices or special benefits currently granted to these entities. A number of sizeable financial services companies and trade associations have launched a concerted effort to limit the growth of the GSEs and spur close examination of how the benefits of their GSE status are being employed. Currently, Fannie Mae and Freddie Mac are the largest corporate buyers of low-income housing tax credits. We are also a Fannie Mae DUS lender and a Freddie Mac Program Plus lender, which enables us to sell loans that we originate to Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac also provide credit enhancement on our behalf that facilitates the securitization of certain of our assets, and Fannie Mae provides credit enhancement for some of the bonds that we originate. While it is impossible to predict what changes will occur and what their impact will be on the activities of the GSEs, any changes could conceivably result in a contraction of the GSEs’ support of the affordable housing market or an increase to the GSEs’ cost of capital, either of which could limit our product offerings or make some of our products less competitive.

We are exposed to construction completion and rehabilitation risks as well as the risk that completed developments in a lease-up phase do not become stabilized.

A portion of our interest income from investments is secured by residential rental housing properties that are still in various stages of construction or which are undergoing substantial rehabilitation, and we may make similar investments in commercial properties. In addition, we invest in similarly situated properties through our tax credit equity business. Construction or rehabilitation of such properties generally takes approximately 12 to 24 months. The principal risk associated with this type of lending is the risk of non-completion of construction or rehabilitation, which may arise as a result of: (a) underestimated initial construction or rehabilitation costs; (b) delays; (c) failure to obtain governmental approvals; and (d) adverse weather and other unpredictable contingencies beyond the control of the developer. If the underlying mortgage securing one of our investments is defaulted due to construction and/or rehabilitation not being completed as required in the underlying documents, we, as the holder of the investments secured by such mortgage, will incur certain costs and may be required to invest additional capital in order to preserve our investment.

In addition, a portion of our interest income from investments is secured by mortgages on properties which are currently in a lease-up phase, and we invest in similarly situated properties through our tax credit equity business. The lease-up of these properties may not be completed on schedule or at anticipated rent levels,

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resulting in a greater risk that these investments may go into default than investments secured by mortgages on properties that are stabilized or fully leased-up. Moreover, there can be no assurance that the underlying property will achieve expected occupancy or debt service coverage levels. If these investments do not perform as anticipated, we may suffer losses on the investments and our results of operations could be materially adversely affected.

The properties directly or indirectly securing our investments or included in our tax credit equity funds may not generate sufficient income to make the payments due to us, and the borrowers under our investments may default on their obligations under these investments.

We have no guarantee that the obligors on our investments will be able to satisfy their obligations to us or that the project partnerships included in our tax credit equity funds will be able to satisfy their obligations. In addition to the macroeconomic factors described above under “—Economic conditions adversely affecting the real estate market could have a material adverse effect on our financial condition and results of operations,” there are property level risks that may result in individual defaults, including increased property level expenses, property mismanagement, and unanticipated environmental problems, among others. Some of the income from our investing business comes from equity investments in partnerships that own multifamily housing developments.

We have limited recourse in the event of a default on a tax-exempt bond or the bankruptcy of a borrower under a tax-exempt bond, and, as a holder of the junior interests in some investments, we have an even more limited ability to take actions that might protect our interests. An assignment of the related mortgage loan, secured by a mortgage on the underlying property and an assignment of rents, is the security for each of our tax-exempt bonds. With respect to stabilized properties, the owners of the underlying properties are only liable for the payment of principal and interest under the mortgage loans to the extent of the cash flow and sale proceeds from the properties. Accordingly, the revenue derived from the operation of the properties and amounts derived from the sale, refinancing or other disposition of the properties is the sole source of funds for payment of principal and interest to us under the tax-exempt bonds. Where we hold a junior position in such investments, the holders of the senior interests may control the ability to enforce remedies. We also invest directly in taxable mortgage loans, which present a similar set of relationships.

At December 31, 2005, $266.3 million of tax-exempt bonds and loans were on non-accrual status (i.e., in default on payment obligations to us). Interest income recognized on these bonds and loans was $7.0 million for the year ended December 31, 2005. Additional interest income that we would have recognized had these bonds and loans been on accrual status was approximately $15.2 million for the year ended December 31, 2005. At times, we make loans though back-to-back investments where we borrow funds from MAHGT and lend the proceeds to developers. MAHGT bears the risk of loss with respect to these underlying investments and as such, if interest income is not recognized by us, we are not required to pay interest expense to MAHGT. $0.9 million of the $15.2 million of interest income not recognized related to our MAHGT relationship during 2005.

Risks Related to Our Tax Credit Equity Segment

As a sponsor of tax credit equity funds, we have exposure to risks of loss in the event that we are unable to place project partnerships into tax credit funds or we are unable to recover our advances to certain project partnerships.

In connection with the sponsorship of tax credit equity funds as described above under Part I, Item 1. Business “Our Business—Our Tax Credit Equity Segment,” we advance funds to acquire interests in property-owning partnerships for inclusion in tax credit equity funds and, at any point in time, the amount of our advances can be material. We typically finance these acquisitions through draws on a line of credit. Recovery of these amounts is subject to our ability to attract tax credit equity investors or, if investors are not found, the sale of the partnership interests in the underlying properties. We could also be liable to investors in tax credit equity funds

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and third parties as a result of serving as general partner or special limited partner in such funds. In addition, even when we are not required to do so, we may advance funds to allow these funds to meet their expenses and/or generate the expected tax benefits to investors, and we might not be able to recover these advances.

We provide guarantees with respect to certain of the tax credit equity funds that we sponsor, and if we were to become obligated to perform on such guarantees our financial condition and results of operations could suffer.

As described above under Part I, Item 1. Business “Our Business—Our Tax Credit Equity Segment,” we provide guarantees to investors in connection with certain of the tax credit equity funds that we sponsor. We could be required to advance funds under such guarantees to lower-tier partnerships to ensure that the investors do not lose their expected tax benefits, and, if the internal rate of return to investors falls below the guaranteed level, we would be required to make a payment so that the guaranteed rate of return will be achieved. Our maximum potential liability pursuant to those guarantees was $547.7 million as of December 31, 2005. See Part II, Item 7. “Capital Resources—Guarantees” and Note 9, “Guarantees and Collateral” in the notes to our financial statements included elsewhere in this Annual Report.

The tax credit equity funds sponsored by us may not generate sufficient cash to pay fees due to us, which could negatively impact our cash flows.

Much of the revenue from our tax credit equity business is earned from multi-tiered funds that we sponsor. These funds are dependent upon the cash flows of lower-tier partnerships in which they invest to generate their own cash flows that are used to pay fees for services, such as the advisory services that we render to them. As the lower-tier partnerships are susceptible to numerous operational risks related to real estate investments generally (see “—General Risks Related to Our Business—Economic conditions adversely affecting the real estate market could have a material adverse effect on our financial condition and results of operations”), the upper-tier funds may not collect sufficient cash to pay the fees they owe to us. If we do not collect these fees, the negative impact on our cash flows, and our net income if we determine the fees are not collectible, could negatively impact our financial condition and results of operations.

There is a risk of elimination of, or changes to, governmental programs that could limit the product offerings of our tax credit equity business.

As discussed above under Part I, Item 1. Business “Our Business—Our Tax Credit Equity Segment,” our tax credit equity business derives revenue from the syndication of partnership interests in properties eligible for low income housing tax credits, or LIHTCs. Although LIHTCs are a part of the Code, Congress could repeal or modify the LIHTC provisions at any time or modify the tax laws so that the value of LIHTC benefits is reduced. If the LIHTC provisions are repealed or adversely modified, the results of operations of our tax credit equity business would be materially adversely affected.

In addition, other government programs may have an impact on our tax credit equity business, such as: (a) passage of a home ownership tax credit program (which is currently supported by the Bush administration), which may reduce the supply and/or demand for LIHTCs; (b) reduction of funding for rent supplements, including the HUD voucher program, which may affect the cash flow and financial performance of LIHTC properties in funds syndicated by us; or (c) significant changes to the Code which may reduce the benefits that investors currently receive from the LIHTC program.

The tax credit equity syndication market is a maturing market, and we are increasingly competing with more syndicators, which may result in lower profit margins in the future.

There are relatively few barriers to entry in the tax credit equity syndication market. As more financial services companies enter this marketplace, competition has increased and our profit margins have decreased. As more syndicators compete for business in a marketplace characterized by a static pool of LIHTCs, the profit

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margins on our tax credit equity business will likely decline and our results of operations may suffer. In addition, as described under “—There is a risk of elimination of, or changes to, governmental programs that could limit the product offerings of our tax credit equity business,” if governmental support for the LIHTC program decreases, this competition could become even more intense as the amount of credits decreases.

Risks Related to Our Debt and Structured Finance Segments

Substantially all of our investments are illiquid, which could prevent us from consummating sales on favorable terms and makes it difficult for us to accurately value our investment portfolio.

Substantially all of our investments lack a regular trading market. This lack of liquidity would be worse during turbulent market conditions or if any of our tax-exempt bonds were determined to be taxable (as discussed under “—Risks Related to the Application of Tax Laws—The characterization of certain of our income as exempt for federal income tax purposes depends upon compliance with numerous sections of the Code—Tax-exempt status of the bonds”) or if any of our bonds or loans were to go into default (as discussed under “General Risks Related to Our Business—The properties directly or indirectly securing our investments may not generate sufficient income to make the payments due to us, and the borrowers under our investments may default on their obligations under these investments.”). As a result of this illiquidity, we could be forced to sell investments on unfavorable terms. In addition, the characteristic illiquidity of our investments makes them hard to value and may cause significant changes in the fair value of our investments as recorded on our financial statements, which would be reflected in carrying value and other comprehensive income. Significant unfavorable changes in the fair value of our investments could adversely affect the value of our common shares.

A significant portion of our assets are involved with securitization programs and, in the event of certain defaults, such assets could be liquidated to meet senior obligations. In addition, if the value of our assets is impaired, we could be required to post additional collateral or terminate the facilities.

As described above under Part I, Item 1. Business “Our Business—Our Debt Segment—Tax Exempt Bonds and Bond Securitizations,” we securitize some of our investments, and we retain residual interests in the securitization programs. In addition, we also pledge investments as collateral with respect to these securitization programs. As of December 31, 2005, approximately $1.2 billion, or 86.8% of the fair value, of our investments in bonds (the majority of which is held in MuniMae TE Bond Subsidiary, LLC (“TE Bond Sub”), our subsidiary that owns a significant portion of our tax exempt bonds and bond-related investments), were either deposited in securitization trusts or pledged as collateral for short-term and long-term securitization programs.

In the event a securitization trust cannot meet its obligations, all or a portion of the deposited tax-exempt bonds may be sold to satisfy the obligations to the holders of the senior interests. Therefore, cash flow from these tax-exempt bonds may not be available to pay any amounts on our residual interests. In the event of the liquidation of the tax-exempt bonds, no payment will be made to us except to the extent that the sale price received for the tax-exempt bonds exceeds the amounts due on the senior obligations of the trust. Further, in a typical short-term securitization facility the payment of the interest and principal on the senior floating rate interests is guaranteed by a third-party credit enhancement provider. If the third party is required to repay the senior floating rate certificates (as a result of poor performance of the bonds deposited in the trust), both the deposited bonds and our pledged assets may be sold to reimburse the third party for its advance of funds and we may lose the cash flow from these tax-exempt bonds and our ownership interest in them. In addition, there may not be sufficient cash flow to pay interest contractually due to us as residual interest holder or bondholder. Our ability to remedy defaults inside the trust is limited. See Note 9, “Guarantees and Collateral—Collateral” in the notes to our financial statement included elsewhere in this Annual Report.

In addition, if the value of our investments in tax-exempt bonds pledged as collateral for securitization programs decreases significantly, we may be required to post cash or additional investments as additional collateral for such programs. In the event that we have insufficient liquidity or unencumbered investments to

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satisfy these collateral requirements, the securitization programs may be terminated and the pledged collateral liquidated to satisfy the obligations to the holders of the securitization program certificates. In such cases, we would lose the cash flow from the tax-exempt bonds and our ownership interest in them, and our financial condition and results of operations could be materially adversely affected.

A portion of our investments are subordinated securities or interests in bonds that are junior in right of payment to other bonds, notes or instruments, and, in the event that the borrowers are unable to make all required payments, we may not receive all payments on such investments to which we are entitled.

As of December 31, 2005, we held investments in subordinated securities or interests in bonds that are junior in right of payment to other bonds, notes or instruments aggregating approximately $68.8 million, or 4.8% of the fair value of our bonds and bond-related investments. Among the risks of these investments are that borrowers may not be able to make payments on both the senior and the junior interests and that the value of the underlying asset may be less than the amounts owed to both the senior and the junior interest holders. In certain circumstances, the borrower may also issue additional senior debt, further reducing the security available for the junior interest holders. As a consequence, we, as a holder of a junior interest, could receive less than the full and timely repayment of our investment. Moreover, the holders of the senior interests may control the ability to enforce remedies. Without the consent of the senior holders, we may have limited ability to take actions that might protect our interests. If the cash flow with respect to a particular investment is not sufficient to make full payments on the junior interests, this may adversely affect our financial condition, the amount of cash that we have available to make distributions to holders of our common shares and the value of our common shares.

As a delegated underwriter and servicer in the Fannie Mae DUS program, we have agreed to share losses (up to certain specified levels) on loans that we underwrite and sell to Fannie Mae.

As discussed above under Part I, Item 1. Business “Our Business” and “Our Business—Our Debt Segment—GSE Business,” we participate in the Fannie Mae DUS program. The terms and conditions of our participation in this program require that we retain a first loss position with respect to loans that we underwrite and sell to Fannie Mae. We assume responsibility for a portion of any loss that may result from borrower defaults, based on Fannie Mae’s loss sharing formulas. Generally, in the event of a default on such a loan, we are responsible for the first 5% of the unpaid principal balance and a portion of any additional losses to a maximum of 20%–40% of the original principal balance depending on the risk level of the loan; any remaining loss is borne by Fannie Mae. As of December 31, 2005 our maximum exposure under the DUS program was approximately $529.3 million. Although our losses to date under these guarantees have been immaterial, there can be no assurance that we will not experience significant losses in the future.

The growth of our business is dependent on maintaining our relationships with the GSEs that participate in the multifamily affordable housing market.

The maintenance of our DUS license with Fannie Mae and our participation in Freddie Mac’s Program Plus are important to the continued productivity and growth of our debt segment operations. As a DUS lender, we are subject to periodic reviews by Fannie Mae, and we must comply with a variety of underwriting and servicing guidelines imposed by Fannie Mae. Fannie Mae could revoke our DUS license in the event that we do not comply with the program guidelines. Alternatively, the value of our DUS license could be adversely impacted if Fannie Mae were to change the delegated authority of its DUS lenders or otherwise make it more costly or difficult for DUS lenders to underwrite and service loans on Fannie Mae’s behalf.

As the GSEs admit more financial services firms into their programs, our competitive advantage decreases and our financial condition and results of operations may suffer.

We have no control over whether Fannie Mae or Freddie Mac expands the size of their programs. The value of our DUS license and our participation in Freddie Mac’s Program Plus could be adversely impacted if either of

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those GSEs were to invite a significant number of our competitors to participate in those programs. As more financial services firms compete for business in this marketplace, the profit margins on our debt business will likely decline and our results of operations may suffer.

Risks Related to Our Fund Management Segment

If our registration as an SEC registered investment adviser were revoked or otherwise terminated, we could lose investment advisory clients.

A growing portion of our business after the MRC acquisition (discussed above under Part I, Item 1. Business, “Recent Developments—Acquisitions”) includes providing investment advisory services to institutional clients. Currently, we are registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Certain of our current clients, and potential future clients, desire or require their advisers to be registered with the SEC. If our registration under the Advisers Act were revoked or otherwise terminated, we could lose investment advisory clients or be unable to grow this portion of our business, and our results of operations could suffer.

Risks Related to the Application of Tax Laws

Our classification as a publicly traded partnership not taxable as a corporation is not free from doubt and could be challenged.

As discussed elsewhere in this Annual Report, we operate as a partnership for federal income tax purposes, which permits us to pass through most of our tax items—including taxable income, tax-exempt income, deductions, credits and other tax items—to shareholders. The listing of our common shares on the New York Stock Exchange, however, causes us to be treated as a “publicly traded partnership” for federal income tax purposes. As a publicly traded partnership, we will be taxed as a corporation for any taxable year in which less than 90% of our gross income consists of “qualifying income.” Qualifying income includes interest, dividends, real property rents, gains from the sale or other disposition of real property or other capital assets held for the production of interest or dividends, and certain other items. Our outside counsel has advised us that, although the issue is not free from doubt, tax-exempt interest income constitutes qualifying income for this purpose.

We believe that we are (and our predecessor was) properly treated as a partnership for federal income tax purposes. However, the Internal Revenue Service (the “IRS”) could challenge our partnership status and we could fail to qualify as a partnership in years that are subject to audit or in future years. If, for any reason, less than 90% of our gross income constitutes qualifying income, our income, deductions, credits and other tax items would not pass through to shareholders, and shareholders would be treated as stockholders in a corporation for federal income tax purposes. In addition, distributions by us to our shareholders would constitute ordinary dividend income, taxable to the shareholders to the extent of our earnings and profits, which would include tax-exempt net income, as well as any taxable net income we may have, reduced by any federal income taxes paid. We would not be able to deduct the payment of these dividends. Also, we would be required to pay federal income tax at regular corporate rates on our net income, with the exception of tax-exempt income, which could adversely impact the value of our common shares.

The characterization of certain of our income as exempt for federal income tax purposes depends upon compliance with numerous sections of the Code.

Tax-exempt status of the bonds

General. On the date of initial issuance of any tax-exempt bond that we hold or have held, directly or indirectly, bond counsel or special tax counsel rendered its opinion to the effect that, based on the law in effect on the date of issuance, interest on such bond is excludable from gross income for U.S. federal income tax

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purposes. These opinions are subject to customary exceptions, including an exception for any tax-exempts bond (other than a bond the proceeds of which are loaned to a charitable organization described in Section 501(c)(3) of the Code) during any period in which it is held by a “substantial user” of the corresponding property or a person “related” to a “substantial user” within the meaning of the Code. See “—Substantial user limitation.” As of the date of the filing of this Annual Report, we do not have knowledge of any events that may adversely affect the tax-exempt status of our bonds, including any notice of a preliminary or other determination by the IRS that it considers interest on any of such bonds to be includable in gross income.

Continuing requirements for tax exemption. The Code establishes certain requirements, which must be met subsequent to the issuance and delivery of a tax-exempt bond for interest on such bond to continue to be excluded from gross income for U.S. federal income tax purposes. Among these continuing requirements are restrictions on the investment and use of the bond proceeds and compliance with a regulatory agreement, arbitrage certificate and/or similar documents. Each issuer of the bonds, as well as the underlying borrowers, has covenanted to comply with these continuing requirements, including any regulatory agreement, arbitrage certificate and similar document. In addition, for tax-exempt bonds the proceeds of which are loaned to a charitable organization described in Section 501(c)(3) of the Code, the continuing exclusion of interest from gross income for U.S. federal income tax purposes depends on the continuing exempt status of the charitable organization borrower. Failure to comply with any of these continuing requirements of the Code may cause the interest on a bond to be includable in gross income for U.S. federal income tax purposes retroactive to the date of issuance regardless of when such noncompliance occurs.

Substantial user limitation. Interest on a bond, other than a bond the proceeds of which are loaned to a charitable organization described in Section 501(c)(3) of the Code, will not be excluded from gross income during any period in which we are a “substantial user” of the underlying property or a person “related” to a “substantial user.” A “substantial user” generally includes any underlying borrower and any person or entity who uses the property on other than a de minimis basis. We or one of our affiliates, as applicable, will be a related person of a substantial user for this purpose if, among other things, we directly, indirectly or by attribution own more than a specified percentage of the stock or capital or profits interests in the substantial user. The attribution rules under federal income tax law are complex and the preceding sentence is not intended to be a complete summary of their application. We have received opinions and/or advice with respect to most of our bonds that we are not a substantial user or a person related thereto. There exist certain levels of indirect common ownership between us and certain of the borrowers under the bonds in which we hold an interest. This common ownership was considered when we received advice that we are not a person related to a substantial user of the property financed by the bonds.

Mark K. Joseph, the Chairman of our Board of Directors controls each of the partnerships that is the borrower on 14 separate bonds owned by us (the “Affected Partnerships”). As of the date of the filing of this Annual Report, Mr. Joseph owns, directly or indirectly (taking into account certain attribution rules of the Code) in the aggregate less than 5% of our capital or profits interests. Based in part on a legal opinion delivered to us by our outside counsel (which is based on numerous assumptions and representations by us), we believe that we are not, by virtue of any equity investment in us by any of our officers, a person related to a substantial user of any of the properties financed with the proceeds of a bond relating to an Affected Partnership. Unlike a ruling from the IRS, however, a legal opinion is not binding and no assurance can be given that the conclusion reached will not be contested by the IRS or, if contested, will be sustained by a court. We intend to use commercially reasonable efforts to contest any adverse determination by the IRS on the substantial user issue. Any such contest will result in the incurrence of additional expenses by us. The issue of whether we will be treated as a related person is a highly factual inquiry, which ultimately depends upon our direct or indirect ownership. Because our common shares are publicly traded, there can be no assurance that we or one of our affiliates will not be treated as a related person to a substantial user at a future time.

Effect of subsequent events on tax-exempt status. Certain events subsequent to the issuance and delivery of a bond may result in a reissuance of such bond for U.S. federal income tax purposes, which could adversely

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affect the tax-exempt status of the bonds. Certain of our mortgage bonds are in default. We believe that we have exercised and continue to exercise prudent business practices to enforce our creditor’s rights under the applicable bond documents, including initiating foreclosure proceedings on the mortgaged properties when advisable. A risk exists that the IRS may treat our actions to exercise or not to exercise rights under one or more of the mortgages of defaulted mortgage bonds as constituting a significant modification and, therefore, conclude that these bonds were reissued for U.S. federal income tax purposes. If the IRS were successful in maintaining this position, interest on these bonds probably would be taxable for U.S. federal income tax purposes. We have been advised by counsel and, in certain circumstances, have received opinions of counsel, and we believe, that our actions (or failures to act) taken in connection with the default of these bonds would not, under then-published rulings, decisions, statutes and regulations, result in a reissuance of such bonds. Unlike a ruling from the IRS, however, the advice of counsel has no binding effect, and no assurances can be given that the conclusions reached will not be contested by the IRS or, if contested, will be sustained by a court. We will use commercially reasonable efforts to contest any adverse determination by the IRS on this issue. Any such contest will result in the incurrence of additional expenses by us.

Investment in other assets. We have been making additional investments in tax-exempt bonds and related assets and entering into hedging transactions such as interest rate swaps. These investments may produce income that is subject to federal income tax, and that may not be qualifying income for purposes of the publicly traded partnership rules. In addition, our investments may include investments in tax-exempt bonds that need to be restructured and remarketed. We could recognize taxable income, gain or loss, upon any such restructuring and remarketing of the tax-exempt bonds even though such restructuring does not result in any cash proceeds to us. In addition, various conditions would have to be met to insure that the restructuring and remarketing of tax-exempt bonds would not cause the loss of the tax-exempt status of interest on such bonds.

Taxable income. We also invest in certain assets, and engage in certain operations that generate income that is not exempt from federal income tax, including dividends from our operating subsidiaries and capital gains from the sale of our assets. Further, as described above, the IRS may seek to recharacterize the income on one or more of our tax-exempt bonds as taxable income. We may also have taxable income in the form of market discount. A shareholder’s distributive share of such income will be taxable to the shareholder, regardless of whether an amount of cash equal to such distributive share is actually distributed. Further, although we believe it to be unlikely, shareholders could owe taxes relating to their investments in us that exceed distributions made by us.

Non-deductibility of certain interest expense. Generally, our shareholders’ portion of our interest expense is deductible by them to the extent that such expense is incurred in connection with our investment and operating activities. Such interest expense, however, is not deductible by our shareholders to the extent of interest on indebtedness incurred or continued to purchase or carry tax-exempt bonds. Directly or through one or more of our subsidiaries, we have borrowed, and will continue to borrow, funds to finance some of our investments. In addition, certain of our corporate subsidiaries have borrowed funds, which indebtedness has been guaranteed by MuniMae. If the IRS were to successfully assert that the indebtedness of these corporate subsidiaries should be treated as indebtedness of MuniMae, the interest deduction could be disallowed at the MuniMae level as described above, and, furthermore, our corporate subsidiaries would not be allowed to deduct interest expense on the payments made with respect to such indebtedness, thereby increasing the tax liability of these subsidiaries and reducing the amount of cash available for distribution to our shareholders.

Allocation of our taxable and tax-exempt income. We will use various accounting and reporting conventions to determine each shareholder’s allocable share of income, including any market discount taxable as ordinary income, gain, loss and deductions. Our allocation provisions will be respected for federal income tax purposes only if they are considered to have “substantial economic effect” or are in accordance with the partners’ “interest in the partnership.” There is no assurance that the IRS will agree with our various accounting methods, conventions and allocation provisions. However, we do not expect that any reasonable adjustments which may be required by the IRS would substantially increase the income allocable to shareholders.

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Tax shelter regulations. Treasury Department regulations require the disclosure of reportable transactions and the maintenance of investor lists for certain potentially abusive tax shelters. Because of the broad scope of these regulations, it is possible that some of our transactions, such as certain transactions subject to confidentiality agreements, certain securitizations and certain sales of certain tax-exempt bonds at a loss, may be subject to the disclosure and list-maintenance requirements. Although we do not believe that any of these transactions would fall within these requirements, the IRS could disagree with our analysis, and significant penalties could be imposed for failure to comply with certain of these requirements.

Validity of certain Section 761 elections and related IRS guidance

Many of the senior interests in our securitization programs are held by tax-exempt money market funds. Tax-exempt money market funds generally have required that these securitization programs, which are structured as partnerships for U.S. federal income tax purposes, make an election under Section 761 of the Code to opt out of the provisions of subchapter K of the Code. As a result, each holder of an interest in these securitization partnerships separately reports its share of income and deductions of the partnership using the holder’s own accounting method and tax year rather than its distributive share of income and deductions calculated at the partnership level.

In 2002 and 2003 the IRS issued a series of revenue procedures, which provided, among other things, that partnerships, such as the ones used to securitize our bonds, do not meet the requirements of Section 761 of the Code. However, the IRS will not challenge a partnership’s or a partner’s tax treatment for partnerships with start-up dates prior to January 1, 2004 that have made a Section 761 election (each a “Pre-2004 Partnership”) if such treatment has been consistent with the Section 761 election and certain other requirements are met. We have been advised by our counsel on these transactions that each Pre-2004 Partnership in which we own an interest has met the requirements set forth in such IRS guidance. In addition, none of the Pre-2004 Partnerships have acquired any new assets that would cause such securitization partnerships to no longer be eligible for the grandfathering rule described above.

It is our intention that the Pre-2004 Partnerships continue to meet the requirements of the IRS guidance described above, which include an income test and an expense test. There can be no assurance, however, that unforeseen circumstances might not cause these partnerships to fail one or more of these requirements, which may cause the Pre-2004 Partnerships to have to comply with the requirements of subchapter K of the Code, including any reporting requirements. In addition, there is no assurance that the IRS would not challenge our position that the Pre-2004 Partnerships are eligible partnerships within the meaning of the IRS guidance described above. In the event that one or more of our securitization partnerships were required to comply with the requirements of subchapter K of the Code, it is likely that all of the tax-exempt money market funds which hold the senior interests in those securitizations having a tender option would tender their positions and the remarketing agent would have to try to locate new purchasers, which were not tax-exempt money market funds, for those tendered senior interests. This would probably result in an increase in the distributions to the holders of the senior interests, which would reduce, dollar for dollar, the distributions on the residual interests in the Pre-2004 Partnerships, which are owned by us. The senior interest holders have tender option rights in all of our floating rate securitizations. We also have fixed rate securitizations where they do not have such rights.

We have further been advised by special tax counsel for each securitization partnership formed by us since January 1, 2004, that such partnership satisfies the requirements set forth in Revenue Procedure 2003-84 to eliminate the need for the securitization partnership to file a Form 1065 with the IRS or to issue Schedules K 1 to its partners. We have made a valid monthly closing election for each such partnership. It is our intention that any future securitization partnerships continue to meet the requirements of Revenue Procedure 2003-84.

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Risks Related to Our Company

Inability to access the capital markets could delay or adversely affect execution of our business plan.

Due to the delay in filing this Annual Report. we will be unable for at least one year subsequent to the date hereof, to access the capital markets to raise equity or debt using the SEC’s short-form registration procedures, which may mean delays in registering additional securities for sale. In addition, we may face delays in applying to register our securities if the SEC staff decides to review this report or our subsequent filings.

Material weakness may still exist in our internal controls.

As discussed below under Item 9A, management has concluded that our internal control over financial reporting was ineffective as of December 31, 2005 due to material weaknesses with respect to our accounting staff and resources, policies and procedures and our financial reporting process. As discussed under “—Remediation of Material Weaknesses” in Item 9A below, we have made various efforts in order to remediate the material weaknesses that we have identified; however, there cannot be any assurance that these corrective actions will be effective. If we do not effectively execute our plans to strengthen our internal controls including remediation of these identified material weaknesses we may experience reportable conditions and material weaknesses in the future, which, if not remediated, may render us unable to detect in a timely manner misstatements that could occur in our financial statements in amounts that may be material. Such a situation could harm our operating results or cause us to fail to meet our reporting obligations. Additionally, disclosure of the material weaknesses could reduce the market’s confidence in our financial statements and affect the price of our common shares.

Because MuniMae is a holding company and substantially all of our investments and assets are held through our subsidiaries, our shareholders are effectively subordinated to the liabilities and preferred equity interests of our subsidiaries.

We hold virtually all of our assets through our subsidiaries. As common equity owner in our subsidiaries, we, and therefore holders of our common shares, are structurally subordinated to the debt obligations and preferred equity interests of our subsidiaries, which at December 31, 2005, aggregated approximately $2.2 billion. In particular, TE Bond Sub has issued $341.0 million of preferred shares to third parties. The holders of TE Bond Sub’s preferred shares have the first right to income and principal of the investments held by it, up to the liquidation preference of the preferred shares plus unpaid distributions upon any liquidation. Additionally, many of our operating subsidiaries are party to credit agreements. In the event of our insolvency, bankruptcy, or liquidation, the creditors and preferred equity holders of our subsidiaries will have priority over the holders of common shares.

We have indebtedness and other liabilities that could adversely affect our business and growth prospects.

We have indebtedness and other liabilities that could have significant adverse effects on our business. Our indebtedness (excluding non-recourse factored notes payable and mortgage notes payable of $245.9 million and $168.0 million in mandatorily redeemable preferred shares of TE Bond Sub as of December 31, 2005, but including the $172.8 million, in the aggregate, trust preferred securities issued by three unconsolidated subsidiaries of ours as discussed in Note 12, “Subordinate Debentures”) totaled $1.7 billion as of December 31, 2005. In addition, as discussed above, TE Bond Sub has issued $341.0 million of preferred shares to third parties, and the terms of these preferred shares includes covenants that limit our ability to incur indebtedness, among other restrictions. This indebtedness and other liabilities may:

• make it more difficult for us to obtain additional financing on favorable terms;

• limit our ability to conduct or grow our business due to increased leverage and the existence of restrictive covenants;

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• require us to dedicate a substantial portion of our cash flows from operations to the repayment of principal and interest on our debt;

• make us more vulnerable to economic downturns; and

• make it more difficult for us to obtain additional financing on favorable terms due to increased leverage and the existence of covenants that may limit our ability to conduct our business, require us to dedicate a substantial portion of our cash flows from operations to the repayment of principal and interest on our debt, impose on us operating and financial restrictions, including minimum capital requirements, that may reduce our ability to respond to changing business and economic conditions or to grow our business and makes us more vulnerable to economic downturns. If we are unable to generate sufficient cash flows from operations in the future, we may have to refinance all or a portion of our debt and/or obtain additional financing. There cannot be any assurance that we will be able to obtain refinancing or additional financing on favorable terms, if at all.

Most of our assets are pledged as collateral.

All of our businesses require significant access to capital, and our capital partners require collateral support for providing capital to us. As a result, we post our assets as collateral to support our borrowings under notes payable, lines of credit, and securitization programs (described above). The majority of our tax-exempt bonds are owned by TE Bond Sub have been placed in or pledged as collateral for securitization programs, notes payable and credit agreements. Substantially all of our construction loans are pledged as collateral to support borrowings under our notes payable and credit agreements (with both financial institutions and our pension fund clients). Certain of our supplemental and permanent loans are pledged as collateral under short-term credit agreements. Certain of our other taxable loans are pledged for securitization and other programs. Our restricted assets (including cash and short-term investments) are pledged as collateral under terms of our interest rate swap contracts, securitization programs, certain guarantees and other obligations. At times, we have posted letters of credit as collateral and pledged our assets or collateral to the letter of credit providers. A portion of our investment in partnerships is pledged as collateral for borrowings under one of our credit agreements. As of December 31, 2005, $2.0 billion, or 63.6%, of our total assets was pledged as collateral, excluding the assets of certain tax credit equity funds and real estate operating partnerships which are consolidated in accordance with Financial Accounting Standards Board’s Financial Interpretations No. 46 (Revised), “Consolidation of Variable Interest Entitites” (“FIN 46”), but including bonds that have been contributed to securitization trusts as part of our securitization programs. See Note 9, “Guarantees and Collateral” in the notes to our consolidated financials statements included elsewhere in this Annual Report. In the event that we need additional access to capital, we may not have sufficient assets to collateralize future debt obligations.

We recently acquired two businesses and reorganized our corporate structure, and the long-term effects of these events will not be measurable for some period of time.

During 2005, we completed two acquisitions as described under Part I, Item I. Business “Our Business—Recent Developments—Acquisitions.” In an effort to integrate these new businesses and our existing businesses, beginning at the end of 2005 and continuing through the beginning of 2006, we undertook and completed a reorganization effort. Integration of acquisitions generally involves a number of risks, including the diversion of management’s attention to the assimilation of the operations of businesses, difficulties in the integration of operations and systems and the realization of potential operating synergies, the assimilation and retention of personnel, challenges in retaining the customers of the combined businesses and potential adverse effects on operating results. Although our reorganization effort was designed to simplify our structure, better serve our clients and position us to offer additional services and investment opportunities, the long-term effects of this effort will not be measurable for some period of time. If we are unable to successfully complete these integration and reorganization efforts, our business and its growth prospects could be negatively affected.

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We are not required to be registered under the Investment Company Act of 1940 and would not be able to conduct our business as we currently conduct it if we were required to be registered.

We intend to conduct our business so as not to become regulated as an investment company under the Investment Company Act of 1940 (the “1940 Act”). We are exempt from registration because, directly and through majority owned subsidiaries, we are primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate. We have received a legal opinion to this effect from our outside securities counsel. In order to qualify for this exemption, according to current interpretations of the staff of the SEC, we must maintain at least 55% of our assets directly in mortgages and other liens on and interests in real estate, with an additional 25% of our assets in real estate-type interests. When we securitize assets, or otherwise invest in a pool of mortgages, all of the certificates issued with respect to the securitization or mortgage pool may be treated as separate from the underlying mortgage loans and, thus, may not be considered as a qualifying interest for purposes of the 55.0% requirement. Similarly, any time we own less than all of a mortgage loan or bond our investment may not be considered a qualifying interest for purposes of the 55% requirement. As a result, our residual securitization interests and some of our bonds and loans are not qualifying interests for purposes of the 55% requirement, although they do qualify for the additional 25% test. The requirement that we maintain 55% of our assets in qualifying interests may inhibit our ability to acquire assets or to securitize additional interests in the future. If we fail to qualify for an exemption from registration as an investment company, either because the composition of our assets changes or because the Commission disagrees with the analysis and opinion of our counsel, which has no binding effect on the Commission, we would be unable to conduct our business as we currently conduct it, which could result in penalties and additional operating costs. In addition, if we fail to qualify for an exemption from registration as an investment company, we may no longer qualify for taxation as a partnership. Additionally, each of our subsidiaries must either not be an investment company or individually qualify for an exemption from registration under the 1940 Act. Even if we maintain our current exemption, if one or more of our subsidiaries becomes subject to registration under the 1940 Act, we would be unable to conduct our business as we currently do.

Certain of our officers and directors may have real or potential conflicts of interest with us.

We have engaged in various transactions in which Mark K. Joseph, the Chairman of our Board of Directors and our former Chief Executive Officer, has a financial interest. Mr. Joseph, through certain family holding companies, controls a 34.7% interest in The Shelter Group, LLC (the “Shelter Group”). Shelter’s operations include acting as a developer of, and providing property management services primarily to, multi-family residential real estate projects. We have numerous relationships and are a party to various transactions with the Shelter Group. We also have numerous relationships with other affiliates of Mr. Joseph.

Additionally, certain of our officers have fiduciary duties to entities that operate for the benefit of constituencies other than our shareholders:

• Certain of our officers act as directors of TE Bond Sub. In this capacity, these persons have fiduciary responsibilities to holders of TE Bond Sub’s preferred shares.

• Certain of our officers act as trustees for MAHGT and the MMER. In this capacity, these persons have fiduciary responsibilities to MAHGT and MMER and to the pension funds that are members of each of these entities.

• Certain of our officers act as directors of MuniMae Foundation, Inc. and MuniMae Affordable Housing, Inc., two non-profit entities organized by and associated with us. In this capacity, these persons have fiduciary responsibilities to these entities.

There may be instances where the interests of these entities and their stakeholders, as applicable, do not coincide with, or are adverse to, the interests of the holders of our common shares or MuniMae. For a more detailed discussion of the transactions discussed above, see Note 18, “Related Party Transactions” in the notes to our consolidated financial statements included elsewhere in this Annual Report.

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We depend on the expertise and service of key members of management and, given the nature of our business, the loss of their services could have a material adverse effect on our business.

We and our subsidiaries depend upon the services of Michael L. Falcone, our President and Chief Executive Officer, as well as other individuals who comprise our executive management team. All decisions with respect to our management and control, subject to the supervision of our Board of Directors, are currently made by such persons. The departure or the loss of the services of any of these key officers or a large number of senior management personnel and other employees could have a material adverse effect on our ability to operate our business effectively and our future results of operations.

Certain provisions of our operating documents may prohibit a change of control.

Our organizational documents contain provisions that may be deemed to have an anti-takeover effect, including provisions providing for staggered terms for the members of our Board of Directors. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our Board of Directors and management and in the policies formulated by the Board of Directors and to discourage an unsolicited takeover if the Board of Directors determines that such a takeover is not in the best interests of our shareholders. These provisions may, however, have the effect of delaying, deferring or preventing a takeover attempt that a shareholder might consider to be in the shareholder’s best interest, including offers that might result in a premium over market price for the common shares. These provisions may reduce interest in us as a potential acquisition target or reduce the likelihood of a change in our management or voting control without the consent of the then incumbent board of directors.

Item 2. Properties.

We do not own any of the real property where we conduct our business. Our headquarter offices are located in Baltimore, Maryland, where we lease approximately 35,000 sq. feet of office space pursuant to a lease that expires in 2014. Our two other principal offices are located in Tampa, Florida (where we lease approximately 35,000 sq. feet of office space pursuant to a lease that expires in 2016) and Boston, Massachusetts (where we lease approximately 50,000 sq. feet of office space pursuant to a lease that expires in 2007).

Our debt, structured finance and fund management segments predominantly use the Baltimore and Tampa offices. Our tax credit equity segment primarily uses our Boston office.

We also lease office space for our regional offices in Chicago, Illinois; Dallas, Texas; Detroit, Michigan; Washington, D.C.; Atlanta, Georgia; San Francisco, California; San Diego, California; Boulder, Colorado; Irvine, California; Lake Forest, Illinois; St. Paul, Minnesota; and New York, New York. We believe our facilities are suitable for our requirements and are adequate for our current and contemplated future operations.

Item 3. Legal Proceedings.

We are not a party to any material litigation or proceeding, or to the best of our knowledge, any threatened litigation or legal proceedings, which, in the opinion of management, individually or in the aggregate, would have a material adverse effect on our results of operations or financial condition.

Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted to a vote of our shareholders during the three months ended December 31, 2005.

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PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common shares are listed on the New York Stock Exchange. On May 26, 2006, there were approximately 2,500 record holders of our common shares, and as of December 31, 2005, there were approximately 31,000 individual participants in security position listings. The following table sets forth the high and low sale prices per common share as reported by the New York Stock Exchange for each calendar quarter in 2005 and 2004 and the distribution declared during such period.

	Common Stock Market Price
	High		Low		Distribution     Declared
2005
Fourth Quarter	$	25.98	$	24.01	$	0.4875
Third Quarter		26.86		24.75		0.4825
Second Quarter		25.99		23.65		0.4775
First Quarter		27.36		23.97		0.4725
2004
Fourth Quarter	$	27.21	$	25.10	$	0.4675
Third Quarter		25.26		23.35		0.4625
Second Quarter		25.74		22.41		0.4575
First Quarter		26.11		24.60		0.4525

Distribution Policy

It is our current policy to pay quarterly distributions to the holders of our common shares.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth information regarding common shares authorized for issuance under our equity compensation plans as of December 31, 2005.

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
Equity compensation plans approved by security holders
Non-employee director’s share plans	144,000		$	23.29	384,772
Employee share incentive plans	581,185	(1)	$	17.76	1,268,654
Equity compensation plans not approved by security holders	–				–
Total	725,185				1,653,426

(1) Includes 304,450 unvested deferred shares and options to purchase 276,735 of our common shares.

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Item 6. Selected Financial Data

On March 10, 2006, we concluded that our previously issued financial statements for the years ended December 31, 2004, 2003, 2002 and 2001 and for the quarters ended September 30, June 30 and March 31, 2005 and 2004 and December 31, 2004 should no longer be relied upon as a result of a number of errors in the application of generally accepted accounting principles. Specifically, we determined we had not: (A) correctly recognized syndication fee revenue; (B) correctly recorded impairments on investments in real estate partnerships held by our guaranteed tax credit equity funds; (C) correctly recorded consolidation entries related to our consolidated tax credit equity funds; (D) correctly capitalized interest costs on investments in real estate partnerships developing low income housing properties; (E) correctly accounted for the deferral and recognition of bond and loan origination fees and direct origination costs; (F) correctly applied the equity method of accounting for investments in certain partnerships; (G) correctly identified and valued derivative financial instruments; (H) correctly recorded income taxes; (I) correctly amortized certain mortgage servicing rights; and (J) correctly identified our segments. The selected financial data set forth in this item have been restated to correct these errors. Related to the restatement, we have made corresponding adjustments to our consolidated statements of cash flow. For additional detail on this restatement, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Results of Operations—Accounting Corrections.”

No other types of adjustments to our consolidated financial statements were made in association with the above-mentioned restatement of our financial results. Unrelated to this restatement, certain prior period reclassifications have been made to conform to current year presentation.

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The income statement data set forth below for the years ended December 31, 2005, 2004 and 2003 and the balance sheet data as of December 31, 2005 and 2004 are derived from our audited financial statements included elsewhere in this Annual Report. These historical results are not necessarily indicative of the results to be expected in the future.

	For the years ended December 31,
(in thousands, except per share data)	2005(1)			(Restated) 2004(2)			(Restated) 2003(3)			(Restated) 2002			(Restated) 2001
CONSOLIDATED INCOME STATEMENT DATA:
Interest income	$	154,154		$	133,568		$	108,701		$	107,544		$	92,286
Fee income		116,556			79,745			47,890			23,799			28,956
Net rental income		22,345			16,435			–			–			–
Total income		293,055			229,748			156,591			131,343			121,242
Interest expense		74,882			66,334			43,507			36,596			30,696
Interest expense on debentures and preferred shares(4)		25,650			17,318			6,189			–			–
Operating expenses		132,770			104,965			56,490			34,154			33,409
Depreciation and amortization		21,210			12,613			7,724			2,089			2,966
Total expenses		254,512			201,230			113,910			72,839			67,071
Net gain on sale of loans		9,401			3,393			4,864			3,407			3,207
Net gain on sale of tax-exempt investments		7,332			304			2,133			4,896			2,396
Net gain on sale of investments in tax credit equity partnerships		10,005			3,019			2,747			282			2,322
Net gain (loss) on derivatives		8,320			941			(871	)		(23,534	)		(7,935	)
Impairments and valuation allowances		(4,577	)		(5,559	)		(6,983	)		(730	)		(3,229	)
Net losses from equity investments in partnerships		(63,421	)		(178,195	)		(10,965	)		(6,576	)		(1,279	)
Income tax (expense) benefit		(2,341	)		6,508			8,515			(30	)		(2,076	)
Net income (loss) allocable to minority interest		74,661			176,807			(6,032	)		(11,938	)		(10,779	)
Income from continuing operations		77,923			35,736			36,089			24,281			36,798
Discontinued operations		9,481	(5)		11,080	(5)		25,748	(5)		–			–
Cumulative effect of a change in accounting principle		–			520	(6)		(1,228	)(7)		–			(12,277	)(8)
Net income	$	87,404		$	47,336		$	60,609		$	24,281		$	24,521
Net income available to common shareholders	$	87,404		$	47,336		$	60,609		$	24,128		$	22,486
EARNINGS PER SHARE:
Common shares (diluted earnings per share before discontinued operations and cumulative effect of accounting change)	$	2.05		$	1.03		$	1.21		$	0.95		$	1.69
Common shares (diluted earnings per share)	$	2.30		$	1.36		$	2.04		$	0.95		$	1.03
DISTRIBUTIONS PER SHARE:
Common shares	$	1.9200		$	1.8400		$	1.7850		$	1.7375		$	1.7025

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	As of December 31,
(in thousands)	2005(1)		(Restated) 2004(2)		(Restated) 2003(3)		(Restated) 2002		(Restated) 2001
CONSOLIDATED BALANCE SHEET DATA:
Bonds and interests in bond securitizations, net	$	1,436,535	$	1,284,953	$	1,043,973	$	781,384	$	629,755
Loans receivable, net		803,828		622,190		550,171		459,310		440,145
Investments in partnerships		872,514		812,257		271,844		96,447		5,393
Derivative financial instruments		3,975		3,102		2,563		18,762		2,912
Total assets		3,831,737		3,300,596		2,224,353		1,546,493		1,289,047
Notes payable		836,440		876,024		663,544		460,449		420,063
Mortgage notes payable		94,716		132,237		–		–		–
Short-term debt		693,785		414,193		371,881		219,945		78,560
Long-term debt		104,215		162,978		172,642		137,832		134,881
Subordinate debentures		172,750		84,000		–		–		–
Preferred shares subject to mandatory redemption(4)		168,000		168,000		168,000		–		–
Tax credit equity guarantee liability		229,690		184,999		148,125		–		–
Derivative financial instruments		4,005		6,171		15,763		49,359		18,646
Minority interest in subsidiary companies		410,973		398,454		31		–		–
Preferred shareholders’ equity in a subsidiary company(4)		168,686		71,031		–		160,465		160,645
Total shareholders’ equity		768,319		676,840		625,469		481,695		435,402

(1) 2005 includes approximately ten months of income and expense from MRC, which was acquired February 18, 2005, and six months of income and expense from Glaser, which was acquired July 1, 2005.

(2) The increase in investments in partnerships and minority interest in subsidiary companies is primarily attributable to the consolidation of tax credit equity funds pursuant to FIN 46 and the lease method of accounting.

(3) The 2003 column includes six months of income and expense from the Housing Community Investment business of Lend Lease Real Estate Investments (“HCI”), which was acquired July 1, 2003.

(4) As a result of the adoption of Statement of Financial Accounting Standards (“FAS”) No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (“FAS 150”), in 2003 we reclassified the liquidation preference value of our preferred shareholders’ equity of $168.0 million to a separate line in the liability section of the consolidated balance sheets. In addition, offering costs of $7.5 million related to these preferred shares have been reclassified to other assets and are being amortized through the redemption dates of the preferred shares. Amounts previously classified as income allocable to preferred shareholders are now recorded as interest expense.

(5) In January and March of 2005, property of certain Project Partnerships was sold for net proceeds of $1.8 million. Approximately $6.9 million of liabilities for the affected Project Partnerships was forgiven and included in the overall gain to the partnerships. In August 2005, September 2004, and April 2003, we both acquired properties by deed in lieu of foreclosure and sold the properties for net proceeds of approximately $17.5 million, $16.2 million, and $38.1 million, respectively. The properties previously served as collateral for tax-exempt bonds and taxable loans we held.

(6) Upon adoption of FIN 46, in March 2004, we determined that we were the primary beneficiary in certain of the tax credit equity funds we originated where there are multiple limited partners. As a result, we consolidated these equity investments at March 31, 2004. The cumulative effect of adopting FIN 46 was an increase to net income of approximately $0.5 million as of March 31, 2004.

(7) As a result of the adoption of FIN 46, we determined our residual interests in bond securitizations represented equity interests in variable interest entities (“VIEs”), and we were the primary beneficiary of the

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VIEs and, therefore, needed to consolidate the securitization trusts. The cumulative effect of adopting FIN 46 was a decrease to net income of approximately $1.2 million as of December 31, 2003.

(8) We have several types of financial instruments that meet the definition of a derivative financial instrument under FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” FAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” and FAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (collectively, “FAS 133”), including interest rate swaps, put option contracts and total return swaps. FAS 133 requires our investment in derivative financial instruments be recorded on the balance sheet with changes in the fair value of these instruments recorded in current earnings. As of January 1, 2001, our put option contracts were recorded on the balance sheet with a fair value of zero and our interest rate swaps and total return swaps were reclassified to trading securities and those with a negative balance were reflected as liabilities on the balance sheet. The cumulative effect of adopting FAS 133 was a decrease to net income of approximately $12.3 million as of January 1, 2001.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General Overview

Our overall strategy is to be a market leader in real estate finance and investment advisory services using our intellectual and financial capital to structure debt and equity solutions to complex financing transactions. We also seek to provide steady growth and strong dividends to our shareholders, deliver unsurpassed service to our developer and investor clients and create an environment where integrity, innovation and service are of the highest importance. We believe that the accomplishment of these goals will provide long-term value to our shareholders, investor and developer clients and employees and will differentiate us from our competitors.

MuniMae was organized in 1996 as a Delaware limited liability company and is classified as a partnership for federal income tax purposes. MuniMae has the same limited liability, governance and management structures as a corporation, but it is treated as a “pass-through” entity for federal income tax purposes. Thus, our shareholders must include their distributive share of our income, deductions and credits on their tax returns. This information is provided to our shareholders through a Schedule K-1 rather than a Form 1099. We conduct our business activities primarily through two wholly-owned subsidiaries:

• MMA Financial, Inc. (“MMAF”), which is organized as a tax paying entity and is where we operate our tax credit, taxable lending, and most of our fee generating real estate finance activities; and

• MuniMae Holdings, LLC (“MMH”), which is organized as a limited liability company and a pass-through entity for federal income tax purposes that holds the majority of our investments in tax exempt bonds.

This organizational structure is designed to allow us to “pass through” the interest income of our investments and the tax-exempt interest income to our shareholders.

The Evolution of our Business

When we became a public company in 1996, we primarily originated, invested in and serviced tax-exempt mortgage revenue bonds issued by state and local government authorities to finance affordable multi-family housing developments. Since becoming a public company, we have continually expanded our business:

• In October 1999, we acquired Midland Financial Holdings, Inc., primarily a designated underwriter for the Federal National Mortgage Association (“Fannie Mae”) and a tax credit syndicator, in a strategic acquisition that diversified our operations.

• In July 2003, we acquired the Housing and Community Investment (“HCI”) business of Lend Lease Real Estate Investments (“Lend Lease”), formerly the tax credit equity syndication division of Lend

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Lease, in a strategic acquisition that firmly established us as a market leader in the tax credit equity syndication business.

• In February 2005, we acquired MONY Realty Capital (“MRC”) from AXA Financial, Inc., formerly the investment manager for several of MONY Life Insurance Company’s commercial real estate funds, in an acquisition that expanded our fund management business and brought us into the commercial real estate market with access to institutional investors.

• In July 2005, we acquired Glaser Financial Group, Inc. (“Glaser”), a full service commercial mortgage banker for market rate multifamily, senior housing and commercial real estate predominately in the upper midwest, in an acquisition that provided even greater scale in the real estate finance market, an opportunity to expand our operations into the upper midwest and product diversification outside of affordable housing.

• In December 2005, we began to reorganize our operations into an affordable housing business unit and a real estate finance business unit to: (1) better align our internal structure with our customer base; (2) expand our business opportunities and capital relationships; and (3) further consolidate our infrastructure to better support our strategic initiatives.

Historically, a significant portion our distributions has been tax-exempt. Over the past several years, our business has increasingly involved activities that generate taxable income: (1) though the HCI acquisition, we dramatically increased the size of our tax credit equity syndication business; (2) we have continually expanded our construction loan business; and (3) the Glaser acquisition more than doubled the size of our debt segment operations. As a result of these changes in our business and our goal to increase management advisory services, the percentage of our distribution that is tax exempt has decreased and can reasonably be expected to continue to decrease further from historical levels. In addition, the ability to take advantage of the tax-exempt component of our distribution depends on the facts and circumstances of the individual taxpayer. In 2004 and 2005 we recognized, and we expect to recognize in the future, taxable gains from the sale of assets, which could include equity interests in real estate or tax-exempt or taxable debt. These trends are likely to continue, and as we grow we are likely to invest in a larger percentage of taxable investments which will cause the percentage of our distribution that is tax exempt to decrease further.

Our Business Segments

We operate through four business segments:

• Through our debt segment we (1) invest in tax-exempt bonds and bond securitizations; (2) make taxable construction, supplemental and permanent loans; (3) provide loan servicing; and (4) originate loans that are ultimately sold to government sponsored enterprises (“GSEs”), such as Fannie Mae, the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Government National Mortgage Association (“Ginnie Mae”) or insured by agencies such as the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development (“HUD”).

• Through our tax credit equity segment we provide tax credit equity syndication and asset management services.

• Through our structured finance segment we invest in other real estate-related securities, including equity investments in real estate operating partnerships, tax exempt and taxable bonds, bond securitizations and taxable loans.

• Through our fund management segment we (1) provide loan origination, loan servicing, investment advisory, asset management and other related services and (2) invest in real estate operating partnerships.

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Results of Operations

Critical Accounting Estimates

Critical accounting estimates are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex or subjective judgments. We applied our critical accounting policies and estimation methods consistently in all periods presented and have discussed these policies with our Audit Committee.

Valuation of tax-exempt bonds, taxable bonds and interests in bond securitizations

Tax-exempt bonds, taxable bonds and interests in bond securitizations (collectively, “investments in bonds”) are classified and accounted for as available-for-sale debt securities and are carried at fair value. Unrealized gains or losses on investments in bonds are recorded through other comprehensive income in shareholders’ equity, while realized gains and losses and other-than-temporary impairments with respect to investments in bonds are recorded through net income.

We determine the fair value of participating bonds (which are bonds that participate in the net cash flows and net capital appreciation of the underlying properties) by discounting the underlying collateral’s expected future cash flows using appropriate discount and capitalization rates. We base the fair value of non-participating bonds and interests in bond securitizations on quotes from external sources. Net operating income from the underlying property is one of the key assumptions used to value our bonds. Keeping other assumptions static, had net operating income from the underlying properties decreased by 10% and 20%, and if such a decrease were to reduce the underlying property’s debt service coverage ratio to less than 1.0, we estimate that the fair value of our bonds would have decreased by approximately $105.0 million and $142.0 million, respectively.

Because our investments in tax-exempt bonds and interests in bond securitizations are secured by non-recourse mortgage loans on real estate properties, the value of our assets is subject to all of the factors affecting bond and real estate values, including macroeconomic conditions, interest rate changes, local and regional real estate market conditions and individual property performance. Further, many of our investments are subordinated to the claims of other senior interests and uncertainties may exist as to a borrower’s ability to meet its principal and interest payments.

We continually evaluate the credit risk exposure associated with our assets to determine whether other-than-temporary impairments exist or a valuation allowance is needed. In making these determinations, we consider the credit risk exposure of the investment, our ability and intent to hold the investment for anticipated recoveries in market value, the length of time and extent to which the market value has been less than carrying value, the financial condition of the underlying collateral including the payment status of the investment and general economic and other more specific conditions applicable to the investment, other collateral available to support the investment and our expectations about recovery of all amounts due under our mortgage obligations on a net present value basis. We use third party quotes for securities with similar characteristics or discounted cash flow valuations to assist in determining the fair value of our investments, when such quotes are available. If the fair value of an investment is less than its amortized cost, and after assessing the above-mentioned factors, we determine that an other-than-temporary impairment exists, we record an impairment loss in net income and adjust the cost basis of the investment accordingly. The new cost basis of the investment is not adjusted for subsequent recoveries in fair value.

We measure impairment based on the present value of expected future cash flows discounted at the investment’s effective interest rate or the fair value of the collateral if the investment is collateral dependent. We provide an allowance for loan losses based upon our specific evaluation of individual investments in the portfolio considering overall loss experience, loan-to-value ratios, delinquency data, economic market conditions, debt service coverage, indemnification agreements, and other factors that warrant recognition in reviewing the loans for impairment. We also continually evaluate other receivables and advances for collectibility, and when it is probable that we will not collect all amounts due, the balance is written down to its realizable value.

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Valuation of mortgage servicing rights

We account for mortgage servicing rights retained after the sale of a related loan by allocating the carrying amount of the loan between the loan and the servicing rights based on their relative fair values. The fair value of the mortgage servicing rights is based on the expected future net cash flow to be received over the estimated life of the loan discounted using an appropriate discount rate. We estimate the fair value based on our own assessment of similar assets and by obtaining market information from external sources. Mortgage servicing rights are amortized over the estimated life of the related loan.

The significant assumptions used in estimating the fair values at December 31, 2005 were as follows:

Weighted average discount rate	13.53%
Weighted average lock-out period	17.1 years
Float and escrow earnings rate	4.39% to 4.88%

The table below illustrates hypothetical, fair values of mortgage servicing rights at December 31, 2005 caused by assumed immediate changes to key assumptions that are used to determine fair value.

(in thousands)
Fair value of MSRs at December 31, 2005	$	80,864
Discount rate:
Fair value after impact of +20% change		72,894
Fair value after impact of +10% change		76,681
Fair value after impact of -10% change		85,507
Fair value after impact of -20% change		90,689
Earnings rate:
Fair value after impact of +20% change		87,615
Fair value after impact of +10% change		84,239
Fair value after impact of -10% change		77,488
Fair value after impact of -20% change		74,113
Prepayment speed:
Fair value after impact of +20% change		77,945
Fair value after impact of +10% change		79,368
Fair value after impact of -10% change		82,438
Fair value after impact of -20% change		84,100

We evaluate our mortgage servicing rights for impairment based on the fair values of these assets compared to their carrying values. When the carrying value for such an asset exceeds its fair value, and we believe the impairment is temporary, we recognize the impairment through a valuation allowance. If we determine that an impairment with respect to such an asset is other-than-temporary, we reduce the carrying amount of the asset appropriately and charge results of operations.

Impairment of goodwill and intangible assets

We test goodwill and intangible assets for impairment when it is probable that impairment has occurred, but not less than annually, using a discounted net cash flow analysis for each business segment. The determination of these future cash flows involves significant judgment on the part of management, including our internal business plans, management review of economic forecasts and estimates of long-term growth prospects. In addition, we perform various sensitivity analyses related to the discount rates used and growth rates used to estimate cash flows to provide further assurance regarding the fair value of goodwill.

Primary beneficiary determination pursuant to FIN 46

Financial Accounting Standards Board’s Financial Interpretations No. 46 (Revised), “Consolidation of Variable Interest Entities” (“FIN 46”), requires the consolidation of a VIE if we are the primary beneficiary of

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the VIE. Typically we are considered the primary beneficiary if our variable interest either absorbs a majority of the VIE’s expected losses, receives a majority of the VIE’s residual returns or both. Generally, FIN 46 impacts our accounting treatment for the following types of equity investments:

• residual interests in bond securitization trusts

• interests in income-producing real estate operating partnerships

• interests in tax credit equity funds

• interests in Project Partnerships

• interests in managed real estate investment funds

The identification of the primary beneficiary involves a number of assumptions and estimates about the economic realities of the VIE and the variable interest holders. Where we have determined that we do not have a sufficiently large variable interest to be a potential primary beneficiary or that we are the only interest holder with a sufficiently large interest, we determine the primary beneficiary using a qualitative approach based on the estimated economics of the VIE. Otherwise, we incorporate a top-down quantitative approach, allocating estimated cash flows to each variable interest holder based on seniority of each of the cash flow scenarios that are probability weighted and used to determine the VIE’s expected losses.

Accounting Corrections

On March 10, 2006, we concluded that our financial statements for the years ended December 31, 2004, 2003, 2002 and 2001 and for the first three quarters in 2005 and for each quarter in 2004 should no longer be relied upon as a result of a number of errors in the application of GAAP. Specifically, we determined that we had not: (A) correctly recognized syndication fee revenue; (B) correctly recorded impairments on investments in real estate partnerships held by our guaranteed tax credit equity funds; (C) correctly recorded consolidation entries related to our consolidated tax credit equity funds; (D) correctly capitalized interest costs on investments in real estate partnerships developing low income housing properties; (E) correctly accounted for the deferral and recognition of bond and loan origination fees and direct origination costs; (F) correctly applied the equity method of accounting for investments in certain partnerships; (G) correctly identified and valued derivative financial instruments; (H) correctly recorded income taxes; (I) correctly amortized certain mortgage servicing rights; and (J) correctly identified our segments.

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Accounting Corrections

A. Accounting for real estate syndication fees—Syndication fees are required to be recognized ratably as syndication partnerships invest in low income housing properties. During the restatement periods, we inappropriately: (1) eliminated certain syndication fees related to consolidated syndication partnerships and (2) recognized syndication fees as investors subscribed to our funds and when we selected or acquired interests in low income housing properties to be sold to syndication partnerships rather than when the syndication partnerships made investments.

B. Accounting for impairments of investments in real estate partnerships held by guaranteed tax credit equity funds—We presented equity in the impairment losses of low income housing properties owned by our guaranteed tax credit equity funds and related revenues earned by providing related tax losses net instead of reporting these amounts separately.

C. Accounting for consolidated tax credit equity funds—We did not prepare and record certain adjustments during the consolidation process. Certain adjustments were not recorded, were recorded incorrectly or were not properly reversed to ensure consolidated amounts were in accordance with GAAP.

D. Accounting for capitalized interest costs associated with investments in real estate partnerships—We did not correctly capitalize interest costs on investments in real estate partnerships developing low income housing properties.

E. Accounting for deferral and recognition of bond and loan origination fees and direct costs—We did not correctly amortize our deferred bond and loan fees using the effective interest method over their contractual terms as required by GAAP. In addition, we did not correctly defer direct costs of originating bonds in accordance with GAAP.

F. Accounting for investments in partnerships using the equity method—We are required to use the equity method to account for investments in unconsolidated partnerships over which we have significant influence.

During the restatement periods, we accounted for certain equity method ventures incorrectly because we did not properly:

• account for differences between our cost of an investment and our share of the underlying equity of the investee;

• calculate our share of the investee’s losses using our economic share of the entity; and

• record our share of losses after our share of cumulative losses exceeded our original investment even though we had guaranteed certain obligations of the investee.

G. Identification and valuation of derivative financial instruments—We did not identify and value certain derivative financial instruments appropriately.

H. Accounting for income taxes—We did not correctly identify certain temporary differences or segregate earnings between taxable corporate entities and nontaxable partnerships resulting in incorrectly recording our tax provision in accordance with GAAP.

I. Accounting for mortgage servicing rights—We incorrectly recorded certain amortization expense related to our capitalized mortgage servicing rights.

J. Disclosure about our segments—We did not identify our segments or report their performance for external reporting purposes the same way we did for reporting to our chief operating decision maker. As a result, we changed our segments from three to four, which now include the debt segment, tax credit equity segment, structured finance segment and fund management segment.

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The table below presents our restated financial data. Parenthetical references relate to the accounting corrections described above. The shareholders’ equity amount below includes an adjustment decreasing the beginning balance at January 1, 2003 of approximately $5.4 million, net of taxes related to the effects of these accounting corrections in 2001 and 2002. Certain amounts from prior periods have been reclassified to conform to the current year presentation. No other types of adjustments to our consolidated financial statements were made in association with the above-mentioned restatement.

	For the years ended December 31,
	2004						2003
	As reported			Restated			As reported			Restated
CONSOLIDATED INCOME STATEMENT DATA:
Interest on bonds and interests in bond securitizations (E)	$	85,505		$	84,107		$	71,636		$	69,942
Interest on loans (G)		43,874			45,579			37,211			37,621
Interest on short-term investments (D)		5,020			3,882			2,158			1,138
Syndication fees (A)		25,535			41,009			26,856			16,350
Guarantee fees (A) and (B)		7,852			10,610			3,614			3,614
Other income (A), (E) and (F)		7,415			2,881			8,855			6,771
Interest expense (D)		69,884			66,334			44,528			43,507
Salaries and benefits (E)		69,540			67,812			41,736			40,900
Depreciation and amortization (I)		14,159			12,613			7,492			7,724
Net gain (loss) on derivatives (G)		(219	)		941			(1,919	)		(871	)
Income tax (expense) benefit (H)		(2,737	)		6,508			138			8,515
Net (income) loss allocable to minority interest		178,280			176,807			(6,032	)		(6,032	)
Net losses from equity investments in partnerships (A), (B), (C) and (F)		(169,404	)		(178,195	)		(3,173	)		(10,965	)
Income before cumulative effect of a change in accounting principle		26,517			46,816			73,723			61,837
Net income		27,037			47,336			72,495			60,609
Earnings per share:
Basic	$	0.78		$	1.37		$	2.47		$	2.06
Diluted		0.78			1.36			2.44			2.04
CONSOLIDATED STATEMENT OF CASH FLOW DATA:
Net cash provided by operating activities	$	54,141		$	94,336		$	45,719		$	39,969
Net cash used in investing activities		(656,892	)		(686,555	)		(347,880	)		(347,910	)
Net cash provided by financing activities		644,806			634,274			309,242			315,022
CONSOLIDATED BALANCE SHEET DATA:
Loans receivable, net (E)	$	630,939		$	622,190
Investments in partnerships (A), (C), (D), (F) and (G)		827,273			812,257
Other assets (A), (D) and (H)		66,040			70,835
Mortgage servicing rights, net (I)		11,349			11,349
Total assets		3,310,330			3,300,596
Tax credit equity guarantee liability (A)		186,778			184,999
Investment in derivative financial instruments (G)		4,923			6,171
Unearned revenue and other liabilities (E), (G) and (H)		74,176			71,145
Total liabilities		2,161,778			2,154,271
Minority interest in subsidiary companies (A)		404,586			398,454
Accumulated other comprehensive income (loss) (E)		(1,532	)		490
Shareholders’ equity		672,935			676,840

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IMPACT ON NET INCOME BY PERIOD:

	2005
	1st Quarter			2nd Quarter			3rd Quarter
Tax credit equity (A), (B), (C) and (D)	$	5,462		$	4,749		$	5,670
Origination fees and direct costs (E)		(805	)		(1,418	)		(472	)
Investments in partnerships using the equity method (F)		(1,518	)		14,583			(2,367	)
Derivative financial instruments (G)		(210	)		(185	)		1,685
Mortgage servicing rights (I)		–			–			–
Taxes		2,547			(1,723	)		954
Total	$	5,476		$	16,006		$	5,470
	2004
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Tax credit equity (A), (B), (C) and (D)	$	4,245		$	4,670		$	3,013		$	6,968		$	18,896
Origination fees and direct costs (E)		(161	)		1,114			(489	)		(300	)		164
Investments in partnerships using the equity method (F)		(2,784	)		(478	)		(3,342	)		(1,506	)		(8,110	)
Derivative financial instruments (G)		(201	)		(203	)		(206	)		(207	)		(817	)
Mortgage servicing rights (I)		(58	)		(58	)		1,037			–			921
Taxes		2,057			1,622			993			4,573			9,245
Total	$	3,098		$	6,667		$	1,006		$	9,528		$	20,299
	2003
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Tax credit equity (A), (B), (C) and (D)	$	–		$	–		$	(535	)	$	(10,829	)	$	(11,364	)
Origination fees and direct costs (E)		(478	)		(239	)		38			280			(399	)
Investments in partnerships using the equity method (F)		(1,210	)		(2,846	)		(459	)		(3,277	)		(7,792	)
Derivative financial instruments (G)		–			(79	)		(198	)		(199	)		(476	)
Mortgage servicing rights (I)		(58	)		(58	)		(58	)		(58	)		(232	)
Taxes		635			1,220			(1,108	)		7,630			8,377
Total	$	(1,111	)	$	(2,002	)	$	(2,320	)	$	(6,453	)	$	(11,886	)

Results of Operations

Year over Year Comparisons

As a result of adopting FIN 46, we began to consolidate certain tax credit equity funds in the first quarter of 2004 in which we are the general partner with an equity interest typically less than 1%. The equity in these funds held by the limited partners (outside investors) is reported as minority interest in our consolidated balance sheets and the investors’ share of the net losses of these funds is reflected as net loss allocable to minority interest in our consolidated statements of income. The effects of consolidating these funds make the year over year comparisons difficult. As appropriate, we have indicated separately in the year over year comparison of results of operations below where the application of FIN 46 has impacted our results of operations.

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Net Interest Income

	For the year ended December 31,
(in thousands)	2005			(Restated) 2004			(Restated) 2003
Interest on bonds and interests in bond securitizations	$	91,467		$	84,107		$	69,942
Interest on loans		57,473			45,579			37,621
Interest on short-term investments (1)		5,214			3,882			1,138
Total interest income		154,154			133,568			108,701
Interest expense (1)		(74,882	)		(66,334	)		(43,507	)
Interest expense on debentures and preferred shares		(25,650	)		(17,318	)		(6,189	)
Net interest income	$	53,622		$	49,916		$	59,005

(1) Includes the effects of the application of the lease method and consolidation of the tax credit equity funds.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

For the year ended December 31, 2005, net interest increased $3.7 million compared to net interest income for the year ended December 31, 2004 due primarily to:

• a $7.3 million net increase in interest on bonds and interests in bond securitizations due primarily to: (a) a $22.8 million increase from new investments in bonds, including the effects of additional draws on draw-down bonds, and production timing differences between 2005 and 2004, partially offset by (b) lower interest income of $7.5 million due to an increase in defaulted and non-accrual bonds; and (c) an $8.0 million net decrease due primarily to the effects of sales and redemption of bonds.

• a $11.9 million net increase in interest on loans due primarily to: (a) an increase of $14.8 million due to higher interest rates charged on existing construction loans; (b) an increase of $3.4 million due to new investments in construction loans; (c) an increase of $2.1 million related to the acquisition of Glaser business, partially offset by (d) a decrease of $8.7 million due to loan sales at permanent conversion and principal pay-downs; and (e) other net increases of $0.3 million.

• a $1.3 million increase in interest on short-term investments due primarily to an increase of $1.5 million from higher investment balances primarily related to the new Glaser and MRC acquisitions, partially offset by a decrease of $0.2 million related to the application of the lease method and consolidation of tax credit equity funds.

• an $8.5 million increase in interest expense due primarily to: (a) an $8.5 million increase from higher interest rates on short-term debt balances and related short-term interest rates, (b) a $2.0 million increase from higher interest rates on notes payable; and (c) a $0.5 million increase due to the accretion of the deferred purchase price related to the Glaser acquisition, partially offset by (d) a $2.2 million decrease due to the effects of the application of the lease method and consolidation of tax credit equity funds (primarily as a result of the consolidation of fewer Project Partnerships in 2005 as compared to 2004) and other net decreases of $0.3 million.

• an $8.3 million increase in interest expense on debentures and preferred shares resulting from the issuance of $88.8 million of trust preferred securities in March and June of 2005 (See Note 12, “Subordinate Debentures” in the notes to our consolidated financial statements).

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

The majority of the increase in interest income on bonds and interests in bond securitizations between 2004 and 2003 is offset by a corresponding increase in interest expense. These increases are due primarily to a change in the method of accounting for certain securitization in accordance with FIN 46 beginning December 31, 2003.

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For the year ended December 31, 2004, we reported the interest income related to the securitization trust assets (tax-exempt bonds) and interest expense related to the senior interest in the trusts (short-term debt) in our consolidated financial statements because we consolidated the securitization trusts pursuant to FIN 46. For the year ended December 31, 2003, the net interest income earned on the securitization trusts was reported as interest on bonds and as a result, $2.2 million of securitization-related interest expense was included in interest income.

In addition, upon the adoption of FAS 150 as of July 1, 2003, interest expense on preferred shares was recorded as interest expense on debentures and preferred shares rather than interest income (expense) allocable to minority interest. During 2003, $6.0 million of interest expense on preferred shares was recorded as interest income (expense) allocable to minority interest and $6.2 million of interest expense on preferred shares was recorded as interest expense on debentures and preferred shares.

For the year ended December 31, 2004, net interest income decreased $9.1 million compared to net interest income for the year ended December 31, 2003 due primarily to:

• a $22.1 million increase in interest on bonds and interests in bond securitizations and interest on loans due to an increase in the average investment in tax-exempt bond and loan receivable balances and the abovementioned $2.2 million amount of securitization-related interest expense included in 2003 interest income;

• a $2.8 million increase in interest on short term investments resulting from interest from consolidated tax credit equity funds and fluctuations in cash and cash equivalent balances;

• a $11.8 million increase in interest expense due primarily to: (a) a $6.4 million increase on senior debt interests in securitizations due to an increase in the number of securitizations; (b) a $1.1 million increase related to higher average notes payable balances and higher interest rates; (c) a $6.7 million increase related to higher outstanding line of credit balances resulting from higher production volumes and higher interest rates in 2004; and (d) a $2.4 million net decrease in other items; and

• a $11.2 million increase in interest expense and amortization of debt issue costs associated with debentures and the 2004 trust preferred securities.

• In addition to the factors described above, for the year ended December 31, 2004, we recorded interest expense of $11.0 million related to the lease method and consolidation of the tax credit equity funds. These adjustments are primarily the result of eliminating intercompany interest from the consolidated tax credit equity funds and the lease method as well as the interest expense related to the consolidated Project Partnerships.

Fee Income

	For the year ended December 31,
(in thousands)	2005		(Restated) 2004		(Restated) 2003
Syndication fees	$	42,977	$	41,009	$	16,350
Origination and brokerage fees		5,552		7,934		6,584
Guarantee fees (1)		19,127		10,610		3,614
Asset management and advisory fees (1)		33,528		12,733		10,337
Loan servicing fees		9,318		4,578		4,234
Other income (1)		6,054		2,881		6,771
Total fee income	$	116,556	$	79,745	$	47,890

(1) Includes the effects of the application of the lease method and consolidation of tax credit equity funds. Of the $36.8 million increase in total fee income from 2004 to 2005, the effects of the application of the lease method and consolidation of tax credit equity funds increased total fee income by approximately $13.3

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million. These effects are primarily the result of eliminating asset management fees and other income we earn from consolidated tax credit equity funds and guarantee fee income generated from the lease method. Typically, less asset management fee elimination year over year results in increases to fee income in consolidation.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

In addition to the changes discussed in footnote (1) above, total fee income increased approximately $36.8 million from 2004 to 2005 due primarily to:

• a $2.0 million increase in syndication fees related to higher syndication volumes;

• a $2.4 million decrease in origination and brokerage fees due primarily to: a $6.9 million decrease caused by a change in origination structure of taxable loans and a decrease in production volumes, partially offset by an increase of $4.5 million in fees resulting from the acquisition of MRC and Glaser;

• a $1.9 million increase in guarantee fees due primarily to an increase in the number of guaranteed funds;

• a $14.5 million increase in asset management and advisory fees due primarily to: (a) an increase of $7.6 million due to an increase in the number of funds managed and lower cash reserves needed on certain funds allowing for payment of fees; and (b) a $6.9 million increase resulting from the acquisition of MRC;

• an increase of $4.7 million in loan servicing fees due primarily to the acquisitions of MRC and Glaser; and

• an increase of $2.8 million in other income due primarily to an adjustment of $1.0 million related to the favorable resolution of a preacquisition contingency and $1.8 million of higher incentive fees on tax credit equity funds.

• In addition, we recorded $13.3 million of adjustments related to the lease method and consolidation of certain tax credit equity funds. These adjustments are primarily the result of eliminating asset management fees and other income we earned from the consolidated tax credit equity funds and guarantee fee income generated from the lease method.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Total fee income for the year ended December 31, 2004 increased $31.9 million over 2003 due primarily to:

• a $24.7 million increase in syndication fees resulting from the higher syndication volume and a full year of operations from the HCI acquisition;

• a $9.7 million increase in asset management and advisory fees due primarily to a full year of operations from the HCI business;

• a $1.4 million increase in origination and brokerage fees resulting from higher production volumes from taxable loans and bonds;

• a $0.4 million increase in guarantee fees primarily due to volume increases resulting from a full year of operations from the HCI business;

• a $0.4 million increase in loan servicing fees due to an increase in the size of the permanent loan portfolio serviced; and

• a $3.5 million decrease in other income due primarily to a $3.0 million decrease in fees collected on conventional equity deals and a collateral release after the sale of property and other net decreases of $0.5 million.

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• In addition, adjustments of $1.2 million related to the lease method and consolidation of certain tax credit equity funds. These adjustments are primarily the result of eliminating asset management fees and other income we earned from the consolidated tax credit equity funds and guarantee fee income generated from the lease method.

Net Rental Income

At times, we take ownership of the general partnership interest in underlying Project Partnerships in which the tax credit equity funds are limited partners. We generally take a 0.01% to 1% general partner interest in the Project Partnership, and the tax credit equity fund, which we may also consolidate, is typically the 99.99% to 99% limited partner. In addition, at times, particularly in the case of developer failures or workouts, we take ownership of the entire general partnership interest in the underlying Project Partnerships in which the tax credit equity funds are the limited partners. Net rental income represents income from the Project Partnerships that we consolidated effective March 31, 2004 as a result of the application of FIN 46. Net rental income increased $5.9 million for the year ended December 31, 2005, as compared to 2004 due to nine months of operations reflected in 2004 versus twelve months of operations in 2005.

Net Gain (Loss) on Sales and Derivatives

	For the year ended December 31,
(in thousands)	2005		(Restated) 2004		(Restated) 2003
Net gain on sale of loans	$	9,401	$	3,393	$	4,864
Net gain on sale of tax-exempt investments		7,332		304		2,133
Net gain on sale of investments in tax credit equity partnerships (1)		10,005		3,019		2,747
Net gain (loss) on derivatives		8,320		941		(871	)
Total net gain on sales and derivatives	$	35,058	$	7,657	$	8,873

(1) Includes the effects of the application of the lease method and consolidation of the tax credit equity funds.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Net gain on sales increased $27.4 million for the year ended December 31, 2005, as compared to 2004, due primarily to:

• an increase of $6.0 million in net gain on sale of loans resulting from an increase in volume of loans sold primarily related to the Glaser acquisition;

• an increase of $7.0 million in net gain on sale of tax-exempt investments due primarily to the repayment or sale of 22 tax-exempt bonds and one senior interest in a bond securitization generating $7.3 million of gain in 2005 versus the sale or repayment of 21 tax-exempt bonds and one senior interest in a bond securitization generating $0.3 million of gain in 2004;

• a decrease of $1.2 million in net gain on sale of investments in tax credit equity partnerships resulting from fluctuations in the operating results and holding periods of certain Project Partnerships temporarily owned by us prior to purchase by tax credit equity funds; and

• an increase of $7.4 million in net gain (loss) on derivatives due primarily to: (a) a $4.4 million increase related to the termination of interest rate swaps; (b) an increase of $4.5 million related to net interest rate swap settlements; and (c) a $1.5 million net decrease due to lower market values of our derivatives and other items.

• In addition to the factors set forth above, a net increase of $8.2 million in net gains related to the effects of the application of the lease method and consolidation of tax credit equity funds. The increase from

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the effects of the application of lease method and consolidation of tax credit equity funds primarily relates to the elimination of the gains recorded on sales of investments in Project Partnerships to consolidated tax credit equity funds and the gains recorded on the extinguishment of guarantees under the lease method.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Net gain on sales decreased $1.2 million for the year ended December 31, 2004 compared to 2003 due primarily to:

• a $1.5 million decrease in gain on sale of loans resulting from: (a) a $1.2 million decrease from taxable loans due to two large taxable loan sales during 2003 generating $1.2 million of gain with no similar substantial gains in 2004 and (b) a $0.7 million decrease due to a decrease in premiums on the sale of loans to GSEs, partially offset by (c) a $0.4 million increase in gains from mortgage servicing rights;

• a $1.8 million decrease in gain on sale of tax-exempt investments due to two large tax exempt investment sales during 2003 generating $2.2 million of gain with no similar substantial gains in 2004; and

• a $1.8 million increase in net gain (loss) on derivatives primarily driven by market fluctuations in the value of our derivatives.

• In addition to the factors discussed above, we recorded adjustments of $0.3 million related to the application of the lease method and consolidation of the tax credit equity funds, which increased the net gain on sales in 2004.

Operating Expenses

	For the year ended December 31,
(in thousands)	2005		(Restated) 2004		(Restated) 2003
Salaries and benefits	$	88,195	$	67,812	$	40,900
General and administrative		32,329		25,976		11,277
Professional fees		12,246		11,177		4,313
Total operating expenses	$	132,770	$	104,965	$	56,490

All line items in the table above include the effects of the application of the lease method and consolidation of tax credit equity funds and Project Partnerships. For 2005, total operating expenses increased $28.0 million as compared to 2004. The effects of the application of the lease method and consolidation of tax credit equity funds and Project Partnerships increased operating expenses $3.0 million. The increase in operating expenses related to these effects is primarily attributable to twelve months of operations from consolidated Project Partnerships in 2005 versus nine months of operations from consolidated Project Partnerships in 2004 and fluctuations in the number of tax credit equity funds consolidated from year to year. This increase of $3.0 million together with the following fluctuations which net to an increase of $25.0 million result in the overall increase of $28.0 million in total operating expenses:

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Total operating expenses increased $25.0 million for the year ended December 31, 2005 compared to 2004 due primarily to:

• a $19.9 million increase in salaries and benefits resulting from: (a) an $11.3 million increase due to an increase in headcount over 2004 as a result of the MRC and Glaser acquisitions; (b) an increase of $3.1 million in deferred compensation arrangements; (c) a $5.2 million charge related to our internal corporate reorganization in the fourth quarter of 2005; and (d) an increase of $0.3 million in other personnel related costs;

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• a $4.3 million increase in general and administrative expenses due primarily to: (a) a $2.4 million increase in costs related to the new MRC and Glaser businesses; (b) a $0.5 million increase in travel and entertainment costs; (c) a $0.5 million increase in director fees; (d) a $0.3 million increase in costs surrounding unreimbursed deal workouts; and (e) a $1.5 million increase in information technology costs, insurance costs and other costs including costs to relocate to our new Tampa office offset by a reduction in charitable contributions of $0.9 million.

• a $0.8 million increase in professional fees due primarily to; (a) a $0.8 million increase in costs from the new MRC and Glaser businesses; and (b) a $0.7 million increase in legal costs, partially offset by (c) a $0.7 million decrease in certain consulting and other costs.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Total operating expenses increased $48.5 million for the year ended December 31, 2004 over 2003 due primarily to:

• a $24.6 million increase in salaries and benefits as a result of the operations of the HCI business, employment growth and an increase in bonus and other compensation costs;

• a $4.0 million increase in general and administrative expenses due primarily to: (a) increases in travel, rent, information and technology and service agreement costs resulting from a full year of operations from the HCI business; (b) a $0.7 million increase in unreimbursed deal expenses; and (c) a $0.4 million increase in charitable contributions;

• a $6.1 million increase in professional fees due to higher legal and accounting fees attributable to Sarbanes-Oxley compliance initiatives, new transactions and a full year of operations from the HCI business.

• In addition to the factors described above, we recorded operating expenses of $13.8 million, after giving effect for eliminations, related to the lease method and consolidation of certain tax credit equity funds.

Depreciation and Amortization

Year Ended December 31, 2005 Compared to year Ended December 31, 2004

Depreciation and amortization increased $8.6 million from the year ended December 31, 2004 to the year ended December 31, 2005 due primarily to:

• a $5.5 million increase in amortization related to mortgage servicing rights assets from the new MRC and Glaser businesses;

• a $0.7 million increase in amortization of intangibles related to the new MRC business;

• a $1.4 million net increase in amortization and depreciation of other intangibles and fixed assets; and

• a $1.0 million increase in depreciation expense from consolidated Project Partnerships due to twelve months of depreciation expense in 2005 versus nine months in 2004.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

For the year ended December 31, 2004, depreciation and amortization expense increased $4.9 million over 2003 due primarily to:

• a $5.8 million increase in depreciation expense resulting from the consolidation of our general partner interests in tax credit equity Project Partnerships;

• a $1.1 million decrease in amortization of mortgage servicing rights; and

• a $0.2 million increase in depreciation and amortization related to assets from the July 2003 acquisition of HCI.

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Impairments and Valuation Allowances Related to Investments

From time to time, borrowers have defaulted on their debt obligations to us. Some of these obligations were incurred in connection with the development of properties that collateralize our tax-exempt bonds. These properties are sometimes referred to as “defaulted assets.” In a number of these circumstances, we have, after evaluating our options, chosen not to foreclose on the property. Instead, we have negotiated the transfer of a property’s deed in lieu of foreclosure to, or replaced the general partner of an original borrowing partnership with, an entity controlled by certain directors and officers of MuniMae, including MuniMae Affordable Housing, Inc. (“MMAH”) and MuniMae Foundation, Inc. (“MMF”). We have taken this action to preserve the value of the original tax-exempt bond obligations and to maximize cash flow from the defaulted assets. The directors and officers receive no monetary benefit from these transactions. Following the transfer of a property to, or replacement of the general partner with, such entity, that entity controls the defaulted or previously defaulted asset, which serves as collateral for our debt.

During 2005, we evaluated the possibility of impairment related to certain transfers of defaulted assets to MMAH and MMF. These transfers were driven by underlying developer failure relating to the construction and management of certain Project Partnerships. As of December 31, 2005, we believe the facts and circumstances surrounding most of these investments and the possible outcomes support a temporary duration of impairment due to our ability and intent to hold the asset until fair value is recoverable, and as such, no other-than-temporary impairment has been recorded. However, for one such tax-exempt bond investment, where the facts and circumstances pointed to an extended length of forecasted impairment and our probable near term foreclosure and sale of the underlying property, we recorded an other-than-temporary impairment of $2.6 million.

In addition to the above impairment amount of $2.6 million recorded in impairments and valuation allowance, we recorded other impairments of $2.0 million related to the following:

• a $1.3 million impairment with respect to a warehousing investment in a real estate operating partnership as well as one tax-exempt bond and two taxable loans;

• a loan loss reserve of $0.4 million related to four taxable loans under loss-sharing agreements with GSEs; and

• a $0.3 million impairment with respect to the write off of a customer relationship intangible asset.

During 2005, we recorded an impairment loss of $1.2 million associated with a loan (unrelated to the developer issue above) to a consolidated Project Partnership. The reserve was recorded through a charge to net income allocable to minority interest due to the consolidation of the underlying Project Partnership.

In accordance with our valuation and impairment policies, we recorded $5.6 million in impairments and valuation allowances in 2004 related primarily to five bonds and five taxable loans with an aggregate face amount of $37.0 million as of December 31, 2004.

We recorded $7.0 million in impairments and valuation allowances in 2003 related primarily to:

• two bonds and eight taxable loans with an aggregate face amount of $39.0 million; and

• advances to two tax credit equity funds with total outstanding balances of $9.3 million.

Net Losses from Equity Investments in Partnerships

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Net losses from equity investments in partnerships decreased $114.8 million for the year ended December 31, 2005, as compared to 2004, due primarily to:

• a decrease of $76.6 million in net losses from equity investments in partnerships resulting from the effects of the application of the lease method and consolidation of certain tax credit equity funds driven

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by a decrease in the number of tax credit equity funds consolidated; and

• a $38.2 million decrease in net losses primarily attributable to an increase in income from investments in income-producing real estate operating partnerships related to the new MRC business and CAPREIT, Inc. and its affiliates (“CAPREIT”).

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Net losses from equity investments in partnerships increased $167.2 million for the year ended December 31, 2004 as compared to 2003. The increase is due to net losses from equity investments in partnerships resulting from the lease method and consolidation of certain tax credit equity funds, as discussed at the beginning of this “Results of Operations” section.

Income Tax (Expense) Benefit

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Income tax expense for 2005 increased $8.8 million compared to 2004. This increase is due to increased state tax liabilities computed on a separate company basis, due primarily to an increase in business from our tax credit equity segment and the increase in business from our recent acquisition of Glaser, and increases in deferred tax expense associated with our equity investments in real estate partnerships.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Income tax expense for the year ended December 31, 2004 increased $2.0 million compared to 2003. This increase is due to state tax liabilities computed on a separate company basis, due primarily to an increase in business from our tax credit equity segment, and increases in deferred tax expense primarily associated with our equity investments in real estate partnerships.

Net Loss Allocable to Minority Interest

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Net loss allocable to minority interest decreased $102.1 million for the year ended December 31, 2005, as compared to 2004. The decrease in loss allocable to the limited partners in consolidated tax credit equity funds is primarily attributable to a decrease in the number of tax credit equity funds consolidated during 2005 as compared to 2004. We typically hold a 0.01% to 1% interest in the tax credit equity funds and therefore approximately 99% of the funds’ losses are shown as net loss allocable to minority interest in the consolidated statements of income.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Net loss allocable to minority interest for the year ended December 31, 2004 increased $182.8 million over 2003. The increase is due primarily to recording income allocable to the limited partners in tax credit equity funds that we consolidated pursuant to FIN 46 and the lease method. We typically hold a 0.01% to 1% interest in the tax credit equity funds and therefore approximately 99% of the funds’ losses are shown as net loss allocable to minority interest in the consolidated statements of income.

Discontinued Operations

During 2005, we acquired a property by deed in lieu of foreclosure. This property previously served as collateral for a tax-exempt bond and taxable loan we held. We sold the property for net proceeds of $17.5 million, which resulted in a $9.5 million gain. The $9.5 million gain was classified as discontinued operations in the consolidated statements of income.

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During 2004, we acquired a property by deed in lieu of foreclosure. This property previously served as collateral for a tax-exempt bond we held. We sold the property for net proceeds of $16.2 million, which resulted in an $11.1 million gain. The $11.1 million gain was classified as discontinued operations in the consolidated statements of income.

During 2003, we acquired a property by deed in lieu of foreclosure. This property previously served as collateral for a tax-exempt bond we held. We sold the property for net proceeds of $38.1 million, which resulted in a $26.8 million gain. The $26.8 million gain and $1.0 million of losses from operations of the property were classified as discontinued operations in the consolidated statements of income.

Cumulative Effect of a Change in Accounting Principle

During the first quarter of 2004, we recorded a cumulative effect of a change in accounting principle of $0.5 million as a result of the adoption of FIN 46 discussed above.

In December 2003, as a result of the adoption FIN 46, we determined that our investments in residual interests in bond securitizations represented equity interests in VIEs. We further determined that we are the primary beneficiary of the VIEs and therefore are required to consolidate the securitization trusts. As a result, we made adjustments to:

• reclassify our residual interests in bond securitizations to investment in tax-exempt bonds;

• reflect the senior interests in the bond securitization trusts in investment in tax-exempt bonds so that the total investment in tax-exempt bonds reported equals the total assets in the securitization trusts,

• reclassify costs of the securitization transactions to debt issue costs, which are included in other assets on our consolidated balance sheets; and

• record the senior interest in the securitization trusts as short-term debt. We also recorded a $1.2 million cumulative effect of a change in accounting principle related to this transaction as a result of the reversal of gain on sales reported in prior periods on these investments.

Other Comprehensive Income

For the year ended December 31, 2005, the net adjustment to other comprehensive income for unrealized holding gains on tax-exempt bonds and interests in bond securitizations available for sale was $9.4 million. After a reclassification adjustment for gains of $10.3 million included in net income, other comprehensive loss for the year ended December 31, 2005, was $0.9 million and total comprehensive income was $86.5 million.

For the year ended December 31, 2004, the net adjustment to other comprehensive income for unrealized holding gains on tax-exempt bonds and residual interests in bond securitizations available for sale was $7.4 million. After a reclassification adjustment for gains of $2.7 million included in net income, other comprehensive income for the year ended December 31, 2004 was $4.7 million and total comprehensive income was $52.0 million.

For the year ended December 31, 2003, the net adjustment to other comprehensive income for unrealized holding gains on tax-exempt bonds and residual interests in bond securitizations available for sale was $2.9 million. After a reclassification adjustment for gains of $27.5 million included in net income, other comprehensive loss for the year ended December 31, 2003 was $24.6 million and total comprehensive income was $36.0 million.

See also our consolidated statements of comprehensive income and the notes to our consolidated financial statements included elsewhere in this Annual Report.

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Liquidity and Capital Resources

As a financial services provider, our liquidity and access to capital is fundamental to our operations. Our principal short-term uses of cash include: funding new investments, payment of distributions to shareholders, acquisitions of Project Partnerships pending syndication (described above in Part I, Item 1. Business “Our Tax Credit Equity Segment”), funding of real estate finance activities and operating expenses. We expect to need approximately $600 million to $700 million in new net capital to meet our 2006 production targets. In 2006, we expect to generate proceeds through the expansion of existing and new debt facilities, the issuance of privately placed preferred securities and operating cash flow. In addition, we are expanding our relationships with the GSEs.

Liquidity

Our principal sources of liquidity are (a) cash and cash equivalents; (b) cash flow from operations (including loan sales to GSEs and government agencies); (c) cash flow from investing activities (which include sales of bonds and loans, principal payments from bonds and loans and distributions from equity investments); and (d) cash flow from financing activities (which include common and preferred equity offerings, debt offerings, securitizations, proceeds from syndications, bank lines of credit and other credit facilities and pension fund financings).

Cash flows

As of December 31, 2005 and 2004, we had cash and cash equivalents of approximately $140.7 million and $92.9 million, respectively. The following table summarizes the changes in our cash and cash equivalents balances from December 31, 2004 to December 31, 2005:

(in thousands)	2005			2004			Change
Net cash provided by (used in)
Operating activities	$	47,211		$	94,336		$	(47,125	)
Investing activities		(682,529	)		(686,555	)		4,026
Financing activities		683,118			634,274			48,844
Net increase in cash and cash equivalents	$	47,800		$	42,055		$	5,745

Operating activities—Cash flow from operating activities was $47.2 million and $94.3 million for the years ended December 31, 2005 and 2004, respectively. The $47.1 million decrease in operating cash flow for 2005 versus 2004 is due primarily to a decrease in net changes in assets and liabilities of $71.7 million, a net increase in non-cash items, tax expense and income allocable to preferred shareholders of $2.6 million, a decrease in net gain on sales of $20.3 million, offset by an increase in net income from continuing operations of $42.3 million.

Investing activities—Cash flow used in investing activities was $682.5 million and $686.6 million for the years ended December 31, 2005 and 2004, respectively. The $4.0 million decrease in cash used in investing activities for 2005 versus 2004 is due primarily to a $136.2 million increase in cash received from principal payments on loans and bonds and proceeds from sales of bonds, a net decrease of $59.4 million in purchases of bonds and interests in bonds and loan originations, a $67.1 million increase in net cash flows towards investments in restricted assets, a $59.0 million increase in cash used in acquisitions of assets and businesses, a $75.6 million decrease in net investments and distributions from investments in partnerships, a $10.3 million increase in cash flow from the termination of derivative financial instruments and a $0.2 million increase in cash used for purchases of property and equipment.

Financing activities—Cash flow from financing activities was $683.1 million and $634.3 million for the years ended December 31, 2005 and 2004, respectively. The $48.8 million increase in financing cash flow for 2005 versus 2004 is due primarily to a $589.5 million increase in cash used to pay down credit facilities and short-term and long-term debt from securitizations, a $540.2 million increase in cash from borrowing provided

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by our credit facilities and securitizations, an $70.1 million increase in cash from investors in tax credit equity funds, a $36.3 million net increase in cash from the issuance of common and preferred shares partially offset by cash used to purchase treasury shares and reductions in cash from common share option exercises and an $8.3 million increase in cash used to pay common share distributions.

Capital resources

Securitizations, equity and debt offerings

We raise capital through public and private offerings of common and preferred shares and trust preferred securities, as well as through the securitization of bonds. For a description of our securitizations and equity and debt offerings summarized below, see Part I, Item 1. Business “Our Debt Segment—Tax Exempt Bonds and Bond Securitizations” and Notes 5, 12, 13 and 17 in our consolidated financial statement included elsewhere in this Annual Report.

(in thousands)	Net proceeds raised for the year ended December 31, 2005
Securitizations
On balance sheet securitizations	$	373,137
Off balance sheet securitizations		24,186
Equity offerings
Common shares		64,876
TE Bond Sub preferred shares		97,700
Debt offerings
MFH Capital Trust 2 preferred securities		48,449
MFH Capital Trust 3 preferred securities		37,548

Due to the delay in filing this Annual Report, we will be unable for at least one year subsequent to the date hereof, to access the capital markets to raise public equity or debt using the SEC’s short-form registration procedures, which may mean delays in registering additional securities for sale. In addition, we may face delays in applying to register our securities if the SEC staff decides to review this report or our subsequent filings. Although the late filing of this Annual Report will affect our ability to quickly raise public equity or debt for a one year period, it will not affect our ability to offer securities in private offerings.

Lines of credit

We rely on short-term lines of credit with commercial banks and finance companies to finance our growth. See Note 11 “Notes Payable and Debt” to our consolidated financial statements included elsewhere in this Annual Report for a description of our line of credit facilities summarized below.

	Principal purpose	December 31, 2005				December 31, 2004
(in thousands)		Aggregate Facilities		Balance		Aggregate Facilities		Balance
General bank lines of credit	Working capital and funding supplemental loans	$	80,000	$	–	$	80,000	$	10,000
Loan warehousing and taxable bond lines	Warehousing construction and permanent loans and taxable bonds		604,000		328,794		592,000		278,364
Tax credit equity warehousing line	Property acquisition and working capital		140,000		64,858		140,000		33,022
Total		$	824,000	$	393,652	$	812,000	$	321,386

Interest rates on these lines of credit, excluding rate reduction programs, ranged from 5.24% to 7.0% in 2005 and 3.3% to 5.3% in 2004.

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Pension funds

At times, we secure capital for our debt business from a group of pension funds with which we have had relationships for over twenty-five years. We act as advisor to Midland Affordable Housing Group Trust (“MAHGT”) and Midland Multifamily Equity REIT (“MMER”) in originating debt and equity investments, respectively, on their behalf. We structure MAHGT’s investments as back-to-back investments in which we borrow funds from MAHGT and lend the proceeds to developers. Although we present these amounts as debt for financial reporting purposes, MAHGT bears the risk of loss with respect to the underlying investments. In addition, from time to time the pension funds make direct investments in debt or equity instruments we originate. Below is a summary of amounts outstanding related to our relationship with the pension funds.

	December 31, 2005						December 31, 2004
(in thousands)	Notes Payable		Lines of Credit		Total		Notes Payable		Lines of Credit		Total
MAHGT	$	140,183	$	–	$	140,183	$	132,038	$	–	$	132,038
MMER		–		–		–		–		–		–
Direct pension fund investment		74,747		N/A		74,747		128,389		N/A		128,389
Total	$	214,930	$	–	$	214,930	$	260,427	$	–	$	260,427

At December 31, 2005, our financing capacity under the arrangements with MAHGT and MMER totaled $19.8 million and $35 million, respectively. This financing capacity is limited by MAHGT’s and MMER’s available cash. Interest rates on notes payable and lines of credit range from 5.89% to 8.37% in 2005 and 3.90% to 10.25% in 2004.

For the years ended December 31, 2005 and 2004, we structured $3.3 and $26.6 million, respectively, in equity investments for MMER and direct pension fund investments.

GSEs and Government Agencies

We rely on GSEs and government agency programs as a source of liquidity and credit enhancement. In addition, at times we sell interests in tax credit equity funds to GSEs. Consequently, our results may be impacted by changes in the lending and investing activities of the GSEs or function of the government agency programs with which we are involved, particularly those that diminish their appetite for investments in affordable housing or make their debt rates relatively more expensive and therefore less attractive to our developer clients.

Certain construction and permanent loans we originate are underwritten and structured so as to be eligible for ultimate placement with GSEs. For the years ended December 31, 2005 and 2004, we delivered $592.5 million and $185.3 million, respectively, of loans in conjunction with GSE programs.

Debt covenants

Certain of our credit facilities contain restrictive covenants, including, but not limited to, net worth, interest coverage, leverage, liquidity, collateral and other terms and conditions. As of December 31, 2005, we were in compliance with all material financial covenants applicable to our credit facilities.

Letters of credit

We have available letter of credit facilities with multiple financial institutions. At December 31, 2005, we had outstanding letters of credit of $395.9 million, which typically provide credit support to various third parties for real estate activities. These letters of credit expire at various dates through September 2017. The unused portion of the letter of credit facilities was $259.6 million at December 31, 2005.

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As disclosed in the guarantee table below, we have provided a guarantee on certain of these letters of credit. Our maximum exposure with respect to letter of credit guarantees was $136.3 million as of December 31, 2005.

Guarantees

Our maximum exposure under our guarantee obligations is not indicative of the likelihood of the expected loss under the guarantees. The following table summarizes our guarantees by type at December 31, 2005 and 2004.

	December 31,
(in millions)	2005				2004
Guarantee	Maximum Exposure		Carrying Amount		Maximum Exposure		Carrying Amount
Loss-sharing agreements with Fannie Mae, GNMA and HUD (1)	$	534.9	$	1.4	$	189.1	$	0.3
Tax credit-related guarantees (2)		547.7		252.7		417.0		185.8
Other financial/payment guarantees (3)		410.8		280.3		295.2		166.1
Letter of credit guarantees (4)		136.3		54.2		152.5		76.6
Indemnification contracts (5)		186.5		119.4		32.0		11.1
	$	1,816.2	$	708.0	$	1,085.8	$	439.9

(1) As a Fannie Mae DUS lender and GNMA loan servicer, we may share in losses relating to underperforming real estate mortgage loans delivered to Fannie Mae and GNMA. More specifically, if the borrower fails to make a payment of principal, interest, taxes or insurance premiums on a DUS loan we originated and sold to Fannie Mae, we may be required to make servicing advances to Fannie Mae. Also, we may participate in a deficiency after foreclosure on Fannie Mae DUS and GNMA loans. The term of the loss sharing agreement is based on the contractual requirements of the underlying loans delivered to Fannie Mae and GNMA, which varies to a maximum of 40 years. Through December 31, 2005, our loss sharing history with respect to these agreements has been nominal.

(2) We acquire and sell interests in partnerships that provide low-income housing tax credits for investors. In conjunction with the sale of these partnership interests, we may provide performance guarantees on the underlying properties owned by the partnerships or guarantees to the fund investors. These guarantees have various expirations to a maximum term of 20 years.

(3) We have entered into arrangements that require us to make payments in the event that a specified third party fails to perform on its financial obligations. We typically provide these guarantees in conjunction with the sale of an asset to a third party or our investment in equity ventures. The terms of such guarantees vary based on loan payoff schedules or our divestitures.

(4) We provide a guarantee of the repayment on losses incurred under letters of credit issued by third parties or to provide substitute letters of credit at a predetermined future date. In addition, we may provide a payment guarantee for certain assets in securitization programs. These guarantees expire at various dates through September 2017.

(5) We have entered into indemnification contracts, which require the guarantor to make payments to the guaranteed party based on changes in an underlying investment that is related to an asset or liability of the guaranteed party. These agreements typically require us to reimburse the guaranteed party for legal and other costs in the event of an adverse judgment in a lawsuit or the imposition of additional taxes due to a change in the tax law or an adverse interpretation of the tax law. The term of the indemnification varies based on the underlying program life, loan payoffs or our divestitures. Based on the terms of the underlying contracts, the maximum exposure amount only includes amounts that can be reasonably estimated at this time. The actual exposure amount could vary significantly.

Leverage

Our guaranteed tax credit equity funds are subject to Statement of Financial Accounting Standards (“FAS”) No. 66, “Accounting for Sales of Real Estate” (“FAS 66”). As a result of FAS 66, the underlying Project

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Partnerships and their operations included in the guaranteed tax credit equity funds as well as the funds’ debt and other liabilities have been recorded on our balance sheet using finance accounting.

New accounting standards that we adopted in 2003 and 2004 have significantly impacted our leverage. Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (“FAS 150”) requires our mandatorily redeemable preferred securities to be classified as debt. FIN 46 requires the consolidation of our equity investment in a VIE if we are the primary beneficiary of the VIE. We determined that our interests in bond securitizations represented equity interests in VIEs, and that we were the primary beneficiary; therefore, we were required to consolidate our securitization trusts as of December 31, 2003.

Upon adoption of FIN 46 in March 2004, we determined that we are the primary beneficiaries of certain tax credit equity funds that have multiple limited partners and consolidated these tax credit equity funds. We continue to consolidate and deconsolidate tax credit equity funds as new funds are formed and reconsideration events as to the primary beneficiary occur.

At times, we take ownership of the general partnership interest in the underlying Project Partnerships in which tax credit equity funds hold investments. For those property-level general partnership interests, we have discontinued the equity method of accounting and consolidated the underlying Project Partnership. As of December 31, 2005, we recorded approximately $245.9 million of nonrecourse debt as a result of the consolidation of tax credit equity funds and Project Partnerships and the effects of FAS 66. The effects of FIN 46 pertaining to the tax credit equity funds and Project Partnerships are not considered under certain of our debt covenant compliance computations.

Off-Balance Sheet Arrangements

We may invest in bonds that are subordinate in priority of payment to senior bonds that are owned by a third party. Such senior bonds represent our off-balance sheet debt. Senior bonds that are not reflected on our balance sheet at December 31, 2005 and 2004 totaled $11.5 million and $11.9 million, respectively (face amount).

The majority of our securitizations are reflected as indebtedness on our consolidated balance sheet, and off-balance sheet securitizations are not material to our liquidity and capital needs. At December 31, 2005 and 2004, our total off-balance-sheet debt relating to securitizations was $101.6 million and $144.1 million, respectively.

Distribution Policy

Our current policy is to maximize shareholder value through, among other things, increases in cash distributions to shareholders. Our board of directors declares quarterly distributions based on management’s recommendation, which itself is based on an evaluation of a number of factors, including our retained earnings, business prospects and available cash.

Our distribution per common share for the three months ended December 31, 2005 and 2004 was $0.4875 and $0.4675, respectively. Our distribution per common share for the years ended December 31, 2005 and 2004 was $1.9200 and $1.8400, respectively.

Contractual obligations

See Item 8—Financial Statements and Supplementary Data: Notes 11, 12, 13 and 16 for a description of our credit facilities, preferred obligations and contractual commitments.

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The following table describes our commitments, as of December 31, 2005, to make future payments under our debt agreements and other contractual obligations:

	Payment due by period
(in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Short-term debt	$	693,785	$	693,785	$	–	$	–	$	–
Notes payable		685,263		542,317		120,945		22,001		–
Long-term debt		104,215		–		29,463		3,154		71,598
Operating lease obligations (1)		46,902		6,535		11,679		10,128		18,560
Subordinate debentures (2)		172,750		–		–		88,750		84,000
Preferred shares subject to mandatory redemption (3)		168,000		–		–		–		168,000
Deferred business purchase cost (4)		12,000		4,000		8,000		–		–
Unfunded loan commitments (5)		347,906		124,146		222,538		–		1,222
Unfunded equity commitments (6)		1,092,476		749,718		342,108		650		–
Employment contract commitments (7)		5,315		3,013		2,029		273		–
Total	$	3,328,612	$	2,123,514	$	736,762	$	124,956	$	343,380

(1) We have entered into non-cancelable operating leases for office space and equipment, as well as software hosting agreements for various information systems initiatives. These leases and hosting agreements expire on various dates through 2016. See Note 16, “Commitments and Contingencies—Lease commitments and hosting agreements” in the notes to our consolidated financial statements included elsewhere in this Annual Report.

(2) Subordinate debentures relate to our offerings of preferred securities of certain business trust subsidiaries of ours. See Note 12, “Subordinate Debentures” in the notes to our consolidated financial statements included elsewhere in this Annual Report.

(3) Preferred shares subject to mandatory redemption relate to our mandatorily redeemable preferred shares issued by TE Bond Sub. See Note 13, “Preferred Shares—Preferred Shares Subject to Mandatory Redemption” in the notes to our consolidated financial statements included elsewhere in this Annual Report.

(4) Deferred business purchase cost relates to the deferred portion of the purchase price in the Glaser acquisition. In July 2005, we acquired Glaser in a stock purchase transaction including three deferred payments of $4.0 million due at each of the three anniversary dates of the closing; and contingent consideration of approximately $5.0 million due on the third anniversary of the closing provided certain operating performance thresholds are achieved. See Note 4, “Acquisitions, Goodwill and Intangible Assets” in the notes to our consolidated financial statements included in this Annual Report.

(5) Unfunded loan commitments are commitments to extend credit to a customer as long as there is no violation of any condition established in the contract. See Note 16, “Commitments and Contingencies—Unfunded loan commitments” in the notes to our consolidated financial statements included elsewhere in this Annual Report.

(6) As the limited partner in real estate operating partnerships, we have committed to extend equity to real estate operating partnerships in accordance with the partnership documents. In addition, our consolidated tax credit equity funds have committed to extend equity to Project Partnerships. See Note 16, “Commitments and Contingencies—Unfunded equity commitments” in the notes to our consolidated financial statements included elsewhere in this Annual Report.

(7) Employment contract commitments include contracted base salary amounts only.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We hold a variety of market risk sensitive investments, including available-for-sale investments in tax-exempt bonds and interests in bond securitizations, taxable construction, permanent and related loans, short- and long-term debt and notes payable. Interest rate risk is the primary market risk to which we are subject.

Interest Rate Risk

As discussed under Part I, Item 1A. “Risk Factors,” because our operations involve real estate we are subject to various risks that affect the real estate market, generally, and the multifamily real estate market, specifically. As discussed under Part I, Item 1A. “Risk Factors—General Risks Related to Our Business—Changing interest rates may have an adverse effect on our financial condition and results of operations,” the primary market risk that we face is interest rate risk.

Interest rates are highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. The interest income collected on fixed-rate investments, interest paid on fixed-rate debt and interest collected on investments that pay interest based on the cash flow available from the underlying property are not directly impacted by fluctuations in interest rates, unless the investment or debt is prepaid as discussed below. In addition, interest income collected on certain of our floating-rate investments is financed with floating-rate debt which mitigates interest rate risk; however, this type of investment structure could be impacted by rising interest rates. In contrast, certain of our investments in interests in bond securitizations and our floating rate short- and long-term debt are directly impacted by fluctuations in market interest rates. Excluding the benefit of interest rate hedges, if interest rates had increased by 100 basis points and 200 basis points at December 31, 2005, our annual net interest income on these investments and debt would have decreased by $5.6 million and $11.2 million, respectively. If interest rates had increased by 100 basis points and 200 basis points at December 31, 2004, our annual net interest income on these investments and debt would have decreased by $4.0 million and $8.1 million, respectively. As discussed below we attempt to manage this interest rate exposure through a financial risk management strategy, which currently relies heavily upon the use of interest rate swaps. Including the effects of our interest rate hedges and using the same 100 and 200 basis point increases in interest rates, the decreases in net interest income noted above would have been reduced to $2.3 million and $4.5 million, respectively, as of December 31, 2005. At December 31, 2004, under the same set of assumptions, the decreases in net interest income caused by a 100 and 200 basis point increase in interest rates would have been reduced to $0.8 million and $1.5 million, respectively. Changes in interest rates would also impact the production levels within each of our business segments. Because production levels are driven by numerous factors, including the interest rate environment, it is extremely difficult to quantify the impact of changing interest rates on our production levels.

Developing an effective interest rate management strategy can be complex, and no strategy can insulate us from all potential risks associated with interest rate changes. Management believes the majority of our interest rate risk arises in connection with

• certain of our interests in bond securitizations and senior interests in securitization trusts which are reflected as short- and long-term debt in our consolidated balance sheets;

• properties warehoused prior to being placed in tax credit equity funds; and

• to the extent not match-funded as described above, floating-rate debt used to finance our real estate finance activities.

We manage our interest rate exposure on our investments in certain tax-exempt bond securitizations through the use of interest rate swaps. We may choose not to hedge all of our floating rate exposure with hedging instruments. As a result, changes in interest rates could result in either an increase or decrease in our interest income and cash flows associated with these investments. Also, certain of the interest rate swap agreements are subject to risk of early termination, possibly at times unfavorable to us. There can be no assurance that we will be able to acquire hedging instruments at favorable prices, or at all, when the existing arrangements expire or are

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terminated. In this case, we would be fully exposed to interest rate risk to the extent the hedging instruments are terminated by the counterparty while the floating rate exposure remains in existence.

The duration of our interest rate swaps is less than the duration of our floating rate instruments. As a result, we would be fully exposed to interest rate risk on our floating rate instruments if we were not able to enter into new interest rate swaps when the existing agreements expire. There can be no assurance that we will be able to acquire interest rate swaps at favorable prices, or at all, when the existing arrangements expire.

In addition, there is no guarantee that any given securitization trust will be in existence for the duration of its associated hedge, as these securitization trusts would be collapsed if the related credit enhancement or liquidity facilities are not renewed.

The interest required to be paid on certain of our senior interests in bond securitization trusts includes a remarketing spread over a floating market interest rate. This remarketing spread varies on a weekly basis and is not mitigated by the hedging instruments discussed above. As a result, changes in the remarketing spread could result in either an increase or decrease in our interest income and cash flows associated with its interests in bond securitizations. At December 31, 2005, our weighted average remarketing spread was 0.096%. If the remarketing spread had increased by 50% and 100% at December 31, 2005, our annual interest income on these investments would have decreased by $0.3 million and $0.5 million, respectively. At December 31, 2004, our weighted average remarketing spread was 0.088%. If the remarketing spread had increased by 50% and 100% at December 31, 2004, our annual interest income on these investments would have decreased by $0.2 million and $0.4 million, respectively.

Our investments in tax-exempt bonds, interests in bond securitizations, and investments in derivative financial instruments are carried at fair value. Significant changes in market interest rates could affect the amount and timing of unrealized and realized gains or losses on these investments. If interest rates had increased by 100 basis points and 200 basis points at December 31, 2005, the market value of these investments would have declined by 6% and 12%, respectively. If interest rates had increased by 100 basis points and 200 basis points at December 31, 2004, the market value of these investments would have declined by 8% and 14%, respectively. However, for the participating tax-exempt bonds for which the fair value is determined by discounting the underlying collateral’s expected future cash flows using current estimates of discount rates and capitalization rates, changes in market interest rates do not have a strong enough correlation to discount and capitalization rates from which to draw a conclusion. There are many mitigating factors to consider in determining what causes discount and capitalization rates to change, such as macroeconomic issues, real estate capital markets, economic events and conditions, and investor risk perceptions.

Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements of MuniMae, together with the report thereon of PricewaterhouseCoopers LLP dated June 21, 2006, are in Item 15 at the end of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings and submissions to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Such controls include those designed to ensure that information is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

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An evaluation was conducted under the supervision and with the participation of management, including the CEO and CFO, on the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2005. Based on this evaluation, the CEO and CFO concluded that, as a result of the material weaknesses set forth below, our disclosure controls and procedures were not effective as of December 31, 2005.

As part of our financial reporting process and during the preparation of this Annual Report, management identified certain errors in our previously issued financial statements and concluded it was necessary to restate our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, management concluded that our internal control over financial reporting was not effective as of December 31, 2004, and at the end of each of the first three quarters of 2005.

After management concluded that there were material weaknesses, we performed additional analyses and other post-closing procedures and concluded that our consolidated financial statements included in this Annual Report on Form 10-K were prepared in accordance with accounting principles generally accepted in the United States of America and present fairly in all material respects our financial position, results of operations and cash flows for the periods presented.

(b) Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP) and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Under the supervision and with the participation of management, including our CEO and CFO, we conducted an evaluation of the effectiveness of the company’s internal control over financial reporting as of December 31, 2005 based on the criteria related to internal control over financial reporting described in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements would not be prevented or detected. Management has identified the following material weaknesses as of December 31, 2005:

1. Ineffective control environment—We did not maintain an effective control environment as defined in the COSO framework. Specifically, we identified the following material weakness related to our control environment:

• We did not maintain a sufficient complement of personnel with a level of accounting knowledge and experience in the application of GAAP commensurate with our financial reporting requirements and business activities, particularly as our business grew in diversity and complexity.

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• We did not maintain or disseminate accounting policy guidance with respect to certain areas with a sufficient level of precision to enable existing personnel to adequately analyze related transactions and apply accounting policies that were in conformity with GAAP.

• Our control environment did not emphasize the need to maintain effective controls to monitor results of operations determined in accordance with GAAP. Specifically, we did not budget net earnings and did not maintain a process to monitor net earnings results against expected results.

These material weaknesses contributed to the material weaknesses discussed below in items 2 through 7, and resulted in the restatement of our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, these material weaknesses could result in a misstatement of any of substantially all our financial statement accounts and disclosures that would cause a material misstatement of the Company’s annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that these control deficiencies constitute material weaknesses.

2. Ineffective financial reporting process—We did not maintain effective controls, including monitoring, over our financial close and reporting process. Specifically, we identified the following material weaknesses related to the financial reporting process:

• Controls over journal entry review and account reconciliations failed to prevent or detect material financial statement errors. In addition, we failed to design and implement exception and monitoring reports to review transactions and detect errors and to integrate our subsidiary and feeder systems with our general ledger system. As a result, our financial reporting process is manually intensive and is based on the review and approval of individual transactions (and resulting journal entries) without adequate compensating controls to detect errors.

• We did not maintain effective controls over the identification and disclosure of our segments. Specifically, we did not identify our segments or report their performance in the same manner for external reporting purposes and for reporting to our chief operating decision maker. This control deficiency resulted in segment disclosures that did not conform to GAAP.

These material weaknesses in our financial reporting process contributed to the material weaknesses discussed below in paragraphs 3 through 7, and resulted in the restatement of our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and each quarter in 2004. In addition, these material weaknesses could result in a misstatement of any of substantially all our financial statement accounts and disclosures that would cause a material misstatement our annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that these control deficiencies constitute material weaknesses.

3. Accounting for tax credit equity business—We did not maintain effective controls over the accuracy of our accounting for the tax credit equity business. Specifically:

• Accounting for real estate syndication fees—We did not correctly recognize syndication fees ratably as syndication partnerships invested in low income housing properties as required by GAAP. Instead, we (1) eliminated certain syndication fees related to consolidated syndication partnerships and (2) recognized syndication fees as investors subscribed to our funds and when we selected or acquired interests in low income housing properties to be sold to syndication partnerships rather than when the syndication partnerships made investments.

• Accounting for impairments of investments in real estate partnerships held by guaranteed tax credit equity funds—We presented equity in the impairment losses of low income housing properties owned by guaranteed tax credit funds and related revenues earned by providing related tax losses net instead of reporting these amounts separately as required by GAAP.

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• Accounting for consolidated tax credit equity funds—We did not correctly record or did not properly reverse certain adjustments to ensure consolidated amounts were in accordance with GAAP.

• Accounting for capitalized interest costs associated with investments in real estate partnerships—We did not correctly capitalize interest costs on investments in real estate partnerships developing low income housing properties in accordance with GAAP.

This control deficiency resulted in the restatement of our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and each quarter in 2004. In addition, this control deficiency could result in a misstatement of syndication fee income, equity in the earnings (losses) of partnerships, interest expense, and net earnings (losses) allocated to minority interest that would result in a material misstatement in our annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

4. Accounting for deferral and recognition of bond and loan origination fees and direct costs—We did not maintain effective controls over the accuracy of our accounting for the deferral and recognition of bond and loan origination fees and direct costs and the related amortization expense. Specifically, we failed to amortize our deferred bond and loan fees using the effective interest method over their contractual terms as required by GAAP rather than the straight-line method over terms anticipating prepayments. In addition, we failed to defer direct costs of originating bonds in accordance with GAAP and effectively monitor our recorded yields on bonds against our expected effective yields. This control deficiency resulted in the restatement of our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of deferred bond and loan origination fees and the related amortization expense that would result in a material misstatement of our annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

5. Accounting for investments in partnerships using the equity method of accounting—We did not maintain effective controls to ensure accurate application of the equity method of accounting for investments in certain partnerships. Specifically, we did not apply the equity method to an investment when our share of the investee’s cumulative losses exceeded our original investment even though we had guaranteed certain obligations of the investee. In addition, we did not account for differences between our cost of an investment and the amount of underlying equity of the investee. We also did not correctly calculate our share of this investee’s losses using our economic share of the entity. This control deficiency resulted in the restatement of our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of equity method investments and equity in their earnings (losses) that would result in a material misstatement of our annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

6. Identification and valuation of derivative financial instruments—We did not maintain effective controls over the identification and valuation of certain derivative financial instruments. Specifically, we did not maintain effective controls to identify derivative financial instruments embedded within financial guarantees. In addition we did not maintain effective controls over the accuracy of assumptions used to value derivatives embedded within commitments to lend. This control deficiency resulted in the restatement of our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of derivative financial instruments and related gains (losses) that would result in a material misstatement of our annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

7. Accounting for income taxes—We did not maintain effective controls over the accounting for income taxes. We did not maintain effective controls over the completeness and accuracy of our income tax provision.

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This control deficiency resulted in the restatement of our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of income taxes that would result in a material misstatement of our annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

Because of the material weaknesses described above, management has concluded that our internal control over financial reporting was ineffective as of December 31, 2005.

Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose opinion thereon is included herein.

(c) Remediation of Material Weaknesses

Management is responsible for maintaining effective internal control over financial reporting, including the adequacy of accounting resources and the quality of the financial reporting processes.

Control environment—In 2004, we recognized the need for additional qualified accounting personnel and began recruiting efforts. By the end of 2004, the accounting staff had more than doubled with most of the new hires starting in the second half of the year. We continued our efforts in 2005 by hiring two Assistant Controllers, a Chief Financial Officer/Chief Accounting Officer and a Controller, each with over 15 years of real estate industry experience.

In 2005, the corporate accounting department was reorganized and the reporting structures of tax credit equity and fund management accounting and finance personnel were realigned to report through the corporate accounting and finance departments. These actions were taken, in part, to improve communication and the nature, extent and oversight of financial reporting controls.

We will continue to hire additional qualified staff, train existing staff, and assess the roles and responsibilities and related qualifications of the accounting staff to ensure that they are adequate to support our financial reporting requirements. Management will also improve the documentation and dissemination of clear accounting policies, particularly those related to accounting for the tax credit equity business, deferral and recognition of loan and bond origination fees and direct costs, the application of the equity method of accounting for investments in partnerships, identification and valuation of derivative financial instruments, accounting for income taxes and disclosures about our segments.

We will also perform a comprehensive review of our business segments, including developing and implementing performance measures and metrics to enhance monitoring controls and error detection efforts, and to more effectively integrate our accounting and financial reporting personnel into our operating businesses.

Financial reporting process—Management has taken certain of the steps necessary to remediate the weaknesses related to its financial reporting process including:

i. increasing the levels of review for complex and judgmental accounting issues, including key estimates;

ii. developing analyses that aggregate similar transaction types, correlate balance sheet and income statement accounts and better support account balances; and

iii. training staff.

Management will continue these efforts in 2006 by:

i. hiring additional qualified staff with significant relevant experience;

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ii. establishing a group dedicated to improving the use of technology to automate analyses, provide direct interfaces from subsidiary systems, and aggregate and process transactions;

iii. developing accounting models related to each of our business activities to train and be used by accounting staff to reduce errors in recording recurring transactions;

iv. developing standard reporting for each of our business units, including exception reports to assist in error detection;

v. establishing and documenting formal accounting policies;

vi. continuing its overall training efforts;

vii. simplifying its accounting processes; and

viii. establishing relationships between accounting staff and key business personnel to proactively manage the accounting implications of prospective transactions.

(d) Changes in Internal Controls Over Financial Reporting

None.

Item 9B. Other Information

None.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

DIRECTORS

The name, age, principal occupation for the last five years, period of service as a director of the company and certain other directorships of each director are set forth below.

Richard O. Berndt, 63, has been a director of the company since 1996. He is the Managing Partner of Gallagher Evelius & Jones LLP, a law firm engaged in the general practice of law. Mr. Berndt has been a partner in that firm since 1972. In addition, Mr. Berndt has been a director of Mercantile-Safe Deposit and Trust Company since 1976 and a director of Mercantile Bankshares Corporation (“Mercantile”), a regional multi-bank holding company, since 1978. He is the chair of Mercantile’s employee benefits committee and a member of Mercantile’s executive committee. Mr. Berndt also serves on the boards of directors of Baltimore Equitable Insurance, Inc., a mutual insurance company, Enterprise Community Investment, Inc., Mercy Health Services, Inc. and Johns Hopkins Medicine.

Michael L. Falcone, 44, has been a director of the company since 1999, and Chief Executive Officer and President of the company since January 1, 2005. Prior to his appointment as the company’s Chief Executive Officer, he had served as Chief Operating Officer since 1997. Prior to joining the company, he was a senior vice president of Shelter Development Corporation, where he was employed from 1983 to 1996. Mr. Falcone serves on the boards of directors of the National Multi-Family Housing Council, the Baltimore Development Corporation, the Greater Baltimore Alliance and the McDonogh School.

Robert S. Hillman, 67, has been a director of the company since 1996, and a director and President of H&V Publishing, Inc., a publishing company, since 1998. Prior to his position at H&V Publishing, Inc., Mr. Hillman was a member of the law firm of Whiteford, Taylor and Preston, LLP, then a 135-attorney firm, from 1987 to 2000. Formerly the executive partner of the firm, Mr. Hillman has extensive experience in municipal finance, real estate, labor, and employment law. He is also Chairman Emeritus of the Babe Ruth Museum and trustee of the Enoch Pratt Free Library.

Barbara B. Lucas, 60, was appointed as a director effective August 1, 2005. Ms. Lucas is Senior Vice President—Public Affairs and Corporate Secretary of The Black & Decker Corporation, a manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems, and serves on Black & Decker’s Management Committee. Ms. Lucas was elected Senior Vice President of Black & Decker in December 1996 after having served as Vice President—Public Affairs since beginning her career with Black & Decker in July 1985. She has been Corporate Secretary and head of Public Affairs since joining the company. Ms. Lucas is a director of Provident Bankshares Corporation (“Provident”), a commercial bank holding company, where she chairs the Compensation Committee. Ms. Lucas is a member of the American Society of Corporate Secretaries, where she formerly served as president of the Mid-Atlantic Regional Chapter and as a national director.

Eddie C. Brown, 65, has been a director of the company since 2003. Mr. Brown is founder, president and a member of the board of directors of Brown Capital Management, Inc., an investment management firm, which manages money for institutions and wealthy individuals. Mr. Brown has served in this capacity since July 1983. Mr. Brown also serves on the boards of directors of Mercantile, the Greater Baltimore Committee and the East Baltimore Development Corporation, and is co-chairman of Reason to Believe.

Douglas A. McGregor, 64, has been a director of the company since 1999. In 2002, Mr. McGregor retired as Vice Chairman and Chief Operating Officer of The Rouse Company, formerly a real estate development and management company, a position he held since 1998. Mr. McGregor had been with The Rouse Company since

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1972. Mr. McGregor has extensive experience in real estate development and management. Mr. McGregor is a trustee of the Garrison Forest School.

Fred N. Pratt, Jr., 61, has been a director of the company since July 2003. Mr. Pratt co-founded the Boston Financial Group (“Boston Financial”), formerly a leading real estate investment manager, operator, and service provider that managed $5.8 billion in real estate investments, that was acquired by Lend Lease Corporation Limited (“Lend Lease”), a leading international retail and residential property group, in 1999. Mr. Pratt served Lend Lease in several capacities including as chief executive officer of Lend Lease Real Estate Investments (U.S.) from April 2001 through February 2003. Mr. Pratt also is a member of the board of Benchmark Assisted Living, a senior housing provider, and is a member of the advisory boards of the Massachusetts Institute of Technology’s Center for Real Estate and Project Hope, a non-profit service agency dedicated to ending family homelessness.

Charles C. Baum, 64, has been a director of the company since 1996 and is the president of United Holdings Co., Inc. Mr. Baum has been the chief financial officer at United Holdings, a company that invests in real estate and securities, and its predecessors since 1973. Mr. Baum is also a member of the boards of directors of Gabelli Group Capital Partners, an investment advisory firm, and Shapiro, Robinson & Associates, a firm that represents professional athletes.

Mark K. Joseph, 67, has been Chairman of the Board of the company since 1996. Prior to January 1, 2005, he also served as our Chief Executive Officer since 1996. He also served as the president and a director of the managing general partner of the SCA Tax-Exempt Fund Limited Partnership, the company’s predecessor, from 1986 through 1996. Mr. Joseph is founding chairman of the board of The Shelter Group, a real estate development and property management company. Mr. Joseph serves on the boards of directors of the Greater Baltimore Committee and Provident.

Arthur S. Mehlman, 64, has been a member of the Board of Directors since 2004. Prior to his retirement in 2002, Mr. Mehlman served as a partner at KPMG, LLP, an independent registered public accounting firm, since 1972, in charge of KPMG’s audit practice for the Baltimore/Washington region. While at KPMG, Mr. Mehlman worked on a broad range of public company audit and compliance issues, and participated as client service or audit engagement partner on more than 60 offerings of debt and equity securities in the United States and Europe. Mr. Mehlman also serves on the boards of directors of the Legg Mason Family of Funds and The Royce Funds.

EXECUTIVE OFFICERS

Listed below are the executive officers of the company as of March 31, 2006.

Michael L. Falcone, 44, has been a director of the company since 1999, and Chief Executive Officer and President of the company since January 1, 2005. Prior to his appointment as the company’s Chief Executive Officer, he served as our Chief Operating Officer since 1997. Prior to joining the company, he was a senior vice president of Shelter Development Corporation, where he was employed from 1983 to 1996. Mr. Falcone serves on the boards of directors of the National Multi-Family Housing Council, the Baltimore Development Corporation, the Greater Baltimore Alliance and the McDonogh School.

Earl W. Cole, III, 53, is an Executive Vice President of the company responsible for the Corporate Credit and Portfolio Risk Management group, and has been an executive officer of the company since 2003. Mr. Cole joined the company’s predecessor, the SCA Tax-Exempt Fund Limited Partnership, in 1989 and has served in various leadership positions with the company since then. Mr. Cole participates in the company’s loan and investment committees and chairs its real estate investment committee. Prior to joining the company, Mr. Cole worked for the U.S. Department of Housing and Urban Development (“HUD”) for 13 years, where he held a number of positions involving HUD’s full range of activities, including loan origination and servicing and community planning and development.

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Frank G. Creamer, Jr., 59, is an Executive Vice President of the company and is responsible for capital partner relationship management, business development and capital raising. Between 2000 and when he joined the company in 2004, Mr. Creamer headed marketing for the commercial credit group of Lend Lease while also managing a number of key client relationships within the financial institutions segment. In addition, he managed Lend Lease’s high yield debt programs. Until 2000, Mr. Creamer was an owner and principal of Creamer Vitale Wellsford, the successor firm to a real estate consulting company he founded in 1990. Previously, Mr. Creamer held various executive positions within Citicorp during an 18-year tenure. Mr. Creamer is a member of the Real Estate Roundtable, is an executive advisory committee member at the Simon School, University of Rochester, is an advisory committee member of Massachusetts Institute of Technology’s Center for Real Estate and is a council member for the Urban Land Institute.

Melanie M. Lundquist, 43, is Executive Vice President and Chief Financial Officer of the company. Ms. Lundquist joined the company in March 2005 as Senior Vice President and Chief Accounting Officer prior to being appointed to her current position effective January 1, 2006. Prior to joining the company, Ms. Lundquist worked for The Rouse Company where she held numerous roles since 1991, the last of which was senior vice president and corporate controller. Ms. Lundquist started her career at KPMG LLP and was a senior manager when she left in 1991.

Gary A. Mentesana, 41, has been an Executive Vice President of the company since July 2003. He is the head of the company’s Affordable Housing Group. Prior to his appointment as Executive Vice President, Mr. Mentesana served as the company’s Chief Capital Officer as well as the company’s Chief Financial Officer. Prior to his starting with the company’s predecessor, the SCA Tax-Exempt Fund Limited Partnership in 1988, Mr. Mentesana worked as a certified public accountant for Coopers and Lybrand.

Jenny Netzer, 50, is an Executive Vice President of the company and is responsible for developing new products related to affordable housing and tax-advantaged investing. Ms. Netzer joined the company in July 2003 as a result of our acquisition of Lend Lease’s tax credit business and through December 2005 she led the business unit responsible for creating and managing investments in affordable housing tax credit properties for institutional investors. Ms. Netzer joined Lend Lease through its acquisition of Boston Financial in 1999 where she had been since 1987. At Boston Financial, Ms. Netzer led the housing tax credit business, new business initiatives and managed the firm’s asset management division. Prior to Boston Financial, Ms. Netzer was deputy budget director for the Commonwealth of Massachusetts where she was responsible for the Commonwealth’s health care and public pension program budgets. In addition, she was assistant controller at Yale University and a member of the Watertown Zoning Board of Appeals.

Charles M. Pinckney, 48, is an Executive Vice President of the company and head of MMA Realty Capital (“MRC”) which houses the market rate investing activities of the company and has three distinct business groups; Agency Investing, Proprietary Capital, and Investment Management. Agency Investing includes the Federal National Mortgage Association, Federal Home Mortgage Loan Corporation and HUD mortgage banking operations for market rate multifamily housing. Proprietary Capital is the balance sheet investing activity for the company. The Investment Management business invests in all forms of commercial real estate on behalf of institution clients. Mr. Pinckney joined the company in 2000 when we purchased Whitehawk Capital, a business Mr. Pinckney co-founded and that was engaged in structured finance activities. Mr. Pinckney received his undergraduate degree from The Citadel and a master’s degree in business administration from Duke University’s Fuqua School of Business.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive officers to file reports of changes in ownership of our equity securities with the SEC and the NYSE. SEC regulations require that directors and executive officers furnish to us copies of all Section 16(a) forms they file. To our knowledge, based solely on

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review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2005, we have identified a total of 16 late filings involving eleven of our directors and executive officers: (a) Mr. Falcone and Ms. Netzer each had one late Form 4 filing, (b) Mr. Mehlman and Ms. Lucas filed amended Forms 3 resulting in each of those forms being considered untimely and (c) Messrs. Baum (two late filings), Berndt (four late filings), Brown (one late filing), Hillman (two late filings), McGregor (one late filing) and Pratt (one late filing) also had late Form 4 filings.

CODE OF ETHICS AND BUSINESS INTEGRITY

The company has developed and adopted a Code of Ethics and Principles of Business Integrity that is applicable to all company employees and directors. The Code of Ethics and Principles of Business Integrity is available on our website and in print at the request of any shareholder by mail to our Secretary c/o Municipal Mortgage & Equity, LLC, at our Baltimore offices.

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Item 11. Executive Compensation.

EXECUTIVE COMPENSATION

Summary Compensation Table

Set forth below is information concerning the various forms of compensation of each person who was (1) our Chief Executive Officer at any time during 2005 and (2) at December 31, 2005, one of our four most highly compensated executive officers, other than the Chief Executive Officer (together, the “Named Executive Officers”).

		Annual Compensation			Long-Term Compensation Awards
Name and Principal Position	Year	Salary ($)	Bonus ($)(1)	Other Annual Compensation (2)	Restricted Stock Award(s) ($)		Securities Underlying Options/SARs (#)		All Other Compensation
Michael L. Falcone	2005	423,077	400,000	26,721	—		201,863	(3)	2,265	(4)
Chief Executive Officer	2004	362,500	525,000	22,498	—		—		2,265	(4)
and President	2003	312,813	378,125	18,183	—		—		2,265	(4)
Jenny Netzer (5)	2005	313,573	525,000	—	—		—		528	(6)
Executive Vice President	2004	291,278	499,997	—	200,000	(7)	—		504	(6)
	2003	132,955	580,092	—	—		—		252	(6)
Charles M. Pinckney	2005	286,539	160,000	15,336	—		124,224	(8)	23	(6)
Executive Vice President	2004	262,500	400,000	13,482	—		—		23	(6)
	2003	235,535	312,500	11,573	—		—		15	(6)
Gary A. Mentesana	2005	289,231	250,000	14,974	—		62,112	(9)	2,265	(10)
Executive Vice President	2004	270,000	300,000	16,178	—		—		2,264	(10)
	2003	250,000	233,333	13,254	—		—		2,264	(10)
William S. Harrison (11)	2005	312,500	200,000	14,743	—		—		15	(6)
Chief Financial Officer	2004	287,500	375,000	15,700	—		—		15	(6)
and Executive Vice President	2003	255,625	233,333	11,349	—		—		15	(6)

(1) Includes the aggregate dollar value of bonus compensation received by such person including cash and deferred shares, as applicable.

(2) The amounts indicated for each person are reimbursements during the fiscal year for the payment of taxes.

(3) Represents options granted during 2006 as bonus compensation earned in 2005 to purchase 201,863 common shares at an exercise price of $26.50 per common shares vesting in four equal installments on April 7, 2006 and each of February 1, 2007, 2008 and 2009.

(4) The amounts indicated include (a) $15 in each year for the dollar value of term life insurance premiums paid by the company and (b) $2,250 in each year in guaranteed company matching contributions to Mr. Falcone’s retirement plan.

(5) Ms. Netzer became an employee of the company on July 1, 2003.

(6) Represent the dollar value of term life insurance premiums paid by the company.

(7) Ms. Netzer held an aggregate of 5,929 restricted shares as of December 31, 2005, with a value of $153,146 based on the closing price for the company’s common shares on December 30, 2005, of which 1,976 vested on February 1, 2006 and 1,976 and 1,977 will vest on each of February 1, 2007 and 2008. Ms. Netzer is entitled to receive distributions with respect to all of the restricted shares payable at the same rate as distributions on our common shares.

(8) Represents options granted during 2006 as bonus compensation earned in 2005 to purchase 124,224 common shares at an exercise price of $26.50 per common share vesting in four equal installments on April 7, 2006 and each of February 1, 2007, 2008 and 2009.

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(9) Represents options granted during 2006 as bonus compensation earned in 2005 to purchase 62,112 common shares at an exercise price of $26.50 per common share vesting in four equal installments on April 7, 2006 and each of February 1, 2007, 2008 and 2009.

(10) The amounts indicated include (a) $15, $14 and $14 in 2005, 2004 and 2003, respectively, for the dollar value of insurance premiums paid by the company and (b) $2,250 in each year in guaranteed company matching contributions to Mr. Mentesana’s retirement plan.

(11) Mr. Harrison resigned effective January 1, 2006.

Options/SAR Grants in Last Fiscal Year

Name	Number of Securities Underlying Options/SARs Granted (#)	% of Total Options/SARs Granted to Employees in Fiscal Year		Exercise or Base Price ($/Sh)	Expiration Date	Grant Date Present Value (1)
Michael L. Falcone	201,863	37.1	%	26.50	April 7, 2016	$	325,000	(2)
Charles M. Pinckney	124,224	22.9	%	26.50	April 7, 2016	$	200,000	(3)
Gary A. Mentesana	62,112	11.4	%	26.50	April 7, 2016	$	100,000	(4)

(1) A binomial lattice option pricing model was used to estimate the grant date present value of these options. The estimated values of these options were determined using the following assumptions: a volatility of 12.27%, a historic average dividend yield of 7.50%, a risk-free rate of return of 4.67%, and an implied expected life of 5.75 years. The estimated values do not reflect any adjustments for risk of forfeiture or restrictions on transferability. There is no assurance that the value realized by an executive, if any, will be at or near the value estimated by the binomial lattice model.

(2) Represents options granted during 2006 as bonus compensation earned in 2005. See footnote (4) to the “Summary Compensation Table.”

(3) Represents options granted during 2006 as bonus compensation earned in 2005. See footnote (9) to the “Summary Compensation Table.”

(4) Represents options granted during 2006 as bonus compensation earned in 2005. See footnote (9) to the “Summary Compensation Table.”

Aggregated Option Exercises in 2005 and Year-End Option Values

The following table sets forth: (1) the total number of unexercised options held at end of fiscal year 2005 and (2) the aggregate dollar value of in-the-money unexercised options held at the end of fiscal year 2005, for the Named Executive Officers who held options to purchase common shares during December 31, 2005.

	Shares acquired on exercise (#)	Value realized ($)	Number of unexercised options held on December 31, 2005 (#)		Value of unexercised in-the-money options at December 31, 2005 ($)(1)
Name			Exercisable	Unexercisable	Exercisable	Unexercisable
Michael L. Falcone	25,500	219,173	45,362	—	406,217	—
Gary A. Mentesana	—	—	29,431	—	263,555	—

(1) Value of unexercised “in-the-money” options is the difference between the closing price of the shares on December 31, 2005 ($25.83 per common share) and the exercise price of the option, multiplied by the number of shares subject to the option. Options are only “in-the-money” if the fair market value of the underlying security exceeds the price of the option.

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Employment Agreements

Mr. Falcone

Term

Mr. Falcone is party to an employment agreement with MMA Financial, Inc. (“MMA Financial” referred to in this section together with the company as “we,” “us” and “our,” as applicable), our wholly-owned subsidiary, dated as of January 1, 2005. Pursuant to this agreement, Mr. Falcone has agreed to serve as our Chief Executive Officer and President for a three-year term ending on December 31, 2007. The agreement provides for automatic one-year renewals, unless proper notice is given before the end of the initial term or any renewal period.

Base Salary and Incentive Compensation

The agreement provides for an initial annual base salary of $425,000 for Mr. Falcone during 2005, which amount increases by 5% per year for each subsequent year. The agreement provides that Mr. Falcone is also eligible to receive: (a) annual incentive compensation, payable in cash, of up to $467,500 per year, depending upon satisfaction of certain individual and company performance objectives and (b) additional long-term compensation, payable one-third in options to purchase the company’s common shares and two-thirds in restricted shares, of up to $385,000 per year depending upon satisfaction of certain company performance objectives. Any additional increases in base salary and the performance objectives used to determine the amount of Mr. Falcone’s incentive compensation will be determined by the Compensation Committee.

The value of any restricted shares granted to Mr. Falcone as long-term incentive compensation will be the closing price of the company’s shares on January 1 of the year after the year for which the incentive compensation is awarded. One-fourth of the restricted shares will be vested at the time annual bonuses are paid for that fiscal year to the company’s other executive officers and one-fourth of each grant of restricted shares will vest on each anniversary of the initial vesting date. The exercise price of any options granted to Mr. Falcone as incentive compensation will be the fair market value of the company’s shares on the date of grant and any unexercised options will expire ten years after the date of grant.

Payments on Termination or a Change in Control

We may terminate our employment agreement with Mr. Falcone for “cause,” which includes Mr. Falcone’s gross negligence, intentional misconduct, conviction of a serious crime, breach of certain non-competition restrictions or breach of the duty of loyalty. “Cause” also includes certain failures by Mr. Falcone to perform services reasonably requested by the board of directors. If we terminate the agreement for cause, Mr. Falcone will receive his base salary up through the date of termination but no portion of any incentive compensation for the fiscal year. If we terminate the agreement without cause or if Mr. Falcone terminates the agreement for good reason (which includes reduction of compensation or diminution of duties) or becomes disabled, Mr. Falcone is entitled to receive his base salary through the date of termination plus a proportionate share of the incentive compensation he would have earned for that year. Upon termination of the agreement without cause, by Mr. Falcone for good reason, or upon Mr. Falcone’s death or disability, all awards granted under the company’s share incentive plans will become fully vested.

We will make severance payments equal to the greater of 24 months’ base salary or the total base salary Mr. Falcone would have received during the remaining term of the agreement if: (a) we terminate Mr. Falcone without cause; (b) Mr. Falcone terminates the agreement for good reason; or (c) Mr. Falcone becomes disabled. The agreement provides for a death benefit equal to two years’ base salary in the event of Mr. Falcone’s death.

If Mr. Falcone’s employment agreement is terminated by us for any reason or by him for good reason within 18 months of a “change in control” of the company (as defined in his agreement), Mr. Falcone will receive

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payments equal to three years’ base salary plus three years of the maximum incentive compensation Mr. Falcone would have been eligible to receive (regardless of satisfaction of performance objectives), and any equity awards granted under the company’s share incentive plans will become fully vested. As defined in his agreement, a “change of control” means the acquisition of voting control of us by any one or more persons or entities who are directly, or indirectly through one or more intermediaries, under common control, or who are related to each other within the meaning of Sections 267 and 707(b) of the Code.

Other Provisions

For a twelve-month period following termination of employment, Mr. Falcone has agreed not to compete with the company or divulge confidential company information.

The agreement requires us to indemnify Mr. Falcone from any and all liability for his acts or omissions performed in the course of his employment, provided that such acts or omissions do not constitute (a) criminal conduct, (b) willful misconduct or (c) a fraud upon, or a breach of his duty of loyalty to, the company.

Other Executive Officers

Ms. Netzer and Messrs. Mentesana and Pinckney each have employment agreements with us dated as of July 1, 2003. Each agreement provides for automatic one-year renewals, unless proper notice is given before the end of the initial term or any renewal period.

Ms. Netzer’s employment agreement has a term of 42 months, ending on December 31, 2006, and provides for an initial base salary of $275,000, which increased by $25,000 on July 1, 2004 and 2005 and will increase by an additional $25,000 on July 1, 2006. Each fiscal year, Ms. Netzer is eligible to receive incentive compensation of up to 100% of her annual base salary, depending on the satisfaction of performance objectives relating to the company, the company’s low-income housing tax credit business and Ms. Netzer’s individual performance, plus up to an additional $200,000 in the event of superior performance by the company’s low-income housing tax credit business.

Each of the employment agreements for Messrs. Mentesana and Pinckney has a term of three years ending on December 31, 2008, and provide for an initial base salary of $325,000, which will increase by $15,000 on each of January 1, 2007 and 2008. Each of the agreements provides that: (a) for the 2006 bonus year, the executive is eligible to receive incentive compensation of up to $275,000, $425,000 or $575,000 for the registrant meeting its threshold, target or superior performance goals, respectively, (b) for the 2007 bonus year, the executive is eligible to receive incentive compensation of up to $285,000, $460,000 or $610,000 for the registrant meeting its threshold, target or superior performance goals, respectively, and (c) for the 2008 bonus year, the executive is eligible to receive incentive compensation of up to $295,000, $460,000 or $645,000 for the registrant meeting its threshold, target or superior performance goals, respectively. Incentive compensation may take the form of cash and equity or equity-based awards.

The employment agreements with each of these executive officers substantially conform to a form agreement approved by the Compensation Committee. This agreement provides for the following:

• Any additional increases in base salary and the performance objectives used to determine the amount of each executive’s incentive compensation will be recommended by our chief executive officer or chief operating officer and approved by the Compensation Committee. Incentive compensation may take the form of cash or common shares. Any incentive compensation awarded in the form of shares will be granted pursuant to the company’s share incentive plans.

• We may terminate the agreement with any executive for “cause,” which includes the executive’s gross negligence, intentional misconduct, conviction of a serious crime, breach of certain non-competition

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restrictions or breach of the duty of loyalty. “Cause” also includes certain violations of the law and certain failures by the executive to perform services reasonably requested of the executive by our chief executive officer or chief operating officer. If we terminate the agreement for cause or the executive terminates the agreement for any reason, the executive will receive his or her base salary up through the date of termination but no portion of any incentive compensation for the fiscal year. If we terminate the agreement without cause or if the executive becomes disabled, the executive is entitled to receive his or her base salary through the date of termination plus a proportionate share of the incentive compensation that the executive would have earned for that year. Upon termination of the agreement by us without cause, by the executive for “good reason” (e.g., reduction of compensation or diminution of duties) or upon the executive’s death or disability, any outstanding equity awards will become fully vested.

• We will make severance payments equal to the greater of twelve months’ base salary or the total base salary the executive would have received during the remaining term of the agreement if: (a) we terminate the agreement without cause; (b) the executive terminates the agreement for good reason; or (c) the executive becomes disabled. The agreements provide for a death benefit equal to two years’ base salary in the event of the executive’s death.

• In addition to any severance payments, if the executive’s employment agreement is terminated by us for any reason or by the executive for good reason within 18 months of a “change in control” (defined in the same manner described above under “—Mr. Falcone–Payments on Termination or a Change in Control,” the executive will receive payments equal to two years’ base salary and any equity awards will become fully vested.

• Each executive officer, for a twelve-month period following termination of his or her employment, has agreed not to compete with the company or divulge confidential company information.

• Each agreement requires us to indemnify the executive from any and all liability for acts or omissions of the executive performed in the course of the executive’s employment, provided that such acts or omissions do not constitute (a) criminal conduct, (b) willful misconduct or (c) a fraud upon, or a breach of the executive’s duty of loyalty to, the company.

Mr. Harrison

On January 4, 2006, we entered into a Release and Waiver Agreement with Mr. Harrison (the “severance agreement”), who served as our Chief Financial Officer until his resignation, effective on January 1, 2006. The severance agreement provides for a lump-sum cash severance payment of $485,000, which was paid in January 2006, and a bonus for Mr. Harrison’s 2005 performance, that was set at $200,000 and paid in accordance with the company’s regular practices for executive bonuses. In consideration of the severance payment, Mr. Harrison has agreed to a limited non-compete provision, not to divulge confidential company information and to release and discharge us and our affiliates from any and all past or present claims, including certain specified types of employment-related claims.

Report of the Compensation Committee of the Board of Directors

The Compensation Committee (the “committee”) of the Board of Directors of Municipal Mortgage & Equity, LLC (the “company”) uses the recommendations of historical studies conducted by an independent consultant in 2001 and 1999 (the “compensation studies”) to assist in the determination of executive compensation. The consultant’s recommendations were based on survey data prepared by nationally recognized real estate compensation consultants. Using these compensation studies, each executive officer position was benchmarked against its own unique peer group, depending upon the roles and responsibilities of the position. The consultants established custom peer groups from two categories of companies: multifamily real estate investment trusts (“REITs”) and specialty finance and investment companies. The compensation of the Chief Executive Officer of the company was compared to the compensation for chief executive officers of various

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REITs and finance companies, while the compensation of the other company executives was compared to the compensation of persons with equivalent responsibilities with specialty finance and investment companies. The committee continues to use the results of this compensation studies, but it has engaged a compensation consultant to review and update the company’s compensation structure.

Compensation for the company’s executive officers is comprised of base salary, annual cash incentive compensation, long-term incentive compensation (in the form of share options and deferred shares), and various benefits, including medical and life insurance plans, generally available to all company employees.

Base Salary for Executive Officers

The company generally establishes base salaries for executive officers, and the committee establishes the base salary for the Chief Executive Officer, at amounts that fall at or below the historical market median. This conservative position has allowed the company and the committee to create long-term incentive opportunities that are at or somewhat above average. The company and the committee provide for individual adjustments to base salary for changes in the market, expansion of job responsibilities and/or the executive’s contribution to the financial success of the company. Annual cash compensation (including base salary and bonus) for all other officers is currently within the competitive ranges of the company’s peer groups. The company and the committee have reviewed and will continue to periodically review the benchmark salary ranges to maintain continued market competitiveness.

Annual Incentive Compensation for Executive Officers

The company’s annual incentive compensation policy is designed to provide incentives to executive officers based on the achievement of qualifying operating profit goals. The committee awards annual bonuses to officers other than the Chief Executive Officer based on his recommendation, which takes into consideration both individual and business unit performance. The annual bonus for the Chief Executive Officer is determined solely by the committee.

The committee has established three performance ranges (threshold, target, and superior) that are used to determine the level of bonus awards for executive officers. The “threshold” performance range indicates solid achievement that falls short of budget expectations. The “target” performance range indicates par achievement with the business plan and internal budget goals. The “superior” performance range indicates exceptional achievement toward realizing the long-term objectives of the company significantly in excess of budget expectations. Determination of whether the company has reached the threshold, target or superior range is based exclusively on the amount of cash available for distribution (“CAD”), taking into account the payment of all bonuses. The company’s annual incentive compensation policy provides for incentive ranges as a percentage of base salary to determine annual bonuses within each performance range.

Compensation of the Chief Executive Officer

Mr. Falcone’s base salary is prescribed by the terms of his employment agreement as described above under “—Employment Agreements”. In determining Mr. Falcone’s incentive compensation for the year ended December 31, 2005, the committee evaluated Mr. Falcone’s individual performance as well as the company’s overall CAD performance for the year, in accordance with the terms of his employment agreement, and benchmarked his total compensation against a custom peer group of companies identified in the compensation studies.

Pursuant to his employment agreement, Mr. Falcone is entitled to receive incentive compensation consisting of two components: an annual incentive component and a long-term incentive component. The annual incentive component is payable within a pre-set range (set forth in Mr. Falcone’s employment agreement) with 20% of such award based on achievement of goals set by the committee and 80% of such award based on the company’s

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CAD performance level. The long-term incentive component is also payable within a pre-set range (set forth in Mr. Falcone’s employment agreement) based entirely on the company’s CAD performance level. For the year ended December 31, 2005, the company’s CAD performance was in the target performance range, and the committee determined that Mr. Falcone either met or exceeded all of his individual goals. Based on these considerations, the committee set Mr. Falcone’s incentive compensation at the level prescribed for superior performance.

RESPECTFULLY SUBMITTED,

COMPENSATION COMMITTEE

Mr. Robert S. Hillman, Chairman

Mr. Charles C. Baum

Ms. Barbara B. Lucas

Mr. Douglas A. McGregor

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee has ever been an officer or employee of the company or any of its subsidiaries. No executive officer of the company served as a member or director of the compensation committee of another company, one of whose executive officers served on the company’s Compensation Committee or served as a director of the company during 2005.

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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS

The following table compares total shareholder return for the company at December 31, 2005 to the Standard and Poor’s 500 Index, the National Association of Real Estate Investment Trusts (“NAREIT”) Index, and the Lipper Municipal Bond High Yield (“Lipper Bond”) Index assuming a $100 investment made on December 31, 2000 and assuming reinvestment of all dividends. The company selected the NAREIT and Lipper Bond indices because the NAREIT index consists of real estate investment trusts which, like the company, pass through the majority of their income to their shareholders, albeit not tax-exempt income, and the Lipper Bond index, which represents the performance of municipal bond issues.

Comparative Total Return Analysis

	MMA	S&P 500	NAREIT Index	Lipper Bond Index
2000	100.0	100.0	100.0	100.0
2001	120.4	88.2	115.5	104.4
2002	131.3	68.7	121.5	110.3
2003	137.1	88.4	168.3	117.9
2004	162.2	98.0	219.4	125.2
2005	165.9	102.8	237.6	133.1

Sources: MMA records, Bloomberg, NAREIT and Lipper

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Ownership of Common Shares by Directors and Officers

The following table shows information with respect to the number of common shares beneficially owned by each of the Named Executive Officers, each director, each nominee for director and our directors and Named Executive Officers as a group as of May 26, 2006. The shares reported as beneficially owned include all shares deemed to be “beneficially owned” by such persons pursuant to Section 13(d) of the Exchange Act. The address for each person listed in the table below is c/o Municipal Mortgage & Equity, LLC, Pier IV Building, 621 E. Pratt Street, Baltimore, MD 21202. Unless otherwise indicated, each shareholder has sole voting and investment power with respect to the shares beneficially owned. Percent of class is based on 38,704,083 common shares outstanding as of May 26, 2006, excluding common shares held by us as of such date and the balances in our directors’ deferred share accounts and including common shares deemed to be beneficially owned pursuant to Rule 13d-3(d)(1) of the Exchange Act. Options included as beneficially owned include options exercisable within 60 days of May 26, 2006.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class
Mark K. Joseph, Chairman of the Board	1,065,236	(1)	2.75	%
Michael L. Falcone, Chief Executive Officer, President and Director	246,064	(2)	*
Charles C. Baum, Director	39,000	(3)	*
Richard O. Berndt, Director	33,809	(4)	*
Eddie C. Brown, Director	12,000	(5)	*
Robert S. Hillman, Director	32,700	(6)	*
Barbara B. Lucas, Director	1,000		*
Douglas A. McGregor, Director	62,500	(7)	*
Arthur S. Mehlman, Director	5,720	(8)	*
Fred N. Pratt, Jr., Director	7,000	(9)	*
William S. Harrison, Chief Financial Officer and Executive Vice President(10)	12,193		*
Gary A. Mentesana, Executive Vice President	110,193	(11)	*
Jenny Netzer, Executive Vice President	27,408		*
Charles M. Pinckney, Executive Vice President	51,436	(12)	*
All directors and Named Executive Officers	1,649,641	(13)	4.26	%

(1) Includes: (a) 306,997 common shares held directly by Mr. Joseph, (b) 3,565 common shares subject to options and (c) 754,674 common shares held indirectly by Mr. Joseph as follows: (i) 277,982 common shares held by SCA Associates 95-II Limited Partnership, (ii) 203,140 common shares held by SCA Associates 86-II Limited Partnership, (iii) 187,466 common shares held by The Shelter Policy Institute I, Inc., (iv) 50,786 common shares held by SDC Associates Limited Partnership, (v) 26,729 common shares held by Shelter Development Holdings, Inc., (vi) 5,084 common shares held by SCA Custodial Co. Inc., (vii) 3,483 common shares held by MME I Corporation and (viii) 4 common shares held by MME II Corporation. Mr. Joseph disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein, and the inclusion of these shares herein shall not be deemed an admission of beneficial ownership of all of the reported shares for any purpose.

(2) Includes: (a) 119,797 common shares held directly by Mr. Falcone, (b) 80,828 common shares subject to options and (c) common shares held by indirectly by Mr. Falcone as follows: (i) 26,741 common shares held by SCA Associates 95-II Limited Partnership, (ii) 6,094 common shares held by SCA Associates 86-II Limited Partnership, (iii) 12,026 common shares held by SDC Associates Limited Partnership and (iv) 578 common shares through the Michael and Beth Falcone Family Foundation.

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(3) Includes 25,000 common shares subject to options.

(4) Includes 21,000 common shares subject to options.

(5) Includes 12,000 common shares subject to options.

(6) Includes 27,500 common shares subject to options.

(7) Includes 22,500 common shares subject to options.

(8) Represents (a) 570 common shares held directly by Mr. Mehlman, (b) 484 restricted shares and (c) 4,666 common shares subject to options.

(9) Represents 7,000 common shares subject to options.

(10) Mr. Harrison resigned effective January 1, 2006.

(11) Includes: (a) 54,214 common shares held directly by Mr. Mentesana, (b) 44,959 common shares subject to options and (c) 11,758 common shares held by indirectly by Mr. Mentesana through SCA Associates 95-II Limited Partnership.

(12) Includes 31,056 common shares subject to options.

(13) Excludes common shares indirectly held by Messrs. Falcone and Mentesana (except 578 common shares held by Mr. Falcone through the Michael and Beth Falcone Family Foundation) since these common shares are presented in the number of common shares beneficially owned by Mr. Joseph.

Other Stock Ownership

No person known to us owns beneficially more than 5% of our common shares based on our review of filings with the SEC.

Item 13. Certain Relationships and Related Transactions.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Set forth below is information describing certain relationships and transactions that we have with certain of our directors, nominees for director and executive officers. In addition to the matters discussed in detail below, we may have other relationships or engage in other transactions with such persons that are not material and have not been described. All of such relationships and transactions are approved pursuant to the procedures described below under “—Review and Approval of Transactions with Related Persons.”

Certain Business Relationships

Set forth below is information describing certain relationships that we have with certain of our directors and nominees for director:

Relationships Involving Certain of Our Directors

Midland Multifamily Equity REIT. Michael L. Falcone, our Chief Executive Officer and President and a director, is a trustee for Midland Multifamily Equity REIT (“MMER”), an affiliate of ours that is a pooled investment vehicle owned by and comprised exclusively of a select group of institutional investors. MMER invests in income-producing real estate through limited partnership interests originated by us. To date, MMER has engaged in business transactions only with us. We earn fee income for investment management services provided to MMER. In addition, we receive origination fees for investments placed with MMER. We earned fees totaling $0.7 million from MMER for the year ended December 31, 2005. Mr. Falcone is not compensated for serving as a trustee of MMER.

Midland Affordable Housing Group Trust. Mr. Falcone is a trustee of Midland Affordable Housing Group Trust (“MAHGT”), an affiliate of ours that is a pooled investment vehicle also owned by and comprised exclusively of a select group of institutional investors. MAHGT invests primarily in real estate backed debt

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investments originated by us. To date, MAHGT has engaged in business transactions only with us. We earn fee income from MAHGT for providing investment management services, originating MAHGT loans, and servicing individual MAHGT investments. We earn these fees on both MAHGT direct investments and investments funded through lines of credit backed by MAHGT assets. We earned fees totaling $0.9 million from MAHGT for the year ended December 31, 2005. Mr. Falcone is not compensated for serving as a trustee of MAHGT.

We structure MAHGT’s debt investments in real estate projects as back-to-back borrowings in which we borrow from MAHGT and lend the proceeds to developers. Although we present these amounts as debt for financial reporting purposes, MAHGT bears the risk of loss on the underlying investments. These borrowings are non-recourse to us and are secured by a pledge to MAHGT of the debt investment made with MAHGT’s funds. For the year ended December 31, 2005, we were party to documents representing indebtedness to MAHGT in an aggregate amount of $140.2 million which represents 3.6% of our consolidated total assets as of that date. Under the terms of the loan documents and a participation agreement between us and MAHGT, the risk of loss on these loans resides with MAHGT and not us.

Relationships with Gallagher, Evelius & Jones LLP

Richard O. Berndt, Esq., one of our directors, is the managing partner of the law firm Gallagher, Evelius & Jones LLP (“GEJ”). As of December 31, 2005, Mr. Berndt owned 5.7% of the equity of GEJ. GEJ provides legal services to us, some of which are provided as part of real estate transactions and are paid for by the borrowers and some of which are paid directly by us. Stephen A. Goldberg, a partner at GEJ, serves as our General Counsel. We pay GEJ directly for Mr. Goldberg’s legal services at his standard hourly rates, and Mr. Goldberg is eligible for an annual stock award but otherwise receives no compensation directly from us. For the year ended December 31, 2005, GEJ received $1.2 million in legal fees for borrower paid legal fees involving us and $3.7 million in legal fees paid directly by us. The fees paid directly by us represented 19.5% of GEJ’s total revenues for 2005, and we anticipate that we will transact an equal or greater amount of business with GEJ during 2006.

Relationships with the Shelter Group

Mr. Joseph, through certain family holding companies, controls a 34.7% interest in The Shelter Group, LLC (the “Shelter Group”). The Shelter Group’s operations include acting as a developer of, and providing property management services primarily to, multifamily residential real estate projects. The Shelter Group provides management services for certain properties that serve as collateral for some of our tax-exempt bond investments, which included six properties during 2005. We paid the Shelter Group fees totaling approximately $0.7 million for property management services with respect to these properties during the year ended December 31, 2005, and we anticipate that we will transact an equal or greater amount of business with the Shelter Group during 2006.

The real estate underlying one of our tax-exempt bonds is owned by a Shelter Group entity. As of December 31, 2005, our carrying amount (e.g., fair market value) for this bond totaled $10.7 million.

Transactions with Management and Others

Set forth below is information describing transactions between us and our subsidiaries, on the one hand, and our directors, nominees for director, executive officers and their family members, on the other hand:

Transactions Involving the Shelter Group

Tax Credit Equity Syndication Transactions. We act as a tax credit equity syndicator for investments in affordable housing projects sponsored by the Shelter Group. During 2005, our Tax Credit Equity segment closed two transactions with the Shelter Group. Total unfunded equity commitments for all projects sponsored by the Shelter Group were $7.8 million as of December 31, 2005. The Shelter Group receives development fees in connection with these transactions. We may engage in similar transactions during 2006. Consistent with

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company policy, Mr. Joseph has not participated, and will not participate, in the structuring or negotiation of these transactions. In accordance with our operating agreement, the disinterested members of our Board of Directors authorized the continued investment in and syndication of tax credit equity investments in affordable housing projects sponsored by the Shelter Group without the need for further Board approval and has approved and ratified all prior tax credit transactions with the Shelter Group.

Shelter Group Revolving Loan Agreement. On February 28, 2005, we entered into a revolving loan agreement with a Shelter Group affiliate for loans to Shelter Group entities in an amount not to exceed $1.5 million (the “Shelter Loan Agreement”). The facility is evidenced by a loan agreement and note with the Shelter Group, together with separate notes for each property on which a loan is made signed by the relevant property partnership. Loans for individual transactions will be subject to our normal due diligence requirements and are expected to include a pledge of collateral typically granted in such transactions. It is customary in the tax credit industry for syndicators to provide development loans to certain developers with whom they have long- standing relationships. During 2005, the maximum amount of indebtedness outstanding under the Shelter Loan Agreement was $0.9 million and as of December 31, 2005 there was no outstanding balance under the Shelter Loan Agreement.

Transactions Involving Other Affiliates of Mr. Joseph

Park View at Dundalk Apartments Project. One of our affiliated public tax credit equity funds holds a limited partner interest in Heritage Court Limited Partnership (the “Heritage Court Partnership”), and an affiliate of the Shelter Group serves as the general partner for the Heritage Court Partnership. The Heritage Court Partnership owns a property known as Park View at Dundalk Apartments (the “Park View Property”). Due to property specific issues, the Park View Property has no value to us. In December 2005, the disinterested members of our Board of Directors approved the sale of the Park View Property to a special purpose limited liability company, PV Dundalk Holdings LLC (the “Park View Buyer”), formed by Mr. Joseph to acquire our interest in the Heritage Court Partnership for $1.00. It is doubtful that this transaction will be consummated. However, if the transaction is consummated, the Park View Buyer will agree to give us 50% of any net sales or refinancing proceeds if the Park View Property is sold or refinanced on or before the second anniversary of the date of sale.

Creekside Village Apartments Project. Mr. Joseph held an indirect interest in the limited partnership (the “Creekside Borrower”) that owned the Creekside Village Apartments project, located in Sacramento, CA (the “Creekside Property”). Prior to August 2005, we held approximately $11.8 million aggregate principal amount in bonds (the “Creekside Bonds”) related to the Creekside Property and were owed $225,000 on a related working capital loan to the Creekside Borrower (the “Creekside WC Loan”). In the early 1990s, the Creekside Borrower defaulted on its payment obligations under the Creekside Bonds and the Creekside WC Loan. In the third quarter of 2005, we took control of the Creekside Borrower, sold the Creekside Property and redeemed the Creekside Bonds and repaid the Creekside WC Loan with the sale proceeds. As part of this transaction, a 501(c)(3) organization affiliated with Mr. Joseph received $26,346 for its interest in the Creekside Borrower.

FSA Bond Portfolio. In February 1995, we, acting as bondholder, and various property partnerships indirectly controlled by Mr. Joseph, as borrowers (the “FSA Borrowing Partnerships”), participated in the refunding of eleven tax-exempt bonds with an aggregate principal balance of $126.6 million. The general partners of the FSA Borrowing Partnerships are controlled by Mr. Joseph (described in greater detail below under “—Transactions Involving Mr. Joseph and Defaulted Tax-Exempt Assets”), and the limited partner of the FSA Borrowing Partnerships is a limited liability company controlled by Mr. Joseph. In the refunding transaction, the originally issued bonds were exchanged for a senior series of tax-exempt bonds with an aggregate principal balance of $67.7 million (the “Series A Bonds”) and a subordinate series of tax-exempt bonds with an aggregate principal balance of $58.9 million (the “Series B Bonds,” and together with the Series A Bonds, the “FSA Bond Portfolio”). We then established a custody arrangement whereby (1) the Series A Bonds were placed into a trust, (2) payments of principal and interest on the Series A Bonds were credit enhanced by insurance policies issued

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by Financial Security Assurance, Inc (“FSA”), and (3) the trust issued custodial receipts representing beneficial ownership interests in the credit enhanced Series A Bonds to unrelated third-party purchasers (the “Custodial Receipts”). We retained the Series B Bonds.

At the end of 1998 and in early 1999, we arranged for further financing with respect to the FSA Bond Portfolio through a sale of mezzanine debt (senior to our Series B Bonds, but junior to the Series A Bonds) (the “FSA Portfolio Demand Notes”). We provided a guarantee of the obligations of the FSA Borrowing Partnerships to pay principal and interest on the FSA Portfolio Demand Notes. As of December 31, 2005, the face amount of the FSA Portfolio Demand Notes at was $16.2 million.

Pursuant to the terms of the custodial arrangement, the Series A Bonds were eligible to be redeemed and refunded at the direction of the borrowing partnerships beginning in early 2005. In order to avoid the cost and time involved with such a transaction, in February 2005 a subsidiary of ours purchased all of the Custodial Receipts and deposited them into a securitization vehicle, whereby new receipts, benefiting from FSA’s underlying credit enhancement, were issued to third-party investors and the subsidiary purchased certificates representing residual beneficial interests in the Custodial Receipts. These residual beneficial interests will indirectly produce tax-exempt income for us. This transaction does not affect the obligations of the FSA Borrowing Partnerships under the Series A Bonds or the Series B Bonds.

Transactions Involving Non-Shelter Group Affiliates of Mr. Joseph and Defaulted Tax-Exempt Assets. From time to time, borrowing partnerships owning real estate projects financed by us have defaulted on their debt obligations to us (each referred to as a “Borrowing Partnership”). Some of these defaulted obligations were incurred in connection with the development of properties that collateralize tax-exempt bonds held by us (“Defaulted Tax-Exempt Assets”). At times, after evaluating our options when faced with such a default, we have chosen not to foreclose on the property collateralizing such Defaulted Tax-Exempt Assets, and, in lieu of foreclosure, we have negotiated the transfer of a property’s deed to, or replaced the general partner of an original Borrowing Partnership with, an entity controlled by and affiliated with certain of our officers (an “Affiliated Entity”). We would generally take this course of action in order to preserve the value of the original tax-exempt bond obligations and maximize cash flow from the Defaulted Tax-Exempt Assets. Following such a transfer or replacement, the Affiliated Entity controls the Defaulted Tax-Exempt Asset that collateralizes the debt obligation to us. At times, some of these Borrowing Partnerships have become current on their debt obligations and have thus ceased to be in default.

The table below includes information regarding certain such Defaulted Tax-Exempt Assets where we and entities owned (directly or indirectly) by Mr. Joseph have an interest:

(dollars in thousands)
	As of December 31, 2005
Entity	No. of Properties	Investment Carrying Value (1)
SCA Successor, Inc (2)	2	$	37,552
SCA Successor II, Inc. (3)	11		128,628
MMA Successor I, Inc. (4)	1		8,909
Total	14	$	175,089

(1) Carrying value amounts do not reflect the fact that many of the bonds related to such properties have been securitized.

(2) SCA Successor, Inc. is the general partner of certain Borrowing Partnerships (including certain of the FSA Borrowing Partnerships discussed above under “—FSA Bond Portfolio”) and is controlled by Mr. Joseph.

(3) SCA Successor II, Inc. is the general partner of certain Borrowing Partnerships (including certain of the FSA Borrowing Partnerships discussed above under “—FSA Bond Portfolio”) and is controlled by Mr. Joseph.

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(4) MMA Successor I, Inc., an entity owned and controlled by Mr. Joseph, is the general partner in one Borrowing Partnership.

Transactions with Affiliated Entities

MuniMae Foundation, Inc. Some of our properties are financed by tax-exempt bonds issued on behalf of borrowers that are tax-exempt organizations under Section 501(c)(3) of the Internal Revenue Code. For such bonds to remain tax-exempt, the property at all times must be owned by a 501(c)(3) organization. Accordingly, whenever one of these properties requires a workout or restructuring where a change in ownership is desirable, we seek to find a qualified 501(c)(3) organization to act as owner. MuniMae Foundation, Inc. (“MuniMae Foundation”) is an affiliated 501(c)(3) corporation devoted to the ownership and operation of affordable housing for all citizens. Certain of our officers and directors serve as officers and directors of MuniMae Foundation. MuniMae Foundation pays us a nominal fee for providing asset management and financial services to it on an annual basis and pays a portion of the salary of one of our employees who serves as its executive director. For the year ended December 31, 2005, we made $0.2 million in charitable contributions to MuniMae Foundation. As of December 31, 2005, MuniMae Foundation directly or indirectly owned four properties for which the carrying value of our investment in these properties was $59.7 million . Because our 501(c)(3) bonds, like most of our loans, are non-recourse, we value these bonds by reference to the underlying property and therefore such loans or contributions by us do not change the value of the bonds on our books, which is determined by reference to the underlying property.

In June 2005, as part of a workout transaction, MuniMae Foundation became the sole member of GF Arlington Inc., a Texas non-profit corporation. As of December 31, 2005, we held $8.8 million and $0.8 million in tax-exempt bonds and working capital loans, respectively, related to the underlying property (a senior living facility). The carrying value of these assets is included in the amounts described in the preceding paragraph.

MuniMae Affordable Housing, Inc. MuniMae Affordable Housing, Inc. (“MMAH”) is an affiliated non-profit entity organized to promote affordable housing. Certain of our officers and directors serve as officers and directors of MMAH. As of December 31, 2005, MMAH directly or indirectly owned interests in eleven Defaulted Tax-Exempt Assets, and the aggregate carrying value of such assets was $55.4 million.

During June of 2005, certain developers for projects being financed by us encountered substantial financial difficulties as a result of, among other problems, inadequate management and supervision of the development of their projects, which included ten affected properties (the “2005 MMAH Assets”). As a result of negotiations with these developers, these developers were required to transfer their interests in the 2005 MMAH Assets to MMAH. Eight of the 2005 MMAH Assets were originally financed, in whole or in part, through equity investments from tax credit equity funds that we sponsored (including some equity investments by guaranteed funds) and tax-exempt bond or taxable loan investments held by us. Two of the 2005 MMAH Assets were originally financed in part by equity investments from tax credit equity funds that we sponsored, but did not involve any debt from us. As of December 31, 2005, the total carrying value of our investments in the 2005 MMAH Assets was $46.5 million.

Depending upon the underlying facts and circumstances surrounding each such property, we have provided additional financial support to them in order to enable further development and maximize the value of our existing investments. Through December 31, 2005, we have provided additional financing of $3.2 million to certain of the 2005 MMAH Assets. We continue to evaluate impairment risk related to all of the 2005 MMAH Assets as it relates to us. As of December 31, 2005, two of the tax-exempt bonds related to the 2005 MMAH Assets were temporarily impaired by $0.8 million and were carried at fair values below amortized cost through a charge to other comprehensive income.

As of December 31, 2005, we recorded through a charge to impairments and valuation allowances, an other-than-temporary impairment of $2.6 million related to a tax-exempt bond with respect to one of the 2005 MMAH

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Assets. In January 2006, we exercised our rights as a bondholder and foreclosed on the underlying project. The project was originally financed with a $8.5 million tax-exempt bond. At the time of foreclosure, the project was sold, and the sale proceeds of $5.8 million were used to redeem the tax-exempt bond.

Review and Approval of Transactions with Related Persons

Our operating agreement provides procedures for the approval of transactions with related persons which include approval of such transactions by a vote of the majority of the disinterested members of our board of directors. All transactions involving us or any of our subsidiaries, on the one hand, and any of our directors or officers, or entities in which any of them have a financial interest, on the other hand are approved through this process, including all transactions between us and the Shelter Group. Additionally, all property management arrangements with the Shelter Group are approved by a vote of the majority of the disinterested members of our board of directors on an annual basis after considering the market rate for the services provided by the Shelter Group and other applicable factors.

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Item 14. Principal Accountant Fees and Services.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PricewaterhouseCoopers LLP (“PwC”) has acted as the company’s independent registered public accounting firm since 1996, and the Audit Committee of the Board of Directors has appointed PwC as the company’s independent registered public accounting firm to audit the company’s financial statements for the year ending December 31, 2006. No election, approval or ratification of our independent registered public accounting firm by the shareholders is required. The audit services rendered by PwC included the audit of the consolidated financial statements of the company and its subsidiaries, management’s assessment of the effectiveness of internal controls over financial reporting, the effectiveness of internal controls over financial reporting, separate audits of certain subsidiaries and tax credit funds, reviews of unaudited quarterly financial information and audit services provided in connection with registration statements filed by the company with the SEC, and other statutory and regulatory filings or engagements.

A representative of PwC will be present at the annual meeting with the right to make a statement if he or she so desires and will be available to respond to appropriate questions by the shareholders.

The following table presents fees for professional audit services billed to us by PwC as of the date of this filing for the audit of the company’s financial statements for fiscal years 2005 and 2004, and fees for audit related services, tax services and all other services billed to us by PwC in fiscal years 2005 and 2004.

	For the Year Ended December 31,
(in thousands)	2005			2004
Audit fees	$	2,680	(1)	$	2,803
Audit-related fees (2)		28			50
Audit and audit-related fees		2,708			2,853
Tax fees (3)		582			706
All other fees		—			—
Total fees	$	3,290		$	3,559

(1) Additional fees for the audit of our financial statements for the year ended December 31, 2005 may be billed as a result of our efforts to restate certain of our financial statements as discussed herein.

(2) Audit related fees consist principally of due diligence services related to acquisitions.

(3) Tax fees in 2005 and 2004 consist of nominee gathering services and production of K-1s for investors, preparation of federal and state tax returns, earnings and profits studies and various other tax consultations.

The Audit Committee is responsible for retaining and terminating the company’s independent registered public accounting firm and for pre-approving the performance of any services by the independent registered public accounting firm. In addition, the Audit Committee is responsible for monitoring the independence and performance of the company’s independent registered public accounting firm and internal audit function and for presenting its conclusions with respect to the independent registered public accounting firm to the full Board of Directors. All the services described above were approved by the Audit Committee.

Pre-approval Policy

All auditing services and non-audit services (other than the de minimis exceptions provided by the Exchange Act) provided to us by our independent auditors must be pre-approved by the Audit Committee. All of the audit, audit-related and tax fees shown above for 2004 and 2005 were pre-approved by the Audit Committee.

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Item 15. Exhibits and Fin ancial Statement Schedules.

(1) The following is a list of the consolidated financial statements included at the end of this report:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2005 and 2004

Consolidated Statements of Income for the Years Ended December 31, 2005, 2004 and 2003

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2005, 2004 and

2003

Consolidated Statement of Shareholders’ Equity for the Years Ended December 31, 2005, 2004 and 2003

Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules:

Schedule II — Valuation and Qualifying Accounts

Schedules other than Schedule II are omitted as not applicable or not required.

(3) Exhibit Index

See Exhibit Index immediately preceding the exhibits.

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Schedule II

Valuation and Qualifying Accounts

December 31, 2005

The information required in this schedule is presented in the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report on Form 10-K.

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MUNICIPAL MORTGAGE & EQUITY, LLC
Dated:    June 22, 2006	By:	/s/    Michael L. Falcone
		Name:    Michael L. Falcone Title:      Chief Executive Officer and President               (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

By:	/s/    Michael L. Falcone                      Name:    Michael L. Falcone Title:      Chief Executive Officer, President and Director               (Principal Executive Officer)	June 22, 2006
By:	/s/    Melanie M. Lundquist                 Name:    Melanie M. Lundquist Title:      Chief Financial Officer and Executive               Vice President (Principal Financial Officer               and Principal Accounting Officer)	June 22, 2006
By:	/s/    Mark K. Joseph                           Name:    Mark K. Joseph Title:      Chairman of the Board of Directors	June 22, 2006
By:	*                                                             Name:    Charles C. Baum Title:      Director
By:	*                                                             Name:    Richard O. Berndt Title:      Director
By:	*                                                             Name:    Eddie C. Brown Title:      Director
By:	*                                                             Name:    Robert S. Hillman Title:      Director
By:	*                                                             Name:    Barbara B. Lucas Title:      Director

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By:	*                                                             Name:    Douglas A. McGregor Title:      Director
By:	*                                                             Name:    Arthur S. Mehlman Title:      Director
By:	*                                                             Name:    Fred N. Pratt, Jr. Title:      Director

/s/    MICHAEL L. FALCONE        

*             By Michael L. Falcone, as Attorney-in-fact

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PricewaterhouseCoopers LLP

250 West Pratt Street

Suite 2100

Baltimore MD 21201-2304

Telephone (410) 783 7600

Facsimile (410) 783 7680

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Municipal Mortgage & Equity LLC:

We have completed integrated audits of Municipal Mortgage & Equity LLC’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the consolidated financial statements listed in index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Municipal Mortgage & Equity LLC and its subsidiaries at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, the Company restated its 2004 and 2003 consolidated financial statements.

Internal control over financial reporting

Also, we have audited management’s assessment, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A, that Municipal Mortgage & Equity LLC did not maintain effective internal control over financial reporting as of December 31, 2005, because (1) the Company did not maintain an effective control environment due to (a) the Company did not maintain a sufficient complement of personnel with a level of accounting knowledge and experience in the application of Generally Accepted Accounting Principles (“GAAP”) commensurate with their financial reporting requirements and business activities, (b) the Company did not maintain or disseminate accounting policy guidance with respect to certain areas with a sufficient level of precision to enable existing personnel to adequately analyze related transactions and apply accounting policies that were in conformity with GAAP, (c) the Company did not maintain effective controls to monitor results of operations determined in accordance with GAAP, (2) the Company did not maintain effective controls over the financial reporting process, (a) the Company did not maintain effective controls over journal entry review and account reconciliations, (b) the Company did not maintain effective controls over the identification and disclosure of their segments, (3) the Company did not maintain effective

F-1

controls over accounting for tax credit equity business, (4) the Company did not maintain effective controls over the accounting for deferral and recognition of bond and loan origination fees and direct costs, (5) the Company did not maintain effective controls over the accounting for investment in partnerships using the equity method of accounting, (6) the Company did not maintain effective controls over the identification and valuation of derivative financial instruments, and (7) the Company did not maintain effective controls over the accounting for income taxes, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The following material weaknesses have been identified and included in management’s assessment as of December 31, 2005:

1. Ineffective control environment — The Company did not maintain an effective internal control environment as defined in the COSO framework. Specifically, they identified the following material weakness related to their control environment:

• The Company did not maintain a sufficient complement of personnel with a level of accounting knowledge and experience in the application of GAAP commensurate with their financial reporting requirements and business activities, particularly as their business grew in diversity and complexity.

• The Company did not maintain or disseminate accounting policy guidance with respect to certain areas with a sufficient level of precision to enable existing personnel to adequately analyze related transactions and apply accounting policies that were in conformity with GAAP.

F-2

• Their control environment did not emphasize the need to maintain effective controls to monitor results of operations determined in accordance with GAAP. Specifically, they did not budget net earnings and did not maintain a process to monitor net earnings results against expected results.

These material weaknesses contributed to the material weaknesses discussed below in paragraph 2 through 7, and resulted in the restatement of their consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, these material weaknesses could result in a misstatement of any of substantially all their financial statement accounts and disclosures that would cause a material misstatement of the Company’s annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that these control deficiencies constitute material weaknesses.

2. Ineffective financial reporting process — The Company did not maintain effective controls, including monitoring, over their financial close and reporting process. Specifically, they identified the following material weaknesses related to the financial reporting process:

• Controls over journal entry review and account reconciliations failed to prevent or detect material financial statement errors. In addition, the Company failed to design and implement exception and monitoring reports to review transactions and detect errors and to integrate their subsidiary and feeder systems with their general ledger system. As a result, their financial reporting process is manually intensive and is based on the review and approval of individual transactions (and resulting journal entries) without adequate compensating controls to detect errors.

• The Company did not maintain effective controls over the identification and disclosure of their segments. Specifically, they did not identify their segments or report their performance in the same manner for external reporting purposes and for reporting to their chief operating decision maker. This control deficiency resulted in segment disclosures that did not conform to GAAP.

These material weaknesses in their financial reporting process contributed to the material weaknesses discussed below in paragraphs 3 through 7, and resulted in the restatement of their consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and each quarter in 2004. In addition, these material weaknesses could result in a misstatement of any of substantially all their financial statement accounts and disclosures that would cause a material misstatement their annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that these control deficiencies constitute material weaknesses.

3. Accounting for tax credit equity business — The Company did not maintain effective controls over the accuracy of their accounting for the tax credit equity business. Specifically:

• Accounting for real estate syndication fees — The Company did not correctly recognize syndication fees ratably as syndication partnerships invested in low income housing properties as required by GAAP. Instead, they (1) eliminated certain syndication fees related to consolidated syndication partnerships and (2) recognized syndication fees as investors subscribed to their funds and when they selected or acquired interests in low income housing properties to be sold to syndication partnerships rather than when the syndication partnerships made investments.

• Accounting for impairments of investments in real estate partnerships held by guaranteed tax credit equity funds — The Company presented equity in the impairment losses of low income housing properties owned by guaranteed tax credit funds and related revenues earned by providing related tax losses net instead of reporting these amounts separately as required by GAAP.

• Accounting for consolidated tax credit equity funds — The Company did not correctly record or did not properly reverse certain adjustments to ensure consolidated amounts were in accordance with GAAP.

F-3

• Accounting for capitalized interest costs associated with investments in real estate partnerships — The Company did not correctly capitalize interest costs on investments in real estate partnerships developing low income housing properties in accordance with GAAP.

This control deficiency resulted in the restatement of their consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and each quarter in 2004. In addition, this control deficiency could result in a misstatement of syndication fee income, equity in the earnings (losses) of partnerships, interest expense, and net earnings (losses) allocated to minority interest that would result in a material misstatement in their annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

4. Accounting for deferral and recognition of bond and loan origination fees and direct costs — The Company did not maintain effective controls over the accuracy of their accounting for the deferral and recognition of bond and loan origination fees and direct costs and the related amortization expense. Specifically, they failed to amortize their deferred bond and loan fees using the effective interest method over their contractual terms as required by GAAP rather than the straight-line method over terms anticipating prepayments. In addition, they failed to defer direct costs of originating bonds in accordance with GAAP and effectively monitor their recorded yields on bonds against their expected effective yields. This control deficiency resulted in the restatement of their consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of deferred bond and loan origination fees and the related amortization expense that would result in a material misstatement of their annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

5. Accounting for investments in partnerships using the equity method of accounting — The Company did not maintain effective controls to ensure accurate application of the equity method of accounting for investments in certain partnerships. Specifically, they did not apply the equity method to an investment when their share of the investee’s cumulative losses exceeded their original investment even though they had guaranteed certain obligations of the investee. In addition, they did not account for differences between their cost of an investment and the amount of underlying equity of the investee. They also did not correctly calculate their share of this investee’s losses using their economic share of the entity. This control deficiency resulted in the restatement of their consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of equity method investments and equity in their earnings (losses) that would result in a material misstatement of their annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

6. Identification and valuation of derivative financial instruments — The Company did not maintain effective controls over the identification and valuation of certain derivative financial instruments. Specifically, they did not maintain effective controls to identify derivative financial instruments embedded within financial guarantees. In addition, they did not maintain effective controls over the accuracy of assumptions used to value derivatives embedded within commitments to lend. This control deficiency resulted in the restatement of their consolidated financial statements for the years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of derivative financial instruments and related gains (losses) that would result in a material misstatement of their annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

7. Accounting for income taxes — The Company did not maintain effective controls over the accounting for income taxes. They did not maintain effective controls over the completeness and accuracy of their income tax provision. This control deficiency resulted in the restatement of their consolidated financial statements for the

F-4

years ended December 31, 2004, 2003 and 2002, for each of the first three quarters in 2005 and for each quarter in 2004. In addition, this control deficiency could result in a misstatement of income taxes that would result in a material misstatement of their annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2005 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

In our opinion, management’s assessment that Municipal Mortgage & Equity LLC did not maintain effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the COSO. Also, in our opinion, because of the effects of the material weaknesses described above on the achievement of the objectives of the control criteria, Municipal Mortgage & Equity LLC has not maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the COSO.

/s/ PricewaterhouseCoopers LLP

Baltimore, Maryland

June 21, 2006

F-5

Municipal Mortgage & Equity, LLC

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31, 2005			(Restated) December 31, 2004
ASSETS
Tax-exempt bonds and interests in bond securitizations, net	$	1,404,974		$	1,275,748
Taxable bonds, net		31,561			9,205
Loans receivable, net		712,632			615,135
Loans receivable held for sale		91,196			7,055
Investments in partnerships		872,514			812,257
Derivative financial instruments		3,975			3,102
Cash and cash equivalents		140,681			92,881
Interest receivable		22,100			18,368
Restricted cash and cash equivalents		96,338			72,836
Other assets		74,763			70,835
Property and equipment, net		9,496			5,304
Real estate projects, net		148,015			177,469
Mortgage servicing rights, net		63,904			11,349
Goodwill		133,299			106,609
Other intangibles		26,289			22,443
Total assets	$	3,831,737		$	3,300,596
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable	$	836,440		$	876,024
Mortgage notes payable		94,716			132,237
Short-term debt		693,785			414,193
Long-term debt		104,215			162,978
Subordinate debentures		172,750			84,000
Preferred shares subject to mandatory redemption		168,000			168,000
Tax credit equity guarantee liability		229,690			184,999
Derivative financial instruments		4,005			6,171
Accounts payable and accrued expenses		43,887			35,258
Interest payable		19,692			19,266
Unearned revenue and other liabilities		116,579			71,145
Total liabilities		2,483,759			2,154,271
Commitments and contingencies
Minority interest in subsidiary companies		410,973			398,454
Preferred shareholders’ equity in a subsidiary company, liquidation preference of $173,000 and $73,000 at December 31, 2005 and December 31, 2004, respectively		168,686			71,031
Shareholders’ equity:
Common shares, no par value (38,083,456 shares issued and outstanding, and 78,019 deferred shares at December 31, 2005 and 35,055,169 shares issued and outstanding, and 58,114 deferred shares at December 31, 2004)		773,337			680,495
Less unearned compensation (deferred shares)		(4,563	)		(4,145	)
Accumulated other comprehensive income (loss)		(455	)		490
Total shareholders’ equity		768,319			676,840
Total liabilities and shareholders’ equity	$	3,831,737		$	3,300,596

The accompanying notes are an integral part of these financial statements.

F-6

Municipal Mortgage & Equity, LLC

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

	For the year ended December 31,
	2005			(Restated) 2004			(Restated) 2003
INCOME:
Interest income
Interest on bonds and interests in bond securitizations	$	91,467		$	84,107		$	69,942
Interest on loans		57,473			45,579			37,621
Interest on short-term investments		5,214			3,882			1,138
Total interest income		154,154			133,568			108,701
Fee income
Syndication fees		42,977			41,009			16,350
Origination and brokerage fees		5,552			7,934			6,584
Guarantee fees		19,127			10,610			3,614
Asset management and advisory fees		33,528			12,733			10,337
Loan servicing fees		9,318			4,578			4,234
Other income		6,054			2,881			6,771
Total fee income		116,556			79,745			47,890
Net rental income		22,345			16,435			–
Total income		293,055			229,748			156,591
EXPENSES:
Interest expense		74,882			66,334			43,507
Interest expense on debentures and preferred shares		25,650			17,318			6,189
Salaries and benefits		88,195			67,812			40,900
General and administrative		32,329			25,976			11,277
Professional fees		12,246			11,177			4,313
Depreciation and amortization		21,210			12,613			7,724
Total expenses		254,512			201,230			113,910
Net gain on sale of loans		9,401			3,393			4,864
Net gain on sale of tax-exempt investments		7,332			304			2,133
Net gain on sale of investments in tax credit equity partnerships		10,005			3,019			2,747
Net gain (loss) on derivatives		8,320			941			(871	)
Impairments and valuation allowances		(4,577	)		(5,559	)		(6,983	)
Income before income tax (expense) benefit, net (income) loss allocable to minority interest, net losses from equity investments in partnerships, discontinued operations and cumulative effect of a change in accounting principle		69,024			30,616			44,571
Income tax (expense) benefit		(2,341	)		6,508			8,515
Net (income) loss allocable to minority interest		74,661			176,807			(6,032	)
Net losses from equity investments in partnerships		(63,421	)		(178,195	)		(10,965	)
Income from continuing operations		77,923			35,736			36,089
Discontinued operations		9,481			11,080			25,748
Income before cumulative effect of a change in accounting principle		87,404			46,816			61,837
Cumulative effect of a change in accounting principle		–			520			(1,228	)
Net income	$	87,404		$	47,336		$	60,609

(Continued)

The accompanying notes are an integral part of these financial statements.

F-7

Municipal Mortgage & Equity, LLC

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

	For the year ended December 31,
	2005		(Restated) 2004		(Restated) 2003
Basic earnings per common share:
Earnings from continuing operations	$	2.06	$	1.04	$	1.23
Discontinued operations		0.25		0.32		0.88
Cumulative effect of a change in accounting principle		–		0.02		(0.04	)
Basic earnings per common share	$	2.31	$	1.37	$	2.06
Weighted average common shares outstanding		37,757		34,522		29,398
Diluted earnings per common share:
Earnings from continuing operations	$	2.05	$	1.03	$	1.21
Discontinued operations		0.25		0.32		0.87
Cumulative effect of a change in accounting principle		–		0.01		(0.04	)
Diluted earnings per common share	$	2.30	$	1.36	$	2.04
Weighted average common shares outstanding		38,177		34,722		29,766

The accompanying notes are an integral part of these financial statements.

F-8

Municipal Mortgage & Equity, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	For the year ended December 31,
	2005			(Restated) 2004			(Restated) 2003
Net income	$	87,404		$	47,336		$	60,609
Other comprehensive income (loss):
Unrealized gains (losses) on investments:
Unrealized holding gains arising during the period		9,401			7,395			2,862
Reclassification adjustment for gains included in net income		(10,346	)		(2,697	)		(27,480	)
Other comprehensive income (loss)		(945	)		4,698			(24,618	)
Comprehensive income	$	86,459		$	52,034		$	35,991

The accompanying notes are an integral part of these financial statements.

F-9

Municipal Mortgage & Equity, LLC

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(in thousands)

	Common Shares (Number)		Common Shares (Amount)			Unearned Compensation			Accumulated Other Comprehensive Income (Loss)			Total
Balance, January 1, 2003	25,546		$	471,089		$	(3,274	)	$	19,249		$	487,064
Restatement adjustments	–			(6,530	)		–			1,161			(5,369	)
Balance, January 1, 2003 (Restated)	25,546			464,559			(3,274	)		20,410			481,695
Comprehensive income	–			60,609			–			(24,618	)		35,991
Distributions of $1.785 per share	–			(51,756	)		–			–			(51,756	)
Options exercised	64			1,180			–			–			1,180
Issuance of common shares	6,844			155,457			–			–			155,457
Purchase of common shares	(69	)		–			–			–			–
Issuance of common shares under employee share incentive plans	112			–			–			–			–
Deferred shares issued under the Non-Employee Directors’ Share Plans	10			240			–			–			240
Deferred share grants	–			3,665			(3,665	)		–			–
Forfeiture of deferred shares	–			(475	)		475			–			–
Amortization of deferred compensation	–			–			2,472			–			2,472
Net tax effect from exercise of options and vesting of deferred shares	–			190			–			–			190
Balance, December 31, 2003 (Restated)	32,507			633,669			(3,992	)		(4,208	)		625,469
Comprehensive income	–			47,336			–			4,698			52,034
Distributions of $1.84 per share	–			(63,181	)		–			–			(63,181	)
Options exercised	284			5,382			–			–			5,382
Issuance of common shares	2,147			52,521			–			–			52,521
Issuance of common shares under employee share incentive plans	157			–			–			–			–
Deferred shares issued under the Non-Employee Directors’ Share Plans	18			377			–			–			377
Deferred share grants	–			3,949			(3,949	)		–			–
Amortization of deferred compensation	–			–			3,796			–			3,796
Net tax effect from exercise of options and vesting of deferred shares	–			442			–			–			442
Balance, December 31, 2004 (Restated)	35,113			680,495			(4,145	)		490			676,840
Comprehensive income	–			87,404			–			(945	)		86,459
Distributions of $1.92 per share	–			(71,432	)		–			–			(71,432	)
Options exercised	188			3,292			–			–			3,292
Issuance of common shares	2,575			65,623			–			–			65,623
Purchase of common shares	(56	)		(1,372	)		–			–			(1,372	)
Issuance of common shares under employee share incentive plans	321			–			–			–			–
Deferred shares issued under the Non-Employee Directors’ Share Plans	21			507			–			–			507
Deferred share grants	–			9,084			(9,084	)		–			–
Amortization of deferred compensation	–			–			8,666			–			8,666
Net tax effect from exercise of options and vesting of deferred shares	–			(264	)		–			–			(264	)
Balance, December 31, 2005	38,162		$	773,337		$	(4,563	)	$	(455	)	$	768,319

The accompanying notes are an integral part of these financial statements.

F-10

Municipal Mortgage & Equity, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the twelve months ended December 31,
	2005			(Restated) 2004			(Restated) 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	87,404		$	47,336		$	60,609
Adjustments to reconcile net income to net cash provided by operating activities:
Income allocated to subsidiary preferred shareholders		4,962			755			5,989
Cumulative effect of a change in accounting principle		–			(520	)		1,228
Net holding gains on trading securities		(10,284	)		(10,131	)		(5,846	)
Impairments and valuation allowances related to investments		4,577			5,559			6,983
Amortization of guarantee liability		(10,933	)		(5,695	)		(2,151	)
Net gain on sales, including discontinued operations		(36,285	)		(17,796	)		(36,234	)
Loss on disposal of fixed assets		–			–			193
Loss from investments in partnerships		75,397			184,017			10,302
Minority interest income		(79,623	)		(177,562	)		–
Net amortization of premiums, discounts and fees on investments		(2,660	)		(5,694	)		875
Depreciation, accretion and amortization		24,304			19,898			11,057
Deferred income taxes		(198	)		(7,360	)		(8,738	)
Deferred share compensation expense		4,369			3,796			2,472
Common and deferred shares issued under the Non-Employee Directors’ Share Plans		507			377			279
Net change in assets and liabilities:
Increase in interest receivable		(3,741	)		(1,688	)		(686	)
Decrease (increase) in other assets		(17,262	)		(32,917	)		1,064
Increase in accounts payable, accrued expenses and other liabilities		40,294			43,067			4,313
(Increase) decrease in loans held for sale		(33,617	)		48,894			(11,740	)
Net cash provided by operating activities		47,211			94,336			39,969
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of bonds and interests in bond securitizations		(291,120	)		(369,315	)		(191,953	)
Loan originations		(379,616	)		(360,833	)		(285,476	)
Acquisition of assets and businesses, net of cash acquired		(59,034	)		–			(105,337	)
Purchases of property and equipment		(7,659	)		(7,392	)		(2,456	)
Proceeds from the sale of property and equipment		–			–			9
Net investment in restricted assets		(36,271	)		30,781			11,505
Principal payments received		300,976			246,764			253,428
Proceeds from the sale of bonds		211,323			129,380			72,583
Distributions received from investments in partnerships		34,398			104			8,942
Net investments in partnerships		(460,825	)		(351,044	)		(98,346	)
Termination of derivative financial instruments		5,299			(5,000	)		(10,809	)
Net cash used in investing activities		(682,529	)		(686,555	)		(347,910	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from credit facilities		1,427,231			1,240,343			1,003,630
Repayment of credit facilities		(1,439,723	)		(1,108,835	)		(800,535	)
Proceeds from tax credit syndication investors		385,031			314,955			12,215
Proceeds from short-term debt		374,625			45,095			31,835
Repayment of short-term debt		(234,786	)		(3,137	)		(71,775	)
Proceeds from long-term debt		107,827			84,000			42,371
Repayment of long-term debt		(30,853	)		(3,900	)		(7,561	)
Purchase of common shares		(1,372	)		–			–
Issuance of common shares		65,623			52,521			155,418
Issuance of preferred shares		97,655			71,031			–
Proceeds from stock options exercised		3,292			5,382			1,180
Distributions to common shares		(71,432	)		(63,181	)		(51,756	)
Net cash provided by financing activities		683,118			634,274			315,022
Net increase in cash and cash equivalents		47,800			42,055			7,081
Cash and cash equivalents at beginning of period		92,881			50,826			43,745
Cash and cash equivalents at end of period	$	140,681		$	92,881		$	50,826

(Continued)

The accompanying notes are an integral part of these financial statements.

F-11

Municipal Mortgage & Equity, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the twelve months ended December 31,
	2005		(Restated) 2004			(Restated) 2003
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	98,693	$	77,517		$	40,801
Income taxes paid	$	1,626	$	1,023		$	212
Non-cash activity related to VIEs under FIN 46:
Loans receivable	$	17,743	$	–		$	–
Investment in partnerships		225,177		395,883			–
Restricted assets		19,769		28,943			–
Other assets		1,192		(520	)		–
Real estate projects, net		23,865		177,576			–
Notes payable		65,922		75,410			–
Mortgage notes payable		33,203		139,532			–
Accounts payable, accrued expenses and other liabilities		10,764		53,508			–
Minority interest in subsidiary companies		177,857		333,447			–
Accumulated other comprehensive income		–		(15	)		–
Non-cash investing and financing activities:
Debt and other liabilities assumed in the acquisition of business		89,992		–			–

The accompanying notes are an integral part of these financial statements.

F-12

Municipal Mortgage & Equity, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BASIS OF PRESENTATION AND OUR SEGMENTS

Basis of presentation

The consolidated financial statements include the accounts of Municipal Mortgage & Equity, LLC, its wholly owned subsidiaries and its partially owned subsidiaries (“MuniMae,” “we” or “us”) in which we have a majority voting interest and control. We also consolidate variable interest entities (“VIEs”) of which we are the primary beneficiary. We account for investments in other ventures using the equity method. All significant intercompany balances and transactions have been eliminated.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingencies at the date of the financial statements and revenues and expenses recognized during the reporting period. We use significant estimates in our determinations of the fair values of our investments in bonds, derivative financial instruments and guarantees because limited markets exist for these items. The estimates are based on assumptions and matters of judgment and therefore cannot be determined with precision. We also use significant estimates and judgments in the evaluation of impairments of assets and the allocation of the costs of business acquisitions. Actual values and results could differ from these and other estimates.

Tabular dollars are in thousands, except per share amounts, unless otherwise noted. All per share amounts reflect common per share amounts.

Description of business

We operate through four business segments:

• Through our debt segment we (1) invest in tax exempt bonds related to affordable housing and bond securitizations; (2) make taxable construction, supplemental and permanent loans; (3) provide loan servicing; and (4) originate loans that are ultimately sold to government sponsored enterprises (“GSEs”), such as the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and an agency of the U.S. Government, the Government National Mortgage Association (“Ginnie Mae”) or insured by agencies such as the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development (“HUD”).

• Through our tax credit equity segment we provide tax credit equity syndication and asset management services.

• Through our structured finance segment we invest in other real estate-related securities, including equity investments in real estate operating partnerships, and debt instruments related to real estate other than affordable housing.

• Through our fund management segment we (1) provide loan origination, loan servicing, investment advisory, asset management and other related services and (2) invest in real estate operating partnerships.

Segment results include all direct revenues of each business segment and a segment earnings measure (“Segment performance measure”) reviewed by our chief operating decision maker.

F-13

The following tables reflect the results of our business segments for the years ended December 31, 2005, 2004 and 2003:

	Debt		Tax credit		Structured finance		Fund management			Total segment
2005
Segment performance measure revenue	$	120,848	$	93,182	$	20,749	$	17,096		$	251,875
Segment performance measure		76,604		41,793		17,151		(2,928	)		132,620
Segment assets	$	2,435,023	$	1,132,871	$	222,235	$	28,146		$	3,818,275
Corporate assets											13,462
Total assets										$	3,831,737
2004
Segment performance measure revenue	$	93,359	$	82,858	$	20,022	$	2,022		$	198,261
Segment performance measure		59,698		36,805		16,898		(957	)		112,444
Segment assets	$	1,989,800	$	1,112,960	$	155,812	$	1,665		$	3,260,237
Corporate assets											40,359
Total assets										$	3,300,596
2003
Segment performance measure revenue	$	94,836	$	33,445	$	7,754	$	—		$	136,035
Segment performance measure		56,976		18,825		5,403		(1,013	)		80,191

Segment performance measure revenue differs from consolidated total income because it:

• includes origination, syndication and guarantee fees and other revenues that can be deferred or eliminated in the calculation of GAAP revenues;

• includes distributions received from our equity method investments;

• includes net gains or losses related to sales of loans, bonds and investments in tax credit equity partnerships;

• includes certain impairments and valuation allowances;

• includes direct financing costs related to our notes payable, lines of credit and securitizations;

• excludes the effects of our consolidated tax credit equity funds and the requirements surrounding the lease method accounting associated with our guaranteed tax credit equity funds;

• adjusts for differences in carrying bases for investments that are sold;

Below is a reconciliation of segment performance measure revenue to consolidated total income:

	2005			2004			2003
Total segment performance measure revenue	$	251,875		$	198,261		$	136,035
Corporate interest income		(3,014	)		(6,901	)		135
Adjustments due to the lease method and consolidation of tax credit equity funds		37,822			33,819			2,095
Fees deferred for GAAP purposes		(36,802	)		(39,984	)		(19,394	)
Non-cash items		53,630			52,731			45,336
Adjustments for investments in partnerships		(10,456	)		(8,178	)		(7,616	)
Total income, restated for 2004 and 2003	$	293,055		$	229,748		$	156,591

F-14

Total segment performance measure differs from consolidated net income because it:

• includes origination, syndication and guarantee fees and other revenues that are required to be deferred or eliminated in the calculation of net income;

• includes distributions received from our equity method investments rather than our equity in net earnings (loss) of the underlying partnership;

• excludes the effects of our consolidated tax credit equity funds and the requirements surrounding the lease method accounting associated with our guaranteed tax credit equity funds;

• excludes certain non-cash items and certain indirect operating and financing costs, including unrealized gains or losses related to derivatives, amortization of intangible assets, non-cash gains and losses associated with sales of loans, certain valuation allowances and impairment losses, changes in accounting principle, deferred income taxes and deferred compensation expense; and

• adjusts for differences in carrying bases for investments that are sold.

Below is a reconciliation of total segment performance measure to consolidated net income:

	2005			2004			2003
Total segment performance measure	$	132,620		$	112,444		$	80,191
Adjustments due to the lease method and consolidation of tax credit equity funds		(8,214	)		(8,676	)		2,054
Fees deferred for GAAP purposes		(36,299	)		(25,778	)		(21,046	)
Non-cash items and certain indirect operating and financing costs		(39,769	)		(29,071	)		(153	)
Adjustments for investments in partnerships		29,865			(10,681	)		(15,143	)
Different carrying bases		9,201			9,098			14,706
Net income, restated for 2004 and 2003	$	87,404		$	47,336		$	60,609

NOTE 2—RESTATEMENT OF PREVIOUSLY REPORTED RESULTS OF OPERATIONS

On March 10, 2006, we concluded that our financial statements for the years ended December 31, 2004, 2003, 2002 and 2001 and for the first three quarters in 2005 and for each quarter in 2004 should no longer be relied upon as a result of a number of errors in the application of GAAP. Specifically, we determined we had not: (A) correctly recognized syndication fee revenue; (B) correctly recorded impairments on investments in real estate partnerships held by our guaranteed tax credit equity funds; (C) correctly recorded consolidation entries related to our consolidated tax credit equity funds; (D) correctly capitalized interest costs on investments in real estate partnerships developing low income housing properties; (E) correctly accounted for the deferral and recognition of bond and loan origination fees and direct origination costs ; (F) correctly applied the equity method of accounting for investments in certain partnerships; (G) correctly identified and valued derivative financial instruments; (H) correctly recorded income taxes; (I) correctly amortized certain mortgage servicing rights; and (J) correctly identified our segments.

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Accounting Corrections

A. Accounting for real estate syndication fees—Syndication fees are required to be recognized ratably as syndication partnerships invest in low income housing properties. During the restatement periods, we inappropriately: (1) eliminated certain syndication fees related to consolidated syndication partnerships and (2) recognized syndication fees as investors subscribed to our funds and when we selected or acquired interests in low income housing properties to be sold to syndication partnerships rather than when the syndication partnerships made investments.

B. Accounting for impairments of investments in real estate partnerships held by guaranteed tax credit equity funds—We presented equity in the impairment losses of low income housing properties owned by our guaranteed tax credit equity funds and related revenues earned by providing related tax losses net instead of reporting these amounts separately.

C. Accounting for consolidated tax credit equity funds—We did not prepare and record certain adjustments during the consolidation process. Certain adjustments were not recorded, were recorded incorrectly or were not properly reversed to ensure consolidated amounts were in accordance with GAAP

D. Accounting for capitalized interest costs associated with investments in real estate partnerships—We did not correctly capitalize interest costs on investments in real estate partnerships developing low income housing properties.

E. Accounting for deferral and recognition of bond and loan origination fees and direct costs—We did not correctly amortize our deferred bond and loan fees using the effective interest method over their contractual terms as required by GAAP. In addition, we did not correctly defer direct costs of originating bonds in accordance with GAAP.

F. Accounting for investments in partnerships using the equity method—We are required to use the equity method to account for investments in unconsolidated partnerships over which we have significant influence.

During the restatement periods, we accounted for certain equity method ventures incorrectly because we did not properly:

• account for differences between our cost of an investment and our share of the underlying equity of the investee;

• calculate our share of the investee’s losses using our economic share of the entity; and

• record our share of losses after our share of cumulative losses exceeded our original investment even though we had guaranteed certain obligations of the investee.

G. Identification and valuation of derivative financial instruments—We did not identify and value certain derivative financial instruments appropriately.

H. Accounting for income taxes—We did not correctly identify certain temporary differences or segregate earnings between taxable corporate entities and nontaxable partnerships resulting in incorrectly recording our tax provision in accordance with GAAP.

I. Accounting for mortgage servicing rights—We incorrectly recorded certain amortization expense related to our capitalized mortgage servicing rights.

J. Disclosure about our segments—We did not identify our segments or report their performance for external reporting purposes the same way we did for reporting to our chief operating decision maker. As a result, we changed our segments from three to four, which now include the debt segment, tax credit equity segment, structured finance segment and fund management segment.

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As a result, we have restated our financial statements for the years ended December 31, 2004 and 2003, for the first three quarters in 2005 and for each quarter in 2004. The effects of these restatements for the years ended December 31, 2004 and 2003 are as follows:

	For the years ended December 31,
	2004						2003
	As reported			Restated			As reported			Restated
CONSOLIDATED INCOME STATEMENT DATA:
Interest on bonds and interests in bond securitizations (E)	$	85,505		$	84,107		$	71,636		$	69,942
Interest on loans (G)		43,874			45,579			37,211			37,621
Interest on short-term investments (D)		5,020			3,882			2,158			1,138
Syndication fees (A)		25,535			41,009			26,856			16,350
Guarantee fees (A) and (B)		7,852			10,610			3,614			3,614
Other income (A), (E) and (F)		7,415			2,881			8,855			6,771
Interest expense (D)		69,884			66,334			44,528			43,507
Salaries and benefits (E)		69,540			67,812			41,736			40,900
Depreciation and amortization (I)		14,159			12,613			7,492			7,724
Net gain (loss) on derivatives (G)		(219	)		941			(1,919	)		(871	)
Income tax (expense) benefit (H)		(2,737	)		6,508			138			8,515
Net (income) loss allocable to minority interest		178,280			176,807			(6,032	)		(6,032	)
Net losses from equity investments in partnerships (A), (B), (C) and (F)		(169,404	)		(178,195	)		(3,173	)		(10,965	)
Income before cumulative effect of a change in accounting principle		26,517			46,816			73,723			61,837
Net income		27,037			47,336			72,495			60,609
Earnings per share:
Basic	$	0.78		$	1.37		$	2.47		$	2.06
Diluted		0.78			1.36			2.44			2.04
CONSOLIDATED STATEMENT OF CASH FLOW DATA:
Net cash provided by operating activities	$	54,141		$	94,336		$	45,719		$	39,969
Net cash used in investing activities		(656,892	)		(686,555	)		(347,880	)		(347,910	)
Net cash provided by financing activities		644,806			634,274			309,242			315,022
CONSOLIDATED BALANCE SHEET DATA:
Loans receivable, net (E)	$	630,939		$	622,190
Investments in partnerships (A), (C), (D), (F) and (G)		827,273			812,257
Other assets (A), (D) and (H)		66,040			70,835
Mortgage servicing rights, net (I)		11,349			11,349
Total assets		3,310,330			3,300,596
Tax credit equity guarantee liability (A)		186,778			184,999
Investment in derivative financial instruments (G)		4,923			6,171
Unearned revenue and other liabilities (E), (G) and (H)		74,176			71,145
Total liabilities		2,161,778			2,154,271
Minority interest in subsidiary companies (A)		404,586			398,454
Accumulated other comprehensive income (loss) (E)		(1,532	)		490
Shareholders’ equity		672,935			676,840

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The shareholders’ equity amount above includes an adjustment decreasing the beginning balance at January 1, 2003 of approximately $5.4 million, net of taxes related to the effects of these accounting corrections in 2001 and 2002.

Certain amounts from prior periods have been reclassified to conform to the current year presentation. No other types of adjustments to our consolidated financial statements were made in association with the above-mentioned restatement.

NOTE 3—OUR SIGNIFICANT ACCOUNTING POLICIES

Tax-exempt bonds, taxable bonds and interests in bond securitizations

We account for investments in bonds as available-for-sale debt securities under the provisions of Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“FAS 115”). Accordingly, investments in bonds are carried at their estimated fair values and unrealized gains or losses arising during the period are recorded as a component of other comprehensive income. Realized gains and losses and other-than-temporary impairments are included in net income. The basis on which the cost of bonds sold or amounts reclassified out of accumulated other comprehensive income is determined using the specific identification method. We determined the fair value of bonds that participate in the net cash flow and net capital appreciation of the underlying properties and/or that are wholly collateral dependent and for which only a limited market exists by discounting the underlying collateral’s expected future cash flows using current estimates of discount rates and capitalization rates. The fair values of all other bonds and interests in bond securitizations are based on quotes from brokers or other external sources.

Most of our interests in bond securitizations represented interests in variable interest entities (“VIEs”) under Financial Accounting Standards Board’s Financial Interpretations No. 46 (Revised), “Consolidation of Variable Interest Entities” (“FIN 46”). When we have determined that we are the primary beneficiary of the VIE and therefore, are required to consolidate our investments and senior interests, we have made entries to: (1) reclassify our interests in bond securitizations to investment in tax-exempt bonds, (2) reflect the senior interests in the bond securitization trusts in investment in tax-exempt bonds so that the total investment in tax-exempt bonds reported equals the total assets in the securitization trusts, (3) reclassify costs of the securitization transactions to debt issue costs, which are included in other assets and (4) record the senior interests in the securitization trusts as short-term debt. In 2003, we recorded a $1.2 million cumulative effect of a change in accounting principle related to the adoption of FIN 46 as a result of the reversal of gain on sales reported in prior periods on these investments.

We recognize base interest on the bonds as revenue as it accrues. Interest income in excess of the base interest (“Participation Interest”) may be available to us through participation features of a bond. Participation Interest is recognized as income when received. Delinquent bonds are placed on non-accrual status for financial reporting purposes when collection of interest is in doubt, which is generally after 90 days of non-payment. We apply interest payments on non-accrual bonds first to previously recorded accrued interest and, once previously accrued interest is satisfied, as interest income when received. The accrual of interest income is reinstated once a bond’s ability to perform is adequately demonstrated and all interest has been paid.

Premiums and discounts are deferred and amortized into interest income using an effective yield over the terms of the related investments. Upon the sale or prepayment of investments in bonds, the unamortized balance of premiums and discounts is recorded as income.

Loans receivable

Our loans receivable consist primarily of construction, supplemental and permanent loans. We account for these investments in accordance with Statement of Financial Accounting Standards No. 114, “Accounting by Creditors for Impairment of a Loan—an Amendment of FASB Statements No. 5 and 15, and Statement of Financial Accounting Standards No. 118, “Accounting by Creditors for Impairment of a Loan—Income Recognition and Disclosures—An Amendment of FASB Statement No. 114,” (collectively “FAS 114”).

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Accordingly, these loans are carried at their net realizable value. When we believe it is probable that we will not collect all amounts due under the terms of the loan, we record a valuation allowance.

We recognize base interest as it accrues. Delinquent loans are placed on non-accrual status for financial reporting purposes when collection of interest is in doubt, which is generally after 90 days of non-payment. We apply interest payments on non-accrual loans first to previously-recorded accrued interest and, once previously accrued interest is satisfied, as interest income when received. The accrual of interest income is reinstated once a loan’s ability to perform is adequately demonstrated and all interest has been paid.

Loans held for sale are generally associated with our GSE business and are typically held for less than three months. These loans are carried at the lower of cost or market. Construction loans usually convert to loans held for sale upon completion of construction.

Below is the reconciliation of the 2004 to 2005 change in loans receivable held for sale balance to the amount presented in our consolidated statement of cash flows:

Increase per our consolidated balance sheets	$	(84,141	)
Increase due to acquisition of Glaser Financial Group, Inc.		46,747
Net gain on sale of loans		3,777
Increase in loans held for sale per our 2005 consolidated statement of cash flows	$	(33,617	)

Other-than-temporary impairments and valuation allowances on investments

We account for other-than-temporary impairments on investment securities in accordance with the provisions of FAS 115 and Accounting Principles Board Opinion (“APB”) No. 18, “The Equity Method of Accounting for Investments in Common Stock.” We evaluate the credit risk exposure associated with our assets to determine whether other-than-temporary impairments exist or a valuation allowance is needed. Where applicable, we consider the credit risk exposure of the investment, our ability and intent to hold the investment for a period of time to allow for anticipated recoveries in market value, the length of time and extent to which the market value has been less than carrying value, the financial condition of the underlying collateral (including the payment status of the investment and general economic and other more specific conditions applicable to the investment), other collateral available to support the investment and whether we expect to recover all amounts due under our mortgage obligations on a net present value basis. Third party quotes of securities with similar characteristics or discounted cash flow valuations are used to assist in determining fair value. If the fair value of the investment is less than its amortized cost, and after assessing the above-mentioned factors, it is determined that an other-than-temporary impairment exists, the impairment is recorded in net income and the cost basis of the security is adjusted accordingly. The new cost basis of the investment is not adjusted for subsequent recoveries in fair value.

When evaluating impairment on loans, we consider our overall loss experience, loan-to-value ratios, delinquency data, economic market conditions, debt service coverage, indemnification agreements, and other factors that warrant recognition in reviewing the loans for impairment. We measure impairment of a loan in accordance with the provisions of FAS 114, which requires a creditor to base its measure of loan impairment on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. We provide an allowance for loan losses based upon our specific evaluation of individual loans in the portfolio. We also evaluate other receivables and advances for collectibility. When we believe it is probable that we will not collect all amounts due, the balance is written down to its realizable value.

Securitization transactions and mortgage servicing rights

We account for our securitization transactions as either sales or financing transactions in accordance with FAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”

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(“FAS 140”) and FIN 46. If the transfer of the underlying bond or loan is considered to result in the surrender of control pursuant to FAS 140, then a sale has occurred and a gain or loss is recognized. If the transfer is not considered a sale under FAS 140, the transaction is considered a secured borrowing and is reflected as either short- or long-term debt, as appropriate, based on the terms of the securitization trust. Most of our bond securitizations are treated as secured borrowings or the related securitization trust is consolidated under FIN 46.

When we sell a loan to a third party and retain the right to service the loan, we allocate the carrying amount of the loan between the mortgage servicing right and the loan based on their relative fair values. We record gains on sale of the loan based on net sale proceeds less the allocated fair value of the loan amount. The carrying amount of the retained mortgage servicing right is amortized in proportion to and over the estimated term of the serviced loan. Mortgage servicing fees are recognized as income when received. Mortgage servicing rights are evaluated for impairment based on comparing their fair values to their carrying amounts, and if we determine that an impairment exists, we reduce the carrying amount through a valuation allowance.

Advisory fees

We earn advisory fees from serving as investment manager to the Midland Affordable Housing Group Trust (“Group Trust”), the Midland Multifamily Equity REIT (“MMER”) and real estate investment funds. Advisory fees are recognized in income during the period in which we perform the services.

Bond and loan origination fees and direct costs

In accordance with FAS No. 91, “Accounting for Nonrefundable Fees and Costs associated with Originating or Acquiring Loans and Initial Direct Costs of Leases,” we amortize our deferred bond and loan fees and our deferred direct origination costs using the effective interest method over their contractual terms.

Origination and brokerage fees

We earn origination fees on bonds and loans we originate for others, which we recognize at the time of origination. We earn brokerage fees through our relationships with the Group Trust, Fannie Mae, Freddie Mac and GNMA. These entities provide permanent loan commitments to borrowers through arrangements made by us. We recognize these fees when earned, which is typically at the time the permanent loan commitment is made.

Syndication and guarantee fees

We acquire and transfer interests in affordable housing projects expected to generate a stream of low-income housing tax credits (“Project Partnerships”) to syndication partnerships. The syndication partnerships receive and distribute the low-income housing tax credits to its investors.

Syndication fees are deferred until the partnership interests are sold and are recognized ratably as the tax credit equity fund invests in the property interests. We estimate that exposure to future costs or losses arising from our involvement with the tax credit equity funds is zero. We do not transfer options or contracts to buy properties in our tax credit syndication business.

With respect to certain tax credit equity funds, we also provide, for a fee, performance guarantees on the underlying Project Partnerships or guarantees to the fund investors. Guarantee fees are classified as liabilities when received and are recognized as revenue ratably over the life of the guarantee.

We do not receive ownership interests in lieu of syndication or guarantee fees and all fees represent normal market rates.

Asset management fees

We earn asset management fees for managing the assets of the tax credit equity funds, including monitoring the compliance of the properties with tax credit regulations. The amount of asset management fees we earn is

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outlined in the fund documents and is based on a percentage of each tax credit equity fund’s invested capital or number of Project Partnerships. The asset management fees are paid from available cash from the tax credit equity funds. We record asset management fees as income when the amount that we will receive is determinable and collection is reasonably assured. These fees are typically paid to us annually in arrears.

Lease accounting for guaranteed tax credit equity funds

When we provide a guarantee in connection with the syndication of a tax credit equity fund, we have continuing involvement with the assets of that fund and are deemed to have effective control over the assets in the fund. Therefore, we account for our involvement in these funds under the lease method. Under the lease method, no profit is recognized from the sale of interests in Project Partnerships to tax credit equity funds. The sales value of our interest in the Project Partnership is equal to our original cost basis of the investment. There are no fees charged by us to the Project Partnership as part of the syndication transaction. We report certain assets and liabilities of the tax credit equity funds, consisting primarily of restricted cash and investments in Project Partnerships (see Note 7), in our consolidated balance sheet. In addition, the investor capital contributions to the tax credit equity funds are reported as a tax credit equity guarantee liability on our consolidated balance sheet (see Note 14). The net income (loss) from the tax credit equity funds is reported in the appropriate line items of our consolidated statements of income.

Our guarantee liability may expire based on the achievement of certain targets by the underlying Project Partnership in the tax credit equity fund or may be outstanding for the life of the tax credit equity fund. When our liability is relieved by the achievement of certain targets, the tax credit guarantee liability is relieved and the related underlying investment in the Project Partnership is removed. Any difference between the carrying value of the de-recognized investment in the Project Partnership and the guarantee liability is reflected in net gain (loss) on sale of investments in tax credit equity partnerships in our consolidated statement of income. For a tax credit equity fund in which our guarantee obligation remains outstanding for the life of the fund, the guarantee liability is amortized straight line over the life of the fund, which is estimated to be 15 years, and the related amortization is reported in guarantee fees in our consolidated statements of income.

Derivatives

Investments in derivative financial instruments are accounted for under the provisions of FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” FAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” and FAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (collectively, “FAS 133”). We recognize all derivatives as either assets or liabilities in the consolidated balance sheets and record these instruments at their fair values. We have not designated our derivative investments as hedges. As a result, changes in the fair value of derivatives are recorded through current earnings in net gain (loss) on derivatives.

We determine the fair value of our investments in interest rate swap agreements, total return swaps and forward loan commitments based on quotes from external sources. We recognize the differential paid or received under interest rate swap and total return swap agreements through net gain (loss) on derivatives.

We determine the fair value of certain of our put option agreements by discounting the underlying collateral’s expected future cash flows using current estimates of discount rates and capitalization rates. We determine the fair value of our other put option agreements based on quotes from external sources, such as brokers, for these or similar investments. Income received on these put options is included in net gain (loss) on derivatives in the consolidated statements of income.

Investments in partnerships

Our investments in partnerships consist of equity interests in real estate operating partnerships and income-producing real estate funds. Investments in partnerships are accounted for using the equity method of accounting.

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We use the equity method when we own an interest in a partnership and can exert significant influence over the partnership’s operations but cannot control the partnership’s operations. Under the equity method, our ownership interest in the partnership’s capital is reported as an investment in our consolidated balance sheets and our allocable share of the income or loss from the partnership is reported as income (loss) from equity investments in partnerships in the consolidated statements of income.

In those instances where we act as the general partner of the tax credit equity funds, we receive a pro rata share of cash distributions that may be distributed to the tax credit equity funds’ partners pursuant to a sale of the Project Partnerships or their assets. Our general partner interests in tax credit equity funds range from 0.1% to 1.0%. Other than our fee income, our pro rata share of income and losses from our general partnership interests constitute the primary sources of income or gain and losses from the tax credit equity funds. For partnerships in which we are a general partner (for example, interests we originate in the tax credit equity syndication funds) we recognize losses to the extent of our partnership liability, regardless of our basis in the partnership interest.

Cash and cash equivalents

Cash and cash equivalents consist principally of investments in money market mutual funds and short-term marketable securities with original maturities of 90 days or less when purchased, all of which are readily convertible to known amounts of cash in seven days or less. Cash equivalents are carried at cost, which approximates fair value.

Property and equipment and real estate projects

Real estate projects include the fixed assets associated with our consolidated Project Partnerships where we typically hold a less than one percent general partner interest. All other property and equipment is associated with our core business. All fixed assets are carried at cost. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or economic life of the underlying assets. Depreciation is provided on either the declining balance or straight line methods over the estimated useful lives of the assets. The following table summarizes land, building and equipment by type as of December 31, 2005 and 2004.

	As of December 31,						Useful Life (years)
	2005			2004
Property and equipment
Furniture and fixtures	$	2,762		$	1,872		5-20
Equipment		444			267		10
Computer software		2,669			1,806		5
Computer hardware		1,777			1,460		5
Leasehold improvements		5,713			3,102		(1	)
		13,365			8,507
Accumulated depreciation		(3,869	)		(3,203	)
Total	$	9,496		$	5,304
Real estate projects
Land	$	15,590		$	26,495		N/A
Building		172,172			207,983		27.50-40
Furniture and fixtures		12,921			6,576		5-20
		200,683			241,054
Accumulated depreciation		(52,668	)		(63,585	)
Total	$	148,015		$	177,469

(1) Varies based on estimated lease term.

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Depreciation expense was $9.1 million, $7.6 million and $1.0 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Long-lived assets

If events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, a recoverability analysis is performed based on estimated undiscounted cash flows expected to be generated by the long-lived asset. If the analysis indicated the carrying amount is not recoverable from future cash flows, the asset is written down to its estimated fair value and an impairment loss is recognized. During 2004, it was determined that long-lived assets of certain Project Partnerships reported in our tax credit segment were impaired. As a result, we recorded an impairment of $1.5 million for the year ended December 31, 2004. There were no such impairment losses during the years ended December 31, 2005 and 2003.

Stock-based compensation

We apply the intrinsic value-based method of accounting prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations to account for stock-based compensation plans. Under this method, compensation cost is recognized for awards of shares of common stock or stock options to our directors and employees only if the quoted market price of the stock at the grant date is greater than the amount the grantee must pay to acquire the stock. The pro forma effects on net earnings and earnings per share of common stock in 2005, 2004 and 2003 of using an optional fair value-based method rather than the intrinsic value-based method of accounting for stock-based compensation awards made since 1995 are insignificant.

Earnings per share of common stock

Basic earnings per share (“EPS”) is computed by dividing net earnings applicable to common shareholders by the weighed-average number of common shares outstanding. Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all dilutive potential common shares during the period. The dilutive effects of liabilities to be settled in common shares are computed using the “if-converted” method and the dilutive effects of options, warrants and their equivalents (including fixed awards and deferred stock issuable under stock-based compensation plans) are computed using the “treasury stock” method.

Net rental income

Net rental income in the accompanying consolidated financial statements relates to the operations of the consolidated Project Partnerships. Net rental income is recognized as earned and is recorded when due from residents, generally upon the first day of the month. Leases are for periods of up to one year, with rental payments due monthly. Net rental income for the years ended December 31, 2005 and 2004 was approximately $22.3 million and $16.4 million, including concessions and bad debt of approximately $0.9 million and $0.1 million, respectively. We had no net rental income in 2003.

Income taxes

We are organized as a limited liability company, which allows us to combine many of the limited liability, governance and management characteristics of a corporation with the pass-through income features of a partnership. We do, however, have numerous corporate subsidiaries (“taxable subsidiaries”) that are subject to income taxes. Income taxes for taxable subsidiaries are accounted for using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of taxable subsidiaries and their respective tax bases and for their operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, tax planning strategies and other factors.

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New accounting pronouncements

In December 2004, the FASB issued FAS No. 123R, “Share-Based Payment,” a revision of FAS No. 123, “Accounting for Stock-Based Compensation” and superseding APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“FAS 123R”). FAS 123R requires us to expense grants made under the share option and employee share purchase plan programs in our consolidated statements of income. The cost will be recognized over the vesting period of the applicable share option or other share-based payment. In April 2005, the SEC approved a new rule for public companies that delays the effective date of FAS 123R to no later than January 1, 2006. The application of this standard had no material effect related to unvested common share options outstanding at December 31, 2005 on our reported financial condition or results of operations. The effects of future awards of common share options may be material.

In June 2005, the FASB ratified the consensus in Emerging Issues Task Force (“EITF”) Issue No. 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” (“Issue 04-5”), which provides guidance in determining whether a general partner controls a limited partnership. To promote consistency in applying this guidance to corporate entities and those entities that hold real estate:

• the EITF amended Issue No. 96-16, “Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Interest Shareholder or Shareholders Have Certain Approval or Veto Rights” (“Issue 96-16”), and

• the FASB staff issued FASB Staff Position (“FSP”) No. 78-9-1 (“FSP 78-9-1”), which amends the American Institute of Public Accountants (“AICPA”) Statement of Position 78-9, “Accounting for Investments in Real Estate Ventures,” to reflect the consensus reached in Issue 04-5.

The effective date for applying the guidance in Issue 04-5 and FSP 78-9-1 (1) was June 29, 2005, for all new limited partnerships and existing limited partnerships for which the partnership agreements are modified and (2) is no later than the beginning of the first reporting period in fiscal years beginning after December 15, 2005, for all other limited partnerships. The application of Issue 04-5 has had no effect on our financial statements.

In November 2005, the FASB introduced FSP 115-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” (“FSP 115-1”). The guidance in FSP 115-1 amends FAS 115 and APB 18 and shall be applied to reporting periods beginning after December 15, 2005. FSP 115-1 addresses:

• the determination as to when an investment is considered impaired and whether that impairment is other-than-temporary and the measurement of an impairment loss,

• the accounting considerations subsequent to the recognition of an other-than-temporary impairment, and

• certain required disclosures about unrealized losses that have not been recognized as other-than-temporary impairments.

The implementation of FSP 115-1 had no material effect on our reported financial condition or results of operations.

In March 2006, the FASB issued FAS 156, “Accounting for Servicing of Financial Assets, an amendment to FAS 140,” which permits an entity to account for one or more classes of servicing rights at fair value, with changes in fair value recorded in income. This statement is effective as of January 1, 2007. We are currently evaluating the effect of this statement.

In February 2006, the FASB issued FAS No. 155, “Accounting for Certain Hybrid Instruments”, which permits fair value accounting for any hybrid financial instrument that contains an embedded derivative that would otherwise require bifurcation in accordance with FAS 133. The statement also subjects beneficial interests issued by securitization vehicles to the requirements of FAS 133. The statement is effective as of January 1, 2007. We are currently evaluating the effect of the statement.

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NOTE 4—ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS

Acquisition of Glaser Financial Group

On July 1, 2005, we acquired all of the outstanding capital stock of Glaser Financial Group, Inc. (“Glaser”). Glaser is a full service commercial mortgage banker that arranges financing primarily through Fannie Mae, Freddie Mac and HUD/FHA for multifamily, senior housing and commercial real estate predominately in the upper Midwest. The purchase price is comprised of:

• cash of $50.8 million;

• three deferred payments of at least $4.0 million (the “Deferred Purchase Price”) on each of the first three anniversaries of the closing date (with an estimated fair value of $10.2 million);

• contingent consideration of approximately $5.0 million provided certain operating performance thresholds are achieved; and

• transaction costs of $0.6 million.

The Deferred Purchase Price and the contingent considerations are payable in common stock at our option.

The purchase price was allocated to the tangible assets and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over those fair values of approximately $24.0 million was recorded as goodwill. The factors considered in allocating the purchase price, including goodwill, included our valuation, based on Glaser’s historical and projected cash flows as well as its business prospects and strategic value. The purchase price is subject to adjustments related primarily to the contingent consideration.

The purchase price was allocated as follows:

Assets
Loans receivable held for sale	$	40,596
Cash and cash equivalents		9,271
Other assets		7,497
Mortgage servicing rights, net		53,968
Goodwill		23,989
Other intangible assets		5,066
Total assets	$	140,387
Liabilities
Short-term debt	$	53,267
Accounts payable, accrued expenses and interest payable		992
Unearned revenue and other liabilities, including deferred purchase price		34,775
Total liabilities	$	89,034
Net cash paid	$	51,353

Of the acquired other intangible assets, $4.0 million was allocated to a license agreement with an indefinite life, $1.0 million was allocated to deferred costs of loans in the process of origination, and $50,000 was allocated to non-compete agreements. The license is classified as an indefinite-lived asset and will not be subject to amortization. Deferred costs of loan originations in process at the acquisition date reduced net gains on the subsequent sales of those loans, substantially all of which occurred in 2005.

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The consolidated statement of operations for the year ended December 31, 2005 includes the results of Glaser’s operations from the date of acquisition. We prepared pro forma consolidated results of operations for 2005 and 2004, assuming the acquisition of Glaser occurred at January 1, 2005 and 2004. The unaudited pro forma results are summarized as follows:

	Twelve months ended
	December 31, 2005		December 31, 2004
Total income	$	300,052	$	246,921
Income from continuing operations	$	76,411	$	37,410
Net income	$	85,892	$	49,010
Income from continuing operations per common share
Basic	$	2.02	$	1.08
Diluted	$	2.00	$	1.08
Net income per common share
Basic	$	2.27	$	1.42
Diluted	$	2.25	$	1.41

The pro forma income, income from continuing operations and net income summarized above are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the assumed date or of future results of operations.

Acquisition of MONY Realty Capital, Inc.

On February 18, 2005, we acquired MONY Realty Capital, Inc. (“MRC”) from AXA Financial, Inc. (“AXA”) for a total purchase cost of $10.9 million comprised of cash paid to AXA of $8.5 million, transaction costs of approximately $1.4 million and liabilities assumed of approximately $1.0 million. MRC provides loan origination, asset management and investment advisory services primarily to institutional investors. We have accounted for this acquisition as a purchase and have allocated the purchase cost to tangible and identified intangible assets based on their fair values. The excess purchase cost over the fair values of these assets has been recorded as goodwill. We allocated approximately $3.4 million to tangible assets (primarily investments in partnerships and receivables), $5.0 million to identifiable intangibles (primarily management and investor advisory contracts and customer relationships) and approximately $2.7 million to goodwill.

Additionally, as part of the purchase agreement, we committed to invest $25.0 million in a real estate partnership in which MRC is a general partner. As of December 31, 2005, we had funded $12.4 million of this commitment and are required to fund the remaining $12.6 million on or prior to February 18, 2008.

Acquisition of HCI

On July 1, 2003, we acquired HCI for $102.0 million in cash. HCI is a syndicator of low-income housing tax credit equity investments. The acquisition and related working capital needs were financed by a $120.0 million secured term credit facility. HCI is owned by MMA Financial TC Corp. (“TC Corp”), a wholly-owned subsidiary of MuniMae.

Goodwill

Goodwill represents the excess of cost over market value of the net assets acquired from the acquisition of businesses. We test goodwill for impairment in the second quarter of each year or when events occur or circumstances change indicating that the value of goodwill might be impaired. In 2005, 2004, and 2003, we found no instances of impairment.

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The following table shows the activity in goodwill for the years ended December 31, 2005 and 2004 by segment.

	Debt		Tax credit equity			Structured finance		Fund management		Total
January 1, 2004	$	34,589	$	71,036		$	1,880	$	–	$	107,505
Goodwill acquired during the period		–		–			–		–		–
Adjustment to previously recorded purchase price		–		(896	)		–		–		(896	)
December 31, 2004		34,589		70,140			1,880		–		106,609
Goodwill acquired during the period		23,989		–			–		2,701		26,690
December 31, 2005	$	58,578	$	70,140		$	1,880	$	2,701	$	133,299

Other intangible assets

The components of other intangible assets are as follows:

	Estimated Useful Life (in Years)	Acquisition Value				Accumulated Amortization						Net Carrying Amount
		2005		2004		2005			2004			2005		2004
Amortized intangible assets:
Asset management contracts	3.5-14.5	$	34,248	$	32,003	$	(14,123	)	$	(9,560	)	$	20,125	$	22,443
Customer relationships	6.9		2,195		–		(293	)		–			1,902		–
Loan origination costs	1		1,234		–		(1,095	)		–			139		–
Other intangibles	2.3-3.9		200		–		(77	)		–			123		–
Weighted average/subtotal	7.3		37,877		32,003		(15,588	)		(9,560	)		22,289		22,443
Unamortized intangible assets:
License agreement	N/A		4,000		–		–			–			4,000		–
Total intangible assets		$	41,877	$	32,003	$	(15,588	)	$	(9,560	)	$	26,289	$	22,443

The total amortization expense recorded for intangible assets for the years ended December 31, 2005, 2004, and 2003 was $6.0 million, $4.7 million, and $4.8 million, respectively. The estimated amortization expense for intangible assets for the next five years is as follows:

2006	$	4,570
2007		3,886
2008		3,435
2009		2,744
2010		2,450

NOTE 5—TAX-EXEMPT BONDS, TAXABLE BONDS AND INTERESTS IN BOND SECURITIZATIONS

General terms of tax-exempt bonds, taxable bonds and interests in bond securitizations

We originate investments in tax-exempt bonds and taxable bonds both for our own account and for others. Tax-exempt and taxable bonds are issued by state and local government authorities to finance multi-family housing developments or other types of real estate including student housing, assisted living developments and community development districts. Our rights under the bonds are defined by the contractual terms of the underlying mortgage loans, which are pledged to the bond issuer and assigned to a trustee for the benefit of bondholders to secure the payment of principal and interest under the bonds. The mortgage loans may be first mortgages or subordinate mortgages on affordable or market rate multi-family housing developments and are

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generally non-recourse, except upon the occurrence of certain events. The mortgage loans bear interest at rates determined by arm’s-length negotiations that reflect market conditions existing at the time the bonds were originated. The purchase price for bonds acquired is negotiated to ensure a yield that reflects market conditions existing at the time of acquisition.

Non-participating bonds, which account for the great majority of our tax-exempt bonds, provide for payment of a fixed or variable rate of interest. Participating bonds have features that allow us to receive additional interest through certain increases in available cash flow from the property in addition to the base interest. The terms of the additional interest to be received on a bond are specific to that bond. Certain participating and non-participating bonds are subordinate bonds, as the payment of interest and principal on the bonds occurs only after payment of principal and interest on a bond that has priority to the cash flow of the underlying collateral.

Principal payments on the bonds, if any, are received in accordance with amortization tables set forth in the bond documents. If no principal amortization is required during the bond term, the outstanding principal balance is required to be paid or refinanced in a lump sum payment at the end of the holding period or at such earlier time as we may require. The mortgage loans are non-assumable except with our consent. The bonds typically contain provisions that prohibit prepayment of the bond for a specified period of time.

We also invest in interests in bonds held in securitization trusts. The bonds underlying the securitization trusts have the same characteristics as the bonds discussed above.

As of December 31, 2005 and 2004, our tax-exempt bonds, taxable bonds and interests in bond securitizations consisted of the following:

	December 31, 2005
	Face Amount		Amortized Cost		Unrealized Gain		Unrealized Losses			Fair Value
Non-participating tax-exempt bonds	$	1,255,742	$	1,232,720	$	29,276	$	(44,995	)	$	1,217,001
Participating tax-exempt bonds		128,209		126,834		5,304		(12,942	)		119,196
Subordinate non-participating tax-exempt bonds		6,546		6,366		283		(1,031	)		5,618
Subordinate participating tax-exempt bonds		60,530		35,800		24,664		(239	)		60,225
Interests in bond securitization trusts		3,817		3,813		–		(879	)		2,934
Taxable bonds		31,735		31,329		245		(13	)		31,561
Total	$	1,486,579	$	1,436,862	$	59,772	$	(60,099	)	$	1,436,535
	December 31, 2004 (Restated)
	Face Amount		Amortized Cost		Unrealized Gain		Unrealized Losses			Fair Value
Non-participating tax-exempt bonds	$	1,127,291	$	1,101,053	$	32,901	$	(44,720	)	$	1,089,234
Participating tax-exempt bonds		128,484		127,103		5,909		(10,567	)		122,445
Subordinate non-participating tax-exempt bonds		6,562		6,384		211		(964	)		5,631
Subordinate participating tax-exempt bonds		60,530		35,799		20,310		(1,334	)		54,775
Interests in bond securitization trusts		4,698		4,693		37		(1,067	)		3,663
Taxable bonds		9,489		9,241		–		(36	)		9,205
Total	$	1,337,054	$	1,284,273	$	59,368	$	(58,688	)	$	1,284,953

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Certain of our investments in tax-exempt bonds, taxable bonds and interests in bond securitizations do not amortize and are therefore categorized as bonds with a single maturity date. The maturity dates of these investments at December 31, 2005 are as follows:

	Face Amount		Fair Value
Due in less than one year	$	350	$	95
Due between one and five years		26,879		27,970
Due between five and ten years		10,535		11,091
Due after ten years		113,262		107,599
	$	151,026	$	146,755

At December 31, 2005, we had 173 tax-exempt bonds, taxable bonds and interests in bond securitizations with an aggregate face amount of $1.34 billion that pay principal at regular intervals over the life of the investments. These investments have final maturity dates ranging from June 2007 to November 2049.

Some of our tax-exempt bonds and taxable bonds include provisions that allow the borrowers to prepay the bonds at a premium or at par after a specified date that is prior to the stated maturity date.

The following table shows the activity for tax-exempt bonds, taxable bonds and interests in bond securitizations for the years ended December 31, 2004 and 2005.

	2005			2004
Balance—January 1,	$	1,284,953		$	1,045,890
Purchases and originations		351,864			378,172
Principal payments		(4,231	)		(11,136	)
Sales/payoff		(201,916	)		(134,662	)
Gains on sale		7,636			12,515
Losses on sale		(305	)		(976	)
Project Partnership consolidation		–			(6,494	)
Other than temporary impairment		(2,868	)		(4,170	)
Change in fair value		(1,065	)		4,698
Amortization		2,467			1,116
Balance—December 31,	$	1,436,535		$	1,284,953

In 2003, five tax-exempt bonds with an aggregate face amount of $31.4 million were repaid, sold or partially redeemed resulting in gross realized gains of $2.8 million and gross realized losses of $0.1 million.

Investments with unrealized losses

The following table shows unrealized losses and fair value aggregated by length of time that the tax-exempt bonds, taxable bonds or interests in bond securitizations have been in a continuous loss position at December 31, 2005 and 2004:

December 31, 2005
Less Than 12 Months		12 Months or More		Total
Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
$211,625	$(3,984)	$264,752	$(56,115)	$476,377	$(60,099)
December 31, 2004
Less Than 12 Months		12 Months or More		Total
Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
$234,840	$(12,618)	$311,869	$(46,070)	$546,709	$(58,688)

F-29

There were 34 and 43 bonds or interests in bond securitizations in a continuous unrealized loss position for more than twelve months at December 31, 2005 and 2004. There were 24 and 28 bonds or interests in bond securitizations in a continuous unrealized loss position for less than twelve months at December 31, 2005 and 2004, respectively. As discussed in Note 3, the fair value of bonds or interests in bond securitizations is determined by external quotes or a discounted cash flow analysis. The value is based on the ability of the bond to receive full payment of principal and interest in a timely manner and the magnitude of those payments relative to income that could be received on similar bonds originated at current market rates. The unrealized losses on the bonds or interests in bond securitizations in the above table were caused primarily by declines in credit quality of the borrowers on specific bonds. All of the bonds are collateralized by operating real estate projects and we expect that they would not be settled at a price less than the amortized cost. We performed reviews of the properties collateralizing each bond and concluded that it was probable that we would receive all amounts due. Because we have the ability and intent to hold these bonds or interests in bond securitizations until a recovery of fair value, which may be at maturity, we do not consider the bonds or interests in bond securitizations to be other-than-temporarily impaired at December 31, 2005.

Included in the table above are nine and twelve tax-exempt bonds as of December 31, 2005 and 2004, respectively, for which we took other-than-temporary impairment charges in the past.

Investments on non-accrual status

The following table summarizes bonds on non-accrual status and the treatment of the related interest income as of and for the years ended December 31, 2005, 2004 and 2003:

Year Ended December 31,	Face Value of Bonds		Interest Income Recognized		Interest Income Not Recognized (1)
2005	$	201,826	$	4,881	$	11,650
2004		108,084		5,207		3,181
2003		102,758		4,968		2,354

(1) This amount represents additional annual interest income that would have been recognized had these bonds been on accrual status.

Securitization programs

We securitize assets in order to enhance the overall return on our investments and to generate proceeds that, along with other sources of capital, facilitate the acquisition of additional investments. Below is a listing of the various programs to facilitate the securitization and credit enhancement of our bond investments:

• the Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) Puttable Floating Option Tax-Exempt Receipts (“P-FLOATs^SM”) program,

• a tender option bond program with the Federal Home Loan Mortgage Corporation (“Freddie Mac”),

• a securitization program using MBIA Insurance Corporation (“MBIA”) credit enhancement,

• a securitization program for community development district (“CDD”) bonds using various financial institutions as credit enhancement providers,

• a long-term fixed-rate securitization program (“Term Securitization Facility”),

• a securitization program using Financial Security Assurance, Inc. (“FSA”) as the credit enhancement provider, and

• a securitization program using Fannie Mae as the credit enhancement provider.

At times we securitize bond investments with counterparties other than those listed above. We securitize assets by depositing one or more bonds into a trust or structuring a transaction whereby a third party deposits one

F-30

or more bonds into a trust. From the trust, one or more certificates are issued on parity or as senior and subordinate certificates. To increase the attractiveness of the senior certificates to investors, a rated capital partner enhances the credit of the senior certificates or of the underlying bonds. We receive cash proceeds from the sale of the certificates and retain the subordinate certificates. The interest rate on the senior certificates may be fixed or variable. If the interest rate is variable, a remarketing agent typically resets the rate on the senior certificates weekly. The residual interests retained by us are subordinate securities and receive the residual interest on the bonds after the payment of all fees and the senior certificate interest.

For certain programs, a counterparty provides liquidity to the senior certificates. In such programs, liquidity advances would be used to provide bridge funding for senior certificates tendered upon a failure to remarket senior certificates or upon the occurrence of mandatory tender events.

The liquidity facilities range in term from one to ten years, and those with one-year terms are renewable annually by the liquidity providers. If the liquidity provider does not renew the liquidity facility, we would be forced to find an alternative liquidity provider, sell the senior interests as fixed-rate securities, repurchase the underlying bonds, or liquidate the underlying bond and our investment in the residual interests. Similarly, if the credit enhancer does not renew the credit enhancement facility, we would be forced to find an alternative credit enhancer, repurchase the underlying bonds, or liquidate the underlying bond and our investment in the residual interests. If we are forced to liquidate our investment in the residual interests and potentially the related interest rate swaps (discussed above), we would recognize gains or losses on the liquidation, which may be significant depending on market conditions. As of December 31, 2005, $431.2 million and $306.7 million of the senior interests in our securitization trusts were subject to annual “rollover” renewal for liquidity and credit enhancement, respectively. As of December 31, 2004, $400.8 million and $186.4 million of the senior interests in our securitization trusts were subject to annual “rollover” renewal for liquidity and credit enhancement, respectively.

Under the FSA securitization program, we refunded bonds into Series A Bonds and Series B Bonds. The Series A Bonds, which are senior to the Series B Bonds, were credit enhanced by FSA and sold to qualified third party investors. The Series A Bonds bear interest at various fixed rates and are subject to mandatory sinking fund redemptions. We retained the Series B Bonds. In February 2005, the Series A Bonds were purchased by Merrill Lynch and securitized in the P-FLOAT program, and we purchased $55,000 (face amount) in residual interests in the P-FLOAT trusts.

We also enter into various forms of interest rate protection in conjunction with these securitization programs through the use of interest rate swap agreements. Refer to footnote 8 for further information.

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As illustrated by the table below, in establishing and managing our securitization programs, we endeavor to maintain a diverse array of capital partners:

December 31, 2005
Sponsor	Nature of Senior Security	Provider of Credit Enhancement	Provider of Liquidity	Fair Value of Bonds (1)		Face Amount of Senior Security Outstanding		Fair Value of Residual Interest			Percentage of Total Senior Securities Outstanding (2)
On Balance Sheet Securitizations:
Merrill Lynch	Short-term, floating rate, weekly reset (3)	Merrill Lynch, FSA or Fannie Mae	Merrill Lynch	$	537,022	$	522,869	$	14,153		60.0	%
Freddie Mac	Fixed	Freddie Mac	Freddie Mac		86,287		63,585		22,702		7.3
MBIA	Short-term, floating rate, weekly reset	MBIA	Bayerisch Landesbank (BLB)		88,292		94,000		(5,708	)	10.8
CDD	Fixed	Compass Bank	N/A		43,604		41,247		2,357		4.7
Other	Weekly reset or fixed	Compass Bank or SunTrust	Compass Bank or SunTrust		35,927		31,372		4,555		3.6
Subtotal					791,132		753,073		38,059		86.4	%
Off Balance Sheet Securitizations:
CDD	Fixed	Compass Bank	N/A		121,545		118,358		3,187		13.6
Total				$	912,677	$	871,431	$	41,246		100.0	%
December 31, 2004
Sponsor	Nature of Senior Security	Provider of Credit Enhancement	Provider of Liquidity	Fair Value of Bonds (1)		Face Amount of Senior Security Outstanding		Fair Value of Residual Interest			Percentage of Total Senior Securities Outstanding (2)
On Balance Sheet Securitizations:
Merrill Lynch	Short-term, floating rate, weekly reset (3)	Merrill Lynch or Fannie Mae	Merrill Lynch	$	269,535	$	262,512	$	7,023		38.0	%
Freddie Mac	Fixed	Freddie Mac	Freddie Mac		87,333		63,835		23,498		9.3
MBIA	Short-term, floating rate, weekly reset	MBIA	Bayerische Landesbank (BLB) and Landesbank Baden-Wurttenberg (LBBW)		134,486		138,315		(3,829	)	20.1
Term	Fixed	MMA Credit Enhancement I, LLC through the pledge of additional bonds	N/A		36,009		43,170		(7,161	)	6.3
CDD	Fixed	Compass Bank	N/A		43,807		41,616		2,191		6.0
Other	Weekly reset or fixed	Compass Bank	Compass Bank		12,823		12,330		493		1.8
Subtotal					583,993		561,778		22,215		81.5	%
Off Balance Sheet Securitizations:
FSA Bonds	Fixed	FSA	N/A		121,675		66,900		54,775		9.7
CDD	Fixed	Compass Bank	N/A		64,668		61,005		3,663		8.8
Subtotal					186,343		127,905		58,438		18.5	%
Total				$	770,336	$	689,683	$	80,653		100.0	%

(1) This amount represents the fair value of bonds held in securitization trusts and is not indicative of the fair value of all our bonds included in our consolidated balance sheets.

(2) This percentage is calculated by dividing the face amount of the senior security outstanding from each securitization program by the total face amount of all senior securities outstanding.

(3) At December 31, 2005, $80.7 million of senior securities had a fixed rate for a term of three months to three years and at December 31, 2004, $15.0 million of senior securities had a fixed rate for a term of one to three years.

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NOTE 6—LOANS RECEIVABLE

Our loans receivable primarily consist of construction loans and supplemental loans as well as other taxable loans. The following table summarizes loans receivable by loan type at December 31, 2005 and 2004.

	December 31, 2005			December 31, 2004
Loan type:
Construction loans	$	518,899		$	502,443
Taxable supplemental loans		72,931			63,611
Other taxable loans		123,922			51,793
		715,752			617,847
Allowance for loan losses		(3,120	)		(2,712	)
Total	$	712,632		$	615,135

Loans receivable held for sale primarily consist of taxable permanent loans and are not included in the table above. As of December 31, 2005 and 2004, loans receivable held for sale were $91.2 million and $7.1 million, respectively.

Supplemental loans and other taxable loans

Supplemental loans include pre-development, bridge and other loans. Pre-development loans are project-specific short-term loans for qualifying, early stage pre-development expenditures and are structured to be repaid by the first installments of equity or construction financing. Bridge and other loans have expenditure purposes and sources of repayment that may or may not be limited to a single project. Bridge and other loans are repaid with general operating cash flow of the development or other capital sources of the borrower, including cash flows from other investments.

Collateral for the supplemental loans can take many forms, including a mortgage against land or other real estate, assignment of syndication proceeds, assignment and pledge of developer fees, assignment and pledge of cash flows from properties as well as corporate and personal guarantees.

Other taxable loans primarily consist of mezzanine financing and certain taxable loans made in conjunction with our tax-exempt bond investments.

Loan programs

We conduct financing activities through certain subsidiaries that originate loans on behalf of or in conjunction with the following entities and their respective programs:

• Fannie Mae—Delegated Underwriting and Servicing (“DUS”) program

• Government National Mortgage Association (“GNMA”)—GNMA Mortgage Backed Security program

• Federal Housing Administration (“FHA”)

• US Department of Housing and Urban Development (“HUD”)—HUD’s Multifamily Accelerated Processing program

• Federal Home Loan Mortgage Corporation (“Freddie Mac”)—Targeted Affordable Housing and Program Plus programs

These entities’ programs provide us with an important source of liquidity. Typically, the loans originated in conjunction with these programs are underwritten and structured in accordance with the terms of these programs.

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In addition, our subsidiaries must meet certain financial requirements including maintaining a minimum net worth, liquidity and insurance coverage as well as holding collateral with a custodian. At December 31, 2005, we were in compliance with all such requirements. Certain programs require us to bear a portion of losses incurred on underlying loans through risk-sharing agreements. Under the risk-sharing agreements, we are responsible for losses on individual loans at varying percentages, in no case greater than 40% of the original unpaid principal balance of the loan or loans covered by the agreement (see guarantee table in Note 9). In addition, at times we retain the servicing rights attached to the loans. The fees we earn for servicing these loans are based on a percentage of the unpaid principal balance of the loans. The servicing portfolio balance related to these programs was $4.8 billion and $1.2 billion at December 31, 2005 and 2004, respectively. For the years ended December 31, 2005, 2004 and 2003, we incurred losses on this portfolio of $0.2 million, $0 and $0.5 million, respectively.

On a limited basis, we originate permanent loans through other mortgage conduits. These mortgage conduits provide an alternative liquidity strategy for the delivery of permanent loans. These conduits are not contractually obligated to purchase any loans. We originated $62.0 million and $15.4 million through other conduit relationships for the years ended December 31, 2005 and 2004, respectively.

Trust and escrow funds

We maintain certain escrow accounts and trust accounts related to principal and interest payments and to escrow funds received but not yet remitted to investors or others on loans we service. These accounts are segregated into special accounts and are excluded from our assets and liabilities.

Loans on non-accrual status

The following table summarizes loans on non-accrual status and the treatment of the related interest income as of and for the years ended December 31, 2005, 2004 and 2003.

Year Ended December 31,	Face Value of Loans		Interest Income Recognized		Interest Income Not Recognized (1)
2005	$	64,425	$	2,100	$	3,573
2004		76,769		2,140		2,942
2003		33,941		1,625		1,266

(1) This amount represents additional annual interest income that would have been recognized had these loans been on accrual status. At times, we make loans though back-to-back investments where we borrow funds from the Group Trust and lend the proceeds to developers. The Group Trust bears the risk of loss with respect to these underlying investments and as such, if interest income is not recognized by us, we are not required to pay interest expense to the Group Trust. $917,331, $512,208 and $115,407 of the interest income not recognized related to our Group Trust relationship during 2005, 2004 and 2003, respectively.

Investment in impaired loans and allowance for loan losses

The following table summarizes the total recorded investment in impaired loans at the end of each period, the average recorded investment in the impaired loans during each period, the related allowance for loan losses at the end of each period and the related amount of interest income recognized during the time within that period that the loans were impaired.

December 31,	Face Value of Impaired Loans		Average Face Value		Allowance for Loan Losses		Interest Income Recognized
2005	$	10,164	$	10,290	$	3,120	$	780
2004		10,343		9,747		2,712		811
2003		9,605		7,839		1,716		737

F-34

The following table summarizes the activity in the allowance for loan losses for the years ended December 31, 2005, 2004 and 2003.

	2005			2004			2003
Balance—January 1,	$	2,712		$	1,716		$	1,136
Provisions		566			1,429			653
Write-offs		(84	)		(266	)		(44	)
Recoveries		(74	)		(167	)		(29	)
Balance—December 31,	$	3,120		$	2,712		$	1,716

NOTE 7—INVESTMENTS IN PARTNERSHIPS

The following table summarizes our investments in partnerships by major category as of December 31, 2005 and 2004 and the related net income (losses) from equity investments in partnerships and net loss allocable to minority interest for the years ended December 31, 2005 and 2004:

	Investment in Partnership Balance				Net Income (Loss) from Equity Investment in Partnerships						Net Loss Allocable to Minority Interest
	2005		(Restated) 2004		2005			(Restated) 2004			2005		(Restated) 2004
Non-guaranteed tax credit equity funds:
Investment in real estate operating partnerships (1)	$	534,186	$	563,113	$	(69,000	)	$	(156,993	)	$	78,789	$	177,390
Guaranteed tax credit equity funds:
Investment in real estate operating partnerships (2)		182,153		149,078		(33,734	)		(18,708	)		–		–
Investment in real estate operating partnerships—warehousing (3)		85,272		43,873		(1,617	)		(2,591	)		309		172
Investment in CAPREIT (4)		52,229		55,532		37,225			281			–		–
Investment in real estate operating partnerships-MRC (5)		14,597		–		2,823			–			–		–
Other investments in partnerships (6)		4,077		661		882			(184	)		525		–
	$	872,514	$	812,257	$	(63,421	)	$	(178,195	)	$	79,623	$	177,562

As of December 31, 2005, we have recorded $4.0 million in cumulative losses that were not suspended due to our liability for the obligations of the investee or our partnership liability.

(1) As a result of FIN 46, we must include on our balance sheet investments by certain non-guaranteed tax credit equity funds. These funds invest in Project Partnerships.

(2) These investments are Project Partnerships owned by tax credit equity funds where we provide a guarantee or otherwise have continuing involvement in the underlying assets of the fund. As a result of the guarantee, we include the assets of the funds in our consolidated balance sheets until such time as our guarantee expires.

(3) We acquire, through limited partnerships, equity interests, which typically represent a 99.9% interest in properties expected to earn tax credits. When we have a sufficient number of such limited partnership interests and have identified tax credit investors, we transfer those interests to a tax credit equity fund for the investors’ benefit.

(4) We make equity investments in income-producing real estate partnerships in joint ventures with CAPREIT, Inc. and its affiliates.

(5) We make equity investments in income-producing real estate partnerships through MRC and its affiliates.

(6) Other investments in partnerships primarily relate to a joint venture and other real estate investments from our tax credit equity segment.

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Pursuant to FIN 46 and in conjunction with (1) above, the table below summarizes the total assets, liabilities and minority interest equity associated with non-guaranteed tax credit equity funds included in the accompanying consolidated balance sheets as of December 31, 2005 and 2004. The assets and liabilities primarily consist of investments in partnerships, restricted cash and debt:

	2005		(Restated) 2004
Assets	$	537,527	$	611,284
Liabilities		139,809		187,727
Minority interest equity		399,109		418,495

At times, we take ownership of the general partnership interest in the underlying Project Partnerships in which the tax credit equity funds hold investments. For those property-level general partnership interests, we have discontinued the equity method of accounting and consolidated the underlying Project Partnership pursuant To FIN 46. The following table summarizes the total assets and liabilities of Project Partnerships included in the accompanying consolidated balance sheets as of December 31, 2005 and 2004:

	2005		2004
Assets	$	139,067	$	178,526
Liabilities		127,879		175,638
Minority interest equity		11,188		2,888

NOTE 8—DERIVATIVE FINANCIAL INSTRUMENTS

The following table provides information with respect to the derivative financial instruments we held at December 31, 2005 and 2004.

	December 31, 2005						December 31, 2004 (Restated)
	Notional Amount		Fair Value (1)				Notional Amount		Fair Value (1)
			Assets		Liabilities (2)				Assets		Liabilities (2)
Interest rate swap agreements (3)	$	337,820	$	3,736	$	1,446	$	286,015	$	3,102	$	4,878
Total return swaps (4)		71,255		239		144		38,200		–		–
Put option agreements (5)		101,155		–		2,022		80,400		–		1,293
Loan commitments (6)		137,889		–		393		–		–		–
Total derivative financial instruments			$	3,975	$	4,005			$	3,102	$	6,171

(1) The amounts disclosed represent the net fair values of all our derivatives at the reporting date.

(2) The aggregate fair value is included in liabilities for financial reporting purposes.

(3) For the interest rate swap agreements, notional amount represents the total amount of our interest rate swap contracts ($337,820 as of December 31, 2005 and $320,975 as of December 31, 2004) less the total amount of our reverse interest rate swap contracts ($0 as of December 31, 2005 and $34,960 as of December 31, 2004).

(4) For the total return swaps, the notional amount represents the total amount of our total return swap contracts.

(5) For put option agreements, the notional amount represents our aggregate obligation under the put option agreements.

(6) Loan commitments represent agreements to replace construction loans with longer-term permanent financing originated by us.

Under the terms of certain of our derivative agreements, we are required to comply with net worth covenants and other terms and conditions. We were in compliance with our covenants at December 31, 2005.

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Excluding the effects of terminated derivatives, we recognized a net increase in net income of $3.8 million, $10.9 million and $17.7 million for the years ended December 31, 2005, 2004 and 2003 respectively, due to the change in fair value of our derivative instruments.

Financial risk management and interest rate swaps

Senior interests in securitization trusts, which bear interest at floating rates and are reported on our consolidated balance sheet as short-term debt, inherently have exposure to interest rate risk. To reduce our exposure to interest rate risks, we may enter into interest rate swaps. Historically, we have attempted to offset substantially all of our floating interest rate exposure related to securitization trusts; however, a portion of this floating rate exposure is not fully mitigated by economic hedging instruments. As a result, changes in interest rates could result in either an increase or a decrease in our interest income and cash flows associated with these investments.

From time to time, we may terminate interest rate swap agreements or enter into interest rate swap contracts that offset certain of our existing swaps (“reverse interest rate swaps”). We may do this for a number of reasons, including in conjunction with converting portions of our short-term floating rate debt to longer-term, fixed-rate facilities.

Under the interest rate swap agreements, we are obligated to pay the counterparty a fixed or floating rate. In return, the counterparty will pay us a floating rate based on to the weekly BMA Municipal Swap Index (an index of weekly tax-exempt variable rate (“BMA index”)) or the London Interbank Offer Rate (“LIBOR”) or a fixed rate based on the BMA index for the specific term of the swap. The cash paid and received on an interest rate swap is settled on a net basis. The average BMA rate for 2005, 2004 and 2003 was approximately 2.43%, 1.22% and 1.03%, respectively.

Total return swaps

We occasionally enter into total return swaps that are intended to replicate the total return on an underlying investment at a then current market interest rate. We use total return swaps to meet strategic financing and investment objectives. During the term of the swaps, we receive from or pay to a counterparty the excess of the market interest rate plus a margin over the underlying investment rate, which is typically fixed. In addition to our settlement receipt or payment, total return swaps may include a cash settlement at termination, whereby we will receive from or pay to the counterparty an amount equal to the increase or decrease in the market value of the underlying investment. We had seven and two total return swaps outstanding at December 31, 2005 and 2004, respectively.

Put options

We have occasionally entered into put option agreements with counterparties whereby the counterparty has the right to sell to us an underlying investment at a specified price, which we are obligated to purchase. Under the put options, we may receive an annual payment for assuming the purchase obligation that is reflected in net gain (loss) on derivatives in our consolidated statements of income. We recorded $0.7 million, $1.0 million and $1.0 million in income (loss) from put options in 2005, 2004 and 2003, respectively. Additionally, we may receive an annual payment for providing asset management services on the underlying investments. In general, we may either net settle the put or take possession of the assets underlying the puts. We had four and three put options outstanding at December 31, 2005 and 2004, respectively.

Loan commitments

In 2005, we began to issue forward loan commitments with fixed interest rate collars. These forward loan commitments provide future permanent financing at conversion for existing construction loans once construction is complete on the underlying project. These permanent loans are characterized as loans held for sale and ultimately held for sale to Fannie Mae.

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The interest rate on the permanent loan is subject to a cap and a floor that are set through the terms of a collar that we sell to the borrower. These commitments expose us to potential gains and losses due to the volatility of interest rates and any interest rate fluctuations that occur between the time the commitment is issued and the permanent financing is closed. The discounted estimated gain or loss at the conversion of the construction loan to a permanent loan represents the value of the forward commitments and collars. We had 26 forward loan commitments outstanding as of December 31, 2005.

2005 transactions

We entered into a contractual arrangement whereby the counterparty to the arrangement will purchase tax-exempt bonds from us or a third party and hold the bonds for a minimum of 30 days. We will have the option to bid for the purchase of the bonds at the time of sale by the counterparty. Regardless of whether we purchase the bonds, we will pay to the counterparty or receive from the counterparty amounts for any declines or increases in the bonds’ market values from the date of purchase to the date of swap termination. The arrangement is considered a derivative transaction and is included in the balance of the total return swaps in the table above. The total maximum notional amount of the swaps is $50.0 million, based on the underlying value of the bonds held by the counterparty. We receive an annual fee of 1.50% to 2.00% of the outstanding notional amount of the swap. During the term of the swap, we are required to post collateral equal to the amount by which the purchase price of the bond or bonds subject to the swap exceeds the quoted market value by more than $1.0 million. Individual swaps have specified maturity dates; however the contractual arrangement itself does not have a termination date. As of December 31, 2005, we had five swaps outstanding under this arrangement with a total notional amount of $33.1 million. During 2005, we realized a gain of $0.3 million at swap termination under this arrangement.

In conjunction with a new non-revolving term financing facility (see Note 11), we entered into a new interest rate swap contract with a total notional amount of $22.0 million. In addition, we entered into four other interest rate swaps with a total notional amount of $121.9 million, a reverse interest rate swap with a notional amount of $75.0 million and a total return swap with a notional amount of $30.0 million. We terminated interest rate swap contracts with a total notional amount of $110.0 million and a reverse interest rate swap with a notional amount of $75.0 million. We realized a gain of $5.0 million on the termination of these swaps.

2004 transactions

In 2004, we terminated swap contracts with a total notional amount of $76.4 million. We recorded a net loss of $5.0 million on the termination of these interest rate swaps. In addition, we entered into new swap contracts with a total notional amount of $110.6 million.

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NOTE 9—GUARANTEES AND COLLATERAL

Guarantees

Our maximum exposure under our guarantee obligations is not indicative of the likelihood of the expected loss under the guarantees. The following table summarizes our guarantees by type at December 31, 2005 and 2004.

	December 31,
(in millions)	2005				2004
Guarantee	Maximum     Exposure		Carrying     Amount		Maximum     Exposure		Carrying     Amount
Loss-sharing agreements with Fannie Mae, GNMA and HUD (1)	$	534.9	$	1.4	$	189.1	$	0.3
Tax credit-related guarantees (2)		547.7		252.7		417.0		185.8
Other financial/payment guarantees (3)		410.8		280.3		295.2		166.1
Letter of credit guarantees (4)		136.3		54.2		152.5		76.6
Indemnification contracts (5)		186.5		119.4		32.0		11.1
	$	1,816.2	$	708.0	$	1,085.8	$	439.9

(1) As a Fannie Mae DUS lender and GNMA loan servicer, we may share in losses relating to underperforming real estate mortgage loans delivered to Fannie Mae and GNMA. More specifically, if the borrower fails to make a payment of principal, interest, taxes or insurance premiums on a DUS loan we originated and sold to Fannie Mae, we may be required to make servicing advances to Fannie Mae. Also, we may participate in a deficiency after foreclosure on Fannie Mae DUS and GNMA loans. The term of the loss sharing agreement is based on the contractual requirements of the underlying loans delivered to Fannie Mae and GNMA, which varies to a maximum of 40 years. Through December 31, 2005, our loss sharing history with respect to these agreements has been nominal.

(2) We acquire and sell interests in partnerships that provide low-income housing tax credits for investors. In conjunction with the sale of these partnership interests, we may provide performance guarantees on the underlying properties owned by the partnerships or guarantees to the fund investors. These guarantees have various expirations to a maximum term of 20 years.

(3) We have entered into arrangements that require us to make payments in the event that a specified third party fails to perform on its financial obligations. We typically provide these guarantees in conjunction with the sale of an asset to a third party or our investment in equity ventures. The terms of such guarantees vary based on loan payoff schedules or our divestitures.

(4) We provide a guarantee of the repayment on losses incurred under letters of credit issued by third parties or to provide substitute letters of credit at a predetermined future date. In addition, we may provide a payment guarantee for certain assets in securitization programs. These guarantees expire at various dates through September 2017.

(5) We have entered into indemnification contracts, which require the guarantor to make payments to the guaranteed party based on changes in an underlying investment that is related to an asset or liability of the guaranteed party. These agreements typically require us to reimburse the guaranteed party for legal and other costs in the event of an adverse judgment in a lawsuit or the imposition of additional taxes due to a change in the tax law or an adverse interpretation of the tax law. The term of the indemnification varies based on the underlying program life, loan payoffs, or our divestitures. Based on the terms of the underlying contracts, the maximum exposure amount only includes amounts that can be reasonably estimated at this time. The actual exposure amount could vary significantly.

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Collateral and restricted assets

The following summarizes the assets, equity or letters of credit we have pledged as collateral or that are considered restricted at December 31, 2005 and 2004.

December 31, 2005

Restricted Cash & Cash Equivalents

Tax-exempt Bonds

Taxable Bonds

Loans Receivable

Investments in Partnerships

Letters of Credit

Total

Tax credit equity fund cash (1)

$

69,336

$

–

$

–

$

–

$

–

$

–

$

69,336

Guaranteed equity fund collateral (2)

3,000

156,660

–

–

–

32,270

191,930

Margin call deposits (3)

–

–

–

–

–

–

–

Bonds held in securitization trusts (4)

–

794,066

–

–

–

–

794,066

Collateral for securitization programs (5)

Merrill Lynch P-Floats

–

138,913

–

–

–

–

138,913

MBIA

17,000

78,191

–

–

–

–

95,191

Term securitization facility

–

–

–

–

–

–

–

Fannie Mae Credit Enhancement

–

–

–

–

–

–

–

Notes payable, warehouse lending and lines of credit (6)

–

–

22,220

659,002

76,533

–

757,755

Other collateral (7)

7,002

55,133

–

–

–

4,000

66,135

Total

$

96,338

$

1,222,963

$

22,220

$

659,002

$

76,533

$

36,270

$

2,113,326

	December 31, 2004
	Restricted Cash & Cash Equivalents		Tax-exempt Bonds		Loans Receivable		Investments in Partnerships		Letter of Credit		TE Bond Common Equity		Total
Tax credit equity fund cash (1)	$	49,100	$	–	$	–	$	–	$	–	$	–	$	49,100
Guaranteed equity fund collateral (2)		1,700		73,809		–		–		–		–		75,509
Margin call deposits (3)		452		–		–		–		–		–		452
Bonds held in securitization trusts (4)		–		587,656		–		–		–		–		587,656
Collateral for securitization programs (5)
Merrill Lynch P-Floats		–		134,361		–		–		–		–		134,361
MBIA		17,000		78,897		–		–		–		–		95,897
Term securitization facility		–		35,251		–		–		–		–		35,251
Fannie Mae Credit Enhancement		1,330		–		–		–		–		–		1,330
Notes payable, warehouse lending and lines of credit (6)		580		95,942		557,163		38,966		–		–		692,651
Other collateral (7)		2,674		118,730		–		–		5,443		294,757		421,604
Total	$	72,836	$	1,124,646	$	557,163	$	38,966	$	5,443	$	294,757	$	2,093,811

(1) Under the lease method of accounting for guaranteed tax credit equity funds and due to the consolidation of certain other funds in accordance with FIN 46, we report the restricted cash of the funds in our consolidated balance sheet. The cash is to be used primarily for investments by the consolidated funds in Project Partnerships, payments of fees to us and other approved uses as set out in the funds’ partnership agreements.

(2) We may provide guarantees in connection with the syndication of a tax credit equity fund. In conjunction with these guarantees, at times we are required to maintain certain levels of collateral in the form of cash and cash equivalents, tax-exempt bonds and letters of credit.

(3) Under the terms of our interest rate swap agreements with counterparties, we are required to maintain cash deposits (“margin call deposits”). The margin call deposit requirements are specific to each counterparty. We must make margin call deposits when the total fair value of our outstanding swap obligations to any one counterparty is, in most cases, greater than $1.0 million. In certain cases, we are also required to post an independent amount of up-front collateral on the swap contracts.

(4) Pursuant to FAS 140 and FIN 46, included in our consolidated balance sheet are bonds that are held in securitization trusts and interests in bond securitizations. The bonds held in securitization trusts are not pledged, however we do not have control over them; therefore we consider these assets to be restricted. The interests in bond securitizations also are not pledged; however they represent the first-loss position in securitization trusts and are restricted in nature. As of December 31, 2005, we had $791.1 million of bonds held in securitization trusts and $2.9 million of interests in bond securitizations. As of December 31, 2004, we had $584.0 million of bonds held in securitization trusts and $3.7 million of interests in bond securitizations.

(5) In order to facilitate the securitization of certain assets at higher leverage ratios than otherwise available to us without posting additional collateral, we have pledged additional bonds to a pool that acts as collateral for senior interests in certain securitization trusts and credit enhancement facilities. From time to time, we may also post cash or cash equivalents to this pool.

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(6) We pledge cash and cash equivalents, bonds, loans and investments in partnerships as collateral for our notes payable, warehouse lending arrangements and line of credit borrowings.

(7) We may elect to pledge collateral in connection with other guarantees, derivative transactions, first loss positions and leases or on behalf of our customers in order to facilitate credit and other collateral requirements. Collateral posted on behalf of our customers is considered temporary and we expect to be fully reimbursed. The $4.0 million and $5.4 million letter of credit for 2005 and 2004, respectively, is pledged as collateral for our loss-sharing agreement with Fannie Mae. The $294.8 million TE Bond Subsidiary, LLC (one of our subsidiaries) common equity for 2004 is pledged as collateral for a total return swap of a promissory note with Merrill Lynch.

NOTE 10—MORTGAGE SERVICING RIGHTS

At December 31, 2005 and 2004, we had capitalized mortgage servicing rights (“MSRs”) with a carrying value of $63.5 million and $11.0 million, respectively, net of accumulated amortization of $11.9 million and $5.0 million, respectively. The December 31, 2005 balance of $63.5 million represents $63.9 million in MSR assets offset by $0.4 million in MSR liabilities. The December 31, 2004 balance of $11.0 million represents $11.4 million in MSR assets offset by $0.4 million in MSR liabilities (included in other liabilities). The following table shows the activity for the years ended December 31, 2005 and 2004.

	2005			(Restated)         2004
Balance—January 1,	$	10,989		$	9,816
MSRs obtained through acquisition of a business		53,968			–
MSRs retained on sales of loans		5,625			1,869
Amortization		(7,098	)		(696	)
Balance—December 31,	$	63,484		$	10,989

At December 31, 2005, we estimated the fair values of our MSRs to be $80.9 million. Our fair values were based upon our own assessment and by obtaining market information from external sources. The significant assumptions used in estimating the fair values at December 31, 2005 were as follows:

Weighted average discount rate	13.53%
Weighted average lock-out period	17.1 years
Float and escrow earnings rate	4.39% to 4.88%

We created loan level prepayment curves for each loan to simulate prepayment behavior for our analysis. Conditional prepayment rates (“CPR”) were set at 0% during the lockout period regardless of the underlying loan rate. After the lockout expiration date and if the loan was subject to a prepayment penalty provision, we applied a CPR of 2% to 10% depending on the loan rate. At the end of the prepayment penalty period, we applied a terminal CPR of 2% to 25% depending on the loan rate.

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The table below illustrates hypothetical, fair values of MSRs at December 31, 2005 caused by assumed immediate changes to key assumptions that are used to determine fair value.

Fair value of MSRs at December 31, 2005	$	80,864
Discount rate:
Fair value after impact of +20% change		72,894
Fair value after impact of +10% change		76,681
Fair value after impact of -10% change		85,507
Fair value after impact of -20% change		90,689
Earnings rate:
Fair value after impact of +20% change		87,615
Fair value after impact of +10% change		84,239
Fair value after impact of -10% change		77,488
Fair value after impact of -20% change		74,113
Prepayment speed:
Fair value after impact of +20% change		77,945
Fair value after impact of +10% change		79,368
Fair value after impact of -10% change		82,438
Fair value after impact of -20% change		84,100

At December 2004, the fair value of the MSRs approximated the carrying value.

NOTE 11—NOTES PAYABLE AND DEBT

General terms of notes payable and debt

Our notes payable consist primarily of notes payable and advances under line of credit arrangements, which are used to:

• finance lending needs;

• finance working capital needs;

• warehouse real estate operating partnerships before they are placed into tax credit equity funds; and

• warehouse permanent loans before they are purchased by third parties.

Our short- and long-term debt relates to securitization transactions and other financing transactions that we have recorded as borrowings. Long-term debt balances mature at various times through 2030. Interest rates on long-term debt range from 3.38% to 12.00%.

Long-term notes payable are amounts borrowed to finance construction-lending activities. These balances mature at various times through 2007. Interest rates on long-term notes payable range from 5.25% to 8.25%. The weighted average interest rate on notes payable and debt due in one year was 4.62% and 3.41% at December 31, 2005 and 2004, respectively.

We rely on short-term lines of credit with commercial banks and finance companies to finance our growth. These borrowings are used to fund and are secured by construction loans, supplemental loans and tax-exempt bonds and also fund general business needs. While many of these lines are payable on demand by the lender, they all mature throughout 2006. Borrowings under these lines are typically subject to certain financial covenants and restrictions on liquidity, indebtedness, consolidated net worth, financial guarantees and other related items.

We have established relationships with pension funds through the Group Trust and MMER. The Group Trust was established by a group of pension funds for the purpose of investing in real estate. The Group Trust provides loans and lines of credit to finance a variety of our loan products. In addition, the Group Trust provides credit support for our short-term credit facilities.

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MMER is a Maryland real estate investment trust established by a group of pension funds including those invested in the Group Trust. MMER acquires equity interests in market rate income-producing real estate partnerships and provides us with short-term lines of credit to finance our lending activities. A subsidiary of MMA Financial Holdings, Inc., a wholly owned subsidiary of MuniMae, is the investment manager for the Group Trust and MMER and receives advisory fees for these services. We also earn origination fees on the placement of equity interests in real estate partnerships with MMER, debt investments with the Group Trust and the placement of direct equity or debt investments with individual pension funds.

The following table provides certain information with respect to our short-term lines of credit as of December 31, 2005 and 2004.

	December 31,
	2005		2004
Total available under revolving lines of credit	$	772,000	$	757,000
Interest rate range on lines of credit (1)		5.24% –7.0%		3.3% –5.3%
Outstanding balance	$	349,762	$	307,306
Weighted average interest rate on outstanding balance		4.8%		4.0 %

(1) Excluding rate reduction programs

Notes payable also include lines of credit and factored and mortgage notes payable of our consolidated tax credit equity funds and Project Partnerships. The lines of credit are non-recourse and not guaranteed by us. The factored notes payable are obligations of the limited partners (investors) of the tax credit equity funds and collateralized by the investors’ subscription receivables. The factored notes payable are non-recourse and not guaranteed by us. The mortgage notes payable are obligations of Project Partnerships, in which we are the general partner, and are non-recourse and not guaranteed by us.

The following tables summarize the outstanding balance and annual maturities of notes payable and debt as of December 31, 2005 and 2004.

	December 31,
	2005		2004
Short-term notes payable	$	192,555	$	193,311
Lines of credit (1)		349,762		307,306
Short-term debt		693,785		414,193
Total short-term notes payable and debt		1,236,102		914,810
Lines of credit (1)		43,890		14,080
Long-term notes payable		99,056		173,440
Long-term debt		104,215		162,978
Total long-term notes payable and debt		247,161		350,498
Tax credit equity fund debt		151,177		187,887
Mortgage notes payable		94,716		132,237
Total notes payable and debt	$	1,729,156	$	1,585,432

(1) The gross capacity under our lines of credit at December 31, 2005 was $824.0 million of which, $39.0 million is available for letters of credit (See Note 16). At December 31, 2005, $393.7 million on our line of credit and $11.4 million of our letter of credit capacity was drawn.

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Annual maturities of notes payable and debt are as follows:

2006	$	1,236,102
2007		100,443
2008		49,965
2009		1,495
2010		23,660
Thereafter		71,598
Mortgage and factored notes payable		245,893	(1)
Total	$	1,729,156

(1) Mortgage and factored notes payable and lines of credit related to the consolidated tax credit equity funds and Project Partnerships are excluded from the annual maturities table due to the lack of necessary information to determine the appropriate maturities.

2005 Transactions

We entered into a new term financing facility of up to $22.0 million with Compass Bank. The facility is secured by certain taxable bonds and has a maturity date of May 1, 2010. Interest accrues at LIBOR plus a spread. In connection with this facility, we entered into certain interest rate swap agreements (see Note 8).

In connection with the Glaser acquisition, we entered into an Amended and Restated Credit Agreement (“Credit Agreement”) with U.S. Bank National Association (“U.S. Bank”). The Credit Agreement provides revolving loans to us to finance specified types of mortgage loans, investments and advances in an amount up to $160.0 million through December 31, 2005 and $75.0 million thereafter and is subject to sub-limits for particular classifications of borrowings. The revolving loans have varying maturities of up to 90 days as agreed upon between U.S. Bank and us. Depending on the type of borrowing, revolving loans bear interest at either U.S. Bank’s prime rate or a floating rate, reset daily, equal to the one-month LIBOR plus a spread. The revolving loans are secured by a first priority lien on specified loans, mortgages, investments and advances financed under the Credit Agreement. The Credit Agreement matures on September 29, 2006.

We entered into a revolving warehouse facility of up to $30.0 million with SunTrust Bank. The facility is secured by taxable bonds and loans held, and it matures on August 31, 2008. Interest accrues on this facility at the three-month LIBOR plus a spread.

We amended and restated the $250.0 million long-term line of credit with Bank of America, N.A. (“Bank of America”), which extended the maturity of the line one year to November 2006 and decreased the amount of the facility to $140.0 million.

The Warehousing Credit and Security Agreement with Residential Funding Corporation with an available credit line of $200.0 million, expired on October 31, 2005 and the principal thereunder was paid in full.

2004 Transactions

We entered into a $250.0 million long-term line of credit with Bank of America, which will be used to fund tax-exempt bonds and taxable construction loans. The line of credit expires in November 2006, unless extended. Borrowings under this line of credit bear interest at either (1) the Eurodollar rate plus a spread or (2) the higher of the Federal Funds Rate plus a spread or Bank of America’s prime rate. Our tax-exempt bonds and taxable construction loans collateralize these borrowings.

Covenant compliance

Under the terms of the various credit facilities, we are required to comply with financial covenants including net worth, interest coverage, leverage, liquidity, collateral and other terms and conditions.

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As of December 31, 2005, we were in compliance with all material financial covenants in our credit facilities.

NOTE 12—SUBORDINATE DEBENTURES

In 2003, one of our consolidated indirect wholly owned subsidiaries, MMA Financial Holdings, Inc., (“MFH”), formed MFH Financial Trust I (“MFH Trust I”) as a special purpose financing entity. In 2005, MFH formed MFH Capital Trust 2 (“MFH Trust II”) and MFH Capital Trust 3 (“MFH Trust III”) as special purpose financing entities. Pursuant to FIN 46, we have determined that we are not the primary beneficiary, and therefore, do not consolidate these special purpose financing entities.

8.05% Subordinate Debentures Purchased by MFH Trust II

On March 15, 2005, MFH Trust II sold $50.0 million of its 8.05% preferred securities, liquidation amount of $1,000 per preferred security, which MFH and we guaranteed (the “MFH Trust II Preferred Securities”) to qualified institutional investors. The MFH Trust II Preferred Securities bear interest at an annual rate of 8.05% through the interest payment date in March 2015, to be adjusted thereafter to a variable rate, reset quarterly, equal to three month LIBOR plus 3.30% per annum of the liquidation amount and may be redeemed in whole or in part beginning on March 30, 2010. Cash distributions on the MFH Trust II Preferred Securities are paid quarterly.

MFH Trust II used the proceeds from the offering to purchase 8.05% junior subordinated debentures issued by MFH with substantially the same economic terms as the MFH Trust II Preferred Securities that are unsecured obligations of MFH and are subordinate to all of MFH’s existing and future senior debt (the “8.05% Debentures”). We have fully and unconditionally guaranteed all of MFH’s obligations on the 8.05% Debentures. MFH used the net proceeds from the issuance of the 8.05% Debentures to (a) repay a portion of a loan from an affiliate, (b) repay other indebtedness of MFH and its affiliates and (c) for general corporate purposes. MFH Trust II can make distributions to holders of the MFH Trust II Preferred Securities only if MFH makes payments on the 8.05% Debentures. MFH Trust II must redeem the MFH Trust II Preferred Securities when and to the extent the 8.05% Debentures are paid at maturity (March 30, 2035) or earlier redeemed.

7.62% Subordinate Debentures Purchased by MFH Trust III

On June 28, 2005, MFH Trust III sold $38.8 million of its 7.62% preferred securities, liquidation amount of $1,000 per preferred security, which MFH and we guaranteed (the “MFH Trust III Preferred Securities”) to qualified institutional investors. The MFH Trust III Preferred Securities bear interest at an annual rate of 7.62% through the interest payment date in June 2015, to be adjusted thereafter to a variable rate, reset quarterly, equal to three month LIBOR plus 3.30% per annum of the liquidation amount and may be redeemed in whole or in part beginning on July 30, 2010. Cash distributions on the MFH Trust III Preferred Securities are paid quarterly.

MFH Trust III used the proceeds from the offerings to purchase 7.62% junior subordinated debentures issued by MFH with substantially the same economic terms as the MFH Trust III Preferred Securities that are unsecured obligations of MFH and are subordinate to all of MFH’s existing and future senior debt (the “7.62% Debentures”). We have fully and unconditionally guaranteed all of MFH’s obligations on the 7.62% Debentures. MFH used the net proceeds from the issuance of the 7.62% Debentures to fund a portion of the acquisition of Glaser (described above in Note 4). MFH Trust III can make distributions to holders of the MFH Trust III Preferred Securities only if MFH makes payments on the 7.62% Debentures. MFH Trust III must redeem the MFH Trust III Preferred Securities when and to the extent the 7.62% Debentures are paid at maturity (July 30, 2035) or earlier redeemed.

9.5% Subordinate Debentures Purchased by MFH Trust I

On May 3, 2004, MFH Trust I sold $60.0 million of its 9.5% preferred securities, liquidation amount of $100 per preferred security, which MFH and we guaranteed (the “MFH Trust I Preferred Securities”) to

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qualified institutional investors. In September 2004, there was a sale of an additional $24.0 million of MFH Trust I Preferred Securities to qualified institutional investors. The $60.0 million of MFH Trust I Preferred Securities were sold with an underwriters’ discount of $3.15 per MFH Trust I Preferred Security or $1.9 million in the aggregate. The additional $24.0 million of Trust I Preferred Securities did not include an initial purchasers’ discount. MFH paid the entire initial purchasers’ discount as well as offering expenses on behalf of MFH Trust. The MFH Trust I Preferred Securities bear interest at an annual rate of 9.5% through the interest payment date of May 5, 2014, to be adjusted thereafter to a rate which is equal to the greater of (a) 9.5% per annum or (b) the rate per annum which is equal to 6.0% plus the then current U.S. Treasury Note with a maturity nearest to May 5, 2024. The Trust I Preferred Securities may be redeemed in whole or in part on May 5, 2014. Cash distributions on the Trust I Preferred Securities are paid quarterly.

MFH Trust I used the proceeds from the offering to purchase Junior Subordinated Debentures (the “Debentures”) issued by MFH. The Debentures have substantially the same economic terms as the Trust I Preferred Securities. MFH Trust I can make distributions to the Trust I Preferred Securities only if MFH makes payments on the Debentures. The Debentures are unsecured obligations and are subordinate to all of MFH’s existing and future senior debt. Pursuant to the transaction documents for the MFH Trust I Preferred Securities, we have effectively fully and unconditionally guaranteed the MFH Trust I Preferred Securities. MFH loaned the net proceeds from the $60.0 million offering to one of its subsidiaries, which in turn used the proceeds to pay off inter-company indebtedness to us. MFH used the net proceeds from the $24.0 million offering to repay a portion of an inter-company loan from us. We used these amounts to repay a portion of our indebtedness as well as for general corporate purposes. MFH Trust must redeem the Trust Preferred Securities when and to the extent the Debentures are paid at maturity or earlier redeemed.

The Debentures, together with the 7.62% and 8.05% Debentures, are included in the accompanying consolidated balance sheet as a long-term liability at the liquidation preference value of $172.8 million. In addition, net offering costs of $5.2 million related to the securities are recorded as debt issuance costs and included in other assets in the accompanying consolidated balance sheet. The offering costs paid by MFH are amortized to interest expense in the accompanying consolidated income statement over a 30-year period based on the call option of the preferred shares. Distributions for all subordinate debentures totaled $12.7 million and $4.6 million for the years ended December 31, 2005 and 2004, respectively. The distributions are included in interest expense on debentures and preferred shares in the accompanying consolidated income statement.

NOTE 13—PREFERRED SHARES

In November 2005, one of our subsidiaries, TE Bond Subsidiary, LLC (“TE Bond Sub”) completed a $100.0 million private placement of rated tax-exempt perpetual preferred shares (“Preferred Shares”). The net proceeds of $97.7 million were used to acquire investments that produce tax-exempt interest income and for general corporate purposes, which may include the repayment of indebtedness of TE Bond Sub.

In October 2004, TE Bond Sub completed a $73.0 million private placement of rated tax-exempt perpetual preferred shares. The net proceeds of $71.0 million were used to acquire investments that produce tax-exempt interest income and for general corporate purposes of TE Bond Sub.

As of December 31, 2005, TE Bond Sub had both preferred shares and mandatorily redeemable preferred shares outstanding. In addition to the quarterly distributions described below, the holders of both the preferred shares and the mandatorily redeemable preferred shares receive an annual capital gains distribution equal to an aggregate of 10% of any net capital gains recognized by TE Bond Sub during the immediately preceding taxable year. The following discussion and related tables summarize the significant terms of each.

Preferred Shareholders’ Equity in a Subsidiary Company

As of December 31, 2005, TE Bond Sub had ten series of preferred shares, excluding the mandatorily redeemable preferred shares described below.

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The Series A-2, A-3, and A-4 Preferred Shares (“Series A Preferred Shares”) bear interest at rates ranging from 4.90%, to 5.125% per annum, respectively, or, if lower, the aggregate net income of TE Bond Sub. The Series A Preferred Shares have a senior claim to the income derived from the investments owned by TE Bond Sub. The Series A Preferred Shares are equal in priority of payment to the Series A and A-1 Mandatorily Redeemable Preferred Shares. The Series B-2 and B-3 Preferred Shares (“Series B Preferred Shares”) bear interest at 5.20% and 5.30% per annum, respectively, or, if lower, the aggregate net income of TE Bond Sub, after interest payments to the Series A and A-1 Mandatorily Redeemable Preferred Shares and the Series A Preferred Shares. The Series B Preferred Shares are equal in priority of payment to the Series B and B-1 Mandatorily Redeemable Preferred Shares. The Series C, C-1, C-2 and C-3 Preferred Shares (“Series C Preferred Shares”) bear interest at rates ranging from 4.70% to 5.80% per annum, respectively, or, if lower, the aggregate net income of TE Bond Sub, after payments to the Series A, A-1, B and B-1 Mandatorily Redeemable Preferred Shares and the Series A and B Preferred Shares. The Series C-1, C-2 and C-3 Preferred Shares are equal in priority of payment to the Series C Preferred Shares, which are senior to the Series D Preferred Shares. The Series D Preferred Shares bear interest at 5.90% per annum, or if lower, the aggregate net income of TE Bond Sub, after payments to the Series A, A-1, B and B-1 Mandatorily Redeemable Preferred Shares and the Series, A, B, and C Preferred Shares. The Series D Preferred Shares are junior in priority of payment to all other Preferred Shares and Mandatorily Redeemable Preferred Shares. Because we hold all of the common equity interest in TE Bond Sub, we are allocated any income from TE Bond Sub available after payment of the cumulative distributions of the Series D Preferred Shares. The initial distribution for the Preferred Shares issued in 2004, which was for the period from October 19, 2004 to December 31, 2004, was paid on January 31, 2005. The initial distribution for the Preferred Shares issued in 2005, which was for the period from November 4, 2005 to December 31, 2005, was paid on January 31, 2006. After payment of the initial distribution, distributions on the Preferred Shares are payable, once declared, on each January 31, April 30, July 31 and October 31. Distributions for the preferred shares totaled $5.0 million and $0.8 million for the years ended December 31, 2005 and 2004, respectively. The distributions are included in net loss allocable to minority interest in the accompanying consolidated income statement.

The Preferred Shares are subject to remarketing on specified dates as indicated in the table below. TE Bond Sub may elect to remarket the Preferred Shares based on the particular series at varying dates beginning on September 30, 2009. On the remarketing date, the remarketing agent will seek to remarket the Preferred Shares at the lowest distribution rate that would result in a resale of the Preferred Shares at a price equal to par plus all accrued but unpaid distributions. The Preferred Shares will not be redeemable prior to the remarketing dates. TE Bond Sub may elect to redeem the Preferred Shares at its liquidation preference plus accrued and unpaid distributions based on the particular series at varying dates beginning on September 30, 2009.

The following table provides a summary of certain terms of the Preferred Shares.

	Issue Date	Number of Shares	Par Amount per Share		Dividend Rate		First Remarketing Date	Optional Redemption Date
Series A-2 Preferred Shares	October 19, 2004	10	$	2,000,000	4.90	%	September 30, 2014	September 30, 2014
Series A-3 Preferred Shares	November 4, 2005	9		2,000,000	4.95		September 30, 2012	September 30, 2012
Series A-4 Preferred Shares	November 4, 2005	8		2,000,000	5.125		September 30, 2015	September 30, 2015
Series B-2 Preferred Shares	October 19, 2004	7		2,000,000	5.20		September 30, 2014	September 30, 2014
Series B-3 Preferred Shares	November 4, 2005	11		2,000,000	5.30		September 30, 2015	September 30, 2015
Series C Preferred Shares	October 19, 2004	13		1,000,000	4.70		September 30, 2009	September 30, 2009
Series C-1 Preferred Shares	October 19, 2004	13		1,000,000	5.40		September 30, 2014	September 30, 2014
Series C-2 Preferred Shares	October 19, 2004	13		1,000,000	5.80		September 30, 2019	September 30, 2019
Series C-3 Preferred Shares	November 4, 2005	10		1,000,000	5.50		September 30, 2015	September 30, 2015
Series D Preferred Shares	November 4, 2005	17		2,000,000	5.90		September 30, 2015	September 30, 2020

Preferred Shares Subject to Mandatory Redemption

Pursuant to FAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” we have classified the liquidation preference value of our preferred shares subject to

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mandatory redemption (collectively, the “Mandatorily Redeemable Preferred Shares”) of $168.0 million to a separate line in the liability section of the consolidated balance sheets. In addition, offering costs of $7.5 million related to the Mandatorily Redeemable Preferred Shares have been classified as other assets. As of December 31, 2005, TE Bond Sub had four series of mandatorily redeemable preferred shares outstanding.

The Series A and A-1 Mandatorily Redeemable Preferred Shares bear interest at 6.875% and 6.30% per annum, respectively, or, if lower, the aggregate net income of TE Bond Sub. The Series A and A-1 Mandatorily Redeemable Preferred Shares have a senior claim to the income derived from the investments owned by TE Bond Sub. The Series A-1 Mandatorily Redeemable Preferred Shares are equal in priority of payment to the Series A Mandatorily Redeemable Preferred Shares. The Series B and B-1 Mandatorily Redeemable Preferred Shares bear interest at 7.75% and 6.80% per annum, respectively, or, if lower, the aggregate net income of TE Bond Sub, after interest payments to the Series A and Series A-1 Mandatorily Redeemable Preferred Shares. Distributions on the Mandatorily Redeemable Preferred Shares totaled $12.7 million and $12.5 million for the years ended December 31, 2005 and 2004, respectively. The distributions are included in interest expense on debentures and preferred shares in the accompanying consolidated income statement.

The Series B-1 Mandatorily Redeemable Preferred Shares are equal in priority of payment to the Series B Preferred Shares. Cash distributions on the Mandatorily Redeemable Preferred Shares are payable, once declared, on each January 31, April 30, July 31 and October 31. The Mandatorily Redeemable Preferred Shares are subject to remarketing on specified dates as indicated in the table below. On the remarketing date, the remarketing agent will seek to remarket the shares at the lowest distribution rate that would result in a resale of the Mandatorily Redeemable Preferred Shares at a price equal to par plus all accrued but unpaid distributions. The Mandatorily Redeemable Preferred Shares will be subject to mandatory tender on specified dates, as indicated below, and on all subsequent remarketing dates at a price equal to par plus all accrued but unpaid distributions. The following table provides a summary of certain terms of the Mandatorily Redeemable Preferred Shares.

	Issue Date	Number of Shares	Par Amount per Share		Dividend Rate		First Remarketing Date	Mandatory Tender Date	Redemption Date
Series A Mandatorily Redeemable Preferred Shares	May 27, 1999	42	$	2,000,000	6.88	%	June 30, 2009	June 30, 2009	June 30, 2049
Series A-1 Mandatorily Redeemable Preferred Shares	October 9, 2001	8		2,000,000	6.30		June 30, 2009	June 30, 2009	June 30, 2049
Series B Mandatorily Redeemable Preferred Shares	June 2, 2000	30		2,000,000	7.75		November 1, 2010	November 1, 2010	June 30, 2050
Series B-1 Mandatorily Redeemable Preferred Shares	October 9, 2001	4		2,000,000	6.80		November 1, 2010	November 1, 2010	June 30, 2050

NOTE 14—TAX CREDIT EQUITY GUARANTEE LIABILITY

As part of the acquisition of HCI (see Note 4), we provided guarantees to Lend Lease related to certain tax credit equity syndication funds where Lend Lease is providing a guarantee to investors or a third party. In addition, subsequent to the acquisition of HCI, we established new guaranteed tax credit equity funds whereby we provide a guarantee to a third party or investors. The following table shows the changes in the tax credit equity guarantee liability:

	2005			2004
Balance—January 1,	$	184,999		$	148,125
Limited partners’ capital contributions		115,032			77,752
Amortization		(10,933	)		(5,695	)
Expiration of guarantees		(59,408	)		(35,183	)
Balance—December 31,	$	229,690		$	184,999

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NOTE 15—INCOME TAXES

Certain subsidiaries of MuniMae are corporations and are therefore subject to federal and state income taxes. The following table summarizes the provision (benefit) for income taxes at December 31, 2005, 2004 and 2003:

	2005			(Restated) 2004			(Restated) 2003
Federal income tax expense (benefit):
Current	$	(203	)	$	(234	)	$	120
Deferred		129			(6,922	)		(8,320	)
State income tax expense (benefit):
Current		2,055			1,087			294
Deferred		360			(439	)		(609	)
Total	$	2,341		$	(6,508	)	$	(8,515	)

During 2005, 2004 and 2003, we recognized approximately $0.2 million, $0.4 million, and $0.2 million, respectively, of net tax effects associated with the exercise of employee stock options and vesting of deferred shares. These tax effects were added directly to shareholders’ equity, and are not reflected in income tax expense on the income statement.

The reconciliation of the difference between the effective income tax rate and the statutory federal income tax rate, as applied to the income of our subsidiaries, which are subject to federal and state taxes, is as follows for the years ended December 31, 2005, 2004 and 2003:

	2005		(Restated) 2004		(Restated) 2003
Provision for income taxes computed using the statutory federal income tax rate	(34.0	)%	(34.0	)%	(34.0	)%
State income taxes, net of federal tax effect	2.1		0.2		(2.5	)
Goodwill amortization	–		–		0.2
Tax exempt interest income	(0.6	)	–		–
Nondeductible interest expense	0.6		–		–
Meals and entertainment	0.2		0.1		0.4
Minority interest	35.8		30.7		0.1
Tax credits	(1.0	)	(0.4	)	(1.9	)
Other	–		0.1		0.5
Provision (benefit) for income taxes	3.1	%	(3.3	)%	(37.2	)%

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Our net deferred tax asset or deferred tax liability is included in other assets and other liabilities and consists of the following at December 31, 2005 and 2004:

	2005			(Restated) 2004
Deferred tax assets:
Tax credit carryover	$	2,528		$	1,780
Net operating loss carryforward		8,883			8,148
Capital loss carryforward		264			–
Consolidated tax credit funds		7,830			4,686
Asset management fees and contract amortization		4,214			4,758
Impairments		1,220			775
Charitable contribution carryover		1,116			982
Guarantee fees & application fees		5,007			2,882
Equity investment market value adjustment		179			–
Deferred origination and loan servicing fees		2,348			320
Promote income		927			–
Loan loss reserve		552			123
State taxes		120			120
Rent expense		371			12
Compensation adjustment		136			–
Other		54			46
Less valuation allowance		(1,934	)		(982	)
Total deferred tax assets	$	33,815		$	23,650
Deferred tax liabilities:
Depreciable assets	$	–		$	56
Other liabilities		381			–
Mortgage servicing rights		24,464			4,236
Tax amortization		4,856			2,912
Purchase price adjustments		2,095			–
Equity investments in partnerships		8,218			1,324
Construction fees		3,577			1,394
Total deferred tax liabilities	$	43,591		$	9,922

At December 31, 2005 and 2004, we had an unused low-income housing tax credit carryforward for federal income tax purposes of approximately $2.5 million and $1.8 million, respectively, which expire at intervals through 2025. This credit is subject to recapture based upon a qualifying disposition. We have qualified disposition bonds to avoid the recapture provisions. Additionally, at December 31, 2005 and 2004, a component of other deferred tax assets was the tax benefit of a charitable contribution carryforward of approximately $2.9 million and $2.6 million, respectively, which expires at intervals through 2010. At December 31, 2005 and 2004, we had net operating loss carryforwards for use in future years in the amount of $20.4 million and $20.7 million, respectively, which expire at intervals through 2025.

NOTE 16—COMMITMENTS AND CONTINGENCIES

Lease commitments and hosting agreements

We have entered into non-cancelable operating leases for office space and equipment, as well as software hosting agreements for various information systems initiatives. These leases and hosting agreements expire on various dates through 2016. Rental expense was approximately $6.7 million, $5.2 million, and $3.2 million for

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the years ended December 31, 2005, 2004 and 2003, respectively. At December 31, 2005, the minimum aggregate rental commitments were as follows:

2006	$	6,535
2007		5,997
2008		5,682
2009		5,157
2010		4,971
Thereafter		18,560
Total	$	46,902

Letters of credit

We have available letter of credit facilities with multiple financial institutions. At December 31, 2005, we had outstanding letters of credit of $395.9 million, which typically provide credit support to various third parties for real estate activities. These letters of credit expire at various dates through September 2017. The unused portion of the letter of credit facilities was $259.6 million at December 31, 2005. As disclosed in the guarantee table in Note 9, we have provided a guarantee on certain of these letters of credit.

Unfunded loan commitments

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. At December 31, 2005 and 2004, the aggregate unfunded commitments totaled approximately $347.9 million and $482.5 million, respectively. The fair value of commitments for loans to be held for investment purposes is not reflected in the financial statements. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. There are no significant concentrations of credit risk with any individual counterparty to originate loans. The fair value of unfunded commitments as of December 31, 2005 and 2004 was $310.7 million and $483.0 million, respectively.

Unfunded equity commitments

As the limited partner in real estate operating partnerships, we have committed to extend equity to real estate operating partnerships in accordance with the partnership documents. In addition, our consolidated tax credit equity funds have committed to extend equity to Project Partnerships. At December 31, 2005 and 2004, the aggregate unfunded commitments totaled approximately $1.1 billion and $463.1 million, respectively.

Future commitment for minimum salary levels under employment contracts

We have employment agreements with several of our executive officers, the terms of which expire at various times through July 2009. Such agreements, which have been revised from time to time, provide for minimum salary levels, as well as for incentive bonuses that are payable if specified management goals are attained. The aggregate commitment for future salaries at December 31, 2005, excluding performance-based bonuses, was approximately $5.3 million.

Fannie Mae participation strips

We hold interest-only securities, which represent the right to receive the excess interest on certain mortgage loans sold to Fannie Mae. These rights result from the contractual right to receive the difference between the interest paid at the borrower’s loan rate and interest paid to Fannie Mae at the rate at which the loan was sold to Fannie Mae. The fair value of the interest-only securities is estimated by discounting the expected future cash flows. Due to the existence of a related obligation to pay all or a portion of these cash flows to the Group Trust, a corresponding liability is reflected on the consolidated balance sheet in other liabilities.

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Glaser purchase contingencies

As part of the Glaser stock purchase agreement (see Note 4 for more information), the purchase price includes three deferred payments of at least $4.0 million on each of the first three anniversaries of the closing date. The fair value of the deferred purchase price as of December 31, 2005 is $10.7 million and is reflected on our consolidated balance sheet in other liabilities. Additionally, there is contingent consideration that may be payable on the third anniversary of the closing date in the event that specified levels of operating performance are achieved. The contingent consideration is not reflected on the consolidated balance sheet as the contingency has yet to be resolved.

Litigation

At December 31, 2005 and 2004, we had a litigation reserve of $1.0 million and $2.0 million, respectively, for routine litigation and administrative proceedings arising in the ordinary course of business. We and certain of our subsidiaries are defendants in various litigation matters arising in the ordinary course of business, some of which involve claims for damages that are substantial in amount. Some of these litigation matters are covered by insurance. We record provisions for litigation matters and other claims when we believe a loss is probable and can be reasonably estimated. We continuously monitor these claims and adjust recorded liabilities as developments warrant. We further believe that any losses we may suffer for litigation and other claims in excess of the recorded aggregate liabilities are not material. Accordingly, in our opinion, adequate provision has been made for losses with respect to litigation matters and other claims, and the ultimate resolution of these matters is not likely to have a material effect on our consolidated financial position or results of operations. Our assessment of the potential outcomes of these matters involves significant judgment and is subject to change based on future developments.

NOTE 17—SHAREHOLDERS’ EQUITY

Earnings per share

The following tables reconcile the numerators and denominators in the basic and diluted earnings per share (“EPS”) calculations for the years ended December 31, 2005, 2004 and 2003. The effect of all potentially dilutive securities was included in the calculation for 2005, 2004 and 2003. The computation of diluted EPS for 2005 and 2003 excluded 21,000 and 30,000 options to purchase common shares, respectively, as they were anti-dilutive.

	2005				2004				2003
	Basic		Diluted		Basic		Diluted		Basic		Diluted
Income from continuing operations	$	77,923	$	77,923	$	35,736	$	35,736	$	36,089		36,089
Interest expense on deferred shares from acquisition, net of taxes of $202		–		304		–		–		–		–
Adjusted net income from continuing operations used in EPS computation	$	77,923	$	78,227	$	35,736	$	35,736	$	36,089	$	36,089
Weighted-average shares outstanding		37,757		37,757		34,522		34,522		29,398		29,398
Dilutive securities:
Options and deferred shares		–		184		–		200		–		368
Deferred shares from acquisition		–		236		–		–		–		–
Adjusted weighted-average shares used in EPS computation		37,757		38,177		34,522		34,722		29,398		29,766

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NOTE 18—RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES AND NON-PROFIT ENTITIES

Certain Business Relationships

Set forth below is information describing certain relationships that we have with certain of our directors and nominees for director:

Relationships Involving Certain of Our Directors

Midland Multifamily Equity REIT. Michael L. Falcone, our Chief Executive Officer and President, and a director, is a trustee for Midland Multifamily Equity REIT (“MMER”), an affiliate of ours. We earn fee income for investment management services provided to MMER. In addition, we receive origination fees for investments placed with MMER. We earned fees totaling $0.7 million, $1.5 million, and $1.4 million from MMER for the years ended December 31, 2005, 2004, and 2003, respectively.

Midland Affordable Housing Group Trust. Mr. Falcone is a trust officer and a trustee of Midland Affordable Housing Group Trust (“MAHGT”), an affiliate of ours. We earn fee income from MAHGT for providing investment management services, originating MAHGT loans, and servicing individual MAHGT investments. We earn these fees on both MAHGT direct investments and investments funded through lines of credit backed by MAHGT assets. We received fees totaling $0.9 million, $4.5 million, and $4.1 million from MAHGT for the years ended December 31, 2005, 2004, and 2003, respectively.

We also borrow money from MAHGT in order to make debt investments in real estate projects on behalf of MAGHT through a market rate credit facility. For the years ended December 31, 2005 and 2004, we were party to documents representing indebtedness to MAHGT in an aggregate amount of $140.2 million and $133.9 million, respectively, which represents 3.6% and 4.0% of our consolidated total assets as of those dates.

Relationships Involving Gallagher, Evelius & Jones LLP

Richard O. Berndt, Esq., one of our directors, is the managing partner of the law firm Gallagher, Evelius & Jones LLP (“GEJ”). As of December 31, 2005, Mr. Berndt owned 5.7% of the equity of GEJ. GEJ provides legal services to us, some of which are provided as part of real estate transactions and are paid for by the borrowers and some of which are paid directly by us. Stephen A. Goldberg, a partner at GEJ, serves as our General Counsel. We pay GEJ directly for Mr. Goldberg’s legal services at his standard hourly rates, and Mr. Goldberg is eligible for an annual stock award but otherwise receives no compensation directly from us. For the years ended December 31, 2005, 2004 and 2003, GEJ received $1.2 million, $1.0 million, and $0.7 million respectively, in legal fees for borrower paid legal fees involving us and $3.7 million, $1.7 million, and $1.0 million, respectively, in legal fees paid directly by us. The fees paid directly by us represented 19.5%, 11.5%, and 10.5% of GEJ’s total revenues for 2005, 2004 and 2003, respectively.

Relationships with the Shelter Group

Mr. Joseph, the Chairman of our Board of Directors and former Chief Executive Officer, through certain family holding companies, holds a 34.7% interest in The Shelter Group, LLC (the “Shelter Group”). The Shelter Group’s operations include acting as a developer of, and providing property management services primarily to, multi-family residential real estate projects. The Shelter Group provides management services for certain properties that serve as collateral for some of our tax-exempt bond investments, which included six, eight, and eight properties during 2005, 2004, and 2003, respectively. We paid the Shelter Group fees totaling approximately $0.7 million, $0.8 million, and $1.0 million for property management services with respect to these properties during the years ended December 31, 2005, 2004, and 2003, respectively.

The real estate underlying one of our tax-exempt bonds is owned by a Shelter Group. As of December 31, 2005 and 2004, our carrying value of this bond totaled $10.7 million and $11.3 million, respectively.

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Transactions with Management and Others

Set forth below is information describing transactions between us and our subsidiaries, on the one hand, and our directors, nominees for director, executive officers and their family members, on the other hand:

Transactions Involving the Shelter Group

Tax Credit Equity Syndication Transactions. We act as a tax credit equity syndicator for investments in affordable housing projects sponsored by the Shelter Group. During 2005 and 2004, our Tax Credit Equity segment closed two transactions each year with the Shelter Group. Total unfunded equity commitments for all projects sponsored by the Shelter Group was $7.8 million and $2.0 million, as of December 31, 2005 and 2004, respectively. The Shelter Group receives development fees in connection with these transactions.

Shelter Group Revolving Loan Agreement. On February 28, 2005, we entered into a revolving loan agreement with a Shelter Group affiliate for loans to Shelter Group entities in an amount not to exceed $1.5 million (the “Shelter Loan Agreement”). During 2005, the maximum amount of indebtedness outstanding under the Shelter Loan Agreement was $0.9 million and as of December 31, 2005, there was no outstanding balance under the Shelter Loan Agreement.

Transactions Involving Other Affiliates of Mr. Joseph

Creekside Village Apartments Project. Mr. Joseph held an indirect interest in the limited partnership (the “Creekside Borrower”) that owned the Creekside Village Apartments project, located in Sacramento, CA (the “Creekside Property”). Prior to August 2005, we held approximately $11.8 million aggregate principal amount in bonds (the “Creekside Bonds”) related to the Creekside Property and were owed $225,000 on a related working capital loan to the Creekside Borrower (the “Creekside WC Loan”). In the early 1990s, the Creekside Borrower defaulted on its payment obligations under the Creekside Bonds and the Creekside WC Loan. In the third quarter of 2005, we took control of the Creekside Borrower, sold the Creekside Property and redeemed the Creekside Bonds and repaid the Creekside WC Loan with the sale proceeds. As part of this transaction, a 501(c)(3) organization with which Mr. Joseph is affiliated received $26,346 for its interest in the Creekside Borrower.

Lakeview Gardens Apartment Project. Mr. Joseph held an indirect interest in the limited partnership (the “Lakeview Borrower”) that owned the Lakeview Gardens Apartments project, located in Miami, FL (the “Lakeview Property”). Prior to September 2004, we held approximately $9.0 million aggregate principal amount in bonds (the “Lakeview Bonds”) related to the Lakeview Property and were owed $305,000 on a related working capital loan to the Lakeview Borrower (the “Lakeview WC Loan”). In the early 1990’s, the Lakeview Borrower defaulted on its payment obligations under the Lakeview Bonds and the Lakeview WC Loan. In the second half of 2004, we took title to the Lakeview Property, sold the Lakeview Property and redeemed the Lakeview Bonds and repaid the Lakeview WC Loan with the sale proceeds. Mr. Joseph did not receive any proceeds (directly or indirectly) from these transactions as a result of his interest in the Lakeview Borrower.

FSA Bond Portfolio. In February 1995, we, acting as bondholder, and various property partnerships indirectly controlled by Mr. Joseph, as borrowers (the “FSA Borrowing Partnerships”), participated in the refunding of eleven tax-exempt bonds with an aggregate principal balance of $126.6 million. The general partners of the FSA Borrowing Partnerships are controlled by Mr. Joseph (described in greater detail below under “Transactions Involving Mr. Joseph and Defaulted Tax-Exempt Assets”), and the limited partner of the FSA Borrowing Partnerships is an “umbrella” limited liability company controlled by Mr. Joseph. In the refunding transaction, the originally issued bonds were exchanged for a senior series of tax-exempt bonds with an aggregate principal balance of $67.7 million (the “Series A Bonds”) and a subordinate series of tax-exempt bonds with an aggregate principal balance of $58.9 million (the “Series B Bonds,” and together with the Series A Bonds, the “FSA Bond Portfolio”). We then established a custody arrangement whereby (1) the Series A Bonds were

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placed into a trust, (2) payments of principal and interest on the Series A Bonds were credit enhanced by insurance policies issued by Financial Security Assurance, Inc (“FSA”), and (3) the trust issued custodial receipts representing beneficial ownership interests in the credit enhanced Series A Bonds to unrelated third-party purchasers (the “Custodial Receipts”). We retained the Series B Bonds.

At the end of 1998 and in early 1999, we arranged for further financing with respect to the FSA Bond Portfolio through a sale of mezzanine debt (senior to our Series B Bonds, but junior to the Series A Bonds) (the “FSA Portfolio Demand Notes”). We provided a guarantee of the obligations of the FSA Borrowing Partnerships to pay principal and interest on the FSA Portfolio Demand Notes. As of December 31, 2005 and 2004, the face amount of the FSA Portfolio Demand Notes was $16.2 million. Our obligation under this guarantee is included in the summary of our guarantees in Note 9 in these Notes to the Consolidated Financial Statements.

Pursuant to the terms of the custodial arrangement, the Series A Bonds were eligible to be redeemed and refunded at the direction of the borrowing partnerships beginning in early 2005. In order to avoid the cost and time involved with such a transaction, in February 2005 a subsidiary of ours purchased all of the Custodial Receipts and deposited them into a securitization vehicle, whereby new receipts, benefiting from FSA’s underlying credit enhancement, were issued to third-party investors and the subsidiary purchased certificates representing residual beneficial interests in the Custodial Receipts. These residual beneficial interests will indirectly produce tax-exempt income for us. This transaction does not affect the obligations of the FSA Borrowing Partnerships under the Series A Bonds or the Series B Bonds.

Transactions Involving non-Shelter Group Affiliates of Mr. Joseph and Defaulted Tax-Exempt Assets. From time to time, borrowing partnerships owning real estate projects financed by us have defaulted on their debt obligations to us (each referred to as a “Borrowing Partnership”). Some of these defaulted obligations were incurred in connection with the development of properties that collateralize tax-exempt bonds held by us (“Defaulted Tax-Exempt Assets”).

The table below includes information regarding certain such Defaulted Tax-Exempt Assets where we and entities owned (directly or indirectly) by Mr. Joseph have an interest:

	December 31, 2005			December 31, 2004
Entity	Number of Properties (4)	Investment Carrying Value		Number of Properties	Investment Carrying Value
SCA Successor, Inc (1)	2	$	37,552	2	$	39,782
SCA Successor II, Inc. (2)	11		128,628	12		65,339
MMA Successor I, Inc. (3)	1		8,909	1		5,991
Total	14	$	175,089	15	$	111,112

(1) SCA Successor, Inc. is the general partner of certain Borrowing Partnerships (including certain of the FSA Borrowing Partnerships discussed above under “FSA Bond Portfolio”) and is controlled by Mr. Joseph.

(2) SCA Successor II, Inc. is the general partner of certain Borrowing Partnerships (including certain of the FSA Borrowing Partnerships discussed above under “FSA Bond Portfolio”) and is controlled by Mr. Joseph.

(3) MMA Successor I, Inc., an entity owned and controlled by Mr. Joseph, is the general partner in one Borrowing Partnership.

(4) Number of properties are whole numbers and are not represented in thousands.

Transactions with Affiliated Entities

MuniMae Foundation, Inc. Some of our properties are financed by tax-exempt bonds issued on behalf of borrowers that are tax-exempt organizations under Section 501(c)(3) of the Internal Revenue Code. For such bonds to remain tax-exempt, the property at all times must be owned by a 501(c)(3) organization. Accordingly,

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whenever one of these properties requires a workout or restructuring where a change in ownership is desirable, we seek to find a qualified 501(c)(3) organization to act as owner. MuniMae Foundation, Inc. (“MuniMae Foundation”) is an affiliated 501(c)(3) corporation devoted to the ownership and operation of affordable housing for all citizens. Certain of our officers and directors serve as officers and directors of MuniMae Foundation. MuniMae Foundation pays us a nominal fee for providing asset management and financial services to it on an annual basis and pays a portion of the salary of one of our employees who serves as its executive director. For the years ended December 31, 2005 and 2004, we made $0.2 million and $1.0 million, respectively, in charitable contributions to MuniMae Foundation. As of December 31, 2005 and 2004, MuniMae Foundation directly or indirectly owned four and three properties for which the carrying value of our investment in these properties was $59.7 million and $52.2 million, respectively as of such dates. Because our 501(c)(3) bonds, like most of our loans, are non-recourse, we value these bonds by reference to the underlying property and therefore such loans or contributions by us do not change the value of the bonds on our books, which is determined by reference to the underlying property.

In June 2005, as part of a workout transaction, MuniMae Foundation became the sole member of GF Arlington Inc., a Texas non-profit corporation. As of December 31, 2005, we held $8.8 million and $0.8 million in tax-exempt bonds and working capital loans, respectively, related to the underlying property (a senior living facility). The carrying value of these assets is included in the amounts described in the preceding paragraph.

MuniMae Affordable Housing, Inc. MuniMae Affordable Housing, Inc. (“MMAH”) is an affiliated non-profit entity organized to promote affordable housing. Certain of our officers and directors serve as officers and directors of MMAH. As of December 31, 2005, and 2004, MMAH directly or indirectly owned interests in eleven and one Defaulted Tax-Exempt Assets, and the aggregate carrying value of such assets was $55.4 million and $6.0 million, respectively, as of such dates.

During June of 2005, certain developers for projects being financed by us encountered substantial financial difficulties as a result of, among other problems, inadequate management and supervision of the development of their projects, which included ten affected properties (the “2005 MMAH Assets”). As a result of negotiations with these developers, these developers were required to transfer their interests in the 2005 MMAH Assets to MMAH. Eight of the 2005 MMAH Assets were originally financed, in whole or in part, through equity investments from tax credit equity funds that we sponsored (including some equity investments by guaranteed funds) and tax-exempt bond or taxable loan investments held by us. Two of the 2005 MMAH Assets were originally financed in part by equity investments from tax credit equity funds that we sponsored, but did not involve any debt from us. As of December 31, 2005, the total carrying value of our investments in the 2005 MMAH Assets was $46.5 million.

Depending upon the underlying facts and circumstances surrounding each such property, we have provided additional financial support to them in order to enable further development and maximize the value of our existing investments. Through December 31, 2005, we have provided additional financing of $3.2 million to certain of the 2005 MMAH Assets. We continue to evaluate impairment risk related to all of the 2005 MMAH Assets as it relates to us. As of December 31, 2005, two of the tax-exempt bonds related to the 2005 MMAH Assets were temporarily impaired by $0.8 million and were carried at fair values below amortized cost through a charge to other comprehensive income.

As of December 31, 2005, we recorded through a charge to impairments and valuation allowances, an other-than-temporary impairment of $2.6 million related to a tax-exempt bond with respect to one of the 2005 MMAH Assets. In January 2006, we exercised our rights as a bondholder and foreclosed on the underlying project. The project was originally financed with a $8.5 million tax-exempt bond. At the time of foreclosure, the project was sold, and the sale proceeds of $5.8 million were used to redeem the tax-exempt bond, which resulted in no gain or loss.

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NOTE 19—NON-EMPLOYEE DIRECTORS’ SHARE PLANS AND EMPLOYEE SHARE INCENTIVE PLANS

Non-employee directors’ share plans

At December 31, 2005, a total of 650,000 shares were authorized to be granted under the non-employee directors’ share plans. The non-employee directors’ plans provide a means for us to attract and retain highly qualified persons to serve as non-employee directors. Under the directors’ plans, an option to purchase 7,000 common shares is granted to each director when first elected or appointed to the Board of Directors. The exercise price of such options will be equal to 100% of the fair market value of the common shares on the date of grant. Options expire at the earlier of ten years after the date of grant or one year after the date a director ceases to serve as such. The options vest in three equal annual installments commencing at the earlier of: (a) the next anniversary of the director’s initial election or appointment or (b) the next annual meeting of shareholders. Such options are subject to earlier vesting in the event of death, disability, or a change in control. Except as otherwise determined by the Board, options will become fully exercisable after the participant ceases to serve as a director for any reason other than death or disability only to the extent that the options are vested at the date he or she ceased to be a director or has vested within two months after the date he or she ceased to be a director.

In addition, we will grant the directors restricted shares on the date of each annual meeting of shareholders. The plan also entitles each director to elect to receive shares or deferred shares in lieu of restricted shares. The restricted shares granted will vest at the earlier of: (a) the next anniversary of the grant of such restricted shares, or (b) the next annual meeting of shareholders. Such restricted shares are subject to earlier vesting in the event of death, disability, or a change in control as defined in the 2004 Directors’ Plans. Except as otherwise determined by the Board, a participant’s restricted shares will become fully vested after the participant ceases to serve as a director for any reason other than death or disability only to the extent that the restricted shares are vested at the date he or she ceased to be a director or has vested within two months after the date he or she ceases to be a director. Restricted shares that remain subject to restriction will be forfeited and reacquired by us at such time a participant ceases to be a director. Under deferred share elections, shares payable are credited to the account of the director, and future distributions payable with respect thereto are paid in the form of additional share credits based upon the fair market value of the common shares on the record date of the distribution payment.

At December 31, 2005, 144,000 options were outstanding under the directors’ plans with exercise prices ranging from $16.81 to $26.67. The weighted average remaining contractual life for these outstanding options was 6.1 years at December 31, 2005. The following table summarizes the activity relating to options issued under the directors’ plans for the years ended December 31, 2005, 2004 and 2003:

	Number of Shares		Weighted Average Exercise Price
Options outstanding at January 1, 2003	136,000		$	21.28
Granted	44,000			24.23
Exercised	–			–
Expired/ Forfeited	–			–
Options outstanding at December 31, 2003	180,000		$	22.00
Granted	7,000		$	25.52
Exercised	(10,000	)		15.84
Expired/ Forfeited	(25,000	)		20.88
Options outstanding at December 31, 2004	152,000		$	22.75
Granted	7,000		$	26.67
Exercised	(15,000	)		19.38
Expired/ Forfeited	–			–
Options outstanding at December 31, 2005	144,000		$	23.29
Options exercisable at:
December 31, 2003	136,000		$	21.28
December 31, 2004	145,000		$	22.62
December 31, 2005	132,333		$	23.03

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The directors’ plans also entitle each director to elect to receive payment of director’s fees in the form of common shares, based on their fair market value on the date of payment, in lieu of cash payment of such fees. Such shares may also be paid on a deferred basis. As of December 31, 2005, 10,251 common shares, 1,458 restricted shares and 78,020 deferred shares had been issued to directors in lieu of cash payments for director fees. As of December 31, 2005, there were 384,772 shares available under the directors’ plans. The following table summarizes the deferred and restricted shares issued to directors and their respective weighted average grant-date share prices during the years ended December 31, 2005, 2004 and 2003:

	Restricted shares issued	Weighted average grant- date share price		Deferred shares issued	Weighted average grant- date share price
2005	968	$	25.83	15,455	$	25.36
2004	490	$	25.49	14,704	$	25.16
2003	–	$	–	7,146	$	24.35

Employee share incentive plans

At December 31, 2005, 3,622,033 shares were authorized to be issued under the share incentive plans. Our share incentive plans provide a means for us to attract, retain and reward executive officers and other key employees, to link employee compensation to measures of our performance and to promote ownership of a greater proprietary interest in MuniMae. The plans authorize grants of a broad variety of awards, including non-qualified stock options, share appreciation rights, restricted shares, deferred shares and shares granted as a bonus or in lieu of other awards. Shares issued as restricted shares and as awards, other than options (including restricted shares), may not exceed 20% and 40%, respectively, of the total reserved under the plans. As of December 31, 2005, there were 1,268,654 shares available under the plans.

Common share options

The exercise price of common share options granted under the plans is equal to 100% of the fair market value of the common shares on the date of grant. The options vest over three to four years. In the event of a change in control of MuniMae (as defined in the plans), the options shall become immediately and fully exercisable. In addition, we may accelerate the exercisability of all or a specified portion of the options at any time. Generally, the options expire ten years from the date of grant. However, options will expire immediately upon the termination of employment for cause and three months after termination of employment for reasons other than death, disability or normal or early retirement. In the event of death, disability or retirement, the options will expire one year after the date of such event. At December 31, 2005, 276,735 options were outstanding under the plans with exercise prices ranging from $16.88 to $21.95. The weighted average remaining contractual life for these outstanding options was 2.3 years at December 31, 2005. The following table

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summarizes the activity relating to options issued under the plans for the years ended December 31, 2005, 2004 and 2003:

	Number of Shares		Weighted Average Exercise Price
Options outstanding at January 1, 2003	826,239		$	18.20
Granted	–			–
Exercised	(64,250	)		18.37
Expired/Forfeited	(19,500	)		18.75
Options outstanding at December 31, 2003	742,489		$	18.17
Granted	–		$	–
Exercised	(280,554	)		18.88
Expired/Forfeited	–			–
Options outstanding at December 31, 2004	461,935		$	17.68
Granted	–		$	–
Exercised	(185,200	)		17.55
Expired/Forfeited	–			–
Options outstanding at December 31, 2005	276,735		$	17.76
Options exercisable at:
December 31, 2003	681,877		$	18.12
December 31, 2004	461,935		$	17.68
December 31, 2005	276,735		$	17.76

Deferred shares

The deferred shares vest over one to ten years, as outlined in the individual award agreements. The deferred share awards also provide for acceleration of vesting on a discretionary basis, upon a change in control and death or disability. As of December 31, 2005, 822,145 deferred shares had vested. We recorded unearned compensation equal to the fair market value of the awards, which is shown as a separate component of shareholders’ equity. Unearned compensation is being amortized into expense over the vesting period. For the years ended December 31, 2005, 2004 and 2003, we recognized compensation expense of $8.9 million, $3.8 million and $2.5 million, respectively, relating to the deferred shares. During the years ended December 31, 2005, 2004 and 2003, we granted 416,545, 158,803 and 146,160 deferred share awards with weighted average grant-date share prices of $24.88, $24.23 and $24.26, respectively.

NOTE 20—FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of our financial instruments are included in the table at the end of this note.

The carrying amounts in the table correspond to amounts included in the accompanying balance sheets. We used the following methods or assumptions to estimate the fair values of financial instruments:

Tax-exempt bonds and interests in bond securitizations, net, taxable bonds, net, derivative financial instruments, cash and cash equivalents, restricted assets, mortgage servicing rights—The carrying amounts reported in the balance sheet approximate the fair value of these assets.

Loans receivable and loans held for sale—The fair value of our fixed rate loans was calculated by discounting the expected cash flows. The discount rates are based on the interest rate charged to current customers for comparable loans. Our adjustable rate loans reprice frequently at current market rates. Therefore, the fair value of these loans has been estimated to approximate their carrying value.

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Interest-only securities—The estimated fair value of the interest-only securities was calculated by discounting contractual cash flows adjusted for current prepayment estimates using a market discount rate.

Notes payable—The estimated fair value of our fixed rate notes payable was calculated by discounting contractual cash flows. The discount rates were based on the interest rates paid to current lenders for comparable notes payable. Our adjustable rate notes payable reprice frequently at current market rates. Therefore, the fair value of these notes payable has been estimated to approximate their carrying value.

Mortgage, factored notes payable and lines of credit–Project Partnerships and tax credit equity funds—Mortgage, factored notes payable and lines of credit (collectively “fund debt”) associated with our consolidated Project Partnerships and tax credit equity funds are excluded from the fair value disclosure of financial instruments due to the lack of necessary information to determine the fair value. At December 31, 2005 and 2004, the balance of fund debt was $245.9 million and $320.1 million, respectively.

Short- and long-term debt—The fair value of short-term debt has been estimated to approximate carrying value due to the frequent reset of interest rates paid. The fair value of long-term debt has been calculated using the quote on the associated tax-exempt bond or by pricing the debt using a comparison of the fixed rate of the debt to current market rates.

Subordinate debentures and preferred shares subject to mandatory redemption—The estimated fair value of the subordinate debentures and preferred shares was calculated by determining the price for these instruments based on the current level of interest rates on comparable investments.

Limitations

The fair value estimates are made at a discrete point in time based on relevant market information and information about the financial instrument. Because no or limited markets exist for a significant portion of our financial instruments fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. In addition, the fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

	December 31, 2005				December 31, 2004
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Tax-exempt bonds and interests in bond securitizations, net	$	1,404,974	$	1,404,974	$	1,275,748	$	1,275,748
Taxable bonds		31,561		31,561		9,205		9,205
Loans receivable, net—fixed		285,756		289,569		121,178		121,626
Loans receivable, net—variable		518,072		518,626		501,012		500,953
Derivative financial instruments		3,975		3,975		3,102		3,102
Cash and cash equivalents		140,681		140,681		92,881		92,881
Restricted cash and cash equivalents		96,338		96,338		72,836		72,836
Interest-only securities		5,706		5,706		5,768		5,768
Mortgage servicing rights, net		63,904		80,864		11,349		11,349
Liabilities:
Notes payable—fixed		61,749		61,226		118,857		118,207
Notes payable—variable		623,514		623,349		569,280		569,275
Short-term debt		693,785		694,071		414,193		414,193
Long-term debt		104,215		101,663		162,978		164,209
Subordinate debentures		172,750		172,299		84,000		85,852
Preferred shares subject to mandatory redemption		168,000		176,223		168,000		182,392
Derivative financial instruments		4,005		4,005		6,171		6,171

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NOTE 21—DISCONTINUED OPERATIONS

In January and March of 2005, properties of certain Project Partnerships were sold for net proceeds of $1.8 million. Approximately $6.9 million of liabilities for the affected Project Partnerships were forgiven and included in the overall gain to the partnerships. We hold a less than 1% general partner interest in the Project Partnerships, and, therefore, the activities related to these properties, including the associated gain on disposal, are immaterial. We as general partner received no proceeds from the sales.

In August 2005, we both acquired a property by deed in lieu of foreclosure and sold the property for net proceeds of approximately $17.5 million. The property previously served as collateral for a tax-exempt bond and taxable loan we held.

In September 2004, we both acquired a property by deed in lieu of foreclosure and sold the property for net proceeds of $16.2 million. The property previously served as collateral for a tax-exempt bond and taxable loan we held.

In April 2003, we acquired a property by deed in lieu of foreclosure. In June 2003, we sold the property for net proceeds of $38.1 million. The property previously served as collateral for a tax-exempt bond and taxable loan we held.

All activities related to these properties have been classified as discontinued operations in the consolidated statements of income. The following table summarizes the components of discontinued operations for the periods presented.

	For the year ended December 31,
	2005		2004		2003
Loss from operations of property	$	–	$	–	$	(1,015	)
Gain on disposal of property		9,481		11,080		26,763
	$	9,481	$	11,080	$	25,748

The net assets of the property as of the date of sale were as follows:

	2005			2004			2003
Fixed assets	$	23,392		$	5,551		$	12,553
Other assets		545			366			252
Other liabilities		(12,479	)		(784	)		(446	)
	$	11,458		$	5,133		$	12,359

NOTE 22—REORGANIZATION OF OPERATIONS

During the fourth quarter of 2005, we adopted a plan to reorganize our operations and alter our strategy related to certain real estate finance activities. This plan was designed to; (1) develop ways to improve service to our customers; (2) increase our market share in existing and new businesses; (3) lower our overall operating costs; and (4) drive profitability over the long-term. As part of this plan, we consolidated activities and restructured roles and responsibilities resulting in a workforce reduction of approximately eight percent. Pursuant to FAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” we recorded a $5.2 million charge to net earnings representing the fair value of the termination benefits and the impairment of certain intangible assets, primarily customer relationship value, no longer deemed to have value. The termination costs

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were recorded in salaries and benefits in the accompanying consolidated statement of income. The following table summarizes the costs incurred during the period and liability at December 31, 2005 (in thousands):

	Termination benefits			Asset write-offs		Total
Debt	$	669		$	–	$	669
Tax credit equity		464			–		464
Structured finance		3			–		3
Fund management		3,755			284		4,039
Unallocated corporate		17			–		17
Total charges		4,908		$	284	$	5,192
Amounts paid		(562	)
Balance at December 31, 2005	$	4,346

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NOTE 23—QUARTERLY RESULTS (UNAUDITED)

See Note 2—Restatement for further information regarding the restated amounts hereon.

	For the year ended December 31, 2005
	1st Quarter						2nd Quarter						3rd Quarter						4th Quarter
	As reported			Restated			As reported			Restated			As reported			Restated
INCOME:
Interest income	$	35,518		$	34,508		$	37,020		$	35,673		$	40,561		$	39,735		$	44,238
Fee income		16,263			21,016			17,955			24,211			21,705			27,070			44,259
Net rental income		6,572			6,572			5,550			5,550			4,828			4,828			5,395
Total income		58,353			62,096			60,525			65,434			67,094			71,633			93,892
EXPENSES:
Interest expense		17,117			16,560			18,702			18,200			19,907			18,799			21,323
Interest expense on debentures and preferred shares		5,231			5,231			6,081			6,081			6,818			6,818			7,520
Operating expenses		28,897			28,590			30,851			30,585			31,021			30,547			43,048
Depreciation and amortization		3,794			3,744			3,937			3,878			6,384			6,364			7,224
Total expenses		55,039			54,125			59,571			58,744			64,130			62,528			79,115
Net (loss) gain on sale of loans		(286	)		(286	)		1,251			1,251			4,796			4,796			3,640
Net gain on sale of tax-exempt investments		914			914			5,159			5,159			442			442			817
Net gain on sale of investments in tax credit equity partnerships		841			841			5,723			5,818			2,494			2,494			851
Net gain on deconsolidation of tax credit equity partnerships		–			–			2,501			–			46			1			–
Net gain (loss) on derivatives		2,888			2,678			94			(91	)		(1,563	)		381			5,352
Impairments and valuation allowances		(812	)		(812	)		(554	)		(554	)		(1,951	)		(1,951	)		(1,260	)
Income before income tax (expense) benefit, net loss allocable to minority interest, net losses from equity investments in partnerships and discontinued operations		6,859			11,306			15,128			18,273			7,228			15,268			24,177
Income tax (expense) benefit		1,216			3,763			(4,251	)		(5,974	)		865			1,819			(1,949	)
Net loss allocable to minority interest		38,882			38,882			22,031			22,031			13,135			13,135			613
Net losses from equity investments in partnerships		(44,726	)		(46,244	)		(9,330	)		5,254			(10,291	)		(13,815	)		(8,616	)
Income from continuing operations		2,231			7,707			23,578			39,584			10,937			16,407			14,225
Discontinued operations		–			–			–			–			9,480			9,480			1
Net income	$	2,231		$	7,707		$	23,578		$	39,584		$	20,417		$	25,887		$	14,226
Earnings per share from continuing operations:
Common shares:
Basic	$	0.06		$	0.21		$	0.62		$	1.04		$	0.29		$	0.43		$	0.37
Diluted	$	0.06		$	0.21		$	0.61		$	1.04		$	0.28		$	0.43		$	0.37
Earnings per share:
Common shares:
Basic	$	0.06		$	0.21		$	0.62		$	1.04		$	0.54		$	0.68		$	0.37
Diluted	$	0.06		$	0.21		$	0.61		$	1.04		$	0.52		$	0.67		$	0.37

F-63

	For the year ended December 31, 2004
	1st Quarter						2nd Quarter						3rd Quarter						4th Quarter
	As reported			Restated			As reported			Restated			As reported			Restated			As Reported			Restated
INCOME:
Interest income	$	31,030		$	30,466		$	34,587		$	34,988		$	34,975		$	34,161		$	33,804		$	33,953
Fee income		15,153			19,020			12,863			17,054			14,176			16,388			22,380			27,283
Net rental income		–			–			5,496			5,140			5,151			5,151			6,943			6,144
Total income		46,183			49,486			52,946			57,182			54,302			55,700			63,127			67,380
EXPENSES:
Interest expense		13,904			13,320			18,651			17,797			16,937			16,187			20,207			19,030
Interest expense on debentures and preferred shares		3,046			3,046			4,004			4,004			4,769			4,769			5,499			5,499
Operating expenses		20,776			20,579			29,845			29,133			27,371			26,996			28,905			28,257
Depreciation and amortization		1,939			1,997			3,936			3,850			3,681			2,644			4,459			4,122
Total expenses		39,665			38,942			56,436			54,784			52,758			50,596			59,070			56,908
Net gain on sale of loans		680			680			1,730			1,730			406			406			577			577
Net gain (loss) on sale of tax-exempt investments		192			192			1,013			1,013			(660	)		(660	)		(241	)		(241	)
Net gain on sale of investments in tax credit equity partnerships		2,435			2,435			379			379			125			125			80			80
Net gain (loss) on derivatives		(3,425	)		(3,627	)		6,687			6,483			(3,245	)		(3,450	)		1,244			1,535
Impairments and valuation allowances		(300	)		(300	)		(430	)		(430	)		(2,646	)		(2,646	)		(3,765	)		(2,183	)
Income (loss) before income tax (expense) benefit, net loss allocable to minority interest, net losses from equity investments in partnerships, discontinued operations and cumulative effect of a change in accounting principle		6,100			9,924			5,889			11,573			(4,476	)		(1,121	)		1,952			10,240
Income tax (expense) benefit		2,510			4,567			(173	)		1,449			(73	)		920			(5,001	)		(428	)
Net loss allocable to minority interest		105			105			76,659			76,685			52,000			52,000			49,853			48,017
Net losses from equity investments in partnerships		(10,511	)		(13,294	)		(71,224	)		(71,889	)		(46,754	)		(50,096	)		(41,419	)		(42,916	)
(Loss) income from continuing operations		(1,796	)		1,302			11,151			17,818			697			1,703			5,385			14,913
Discontinued operations		–			–			–			–			10,865			10,865			215			215
(Loss) income before cumulative effect of a change in accounting principle		(1,796	)		1,302			11,151			17,818			11,562			12,568			5,600			15,128
Cumulative effect of a change in accounting principle		520			520			–			–			–			–			–			–
Net (loss) income	$	(1,276	)	$	1,822		$	11,151		$	17,818		$	11,562		$	12,568		$	5,600		$	15,128
(Loss) earnings per share from continuing operations:
Common shares:
Basic	$	(0.06	)	$	0.04		$	0.32		$	0.51		$	0.02		$	0.05		$	0.15		$	0.43
Diluted	$	(0.06	)	$	0.04		$	0.32		$	0.51		$	0.02		$	0.05		$	0.15		$	0.42
(Loss) earnings per share:
Common shares:
Basic	$	(0.04	)	$	0.05		$	0.32		$	0.51		$	0.33		$	0.36		$	0.16		$	0.43
Diluted	$	(0.04	)	$	0.05		$	0.32		$	0.51		$	0.33		$	0.36		$	0.16		$	0.43

F-64

The effect of the restatements described in Note 2 were as follows:

IMPACT ON NET INCOME BY PERIOD:

	2005
	1st Quarter			2nd Quarter			3rd Quarter
Tax credit equity (A), (B), (C) and (D)	$	5,462		$	4,749		$	5,670
Origination fees and direct costs (E)		(805	)		(1,418	)		(472	)
Investments in partnerships using the equity method (F)		(1,518	)		14,583			(2,367	)
Derivative financial instruments (G)		(210	)		(185	)		1,685
Mortgage servicing rights (I)		–			–			–
Taxes		2,547			(1,723	)		954
Total	$	5,476		$	16,006		$	5,470

	2004
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Tax credit equity (A), (B), (C) and (D)	$	4,245		$	4,670		$	3,013		$	6,968		$	18,896
Origination fees and direct costs (E)		(161	)		1,114			(489	)		(300	)		164
Investments in partnerships using the equity method (F)		(2,784	)		(478	)		(3,342	)		(1,506	)		(8,110	)
Derivative financial instruments (G)		(201	)		(203	)		(206	)		(207	)		(817	)
Mortgage servicing rights (I)		(58	)		(58	)		1,037			–			921
Taxes		2,057			1,622			993			4,573			9,245
Total	$	3,098		$	6,667		$	1,006		$	9,528		$	20,299
	2003
	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Tax credit equity (A), (B), (C) and (D)	$	–		$	–		$	(535	)	$	(10,829	)	$	(11,364	)
Origination fees and direct costs (E)		(478	)		(239	)		38			280			(399	)
Investments in partnerships using the equity method (F)		(1,210	)		(2,846	)		(459	)		(3,277	)		(7,792	)
Derivative financial instruments (G)		–			(79	)		(198	)		(199	)		(476	)
Mortgage servicing rights (I)		(58	)		(58	)		(58	)		(58	)		(232	)
Taxes		635			1,220			(1,108	)		7,630			8,377
Total	$	(1,111	)	$	(2,002	)	$	(2,320	)	$	(6,453	)	$	(11,886	)

F-65

EXHIBIT INDEX

Exhibit No.	Description	Incorporation by Reference
2.1	Agreement of Merger, dated as of August 1, 1996, by and between SCA Tax Exempt Fund Limited Partnership and the Company.	Incorporated by reference to the Company’s Registration Statement on Form S-4 (No. 33-99088).
2.2	Stock Purchase Agreement, dated as of June 8, 2005, by and between David Williams, Kevin Filter, MMA Mortgage Investment Corporation and the Company (the “Glaser Stock Purchase Agreement”).	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 10, 2005.
2.2.1	Amendment No. 1 to the Glaser Stock Purchase Agreement, dated as of July 1, 2005, by and between David Williams, Kevin Filter, MMA Mortgage Investment Corporation and the Company.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
3.1	Amended and Restated Certificate of Formation and Operating Agreement of the Company.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.
3.2	Amended and Restated Bylaws of the Company.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
4.1	Specimen Common Share Certificate.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
4.2	Indenture, dated as of May 3, 2004, by and between MMA Financial Holdings, Inc. and Wilmington Trust Company.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
10.1	Amended and Restated Master Recourse Agreement by and among the Federal National Mortgage Association, the Company and MMACAP, LLC dated as of December 1, 2000.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004
10.2	Credit Agreement, dated as of November 12, 2004, as amended, among MuniMae TEI Holdings, LLC, MMA Construction Finance, LLC and MMA Mortgage Investment Corporation, as borrowers, the Company, as guarantor, Bank of America, N.A., as administrative agent, U.S. Bank National Association, RBC Capital Markets and CitiCorp USA, Inc., as co-syndication agents, and the other lenders party thereto.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 17, 2004.

E-1

Exhibit No.	Description	Incorporation by Reference
10.3.1	Fifth Amended and Restated Revolving Loan and Letter of Credit Agreement (the “Tax Credit Warehousing Agreement”), dated as of November 4, 2005, by and among MMA Financial Warehousing, LLC and MMA Financial Bond Warehousing, LLC, as borrowers, the Company, MMA Financial Holdings, Inc., MMA Equity Corporation, MMA Financial TC Corp., MMA Financial BFGLP, LLC, MMA Financial BFRP, Inc., MMA Financial BFG Investments, LLC and MMA Special Limited Partner, Inc., as guarantors, and Bank of America, N.A., as administrative agent and lender, and the other lenders party thereto.*	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
10.3.2	Guaranty Agreement, dated as of November 4, 2005, by Municipal Mortgage & Equity, LLC in favor of Bank of America, N.A., in its capacity as agent for the banks under the Tax Credit Warehouse Agreement.*	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
10.4.1	Amended and Restated Credit Agreement effective as of November 16, 2005 between U.S. Bank National Association and MMA Mortgage Investment Corporation (the “US Bank Credit Agreement”).
10.4.2	First Amendment, dated as of December 5, 2005, to the US Bank Credit Agreement.
10.4.3	Second Amendment, dated as of December 14, 2005, to the US Bank Credit Agreement.
10.4.4	Third Amendment, dated as of March 15, 2006, to the US Bank Credit Agreement.
10.5	Multifamily and Health Care Mortgage Loan Repurchase Agreement dated as of May 31, 2006 between MMA Mortgage Investment Corporation and Washington Mutual Bank.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 6, 2006.
10.6	Warehousing Credit and Security Agreement dated as of May 31, 2006 between MMA Construction Finance, LLC and Washington Mutual Bank.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 6, 2006
10.7.1	Letter of Credit Facility Agreement, dated as of October 18, 2002, as amended, between MMA Mortgage Investment Corporation (formerly, Midland Mortgage Investment Corporation) and Bank of America, N.A. (the “BOA MMIC LC Agreement”).

E-2

Exhibit No.	Description	Incorporation by Reference
10.7.2	Letter of Credit Facility Agreement, dated as of October 18, 2002, as amended, between MMA Construction Finance, LLC (formerly, MuniMae Midland Construction Finance, LLC) and Bank of America, N.A. (the “BOA MMCF LC Agreement,” and together with the BOA MMIC LC Agreement, the “BOA LC Agreements”).
10.7.3	First Amendment to the BOA LC Agreements dated as of December 23, 2002.
10.7.4	Second Amendment to the BOA LC Agreements dated as of October 15, 2004.
10.7.5	Third Amendment to the BOA LC Agreements dated as of January 20, 2005.
10.7.6	Fourth Amendment to the BOA LC Agreements dated as of March 1, 2006.
10.8.1	Revolving Credit Agreement (the “BOA $72M Agreement”) dated as of November 12, 2003 by and among MuniMae Construction Finance, LLC (formerly, MuniMae Midland Construction Finance, LLC), the banks party thereto, and Bank of America, N.A., as administrative agent.
10.8.2	First Amendment to the BOA $72M Agreement dated as of May 4, 2005.
10.9.1	Amended and Restated Credit Agreement (the “BOA $70M Agreement”), dated as of December 3, 2004, among MMA Construction Finance, LLC and MMA Mortgage Investment Corporation (formerly, Midland Mortgage Investment Corporation), as borrowers, and Bank of America, N.A. and the other lenders party thereto.
10.9.2	First Amendment to the BOA $70M Agreement dated as of February 1, 2005.
10.9.3	Second Amendment to the BOA $70M Agreement dated as of December 2, 2005.
10.10.1	Mortgage Asset Purchase Agreement, dated as of June 15, 2006, with Wachovia Bank, National Association (“Wachovia”).	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2006.
10.10.2	Custodial Agreement, dated as of June 15, 2006, by and among MMA Realty Capital Repurchase Subsidiary, LLC, Wachovia and Wells Fargo Bank, National Association, as the custodian.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2006.

E-3

Exhibit No.	Description	Incorporation by Reference
10.10.3	Guaranty Agreement, dated as of June 15, 2006, by the Company, for the benefit of Wachovia.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2006.
10.10.4	Pledge and Security Agreement, dated as of the June 15, 2006, by MMA Capital Corporation, as the pledgor, for the benefit of Wachovia.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21, 2006.
10.11	Form of Municipal Mortgage & Equity, L.L.C. 1998 Share Incentive Plan.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
10.12	Form of Municipal Mortgage & Equity, L.L.C. 1998 Non-Employee Directors’ Share Incentive Plan.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
10.13	Form of Municipal Mortgage & Equity, L.L.C. 2001 Share Incentive Plan.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
10.14	Form of Municipal Mortgage & Equity, L.L.C. 2001 Non-Employee Directors’ Share Incentive Plan.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
10.15	Municipal Mortgage & Equity, LLC 2004 Non-Employee Directors’ Share Plan.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.
10.16	Municipal Mortgage & Equity, LLC Amended and Restated 2004 Share Incentive Plan and Form of Deferred Share Agreement.	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.
10.17.1	Employment Agreement by and between the Company and Mark K. Joseph dated as of July 1, 2003 (the “M. Joseph Employment Agreement”).	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
10.17.2	Amendment to the M. Joseph Employment Agreement by and between the Company and Mark K. Joseph dated as of January 1, 2005.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004
10.17.3	Assignment and Assumption Agreement, dated as of January 1, 2006, by and between the Company, MMA Financial, Inc. and Mr. Joseph.
10.18.1	Employment Agreement by and between the Company and Michael L. Falcone dated as of July 1, 2005.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
10.18.2	Assignment and Assumption Agreement, dated as of January 1, 2006, by and between the Company, MMA Financial, Inc. and Mr. Falcone.

E-4

Exhibit No.	Description	Incorporation by Reference
10.19.1	Employment Agreement by and between the Company and Earl W. Cole, III dated as of July 1, 2003.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
10.19.2	Assignment and Assumption Agreement, dated as of January 1, 2006, by and between the Company, MMA Financial, Inc. and Mr. Cole.
10.20	Employment Agreement by and between the Company and Gary A. Mentesana dated as of June 14, 2006.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 19, 2006.
10.21.1	Employment Agreement by and between the Company and Jenny Netzer dated as of July 1, 2003.	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
10.22	Employment Agreement by and between the Company and Charles M. Pinckney dated as of June 13, 2006.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 19, 2006.
10.23	Employment Agreement between MMA Financial, Inc. and Melanie M. Lundquist dated as of December 31, 2004.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 1, 2005.
21	List of subsidiaries.
24	Powers of Attorney.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Confidential treatment has been requested for certain portions of this Exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, which portions have been omitted and filed separately with the Securities and Exchange Commission.

E-5

EX-10.4.1

Exhibit 10.4.1

execution copy

AMENDED AND RESTATED CREDIT AGREEMENT

This Amended and Restated Credit Agreement is dated as of November 16, 2005, by and between MMA MORTGAGE INVESTMENT CORPORATION, a Florida corporation (the “Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Bank”).

Preliminary Statement

The Bank and the Borrower have entered into the following agreements, each dated as of July 1, 2005 (the “Existing Credit Documents”): (i) Credit Agreement, and Notes issued thereunder (the “Original Credit Agreement”), (ii) Amended and Restated Mortgage Loan Pledge Agreement, (iii) Amended and Restated Investment Pledge Agreement, (iv) Amended and Restated P & I Advance Pledge Agreement, under which the Bank made certain loans to the Borrower. Such loans are secured by the security provisions of the Existing Credit Documents. The Borrower has requested that the Bank continue to make loans to Borrower, as more particularly described herein and in document provided for hereunder, and the Borrower and the Bank have agreed that the Original Credit Agreement shall be amended to read as follows to govern such loans and other extensions of credit as hereinafter provided.

Agreement

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend and restate the Original Credit Agreement as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.1 Definitions. As used herein, in each exhibit hereto and in each other Loan Document (unless otherwise expressly defined therein), the following terms shall have the following respective meanings (such terms to be equally applicable to both the singular and plural forms of the terms defined):

“Adjusted Tangible Net Worth” means the total of (a) net worth, determined in accordance with GAAP, plus (b) an amount equal to seventy five percent (75%) of the Fair Market Value of the Borrower’s Servicing Portfolio, minus (c) any advances or loans to or investments in the Borrower’s shareholders, officers or entities that are controlled by the Borrower’s shareholders or officers, minus (d) organizational costs net of accumulated amortization, minus (e) servicing contracts net of accumulated amortization, and minus (f) other items treated as intangible assets under GAAP. For such purposes, the term “Fair Market Value” means the current fair market value of the Servicing Portfolio as reasonably determined by the Bank based on appraisals of independent appraisers reasonably satisfactory to the Bank (if such appraisals present a range of values, the Bank shall apply the midpoint of such values to determine the Fair Market Value).

“Advance Percentage” means (a) 100%, if the Borrower shall have deposited an amount equal to 1% of the amount of all outstanding Warehouse Advances (after giving effect to any Warehouse Advance then being requested) into the Cash Collateral Account, or (b) 99% otherwise

“Advances” means the loans by the Bank to the Borrower hereunder, and shall consist of the following (each a “type” of Advance):

(a) “Revolving Advance” made under Section 2.1(a), consisting of:

(i) “Warehousing Advances” if made for purposes set forth in Section 2.2(a);

(ii) “Investment Advances” if made for purposes set forth in Section 2.2(b);

(iii) “Bridge Advances” if made for purposes set forth in Section 2.2(c); and

(b) “Fannie Mae Advances” made under Section 2.1(b), for purposes set forth in Section 2.2(d).

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Amended and Restated Credit Agreement, as the same may be amended, modified or restated from time to time hereafter.

“Balance Supported Advances” means a portion of all Advances outstanding during each calendar month equal to the Average Daily Available Deposits maintained by the Borrower with the Bank during such month in excess of those required to compensate the Bank for the facility fee provided in Section 2.6. For purposes of the foregoing “Average Daily Available Deposits” shall mean, with respect to a calendar month, the average daily amount of Available Deposits on deposit with the Bank during such calendar month, and “Available Deposits” shall mean, at the time of determination, interest-free collected deposit balances maintained by the Borrower with the Bank, in excess of those which the Bank reasonably determines (in a manner consistent with the equivalent determinations made for other commercial customers of the Bank) to be necessary to support other banking services provided to the Borrower and to compensate the Bank for costs of maintaining reserves and insurance of the Federal Deposit Insurance Corporation (or any successor), which services and costs are not covered by cash payments by the Borrower.

“Bridge Mortgage Loans” means Mortgage Loans financed by Bridge Advances and meeting all of the requirements of Section 2.2(c) hereof.

“Business Day” means a day on which the Bank is open for the transaction of business in Minneapolis, Minnesota, and for purposes of the setting of rates of interest hereunder, a day on which dealings in Dollars may be carried on by the Bank in the interbank eurodollar market.

“Cash Collateral Account” means an account established by the Borrower with the Bank, which account shall be under the sole dominion and control of the Bank for purposes of the deposit referred to in the definition of “Advance Percentage.”

“Collateral” means all of the collateral under the Pledge Agreements and all other collateral in which a Security Interest is granted to the Bank to secure the Notes from time to time.

“Commitments” means the maximum unpaid principal amount of Advances which may from time to time be outstanding as provided in Section 2.1 hereof and, as the context may require, the agreement of the Bank to make Advances to the Borrower subject to the terms and conditions of this Agreement. The Commitment shall initially be in the following amounts, each as reduced from time to time as provided in Section 2.9(a) hereof:

(a) the “Revolving Commitment”, in the amount of (i) $110,000,000 as of the date of this Agreement through and including December 31, 2005, and (ii) $75,000,000 from January 1, 2006, through and including the Termination Date, which Revolving Commitments shall be further limited to the following:

(i) the full Revolving Commitment for Warehousing Advances;

(ii) the lesser of (A) $55,000,000, or (B) the full Revolving Commitment, for Investment Advances (the “Investment Sublimit”);

(iii) the lesser of (A) $10,000,000, or (B) the full Revolving Commitment, for Bridge Advances (the “Bridge Sublimit”); and

(b) the “Fannie Mae Commitment” in the amount of the lesser of (i) $10,000,000, or (ii) the full Revolving Commitment, for Fannie Mae Advances.

“Confirmation of Borrowing/Paydown” means a confirmation in a form consistent with the practice of the Borrower and the Bank immediately prior to the execution of this Agreement or in such form as is agreed from time to time between the Borrower and the Bank.

“Debt Service Coverage Ratio” means the ratio, calculated for each period of four consecutive fiscal quarters of the Borrower, of the ratio of:

(a) the remainder of: (i) Earnings Before Interest, Depreciation and Amortization for such four-quarter period, less (ii) any non-cash revenues included in (a)(i) pursuant to application of FAS 140 or any similar requirement of GAAP;

to

(b) the sum of (i) mandatory principal payments of Indebtedness of the Company; plus (ii) the interest expense of the Company (determined in accordance with GAAP), each of the same four-quarter period.

“Default” means an event which would be an Event of Default with the passage of time or the giving of notice.

“Earnings Before Interest, Depreciation and Amortization” means the net income of the Borrower before deductions for interest expense, depreciation and amortization, all as determined in accordance with GAAP, excluding therefrom (a) nonoperating gains (including without limitation, extraordinary or unusual gains, gains arising from the sale of assets other than inventory and other nonrecurring gains) during such period and (b) similar nonoperating losses (including, without limitation, losses arising from the sale of assets other than inventory and other nonrecurring losses) during such period.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute, together with regulations thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is a member of a group of which the Borrower is a member and which is treated as a single employer under Section 414 of the Code.

“Escrow Request” means a letter by the Borrower to the Bank in the form of Exhibit B, duly completed.

“Event of Default” is defined in Section 5.1.

“Fannie Mae” means Fannie Mae Corporation, or its successor.

“FHA” means the Federal Housing Administration, or its successor.

“Floating LIBOR Rate” means an annual rate equal to the one-month LIBOR rate quoted by Bank from Telerate Page 3750 or any successor thereto, which shall be that one-month LIBOR rate in effect and reset each New York Banking Day, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation.

“Freddie Mac” means Freddie Mac Corporation, or its successor.

“Funding and Settlement Account” means account number ending in 2927 of the Borrower maintained with the Bank, which account shall be under the sole dominion and control of the Bank.

“GAAP” means generally accepted accounting principles consistently applied and maintained throughout the period indicated, except for changes mandated by the Financial Accounting Standard Board or similar accounting authority of comparable standing.

“Ginnie Mae” means Ginnie Mae Corporation, or its successor.

“Glaser” means Glaser Financial Group, Inc., a Minnesota corporation, which was acquired by the Borrower and merged into the Borrower with the Borrower being the surviving entity and owner of all assets formerly owned by Glaser and undertaking all of the liabilities and obligations that were formerly liabilities and obligations of Glaser.

“HUD” means the U.S. Department of Housing and Urban Development or its successor.

“Immediately Available Funds” means funds with good value on the day and in the city in which payment is received.

“Indebtedness” means all obligations of the Borrower which, in accordance with GAAP, should be classified as liabilities on its balance sheet, and shall include all guaranties by the Borrower of Indebtedness of third parties, provided, that Indebtedness shall not include trade accounts payable arising in the ordinary course of business.

“Loan Documents”: this Agreement, the Notes, the Pledge Agreements, UCC-1 Financing Statements and each other instrument, document, guaranty, security agreement, mortgage, or other agreement, executed and delivered by the Borrower or any guarantor or party, granting security interests in connection with this Agreement, the Advances or any collateral for the Advances.

“Material Adverse Effect” means a material adverse effect upon the business, operations, properties, assets or condition (financial or otherwise) of the Borrower.

“Mortgage-backed Security” means a security (including, without limitation, participation certificates) that is an interest in a pool of mortgages or is secured by such an interest and is guaranteed by Ginnie Mae or is issued or guaranteed by Fannie Mae or Freddie Mac.

“Mortgage” means a mortgage, deed of trust or similar security instrument which constitutes a first-priority lien (unless the Bank otherwise agrees to a lower priority) on real property that has been improved, or, subject to the approval of the Bank, on which improvements are under construction.

“Mortgage Loan” means a loan secured by a Mortgage.

“New York Banking Day” means any day (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.

“Notes” means the Notes issued under, and as defined by, Section 2.5, and all other promissory notes issued by the Borrower to evidence obligations of the Borrower to the Bank under this Agreement or the other Loan Documents, all as amended, restated, modified, extended, renewed or replaced from time to time.

“Obligations” means any and all indebtedness, obligations and liabilities of the Borrower to the Bank (whether now existing or hereafter arising, voluntary or involuntary, whether or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time decreased or extinguished and later increased, created or incurred) arising out of or related to the Loan Documents, or any of them.

“Permitted Investments” means the following, in each case not subject to any lien, security interest, right of offset, or other encumbrance (except in favor of the Bank): (i) bank deposits held in the Borrower’s name at the Bank or repurchase obligations of the Bank having a term of not more than 90 days with respect to securities issued or fully guaranteed by the United States Government, (ii) securities with remaining maturities of 90 days or less issued or fully guaranteed by the United States Government or other securities with remaining maturities of 90 days or less issued or fully guaranteed by any state, political subdivision or taxing authority (provided that such other securities are rated at least A by Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.), and (iii) commercial paper with remaining maturities of 90 days or less of a domestic issuer rated as least A-1 by Standard & Poor’s Ratings Group or P-1 by Moody’s Investors Service, Inc.

“Person” means any natural person, corporation, partnership, joint venture, firm, association, trust, governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.

“Plan” means an employee benefit plan or other plan, maintained for employees of the Borrower or of any ERISA Affiliate, and subject to Title IV of ERISA or Section 412 of the Code.

“Pledge Agreements” means the following Agreements, each dated as of the date of this Agreement, each as amended, restated, modified, extended, renewed or replaced from time to time:

(a) Amended and Restated Mortgage Loan Pledge Agreement (the “Mortgage Pledge Agreement”);

(b) Amended and Restated Investment Pledge Agreement (the “Investment Pledge Agreement”);

and, if the Fannie Mae Advances are borrowed, a “Servicing Pledge Agreement” in the form of Exhibit C hereto.

“Prime Rate” means the rate of interest from time to time announced by the Bank as its “prime rate.” For purposes of determining any interest rate which is based on the Prime Rate, such interest rate shall be adjusted each time that the prime rate changes.

“Servicing Portfolio” means, as of a date of determination, the aggregate unpaid principal balance of Mortgage Loans which are serviced by the Borrower, excluding Mortgage Loans serviced by the Borrower under a subservicing agreement and excluding construction Mortgage Loans, unless such construction Mortgage Loans will (under applicable documents) be converted to permanent loans that will be serviced by the Borrower.

“Subsidiary” means any corporation a majority of the shares of the outstanding capital stock of which is owned by the Borrower, either directly or through one or more subsidiaries.

“Termination Date”: the earliest of (i) the date on which the Bank terminates the Commitments pursuant to Section 5.2 hereof, (ii) the date on which the Commitments are reduced to $0 and all Advances repaid, as provided in Section 2.9(a), and (ii) September 29, 2006.

1.2 Accounting Terms and Calculations. All accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP. To the extent any change in GAAP after the date hereof affects any computation or determination required to be made pursuant to this Agreement, such computation or determination shall be made as if such change in GAAP had not occurred unless the Borrower and the Bank agree in writing on an adjustment to such computation or determination to account for such change in GAAP.

1.3 Computation of Time Periods. In this Agreement, in the computation of a period of time from a specified date to a later specified date, unless otherwise stated the word “from” means “from and including” and the word “to” or “until” each means “to but excluding”.

1.4 Other Terms. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, schedule, exhibit and like references are to this Agreement unless otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or.” The singular includes the plural and the singular.

ARTICLE II

MAKING OF ADVANCES

2.1 Commitments. Subject to the terms and conditions of this Agreement and provided no Default or Event of Default has occurred and is continuing, the Bank agrees, from time to time during the period from the date hereof to, but not including, the Termination Date, to make the Advances to the Borrower. The Borrower may repay and reborrow the Advances. The Advances shall be subject to the following further restrictions (in addition to other restrictions set forth in this Agreement):

(a) the sum of the outstanding Revolving Advances plus the outstanding Fannie Mae Advances shall not exceed the Revolving Commitment at any time and the following types of Revolving Advances shall be subject to the following limits:

(i) the outstanding Warehousing Advances shall not exceed the Revolving Commitment at any time;

(ii) the outstanding Investment Advances shall not exceed the Investment Sublimit at any time; and

(iii) the Bridge Advances shall not exceed the Bridge Sublimit at any time.

(b) The Fannie Mae Advances shall not exceed the Fannie Mae Commitment at any time.

2.2 Use of Advances and Collateral for Advances. The Advances of the following types shall be used solely for the following purposes:

(a) Warehousing Advances shall be used solely to finance Mortgage Loans made by the Borrower that are acceptable to the Bank and are pledged and delivered to the Bank under the Mortgage Pledge Agreement as security for all Obligations. Each such Mortgage Loan shall be reviewed by the Bank and must meet the Bank’s criteria for the warehousing of multifamily housing Mortgage Loans, including satisfactory evidence:

(i) of a take-out commitment from Fannie Mae or Freddie Mac acceptable to the Bank; or

(ii) of conformance of the loans to requirements for inclusion in a pool supporting a Ginnie Mae mortgage-backed security, endorsement to insure such loans by HUD, and an acceptable take-out commitment from an investor acceptable to the Bank for the proposed Ginnie Mae mortgage-backed security.

(b) Investment Advances shall be used solely to purchase Permitted Investments, which Permitted Investments will be pledged and delivered to the Bank under the Investment Pledge Agreement as security for all Obligations. To the extent possible, the Borrower shall only request and borrow Investment Advances that will be Balance Supported Advances.

(c) Bridge Advances shall be used solely to finance Mortgage Loans by the Borrower that meet all requirements for Mortgage Loans financed by Warehousing Advances (including pledge of the Bridge Mortgage Loans under the Mortgage Pledge Agreement), except:

(i) The Bridge Advances shall not be subject to the requirements of Section 2.2(a)(i) and (ii);

(ii) Each Bridge Mortgage Loan shall meet the underwriting guidelines of Fannie Mae, Freddie Mac or another investor acceptable to the Bank for permanent loans (except for guidelines pertaining to the amount of permanent loans in relation to rental income of a property on a stabilized basis); and

(iii) The maximum amount to be advanced by the Bank with respect to each Bridge Mortgage Loan shall not exceed an amount equal to 95% of outstanding principal balance of the Bridge Mortgage Loan.

(d) Fannie Mae Advances shall be used solely to purchase investments approved by Fannie Mae, which shall be held as assets of the Borrower to satisfy requirements of Fannie Mae under the Fannie Mae Delegated Underwriter and Servicer Program, or which may be deposited by the Borrower with Fannie Mae or its custodian in connection with the performance of the Borrower’s obligations under the Fannie Mae Delegated Underwriter and Servicer Program.

2.3 Further Limitation on Amounts of Advances. In addition to the limits set forth elsewhere in this Agreement, the amount of each Advance shall be subject to the following limitations:

(a) A Warehousing Advance to fund any Mortgage Loan shall not exceed an amount equal to the Advance Percentage of the lesser of (a) the origination cost thereof (not exceeding the original principal amount thereof) and (b) the purchase price (not to exceed par) therefor under the applicable Fannie Mae or Freddie Mac take-out commitment applicable thereto;

(b) An Investment Advance shall not exceed the purchase price of the Permitted Investments that shall be purchased with the proceeds of such Investment Advance;

(c) A Bridge Advance to fund any Bridge Mortgage Loan shall not exceed an amount equal to 95% of outstanding principal balance of such Bridge Mortgage Loan; and

(d) Fannie Mae Advances shall not exceed 67% of the fair market value of pledged servicing rights under the Servicing Pledge Agreement (“Pledged Servicing Rights”) other than the Fannie Mae servicing portfolio, which servicing rights are acceptable to the Bank for such purpose (for such purpose, “fair market value” meaning the value of such Pledged Servicing Rights as determined by the most recent appraisal by an independent appraiser satisfactory to the Bank, adjusted as deemed requisite by the Bank for changes in market value of servicing rights, generally, since the time of such appraisal).

2.4 Procedures for Borrowing of Advances.

(a) On or before the Business Day prior to the date any Advance shall be requested, the Borrower shall provide to the Bank, (i) an Escrow Request, and (ii) other information reasonably requested by the Bank concerning each Mortgage Loan to be financed by an Advance to enable the Bank to make the necessary determination of whether such Mortgage Loan is acceptable to finance hereunder.

(b) The Borrower shall give the Bank telephonic notice of each request for an Advance not later than 10:00 a.m. (Minneapolis time) on the Business Day prior to a requested Advance, specifying the amount of the Advance requested. The Borrower shall promptly confirm any such request it makes by delivering to the Bank a duly completed and executed Confirmation of Borrowing/Paydown/Conversion. Subject to provision of information for Advances funding any Mortgage Loan and subject to satisfaction of all conditions precedent to the relevant Advance, the Bank shall deposit into the Funding and Settlement Account in Immediately Available Funds by not later than 3:00 P.M. (Minneapolis time) on the Business Day of the Advance the amount of the Advance requested by the Borrower.

2.5 Notes and Repayment of Advances.

(a) The Bank shall enter in its records the amount of each Advance, the rate of interest borne by each Advance and the payments made on the Advances, and such records shall be deemed conclusive evidence of the subject matter thereof, absent manifest error. The Advances shall be evidenced by the following promissory notes of the Borrower:

(i) The Revolving Advances shall be evidenced by a promissory note substantially in the form of Exhibit A-1 (the “Revolving Note”); and

(ii) The Fannie Mae Advances shall be evidenced by a promissory note substantially in the form of Exhibit A-2 (the “Fannie Mae Advance Note”).

(b) The Advances and the Notes shall be due and payable on the Termination Date, provided, however, that the following provisions and maturities shall apply to the following types of Advances (and in each case, the following provisions shall not extend the maturity of any Advance to a time after the Termination Date):

(i) Each Warehousing Advance shall be payable in full not later than the date which is 90 days after the date on which such Warehousing Advance was made by the Bank.

(ii) Each Bridge Advance shall mature and be payable as follows:

(A) on the date 180 days after the making of any Bridge Advance, the amount of the excess of such Bridge Advance over 90% of the outstanding principal balance of the Bridge Mortgage Loan financed by such Bridge Advance, and interest thereon, shall mature and be payable; and

(B) the full amount of any Bridge Advance shall be paid on or before the date 730 days after the making of such Bridge Advance.

(c) The Borrower shall repay any Warehousing Advance or Bridge Advance upon any repayment or sale of the Mortgage Loan financed by any such Advance. The amount of such repayment shall not be less than: (i) prior to occurrence of an Event of Default, the amount of the outstanding principal and accrued interest of the Advance made to finance the repaid or sold Mortgage Loan that remains outstanding, or (ii) after occurrence and during continuance of an Event of Default, an amount equal to the greater of the amount calculated under subparagraph (i) hereof, or the full amount of such repayment or the proceeds of sale of such Mortgage Loan.

2.6 Facility Fee. The Borrower shall pay to the Bank a fee at a rate of 0.125% per annum on the Revolving Commitment. In lieu of paying all or any portion of such fees, the Borrower may maintain Average Daily Available Deposits with the Bank during each month in an amount that would produce earnings credits to pay such fees (or any portion thereof), at the earnings credit rate

per annum established by the Bank for non-interest bearing demand deposits from time to time. All of such accrued and unpaid fees shall be calculated on the basis of actual days elapsed in a year of 360 days and payable on the first day of each calendar month.

2.7 Interest. Interest on Advances shall accrue at whichever of the following fluctuating rates per annum is designated by the Borrower at the time each such Advance is made:

(a) For all Advances, unless Section 2.7(b) applies:

(i) for Balance Supported Advances the following, subject to adjustment as provided in Section 2.8:

(1) 0.750% for Revolving Advances that are Investment Advances;

(2) 1.750% for Revolving Advances that are Bridge Advances; and

(3) 1.250% for all other Revolving Advances and Fannie Mae Advances;

The Bank shall determine, and shall notify the Borrower of the amount of the Advances deemed to be Balance Supported Advances on a monthly basis.

(ii) for all Advances that are not Balance Supported Advances either (x) the Prime Rate per annum, or (y) the Floating LIBOR Rate, plus (for interest determined under this subparagraph (y) only):

(1) 0.750% for Revolving Advances that are Investment Advances;

(2) 1.750% for Revolving Advances that are Bridge Advances; and

(3) 1.250% for all other Revolving Advances and Fannie Mae Advances;

(b) Any amount of the Advances not paid when due, whether at the date scheduled therefor or earlier upon acceleration, shall bear interest until paid in full at a rate per annum equal to the Prime Rate plus 2.00% per annum.

(c) Bank’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

(d) Interest on all Advances shall be calculated on the basis of the actual number of days elapsed in a year of 360 days.

2.8 Reduction of Balance Supported Rates. In the event that the Borrower maintains Average Daily Available Deposits applied to any month that exceed the amount that would cause all outstanding Advances to be deemed Balance Supported Advances (such excess is called “Excess Available Deposits”), the Bank shall reduce the rate of interest to not less than 0.125% per annum (called a “Reduced Fixed Rate”), which Reduced Fixed Rate shall apply to the Balance Supported Advances. The Excess Available Deposits required for the Reduced Fixed Rate shall be calculated in accordance with the following formula:

AEAD	=	ILF	x	360
		ECR x RF		n

In such formula:

“AEAD” means the daily average amount of Excess Available Deposits required to support such reduced rate of interest.

“ILF” means the interest loss factor, calculated to equal the remainder of (i) the amount of interest that would have accrued during such month on the relevant Balance Supported Advances at the rates applicable under Section 2.7(a) and (b), less (ii) the amount of interest that accrued during such month on the relevant Balance Supported Advances at the Reduced Fixed Rate.

“ECR” means the earnings credit rate per annum established by the Bank for non-interest bearing demand deposits from time to time.

“RF” means a reserve factor equal to the number one (1) minus the percentage (expressed as a decimal, rather than a percentage) stipulated by Regulation D of the Board of Governors of the Federal Reserve as the highest marginal percentage of net demand deposits required to be maintained as reserves by the Bank.

“n” means the number of days in the relevant month.

The Bank shall determine the amount of average Excess Available Deposits applied to any month, which it shall determine based on internally-prepared account analysis and on timing and carry-over conventions that it shall establish for such purpose from time to time. The Bank shall notify the Borrower of application of a Reduced Fixed Rate on Balance Supported Advances based on such determinations.

2.9 Other Provisions respecting Commitments and Advances.

(a) Reductions in the Warehousing Commitment Amount. The Borrower may, at any time on at least thirty days’ prior notice to the Bank, permanently reduce the Commitments by any amount which is an integral multiple of $1,000,000. Upon such reduction, the amount of any Advance that exceeds any Commitment after giving effect to such reduction shall be repaid and may not be reborrowed.

(b) Time and Method of Payments. All payments and prepayments by the Borrower of the Advances or any interest thereon shall be made in Immediately Available Funds not later than 2:00 p.m. (Minneapolis time) on the dates called for under this Agreement at the office of the Bank. Funds received after such hour shall be deemed to have been received by the Bank on the next Business Day. The Borrower hereby authorizes the Bank to charge its respective Funding and Settlement Account in an amount equal to any such payment or prepayment when due and payable to the Bank under this Agreement on

the date due and the Borrower agrees to maintain collected funds in its respective Funding and Settlement Account sufficient to pay its obligations as and when due. If any payment of principal of the Advances becomes due and payable on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of any interest on such principal payment.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

To induce the Bank to extend the Revolving Commitment and to make Advances hereunder, the Borrower represents, covenants and warrants to the Bank that:

3.1 Organization. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and proposed to be conducted, to execute, deliver, pay and perform the Loan Documents and to carry out the transactions contemplated hereby and thereby.

3.2 Good Standing. The Borrower is in good standing wherever necessary to carry on its business and operations and in all jurisdictions in which the failure to be in good standing would permanently preclude the Borrower from enforcing its rights with respect to any material asset or expose the Borrower to any material liability.

3.3 Due Authorization. The execution, delivery, payment and performance by the Borrower of the Loan Documents have been duly authorized by all necessary corporate action by the Borrower.

3.4 No Violation. The execution, delivery, payment and performance by the Borrower of the Loan Documents do not (i) violate any provision of law applicable to the Borrower, the Articles of Incorporation or Bylaws of the Borrower or any order, judgment or decree of any court or other agency of government binding on the Borrower, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) in any material respect a default under any material contractual obligation of the Borrower, (iii) result in or require the creation or imposition of any lien, security interest, charge or encumbrance of any nature whatsoever upon any of its properties or assets except the security interest granted to the Bank under the Pledge Agreements, or (iv) require any approval of shareholders or any approval or consent of any person or entity under any contractual obligation of the Borrower other than approvals or consents which have been obtained.

3.5 No Additional Approval. The execution, delivery, payment and performance by the Borrower of the Loan Documents do not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Federal, state or other governmental authority or regulatory body or other Person except those that have been obtained and any filings to perfect liens in favor of the Bank.

3.6 Valid and Binding Obligations. The Loan Documents are the legally valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

3.7 Financial Statements. The Borrower and Glaser have heretofore delivered to the Bank the audited financial statements of the Borrower and Glaser as at December 31, 2004, and the unaudited financial statements of the Borrower as at June 30, 2005. Said financial statements were prepared in accordance with GAAP and fairly present the financial condition of the Borrower and Glaser as at the dates and for the periods therein indicated. As of the date or dates of the execution and delivery of the Loan Documents by the Borrower, the Borrower has no contingent obligations, contingent liabilities, liabilities for taxes or other outstanding financial obligations which are material in the aggregate and which are not reflected in said financial statements or in the notes thereto.

3.8 No Material Adverse Change. Since December 31, 2004, there has been no materially adverse change in the business, operations, properties, assets or condition (financial or otherwise) of the Borrower.

3.9 Title to Properties. The Borrower has good, sufficient and legal title to all the properties and assets reflected in its financial statements as at December 31, 2004, and all assets held by the Borrower on the date hereof but acquired subsequent to the date of such financial statements, except for properties and assets not constituting Collateral (a) which are disposed of in the ordinary course of business, or (b) as would not have a Material Adverse Effect. All such properties and assets are free and clear of liens, security interests and encumbrances except as permitted hereunder. The pledge and assignment of the Collateral pursuant to the Pledge Agreements creates a valid security interest in the Collateral and the lien on the Collateral created by the Pledge Agreements will be a first priority lien thereon, superior to any other liens, security interests or encumbrances.

3.10 No Suits or Actions. There is no action, suit, proceeding or arbitration (whether or not purportedly on behalf of the Borrower) at law or in equity or before or by any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or its properties that would have a Material Adverse Effect, and there is no basis known to the Borrower for any action, suit or proceeding which would have a Material Adverse Effect. The Borrower is not (i) in violation of any applicable law which violation has or will have a Material Adverse Effect or (ii) subject to or in default with respect to any final judgment, writ, injunction, decree, rule or regulation of any court or Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which has or will have a Material Adverse Effect. There is no action, suit, proceeding or investigation pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower which questions the validity or the enforceability of the Loan Documents or the transactions contemplated thereby.

3.11 Taxes. All tax returns and reports of the Borrower required to be filed by it have been timely filed, and all taxes, assessments, fees and other governmental charges upon the Borrower and upon its properties, assets, income and franchises which are due and payable have been paid when due and payable, except in each case such as would not have a Material Adverse Effect and except those which are being contested by the Borrower in good faith and by appropriate proceedings and which, if determined adversely to the Borrower, would not have a Material Adverse Effect. The Borrower knows of no proposed tax assessment against it that would have a Material Adverse Effect.

3.12 Restrictions. The Borrower is not a party to or subject to any contractual obligation or charter or other internal restriction that has or will have a Material Adverse Effect.

3.13 No Default. The Borrower is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any contractual obligation of the Borrower, and no condition exists which, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, would not have a Material Adverse Effect. To the best knowledge of the Borrower, the other parties to any contractual obligation of the Borrower are not in default thereunder, except where the consequences, direct or indirect, of such default or defaults, if any, would not have a Material Adverse Effect.

3.14 Statutory Restrictions. The Borrower is not subject to regulation under the Public Utility Holding Company Act of 1935 or the Investment Company Act of 1940 or to any Federal or state statute or regulation limiting its ability to incur Indebtedness for money borrowed.

3.15 Margin Regulations. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any Advance will be used to purchase any margin stock.

3.16 No Default. No material Indebtedness of the Borrower is in default.

3.17 ERISA Plans. The provisions of each Plan of the Borrower or any affiliate comply in all material respects with all applicable requirements of ERISA except where any failure to comply would not reasonably be expected to have a Material Adverse Effect, and Borrower has not incurred any “accumulated funding deficiency” within the meaning of ERISA and has not incurred any material liability to PBGC, in connection with any Plan. For the purposes hereof, “PBGC” shall mean the Pension Benefit Guaranty Corporation or any successor.

3.18 Qualifications. The Borrower is eligible and is in good standing as a Fannie Mae-approved seller/servicer, Freddie Mac-approved issuer/servicer, Ginnie Mae-approved issuer/servicer, and HUD-approved correspondent or non-supervised mortgagee, eligible to originate, purchase, hold, sell and service FHA-insured Mortgage Loans. The Borrower has maintained all other rights, privileges, licenses, approvals, franchises, properties and assets necessary in the normal conduct of its business, including, without limitation, approvals with respect to Ginnie Mae, Fannie Mae, Freddie Mac, HUD and FHA.

ARTICLE IV

COVENANTS

From the date of this Agreement and for so long as the Revolving Commitment is in effect or any sums are owing from the Borrower to the Bank under the Loan Documents, the Borrower agrees that it will:

4.1 Financial Statements. Furnish to the Bank:

(a) within 120 days after the end of each of the Borrower’s fiscal years, the Borrower’s audited financial statements, prepared in accordance with GAAP and certified by an accounting firm selected by the Borrower and reasonably satisfactory to the Bank.

(b) within 60 days after the end of each of the Borrower’s fiscal quarters a copy of the Borrower’s unaudited financial statements, prepared in accordance with GAAP and certified by an authorized financial officer of the Borrower.

(c) with each financial statement required under (a) and (b) of this Section a compliance certificate in the form attached hereto as Exhibit D.

(d) Promptly after the occurrence thereof, written notice of the occurrence of any Event of Default when the same becomes known to the President or any other executive officer of the Borrower.

(e) within 30 days after the end of each fiscal quarter of the Borrower such information concerning the Servicing Portfolio (as hereinafter defined) and the Mortgage Loans included therein as may from time to time be reasonably requested by the Bank, including, without limitation, the following: unpaid principal balance of the Mortgage Loans included in the Servicing Portfolio by state, loan type and investor, coupon rate and servicing fee, delinquency and foreclosure status and designating which servicing rights in the Servicing Portfolio, if any, are Pledged Servicing Rights.

(f) promptly upon receipt by the Borrower thereof copies of each audit or report prepared by Ginnie Mae, Freddie Mac or Fannie Mae on the Borrower.

(g) within 30 days after the end of each fiscal quarter, an updated status report on all Bridge Mortgage Loans.

4.2 Existence. Maintain (a) its corporate existence in good standing under the laws of the jurisdiction of its incorporation and (b) its right to carry on its business and operations in each jurisdiction in which the character of the properties owned or leased by it or the business conducted by it makes such qualification necessary and the failure to be in good standing would permanently preclude the Borrower from enforcing its rights with respect to any material assets or expose the Borrower to any material liability.

4.3 Compliance with Law. Comply with all applicable laws, rules, regulations and orders (including without limitation Regulation X of the Board of Governors of the Federal Reserve System), the failure to be in compliance with which would have a materially adverse effect on the financial condition of the Borrower, such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith by appropriate proceedings and for which any reserves required by GAAP have been established.

4.4 ERISA Plans. Maintain each Plan in material compliance with all material applicable requirements of ERISA and of the Internal Revenue Code and with all material applicable rulings and regulations issued under the provisions of ERISA and of the Internal Revenue Code except where any failure to comply would not reasonably be expected to have a Material Adverse Effect.

4.5 Properties. Keep and maintain all of its property and assets in good order and repair, subject to ordinary wear and tear, and keep its assets and business fully covered by insurance with reputable and financially sound insurance companies against such hazards (including, without limitation, product liability and interruption of business operations) and in such amounts as is required by the terms of any law or as is customarily maintained by businesses similarly situated.

4.6 Inspection. Upon reasonable prior notice during regular business hours, permit any person designated by the Bank in writing, at the Bank’s expense, to visit and inspect any of the properties, corporate books and financial records of the Borrower and discuss its affairs and finances with the principal officers of the Borrower and its independent public accountants.

4.7 Servicing Portfolio. Not permit its Servicing Portfolio at any time to be less than $2,700,000,000.

4.8 Adjusted Tangible Net Worth. Not permit its Adjusted Tangible Net Worth to be less than $27,000,000 at any time.

4.9 Debt Service Coverage Ratio. Not permit the Borrower’s Debt Service Coverage Ratio, calculated for each period of four consecutive fiscal quarters, to be less than 1.15 to 1.00 for any such four-quarter period.

4.10 Mortgage Loans. Observe and comply, and require each obligor under each Mortgage Loan financed with the proceeds of an Advance, to the extent provided in the documents evidencing and securing the Mortgage Loan, to observe and comply, with all laws, rules, regulations and orders of any government or government agency relating to health, safety, pollution, hazardous materials or other environmental matters to the extent non-compliance could result in a material liability or otherwise have a material adverse effect on the Borrower or such obligor or the real estate and other property securing any such Mortgage Loan; give the Bank prompt written notice of the receipt by the Borrower of any notice of violation received from any government or government agency as to any environmental matter or the

commencement of any judicial or administrative proceeding relating to health, safety or environmental matters (a) in which an adverse determination or result could result in the revocation of or have a material adverse effect on any operating permits, air emission permits, water discharge permits, hazardous waste permits or other permits held by the Borrower or any such obligor which are material to the operations of the Borrower or any such obligor or the real estate or other property securing any such Mortgage Loan), or (b) which will or threatens to impose a material liability on the Borrower or any such obligor or which will require a material expenditure by the Borrower or any such obligor to cure any alleged problem or violation; and require each such obligor to the extent provided in the documents evidencing and securing the Mortgage Loan, to give prompt written notice to the Borrower of the receipt by such obligor of any such notice of violation and of the commencement of any such proceeding with respect to such obligor or its property.

4.11 Maintain Qualifications. Maintain its eligibility and be in good standing as a Fannie Mae-approved seller/servicer, Freddie Mac-approved issuer/servicer, Ginnie Mae-approved issuer/servicer, and FHA approved mortgagee. Maintain all other rights, privileges, licenses, approvals, franchises, properties and assets necessary in the normal conduct of its business, including, without limitation, approvals with respect to Ginnie Mae, Fannie Mae, Freddie Mac, HUD and FHA.

4.12 Servicing Portfolio Valuation. Upon the annual request of the Bank, deliver to the Bank an evaluation of the Borrower’s Servicing Portfolio by an independent third-party provider selected by the Borrower and acceptable to the Bank, stating the fair market value of the Borrower’s Servicing Portfolio.

ARTICLE V

EVENTS OF DEFAULT; REMEDIES

5.1 Events of Default. Any of the following shall be an Event of Default hereunder:

(a) The Borrower shall fail to make any principal payment on the Notes when due;

(b) The Borrower shall fail to make any interest payment on the Notes within 5 days after the due date therefor;

(c) Any representation, warranty or statement of fact made by the Borrower herein, in any other Loan Document or in any certificate, schedule, statement, report, notice or writing furnished by the Borrower to the Bank pursuant to the terms of this Agreement or any other Loan Document shall be untrue in any material respect as of the date thereof;

(d) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 4.7, 4.8 or 4.9 of this Agreement;

(e) The Borrower shall fail to perform or observe any other term, covenant or agreement contained herein or in any other Loan Document, and such failure shall continue for thirty (30) days;

(f) The Borrower shall become insolvent or shall fail generally to pay its debts as they mature or shall apply for, shall consent to, or shall acquiesce in the appointment of a custodian, trustee or receiver thereof or for a substantial part of the property thereof; or, in the absence of such application, consent or acquiescence, a custodian, trustee or receiver shall be appointed for the Borrower or for a substantial part of the property thereof and such appointment is not revoked or rescinded within 60 days after such appointment is made; or the Borrower shall make an assignment for the benefit of creditors;

(g) The Borrower shall be voluntarily or involuntarily dissolved or shall be the subject of any bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or insolvency law; or any dissolution or liquidation proceeding shall be instituted by or against the Borrower and, if instituted against the Borrower, shall be consented to or acquiesced in by the Borrower, shall not have been dismissed within 60 days or an order for relief shall have been entered against the Borrower;

(h) Final judgments against the Borrower for the payment of money totaling in excess of $1,000,000 shall be outstanding for a period of thirty (30) days without a stay of execution to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage.

(i) The maturity of any Indebtedness of the Borrower (other than Indebtedness under this Agreement) in aggregate amounts exceeding $5,000,000 shall be accelerated, or the Borrower shall fail to pay any such Indebtedness in aggregate amounts exceeding $5,000,000 when due or, in the case of such Indebtedness payable on demand, when demanded, or any event shall occur or condition shall exist and shall continue for more than the period of grace, if any, applicable thereto and shall have the effect of either:

(i) causing the holder of any such Indebtedness in aggregate amounts exceeding $5,000,000 or any trustee or other Person acting on behalf of such holder to cause, such Indebtedness in aggregate amounts exceeding $5,000,000 to become due prior to its stated maturity or to realize upon any collateral given as security therefor; or

(ii) permitting the holder of any such Indebtedness in aggregate amounts exceeding $5,000,000 or any trustee or other Person acting on behalf of such holder to cause, such Indebtedness in aggregate amounts exceeding $5,000,000 to become due prior to its stated maturity or to realize upon any collateral given as security therefor, provided that if such holder or trustee is not actually accelerating such Indebtedness or enforcing any right to any collateral therefor, such event shall not be an Event of Default hereunder if it is cured or waived within thirty (30) days after the occurrence thereof;

(j) Municipal Mortgage & Equity LLC shall cease to own, directly or indirectly, all of the voting stock of the Borrower; or

(k) Any Loan Document shall not be, or shall cease to be, binding in accordance with their terms.

5.2 Remedies. If (a) any Event of Default described in Section 5.1(f) or (g) shall occur, the Commitments shall automatically terminate and the outstanding principal of the Notes, the accrued interest thereon and all other obligations of the Borrower to the Bank under this Agreement and the Notes, shall automatically become immediately due and payable or (b) any other Event of Default shall occur and be continuing, then, the Bank may do all of the following: (i) declare the Commitments terminated, whereupon the Commitments shall be terminated and (ii) declare the outstanding principal of the Notes, the accrued interest thereon and all other obligations of the Borrower to the Bank under the Loan Documents to be forthwith due and payable, whereupon the Notes, all accrued interest thereon and all such obligations shall immediately become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in the Loan Documents to the contrary notwithstanding.

5.3 Setoff. As additional security for the payment of the Obligations and any other obligations of the Borrower to the Bank of any nature whatsoever and subject to the immediately following sentence, the Borrower grants to the Bank a security interest in, a lien on, and an express contractual right to set off against, all deposit accounts and all deposit account balances, cash and any other property of the Borrower now or hereafter maintained with, or in the possession of, the Bank and the right to refuse to allow withdrawals from any such account or of any such property (collectively, “Setoff”). The Bank may, at any time upon the occurrence of an Event of Default hereunder, Setoff against the Obligations whether or not the Obligations (including future installments) are then due or have been accelerated, all without any advance or contemporaneous notice or demand of any kind to the Borrower, such notice and demand being expressly waived.

ARTICLE VI

OTHER CONDITIONS

6.1 Conditions to Effectiveness of this Agreement. Effectiveness of this Agreement as a restatement and amendment to the Original Credit Agreement, and the making of any Advance by the Bank hereunder shall be subject to the satisfaction of the conditions precedent that the Bank shall have received all of the following, in form and substance satisfactory to the Bank, each duly executed and the following shall have occurred:

(a) The Notes (provided, that the Fannie Mae Advance Note shall be delivered only as a condition to the making of the Fannie Mae Advances, and not the other Advances hereunder).

(b) The Amended and Restated Servicing Pledge Agreement and an acknowledgement or acknowledgements, as requested by the Bank, of pledge of servicing rights thereunder by Ginnie Mae (as a condition to the making of the Fannie Mae Advances, and not the other Advances hereunder).

(c) The Mortgage Pledge Agreement and the Investment Pledge Agreement.

(d) A copy of the approval resolution of the Borrower, certified by the Secretary or an Assistant Secretary of the Borrower, together with a certificate showing the names and titles, and bearing the signatures of, the officers of the Borrower authorized to execute the Loan Documents and to request Advances hereunder.

(e) Copies of the Borrower’s Articles of Incorporation and By-Laws with all amendments thereto, certified by the Secretary or an Assistant Secretary of the Borrower.

(f) A good standing certificate of the Borrower.

(g) An opinion of the Borrower’s counsel, in form and substance satisfactory to the Bank.

6.2 All Advances. The obligation of the Bank to make any Advance hereunder, including the first, shall be subject to the satisfaction of the condition precedent that on the date of such Advance the following statements shall be true (the request by the Borrower for such Advance shall be deemed to constitute a representation and warranty by the Borrower that (a), (b) and (c) are true):

(a) Before and after giving effect to such Advance, the representation and warranties contained in Article III shall be true and correct, as though made on the date of such Advance;

(b) No Event of Default, as hereinafter defined, has occurred and is continuing, or would result from such Advance, and no event has occurred which with the giving of notice or passage of time or both would mature into an Event of Default hereunder;

(c) No material adverse change shall have occurred in the condition, financial or otherwise, of the Borrower;

(d) The Bank shall have received the Collateral securing the relevant Advance and shall have a perfected first priority security interest in such Collateral under the relevant Pledge Agreement; and

(e) In the instance of each type of Advance, information concerning the use of such Advance and the Collateral for such Advance, together with pledge and delivery of such Collateral, as required by the Bank, including transmittal letters and certificates in the form required by the Bank from time to time.

ARTICLE VII

MISCELLANEOUS

7.1 Successors and Assigns. The parties hereto agree that this Agreement shall be binding upon and inure to the benefit of their respective successors in interest and assigns including any holder of the Note, provided, however, that the Borrower may not assign or transfer its interest hereunder without the prior written consent of the Bank.

7.2 Notices. Any notices required or contemplated hereunder shall be effective upon the placing thereof in the United States mails, certified mail and with return receipt requested, postage prepaid, and addressed as follows:

If to Borrower: To the address on the signature page hereof

with copies to:

MMA Mortgage Investment Corporation

621 E. Pratt St. Ste 300

Baltimore, MN 21202

Attention: Treasurer

MMA Mortgage Investment Corporation

621 E. Pratt St. Ste 300

Baltimore, MN 21202

Attention: General Counsel

and

2177 Youngman Avenue

St. Paul, MN 55116

Attention: Vice President Finance and Operations

If to Bank:

U.S. Bank National Association

BC-MN-H03B

800 Nicollet Mall

Minneapolis, Minnesota 55402

Attention: Mortgage Banking Division

7.3 No Waiver; Amendment in Writing. No failure to delay on the part of Bank in exercising any right, power or privilege hereunder and no course of dealing between the Borrower and Bank shall operate as a waiver thereof; nor shall any single or partial exercise or any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Neither this Agreement nor any provision hereof may be modified, waived, discharged or terminated orally or by course of conduct, but only by an instrument in writing signed by the parties hereto.

7.4 Expenses. The Borrower shall reimburse the Bank on demand for any reasonable out-of-pocket expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the preparation, review and amendment of the Loan Documents and in attempting to enforce the obligations of the Borrower under the Loan Documents, which obligations shall survive the termination of this Agreement.

7.5 Choice of Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED

BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.

7.6 Jurisdiction. AT THE OPTION OF THE BANK, THIS AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

7.7 Waiver of Jury Trial. THE BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

(signature page follows)

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

MMA MORTGAGE INVESTMENT
CORPORATION
By	/s/ Gary A. Mentesana
Title:	Executive Vice President
MMA Mortgage Investment Corporation
621 E. Pratt St. Ste 300
Baltimore, MN 21202
Attention: Treasurer and General Counsel
Telephone: (443) 263-2900
Fax: (410) 727-5387
U.S. BANK NATIONAL ASSOCIATION
By	/s/ Randy S. Baker
	Randy S. Baker
	Its Vice President
U.S. Bank National Association
Mortgage Banking Services
U.S. Bancorp Center
800 Nicollet Mall
Mail Station BC-MN-H03B
Minneapolis, Minnesota 55402-7020
Attention: Randy S. Baker
Telephone: (612) 303-3580
Fax: (612) 303-2253

EX-10.4.2

Exhibit 10.4.2

FIRST AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT, dated as of December 5, 2005, amends and modifies a certain Amended and Restated Credit Agreement, dated as of November 16, 2005 (the “Credit Agreement”), between MMA MORTGAGE INVESTMENT CORPORATION (the “Borrower”) and U.S. BANK NATIONAL ASSOCIATION (the “Bank”). Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement.

FOR VALUE RECEIVED, the Borrower and the Bank agree that the Credit Agreement is amended as follows.

ARTICLE I - AMENDMENTS TO THE CREDIT AGREEMENT

1.1 Commitments. The Definition of “Commitments” in Section 1.1 is amended to read as follows:

“‘Commitments’ means the maximum unpaid principal amount of Advances which may from time to time be outstanding as provided in Section 2.1 hereof and, as the context may require, the agreement of the Bank to make Advances to the Borrower subject to the terms and conditions of this Agreement. The Commitment shall initially be in the following amounts, each as reduced from time to time as provided in Section 2.9(a) hereof:

(a) the ‘Revolving Commitment’, in the amount of (i) $110,000,000 as of the date of this Agreement through and including December 4, 2005, (ii) $160,000,000 from December 5, 2005 through and including December 31, 2005, and (iii) $75,000,000 from January 1, 2006, through and including the Termination Date, which Revolving Commitments shall be further limited to the following:

(i) the full Revolving Commitment for Warehousing Advances;

(ii) the lesser of (A) (x) $55,000,000 as of the date of this Agreement through and including December 4, 2005, (y) $105,000,000 from December 5, 2005 through and including December 31, 2005, and (z) $55,000,000 from January 1, 2006, through and including the Termination Date, or (B) the full Revolving Commitment, for Investment Advances (the ‘Investment Sublimit’);

(iii) the lesser of (A) $10,000,000, or (B) the full Revolving Commitment, for Bridge Advances (the ‘Bridge Sublimit’); and

(b) the ‘Fannie Mae Commitment’ in the amount of the lesser of (i) $10,000,000, or (ii) the full Revolving Commitment, for Fannie Mae Advances.”

1.2 Interest. Section 2.7 is amended to read as follows:

“2.7 Interest. Interest on Advances shall accrue at whichever of the following fluctuating rates per annum is designated by the Borrower at the time each such Advance is made:

(a) For all Advances, unless Section 2.7(b) applies:

(i) for Balance Supported Advances the following, subject to adjustment as provided in Section 2.8:

(1) 0.750% for Revolving Advances that are Investment Advances;

(2) 1.750% for Revolving Advances that are Bridge Advances;

(3) 0.875% for Revolving Advances that are Warehousing Advances; and

(4) 1.25% for Fannie Mae Advances.

The Bank shall determine, and shall notify the Borrower of the amount of the Advances deemed to be Balance Supported Advances on a monthly basis.

(ii) for all Advances that are not Balance Supported Advances either (x) the Prime Rate per annum, or (y) the Floating LIBOR Rate, plus (for interest determined under this subparagraph (y) only):

(1) 0.750% for Revolving Advances that are Investment Advances;

(2) 1.750% for Revolving Advances that are Bridge Advances; and

(3) 0.875% for Revolving Advances that are Warehousing Advances; and

(4) 1.25% for Fannie Mae Advances.

(b) Any amount of the Advances not paid when due, whether at the date scheduled therefor or earlier upon acceleration, shall bear interest until paid in full at a rate per annum equal to the Prime Rate plus 2.00% per annum.

(c) Bank’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

(d) Interest on all Advances shall be calculated on the basis of the actual number of days elapsed in a year of 360 days.”

1.3 Note. A promissory note in the form provided by the Bank to the Borrower with this Amendment shall be executed and delivered by the Borrower and shall be and constitute the “Revolving Note” and one of the “Notes” for purposes of all references thereto in the Credit Agreement.

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1.4 Construction. All references in the Credit Agreement to “this Agreement”, “herein” and similar references shall be deemed to refer to the Credit Agreement as amended by this Amendment.

ARTICLE II - REPRESENTATIONS AND WARRANTIES

To induce the Bank to enter into this Amendment and to make and maintain the Loans under the Credit Agreement as amended hereby, the Borrower hereby warrants and represents to the Bank that it is duly authorized to execute and deliver this Amendment, and to perform its obligations under the Credit Agreement as amended hereby, and that this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms.

ARTICLE III - CONDITIONS PRECEDENT

This Amendment shall become effective on the date first set forth above, provided, however, that the effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

3.1 Warranties. Before and after giving effect to this Amendment, the representations and warranties in Article III of the Credit Agreement shall be true and correct as though made on the date hereof, except for changes that are permitted by the terms of the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.2 Defaults. Before and after giving effect to this Amendment, no Default and no Event of Default shall have occurred and be continuing under the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.3 Documents. The Borrower shall have executed and delivered this Amendment and the Revolving Note.

ARTICLE IV - GENERAL

4.1 Expenses. The Borrower agrees to reimburse the Bank upon demand for all reasonable expenses (including reasonable attorneys’ fees and legal expenses) incurred by this Bank in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith, and in enforcing the obligations of the Borrower hereunder, and to pay and save the Bank harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of this Amendment or the issuance of the Note hereunder, which obligations of the Borrower shall survive any termination of the Credit Agreement.

4.2 Counterparts. This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.

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4.3 Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.

4.4 Law; Consent to Jurisdiction; Waiver of Jury Trial. This Amendment shall be a contract made under the laws of the State of Minnesota, which laws shall govern all the rights and duties hereunder. This Amendment shall be subject to the Consent to Jurisdiction and Waiver of Jury Trial provisions of the Credit Agreement.

4.5 Successors; Enforceability. This Amendment shall be binding upon the Borrower and the Bank and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the successors and assigns of the Bank. Except as hereby amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed at Minneapolis, Minnesota by their respective officers thereunto duly authorized as of the date first written above.

U.S. BANK NATIONAL ASSOCIATION
By	/s/ Randy S. Baker
	Randy S. Baker
	Its Vice President
MMA MORTGAGE INVESTMENT CORPORATION
By	/s/ Gary A. Mentesana
Name:	Gary A. Mentesana
Title:	Executive Vice President

4

EX-10.4.3

Exhibit 10.4.3

SECOND AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

THIS SECOND AMENDMENT, dated as of December 14, 2005, amends and modifies a certain Amended and Restated Credit Agreement, dated as of November 16, 2005, as amended by an Amendment dated as of December 5, 2005 (as so amended, the “Credit Agreement”), between MMA MORTGAGE INVESTMENT CORPORATION (the “Borrower”) and U.S. BANK NATIONAL ASSOCIATION (the “Bank”). Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement.

FOR VALUE RECEIVED, the Borrower and the Bank agree that the Credit Agreement is amended as follows.

ARTICLE I - AMENDMENTS TO THE CREDIT AGREEMENT

1.1 Commitments. The Definition of “Commitments” in Section 1.1 is amended to read as follows:

“‘Commitments’ means the maximum unpaid principal amount of Advances which may from time to time be outstanding as provided in Section 2.1 hereof and, as the context may require, the agreement of the Bank to make Advances to the Borrower subject to the terms and conditions of this Agreement. The Commitment shall initially be in the following amounts, each as reduced from time to time as provided in Section 2.9(a) hereof:

(a) the ‘Revolving Commitment’, in the amount of (i) $110,000,000 as of the date of this Agreement through and including December 4, 2005, (ii) $160,000,000 from December 5, 2005 through and including March 15, 2006, and (iii) $75,000,000 from March 16, 2006, through and including the Termination Date, which Revolving Commitments shall be further limited to the following:

(i) the full Revolving Commitment for Warehousing Advances;

(ii) the lesser of (A) (x) $55,000,000 as of the date of this Agreement through and including December 1, 2005, (y) $105,000,000 from December 2, 2005 through and including December 31, 2005, and (z) $55,000,000 from January 1, 2006, through and including the Termination Date, or (B) the full Revolving Commitment, for Investment Advances (the ‘Investment Sublimit’);

(iii) the lesser of (A) (x) $10,000,000 as of the date of this Agreement through and including December 13, 2005, (y) $62,000,000 from December 14, 2005 through and including March 15, 2006, and (z)

$10,000,000 from March 16, 2006, through and including the Termination Date, or (B) the full Revolving Commitment, for Bridge Advances (the ‘Bridge Sublimit’); and

(b) the ‘Fannie Mae Commitment’ in the amount of the lesser of (i) $10,000,000, or (ii) the full Revolving Commitment, for Fannie Mae Advances.”

1.2 Maturity of Certain Bridge Advances. Section 2.5(ii) is amended by adding the following sentence at the end of such Section:

“Notwithstanding the foregoing repayment requirements, the Bridge Advances that cause the aggregate amounts of the Bridge Advances to exceed $10,000,000 shall be paid upon reduction of the Bridge Sublimit to $10,000,000, as provided in the definition thereof.”

1.3 Construction. All references in the Credit Agreement to “this Agreement”, “herein” and similar references shall be deemed to refer to the Credit Agreement as amended by this Amendment.

ARTICLE II - REPRESENTATIONS AND WARRANTIES

To induce the Bank to enter into this Amendment and to make and maintain the Loans under the Credit Agreement as amended hereby, the Borrower hereby warrants and represents to the Bank that it is duly authorized to execute and deliver this Amendment, and to perform its obligations under the Credit Agreement as amended hereby, and that this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms.

ARTICLE III - CONDITIONS PRECEDENT

This Amendment shall become effective on the date first set forth above, provided, however, that the effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

3.1 Warranties. Before and after giving effect to this Amendment, the representations and warranties in Article III of the Credit Agreement shall be true and correct as though made on the date hereof, except for changes that are permitted by the terms of the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.2 Defaults. Before and after giving effect to this Amendment, no Default and no Event of Default shall have occurred and be continuing under the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.3 Documents. The Borrower shall have executed and delivered this Amendment.

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ARTICLE IV - GENERAL

4.1 Expenses. The Borrower agrees to reimburse the Bank upon demand for all reasonable expenses (including reasonable attorneys’ fees and legal expenses) incurred by this Bank in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith, and in enforcing the obligations of the Borrower hereunder, and to pay and save the Bank harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of this Amendment, which obligations of the Borrower shall survive any termination of the Credit Agreement.

4.2 Counterparts. This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.

4.3 Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.

4.4 Law; Consent to Jurisdiction; Waiver of Jury Trial. This Amendment shall be a contract made under the laws of the State of Minnesota, which laws shall govern all the rights and duties hereunder. This Amendment shall be subject to the Consent to Jurisdiction and Waiver of Jury Trial provisions of the Credit Agreement.

4.5 Successors; Enforceability. This Amendment shall be binding upon the Borrower and the Bank and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the successors and assigns of the Bank. Except as hereby amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects.

(signature page follows)

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed at Minneapolis, Minnesota by their respective officers thereunto duly authorized as of the date first written above.

U.S. BANK NATIONAL ASSOCIATION
By	/s/ Randy S. Baker
Title:	Vice President
MMA MORTGAGE INVESTMENT CORPORATION
By:	/s/ Anthony Mifsud
Title:	Senior Vice President and Treasurer

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EX-10.4.4

Exhibit 10.4.4

THIRD AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

THIS THIRD AMENDMENT, dated as of March 15, 2006, amends and modifies a certain Amended and Restated Credit Agreement, dated as of November 16, 2005, as amended by Amendments dated as of December 5, 2005 and December 14, 2005 (as so amended, the “Credit Agreement”), between MMA MORTGAGE INVESTMENT CORPORATION (the “Borrower”) and U.S. BANK NATIONAL ASSOCIATION (the “Bank”). Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement.

FOR VALUE RECEIVED, the Borrower and the Bank agree that the Credit Agreement is amended as follows.

ARTICLE I - AMENDMENTS TO THE CREDIT AGREEMENT

1.1 Commitments. The Definition of “Commitments” in Section 1.1 is amended to read as follows:

“‘Commitments’ means the maximum unpaid principal amount of Advances which may from time to time be outstanding as provided in Section 2.1 hereof and, as the context may require, the agreement of the Bank to make Advances to the Borrower subject to the terms and conditions of this Agreement. The Commitment shall initially be in the following amounts, each as reduced from time to time as provided in Section 2.9(a) hereof:

(a) the ‘Revolving Commitment’, in the amount of (i) $110,000,000 as of the date of this Agreement through and including December 4, 2005, (ii) $160,000,000 from December 5, 2005 through and including March 15, 2006, and (iii) $150,000,000 from March 16, 2006, through and including the Termination Date, which Revolving Commitments shall be further limited to the following:

(i) the full Revolving Commitment for Warehousing Advances;

(ii) the lesser of (A) (w) $55,000,000 as of the date of this Agreement through and including December 1, 2005, (x) $105,000,000 from December 2, 2005 through and including December 31, 2005, (y) $55,000,000 from January 1, 2006 through and including March 15, 2006, and (z) $100,000,000 from March 16, 2006, through and including the Termination Date, or (B) the full Revolving Commitment, for Investment Advances (the ‘Investment Sublimit’);

(iii) the lesser of (A) (x) $10,000,000 as of the date of this Agreement through and including December 13, 2005, (y) $62,000,000 from

December 14, 2005 through and including March 15, 2006, and (z) $40,000,000 from March 16, 2006, through and including the Termination Date, or (B) the full Revolving Commitment, for Bridge Advances (the ‘Bridge Sublimit’); and

(b) the ‘Fannie Mae Commitment’ in the amount of the lesser of (i) $15,000,000, or (ii) the full Revolving Commitment, for Fannie Mae Advances.”

1.2 Construction. All references in the Credit Agreement to “this Agreement”, “herein” and similar references shall be deemed to refer to the Credit Agreement as amended by this Amendment.

ARTICLE II - REPRESENTATIONS AND WARRANTIES

To induce the Bank to enter into this Amendment and to make and maintain the Loans under the Credit Agreement as amended hereby, the Borrower hereby warrants and represents to the Bank that it is duly authorized to execute and deliver this Amendment, and to perform its obligations under the Credit Agreement as amended hereby, and that this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms.

ARTICLE III - CONDITIONS PRECEDENT

This Amendment shall become effective on the date first set forth above, provided, however, that the effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent:

3.1 Warranties. Before and after giving effect to this Amendment, the representations and warranties in Article III of the Credit Agreement shall be true and correct as though made on the date hereof, except for changes that are permitted by the terms of the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.2 Defaults. Before and after giving effect to this Amendment, no Default and no Event of Default shall have occurred and be continuing under the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition.

3.3 Documents. The Borrower shall have executed and delivered this Amendment.

ARTICLE IV - GENERAL

4.1 Expenses. The Borrower agrees to reimburse the Bank upon demand for all reasonable expenses (including reasonable attorneys’ fees and legal expenses) incurred by this Bank in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith, and in enforcing the obligations of the Borrower hereunder, and to pay and save

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the Bank harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of this Amendment, which obligations of the Borrower shall survive any termination of the Credit Agreement.

4.2 Counterparts. This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.

4.3 Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.

4.4 Law; Consent to Jurisdiction; Waiver of Jury Trial. This Amendment shall be a contract made under the laws of the State of Minnesota, which laws shall govern all the rights and duties hereunder. This Amendment shall be subject to the Consent to Jurisdiction and Waiver of Jury Trial provisions of the Credit Agreement.

4.5 Successors; Enforceability. This Amendment shall be binding upon the Borrower and the Bank and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the successors and assigns of the Bank. Except as hereby amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects.

(signature page follows)

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed at Minneapolis, Minnesota by their respective officers thereunto duly authorized as of the date first written above.

U.S. BANK NATIONAL ASSOCIATION
By	/s/ Randy S. Baker
Title:	Vice President
MMA MORTGAGE INVESTMENT CORPORATION
By:	/s/ Anthony Mifsud
Title:	Senior Vice President and Treasurer

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EX-10.7.1

Exhibit 10.7.1

Execution Copy

LETTER OF CREDIT FACILITY AGREEMENT

[Midland Mortgage Investment Corporation]

This LETTER OF CREDIT FACILITY AGREEMENT is entered into as of October 18, 2002, between Midland Mortgage Investment Corporation, a Florida corporation (the “Company”), and Bank of America, N.A. (the “Bank”).

WITNESSETH:

WHEREAS, Fannie Mae, a corporation organized under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 et seq. (“Fannie Mae”) is prepared to provide standby credit enhancement instruments pursuant to its DUS Bond Credit Enhancement Mortgage Loan Program (the “Bond Enhancement Program”);

WHEREAS, it is a condition to the issuance of credit enhancement instruments under the Bond Enhancement Program that a standby letter of credit (“Construction Letter of Credit”) be issued by a national, federally insured, financial institution in favor of Fannie Mae with respect to each credit enhancement instrument issued by Fannie Mae;

WHEREAS, the Fannie Mae Commitment issued by Fannie Mae in connection with the Bond Enhancement Program and the Construction Advance Loan Program requires that the Company pay a Forward Commitment Deposit Fee which may be posted in the form of a standby letter of credit (“Deposit Fee Letter of Credit”) in the amount of such fee;

WHEREAS, the Company, in its capacity as Construction Lender and Servicer under the Bond Enhancement Program, wishes to apply from time to time to Bank for the issuance of such letters of credit; and

WHEREAS, the Bank is prepared to issue such letters of credit in favor of Fannie Mae on the terms and conditions set forth herein:

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.01 Certain Defined Terms. The following terms have the following meanings:

“Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise.

“Agreement” means this Letter of Credit Facility Agreement.

“Amendment Application” means the Bank’s standard form of application for amendment of outstanding letters of credit that is in use at the time any such amendment of the Letter of Credit is requested by the Company.

“Application” means a Bank of America Letter of Credit Application attached hereto as Exhibit A.

“Attorney Costs” means and includes all reasonable fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel.

“Availability Date” means October 18, 2004, or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.

“Bank-Related Persons” means the Bank, together with its Affiliates and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

“Bond Enhancement Facility Amount” means the amount equal to $100,000,000 minus the L/C Obligations outstanding under the Construction Advance Loan Facility.

“Business Day” means any day other than (a) a Saturday or Sunday, or (b) any other day on which commercial banks in New York, New York, or Dallas, Texas are authorized or required by law to close.

“Capital Adequacy Regulation” means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank.

A “Change of Control” shall be deemed to have occurred if (a) any person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Commission as in effect on the date hereof) shall own directly or indirectly, beneficially or of record, shares representing more than 20% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Parents or the Company or any

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corporation directly or indirectly Controlling the Parents or the Company; or (b) a majority of the seats (other than vacant seats) on the board of directors of the Parents or the Company or any corporation directly or indirectly Controlling the Parents or the Company shall at any time be occupied by persons who were neither (i) nominated by the management of the Parents or the Company or by persons who were members of the board of directors as of the Effective Date or members elected by two thirds of such members, nor (ii) appointed by directors so nominated; provided, however, that an event described in clause (a) above shall not constitute a “Change in Control” if the acquisition of shares resulting in ownership of in excess of the 20% threshold referred to in such clause (a) shall have been approved, prior to the acquisition of such shares or the commencement by the person or group referred to in such clause (a) of a tender offer for shares of the Parents or the Company that would result, if successful, in such person or group owning in excess of such 20% threshold, by a majority of the members of the board of directors of the Parents or the Company who were either members of the board of directors as of the date of this Agreement or nominated or appointed as provided in clauses (b)(i) or (ii) above.

“Closing Date” means the date on which all conditions precedent set forth in Article IV are satisfied or waived by the Bank.

“Code” means the Internal Revenue Code of 1986, and regulations promulgated thereunder.

“Construction Advance Loan Facility” means the Letter of Credit Facility Agreement between the Bank and MMCF pursuant to which the Bank has agreed to issue letters of credit in favor of Fannie Mae with respect to loans to developers of multi-family residential properties under the Construction Advance Loan Program.

“Construction Phase Financing Agreement” means any of those certain Construction Phase Financing Agreements between the Company and Fannie Mae pursuant to which the Company agrees to cause to be issued letters of credit in favor of Fannie Mae under the Bond Enhancement Program.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have meanings correlative thereto.

“Date of Issuance” means, with respect to any Letter of Credit, the date of issuance of such Letter of Credit.

“Default” means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during any applicable notice or cure period) constitute an Event of Default.

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“Detroit Pension Fund” means the Policemen & Firemen Retirement System of the City of Detroit.

“Dollars”, “dollars” and “$” each mean lawful money of the United States.

“Event of Default” means any of the events or circumstances specified in Section 7.01.

“Expiry Date” means the last day a drawing may be made under a Letter of Credit, which such date shall be approved by Fannie Mae but in no event shall be later than two (2) years after the date of issuance of such Letter of Credit.

“Fannie Mae” means Fannie Mae, a corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 et seq.

“GAAP” means generally accepted accounting principles, applied on a consistent basis.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Guarantee” of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however, that the term Guarantee shall not include endorsements for collection or deposit, in either case in the ordinary course of business.

“Incorporation Documents” means the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of shareholders of such incorporation, and all applicable resolutions of the board of directors (or any committee thereof), of such incorporation.

“Indebtedness” of any Person means, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by a

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note, bond, debenture or similar instrument, (iii) all obligations of such Person upon which interest charges are customarily paid, (iv) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (v) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than accounts payable to suppliers incurred in the ordinary course of business and not overdue), (vi) all indebtedness of any other Person secured by any Lien on any property owned by the Company, whether or not such indebtedness has been assumed, (vii) the principal component of all Capitalized Lease Obligations of such Person, and (viii) all Guarantees of such Person.

“Indemnified Liabilities” has the meaning specified in Section 8.05.

“Indemnified Person” has the meaning specified in Section 8.05.

“Insolvency Proceeding” means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; undertaken under U.S. Federal, state or foreign law, including the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.).

“L/C Obligations” means at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of all unreimbursed drawings under all Letters of Credit.

“Letter of Credit” means either a Construction Letter of Credit or a Deposit Fee Letter of Credit (each as defined in the Recitals) issued by the Bank for the account of the Company in favor of Fannie Mae substantially in the form attached hereto as Exhibit B, as provided for hereunder.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien (statutory or other) or charge of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the Uniform Commercial Code or any comparable law).

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

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“Material Adverse Effect” means a materially adverse effect on the business, assets, condition (financial or otherwise) or results of operations of (a) the Parents, (b) the Company, (c) the Parents, the Company and their Subsidiaries taken as a whole, or (d) either of the Pension Funds.

“MMCF” means MuniMae Midland Construction Finance, LLC, a Maryland limited liability company.

“Obligations” means all reimbursement obligations, advances, debts, liabilities, obligations, covenants and duties arising under any Related Document owing by the Company to the Bank or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising.

“Parents” means, collectively and individually, Municipal Mortgage & Equity, LLC, a limited liability company organized under the laws of the State of Delaware; MuniMae Midland, LLC, a limited liability company organized under the laws of the state of Maryland, and MuniMae Investment Service Corporation, a Maryland corporation.

“Participant” has the meaning specified in Section 8.08.

“Pension Fund Certificate” means a certificate, substantially in the form of Exhibit C to this Agreement.

“Pension Funds” means the Detroit Pension Fund and the Wayne County Pension Fund.

“Pension Fund L/C” means any standby letter of credit issued by the Detroit Pension Fund or the Wayne County Pension Fund, as security for the Letters of Credit issued hereunder, each of which shall:

(a) be an irrevocable letter of credit, effective as of the date of the issuance of the Letter of Credit which such Pension Fund L/C secures, that is in the form of Exhibit D to this Agreement, or in such other form as may be approved by the Bank;

(b) be in an initial stated amount equal to the amount of the Letter of Credit which such Pension Fund L/C secures;

(c) accompanied, on delivery to the Bank, by a Pension Fund Certificate;

(d) be issued for the sole benefit of the Bank;

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(e) have an expiration date at least 15 days after the Expiry Date of the Letter of Credit which such Pension Fund L/C secures; and

(f) provide that it may be drawn, in whole and not in part, by presentation to the applicable Pension Fund of a clean sight draft.

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority.

“Prime Rate” means the rate of interest per annum publicly announced by the Bank from time to time as its prime rate.

“Property” means all assets and properties of any nature whatsoever, whether real or personal, tangible or intangible, including without limitation intellectual property.

“Related Documents” means this Agreement, the Letter of Credit, the Application, the Amendment Application and any other agreement or instrument relating thereto and to the transactions contemplated hereby.

“Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

“Responsible Officer” means the chief executive officer, the president, treasurer or senior vice president of the Company, or any other officer having substantially the same authority and responsibility.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“Subsidiary” of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50% of the voting stock, membership interests or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of the Company.

“UCP” has the meaning specified in Section 2.10 hereof.

“United States” and “U.S.” each means the United States of America.

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“Wayne County Pension Fund” means the Wayne County Employees’ Retirement System.

1.02 Other Interpretive Provisions.

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Appendix references are to this Agreement unless otherwise specified. The term “documents” includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. The term “including” is not limiting and means “including without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”

(c) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Related Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise expressly provided, any reference to any action of the Bank by way of consent, approval or waiver shall be deemed modified by the phrase “in its sole discretion.”

(e) This Agreement and the other Related Documents to which the Company and the Bank are parties are the result of negotiations between, and have been reviewed by counsel to, the Bank and the Company, and are the products of both parties. Accordingly, they shall not be construed against the Bank merely because of the Bank’s involvement in their preparation.

1.03 Accounting Principles. Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of the Company.

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ARTICLE II

THE LETTERS OF CREDIT

2.01 The Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, the Bank agrees, from time to time on any Business Day during the period from the Closing Date to the Availability Date, to issue Letters of Credit, and to amend Letters of Credit previously issued by it, in accordance with Section 2.02(b), provided, however, that after giving effect to the issuance of any Letter of Credit, the aggregate amount of all L/C Obligations hereunder shall not exceed the Bond Enhancement Facility Amount. The Company’s ability to request that the Bank issue Letters of Credit shall be fully revolving, that is, the Company may, during the foregoing period, and within the foregoing limits, request that the Bank issue Letters of Credit to replace Letters of Credit which have been returned to the Bank for cancellation or which have been drawn upon and reimbursed.

(b) The Bank is under no obligation to issue any Letter of Credit if:

(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Bank from issuing such Letter of Credit, or any Requirement of Law applicable to Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Bank shall prohibit, or request that the Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular, or shall impose upon the Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which Bank in good faith deems material to it;

(ii) one or more of the applicable conditions contained in Article IV is not then satisfied;

(iii) the requested Expiry Date of such Letter of Credit is more than two (2) years after the date such Letter of Credit issued; or

(iv) such Letter of Credit is not secured, as of the date of its issuance, by a Pension Fund L/C having an expiry date of at least fifteen (15) days following the Expiry Date of such Letter of Credit.

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2.02 Issuance of Letters of Credit.

(a) Each Letter of Credit shall be issued upon the delivery to Bank of (i) the irrevocable written request of the Company, in the form of a completed Application executed by the Company, and (ii) the Pension Fund L/C which will secure such Letter of Credit, which Application shall be received by the Bank at least five (5) Business Days prior to the proposed date of issuance of the Letter of Credit, and which Pension Fund L/C shall be received by the Bank at least two (2) Business Days prior to the proposed date of the issuance of the Letter of Credit. Such request for issuance of a Letter of Credit shall (i) be by facsimile, confirmed immediately in an original writing, (ii) accompanied by a Pension Fund Certificate, and (iii) shall specify in form and detail satisfactory to the Bank: (A) the proposed date of issuance of such Letter of Credit (which shall be a Business Day); (B) the face amount of such Letter of Credit; (C) the Expiry Date of such Letter of Credit; and (D) the name and address of the beneficiary (Fannie Mae) thereof. Wherever there is an inconsistency between the provisions of this Agreement and the terms and conditions of the Application, the provisions of this Agreement shall prevail.

(b) From time to time while a Letter of Credit is outstanding and prior to the Expiry Date, the Bank will, upon the irrevocable written request of the Company, which shall be received by the Bank at least five (5) Business Days prior to the proposed date of amendment, consider an amendment of such Letter of Credit (other than an extension of the Expiry Date which is covered by Section 2.12 hereof). Such request for amendment of a Letter of Credit shall be by facsimile, confirmed immediately in an original writing, and shall specify in form and detail satisfactory to the Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; (iv) evidence that the Pension Fund L/C shall be amended so as to be in the same amount and to have the same terms as such amended Letter of Credit; and (v) such other matters as the Bank may require.

2.03 Drawings on Letters of Credit. Fannie Mae is authorized to make drawings under the Letters of Credit in accordance with the terms of the Letter of Credit. The Company hereby directs the Bank to make payments under each Letter of Credit in the manner provided in such Letter of Credit. The Company hereby irrevocably approves reductions and reinstatements of the amount of each Letter of Credit in accordance with the terms of such Letter of Credit.

2.04 Reimbursement and Other Payments.

(a) If (i) the Bank is required to draw under a Pension Fund L/C pursuant to subsection (c) below prior to requesting payment from the Company and is not paid in full under such Pension Fund L/C or (ii) the Bank is not required to so draw

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under a Pension Fund L/C pursuant to subsection (c) below, the Company shall pay to the Bank:

(1) immediately after (and on the same Business Day as) any amount is drawn under any Letter of Credit, a sum (and interest on such amount as provided in subsection (b) below) equal to the amount so drawn and paid;

(2) promptly upon notice from the Bank of the amount thereof, any and all reasonable charges and expenses, including transaction fees in connection with drawings under any Letter of Credit, which the Bank may pay or incur relative to such Letter of Credit (together with the amount described in clause (1) above, the “Amount Owing”).

(b) The Company shall pay to the Bank interest on any and all amounts owed and unpaid by the Company when due hereunder for each day from the date such amounts become due until payment in full, payable on demand, at a fluctuating interest rate per annum equal to the Prime Rate plus three percent (3%) (the “Interest Owing”); provided, however, that such fluctuating interest rate shall in no event be higher (with respect to each such amount due and payable hereunder, from the date such amount is due and payable until the date such amount is paid in full) than the maximum rate permitted by applicable law.

(c) Notwithstanding any other provision in this Section 2.04, if at any time an amount is drawn under any Letter of Credit (for whatever reason), the Bank shall, with the exceptions noted below, prior to requesting payment from the Company, draw under the Pension Fund L/C which secures such Letter of Credit, in an amount equal to the Amount Owing. The Bank is not required to draw under the Pension Fund L/C prior to requesting payment from the Company if (i) an injunction, restraining order, or other court order prevents the Bank from drawing under the Pension Fund L/C, or (ii) an event described in Section 7.01(b) or (c) has occurred with respect to the Pension Fund that has issued the Pension Fund L/C which secures the Letter of Credit which has been drawn on. In any event, the Company shall remain at all times liable for the Amount Owing and the Interest Owing with respect to each Letter of Credit, and will pay such amount to the Bank if the Bank so requests.

(d) If Fannie Mae makes a drawing under the Letter of Credit because a “Letter of Credit Issuer Rating Event” (as defined in any Construction Phase Financing Agreement) has occurred, the Bank shall draw under the Pension Fund L/C which secures such Letter of Credit, unless, prior to the draw by Fannie Mae, the Company has deposited with the Bank as cash collateral an amount equal to such drawing.

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2.05 Role of the Bank.

(a) The Company agrees that, in paying any drawing under any Letter of Credit, the Bank shall not have any responsibility to obtain any document (other than any sight draft and certificates expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.

(b) The Bank shall not be liable for: (i) any action taken or omitted in the absence of breach of this Agreement, gross negligence or willful misconduct; or (ii) the due execution, effectiveness, validity or enforceability of any Letter of Credit, any Application or any other document relating to any Letter of Credit.

(c) The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Company from pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Bank-Related Person, nor any of the correspondents, participants or assignees of the Bank, shall be liable or responsible for any of the matters described in clauses (a) through (f) of Section 2.06; provided, however, that, anything in such clauses or elsewhere herein to the contrary notwithstanding, the Company may have a claim against the Bank, and the Bank may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the Bank’s willful misconduct or gross negligence or the Bank’s breach of this Agreement, willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing: (i) the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) the Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

2.06 Obligations Absolute. The obligations of the Company under this Agreement and any other Related Document to reimburse the Bank for a drawing under a Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such other Related Document under all circumstances, including the following:

(a) any lack of validity or enforceability of this Agreement or any other Related Document;

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(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of such Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents;

(c) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the Related Documents or any unrelated transaction;

(d) any draft, demand, certificate or other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any material respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under the Letter of Credit;

(e) any payment made by the Bank under the Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of the Letter of Credit, including any arising in connection with any Insolvency Proceeding;

(f) the existence, validity or invalidity, enforceability or unenforceability of any Pension Fund L/C; or

(g) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to the Company.

2.07 Examination of Documents. Notwithstanding anything to the contrary in Section 2.06, the Bank shall not be excused from liability to the Company to the extent of any direct damages (as opposed to consequential, indirect and punitive damages, claims in respect of which are hereby waived by the Company) suffered by the Company that are caused by the Bank’s breach of this Agreement, gross negligence or willful misconduct when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof, provided, however, that the parties hereto expressly agree that:

(a) the Bank may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

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(b) the Bank shall have the right, in its sole discretion, to decline to accept documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

(c) this Section shall establish the standard of care to be exercised by the Bank when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

2.08 Letter of Credit Fees.

(a) The Company shall pay to the Bank an origination fee with respect to each Letter of Credit issued hereunder in an amount equal to: (i) .275% per annum if the Pension Fund L/C which secures such Letter of Credit is issued by a Pension Fund with a current S&P credit rating of “AA-” or greater, or (ii) .325% per annum if the Pension Fund L/C which secures such Letter of Credit is issued by a Pension Fund with a current S&P credit rating of “A” or “A-”, calculated in each case for the number of days such Letter of Credit is outstanding, calculated on a 360-day basis. Such fees shall be due and payable upon issuance of the Letter of Credit. If a Pension Fund’s S&P credit rating is lowered to a level such that a higher Letter of Credit fee would be payable, the Company shall pay to the Bank such additional Letter of Credit fee for the period commencing on the date of the decrease of the Pension Fund’s S&P credit rating until the Expiry Date of the Letter of Credit secured by such Pension Fund’s Pension Fund L/C.

(b) The Company shall pay to the Bank an administration fee of $25,000 per annum, which such fee shall be due and payable on the Closing Date, on the first anniversary of the Closing Date, and, if the Availability Date is extended as provided for in Section 2.11, on each additional anniversary of the Closing Date.

(c) The Company shall pay to the Bank the Bank’s standard processing fees for issuing, amending and disbursing funds under standby letters of credit.

2.09 Computation of Fees and Interest. All computations of interest and of per annum fees shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. Each determination of an interest rate by the Bank shall be conclusive and binding on the Company in the absence of manifest error.

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2.10 Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce (“UCP”) most recently at the time of issuance of any Letter of Credit or any Pension Fund L/C shall (unless otherwise expressly provided in such Letter of Credit) apply to such Letter of Credit or such Pension Fund L/C, as applicable.

2.11 Extension of Availability Date. At any time that there shall remain less than ninety (90) and more than thirty (30) days to the Availability Date, the Company may request, upon delivery to the Bank of a Notice of Extension in the form attached hereto as Exhibit E, that the Bank extend the Availability Date for a period of up to two (2) years. If the Bank, in its sole discretion, elects to extend the Availability Date, such extension shall be effective on the Business Day following the date of the Bank’s acceptance of such request, and thereafter all references to the Availability Date hereunder shall be to the Availability as so extended.

2.12 Extension of Expiry Date. At any time there shall remain less than sixty (60) days to the Expiry Date of any Letter of Credit, the Company may, by delivery to the Bank of a Request for Extension in the form attached hereto as Exhibit F, request that the Bank extend the Expiry Date of such Letter of Credit for a period of six (6) months. The Bank will consider such request only if (a) the Bank receives evidence satisfactory to it that the Pension Fund L/C which secures the Letter of Credit for which such request has been made has been extended to have an expiry date of at least fifteen (15) days after the extended Expiry Date, and (b) at the time of such extension, the Pension Fund which has issued the Pension Fund L/C which secures such Letter of Credit has an S&P credit rating of “A-“ or higher. The Request for Extension must be received by the Bank at least five (5) Business Days prior to the Expiry Date to which the request relates and the extended Pension Fund L/C must be received by the Bank at least two (2) Business Days prior to such Expiry Date. Any date to which any Expiry Date has been extended in accordance with this Section 2.12 may be extended in like manner for one (1) additional six (6) month period.

ARTICLE III

TAXES AND YIELD PROTECTION

3.01 Taxes. If any payments to the Bank under this Agreement are made from outside the United States, the Company will not deduct any foreign taxes from any payments it makes to the Bank. If any such taxes are imposed on any payments made by the Company (including payments under this Section 3.01), the Company will pay the taxes and will also pay to the Bank, at the time interest is paid, any additional amount which the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such taxes had not been imposed. The Company will confirm that it has paid the taxes by giving the Bank official tax receipts (or notarized copies) within 30 days after the due date.

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3.02 Increased Costs and Reduction of Return.

(a) If the Bank determines that, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance by the Bank with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to the Bank (other than income or other taxes) of agreeing to issue or issuing or maintaining any Letter of Credit or maintaining any unpaid drawing under any Letter of Credit, then the Company shall be liable for, and shall from time to time, within three (3) Business Days following demand, pay to the Bank, additional amounts as are sufficient to compensate the Bank for such increased costs; provided, however, that the Company shall not be liable to pay any amounts pursuant to clause (ii) of this paragraph to the extent that such costs are incurred by reason of the gross negligence or willful misconduct of the Bank.

(b) If the Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Bank (or any office of the Bank issuing any Letter of Credit) or any corporation controlling the Bank with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and (taking into consideration the Bank’s or such corporation’s policies with respect to capital adequacy and the Bank’s desired return on capital) determines that the amount of such capital is increased as a consequence of its obligations under this Agreement or the Letter of Credit, then, within three (3) Business Days following demand of the Bank to the Company, the Company shall pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase.

(c) Any demand made by the Bank under this Section 3.02 shall be accompanied by a written explanation from the Bank of the increased costs or increased capital, as the case may be.

3.03 Survival. The agreements and obligations of the Company in this Article III shall survive the payment of all other Obligations.

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ARTICLE IV

CONDITIONS PRECEDENT

4.01 Conditions of Closing. On or before the Closing Date, the Bank shall have received all of the following, in form and substance satisfactory to the Bank:

(a) Letter of Credit Facility. This Agreement duly executed by the Company;

(b) Resolutions; Incumbency. (i) Copies of the resolutions of the board of directors of the Company authorizing the transactions contemplated hereby, certified as of the Closing Date by the Secretary of the Company; and (ii) a certificate of the Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Agreement, and all other Related Documents to be delivered by it hereunder;

(c) Good Standing. A good standing and tax good standing certificate for the Company from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation;

(d) Legal Opinion. A favorable opinion of counsel to the Company, addressed to the Bank, with respect to such legal matters relating hereto as the Bank may request;

(e) Payment of Fees. Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with Attorney Costs of the Bank to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute the Bank’s reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings, including any such costs, fees and expenses arising under or referenced in Sections 2.04 and 8.04;

(f) Certificate. A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that: (i) the representations and warranties contained in Article V are true and correct on and as of such date, as though made on and as of such date; (ii) no Default or Event of Default exists or would result from the execution and delivery of this Agreement; and (iii) there has occurred since December 31, 2001, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect;

(g) Related Agreements. An executed copy (or a duplicate thereof) of each of all other Related Documents;

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(h) Construction Advance Loan Facility. Evidence that the Construction Advance Loan Facility has been signed by the parties thereto and that the conditions of closing thereunder have been satisfied; and

(i) Other Documents. Such other approvals, opinions, documents or materials as the Bank may reasonably request.

4.02 Conditions to Issuance of Each Letter of Credit. On any date on which the Company requests that the Bank issue a Letter of Credit hereunder, unless otherwise waived by the Bank,

(a) the Bank shall have received:

(i) a completed and executed Application;

(ii) payment of all fees due and payable under Section 2.08(a) and (c).

(iii) a Pension Fund L/C securing such Letter of Credit; and

(iv) a Pension Fund Certificate for the Pension Fund L/C described in (iii) above; and

(b) each of the following shall be true:

(i) Representations and Warranties. Each of the representations and warranties made by the Company in or pursuant to this Agreement or the Related Documents shall be true and correct in all material respects on and as of such date as it made on and as of such date (except to the extent such representations and warranties relate solely to an earlier date);

(ii) Default. No Default or Event of Default shall have occurred or be continuing on such date or after giving effect to the extension of credit requested to be made on such date;

(iii) No Material Adverse Effect. Since the Closing Date, there shall have been no Material Adverse Effect;

(iv) Change of Control. Since the Closing Date, there shall have been no Change of Control;

(v) Pension Fund Credit Rating. The S&P credit rating of the Pension Fund whose Pension Fund L/C secures the Letter of Credit is “A-” or higher; and

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(vi) Termination Event. None of the events described in Section 7.02 shall have occurred and be continuing.

provided, however, that nothing in this Section 4.02(b), other than clause (i), shall be construed as a representation or warranty by the Company.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Bank that:

5.01 Incorporation; Existence; Good Standing. The Company is a corporation, duly organized, validly existing and in good standing under the laws of the state of Maryland, has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business, and is not in violation of its Incorporation Documents. The address set forth on the signature page of this Agreement is its principal business office. The Company is in compliance with all laws, regulations, rules and orders governing its existence and operations in all material respects.

5.02 Power and Authority. The Company has the power and authority to execute and perform this Agreement and the Related Documents.

5.03 Due Authorization. The Company has taken all necessary corporate action necessary to duly authorize the execution, delivery and performance of this Agreement and the Related Documents.

5.04 Binding Agreement. This Agreement is a legal, valid and binding obligation of the Company, and enforceable against the Company in accordance with its terms, subject only to (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws or enactments in effect now or in the future affecting the enforceability of creditors’ rights generally; (b) applicable principles of equity, whether such principles are applied by a court of equity or a court of law; and (c) the exercise of judicial discretion.

5.05 Non-Conflicting Agreements. The execution and delivery of this Agreement and the Related Documents by the Company, and the Company’s performance of this Agreement do not and will not (a) contravene any law, ordinance, regulation or rule of any Governmental Authority having jurisdiction over the Company (including any laws relating to usury) or its properties or assets or any constitutional or statutory provision in any material respect; (b) violate any order, decree or writ of any court having jurisdiction over the Company or its properties or assets in any material respect; or (c) conflict with, or constitute a breach of, or a default under, or result in a

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violation of, the articles of incorporation, charter, bylaws or other governing instrument of the Company, or any company restriction, bond or debenture applicable to the Company, or any note, mortgage, deed of trust or other evidence of indebtedness, or any material agreement, contract, indenture, document or other instrument to which the Company is a party or by which it is bound or to which its properties or assets are or may be subject.

5.06 Consents; Approvals. No notice, approval, authorization, consent, order, exemption or other action of, or notice to, or filing with any Governmental Authority or other public board or body or of any person, firm or corporation is or will be necessary or required as a condition to (a) the valid authorization, execution and delivery of this Agreement and the Related Documents or (b) the performance of the Company’s obligations under this Agreement and the Related Documents, except those that have been obtained and are in full force and effect.

5.07 Insolvency. No attachment, execution, or voluntary or involuntary proceeding in bankruptcy against the Company, and no assignment for the benefit of creditors by the Company has been contemplated, threatened or initiated.

5.08 Creditor Proceeding. The Company is not a party to any bankruptcy, reorganization, insolvency or other like proceeding against the Company, and no such proceeding pending or, to the best knowledge of the Company, threatened or known to be contemplated.

5.09 Litigation. There are no judgments, decrees or orders of any court, Governmental Authority or administrative agency issued against or otherwise applicable against the Company, or proceedings (including litigation, actions, claims, governmental or quasi-governmental proceedings and, to the best of its knowledge, investigations) of a legal, equitable, regulatory or administrative nature, completed or pending, to which the Company is a party or, to the Company’s best knowledge, threatened, against or affecting the Company that (a) call in to question and are likely to materially adversely affect, in the judgment of the party affected by such action (i) the Company’s creation, incorporation, or existence, (ii) the authority of the Company to conduct its operations, or (iii) the authority of the Company to perform its obligations under this Agreement or the Related Documents; or (b) are likely to materially adversely affect, in the judgment of the party affected by such action (i) the financial condition or operations of the Company, (ii) the business of the Company, (iii) the transactions to be effected by this Agreement or the Related Documents, or (iv) the Company’s ability to perform each of its obligations under this Agreement and the Related Documents. The Company is not in default with respect to any order of any court, Governmental Authority or arbitration board or tribunal.

5.10 Cease or Desist Orders. The Company is not under any cease or desist order or other order of a similar nature, temporary or permanent, of any federal, state or

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local authority that would have the effect of preventing or hindering the Company from the performance of its duties under this Agreement or the Related Documents in any material respect; nor is there any such proceeding pending, threatened or known to be contemplated that, if successful, could lead to the issuance of any such order.

5.11 Full Disclosure. The Company represents and warrants that no representation or warranty contained in this Agreement and no statement, certificate, document or other instrument furnished or to be furnished by the Company under this Agreement, or otherwise, relating to the transactions to be effected under this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make any such representation, warranty, statement, certificate, document or other instrument not misleading.

5.12 Depository Institution. The Company, if the Company is a depository institution, has complied with the requirements of 12 U.S.C. § 1823(e), as amended from time to time, in connection with the authorization, execution, delivery, and retention of this Agreement and any commitment or loan document required to be issued or entered into by the Company under or in connection with this Agreement.

5.13 Proceeds of Letters of Credit; Margin Regulations. The proceeds of the Letters of Credit are to be used solely for the purposes set forth in and permitted by Section 6.02. No part of the proceeds of any Letter of Credit will be used by the Company to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the issuance of any Letter of Credit nor the use of proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X.

5.14 Pension Fund Ratings. As of the Closing Date, the Detroit Pension Fund has an S&P credit rating of “AA” and the Wayne County Pension Fund has an S&P credit rating of “AA-”.

5.15 Timeliness of Representations and Warranties. Each representation and warranty made or given in this Agreement, or pursuant to it, shall be true and correct as of the Closing Date and as of the date of any issuance of any Letter of Credit hereunder.

ARTICLE VI

COVENANTS

So long as the Letter of Credit shall be outstanding or any Obligation shall remain unpaid or unsatisfied, unless the Bank waives compliance in writing:

6.01 Financial Statements. For so long as this Agreement is in effect/any Letter of Credit is outstanding, the Company shall deliver to the Bank, in form and substance

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satisfactory to the Bank, (a) as soon as available, but not later than thirty (30) days after the end of each quarter, a copy of the unaudited quarterly or semi-annual financial statements of each Pension Fund, and (b) as soon as available, but not later than ninety (90) days after the end of each fiscal year, (i) a copy of the audited financial statements of the Company, and (ii) a copy of the audited financial statements of each Pension Fund (including the Investment Policy and Performance Report), each of which shall include a balance sheet as at the end of such year and the related consolidated and consolidating statements of income or operations, shareholders’ or members’ equity and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of a nationally recognized independent public accounting firm, which report shall state that such financial statements present fairly the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years.

6.02 Notices. The Company shall promptly notify the Bank, at its address indicated on the signature page to this Agreement, or such other address as the Bank shall request:

(a) of the occurrence of any Default or Event of Default;

(b) of any matter that has resulted in or may reasonably be expected to result in a Material Adverse Effect;

(c) of any material change in accounting policies or financial reporting practices by the Company or any of its Subsidiaries or, to the extent it has knowledge thereof, of either Pension Fund; and

(d) of any change in the S&P credit rating of either Pension Fund of which it has knowledge.

6.03 Preservation of Company Existence. The Company shall, and shall cause each of its Subsidiaries to:

(a) preserve and maintain in full force and effect its existence and good standing under the laws of its state of jurisdiction of incorporation or organization;

(b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises reasonably necessary or desirable in the normal conduct of its business; and

(c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill.

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6.04 Letter of Credit. The Company shall deliver to the Bank the Letter of Credit referred to in each Construction Phase Financing Agreement on the Business Day following the date of the Company’s receipt of such Letter of Credit.

ARTICLE VII

EVENTS OF DEFAULT

7.01 Event of Default. Any of the following shall constitute an “Event of Default” after the applicable cure period:

(a) Non-Payment. The Company fails to pay, (i) any amount specified in Section 2.04(a) within one (1) Business Day after the date on which required to be paid herein, or (ii) within five (5) days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Related Document; or

(b) Insolvency; Voluntary Proceedings. The Parents, the Company, any Subsidiary, or either Pension Fund (i) cease or fail to be solvent, or generally fail to pay, or admit in writing their inability to pay, their debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily cease to conduct their business in the ordinary course; (iii) commence any Insolvency Proceeding with respect to themselves; or (iv) take any action to effectuate or authorize any of the foregoing; or

(c) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Parents, the Company, any Subsidiary, or either Pension Fund or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Parents’, the Company’s, any Subsidiary’s or either Pension Fund’s properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 90 days after commencement, filing or levy; (ii) the Parents, the Company, any Subsidiary or either Pension Fund admit the material allegations of a petition against them in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Parents, the Company, any Subsidiary or either Pension Fund acquiesce in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for themselves or a substantial portion of their property or business.

If an Event of Default should occur, the Bank may: (a) declare by written notice all amounts due hereunder (including any obligation with respect to out-standing Letters

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of Credit) or under any other Related Document to which the Bank and the Company are parties to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; provided, however, that upon the occurrence of any event specified in subsection (b) or (c) of this Section 7.01, all amounts due hereunder (including any contingent obligation with respect to the Letters of Credit) or under any other Related Document to which the Bank and the Company are parties shall automatically become due and payable without further act of the Bank; (b) by written notice to the Company, require the Company to deposit with the Bank as cash collateral an amount equal to the then undrawn amount of the Letters of Credit; and/or (c) exercise all rights and remedies available to it under the Related Documents or applicable law.

7.02 Termination of Bank’s Obligation to Issue Letters of Credit. If any of the following events should occur, the Bank may, at its discretion, suspend or terminate the issuance of Letters of Credit hereunder:

(a) Representation or Warranty. Any representation or warranty by the Company made herein, in any other Related Document, or which is contained in any certificate, document or financial or other statement by the Company, or any Responsible Officer, furnished at any time under this Agreement, or in or under any other Related Document, is incorrect in any material respect on or as of the date made or deemed made; or

(b) Breach of Covenant. The Company fails to perform or observe any other term or covenant contained in this Agreement or any other Related Document, and such default shall continue unremedied for a period of thirty (30) days after the earlier of (i) the date upon which a Responsible Officer knew of such failure and (ii) the date upon which written notice thereof is given to the Company by the Bank; or

(c) Cross-Default. The Parents, the Company or any Subsidiary (A) fail to make any payment, regardless of amount, in respect of any Indebtedness, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $25,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise); or (B) fail to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness, if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity or cash collateral in respect thereof to be demanded and the principal amount of such Indebtedness exceeds $25,000,000; or

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(d) Monetary Judgments. One or more non-interlocutory judgments, non-interlocutory orders, decrees or arbitration awards is entered against the Parents, the Company or any Subsidiary or either Pension Fund involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related series of transactions, incidents or conditions, of $25,000,000 or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 60 days after the entry thereof; or

(e) Non-Monetary Judgments. Any non-monetary judgment, order or decree is entered against the Parents, the Company or any Subsidiary or either Pension Fund which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of ninety (90) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(f) Other Documents. An event of default (however designated) occurs under any Construction Phase Financing Agreement or the Construction Advance Loan Facility; or

(g) Pension Fund Ratings. Either Pension Fund is not rated by Standard & Poors, Inc. within ninety (90) days of such Pension Fund’s fiscal year end.

7.03 Decline or Unavailability of Pension Fund Ratings. If the S&P credit rating of a Pension Fund which has issued one or more Pension Fund L/Cs falls below “A-” or such Pension Fund is no longer rated by Standard & Poors, Inc., the Bank shall promptly notify the Company of such occurrence, and the Company shall advise the Bank, within two (2) Business Days of receiving such notice, that one of the following options will occur within five (5) Business Days of such notice: (a) the Company will replace the Pension Fund L/Cs with new letters of credit issued by a new pension fund acceptable to the Bank in its sole discretion with an S&P credit rating of “A-” or better; (b) the Bank should draw an amount equal to the L/C Obligations under the Pension Fund L/Cs and use such amount to cash collateralize the outstanding Letters of Credit, or (c) the Company will transfer to the Bank an amount equal to the amount of the L/C Obligations as cash collateral for the outstanding Letters of Credit. If the Bank fails to receive timely notice from the Company or the Company does not implement the option selected in the notice within the five (5) Business Day Period, the Bank may draw under the Pension Fund L/C.

7.04 Rights Not Exclusive. The rights provided for in this Agreement and the other Related Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

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7.05 Right of Bank to Draw on Pension Fund L/Cs. Nothing in this Article VII shall be construed to prevent the Bank from drawing under a Pension Fund L/C pursuant to the terms of this Agreement if there is a draw by Fannie Mae under a Letter of Credit issued hereunder. However, notwithstanding the foregoing, the Bank shall not draw on a Pension Fund L/C unless there has been a draw on the Letter of Credit secured by such Pension Fund L/C or the Bank is entitled to draw under Section 7.03.

ARTICLE VIII

MISCELLANEOUS

8.01 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Related Document, and no consent with respect to any departure by the Company or any applicable Subsidiary therefrom, shall be effective unless the same shall be in writing and signed by the Bank and the Company, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

8.02 Notices.

(a) All notices, requests, consents, approvals, waivers and other communications shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the signature page hereof with respect to such Person, and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, telecopied or delivered, to the address or facsimile number specified for notices on the signature page hereof with respect to such Person; or, as directed to the Company or the Bank, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such other address as shall be designated by such party in a written notice to the Company and the Bank.

Copies of all notices to the Company shall be delivered to:

Honigman Miller Schwartz and Cohn, LLP

2290 First National Building

660 Woodward Avenue

Detroit, Michigan 48226-3583

Fax: (313) 465-8000

Attention: Gregory J. DeMars

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and copies of all notices to the Bank shall be delivered to:

Patton Boggs LLP

2001 Ross Avenue, Suite 3000

Dallas, Texas 75201

Fax: (214) 758-1550

Attention: Robert S. Rendell

(b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that notices pursuant to Article II shall not be effective until actually received by the Bank.

(c) Any agreement of the Bank herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Company. The Bank shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Bank shall not have any liability to the Company or other Person on account of any action taken or not taken by the Bank in reliance upon such telephonic or facsimile notice. The obligation of the Company to pay the Obligations hereunder shall not be affected in any way or to any extent by any failure by the Bank to receive written confirmation of any telephonic or facsimile notice or the receipt by the Bank of a confirmation which is at variance with the terms understood by the Bank to be contained in the telephonic or facsimile notice.

8.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

8.04 Costs and Expenses. The Company shall: (a) whether or not the transactions contemplated hereby are consummated, pay or reimburse the Bank within ten Business Days after demand (subject to Section 4.01(e)) for all costs and expenses incurred by the Bank in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Related Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including Attorney Costs incurred by the Bank with respect thereto; and (b) pay or reimburse the Bank within ten Business Days after demand for all costs and expenses (including Attorney Costs) incurred by it in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or any other

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Related Document during the existence of an Event of Default or after acceleration of the Obligations hereunder (including in connection with any “workout” or restructuring regarding the Obligations hereunder, and including in any Insolvency Proceeding or appellate proceeding).

8.05 Indemnification. Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify, defend and hold the Bank and each of its officers, directors, employees, counsel, agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Obligations hereunder) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or any Letter of Credit or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided, however, that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting solely from the breach of this Agreement, gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations.

8.06 Payments Set Aside. To the extent that the Company makes a payment to the Bank, or the Bank exercises its right of set-off, or the Bank draws on any Pension Fund L/C, and such payment or the proceeds of such set-off or the amount drawn or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Bank in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred or such amount had not been drawn.

8.07 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Bank.

8.08 Participations. The Bank may at any time and from time to time, subject to the Company’s consent which may not be unreasonably withheld, sell to one or more commercial banks or other Persons (a “Participant”) participating interests in the Letters of Credit and the other interests of the Bank hereunder and under the other Related Documents.

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8.09 Confidentiality. The Bank agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as “confidential” or “secret” by the Company and provided to it by the Company or any Subsidiary, under this Agreement or any other Related Document, and the Bank shall not use any such information other than in connection with or in enforcement of this Agreement and the other Related Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary; except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by the Bank, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company known to the Bank; provided, however, that the Bank may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of the Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Related Document; (E) to the Bank’s independent auditors and other professional advisors; (F) to any Participant, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Bank hereunder; (G) as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with the Bank; and (H) to its Affiliates.

8.10 Set-off. In addition to any rights and remedies of the Bank provided by law, if an Event of Default exists and the Obligations hereunder have been accelerated, the Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, the Bank to or for the credit or the account of the Company against any and all Obligations owing to the Bank, now or hereafter existing, irrespective of whether or not the Bank shall have made demand under this Agreement or any Related Document and although such Obligations may be contingent or unmatured. The Bank agrees promptly to notify the Company after any such set-off and application made by the Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

8.11 Counterparts. This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument.

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8.12 Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

8.13 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Bank and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Related Documents.

8.14 Governing Law and Jurisdiction.

(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES; PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY AND THE BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY AND THE BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY AND THE BANK EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK.

8.15 Waiver of Jury Trial. THE COMPANY AND THE BANK EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS TO WHICH THEY ARE

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PARTIES, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT, AND THAT RELATE TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY INCLUDING, CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS TO WHICH THEY ARE PARTIES OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS TO WHICH THE COMPANY AND THE BANK ARE PARTIES.

8.16 Entire Agreement. This Agreement, together with the other Related Documents, embodies the entire agreement and understanding between the Company and the Bank, and supersedes all prior or contemporaneous agreements and understandings of such Persons, oral or written, relating to the subject matter hereof and thereof.

8.17 Ratings Changes. The Bank shall give the Company prompt notice of any change of its long term debt rating by Moody’s Investors Services or Standard & Poors, Inc., provided that any failure to comply therewith shall not affect any obligation of the Company to the Bank hereunder.

8.18 Term. This Agreement shall terminate only at such time when all Letters of Credit have either expired or been fully reimbursed and terminated.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

MIDLAND MORTGAGE INVESTMENT CORPORATION
By:	/s/  Keith J. Gloeckl
Name:	Keith J. Gloeckl
Title:	President
NOTICE ADDRESS: 33 North Garden Avenue, Suite 1200 Clearwater, Florida 33755 Attention: Thomas Vandergrift Facsimile: (727) 443-6067
BANK OF AMERICA, N.A
By:	/s/  Jeff Journey
Name:	Jeff Journey
Title:	SVP
NOTICE ADDRESS: 901 Main Street, 51st Floor TX1-492-51-01 Dallas, Texas 75202-3715 Telephone: (214) 209-9325 Facsimile: (214) 209-1571
Attention: Loan Administration – Susan Mogish

F-1

With copy to:

Bank of America, N.A.

333 S. Beaudry Avenue, 19^th Floor

CA9-703-19-23

Los Angeles, CA 90017-1466

Telephone: (213) 345-0098

Facsimile: (213) 345-6710

F-2

EX-10.7.2

Exhibit 10.7.2

Execution Copy

LETTER OF CREDIT FACILITY AGREEMENT

[MuniMae Midland Construction Finance, LLC]

This LETTER OF CREDIT FACILITY AGREEMENT is entered into as of October 18, 2002, between MuniMae Midland Construction Finance, LLC, a Maryland limited liability company (the “Company”), and Bank of America, N.A. (the “Bank”).

WITNESSETH:

WHEREAS, Fannie Mae, a corporation organized under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 et. seq. (“Fannie Mae”) is prepared to make certain loans to developers of multi-family residential properties under its Construction Advance Loan Program (“CAL Program”);

WHEREAS, it is a condition to the making of loans under the CAL Program that a standby letter of credit be issued by a national, federally insured, financial institution in favor of Fannie Mae with respect to each such loan;

WHEREAS, the Company, in facilitating the consummation of loans to borrowers under the CAL Program, wishes to apply from time to time to Bank for the issuance of such letters of credit; and

WHEREAS, the Bank is prepared to issue such letters of credit in favor of Fannie Mae on the terms and conditions set forth herein:

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.01 Certain Defined Terms. The following terms have the following meanings:

“Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person

if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise.

“Agreement” means this Letter of Credit Facility Agreement.

“Amendment Application” means the Bank’s standard form of application for amendment of outstanding letters of credit that is in use at the time any such amendment of the Letter of Credit is requested by the Company.

“Application” means a Bank of America Letter of Credit Application attached hereto as Exhibit A.

“Attorney Costs” means and includes all reasonable fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel.

“Availability Date” means October 18, 2004, or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.

“Bank-Related Persons” means the Bank, together with its Affiliates and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

“Bond Credit Enhancement and Commitment Fee Facility” means the Letter of Credit Facility Agreement between the Bank and MMI pursuant to which the Bank has agreed to issue letters of credit in favor of Fannie Mae with respect to (a) Fannie Mae’s credit enhancement of tax-exempt multi-family housing revenue bonds, and (b) the commitment deposit fee requirements under the the CAL Program and the DUS Bond Credit Enhancement Mortgage Loan Program.

“Business Day” means any day other than (a) a Saturday or Sunday, or (b) any other day on which commercial banks in New York, New York, or Dallas, Texas are authorized or required by law to close.

“Capital Adequacy Regulation” means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank.

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A “Change of Control” shall be deemed to have occurred if (a) any person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Commission as in effect on the date hereof) shall own directly or indirectly, beneficially or of record, shares representing more than 20% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Parents or the Company or any corporation directly or indirectly Controlling the Parents or the Company; or (b) a majority of the seats (other than vacant seats) on the board of directors of the Parents or the Company or any corporation directly or indirectly Controlling the Parents or the Company shall at any time be occupied by persons who were neither (i) nominated by the management of the Parents or the Company or by persons who were members of the board of directors as of the Effective Date or members elected by two thirds of such members, nor (ii) appointed by directors so nominated; provided, however, that an event described in clause (a) above shall not constitute a “Change in Control” if the acquisition of shares resulting in ownership of in excess of the 20% threshold referred to in such clause (a) shall have been approved, prior to the acquisition of such shares or the commencement by the person or group referred to in such clause (a) of a tender offer for shares of the Parents or the Company that would result, if successful, in such person or group owning in excess of such 20% threshold, by a majority of the members of the board of directors of the Parents or the Company who were either members of the board of directors as of the date of this Agreement or nominated or appointed as provided in clauses (b)(i) or (ii) above.

“Closing Date” means the date on which all conditions precedent set forth in Article IV are satisfied or waived by the Bank.

“Code” means the Internal Revenue Code of 1986, and regulations promulgated thereunder.

“Construction Loan Facility Amount” means the amount equal to $100,000,000 minus the L/C Obligations outstanding under the Bond Credit Enhancement and Commitment Fee Facility.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have meanings correlative thereto.

“Date of Issuance” means, with respect to any Letter of Credit, the date of issuance of such Letter of Credit.

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“Default” means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during any applicable notice or cure period) constitute an Event of Default.

“Detroit Pension Fund” means the Policemen & Firemen Retirement System of the City of Detroit.

“Dollars”, “dollars” and “$” each mean lawful money of the United States.

“Event of Default” means any of the events or circumstances specified in Section 7.01.

“Expiry Date” means the last day a drawing may be made under a Letter of Credit, which such date shall be approved by Fannie Mae but in no event shall be later than two (2) years after the date of issuance of such Letter of Credit.

“Fannie Mae” means Fannie Mae, a corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. §1716 et. seq.

“GAAP” means generally accepted accounting principles, applied on a consistent basis.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Guarantee” of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or other

4

financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however, that the term Guarantee shall not include endorsements for collection or deposit, in either case in the ordinary course of business.

“Indebtedness” of any Person means, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by a note, bond, debenture or similar instrument, (iii) all obligations of such Person upon which interest charges are customarily paid, (iv) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (v) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than accounts payable to suppliers incurred in the ordinary course of business and not overdue), (vi) all indebtedness of any other Person secured by any Lien on any property owned by the Company, whether or not such indebtedness has been assumed, (vii) the principal component of all Capitalized Lease Obligations of such Person, and (viii) all Guarantees of such Person.

“Indemnified Liabilities” has the meaning specified in Section 8.05.

“Indemnified Person” has the meaning specified in Section 8.05.

“Insolvency Proceeding” means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; undertaken under U.S. Federal, state or foreign law, including the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.).

“L/C Obligations” means at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of all unreimbursed drawings under all Letters of Credit.

“Letter of Credit” means a standby letter of credit issued by the Bank for the account of the Company in favor of Fannie Mae substantially in the form attached hereto as Exhibit B, as provided for hereunder.

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“Lien” means any mortgage, pledge, security interest, encumbrance, lien (statutory or other) or charge of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the Uniform Commercial Code or any comparable law).

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

“Master Forward Financing Agreement” means that certain Master Forward Financing Agreement, dated as of May 15, 2001, between the Company and Fannie Mae.

“Material Adverse Effect” means a materially adverse effect on the business, assets, condition (financial or otherwise) or results of operations of (a) the Parents, (b) the Company, (c) the Parents, the Company and their Subsidiaries taken as a whole, or (d) either of the Pension Funds.

“MMI” means Midland Mortgage Investment Corporation, a Florida corporation.

“Obligations” means all reimbursement obligations, advances, debts, liabilities, obligations, covenants and duties arising under any Related Document owing by the Company to the Bank or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising.

“Organization Documents” means the certificate or articles of organization, the regulations or limited liability company agreement, any certificate of determination or instrument relating to the rights of members or managers of such limited liability company, and all applicable resolutions of the board of directors, members or managers, as applicable (or any committee thereof), of such limited liability company.

“Parents” means, collectively and individually, Municipal Mortgage & Equity, LLC, a limited liability company organized under the laws of the State of Delaware; MuniMae Midland, LLC, a limited liability company organized under the laws of the state of Maryland, and MuniMae Investment Service Corporation, a Maryland corporation.

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“Participant” has the meaning specified in Section 8.08.

“Pension Fund Certificate” means a certificate, substantially in the form of Exhibit C to this Agreement.

“Pension Funds” means the Detroit Pension Fund and the Wayne County Pension Fund.

“Pension Fund L/C” means any standby letter of credit issued by the Detroit Pension Fund or the Wayne County Pension Fund, as security for the Letters of Credit issued hereunder, each of which shall:

(a) be an irrevocable letter of credit, effective as of the date of the issuance of the Letter of Credit which such Pension Fund L/C secures, that is in the form of Exhibit D to this Agreement, or in such other form as may be approved by the Bank;

(b) be in an initial stated amount equal to the amount of the Letter of Credit which such Pension Fund L/C secures;

(c) accompanied, on delivery to the Bank, by a Pension Fund Certificate;

(d) be issued for the sole benefit of the Bank;

(e) have an expiration date at least 15 days after the Expiry Date of the Letter of Credit which such Pension Fund L/C secures; and

(f) provide that it may be drawn, in whole and not in part, by presentation to the applicable Pension Fund of a clean sight draft.

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority.

“Prime Rate” means the rate of interest per annum publicly announced by the Bank from time to time as its prime rate.

“Property” means all assets and properties of any nature whatsoever, whether real or personal, tangible or intangible, including without limitation intellectual property.

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“Related Documents” means this Agreement, the Letter of Credit, the Application, the Amendment Application and any other agreement or instrument relating thereto and to the transactions contemplated hereby.

“Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

“Responsible Officer” means the chief executive officer, the president, treasurer or senior vice president of the Company, or any other officer having substantially the same authority and responsibility.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“Subsidiary” of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50% of the voting stock, membership interests or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of the Company.

“UCP” has the meaning specified in Section 2.10 hereof.

“United States” and “U.S.” each means the United States of America.

“Wayne County Pension Fund” means the Wayne County Employees’ Retirement System.

1.02 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Appendix references are to this Agreement unless otherwise specified. The term “documents” includes any and all instruments, documents, agreements, certificates, indentures, notices

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and other writings, however evidenced. The term “including” is not limiting and means “including without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”

(c) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Related Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

(d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise expressly provided, any reference to any action of the Bank by way of consent, approval or waiver shall be deemed modified by the phrase “in its sole discretion.”

(e) This Agreement and the other Related Documents to which the Company and the Bank are parties are the result of negotiations between, and have been reviewed by counsel to, the Bank and the Company, and are the products of both parties. Accordingly, they shall not be construed against the Bank merely because of the Bank’s involvement in their preparation.

1.03 Accounting Principles. Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of the Company.

ARTICLE II

THE LETTERS OF CREDIT

2.01 The Letters of Credit. (a) Subject to the terms and conditions of this Agreement, the Bank agrees, from time to time on any Business Day during the period from the Closing Date to the Availability Date, to issue Letters of Credit, and to amend Letters of Credit previously issued by it, in accordance with Section 2.02(b), provided, however, that after giving effect to the issuance

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of any Letter of Credit, the aggregate amount of all L/C Obligations hereunder shall not exceed the Construction Loan Facility Amount. The Company’s ability to request that the Bank issue Letters of Credit shall be fully revolving, that is, the Company may, during the foregoing period, and within the foregoing limits, request that the Bank issue Letters of Credit to replace Letters of Credit which have been returned to the Bank for cancellation or which have been drawn upon and reimbursed.

(b) The Bank is under no obligation to issue any Letter of Credit if:

(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Bank from issuing such Letter of Credit, or any Requirement of Law applicable to Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Bank shall prohibit, or request that the Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular, or shall impose upon the Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which Bank in good faith deems material to it;

(ii) one or more of the applicable conditions contained in Article IV is not then satisfied;

(iii) the requested Expiry Date of such Letter of Credit is more than two (2) years after the date such Letter of Credit issued; or

(iv) such Letter of Credit is not secured, as of the date of its issuance, by a Pension Fund L/C having an expiry date of at least fifteen (15) days following the Expiry Date of such Letter of Credit.

2.02 Issuance of Letters of Credit. (a) Each Letter of Credit shall be issued upon the delivery to Bank of (i) the irrevocable written request of the Company, in the form of a completed Application executed by the Company, and (ii) the Pension Fund L/C which will secure such Letter of Credit, which Application shall be received by the Bank at least five (5) Business Days prior to the proposed date of issuance of the Letter of Credit, and which Pension Fund L/C shall be received by the Bank at least two (2) Business Days prior to the proposed date of the issuance of the Letter of Credit. Such request for issuance of a Letter of Credit shall (i) be by facsimile, confirmed immediately in an original writing, (ii) accompanied by a Pension Fund Certificate, and (iii) shall

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specify in form and detail satisfactory to the Bank: (A) the proposed date of issuance of such Letter of Credit (which shall be a Business Day); (B) the face amount of such Letter of Credit; (C) the Expiry Date of such Letter of Credit; and (D) the name and address of the beneficiary (Fannie Mae) thereof. Wherever there is an inconsistency between the provisions of this Agreement and the terms and conditions of the Application, the provisions of this Agreement shall prevail.

(b) From time to time while a Letter of Credit is outstanding and prior to the Expiry Date, the Bank will, upon the irrevocable written request of the Company, which shall be received by the Bank at least five (5) Business Days prior to the proposed date of amendment, consider an amendment of such Letter of Credit (other than an extension of the Expiry Date which is covered by Section 2.12 hereof). Such request for amendment of a Letter of Credit shall be by facsimile, confirmed immediately in an original writing, and shall specify in form and detail satisfactory to the Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; (iv) evidence that the Pension Fund L/C shall be amended so as to be in the same amount and to have the same terms as such amended Letter of Credit; and (v) such other matters as the Bank may require.

2.03 Drawings on Letters of Credit. Fannie Mae is authorized to make drawings under the Letters of Credit in accordance with the terms of the Letter of Credit. The Company hereby directs the Bank to make payments under each Letter of Credit in the manner provided in such Letter of Credit. The Company hereby irrevocably approves reductions and reinstatements of the amount of each Letter of Credit in accordance with the terms of such Letter of Credit.

2.04 Reimbursement and Other Payments. (a) If (i) the Bank is required to draw under a Pension Fund L/C pursuant to subsection (c) below prior to requesting payment from the Company and is not paid in full under such Pension Fund L/C or (ii) the Bank is not required to so draw under a Pension Fund L/C pursuant to subsection (c) below, the Company shall pay to the Bank:

(1) immediately after (and on the same Business Day as) any amount is drawn under any Letter of Credit, a sum (and interest on such amount as provided in subsection (b) below) equal to the amount so drawn and paid;

(2) promptly upon notice from the Bank of the amount thereof, any and all reasonable charges and expenses, including

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transaction fees in connection with drawings under any Letter of Credit, which the Bank may pay or incur relative to such Letter of Credit (together with the amount described in clause (1) above, the “Amount Owing”).

(b) The Company shall pay to the Bank interest on any and all amounts owed and unpaid by the Company when due hereunder for each day from the date such amounts become due until payment in full, payable on demand, at a fluctuating interest rate per annum equal to the Prime Rate plus three percent (3%) (the “Interest Owing”); provided, however, that such fluctuating interest rate shall in no event be higher (with respect to each such amount due and payable hereunder, from the date such amount is due and payable until the date such amount is paid in full) than the maximum rate permitted by applicable law.

(c) Notwithstanding any other provision in this Section 2.04, if at any time an amount is drawn under any Letter of Credit (for whatever reason), the Bank shall, with the exceptions noted below, prior to requesting payment from the Company, draw under the Pension Fund L/C which secures such Letter of Credit, in an amount equal to the Amount Owing. The Bank is not required to draw under the Pension Fund L/C prior to requesting payment from the Company if (i) an injunction, restraining order, or other court order prevents the Bank from drawing under the Pension Fund L/C, or (ii) an event described in Section 7.01(b) or (c) has occurred with respect to the Pension Fund that has issued the Pension Fund L/C which secures the Letter of Credit which has been drawn on. In any event, the Company shall remain at all times liable for the Amount Owing and the Interest Owing with respect to each Letter of Credit, and will pay such amount to the Bank if the Bank so requests.

(d) If Fannie Mae makes a drawing under the Letter of Credit because a “Letter of Credit Issuer Rating Event” (as defined in the Master Forward Financing Agreement) has occurred, the Bank shall draw under the Pension Fund L/C which secures such Letter of Credit, unless, prior to the draw by Fannie Mae, the Company has deposited with the Bank as cash collateral an amount equal to such drawing.

2.05 Role of the Bank.

(a) The Company agrees that, in paying any drawing under any Letter of Credit, the Bank shall not have any responsibility to obtain any document (other than any sight draft and certificates expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.

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(b) The Bank shall not be liable for: (i) any action taken or omitted in the absence of breach of this Agreement, gross negligence or willful misconduct; or (ii) the due execution, effectiveness, validity or enforceability of any Letter of Credit, any Application or any other document relating to any Letter of Credit.

(c) The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Company from pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Bank-Related Person, nor any of the correspondents, participants or assignees of the Bank, shall be liable or responsible for any of the matters described in clauses (a) through (f) of Section 2.06; provided, however, that, anything in such clauses or elsewhere herein to the contrary notwithstanding, the Company may have a claim against the Bank, and the Bank may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the Bank’s willful misconduct or gross negligence or the Bank’s breach of this Agreement, willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing: (i) the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) the Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

2.06 Obligations Absolute. The obligations of the Company under this Agreement and any other Related Document to reimburse the Bank for a drawing under a Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such other Related Document under all circumstances, including the following:

(a) any lack of validity or enforceability of this Agreement or any other Related Document;

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(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of such Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the Related Documents;

(c) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the Related Documents or any unrelated transaction;

(d) any draft, demand, certificate or other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any material respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under the Letter of Credit;

(e) any payment made by the Bank under the Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of the Letter of Credit, including any arising in connection with any Insolvency Proceeding;

(f) the existence, validity or invalidity, enforceability or unenforcability of any Pension Fund L/C; or

(g) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to the Company.

2.07 Examination of Documents. Notwithstanding anything to the contrary in Section 2.06, the Bank shall not be excused from liability to the Company to the extent of any direct damages (as opposed to consequential, indirect and punitive damages, claims in respect of which are hereby waived by the Company) suffered by the Company that are caused by the Bank’s breach of this Agreement, gross negligence or willful misconduct when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof, provided, however, that the parties hereto expressly agree that:

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(a) the Bank may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

(b) the Bank shall have the right, in its sole discretion, to decline to accept documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

(c) this Section shall establish the standard of care to be exercised by the Bank when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

2.08 Letter of Credit Fees. (a) The Company shall pay to the Bank an origination fee with respect to each Letter of Credit issued hereunder in an amount equal to: (i) .275% per annum if the Pension Fund L/C which secures such Letter of Credit is issued by a Pension Fund with a current S&P credit rating of “AA-” or greater, or (ii) .325% per annum if the Pension Fund L/C which secures such Letter of Credit is issued by a Pension Fund with a current S&P credit rating of “A” or “A-”, calculated in each case for the number of days such Letter of Credit is outstanding, calculated on a 360-day basis. Such fees shall be due and payable upon issuance of the Letter of Credit. If a Pension Fund’s S&P credit rating is lowered to a level such that a higher Letter of Credit fee would be payable, the Company shall pay to the Bank such additional Letter of Credit fee for the period commencing on the date of the decrease of the Pension Fund’s S&P credit rating until the Expiry Date of the Letter of Credit secured by such Pension Fund’s Pension Fund L/C.

(b) The Company shall pay to the Bank an administration fee of $25,000 per annum, which such fee shall be due and payable on the Closing Date, on the first anniversary of the Closing Date, and, if the Availability Date is extended as provided for in Section 2.11, on each additional anniversary of the Closing Date.

(c) The Company shall pay to the Bank the Bank’s standard processing fees for issuing, amending and disbursing funds under standby letters of credit.

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2.09 Computation of Fees and Interest. All computations of interest and of per annum fees shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. Each determination of an interest rate by the Bank shall be conclusive and binding on the Company in the absence of manifest error.

2.10 Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce (“UCP”) most recently at the time of issuance of any Letter of Credit or any Pension Fund L/C shall (unless otherwise expressly provided in such Letter of Credit) apply to such Letter of Credit or such Pension Fund L/C, as applicable.

2.11 Extension of Availability Date. At any time that there shall remain less than ninety (90) and more than thirty (30) days to the Availability Date, the Company may request, upon delivery to the Bank of a Notice of Extension in the form attached hereto as Exhibit E, that the Bank extend the Availability Date for a period of up to two (2) years. If the Bank, in its sole discretion, elects to extend the Availability Date, such extension shall be effective on the Business Day following the date of the Bank’s acceptance of such request, and thereafter all references to the Availability Date hereunder shall be to the Availability as so extended

2.12 Extension of Expiry Date. At any time there shall remain less than sixty (60) days to the Expiry Date of any Letter of Credit, the Company may, by delivery to the Bank of a Request for Extension in the form attached hereto as Exhibit F, request that the Bank extend the Expiry Date of such Letter of Credit for a period of six (6) months. The Bank will consider such request only if (a) the Bank receives evidence satisfactory to it that the Pension Fund L/C which secures the Letter of Credit for which such request has been made has been extended to have an expiry date of at least fifteen (15) days after the extended Expiry Date, and (b) at the time of such extension, the Pension Fund which has issued the Pension Fund L/C which secures such Letter of Credit has an S&P credit rating of “A-”or higher. The Request for Extension must be received by the Bank at least five (5) Business Days prior to the Expiry Date to which the request relates and the extended Pension Fund L/C must be received by the Bank at least two (2) Business Days prior to such Expiry Date. Any date to which any Expiry Date has been extended in accordance with this Section 2.12 may be extended in like manner for one (1) additional six (6) month period.

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ARTICLE III

TAXES AND YIELD PROTECTION

3.01 Taxes. If any payments to the Bank under this Agreement are made from outside the United States, the Company will not deduct any foreign taxes from any payments it makes to the Bank. If any such taxes are imposed on any payments made by the Company (including payments under this Section 3.01), the Company will pay the taxes and will also pay to the Bank, at the time interest is paid, any additional amount which the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such taxes had not been imposed. The Company will confirm that it has paid the taxes by giving the Bank official tax receipts (or notarized copies) within 30 days after the due date.

3.02 Increased Costs and Reduction of Return. (a) If the Bank determines that, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance by the Bank with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to the Bank (other than income or other taxes) of agreeing to issue or issuing or maintaining any Letter of Credit or maintaining any unpaid drawing under any Letter of Credit, then the Company shall be liable for, and shall from time to time, within three (3) Business Days following demand, pay to the Bank, additional amounts as are sufficient to compensate the Bank for such increased costs; provided, however, that the Company shall not be liable to pay any amounts pursuant to clause (ii) of this paragraph to the extent that such costs are incurred by reason of the gross negligence or willful misconduct of the Bank.

(b) If the Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Bank (or any office of the Bank issuing any Letter of Credit) or any corporation controlling the Bank with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and (taking into consideration the Bank’s or such corporation’s policies with respect to capital adequacy and the Bank’s desired return on capital) determines that the amount of such capital is increased as a consequence of its obligations under this Agreement or the Letter of Credit, then, within three (3) Business Days following demand of the

17

Bank to the Company, the Company shall pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase.

(c) Any demand made by the Bank under this Section 3.02 shall be accompanied by a written explanation from the Bank of the increased costs or increased capital, as the case may be.

3.03 Survival. The agreements and obligations of the Company in this Article III shall survive the payment of all other Obligations.

ARTICLE IV

CONDITIONS PRECEDENT

4.01 Conditions of Closing. On or before the Closing Date, the Bank shall have received all of the following, in form and substance satisfactory to the Bank:

(a) Letter of Credit Facility. This Agreement duly executed by the Company;

(b) Resolutions; Incumbency. (i) Copies of the resolutions of the board of directors, members or managers, as applicable, of the Company authorizing the transactions contemplated hereby, certified as of the Closing Date by the Secretary of the Company; and (ii) a certificate of the Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Agreement, and all other Related Documents to be delivered by it hereunder;

(c) Good Standing. A good standing and tax good standing certificate for the Company from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation;

(d) Legal Opinion. A favorable opinion of counsel to the Company, addressed to the Bank, with respect to such legal matters relating hereto as the Bank may request;

(e) Payment of Fees. Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to the extent then due and payable

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on the Closing Date, together with Attorney Costs of the Bank to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute the Bank’s reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings, including any such costs, fees and expenses arising under or referenced in Sections 2.04 and 8.04;

(f) Certificate. A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that: (i) the representations and warranties contained in Article V are true and correct on and as of such date, as though made on and as of such date; (ii) no Default or Event of Default exists or would result from the execution and delivery of this Agreement; and (iii) there has occurred since December 31, 2001, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect;

(g) Related Agreements. An executed copy (or a duplicate thereof) of each of all other Related Documents;

(h) Bond Credit Enhancement and Commitment Fee Facility. Evidence that the Bond Credit Enhancement and Commitment Fee Facility has been signed by the parties thereto and that the conditions of closing thereunder have been satisfied; and

(i) Other Documents. Such other approvals, opinions, documents or materials as the Bank may reasonably request.

4.02 Conditions to Issuance of Each Letter of Credit. On any date on which the Company requests that the Bank issue a Letter of Credit hereunder, unless otherwise waived by the Bank,

(a) the Bank shall have received:

(i) a completed and executed Application;

(ii) payment of all fees due and payable under Section 2.08(a) and (c).

(iii) a Pension Fund L/C securing such Letter of Credit; and

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(iv) a Pension Fund Certificate for the Pension Fund L/C described in (iii) above; and

(b) each of the following shall be true:

(i) Representations and Warranties. Each of the representations and warranties made by the Company in or pursuant to this Agreement or the Related Documents shall be true and correct in all material respects on and as of such date as it made on and as of such date (except to the extent such representations and warranties relate solely to an earlier date);

(ii) Default. No Default or Event of Default shall have occurred or be continuing on such date or after giving effect to the extension of credit requested to be made on such date;

(iii) No Material Adverse Effect. Since the Closing Date, there shall have been no Material Adverse Effect;

(iv) Change of Control. Since the Closing Date, there shall have been no Change of Control;

(v) Pension Fund Credit Rating. The S&P credit rating of the Pension Fund whose Pension Fund L/C secures the Letter of Credit is “A-” or higher; and

(vi) Termination Event. None of the events described in Section 7.02 shall have occurred and be continuing.

provided, however, that nothing in this Section 4.02(b), other than clause (i), shall be construed as a representation or warranty by the Company.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Bank that:

5.01 Organization; Existence; Good Standing. The Company is a limited liability company, duly organized, validly existing and in good standing

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under the laws of the state of Maryland, has all limited liability company powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business, and is not in violation of its Organization Documents. The address set forth on the signature page of this Agreement is its principal business office. The Company is in compliance with all laws, regulations, rules and orders governing its existence and operations in all material respects.

5.02 Power and Authority. The Company has the power and authority to execute and perform this Agreement and the Related Documents.

5.03 Due Authorization. The Company has taken all necessary limited liability company action necessary to duly authorize the execution, delivery and performance of this Agreement and the Related Documents.

5.04 Binding Agreement. This Agreement is a legal, valid and binding obligation of the Company, and enforceable against the Company in accordance with its terms, subject only to (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws or enactments in effect now or in the future affecting the enforceability of creditors’ rights generally; (b) applicable principles of equity, whether such principles are applied by a court of equity or a court of law; and (c) the exercise of judicial discretion.

5.05 Non-Conflicting Agreements. The execution and delivery of this Agreement and the Related Documents by the Company, and the Company’s performance of this Agreement do not and will not (a) contravene any law, ordinance, regulation or rule of any Governmental Authority having jurisdiction over the Company (including any laws relating to usury) or its properties or assets or any constitutional or statutory provision in any material respect; (b) violate any order, decree or writ of any court having jurisdiction over the Company or its properties or assets in any material respect; or (c) conflict with, or constitute a breach of, or a default under, or result in a violation of, the articles of organization, charter, limited liability company agreement or other governing instrument of the Company, or any company restriction, bond or debenture applicable to the Company, or any note, mortgage, deed of trust or other evidence of indebtedness, or any material agreement, contract, indenture, document or other instrument to which the Company is a party or by which it is bound or to which its properties or assets are or may be subject.

5.06 Consents; Approvals. No notice, approval, authorization, consent, order, exemption or other action of, or notice to, or filing with any Governmental Authority or other public board or body or of any person, firm or

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corporation is or will be necessary or required as a condition to (a) the valid authorization, execution and delivery of this Agreement and the Related Documents or (b) the performance of the Company’s obligations under this Agreement and the Related Documents, except those that have been obtained and are in full force and effect.

5.07 Insolvency. No attachment, execution, or voluntary or involuntary proceeding in bankruptcy against the Company, and no assignment for the benefit of creditors by the Company has been contemplated, threatened or initiated.

5.08 Creditor Proceeding. The Company is not a party to any bankruptcy, reorganization, insolvency or other like proceeding against the Company, and no such proceeding pending or, to the best knowledge of the Company, threatened or known to be contemplated.

5.09 Litigation. There are no judgments, decrees or orders of any court, Governmental Authority or administrative agency issued against or otherwise applicable against the Company, or proceedings (including litigation, actions, claims, governmental or quasi-governmental proceedings and, to the best of its knowledge, investigations) of a legal, equitable, regulatory or administrative nature, completed or pending, to which the Company is a party or, to the Company’s best knowledge, threatened, against or affecting the Company that (a) call in to question and are likely to materially adversely affect, in the judgment of the party affected by such action (i) the Company’s creation, organization, or existence, (ii) the authority of the Company to conduct its operations, or (iii) the authority of the Company to perform its obligations under this Agreement or the Related Documents; or (b) are likely to materially adversely affect, in the judgment of the party affected by such action (i) the financial condition or operations of the Company, (ii) the business of the Company, (iii) the transactions to be effected by this Agreement or the Related Documents, or (iv) the Company’s ability to perform each of its obligations under this Agreement and the Related Documents. The Company is not in default with respect to any order of any court, Governmental Authority or arbitration board or tribunal.

5.10 Cease or Desist Orders. The Company is not under any cease or desist order or other order of a similar nature, temporary or permanent, of any federal, state or local authority that would have the effect of preventing or hindering the Company from the performance of its duties under this Agreement or the Related Documents in any material respect; nor is there any such proceeding pending, threatened or known to be contemplated that, if successful, could lead to the issuance of any such order.

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5.11 Full Disclosure. The Company represents and warrants that no representation or warranty contained in this Agreement and no statement, certificate, document or other instrument furnished or to be furnished by the Company under this Agreement, or otherwise, relating to the transactions to be effected under this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make any such representation, warranty, statement, certificate, document or other instrument not misleading.

5.12 Depository Institution. The Company, if the Company is a depository institution, has complied with the requirements of 12 U.S.C. Section 1823(e), as amended from time to time, in connection with the authorization, execution, delivery, and retention of this Agreement and any commitment or loan document required to be issued or entered into by the Company under or in connection with this Agreement.

5.13 Proceeds of Letters of Credit; Margin Regulations. The proceeds of the Letters of Credit are to be used solely for the purposes set forth in and permitted by Section 6.02. No part of the proceeds of any Letter of Credit will be used by the Company to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the issuance of any Letter of Credit nor the use of proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X.

5.14 Pension Fund Ratings. As of the Closing Date, the Detroit Pension Fund has an S&P credit rating of “AA” and the Wayne County Pension Fund has an S&P credit rating of “AA-”.

5.15 Timeliness of Representations and Warranties. Each representation and warranty made or given in this Agreement, or pursuant to it, shall be true and correct as of the Closing Date and as of the date of any issuance of any Letter of Credit hereunder.

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ARTICLE VI

COVENANTS

So long as the Letter of Credit shall be outstanding or any Obligation shall remain unpaid or unsatisfied, unless the Bank waives compliance in writing:

6.01 Financial Statements. For so long as this Agreement is in effect/any Letter of Credit is outstanding, the Company shall deliver to the Bank, in form and substance satisfactory to the Bank, (a) as soon as available, but not later than thirty (30) days after the end of each quarter, a copy of the unaudited quarterly or semi-annual financial statements of each Pension Fund, and (b) as soon as available, but not later than ninety (90) days after the end of each fiscal year, (i) a copy of the audited financial statements of the Company, and (ii) a copy of the audited financial statements of each Pension Fund (including the Investment Policy and Performance Report), each of which shall include a balance sheet as at the end of such year and the related consolidated and consolidating statements of income or operations, shareholders’ or members’ equity and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of a nationally recognized independent public accounting firm, which report shall state that such financial statements present fairly the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years.

6.02 Notices. The Company shall promptly notify the Bank, at its address indicated on the signature page to this Agreement, or such other address as the Bank shall request:

(a) of the occurrence of any Default or Event of Default;

(b) of any matter that has resulted in or may reasonably be expected to result in a Material Adverse Effect;

(c) of any material change in accounting policies or financial reporting practices by the Company or any of its Subsidiaries or, to the extent it has knowledge thereof, of either Pension Fund; and

(d) of any change in the S&P credit rating of either Pension Fund of which it has knowledge.

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6.03 Preservation of Company Existence. The Company shall, and shall cause each of its Subsidiaries to:

(a) preserve and maintain in full force and effect its existence and good standing under the laws of its state of jurisdiction of incorporation or organization;

(b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises reasonably necessary or desirable in the normal conduct of its business; and

(c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill.

6.04 Construction Letter of Credit. The Company shall deliver to the Bank the Construction Letter of Credit referred to in the Master Forward Financing Agreement on the Business Day following the date of the Company’s receipt of such Construction Letter of Credit.

ARTICLE VII

EVENTS OF DEFAULT

7.01 Event of Default. Any of the following shall constitute an “Event of Default” after the applicable cure period:

(a) Non-Payment. The Company fails to pay, (i) any amount specified in Section 2.04(a) within one (1) Business Day after the date on which required to be paid herein, or (ii) within five (5) days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Related Document; or

(b) Insolvency; Voluntary Proceedings. The Parents, the Company, any Subsidiary, or either Pension Fund (i) cease or fail to be solvent, or generally fail to pay, or admit in writing their inability to pay, their debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily cease to conduct their business in the ordinary course; (iii) commence any Insolvency Proceeding with respect to themselves; or (iv) take any action to effectuate or authorize any of the foregoing; or

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(c) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Parents, the Company, any Subsidiary, or either Pension Fund or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Parents’, the Company’s, any Subsidiary’s or either Pension Fund’s properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 90 days after commencement, filing or levy; (ii) the Parents, the Company, any Subsidiary or either Pension Fund admit the material allegations of a petition against them in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Parents, the Company, any Subsidiary or either Pension Fund acquiesce in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for themselves or a substantial portion of their property or business.

If an Event of Default should occur, the Bank may: (a) declare by written notice all amounts due hereunder (including any obligation with respect to out-standing Letters of Credit) or under any other Related Document to which the Bank and the Company are parties to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; provided, however, that upon the occurrence of any event specified in subsection (b) or (c) of this Section 7.01, all amounts due hereunder (including any contingent obligation with respect to the Letters of Credit) or under any other Related Document to which the Bank and the Company are parties shall automatically become due and payable without further act of the Bank; (b) by written notice to the Company, require the Company to deposit with the Bank as cash collateral an amount equal to the then undrawn amount of the Letters of Credit; and/or (c) exercise all rights and remedies available to it under the Related Documents or applicable law.

7.02 Termination of Bank’s Obligation to Issue Letters of Credit. If any of the following events should occur, the Bank may, at its discretion, suspend or terminate the issuance of Letters of Credit hereunder:

(a) Representation or Warranty. Any representation or warranty by the Company made herein, in any other Related Document, or which is contained in any certificate, document or financial or other statement by the Company, or any Responsible Officer, furnished at any time under this Agreement, or in or under any other Related Document, is incorrect in any material respect on or as of the date made or deemed made; or

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(b) Breach of Covenant. The Company fails to perform or observe any other term or covenant contained in this Agreement or any other Related Document, and such default shall continue unremedied for a period of thirty (30) days after the earlier of (i) the date upon which a Responsible Officer knew of such failure and (ii) the date upon which written notice thereof is given to the Company by the Bank; or

(c) Cross-Default. The Parents, the Company or any Subsidiary (A) fail to make any payment, regardless of amount, in respect of any Indebtedness, having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $25,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise); or (B) fail to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness, if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity or cash collateral in respect thereof to be demanded and the principal amount of such Indebtedness exceeds $25,000,000; or

(d) Monetary Judgments. One or more non-interlocutory judgments, non-interlocutory orders, decrees or arbitration awards is entered against the Parents, the Company or any Subsidiary or either Pension Fund involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related series of transactions, incidents or conditions, of $25,000,000 or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 60 days after the entry thereof; or

(e) Non-Monetary Judgments. Any non-monetary judgment, order or decree is entered against the Parents, the Company or any Subsidiary or either Pension Fund which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of ninety (90) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

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(f) Other Documents. An event of default (however designated) occurs under the Master Forward Financing Agreement or the Bond Credit Enhancement Commitment Fee Facility; or

(g) Pension Fund Ratings. Either Pension Fund is not rated by Standard & Poors, Inc. within ninety (90) days of such Pension Fund’s fiscal year end.

7.03 Decline or Unavailability of Pension Fund Ratings. If the S&P credit rating of a Pension Fund which has issued one or more Pension Fund L/Cs falls below “A-” or such Pension Fund is no longer rated by Standard & Poors, Inc., the Bank shall promptly notify the Company of such occurrence, and the Company shall advise the Bank, within two (2) Business Days of receiving such notice, that one of the following options will occur within five (5) Business Days of such notice: (a) the Company will replace the Pension Fund L/Cs with new letters of credit issued by a new pension fund acceptable to the Bank in its sole discretion with an S&P credit rating of “A-” or better; (b) the Bank should draw an amount equal to the L/C Obligations under the Pension Fund L/Cs and use such amount to cash collateralize the outstanding Letters of Credit, or (c) the Company will transfer to the Bank an amount equal to the amount of the L/C Obligations as cash collateral for the outstanding Letters of Credit. If the Bank fails to receive timely notice from the Company or the Company does not implement the option selected in the notice within the five (5) Business Day Period, the Bank may draw under the Pension Fund L/C.

7.04 Rights Not Exclusive. The rights provided for in this Agreement and the other Related Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

7.05 Right of Bank to Draw on Pension Fund L/Cs. Nothing in this Article VII shall be construed to prevent the Bank from drawing under a Pension Fund L/C pursuant to the terms of this Agreement if there is a draw by Fannie Mae under a Letter of Credit issued hereunder. However, notwithstanding the foregoing, the Bank shall not draw on a Pension Fund L/C unless there has been a draw on the Letter of Credit secured by such Pension Fund L/C or the Bank is entitled to draw under Section 7.03.

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ARTICLE VIII

MISCELLANEOUS

8.01 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Related Document, and no consent with respect to any departure by the Company or any applicable Subsidiary therefrom, shall be effective unless the same shall be in writing and signed by the Bank and the Company, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

8.02 Notices. (a) All notices, requests, consents, approvals, waivers and other communications shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the signature page hereof with respect to such Person, and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, telecopied or delivered, to the address or facsimile number specified for notices on the signature page hereof with respect to such Person; or, as directed to the Company or the Bank, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such other address as shall be designated by such party in a written notice to the Company and the Bank.

Copies of all notices to the Company shall be delivered to:

Honigman Miller Schwartz and Cohn, LLP

2290 First National Building

660 Woodward Avenue

Detroit, Michigan 48226-3583

Fax: (313) 465-8000

Attention: Gregory J. DeMars

and copies of all notices to the Bank shall be delivered to:

Patton Boggs LLP

2001 Ross Avenue

Suite 3000

Dallas, Texas 75201

Fax: 214-758-1550

Attention: Robert S. Rendell

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(b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that notices pursuant to Article II shall not be effective until actually received by the Bank.

(c) Any agreement of the Bank herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Company. The Bank shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Bank shall not have any liability to the Company or other Person on account of any action taken or not taken by the Bank in reliance upon such telephonic or facsimile notice. The obligation of the Company to pay the Obligations hereunder shall not be affected in any way or to any extent by any failure by the Bank to receive written confirmation of any telephonic or facsimile notice or the receipt by the Bank of a confirmation which is at variance with the terms understood by the Bank to be contained in the telephonic or facsimile notice.

8.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

8.04 Costs and Expenses. The Company shall: (a) whether or not the transactions contemplated hereby are consummated, pay or reimburse the Bank within ten Business Days after demand (subject to Section 4.01(e)) for all costs and expenses incurred by the Bank in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Related Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including Attorney Costs incurred by the Bank with respect thereto; and (b) pay or reimburse the Bank within ten Business Days after demand for all costs and expenses (including Attorney Costs) incurred by it in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or any other Related Document during the existence of an Event of Default or after

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acceleration of the Obligations hereunder (including in connection with any “workout” or restructuring regarding the Obligations hereunder, and including in any Insolvency Proceeding or appellate proceeding).

8.05 Indemnification. Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify, defend and hold the Bank and each of its officers, directors, employees, counsel, agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Obligations hereunder) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or any Letter of Credit or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided, however, that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting solely from the breach of this Agreement, gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations.

8.06 Payments Set Aside. To the extent that the Company makes a payment to the Bank, or the Bank exercises its right of set-off, or the Bank draws on any Pension Fund L/C, and such payment or the proceeds of such set-off or the amount drawn or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Bank in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred or such amount had not been drawn.

8.07 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Bank.

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8.08 Participations. The Bank may at any time and from time to time, subject to the Company’s consent which may not be unreasonably withheld, sell to one or more commercial banks or other Persons (a “Participant”) participating interests in the Letters of Credit and the other interests of the Bank hereunder and under the other Related Documents.

8.09 Confidentiality. The Bank agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as “confidential” or “secret” by the Company and provided to it by the Company or any Subsidiary, under this Agreement or any other Related Document, and the Bank shall not use any such information other than in connection with or in enforcement of this Agreement and the other Related Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary; except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by the Bank, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company known to the Bank; provided, however, that the Bank may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of the Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Related Document; (E) to the Bank’s independent auditors and other professional advisors; (F) to any Participant, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Bank hereunder; (G) as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with the Bank; and (H) to its Affiliates.

8.10 Set-off. In addition to any rights and remedies of the Bank provided by law, if an Event of Default exists and the Obligations hereunder have been accelerated, the Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time

32

held by, and other indebtedness at any time owing by, the Bank to or for the credit or the account of the Company against any and all Obligations owing to the Bank, now or hereafter existing, irrespective of whether or not the Bank shall have made demand under this Agreement or any Related Document and although such Obligations may be contingent or unmatured. The Bank agrees promptly to notify the Company after any such set-off and application made by the Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

8.11 Counterparts. This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument.

8.12 Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

8.13 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Bank and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Related Documents.

8.14 Governing Law and Jurisdiction.

(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES; PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND

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DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY AND THE BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY AND THE BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY AND THE BANK EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK.

8.15 Waiver of Jury Trial. THE COMPANY AND THE BANK EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS TO WHICH THEY ARE PARTIES, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT, AND THAT RELATE TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY INCLUDING, CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS TO WHICH THEY ARE PARTIES OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS TO WHICH THE COMPANY AND THE BANK ARE PARTIES.

8.16 Entire Agreement. This Agreement, together with the other Related Documents, embodies the entire agreement and understanding between the Company and the Bank, and supersedes all prior or contemporaneous agreements and understandings of such Persons, oral or written, relating to the subject matter hereof and thereof.

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8.17 Ratings Changes. The Bank shall give the Company prompt notice of any change of its long term debt rating by Moody’s Investors Services or Standard & Poors, Inc., provided that any failure to comply therewith shall not affect any obligation of the Company to the Bank hereunder.

8.18 Term. This Agreement shall terminate only at such time when all Letters of Credit have either expired or been fully reimbursed and terminated.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

MUNIMAE MIDLAND CONSTRUCTION FINANCE, LLC
By:	MuniMae Midland, LLC
	Sole Member
By:	/s/  Keith J. Gloeckl
Name:	Keith J. Gloeckl
Title:	Executive Vice President
NOTICE ADDRESS:
33 North Garden Avenue
Suite 1200
Clearwater, Florida 33755
Attention:   Lynn Coovert
Facsimile:   (727) 443-6067
BANK OF AMERICA, N.A
By:	/s/  Jeff Journey
Name:	Jeff Journey
Title:	Senior Vice President
NOTICE ADDRESS:
901 Main Street
51st Floor
TX1-492-51-01
Dallas, Texas 75202-3715
Telephone:  (214) 209-9325
Facsimile:    (214) 209-1571
Attention: Loan Administration – Susan Mogish

Page F-1

With copy to:
Bank of America, N.A.
333 S. Beaudry Avenue
19th Floor
CA9-703-19-23
Los Angeles, CA 90017-1466
Telephone:	(213) 345-0098
Facsimile:	(213) 345-6710

Page F-2

EX-10.7.3

Exhibit 10.7.3

Execution Copy

FIRST AMENDMENT TO

LETTER OF CREDIT

FACILITY AGREEMENTS

THIS FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENTS (this “Amendment”) made as of the 23^rd day of December, 2002, between MUNIMAE MIDLAND CONSTRUCTION FINANCE, LLC, a Maryland limited liability company (“MMCF”), MIDLAND MORTGAGE INVESTMENT CORPORATION, a Florida corporation (“MMI”) (MMCF and MMI are collectively referred to herein as the “Companies”) and BANK OF AMERICA, N.A. (the “Bank”).

WITNESSETH

WHEREAS, MMCF and MMI each entered into a Letter of Credit Facility Agreement dated October 18, 2002 with the Bank (individually the “MMCF Facility Agreement” and the “MMI Facility Agreement,” and collectively the “Facility Agreements”); and

WHEREAS, the Companies have requested that the Bank make certain amendments to the Facility Agreements, and the Bank is willing to do so subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Defined Terms. All capitalized terms used but not otherwise defined in this Amendment shall have the meaning ascribed to them in the Facility Agreements. Unless otherwise specified, all section references herein refer to sections of the Facility Agreements.

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2. Amendments to the MMCF Facility Agreement.

2.1 (a) The “Whereas Clauses” are amended to read as follows:

“WHEREAS, Fannie Mae, a corporation organized under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 et. seq. (“Fannie Mae”) is prepared to make certain loans to developers of multi-family residential properties under its Construction Advance Loan Program (“CAL Program”) and Freddie Mac, a corporation organized under the Federal Home Loan Mortgage Corporation Act, 12 U.S.C. § 1452 et. seq. (“Freddie Mac”) is prepared to provide standby credit enhancement instruments pursuant to its Bond Credit Enhancement Program (the “Bond Enhancement Program”);

WHEREAS, it is a condition to the making of loans under the CAL Program that a standby letter of credit (“Construction Letter of Credit”) be issued by a national, federally insured, financial institution in favor of Fannie Mae with respect to each such loan;

WHEREAS, it is a condition to the issuance of credit enhancement instruments under the Bond Enhancement Program that a standby letter of credit (“Bond Enhancement Letter of Credit”) be issued by a national, federally insured, financial institution in favor of Freddie Mac, with respect to each credit enhancement instrument issued by Freddie Mac.

WHEREAS, the Freddie Mac Commitment issued by Freddie Mac in connection with the Bond Enhancement Program requires that the Company pay a Forward Commitment Deposit Fee which may be posted in the form of a standby letter of credit (“Deposit Fee Letter of Credit”) in the amount of such fee;

WHEREAS, the Company, in its capacity as Construction Lender and Servicer under the CAL Program and the Bond Enhancement Program, wishes to apply from time to time to Bank for the issuance of such letters of credit; and

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WHEREAS, the Bank is prepared to issue such letters of credit in favor of Fannie Mae and Freddie Mac on the terms and conditions set forth herein:”

(b) The CAL Program and the Bond Enhancement Programs are collectively referred to in the MMCF Facility Agreement as the “Programs.”

(c) Each reference in the MMCF Facility Agreement to the “CAL Program” shall mean the “Programs” unless the context dictates otherwise.

(d) Each reference in the MMCF Facility Agreement to “Fannie Mae” shall mean “Fannie Mae or Freddie Mac” unless the context dictates otherwise.

2.2 The definition of “Bond Credit Enhancement and Commitment Fee Facility” is amended to read as follows:

“ ‘Bond Credit Enhancement and Commitment Fee Facility’ means the Letter of Credit Facility Agreement between the Bank and MMI pursuant to which the Bank has agreed to issue letters of credit in favor of Fannie Mae and Freddie Mac with respect to (a) Fannie Mae’s and Freddie Mac’s credit enhancement of tax-exempt multi-family housing revenue bonds, and (b) the commitment deposit fee requirements under the CAL Program and the Bond Enhancement Programs.”

2.3 The definition of “Construction Loan Facility Amount” is amended to read as follows:

“ ‘Construction Loan Facility Amount’ means the amount equal to $65,000,000 (the “Base Amount”) minus the L/C Obligations outstanding under the Bond Credit Enhancement and Commitment Fee Facility, provided that such Base Amount (i) shall be increased by an amount equal to any reduction, following the date hereof, in any commitment (other than the commitments under the Facility Agreements) of the Bank in favor of the Parents or any subsidiary thereof, and (ii) in any event, shall be increased to $100,000,000 on June 30, 2003.”

2.4 The definition of “Expiry Date” is amended to read as follows:

“ ‘Expiry Date’ means the last day a drawing may be made under a Letter of Credit, which such date shall be approved by Fannie Mae or Freddie Mac but in no event shall be later than forty-two (42) months after the date of issuance of such Letter of Credit.”

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2.5 The following definition is added to the MMCF Facility Agreement:

“ ‘Freddie Mac’ means the Federal Home Loan Mortgage Corporation, a corporation organized and existing under the Federal Home Loan Mortgage Corporation Act, 12 U.S.C. § 1452 et. seq.”

2.6 The definition of “Letter of Credit” is amended to read as follows:

“ ‘Letter of Credit’ means a Construction Letter of Credit, a Bond Enhancement Letter of Credit or a Deposit Fee Letter of Credit (each as defined in the Recitals) issued by the Bank for the account of the Company in favor of Fannie Mae or Freddie Mac substantially in the form attached hereto as Exhibit B-1 (Fannie Mae) or Exhibit B-2 (Freddie Mac), as provided hereunder.”

2.7 The definition of “Pension Funds” is amended to read as follows:

“ ‘Pension Funds’ means the Detroit Pension Fund, the Wayne County Pension Fund, and the City of Detroit General Retirement System.”

2.8 The definition of “Pension Fund L/C” is amended to read as follows:

(a) The introductory paragraph:

“ ‘Pension Fund L/C’ means any standby letter of credit issued by one of the Pension Funds, as security for the Letters of Credit issued hereunder, each of which shall:”

(b) Clause (e):

“(e) have an expiration date at least 30 days after the Expiry Date of the Letter of Credit which such Pension Fund L/C secures; and”

2.9 Section 2.01(b) is amended to read as follows:

(a) “(iii) the requested Expiry Date of such Letter of Credit is more than forty-two (42) months after the date such Letter of Credit is issued; or”

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(b) “(iv) such Letter of Credit is not secured, as of the date of its issuance, by a Pension Fund L/C having an expiry date of at least thirty (30) days following the Expiry Date of such Letter of Credit.”

2.10 The second sentence of Section 2.12 is amended to read as follows:

“The Bank will consider such request only if (a) the Bank receives evidence satisfactory to it that the Pension Fund L/C which secures the Letter of Credit for which such request has been made has been extended to have an expiry date of at least thirty (30) days after the extended Expiry Date, and (b) at the time of such extension, the Pension Fund which has issued the Pension Fund L/C which secures such Letter of Credit has an S&P credit rating of “A-” or higher.”

2.11 Exhibit B is redesignated as Exhibit B-1, and Exhibit B-2 in the form attached hereto is added to MMCF Agreement.

3. Amendments to the MMI Facility Agreement.

3.1 (a) The “Whereas Clauses” are amended to read as follows:

“WHEREAS, Fannie Mae, a corporation organized under the Federal National Mortgage Association Charter Act, 12 U.S.C. § 1716 et seq. (“Fannie Mae”) is prepared to provide standby credit enhancement instruments pursuant to its DUS Bond Credit Enhancement Mortgage Loan Program and Freddie Mac, a corporation organized under the Federal Home Loan Mortgage Corporation Act, 12 U.S.C. § 1452 et. seq. (“Freddie Mac”) is prepared to provide standby credit enhancement instruments pursuant to its Bond Credit Enhancement Program (the “Bond Enhancement Programs”);

WHEREAS, it is a condition to the issuance of credit enhancement instruments under the Bond Enhancement Programs that a standby letter of credit (“Construction Letter of Credit”) be issued by a national, federally insured, financial institution in favor of Fannie Mae or Freddie Mac with respect to each credit enhancement instrument issued by Fannie Mae or Freddie Mac;

WHEREAS, the Fannie Mae and Freddie Mac Commitments in connection with the Bond Enhancement Programs and the Construction Advance Loan Program require that the Company pay a Forward Commitment Deposit Fee which may be posted in the form of a standby letter of credit (“Deposit Fee Letter of Credit”) in the amount of such fee;

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WHEREAS, the Company, in its capacity as Construction Lender and Servicer under the Bond Enhancement Programs, wishes to apply from time to time to Bank for the issuance of such letters of credit; and

WHEREAS, the Bank is prepared to issue such letters of credit in favor of Fannie Mae and Freddie Mac on the terms and conditions set forth herein;”

(b) Each reference in the MMI Facility Agreement to the “Bond Enhancement Program” shall mean the “Bond Enhancement Programs” unless the context dictates otherwise.

(c) Each reference in the MMI Facility Agreement to “Fannie Mae” shall mean “Fannie Mae or Freddie Mac” unless the context dictates otherwise.

3.2 The third “Whereas Clause” is amended to read as follows:

“WHEREAS, the Fannie Mae Commitment issued by Fannie Mae in connection with its Bond Enhancement Program and the Construction Advance Loan Program and the Freddie Mac Commitment issued by Freddie Mac in connection with its Bond Enhancement Program require that the Company pay a Forward Commitment Deposit Fee which may be posted in the form of a standby letter of credit (“Deposit Fee Letter of Credit”) in the amount of such fee;”

3.3 The definition of “Bond Enhancement Facility Amount” is amended to read as follows:

“ ‘Bond Enhancement Facility Amount’ means the amount equal to $65,000,000 (the “Base Amount”) minus the L/C Obligations outstanding under the Construction Advance Loan Facility, provided that such Base Amount (i) shall be increased by an amount equal to any reduction, following the date hereof, in any commitment (other than the commitment under the Facility Agreements) of the Bank in favor of the Parents or any subsidiary thereof, and (ii) in any event, shall be increased to $100,000,000 on June 30, 2003.”

3.4. The definition of “Construction Advance Loan Facility” is amended to read as follows:

“ ‘Construction Advance Loan Facility’ means the Letter of Credit Facility Agreement between the Bank and MMCF pursuant to which the Bank

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has agreed to issue letters of credit in favor of Fannie Mae and Freddie Mac with respect to loans to developers of multi-family residential properties under the Construction Advance Loan Program and with respect to the Bond Enhancement Program of Freddie Mac.”

3.5 The definition of “Expiry Date” is amended to read as follows:

“ ‘Expiry Date’ means the last day a drawing may be made under a Letter of Credit, which such date shall be approved by Fannie Mae or Freddie Mac but in no event shall be later than forty-two (42) months after the date of issuance of such Letter of Credit.”

3.6 The following definition is added to the MMI Facility Agreement:

“ ‘Freddie Mac’ means the Federal Home Loan Mortgage Corporation, a corporation organized and existing under the Federal Home Loan Mortgage Corporation Act, 12 U.S.C. § 1452 et. seq.”

3.7 The definition of “Letter of Credit” is amended to read as follows:

“ ‘Letter of Credit’ means either a Construction Letter of Credit or a Deposit Fee Letter of Credit (each as defined in the Recitals) issued by the Bank for the account of the Company in favor of Fannie Mae or Freddie Mac substantially in the form attached hereto as Exhibit B-1 (Fannie Mae) or Exhibit B-2 (Freddie Mac), as provided for hereunder.”

3.8 The definition of “Pension Funds” is amended to read as follows:

“ ‘Pension Funds’ means the Detroit Pension Fund, the Wayne County Pension Fund, and the City of Detroit General Retirement System.”

3.9 The definition of “Pension Fund L/C” is amended to read as follows:

(a) The introductory paragraph:

“ ‘Pension Fund L/C’ means any standby letter of credit issued by one of the Pension Funds, as security for the Letters of Credit issued hereunder, each of which shall:”

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(b) Clause (e):

“(e) have an expiration date at least 30 days after the Expiry Date of the Letter of Credit which such Pension Fund L/C secures; and”

3.10 Section 2.01(b) is amended to read as follows:

(a) “(iii) the requested Expiry Date of such Letter of Credit is more than forty-two (42) months after the date such Letter of Credit is issued; or”

(b) “(iv) such Letter of Credit is not secured, as of the date of its issuance, by a Pension Fund L/C having an expiry date of at least thirty (30) days following the Expiry Date of such Letter of Credit.”

3.11 The second sentence of Section 2.12 is amended to read as follows:

“The Bank will consider such request only if (a) the Bank receives evidence satisfactory to it that the Pension Fund L/C which secures the Letter of Credit for which such request has been made has been extended to have an expiry date of at least thirty (30) days after the extended Expiry Date, and (b) at the time of such extension, the Pension Fund which has issued the Pension Fund L/C which secures such Letter of Credit has an S&P credit rating of “A-” or higher.”

3.12 Exhibit B is redesignated as Exhibit B-1, and Exhibit B-2 in the form attached hereto is added to MMI Agreement.

4. Effectiveness of Amendment. This Amendment shall be effective upon receipt by the Bank of an executed copy of this Amendment.

5. Ratifications, Representations and Warranties.

(a) The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Facility Agreements and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Facility Agreements are ratified and confirmed and shall continue in full force and effect. MMCF, MMI and the Bank agree that the Facility Agreements, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

(b) To induce the Bank to enter into this Amendment, MMCF and MMI ratify and confirm each representation and warranty set forth in the

8

Facility Agreements as if such representations and warranties were made on the even date herewith, and further represent and warrant (i) that there has not occurred since the date of the last financial statements delivered to the Bank any event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect, (ii) that no Event of Default exists on the date hereof, and (iii) that MMCF and MMI are each fully authorized to enter into this Amendment.

6. Benefits. This Amendment shall be binding upon and inure to the benefit of MMCF, MMI and the Bank, and their respective successors and assigns; provided, however, that MMCF and MMI may not, without the prior written consent of the Bank, assign any rights, powers, duties or obligations under this Amendment, or the Facility Agreements.

7. Construction. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

8. Invalid Provisions. If any provision of this Amendment is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.

9. Entire Agreement. The Facility Agreements, as amended by this Amendment, contain the entire agreement among the parties regarding the subject matter hereof and supersedes all prior written and oral agreements and understandings among the parties hereto regarding same.

10. Reference to Facility Agreement. The Facility Agreements and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Facility Agreements, as amended hereby, are hereby amended so that any reference in the Facility Agreements to the Facility Agreements shall mean a reference to the Facility Agreements as amended hereby.

11. Counterparts. This Amendment may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same agreement.

[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

MUNIMAE MIDLAND CONSTRUCTION FINANCE, LLC
By:	MuniMae Midland, LLC
	Sole Member
By:	/s/  Keith J. Gloeckl
Name:	Keith J. Gloeckl
Title:	Executive Vice President
NOTICE ADDRESS:
33 North Garden Avenue
Suite 1200
Clearwater, Florida 33755
Attention: Lynn Coovert
Facsimile: (727) 443-6067
MIDLAND MORTGAGE INVESTMENT CORPORATION
By:	/s/  Keith J. Gloeckl
Name:	Keith J. Gloeckl
Title:	President
NOTICE ADDRESS:
33 North Garden Avenue, Suite 1200
Clearwater, Florida 33755
Attention: Thomas Vandergrift
Facsimile: (727) 443-6067

10

BANK OF AMERICA, N.A
By:	/s/  Jeff Journey
Name:	Jeff Journey
Title:	Senior Vice President
NOTICE ADDRESS:
901 Main Street
51st Floor
TX1-492-51-01
Dallas, Texas 75202-3715
Telephone: (214) 209-9325
Facsimile: (214) 209-1571
Attention: Loan Administration – Susan Mogish
With copy to:
Bank of America, N.A.
333 S. Beaudry Avenue, 19th Floor
CA9-703-19-23
Los Angeles, CA 90017-1466
Telephone: (213) 345-0098
Facsimile: (213) 345-6710

11

EX-10.7.4

Exhibit 10.7.4

SECOND AMENDMENT TO

LETTER OF CREDIT

FACILITY AGREEMENTS

THIS SECOND AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENTS (this “Amendment”) made as of the 15^th day of October, 2004, between MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company (“MMCF”), MIDLAND MORTGAGE INVESTMENT CORPORATION, a Florida corporation (“MMI”) (MMCF and MMI are collectively referred to herein as the “Companies”) and BANK OF AMERICA, N.A. (the “Bank”).

WITNESSETH

WHEREAS, MuniMae Midland Construction Finance, LLC and MMI each entered into a Letter of Credit Facility Agreement dated October 18, 2002 with the Bank, as amended by a First Amendment to Letter of Credit Facility Agreement dated as of December 23, 2002 (individually the “MMCF Facility Agreement” and the “MMI Facility Agreement,” and collectively the “Facility Agreements”); and

WHEREAS, on March 26, 2004 MuniMae Midland Construction Finance, LLC changed its name to “MMA Construction Finance, LLC;”

WHEREAS, the Companies have requested that the Bank make certain amendments to the Facility Agreements, and the Bank is willing to do so subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Defined Terms. All capitalized terms used but not otherwise defined in this Amendment shall have the meaning ascribed to them in the Facility Agreements. Unless otherwise specified, all section references herein refer to sections of the Facility Agreements.

2. Amendments to the MMCF Facility Agreement.

2.1. MMCF is substituted for MuniMae Midland Construction Finance, LLC in the definition of “Company” and in all Exhibits to the Facility Agreement.

2.2. The definition of “Availability Date” is revised to read as follows:

“‘Availability Date’ means January 18, 2005, or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.”

3. Amendments to the MMI Facility Agreement. The definition of “Availability Date” is revised to read as follows:

“‘Availability Date’ means January 18, 2005, or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.”

4. Effectiveness of Amendment. This Amendment shall be effective upon receipt by the Bank of an executed copy of this Amendment and an administration fee of $6,250.00.

5. Ratifications, Representations and Warranties.

5.1. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Facility Agreements and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Facility Agreements are ratified and confirmed and shall continue in full force and effect. MMCF, MMI and the Bank agree that the Facility Agreements, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

5.2. To induce the Bank to enter into this Amendment, MMCF and MMI ratify and confirm each representation and warranty set forth in the Facility Agreements as if such representations and warranties were made on the even date herewith, and further represent and warrant (i) that there has not occurred since the date of the last financial statements delivered to the Bank any event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect, (ii) that no Event of Default exists on the date hereof, and (iii) that MMCF and MMI are each fully authorized to enter into this Amendment.

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6. Benefits. This Amendment shall be binding upon and inure to the benefit of MMCF, MMI and the Bank, and their respective successors and assigns; provided, however, that MMCF and MMI may not, without the prior written consent of the Bank, assign any rights, powers, duties or obligations under this Amendment, or the Facility Agreements.

7. Construction. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

8. Invalid Provisions. If any provision of this Amendment is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.

9. Entire Agreement. The Facility Agreements, as amended by this Amendment, contain the entire agreement among the parties regarding the subject matter hereof and supersedes all prior written and oral agreements and understandings among the parties hereto regarding same.

10. Reference to Facility Agreement. The Facility Agreements and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Facility Agreements, as amended hereby, are hereby amended so that any reference in the Facility Agreements to the Facility Agreements shall mean a reference to the Facility Agreements as amended hereby.

11. Counterparts. This Amendment may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same agreement.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

MMA CONSTRUCTION FINANCE, LLC
By:	MuniMae Investment Services Corporation
Its:	Sole Member
By:	/s/ William S. Harrison
Name:	William S. Harrison
Title:	Chief Financial Officer
NOTICE ADDRESS:
33 North Garden Avenue, Suite 1200
Clearwater, Florida 33755
Attention: Lynn Coovert
Facsimile: (727) 443-6067
MIDLAND MORTGAGE INVESTMENT CORPORATION
By:	/s/ William S. Harrison
Name:	William S. Harrison
Title:	Chief Financial Officer
NOTICE ADDRESS:
33 North Garden Avenue, Suite 1200
Clearwater, Florida 33755
Attention: Thomas Vandergrift
Facsimile: (727) 443-6067

BANK OF AMERICA, N.A
By:	/s/ Jeff Journey
Name:	Jeff Journey
Title:	Senior Vice President
NOTICE ADDRESS:
901 Main Street, 51st Floor
TX1-492-51-01
Dallas, Texas 75202-3715
Telephone: (214) 209-9325
Facsimile: (214) 209-1571
Attention: Loan Administration – Susan Mogish
With copy to:
Bank of America, N.A.
333 S. Beaudry Avenue, 19th Floor
CA9-703-19-23
Los Angeles, CA 90017-1466
Telephone: (213) 345-0098
Facsimile: (213) 345-6710

EX-10.7.5

Exhibit 10.7.5

Execution Copy

THIRD AMENDMENT TO

LETTER OF CREDIT

FACILITY AGREEMENTS

THIS THIRD AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENTS (this “Amendment”) made as of the 20^th day of January, 2005, among MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company (“MMCF”), MMA MORTGAGE INVESTMENT CORPORATION, a Florida corporation (“MMI”) (MMCF and MMI are collectively referred to herein as the “Companies”) and BANK OF AMERICA, N.A. (the “Bank”).

WITNESSETH

WHEREAS, MMCF and MMI each entered into a Letter of Credit Facility Agreement dated October 18, 2002 with the Bank (as amended, individually the “MMCF Facility Agreement” and the “MMI Facility Agreement,” and collectively the “Facility Agreements”); and

WHEREAS, the Companies have requested that the Bank make certain amendments to the Facility Agreements, and the Bank is willing to do so subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Defined Terms. All capitalized terms used but not otherwise defined in this Amendment shall have the meaning ascribed to them in the Facility Agreements. Unless otherwise specified, all section references herein refer to sections of the Facility Agreements.

2. Amendments to the MMCF Facility Agreement.

2.1 Availability Date. The definition of “Availability Date” is revised to read as follows:

“‘Availability Date’ means March 18, 2006 or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.”

2.2 Section 2.11. Section 2.11, Extension of Availability Date, is amended by substituting “one (1) year” for “two (2) years” on line five thereof.

2.3 Section 5.13. Section 5.13, Proceeds of Letter of Credit, is amended to read as follows:

“5.13 Proceeds of Letters of Credit; Margin Regulations. The proceeds of the Letters of Credit are to be used solely in connection with the Construction Advance Loan Facility. No part of the proceeds of any Letter of Credit will be used by the Company to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the issuance of any Letter of Credit nor the use of proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X.”

2.4 Section 6.01. Section 6.01, Financial Statements, is amended by substituting “sixty (60)” for “thirty (30)” on lines three and four thereof, and by substituting “one hundred twenty (120)” for “ninety (90)” on line six thereof.

2.5 Section 8.02. Section 8.02, Notices, is amended by providing that copies of all notices to the Company shall be delivered to:

“Gallagher Evelius & Jones LLP

218 North Charles Street, Suite 400

Baltimore, Maryland 21201

Fax: (410) 468-2786

Attention: Stephen A. Goldberg”

3. Amendments to the MMI Facility Agreement.

3.1 Change of Name. The Bank hereby consents to the change of the corporate name of “Midland Mortgage Investment Corporation” to “MMA Mortgage Investment Corporation,” which change of name was effective as of January 11, 2005. MMA Mortgage Investment Corporation is hereby substituted for Midland Mortgage Investment Corporation in the definition of “Company” and in all Exhibits to the MMI Facility Agreement.

3.2 Availability Date. The definition of “Availability Date” is revised to read as follows:

“‘Availability Date’ means March 18, 2006 or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.”

3.3 Section 2.11. Section 2.11, Extension of Availability Date, is amended by substituting “one (1) year” for “two (2) years” on line five thereof.

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3.4 Section 5.13. Section 5.13, Proceeds of Letter of Credit, is amended to read as follows:

“5.13 Proceeds of Letters of Credit; Margin Regulations. The proceeds of the Letters of Credit are to be used solely in connection with the Bond Credit Enhancement and Commitment Fee Facility. No part of the proceeds of any Letter of Credit will be used by the Company to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the issuance of any Letter of Credit nor the use of proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X.”

3.5 Section 6.01. Section 6.01, Financial Statements, is amended by substituting “sixty (60)” for “thirty (30)” on lines three and four thereof, and by substituting “one hundred twenty (120)” for “ninety (90)” on line six thereof.

3.6 Section 8.02. Section 8.02, Notices, is amended by providing that copies of all notices to the Company shall be delivered to:

“Gallagher Evelius & Jones LLP

218 North Charles Street, Suite 400

Baltimore, Maryland 21201

Fax: (410) 468-2786

Attention: Stephen A. Goldberg”

4. Effectiveness of Amendment. This Amendment shall be effective upon receipt by the Bank of (a) an executed copy of this Amendment; and (b) an administration fee of $29,167.

5. Ratifications, Representations and Warranties.

(a) The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Facility Agreements and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Facility Agreements are ratified and confirmed and shall continue in full force and effect. MMCF, MMI and the Bank agree that the Facility Agreements, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

(b) To induce the Bank to enter into this Amendment, MMCF and MMI ratify and confirm each representation and warranty set forth in the Facility Agreements as if such representations and warranties were made on the even date herewith, and further represent and warrant (i) that there has not occurred since the date of the last financial statements delivered to the Bank any event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect, (ii) that no Event of Default exists on the date hereof, and (iii) that MMCF and MMI are each fully authorized to enter into this Amendment.

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6. Benefits. This Amendment shall be binding upon and inure to the benefit of MMCF, MMI and the Bank, and their respective successors and assigns; provided, however, that MMCF and MMI may not, without the prior written consent of the Bank, assign any rights, powers, duties or obligations under this Amendment, or the Facility Agreements.

7. Construction. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

8. Invalid Provisions. If any provision of this Amendment is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.

9. Entire Agreement. The Facility Agreements, as amended by this Amendment, contain the entire agreement among the parties regarding the subject matter hereof and supersedes all prior written and oral agreements and understandings among the parties hereto regarding same.

10. Reference to Facility Agreement. The Facility Agreements and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Facility Agreements, as amended hereby, are hereby amended so that any reference in the Facility Agreements to the Facility Agreements shall mean a reference to the Facility Agreements as amended hereby.

11. Counterparts. This Amendment may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same agreement.

4

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

MMA CONSTRUCTION FINANCE, LLC
By:	MuniMae Investment Services Corporation
Its:	Sole Member
By:	/s/ William S. Harrison
Name:	William S. Harrison
Title:	Chief Financial Officer

NOTICE ADDRESS:
33 North Garden Avenue
Suite 1200
Clearwater, Florida 33755
Attention:   Terry Myers
Facsimile:   (727) 443-6067
MMA MORTGAGE INVESTMENT CORPORATION
By:	/s/ William S. Harrison
Name:	William S. Harrison
Title:	Chief Financial Officer
NOTICE ADDRESS:
33 North Garden Avenue, Suite 1200
Clearwater, Florida 33755
Attention: Terry Myers
Facsimile: (727) 443-6067

BANK OF AMERICA, N.A
By:	/s/    Yelda D. Tuz
Name:	Yelda D. Tuz
Title:	SVP
NOTICE ADDRESS:
901 Main Street
51st Floor
TX1-492-51-01
Dallas, Texas 75202-3715
Telephone:	(214) 209-9325
Facsimile:	(214) 209-1571
Attention: Loan Administration – Susan Mogish
With copy to:
Bank of America, N.A.
333 S. Beaudry Avenue, 19th Floor
CA9-703-19-23
Los Angeles, CA 90017-1466
Telephone:	(213) 345-0098
Facsimile:	(213) 345-6710

EX-10.7.6

Exhibit 10.7.6

FOURTH AMENDMENT TO

LETTER OF CREDIT

FACILITY AGREEMENTS

THIS FOURTH AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENTS (this “Amendment”) made as of the 1^st day of March, 2006, among MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company (“MMCF”), MMA MORTGAGE INVESTMENT CORPORATION, a Florida corporation (“MMI”) (MMCF and MMI are collectively referred to herein as the “Companies”) and BANK OF AMERICA, N.A. (the “Bank”).

WITNESSETH

WHEREAS, MMCF and MMI each entered into a Letter of Credit Facility Agreement dated October 18, 2002 with the Bank (as amended, individually the “MMCF Facility Agreement” and the “MMI Facility Agreement,” and collectively the “Facility Agreements”); and

WHEREAS, the Companies have requested that the Bank make certain amendments to the Facility Agreements, and the Bank is willing to do so subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Defined Terms. All capitalized terms used but not otherwise defined in this Amendment shall have the meaning ascribed to them in the Facility Agreements. Unless otherwise specified, all section references herein refer to sections of the Facility Agreements.

2. Amendments to the MMCF Facility Agreement.

1.0 Availability Date. The definition of “Availability Date” is revised to read as follows:

“‘Availability Date’ means September 18, 2006 or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.”

2.0 Construction Loan Facility Amount. The definition of “Construction Loan Facility Amount” is amended to substitute “$75,000,000” for “$100,000,000.”

3. Amendments to the MMI Facility Agreement.

1.0 Availability Date. The definition of “Availability Date” is revised to read as follows:

“‘Availability Date’ means September 18, 2006 or, if the Availability Date is extended pursuant to Section 2.11, the Availability Date as so extended.”

2.0 Bond Enhancement Facility Amount. The definition of “Bond Enhancement Facility Amount” is amended to substitute “$75,000,000” for “$100,000,000.”

4. Effectiveness of Amendment. This Amendment shall be effective upon receipt by the Bank of (a) an executed copy of this Amendment; and (b) an administration fee of $12,500.

5. Ratifications, Representations and Warranties.

(a) The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Facility Agreements and, except as expressly modified and superseded by this Amendment, the terms and provisions of the Facility Agreements are ratified and confirmed and shall continue in full force and effect. MMCF, MMI and the Bank agree that the Facility Agreements, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.

(b) To induce the Bank to enter into this Amendment, MMCF and MMI ratify and confirm each representation and warranty set forth in the Facility Agreements as if such representations and warranties were made on the even date herewith, and further represent and warrant (i) that there has not occurred since the date of the last financial statements delivered to the Bank any event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect, (ii) that no Event of Default exists on the date hereof, and (iii) that MMCF and MMI are each fully authorized to enter into this Amendment.

6. Benefits. This Amendment shall be binding upon and inure to the benefit of MMCF, MMI and the Bank, and their respective successors and assigns; provided, however, that MMCF and MMI may not, without the prior written consent of the Bank, assign any rights, powers, duties or obligations under this Amendment, or the Facility Agreements.

7. Construction. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

8. Invalid Provisions. If any provision of this Amendment is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of this Amendment shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance.

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9. Entire Agreement. The Facility Agreements, as amended by this Amendment, contain the entire agreement among the parties regarding the subject matter hereof and supersedes all prior written and oral agreements and understandings among the parties hereto regarding same.

10. Reference to Facility Agreement. The Facility Agreements and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Facility Agreements, as amended hereby, are hereby amended so that any reference in the Facility Agreements to the Facility Agreements shall mean a reference to the Facility Agreements as amended hereby.

11. Counterparts. This Amendment may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same agreement.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

MMA CONSTRUCTION FINANCE, LLC
By:	MuniMae Holdings, LLC
Its:	Sole Member
	By:	Municipal Mortgage & Equity, LLC
	Its:	Sole Member
		By:	/s/    Melanie M. Lundquist
		Name:	Melanie M. Lundquist
		Title:	EVP & CFO
NOTICE ADDRESS:
621 East Pratt Street, Suite 300
Baltimore, MD 21202
Attention:	Treasurer
	General Counsel
Facsimile:	(410) 727-5387
MMA MORTGAGE INVESTMENT CORPORATION
By:	/s/    Melanie M. Lundquist
Name:	Melanie M. Lundquist
Title:	EVP & CFO
NOTICE ADDRESS:
621 East Pratt Street, Suite 300
Baltimore, MD 21202
Attention: Treasurer
General Counsel
Facsimile: (410) 727-5387

BANK OF AMERICA, N.A
By:	/s/    Ugo Arinzeh
Name:	Ugo Arinzeh
Title:	Vice President
NOTICE ADDRESS:
One Federal Street
4th Floor
MA5-503-04-16
Boston, MA 02110
Telephone: (617) 346-2396
Facsimile: (617) 346-5025
Attention: Loan Administration – Michael Twomey
With copy to:
Bank of America, N.A.
730 15th Street, N.W.
8th Floor
DC1-701-08-04
Washington, D.C. 20005
Telephone: (202) 624-4345
Facsimile: (202) 624-1847
Attention: Ugo Arinzeh

EX-10.8.1

Exhibit 10.8.1

REVOLVING CREDIT AGREEMENT

THIS REVOLVING CREDIT AGREEMENT (this “Credit Agreement”) is dated as of November 12, 2003 by and among MUNIMAE MIDLAND CONSTRUCTION FINANCE, LLC, a Maryland limited liability company (the “Borrower”), the banks and financial institutions listed on the signature page hereof as the Initial Lenders (the “Initial Lenders”), and BANK OF AMERICA, N.A., a national banking association (in its individual capacity, “Bank of America”), as administrative agent (together with any successor appointed pursuant to Section 11 below, the “Administrative Agent”) for the Lenders, and each of the other lending institutions that becomes a lender hereunder (herein collectively referred to as the “Lenders”; and each individually referred to as a “Lender”), and BANC OF AMERICA SECURITIES LLC, as sole lead arranger and sole book manager.

A. Borrower has requested that Lenders make Loans and cause the issuance of letters of credit for the principal purpose of financing certain constructions loans made by Borrower, to provide working capital, and for other purposes permitted under Borrower’s Operating Memorandum; and

B. Lenders are willing to make Loans and to cause the issuance of letters of credit upon the terms and subject to the conditions set forth in this Credit Agreement.

NOW, THEREFORE, in consideration of the mutual promises herein contained and for other valuable consideration the parties hereto do hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms. For the purposes of this Credit Agreement, unless otherwise expressly defined, the following terms shall have the respective meanings assigned to them in this Section 1 or in the Section or recital referred to:

“Acknowledgement and Consent” means the Acknowledgement and Consent to the Assignment of Forward Commitment Agreement of even date herewith made by MAHGT in favor of Administrative Agent for the benefit of Lenders, pursuant to which MAHGT has made certain acknowledgements, consents and agreements with respect to the assignment of the Forward Commitment Agreement, the MAHGT Security Agreement, the MAHGT Account Assignment and the rights thereunder.

“Adjusted LIBOR Rate” means, for any LIBOR Loan for any Interest Period therefor, the rate per annum (rounded upwards to the next higher 1/100 of 1%) determined by Administrative Agent to be equal to: (a) the quotient obtained by dividing: (i) the LIBOR Rate for such LIBOR Loan for such Interest Period; by (ii) one (1) minus the LIBOR Reserve Requirement for such LIBOR Loan for such Interest Period; plus (b) the Applicable Margin.

“Administrative Agent” is defined in the preamble to this Credit Agreement.

“Administrative Agent Funding Request” is defined in the Acknowledgement and Consent.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For the purpose of this definition, “control” and the correlative meanings of the terms “controlled by” and “under common control with” means the possession, directly or indirectly, of the

power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting shares or partnership interests or by contract or otherwise.

“Applicable Lending Office” means, for each Lender and for each Type of Loan, the “lending office” of such Lender (or of an affiliate of such Lender) designated for such Type of Loan on the signature pages hereof or such other office of such Lender (or an affiliate of such Lender) as such Lender may from time to time specify to Administrative Agent and Borrower by written notice in accordance with the terms hereof as the office by which Type of Loans are to be made and maintained.

“Applicable Margin” means eighty-seven and one-half basis points (0.875%) per annum.

“Applicable Requirement” means for any Included Investor that is: (a) a Governmental Plan Investor, or the Responsible Party with respect to such Governmental Plan Investor, in addition to a Rating of A-/A3 or higher, a minimum Funding Ratio for the Governmental Plan Investor based on the Rating of the Responsible Party as follows:

Rating	Minimum Funding Ratio
A-/A3 or higher	No minimum

and (b) otherwise a Rated Investor, a Rating of A-/A3 or higher.

The first rating indicated in each case above is the S&P rating and the second rating indicated in each case above is the Moody’s rating. In the event that the S&P and Moody’s ratings are not equivalent, the Applicable Requirement shall be based on the lower of the two. If any such Person has only one Rating, from either S&P or Moody’s, that Rating shall apply. If a Governmental Plan Investor and its Responsible Party both have ratings, then the higher of the two shall apply.

“Application and Agreement for Letter of Credit” means an application and agreement for standby letter of credit by, between and among all or any of Borrower, on the one hand, and the Letter of Credit Issuer, on the other hand, in a form provided by the Letter of Credit Issuer (and customarily used by it in similar circumstances) and conformed to the terms of this Credit Agreement, either as originally executed or as it may from time to time be supplemented, modified, amended, renewed, or extended, provided, however, to the extent that the terms of such Application and Agreement are inconsistent with or otherwise more onerous than the terms of this Credit Agreement, the terms of this Credit Agreement shall control.

“Approved Lending Entity” means any Lending Entity that is administered or managed by: (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignee” is defined in Section 12.11(c) hereof.

“Assignment and Assumption Agreement” means an assignment and assumption agreement entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 12.11(c) hereof), and accepted by the Administrative Agent, pursuant to which any Lender assigns all or any portion of its rights and obligations hereunder, which assignment and assumption

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agreement shall be in the form of Exhibit G attached hereto or any other form approved by the Administrative Agent.

“Available Commitment” means the lesser of: (a) the Maximum Commitment, or such lesser amount after giving effect to reductions in the Commitments pursuant to Section 3.6 hereof; or (b) ninety percent (90%) of the Remaining Subscription Amount of the Included Investors.

“Bank of America” is defined in the preamble to this Credit Agreement.

“Borrower” is defined in the first paragraph hereof.

“Borrower Funding Request” is defined in the Forward Commitment Agreement.

“Borrower Party” is defined in Section 11.1(a) hereof.

“Borrower Security Agreement” is defined in Section 5.1.

“Borrowing” means a disbursement made by Lenders of any of the proceeds of the Loans when such disbursement increases the outstanding principal amount of the Loans, and “Borrowings” means the plural thereof.

“Business Day” means any day of the year except a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law to close.

“Capital Leases” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability Information System.

“Closing Date” means the date on which all of the conditions precedent set forth in Section 6.1 hereof are satisfied or waived.

“Code” means the Uniform Commercial Code as adopted in the State of Florida and any other state, which governs creation or perfection (and the effect thereof) of security interests in any Collateral for the Obligation.

“Collateral” is defined in Section 5.1.

“Collateral Documents” means the security agreements, financing statements, assignments, and other documents and instruments from time to time executed and delivered pursuant to this Credit Agreement and any documents or instruments amending or supplementing the same, including, without limitation, the MAHGT Security Agreement, the MAHGT Account Assignment, the Borrower Security Agreement and Investor Confirmation.

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“Commitment” means, for each Lender, the amount set forth opposite its signature on this Credit Agreement or on its respective Assignment and Assumption Agreement, as the same may be reduced from time to time by Borrower, pursuant to Section 3.6 hereof, or by further assignment by such Lender pursuant to Section 12.11(c) hereof.

“Commitment Fee Letter” is defined in the Forward Commitment Agreement.

“Commitment Period” means the period commencing on the Closing Date and ending on the Maturity Date.

“Compliance Certificate” is defined in Section 8.1(b).

“Confidential Information” means, at any time, all data, reports, interpretations, forecasts and records containing or otherwise reflecting information and concerning any or all of Borrower or its Investors which is not available to the general public, together with analyses, compilations, studies or other documents, which contain or otherwise reflect such information made available by or on behalf of Borrower or its Investors pursuant to this Credit Agreement orally or in writing to Administrative Agent or any Lender or their respective employees, advisors, attorneys, certified public accountants or agents, but shall not include any data or information that: (a) was or became generally available to the public at or prior to such time (unless divulged by Administrative Agent or such Lender or Administrative Agent’s or Lender’s respective employees, advisors, attorneys, certified public accountants or agents); or (b) was or became available to Administrative Agent or a Lender or to Administrative Agent’s or Lender’s respective attorneys, certified public accountants or agents on a non-confidential basis from Borrower or its Investors or any other source at or prior to such time.

“Constituent Documents” means, for any entity, its constituent or organizational documents, including: (a) in the case of a limited partnership, its certificate of limited partnership and its limited partnership agreement; (ii) in the case of a limited liability company, its certificate of formation or organization and its operating agreement or limited liability company agreement; (iii) in the case of a corporation, its articles or certificate of incorporation and its bylaws; and (iv) in the case of a trust, its declaration of trust and its bylaws.

“Construction Loan Facility” means the $70,000,000 revolving credit facility for warehouse, construction and permanent loans for multi-family projects which have received or are encumbered by low housing tax credits, as evidenced by that certain Credit Agreement dated as of December 4, 2001, as same has been amended pursuant to amendments dated November 4, 2002, and November 4, 2003, and as same may be further amended, restated, supplemented or restructured from time to time, and arranged and provided by Bank of America, N.A., as administrative agent, Fleet National Bank, as co-agent, and the other lenders named therein.

“Continue,” “Continuation,” and “Continued” shall refer to the continuation pursuant to a Rollover of a LIBOR Loan as a LIBOR Loan from one Interest Period to the next Interest Period.

“Controlled Group” means: (a) the controlled group of corporations as defined in Section 1563 of the Internal Revenue Code; or (b) the group of trades or businesses under common control as defined in Section 414(c) of the Internal Revenue Code, in each case of which Borrower is a part or may become a part.

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“Conversion Date” is any LIBOR Conversion Date, or Reference Rate Conversion Date, as applicable.

“Conversion Notice” is defined in Section 2.3(d) hereof.

“Convert,” “Conversion,” and “Converted” shall refer to a conversion pursuant to Section 2.3(d) or Section 4 of one Type of Loan into another Type of Loan.

“Corporation Documents” means, for any corporation, a true copy of the articles of incorporation or organization, as the case may be, evidencing the creation of such corporation, with all amendments thereto, certified by an duly authorized officer of such corporation as being true, correct and complete, together with: (a) a certificate of incorporation (or other similar instruments) and all amendments thereto currently certified by the applicable authority for the state or country (as the case may be) of incorporation; (b) a current bylaws; (c) a current certificate of existence and good standing (or other similar instruments) of such corporation issued by the applicable authority for the state or country (as the case may be) of incorporation; and (d) if appropriate, a current certificate of qualification and good standing (or other similar instruments) from the appropriate authority of each state in which it must be qualified to do business.

“Covered Plan” means an “employee benefit plan” as defined in Section 3(3) of ERISA and covered by Section 4 of ERISA.

“Credit Agreement” means this Revolving Credit Agreement, of which this Section 1 forms a part, together with all amendments and modifications hereof and supplements and attachments hereto.

“Current Party” is defined in Section 12.12.

“Debtor Relief Laws” means any applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, fraudulent conveyance, reorganization, or similar laws affecting the rights, remedies, or recourse of creditors generally, including without limitation the United States Bankruptcy Code and all amendments thereto, as are in effect from time to time during the term of the Loans.

“Default Rate” means on any day the lesser of: (a) the Reference Rate in effect on such day, plus four percent (4%); or (b) the Maximum Rate.

“Defaulting Investor” is defined in Section 2.1(c) hereof.

“Detroit Pension Plan Investors” means (a) the General Retirement System of the City of Detroit, (b) the Wayne County Employees’ Retirement System, and (c) the Policemen and Firemen System of the City of Detroit, and “Detroit Pension Plan Investor” means any of them.

“Dollars” and the sign “$” means lawful currency of the United States of America.

“Eligible Assignee” means: (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Lending Entity; and (d) any other Person (other than natural person) approved by: (i) Administrative Agent, (ii) in the case of any assignment of a Commitment, and (iii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that

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notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of Borrower’s Affiliates or subsidiaries.

“Environmental Complaint” means any complaint, order, demand, citation or notice threatened or issued in writing to Borrower by any Person with regard to air emissions, water discharges, Releases, or disposal of any Hazardous Material, noise emissions or any other environmental, health or safety matter affecting Borrower or any of Borrower’s Properties.

“Environmental Laws” means: (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Re-authorization Act of 1986, 42 U.S.C. §9601 et seq.; (b) the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §6901 et seq.; (c) the Clean Air Act, 42 U.S.C. §7401 et seq., as amended by the Clean Air Act Amendments of 1990; (d) the Clean Water Act of 1977, 33 U.S.C. §1251 et seq.; (e) the Toxic Substances Control Act, 15 U.S.C.A. §2601 et seq.; (f) all other federal, state and local laws, or ordinances relating to pollution or protection of human health or the environment including without limitation, air pollution, water pollution, noise control, or the use, handling, discharge, disposal or Release of Hazardous Materials, as each of the foregoing may be amended from time to time, applicable to Borrower, and (g) any and all regulations promulgated under or pursuant to any of the foregoing statutes.

“Environmental Liability” means any written claim, demand, obligation, cause of action, accusation or allegation, or any order, violation, damage (including, without limitation, to any Person, property or natural resources), injury, judgment, penalty or fine, cost of enforcement, cost of remedial action, cleanup, restoration or any other cost or expense whatsoever, including reasonable attorneys’ fees and disbursements resulting from the violation or alleged violation of any Environmental Law or the imposition of any Environmental Lien or otherwise arising under any Environmental Law or resulting from any common law cause of action asserted by any Person.

“Environmental Lien” means a Lien in favor of any Governmental Authority: (a) under any Environmental Law; or (b) for any liability or damages arising from, or costs incurred by, any Governmental Authority in response to the Release or threatened Release of any Hazardous Material.

“Environmental Requirement” means any Environmental Law, agreement, or restriction, as the same now exists or may be changed, amended, or come into effect in the future, which pertains to health, safety, or the environment, including, but not limited to ground, air, water, or noise pollution, or underground or aboveground tanks.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder by any Governmental Authority, as from time to time in effect.

“Event of Default” is defined in Section 10.1 hereof.

“Exclusion Event” is defined in Section 2.1(c) hereof.

“Extension Fee” means the amount equal to the product of (a) the Maximum Commitment on the Initial Stated Maturity Date multiplied by (b) fifteen hundredths of one percent (0.15%).

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“Extension Notice” means the notice in the form of Exhibit H attached hereto pursuant to which Borrower elects to extend the Stated Maturity Date, and certifies that, as of the date of such notice: (a) the representations and warranties contained in Section 7 hereof are true and correct in all material respects, with the same force and effect as if made on and as of such date (except to the extent of changes in facts or circumstances that have been disclosed to Administrative Agent and do not constitute an Event of Default or a Potential Default under Section 10.1(a), 10.1(h) or 10.1(i) hereof); (b) no Event of Default or Potential Default under Section 10.1(a), 10.1(h) or 10.1(i) has occurred and is continuing; (c) no event has occurred which could reasonably be expected to have a Material Adverse Effect, and (d) the Stated Maturity Date as so extended is at least ninety (90) days prior to the Termination Date.

“Fannie Mae” means Fannie Mae, the Federal National Mortgage Association.

“Federal Funds Rate” means, on any day, a fluctuating interest rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to 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 such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three (3) Federal funds brokers of recognized standing selected by Administrative Agent.

“Fee Letter” shall mean that certain letter agreement by and among Borrower, Administrative Agent and Lenders dated as of the date hereof.

“Foreign Lender” is defined in Section 4.6(e) hereof.

“Forward Commitment” means the unconditional commitment of MAHGT to make a loan to Borrower pursuant to the Forward Commitment Agreement.

“Forward Commitment Agreement” means that certain Forward Commitment Agreement dated as of November 6, 2003, made by MAHGT in favor of Borrower, as same may be amended, restated or supplemented from time to time, pursuant to which MMCF has issued the Forward Commitment, and substantially in the form of Exhibit E attached hereto.

“Forward Commitment Default” is defined in the Forward Commitment Agreement.

“Funding Account” means an account maintained by Administrative Agent for the purpose of funding Loans and receiving and disbursing payments hereunder. The Funding Account shall be maintained at an office of Administrative Agent in Dallas, Texas, or such other place of which Administrative Agent shall notify Borrower and Lenders.

“Funding Ratio” means for a Governmental Plan Investor, the total net fair market value of the assets of the plan over the actuarial present value of the plan’s total benefit liabilities, as reported in such plan’s audited financial statements.

“Funding Request” is defined in the Forward Commitment Agreement.

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“GAAP” means those generally accepted accounting principles and practices that are recognized as such by the American Institute of Certified Public Accountants or by the Financial Accounting Standards Board or through other appropriate boards or committees thereof, and that are consistently applied for all periods, after the date hereof, so as to properly reflect the financial position of Borrower, except that any accounting principle or practice required to be changed by the Financial Accounting Standards Board (or other appropriate board or committee of the said Board) in order to continue as a generally accepted accounting principle or practice may be so changed.

“Governmental Authority” means any foreign governmental authority, the United States of America, any State of the United States of America, and any subdivision of any of the foregoing, and any agency, department, commission, board, authority or instrumentality, bureau or court having jurisdiction over Borrower, Administrative Agent, any Lender, or the Letter of Credit Issuer, or any of their respective businesses, operations, assets, or properties.

“Governmental Plan Investor” means an Investor that is a pension plan and that is a governmental plan as defined in Section 3(32) of ERISA.

“Guaranty Obligations” means, with respect to any Person, without duplication, any obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation, whether or not contingent: (a) to purchase any such Indebtedness or other obligation or any property constituting security therefor; (b) advance or provide funds or other support for the payment or purchase of such Indebtedness or obligation or to maintain working capital, solvency or other balance sheet condition of such other Person (including, without limitation, maintenance agreements, comfort letters, take or pay arrangements, put agreements, forward commitment agreements, or similar agreements or arrangements) for the benefit of the holder of Indebtedness of such other Person; (c) to lease or purchase property, securities or services primarily for the purpose of assuring the owner of such Indebtedness; or (d) to otherwise assure or hold harmless the owner of such Indebtedness or obligation against loss in respect thereof.

“Hazardous Material” means any substance, material, or waste which is or becomes regulated, under any Environmental Law, as hazardous to public health or safety or to the environment, including, but not limited to: (a) any substance or material designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act, as amended, 33 U.S.C. §1251 et seq., or listed pursuant to Section 307 of the Clean Water Act, as amended; (b) any substance or material defined as “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901 et seq.; (c) any substance or material defined as a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §9601 et seq.; or (d) petroleum, petroleum products and petroleum waste materials.

“Included Investor” means (a) each Detroit Pension Plan Investor, and (b) an Investor which has been designated and approved by all Lenders as an Included Investor, provided that (a) it is not a Defaulting Investor and it has met the Applicable Requirement; and (b) it has delivered to Administrative Agent the documentation required under Section 3.3 of the Forward Commitment Agreement; provided that if such Person is a Defaulting Investor it shall no longer be an Included Investor until such time as all Exclusion Events affecting it have been cured and it shall have been re-approved as an Included Investor in the sole and absolute discretion of Administrative Agent, the Letter of Credit Issuer, and all of the Lenders.

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“Indebtedness” of any Person means, without duplication: (a) all obligations of such Person for borrowed money; (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made; (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business); (d) all obligations, other than intercompany items, of such Person issued or assumed as the deferred purchase price of property or services purchased by such Person which would appear as liabilities on an unconsolidated balance sheet of such Person (other than trade accounts payable); (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed; (f) all Guaranty Obligations of such Person; (g) the principal portion of all obligations of such Person under: (i) Capital Leases; and (ii) any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product of such Person where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP; (h) all obligations of such Person to repurchase any securities which repurchase obligation is related to the issuance thereof, including, without limitation, obligations commonly known as residual equity appreciation potential shares; (i) all net obligations of such Person in respect of Swap Contracts; (j) the maximum amount of all performance and standby letters of credit issued or bankers’ acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed); and (k) the aggregate amount of uncollected accounts receivable of such Person subject at such time to a sale of receivables (or similar transaction) regardless of whether such transaction is effected without recourse to such Person or in a manner that would not be reflected on the balance sheet of such Person in accordance with GAAP. The Indebtedness of any Person shall include the Indebtedness of any partnership or unincorporated joint venture for which such Person is legally obligated.

“Indemnitee” is defined in Section 12.5(b) hereof.

“Initial Lenders” is defined in the recital of parties to this Credit Agreement.

“Initial Stated Maturity Date” is defined in the definition of Stated Maturity Date.

“Interest Option” means the Adjusted LIBOR Rate and the Reference Rate.

“Interest Payment Date” means: (a) as to any Reference Rate Loan, the first Business Day of each month, commencing on the first of such days to occur after such Reference Rate Loan is made or any LIBOR Loan is Converted to a Reference Rate Loan, or such earlier date as such Reference Rate Loan shall mature, by acceleration or otherwise, and on any Reference Rate Conversion Date; (b) as to any LIBOR Loan, the first day of each month, commencing on the first of such days to occur after such LIBOR Loan is made or any Reference Rate Loan is converted to a LIBOR Loan, or such earlier date as such LIBOR Loan shall mature, by acceleration or otherwise, and on any LIBOR Rate Conversion Date; and (c) as to any Loan, the date of any prepayment made hereunder, as to the amount prepaid.

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“Interest Period” means, with respect to any LIBOR Loan, a period commencing:

(a) on the borrowing date of such LIBOR Loan; or

(b) on the termination date of the immediately preceding Interest Period in the case of a Rollover to a successive Interest Period as described in Section 2.3 hereof,

and ending one, two or three months thereafter, each as Borrower shall elect in accordance with Section 2.3 hereof; provided, further, however, that:

(i) any Interest Period that would otherwise end on a day that is not a LIBOR Banking Day shall be extended to the next succeeding LIBOR Banking Day unless such LIBOR Banking Day falls in another calendar month, in which case such Interest Period shall end on the next preceding LIBOR Banking Day;

(ii) any Interest Period which begins on the last LIBOR Banking Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (i) above, end on the last LIBOR Banking Day of a calendar month; and

(iii) if the Interest Period would otherwise end after the Stated Maturity Date, such Interest Period shall end on the Stated Maturity Date.

“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended.

“Investors” means the investors in MAHGT and reference to “Investor” shall be to any one of them.

“Investor Confirmation” is defined in the Forward Commitment Agreement.

“Laws” means, collectively, all federal, state, and local statutes, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the forces of law.

“Lender Default” is defined in Section 12.12 hereof.

“Lenders” means the Initial Lenders and each of the other lending institutions that shall become a Lender hereunder pursuant to Section 12.11(c) hereof.

“Lending Entity” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

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“Letter of Credit” means any letter of credit issued by the Letter of Credit Issuer pursuant to Section 2.8 hereof either as originally issued or as the same may, from time to time, be amended or otherwise modified or extended.

“Letter of Credit Issuer” means Bank of America, or any Lender or Affiliate of such Lender so designated, and which accepts such designation, by Administrative Agent and approved by Borrower.

“Letter of Credit Liability” means the aggregate amount of the undrawn stated amount of all outstanding Letters of Credit plus the amount drawn under Letters of Credit for which the Letter of Credit Issuer and Lenders, or any one or more of them, have not yet received payment or reimbursement (in the form of a conversion of such liability to Loans, or otherwise) as required pursuant to Section 2.8 hereof.

“LIBOR Banking Day” means a day other than a Saturday or a Sunday, and on which Administrative Agent is open for business in New York and London, and dealing in offshore Dollars, or, if Administrative Agent does not have an office dealing with offshore Dollars in such locations, then in such location as Administrative Agent does have such an office.

“LIBOR Conversion Date” is defined in Section 2.3(d) hereof.

“LIBOR Loan” means a Loan made hereunder with respect to which the interest rate is calculated by reference to the LIBOR Rate for a particular Interest Period.

“LIBOR Rate” means, with respect to any LIBOR Loan for any Interest Period, the rate per annum (rounded upwards to the next higher 1/100 of 1%) appearing on Telerate Page 3750 as the London interbank offered rate for deposits in Dollars with respect to such Interest Period at approximately 11:00 a.m. (London time) on the date two (2) LIBOR Banking Days prior to the date such rate shall apply. If for any reason such rate is not available, the “LIBOR Rate” shall be the rate per annum (rounded upwards to the next higher 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars with respect to such Interest Period at approximately 11:00 a.m. (London time) on the date two (2) LIBOR Banking Days prior to the date such rate shall apply; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards to the next higher 1/100 of 1%).

“LIBOR Reserve Requirement” means, at any time, the maximum rate at which reserves (including, without limitation, any marginal, special, supplemental, or emergency reserves) are required to be maintained under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) by member banks of the Federal Reserve System against “Eurocurrency liabilities” (as such term is used in Regulation D). The Adjusted LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the LIBOR Reserve Requirement. Each determination by Administrative Agent of the LIBOR Reserve Requirement shall, in the absence of manifest error, be conclusive and binding.

“Lien” means any lien, mortgage, security interest, tax lien, pledge, encumbrance, or conditional sale or title retention arrangement, or any other interest in property designed to secure the repayment of indebtedness, whether arising by agreement or under any statute or law, or otherwise.

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“LLC Documents” means, for any limited liability company, a true copy of the articles of incorporation or organization, as the case may be, evidencing the creation of such limited liability company, with all amendments thereto, certified by an authorized officer of such limited liability company as being true, correct and complete, together with: (a) a certificate of incorporation (or other similar instruments) and all amendments thereto currently certified by the applicable authority for the state or country (as the case may be) of incorporation; (b) a current operating agreement (or operating memorandum or similar document); (c) a current certificate of existence and good standing (or other similar instruments) of such limited liability company issued by the applicable authority for the state or country (as the case may be) of incorporation; and (d) if appropriate, a current certificate of qualification and good standing (or other similar instruments) from the appropriate authority of each state in which it must be qualified to do business.

“Loan Documents” means this Credit Agreement, the Notes (including any renewals, extensions, re-issuances and refundings thereof), the Forward Commitment Agreement, the MAHGT Security Agreement, the MAHGT Account Assignment, the Acknowledgement and Consent, the Borrower Security Agreement and such other agreements and documents, and any amendments, restatements, or supplements thereto or modifications thereof, executed or delivered pursuant to the terms of this Credit Agreement or any of the other Loan Documents and any additional documents delivered in connection with any such amendment, restatement, supplement or modification.

“Loans” means the group of LIBOR Loans and Reference Rate Loans made by Lenders to Borrower pursuant to the terms and conditions of this Credit Agreement.

“MAHGT” means Midland Affordable Housing Group Trust, a Florida group trust.

“MAHGT Account Assignment” is defined in the Forward Commitment Agreement.

“MAHGT Promissory Note” is defined in the Forward Commitment Agreement.

“MAHGT Security Assignment” is defined in the Forward Commitment Agreement.

“Material Adverse Effect” means any circumstances or events which could reasonably be expected to: (a) have any adverse effect whatsoever upon the validity, performance, or enforceability of any of the Loan Documents executed by Borrower, MAHGT or any Included Investor; (b) materially impair the ability of Borrower, MAHGT or an Included Investor to fulfill their obligations under the Loan Documents; (c) cause an Event of Default; or (d) materially impair, impede, or jeopardize the obligation and the liability of any Included Investor to fulfill its obligations under its Subscription Agreement or Investor Confirmation.

“Maturity Date” means the earliest of: (a) the Stated Maturity Date; (b) the date upon which Borrower terminates the Commitments pursuant to Section 3.6 hereof or otherwise; and (c) the date upon which Administrative Agent declares the Obligation due and payable after the occurrence of an Event of Default.

“Maximum Commitment” means $72,000,000.00, or such lower amount as reduced by Borrower pursuant to Section 3.6 hereof.

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“Maximum Rate” means, on any day, the highest rate of interest (if any) permitted by applicable law on such day.

“MMCF Funding Request” is defined in the Forward Commitment Agreement.

“Moody’s” means Moody’s Investors Service, Inc.

“Notes” means the promissory notes provided for in Section 3.1 hereof, and all promissory notes delivered in substitution or exchange therefor, as such notes may be amended, restated, reissued, extended or modified; and “Note” means any one of the Notes.

“Obligation” means all present and future indebtedness, obligations, and liabilities of Borrower to Lenders (including, without limitation, Loans, Letters of Credit Liability, or both), and all renewals and extensions thereof (including, without limitations, Loans), or any part thereof, arising pursuant to this Credit Agreement (including, without limitation, the indemnity provisions hereof) or represented by the Notes, and all interest accruing thereon, and attorneys’ fees incurred in the enforcement or collection thereof, regardless of whether such indebtedness, obligations, and liabilities are direct, indirect, fixed, contingent, joint, several, or joint and several; together with all indebtedness, obligations, and liabilities of Borrower to Lenders evidenced or arising pursuant to any of the other Loan Documents, and all renewals and extensions thereof, or any part thereof.

“Operating Memorandum” means the Operating Memorandum of Borrower dated as of December 1, 1999, as amended.

“Other Taxes” is defined in Section 4.6(b) hereof.

“Participant” is defined in Section 12.11(b) hereof.

“Person” means any natural person, joint venture, association, trust, estate, business trust, corporation, nonprofit corporation, company, partnership, limited liability company, sovereign government or agency, instrumentality, or political subdivision thereof, or any similar entity or organization.

“Plan” means any plan, including single employer and multi-employer plans to which Section 4021(a) of ERISA applies, or any retirement medical plan, each as established or maintained for employees of Borrower or any member of the Controlled Group to which Section 4021(a) of ERISA applies.

“Potential Default” means any condition, act, or event which, with the giving of notice or lapse of time or both, would become an Event of Default.

“Prime Rate” means, on any day, the prime rate reported in the Wall Street Journal (or the average prime rate if a high and low prime rate are therein reported), and the Prime Rate shall change without notice with each change in such prime rate as of the date such change is reported. If the Wall Street Journal does not or ceases to report such a prime rate, the Prime Rate shall thereafter be determined by such alternate method as may be reasonably selected by Administrative Agent.

“Principal Obligation” means the sum of (a) the aggregate outstanding principal amount of the Loans; plus (b) the aggregate undrawn amount of all outstanding Letters of Credit, plus the amount drawn under

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Letters of Credit for which the Letter of Credit Issuer and Lenders, or any one of them, have not yet received payment or reimbursement (in the form of a conversion of such liability to Loans, or otherwise).

“Pro Rata Share” means, with respect to each Lender, the percentage obtained from the fraction: (a) (i) the numerator of which is the Commitment of such Lender; and (ii) the denominator of which is the aggregate Commitments of all Lenders; or (b) in the event the Commitments are zero (0): (i) the numerator of which is the Obligation outstanding with respect to such Lender; and (ii) the denominator of which is the total Obligation outstanding.

“Rated Investor” means any Investor that has a Rating.

“Rating” means, for any Person, its senior unsecured debt rating (or equivalent thereof, such as, but not limited to, a corporate credit rating, issuer rating/insurance financial strength rating (for an insurance company), general obligation rating (for a governmental entity), or revenue bond rating (for an educational institution)) from either of S&P or Moody’s.

“Reference Rate” means, on any date, the Prime Rate. Each change in the Reference Rate shall become effective without prior notice to Borrower automatically as of the opening of business on the day of such change in the Reference Rate.

“Reference Rate Conversion Date” is defined in Section 2.3(d).

“Reference Rate Loan” means a Loan made hereunder with respect to which the interest rate is calculated by reference to the Reference Rate.

“Register” is defined in Section 12.11(e) hereof.

“Regulation D,” “Regulation T,” “Regulation U,” and “Regulation X” means Regulation D, T, U, or X, as the case may be, of the Board of Governors of the Federal Reserve System, from time to time in effect, and shall include any successor or other regulation relating to reserve requirements applicable to partner banks of the Federal Reserve System.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration of Hazardous Materials into the environment, or into or out of any Projects, including the movement of any Hazardous Material through or in the air, soil, surface water, groundwater, of any Property.

“Remaining Subscription Amount” means, with respect to any Investor, at any time (i) such Investor’s Subscription Amount at such time, minus (ii) such Investor’s aggregate Subscription Contributions made or subject to a Subscription Call Notice prior to such time.

“Request for Borrowing” is defined in Section 2.3 hereof.

“Request for Letter of Credit” is defined in Section 2.8(b) hereof.

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“Required Lenders” means, at any time: (a) Lenders not in Lender Default and holding an aggregate Pro Rata Share of greater than fifty percent (50%) of the Commitments; or (b) at any time that the Lender Commitments are zero (0), Lenders not in Lender Default and owed an aggregate Pro Rata Share of greater than fifty percent (50%) of the Obligation outstanding at such time.

“Responsible Officer” means: (a) in the case of a corporation or trust, its president or any vice president, and, in any case where two Responsible Officers are acting on behalf of such corporation, the second such Responsible Officer may be a secretary or assistant secretary; (b) in the case of a limited partnership, the Responsible Officer of the general partner, acting on behalf of such general partner in its capacity as general partner; and (c) in the case of a limited liability company, the Responsible Officer of the managing member, acting on behalf of such managing member in its capacity as managing member.

“Responsible Party” means, for any Governmental Plan Investor: (a) if the state under which the Governmental Plan Investor operates is obligated to fund the Governmental Plan Investor and is liable to fund any shortfalls, the state; and (b) otherwise, the Governmental Plan Investor itself.

“Rollover” means the renewal of any LIBOR Loan upon the expiration of the Interest Period with respect thereto, pursuant to Section 2.3 hereof.

“Rollover Notice” is defined in Section 2.3 hereof.

“S&P” means Standard & Poor’s Rating Services, a division of the McGraw & Hill Companies, Inc.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended to the date hereof and from time to time hereafter, and any successor statute.

“Stated Maturity Date” means November 12, 2004 (the “Initial Stated Maturity Date”) unless extended pursuant to Section 2.13 hereof, in which case the Stated Maturity Date shall be such extended date.

“Subscription Agreements” means all Subscription Agreements entered into by and between the Investors and MAHGT, pursuant to which such Investors have agreed to purchase units of MAHGT for the subscription amount set forth therein; and “Subscription Agreement” means any one of the Subscription Agreements.

“Subscription Amount” means, for any Investor, its “Subscription Amount” as defined in the Subscription Agreement; and “Subscription Amounts” mean the aggregate Subscription Amounts of all Investors under the Subscription Agreements.

“Subscription Call” means a call upon the Investors to fund all or any portion of the Remaining Subscription Amounts pursuant to and in accordance with the Trust Agreement and their respective Subscription Agreement.

“Subscription Call Notice” means any written notice sent to the Investors for the purpose of making a Subscription Call.

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“Subscription Contribution” means, for any Investor, a payment of amounts due and owing by such Investor under its Subscription Agreement.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Tangible Net Worth” means, at any particular time, all amounts which, in conformity with GAAP, would be included as unitholders’ equity on a balance sheet of MAHGT; provided, however, there shall be excluded therefrom: (a) any amount at which shares of beneficial interest of MAHGT appear as an asset on the Borrower’s balance sheet, (b) goodwill, including any amounts, however designated, that represent the excess of the purchase price paid for assets or stock over the value assigned thereto, (c) patents, trademarks, trade names, and copyrights, (d) deferred expenses, (e) loans and advances to any unitholder, director, officer, or employee of MAHGT or any Affiliate of MAHGT, and (f) all other assets which are properly classified as intangible assets.

“Taxes” is defined in Section 4.6(a) hereof.

“Telerate Page 3750” means the display designated as “Page 3750” on the Moneyline Telerate Service (or such other page as may replace Page 3750 on the Moneyline Telerate Service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association interest settlement rates for U.S. Dollar deposits). Any LIBOR Rate determined on the basis of the rate displayed on Telerate Page 3750 in accordance with the provisions hereof shall be subject to corrections, if any, made in such rate and displayed by the Moneyline Telerate Service within one hour of the time when such rate is first displayed by such Service.

“Termination Date” has the meaning assigned to it in the Subscription Agreement.

“Trust Agreement” means the Declaration of Trust of MAHGT, dated December 11, 1991, as amended.

“Trust Documents” means, for any real estate investment trust, a true copy of the declaration of trust evidencing the creation of such trust, with all amendments thereto, certified by an authorized officer of such trust as being true, correct and complete, together with: (a) the bylaws of the trust, (b) a copy of the declaration of trust and all amendments thereto currently certified by the applicable authority for the state of organization; (c) if appropriate, a current certificate of existence and good standing of such trust issued by the applicable authority for the state of organization; and (d) if appropriate, a current certificate of

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qualification and good standing (or other similar instruments) from the appropriate authority of each state in which it must be qualified to do business.

“Type of Loan” means any type of Loan (i.e., a Reference Rate Loan or LIBOR Loan).

“2003 Side Letter” is defined in the Forward Commitment Agreement.

1.2 Other Definitional Provisions. All terms defined in this Credit Agreement shall have the above-defined meanings when used in the Notes or any other Loan Documents or any certificate, report or other document made or delivered pursuant to this Credit Agreement, unless otherwise defined in such other document.

(a) Defined terms used in the singular shall import the plural and vice versa.

(b) The words “hereof,” “herein,” “hereunder,” and similar terms when used in this Credit Agreement shall refer to this Credit Agreement as a whole and not to any particular provisions of this Credit Agreement.

(c) Unless otherwise specified in the Loan Documents, time references are to time in New York, New York.

SECTION 2. REVOLVING CREDIT LOANS AND LETTERS OF CREDIT

2.1 The Commitment.

(a) Committed Amount. Subject to the terms and conditions herein set forth, Lenders agree, during the Commitment Period: (i) to extend to Borrower a revolving line of credit; and (ii) to participate in Letters of Credit issued by the Letter of Credit Issuer for the account of Borrower.

(b) Limitation on Borrowings and Re-borrowings. Notwithstanding anything to the contrary herein contained, Lenders shall not be required to advance any Borrowing or Rollover, or cause the issuance of any Letter of Credit if:

(i) after giving effect to such Borrowing or Rollover, or issuance of such Letter of Credit, the Principal Obligation would exceed the Available Commitment; or

(ii) an Event of Default or a Potential Default exists.

(c) Exclusion Events. If any of the following events (each, an “Exclusion Event”) shall occur with respect to any Included Investor (such Investor hereinafter referred to as a “Defaulting Investor”), then such Investor shall no longer be an Included Investor:

(i) it shall: (A) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor, or liquidator of itself or of all or a substantial part of its assets; (B) file a voluntary petition as debtor in bankruptcy or admit in writing that it is unable to pay its debts as they become due; (C) make a general assignment for the benefit of

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creditors; (D) file a petition or answer seeking reorganization or an arrangement with creditors or take advantage of any Debtor Relief Laws; (E) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization, or insolvency proceeding; or (F) take personal, partnership, limited liability company, corporate or trust action, as applicable, for the purpose of effecting any of the foregoing;

(ii) an order, order for relief, judgment, or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition seeking such Investor’s reorganization or appointing a receiver, custodian, trustee, intervenor, or liquidator of such Investor or of all or substantially all of its assets, and such order, judgment, or decree shall continue unstayed and in effect for a period of sixty (60) days;

(iii) any final judgment(s) for the payment of money which in the aggregate exceed fifteen percent (15%) of its net worth shall be rendered against such Investor, and such judgment or judgments shall not be satisfied or discharged at least ten (10) days prior to the date on which any of its assets could be lawfully sold to satisfy such judgment;

(iv) such Investor shall repudiate, challenge, or declare unenforceable its obligation to make contributions to the capital of MAHGT pursuant to its Subscription Agreement or a Subscription Call Notice, or shall otherwise disaffirm any material provision of the Trust Agreement or its Subscription Agreement relating to Subscription Contributions;

(v) any representation or warranty made under the Investor Confirmation executed by such Investor shall prove to be untrue or inaccurate in any material respect;

(vi) such Investor shall redeem or transfer its units in MAHGT except as permitted by the Trust Agreement, the Forward Commitment Agreement, the Acknowledgement and Consent, and its Investor Confirmation;

(vii) such Investor shall be in default under the Trust Agreement, its Subscription Agreement, or its Investor Confirmation;

(viii) default shall occur in the performance by such Investor of any of the material covenants or agreements contained in any of the Loan Documents executed by it (except as otherwise specifically addressed in this Section 2.1(c)(c), in which case no grace period beyond any provided for herein shall apply) and such default shall continue uncured to the satisfaction of Administrative Agent for a period of thirty (30) days after written notice thereof has been given by Administrative Agent to Borrower and to such Investor; or

(ix) such Investor shall fail to maintain the Applicable Requirement for such Investor required in the definition of Applicable Requirement in Section 1 hereof.

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(d) Mandatory Prepayment.

(i) Excess Loan Outstanding. If, on any day, the Principal Obligation exceeds the Available Commitment, then Borrower shall pay such excess to Administrative Agent, for the benefit of Lenders, in immediately available funds (except to the extent any such excess is addressed by Section 2.1(d)(ii)): (i) within two (2) Business Days, to the extent such funds are available in any account maintained by Borrower; and (ii) otherwise within ten (10) Business Days.

(ii) Excess Letters of Credit Outstanding. If any excess calculated pursuant to Section 2.1(d)(i) is attributable to undrawn Letters of Credit, Borrower shall pay such excess to Administrative Agent, when required pursuant to the terms of Section 2.1(d)(i) for deposit in a segregated interest-bearing cash collateral account, as security for such portion of the Obligation. Unless otherwise required by law, upon: (i) a change in circumstances such that the Principal Obligation no longer exceeds the Available Commitment; or (ii) the full and final payment of the Obligation, Administrative Agent shall return to Borrower any amounts remaining in said cash collateral account.

2.2 Revolving Credit Commitment. Subject to the terms and conditions herein set forth, each Lender severally agrees, during the Commitment Period, to make Loans to Borrower at any time and from time to time in an aggregate principal amount up to such Lender’s Commitment at any such time; provided, however, that, after making such Loans: (a) such Lender’s Pro Rata Share of the Principal Obligation would not exceed such Lender’s Commitment; and (b) the Principal Obligation would not exceed the Available Commitment. Subject to the foregoing limitation, Borrower may borrow, repay without penalty or premium, and re-borrow hereunder, during the Commitment Period. Each Borrowing pursuant to this Section 2.2 shall be made ratably by Lenders in proportion to such Lender’s Pro Rata Share of the Available Commitment. No Lender shall be obligated to fund any Loan if the interest rate applicable thereto under Section 2.6(a) hereof would exceed the Maximum Rate in effect with respect to such Loan.

2.3 Manner of Borrowing. Borrower shall give Administrative Agent notice of the date of each requested Borrowing hereunder, which notice may be by telephone, if confirmed in writing, telex, facsimile, or other written communication (a “Request for Borrowing”), and which notice shall be irrevocable and effective upon receipt by Administrative Agent. Each Request for Borrowing shall be furnished to Administrative Agent, no later than 12:00 p.m.: (a) at least three (3) LIBOR Banking Days prior to the requested date of the funding of a LIBOR Loan; and (b) at least one (1) Business Day prior to the requested date of the funding of a Reference Rate Loan; and must specify: (i) the amount of such Borrowing; (ii) whether such Borrowing shall be a LIBOR Loan or a Reference Rate Loan; and (iii) the Interest Period therefor in the case of a LIBOR Loan. Any Request for Borrowing received by Administrative Agent after 12:00 p.m. shall be deemed to have been given by Borrower on the next succeeding LIBOR Banking Day, in the case of a LIBOR Loan, or the next succeeding Business Day, in the case of a Reference Rate Loan.

(a) Request for Borrowing. Each Request for Borrowing shall be in the form attached hereto as Exhibit A (with blanks appropriately completed in conformity herewith) and shall be deemed to constitute a representation and warranty by Borrower that:

(i) The representations and warranties set forth in Section 7 hereof are true and correct in all material respects on and as of the date of such Request for Borrowing, with the same force and effect as if made on and as of such date provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct as of such earlier date, and for purposes of this Section 2.3, the representations and warranties contained in Section 7.6 hereof shall be deemed to refer to the most recent financial statements furnished pursuant to Section 8.1 hereof;

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(ii) No Event of Default or Potential Default exists and is continuing at such date; and

(iii) After giving effect to such Borrowing the Principal Obligation will not exceed the Available Commitment as of such date.

Each Request for Borrowing shall be irrevocable and binding on Borrower, and Borrower shall indemnify Lenders against any cost, loss, or expense incurred by Lenders, or any of them, as a result of any failure to fulfill, on or before the date specified in the Request for Borrowing, the conditions to such Borrowing set forth herein, including, without limitation, any cost, loss, or expense incurred by reason of the liquidation or redeployment of the deposits or other funds acquired by Lenders, or any of them, to fund the Borrowing to be made by Lenders as a part of such Borrowing when such Borrowing, as a result of such failure, is not made on such date. A certificate of Administrative Agent setting forth the amount of any such cost, loss or expense, and the basis for the determination thereof and the calculation thereof, shall be delivered to Borrower and shall, in the absence of a manifest error, be conclusive and binding. Notwithstanding any provision to the contrary contained in this Section 2.3, Borrower shall not be required to indemnify Lenders against any costs, loss or expenses incurred by Lenders, or any of them, as a result of the liquidation or redeployment of funds due to Borrower’s failure to fulfill, on or before the date specified for a Reference Rate Borrowing, the conditions to such Borrowing set forth herein.

(b) Request for Current Rates. Prior to making a Request for Borrowing, Borrower may (without specifying whether the anticipated Borrowing shall be a Reference Rate Loan or LIBOR Loan) request that Administrative Agent provide it with the most recent Reference Rate and Adjusted LIBOR Rate available to Lenders. Administrative Agent shall endeavor to provide such quoted rates to Borrower within two (2) Business Days after such request, provided, however, that Administrative Agent’s failure to timely provide such rates shall not relieve Borrower of its obligations hereunder.

(c) Rollovers. No later than 12:00 p.m. at least three (3) LIBOR Banking Days prior to the termination of each Interest Period related to a LIBOR Loan, Borrower shall give Administrative Agent written notice (which notice may be via fax) substantially in the form of Exhibit D attached hereto (the “Rollover Notice”) whether it desires to renew such LIBOR Loan. The Rollover Notice shall also specify the length of the Interest Period selected by Borrower with respect to such Rollover. Each Rollover Notice shall be irrevocable and effective upon notification thereof to Administrative Agent. If Borrower fails to timely give Administrative Agent the Rollover Notice with respect to any LIBOR Loan, Borrower shall be deemed to have

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elected the Reference Rate as the Interest Option with respect to such Loan commencing on the expiration of the preceding Interest Period.

(d) Conversions. Borrower shall have the right, with respect to: (i) any Reference Rate Loan, on any LIBOR Banking Day (a “LIBOR Conversion Date”), to convert such Reference Rate Loan to a LIBOR Loan; and (ii) any LIBOR Loan, on any Business Day (a “Reference Rate Conversion Date”) to convert such LIBOR Loan to a Reference Rate Loan, provided, however, that Borrower shall, on such Reference Rate Conversion Date, make the payments required by Section 4.5 hereof; in either case, by giving Administrative Agent written notice substantially in the form of Exhibit B attached hereto (a “Conversion Notice”) of such selection no later than 12:00 p.m. at least: (1) three (3) LIBOR Banking Days prior to such LIBOR Conversion Date; or (2) one (1) Business Day prior to such Reference Rate Conversion Date. Each Conversion Notice shall be irrevocable and effective upon notification thereof to Administrative Agent.

(e) Tranches. Notwithstanding anything to the contrary contained herein, no more than five (5) LIBOR Loans may be outstanding hereunder at any one time during the Commitment Period.

(f) Agent Notification to Lenders. Administrative Agent shall promptly notify each Lender of receipt of a Request for Borrowing, a Conversion Notice or a Rollover Notice, the amount of the Borrowing and such Lender’s Pro Rata Share thereof, the date the Borrowing is to be made, the Interest Option selected, the Interest Period selected, if applicable, and the applicable rate of interest.

2.4 Minimum Loan Amounts. Each LIBOR Rate Loan shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000, and each Reference Rate Loan shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $500,000; provided, however, that a Reference Rate Loan may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of a Letter of Credit under Section 2.8.

2.5 Funding. Each Lender shall make the proceeds of its Pro Rata Share of each Borrowing available to Administrative Agent at the appropriate Funding Account for the account of Borrower no later than 12:00 p.m. on the date specified in the Request for Borrowing as the borrowing date, in immediately available funds, and, upon fulfillment of all applicable conditions set forth herein, Administrative Agent shall deposit such proceeds in immediately available funds in Borrower’s account maintained with Administrative Agent not later than 2:00 p.m. on the borrowing date or, if requested by Borrower in the Request for Borrowing, shall wire-transfer such funds as requested on or before such time. The failure of any Lender to advance the proceeds of its Pro Rata Share of any Borrowing required to be advanced hereunder shall not relieve any other Lender of its obligation to advance the proceeds of its Pro Rata Share of any Borrowing required to be advanced hereunder. The liabilities and obligations of each Lender hereunder shall be several and not joint, and neither Administrative Agent nor any Lender shall be responsible for the performance by any other Lender of its obligations hereunder. Each Lender hereunder shall be liable to Borrower only for the amount of its respective Commitment.

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2.6 Interest Rate.

(a) Rate. The unpaid principal of each Reference Rate Loan shall bear interest at a rate per annum which shall from day to day be equal to the Reference Rate in effect from day to day. The unpaid principal of each LIBOR Loan shall bear interest at a rate per annum which shall be equal to the Adjusted LIBOR Rate for the applicable Interest Period.

(b) Change in Rate; Past Due Amounts; Calculations of Interest. Each change in the rate of interest for any Borrowing shall become effective, without prior notice to Borrower, automatically as of the opening of business of Administrative Agent on the date of said change. Interest on the unpaid principal balance of each Loan shall be calculated on the basis of the actual days elapsed in a year consisting of 360 days. If any principal of, or interest on, the Obligation is not paid when due, then (in lieu of the interest rate provided in subsection (a) above) such past due principal and interest shall bear interest at the Default Rate. If any other Event of Default hereunder shall arise, then (in lieu of the interest rate provided in subsection (a) above) the principal amount of each Loan in effect at such time and the interest thereon shall bear interest at the Default Rate, until such Event of Default is cured or is waived.

2.7 Determination of Rate. Administrative Agent shall determine each interest rate applicable to the Borrowings hereunder. Administrative Agent shall give prompt notice to Borrower and to Lenders of each rate of interest so determined, and its determination thereof shall be conclusive and binding in the absence of manifest error.

2.8 Letters of Credit.

(a) Letter of Credit Commitment. Subject to the terms and conditions hereof, on any Business Day during the Commitment Period, Administrative Agent shall cause the Letter of Credit Issuer to issue such Letters of Credit in such aggregate face amounts as Borrower may request, provided that: (i) on the date of issuance, after giving effect to the issuance of any such Letter of Credit, the Letter of Credit Liability will not exceed the remainder of: (x) the Available Commitment as of such date; minus (y) the Principal Obligation as of such date; (ii) the expiry date of the Letter of Credit shall not be later than the earlier of: (x) twelve months after the date of issuance; or (y) thirty (30) days prior to the Stated Maturity Date, without the Letter of Credit Issuer’s Consent, in its sole discretion; and (iii) the Letter of Credit Issuer shall be under no obligation to issue any Letter of Credit if, after the Closing Date: (x) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Letter of Credit Issuer from issuing such Letter of Credit, or any Law applicable to the Letter of Credit Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Letter of Credit Issuer shall prohibit, or request that the Letter of Credit Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Letter of Credit Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Letter of Credit Issuer is not otherwise compensated hereunder) not in effect on the Closing Date; or (y) the issuance of such Letter of Credit would violate one or more policies of the Letter of Credit Issuer.

(b) Request. Each request for a Letter of Credit (a “Request for Letter of Credit”) shall be submitted to Administrative Agent in the form attached hereto as Exhibit C (with blanks

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appropriately completed in conformity herewith), together with an Application and Agreement for Letter of Credit, for the Letter of Credit Issuer, on or before 11:00 a.m. (New York time) at least five (5) Business Days prior to the requested date of issuance of a Letter of Credit. Administrative Agent shall promptly notify each Lender of such Request for Letter of Credit and the terms of the requested Letter of Credit. Upon each such application, Borrower shall be deemed to have automatically made to Administrative Agent, each Lender, and the Letter of Credit Issuer the following representations and warranties:

(i) As of the date of the issuance of the Letter of Credit requested, the representations and warranties set forth in Section 7 hereof are true and correct in all material respects on and as of the date of such issuance, with the same force and effect as if made on and as of such date (except to the extent of changes in facts or circumstances that have been disclosed to Lenders and do not constitute an Event of Default or a Potential Default under this Credit Agreement or any other Loan Document);

(ii) No Event of Default or, to its knowledge, Potential Default exists and is continuing at such date; and

(iii) After giving effect to the issuance of the requested Letter of Credit the Letter of Credit Liability will not exceed the remainder of: (A) the Available Commitment as of such date; minus (B) the Principal Obligation as of such date.

(c) Participation by Lenders. Each Lender shall and does hereby participate ratably with the Letter of Credit Issuer in each Letter of Credit issued and outstanding hereunder to the extent of its Pro Rata Share of the Letter of Credit Liability with respect to each such Letter of Credit, and shall share in all rights and obligations resulting therefrom, including, without limitation: (i) the right to receive from Administrative Agent its Pro Rata Share of any reimbursement of the amount of each draft drawn under each Letter of Credit; (ii) the right to receive from Administrative Agent its Pro Rata Share of the Letter of Credit fee pursuant to Section 2.12 hereof; (iii) the right to receive from Administrative Agent its additional costs pursuant to Section 4.1 hereof; and (iv) the obligation to pay to the Administrative Agent or the Letter of Credit Issuer, as the case may be, in immediately available funds, its Pro Rata Share of any unreimbursed drawing under a Letter of Credit.

(d) Payment of Letter of Credit. In consideration for the issuance by the Letter of Credit Issuer of the Letters of Credit, Borrower hereby authorizes, empowers, and directs Administrative Agent, for the benefit of Lenders and the Letter of Credit Issuer, to disburse directly, as a Borrowing hereunder, to the Letter of Credit Issuer, with notice to Borrower, in immediately available funds an amount equal to the stated amount of each draft drawn under each Letter of Credit plus all interest, reasonable costs and expenses, and fees due to the Letter of Credit Issuer pursuant to this Credit Agreement. Subject to receipt of notice from the Administrative Agent, each Lender shall pay to the Administrative Agent such Lender’s Pro Rata Share of the amount disbursed by the Administrative Agent on the Business Day on which the Letter of Credit Issuer honors any such draft or incurs or is owed any such interest, costs, expenses or fees. Administrative Agent will promptly notify Borrower of any disbursements made by Lenders pursuant to the terms hereof, provided that the failure to give such notice will not affect the validity of the disbursement, and Administrative Agent shall provide Lenders with

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notice thereof. Any such disbursement made by Lenders to the Letter of Credit Issuer on account of a Letter of Credit shall be deemed a Reference Rate Loan; and Borrower shall be deemed to have given to Administrative Agent, in accordance with the terms and conditions of Section 2.3, a Request for Borrowing with respect thereto. Administrative Agent and Lenders may conclusively rely on the Letter of Credit Issuer as to the amount due the Letter of Credit Issuer by reason of any draft of a Letter of Credit or due the Letter of Credit Issuer under any Application and Agreement for Letter of Credit.

(e) Acceleration of Undrawn Amounts. Should Administrative Agent demand payment of the Obligation hereunder prior to the Maturity Date pursuant to Section 10.2 hereof, Administrative Agent, by written notice to Borrower, may take one or more of the following actions: (i) declare the obligation of the Letter of Credit Issuer to issue Letters of Credit hereunder terminated, whereupon such obligations shall forthwith terminate without any other notice of any kind; or (ii) declare the outstanding Letter of Credit Liability to be forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby waived, and demand that Borrower pay to Administrative Agent for deposit in a segregated interest-bearing cash collateral account, as security for the Obligation, an amount equal to the aggregate undrawn stated amount of all Letters of Credit then outstanding at the time such notice is given. Unless otherwise required by law, upon the full and final payment of the Obligation, Administrative Agent shall return to Borrower any amounts remaining in said cash collateral account

2.9 Use of Proceeds and Letters of Credit. The proceeds of the Loans and the Letters of Credit shall be used for the purposes permitted under the Operating Memorandum. Neither Lenders nor Administrative Agent shall have any liability, obligation, or responsibility whatsoever with respect to Borrower’s use of the proceeds of the Loans or the Letters of Credit, and neither Lenders nor Administrative Agent shall be obligated to determine whether or not Borrower’s use of the proceeds of the Loans or the Letters of Credit are for purposes permitted under the Operating Memorandum. Nothing, including, without limitation, any Borrowing, any Rollover, any issuance of any Letter of Credit, or acceptance of other document or instrument, shall be construed as a representation or warranty, express or implied, to any party by Lenders or Administrative Agent as to whether any investment by Borrower is permitted by the terms of the Operating Memorandum.

2.10 Administrative Agent Fees. Borrower shall pay, to Administrative Agent, fees in consideration of the arrangement and administration of the Commitments, which fees shall be payable in amounts and on the dates agreed to between Borrower and Administrative Agent in the Fee Letter.

2.11 Unused Commitment Fee. In addition to the payments provided for in Section 3 hereof, Borrower shall pay to Administrative Agent, for the account of each Lender, according to its Pro Rata Share, an unused commitment fee on the daily amount of the Maximum Commitment which was unused (through the extension of Loans or issuance of Letters of Credit) during the immediately preceding calendar quarter calculated on the basis of actual days elapsed in a year consisting of 360 days: (a) if such unused amount is equal to or more than fifty percent (50%) of the Maximum Commitment, at the rate of seventeen and one-half basis points (0.175%) per annum; and (b) if such unused amount is less than fifty percent (50%) of the Maximum Commitment, at the rate of fifteen basis points (0.15%) per annum, in each case payable in arrears on the first Business Day of each calendar quarter for the preceding calendar quarter. For purposes of this Section 2.11, the fee shall be calculated each time the Principal Obligation

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or the Maximum Commitment increases or decreases, for the number of days since the last calculation of the fee, as follows:

(((Maximum Commitment for such period - Principal Obligation for such period) * [0.175% or 0.15%, as applicable] * number of days in such period) / 360)

Borrower and Lenders acknowledge and agree that the commitment fees payable hereunder are bona fide commitment fees and are intended as reasonable compensation to Lenders for committing to make funds available to Borrower as described herein and for no other purposes.

2.12 Letter of Credit Fees. Borrower shall pay to Administrative Agent, for the benefit of Lenders, in consideration for the issuance of Letters of Credit hereunder, a non-refundable per annum fee equal to .875% on the face amount of each Letter of Credit, less the amount of any draws on such Letter of Credit, payable in quarterly installments in arrears, commencing on the issuance date and continuing for so long as such Letter of Credit remains outstanding.

2.13 Extension of Stated Maturity Date. Borrower may extend the Stated Maturity Date one time to May 12, 2005 upon: (a) the delivery of the Extension Notice to Administrative Agent not more than ninety (90) days nor less than thirty (30) days prior to the Initial Stated Maturity Date, and (b) the payment of the Extension Fee.

SECTION 3. PAYMENT OF OBLIGATIONS

3.1 Notes. The LIBOR Loans and Reference Rate Loans to be made by Lenders to Borrower hereunder shall be evidenced by promissory notes of Borrower. Each Note issued by Borrower shall: (a) be in the amount of the applicable Lender’s Commitment; (b) be payable to the order of such Lender at the principal office of Administrative Agent; (c) bear interest in accordance with Section 2.6 and Section 12.13 hereof; and (d) be substantially in the form of Exhibit D attached hereto (with blanks appropriately completed in conformity herewith). Borrower agrees, from time to time, upon the request of Administrative Agent or any affected Lender, to reissue new Notes, in accordance with the terms and in the form heretofore provided, to any Lender and any Assignee of such Lender in accordance with Section 12.11(c) hereof, in renewal of and substitution for the Notes previously issued by Borrower to the affected Lender.

3.2 Payment of Obligation. The unpaid principal amount of the Obligation, together with all accrued but unpaid interest thereon, shall be due and payable on the Maturity Date.

3.3 Payment of Interest.

(a) Interest. Interest on each Borrowing and any portion thereof shall commence to accrue in accordance with the terms of this Credit Agreement and the other Loan Documents as of the date of the disbursal or wire transfer of such Borrowing by Administrative Agent, consistent with the provisions of Section 2.5, notwithstanding whether Borrower received the benefit of such Borrowing as of such date and even if such Borrowing is held in escrow pursuant to the terms of any escrow arrangement or agreement. When a Borrowing is disbursed by wire transfer pursuant to instructions received from Borrower, then such Borrowing shall be considered made at the time of the transmission of the wire, rather than the time of receipt thereof

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by the receiving bank. With regard to the repayment of the Loans, interest shall continue to accrue on any amount repaid until such time as the repayment has been received in federal or other immediately available funds by Administrative Agent in the appropriate Funding Account.

(b) Interest Payment Dates. Accrued and unpaid interest on the Obligation shall be due and payable in arrears on each Interest Payment Date, and on the Maturity Date.

3.4 Payments on the Obligation. All payments of principal of, and interest on, the Obligation under this Credit Agreement by Borrower to or for the account of Lenders, or any of them, shall be made by Borrower for receipt by Administrative Agent before 12:00 p.m. in federal or other immediately available funds to the appropriate Funding Account. Funds received after 12:00 p.m. shall be treated for all purposes as having been received by Administrative Agent on the first Business Day next following receipt of such funds. Except as provided in Section 12.11 hereof, each Lender shall be entitled to receive its Pro Rata Share of each payment received by Administrative Agent hereunder for the account of Lenders on the Obligation. Each payment received by Administrative Agent hereunder for the account of a Lender shall be promptly distributed by Administrative Agent to such Lender. Administrative Agent and each Lender hereby agree that payments to Administrative Agent by Borrower of principal of, and interest on, the Obligation by Borrower to or for the account of Lenders in accordance with the terms of the Credit Agreement, the Notes and the other Loan Documents shall constitute satisfaction of Borrower’s obligations with respect to any such payments, and Administrative Agent shall indemnify, and each Lender shall hold harmless, Borrower from any claims asserted by any Lender in connection with Administrative Agent’s duty to distribute and apportion such payments to Lenders in accordance with this Section 3.4. All payments made on the Obligation shall be credited, to the extent of the amount thereof, in the following manner: (a) first, against all costs, expenses and other fees (including reasonable attorneys’ fees) arising under the terms hereof; (b) second, against the amount of interest accrued and unpaid on the Obligation as of the date of such payment; (c) third, against all principal due and owing on the Obligation as of the date of such payment; and (d) fourth, to all other amounts constituting any portion of the Obligation.

3.5 Voluntary Prepayments. Borrower may, without premium or penalty, upon three (3) Business Days’ prior written notice to Administrative Agent, prepay the principal of the Obligation then outstanding, in whole or in part, at any time or from time to time; provided, however, that if Borrower shall prepay the principal of any LIBOR Loan on any date other than the last day of the Interest Period applicable thereto, Borrower shall make the payments required by Section 4.5 hereof. Notwithstanding any provision to the contrary in this Section 3.5, if Borrower desires to prepay a Reference Rate Loan, Borrower shall only be required to provide written notice thereof to Administrative Agent of such prepayment one (1) Business Day in advance of such payment. Any prepayment not received by 12:00 p.m. on a Business Day shall be deemed to have been paid on the next succeeding Business Day. All prepayments of LIBOR Loans must be made on a LIBOR Banking Day.

3.6 Reduction or Early Termination of Commitments. So long as no Request for Borrowing or Request for Letter of Credit is outstanding, Borrower may terminate the Commitments, or reduce the Maximum Commitment, by giving prior irrevocable written notice to Administrative Agent of such termination or reduction three (3) Business Days prior to the effective date of such termination or reduction (which date shall be specified by Borrower in such notice): (a)(i) in the case of complete termination of the Commitments, upon prepayment of all of the outstanding Obligation, including, without limitation, all interest accrued thereon, in accordance with the terms of Section 3.5; or (ii) in the

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case of a reduction of the Maximum Commitment, upon prepayment of the amount by which the Principal Obligation exceeds the reduced Available Commitment resulting from such reduction, including, without limitation, payment of all interest accrued thereon, in accordance with the terms of Section 3.5, provided, however, that, except in connection with a termination of the Commitments, the Maximum Commitment may not be reduced such that, upon such reduction, the Available Commitment is less than the aggregate stated amount of outstanding Letters of Credit; and (b) in the case of the complete termination of the Commitments, if any Letter of Credit Liability exists, upon payment to Administrative Agent for deposit in a segregated interest-bearing cash collateral account, as security for the Letter of Credit Liability, an amount equal to the Letter of Credit Liability then outstanding at the time such notice is given, without presentment, demand, protest or any other notice of any kind, all of which are hereby waived. Unless otherwise required by law, upon the full and final payment of the Letter of Credit Liability, or the termination of all outstanding Letter of Credit Liability due to the expiration of all outstanding Letters of Credit prior to draws thereon, Administrative Agent shall return to Borrower any amounts remaining in said cash collateral account, provided, however, that to the extent individual Letters of Credit expire, Agent will return to Borrower the corresponding amount of the expired Letter of Credit Liability. Notwithstanding the foregoing, any reduction of the Maximum Commitment shall be in an amount of at least $5,000,000 or in integral multiples of $1,000,000 in excess thereof; and (4) in no event shall a reduction by Borrower reduce the Maximum Commitment to $3,000,000 or less (except for a termination of all the Commitments). Promptly after receipt of any notice of reduction or termination, Agent shall notify each Lender of the same. Any reduction of the Maximum Commitment shall reduce the Commitments of the Lenders on a pro rata basis.

3.7 Lending Office. Each Lender may: (a) designate its principal office or a branch, subsidiary or Affiliate of such Lender as its lending office (and the office to whose accounts payments are to be credited) for any LIBOR Loan; (b) designate its principal office or a branch, subsidiary or Affiliate as its lending office (and the office to whose accounts payments are to be credited) for any Reference Rate Loan and (c) change its lending offices from time to time by notice to Administrative Agent and Borrower. In such event, such Lender shall continue to hold the Note, if any, evidencing its loans for the benefit and account of such branch, subsidiary or Affiliate. Each Lender shall be entitled to fund all or any portion of its Commitment in any manner it deems appropriate, consistent with the provisions of Section 2.5, but for the purposes of this Credit Agreement such Lender shall, regardless of such Lender’s actual means of funding, be deemed to have funded its Commitment in accordance with the Interest Option selected from time to time by the Borrower for such Borrowing period.

SECTION 4. CHANGE IN CIRCUMSTANCES.

4.1 Increased Cost and Reduced Return.

(a) Change in Law: Increased Cost. If any Lender or Letter of Credit Issuer determines that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining LIBOR Loans, or (as the case may be) issuing or participating in Letters of Credit by virtue of the participation arrangement provided in Section 2.8(c) hereof, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from: (i) Taxes or Other Taxes (as to which Section 4.6 shall govern), (ii) changes in the basis of taxation of overall net income or overall

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gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Applicable Lending Office, and (iii) reserve requirements utilized in the determination of the Adjusted LIBOR Rate, then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction: (A) promptly on demand, to the extent that funds are available in the Collateral Account or any other account maintained by Borrower; and (B) otherwise within thirteen (13) Business Days after demand.

(b) Change in Law: Reduced Return. If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Applicable Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction: (A) promptly on demand, to the extent that funds are available in the Collateral Account or any other account maintained by Borrower; and (B) otherwise, to the extent that it is necessary for Borrower to issue a Capital Demand Notice to fund such required payment, within thirteen (13) Business Days after demand (but in any event, Borrower shall issue such Capital Demand Notice and shall make such payment after the related Subscription Contributions are received).

(c) Notice. Each Lender and the Letter of Credit Issuer shall promptly notify Borrower and Administrative Agent of any event of which it has knowledge, occurring after the date hereof, but in no event later than ninety (90) days after the occurrence of such event, which will or may entitle such Lender to compensation pursuant to this Section 4.1 and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the good faith judgment of such Lender, be otherwise disadvantageous to it.

4.2 Limitation on Types of Loans. If the Administrative Agent determines in connection with any request for a LIBOR Loan or a Conversion to or Continuation thereof that (a) Dollar deposits are not being offered to banks in the applicable offshore Dollar market for the applicable amount and Interest Period of such LIBOR Loan, (b) adequate and reasonable means do not exist for determining the LIBOR Rate for such LIBOR Loan, or (c) the LIBOR Rate for such LIBOR Loan does not adequately and fairly reflect the cost to the Lenders of funding such LIBOR Loan, the Administrative Agent will promptly notify the Borrower and all Lenders. Thereafter, the obligation of the Lenders to make or maintain LIBOR Loans shall be suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending Request for Borrowing, Conversion or Continuation of LIBOR Loans or, failing that, will be deemed to have Converted such Request for Borrowing of LIBOR Loans into a Request for Borrowing of Reference Rate Loans in the amount specified therein.

4.3 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted in writing that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Loans, or materially restricts the authority of such

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Lender to purchase or sell, or to take deposits of, Dollars in the applicable offshore Dollar market, or to determine or charge interest rates based upon the LIBOR Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or Continue LIBOR Loans or to Convert Reference Rate Loans to LIBOR Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon any such prepayment or Conversion, the Borrower shall also pay interest on the amount so prepaid or Converted. Each Lender agrees to designate a different Applicable Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

4.4 Treatment of Affected Loans. If the obligation of any Lender to make a LIBOR Loan or to Continue, or to Convert any Type of Loan into LIBOR Loans shall be suspended pursuant to Section 4.3 hereof, such Lender’s LIBOR Loans shall be automatically Converted into Reference Rate Loans on the last day(s) of the then current Interest Period(s) for such LIBOR Loans (or, in the case of a Conversion required by Section 4.3 hereof, on such earlier date as such Lender may specify to Borrower with a copy to Administrative Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 4.3 hereof that gave rise to such Conversion no longer exist:

(a) to the extent that such Lender’s LIBOR Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s LIBOR Loans shall be applied instead to its Reference Rate Loans; and

(b) all Loans that would otherwise be made or Continued by such Lender as LIBOR Loans shall be made instead as Reference Rate Loans, and all Loans of such Lender that would otherwise be Converted into LIBOR Loans shall remain as Reference Rate Loans.

If such Lender gives notice to Borrower (with a copy to Administrative Agent) that the circumstances specified in Section 4.3 that gave rise to the Conversion of such Lender’s LIBOR Loans pursuant to this Section 4.4 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when LIBOR Loans made by other Lenders are outstanding, such Lender’s Reference Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR Loans to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding LIBOR Loans and by such Lender are held Pro Rata (as to principal amounts, Types, and Interest Periods) in accordance with their respective Commitments.

4.5 Compensation. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or reasonable expense incurred by it as a result of:

(a) any Continuation, Conversion, payment or prepayment of any LIBOR Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise), including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such LIBOR Loan or from fees (including any breakage fees) payable to the Lenders to terminate the deposits from which such funds were obtained together with payment of any customary administrative fees charged by such Lender in connection with the foregoing, provided, however, that if Borrower shall be required to pay any of the foregoing amounts to

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Lenders due to a prepayment pursuant to clause (b) of Section 2.5 as a result of a Lender failing to make its Pro Rata Share of any requested Borrowing, such defaulting Lender shall reimburse Borrower for such amounts, together with payment of any customary administrative fees charged by such Lender in connection with the foregoing;

(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan, and including, without limitation, the failure of any condition precedent specified in Section 6 to be satisfied) to prepay, borrow, Continue or Convert any Loan other than a Reference Rate Loan on the date or in the amount notified by the Borrower; or

(c) any assignment of a LIBOR Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 12.11(c); including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such LIBOR Loan or from fees (including any breakage fees) payable to the Lenders to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 4.5, each Lender shall be deemed to have funded each LIBOR Loan by a matching deposit or other borrowing in the applicable offshore Dollar interbank market for a comparable amount and for a comparable period, whether or not such LIBOR Loan was in fact so funded.

4.6 Taxes.

(a) Excluded Taxes. Any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its net income, profit, business activity and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.6), the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof.

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(b) Other Taxes. In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other Taxes”).

(c) Gross Up. If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent (for the account of such Lender) or to such Lender, at the time interest is paid, such additional amount that such Lender specifies as necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) such Lender would have received if such Taxes or Other Taxes had not been imposed.

(d) Indemnification. The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 4.6) paid by the Administrative Agent and such Lender, (ii) amounts payable under Section 4.6(c) and (iii) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor.

(e) Prescribed Forms. Each Lender that is a “foreign corporation, partnership or trust” within the meaning of the Internal Revenue Code of 1986 (as amended) (a “Foreign Lender”) shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Internal Revenue Code of 1986 (as amended) (or after accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Person and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Person by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Person by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Person is entitled to an exemption from, or reduction of, U.S. withholding tax. Thereafter and from time to time, each such Person shall (a) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Person by the Borrower pursuant to this Agreement, (b) promptly notify the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (c) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Person. If such Person fails to deliver the above forms or other

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documentation, then the Administrative Agent may withhold from any interest payment to such Person an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Internal Revenue Code of 1986 (as amended), without reduction. If any Governmental Authority asserts that the Administrative Agent did not properly withhold any tax or other amount from payments made in respect of such Person, such Person shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section 4.6, and costs and expenses (including all attorney fees and expenses) of the Administrative Agent. The obligation of the Lenders under this Section 4.6 shall survive the payment of all Obligations and the resignation or replacement of the Administrative Agent.

(f) Selection of Lending Office. If Borrower is or is likely to be required to pay additional amounts to or for the account of any Lender pursuant to this Section 4.6, then such Lender will agree to use reasonable efforts to change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the good faith judgment of such Lender, is not otherwise disadvantageous to such Lender.

(g) Evidence of Payment. Within thirty (30) days after the date of any payment of Taxes or Other Taxes, Borrower shall furnish to Administrative Agent the original or a certified copy of a receipt evidencing such payment.

4.7 Requests for Compensation.

(a) Certificate. If the Administrative Agent or any Lender claim compensation under this Section 4, it shall furnish to Borrower and Administrative Agent, if applicable, a certificate setting forth the additional amount or amounts to be paid to it hereunder and such certificate shall be conclusive in the absence of manifest error. In determining such amount or amounts, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods.

(b) Lender Removal. If any Lender makes a claim for compensation under Section 4.1 or 4.6, the Borrower may remove or replace such Lender in accordance with Section 12.11(c).

4.8 Survival. Without prejudice to the survival of any other agreement of Borrower hereunder, all of the Borrower’s obligations under this Section 4 shall survive termination of the Commitments and payment in full of all the other Obligations.

SECTION 5. SECURITY

5.1 Assignment of Forward Commitment and Collateral Rights. Borrower shall assign to Administrative Agent, for the benefit of Lenders, all of its right, title and interest under the Forward Commitment Agreement and the collateral therefor granted to Borrower under the MAHGT Security Agreement and MAHGT Account Assignment, including all rights related to the Subscription Amounts, Remaining Subscription Amounts, Subscription Calls, Subscription Call Notices, Subscription Contributions, and the MAHGT Subscription Account, pursuant to a security agreement (the “Borrower

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Security Agreement”), in substantially the form attached hereto as Exhibit F (the collateral set forth in this Section 5.1 being herein collectively referred to as the “Collateral”).

SECTION 6. CONDITIONS PRECEDENT TO LENDING

6.1 Obligation of Lenders. The obligation of Lenders to honor the terms and conditions herein is subject to Administrative Agent’s receipt of the following:

(a) Credit Agreement. This Credit Agreement, duly executed and delivered by Borrower;

(b) Notes. A Note for each Lender, duly executed and delivered by Borrower;

(c) Forward Commitment Agreement. The Forward Commitment Agreement, duly executed and delivered by MAHGT and Borrower;

(d) Acknowledgement and Consent. The Acknowledgement and Consent duly executed and delivered by MAHGT.

(e) MAHGT Security Agreement. The MAHGT Security Agreement, duly executed and delivered by MAHGT, and collaterally assigned by Borrower in favor of Administrative Agent for the benefit of Lenders;

(f) MAHGT Subscription Account Assignment. The MAHGT Subscription Account Assignment, duly executed and delivered by MAHGT, and collaterally assigned by Borrower in favor of Administrative Agent for the benefit of Lenders;

(g) Borrower Security Agreement. The Borrower Security Agreement duly executed and delivered by Borrower;

(h) Financing Statements.

(i) searches of Code filings (or their equivalent) in each jurisdiction where any Collateral is located or where a filing has been or would need to be made in order to perfect the Lenders’ security interest in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist, or, if necessary, copies of proper financing statements, if any, filed on or before the date hereof necessary to terminate all security interests and other rights of any Person in any Collateral previously granted; and

(ii) duly executed Code financing statements, and any amendments thereto, for each appropriate jurisdiction as is necessary, in the Administrative Agent’s sole discretion, to perfect the Lenders’ security interest in the Collateral;

(i) Subscription Agreements, Investor Confirmations and Evidence of Authority. From each of the Detroit Pension Fund Investors (i) a duly executed Investor Confirmation, (ii) its Subscription Agreement and 2003 Side Letter, and (iii) a favorable opinion

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of its counsel as to the formation and good standing of such Detroit Pension Fund Investor and its authorization to issue, execute and deliver its Subscription Agreement and Investor Confirmation.

(j) Proceedings of the Borrower. Administrative Agent shall have received a copy of the resolutions, in form and substance satisfactory to Administrative Agent, authorizing and causing: (i) the execution, delivery and performance of this Credit Agreement, the Forward Commitment Agreement, and the other Loan Documents to which the Borrower is a party; (ii) the Borrowings contemplated hereunder; (iii) the transactions contemplated under the Loan Documents; and (iv) the granting of the Liens created pursuant to the Borrower Security Agreement, certified by a Responsible Officer of Borrower as of the Closing Date, which certificate shall be in form and substance satisfactory to Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded;

(k) Officer’s and Incumbency Certificates. A signed certificate from a Responsible Officer of Borrower who shall certify: (i) the names of the Persons authorized, on the date hereof, to sign each of the Loan Documents and the other documents or certificates to be delivered pursuant to the Loan Documents on behalf of Borrower, together with the true signatures of each such Person; and (ii) that each of the representations and warranties made by Borrower and set forth in the Loan Documents to which it is a party as true and correct on and as of the Closing Date. Administrative Agent may conclusively rely on such certificate until it shall receive a further certificate canceling or amending the prior certificate and submitting the signatures of the Persons named in such further certificate;

(l) Proceedings of MAHGT. Administrative Agent shall have received a copy of the resolutions, in form and substance satisfactory to Administrative Agent, authorizing and causing: (i) the execution, delivery and performance of the Forward Commitment Agreement, the MAHGT Security Agreement and the MAHGT Account Assignment; (ii) the transactions contemplated thereunder; and (iii) the granting of the Liens created pursuant to the MAHGT Security Agreement and the MAHGT Account Assignment, certified by a Responsible Officer of MAHGT as of the Closing Date, which certificate shall be in form and substance satisfactory to Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded;

(m) Officer’s and Incumbency Certificates. A signed certificate from a Responsible Officer of MAHGT who shall certify: (i) the names of the Persons authorized, on the date hereof, to sign each of the Forward Commitment Agreement, MAHGT Security Agreement and MAHGT Account Assignment and the other documents or certificates to be delivered on behalf of MAHGT, together with the true signatures of each such Person; and (ii) that each of the representations and warranties made by MAHGT and set forth in the Forward Commitment Agreement, MAHGT Security Agreement and MAHGT Account Assignment to which it is a party as true and correct on and as of the Closing Date. Administrative Agent may conclusively rely on such certificate until it shall receive a further certificate canceling or amending the prior certificate and submitting the signatures of the Persons named in such further certificate;

(n) Borrower Constituent Documents. True and complete copies of the Operating Memorandum and the LLC Documents of Borrower as in effect on the date hereof;

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(o) MAHGT Trust Documents. True and complete copies of the Trust Documents of MAHGT as in effect on the date hereof;

(p) Opinion of Counsel of Borrower. A favorable opinion of Honigman Miller Schwartz and Cohn, LLP, counsel to MAHGT, covering such matters relating to the transactions contemplated hereby as reasonably requested by Administrative Agent, and substantially in a form acceptable to Administrative Agent. Borrower hereby requests each such counsel to deliver such opinion;

(q) Opinion of Counsel of MAHGT. A favorable opinion of Honigman Miller Schwartz and Cohn, LLP, counsel to Borrower, covering such matters relating to the transactions contemplated hereby as reasonably requested by Administrative Agent, and substantially in a form acceptable to Administrative Agent;

(r) Appointment of Process Agent. Confirmation from the Process Agent that it has accepted its appointment as process agent under the Forward Commitment Agreement and the Acknowledgement and Consent.

(s) Fee Letter and Fees; Costs and Expenses. Payment of all fees and other amounts due and payable on or prior to the date hereof, including pursuant to the Fee Letter, and, to the extent invoiced, reimbursement or payment of all reasonable expenses required to be reimbursed or paid by Borrower hereunder, including the reasonable fees and disbursements invoiced through the date hereof of Administrative Agent’s special counsel, Haynes and Boone, LLP; and

(t) Additional Information. Such other information and documents as may reasonably be required by Administrative Agent and its counsel.

6.2 All Loans and Letters of Credit. The obligation of Lenders to advance each Borrowing or to cause the issuance of Letters of Credit hereunder is subject to the conditions that:

(a) Representations and Warranties. All of the representations and warranties contained in Section 7 hereof, unless otherwise disclosed to Administrative Agent in writing prior to the requested Borrowing, shall be true and correct in all material respects on and as of the date of the advance of such Borrowing or issuance of such Letter of Credit, with the same force and effect as if made on and as of such; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct as of such earlier date in all material respects, and for purposes of this Section 6.2, the representations and warranties contained in Section 7.6 hereof shall be deemed to refer to the most recent financial statements furnished pursuant to Section 8.1 hereof.

(b) No Default. No event shall have occurred and be continuing, or would result from the Borrowing or the issuance of the Letter of Credit, which constitutes an Event of Default or a Potential Default; and

(c) Request for Borrowing or Request for Letter of Credit. Administrative Agent shall have received a Request for Borrowing or Request for Letter of Credit, as applicable.

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(d) Application for Letter of Credit. In the case of a Letter of Credit, the Letter of Credit Issuer shall have received an Application and Agreement for Letter of Credit executed by Borrower.

SECTION 7. REPRESENTATIONS AND WARRANTIES.

To induce Lenders to make the Loans and cause the issuance of Letters of Credit hereunder, Borrower represents and warrants to Lenders that:

7.1 Organization and Good Standing of Borrower. Borrower is a limited liability company duly organized and existing under the laws of the State of Maryland, has the requisite power and authority to own its properties and assets and to carry on its business as now conducted, and is qualified to do business in each jurisdiction where the nature of the business conducted or the property owned or leased requires such qualification or where the failure to be so qualified to do business would have a Material Adverse Effect.

7.2 Authorization and Power. Borrower has the requisite power and authority to execute, deliver, and perform its obligations under this Credit Agreement, the Notes, and the other Loan Documents to be executed by it; Borrower is duly authorized to, and has taken all action necessary to authorize it to execute, deliver, and perform its obligations under this Credit Agreement, the Notes, and such other Loan Documents and are and will continue to be duly authorized to perform their respective obligations under this Credit Agreement, the Notes, and such other Loan Documents.

7.3 No Conflicts or Consents. None of the execution and delivery of this Credit Agreement, the Notes, or the other Loan Documents, the consummation of any of the transactions herein or therein contemplated, or the compliance with the terms and provisions hereof or with the terms and provisions thereof, will contravene or conflict, in any manner that could cause a Material Adverse Effect, with any provision of law, statute, or regulation to which Borrower is subject or any judgment, license, order, or permit applicable to Borrower or any indenture, mortgage, deed of trust, or other agreement or instrument to which Borrower is a party or by which Borrower may be bound, or to which Borrower or may be subject. Except to the extent obtained by Borrower, no consent, approval, authorization, or order of any court or Governmental Authority or third party is required in connection with the execution and delivery by Borrower of the Loan Documents or to consummate the transactions contemplated hereby or thereby.

7.4 Enforceable Obligations. This Credit Agreement, the Notes and the other Loan Documents to which Borrower is a party are the legal and binding obligations of Borrower enforceable in accordance with their respective terms, subject to Debtor Relief Laws and equitable principles.

7.5 Priority of Liens. The Collateral Documents create, as security for the Obligation, valid and enforceable, exclusive, first priority security interests in and Liens under the Code on all of the Collateral in which Borrower has any right, title or interest, in favor of Administrative Agent for the benefit of Lenders, subject to no other Liens, except as enforceability may be limited by Debtor Relief Laws and equitable principles. Such security interests in and Liens on the Collateral in which Borrower has any right, title, or interest shall be superior to and prior to the rights of all third parties in such Collateral, and, other than in connection with any future change in Borrower’s location (as determined under the Code), name, identity or structure, no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than

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the filing of continuation statements in accordance with applicable law. Each Lien referred to in this Section 7.5 is and shall be the sole and exclusive Lien on the Collateral.

7.6 Financial Condition. Borrower has delivered to Administrative Agent the most-recently available copies of the financial statements and reports described in Section 8.1 hereof, and copies of its balance sheet as of September 30, 2003. Such statements fairly present, in all material respects, the financial condition of Borrower as of the applicable date of delivery, and have been prepared in accordance with GAAP, except as provided therein. Borrower is in compliance with all existing financial obligations.

7.7 Full Disclosure. Neither this Credit Agreement nor any other document, certificate or statement furnished to Lenders by or on behalf of Borrower in connection with the transactions contemplated hereby contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statement contained therein or herein, taken as a whole, not misleading that could result in a Material Adverse Effect.

7.8 No Default. No event has occurred and is continuing which constitutes an Event of Default or a Potential Default.

7.9 No Litigation. There are no actions, suits or legal, equitable, arbitration or administrative proceedings pending, or to the knowledge of Borrower threatened in writing, against Borrower or the Included Investors that would, if adversely determined, have a Material Adverse Effect.

7.10 Material Adverse Effect. There are no changes in the business, assets, operations or condition (financial or otherwise) of Borrower, or any Included Investor, or in the facts and information regarding such entities as represented since the date of the most recent financial statements of Borrower or such Included Investor delivered to Lenders which could reasonably be expected to result in a Material Adverse Effect, or in the Ratings of any Included Investor.

7.11 Taxes. To the extent that failure to do so would have a Material Adverse Effect, all tax returns required to be filed by Borrower in any jurisdiction have been filed and all taxes (including mortgage recording taxes), assessments, fees, and other governmental charges upon Borrower or upon any of its properties, income or franchises have been paid prior to the time that such taxes could give rise to a lien thereon. There is no proposed tax assessment against Borrower or any basis for such assessment which is material and is not being contested in good faith.

7.12 Tax Shelter Regulations. Borrower does not intend to treat the Loans and/or Letters of Credit and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In the event Borrower determines to take any action inconsistent with such intention, it will promptly notify Administrative Agent thereof. If Borrower so notifies Administrative Agent, Borrower acknowledges that one or more of the Lenders may treat its Loans and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation.

7.13 Principal Office. The principal office, chief executive office, and principal place of business of Borrower is at 33 North Garden Avenue, Suite 1200, Clearwater, Florida 33755.

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7.14 ERISA. Borrower has not established and does not maintain any Plan.

7.15 Compliance with Law. Borrower is, to the best of its knowledge, in compliance in all material respects with all material laws, rules, regulations, orders, and decrees which are applicable to it or its properties, including, without limitation, ERISA and Environmental Laws.

7.16 Fiscal Year. The fiscal year of Borrower is the calendar year.

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

SECTION 8. AFFIRMATIVE COVENANTS

So long as Lenders have any commitment to lend hereunder or to cause the issuance of any Letter of Credit hereunder, and until payment in full of the Notes and the performance in full of the Obligation under this Credit Agreement and the other Loan Documents, Borrower agrees that, unless Administrative Agent shall otherwise consent in writing based upon the approval of the Required Lenders (unless the approval of Administrative Agent alone or a different number of Lenders is expressly permitted below):

8.1 Financial Statements, Reports and Notices. Borrower shall deliver to Administrative Agent sufficient copies for each Lender of the following:

(a) Limited Liability Company Financial Reports and Other Information.

(i) Annual Reports. As soon as available, but no later than one hundred twenty (120) days after the end of the Borrower’s fiscal year, a report setting forth, as of the end of such fiscal year, the Borrower’s balance sheet and income statement; together with the unqualified opinion of a firm of nationally-recognized independent certified public accountants, based on an audit using GAAP, that such financial statements were prepared in accordance with GAAP and present fairly the financial condition and results of operations of Borrower; and

(ii) Quarterly Reports. As soon as available, but no later than forty-five (45) days after the end of each of the first three fiscal quarters of Borrower, commencing with the quarter ending on September 30, 2003 (which financial information shall be delivered on the Closing Date), an unaudited report setting forth as of the end of such fiscal quarter, the Borrower’s balance sheet and income statement, certified by a Responsible Officer of Borrower that such financial statements are true and correct, were prepared in accordance with GAAP and present fairly the financial condition and results of operations of Borrower.

(b) Quarterly Compliance Certificate. No later than forty-five (45) days after the end of each of the first three fiscal quarters of Borrower, and no later than one hundred twenty (120) days after the end of Borrower’s fiscal year, a compliance certificate (the “Compliance Certificate”), certified by a Responsible Officer of Borrower to be true and correct stating whether any Event of Default or any Potential Default exists.

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(c) Reportable Transaction Status. Promptly after Borrower has notified Administrative Agent of any intention by Borrower to treat the Loans and/or Letters of Credit and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form.

(d) Reports and Notices. Simultaneously with delivery thereof, copies of all other financial statements, reports, notices, and other matters at any time or from time to time prepared by Borrower and furnished to MAHGT.

(e) Other Information. Such other information concerning the business, properties, or financial condition of Borrower as Administrative Agent shall reasonably request.

8.2 Payment of Taxes. Borrower will pay and discharge all taxes, assessments, and governmental charges or levies imposed upon it, or them, or upon its, or their, income or profits, or upon any property belonging to it, or them, before delinquent, if such failure would have a Material Adverse Effect; provided, however, that Borrower shall not be required to pay any such tax, assessment, charge, or levy if and so long as the amount, applicability, or validity thereof shall currently be contested in good faith by appropriate proceedings and appropriate reserves therefor have been established in accordance with GAAP.

8.3 Maintenance of Existence and Rights. Borrower will preserve and maintain its existence. Borrower shall further preserve and maintain all of its rights, privileges, and franchises necessary in the normal conduct of its business and in accordance with all valid regulations and orders of any Governmental Authority the failure of which would have a Material Adverse Effect.

8.4 Notice of Default. Borrower will furnish to Administrative Agent, promptly upon becoming aware of the existence of any condition or event which constitutes an Event of Default or a Potential Default, a written notice specifying the nature and period of existence thereof and the action which Borrower is taking or proposes to take with respect thereto. Borrower will promptly notify Administrative Agent in writing upon becoming aware of any breach by MAHGT of the Forward Commitment Agreement.

8.5 Other Notices. Borrower will, promptly upon receipt of knowledge thereof, notify Administrative Agent of any of the following events that could have a Material Adverse Effect: (a) any change in the financial condition or business of Borrower; (b) any default under any material agreement, contract, or other instrument to which Borrower is a party or by which any of its properties are bound, or any acceleration of the maturity of any material indebtedness owing by Borrower; (c) any uninsured claim against or affecting Borrower that may have a Material Adverse Effect; (d) the commencement of, and any material determination in, any litigation with any third party or any proceeding before any Governmental Authority affecting Borrower; (e) any Environmental Complaint or any claim, demand, action, event, condition, report or investigation indicating any potential or actual liability arising in connection with: (i) the non-compliance with or violation of the requirements of any Environmental Law or any permit issued under any Environmental Law which individually or in the aggregate might have a Material Adverse Effect; or (ii) the Release or threatened Release of any Hazardous Material into the environment which individually or in the aggregate might have a Material Adverse Effect; (f) the existence of any Environmental Lien on any properties or assets of Borrower; (g) any material remedial action taken by Borrower in response to any order, consent decree or judgment of any Governmental

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Authority or any Environmental Liability; or (h) the listing of any of Borrower’s properties or assets on CERCLIS to the extent that Borrower obtains knowledge of such listing.

8.6 Operations and Properties. Borrower will act prudently and in accordance with customary industry standards in managing or operating its assets, properties, business, and investments so as not to incur a Material Adverse Effect; Borrower will keep in good working order and condition, ordinary wear and tear excepted, all of its assets and properties which are necessary to the conduct of their business so as not to incur a Material Adverse Effect.

8.7 Books and Records; Access. Borrower will give any representative of Administrative Agent or Lenders, or any of them, access during all business hours to, and permit representative to examine, copy, or make excerpts from, any and all books, records, and documents in the possession of Borrower and relating to its affairs, and to inspect any of the properties of Borrower, provided, however, that, so long as no Event of Default exists, any such inspection shall be conducted by Administrative Agent on behalf of Lenders, after prior written notice to Borrower.

8.8 Compliance with Law. Borrower will comply in all material respects with all material laws, rules, regulations, and all orders of any Governmental Authority, including without limitation, ERISA and Environmental Laws.

8.9 Insurance. Borrower will maintain liability insurance, and insurance on its present and future business and properties against such casualties, risks, and contingencies, and in such types and amounts, as are consistent with customary practices and standards for entities in similar circumstances, the failure of which to maintain could have a Material Adverse Effect.

8.10 Authorizations and Approvals. Borrower will promptly obtain, from time to time at its own expense, all such governmental licenses, authorizations, consents, permits and approvals as may be required to enable Borrower to comply with their respective obligations hereunder, under the other Loan Documents and under their respective Constituent Documents.

8.11 Maintenance of Liens. Borrower shall perform all such acts and execute all such documents as Administrative Agent may reasonably request in order to enable Lenders to report, file, and record every instrument that Administrative Agent may deem necessary in order to perfect and maintain Lenders’ liens and security interests in the Collateral and otherwise to preserve and protect the rights of Lenders as secured parties. Borrower shall not grant or create any other Liens on any Collateral, whether junior, equal, or superior in priority to the Liens created by the Loan Documents.

8.12 Forward Commitment Agreement. Upon the occurrence of an Event of Default, promptly, but in no event later than two (2) days following such occurrence, Borrower shall issue a Borrower Funding Request under the Forward Commitment Agreement requesting the funding of the Forward Commitment.

8.13 Further Assurances. Borrower will make, execute or endorse, and acknowledge and deliver or file or cause the same to be done, all such vouchers, invoices, notices, certifications, and additional agreements, undertakings, conveyances, transfers, assignments, financing statements, or other assurances, and take any and all such other action, as Administrative Agent may, from time to time, deem reasonably necessary or proper in connection with the Credit Agreement or any of the other Loan

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Documents, the obligations of Borrower hereunder or thereunder, or for better assuring and confirming unto Lenders all or any part of the security for any of such obligations.

SECTION 9. NEGATIVE COVENANTS

So long as Lenders have any commitment to lend hereunder or to cause the issuance of any Letter of Credit hereunder, and until payment and performance in full of the Obligation under this Credit Agreement and the other Loan Documents, Borrower agrees that, without the written consent of Administrative Agent, based upon the approval of Required Lenders (unless the approval of Administrative Agent alone or a different number of Lenders is expressly permitted below):

9.1 Mergers. Borrower will not merge or consolidate with or into any Person, unless Borrower is the surviving entity.

9.2 Negative Pledge. Without the approval of all Lenders, Borrower will not create or suffer to exist any mortgage, pledge, security interest, conditional sale or other title retention agreement, charge, encumbrance, or other Lien (whether such interest is based on common law, statute, other law or contract) upon the Collateral, except for the security interests granted to the Administrative Agent for the benefit of the Lenders under the Collateral Documents.

9.3 Fiscal Year and Accounting Method. Without the consent of Administrative Agent alone, Borrower will not change its fiscal year or method of accounting.

9.4 Modifications of Constituent Documents or Forward Commitment Agreement. Except for amendments or modifications to the Commitment Fee Letter and the MAHGT Promissory Note, which can be made without the consent of Administrative Agent or Lenders, Borrower shall not: (a) (i) alter, amend, modify, terminate, or change any provision of the Forward Commitment Agreement, or (ii) approve, consent to, or permit any deviation from, modification of or amendment to the terms and conditions of the Forward Commitment by MAHGT, without the prior written consent of Administrative Agent and all Lenders; or (b) alter, amend, modify, terminate, or change any provision of its Operating Memorandum or LLC Documents. With respect to any proposed amendment, modification or change to the Operating Memorandum or LLC Documents, Borrower shall notify Administrative Agent of such proposal. Administrative Agent shall determine, in its sole discretion (that is, the determination of the other Lenders shall not be required) on Administrative Agent’s good faith belief, whether such proposed amendment, modification or change to such document is a material amendment, and shall use reasonable efforts to notify Borrower of its determination within ten (10) Business Days of the date on which it is deemed to have received such notification pursuant to Section 12.6 hereof. If Administrative Agent determines that the proposed amendment is a material amendment, the approval of the Required Lenders and Administrative Agent will be required, and Administrative Agent shall promptly notify the Lenders of such request for such approval, distributing, as appropriate, the proposed amendment and any other relevant information provided by Borrower, and Lenders shall have ten (10) Business Days from the date of such notice from Administrative Agent to deliver their approval or denial thereof. If Administrative Agent determines that the proposed amendment is not a material amendment, Borrower may make such amendment with the consent of Administrative Agent, acting alone.

9.5 ERISA Compliance. Borrower shall not establish or maintain any Plan.

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9.6 Dissolution. Without the consent of all Lenders, Borrower will not take any action to terminate or dissolve itself.

9.7 Limitations on Dividends and Distributions.

(a) Borrower shall not declare or pay any dividends or distributions except as permitted under its Constituent Documents.

(b) Borrower shall not declare or pay any dividends or distributions: (i) after the issuance of a notice of an Event of Default by Administrative Agent, (ii) during the occurrence and continuance of an Event of Default; or (iii) after a Potential Default related to Section 10.1(a), 10.1(h) or 10.1(i) has occurred; in each case until such Potential Default or Event of Default is cured by Borrower.

SECTION 10. EVENTS OF DEFAULT

10.1 Events of Default. An “Event of Default” shall exist if any one or more of the following events (herein collectively called “Events of Default”) shall occur and be continuing:

(a) (i) Borrower shall fail to pay when due any principal of the Obligation; or (ii) Borrower shall fail to pay when due any interest on the Obligation or any fee, expense, or other payment required hereunder and any of the Loan Documents, and such failure under this clause (ii) shall continue for five (5) days following the date such payment was due;

(b) any representation or warranty made by Borrower under this Credit Agreement, or by MAHGT under the Forward Commitment Agreement, or under any of the other Loan Documents executed by either of them, or in any certificate or statement furnished or made to Lenders or any of them by Borrower or MAHGT, shall prove to be untrue or inaccurate in any material respect as of the date on which such representation or warranty is made;

(c) default shall occur in the performance of any of the covenants or agreements contained herein (other than the covenants contained in Sections 2.1(d), 8.11, 8.12 or Sections 9.1 through 9.7), or of the covenants or agreements of Borrower contained in any other Loan Documents executed by such Person, and such default shall continue uncured to the satisfaction of Administrative Agent for a period of thirty (30) days after the earlier of: (i) written notice thereof has been given by Administrative Agent to Borrower; or (ii) Administrative Agent has been notified or should have been notified of such default pursuant to Section 8.4 or Section 8.5 hereof (provided that such thirty (30) day cure period shall not apply respecting covenants relating to notices to be given by Borrower);

(d) default shall occur in the performance of any of the covenants or agreements of Borrower contained in Sections 2.1(d), 8.11, 8.12 or Sections 9.1 through 9.7 hereof;

(e) there shall occur, in the reasonable judgment of Administrative Agent, a Material Adverse Effect;

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(f) any of the Loan Documents executed by Borrower or MAHGT shall cease, in whole or in part, to be legal, valid, binding agreements enforceable against such Person in accordance with the terms thereof or shall in any way be terminated or become or be declared ineffective or inoperative or shall in any way whatsoever cease to give or provide the respective liens, security interest, rights, titles, interest, remedies, powers, or privileges intended to be created thereby;

(g) default shall occur in the payment of any Indebtedness of Borrower or MAHGT (other than the Obligation), in an aggregate amount of $10,000,000 or more, and such default shall continue for more than the applicable period of grace, if any; or any such indebtedness shall become due before its stated maturity by acceleration of the maturity thereof or shall become due by its terms and shall not be promptly paid or extended;

(h) Borrower or MAHGT shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor, or liquidator of itself or of all or a substantial part of its assets; (ii) file a voluntary petition in bankruptcy or admit in writing that it is unable to pay its debts as they become due; (iii) make a general assignment for the benefit of creditors; (iv) file a petition or answer seeking reorganization of an arrangement with creditors or to take advantage of any Debtor Relief Laws; (v) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding; or (vi) take partnership or corporate action for the purpose of effecting any of the foregoing;

(i) an order, order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition seeking reorganization of Borrower or MAHGT, or appointing a receiver, custodian, trustee, intervenor, or liquidator of Borrower, or of all or substantially all of its assets, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days;

(j) any final judgment(s) for the payment of money in excess of the sum of $10,000,000 in the aggregate shall be rendered against Borrower or MAHGT and such judgment or judgments could have a Material Adverse Effect, unless covered by insurance and unless being appealed and Borrower or MAHGT, as the case may be, has posted a bond or cash collateral;

(k) a default shall occur under the Construction Loan Facility, and such default shall continue for more than the applicable period of grace, if any;

(l) a Forward Commitment Default shall occur and be continuing; or

(m) Investors having Subscription Amounts aggregating fifteen percent (15%) or greater of the aggregate Subscription Amounts of all Investors shall default in their obligation to fund any Subscription Call as required.

10.2 Remedies Upon Event of Default. If an Event of Default shall have occurred and be continuing, then Administrative Agent may: (a) suspend the Commitments of Lenders until such Event of Default is cured; (b) terminate the Commitment of Lenders hereunder; (c) declare the principal of, and all interest then accrued on, the Obligation to be forthwith due and payable (including the liability to fund the

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Letter of Credit Liability pursuant to Section 2.8(e) hereof), whereupon the same shall forthwith become due and payable without presentment, demand, protest, or notice of intention to accelerate, all of which Borrower hereby expressly waives, anything contained herein or in any other Loan Document to the contrary notwithstanding; (d) exercise any right, privilege, or power set forth in the Forward Commitment Agreement, including but not limited to the issuance of an Administrative Agent Funding Request pursuant thereto in the event that Borrower has failed to issue a Borrower Funding Request pursuant to Section 8.12 hereof; or (e) without notice of default or demand, pursue and enforce any of Administrative Agent’s or Lenders’ rights and remedies under the Loan Documents, or otherwise provided under or pursuant to any applicable law or agreement; provided, however, that if any Event of Default specified in Sections 10.1(h) or 10.1(i) hereof shall occur, the principal of, and all interest on, the Obligation shall thereupon become due and payable concurrently therewith, without any further action by Administrative Agent or Lenders, or any of them, and without presentment, demand, protest, notice of default, notice of acceleration, or of intention to accelerate or other notice of any kind, all of which Borrower hereby expressly waives.

10.3 Performance by Administrative Agent. Should Borrower fail to perform any covenant, duty, or agreement contained herein or in any of the Loan Documents, and such failure continues beyond any applicable cure period, Administrative Agent may, but shall not be obligated to, perform or attempt to perform such covenant, duty, or agreement on behalf of such Person. In such event, Borrower shall, at the request of Administrative Agent promptly pay any amount expended by Administrative Agent in such performance or attempted performance to Administrative Agent at its principal office in Dallas, Texas, together with interest thereon at the Default Rate from the date of such expenditure until paid. Notwithstanding the foregoing, it is expressly understood that neither Administrative Agent nor Lenders assume any liability or responsibility for the performance of any duties of Borrower, or any related Person hereunder or under any of the Loan Documents or other control over the management and affairs of Borrower, or any related Person, nor by any such action shall Administrative Agent or Lenders be deemed to create a partnership arrangement with Borrower, or any related Person.

SECTION 11. AGENT

11.1 Appointment.

(a) Authority of Administrative Agent. Each Lender hereby designates and appoints Bank of America, N.A. as Administrative Agent of such Lender to act as specified herein and the other Loan Documents, and each such Lender hereby authorizes the Administrative Agent, as the agent for such Lender, to take such action on its behalf under the provisions of this Credit Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Loan Documents, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any of the other Loan Documents, or shall otherwise exist against the Administrative Agent. The provisions of this Section 11 are solely for the benefit of the Administrative Agent and the Lenders and none of Borrower, or any Affiliate of the foregoing (a “Borrower Party”) shall have any rights as a third-party beneficiary of the provisions hereof

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(except for the provisions that explicitly relate to Borrower in Section 11.10). In performing its functions and duties under this Credit Agreement and the other Loan Documents, Administrative Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for any Borrower Party.

(b) Release of Collateral. The Lenders irrevocably authorize Administrative Agent, at the Administrative Agent’s option and in its discretion, to release any security interest in or Lien on any Collateral granted to or held by the Administrative Agent: (i) upon termination of this Credit Agreement and the other Loan Documents, termination of the Commitments and all Letters of Credit and payment in full of all of the Obligation, including all fees and indemnified costs and expenses that are then due and payable pursuant to the terms of the Loan Documents; and (ii) if approved by the Lenders pursuant to the terms of Section 12.1. Upon the request of Administrative Agent, the Lenders will confirm in writing Administrative Agent’s authority to release particular types or items of Collateral pursuant to this subsection (b).

11.2 Delegation of Duties. Administrative Agent may execute any of its duties hereunder or under the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of legal counsel, accountants, and other professionals selected by Administrative Agent concerning all matters pertaining to such duties. Administrative Agent shall not be responsible to any Lender for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care, nor shall it be liable for any action taken or suffered in good faith by it in accordance with the advice of such Persons.

11.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be liable to any Lender for any action lawfully taken or omitted to be taken by it or such Person under or in connection herewith or in connection with any of the other Loan Documents (except for its or such Person’s own gross negligence or willful misconduct) or responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any of the Borrower Parties contained herein or in any of the other Loan Documents or in any certificate, report, document, financial statement or other written or oral statement referred to or provided for in, or received by Administrative Agent under or in connection herewith or in connection with the other Loan Documents, or enforceability or sufficiency therefor of any of the other Loan Documents, or for any failure of a Borrower Party to perform its obligations hereunder or thereunder. Administrative Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Credit Agreement, or any of the other Loan Documents or for any representations, warranties, recitals or statements made herein or therein or made by any Borrower Party in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by Administrative Agent to the Lenders or by or on behalf of the Borrower Parties to the Administrative Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans, or the use of the Letters of Credit, or of the existence or possible existence of any Potential Default or Event of Default, or to inspect the properties, books or records of the Borrower Parties. Administrative Agent is not a trustee for the Lenders and owes no fiduciary duty to the Lenders. Each Lender recognizes and agrees that Administrative Agent shall not be required to determine independently whether the conditions described in Sections 6.2(a) or 6.2(b) have

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been satisfied and, when Administrative Agent disburses funds to Borrower, or causes Letters of Credit to be issued, it may rely fully upon statements contained in the relevant requests by Borrower.

11.4 Reliance on Communications. Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to any of the Borrower Parties, independent accountants and other experts selected by Administrative Agent with reasonable care). Administrative Agent may deem and treat each Lender as the owner of its interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent in accordance with Section 12.11(c). Administrative Agent shall be fully justified in failing or refusing to take any action under this Credit Agreement or under any of the other Loan Documents unless it shall first receive such advice or concurrence of the Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Loan Documents in accordance with a request of the Required Lenders (or to the extent specifically required, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns).

11.5 Notice of Default. Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential Default or Event of Default hereunder unless Administrative Agent has received notice from a Lender or a Borrower Party referring to the Loan Document, describing such Potential Default or Event of Default and stating that such notice is a “notice of default.” In the event that Administrative Agent receives such a notice, Administrative Agent shall give prompt notice thereof to the Lenders. Administrative Agent shall take such action with respect to such Potential Default or Event of Default as shall be reasonably directed by the Required Lenders and as is permitted by the Loan Documents.

11.6 Non-Reliance on Administrative Agent and Lenders. Each Lender expressly acknowledges that neither Administrative Agent, nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Administrative Agent or any affiliate thereof hereinafter taken, including any review of the affairs of any Borrower Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower Parties and made its own decision to make its Loans hereunder and enter into this Credit Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent 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 analysis, appraisals and decisions in taking or not taking action under this Credit Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower Parties. Except for notices, reports and other documents expressly

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required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of the Borrower Parties which may come into the possession of the Administrative Agent or any of their officers, directors, employees, agents, attorneys-in-fact or affiliates.

11.7 Indemnification. The Lenders agree to indemnify Administrative Agent in its capacity as such (to the extent not reimbursed by Borrower and without limiting or increasing the obligation of Borrower to do so), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following payment in full of the Obligation) be imposed on, incurred by or asserted against Administrative Agent in its capacity as such in any way relating to or arising out of this Credit Agreement or the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of Administrative Agent. If any indemnity furnished to Administrative Agent for any purpose shall, in the opinion of Administrative Agent, be insufficient or become impaired, Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section 11.7 shall survive the payment of the Obligation.

11.8 Administrative Agent in Its Individual Capacity. With respect to the Loans made and Letters of Credit issued and all obligations owing to it, Administrative Agent acting in its individual capacity shall have the same rights and powers under this Credit Agreement as any Lender and may exercise the same as though it were not an agent, and the terms “Lender” and “Lenders” shall include Administrative Agent in its individual capacity. Administrative Agent acting in its individual capacity and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with Borrower or any other Borrower Party as though Administrative Agent were not an agent hereunder and without any duty to account therefor to the other Lenders.

11.9 Successor Agent. Administrative Agent may, at any time, resign upon thirty (30) days written notice to the Lenders and Borrower. Upon any such resignation of the Administrative Agent, the Required Lenders shall have the right to appoint a successor Administrative Agent (subject, except when an Event of Default exists, to the consent of the Borrower, not to be unreasonably withheld). If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within sixty (60) days after the notice of resignation, then the retiring Administrative Agent shall select a successor Administrative Agent (subject, except when an Event of Default exists, to the consent of Borrower, not to be unreasonably withheld); provided such successor is an Eligible Assignee (or if no Eligible Assignee shall have been so appointed by the retiring Administrative Agent and shall have accepted such appointment, then the Lenders shall perform all obligations of the retiring Administrative Agent hereunder until such time, if any, as a successor Administrative Agent shall have been appointed and shall have accepted such appointment as provided for above). Upon the acceptance of any appointment as an Administrative Agent hereunder by a successor, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and shall assume the duties

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and obligations of such retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations as Administrative Agent under this Credit Agreement and the other Loan Documents and the provisions of this Section 11.9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Credit Agreement.

11.10 Reliance by Borrower. Borrower shall be entitled to rely upon, and to act or refrain from acting on the basis of, any notice, statement, certificate, waiver or other document or instrument delivered by Administrative Agent to Borrower or such other Person so long as Administrative Agent is purporting to act in its respective capacity as Administrative Agent pursuant to this Credit Agreement, and Borrower shall not be responsible or liable to any Lender (or to any Participant or to any Assignee), or as a result of any action or failure to act (including actions or omissions which would otherwise constitute defaults hereunder) which is based upon such reliance upon Administrative Agent. Borrower shall be entitled to treat Administrative Agent as the properly authorized Administrative Agent pursuant to this Credit Agreement until Borrower shall have received notice of resignation, and such Persons shall not be obligated to recognize any successor Administrative Agent until Borrower shall have received written notification satisfactory to it of the appointment of such successor.

SECTION 12. MISCELLANEOUS

12.1 Amendments. Neither this Credit Agreement nor any other Loan Document, nor any of the terms hereof or thereof, may be amended, waived, discharged or terminated, unless such amendment, waiver, discharge, or termination is in writing and signed by Administrative Agent (based upon the approval of the Required Lenders), or the Required Lenders, on the one hand, and Borrower on the other hand, subject to Administrative Agent receiving a written consent from the Included Investor (or from its Investment Entity) authorizing the Borrower to agree to such amendment, waiver, discharge or termination; provided that no such amendment, waiver, discharge, or termination shall, without the consent of:

(a) each Lender affected thereby:

(i) reduce or increase the amount or alter the term of the Commitment of such Lender, or alter the provisions relating to any fees (or any other payments) payable to such Lender;

(ii) extend the time for payment for the principal of or interest on the Obligation, or fees or costs, or reduce the principal amount of the Obligation (except as a result of the application of payments or prepayments), or reduce the rate of interest borne by the Obligation (other than as a result of waiving the applicability of the Default Rate), or otherwise affect the terms of payment of the principal of or any interest on the Obligation or fees or costs hereunder;

(iii) release any liens granted under the Collateral Documents, except as otherwise contemplated herein or therein, and except in connection with the transfer of interests in Borrower permitted hereunder; and

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(b) all Lenders:

(i) permit the cancellation, excuse or reduction of the Subscription Amount of any Included Investor (in connection with a request for consent under the Forward Commitment);

(ii) amend the definition of “Available Commitment” or the definition of any of the defined terms used therein;

(iii) amend the definition of “Included Investor” or the definition of any of the defined terms used therein;

(iv) change the percentages specified in the definition of Required Lenders herein or any other provision hereof specifying the number or percentage of Lenders which is required to amend, waive or modify any rights hereunder or otherwise make any determination or grant any consent hereunder;

(v) consent to the assignment or transfer by Borrower of any of its rights and obligations under (or in respect of) the Loan Documents; or

(vi) amend the terms of this Section 12.1.

Notwithstanding the above: (A) no provisions of Section 11 may be amended or modified without the consent of Administrative Agent; (B) no provisions of Section 2.8 may be amended or modified without the consent of the Letter of Credit Issuer; and (C) Section 8 and Section 9 specify the requirements for waivers of the covenants listed therein, and any amendment to a provision of Section 8 or Section 9 shall require the consent of the Lenders that are specified therein as required for a waiver thereof.

Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above and in Section 9: (1) each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects the Loans or the Letters of Credit, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein; (2) the Required Lenders may consent to allow a Borrower Party to use cash collateral in the context of a bankruptcy or insolvency proceeding; and (3) Administrative Agent may, in its sole discretion, agree to the modification or waiver of any of the other terms of this Credit Agreement or any other Loan Document or consent to any action or failure to act by Borrower, if such modification, waiver, or consent is of an administrative nature.

If Administrative Agent shall request the consent of any Lender to any amendment, change, waiver, discharge, termination, consent or exercise of rights covered by this Credit Agreement, and not receive such consent or denial thereof in writing within ten (10) Business Days of the making of such request by Administrative Agent, as the case may be, such Lender shall be deemed to have given its consent to the request.

12.2 Sharing of Offsets. Each Lender and Administrative Agent agrees that if it shall, through the exercise of any right of counterclaim, offset, banker’s lien or otherwise, receive payment of a

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portion of the aggregate amount of principal, interest and fees due to such Lender hereunder which constitutes a greater proportion of the aggregate amount of principal, interest and fees then due to such Lender hereunder or under its Note than the proportion received by any other Lender in respect of the aggregate amount of principal, interest and fees due with respect to such other Lender’s Note or the Obligation to such Lender under this Credit Agreement, then such Lender shall purchase participations in the Obligation under this Credit Agreement held by such other Lenders so that all such recoveries of principal, interest and fees with respect to this Credit Agreement, the Notes and the Obligation thereunder held by Lenders shall be pro rata according to each Lender’s Commitment (determined as of the date hereof and regardless of any change in any Lender’s Commitment caused by such Lender’s receipt of a proportionately greater or lesser payment hereunder).

12.3 Sharing of Collateral. To the extent permitted by applicable law, each Lender and Administrative Agent, in its capacity as a Lender, agrees that if it shall, through the receipt of any proceeds from a Subscription Call or the exercise of any remedies under any Collateral Documents, receive or be entitled to receive payment of a portion of the aggregate amount of principal, interest and fees due to it under this Credit Agreement which constitutes a greater proportion of the aggregate amount of principal, interest and fees then due to such Lender under this Credit Agreement or its Note than the proportion received by any other Lender in respect of the aggregate amount of principal, interest and fees due with respect to any other Lender’s Note or the Obligation to such Lender under this Credit Agreement, then such Lender or Administrative Agent, in its capacity as a Lender, as the case may be, shall purchase participations in the Obligation under this Credit Agreement held by such other Lenders so that all such recoveries of principal, interest and fees with respect to this Credit Agreement, the Notes and the Obligation thereunder held by Lenders shall be pro rata according to each Lender’s Commitment (determined as of the date hereof and regardless of any change in any Lender’s Commitment caused by such Lender’s receipt of a proportionately greater or lesser payment hereunder). Each Lender hereby authorizes and directs Administrative Agent to coordinate and implement the sharing of collateral contemplated by this Section 12.3 prior to the distribution of proceeds from Subscription Calls or proceeds from the exercise of remedies under the Collateral Documents prior to making any distributions of such proceeds to each Lender or Administrative Agent, in their respective capacity as Lenders.

12.4 Waiver. No failure to exercise, and no delay in exercising, on the part of Administrative Agent or Lenders, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other further exercise thereof or the exercise of any other right. The rights of Administrative Agent and Lenders hereunder and under the Loan Documents shall be in addition to all other rights provided by law. No modification or waiver of any provision of this Credit Agreement, the Notes or any of the other Loan Documents, nor consent to departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand. Subject to Section 12.1, Administrative Agent acting on behalf of the Required Lenders, and Borrower may from time to time enter into agreements amending or changing any provision of this Credit Agreement or the rights of Lenders or Borrower hereunder, or may grant waivers or consents to a departure from the due performance of the obligations of Borrower hereunder, any such agreement, waiver or consent made with such written consent of Administrative Agent being effective to bind all Lenders, except as provided in Section 12.1.

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12.5 Payment of Expenses; Indemnity.

(a) Borrower agrees to pay (within five (5) days after the receipt of written notice from Administrative Agent) all out-of-pocket costs and expenses of Administrative Agent (including without limitation the reasonable fees and expenses of Administrative Agent’s legal counsel) reasonably incurred by it in connection with the due diligence, negotiation, preparation, execution and delivery of this Credit Agreement, the Notes, and the other Loan Documents and any and all amendments, modifications and supplements thereof or thereto, and, if an Event of Default exists, all out-of-pocket costs and expenses of Administrative Agent and Lenders (including, without limitation, the reasonable attorneys’ fees of Administrative Agent’s and Lenders’ legal counsel) reasonably incurred by them in connection with the presentation and enforcement of, and Administrative Agent’s and Lenders’ rights under, this Credit Agreement, the Notes, and the other Loan Documents.

(b) Borrower agrees to indemnify Administrative Agent and each of Lenders and their respective officers or employees (each such Person, including without limitation Agent and each of Lenders, being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, actions, judgments, suits, disbursements, penalties, damages (other than consequential damages), liabilities, obligations, costs and related expenses, including reasonable counsel fees and expenses, imposed upon, incurred by or asserted against any Indemnitee, as and when incurred, arising out of, in any way connected with, or as a result of:

(i) the execution and delivery of this Credit Agreement or any other Loan Document or any agreement or instrument contemplated thereby,

(ii) the use or misuse of the proceeds of the Loans,

(iii) the fraudulent actions or misrepresentations of Borrower or its Affiliates in connection with the transactions contemplated by this Credit Agreement and the other Loan Documents, or

(iv) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto.

(c) WITHOUT LIMITATION OF AND SUBJECT TO THE FOREGOING, BORROWER INTENDS AND AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNITEE WITH RESPECT TO ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND EXPENSES OF COUNSEL) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OR CLAIMS OF NEGLIGENCE OF SUCH OR ANY OTHER INDEMNITEE OR ANY STRICT LIABILITY OR CLAIMS OF STRICT LIABILITY.

(d) The provisions of this Section 12.5 shall remain operative and in full force and effect regardless of the expiration of the Commitment Period, the consummation of the transactions contemplated hereby, the repayment of the Obligation, the occurrence of the Maturity Date, the invalidity, illegality, or unenforceability of any term or provision of this Credit

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Agreement or any other Loan Document, or any investigation made by or on behalf of Lenders. All amounts due under this Section 12.5 shall be payable promptly on written demand therefor.

(e) The provisions in this Section 12.5 are subject to the following limitations: (i) provided that no Event of Default has occurred which is continuing, no Indemnitee shall compromise or settle any claim brought by a third party for which it is indemnified under this Section 12.5 without the prior written consent of Borrower, such consent not to be unreasonably withheld, conditioned or delayed, and it being understood that the rights to indemnification set forth in this Section 12.5 shall continue during any period in which an Indemnitee awaits the decision of Borrower with respect to such settlement or compromise, and shall also continue should Borrower not consent to such proposed settlement or compromise; (ii) no Indemnitee shall be indemnified under this Section 12.5 for any claim which is determined pursuant to a final judgment of a court of competent jurisdiction to have resulted from any fraud, willful misconduct or gross negligence of such Indemnitee; (iii) no Indemnitee shall be indemnified under this Section 12.5 for claims arising out of any litigation, arbitration or other proceedings instituted by Borrower against any Indemnitee (or any counter or cross claim asserted by Borrower against an Indemnitee in any proceeding instituted by the Indemnitee or a third party) to the extent Borrower is the prevailing party in such proceeding (or with regards to such counter or cross claim); and (iv) no Indemnitee shall be indemnified under this Section 12.5 for any claim of consequential or punitive damages.

12.6 Notice. Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing (except where telephonic instructions or notices are expressly authorized herein to be given) and shall be deemed to be effective: (a) if by hand delivery, telecopy or other facsimile transmission, on the day and at the time on which delivered to such party at the address or fax numbers specified below; (b) if by mail, on the day which it is received after being deposited, postage prepaid, in the United States registered or certified mail, return receipt requested, addressed to such party at the address specified below; or (c) if by FedEx or other reputable express mail service, on the next Business Day following the delivery to such express mail service, addressed to such party at the address set forth below; or (d) if by telephone, on the day and at the time communication with one of the individuals named below occurs during a call to the telephone number or numbers indicated for such party below:

If to Borrower:

MuniMae Midland Construction Finance

33 North Garden Avenue, Suite 1200

Clearwater, Florida 33755

Telephone:	727.373.8106
Attention:	Terry Myers
Fax:	727.443.6067

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With a copy to:

Honigman Miller Schwartz & Cohn LLP

2290 First National Building

Detroit, Michigan 48226

Telephone:	313.465.7356
Fax:	313.465.7357
Attention:	Gregory J. DeMars, Esq.

If to Administrative Agent:

Bank of America, N.A.

901 Main Street, 51st Floor

TX1-492-51-01

Dallas, Texas 75202-3714

Telephone:	214-209-1503
Fax:	214-209-1832
Attention:	Mr. Jeffrey W. Journey

With a copy to:

Bank of America, N.A.

901 Main Street, 51st Floor

TX1-492-51-01

Dallas, Texas 75202-3714

Telephone:	214-209-9325
Fax:	214-209-1571
Attention:	Loan Administration
	Ms. Susan K. Mogish

If to Lenders:

At the address and numbers set forth below the signature of such Lender on the signature page hereof or on the Assignment and Assumption Agreement of such Lender.

Any party may change its address for purposes of this Credit Agreement by giving notice of such change to the other parties pursuant to this Section 12.6. With respect to any notice received by Administrative Agent from Borrower, any Investor, not otherwise addressed herein, Administrative Agent shall notify Lenders promptly of the receipt of such notice, and shall provide copies thereof to Lenders. When determining the prior days notice required for any Request for Borrowing, or other notice to be provided by Borrower, an Investor, hereunder, the day the notice is delivered to Administrative Agent (or such other applicable Person) shall not be counted, but the day of the related Borrowing, or other relevant action shall be counted.

12.7 Governing Law. The substantive laws of the State of New York applicable to agreements made and to be performed entirely within such state, without regard to the choice of law

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principles that might otherwise apply, except to the extent the laws of another jurisdiction govern the creation, perfection, validity, or enforcement of Liens under the Collateral Documents, and the applicable federal laws of the United States of America, shall govern the validity, construction, enforcement and interpretation of this Credit Agreement and all of the other Loan Documents.

12.8 Choice of Forum; Consent to Service of Process and Jurisdiction; Waiver of Trial by Jury. Any suit, action or proceeding against Borrower with respect to this Credit Agreement or the other Loan Documents or any judgment entered by any court in respect thereof, may be brought in the courts of the State of New York, or in the United States Courts located in the Borough of Manhattan in the New York City, as Lenders in their sole discretion may elect and Borrower hereby submits to the non-exclusive jurisdiction of such courts for the purpose of any such suit, action or proceeding. Borrower hereby agrees that service of all writs, process and summonses in any such suit, action or proceeding brought in the State of New York may be brought upon its process agent appointed below, and Borrower hereby irrevocably appoints Corporation Service Company, 80 State Street, Albany, New York 12207, its process agent, as its true and lawful attorney-in-fact in its name, place and stead to accept such service of any and all such writs, process and summonses. Borrower hereby irrevocably consents to the service of process in any suit, action or proceeding in said court by the mailing thereof by Lender by registered or certified mail, postage prepaid, to Borrower’s address set forth in Section 12.6 hereof. Borrower hereby irrevocably waives any objections which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Credit Agreement or the Notes brought in the courts located in the State of New York, Borough of Manhattan in New York City, and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING BROUGHT IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHICH WAIVER IS INFORMED AND VOLUNTARY.

12.9 Invalid Provisions. If any provision of this Credit Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Credit Agreement, such provision shall be fully severable and this Credit Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Credit Agreement, and the remaining provisions of this Credit Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Credit Agreement, unless such continued effectiveness of this Credit Agreement, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein. If any provision of this Credit Agreement shall conflict with or be inconsistent with any provision of any of the other Loan Documents, then the terms, conditions and provisions of this Credit Agreement shall prevail.

12.10 Entirety and Amendments. The Loan Documents embody the entire agreement between the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof and thereof, and this Credit Agreement and the other Loan Documents may be amended only by an instrument in writing executed by Borrower and Administrative Agent, on behalf of Lenders.

12.11 Parties Bound; Assignment.

(a) Parties Bound. The provisions of this Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted

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hereby, except that Borrower may not assign or otherwise transfer any of its respective rights or obligations under this Credit Agreement without the prior written consent of all Lenders and any Lender may assign or otherwise transfer any of its rights or obligations hereunder except: (i) to an Eligible Assignee in accordance with the provisions of Section 12.11(c) hereof, (ii) by way of participation in accordance with the provision of Section 12.11(b) hereof, or (iii) by way of pledge or assignment of a security interest subject to the restriction of Section 12.11(c)(i) hereof (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 12.11(b) hereof and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement.

(b) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell to one or more banks or other financial institutions (each a “Participant”) a participating interest in all or a portion of such Lender’s rights and/or obligations under this Credit Agreement (including all or a portion of its Commitment or any or all of the Loans owing to it), provided that: (i) any such participation shall be in a minimum amount of $5,000,000, and, if in a greater amount, in integral multiples of $1,000,000, (ii) such Lender’s obligation under this Credit Agreement shall remain unchanged, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of its obligations hereunder, and (iv) Borrower, Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Credit Agreement. Any agreement or instrument pursuant to which any Lender may sell such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the Obligation including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Credit Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to (x) reductions or increases in the amount, or altering the term, of the Commitment of such Participant and (y) changes to the Maturity Date or interest rate. Borrower agrees that each Participant shall be entitled to the benefits of Section 4 hereof with respect to its participating interest to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.11(c) hereof, provided, however, that in no event shall Borrower be obligated to pay to such Participant amounts greater than those Borrower would have been required to pay to the granting Lender in the absence of such participation, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 4.6 hereof unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 4.6(e) hereof as though it were a Lender. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 4 hereof as though it were a Lender, provided such Participant agrees to be subject to Section 12.2 hereof as though it were a Lender. An assignment or other transfer which is not permitted by subsection (c) below shall be given effect for purposes of this Credit Agreement only to the extent of a participating interest sold in accordance with this subsection (b).

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(c) Assignments. Any Lender may (at its expense, except for assignments to or from Administrative Agent, which shall be at the expense of Borrower pursuant to the terms of this Credit Agreement), and, following a demand by Borrower (following a demand by such Lender for payment of any amounts under Section 4.1 or 4.6) shall, at any time assign to one or more Eligible Assignees (an “Assignee”) all, or a proportionate part of all (in a constant, not varying percentage), of its rights and obligations under this Credit Agreement and its Note (including all or a portion of its Commitment and the Loans at the time owing to it), and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement; provided, however, that:

(i) this subsection (c) shall not restrict an assignment or any Lender from pledging a security interest in all or any portion of its rights under this Credit Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, but no such pledge or assignment to a Federal Reserve Bank shall release the assigning Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto;

(ii) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Lending Entity with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loan of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption Agreement with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed) shall be in a minimum amount of $5,000,000, and, if in a greater amount, in integral multiples of $1,000,000;

(iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Credit Agreement with respect to the Loans or the Commitment assigned, except that this clause (iii) shall not (x) apply to rights in respect of competitive loans, if any, or (y) prohibit any Lender from assigning all or a portion of its rights and obligations among separate tranches, if any, on a non-pro rata basis;

(iv) any assignment of a Commitment must be approved by the Administrative Agent and the letter of credit issuer unless the Person that is the proposed assignee is itself a Lender with a Commitment (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee);

(v) if the assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to Borrower and Administrative Agent

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certification as to exemption from deduction or withholding of Taxes in accordance with Sections 4.6;

(vi) the parties to each such assignment shall execute and deliver to Administrative Agent an Assignment and Assumption Agreement, the Assignee shall pay to the transferor Lender an amount equal to the purchase price agreed between such transferor Lender and such Assignee, and the transferor Lender shall deliver payment of a processing and recordation fee of $3,500 to Administrative Agent (except in the case of a transfer at the demand of Borrower, in which case either Borrower or the transferee Lender shall pay such fee), and the Assignee, if it shall not be a Lender, shall deliver to Administrative Agent an Administrative Questionnaire; and

(vii) each assignment made as a result of a demand by Borrower shall be arranged by Borrower after consultation with Administrative Agent and shall be either an assignment of all of the rights and obligations of the assigning Lender under this Credit Agreement or an assignment of a portion of such rights and obligations made concurrently with another assignment or assignments that together constitute an assignment of all of the rights and obligations of the assigning Lender.

Any assignment or transfer by a Lender of rights or obligations under this Credit Agreement that does not comply with this Section 12.11(c) shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.11(b) hereof.

(d) Consequences of Assignment. Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 12.11(e) hereof, from and after the effective date specified in each Assignment and Assumption Agreement and payment by such Assignee to such assignor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be a Lender party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption Agreement, shall have all the rights and obligations of a Lender with a Commitment/Loans as set forth in such Assignment and Assumption Agreement, and the assignor Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations hereunder to a corresponding extent (and, in the case of an Assignment and Assumption Agreement covering all of the obligations under this Credit Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Section 4 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon the consummation of any assignment pursuant to subsection (c), the transferor Lender, Administrative Agent and Borrower shall make appropriate arrangements so that, if required, new Notes are issued to such Assignee and the transferor Lender.

(e) Register of Lenders. Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in Maryland or at such other location as Administrative Agent shall designate in writing to each Lender and Borrower, a copy of each Assignment and Assumption Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of Lenders, the amount of each Lender’s Pro Rata Share of the Commitments and the Loans pursuant to the terms hereof from time to time (the

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“Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, Administrative Agent and Lenders may treat each person or entity whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Credit Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection and copying by Borrower or any Lender during normal business hours upon reasonable prior notice to Administrative Agent. Upon receipt of any Assignment and Assumption Agreement, Administrative Agent shall, if such Assignment and Assumption Agreement, has been completed, fully-executed and is substantially in the form of Exhibit G hereto: (i) accept such an Assignment and Assumption Agreement; (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to Borrower.

(f) Disclosure of Information. Any Lender may furnish any information concerning Borrower or any Investor in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of Section 12.16 hereof.

12.12 Lender Default. If for any reason any Lender shall fail or refuse to abide by its obligations hereunder, and such Lender shall not have cured such failure within five (5) Business Days of its occurrence (a ”Lender Default”), then, in addition to the rights and remedies that may be available to Administrative Agent, Lenders, or Borrower at law or in equity, such Lender’s right to vote on matters related to this Credit Agreement, and to participate in the administration of the Loans, the Letters of Credit, and this Credit Agreement, shall be suspended during the pendency of such failure or refusal. Administrative Agent shall have the right, but not the obligation, in its sole discretion, to acquire at par all of such Lender’s Commitment, including its Pro Rata Share in the Obligation under this Credit Agreement. In the event that Administrative Agent does not exercise its right to so acquire all of such Lender’s interests, then each Lender that is not in Default (a “Current Party”) shall then, thereupon, have the right, but not the obligation, in its sole discretion to acquire at par (or if more than one Current Party exercises such right, each Current Party shall have the right to acquire, pro rata) such Lender’s Commitment, including its Pro Rata Share in the outstanding Obligation under this Credit Agreement.

12.13 Maximum Interest. Regardless of any provision contained in any of the Loan Documents, Lenders shall never be entitled to receive, collect or apply as interest on the Obligation any amount in excess of the Maximum Rate, and, in the event that Lenders ever receive, collect or apply as interest any such excess, the amount which would be excessive interest shall be deemed to be a partial prepayment of principal and treated hereunder as such; and, if the principal amount of the Obligation is paid in full, any remaining excess shall forthwith be paid to Borrower. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, Borrower and Lenders shall, to the maximum extent permitted under applicable law: (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the Obligation so that the interest rate does not exceed the Maximum Rate; provided that, if the Obligation is paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, Lenders shall refund to Borrower the amount of such excess or credit the amount of such excess against the principal amount of the Obligation and, in such event, Lenders shall not be subject to any penalties provided by any laws for contracting for, charging, taking, reserving or receiving interest in excess of the Maximum Rate.

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12.14 Headings. Section headings are for convenience of reference only and shall in no way affect the interpretation of this Credit Agreement.

12.15 Survival. All representations and warranties made by Borrower herein shall survive delivery of the Notes, the making of the Loans, and the issuance of the Letters of Credit.

12.16 Availability of Records; Confidentiality. Borrower acknowledges and agrees that Administrative Agent may provide to Lenders, and that Administrative Agent and each Lender may provide to any Participant or Assignee or proposed Participant or Assignee, originals or copies of this Credit Agreement, all Loan Documents and all other documents, certificates, opinions, letters of credit, reports, and other material information of every nature or description, and may communicate all oral information, at any time submitted by or on behalf of Borrower, any Investor, or received by Administrative Agent or a Lender in connection with the Loans, the Letter of Credit Liability, and the Commitments or Borrower and any Investor; provided, however, that, prior to any such delivery or communication, the Lender, Participant, or Assignee, as the case may be, shall agree to preserve the confidentiality of all data and information which constitutes Confidential Information. Anything herein to the contrary notwithstanding, the provisions of this Section 12.16 shall not preclude or restrict any such party from disclosing any Confidential Information: (a) with the prior written consent of Borrower; (b) upon the order of or pursuant to the rules and regulations of any Governmental Authority having jurisdiction over such party; (c) in connection with any audit by an independent public accountant of such party, provided such auditor thereto agrees to be bound by the provisions of this Section 12.16; (d) to examiners or auditors of any applicable Governmental Authority which examines such party’s books and records while conducting such examination or audit; (e) to the employees, agents, affiliates and advisors who are directly involved in the transactions contemplated under the Loan Documents; or (f) as otherwise specifically required by law. Notwithstanding anything herein to the contrary, the information subject to this Section 12.16 shall not include, and Administrative Agent and each Lender may disclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to Administrative Agent or such Lender relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transactions as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Loans, Letters of Credit and transactions contemplated hereby and thereby.

12.17 Multiple Counterparts. This Credit Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement, and any of the parties hereto may execute this Credit Agreement by signing any such counterpart.

REMAINDER OF PAGE INTENTIONALLY BLANK

SIGNATURE PAGES FOLLOW.

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

BORROWER:
MUNIMAE MIDLAND CONSTRUCTION FINANCE, LLC a Maryland limited liability company
By:	Municipal Mortgage & Equity, LLC, a Delaware limited liability company its Sole Member
	By:	/s/ Michael L. Falcone
		Name: Michael L. Falcone
		Title: President and CEO

Revolving Credit Agreement Signature Page

	ADMINISTRATIVE AGENT AND LENDER:
Commitment: $72,000,000	BANK OF AMERICA, N.A., as Administrative Agent and a Lender
	By:	/s/ Jeffrey W. Journey
		Jeffrey W. Journey
		Senior Vice President
	Bank of America, N.A. 901 Main Street, 51st Floor TX1-492-51-01 Dallas, Texas 75202-3714
	Telephone: 214-209-1503
	Fax: 214-209-1832
	Attention: Mr. Jeffrey W. Journey
	Senior Vice President
	Copy to:
	Bank of America, N.A. 901 Main Street, 51st Floor TX1-492-51-01 Dallas, Texas 75202-3714
	Telephone: 214-209-9325
	Fax: 214-209-1571
	Attention: Loan Administration
	Ms. Susan K. Mogish

EX-10.8.2

Exhibit 10.8.2

FIRST AMENDMENT

TO

REVOLVING CREDIT AGREEMENT

This FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (this “Amendment”) is entered into as of May 4, 2005, among MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company and formerly known as MuniMae Midland Construction Finance, LLC (“Borrower), each lender from time to time a party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent (“Administrative Agent”).

A. Borrower, Administrative Agent and Lenders have entered into that certain Revolving Credit Agreement dated as of November 12, 2003 (the “Credit Agreement) pursuant to which Lenders have provided Borrower with a $72 million revolving credit facility;

B. Borrower has requested (a) that the maturity of the Credit Agreement be extended by one year until May 12, 2006 (the “Maturity Extension”), (b) that the extension option be modified to cover a period of twelve months (the “Extension Option Modification”), (c) that the period for delivery of quarterly statements be extended to sixty (60) days (the “Reporting Requirement Modification”), and (d) that certain clarifying changes be made to the notice provisions set forth in Section 8.5 of the Credit Agreement (the “Notice Provision Modification”); and Administrative Agent and Lenders have agreed to the Maturity Extension, the Extension Option Modification, the Reporting Requirement Modification, and the Notice Provision Modification;

C. Borrower, Administrative Agent and Lenders have agreed, upon the following terms and conditions, to amend the Credit Agreement to reflect the Maturity Extension, the Extension Option Modification, the Reporting Requirement Modification, and the Notice Provision Modification.

NOW, THEREFORE, in consideration of the mutual promises herein contained, and for other valuable consideration, the parties hereto agree as follows:

1. Defined Terms.

Unless otherwise specified, the defined terms will have their meanings as provided in the Credit Agreement.

2. Amendment to Credit Agreement and Loan Documents.

a. The definition of Acknowledgment and Consent contained in Section 1.1 of the Credit Agreement is hereby amended in its entirety to read as follows:

‘“Acknowledgement and Consent” means the Acknowledgment and Consent to the Assignment of Forward Commitment Agreement of even date herewith made by MAHGT in favor of Administrative Agent for the benefit of Lenders, as the same may be amended, restated or supplemented from time to time, pursuant to which MAHGT has made certain acknowledgments, consents and agreements with respect to the assignment of the Forward Commitment Agreement, the MAHGT Security Agreement, the MAHGT Account Assignment and the rights thereunder.

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b. The definition of Extension Fee contained in Section 1.1 of the Credit Agreement is hereby amended in its entirety to read as follows:

‘“Extension Fee” means the extension fee set forth in that certain fee letter, dated as of May 4, 2005 between Bank of America and Borrower.

c. The definition of Stated Maturity Date contained in Section 1.1 of the Credit Agreement is hereby amended in its entirety to read as follows:

‘“Stated Maturity Date” means May 12, 2006 (the “Initial Stated Maturity Date”) unless extended pursuant to Section 2.13 hereof, in which case the Stated Maturity Date shall be such extended date.”

d. Section 2.13 of the Credit Agreement is hereby amended in its entirety to read as follows:

“2.13 Extension of Stated Maturity Date. Borrower may extend the Stated Maturity Date one time to May 11, 2007 upon: (a) the delivery of the Extension Notice to Administrative Agent not more than ninety (90) days nor less than thirty (30) days prior to the Initial Stated Maturity Date, and (b) the payment of the Extension Fee.”

e. Section 8.1(a)(ii) of the Credit Agreement is hereby amended in its entirety to read as follows:

“(ii) Quarterly Reports. As soon as available, but no later than sixty (60) days after the end of each of the first three fiscal quarters of Borrower, commencing with the quarter ending on March 31, 2005, an unaudited report setting forth as of the end of such fiscal quarter, the Borrower’s balance sheet and income statement, certified by a Responsible Officer of Borrower that such financial statements are true and correct, were prepared in accordance with GAAP and present fairly the financial condition and results of operations of Borrower.”

f. Section 8.1(b) of the Credit Agreement is hereby amended in its entirety to read as follows:

“(b) Quarterly Compliance Certificate. No later than sixty (60) days after the end of each of the first three fiscal quarters of Borrower, and no later than one hundred twenty (120) days after the end of Borrower’s fiscal year, a compliance certificate in the form of Exhibit I hereof (the “Compliance Certificate”), certified by a Responsible Officer of Borrower to be true and correct.

g. Section 8.5 of the Credit Agreement is hereby amended in its entirety to read as follows:

“8.5 Other Notices. Borrower will, promptly upon receipt of knowledge thereof, notify Administrative Agent of any of the following events to the extend that they could have a Material Adverse Effect: (a) any change in the financial condition or business of Borrower; (b) any default under any material agreement, contract, or other instrument to which Borrower is a party or by which any of its properties are bound, or any acceleration of the maturity of any material indebtedness owing by Borrower; (c) any uninsured claim against or affecting Borrower; (d) the commencement of, and any material determination in, any litigation with any third party or any proceeding before any Governmental Authority affecting Borrower; (e) any Environmental Complaint or any claim, demand, action, event, condition, report or investigation indicating any potential or actual liability arising in connection with:

(i) the non-compliance with or violation of the requirements of any Environmental Law or any permit issued under any Environmental Law which individually or in the aggregate might have a Material Adverse Effect; or (ii) the Release or threatened Release of any Hazardous Material into the environment which individually or in the aggregate might have a Material Adverse Effect; (f) the existence of any Environmental Lien on any properties or assets of Borrower; (g) any material remedial action taken by Borrower in response to any order, consent decree or judgment of any Governmental Authority or any Environmental Liability; or (h) the listing of any of Borrower’s properties or assets on CERCLIS to the extent that Borrower obtains knowledge of such listing.”

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h. All references in the Credit Agreement and the other Loan Documents to either “MuniMae Midland Construction Finance, LLC” or “MMCF” are hereby deemed to be references to “MMA Construction Finance, LLC.”

3. Effectiveness. The effectiveness of this Amendment is subject to receipt by Administrative Agent of the following:

a. Amendment. This Amendment, duly executed and delivered by Borrower, Administrative Agent and Lenders.

b. Amendment to Forward Commitment Agreement. The First Amendment to the Forward Commitment Agreement, duly executed and delivered by Borrower and Midland Affordable Housing Group Trust (“MAHGT”).

c. Opinion of Counsel. A favorable opinion of Honigman Miller Schwartz and Cohn, LLP, counsel to Borrower and MAHGT, covering such matters relating to the transactions contemplated hereby as reasonably requested by Administrative Agent, and substantially in a form acceptable to Administrative Agent.

d. Confirmation of Appointment of Process Agent. Confirmation from the Process Agent that it continues to be appointed as process agent pursuant to Section 6.1(r) of the Credit Agreement.

e. Fees, Costs and Expenses. Payment of all fees and other amounts due and payable on or prior to the date hereof, including the Extension Fee, and, to the extend invoiced, reimbursement or payment of all reasonable expenses required to be reimbursed or paid by Borrower under the Loan Documents, including the reasonable fees and disbursements invoiced through the date hereof of Administrative Agent’s special counsel, Haynes and Boone, LLP.

f. Other Information. Such other information and documents, including amendments to Loan Documents, as may reasonably be required by Administrative Agent and its counsel.

4. Representations and Warranties. Borrower hereby represents and warrants to Administrative Agent and Lenders as follows:

a. Due Authorization. Borrower is duly authorized to execute, deliver and perform this Amendment, and the Credit Agreement, as amended by this Amendment, is the legal and binding obligation of Borrower enforceable against in accordance with its terms.

b. Credit Agreement. All of the representations and warranties contained in Section 7 of the Credit Agreement made by Borrower are true and correct in all material respects as of the date hereof.

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c. No Event of Default. No event has occurred and is continuing or would result from entering into this Amendment, which constitutes or would constitute an Event of Default or a Potential Default.

d. No Amendments. There have been no amendments to the Organizational Documents of Borrower since the latest delivery thereof by Borrower to Administrative Agent.

5. Miscellaneous.

a. No Other Amendments. Except as expressly amended herein, the terms of the Credit Agreement shall remain in full force and effect.

b. Limitation on Agreements. The amendment set forth herein is limited precisely as written and shall not be deemed (a) to be a consent under or waiver of any other term or condition in the Credit Agreement or any of the Loan Documents, or (b) to prejudice any right or rights which Administrative Agent and Lenders now have or may have in the future under, or in connection with the Credit Agreement, as amended hereby, the Loan Documents or any of the other documents referred to herein or therein. From and after the effectiveness of this Amendment, all references in the Credit Agreement to the Credit Agreement shall be deemed to be references to the Credit Agreement after giving effect to this Amendment.

c. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

d. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THAT MIGHT OTHERWISE APPLY.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES FOLLOW.

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

BORROWER:
MMA CONSTRUCTION FINANCE, LLC,
By: MuniMae Investment Services Corporation
	By:	/s/ William S. Harrison
		Name: William S. Harrison
		Title:    EVP & CFO

First Amendment to Revolving Midland Subscription Credit Agreement Signature Page

ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative Agent and a Lender
By:	/s/ Jeff Journey
	Name: Jeff Journey
	Title: SVP

First Amendment to Revolving Midland Subscription Credit Agreement Signature Page

LENDER:
FIRST COMMERCIAL BANK, LOS ANGELES BRANCH, as a Lender
By:	/s/ Chih-Tiao Shih
	Name: Chih-Tiao Shih
	Title: SAVP & Deputy General Manager

Exhibit I – Compliance Certificate

EX-10.9.1

Exhibit 10.9.1

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of December 3, 2004

among

MMA CONSTRUCTION FINANCE, LLC

and

MIDLAND MORTGAGE INVESTMENT CORPORATION,

as the Borrowers,

BANK OF AMERICA, N.A.,

as Administrative Agent,

and

L/C Issuer,

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

TABLE OF CONTENTS

Section		Page
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS		1
1.01	Defined Terms	1
1.02	Other Interpretive Provisions	19
1.03	Accounting Terms	20
1.04	Rounding	20
1.05	References to Agreements and Laws	20
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS		20
2.01	Committed Loans	20
2.02	Borrowings, Conversions and Continuations of Committed Loans	21
2.03	Letters of Credit	22
2.04	Prepayments	29
2.05	Reduction or Termination of Commitments	29
2.06	Repayment of Loans	30
2.07	Interest	30
2.08	Utilization Fee	30
2.09	Computation of Interest and Fees	31
2.10	Evidence of Debt	31
2.11	Payments Generally	31
2.12	Sharing of Payments	33
2.13	Joint and Several Liability	34
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY		35
3.01	Taxes	35
3.02	Illegality	36
3.03	Inability to Determine Rates	36
3.04	Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans	36
3.05	Funding Losses	37
3.06	Matters Applicable to all Requests for Compensation	38
3.07	Survival	38
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS		38
4.01	Conditions of Initial Credit Extension	38
4.02	Conditions to all Credit Extensions and Conversions and Continuations	41
ARTICLE V. REPRESENTATIONS AND WARRANTIES		42
5.01	Existence, Qualification and Power; Compliance with Laws	42
5.02	Authorization; No Contravention	43
5.03	Governmental Authorization	43
5.04	Binding Effect	43
5.05	Financial Statements; No Material Adverse Effect	43
5.06	Litigation	43
5.07	No Default	44
5.08	Ownership of Property; Liens	44

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5.09	Environmental Compliance	44
5.10	Insurance	44
5.11	Taxes	44
5.12	ERISA Compliance	44
5.13	Subsidiaries	45
5.14	Margin Regulations; Investment Company Act; Public Utility Holding Company Act	45
5.15	Disclosure	45
5.16	Intellectual Property; Licenses, Etc.	46
5.17	Fannie Mae Documents	46
ARTICLE VI. AFFIRMATIVE COVENANTS		46
6.01	Financial Statements	46
6.02	Certificates; Other Information	47
6.03	Notices	48
6.04	Payment of Obligations	48
6.05	Preservation of Existence, Etc.	49
6.06	Maintenance of Properties	49
6.07	Maintenance of Insurance	49
6.08	Compliance with Laws	49
6.09	Books and Records	49
6.10	Inspection Rights	49
6.11	Compliance with ERISA	50
6.12	Use of Proceeds	50
6.13	Loan Committee Meetings	50
6.14	MMI as DUS Lender	50
6.15	Use of Approved Loan Documentation	50
6.16	Servicing	50
6.17	Forward Commitment Agreement	50
6.18	Enforcement of Covenants	50
ARTICLE VII. NEGATIVE COVENANTS		50
7.01	Fundamental Changes	50
7.02	Dispositions	51
7.03	Restricted Payments	51
7.04	ERISA	51
7.05	Change in Nature of Business	52
7.06	Transactions with Affiliates	52
7.07	Burdensome Agreements	52
7.08	Use of Proceeds	52
7.09	Fannie Mae Documents	52
7.10	Negative Pledge	52
7.11	Debt Service Coverage Ratio	52
7.12	Modifications of Organization Documents or Forward Commitment Agreement	52
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES		53
8.01	Events of Default	53
8.02	Remedies Upon Event of Default	55

ii Credit Agreement

ARTICLE IX. ADMINISTRATIVE AGENT		56
9.01	Appointment and Authorization of Administrative Agent	56
9.02	Delegation of Duties	57
9.03	Liability of Administrative Agent	57
9.04	Reliance by Administrative Agent	57
9.05	Notice of Default	58
9.06	Credit Decision; Disclosure of Information by Administrative Agent	58
9.07	Indemnification of Administrative Agent	59
9.08	Administrative Agent in its Individual Capacity	59
9.09	Successor Administrative Agent	59
ARTICLE X. MISCELLANEOUS		60
10.01	Amendments, Etc.	60
10.02	Notices and Other Communications; Facsimile Copies	61
10.03	No Waiver; Cumulative Remedies	62
10.04	Attorney Costs, Expenses and Taxes	62
10.05	Indemnification by the Borrowers	63
10.06	Payments Set Aside	64
10.07	Successors and Assigns	64
10.08	Confidentiality	67
10.09	Set-off	67
10.10	Interest Rate Limitation	68
10.11	Counterparts	68
10.12	Integration	68
10.13	Survival of Representations and Warranties	68
10.14	Severability	69
10.15	Foreign Lenders	69
10.16	Removal and Replacement of Lenders	70
10.17	Governing Law	70
10.18	Waiver of Right to Trial by Jury	71
10.19	Time of the Essence	71
10.20	ENTIRE AGREEMENT	71
10.21	ARBITRATION	71
10.22	Special Provisions Addressing Collateral	73
10.23	U.S. Patriot Act Notice	74

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SCHEDULES

2.01	Commitments and Pro Rata Shares
2.02	Wiring Instructions
2.03	Existing Letters of Credit
4.01	Borrowing Base Submission Package
5.13	Subsidiaries and Other Equity Investments
10.02	Eurodollar and Domestic Lending Offices, Addresses for Notices

iv Credit Agreement

EXHIBITS

Form of:
A.	Committed Loan Notice
B.	Committed Loan Note
C.	Compliance Certificate
D.	Assignment and Acceptance
E.	Opinion of Counsel
F.	Borrowing Base Report
G.	Assignment of Notes and Liens

v Credit Agreement

CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of December 3, 2004, among MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company and formerly known as MuniMae Midland Construction Finance, LLC (“MMCF”), MIDLAND MORTGAGE INVESTMENT CORPORATION, a Florida corporation, (“MMI;” MMCF and MMI each individually, a “Borrower” and collectively, the “Borrowers”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer.

1) MMCF and MMI desire to borrow from Lenders, and Lenders desire to loan to MMCF and MMI, certain funds pursuant to a revolving credit facility;

2) Borrowers, Administrative Agent, L/C Issuer and the lenders named therein are parties to that certain Credit Agreement dated as of January 15, 2004, pursuant to which the lenders named therein have provided Borrowers with a $70,000,000 revolving credit facility pursuant to the terms thereof (the “Original Credit Agreement”);

3) Borrowers, Administrative Agent, L/C Issuer and the Lenders desire to amend and restate the Original Credit Agreement to (a) extend the maturity date to December 2, 2005; (b) increase the advance percentage under the Borrowing Base; (iii) modify the Borrowing procedures; and (d) make various other modifications to the Credit Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto do hereby amend and restate the Original Credit Agreement as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

“Acknowledgement and Consent” means the Acknowledgement and Consent to the Assignment of Forward Commitment Agreement dated January 15, 2004 made by MAHGT in favor of the Administrative Agent for the benefit of the Lenders, pursuant to which MAHGT has made certain acknowledgements, consents and agreements with respect to the assignment of the Forward Commitment Agreement, the MAHGT Pledge Agreement, and the rights thereunder.

“Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

“Administrative Agent Funding Request” is defined in the Acknowledgement and Consent.

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“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrowers and the Lenders.

“Affiliate” means, as to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person possesses, directly or indirectly, power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

“Agent-Related Persons” means the Administrative Agent, together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, the Arranger), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

“Aggregate Commitments” has the meaning set forth in the definition of “Commitment.”

“Aggregate Funded Mortgage Loan Amount” means, at any time, the aggregate principal amount outstanding under all loans that are acceptable to the Administrative Agent in its sole discretion and satisfy the following conditions:

(a) the loan was made by a Borrower or MAHGT for the purpose of financing multi-family residential projects and the loan is secured by property and is eligible for purchase by Fannie Mae;

(b) the loan is in the maximum principal amount of $20,000,000.00;

(c) the loan is subject to a first priority perfected Lien in favor of the Administrative Agent and no other Liens;

(d) a Borrower or MAHGT has good and indefeasible title to the loan, subject to no claims, agreements, or interests, except that loans made by MMI and MMCF may be subject to a participation interest in favor of MAHGT;

(e) no default exists under the loan;

(f) the loan was made in compliance with all applicable laws, rules, and regulations;

(g) the obligor with respect to the loan is not insolvent or the subject of any bankruptcy or insolvency proceeding;

(h) the loan is payable in Dollars;

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(i) the loan shall be ineligible if the obligor thereunder is (i) domiciled in any country other than the United States of America, or (ii) is the United States of America or any department, agency, or instrumentality thereof;

(j) if made by a Borrower, the loan is subject to a commitment from MMI (or MAHGT as a Takeout Commitment) to refinance such loan on a long-term basis upon, among other things, completion of construction;

(k) a Borrower had adequate unadvanced funds available under the Aggregate Commitments to fully fund the commitments of such Borrower or MAHGT under such loan;

(l) the loan is evidenced by and subject to Approved Loan Documentation;

(m) the property which secures the loan is the subject of a satisfactory current appraisal which complies with all Fannie Mae requirements, all policies and procedures of the Administrative Agent and all laws, rules, and regulations application to the Administrative Agent;

(n) the loan has been submitted to the Administrative Agent for inclusion in the Borrowing Base, all items set forth on Schedule 4.01(I) (and, to the extent requested or otherwise required, 4.01(II)) hereto for such loan have been submitted to Administrative Agent, and such loan has been approved by the Administrative Agent for inclusion in the Borrowing Base; provided, however, the Administrative Agent shall nonetheless retain the right to reject any loans submitted for inclusion in the Borrowing Base at any time upon Administrative Agent’s review of the items delivered to the Administrative Agent in connection with such loan; and

(o) the loan was underwritten in conformance with all applicable Fannie Mae requirements and the DUS Guide and, the requirements set forth in the Special Purchase Agreement, is intended and will be eligible for purchase by Fannie Mae thereunder, and availability exists under the Special Purchase Agreement in a Dollar amount sufficient to purchase such loan.

Notwithstanding the foregoing, loans that satisfy any of the following criteria shall not be eligible to be included in the Aggregate Funded Mortgage Loan Amount:

(i) the loan is rejected for purchase by Fannie Mae pursuant to the Special Purchase Agreement or the DUS Guide;

(ii) the loan is not, in the Administrative Agent’s determination, capable of meeting the criteria for purchase by Fannie Mae under the Special Purchase Agreement or the DUS Guide;

(iii) the loan fails to, at any time, satisfy all of the criteria set forth in (a) through (o) above;

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(iv) without the Administrative Agent’s prior consent, the terms of the loan are modified in any material respect, or any collateral for the loan is released, or any document governing the loan is amended or modified in any material respect;

(v) the principal amount of the loan, when added to all other loans accepted by Administrative Agent for inclusion in the Borrowing Base, exceeds the Dollar amount of loans available to be purchased by Fannie Mae under the Special Purchase Agreement; and

(vi) the loan has remained eligible for inclusion in determining the Aggregate Funded Mortgage Loan Amount for (a) a period of twenty-four (24) months after completion of construction on the project, (b) a period of twelve (12) months after Stabilization of the underlying project has occurred, or (c) a period of forty-eight (48) months after such loan was first included in the Aggregate Funded Mortgage Loan Amount;

(vii) there shall have occurred (a) a payment default on the loan, without regard to any grace or cure period provided in the underlying loan documents for such loan, or (b) a non-payment default on the loan which results in the acceleration of the maturity of such loan.

“Agreement” means this Amended and Restated Credit Agreement.

“Applicable Rate” means a per annum rate equal to:

(a) With respect to Base Rate Loans, if the aggregate Outstanding Amount of all Loans and L/C Obligations equals not more than 50% of the Aggregate Funded Mortgage Loan Amount, minus 00.25%, and if same shall equal a greater amount, then plus zero percent; and

(b) With respect to Eurodollar Rate Loans, if the aggregate Outstanding Amount of all Loans and L/C Obligations equals not more than 50% of the Aggregate Funded Mortgage Loan Amount, plus 1.50%, and if same shall equal a greater amount, then plus 1.75%.

“Approved Loan Documentation” means the form of promissory note, mortgage, deed of trust, construction loan agreement, financing statement, assignment of rents, and related documents approved by Fannie Mae and the Administrative Agent.

“Arranger” means Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager.

“Assignment and Acceptance” means an Assignment and Acceptance substantially in the form of Exhibit D.

“Assignment of Notes and Liens” has the meaning specified in Section 4.01(d)(xv).

4 Credit Agreement

“Attorney Costs” means and includes all fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel.

“Attributable Indebtedness” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

“Audited Financial Statements” means the audited consolidated balance sheet of each Borrower and its respective Subsidiaries for the fiscal year ended December 31, 2002, and the related consolidated statements of income and cash flows for such fiscal year of each Borrower and its respective Subsidiaries.

“Bank of America” means Bank of America, N.A.

“Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” Such rate is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” and “Borrowers” have the meanings set forth in the introductory paragraph hereto.

“Borrower Security Agreement” means that certain Borrower Security Agreement of Borrowers, dated January 15, 2004, as the same may be amended, supplemented, or modified, made by Borrowers in favor of Administrative Agent for the benefit of the Lenders, pursuant to which each of the Borrowers has pledged and granted to the Administrative Agent for the benefit of the Lenders a security interest in the collateral described therein.

“Borrowing Base” means, at any time, an amount equal to seventy percent (70%) of the sum of the least of (i) current loan balance, (ii) permanent take-out commitment, and (iii) the

5 Credit Agreement

stabilized appraised value for each loan included in the Aggregate Funded Mortgage Loan Amount.

“Borrowing Base Report” means a report of the Borrowers to the Lender in the form of Exhibit F hereto.

“Borrowing Base Submission Package” means the items delineated on Schedule 4.01 hereof.

“Business Day” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the applicable offshore Dollar interbank market.

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term shall have corresponding meaning. The Borrowers hereby grant the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a Lien on all such cash and deposit account balances. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.

“Change of Control” means, with respect to any Person, an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such Person or its subsidiaries, or any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person shall be deemed to have “beneficial ownership” of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity interests of such Person; or

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

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“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 4.01 (or, in the case of Section 4.01(b), waived by the Person entitled to receive the applicable payment).

“Code” means the Internal Revenue Code of 1986.

“Collateral” means all property in which the Administrative Agent now or hereafter holds a security interest pursuant to the MMI Pledge Agreement, and the MMCF Pledge Agreement, and the Borrower Security Agreement.

“Commitment” means, as to each Lender, its obligation to (a) make Committed Loans to the Borrowers pursuant to Section 2.01, and (b) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01, as such amount may be reduced or adjusted from time to time in accordance with this Agreement (collectively, the “Aggregate Commitments”).

“Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the same Type and having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

“Committed Loan” has the meaning specified in Section 2.01.

“Committed Loan Note” means a joint and several promissory note made by the Borrowers in favor of a Lender evidencing Committed Loans made by such Lender, substantially in the form of Exhibit B.

“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Committed Loans as the same Type, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

“Compliance Certificate” means a certificate substantially in the form of Exhibit C.

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Credit Extension” means each of the following: (a) a Committed Borrowing, and (b) an L/C Credit Extension.

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States of America or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

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“Debt Service Coverage Ratio” means, at any time, the ratio of (a) the sum of (i) income earned pursuant to the Commitment Fee (as defined in the Forward Commitment) by MAHGT, plus (ii) accrued interest due and owing (A) on loans subject to the first priority perfected Lien of the Administrative Agent pursuant to the Borrower Security Agreement, the MMI Pledge Agreement and the MMCF Pledge Agreement, plus (B) on loans previously owned by MAHGT which have been sold to Fannie Mae for which MAHGT retains the right to receive interest income (to the extent such interest income is owing to MAHGT), plus (C) on other loans (specifically excluding loans to Affiliates) which are owned by MAHGT free and clear of any Liens (other than Liens in favor of the Administrative Agent), to (b) accrued interest due and owing (i) to Lenders under this Agreement, and (ii) under the Subscription Loan Facility.

“Default” means any event that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by applicable Laws.

“Defaulting Lenders” has the meaning specified in the definition of Voting Percentage.

“Disposition” or “Dispose” means the sale, transfer, license or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“Dollar” and “$” means lawful money of the United States of America.

“DUS Guide” means the Fannie Mae Delegated Underwriting and Servicing Guide, as amended, supplemented, modified, or reissued from time to time, including any DUS lender memos, announcements, or guide updates issued pursuant thereto.

“DUS Lender” means a lender approved by Fannie Mae as a full Delegated Underwriting and Servicing lender under the agreements, rules, guides and regulations as may be in effect from time to time as promulgated by Fannie Mae.

“Eligible Assignee” has the meaning specified in Section 10.07(h).

“Environmental Laws” means all Laws relating to environmental, health, safety and land use matters applicable to any property.

“ERISA” means the Employee Retirement Income Security Act of 1974 and any regulations issued pursuant thereto.

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“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with a Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by a Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Borrower or any ERISA Affiliate.

“Eurodollar Rate” means for any Interest Period with respect to any Eurodollar Rate Loan:

(a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on page 3750 of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

(b) if the rate referenced in the preceding subsection (a) does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

(c) if the rates referenced in the preceding subsections (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest (rounded upward to the next 1/100th of 1%) at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the offshore Dollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period.

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“Eurodollar Rate Committed Loan” means a Committed Loan that bears interest at a rate based on the Eurodollar Rate.

“Eurodollar Rate Loan” means a Eurodollar Rate Committed Loan.

“Event of Default” is defined in Section 8.01.

“Existing Letters of Credit” means the letters of credit described on Schedule 2.03 hereto.

“Fannie Mae” means Fannie Mae, the Federal National Mortgage Association.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

“Fee Letter” means that certain fee letter, dated November 30, 2004, between Borrowers, Bank of America, N.A. and Banc of America Securities, LLC.

“Foreign Lender” has the meaning specified in Section 10.15.

“Forward Commitment” means the unconditional commitment of MAHGT to make a loan or loans to the Borrowers pursuant to the Forward Commitment Agreement.

“Forward Commitment Agreement” means that certain Forward Commitment Agreement dated as of November 6, 2003, made by MAHGT in favor of Borrowers, as same may be amended, restated or supplemented from time to time as permitted hereby, pursuant to which MAHGT has issued the Forward Commitment.

“Forward Commitment Default” is defined in the Forward Commitment Agreement.

“Funding Request” is defined in the Forward Commitment Agreement.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination, consistently applied. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrowers or the Required

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Lenders shall so request, the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) the Borrowers shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Guaranty Obligation” means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guarantying or having the economic effect of guarantying any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligees in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligees against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person; provided, however, that the term “Guaranty Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guarantying Person in good faith.

“Indebtedness” means, as to any Person at a particular time, all of the following:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

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(b) any direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, surety bonds and similar instruments;

(c) net obligations under any Swap Contract in an amount equal to (i) if such Swap Contract has been closed out, the termination value thereof, or (ii) if such Swap Contract has not been closed out, the mark-to-market value thereof determined on the basis of readily available quotations provided by any recognized dealer in such Swap Contract;

(d) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(e) capital leases and Synthetic Lease Obligations; and

(f) all Guaranty Obligations of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person except for customary exceptions acceptable to the Required Lenders. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

“Indemnified Liabilities” has the meaning set forth in Section 10.05.

“Indemnitees” has the meaning set forth in Section 10.05.

“Interest Payment Date” means the first Business Day of each calendar month and the Maturity Date.

“Interest Period” means as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or (in the case of any Eurodollar Rate Committed Loan) converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrowers in their Committed Loan Notice; provided that:

(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

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(ii) any Interest Period pertaining to a Eurodollar Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the scheduled Maturity Date.

“Investment” means, as to any Person, any acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, guaranty of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“IRS” means the United States Internal Revenue Service.

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“L/C Advance” means, with respect to each Lender, such Lender’s participation in any L/C Borrowing in accordance with its Pro Rata Share.

“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

“L/C Obligations” means, as at any date of determination, the aggregate undrawn face amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.

“Lender” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the L/C Issuer.

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“Lending Office” means, as to any Lender, the office or offices of such Lender described as such on Schedule 10.02, or such other office or offices as a Lender may from time to time notify the Borrowers and the Administrative Agent.

“Letter of Credit” means any letter of credit issued hereunder and shall include the Existing Letters of Credit.

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a letter of credit in the form from time to time in use by the L/C Issuer.

“Letter of Credit Expiration Date” means the day that is 364 days after the Maturity Date (or, if such day is not a Business Day, the next preceding Business Day).

“Letter of Credit Sublimit” means an amount equal to $14,000,000.00. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction), including the interest of a purchaser of accounts receivable.

“Loan” means an extension of credit by a Lender to the Borrowers under Article II in the form of a Committed Loan.

“Loan Documents” means this Agreement, each Note, each Request for Credit Extension, each Letter of Credit Application, each Compliance Certificate, the MAHGT Pledge Agreement, the MMI Pledge Agreement, the MMCF Pledge Agreement, the Assignments of Notes and Liens, the Forward Commitment Agreement, the Acknowledgement and Consent, and the Borrower Security Agreement.

“MAHGT” means Midland Affordable Housing Group Trust, a Florida group trust.

“MAHGT Pledge Agreement” means that certain Pledge Agreement of MAHGT, dated January 15, 2004, as the same may be amended, supplemented, or modified, made by MAHGT in favor of Borrowers, pursuant to which MAHGT has pledged and granted to the Borrowers a security interest in the collateral described therein.

“MAHGT Pledge Assignment” is defined in the Forward Commitment Agreement.

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of either of the Borrowers or the Borrowers and their Subsidiaries taken as a whole; (b) a material impairment of the ability of either Borrower or MAHGT to perform its obligations

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under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against either Borrower or MAHGT of any Loan Document to which it is a party.

“Maturity Date” means (a) December 2, 2005, or (b) such earlier date upon which the Commitments may be terminated in accordance with the terms hereof.

“MMCF” means MMA Construction Finance, LLC, a Maryland limited liability company, formerly known as MuniMae Midland Construction Finance, LLC. All references in the Original Credit Agreement or any other Loan Document to MMCF or MuniMae Midland Construction Finance, LLC shall be deemed to be references to MMA Midland Construction Finance, LLC.

“MMCF Pledge Agreement” means that certain Pledge Agreement of MMCF, dated January 15, 2004, as the same may be amended, supplemented, or modified, made by MMCF in favor of Administrative Agent for the benefit of the Lenders, pursuant to which MMCF has pledged and granted to the Administrative Agent for the benefit of the Lenders a security interest in the collateral described therein.

“MMI” means Midland Mortgage Investment Corporation, a Florida corporation.

“MMI Pledge Agreement” means that certain Pledge Agreement of MMI, dated January 15, 2004, as the same may be amended, supplemented, or modified, made by MMI in favor of Administrative Agent for the benefit of the Lenders, pursuant to which MMI has pledged and granted to the Administrative Agent for the benefit of the Lenders a security interest in the collateral described therein.

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding three calendar years, has made or been obligated to make contributions.

“Notes” means, collectively, the Committed Loan Notes.

“Obligations” means all advances to, and debts, liabilities, obligations, covenants, and duties of either Borrower arising under any Loan Document, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising fixed or contingent, joint, several or joint and several and including interest that accrues after the commencement by or against either Borrower or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding.

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (b) with respect to any limited liability company, the articles of formation and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation and any agreement, instrument, filing or notice with respect thereto filed

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in connection with its formation with the secretary of state or other department in the state of its formation, in each case as amended from time to time.

“Original Credit Agreement” is defined in Recital 2 hereof.

“Outstanding Amount” means (i) with respect to Committed Loans, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

“Participant” has the meaning specified in Section 10.07(d).

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by either Borrower or any ERISA Affiliate or to which either Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years.

“Person” means any individual, trustee, corporation, general partnership, limited partnership, limited liability company, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture or Governmental Authority.

“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by either Borrower or any ERISA Affiliate of either Borrower.

“Pro Rata Share” means, with respect to each Lender, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments set forth opposite the name of such Lender on Schedule 2.01, as such share may be adjusted as contemplated herein.

“Register” has the meaning set forth in Section 10.07(c).

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, and (b) with respect to an L/C Credit Extension, a Letter of Credit Application.

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“Required Lenders” means, as of any date of determination, at least two Lenders whose Voting Percentages aggregate more than 50% (excluding Defaulting Lenders).

“Responsible Officer” means (a) relating to the delivery of any Compliance Certificate, the chief executive officer, president, chief financial officer or controller of a Borrower, and (b) relating to all other submissions and deliveries, any duly elected officer or authorized employee of a Borrower. Any document delivered hereunder that is signed by a Responsible Officer of a Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Borrower.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock of either Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or of any option, warrant or other right to acquire any such capital stock.

“Special Purchase Agreement” means the Special Purchase Agreement dated effective December 1, 1993, between Fannie Mae and MMI, as amended by Amendment to Special Purchase Agreement dated December 7, 1994, a Letter Agreement dated August 25, 1995, a Second Amendment to Special Purchase Agreement dated June 10, 1997, DUS Tax Credit Addendum to Selling and Servicing Contract and Special Purchase Agreement executed on or about June 8, 1998, and Third Amendment to Special Purchase Agreement dated as of August 15, 2001, and as the same may be amended, supplemented, or modified from time to time in a manner not adverse to the interests of MAHGT, MMI, MMCF, or the Lenders.

“Stabilization” means the applicable project has achieved 90% occupancy for ninety consecutive days.

“Subscription Loan Facility” means the $72,000,000 revolving credit facility, by and among MMCF, as borrower, Bank of America, N.A., as administrative agent, and the lenders named therein, as lenders, as evidenced by that certain Revolving Credit Agreement dated as of November 12, 2003, and as same may be amended, restated, supplemented or restructured from time to time.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Borrower.

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“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender).

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

“Takeout Commitment” means the issuance of a commitment to purchase or fund a loan from MMI or MMCF on or before the completion of the construction and the termination of the loan.

“Tangible Net Worth” means, as to any Person at any particular time, all amounts which, in conformity with GAAP, would be included as shareholders’ equity on a balance sheet of such Person; provided, however, there shall be excluded therefrom: (a) any amount at which shares of beneficial interest of such Person appear as an asset on such Person’s balance sheet, (b) goodwill, including any amounts, however designated, that represent the excess of the purchase price paid for assets or stock over the value assigned thereto, (c) patents, trademarks, trade names, and copyrights, (d) deferred expenses, (e) loans and advances to any stockholder, director, officer, or employee of such Person or any Affiliate of such Person, and (f) all other assets which are properly classified as intangible assets.

“Threshold Amount” means $5,000,000.

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“Type” means with respect to a Committed Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“Unreimbursed Amount” has the meaning set forth in Section 2.04(c)(i).

“Voting Percentage” means, as to any Lender, (a) at any time when the Commitments are in effect, such Lender’s Pro Rata Share and (b) at any time after the termination of the Commitments, the percentage (carried out to the ninth decimal place) which (i) the sum of (A) the Outstanding Amount of such Lender’s Committed Loans, plus (B) such Lender’s Pro Rata Share of the Outstanding Amount of L/C Obligations, then constitutes of (ii) the Outstanding Amount of all Loans and L/C Obligations; provided, however, that if any Lender has failed to fund any portion of the Committed Loans or participations in L/C Obligations required to be funded by it hereunder (each such Lender being from time to time hereinafter called a “Defaulting Lender)”, such Lender’s Voting Percentage shall be deemed to be -0-, and the respective Pro Rata Shares and Voting Percentages of the other Lenders shall be recomputed for purposes of this definition, and the definition of “Required Lenders” shall be determined without regard to such Lender’s Commitment or the outstanding amount of its Committed Loans and L/C Advances, as the case may be.

1.02 Other Interpretive Provisions.

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) (i) The words “herein” and “hereunder” and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof.

(ii) Unless otherwise specified herein, Article, Section, Exhibit and Schedule references are to this Agreement.

(iii) The term “including” is by way of example and not limitation.

(iv) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced.

(c) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

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(d) Section headings herein and the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

1.03 Accounting Terms. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

1.04 Rounding. Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05 References to Agreements and Laws. Unless otherwise expressly provided herein, (a) references to agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 Committed Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Committed Loan”) to the Borrowers on a joint and several basis from time to time on any Business Day during the period from the Closing Date to the Maturity Date, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Committed Borrowing, (i) the aggregate Outstanding Amount of all Loans and L/C Obligations shall not exceed the lesser of the Aggregate Commitments and the Borrowing Base, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, shall not exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein. Each Borrower represents that the value of the consideration received and to be received by it hereunder or pursuant hereto is reasonably worth at least as much as each Borrower’s liability under this Agreement and the other Loan Documents, and that liability may reasonably be expected to directly or indirectly benefit each Borrower.

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2.02 Borrowings, Conversions and Continuations of Committed Loans.

(a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Committed Loans as the same Type shall be made upon the Borrowers’ irrevocable written notice by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of each of the Borrowers. Each such notice must be received by the Administrative Agent not later than 12:00 noon, New York, New York time, (i) five (5) Business Days prior to the requested date of any Committed Borrowing if such Committed Borrowing includes an addition of loans to the Borrowing Base, or (ii) if no loans are to be added to the Borrowing Base, then (x) three (3) Business Days prior to the requested date of the Committed Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (y) on the requested date of any Committed Borrowing of Base Rate Loans. Each Committed Loan Notice shall be accompanied by a Borrowing Base Report and a certificate as of such date signed by a Responsible Officer to the effect that they are in compliance with the Borrowing Base as of the date of such Committed Borrowing, and a Borrowing Base Submission Package if mortgage loans are being delivered at such time for inclusion in the Borrowing Base. Each Committed Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Committed Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice, which must be in writing, shall specify (i) whether the Borrowers are requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Committed Loans as the same Type, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrowers fail to specify a Type of Committed Loan in a Committed Loan Notice or if the Borrowers fail to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made or continued as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrowers request a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of its Pro Rata Share of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Borrowers, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 2:00 p.m., New York, New York time on the Business Day specified in the applicable Committed Loan Notice. Upon

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satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrowers in like funds as received by the Administrative Agent either by (i) crediting the account of either Borrower (at the direction of the Borrowers) on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to the Administrative Agent by the Borrowers; provided, however, that if, on the date of the Committed Borrowing there are L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings, and second, to the Borrowers as provided above.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of the Interest Period for such Eurodollar Rate Loan. During the existence of a Default or Event of Default, no Committed Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders, and the Required Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans be converted immediately to Base Rate Loans.

(d) The Administrative Agent shall promptly notify the Borrowers and the Lenders of the interest rate applicable to any Eurodollar Rate Committed Loan upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. The Administrative Agent shall notify the Borrowers and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

(e) After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than five Interest Periods for Eurodollar Rate Loans in effect with respect to Committed Loans.

2.03 Letters of Credit

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of a Borrower or other Persons (so long as a Borrower is the applicant with respect to all Letters of Credit and the Letter of Credit is to be used in accordance with Section 6.12), and to amend or renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of a Borrower or other Persons (so long as a Borrower is the applicant with respect thereto); provided that the L/C Issuer shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in any Letter of Credit if, as of the date of such L/C Credit Extension, (x) the Outstanding

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Amount of all L/C Obligations and all Loans would exceed the lesser of the Aggregate Commitments or the Borrowing Base, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, would exceed such Lender’s Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrowers may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit (and, solely in connection with deemed compliance with Section 6.12 hereof, amendments and renewals thereto) shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof. The Borrowers expressly assume and agree to pay, perform, and be bound by all reimbursement obligations under all Existing Letters of Credit, this Agreement and the other Loan Documents. The Borrowers agree to provide the L/C Issuer with replacement Letter of Credit Applications for all Existing Letters of Credit dated as of the Closing Date of this Agreement.

(ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(B) subject to Section 2.03(b)(iii), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last renewal, unless the Required Lenders have approved such expiry date;

(C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date;

(D) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer; or

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(E) such Letter of Credit is in a face amount less than $100,000, or is to be used for a purpose other than in the ordinary course of business of a Borrower or denominated in a currency other than Dollars.

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(b) Procedures for Issuance and Amendment of Letters of Credit; Evergreen Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of either Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of such Borrower. Such L/C Application must be received by the L/C Issuer and the Administrative Agent not later than 12:00 noon, New York, New York time, at least five (5) Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose of the Letter of Credit; and (H) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from a Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of such Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a participation in such Letter of

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Credit in an amount equal to the product of such Lender’s Pro Rata Share times the amount of such Letter of Credit.

(iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrowers and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

(c) Drawings and Reimbursements; Funding of Participations.

(i) Upon any drawing under any Letter of Credit, the L/C Issuer shall notify the Borrowers and the Administrative Agent thereof. Not later than 12:00 noon, New York, New York time, on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrowers shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrowers fail to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and such Lender’s Pro Rata Share thereof. In such event, the Borrowers shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i) make funds available to the Administrative Agent for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than 2:00 p.m., New York, New York time on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Committed Base Rate Loan to the Borrowers in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrowers, jointly and severally, shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the

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account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.

(iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall be solely for the account of the L/C Issuer.

(v) Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrowers or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default or Event of Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrowers to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

(d) Repayment of Participations.

(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment related to such Letter of Credit (whether directly from the Borrowers or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), or any payment of interest thereon, the Administrative Agent will distribute to such Lender its Pro Rata Share thereof in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned, each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Pro Rata Share

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thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.

(e) Obligations Absolute. The obligation of the Borrowers to reimburse the L/C Issuer for each drawing under each Letter of Credit, and to repay each L/C Borrowing and each drawing under a Letter of Credit that is refinanced by a Borrowing of Committed Loans, shall be joint and several, absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;

(ii) the existence of any claim, counterclaim, set-off, defense or other right that the Borrowers may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrowers.

Each Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is issued for its account and, in the event of any claim of noncompliance with such Borrower’s instructions or other irregularity, such Borrower will immediately notify the L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

(f) Role of L/C Issuer. Each Lender and the Borrowers agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any

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document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. No Agent-Related Person nor any of the respective correspondents, participants or assignees of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to their use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrowers’ pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Agent-Related Person, nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrowers which the Borrowers prove were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of 10 days prior to the Maturity Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the Borrowers shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount).

(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C Issuer and a Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the “ICC”) at the time of issuance (including the ICC decision published by the Commission on Banking Technique and Practice on April 6, 1998 regarding the European single currency (euro)) shall apply to each commercial Letter of Credit.

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(i) Letter of Credit Fees. The Borrowers shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share a Letter of Credit fee for each Letter of Credit equal to the product of 00.75% per annum times the actual daily maximum amount available to be drawn under each Letter of Credit. Such fee for each Letter of Credit shall be due and payable quarterly in arrears on the first Business Day of each January, April, July, and October, commencing with the first such date to occur after the Closing Date (for each Existing Letter of Credit), and the first such date to occur after the issuance of any Letter of Credit, and on the Maturity Date.

(j) Documentary and Processing Charges Payable to L/C Issuer. The Borrowers shall pay directly to the L/C Issuer for their own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such fees and charges are due and payable on demand and are nonrefundable.

(k) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.

2.04 Prepayments.

(a) The Borrowers may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 12:00 noon, New York, New York time, (A) three Business Days prior to any date of prepayment of Eurodollar Rate Committed Loans, and (B) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate Committed Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Committed Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Borrowers, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. Each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with their respective Pro Rata Shares.

(b) If for any reason the Outstanding Amount of all Loans and L/C Obligations at any time exceeds the lesser of the Aggregate Commitments or the Borrowing Base then in effect, the Borrowers shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess.

2.05 Reduction or Termination of Commitments. The Borrowers may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or permanently reduce the Aggregate Commitments to an amount not less than the then Outstanding Amount of all Loans

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and L/C Obligations; provided that (i) any such notice shall be received by the Administrative Agent not later than 12:00 noon, New York, New York, time, five Business Days prior to the date of termination or reduction, and (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof. The Administrative Agent shall promptly notify the Lenders of any such notice of reduction or termination of the Aggregate Commitments. Once reduced in accordance with this Section, the Commitments may not be increased. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Pro Rata Share. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

2.06 Repayment of Loans. The Borrowers shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans outstanding on such date.

2.07 Interest.

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Committed Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

(b) If any amount payable by the Borrowers under any Loan Document is not paid when due (without regard to any applicable grace periods), such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.08 Utilization Fee. In addition to certain fees described in the Fee Letter and subsections (i) and (j) of Section 2.03, the Borrowers shall pay to the Administrative Agent for the account of each Lender, other than any Defaulting Lender, in accordance with its Pro Rata Share, a utilization fee of 0.125% times the actual daily unused portion of each Lender’s Commitment. The utilization fee shall be due and payable quarterly in arrears on the first Business Day of each January, April, July and October, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. The utilization fee shall be calculated quarterly in arrears. The utilization fee shall accrue at all times, including at any time during which one or more of the conditions in Article IV is not met.

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2.09 Computation of Interest and Fees. Computation of interest on Base Rate Loans shall be calculated on the basis of a year of 360 days and the actual number of days elapsed. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall bear interest for one day.

2.10 Evidence of Debt.

(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Loans and L/C Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of such Lender shall control. Upon the request of any Lender made through the Administrative Agent, such Lender’s Loans may be evidenced by a Committed Loan Note in addition to such accounts or records. Each Lender may attach schedules to its Note(s) and endorse thereon the date, Type (if applicable), amount and maturity of the applicable Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control.

2.11 Payments Generally.

(a) All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 1:00 p.m., New York, New York time, on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 1:00 p.m., New York, New York, time, shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.

(b) Subject to the definition of “Interest Period,” if any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the

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next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(c) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i) first, toward costs and expenses (including Attorney Costs and amounts payable under Article III) incurred by the Administrative Agent and each Lender, (ii) second, toward repayment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (iii) third, toward repayment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.

(d) Unless the Borrowers or any Lender has notified the Administrative Agent prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrowers or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrowers or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then:

(i) if the Borrowers fail to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds, at the Federal Funds Rate from time to time in effect; and

(ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrowers to the date such amount is recovered by the Administrative Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Committed Loan, included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand therefor upon the Borrowers, and the Borrowers shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrowers may have against any Lender as a result of any default by such Lender hereunder.

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A notice of the Administrative Agent to any Lender with respect to any amount owing under this subsection (d) shall be conclusive, absent manifest error.

(e) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender within 3 Business Days, or if thereafter then with interest thereon at a rate per annum equal to the Federal Funds Rate from time to time in effect unless such delay in return is due to acts of God or war or by requirements of applicable Governmental Authority.

(f) The obligations of the Lenders hereunder to make Committed Loans and to fund participations in Letters of Credit are several and not joint. The failure of any Lender to make any Committed Loan or to fund any such participation on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan or purchase its participation.

(g) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

2.12 Sharing of Payments. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, or the participations in L/C Obligations held by it, any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such sub-participations in the participations in L/C Obligations held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loan or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender, such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrowers agree that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that

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purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.

2.13 Joint and Several Liability. Each of the Borrowers acknowledges, agrees, represents and warrants the following:

(a) The Lenders have been induced to make the Credit Extensions to the Borrowers in part based upon the assurances by each of the Borrowers that each of the Borrowers desires that the Obligations under the Loan Documents be honored and enforced as separate obligations of each of the Borrowers, should the Administrative Agent and the Lenders desire to do so.

(b) Notwithstanding the foregoing, the Borrowers shall be jointly and severally liable to the Lenders for all representations, warranties, covenants, obligations and indemnities, including, without limitation, the Committed Loans and the other Obligations, and the Administrative Agent and the Lenders may at their option enforce the entire amount of the Committed Loans and the other Obligations against any one or more of the Borrowers.

(c) The Administrative Agent (on behalf of the Lenders) may exercise remedies against each of the Borrowers and its property separately, whether or not the Administrative Agent exercises remedies against the other of the Borrowers or its property. The Administrative Agent may enforce one or more of the obligations of one of the Borrowers without enforcing obligations of the other of the Borrowers. Any failure or inability of the Administrative Agent to enforce one or more obligations of one of the Borrowers shall not in any way limit the Administrative Agent’s right to enforce the obligations of the other of the Borrowers. If the Administrative Agent forecloses or exercises similar remedies under any one or more of the Loan Documents, then, to the extent permitted by applicable law, such foreclosure or similar remedy shall be deemed to reduce the balance of the Obligations only to the extent of the cash proceeds actually realized by the Lenders from such foreclosure or similar remedy or, if applicable, the Administrative Agent’s credit bid at such sale, regardless of the effect of such foreclosure or similar remedy on the Obligations secured by such Loan Documents under the applicable state law.

(d) Each Borrower represents that the value of the consideration received and to be received by it hereunder and under the other Loan Documents is reasonably worth at least as much as each Borrower’s liability under this Agreement, and that liability may reasonably be expected to directly or indirectly benefit each Borrower.

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ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Any and all payments by the Borrowers to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as “Taxes”). If the Borrowers shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers shall make such deductions, (iii) the Borrowers shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, the Borrowers shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof.

(b) In addition, the Borrowers agree to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other Taxes”).

(c) If the Borrowers shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrowers shall also pay to the Administrative Agent (for the account of such Lender) or to such Lender, at the time interest is paid, such additional amount that such Lender specifies as necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) such Lender would have received if such Taxes or Other Taxes had not been imposed.

(d) The Borrowers agree to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the

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relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor.

3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or materially restricts the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the applicable offshore Dollar market, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrowers through the Administrative Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to Eurodollar Rate Committed Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrowers shall also pay interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

3.03 Inability to Determine Rates. If the Administrative Agent determines in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the applicable offshore Dollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for such Eurodollar Rate Loan, or (c) the Eurodollar Rate for such Eurodollar Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Eurodollar Rate Loan, the Administrative Agent will promptly notify the Borrowers and all Lenders. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrowers may revoke any pending request for a Committed Borrowing, conversion or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.

3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.

(a) If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in

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amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements contemplated by Section 3.04(c)), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.

(b) If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.

(c) The Borrowers shall pay to each Lender, as long as such Lender shall be required under regulations of the Board to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional costs on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrowers shall have received at least 15 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 15 days from receipt of such notice.

3.05 Funding Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or

(b) any failure by the Borrowers (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrowers; or

(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrowers pursuant to Section 10.16;

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate

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the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Committed Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the applicable offshore Dollar interbank market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Committed Loan was in fact so funded.

3.06 Matters Applicable to all Requests for Compensation.

(a) A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods.

(b) Upon any Lender’s making a claim for compensation under Section 3.01 or 3.04, the Borrowers may remove or replace such Lender in accordance with Section 10.16.

3.07 Survival. All of the Borrowers’ obligations under this Article III shall survive termination of the Commitments and payment in full of all the other Obligations.

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions of Initial Credit Extension. The obligation of each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

(a) Unless waived by all the Lenders (or by the Administrative Agent with respect to immaterial matters), the Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Person, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and its legal counsel:

(i) executed counterparts of this Agreement,

(ii) executed counterparts of the MAHGT Pledge Agreement, the MMI Pledge Agreement, the MMCF Pledge Agreement, the Forward Commitment Agreement, the Acknowledgement and Consent, and the Borrower Security Agreement sufficient in number for distribution to the Administrative Agent, each Lender and the Borrowers;

(iii) executed counterparts of the First Amendment to Forward Commitment Agreement, the First Amendment to Borrower Security Agreement and the Confirmation

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of Acknowledgment and Consent sufficient in number for distribution to the Administrative Agent, each Lender and the Borrowers;

(iv) Committed Loan Notes executed jointly and severally by the Borrowers in favor of each Lender requesting such a Note, each in a principal amount equal to such Lender’s Commitment;

(v) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Borrower and MAHGT as the Administrative Agent may require to establish the identities of and verify the authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Borrower or MAHGT is a party;

(vi) such evidence as the Administrative Agent may reasonably require to verify that each Borrower and MAHGT is duly organized or formed, validly existing, in good standing and qualified to engage in business in each jurisdiction in which it is required to be qualified to engage in business, including certified copies of each such Person’s Organization Documents, certificates of good standing and/or qualification to engage in business and tax clearance certificates;

(vii) a certificate signed by a Responsible Officer of each of the Borrowers certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements which has or could be reasonably expected to have a Material Adverse Effect;

(viii) an opinion of counsel to each Borrower and MAHGT in form and substance satisfactory to the Administrative Agent; and

(ix) such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuer, or the Required Lenders reasonably may require.

(b) Any fees required to be paid on or before the Closing Date shall have been paid.

(c) Unless waived by the Administrative Agent, the Borrowers shall have paid all Attorney Costs of the Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Administrative Agent).

(d) The Administrative Agent shall have received:

(i) Evidence satisfactory to the Administrative Agent that the execution, delivery, and performance of this Agreement and the other Loan Documents

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contemplated hereby have been duly authorized in accordance with the appropriate proceedings of each of the Borrowers and MAHGT, together with a certificate, certified by a Responsible Officer of each of the Borrowers and MAHGT, certifying the names of the Persons authorized to sign this Agreement and each of the other Loan Documents to which the Borrowers or MAHGT are or are to be a party together with specimen signatures of such Persons.

(ii) Resolutions of the Board of Directors of MMI certified by a Secretary or an Assistant Secretary of MMI which authorize the execution, delivery, and performance by MMI of the Loan Documents to which MMI is or is to be a party.

(iii) A certificate of incumbency certified by the Secretary or an Assistant Secretary of MMI certifying the names of the officers of MMI authorized to sign the Loan Documents to which MMI is or is to be a party together with specimen signatures of such officers.

(iv) The articles of incorporation of MMI certified by the Secretary of State of the state of incorporation of MMI.

(v) The bylaws of MMI certified by the Secretary or an Assistant Secretary of MMI.

(vi) Certificates of the appropriate government officials of the state of incorporation MMI to the existence and good standing of MMI.

(vii) Resolutions of the Board of Directors or comparable governing body of MMCF certified by a Secretary or an Assistant Secretary of MMCF which authorize the execution, delivery, and performance by MMCF of the Loan Documents to which MMCF is or is to be a party.

(viii) A certificate of incumbency certified by the Secretary or an Assistant Secretary or other authorized officer of MMCF certifying the names of the officers of MMCF authorized to sign the Loan Documents to which MMCF is or is to be a party together with specimen signatures of such officers.

(ix) The articles of organization of MMCF certified by the Secretary of State of the state of organization of MMCF.

(x) The bylaws or equivalent document of MMCF certified by the Secretary or an Assistant Secretary of MMCF.

(xi) Certificates of the appropriate government officials of the state of organization MMCF to the existence and good standing of MMCF.

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(xii) A copy of the amended and restated Group Trust Agreement of MAHGT, certified as of a current date to be true and correct by the Department of the State of Florida.

(xiii) Evidence satisfactory to the Administrative Agent that the execution, delivery, and performance of the Loan Documents contemplated hereby to which MAHGT is a party have been duly authorized in accordance with the appropriate trust proceedings of MAHGT, together with a certificate, certified by an authorized trustee of MAHGT, certifying the names of the Persons authorized to sign the Loan Documents to which MAHGT is or is to be a party together with specimen signatures of such Persons.

(xiv) Uniform Commercial Code financing statements authorized by the Borrowers and MAHGT (and executed if necessary) and covering such Collateral as the Administrative Agent may request.

(xv) Certificate by Responsible Officers or Trustees, as applicable, of MMI, MMCF and MAHGT, certifying the documents and certificates delivered pursuant to Sections 4.01(d)(xv) through (xvii) and Sections 4.01(d)(xix) and (xxi) of the Original Credit Agreement are in full force and effect and have not been amended, modified, supplemented or cancelled; otherwise complete sets of such documents and certificates.

(xvi) The results of a Uniform Commercial Code search showing all financing statements and other documents or instruments on file against the Borrowers and MAHGT in the offices of the Secretary of State of Florida and Maryland. Such search shall be as of a date no more than ten (10) days prior to the date of this Agreement.

(xvii) Confirmation from the process agent under this Agreement, the Forward Commitment Agreement, and Acknowledgment and Consent that it has accepted its appointment as process agent under each such agreement.

Administrative Agent acknowledges that the condition precedent set forth in Section 4.01(a)(ii) has been satisfied.

4.02 Conditions to all Credit Extensions and Conversions and Continuations. The obligation of each Lender to honor any Request for Credit Extension is subject to the following conditions precedent:

(a) The representations and warranties of the Borrowers contained in Article V, or which are contained in any document furnished at any time under or in connection herewith, shall be true and correct on and as of the date of such Credit Extension, conversion or continuation, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date.

(b) No Default or Event of Default shall exist, or would result from such proposed Credit Extension, conversion or continuation.

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(c) The Administrative Agent and, if applicable, the L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof.

(d) The Administrative Agent shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as the Administrative Agent or the Required Lenders reasonably may require.

(e) At least (i) five (5) Business Days prior to the date of the requested Credit Extension if such Credit Extension includes an addition of any loans to the Borrowing Base, or (ii) if such Credit Extension does not include an addition of loans to the Borrowing Base, (x) on the requested date of any Committed Borrowing of Base Rate Loans, and (y) three (3) Business Days prior to the date of any other requested Credit Extension, the Administrative Agent shall have received a Borrowing Base Report dated the date of such Credit Extension which shall include a representation that Borrowers are in compliance with the Borrowing Base after giving effect to the requested Credit Extension and, if such Credit Extension includes an addition of any loans to the Borrowing Base, all items referenced in Schedule 4.01, including, without limitation, any original notes (or evidence that any such original note is being held pursuant to a bailment agreement acceptable to the Administrative Agent), and copies of guarantees, permanent loan commitments, mortgages/deeds of trust, and title insurance policies, such related documents as Administrative Agent may request, and the Administrative Agent shall have approved same; provided that at such time as no Mortgage Loans are subject to Pre-Commitment Review by Fannie Mae, then it shall not be necessary that the Administrative Agent shall have approved such loans, but nonetheless the Administrative Agent shall have the right at any time to reject any such loan upon review of the information delivered to the Administrative Agent with respect to such loan, and provided further that if at any time Pre-Commitment Review shall be reinstated by Fannie Mae, then the approval of the Administrative Agent with respect to all such loans shall be required.

(f) Administrative Agent shall have received evidence satisfactory to Administrative Agent (i) that loans in an amount sufficient to support the Borrowing Base, including any new loans submitted with the requested Credit Extension or Letter of Credit, are available to be purchased by Fannie Mae under the Special Purchase Agreement and (ii) that Fannie Mae’s commitment thereunder is sufficient to purchase such loans.

Each Request for Credit Extension shall be submitted jointly by the Borrowers and shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a), (b), and (f) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

The Borrowers represent and warrant to the Administrative Agent and the Lenders that:

5.01 Existence, Qualification and Power; Compliance with Laws. Each Borrower (a) is a corporation, partnership, limited liability company or trust duly organized or formed,

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validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business and to execute, deliver, and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws, except in each case referred to in clause (c) or this clause (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

5.02 Authorization; No Contravention. The execution, delivery and performance by each Borrower of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any Contractual Obligation to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its property is subject; or (c) violate any Law.

5.03 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Borrower of this Agreement or any other Loan Document.

5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been duly executed and delivered by each Borrower. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Borrower, enforceable against each Borrower that is party thereto in accordance with its terms.

5.05 Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of each Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of each Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness in accordance with GAAP consistently applied throughout the period covered thereby.

(b) Since the date of the Audited Financial Statements, there has been no event or circumstance that has or could reasonably be expected to have a Material Adverse Effect.

5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of either Borrower after due and diligent investigation, threatened or

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contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against either of the Borrowers, or its Subsidiaries or against any of their properties or revenues which (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) if determined adversely, could reasonably be expected to have a Material Adverse Effect.

5.07 No Default. Neither of the Borrowers nor its Subsidiaries is in default under or with respect to any Contractual Obligation which could be reasonably expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

5.08 Ownership of Property; Liens. Each Borrower and its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, have a Material Adverse Effect. As of the Effective Date, the property of each of the Borrowers and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.

5.09 Environmental Compliance. The Borrowers and their Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and, as a result thereof, the Borrowers have reasonably concluded that such Environmental Laws and claims would not, individually or in the aggregate, have a Material Adverse Effect.

5.10 Insurance. The properties of each of the Borrowers and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrowers, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where each of the Borrowers or its Subsidiaries operate.

5.11 Taxes. Each of the Borrowers and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against either of the Borrowers or any Subsidiary that would, if made, have a Material Adverse Effect.

5.12 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to

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the best knowledge of each Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. Each of the Borrowers and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of each of the Borrowers, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could be reasonably expected to result in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither of the Borrowers nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither of the Borrowers nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither of the Borrowers nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

5.13 Subsidiaries. Neither of the Borrowers has any Subsidiaries nor does it have any equity investments in any other corporation or entity other than those specifically disclosed in Schedule 5.13.

5.14 Margin Regulations; Investment Company Act; Public Utility Holding Company Act.

(a) Neither of the Borrowers is engaged and neither Borrower will engage, principally or as one of their important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board), or extending credit for the purpose of purchasing or carrying margin stock.

(b) Neither of the Borrowers, any Person controlling either of the Borrowers, or any Subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

5.15 Disclosure. No statement, information, report, representation, or warranty made by either Borrower in any Loan Document or furnished to the Administrative Agent or any Lender by or on behalf of any Borrower in connection with any Loan Document contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were

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made, not misleading. To the knowledge of each Borrower, all of the representations and warranties made by MAHGT in the Forward Commitment Agreement are true and correct.

5.16 Intellectual Property; Licenses, Etc. Each of the Borrowers and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of each of the Borrowers, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by either of the Borrowers or any of its Subsidiaries infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of each of the Borrowers, threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of each of the Borrowers, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect.

5.17 Fannie Mae Documents. The Borrowers have delivered to the Administrative Agent a true and correct copy of all agreements among the Borrowers, MAHGT, and Fannie Mae or any of them, all of which agreements are in full force and effect and no defaults exist thereunder. MMI is and shall remain a DUS Lender and a Special Lender under the terms and conditions of the Special Purchase Agreement.

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrowers shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, 6.03, and 6.12) cause each of their respective Subsidiaries to,

6.01 Financial Statements. Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent, and the Required Lenders:

(a) as soon as available, but in any event within 120 days after the end of each fiscal year of such Persons, a consolidated balance sheet of each of the Borrowers and its respective Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with GAAP and shall not be subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications and exceptions not reasonably acceptable to the Required Lenders; and

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(b) as soon as available, and in any event within sixty (60) days after the end of each fiscal quarter, a copy of an unaudited financial report of each of the Borrowers as of the end of such quarter and for the portion of the fiscal year then ended, containing balance sheets and statements of income, and retained earnings, all in reasonable detail certified by a Responsible Officer of each of the Borrowers to have been prepared in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and to fairly and accurately present (subject to year-end audit adjustments) the financial condition and results of operations of the respective Borrower at the date and for the periods indicated therein.

6.02 Certificates; Other Information. Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

(a) Concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its independent certified public accountants certifying such financial statements;

(b) Concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of each of the Borrowers;

(c) As soon as available, and in any event within twenty-five (25) days after the end of each calendar month, a Borrowing Base Report in substantially the form of Exhibit F hereto, certified by a Responsible Officer of each of the Borrowers, together with (i) a duly completed Compliance Certificate signed by a Responsible Officer of each of the Borrowers, (ii) the accompanying documentation required as set forth on Schedule 4.01 hereto, including the property debt service coverage ratio information, and (iii) the schedule of all loans in the Borrowing Base required by subsections A(7) and A(8) thereof;

(d) Concurrently with the delivery of a Committed Loan Notice, the documentation required as set forth on Schedule 4.01 hereto, if the Committed Loan Notice includes an addition of loans to the Borrowing Base;

(e) Upon request by Administrative Agent, promptly after the furnishing thereof, copies of any financial statement or report received by either of the Borrowers from Fannie Mae or furnished to Fannie Mae by either of the Borrowers, or any other party pursuant to the terms of any indenture, loan, or credit or similar agreement (excluding agreements by the Borrowers to make loans) and not otherwise required to be furnished to the Administrative Agent pursuant to any other clause of this Section;

(f) Promptly upon receipt of same, copies of any update, announcement, lender memo, amendment, modification, supplement, or reissuance of the DUS Guide;

(g) As soon as possible and in any event within three (3) days after the occurrence thereof, written notice of the reinstatement of the Pre-Commitment Review Period for any region under and as defined in the Special Purchase Agreement and written notice of termination of the Pre-Commitment Review Period for any region;

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(h) Promptly after such sale, but in any event within three (3) Business Days thereafter, written notice of the sale or participation of any loan to Fannie Mae pursuant to the Special Purchase Agreement that has been submitted by Borrowers for inclusion in the Borrowing Base;

(i) Promptly, such additional information regarding the business, financial or corporate affairs of the Borrowers or their Subsidiaries as the Administrative Agent, at the request of any Lender, may from time to time request.

6.03 Notices. Promptly notify the Administrative Agent and each Lender:

(a) of the occurrence of any Default or Event of Default;

(b) of any matter that has resulted or may result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of either of the Borrowers or any of its Subsidiaries; (ii) any dispute, litigation, investigation, proceeding or suspension between either of the Borrowers or any of its Subsidiaries and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting either of the Borrowers or any of its Subsidiaries, including pursuant to any applicable Environmental Laws;

(c) of any litigation, investigation or proceeding affecting any Borrower in which the amount involved exceeds the Threshold Amount, or in which injunctive relief or similar relief is sought, which relief, if granted, could be reasonably expected to have a Material Adverse Effect;

(d) of the occurrence of any ERISA Event;

(e) of any material change in the DUS Guide, the policies and procedures of Fannie Mae, and any accounting policies or financial reporting practices by the Borrowers or their Subsidiaries.

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of each of the Borrowers setting forth details of the occurrence referred to therein and stating what action the Borrowers have taken and propose to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement or other Loan Document that have been breached.

6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all their obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon them or their properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Borrowers or their Subsidiaries; (b) all lawful claims which, if unpaid, would by law become a Lien upon their property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

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6.05 Preservation of Existence, Etc. Preserve, renew and maintain in full force and effect their legal existence and good standing under the Laws of the jurisdiction of their organization; take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of their business, except in a transaction permitted by Section 7.01 or 7.02; and preserve or renew all of their registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of their material properties and equipment necessary in the operation of their business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of their facilities.

6.07 Maintenance of Insurance. Maintain with financially sound and reputable insurance companies that are not Affiliates of the Borrowers, insurance with respect to their properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

6.08 Compliance with Laws. Comply in all material respects with the requirements of all Laws applicable to them or to their business or property, except in such instances in which (i) such requirement of Law is being contested in good faith or a bona fide dispute exists with respect thereto; or (ii) the failure to comply therewith could not be reasonably expected to have a Material Adverse Effect.

6.09 Books and Records.

(a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of each of the Borrowers or its Subsidiaries, as the case may be; and

(b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over either of the Borrowers or its Subsidiaries, as the case may be.

6.10 Inspection Rights. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of their properties, to examine their corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their affairs, finances and accounts with their directors, officers, and independent public accountants, all at the expense of the Borrowers and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrowers; provided, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent

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contractors) may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice.

6.11 Compliance with ERISA. Do, and cause each of their ERISA Affiliates to do, each of the following: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code.

6.12 Use of Proceeds. Use the proceeds of the Credit Extensions to warehouse loans for multi-family projects (and issue Letters of Credit supporting these loans) for which each loan is, among other things (a) eligible for purchase by Fannie Mae (until such loans are sold to Fannie Mae or another investor), and (b) secured by property.

6.13 Loan Committee Meetings. The Borrowers will permit representatives of the Lenders to attend and participate in meetings of representatives of the Borrowers at which proposed loans to be made by the Borrowers and which may be submitted to Administrative Agent for inclusion in the Borrowing Base will be discussed.

6.14 MMI as DUS Lender. MMI shall retain its status as a DUS Lender.

6.15 Use of Approved Loan Documentation. The Borrowers will cause all loans made by them after the date hereof in which MAHGT will hold a participation interest, for which MAHGT will issue a long-term financing commitment, or which are submitted for inclusion in the Borrowing Base to be made pursuant to Approved Loan Documentation.

6.16 Servicing. The Borrowers shall comply with Section 10.22 of this Agreement addressing servicing of the mortgage loans which are Collateral.

6.17 Forward Commitment Agreement. Upon the occurrence of an Event of Default, promptly, but in no event later than two (2) days following such occurrence, the Borrowers shall issue a Funding Request under the Forward Commitment Agreement requesting the funding of the Forward Commitment.

6.18 Enforcement of Covenants. The Borrowers shall enforce each of the affirmative and negative covenants of MAHGT under the Forward Commitment Agreement.

ARTICLE VII.

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrowers shall not, and shall it permit their Subsidiaries to, directly or indirectly:

7.01 Fundamental Changes. Merge, consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of their assets (whether now owned or hereafter acquired) to or in favor of any Person unless the respective Borrower affected by such merger is the surviving entity.

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7.02 Dispositions. Make any Disposition or enter into any agreement to make any Disposition, except:

(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

(b) Dispositions of inventory in the ordinary course of business;

(c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property, (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property or (iii) the Board of Directors or senior management of the applicable Borrower or Subsidiary has determined in good faith that the failure to replace such property will not be detrimental to the business of such Borrower or Subsidiary;

(d) Dispositions of property by any Subsidiary to its parent Borrower or to a wholly-owned Subsidiary;

(e) Dispositions to Fannie Mae in compliance with Section 10.22; and

(f) Dispositions permitted by Section 7.04,

provided, however, that any Disposition pursuant to clauses (a) through (f) shall be for fair market value and shall only be permitted when no Default exists or will result therefrom.

7.03 Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:

(a) The Borrowers shall not declare or pay any Restricted Payments except as permitted under its Organization Documents.

(b) The Borrowers shall not declare or pay any Restricted Payments: (i) after the issuance of a notice of an Event of Default by Administrative Agent, (ii) during the occurrence and continuance of an Event of Default; or (iii) after a Default related to Section 8.01(a),(f), or (g) has occurred; in each case until such a Default or Event of Default is cured by a Borrower.

7.04 ERISA. At any time engage in a transaction which could be subject to Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in any non-exempt “prohibited transaction” (as defined in Section 4975 of the Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur any material “accumulated funding deficiency” (as

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defined in Section 302 of ERISA), which, with respect to each event listed above, could be reasonably expected to have a Material Adverse Effect.

7.05 Change in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by the Borrowers and their Subsidiaries on the date hereof.

7.06 Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of the Borrowers, other than arm’s-length transactions with Affiliates.

7.07 Burdensome Agreements. Enter into any Contractual Obligation that limits the ability (a) of any Subsidiary to make Restricted Payments to the Borrowers or to otherwise transfer property to the Borrowers or (b) of the Borrowers or any of their Subsidiaries to create, incur, assume or suffer to exist Liens on their property.

7.08 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

7.09 Fannie Mae Documents. Neither of the Borrowers shall amend or modify any material term of the Special Purchase Agreement, or shall breach any term of such agreement.

7.10 Negative Pledge. Without the approval of all Lenders, neither Borrower will create or suffer to exist any mortgage, pledge, security interest, conditional sale or other title retention agreement, charge, encumbrance, or other Lien (whether such interest is based on common law, statute, other law or contract) upon the Collateral, except for the security interests granted to the Administrative Agent for the benefit of the Lenders under the Loan Documents.

7.11 Debt Service Coverage Ratio. The Borrowers will at all times maintain a Debt Service Coverage Ratio of not less than 2.0 to 1.0.

7.12 Modifications of Organization Documents or Forward Commitment Agreement. Except for amendments or modifications to the Commitment Fee Letter (as defined in the Forward Commitment Agreement) and the MAHGT Promissory Note (as defined in the Forward Commitment Agreement), which can be made without the consent of Administrative Agent or Lenders, the Borrowers shall not: (a) (i) alter, amend, modify, terminate, or change any provision of the Forward Commitment Agreement, or (ii) approve, consent to, or permit any deviation from, modification of or amendment to the terms and conditions of the Forward Commitment by MAHGT, without the prior written consent of Administrative Agent and all Lenders; or (b) alter, amend, modify, terminate, or change any provision of their respective Organization Documents. With respect to any proposed amendment, modification or change to their respective Organization Documents, the Borrowers shall notify Administrative Agent of such proposal. To the extent either Borrower receives notice of a proposal by MAHGT to alter, amend, modify or change its Organization Documents, such Borrower shall notify

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Administrative Agent of such proposal. The Administrative Agent shall determine, in its sole discretion, (that is, the determination of the other Lenders shall not be required) on the Administrative Agent’s reasonable good faith belief, whether such proposed amendment, modification or change to such document is a material amendment, and shall use reasonable efforts to notify the Borrowers of its determination within ten (10) Business Days of the date on which it is deemed to have received such notification pursuant to Section 12.6 hereof. If the Administrative Agent determines that the proposed amendment is a material amendment, the approval of the Required Lenders and the Administrative Agent will be required, and the Administrative Agent shall promptly notify the Lenders of such request for such approval, distributing, as appropriate, the proposed amendment and any other relevant information provided by the Borrowers, and the Lenders shall have ten (10) Business Days from the date of such notice from the Administrative Agent to deliver their approval or denial thereof. If the Administrative Agent determines that the proposed amendment is not a material amendment, the Borrowers may make such amendment without the consent of the Administrative Agent, acting alone.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default. The term “Event of Default” means the existence or occurrence of any one or more of the following:

(a) Non-Payment. Any Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within five days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any commitment or other fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants. Any Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.12, 6.17, 6.18 or Article VII; or

(c) Other Defaults. Any Borrower fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

(d) Representations and Warranties. Any representation or warranty made or deemed made by (i) any Borrower under this Agreement, in any other Loan Document, or in any document delivered in connection herewith or therewith, or (ii) by MAHGT under the Forward Commitment Agreement, proves to have been incorrect when made or deemed made; or

(e) Cross-Default. (i) Any Borrower or MAHGT (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guaranty Obligation (other than Indebtedness hereunder and Indebtedness under Swap Contracts (but including, without limitation, under the

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Forward Commitment Agreement, the Acknowledgement and Consent, and the MAHGT Pledge Agreement)) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guaranty Obligation or contained in any instrument or agreement evidencing, securing or relating thereto (but including, without limitation, under the Forward Commitment Agreement, the Acknowledgement and Consent, and the MAHGT Pledge Agreement), or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guaranty Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased or redeemed (automatically or otherwise) prior to its stated maturity, or such Guaranty Obligation to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which either of the Borrowers or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which either of the Borrowers or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by either of the Borrowers or such Subsidiaries as a result thereof is greater than the Threshold Amount; or

(f) Insolvency Proceedings, Etc. Any Borrower or MAHGT institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) Any Borrower or MAHGT becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

(h) Judgments. There is entered against either of the Borrowers or MAHGT (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any non-monetary final judgment that has, or would reasonably be expected to have, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or

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(B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of either of the Borrowers or MAHGT under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) either of the Borrowers, MAHGT, or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than the agreement of all the Lenders or satisfaction in full of all the Obligations, ceases to be in full force and effect, or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect; or any Borrower or MAHGT denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

(k) Change of Control. There occurs any Change of Control with respect to either of the Borrowers; or

(l) Material Adverse Effect. There occurs any event or circumstance that has a Material Adverse Effect; or

(m) MMA. MMA Advisory Services, Inc. shall cease to be active in the management of MAHGT and the Borrowers; or

(n) Fannie Mae. The Special Purchase Agreement shall terminate, or MAHGT, MMI, and MMCF shall at any time be unable to realize upon the benefits of the Special Purchase Agreement or MMI’s status as a DUS Lender, or MMI or MMCF shall breach any term of the Special Purchase Agreement, or MMI shall cease to be a DUS Lender; or

(o) A default shall occur under the Subscription Loan Facility, and such default shall continue for more than the applicable period of grace, if any; or

(p) A Forward Commitment Default shall occur and be continuing.

8.02 Remedies Upon Event of Default. If any Event of Default occurs, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders,

(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

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(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;

(c) require that the Borrowers Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsection (f) of Section 8.01, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrowers to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

ARTICLE IX.

ADMINISTRATIVE AGENT

9.01 Appointment and Authorization of Administrative Agent.

(a) Each Lender hereby irrevocably (subject to Section 9.09) appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

(b) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith until such time (and except for so long) as the Administrative Agent may agree at the request of the Required Lenders to act for the L/C Issuer with respect thereto; provided, however, that the L/C Issuer shall have all of the

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benefits and immunities (i) provided to the Administrative Agent in this Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term “Administrative Agent” as used in this Article IX included the L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the L/C Issuer.

9.02 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

9.03 Liability of Administrative Agent. No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Borrower or MAHGT or any respective officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Borrower or MAHGT.

9.04 Reliance by Administrative Agent.

(a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Borrower or MAHGT), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or

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consent of the Required Lenders or all the Lenders, if required hereunder, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and participants. Where this Agreement expressly permits or prohibits an action unless the Required Lenders or all Lenders otherwise determine, the Administrative Agent shall, and in all other instances, the Administrative Agent may, but shall not be required to, initiate any solicitation for the consent or a vote of the Lenders.

(b) For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender.

9.05 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrowers referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default or Event of Default as may be directed by the Required Lenders in accordance with Article VIII; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders.

9.06 Credit Decision; Disclosure of Information by Administrative Agent. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Borrower or MAHGT or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrowers, MAHGT, and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other

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condition and creditworthiness of the Borrowers and MAHGT. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Borrowers or MAHGT or any of their respective Subsidiaries or Affiliates which may come into the possession of any Agent-Related Person.

9.07 Indemnification of Administrative Agent. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Borrower and without limiting the obligation of any Borrower to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Person’s gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrowers. The undertaking in this Section shall survive termination of the Commitments, the payment of all Obligations hereunder and the resignation or replacement of the Administrative Agent.

9.08 Administrative Agent in its Individual Capacity. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Borrowers, MAHGT, and their respective Affiliates as though Bank of America were not the Administrative Agent or the L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Borrower, MAHGT, or their respective Affiliates (including information that may be subject to confidentiality obligations in favor of such Borrower, MAHGT, or its respective Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent or the L/C Issuer, and the terms “Lender” and “Lenders” include Bank of America in its individual capacity.

9.09 Successor Administrative Agent. The Administrative Agent may, and at the request of the Required Lenders shall, resign as Administrative Agent upon 30 days’ notice to

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the Lenders. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders which successor administrative agent shall be consented to by the Borrowers at all times other than during the existence of an Event of Default (which consent of the Borrowers shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrowers, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor administrative agent and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.03 and 10.13 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. Notwithstanding the foregoing, however, Bank of America may not be removed as Administrative Agent at the request of the Required Lenders unless Bank of America shall also simultaneously be replaced and fully released as “L/C Issuer” hereunder pursuant to documentation in form and substance reasonably satisfactory to Bank of America.

ARTICLE X.

MISCELLANEOUS

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrowers therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrowers, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall, unless in writing and signed by each of the Lenders directly affected thereby and by the Borrowers, and acknowledged by the Administrative Agent, do any of the following:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02);

(b) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, or interest due to the Lenders (or any of them) hereunder or under any other Loan Document;

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(c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the proviso below) any fees or other amounts payable hereunder or under any other Loan Document; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest at the Default Rate;

(d) change the percentage of the Aggregate Commitments or of the aggregate unpaid principal amount of the Loans and L/C Obligations which is required for the Lenders or any of them to take any action hereunder;

(e) change the Pro Rata Share or Voting Percentage of any Lender;

(f) amend this Section, or Section 2.12, or any provision herein providing for consent or other action by all the Lenders; or

(g) release all or substantially all of the Collateral except as provided in this Agreement and the other Loan Documents;

and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Required Lenders or all the Lenders, as the case may be, affect the rights or duties of the L/C Issuer under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; and (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Required Lenders or all the Lenders, as the case may be, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document. Notwithstanding anything to the contrary herein, any Lender that has failed to fund any portion of the Committed Loans or participations in L/C Obligations required to be funded by it hereunder shall not have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Pro Rata Share of such Lender may not be increased without the consent of such Lender.

10.02 Notices and Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile number or (subject to subsection (c) below) electronic mail address specified for notices on Schedule 10.02; or, in the case of the Borrowers, the Administrative Agent or the L/C Issuer, to such other address as shall be designated by such party in a notice to the other parties, and in the case of any other party, to such other address as shall be designated by such party in a notice to the Borrowers, the Administrative Agent and the L/C Issuer. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if delivered by hand or by courier, when signed for by the intended recipient; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the

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Administrative Agent and the L/C Issuer pursuant to Article II shall not be effective until actually received by such Person. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified on Schedule 10.02, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder.

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

(c) Limited Use of Electronic Mail. Electronic mail and internet and intranet web sites may be used only to distribute routine communications, such as financial statements and other information, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose.

(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of the Borrowers even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrowers shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrowers. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

10.04 Attorney Costs, Expenses and Taxes. The Borrowers jointly and severally agree (a) to pay or reimburse the Administrative Agent for all costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse the Administrative Agent and each Lender for all costs and expenses incurred in connection with the enforcement,

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attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. The agreements in this Section shall survive the termination of the Commitments and repayment of all the other Obligations.

10.05 Indemnification by the Borrowers. Whether or not the transactions contemplated hereby are consummated, the Borrower shall jointly and severally indemnify and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), or (c) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by either of the Borrowers, or any Environmental Liability related in any way to either Borrower, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnitee have any liability for any indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). All amounts due under this Section 10.05 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any

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Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

10.06 Payments Set Aside. To the extent that either of the Borrowers make a payment to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.

10.07 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrowers may not assign or otherwise transfer any of their rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrowers without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrowers otherwise consent (each such consent not to be unreasonably withheld or delayed), (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, and (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500. Subject to acceptance and

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recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Acceptance, the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.07, 10.04 and 10.05). Upon request, the Borrowers (at their expense) shall execute and deliver new or replacement Notes to the assigning Lender and the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Any Lender may, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification that would (i) postpone any date upon which any payment of money is scheduled to be paid to such Participant, (ii) reduce the principal, interest, fees or other amounts payable to such Participant, or (iii) release all or substantially all of the Collateral. Subject to subsection (e) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law,

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each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.12 as though it were a Lender.

(e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 10.15 as though it were a Lender.

(f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Notes, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) If the consent of the Borrowers to an assignment or to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of Section 10.07(b)), the Borrowers shall be deemed to have given their consent five Business Days after the date notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrowers prior to such fifth Business Day.

(h) As used herein, the following terms have the following meanings:

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural Person) approved by the Administrative Agent and, unless (x) such Person is taking delivery of an assignment in connection with physical settlement of a credit derivatives transaction or (y) an Event of Default has occurred and is continuing, the Borrowers (each such approval not to be unreasonably withheld or delayed).

“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

(i) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days’ notice to the Borrowers and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrowers shall be entitled to appoint from

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among the Lenders a successor L/C Issuer hereunder; provided, however, that no failure by the Borrowers to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer. Bank of America shall retain all the rights and obligations of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund participations in Unreimbursed Amounts pursuant to Section 2.03(c)). Further, without the consent of Required Lenders, Bank of America agrees that it will not assign all or any portion of its rights under this Agreement if the effect thereof would be to reduce its Commitment below $20,000,000 as long as it remains the Administrative Agent.

10.08 Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counter-party’s or prospective counter-party’s professional advisor) to any credit derivative transaction relating to obligations of the Borrowers; (g) with the consent of the Borrowers; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrowers; or (i) to the National Association of Insurance Commissioners or any other similar organization or any nationally recognized rating agency that requires access to information about a Lender’s or its Affiliates’ investment portfolio in connection with ratings issued with respect to such Lender or its Affiliates. For the purposes of this Section, “Information” means all information received from the Borrowers relating to the Borrowers or their business, other than any such information that is available to the Administrative Agent or any Lender on a non-confidential basis prior to disclosure by the Borrowers; provided that, in the case of information received from the Borrowers after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

10.09 Set-off. In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrowers, any such notice being waived by the Borrowers to the fullest extent permitted by law, to set off and apply

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any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of either Borrower against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Borrowers and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

10.10 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations.

10.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10.12 Integration. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

10.13 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Credit Extension, and shall continue in full force and effect as long

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as any Loan or any other Obligation shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

10.14 Severability. Any provision of this Agreement and the other Loan Documents to which the Borrowers are a party that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.15 Foreign Lenders. Each Lender that is a “foreign corporation, partnership or trust” within the meaning of the Code (a “Foreign Lender”) shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Code (or after accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Person and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Person by the Borrowers pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Person by the Borrowers pursuant to this Agreement) or such other evidence satisfactory to the Borrowers and the Administrative Agent that such Person is entitled to an exemption from, or reduction of, U.S. withholding tax. Thereafter and from time to time, each such Person shall (a) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrowers and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Person by the Borrowers pursuant to this Agreement, (b) promptly notify the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (c) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrowers make any deduction or withholding for taxes from amounts payable to such Person. If such Person fails to deliver the above forms or other documentation, then the Administrative Agent may withhold from any interest payment to such Person an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction. If any Governmental Authority asserts that the Administrative Agent did not properly withhold any tax or other amount from payments made in respect of such Person, such Person shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the payment of all Obligations and the resignation or replacement of the Administrative Agent.

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10.16 Removal and Replacement of Lenders.

(a) Under any circumstances set forth herein providing that the Borrowers shall have the right to remove or replace a Lender as a party to this Agreement, the Borrowers may, upon notice to such Lender and the Administrative Agent, (i) remove such Lender by terminating such Lender’s Commitment or (ii) replace such Lender by causing such Lender to assign its Commitment (without payment of any assignment fee) pursuant to Section 10.07(b) to one or more other Lenders or Eligible Assignees procured by the Borrowers; provided, however, that if the Borrowers elect to exercise such right with respect to any Lender pursuant to Section 3.06(b), it shall be obligated to remove or replace, as the case may be, all Lenders that have made similar requests for compensation pursuant to Section 3.01 or 3.04. The Borrowers shall (x) pay in full all principal, interest, fees and other amounts owing to such Lender through the date of termination or assignment (including any amounts payable pursuant to Section 3.05), (y) provide appropriate assurances and indemnities (which may include letters of credit) to the L/C Issuer as it may reasonably require with respect to any continuing obligation to purchase participation interests in any L/C Obligations then outstanding, and (z) release such Lender from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver an Assignment and Acceptance with respect to such Lender’s Commitment and outstanding Credit Extensions. The Administrative Agent shall distribute an amended Schedule 2.01, which shall be deemed incorporated into this Agreement, to reflect changes in the identities of the Lenders and adjustments of their respective Commitments and/or Pro Rata Shares resulting from any such removal or replacement.

(b) In order to make all the Lenders’ interests in any outstanding Credit Extensions ratable in accordance with any revised Pro Rata Shares after giving effect to the removal or replacement of a Lender, the Borrowers shall pay or prepay, if necessary, on the effective date thereof, all outstanding Committed Loans of all Lenders, together with any amounts due under Section 3.05. The Borrowers may then request Committed Loans from the Lenders in accordance with their revised Pro Rata Shares. The Borrowers may net any payments required hereunder against any funds being provided by any Lender or Eligible Assignee replacing a terminating Lender. The effect for purposes of this Agreement shall be the same as if separate transfers of funds had been made with respect thereto.

(c) This section shall supersede any provision in Section 10.01 to the contrary.

10.17 Governing Law.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES SITTING IN THE BOROUGH OF MANHATTAN OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE

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ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. BORROWER HEREBY AGREES THAT SERVICE OF ALL WRITS, PROCESS AND SUMMONSES IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN THE STATE OF NEW YORK MAY BE BROUGHT UPON ITS PROCESS AGENT APPOINTED BELOW, AND BORROWER HEREBY IRREVOCABLY APPOINTS CORPORATION SERVICE COMPANY, 80 STATE STREET, ALBANY, NEW YORK 12207, ITS PROCESS AGENT, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT IN ITS NAME, PLACE AND STEAD TO ACCEPT SUCH SERVICE OF ANY AND ALL SUCH WRITS, PROCESS AND SUMMONSES.

10.18 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

10.19 Time of the Essence. Time is of the essence of the Loan Documents.

10.20 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

10.21 ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE

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ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED NOTES OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE “SPECIAL RULES” SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED THE CITY OF BORROWER’S DOMICILE AT THE TIME OF THIS AGREEMENT’S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS.

(B) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. § 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE ADMINISTRATIVE AGENT OR ANY LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR

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PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.

10.22 Special Provisions Addressing Collateral.

(a) Upon the Borrowers’ written notification to the Administrative Agent that particular Collateral is to be imminently transferred pursuant to the Special Purchase Agreement or other means acceptable to the Administrative Agent, the Administrative Agent shall, subject to the proviso in this Section set forth below, transmit the appropriate Collateral to the designated transferee under the Administrative Agent’s trust receipt and transmittal letter: (a) advising of the Administrative Agent’s Liens on such Collateral; (b) stating that such transferee shall be deemed to be holding such Collateral in trust, subject to the Administrative Agent’s Liens and as agent and bailee on behalf of Administrative Agent, until such time as payment is received therefor by Administrative Agent or such Collateral is returned to the Administrative Agent; (c) stating that the release of the Administrative Agent’s Liens on such Collateral is conditioned upon payment therefor to Administrative Agent in the amount equal to the Borrowing Base valuation of such Collateral plus accrued and unpaid interest thereon if after such release the Outstanding Amount of all Loans and L/C Obligations exceeds the Borrowing Base; and (d) requiring return of such Collateral to the Administrative Agent within twenty (20) days of transmittal thereof if payment therefor is not earlier made to Administrative Agent (and any Collateral not so returned within such twenty (20) days shall not be eligible for inclusion in the Borrowing Base until so returned). All payments received under this Section 10.22 shall be applied by the Administrative Agent to the Obligations. Immediately upon the Administrative Agent’s receipt of payments under this Section 10.22, the Administrative Agent will execute and deliver to the Borrowers such documentation and agreements as may reasonably be requested by the Borrowers to acknowledge the release of the Liens of the Administrative Agent in any Collateral released pursuant to this Section 10.22. Notwithstanding any provision to the contrary in this Section 10.22, any proceeds to be received by the Borrowers from a sale of any Collateral in excess of the Borrowing Base valuation of the Collateral released under this Section 10.22 shall be released to the Borrowers so long as no Default then exists or will result therefrom. The parties hereto will cooperate in the effort to transfer loans to Fannie Mae under the Special Purchase Agreement.

(b) The Borrowers shall be responsible to ensure the proper servicing of the loans pledged as Collateral including the collection, maintenance, and application of all tax, insurance, and other escrow funds relating to any loans pledged pursuant hereto or any mortgaged property the subject thereof in accordance with all applicable mortgage collateral documents, servicing agreements, rules, regulations, and all other applicable laws. The Borrowers shall maintain at all times each mortgage relating to any loan pledged as Collateral (a) as a valid and enforceable Lien on the mortgaged property covered thereby, in compliance with all applicable laws, and (b) in full force and effect. The Borrowers shall cause each note or obligation evidencing a loan pledged as Collateral to be kept and maintained at all times in full force and effect, as valid and binding obligations, enforceable in accordance with their respective terms, without any default.

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The Borrowers shall retain all servicing rights, and service, all mortgage loans which are Collateral, unless the Administrative Agent otherwise agrees in writing.

(c) If a Default does not exist, the Administrative Agent may, upon written request therefor by the Borrowers, transmit Collateral to the Borrowers under the Administrative Agent’s trust receipt and transmittal letter (which must be satisfactory to the Administrative Agent) for the purpose of enabling the Borrowers to prepare the Collateral for future disposition thereof by making corrections or supplements thereto or otherwise dealing with the Collateral in a manner preliminary to its future disposition; provided that (i) the Borrowers covenant and agree to return all such Collateral to the Administrative Agent within twenty (20) days after transmittal thereof by the Administrative Agent to the Borrowers, (ii) any such Collateral not so returned within such twenty (20) days shall not be eligible for inclusion in the Borrowing Base until so returned, (iii) the Administrative Agent will be deemed to have retained possession of such Collateral at all times, and (iv) the aggregate outstanding principal balance of the Collateral released pursuant to this Section 10.22 at any one time shall not exceed fifteen percent (15%) of the aggregate outstanding principal balance of all loans which are within the Borrowing Base. The Borrowers shall provide on a bi-monthly basis to the Administrative Agent a report listing the Collateral released to it pursuant to this Section 10.22 and the respective dates on which the twenty (20) day period after transmittal thereof expires.

(d) As a condition precedent to the Administrative Agent’s release of Collateral pursuant to this Section 10.22, the Borrowers shall provide to the Administrative Agent either a certificate of a Responsible Officer of Borrowers or a Borrowing Base Report dated the date of such release and after giving effect thereto, confirming continuing compliance with the Borrowing Base after giving effect to such release.

10.23 U.S. Patriot Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of each Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Borrower in accordance with the Act.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

BORROWERS:
MMA CONSTRUCTION FINANCE, LLC,
By:	MuniMae Investment Services Corporation
	By:	/s/ William S. Harrison
		Name:	William S. Harrison
		Title:	EVP & CFO
MIDLAND MORTGAGE INVESTMENT CORPORATION
	By:	/s/ William S. Harrison
		Name:	William S. Harrison
		Title:	EVP & CFO
LENDERS:
BANK OF AMERICA, N.A., as Administrative Agent, Lender and L/C Issuer
By:	/s/ Jeff Journey
	Name:	Jeff Journey
	Title:	SVP

Schedule 10.02

EX-10.9.2

Exhibit 10.9.2

FIRST AMENDMENT

TO

AMENDED AND RESTATED CREDIT AGREEMENT

This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is entered into as of February 1, 2005, among MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company and formerly known as MuniMae Midland Construction Finance, LLC (“MMCF”), MMA MORTGAGE INVESTMENT CORPORATION, a Florida corporation and formerly known as Midland Mortgage Investment Corporation (“MMI”; MMI and MMCF collectively called “Borrowers”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent (“Administrative Agent”) and L/C Issuer (“L/C Issuer”).

A. Borrowers, Administrative Agent, L/C Issuer, and Lenders have entered into that certain Amended and Restated Credit Agreement dated as of December 3, 2004 (the “Credit Agreement”) pursuant to which Lenders have provided Borrowers with a $70 million revolving credit facility;

B. On January 11, 2005, Midland Mortgage Investment Corporation filed an Amendment to Articles of Incorporation of MMI with the Florida Department of State changing its name to MMA Mortgage Investment Corporation (the “Name Change”);

C. Borrowers, Administrative Agent, L/C Issuer and Lenders have agreed, upon the following terms and conditions, to amend the Credit Agreement and the other Loan Documents to reflect the Name Change.

NOW, THEREFORE, in consideration of the mutual promises herein contained, and for other valuable consideration, the parties hereto agree as follows:

1. Defined Terms.

Unless otherwise specified, the defined terms will have their meanings as provided in the Credit Agreement.

2. Amendment to Credit Agreement and Loan Documents.

All references in the Credit Agreement and the other Loan Documents to either “Midland Mortgage Investment Corporation” or “MMI” are hereby deemed to be references to “MMA Mortgage Investment Corporation.”

3. Effectiveness. The effectiveness of this Amendment is subject to receipt by Administrative Agent of the following:

a. Amendment. This Amendment, duly executed and delivered by each of the Borrowers, Administrative Agent, L/C Issuer and Lenders.

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b. Other Information. Such other information and documents as may reasonably be required by Administrative Agent and its counsel.

4. Representations and Warranties. Borrowers hereby represent and warrant to Administrative Agent, L/C Issuer and Lenders as follows:

a. Due Authorization. Each of the Borrowers is duly authorized to execute, deliver and perform this Amendment, and the Credit Agreement, as amended by this Amendment, is the legal and binding obligation of each Borrower enforceable against each Borrower in accordance with its terms.

b. Credit Agreement. [INTENTIONALLY OMMITTED].

c. No Event of Default. [INTENTIONALLY OMMITTED].

d. No Amendments. Except for the Amendment to Articles of Incorporation of MMI, dated January 10, 2005, and filed with the Florida Department of State on January 11, 2005, there have been no amendments to the Organization Documents of any of the Borrowers and General Partner since the latest delivery thereof by Borrowers to Administrative Agent.

5. Miscellaneous.

a. No Other Amendments. Except as expressly amended herein, the terms of the Credit Agreement shall remain in full force and effect.

b. Limitation on Agreements. The amendment set forth herein is limited precisely as written and shall not be deemed (a) to be a consent under or waiver of any other term or condition in the Credit Agreement or any of the Loan Documents, or (b) to prejudice any right or rights which Administrative Agent, L/C Issuer and Lenders now have or may have in the future under, or in connection with the Credit Agreement, as amended hereby, the New Note, the Loan Documents or any of the other documents referred to herein or therein. From and after the effectiveness of this Amendment, all references in the Credit Agreement to the Credit Agreement shall be deemed to be references to the Credit Agreement after giving effect to this Amendment.

c. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

d. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THAT MIGHT OTHERWISE APPLY.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES FOLLOW.

2

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

BORROWERS:
MMA CONSTRUCTION FINANCE, LLC,
By:	MuniMae Investment Services Corporation
	By:	/s/ Gary A. Mentesana
		Name:	Gary A. Mentesana
		Title:	Executive Vice President
MMA MORTGAGE INVESTMENT CORPORATION
	By:	/s/ Gary A. Mentesana
		Name:	Gary A. Mentesana
		Title:	Executive Vice President

First Amendment to Amended and Restated Midland Corporate Credit Agreement Signature Page

ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Lender
By:	/s/ Ugo Arinzeh
	Name: Ugo Arinzeh
	Title: Vice President

First Amendment to Amended and Restated Midland Corporate Credit Agreement Signature Page

EX-10.9.3

Exhibit 10.9.3

SECOND AMENDMENT

TO

AMENDED AND RESTATED CREDIT AGREEMENT

This SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is entered into as of December 2, 2005, among MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company and formerly known as MuniMae Midland Construction Finance, LLC (“MMCF”), MMA MORTGAGE INVESTMENT CORPORATION, a Florida corporation and formerly known as Midland Mortgage Investment Corporation (“MMI”; MMI and MMCF collectively called “Borrowers”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent (“Administrative Agent”) and L/C Issuer (“L/C Issuer”).

A. Borrowers, Administrative Agent, L/C Issuer, and Lenders have entered into that certain Amended and Restated Credit Agreement dated as of December 3, 2004, as amended by that certain First Amendment to Amended and Restated Credit Agreement, dated February 1, 2005 (the “Credit Agreement”) pursuant to which Lenders have provided Borrowers with a $70 million revolving credit facility;

B. Borrowers have requested (a) that the maturity of the Credit Agreement be extended by six (6) months until June 2, 2006 with an option for an additional six (6) month extension until December 1, 2006 (the “Maturity Extension”), (b) that Section 7.02 of the Credit Agreement be modified to reflect Borrower’s current practices regarding Dispositions (the “Disposition Provision Modification”), (c) that Section 7.07 of the Credit Agreement be modified by deleting clause (b) of this Section in its entirety (the “Lien Provision Modification”), (d) that Section 7.10 of the Credit Agreement be modified to add Subsidiaries of the Borrowers (the “Negative Pledge Provision Modification”), and (e) that certain clerical errors in various provisions be remedied (the “Clean Up Modification”); and Administrative Agent, L/C Issuer and Lenders have agreed to the Maturity Extension, the Disposition Provision Modification, the Lien Provision Modification, the Negative Pledge Provision Modification, and the Clean Up Modification;

C. Borrowers, Administrative Agent, L/C Issuer and Lenders have agreed, upon the following terms and conditions, to amend the Credit Agreement to reflect the Maturity Extension, the Disposition Provision Modification, the Lien Provision Modification, the Negative Pledge Provision Modification, and the Clean Up Modification.

NOW, THEREFORE, in consideration of the mutual promises herein contained, and for other valuable consideration, the parties hereto agree as follows:

1. Defined Terms.

Unless otherwise specified, the defined terms will have their meanings as provided in the Credit Agreement.

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2. Amendment to Credit Agreement and Loan Documents.

a. The definition of Extension Fee is hereby added to Section 1.01 of the Credit Agreement to read as follows”

‘“Extension Fee” means the extension fee set forth in that certain fee letter, dated as of December 2, 2005 between Administrative Agent and Borrowers.

b. The definition of Extension Notice is hereby added to Section 1.01 of the Credit Agreement to read as follows:

‘“Extension Notice” means the notice in the form of Exhibit H attached hereto pursuant to which Borrowers elect to extend the Maturity Date, and certify that, as of the date of such notice: (a) the representations and warranties contained in Section 7 hereof are true and correct in all material respects, with the same force and effect as if made on and as of such date (except to the extent of changes in facts or circumstances that have been disclosed to Administrative Agent and do not constitute an Event of Default or a Potential Default under Section 8.01(a), 8.01(f) or 8.01(g) hereof); (b) no Event of Default or Potential Default under Section 8.01(a), 8.01(f) or 8.01(g) has occurred and is continuing; and (c) no event has occurred which could reasonably be expected to have a Material Adverse Effect.

c. The definition of Initial Maturity Date is hereby added to Section 1.01 of the Credit Agreement to read as follows:

‘“Initial Maturity Date” is defined in the definition of Maturity Date.

d. The definition of Maturity Date contained in Section 1.01 of the Credit Agreement is hereby amended in its entirety to read as follows:

‘“ Maturity Date” means (a) June 2, 2006 (the “Initial Maturity Date”) unless extended pursuant to Section 2.14 hereof, in which case the Maturity Date shall be such extended date, or (b) such earlier date upon which the Commitments may be terminated in accordance with the terms hereof.”

e. Section 2.14 of the Credit Agreement is hereby added to read as follows:

“2.14 Extension of Maturity Date. Borrowers may extend the Maturity Date one time to December 1, 2006 upon: (a) the delivery of the Extension Notice to Administrative Agent not more than sixty (60) days nor less than thirty (30) days prior to the Initial Maturity Date, and (b) the payment of the Extension Fee.”

f. The reference in Section 5.08 of the Credit Agreement to Section 7.01 of the Credit Agreement is hereby deleted and replaced with a reference to Section 7.10 of the Credit Agreement.

g. The introductory paragraph of Article VII of the Credit Agreement is hereby amended by deleting the partial sentence “and shall it permit their Subsidiaries to” and replacing it with the partial sentence “and shall not permit their Subsidiaries to.”

h. Section 4.02(a) of the Credit Agreement is hereby amended in its entirety to read as follows:

“(a) The representations and warranties of the Borrowers contained in Article V, or which are contained in any document furnished at any time under or in connection herewith, shall be true and

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correct on and as of the date of such Credit Extension, conversion or continuation, except (i) to the extent of changes in facts or circumstances that have been disclosed to Administrative Agent and do not constitute an Event of Default or a Potential Default under the Credit Agreement, and (ii) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date.”

i. Section 7.02 of the Credit Agreement is hereby amended in its entirety to read as follows:

“Make any Disposition of Collateral or enter into any agreement to make any Disposition of Collateral, except as otherwise expressly permitted hereunder or under the other Loan Documents.”

j. Section 7.03 of the Credit Agreement is hereby amended in its entirety to read as follows:

“7.03 Restricted Payments. Declare, pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except (i) that the Borrowers may declare or pay any Restricted Payments permitted under their Organization Documents; provided, however, that any Restricted Payments permitted under their Organization Documents may not be declared or paid (i) after the issuance of a notice of an Event of Default by Administrative Agent; (ii) during the occurrence and continuance of an Event of Default; or (iii) after a Default related to Section 8.01(a), (f) or (g) has occurred; in each case until such a Default or Event of Default is cured by the respective Borrower, and (ii) any Subsidiary of any Borrower may always declare, pay or make any Restricted Payments to such Borrower.

k. Section 7.07 of the Credit Agreement is hereby amended in its entirety to read as follows:

“7.07 Burdensome Agreements. Enter into any Contractual Obligation that limits the ability of any Subsidiary to make Restricted Payments to the Borrowers or to otherwise transfer property to the Borrowers.”

l. Section 7.10 of the Credit Agreement is hereby amended in its entirety to read as follows:

m. “7.10 Negative Pledge. Without the approval of all Lenders, neither Borrower will create or suffer to exist or permit any Subsidiary to create or suffer to exist any mortgage, pledge, security interest, conditional sale or other title retention agreement, charge, encumbrance or other Lien (whether such interest is based on common law, statute, other law or contract) upon the Collateral, except for the security interests granted to the Administrative Agent for the benefit of the Lenders under the Loan Documents.”

n. Section 8.01(m) of the Credit Agreement is hereby amended by deleting the partial sentence “and the Borrowers.”

3. Effectiveness. The effectiveness of this Amendment is subject to receipt by Administrative Agent of the following:

a. Amendment. This Amendment, duly executed and delivered by each of the Borrowers, Administrative Agent, L/C Issuer and Lenders.

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b. Opinion of Counsel. A favorable opinion of counsel to Borrowers, reasonably acceptable to Administrative Agent, covering such matters relating to the transactions contemplated hereby as reasonably requested by Administrative Agent, and substantially in a form acceptable to Administrative Agent.

c. Other Information. Such other information and documents as may reasonably be required by Administrative Agent and its counsel.

4. Representations and Warranties. Borrowers hereby represent and warrant to Administrative Agent, L/C Issuer and Lenders as follows:

a. Due Authorization. Each of the Borrowers is duly authorized to execute, deliver and perform this Amendment, and the Credit Agreement, as amended by this Amendment, is the legal and binding obligation of each Borrower enforceable against each Borrower in accordance with its terms.

b. Credit Agreement. All of the representations and warranties contained in Article V of the Credit Agreement made by Borrowers are true and correct in all material respects as of the date hereof (except to the extent of changes in facts or circumstances that have been disclosed to Administrative Agent and do not constitute an Event of Default or a Potential Default under the Credit Agreement); provided, that, any representation and warranty that is made with respect to facts or circumstances as of a specific date shall be true and correct as of such date.

c. No Event of Default. No event has occurred and is continuing or would result from entering into this Amendment, which constitutes or would constitute an Event of Default or a Potential Default.

d. No Amendments. There have been no amendments to the Organization Documents of any of the Borrowers and General Partner since the latest delivery thereof by Borrowers to Administrative Agent.

5. Miscellaneous.

a. No Other Amendments. Except as expressly amended herein, the terms of the Credit Agreement shall remain in full force and effect.

b. Limitation on Agreements. The amendment set forth herein is limited precisely as written and shall not be deemed (a) to be a consent under or waiver of any other term or condition in the Credit Agreement or any of the Loan Documents, or (b) to prejudice any right or rights which Administrative Agent, L/C Issuer and Lenders now have or may have in the future under, or in connection with the Credit Agreement, as amended hereby, the New Note, the Loan Documents or any of the other documents referred to herein or therein. From and after the effectiveness of this Amendment, all references in the Credit Agreement to the Credit Agreement shall be deemed to be references to the Credit Agreement after giving effect to this Amendment.

c. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

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d. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THAT MIGHT OTHERWISE APPLY.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES FOLLOW.

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

BORROWERS:
MMA CONSTRUCTION FINANCE, LLC,
By: MuniMae Investment Services Corporation
	By:	/s/ Gary A. Mentesana
		Name: Gary A. Mentesana
		Title:   Executive Vice President
MMA MORTGAGE INVESTMENT CORPORATION
	By:	/s/ Gary A. Mentesana
		Name: Gary A. Mentesana
		Title:   Executive Vice President

First Amendment to Amended and Restated Midland Corporate Credit Agreement Signature Page

ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and Lender
By:	/s/ Ugo Arinzeh
	Name: Ugo Arinzeh
	Title:   Vice President

MMA Construction Finance / MMA Investment Corporation Credit Facility

Exhibit H

LENDER:
FANNIE MAE, as Lender
By:	/s/ Wayne R. Curtis
	Name: Wayne R. Curtis
	Title: Vice President

MMA Construction Finance / MMA Investment Corporation Credit Facility

Exhibit H

EX-10.17.3

Exhibit 10.17.3

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment”) is made this 1^st day of January, 2006 (the “Effective Date”), by and between MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company (“Assignor”) and MMA FINANCIAL, INC., a Maryland corporation (“Assignee”) and acknowledged and consented to by Mark K. Joseph (the “Employee”).

WHEREAS, Assignor and Employee are parties to that certain Employment Agreement dated as of July 1, 2003 (the “Agreement”), as amended by that certain Amendment to Employment Agreement dated as of January 1, 2005 (the “Amendment”), which Agreement and Amendment are attached hereto as Exhibit A (the “Employment Agreement”); and

WHEREAS, Assignor desires to assign to Assignee, and Assignee desires to assume the rights and obligations under the Employment Agreement; and

WHEREAS, Assignor desires to document Employee’s acknowledgment and agreement to this Assignment in accordance with Section 9(b) of the Employment Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Assignment and Assumption. As of the Effective Date and in accordance with this Assignment, Assignor hereby conveys and assigns and Assignee hereby assumes all of the obligations of the “Employer” under the Employment Agreement, and the Assignee agrees to be bound by and subject to all the terms and conditions of the Employment Agreement from and after the Effective Date.

2. Continuing Rights and Obligations of the Assignor. Notwithstanding the agreements set forth in Section 1 of this Assignment, the parties hereto acknowledge and agree that all references in the Employment Agreement to the “Employer” with respect to (a) the Board of Directors or committees thereof, (b) equity compensation plans, (c) a “Change in Control” (as defined in the Employment Agreement) and (d) the covenant not to compete made by the Employee (collectively, the “Assignor Rights”) shall refer to the Assignor, as applicable. The Assignor shall continue to have all rights to act under the Employment Agreement with respect to the Assignor Rights, and nothing in this Assignment shall otherwise limit, terminate or modify such Assignor Rights.

3. Effective Date. The effective date of this Assignment shall be as of the Effective Date.

4. Binding Effect. This Assignment shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns and personal representatives.

5. Counterparts. This Assignment may be executed in counterparts, all of which together shall constitute one agreement.

6. Governing Law. This Assignment shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without giving effect to the conflict of laws provisions thereof.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have set their hand and seal as of the date first above written.

MUNICIPAL MORTGAGE & EQUITY, LLC
By:	/s/ Melanie M. Lundquist
Name:	Melanie M. Lundquist
Title:	EVP and Chief Financial Officer
MMA FINANCIAL, INC.
By:	/s/ Melanie M. Lundquist
Name:	Melanie M. Lundquist
Title:	EVP and Chief Financial Officer
Acknowledged and Consented to by:
/s/ Mark K. Joseph
Name:	Mark K. Joseph

EX-10.18.2

Exhibit 10.18.2

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment”) is made this 1^st day of January, 2006 (the “Effective Date”), by and between MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company (“Assignor”) and MMA FINANCIAL, INC., a Maryland corporation (“Assignee”) and acknowledged and consented to by MICHAEL L. FALCONE (the “Employee”).

WHEREAS, Assignor and Employee are parties to that certain Employment Agreement dated as of January 1, 2005 attached hereto as Exhibit A (the “Employment Agreement”); and

WHEREAS, Assignor desires to assign to Assignee, and Assignee desires to assume the rights and obligations under the Employment Agreement; and

WHEREAS, Assignor desires to document Employee’s acknowledgment and agreement to this Assignment in accordance with Section 10(b) of the Employment Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Assignment and Assumption. As of the Effective Date and in accordance with this Assignment, Assignor hereby conveys and assigns and Assignee hereby assumes all of the obligations of the “Employer” under the Employment Agreement, and the Assignee agrees to be bound by and subject to all the terms and conditions of the Employment Agreement from and after the Effective Date.

2. Continuing Rights and Obligations of the Assignor. Notwithstanding the agreements set forth in Section 1 of this Assignment, the parties hereto acknowledge and agree that all references in the Employment Agreement to the “Employer” with respect to (a) the Board of Directors or committees thereof, (b) equity compensation plans, (c) a “Change in Control” (as defined in the Employment Agreement) and (d) the covenant not to compete made by the Employee (collectively, the “Assignor Rights”) shall refer to the Assignor, as applicable. The Assignor shall continue to have all rights to act under the Employment Agreement with respect to the Assignor Rights, and nothing in this Assignment shall otherwise limit, terminate or modify such Assignor Rights.

3. Effective Date. The effective date of this Assignment shall be as of the Effective Date.

4. Binding Effect. This Assignment shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns and personal representatives.

5. Counterparts. This Assignment may be executed in counterparts, all of which together shall constitute one agreement.

6. Governing Law. This Assignment shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without giving effect to the conflict of laws provisions thereof.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have set their hand and seal as of the date first above written.

MUNICIPAL MORTGAGE & EQUITY, LLC
By:	/s/ Melanie M. Lundquist
Name:	Melanie M. Lundquist
Title:	EVP and Chief Financial Officer
MMA FINANCIAL, INC.
By:	/s/ Melanie M. Lundquist
Name:	Melanie M. Lundquist
Title:	EVP and Chief Financial Officer
Acknowledged and Consented to by:
/s/ Michael L. Falcone
Name: Michael L. Falcone

EX-10.19.2

Exhibit 10.19.2

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment”) is made this 1^st day of January, 2006 (the “Effective Date”), by and between MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company (“Assignor”) and MMA FINANCIAL, INC., a Maryland corporation (“Assignee”) and acknowledged and consented to by Earl W. Cole, III (the “Employee”).

WHEREAS, Assignor and Employee are parties to that certain Employment Agreement dated as of July 1, 2003 attached hereto as Exhibit A (the “Employment Agreement”); and

WHEREAS, Assignor desires to assign to Assignee, and Assignee desires to assume the rights and obligations under the Employment Agreement; and

WHEREAS, Assignor desires to document Employee’s acknowledgment and agreement to this Assignment in accordance with Section 10(b) of the Employment Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Assignment and Assumption. As of the Effective Date and in accordance with this Assignment, Assignor hereby conveys and assigns and Assignee hereby assumes all of the obligations of the “Employer” under the Employment Agreement, and the Assignee agrees to be bound by and subject to all the terms and conditions of the Employment Agreement from and after the Effective Date.

2. Continuing Rights and Obligations of the Assignor. Notwithstanding the agreements set forth in Section 1 of this Assignment, the parties hereto acknowledge and agree that all references in the Employment Agreement to the “Employer” with respect to (a) the Board of Directors or committees thereof, (b) equity compensation plans, (c) a “Change in Control” (as defined in the Employment Agreement) and (d) the covenant not to compete made by the Employee (collectively, the “Assignor Rights”) shall refer to the Assignor, as applicable. The Assignor shall continue to have all rights to act under the Employment Agreement with respect to the Assignor Rights, and nothing in this Assignment shall otherwise limit, terminate or modify such Assignor Rights.

3. Effective Date. The effective date of this Assignment shall be as of the Effective Date.

4. Binding Effect. This Assignment shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns and personal representatives.

5. Counterparts. This Assignment may be executed in counterparts, all of which together shall constitute one agreement.

6. Governing Law. This Assignment shall be governed by and construed and enforced in accordance with the laws of the State of Maryland without giving effect to the conflict of laws provisions thereof.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have set their hand and seal as of the date first above written.

MUNICIPAL MORTGAGE & EQUITY, LLC
By:	/s/ Melanie M. Lundquist
Name:	Melanie M. Lundquist
Title:	EVP and Chief Financial Officer
MMA FINANCIAL, INC.
By:	/s/ Melanie M. Lundquist
Name:	Melanie M. Lundquist
Title:	EVP and Chief Financial Officer
Acknowledged and Consented to by:
/s/ Earl W. Cole, III
Name:	Earl W. Cole, III

EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

Name of Subsidiary	Jurisdiction of Organization
Affordable Property Holdings, LLC	Michigan
CAPREIT Tera Venture, LLC	Maryland
FM Sponsor I, LLC	Maryland
MMA Financial Bond Warehousing, LLC	Maryland
MMA Financial Warehousing, LLC	Maryland
MMA Advisory Services (formerly Midland Advisory Services, Inc.)	Michigan
MMA Capital Corporation	Michigan
MMA Equity Corporation1	Florida
MMA Financial Holdings, Inc. (formerly Midland Financial Holdings, Inc.)	Florida
MMA Middle Tier I, LP	Delaware
MMA Mortgage Investment Corporation	Florida
Midland Realty Investment Corporation	Florida
MMA Special Limited Partner, Inc.	Florida
MMA Special Partners Corp.	Delaware
MMA Credit Enhancement I, LLC	Maryland
MMA Servicing, LLC	Maryland
MMACap, LLC	Delaware
Municipal Mortgage Investments II, LLC	Maryland
Municipal Mortgage Investments III, LLC	Maryland
Municipal Mortgage Investments IV, LLC	Maryland
Municipal Mortgage Investments, LLC	Maryland
MuniMae Investment Services Corporation	Maryland
MMA Construction Finance, LLC (formerly MuniMae Construction Finance, LLC)	Maryland
MMA Financial Equity I, LLC	Maryland
MMA Financial Equity II, LLC	Maryland
MMA Financial Equity III, LLC	Maryland
MMA Financial Equity IV, LLC	Maryland
MMA Financial Equity V, LLC	Maryland
MMA Financial Equity Ventures, LLC	Maryland
MMA Financial, LLC (formerly MuniMae Midland, LLC)	Maryland
MuniMae Portfolio Services, LLC	Maryland
MuniMae Structured Finance, LLC	Maryland

¹ This company controls 100 consolidated wholly-owned subsidiaries engaged in the syndication of low-income housing tax credits equity investments, including asset management services, which operate in the United States.

MMA Financial Swap Party I, LLC	Maryland
MuniMae TE Bond Subsidiary, LLC	Maryland
Munimae TEI Holdings, LLC	Maryland
TE Bond Holder Limited Partnership	Maryland
Whitehawk Capital Fund IV, LLC	Maryland
Whitehawk Capital, LLC	Delaware
MMA Financial TC Corp. 2	Delaware
MMA Financial BFG Investments, LLC	Delaware
MMA Financial BFGLP, LLC	Maryland
MMA Financial BFRP, Inc.	Delaware
MMA Financial CDD Sponsor, LLC	Maryland
MMA Financial CDE Investor, LLC	Maryland
MMA Financial Community Investment, LLC	Maryland
MFH Financial Trust I	Delaware
West Cedar Acquisitions LLC	Delaware
Acquisitions Investments Corp.	Massachusetts
BF Institutional Tax Credits Acquisitions Limited Partner	Massachusetts
Lend Lease MSR Corp.	Delaware

² This company controls 979 consolidated wholly-owned subsidiaries engaged in the syndication of low-income housing tax credits equity investments, including asset management services, which operate in the United States.

EX-24

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Charles C. Baum
Name:	Charles C. Baum

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Richard O. Berndt
Name:	Richard O. Berndt, Esq.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Eddie C. Brown
Name:	Eddie C. Brown

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Robert S. Hillman
Name:	Robert S. Hillman

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Barbara B. Lucas
Name:	Barbara B. Lucas

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Arthur S. Mehlman
Name:	Arthur S. Mehlman

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Fred N. Pratt, Jr.
Name:	Fred N. Pratt, Jr.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company, does hereby constitute and appoint MICHAEL L. FALCONE, STEPHEN A. GOLDBERG and MELANIE M. LUNDQUIST, and each of them, the true and lawful attorney-in-fact of the undersigned, in the name, place and stead of the undersigned, to sign the name of the undersigned to the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2005, File Number 001-11981, to be filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and to any amendment thereto, and to cause the same to be filed with the Securities and Exchange Commission, it being intended to give and hereby giving and granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned could do if personally present; and the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or any one of them, shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24^th day of February 2006.

By:	/s/ Douglas A. McGregor
Name:	Douglas A. McGregor

EX-31.1

Exhibit 31.1

CERTIFICATIONS

Certification of Chief Executive Officer

I, Michael L. Falcone, certify that:

1. I have reviewed this annual report on Form 10-K of Municipal Mortgage & Equity, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 22, 2006

/s/    Michael L. Falcone

Michael L. Falcone

Chief Executive Officer, President and Director

EX-31.2

Exhibit 31.2

CERTIFICATIONS

Certification of Chief Financial Officer

I, Melanie M. Lundquist, certify that:

1. I have reviewed this annual report on Form 10-K of Municipal Mortgage & Equity, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or person performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 22, 2006

/s/    Melanie M. Lundquist

Melanie M. Lundquist

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Municipal Mortgage & Equity, LLC, a Delaware limited liability company (the “Company”), on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael L. Falcone, President, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 22, 2006

/s/    Michael L. Falcone

Michael L. Falcone

Chief Executive Officer, President and Director

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Municipal Mortgage & Equity, LLC, a Delaware limited liability company (the “Company”), on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Melanie M. Lundquist, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 22, 2006

/s/     Melanie M. Lundquist

Melanie M. Lundquist

Chief Financial Officer