MUNICIPAL MORTGAGE & EQUITY LLC (Form: 10-Q, Received: 11/09/2005 06:36:06)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)

þ	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2005

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the 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 E. Pratt Street, Suite 300 Baltimore, Maryland		21202-3140
(Address of principal executive offices)		(Zip Code)

(443) 263-2900

(Registrant’s telephone number, including area code)

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. þ Yes ¨ No

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

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

The Registrant had 38,135,023 common shares outstanding as of November 1, 2005.

Municipal Mortgage & Equity, LLC

INDEX TO FORM 10-Q


Part I — Financial Information		4

Item 1.	Financial Statements (Unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4.	Controls and Procedures	46

Part II — Other Information		47

Item 1.	Legal Proceedings	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Submission of Matters to a Vote of Security Holders	47

Item 5.	Other Information	47

Item 6.	Exhibits	48

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The disclosure in this Quarterly Report on Form 10-Q (this “ Quarterly Report ”) contains some forward looking statements intended to qualify for the safe harbor contained in Section 27A of the Securities Act of 1933, as amended, 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 identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “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 Quarterly Report include: (a) the Company’s expectations about the seasonality of its tax credit equity and tax exempt bond origination businesses, (b) the Company’s expectations as to the extension and/or renewal of certain of its credit facilities, (c) the Company’s expectation about the funding sources for the payment of the deferred consideration and the funding sources and amount of the contingent consideration for the acquisition of Glaser Financial Group, Inc., (d) the Company’s expectations as to its short- and long-term financing needs and potential sources and (e) the Company’s expectation about its interest rate swap transactions.

Any or all of our forward-looking statements in this Quarterly Report 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 our discussion in this Quarterly Report will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. 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 or failure to comply with applicable tax laws;

•

the availability of capital to fund operations;

•

the performance of multifamily housing developments and other investments;

•

the ability to acquire new investments;

•

changes in accounting principles generally accepted in the United States;

•

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

•

other risk factors described by the Company in its current and periodic filings with the Securities and Exchange Commission (the “ SEC ”) pursuant to the Exchange Act.

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited).

Municipal Mortgage & Equity, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)


	September 30, 2005			December 31, 2004
ASSETS
Tax-exempt bonds and interests in bond securitizations, net (Note 4)	$	1,339,385		$	1,275,748
Taxable bonds, net (Note 4)		23,670			9,205
Loans receivable, net (Note 5)		687,331			593,968
Loans receivable held for sale (Note 5)		45,868			27,766
Investment in partnerships (Note 6)		777,009			827,273
Derivative financial instruments (Note 7)		3,292			3,102
Cash and cash equivalents		64,514			92,881
Interest receivable		19,197			18,368
Restricted assets (Note 8)		114,078			72,805
Other assets		73,518			66,040
Land, building and equipment, net		169,117			182,773
Mortgage servicing rights, net		67,056			11,349
Goodwill		130,431			106,609
Other intangibles		28,172			22,443

Total assets	$	3,542,638		$	3,310,330

LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable (Note 9)	$	887,415		$	880,224
Mortgage notes payable (Note 9)		109,627			132,237
Short-term debt (Note 9)		484,059			413,157
Long-term debt (Note 9)		139,041			164,014
Subordinate debentures (Note 10)		172,750			84,000
Preferred shares subject to mandatory redemption		168,000			168,000
Tax credit equity guarantee liability (Note 11)		209,861			186,778
Derivative financial instruments (Note 7)		2,861			4,923
Accounts payable and accrued expenses		29,224			35,003
Interest payable		17,359			19,266
Unearned revenue and other liabilities		125,994			74,176

Total liabilities	$	2,346,191		$	2,161,778

Commitments and contingencies (Note 12)
Minority interest in subsidiary companies		384,525			404,586
Preferred shareholders’ equity in a subsidiary company, liquidation preference of $73,000 at September 30, 2005 and December 31, 2004		71,031			71,031
Shareholders’ equity (Note 13):
Common shares, no par value (42,046,099 shares authorized, including 38,211,783 shares issued and outstanding, and 74,814 deferred shares at September 30, 2005 and 39,471,099 shares authorized, including 35,179,884 shares issued and outstanding, and 58,114 deferred shares at December 31, 2004)		752,212			681,227
Less common shares held in treasury at cost (181,015 and 124,715 shares at September 30, 2005 and December 31, 2004, respectively)		(3,987	)		(2,615	)
Less unearned compensation (deferred shares)		(6,346	)		(4,145	)
Accumulated other comprehensive loss		(988	)		(1,532	)

Total shareholders’ equity		740,891			672,935

Total liabilities and shareholders’ equity	$	3,542,638		$	3,310,330

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

Municipal Mortgage & Equity, LLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

(unaudited)


	For the three months ended September 30,						For the nine months ended September 30,
	2005			2004			2005			2004
INCOME
Interest income
Interest on bonds and interests in bond securitizations	$	23,984		$	22,765		$	71,430		$	63,609
Interest on loans		14,971			10,872			38,582			32,981
Interest on short-term investments		1,606			1,338			3,087			4,004

Total interest income		40,561			34,975			113,099			100,594

Fee income
Syndication fees		2,278			6,861			11,310			14,802
Origination and brokerage fees		1,539			1,665			3,384			5,429
Guarantee fees		3,967			2,093			10,942			5,452
Asset management and advisory fees		7,588			1,685			18,618			9,818
Loan servicing fees		3,450			1,059			6,022			3,316
Other income		2,883			813			5,647			3,371

Total fee income		21,705			14,176			55,923			42,188

Net rental income		4,828			5,151			16,950			10,290

Total income		67,094			54,302			185,972			153,072

EXPENSES
Interest expense		19,907			16,937			55,726			49,304
Interest expense on debentures and preferred shares (Note 10)		6,818			4,769			18,130			11,819
Salaries and benefits		22,227			17,759			59,915			53,742
General and administrative		6,179			7,148			22,895			17,390
Professional fees		2,615			2,464			7,959			6,673
Depreciation and amortization		6,384			3,681			14,115			9,412

Total expenses		64,130			52,758			178,740			148,340

Net gain on sale of loans		4,796			406			5,761			2,816
Net gain (loss) on sale of tax-exempt investments		442			(660	)		6,515			545
Net gain on sale of investments in tax credit equity partnerships		2,494			125			9,058			2,939
Net gain on deconsolidation of tax credit equity partnerships		46			—			2,547			—
Net gain (loss) on derivatives		(1,563	)		(3,245	)		1,419			18
Impairments and valuation allowances		(1,951	)		(2,646	)		(3,317	)		(3,376	)
Income before income tax benefit (expense), net loss allocable to minority interest, net losses from equity investments in partnerships, discontinued operations and cumulative effect of a change in accounting principle		7,228			(4,476	)		29,215			7,674
Income tax benefit (expense)		865			(73	)		(2,170	)		2,264
Net loss allocable to minority interest		13,135			52,000			74,048			128,790
Net losses from equity investments in partnerships		(10,291	)		(46,754	)		(64,347	)		(128,676	)

Income from continuing operations		10,937			697			36,746			10,052
Discontinued operations (Note 16)		9,480			10,865			9,480			10,865

Income before cumulative effect of a change in accounting principle		20,417			11,562			46,226			20,917
Cumulative effect of a change in accounting principle		—			—			—			520

Net income	$	20,417		$	11,562		$	46,226		$	21,437

(Continued)

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

Municipal Mortgage & Equity, LLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

(unaudited)


	For the three months ended September 30,				For the nine months ended September 30,
	2005		2004		2005		2004
Basic earnings per common share:
Earnings from continuing operations	$	0.29	$	0.02	$	0.98	$	0.29
Discontinued operations		0.25		0.31		0.25		0.31
Cumulative effect of a change in accounting principle		—		—		—		0.02

Basic earnings per common share	$	0.54	$	0.33	$	1.23	$	0.62

Weighted average common shares outstanding		38,064,377		34,927,975		37,628,566		34,343,492
Diluted earnings per common share:
Earnings from continuing operations	$	0.28	$	0.02	$	0.96	$	0.29
Discontinued operations		0.24		0.31		0.25		0.31
Cumulative effect of a change in accounting principle		—		—		—		0.02

Diluted earnings per common share	$	0.52	$	0.33	$	1.21	$	0.62

Weighted average common shares outstanding		38,982,520		35,267,697		38,259,217		34,696,146

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

Municipal Mortgage & Equity, LLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	For the three months ended September 30,						For the nine months ended September 30,
	2005			2004			2005			2004
Net income	$	20,417		$	11,562		$	46,226		$	21,437
Other comprehensive (loss) income:
Unrealized gains (losses) on investments:
Unrealized holding (losses) gains arising during the period		(1,779	)		8,519			7,059			4,113
Reclassification adjustment for gains included in net income		(442	)		(1,733	)		(6,515	)		(2,938	)

Other comprehensive (loss) income		(2,221	)		6,786			544			1,175

Comprehensive income	$	18,196		$	18,348		$	46,770		$	22,612

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

Municipal Mortgage & Equity, LLC

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


	Common Shares			Treasury Shares			Unearned Compensation			Accumulated Other Comprehensive Income (Loss)			Total
Balance, January 1, 2005	$	681,227		$	(2,615	)	$	(4,145	)	$	(1,532	)	$	672,935
Net income		46,226			—			—			—			46,226
Unrealized gains on investments, net of reclassifications		—			—			—			544			544
Distributions		(52,851	)		—			—			—			(52,851	)
Purchase of treasury shares		—			(1,372	)		—			—			(1,372	)
Options exercised		2,466			—			—			—			2,466
Issuance of common shares		64,892			—			—			—			64,892
Deferred shares issued under the Non-Employee Directors’ Share Plans		407			—			—			—			407
Deferred share grants		9,848			—			(9,848	)		—			–
Amortization of deferred compensation		—			—			7,647			—			7,647
Net tax expense from exercise of options and vesting of deferred shares		(3	)		—			—			—			(3	)

Balance, September 30, 2005	$	752,212		$	(3,987	)	$	(6,346	)	$	(988	)	$	740,891


	Common Shares		Treasury Shares
SHARE ACTIVITY:
Balance, January 1, 2005	35,113,283		124,715
Options exercised	141,450		—
Purchase of treasury shares	(56,300	)	56,300
Issuance of common shares	2,575,000		—
Issuance of common shares under employee share incentive plans	314,684		—
Deferred shares issued under the Non-Employee Directors’ Share Plans	17,465		—

Balance, September 30, 2005	38,105,582		181,015

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

Municipal Mortgage & Equity, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	For the nine months ended September 30,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	46,226		$	21,437
Adjustments to reconcile net income to net cash provided by operating activities:
Income allocated to subsidiary preferred shareholders		2,837			—
Cumulative effect of a change in accounting principle		—			(520	)
Net holding gains on trading securities		(2,252	)		(3,436	)
Impairments and valuation allowances related to investments		4,203			3,376
Amortization of guarantee liability		(7,761	)		(3,748	)
Net gain on sales, including discontinued operations		(30,814	)		(17,165	)
Net gain on deconsolidation of tax credit equity partnerships		(2,547	)		—
Loss from investments in partnerships		64,347			127,985
Minority interest income		(76,885	)		(128,427	)
Net amortization of premiums, discounts and fees on investments		(7,321	)		(3,794	)
Depreciation, accretion and amortization		16,908			14,442
Deferred income taxes		(868	)		(3,021	)
Deferred share compensation expense		7,647			2,882
Common and deferred shares issued under the Non-Employee Directors’ Share Plans		407			245
Net change in assets and liabilities:
Increase in interest receivable		(817	)		(2,006	)
Decrease (increase) in other assets		2,625			(15,266	)
Increase in accounts payable, accrued expenses and other liabilities		3,799			14,721
Decrease in loans held for sale		10,234			12,553

Net cash provided by operating activities		29,968			20,258

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of bonds and interests in bond securitizations		(259,408	)		(282,603	)
Loan originations		(296,263	)		(243,900	)
Acquisition of assets and businesses, net of cash acquired		(58,587	)		—
Purchases of property and equipment		(11,490	)		(4,507	)
Net investment in restricted assets		(53,734	)		7,635
Principal payments received		215,292			139,167
Proceeds from the sale of investments		198,335			110,517
Distributions received from investments in partnerships		29,560			5,629
Net investments in partnerships		(304,220	)		(245,235	)

Net cash used in investing activities		(540,515	)		(513,297	)

CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from credit facilities		1,000,327			924,886
Repayment of credit facilities		(980,296	)		(748,953	)
Proceeds from tax credit syndication investors		316,990			196,599
Proceeds from short-term debt		285,005			57,220
Repayment of short-term debt		(214,103	)		(1,408	)
Proceeds from long-term debt		107,827			85,140
Repayment of long-term debt		(44,056	)		(16,555	)
Purchase of treasury shares		(1,372	)		—
Issuance of common shares		64,892			52,506
Proceeds from stock options exercised		2,466			3,576
Distributions to common shares		(52,851	)		(46,814	)
Distributions to preferred shareholders in a subsidiary company		(2,649	)		—

Net cash provided by financing activities		482,180			506,197

Net (decrease) increase in cash and cash equivalents		(28,367	)		13,158
Cash and cash equivalents at beginning of period		92,881			50,826

Cash and cash equivalents at end of period	$	64,514		$	63,984

(Continued)

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

Municipal Mortgage & Equity, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	For the nine months ended September 30,
	2005		2004
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	72,586	$	60,039

Income taxes paid	$	1,044	$	4

Non-cash activity related to VIEs under FIN 46:
Loans receivable	$	11,461	$	—
Investment in partnerships		225,177		1,265,623
Restricted assets		19,461		134,228
Other assets		1,165		17,939
Land, building and equipment, net		18,949		166,360
Notes payable		65,922		208,655
Mortgage notes payable		23,476		123,900
Accounts payable, accrued expenses and other liabilities		5,640		35,277
Minority interest in subsidiary companies		181,175		1,179,915
Accumulated other comprehensive income		—		61
Non-cash investing and financing activities:
Debt and other liabilities assumed in the acquisition of businesses		89,935		—

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

Municipal Mortgage & Equity, LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—BASIS OF PRESENTATION

Municipal Mortgage & Equity, LLC (“ MuniMae ” and, together with its subsidiaries, the “ Company ”) provides debt and equity financing to developers of multifamily housing and other real estate investments. The Company invests in tax-exempt bonds, or interests in bonds, issued by state and local governments or their agencies or authorities to finance multifamily housing developments. These tax-exempt bonds are not general obligations of state and local governments, or the agencies or authorities that issue the bonds; however, the multifamily housing developments, as well as the rents paid by the tenants, typically secure these investments. The Company also invests in tax-exempt bonds, or interests in bonds, secured by student housing or assisted living developments; and tax-exempt bonds issued by community development districts to finance the development of community infrastructure supporting single-family housing, mixed use and commercial developments and secured by specific payments or assessments pledged by the local improvement district that issues the bonds (“ CDD bonds ”). Interest income derived from the majority of the Company’s bond investments is exempt income for federal income tax purposes.

The Company also engages in real estate finance activities that generate income that is includable for federal income tax purposes. These include the origination of, investment in and servicing of investments in multifamily housing, and sourcing, underwriting, structuring and managing of commercial real estate investments, both for the Company’s own account and on behalf of third parties. The Company is also a low-income housing tax credit syndicator, whereby it acquires and transfers to investors interests in partnerships that receive and distribute low-income housing tax credits to investors. The Company earns syndication fees on the placement of these interests with investors. The Company also earns fees for providing guarantees on certain tax credit equity funds and for managing the low-income housing tax credit equity funds it has syndicated.

MuniMae was organized in 1996 as a Delaware limited liability company. As a limited liability company, the Company combines many of the limited liability, governance and management characteristics of a corporation with the pass-through income features of a partnership. Since MuniMae is classified as a partnership for federal income tax purposes, MuniMae is not itself subject to federal and, in most cases, state and local income taxes. Instead, each shareholder must include his or her distributive share of MuniMae’s income, deductions and credits on the shareholder’s income tax return. Most of the Company’s real estate finance and tax credit syndication activities are conducted through subsidiaries classified as corporations for federal income tax purposes. These corporations do not have the pass-through income features of a partnership.

The condensed consolidated financial statements include the accounts of MuniMae, its wholly owned subsidiaries, its majority owned subsidiaries and variable interest entities (“ VIEs ”) where management determined that the Company was the primary beneficiary of the VIE. All significant intercompany balances and transactions have been eliminated.

The results of consolidated operations for the three- and nine-month periods ended September 30, 2005, are not necessarily indicative of the results to be expected for the full year. The operating results from the Company’s tax credit equity syndication business are expected to fluctuate based on seasonal patterns. The highest production volumes from the tax credit business generally occur in the second half of the fiscal year. However, corresponding increases in revenues are not necessarily the resulting effect as syndication revenues earned in association with consolidated tax credit equity funds are eliminated in consolidation. Seasonality in tax-exempt bond originations generally results in higher volume in the second half of the fiscal year.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC and, in the opinion of management, contain all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of the results for the periods presented. These results have been determined on the basis of accounting principles and policies discussed in Note 1 to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 (the “ Company’s 2004 Form 10-K ”). Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles in the United States of America (“ GAAP ”) have been condensed or omitted. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s 2004 Form 10-K. Certain 2004 amounts have been reclassified to conform to the 2005 presentation with no effect on previously reported net income or shareholders’ equity.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“ FASB ”) issued Statement of Financial Accounting Standards (“ SFAS ”) No. 123R, “Share-Based Payment,” a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” and superseding APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“ SFAS 123R ”). SFAS 123R requires the Company to expense grants made under the share option and employee share purchase plan programs. 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 SFAS 123R such that the Company must adopt it no later than January 1, 2006. Upon adoption of SFAS 123R, amounts previously disclosed under SFAS No. 123 will be recorded in the consolidated statements of income. The Company is continuing to evaluate the impact of this standard and expects that implementation of SFAS No. 123R will have no material effect on its reported financial condition or results of operations.

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. Thus far, the impact of Issue 04-5 has had no effect on the Company’s financial statements. The Company will continue to evaluate the impact of Issue 04-5 throughout the remainder of 2005.

NOTE 2—SHARE-BASED EMPLOYEE COMPENSATION

The Company accounts for both the non-employee director share plans and the employee share incentive plans under the recognition and measurement principles of Accounting Principles Board (“ APB ”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Accordingly, since grants have been made at fair value, no compensation expense has been recognized for the options issued under the plans for the nine months ended September 30, 2005 and 2004. SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (“ SFAS 148 ”), requires the Company to make certain disclosures as if the compensation expense for the Company’s plans had been determined based on the fair value on the date of grant for awards under those plans. Using the Black Scholes option-pricing model, the Company estimated the fair value of each option awarded during the nine months ended September 30, 2005 and 2004 based on the fair value recognition provisions of statements of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” as amended by FAS 148. The estimated fair values of options awarded were de minimis and would have no impact on the earnings per share calculation for the three or nine months ended September 30, 2005 and 2004.

NOTE 3—ACQUISITIONS

On February 18, 2005, the Company purchased 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. The Company has accounted for this acquisition as a purchase and has 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. The Company allocated approximately $2.9 million to tangible assets (primarily investments in partnerships and receivables), $7.0 million to identifiable intangibles (primarily management advisory contracts, mortgage servicing rights and customer relationship value) and approximately $0.9 million to goodwill.

Additionally, as part of the purchase agreement, the Company committed to invest $25.0 million in a real estate partnership in which MRC is already a general partner. This interest was acquired by the Company upon its acquisition of MRC. The Company is required to invest the remainder of the $25.0 million commitment on or prior to the third anniversary of the closing date of the acquisition. As of September 30, 2005, the Company had funded $9.2 million of its commitment.

On July 1, 2005, the Company completed the acquisition of all the outstanding capital stock of Glaser Financial Group, Inc. (“ Glaser ”). Glaser was a full service commercial mortgage banker that arranged financing predominately in the upper Midwest for multifamily, senior housing and commercial real estate through Fannie Mae DUS, Freddie Mac, HUD/FHA, conventional and conduit funding sources. The purchase price included a combination of cash and common shares and could total approximately $68.5 million assuming certain performance metrics are achieved. The initial portion of cash purchase price was financed primarily through the sale of approximately $38.8 million in Trust Preferred Securities (see Note 10). The remainder of the initial cash purchase price was funded through cash on hand.

The Glaser acquisition has been accounted for as a purchase. The total purchase price, excluding contingent consideration, was $63.5 million, which includes: (i) the initial cash purchase price of $50.0 million, (ii) three deferred payments of at least $4.0 million on each of the first three anniversaries of the closing date (fair value of $10.2 million) (the “ Deferred Purchase Price ”), (iii) $1.0 million for reimbursement of additional working capital and (iv) capitalized acquisition costs of $0.5 million. 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 was not recorded at the acquisition date as it will be recorded once the contingency is resolved.

The Company allocated the purchase price of its acquisition to the tangible assets, liabilities and identified intangible assets acquired based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. Of the total purchase price for Glaser, approximately $23.5 million was allocated to goodwill. The Deferred Purchase Price of $10.2 million is included in unearned revenue and other liabilities in the purchase price allocation below. The factors considered in allocating the purchase price, including goodwill, included the Company’s valuation, which focused on Glaser’s historical and projected cash flows as well as its business prospects and strategic value. The total purchase price is subject to adjustments as the result of finalizing certain post-acquisition adjustments primarily related to the contingent consideration. The purchase price was allocated as follows:


*(in thousands)*
Assets
Loans receivable held for sale	$	46,746
Cash and cash equivalents		9,267
Other assets		963
Mortgage servicing rights, net		53,968
Goodwill		23,504
Other intangibles		5,066

Total assets	$	139,514

Liabilities
Short-term debt	$	53,267
Accounts payable, accrued expenses and interest payable		986
Unearned revenue and other liabilities		34,725

Total liabilities	$	88,978

Net cash paid	$	50,536

Of the total purchase price, approximately $5.1 million was allocated to intangible assets. Of this amount, $4.0 million relates to a license agreement with an indefinite life, $1.0 million relates to loans in process of origination, and $50,000 relates to non-compete agreements. The license will be classified as an indefinite-lived asset, and therefore, will not be subject to amortization. Loans in the process of origination are amortized to net gain on sale of loans as the related transactions close, all of which are expected to close within the next twelve months. The Company recognized amortization of $0.7 million for the period ended September 30, 2005 related to loans in process of origination.

The pro forma financial information reflects pro forma adjustments that are based upon available information and which management believes is reasonable. The pro forma financial information does not necessarily reflect the results of operations or financial position of the Company that actually would have resulted had the acquisition occurred on the assumed date. The pro forma financial information is based on historical results of the combined entities and is not necessarily indicative of results that will be achieved by the combined entities in the future. Some factors that may result in differences between the pro forma financial information and actual results are: changes in the financial performance of the acquired businesses, synergy savings in the combined entity and the risk factors identified in the Company’s periodic and current reports filed pursuant to the Exchange Act.

The condensed consolidated statements of income for the three and nine months ended September 30, 2005 include the results of operations of Glaser from the date of acquisition. The following table reflects the pro forma results of operations for the three and nine months ended September 30, 2005 and 2004 as if the acquisition had been completed as of the beginning of the period presented:


	Three months ended,				Nine months ended,
(in thousands, except per share data)	September 30, 2005		September 30, 2004		September 30, 2005		September 30, 2004
Total income	$	67,094	$	58,538	$	192,969	$	164,104
Income from continuing operations	$	11,401	$	1,907	$	35,949	$	11,192
Net income	$	20,881	$	12,772	$	45,429	$	22,577
Income from continuing operations per common share
Basic	$	0.30	$	0.05	$	0.95	$	0.33
Diluted	$	0.29	$	0.05	$	0.94	$	0.33
Net income per common share
Basic	$	0.55	$	0.37	$	1.20	$	0.66
Diluted	$	0.54	$	0.36	$	1.19	$	0.65

NOTE 4—TAX-EXEMPT BONDS, TAXABLE BONDS AND INTERESTS IN BOND SECURITIZATIONS

The Company originates investments in tax-exempt and taxable bonds both for its own account and for others. Tax-exempt and taxable bonds are issued by state and local government authorities to finance multifamily housing developments or other types of real estate, including land infrastructure development. The multifamily bonds are secured primarily by non-recourse mortgage loans on affordable and market rate multifamily housing, while the land infrastructure bonds are secured by property or sales tax liens and other assessments on the district. The Company also invests in tax-exempt bonds, or interests in bonds, secured by student housing or assisted living developments.

The Company’s sources of capital to fund these lending activities include proceeds from equity and debt offerings, securitizations, loans from warehousing facilities and lines of credit with banks, pension funds and finance companies and cash on hand. The Company earns interest income from its investment in tax-exempt bonds and taxable bonds. The Company also earns origination, construction administration and servicing fees through subsidiaries, classified as corporations for federal income tax purposes, for originating and servicing the bonds.

As of September 30, 2005 and December 31, 2004, the Company held tax-exempt bonds with a fair value of $1,339.4 million and $1,275.7 million, respectively, and taxable bonds with a fair value of $23.7 million and $9.2 million, respectively. The following tables summarize the bonds by type as of each such date.


	September 30, 2005
(in thousands)	Face Amount		Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
Non-participating tax-exempt bonds	$	1,185,105	$	1,166,657	$	27,807	$	(43,133	)	$	1,151,331
Participating tax-exempt bonds		128,234		127,672		5,474		(13,210	)		119,936
Subordinate non-participating tax-exempt bonds		6,550		6,372		210		(1,008	)		5,574
Subordinate participating tax-exempt bonds		60,530		35,799		23,643		(345	)		59,097
Interests in securitization trusts		3,892		3,880		11		(444	)		3,447
Taxable bonds		23,907		23,622		50		(2	)		23,670

Total	$	1,408,218	$	1,364,002	$	57,195	$	(58,142	)	$	1,363,055


	December 31, 2004
(in thousands)	Face Amount		Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
Non-participating tax-exempt bonds	$	1,127,291	$	1,102,554	$	30,836	$	(44,156	)	$	1,089,234
Participating tax-exempt bonds		128,484		127,853		5,515		(10,923	)		122,445
Subordinate non-participating tax-exempt bonds		6,562		6,383		184		(936	)		5,631
Subordinate participating tax-exempt bonds		60,530		35,799		20,310		(1,334	)		54,775
Interests in securitization trusts		4,698		4,687		36		(1,060	)		3,663
Taxable bonds		9,489		9,205		—		—			9,205

Total	$	1,337,054	$	1,286,481	$	56,881	$	(58,409	)	$	1,284,953

During the nine months ended September 30, 2005, the Company invested in tax-exempt bonds with a face amount of $247.0 million and a purchase price of $244.8 million. Of the total face amount of $247.0 million, $180.3 million represents the Company’s new primary investments (bonds which the Company originated) and $66.7 million reflects new secondary market investments (previously issued securities purchased from third parties).

The Company structures some tax-exempt bonds so that the borrower makes draws on the bonds throughout the construction period (“ draw down bonds ”). In the year these bonds are originated, the total draws for the year are reported as new primary investments. The Company originated a face amount of $46.8 million in new draw down bonds during the nine months ended September 30, 2005. The Company also funded additional draws of $39.0 million on existing tax-exempt draw down bonds, increasing the face amount of these bonds to $129.8 million as of September 30, 2005.

Nineteen tax-exempt bonds with an amortized cost of $182.5 million were redeemed or sold during the nine months ended September 30, 2005. The Company recognized an aggregate gain of $6.5 million in connection with these redemptions and sales. Of the $182.5 million, seven bonds that were in a bond securitization and five bonds that were wholly owned with an amortized cost of $130.7 million and $8.6 million, respectively, were redeemed during the nine months ended September 30, 2005, resulting in a gain totaling $4.9 million. Two bonds that were in a bond securitization, four bonds that were wholly owned and one senior interest in a bond securitization with an amortized cost of $13.0 million, $28.7 million and $1.5 million, respectively, were sold during the nine months ended September 30, 2005, resulting in a gain totaling $1.6 million.

In order to facilitate the securitization of certain assets at higher leverage ratios than otherwise would be available to the Company without the posting of additional collateral, the Company has pledged additional bonds to various pools that act as collateral for senior interests in certain securitization trusts. From time to time, the Company pledges bonds as collateral for letters of credit, lines of credit, warehouse lending arrangements, other investments and derivative agreements. In addition, at times the Company pledges collateral when providing a guarantee in connection with the syndication of tax credit equity funds. At September 30, 2005 and December 31, 2004, the total carrying amount of the tax-exempt bonds pledged as collateral was $541.7 million and $537.0 million, respectively. At September 30, 2005 and December 31, 2004, the total carrying amount of taxable bonds pledged as collateral was $22.0 million and $0, respectively.

During the nine months ended September 30, 2005, the Company recorded an other-than-temporary impairment of $1.6 million on two tax-exempt bonds with an aggregate face amount of $10.0 million. During the nine months ended September 30, 2004, the Company recorded an other-than-temporary impairment of $3.3 million on four tax-exempt bonds with an aggregate face amount of $25.4 million.

The Company places delinquent bonds on non-accrual status for financial reporting purposes when collection of interest is in doubt, which is generally after 90 days of non-payment. At September 30, 2005 and December 31, 2004, there were $162.9 million and $108.1 million (face value), respectively, of bonds on non-accrual status.

NOTE 5—LOANS RECEIVABLE

The Company’s loans receivable and loans receivable held for sale consist primarily of construction loans, taxable permanent loans, taxable supplemental loans and other taxable loans. Supplemental loans include pre-development loans, bridge loans and other loans. The following table summarizes loans receivable by loan type at September 30, 2005 and December 31, 2004.


(in thousands)	September 30, 2005			December 31, 2004
Loan Type:
Construction loans	$	525,962		$	503,745
Taxable permanent loans		45,868			27,766
Supplemental loans		73,056			62,079
Other taxable loans		93,065			31,104

		737,951			624,694

Allowance for loan losses		(4,752	)		(2,960	)

Total	$	733,199		$	621,734

The Company had loans receivable held for sale of $45.9 million and $27.8 million at September 30, 2005 and December 31, 2004, respectively. These loans committed for sale are sold to Federal National Mortgage Association (“ Fannie Mae ”), Government National Mortgage Association (“ GNMA ”) and third party conduit lenders. The carrying values of these loans approximate their fair values.

The Company pledges loans as collateral for the Company’s notes payable, warehouse lending arrangements and line of credit borrowings. In addition, in order to facilitate the securitization of certain assets at higher leverage ratios than otherwise available to the Company without the posting of additional collateral, the Company has pledged additional taxable loans to a pool that acts as collateral for senior interests in certain securitization trusts and credit enhancement facilities. At September 30, 2005 and December 31, 2004, the total carrying amount of the loans receivable pledged as collateral was $617.2 million and $548.0 million, respectively.

The Company places delinquent loans on non-accrual status for financial reporting purposes when collection of interest is in doubt, which is generally after 90 days of non-payment. At September 30, 2005 and December 31, 2004, there were $67.3 million and $77.4 million (face value), respectively, of loans on non-accrual status.

NOTE 6—INVESTMENT IN PARTNERSHIPS

The Company’s investments in partnerships primarily consist of equity interests in real estate operating partnerships and equity investments in income-producing real estate partnerships. The Company’s investments in partnerships are accounted for using the equity method. The following table summarizes investments in partnerships by major category at September 30, 2005 and December 31, 2004:


(in thousands)	September 30, 2005		December 31, 2004
Non-guaranteed tax credit equity funds:
Investment in real estate operating partnerships (1)	$	457,965	$	563,310
Guaranteed tax credit equity funds:
Investment in real estate operating partnerships (2)		155,113		149,078
Investment in real estate operating partnerships—warehousing (3)		80,265		43,873
Investment in CAPREIT (4)		69,681		70,351
Investments in real estate operating partnerships—MRC (5)		10,777		—
Other investments in partnerships (6)		3,208		661

	$	777,009	$	827,273

(1)

As a result of FASB Interpretation No. 46 (Revised) (“ FIN 46R ”), the Company must include on its balance sheet investments by certain non-guaranteed tax credit equity funds. These funds invest in limited partnership interests in real estate operating partnerships (“ Project Partnerships ”).

(2)

These investments are real estate operating partnerships owned by tax credit equity funds where the Company provides a guarantee or otherwise has continuing involvement in the underlying assets of the fund. As a result of the guarantee, the Company includes the assets of the funds in its consolidated balance sheets until such time as the Company’s guarantee expires.

(3)

The Company acquires, through limited partnership interests, equity interests, which typically represent a 99.0% interest in properties expected to earn tax credits. When the Company has a sufficient number of such limited partnership interests and has identified tax credit investors, it transfers those interests to a tax credit equity fund for the investors’ benefit. The Company typically owns these partnership interests for three to nine months before they are transferred to a tax credit equity fund.

(4)	The Company makes equity investments in income-producing real estate partnerships in joint ventures with CAPREIT, Inc. and its affiliates.

(5)	The Company makes 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 the Company’s tax credit equity segment.

NOTE 7—DERIVATIVE FINANCIAL INSTRUMENTS

At September 30, 2005 and December 31, 2004, the Company’s derivative financial instruments consisted of interest rate swaps, put option contracts, total return swaps and loan commitments.

In March 2005, the Company entered into a contractual arrangement whereby the counterparty to the arrangement will purchase tax-exempt bonds from the Company or a third party and hold the bonds for a minimum of 30 days. The Company will have the option to bid for the purchase of the bonds at the time of sale by the counterparty. Regardless of whether the bonds are purchased by the Company or not, the Company 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 below. The total maximum notional amount of the swap is $50.0 million, based on the underlying value of the bonds held by the counterparty. The Company will receive a 1.50% annual fee on the outstanding notional amount of the swap. During the term of the swap, the Company is 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. The arrangement has a maturity date of January 23, 2017. As of September 30, 2005, the Company had two swaps outstanding under this arrangement with a total notional amount of $9.6 million.

In June 2005, the Company terminated interest rate swap contracts with a total notional amount of $35.0 million. The Company recorded a net gain of $1.5 million on the termination of these interest rate swaps. In addition, the Company in conjunction with a new non-revolving term financing facility (see Note 9) entered into a new interest rate swap contract with a total notional amount of $18.4 million and an effective date in July 2005. The total notional amount of this contract is expected to increase to $22.0 million in the fourth quarter of 2005. In addition to the above-mentioned interest rate swaps, the Company entered into two other interest rate swaps with a total notional amount of $16.9 million in February 2005, and one additional interest rate swap with a notional amount of $75.0 million in September 2005.

The following table provides certain information with respect to the derivative financial instruments held by the Company at September 30, 2005 and December 31, 2004:


	September 30, 2005							December 31, 2004
	Notional Amount		Fair Value (1)					Notional Amount		Fair Value (1)
(in thousands)	Notional Amount		Assets		Liabilities (2)			Notional Amount		Assets		Liabilities (2)
Interest rate swap agreements (3)	$	431,262	$	3,292	$	(2,529	)	$	286,015	$	3,102	$	(4,878	)
Total return swaps (4)		32,760		—		(103	)		38,200		—		—
Put option agreements (5)		101,155		—		—			105,610		—		(45	)
Loan commitments (6)		74,369		—		(229	)		—		—		—

Total derivative financial instruments			$	3,292	$	(2,861	)			$	3,102	$	(4,923	)

(1)	The amounts disclosed represent the net fair values of all the Company’s derivatives at the reporting date.

(2)	The aggregate negative fair value of the investments is included in liabilities for financial reporting purposes.

(3)

For the interest rate swap agreements, notional amount represents the total amount of the Company’s interest rate swap contracts ($431,262 as of September 30, 2005 and $320,975 as of December 31, 2004) less the total amount of the Company’s reverse interest rate swap contracts ($0 as of September 30, 2005 and $34,960 as of December 31, 2004).

(4)	For the total return swaps, the notional amount represents the total amount of the Company’s total return swap contracts.

(5)	For put option agreements, the notional amount represents the Company’s aggregate obligation under the put option agreements.

(6)	Loan commitments represent agreements to replace construction loans with longer-term financing originated by the Company.

NOTE 8—RESTRICTED ASSETS

Restricted assets includes cash and cash equivalents summarized by major category in the table below at September 30, 2005 and December 31, 2004:


(in thousands)	September 30, 2005		December 31, 2004
Tax credit equity fund cash (1)	$	71,779	$	49,069
Margin call deposits (2)		2		452
Collateral for securitization programs (3)		17,000		17,000
Guaranteed fund collateral (4)		18,100		1,700
Other cash collateral (5)		7,197		4,584

	$	114,078	$	72,805

(1)

Under the financing method of accounting for guaranteed tax credit equity funds and due to the consolidation of certain other funds in accordance with FIN 46R, the Company reports the restricted cash of the funds in the Company’s consolidated balance sheet. The cash is to be used primarily for investments by the consolidated funds into partnerships and other approved uses as set out in the funds’ partnership agreements.

(2)

Under the terms of the Company’s interest rate swap agreements with counterparties, the Company is required to maintain cash deposits (“ margin call deposits ”). The margin call deposit requirements are specific to each counterparty. The Company must make margin call deposits when the total fair value of the Company’s outstanding swap obligations to any one counterparty is, in most cases, greater than $1.0 million.

(3)

In order to facilitate the securitization of certain assets at higher leverage ratios than otherwise available to the Company without the posting of additional collateral, the Company has pledged additional bonds to a pool that acts as collateral for senior interests in certain securitization trusts. From time to time, the Company may also post cash or cash equivalents to this pool.

(4)

Under the terms of investor return floor agreements with Merrill Lynch related to certain guaranteed tax credit equity funds, the Company is required to post upfront collateral. The total collateral includes $8.6 million in cash collateral, $8.5 million of investments in third party floating rate trust securities, and $1.0 million of tax credit equity fund reserves.

(5)

From time to time, the Company may elect to pledge collateral in connection with other guarantees, first loss positions and leases or on behalf of its customers in order to facilitate credit and other collateral requirements. Collateral posted on behalf of its customers is considered temporary and the Company expects to be fully reimbursed.

NOTE 9—NOTES PAYABLE AND DEBT

The Company’s notes payable consist primarily of notes payable and advances under line of credit arrangements which are used to: (1) finance lending activities; (2) finance working capital needs; and (3) warehouse real estate operating partnerships before they are placed into tax credit equity funds. Notes payable also includes factored and mortgage notes payable reflected on the Company’s condensed consolidated balance sheets as a result of consolidating certain tax credit equity funds pursuant to FIN 46R. The factored notes payable are obligations of the limited partners (investors) of the tax-credit funds and collateralized by the investors’ subscription receivables. The factored notes payable are non-recourse and not guaranteed by the Company. The mortgage notes payable are obligations of Project Partnerships, in which the Company is the general partner, and are non-recourse and not guaranteed by the Company. The Company’s short- and long-term debt relates to securitization transactions and other financing transactions that the Company has recorded as borrowings. The following table summarizes notes payable and debt at September 30, 2005 and December 31, 2004:


(in thousands)	Total of Facilities (1)			September 30, 2005		December 31, 2004
Short-term notes payable		N/A		$	191,833	$	193,311
Lines of credit	$	597,000	(2)		282,714		307,306
Short-term debt		N/A			484,059		413,157

Total short-term notes payable and debt					958,606		913,774

Long-term notes payable		N/A			145,496		173,440
Lines of credit	$	302,000			146,088		14,080
Long-term debt		N/A			139,041		164,014

Total long-term notes payable and debt					430,625		351,534

Factored notes payable					121,284		192,087
Mortgage notes payable					109,627		132,237

Total notes payable and debt				$	1,620,142	$	1,589,632

(1)	As of September 30, 2005.

(2)	$39.0 million of these facilities are reserved for letters of credit.

The Warehousing Credit and Security Agreement with Residential Funding Corporation expired on October 31, 2005, and the principal thereunder was paid in full.

During the second quarter of 2005, the Company 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, the Company entered into certain interest rate swap agreements (see Note 7).

During the third quarter of 2005, the Company 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 London Interbank Offer Rate (“ LIBOR ”) plus a spread.

In November 2005, the Company amended and restated a $140.0 million existing warehouse line with Bank of America, N.A. extending the maturity of the line one year.

In connection with the Glaser acquisition, the Company entered into an Amended and Restated Credit Agreement ( “Credit Agreement” ) effective as of July 1, 2005 with U.S. Bank National Association ( “U.S. Bank” ). The Credit Agreement provided for revolving loans to the Company to finance specified types of mortgage loans, investments and advances in an amount of up to $255.0 million, subject to sub-limits for particular classifications of borrowings. The revolving loans have varying maturities of up to 90 days as agreed upon between the Company and U.S. Bank. 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 rate 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. In September 2005, the Company extended the term of the facility from September 30, 2005 to November 18, 2005 with a reduction in the committed amount from $255.0 million to $110.0 million. The Company expects to complete negotiation on the renewal of the Credit Agreement before the expiration of the extension.

Covenant Compliance

Under the terms of the various credit facilities, the Company is required to comply with financial covenants including net worth, interest coverage, leverage, collateral and other terms and conditions.

As of September 30, 2005, the Company was in compliance with all material financial covenants in its credit facilities.

NOTE 10—SUBORDINATE DEBENTURES

In 2005, MMA Financial Holdings, Inc., a consolidated indirect wholly-owned subsidiary of the Company (“ MFH ”), formed MFH Capital Trust II (“ MFH Trust II ”) and MFH Capital Trust III (“ MFH Trust III ”) as unconsolidated 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, guaranteed by MFH and the Company (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 ”). 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, guaranteed by MFH and the Company (the “ MFH Trust III Preferred Securities ,” and together with the MFH Trust II Preferred Securities, the “ Trust 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 ,” and together with the 8.05% Debentures, the “ 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 3). 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.

The Debentures are included in the accompanying condensed consolidated balance sheets as a long-term liability at the liquidation preference of $88.8 million. In addition, net offering costs of $2.9 million related to the Trust Preferred Securities are recorded as debt issuance costs and included in other assets in the accompanying condensed consolidated balance sheet. The offering costs paid by MFH are amortized to interest expense in the accompanying condensed consolidated income statement over a 30-year period based on the call option of the preferred shares.

NOTE 11—TAX CREDIT EQUITY GUARANTEE LIABILITY

As part of the acquisition of the HCI business (“ HCI ”) of Lend Lease Corporation Limited (“ Lend Lease ”), the Company 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, the Company has established new guaranteed tax credit equity funds whereby the Company provides a guarantee to a third party or investors. The following table shows the changes in the tax credit equity guarantee liability:


(in thousands)
Balance at January 1, 2005	$	186,778
Amortization		(7,761	)
Expiration of guarantees		(48,147	)
Limited partners’ capital contributions		78,991

Balance at September 30, 2005	$	209,861

NOTE 12—GUARANTEES, COMMITMENTS AND CONTINGENCIES

Set forth in the table below is a summary of the maximum exposure, carrying amount and supporting collateral with respect to the Company’s guarantee obligations. The Company’s maximum exposure under its guarantee obligations may not be indicative of the likelihood of the expected loss under the guarantees. The following table summarizes the Company’s guarantees by type at September 30, 2005:


(in millions)	September 30, 2005
Guarantee	Note		Maximum Exposure		Carrying Amount		Supporting Collateral
Loss-sharing agreements with Fannie Mae, GNMA and HUD	(1	)	$	517.7	$	0.2	$4.0 million letter of credit pledged
Bank line of credit guarantees	(2	)		279.4		279.4	$316.6 million of investment in partnership, loans receivable, tax-exempt and taxable bonds
Tax credit-related guarantees	(3	)		508.9		230.5	$36.6 million of cash, tax-exempt bonds, loans receivable and letters of credit
Other financial/payment guarantees	(4	)		461.5		295.1	$499.2 million of cash, equity and tax-exempt bonds
Put options	(5	)		70.8		2.1	$14.8 million of tax-exempt bonds
Letters of credit guarantees	(6	)		121.9		65.3	$11.0 million of cash and loans receivable
Indemnification securities contracts	(7	)		131.4		78.0	None
Trust preferred securities guarantees	(8	)		175.8		175.8	None

			$	2,267.4	$	1,126.4

(1)

As a Fannie Mae DUS™ lender and GNMA loan servicer, the Company 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 originated by the Company and sold to Fannie Mae, the Company may be required to make servicing advances to Fannie Mae. Also, the Company 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.

(2)

The Company provides payment or performance guarantees for certain borrowings under line of credit facilities. The amount outstanding under these lines of credit was $277.8 million at September 30, 2005. This amount is included in notes payable in the Company’s condensed consolidated balance sheets.

(3)

The Company acquires and sells interests in partnerships that provide low-income housing tax credits for investors. In conjunction with the sale of these partnership interests, the Company 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.

(4)

The Company has entered into arrangements that require it to make payments in the event that a specified third party fails to perform on its financial obligations. The Company typically provides these guarantees in conjunction with the sale of an asset to a third party or the Company’s investment in equity ventures. The term of such guarantees vary based on loan payoff schedules or Company divestitures.

(5)	The Company has entered into put option agreements with counterparties whereby the counterparty has the right to sell to the Company, and the Company has the obligation to buy, an underlying investment at a specified price. These put option agreements expire at various dates through June 2010.

(6)

The Company provides 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, the Company may provide a payment guarantee for certain assets in securitization programs. These guarantees expire at various dates through September 2007.

(7)

The Company has 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 the Company 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 Company 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.

(8)

The Company provides a payment guarantee of the underlying trust preferred securities issued by certain unconsolidated entities (see Note 10). The guarantee obligation is unsecured and subordinated to the Company’s existing and future debt and liabilities, except for debt and liabilities which by their terms are specifically subordinated to the guarantee obligations and the rights of the holders of various classes of existing and future preferred shares of the Company.

NOTE 13—SHAREHOLDERS’ EQUITY

Equity Offering

In February 2005, the Company sold to the public approximately 2.6 million of its common shares at a price of $26.51 per share in a registered offering. Net proceeds from the offering were approximately $64.9 million and were used for general corporate purposes, including funding of new investments, paying down debt and working capital.

Share Repurchase Program

During the first quarter of 2005, the Company purchased 56,300 common shares at an aggregate cost of $1.4 million under a share repurchase program previously approved by the Board of Directors.

Distributions

On January 21, 2005, the Board of Directors declared a distribution of $0.4725 per common share for the three months ended December 31, 2004 to common shareholders of record on January 31, 2005. The payment date for the distribution was February 11, 2005. On April 21, 2005, the Board of Directors declared a distribution of $0.4775 per common share for the three months ended March 31, 2005 to common shareholders of record on May 2, 2005. The payment date for the distribution was May 13, 2005. On July 21, 2005, the Board of Directors declared a distribution of $0.4825 per common share for the three months ended June 30, 2005 to common shareholders of record on August 1, 2005. The payment date for the distribution was August 12, 2005.

Earnings per Share

The following tables reconcile the numerators and denominators in the basic and diluted earnings per share (“ EPS ”) calculations for common shares for the three and nine months ended September 30, 2005 and 2004. The effect of all potentially dilutive securities was included in the calculation for September 30, 2005 and 2004. The computation of diluted EPS for the periods ended September 30, 2005 and 2004 excluded 7,000 and 37,000 options to purchase common shares, respectively, as they were anti-dilutive.

Municipal Mortgage & Equity, LLC

RECONCILIATION OF BASIC AND DILUTED EPS

(in thousands, except share data)

(unaudited)


	For the three months ended September 30, 2005				For the three months ended September 30, 2004
	Basic		Diluted		Basic		Diluted
Net income from continuing operations	$	10,937	$	10,937	$	697	$	697
Interest expense on deferred shares from acquisition, net of taxes of $81		—		129		—		—

Adjusted net income from continuing operations used in EPS computation	$	10,937	$	11,066	$	697	$	697

Weighted-average shares outstanding		38,064,377		38,064,377		34,927,975		34,927,975
Dilutive securities:
Options and deferred shares		—		446,087		—		339,722
Deferred shares from acquisition		—		472,056		—		—

Adjusted weighted-average shares used in EPS computation		38,064,377		38,982,520		34,927,975		35,267,697


	For the nine months ended September 30, 2005				For the nine months ended September 30, 2004
	Basic		Diluted		Basic		Diluted
Net income from continuing operations	$	36,746	$	36,746	$	10,052	$	10,052
Interest expense on deferred shares from acquisition, net of taxes of $81		—		129		—		—

Adjusted net income from continuing operations used in EPS computation	$	36,746	$	36,875	$	10,052	$	10,052

Weighted-average shares outstanding		37,628,566		37,628,566		34,343,492		34,343,492
Dilutive securities:
Options and deferred shares		—		473,299		—		352,654
Deferred shares from acquisition		—		157,352		—		—

Adjusted weighted-average shares used in EPS computation		37,628,566		38,259,217		34,343,492		34,696,146

NOTE 14—RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES AND NON-PROFIT ENTITIES

From time to time, borrowers have defaulted on their debt obligations to the Company. Some of these obligations were incurred in connection with the development of properties that collateralize the Company’s tax-exempt bonds. These properties are sometimes referred to as “defaulted assets.” In a number of these circumstances, the Company has, after evaluating its options, chosen not to foreclose on the property. Instead, the Company has 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 officers of the Company, including MMA Affordable Housing, Inc. (“ MMAH ”) and MuniMae Foundation, Inc. (“ MMF ”). The Company has taken this action to preserve the value of the original tax-exempt bond obligations and to maximize cash flow from the defaulted assets. The 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 the debt to the Company.

During 2005, certain developers opted or were required to transfer to the Company or an affiliate of the Company all of their rights and interests in eleven properties, as the developers had encountered substantial financial difficulties and/or had inadequately managed and supervised development of the underlying properties. Eight of the eleven properties were originally financed, in whole or in part, through equity investments from tax credit equity funds that the Company sponsored (including some from guaranteed funds) and tax-exempt bond or taxable loan investments held by the Company. Two of the eleven properties had no Company debt and were originally financed in part by equity investments from tax credit equity funds that the Company sponsored. One of the eleven properties had no equity investment sponsored by the Company and was financed in part by a tax-exempt bond investment and a taxable loan investment held by the Company. The general partner interests in ten of the property partnerships were transferred to MMAH. The sole member interest in one of the property partnerships that is a not-for-profit was transferred to MMF.

During the third quarter of 2005, the Company continued to evaluate the risks, funding needs and construction timelines of each of the above properties. To enable further development of certain of the properties, additional financial support has been provided depending upon the underlying facts and circumstances surrounding each property. The Company will continue to evaluate and mitigate risks and economic impacts associated with providing additional financing to these properties and if necessary, where the Company is a senior debt holder, foreclosure as a possible liquidation event.

The Company provided a taxable loan of $1.5 million to one of the eleven properties. The Company continues to evaluate impairment risk related to all of the above-mentioned investments as each relates to the Company. During the third quarter of 2005, the Company recorded through a charge to impairments and valuation allowances a loan loss reserve of $0.4 million related to taxable loans and an other-than-temporary impairment of $1.3 million related to one tax-exempt bond. As of September 30, 2005, two of the tax-exempt bonds are temporarily impaired by $4.4 million and are carried at fair values below amortized cost through a charge to other comprehensive income. The total carrying value of the Company’s investments in these properties was $62.1 million as of September 30, 2005.

The Company is exposed to or has experienced the following risks associated with the above-mentioned investments: (1) we could decide to provide loans to the partnerships in order to complete the construction or rehabilitation of certain properties and to achieve stabilization of those properties which are not substantially leased, and underperformance of these loans could result in losses to the Company; (2) the tax-exempt bonds secured by properties held in these partnerships could become other-than-temporarily impaired resulting in a loss recorded in the condensed consolidated statements of income; (3) we could be called upon to make payments pursuant to our yield guarantees related to properties held in sponsored guaranteed funds; (4) a bankruptcy by the replaced general partners or the construction companies involved in these properties or their affiliates may give rise to additional claims concerning these partnerships; and (5) we may foreclose on the properties related to our debt investments, which foreclosure could result in losses to the Company.

NOTE 15—BUSINESS SEGMENT REPORTING

The Company has three reportable business segments:

•

an investing segment produces tax-exempt and taxable interest income through investments in tax-exempt bonds, interests in bond securitizations, taxable loans and derivative financial instruments and produces equity investment income from real estate operating partnerships;

•

a tax credit equity segment primarily generates fees by providing tax credit equity syndication and asset management services; and

•

a real estate finance segment primarily generates taxable fee income by providing loan servicing, loan origination, advisory and other related services. The real estate finance segment includes certain new business/product initiatives of the Company and encompasses our fiduciary responsibilities to our institutional investor clients.

Segment results include all direct revenues and expenses of each segment and allocations of indirect expenses based on specific methodologies. The Company’s reportable segments are strategic business units that primarily generate different income streams and are managed separately.

The following tables reflect the results of the Company’s business segments for the three and nine months ended September 30, 2005 and 2004.

Municipal Mortgage & Equity, LLC

SEGMENT REPORTING FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(in thousands)


	For the three months ended September 30, 2005
	Investing		Real Estate Finance			Tax Credit			Adjustments			Total Consolidated
INCOME STATEMENT DATA
Total interest income	$	27,746	$	14,513		$	1,506		$	(3,204	)(1)	$	40,561
Total fee income		151		13,414			12,384			(4,244	)(2)		21,705
Net rental income		—		—			4,828			—			4,828

Total operating income	$	27,897	$	27,927		$	18,718		$	(7,448	)	$	67,094

Net income (loss)	$	29,207	$	(1,203	)	$	(3,343	)	$	(4,244	)	$	20,417
Depreciation and amortization		37		3,666			2,681			—			6,384
Net income (loss) from equity investments in partnerships		9,511		864			(20,666	)		—			(10,291	)
Discontinued operations		9,480		—			—			—			9,480
BALANCE SHEET DATA
Total assets	$	1,760,010	$	1,046,126		$	1,040,991		$	(304,489	)(3)	$	3,542,638

	For the three months ended September 30, 2004
	Investing		Real Estate Finance			Tax Credit			Adjustments			Total Consolidated
INCOME STATEMENT DATA
Total interest income	$	27,673	$	9,961		$	1,307		$	(3,966	)(1)	$	34,975
Total fee income		157		1,921			12,891			(793	)(2)		14,176
Net rental income		—		—			5,151			—			5,151

Total operating income	$	27,830	$	11,882		$	19,349		$	(4,759	)	$	54,302

Net income (loss)	$	19,245	$	(7,030	)	$	140		$	(793	)	$	11,562
Depreciation and amortization		32		487			3,162			—			3,681
Net income (loss) from equity investments in partnerships		1,106		—			(47,860	)		—			(46,754	)
Discontinued operations		10,865		—			—			—			10,865
BALANCE SHEET DATA
Total assets	$	1,634,789	$	745,975		$	2,046,377		$	(245,723	)(3)	$	4,181,418

(1)	Adjustments represent intercompany interest and expense that are eliminated in consolidation.

(2)	Adjustments represent origination fees on purchased investments, which are deferred and amortized into income over the life of the investment.

(3)	Adjustment represents intercompany receivables and payables that are eliminated in consolidation.

Municipal Mortgage & Equity, LLC

SEGMENT REPORTING FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(in thousands)


	For the nine months ended September 30, 2005
	Investing		Real Estate Finance			Tax Credit			Adjustments			Total Consolidated
INCOME STATEMENT DATA
Total interest income	$	84,453	$	36,104		$	3,633		$	(11,091	)(1)	$	113,099
Total fee income		561		24,900			37,648			(7,186	)(2)		55,923
Net rental income		—		—			16,950			—			16,950

Total operating income	$	85,014	$	61,004		$	58,231		$	(18,277	)	$	185,972

Net income (loss)	$	70,474	$	(8,337	)	$	(8,725	)	$	(7,186	)	$	46,226
Depreciation and amortization		105		5,037			8,973			—			14,115
Net income (loss) from equity investments in partnerships		25,800		1,622			(91,769	)		—			(64,347	)
Discontinued operations		9,480		—			—			—			9,480
BALANCE SHEET DATA
Total assets	$	1,760,010	$	1,046,126		$	1,040,991		$	(304,489	)(3)	$	3,542,638

	For the nine months ended September 30, 2004
	Investing		Real Estate Finance			Tax Credit			Adjustments			Total Consolidated
INCOME STATEMENT DATA
Total interest income	$	81,522	$	29,429		$	4,700		$	(15,057	)(1)	$	100,594
Total fee income		721		12,077			32,580			(3,190	)(2)		42,188
Net rental income		—		—			10,290			—			10,290

Total operating income	$	82,243	$	41,506		$	47,570		$	(18,247	)	$	153,072

Net income (loss)	$	49,899	$	(7,569	)	$	(17,703	)	$	(3,190	)	$	21,437
Depreciation and amortization		117		1,594			7,701			—			9,412
Net income (loss) from equity investments in partnerships		1,266		—			(129,942	)		—			(128,676	)
Discontinued operations		10,865		—			—			—			10,865
BALANCE SHEET DATA
Total assets	$	1,634,789	$	745,975		$	2,046,377		$	(245,723	)(3)	$	4,181,418

(1)	Adjustments represent intercompany interest and expense that are eliminated in consolidation.

(2)	Adjustments represent origination fees on purchased investments, which are deferred and amortized into income over the life of the investment.

(3)	Adjustment represents intercompany receivables and payables that are eliminated in consolidation.

NOTE 16—DISCONTINUED OPERATIONS

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 were forgiven and included in the overall gain to the partnerships. The Company holds 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 de minimis to the Company. The Company as general partner received no proceeds from the sales.

In August 2005, the Company 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 held by the Company. The following table summarizes the components of discontinued operations for the periods presented.


	For the three months ended September 30,				For the nine months ended September 30,
(in thousands)	2005		2004		2005		2004
Income (loss) from operations of property	$	—	$	—	$	—	$	—
Gain on disposal of property		9,480		10,865		9,480		10,865

Discontinued operations	$	9,480	$	10,865	$	9,480	$	10,865

The net assets of the properties as of the dates of sale were as follows:


(in thousands)	2005			2004
Fixed assets	$	23,392		$	3,983
Other assets		545			366
Other liabilities		(12,479	)		784

Net assets of discontinued operations	$	11,458		$	5,133

NOTE 17—SUBSEQUENT EVENTS

On November 4, 2005, a subsidiary of the Company, 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 will be 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. The offering included five new series of tax-exempt securities consisting of $18.0 million of Series A-3 Cumulative Perpetual Preferred Shares, $16.0 million of Series A-4 Cumulative Perpetual Preferred Shares, $22.0 million of Series B-3 Subordinate Cumulative Perpetual Preferred Shares, $10.0 million of Series C-3 Subordinate Cumulative Perpetual Preferred Shares and $34.0 million of Series D Subordinate Cumulative Perpetual Preferred Shares. These shares were sold to institutional investors with a weighted average distribution rate of 5.43%.

Item 2.

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

Overview

The Company posts all reports filed with the SEC on its website at http://www.munimae.com. The Company also makes available free of charge its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the Company electronically files such material with the SEC. These reports are also available free of charge by contacting Angela Richardson in Investor Relations at 621 E. Pratt Street, Suite 300, Baltimore, Maryland, 21202 or info@munimae.com or by calling 888-788-3863. This Quarterly Report contains trademarks, trade names and services marks of other companies that are the property of their respective owners.

Summary Results of Operations

Net income increased $8.9 million and $24.8 million for the three and nine months ended September 30, 2005, respectively, over the same periods in 2004. The increases are primarily driven by increases of $7.5 million and $13.7 million in fee income and $9.6 million and $19.0 million in net gain on sales offset by increases in operating expenses of $3.7 million and $13.0 million for the three and nine months ended September 30, 2005, respectively, over the same periods in 2004. The Company recorded an income tax benefit of $0.9 million and income tax expense of $2.2 million for the three and nine months ended September 30, 2005, respectively. In addition, the Company recorded $2.0 million and $3.3 million in impairments and valuation allowances related to certain bonds, taxable loans and equity method investments for the three and nine months ended September 30, 2005, respectively.

Recent Developments

On July 1, 2005, the Company completed the acquisition of Glaser Financial Group, Inc. (“ Glaser ”). Glaser was a full service commercial mortgage banker that arranged financing predominately in the upper Midwest for multifamily, senior housing and commercial real estate through Fannie Mae DUS ^TM , Freddie Mac, HUD/FHA, conventional and conduit funding sources. The purchase price included a combination of cash and common shares and could total approximately $68.5 million, assuming certain performance metrics are achieved. The initial portion of the cash purchase price, which equaled $50.0 million, was financed primarily through the sale of approximately $38.8 million in Trust Preferred Securities. The remainder of the initial portion of the purchase price is being funded through cash on hand. In connection with the acquisition, the Company entered into an Amended and Restated Credit Agreement ( “Credit Agreement” ) effective as of July 1, 2005 with U.S. Bank National Association (“ U.S. Bank ”). The Credit Agreement provided for revolving loans to the Company to finance specified types of mortgage loans, investments and advances in an amount of up to $255.0 million, subject to sub-limits for particular classifications of borrowings. In September 2005, the Company extended the term of the facility from September 30, 2005 to November 18, 2005 with a reduction in the committed amount from $255.0 million to $110.0 million. The Company expects to complete negotiation on the renewal of the Credit Agreement before the expiration of this extension.

Liquidity and Capital Resources

Capital

The Company’s principal short-term financing needs include: funding new investments, payment of distributions to shareholders, acquisitions of operating partnerships pending syndication (which we refer to as warehousing) and funding of real estate finance activities. The Company’s principal sources of liquidity are (a) cash and cash equivalents, (b) cash flow from operations (c) cash flow from investing activities (which include sales of investments) and (d) cash flow from financing activities (which include equity offerings, debt offerings, securitizations, proceeds from syndications, bank lines of credit and other credit facilities, letters of credit, pension fund financings and government sponsored entities (“ GSEs ”)).

The following table summarizes the transactions structured by the Company for the three months ended September 30, 2005:


(in millions)	Third Quarter Volume
Taxable Construction/Permanent Lending	$	704.3
Tax-exempt Bonds Construction/Permanent		90.2
Supplemental Loans		12.5
Equity Raised for Tax Credit Syndications		370.2

Total	$	1,177.2

In order to continue to expand its operations and meet its production projections, the Company will need to increase its access to financing during the remainder of 2005 and in future years. The Company expects it will need approximately $100.0 million to $200.0 million in new net capital (including through additional borrowings under existing credit facilities) during the remainder of 2005 to meet its 2005 production targets. As discussed in more detail below under “—Cash Flows—Financing Activities—Lines of Credit,” the Company has entered into discussions with its existing capital providers to increase their financing commitments. In addition, the Company is seeking to establish relationships with additional pension funds, investors in funds we manage, and to expand its relationships with GSEs.

Cash Flows

At September 30, 2005 and 2004, the Company had cash and cash equivalents of approximately $64.5 million and $64.0 million, respectively. The following table summarizes the changes in our cash and cash equivalents balances from September 30, 2004 to September 30, 2005:


	For the nine months ended September 30,						Change
	2005			2004			Change
Net cash provided by (used in)
Operating activities	$	29,968		$	20,258		$	9,710
Investing activities		(540,515	)		(513,297	)		(27,218	)
Financing activities		482,180			506,197			(24,017	)

Net increase (decrease) in cash and cash equivalents	$	(28,367	)	$	13,158		$	(41,525	)

Operating Activities— Cash flow from operating activities was $30.0 million and $20.3 million for the nine months ended September 30, 2005 and 2004, respectively. The $9.7 million increase in operating cash flow for 2005 versus 2004 is due primarily to an increase in net changes in assets and liabilities of $5.8 million, a net decrease in non-cash items, tax benefits and income allocable to preferred shareholders of $6.4 million, an increase in net gain on sales of $16.4 million, offset by an increase in net income from continuing operations of $26.7 million.

Investing Activities— Cash flow used in investing activities was $540.5 million and $513.3 million for the nine months ended September 30, 2005 and 2004, respectively. The $27.2 million decrease in investing cash flow for 2005 versus 2004 is due primarily to a $163.9 million increase in cash received from principal payments on loans and bonds and proceeds from sales of investments, a net increase of $29.2 million in purchases of bonds and interests in bonds and loan originations, a $61.4 million increase in net cash flows towards investments in restricted assets, a $58.6 million increase in cash used in acquisitions of assets and businesses, a $35.1 million decrease in net investments and distributions from investments in partnerships and a $7.0 million increase in cash used for purchases of property and equipment.

Financing Activities —Cash flow from financing activities was $482.2 million and $506.2 million for the nine months ended September 30, 2005 and 2004, respectively. The $24.0 million decrease in financing cash flow for 2005 versus 2004 is due primarily to a $471.5 million increase in cash used to pay down credit facilities and short-term and long-term debt from securitizations, $325.9 million increase in cash from borrowing provided by our credit facilities and securitizations, $120.4 million increase in cash from investors in consolidated tax credit equity funds, a $9.9 million net increase in cash from the issuance of common shares partially offset by cash used to purchase treasury shares and reductions in cash from common share option exercises and a $8.7 million increase in cash used to pay common share and preferred share distributions.

Equity Offerings

In February 2005, the Company sold to the public approximately 2.6 million common shares at a price of $26.51 per share. Net proceeds on the 2.6 million shares approximated $64.9 million. The net proceeds from this offering were used for general corporate purposes, including funding of new investments, paying down debt and working capital.

As discussed above under the heading—“Recent Developments,” TE Bond Sub completed a private placement of Preferred Shares in November 2005 with net proceeds of approximately $97.7 million.

Debt Offerings

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”). 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.

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 ,” and together with the 8.05% Debentures, the “ 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 3, “Acquisitions” to the Condensed Consolidated Financial Statements). 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.

The Company expects to continue to generate capital through the issuance of privately placed preferred securities.

Preferred Shares

As discussed above under—”Recent Developments” and Note 17, “Subsequent Events,” in November 2005, a subsidiary of the Company, TE Bond Subsidiary, LLC completed a $100.0 million private placement of rated tax-exempt perpetual preferred shares .

Lines of Credit

Residential Funding Corporation— The Warehousing Credit and Security Agreement with Residential Funding Corporation expired on October 31, 2005, and the principal thereunder was paid in full.

Compass Bank —During the second quarter of 2005, the Company entered into a new term financing facility with Compass Bank providing for total borrowings of up to $22.0 million. 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, the Company entered into certain interest rate swap agreements (see Note 7 to the Condensed Consolidated Financial Statements).

SunTrust Bank —During the third quarter of 2005, the Company 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 London Interbank Offer Rate (“ LIBOR ”) plus a spread.

Bank of America —In November 2005, the Company amended and restated a $140.0 million existing warehouse line with Bank of America, N.A. extending the maturity of the line one year.

U.S. Bank —In connection with the Glaser acquisition, MMA Mortgage Investment Corporation, an indirect wholly-owned subsidiary of the Company (“ MMIC ”), entered into an Amended and Restated Credit Agreement (“ Credit Agreement ”) effective as of July 1, 2005 with U.S. Bank National Association (“ U.S. Bank ”). The Credit Agreement provided for revolving loans to MMIC to finance specified types of mortgage loans, investments and advances in an amount of up to $255.0 million, subject to sub-limits for particular classifications of borrowings. The revolving loans have varying maturities of up to 90 days as agreed upon between the Company and U.S. Bank. 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 rate 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. In September 2005, the Company extended the term of the facility from September 30, 2005 to November 18, 2005 with a reduction in the committed amount from $255.0 million to $110.0 million. The Company expects to complete negotiation on the renewal of the Credit Agreement before the expiration of the extension.

Debt Covenants —Certain of our credit facilities contain restrictive covenants, including, but not limited to, including net worth, interest coverage, leverage, collateral and other terms and conditions. As of September 30, 2005, the Company was in compliance with all material financial covenants applicable to its credit facilities.

Off-Balance-Sheet Arrangements

The Company 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 off-balance-sheet debt for the Company. These senior bonds that are not reflected on the Company’s balance sheet at September 30, 2005 and December 31, 2004 totaled $11.5 million and $11.9 million, respectively (face amount).

The Company securitizes bonds and other assets in order to enhance its overall return on its investments and to generate proceeds that facilitate the acquisition of additional investments. The Company uses various programs to facilitate the securitization and credit enhancement of its bond investments. For a description of a typical bond securitization structure, see further discussion under “Liquidity and Capital Resources” in the Company’s 2004 Form 10-K. The substantial majority of the Company’s securitizations are reflected as indebtedness on its consolidated balance sheet, and off-balance-sheet securitizations are not material to the Company’s liquidity and capital needs. At September 30, 2005 and December 31, 2004, the Company’s total off-balance-sheet debt relating to securitizations totaled $103.0 million and $144.1 million, respectively.

Contractual Obligations

The Company’s 2004 Form 10-K contains a detailed description of the Company’s contractual obligations. Except as described below, there has been no material change to the information related to the Company’s contractual obligations since December 31, 2004.

March 2005 Transaction

In March 2005, the Company entered into a contractual arrangement whereby the counterparty to the arrangement will purchase tax-exempt bonds from the Company or a third party and hold the bonds for a minimum of 30 days. The Company will have the option to bid for the purchase of the bonds at the time of sale by the counterparty. Regardless of whether the bonds are purchased by the Company or not, the Company will pay to the counterparty or receive from the counterparty amounts for any declines or increases in the bonds’ market value from the date of purchase to the date of swap termination. The arrangement is considered a derivative. The total maximum notional amount of the swap is $50.0 million, based on the underlying value of the bonds held by the counterparty. The Company will receive a 1.50% annual fee on the outstanding notional amount of the swap. During the term of the swap, the Company is 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. The arrangement has a maturity date of January 23, 2017. As of September 30, 2005, the Company had two swaps outstanding under this arrangement with a total notional amount of $9.6 million.

Interest Rate Swap Transactions

In connection with the Compass Bank term financing facility discussed immediately below under “—Lines of Credit,” the Company entered into a new interest rate swap contract with a total notional amount of $18.4 million and an effective date in July 2005. The total notional amount of this contract is expected to increase to $22.0 million in the fourth quarter of 2005.

In addition, the Company entered into two other interest rate swap contracts with a total notional amount of $16.9 million in February 2005, and one additional interest rate swap with a notional amount of $75.0 million in September 2005.

Lines of Credit

As discussed above under “—Liquidity and Capital Resources—Cash Flows—Lines of Credit” and Note 9, “Notes Payable and Debt,” to the Condensed Consolidated Financial Statements: (1) in connection with the acquisition of Glaser, the Company entered into the Credit Agreement with U.S. Bank providing for revolving loans with varying maturities of up to 90 days, (2) during the third quarter of 2005, the Company entered into a revolving warehouse facility of up to $30.0 million with SunTrust that matures on August 31, 2008, (3) in September 2005, the Company extended the term of its $140.0 million existing warehouse line with Bank of America (and subsequently amended and restated this agreement (See Item 5, “Other Information”)) and (4) during the second quarter of 2005, the Company entered into a new term financing facility with Compass Bank permitting total borrowings of up to $22.0 million with a maturity date of May 1, 2010.

Recent Acquisitions

In February 2005, the Company completed the acquisition of MONY Realty Capital, Inc. (“ MRC ”) from AXA Financial, Inc. for a total purchase price of $10.9 million. MRC sources, underwrites, structures, closes and manages commercial real estate investments and is included in the Company’s real estate finance segment. Part of the purchase agreement requires that the Company commit to invest $25.0 million in a real estate partnership in which MRC is already a general partner. As of September 30, 2005, the Company had funded $9.2 million of its commitment.

As discussed above under “—Recent Developments” and Note 3, “Acquisitions,” to the Condensed Consolidated Financial Statements, the Company completed the acquisition of Glaser on July 1, 2005. The purchase price for the acquisition of Glaser includes three deferred payments of at least $4.0 million on each of the first three anniversaries of the closing date and 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 estimated future contingent consideration payable is $5.0 million.

Guarantees


(in millions)	September 30, 2005
Guarantee	Note		Maximum Exposure		Carrying Amount		Supporting Collateral
Loss-sharing agreements with Fannie Mae, GNMA and HUD	(1	)	$	517.7	$	0.2	$4.0 million letter of credit pledged
Bank line of credit guarantees	(2	)		279.4		279.4	$316.6 million of investment in partnership, loans receivable, tax-exempt and taxable bonds
Tax credit-related guarantees	(3	)		508.9		230.5	$36.6 million of cash, tax-exempt bonds, loans receivable and letters of credit
Other financial/payment guarantees	(4	)		461.5		295.1	$499.2 million of cash, equity and tax-exempt bonds
Put options	(5	)		70.8		2.1	$14.8 million of tax-exempt bonds
Letters of credit guarantees	(6	)		121.9		65.3	$11.0 million of cash and loans receivable
Indemnification securities contracts	(7	)		131.4		78.0	None
Trust preferred securities guarantees	(8	)		175.8		175.8	None

			$	2,267.4	$	1,126.4

(1)

As a Fannie Mae DUS lender and GNMA loan servicer, the Company 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 originated by the Company and sold to Fannie Mae, the Company may be required to make servicing advances to Fannie Mae. Also, the Company 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.

(2)	The Company provides payment or performance guarantees for certain borrowings under line of credit facilities. The amount outstanding under these lines of credit was $277.8 million at September 30, 2005. This amount is included in notes payable in the Company’s consolidated balance sheet.

(3)

(4)

The Company has entered into arrangements that require the Company to make payments in the event a specified third party fails to perform on its financial obligation. The Company typically provides these guarantees in conjunction with the sale of an asset to a third party or the Company’s investment in equity ventures. The term of the guarantee varies based on loan payoff schedules or Company divestitures.

(5)	The Company has entered into put option agreements with counterparties whereby the counterparty has the right to sell to the Company, and the Company has the obligation to buy, an underlying investment at a specified price. These put option agreements expire at various dates through June 2010.

(6)

(7)

(8)

The Company provides a payment guarantee of the underlying trust preferred securities issued. The guarantee obligation is unsecured and subordinated to the Company’s existing and future debt and liabilities except for debt and liabilities which by their terms are specifically subordinated to the guarantee obligations and the rights of the holders of various classes of existing and future preferred shares of the Company.

Critical Accounting Policies and Estimates, New Accounting Pronouncements and Seasonality

Critical Accounting Policies and Estimates

The Company’s 2004 Form 10-K contains a detailed description of the Company’s critical accounting policies and estimates. There has been no material change to the information related to critical accounting policies and estimates since December 31, 2004, except as noted under the “New Accounting Pronouncements” section in Note 1 to the Condensed Consolidated Financial Statements included in this Report.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“ FASB ”) issued Statement of Financial Accounting Standards (“ SFAS ”) No. 123R, “Share-Based Payment,” a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” and superseding APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“ FAS 123R ”). FAS 123R requires the Company to expense grants made under the share option and employee share purchase plan programs. The cost will be recognized over the vesting period of the applicable share option or other share-based payment. In April 2005, the Securities and Exchange Commission approved a new rule for public companies that delays the effective date of SFAS 123R such that the Company must adopt it no later than January 1, 2006. Upon adoption of FAS 123R, amounts previously disclosed under SFAS No. 123 will be recorded in the consolidated income statement. The Company is continuing to evaluate the impact of this standard.

In June 2005, the FASB ratified the consensus in 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 FASB staff issued FSP No. SOP 78-9-1, which amends 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 SOP 78-9-1 is (1) June 29, 2005, for all new limited partnerships and existing limited partnerships for which the partnership agreements are modified and (2) no later than the beginning of the first reporting period in fiscal years beginning after December 15, 2005, for all other limited partnerships. Thus far, the impact of Issue 04-5 has had no effect on the Company’s financial statements. The Company will continue to evaluate the impact of Issue 04-5 throughout the remainder of 2005.

Seasonality

Results of Operations

Net Interest Income


	For the three months ended September 30,										For the nine months ended September 30,
(in thousands)	2005			%		2004			%		2005			%		2004			%
Interest on bonds and interests in bond securitizations	$	23,984		173.3	%	$	22,765		171.5	%	$	71,430		182.0	%	$	63,609		161.1	%
Interest on loans		14,971		108.2			10,872		81.9			38,582		98.3			32,981		83.6
Interest on short-term investments		1,606		11.6			1,338		10.1			3,087		7.9			4,004		10.1

Total interest income		40,561					34,975		—			113,099					100,594		—
Interest expense		(19,907	)	(143.9	)		(16,937	)	(127.6	)		(55,726	)	(142.0	)		(49,304	)	(124.9	)
Interest expense on debentures and preferred shares		(6,818	)	(49.2	)		(4,769	)	(35.9	)		(18,130	)	(46.2	)		(11,819	)	(29.9	)

Net interest income	$	13,836		100.0	%	$	13,269		100.0	%	$	39,243		100.0		$	39,471		100.0	%

In the table above, interest on short-term investments and interest expense include the effects of the application of the financing method and consolidation of the tax credit equity funds. Net interest income increased $0.6 million for the three months ended September 30, 2005, as compared to the same period in 2004, primarily due to: (1) a $1.2 million net increase in interest on bonds and interests in bond securitizations resulting from (i) new investments in tax-exempt bonds producing $6.1 million of interest income, partially offset by (ii) a reduction of $2.4 million in interest income due to sales, redemptions or restructuring of underlying tax-exempt bond investments, (iii) an increase in defaulted and non-accrual bonds that decreased interest income by $2.1 million coupled with other net decreases in bond interest income of $0.4 million; (2) a $4.1 million increase in interest on loans due to increases in the prime rate and the average loan receivable balance partially due to the new Glaser business; (3) a $0.3 million increase in interest on short-term investments due primarily to an increase of $0.3 million in interest on short-term investments related to fluctuations in short-term investment accounts and interest charged to tax credit equity funds on warehoused properties offset by a slight decrease in interest on short-term investments related to the financing method and consolidation of tax credit equity funds; (4) a $3.0 million increase in interest expense resulting from (i) a $2.2 million increase in interest expense due to an increase in short-term debt holdings coupled with significant increases in short-term interest rates, (ii) a $1.1 million increase in interest expense related to increases in underlying borrowing rates affecting notes payable balances, (iii) a $0.3 million increase in amortization of debt issue costs related to new credit facilities entered into during 2005, (iv) a $0.2 million interest expense increase resulting from the accretion of the deferred purchase price related to the Glaser acquisition, offset by (v) a $0.8 million decrease in interest expense related to the effects of the financing method and consolidation of tax credit equity funds; (5) a $2.0 million increase in interest expense on debentures and preferred shares resulting from the interest expense and related amortization of debt issue costs applicable to the issuance of the $112.8 million of trust preferred securities issued in September of 2004 and March and June of 2005. The above-mentioned fluctuations related to the effects of the application of the financing method and consolidation of tax credit partnerships are primarily related to the elimination of intercompany interest from the consolidated tax credit equity funds and the effects of the application of the financing method as well as the interest expense related to the consolidated Project Partnerships.

During the three months ended September 30, 2005 and 2004, $0.9 million and $0 million, respectively, of interest expense on preferred shares was recorded as net income allocable to minority interest. These preferred shares are recorded as preferred shareholders’ equity in a subsidiary company and were issued in October of 2004. Including these amounts as interest expense above results in an overall decrease of $0.3 million in net interest income.

Net interest income decreased $0.2 million for the nine months ended September 30, 2005, as compared to the same period in 2004, primarily due to: (1) a $7.8 million net increase in interest on bonds and interests in bond securitizations resulting from (i) new investments in tax-exempt bonds producing $21.0 million of interest income, partially offset by (ii) an increase in defaulted and non-accrual bonds that decreased interest income by $7.1 million and (iii) a reduction of $6.7 million in interest income due to sales and restructuring of underlying tax-exempt bond investments coupled with other net increases in bond interest income of $0.6 million; (2) a $5.6 million increase in interest on loans due to increases in interest rates and average loan receivable balances partially due to the new Glaser business; (3) a $0.9 million decrease in interest on short-term investments due primarily to (i) a decrease of $0.2 million in interest on short-term investments related to fluctuations in short-term investment accounts and interest charged to tax credit equity funds on warehoused properties and (ii) a decrease of $0.7 million in interest on short-term investments related to the financing method and consolidation of tax credit equity funds; (4) an increase of $6.4 million in interest expense resulting from (i) a $5.7 million increase in expense due to an increase in short-term debt holdings coupled with significant increases in short-term interest rates, (ii) a $0.4 million increase in amortization of debt issue costs related to new credit facilities entered into during 2005 and (iii) a $0.2 million increase resulting from the accretion of the deferred purchase price related to the Glaser acquisition coupled with other net increases in interest expense of $0.1 million; and (5) a $6.3 million increase in interest expense on debentures and preferred shares resulting from the interest expense and related amortization of debt issue costs applicable to the issuance of the $112.8 million of trust preferred securities issued in September of 2004 and March and June of 2005. The above-mentioned fluctuations related to the effects of the application of the financing method and consolidation of tax credit partnerships are primarily related to the elimination of intercompany interest from the consolidated tax credit equity funds and the financing method as well as the interest expense related to the consolidated Project Partnerships.

During the nine months ended September 30, 2005 and 2004, $2.8 million and $0 million, respectively, of interest expense on preferred shares was recorded as net income allocable to minority interest. These preferred shares are recorded as preferred shareholders’ equity in a subsidiary company and were issued in October of 2004. Including these amounts as interest expense above results in an overall decrease of $3.0 million in net interest income.

Fee Income


	For the three months ended September 30,								For the nine months ended September 30,
	2005		%		2004		%		2005		%		2004		%
(in thousands)
Syndication fees	$	2,278	10.5	%	$	6,861	48.4	%	$	11,310	20.2	%	$	14,802	35.0	%
Origination and brokerage fees		1,539	7.1			1,665	11.7			3,384	6.1			5,429	12.9
Guarantee fees		3,967	18.2			2,093	14.8			10,942	19.5			5,452	12.9
Asset management and advisory fees		7,588	35.0			1,685	11.9			18,618	33.3			9,818	23.3
Loan servicing fees		3,450	15.9			1,059	7.5			6,022	10.8			3,316	7.9
Other income		2,883	13.3			813	5.7			5,647	10.1			3,371	8.0

Total fee income	$	21,705	100.0	%	$	14,176	100.0	%	$	55,923	100.0	%	$	42,188	100.0	%

The table above includes the effects of the application of the financing method and the consolidation of tax credit equity funds. Syndication fees, asset management and advisory fees, guarantee fees and other income are all affected by either or both of the financing method and the consolidation of tax credit equity funds. For the three months ended September 30, 2005, total fee income increased $7.5 million over the same period for 2004. The effects of the application of the financing method and the consolidation of tax credit equity funds account for $4.3 million of the overall increase. These effects are primarily the result of eliminating syndication fees, asset management fees and other income earned by the Company from the consolidated tax credit equity funds and guarantee fee income generated from the financing method. This increase of $4.3 million together with the following fluctuations which net to an increase of $3.2 million result in the overall increase of $7.5 million in total fee income: (1) a decrease of $4.5 million in syndication fees primarily due to the deferral of the recognition of syndication fee revenue where investor equity closing down payment amounts were insufficient to trigger revenue recognition; (2) a decrease of $0.1 million in origination and brokerage fees due to (i) a decrease of $1.7 million in fees driven by a change in origination structure of taxable loans substantially offset by (ii) an increase of $1.6 million in fees from our new MRC business; (3) a $0.5 million increase in guarantee fees primarily due to an increase in the number of guaranteed funds; (4) an increase of $2.5 million in asset management and advisory fees primarily due to the new MRC business; (5) an increase of $2.4 million in loan servicing fees due to an increase in our servicing portfolio including fees from our new MRC and Glaser businesses; and (6) an increase of $2.4 million in other income due to (i) a reduction of the Company’s litigation reserve of $1.0 million due to a change in estimated exposure, (ii) $0.8 million in income related to the new Glaser and MRC businesses which primarily relates to prepayment and servicing fees, (iii) $0.2 million in prepayment fees from the legacy real estate finance business and (iv) $0.4 million in other income items.

For the nine months ended September 30, 2005, total fee income increased $13.7 million over the same period for 2004. The effects of the application of the financing method and the consolidation of tax credit equity funds account for $10.8 million of the overall increase. These effects are primarily the result of eliminating syndication fees, asset management fees and other income earned by the Company from the consolidated tax credit equity funds and guarantee fee income generated from the financing method. This increase of $10.8 million together with the following fluctuations which net to an increase of $2.9 million result in the overall increase of $13.7 million in total fee income: (1) a decrease of $4.1 million in syndication fees primarily due to the timing differences associated with investor equity down payments within tax credit equity funds resulting in a delay in syndication fees earned; (2) a decrease of $2.0 million in origination and brokerage fees due to (i) a decrease of $4.6 million in fees driven by a change in origination structure of taxable loans partially offset by (ii) an increase of $2.6 million in fees from our new MRC business; (3) an increase of $1.5 million in guarantee fees primarily due to an increase in the number of guaranteed funds; (4) an increase of $2.4 million in asset management and advisory fees primarily due to the new MRC business; (5) an increase of $2.7 million in loan servicing fees due to an increase in our servicing portfolio including fees from our new MRC and Glaser businesses; and (6) an increase of $2.4 million in other income primarily due to (i) the reduction of the Company’s litigation reserve discussed above, (ii) $0.8 million in income related to the new Glaser and MRC businesses which primarily relates to prepayment and servicing fees, (iii) $0.2 million in prepayment fees from the legacy real estate finance business and (iv) $0.4 million in other income items.

Net Rental Income

At times, the company takes ownership of the general partnership interest in underlying Project Partnerships in which the tax credit equity funds are limited partners. The Company generally takes a 0.01% to 1% general partner interest in the Project Partnership, and the tax credit equity fund, which the Company 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, the Company takes 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 were consolidated by the Company effective March 31, 2004. Net rental income decreased $0.3 million for the three months ended September 30, 2005, as compared to the same period for 2004, primarily due to fewer Project Partnerships being consolidated in 2005. Net rental income increased $6.7 million for the nine months ended September 30, 2005 over the same period for 2004 due to six months of operations reflected in 2004 versus nine months of operations in 2005.

Net Gains


	For the three months ended September 30,										For the nine months ended September 30,
(in thousands)	2005			%		2004			%		2005		%		2004		%
Net gain on sale of loans	$	4,796		77.2	%	$	406		(12.0	)%	$	5,761	22.8	%	$	2,816	44.6	%
Net gain (loss) on sale of tax-exempt investments		442		7.1			(660	)	19.6			6,515	25.7			545	8.6
Net gain on sale of investments in tax credit equity partnerships		2,494		40.1			125		(3.7	)		9,058	35.8			2,939	46.5
Net gain on deconsolidation of tax credit equity partnerships		46		0.7			—		—			2,547	10.1			—	—
Net gain (loss) on derivatives		(1,563	)	(25.1	)		(3,245	)	96.1			1,419	5.6			18	0.3

Total net gains	$	6,215		100.0	%	$	(3,374	)	100.0	%	$	25,300	100.0	%	$	6,318	100.0	%

Net gains increased $9.6 million for the three months ended September 30, 2005, as compared to the same period in 2004, due primarily to: (1) an increase of $4.4 million in net gain on sale of loans due to (i) an increase of $2.4 million in gains from mortgage servicing rights assets related to the new Glaser business and (ii) an increase of $2.0 million in gains on originations and premiums related to sales of immediate delivery loans primarily associated with the new Glaser business; (2) a $1.1 million increase in net gain (loss) on sale of tax-exempt investments due to the sale or repayment of six tax-exempt bonds generating $0.4 million of gain versus the sale or repayment of six tax-exempt bonds and one senior interest in a bond securitization in 2004 generating a loss of $0.7 million; (3) a $1.0 million decrease in net gain on sale of investments in tax credit equity partnerships resulting from fluctuations in the operating results and time held of certain Project Partnerships temporarily owned by the Company prior to sale to tax credit equity funds; (4) a $1.6 million increase in net gain (loss) on derivatives due to (i) a $1.3 million net increase primarily driven by market fluctuations in the value of the Company’s derivatives and (ii) a $0.3 million increase related to the termination of an interest rate swap; and (5) a net increase of $3.5 million to net gains related to the effects of the application of the financing method and consolidation of the tax credit equity funds. The increase from the effects of the application of the financing method and consolidation of the tax credit equity funds primarily relates to the elimination of the gains recorded on sales of investments in tax credit equity partnerships to consolidated tax credit equity funds and the gains recorded on the extinguishment of guarantees under the financing method.

Net gains increased $19.0 million for the nine months ended September 30, 2005, as compared to the same period in 2004, due primarily to: (1) a $2.9 million increase in net gain on sale of loans due to (i) an increase of $2.4 million in gains from mortgage servicing rights related to the new Glaser business, (ii) an increase of $2.3 million in gains on originations and premiums related to sales of immediate delivery loans primarily associated with the new Glaser business partially offset by (iii) a $1.8 million decrease in gains on loans due to a net decrease in the legacy real estate finance business production volume; (2) a $6.0 million increase in net gain on sale of tax-exempt investments due to the repayment or sale of eighteen tax-exempt bonds and one senior interest in a bond securitization generating $6.5 million of gain versus the sale or repayment of twelve tax-exempt bonds and one senior interest in a bond securitization in 2004 generating $0.5 million of gain; (3) a $0.1 million decrease in net gain on sale of investments in tax credit equity partnerships resulting from fluctuations in the operating results and time held of certain Project Partnerships temporarily owned by the Company prior to sale to tax credit equity funds; (4) a $2.5 million increase in gain on deconsolidation of tax credit equity partnerships due to the deconsolidation of one tax credit equity fund in 2005 versus zero in 2004; (5) a $1.4 million increase in net gain on derivatives due to (i) a $1.8 million increase in net gains related to the termination of interest rate swaps, offset by (ii) a $0.4 million net decrease primarily driven by market fluctuations in the value of the Company’s derivatives; and (6) a net increase of $6.3 million in net gains related to the effects of the application of the financing method and consolidation of the tax credit equity funds. The increase from the effects of the application of the financing method and consolidation of the tax credit equity funds primarily relates to the elimination of the gains recorded on sales of investments in tax credit equity partnerships to consolidated tax credit equity funds and the gains recorded on the extinguishment of guarantees under the financing method.

Operating Expenses


	For the three months ended September 30,								For the nine months ended September 30,
(in thousands)	2005		%		2004		%		2005		%		2004		%
Salaries and benefits	$	22,227	71.7	%	$	17,759	64.9	%	$	59,915	66.0	%	$	53,742	69.0	%
General and administrative		6,179	19.9			7,148	26.1			22,895	25.2			17,390	22.4
Professional fees		2,615	8.4			2,464	9.0			7,959	8.8			6,673	8.6

Total operating expenses	$	31,021	100.0	%	$	27,371	100.0	%	$	90,769	100.0	%	$	77,805	100.0	%

All line items in the table above include the effects of the application of the financing method and the consolidation of tax credit equity funds. Total operating expenses increased $3.7 million for the three months ended September 30, 2005, over the same period for 2004 due primarily to: (1) a $4.6 million increase in salaries and benefits resulting from, (i) a $4.4 million increase in salaries, bonus costs, taxes and health insurance due to an increase in headcount over the prior period as a result of the MRC and Glaser acquisitions and (ii) a $0.2 million increase in deferred compensation arrangements related to the new MRC business; (2) a $1.1 million increase in general and administrative expenses due to increases in office rent, travel, insurance and information technology expenses related to the increase in headcount and the integration of the new MRC and Glaser businesses; (3) a $0.2 million increase in professional fees due primarily to increased consulting and legal fees related to the integration of the new MRC business; partially offset by (4) a $2.2 million decrease in operating expenses, after giving effect for eliminations, related to the effects of the application of the financing method and consolidation of certain tax credit equity funds. The decrease related to the effects of the application of the financing method and consolidation of certain tax credit equity funds is due to fewer Project Partnerships being consolidated in 2005 as compared to the same period in 2004.

Total operating expenses increased $13.0 million for the nine months ended September 30, 2005, over the same period for 2004 due primarily to: (1) a $5.5 million increase in salaries and benefits resulting from, (i) an $8.2 million increase in salaries, taxes and health insurance due to an increase in headcount as a result of the MRC and Glaser acquisitions, offset by (ii) a decrease of $2.5 million in compensation costs resulting from the retirement of our previous chief executive officer and the end of 2004 and (iii) a $0.2 million decrease in bonus costs and deferred compensation due to timing differences; (2) an increase of $2.8 million in general and administrative expenses due to increases in office rent, travel, insurance and information technology expenses related to the increase in headcount and the integration of the new MRC and Glaser businesses; (3) a $0.9 million increase in professional fees due primarily to increased accounting and consulting fees surrounding internal control compliance; and (4) an increase in operating expenses of $3.8 million, after giving effect for eliminations, related to the effects of the application of the financing method and consolidation of certain tax credit equity funds. The increase in operating expenses related to the effects of the application of the financing method and consolidation of certain tax credit equity funds are primarily attributable to nine months of operations from consolidated Project Partnerships in 2005 versus six months of operations from consolidated Project Partnerships in 2004.

Depreciation and Amortization

Depreciation and amortization increased $2.7 million for the three months ended September 30, 2005, as compared to the same period in 2004, due to a $2.9 million increase in amortization of mortgage servicing rights assets primarily related to the new MRC and Glaser businesses offset in part by a decrease in depreciation expense from the consolidated Project Partnerships as fewer were consolidated in the 2005 period as compared to the 2004 period.

Depreciation and amortization increased $4.7 million for the nine months ended September 30, 2005, as compared to the same period in 2004, due to: (1) a $2.9 million increase in amortization of mortgage servicing rights assets primarily related to the new MRC and Glaser businesses; (2) a $0.3 million increase in depreciation of fixed assets and amortization of intangibles resulting from the new MRC and Glaser businesses; and (3) a $1.5 million increase in depreciation expense from the consolidated Project Partnerships due to nine months of depreciation expense versus six months for the same period in 2004.

Impairments and Valuation Allowances Related to Investments

During the third quarter of 2005, the Company continued to evaluate the possibility of impairment related to certain transfers of interests to MMAH and MMF. These transfers of interests were driven by underlying developer failure relating to the construction and management of the property partnerships. At this time, the facts and circumstances surrounding certain investments and the possible outcomes are not clear and no other-than-temporary impairment is probable or estimable for these investments. However, for investments where the facts and circumstances are probable and reasonably estimable, the Company has recorded an impairment loss of $0.4 million related to taxable loans and an other-than-temporary impairment of $1.3 million related to one tax-exempt bond.

In addition to the above impairment amounts of $1.7 million recorded in impairments and valuation allowance, the Company recorded an unrelated impairment of $0.2 million related to one taxable loan under the loss-sharing agreement with Fannie Mae.

During the third quarter of 2005, the Company 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.

For the nine months ended September 30, 2005, the Company recorded $3.3 million in impairments and valuation allowances primarily resulting from: (1) a $1.6 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 and (2) a loan loss reserve of $0.4 million related to taxable loans and an other-than-temporary impairment of $1.3 million related to one tax-exempt bond associated with the developer issues noted above.

Management has reviewed the Company’s investment portfolio in the wake of hurricanes Rita and Katrina. Based on information currently available to the Company, management believes that the effects of the hurricanes will not have a material impact to the Company, and no impairment related thereto has been recorded.

Net Losses from Equity Investments in Partnerships

Net losses from equity investments in partnerships decreased $36.5 million for the three months ended September 30, 2005, as compared to the same period in 2004, due primarily to: (1) a decrease of $26.4 million in net losses from equity investments in partnerships resulting from the effects of the application of the financing method and consolidation of certain tax credit equity funds driven by a decrease in the number of tax credit equity funds consolidated and (2) a $10.1 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” ).

Net losses from equity investments in partnerships decreased $64.3 million for the nine months ended September 30, 2005, as compared to the same period in 2004, due primarily to: (1) a decrease of $36.5 million in net losses from equity investments in partnerships resulting from the effects of the application of the financing method and consolidation of certain tax credit equity funds driven by a decrease in the number of tax credit equity funds consolidated offset by nine months of operations recorded in 2005 versus six months of operations in 2004; and (2) a $27.8 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.

Net Loss Allocable to Minority Interest

Net loss allocable to minority interest decreased $38.9 million and $54.7 million for the three and nine months ended September 30, 2005, respectively, as compared to the same periods in 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. The Company typically holds 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 condensed consolidated statements of income.

Income Tax (Expense) Benefit

The Company had an income tax benefit of $0.9 million for the three months ended September 30, 2005, as compared to income tax expense of $73,000 for the same period in 2004 due to larger deferred tax benefits offsetting current tax expense in 2005 relating to deferred revenue and fees from the tax credit equity segment.

The Company had income tax expense of $2.2 million for the nine months ended September 30, 2005, as compared to an income tax benefit of $2.3 million for the same period in 2004. The $4.5 million increase in expense is primarily attributable to an increase in the deferred tax liability associated with equity investments in income-producing real estate partnerships in joint ventures with CAPREIT, a reduction in available net operating losses and increased income in the Company’s taxable subsidiaries.

Discontinued Operations

During the three months ended September 30, 2005, the Company acquired a property by deed in lieu of foreclosure. This property previously served as collateral for a tax-exempt bond and taxable loan held by the Company. The Company 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 condensed consolidated statements of income.

During the three months ended September 30, 2004, the Company acquired a property by deed in lieu of foreclosure. This property previously served as collateral for a tax-exempt bond held by the Company. The Company sold the property for net proceeds of $16.0 million, which resulted in a $10.9 million gain. The $10.9 million gain was classified as discontinued operations in the condensed consolidated statements of income.

During January and March of 2005, property of certain Project Partnerships was sold for net proceeds of $1.8 million. The Company holds a less than 1% general partnership interest in the Project Partnerships, and therefore, the activities related to these properties, including the associated gain on disposal, are de minimis. As a result, and no gain or loss was recorded for the three and nine months ended September 30, 2005.

Cumulative Effect of a Change in Accounting Principle

For the nine months ended September 30, 2004, the Company recorded a cumulative effect of a change in accounting principle of $0.5 million as a result of the adoption of FIN 46R (See Note 6, “Investment in Partnerships,” to the Condensed Consolidated Financial Statements) and the consolidation of certain tax credit equity funds.

Other Comprehensive Income

For the three and nine months ended September 30, 2005, the net adjustment to other comprehensive income for unrealized holding (losses) gains on tax-exempt bonds and interests in bond securitizations available for sale was $(1.8) million and $7.1 million, respectively. After a reclassification adjustment for gains of $0.4 million and $6.5 million, respectively, included in net income, other comprehensive (loss) income for the three and nine months ended September 30, 2005, was $(2.2) million and $0.5 million, respectively, and total comprehensive income was $18.2 million and $46.8 million, respectively.

Related Party Transactions

The Company’s 2004 Form 10-K contains a detailed description of the Company’s related party transactions. There have been no other material changes since December 31, 2004 to the information related to the Company’s related party transactions.

Income Tax Considerations

The Company’s 2004 Form 10-K contains a detailed description of the Company’s income tax considerations. There has been no material change since December 31, 2004 to the information related to income tax considerations.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

There has been no material change since December 31, 2004 to the information included in Item 7A of the Company’s 2004 Form 10-K.

Item 4.

Controls and Procedures

Based on their evaluation as of September 30, 2005, the Company’s management, including its Chief Executive Officer and President and its Chief Financial Officer, has concluded that the Company’s “disclosure controls and procedures” as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 are effective. No change occurred in the Company’s “internal control over financial reporting” (as defined in Rule 13a-15(f)) during the Company’s last fiscal quarter which was identified in connection with the evaluation required by Rule 13a-15(a) as materially affecting, or reasonably likely to materially affect, the Company’s internal control over financial reporting.

Our on-going review and monitoring of internal control over financial reporting does not currently cover, and will not cover by the fiscal year ending December 31, 2005, MRC (formerly MONY Realty Capital, Inc.), which was acquired in February 2005 and Glaser, which was acquired in July 2005. By the end of this fiscal year, management will not be able to fully assess the effectiveness of internal control over financial reporting for these business units because MRC and Glaser were acquired by the Company during 2005, and management believes it will not be possible for it to conduct a complete assessment of the internal controls during the integration of these entities.

However, management has commenced its assessment of MRC’s internal control over financial reporting and will commence its assessment of Glaser’s internal control over financial reporting during the fourth quarter of 2005. Management expects to have completed its assessments by December 31, 2006, the date upon which management is required to have completed its assessments of MRC and Glaser under current law. These acquisitions are described in Note 3 to our condensed consolidated financial statements.

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings.

We are party to various legal proceedings from time to time, none of which we currently deem to be material.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

(a)

None.

(b)

None.

(c)	The following table summarizes the Company’s purchases of common shares during the first quarter of 2005:


Issuer Purchases of Equity Security

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
January 1, 2005 to January 31, 2005	—	$	—	—	1,500,000
February 1, 2005 to February 28, 2005	—		—	—	1,500,000
March 1, 2005 to March 31, 2005	56,300		24.36	56,300	1,443,700

Total	56,300	$	24.36	56,300	1,443,700

(1)	The Company announced on July 24, 2002, a share repurchase plan authorizing a repurchase of up to 1.5 million common shares.

There were no share repurchases during the second or third quarters of 2005.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Submission of Matters to a Vote of Security Holders

At the annual meeting of the Company’s shareholders held on June 2, 2005, the shareholders voted on the election of certain members of the Company’s board of directors. Each of the nominees for director was elected by the shareholders. The election results were as follows: Charles C. Baum (34,597,090 in favor and 260,679 abstaining), Mark K. Joseph (34,617,898 in favor and 239,871 abstaining) and Arthur S. Mehlman (34,625,395 in favor and 232,374 abstaining).

Item 5.

Other Information.

On November 4, 2005, 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 entered into a Fifth Amended and Restated Revolving Loan and Letter of Credit Agreement (the “ Tax Credit Warehouse Agreement ”), allowing the borrowers to borrow, repay and re-borrow, on a secured basis, up to $140.0 million for the purpose of financing the acquisition of interests in partnerships that receive and distribute low-income housing tax credits to investors and the warehousing such interests prior to syndication to third party investors. The Tax Credit Warehouse Agreement also provides for the issuance of letters of credit in connection with such investments. The Tax Credit Warehouse Agreement will mature on November 3, 2006. Also on November 4, 2005, the Company and Bank of America, N.A. entered into that certain Guaranty Agreement, dated as of November 4, 2005 (the “ Guaranty Agreement ,” and together with the Tax Credit Warehouse Agreement, the “ Credit Facility ”). The Tax Credit Warehouse Agreement and the Guaranty Agreement are both attached to this Quarterly Report as exhibits and are incorporated herein by reference.

Borrowings under the Credit Facility bear interest at a floating rate of interest determined by reference to Bank of America’s prime rate or to a LIBOR based rate of interest plus a margin. The Company is required to co-fund a certain percentage of each investment financed under the Credit Facility. The Company may prepay advances under the Credit Facility at any time without premium or penalty other than standard LIBOR breakage costs. The Company will pay a fee on the unused portion of the commitment under the Credit Facility and certain other fees.

The Credit Facility contains terms and provisions (including representations, covenants and conditions) customary for agreements of this type. Financial covenants applicable to the Company on a consolidated basis include maintenance of minimum unencumbered liquidity, minimum consolidated tangible net worth, maximum consolidated leverage ratio, maximum ratio of consolidated senior indebtedness to consolidated tangible net worth and minimum consolidated interest and distribution coverage ratio. Financial covenants applicable to MMA Equity Corporation and MMA Financial TC Corp. and their subsidiaries on a consolidated basis include minimum consolidated net worth, minimum ratio of consolidated cash available for distribution plus consolidated fixed charges to consolidated fixed charges, and minimum consolidated cash available for distribution. Other covenants include restrictions on the ability of the Company to, among other things, create liens on or dispose of the assets of MMA Equity Corporation and MMA Financial TC Corp. and their subsidiaries and assets pledged in connection with the facility; engage in mergers, dissolutions, liquidations or consolidations; sell substantially all of its assets or its interests in the borrowers and the guarantors; make certain changes to its and its subsidiaries’ organizational structure; pay dividends or make other capital distributions; change the nature of the Company’s business; and engage in transactions with affiliates. Additional restrictions apply to the activities of the Company’s subsidiaries that are involved in the low-income housing tax credit business, including the borrowers and MMA Special Limited Partner, Inc.

The Credit Agreement contains customary events of default, including nonpayment of principal, interest, cofunding amounts, fees or other amounts; violation of covenants; inaccuracy of representations and warranties; cross-defaults to other material indebtedness; certain bankruptcy events; material judgments; the invalidity of the loan documents; and the occurrence of a material adverse change in the financial condition or results of operations of the borrowers or any guarantor. If an event of default occurs and is continuing under the Credit Agreement, payment of all amounts outstanding under the Credit Agreement may be accelerated and the lenders’ commitments may be terminated.

Item 6.

Exhibits

See Exhibit Index immediately preceding the exhibits.

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

DATE: November 8, 2005	By:	/s/ W ILLIAM S. H ARRISON
		William S. Harrison Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

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	Purchase and Sale Agreement, dated as of May 14, 2003, by and among Lend Lease Corporation Limited, BFG-GP, Inc., Lend Lease (US) Services, Inc., Lend Lease Real Estate Investments, Inc., Midland Financial Holdings, Inc., and MMA Financial, Inc.	Incorporated by reference to the Company’s Current Report on Form 8–K filed on July 10, 2003

2.3	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.

2.3.1	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

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

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	Master Repurchase Agreement by and among the Company, Trio Portfolio Investors, LLC, Rio Portfolio Partners, LP, Blackrock Capital Finance, LP, Brazos Fund, LP and M.F. Swapco, Inc. dated as of June 30, 1997	Incorporated by reference to the Company’s Current Report on Form 8–K filed on January 23, 1998

10.2	Stock Purchase and Contribution Agreement by and between the Company and Robert J. Banks, Keith J. Gloeckl and Ray F. Mathis dated September 30, 1999	Incorporated by reference to the Company’s Current Report on Form 8–K filed on November 8, 1999

10.3	Registration Rights Agreement by and among the Company and Robert J. Banks, Keith J. Gloeckl and Ray F. Mathis, as holders of the Company’s common shares, dated October 20, 1999	Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 2, 1999, as amended

10.4	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



10.5	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

10.6.1	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*

10.6.2	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*

10.7	Amended and Restated Credit Agreement, dated July 1, 2005, by and between MMA Mortgage Investment Corporation and U.S. Bank National Association.	Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 7, 2005, as amended

10.8	Municipal Mortgage & Equity, LLC 1998 Share Incentive Plan

10.9	Municipal Mortgage & Equity, LLC 1998 Non–Employee Directors’ Share Incentive Plan

10.10	Municipal Mortgage & Equity, LLC 2001 Share Incentive Plan

10.11	Municipal Mortgage & Equity, LLC 2001 Non–Employee Directors’ Share Incentive Plan

10.12	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

10.13	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

10.14.1	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

10.14.2	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

10.15	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

*	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.



10.16	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

10.17	Employment Agreement by and between the Company and Keith J. Gloeckl 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

10.18	Employment Agreement by and between the Company and Gary A. Mentesana 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	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

10.20	Employment Agreement by and between the Company and Charles M. Pinckney 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

10.21	Employment Agreement by and between the Company and Frank G. Creamer, Jr. dated as of August 1, 2004	Incorporated by reference to the Company’s Quarterly Report on Form 10–Q for the quarter ended June 30, 2004

10.22	Employment Agreement between the Company 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

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.

Exhibit 2.3.1

AMENDMENT NO. 1 TO THE

STOCK PURCHASE AGREEMENT

This AMENDMENT NO. 1 TO THE STOCK PURCHASE AGREEMENT (this “ Amendment ”), effective as of July 1, 2005, is entered into by and among MMA MORTGAGE INVESTMENT CORPORATION, a Florida corporation (“ Purchaser ”), MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company (“ MuniMae ”), DAVID WILLIAMS, a resident of the State of Minnesota, and KEVIN FILTER, a resident of the State of Minnesota (together with David Williams, the “ Sellers ”).

RECITALS

A. Purchaser, MuniMae and the Sellers have entered into a Stock Purchase Agreement, dated as of June 8, 2005 (the “ Purchase Agreement ”), pursuant to which Purchaser is acquiring from the Sellers all of the issued and outstanding shares of capital stock of Glaser Financial Group, Inc., a Minnesota corporation.

B. Section 12.08 of the Purchase Agreement permits the parties to amend or modify the terms and conditions of the Purchase Agreement provided such amendment is made by a written instrument duly executed by or on behalf of each party thereto.

C. The parties desire to amend the Purchase Agreement as provided below.

D. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Purchase Agreement.

Accordingly, and in consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

1. Amendment to Section 2.09 . Subsections (a) and (c) of Section 2.09 of the Purchase Agreement are hereby deleted in their entirety. Subsection (b) of Section 2.09 of the Purchase Agreement is hereby amended by deleting the date “August 15, 2005” in the first sentence thereof and replacing it with the date “August 31, 2005”.

2. Amendment to Section 5.05(b) . Section 5.05(b) of the Purchase Agreement is hereby amended to delete the reference to “ Schedule 3.27 ” and replace it with “ Exhibit H .”

3. Amendment to Section 5.08(b) . Section 5.08(b) of the Purchase Agreement is hereby amended in its entirety to provide as follows:

“(b) Notwithstanding Section 5.08(a) to the contrary, no later than the Business Day immediately preceding the Closing Date, David Williams will repay in full the promissory note identified on Schedule 3.27 payable by him. For purposes of this Agreement, such repayment shall be treated as having occurred immediately prior to the Closing Date.”

4. Addition of Section 5.08(c) . The following shall be added to the Purchase Agreement as Section 5.08(c):

“(c) Notwithstanding Section 5.08(a) to the contrary, no later than the Business Day immediately preceding the Closing Date, Sellers will cause the Company and GFW Lamplighter Village, LLC to amend that certain promissory note identified on Schedule 3.27 payable by GFW Lamplighter Village, LLC to reflect a change in the interest rate stated on the note from 4% to 5.25% and the maturity date of the note from June 28, 2005 to September 30, 2005. In addition, notwithstanding Section 5.08(a) to the contrary, no later than the Business Day immediately preceding the Closing Date, Sellers will cause the Company and GFW Properties, LLC to amend that certain promissory note identified on Schedule 3.27 payable by GFW Properties, LLC to reflect a change in the interest rate stated on the note from 5% to 5.25% and the maturity date of the note from September 1, 2005 to September 30, 2005. Both of the promissory notes referenced above shall be guaranteed by Sellers”.

5. Amendment to Section 8.02(a) . Section 8.02(a) of the Purchase Agreement is hereby amended to delete “HUD” and “GNMA” from the list of written consents to the Transaction that the Sellers must obtain and deliver as a condition to the Closing.

6. Amendment to Section 8.03(c) . Section 8.03(c) of the Purchase Agreement is hereby amended in its entirety to provide as follows:

“Purchaser and MuniMae shall have performed in all material respects all obligations and agreements and complied with all covenants in this Agreement or in any Operative Agreement to be performed and complied with by Purchaser and MuniMae, respectively, at or before Closing and each of Purchaser and MuniMae shall so certify as to itself in writing at Closing.”

7. Additional Acknowledgement and Agreement . Without addressing the status of any other notices contained in Sellers’ “Section 5.03 Notification Related to the Sellers’ Disclosure Schedules” which is delivered to Purchaser and MuniMae on the date hereof (the “Notice”), Purchaser, MuniMae and Sellers acknowledge and agree that the disclosure schedules contained in the Notice which relate to the Lakeview of Ocotillo Apartments in Chandler, Arizona shall be notices given pursuant to Section 5.03 of the Purchase Agreement of facts existing or circumstances occurring prior to the date of the Purchase Agreement for purposes thereof.

8. No Other Changes . Except as specifically amended by this Amendment, all other provisions of the Purchase Agreement remain in full force and effect. This Amendment shall not constitute or operate as a waiver of, or estoppel with respect to, any provisions of the Purchase Agreement by any party hereto.

9. Counterparts . This Amendment 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 agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

SELLERS:

/S/ D AVID W ILLIAMS

David Williams

/S/ K EVIN F ILTER

Kevin Filter


PURCHASER:

MMA MORTGAGE INVESTMENT CORPORATION

By:		/S/ G ARY A. M ENTESANA
Name:		Gary A. Mentesana
Its:		Executive Vice President


MUNIMAE:

MUNICIPAL MORTGAGE & EQUITY, LLC

By:		/S/ G ARY A. M ENTESANA
Name:		Gary A. Mentesana
Its:		Executive Vice President

(Signature Page to Amendment No. 1 to Stock Purchase Agreement)

Exhibit 4.1

LOGO

COMMON SHARES

NO PAR VALUE

ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFICATE TRANSFERABLE IN

CRANFORD, NJ OR NEW YORK, NY

COMMON SHARES

NO PAR VALUE

SEE REVERSE FOR CERTAIN DEFINITIONS

LEGENDS ON REVERSE

CUSIP 62624B 10 1

Municipal Mortgage and Equity, L.L.C

FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF

SHARES CERTIFICATE

Municipal Mortgage and Equity, L.L.C. transferable only on the books of the Limited Liability

Company by the holder hereof in person or by Attorney NAME CHANGED upon surrender of this Certificate LLC properly endorsed.

& EQUITY,

This Certificate is not valid until countersigned MORTGAGE and registered by the Transfer Agent and Registrar.

In Witness Whereof, the MUNICIPAL said Limited Liability Company has caused this Certificate to be signed by its duly authorized officers.

Dated:

COUNTERSIGNED AND REGISTERED:

REGISTRAR AND TRANSFER COMPANY

(CRANFORD, NJ) TRANSFER AGENT

AND REGISTRAR BY

AUTHORIZED SIGNATURE

SECRETARY

PRESIDENT

LOGO

THIS CERTIFICATE AND THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT IN ALL RESPECTS TO THE PROVISIONS OF THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF FORMATION AND OPERATING AGREEMENT, AS AMENDED (THE “AGREEMENT”), WHICH GOVERNS THE RESPECTIVE RIGHTS OF DIFFERENT CATEGORIES OF COMPANY SHAREHOLDERS (INCLUDING THE RIGHTS RELATING TO THE SHARES REPRESENTED HEREBY). A COPY OF THE AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

For Value Received, hereby sell, assign and transfer unto Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said Shares on the books of the within named Company with full power of substitution in the premises.

Dated

In presence of

THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF NOTICE: THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

SIGNATURE(S) GUARANTEED:

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

Exhibit 10.6.1

EXECUTION COPY

F IFTH A MENDED AND R ESTATED

R EVOLVING L OAN AND L ETTER OF C REDIT A GREEMENT

AMONG

B ANK OF A MERICA , N.A., C ITICORP USA, I NC .,

M ERRILL L YNCH C OMMUNITY D EVELOPMENT C OMPANY , LLC,

S OVEREIGN B ANK , C OMERICA B ANK , AND HSBC B ANK USA

WITH

B ANK OF A MERICA , N.A., AS A GENT AND AS S OLE L EAD A RRANGER ,

AND

M UNICIPAL M ORTGAGE & E QUITY , LLC

AND

C ERTAIN OF ITS A FFILIATES D EFINED

H EREIN AS THE B ORROWER AND THE G UARANTORS

D ATED AS OF : N OVEMBER 4, 2005

Prepared by:

LOGO

Nutter, McClennen & Fish, LLP

155 Seaport Boulevard

Boston, MA 02210-2604

*	The term “ <[CONFIDENTIAL]> ” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

TABLE OF CONTENTS


ARTICLE I: DEFINITIONS		3
1.1	Certain Defined Terms	3
1.2	Accounting Terms	16
1.3	Interpretation and Construction	16
ARTICLE II: LOANS; INTEREST; FEES		17
2.1	Revolving Loans	17
2.2	Letters of Credit	18
2.3	Revolving Loan Account	19
2.4	Interest and Fees	20
2.5	LIBOR Pricing Option	21
2.6	Payments and Computations	23
2.7	Obligations Absolute	24
2.8	Grant of Security	24
2.9	Guaranty	25
2.10	Maturity	25
2.11	Sublimits on Advances	25
2.12	Optional Term Loan Conversion	26
2.13	Change in Capital Requirement	26
2.14	Change in Laws	27
2.15	Term of Agreement	27
ARTICLE III: CONDITIONS PRECEDENT		28
3.1	Conditions Precedent to Effectiveness of this Agreement	28
3.2	Conditions Precedent to Making Revolving Loans or Issuing Letters of Credit	28
3.3	Delivery of Documents	32
3.4	Conditions Precedent to Releasing Collateral	32
3.5	Conditions Precedent to Releasing Cash Collateral	32
ARTICLE IV: REPRESENTATIONS AND WARRANTIES		32
4.1	Organization and Qualification	33
4.2	Capitalization	34
4.3	Authorization	34
4.4	Title to Properties; Absence of Liens	34
4.5	Compliance	35
4.6	Solvency	35
4.7	Events of Default	35
4.8	Taxes	35
4.9	Restrictions on the Borrower and the Guarantors	35
4.10	ERISA	36
4.11	Environmental and Regulatory Compliance	36
4.12	Contracts with Affiliates, Etc.	37
4.13	Regulatory Approvals	37
4.14	Enforceability	37
4.15	Liens	37
4.16	Litigation	37
4.17	Financial Statement	37
4.18	Reliance on Offering Memorandum	38


ARTICLE V: COVENANTS		38
5.1	Liens	38
5.2	Merger; Sale	39
5.3	Taxes; Reserves	39
5.4	Notices	39
5.5	Inspection	41
5.6	Financial Reporting	41
5.7	Insurance	43
5.8	Collateral	43
5.9	Further Assurances	44
5.10	Intentionally omitted	44
5.11	No Amendments to Certain Documents	44
5.12	Intentionally omitted	44
5.13	Change of Jurisdiction of Organization; Name Change; Change of Location	44
5.14	Offering Memoranda	44
5.15	Property Partnership Approval by Bank	45
5.16	Conduct of Business	47
5.17	Limitation of Indebtedness	49
5.18	ERISA Compliance	49
5.19	Intentionally omitted	49
5.20	Maintenance of Books and Records	50
5.21	Use of Proceeds	50
5.22	Transactions with Affiliates	50
5.23	Environmental Regulations	50
5.24	Fiscal Year	51
5.25	Investor Contributions	51
5.26	Restricted Payments	51
5.27	Ownership; Control	51
5.28	Transfer of Property Partnership Interests	51
5.29	Separate Credit Reliance	51
5.30	Financial Covenants	52
5.31	Disbursement and Repayment Accounts	52
5.32	Warehouse Credit Facilities	52
5.33	Special Limited Partner	53
5.34	Subordination Agreement	53
ARTICLE VI: DEFAULTS AND REMEDIES		54
6.1	Events of Default	54
6.2	Remedies	56
6.3	Termination of Contracts	57
ARTICLE VII: AGENCY		57
7.1	Appointment and Authorization	57
7.2	Resignation of Agent; Removal of Agent; Successor Agent	57
7.3	Agent And Affiliates	58
7.4	Future Advances	58
7.5	Payments	60
7.6	Interest, Fees and Other Payments	61


7.7	Action by Agent	61
7.8	Consultation with Experts	62
7.9	Liability of Agent	62
7.10	Indemnification	63
7.11	Independent Credit Decision	63
ARTICLE VIII: MISCELLANEOUS		63
8.1	Amendments and Waivers	63
8.2	Performance by Beneficiary	65
8.3	CONTROLLING LAW	65
8.4	Notices	65
8.5	Headings	66
8.6	Counterparts	66
8.7	Indemnification	66
8.8	Liability of the Agent and the Banks	67
8.9	Costs and Expenses	67
8.10	Severability	68
8.11	Continuing Obligation; Recourse; Assignment; Survival	68
8.12	Compliance with Usury Laws	69
8.13	Banks’ Right to Pledge Notes	69
8.14	Banks’ Right to Participate	69
8.15	Replacement Documents	70
8.16	Setoff	70
8.17	Investment Securities	70
8.18	Entire Agreement	70
8.19	WAIVER OF JURY TRIAL; VENUE	71
8.20	Reference to Original Agreement	72

iii

ATTACHMENTS TO LOAN AGREEMENT


SCHEDULE A*		Information Regarding Borrower, Guarantors and the Banks
EXHIBIT 3.1.1		Closing Checklist
EXHIBIT 3.2		Draw Certificate
EXHIBIT 3.2.4(c)		Form of MTE Pledge Agreement
EXHIBIT 3.2.5(c)		Form of Collateral Assignment, Pledge and Security Agreement
EXHIBIT 3.2.5(c)(i)		Form of Convertible Loan Agreement
EXHIBIT 5.6.2		Compliance Certificate
EXHIBIT 5.7		Insurance Requirements
EXHIBIT 5.15.3		Approved Form of Property Partnership Agreement
EXHIBIT 5.15.4		Minimum Investment Criteria
EXHIBIT 5.15.6		Approved Form of MTE Agreement
EXHIBIT 5.29		Separateness Covenants

*	The term “ <[CONFIDENTIAL]> ” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

F IFTH A MENDED AND R ESTATED R EVOLVING L OAN AND L ETTER OF C REDIT A GREEMENT

THIS FIFTH AMENDED AND RESTATED REVOLVING LOAN AND LETTER OF CREDIT AGREEMENT (this “Agreement”) is entered into as of November 4, 2005, among: the several entities included among the Borrower as listed on Schedule A attached hereto (individually, and collectively, jointly and severally, the “Borrower”); the several entities included among the Guarantors as listed on Schedule A attached hereto (each, individually, a “Guarantor,” and collectively, jointly and severally, the “Guarantors”); the several entities included among the Banks as listed on Schedule A attached hereto (each, individually, a “Bank” and collectively, but not jointly, the “Banks”); and Bank of America, N.A., a national banking association and as successor by merger to Fleet National Bank (“Bank of America”) as agent for the Banks (in such capacity, the “Agent”) and as sole lead arranger.

RECITALS

Reference is made to the following facts that constitute the background of this Agreement (certain of the terms set forth in these Recitals are defined in Section 1.1 and Schedule A ):

I.	BACKGROUND REGARDING PURPOSE OF AMENDMENT AND RESTATEMENT :

A. As of September 30, 2004, the parties hereto amended and restated (for the fourth time) that certain Revolving Loan and Letter of Credit Agreement, dated as of November 15, 2002, among Bank of America, the Borrower, and MuniMae, MFH and MEC (as amended and restated prior to the date hereof, the “Original Agreement”), pursuant to which the Banks have provided and continue to provide certain credit facilities.

B. The Borrower and Guarantors have requested, among other things, to renew the credit accommodations and the revolving line of credit made available to the Borrower pursuant to the terms of the Original Agreement.

C. In response to such request, the Agent and the Banks are willing to amend and restate the Original Agreement upon the terms and conditions set forth herein, it being the intention of the parties that such amendment and restatement shall constitute a continuation, rather than a novation, of the obligations of the Borrower and the Guarantors under the Original Agreement.

D. Accordingly, the Borrower, the Guarantors, the Agent and the Banks have agreed to amend and restate the Original Agreement in accordance with the terms of this Agreement.

II.	BACKGROUND REGARDING THE BORROWER’S BUSINESS AND PURPOSE OF THIS AGREEMENT :

E. The Borrower holds or intends to acquire, prior to syndication via an Investment Partnership, equity interests constituting at least 95% (or, at the Borrower’s election, such greater interest as permitted in applicable Internal Revenue Service regulations) of the limited partnership or membership interests in Property Partnerships and has made or will make capital

contributions to the Property Partnerships in exchange for such equity interests (such capital contributions hereinafter referred to as “Direct Investments”).

F. In lieu of making Direct Investments directly to Property Partnerships, the Borrower may, from time to time, make capital contributions to Middle Tier Entities in exchange for all of the equity interests in such MTEs (such capital contributions hereinafter referred to as “Investment Contributions”), so as to permit each such MTE to make Direct Investments in one, and only one, Property Partnership, in order to permit the Borrower to hold, indirectly through its ownership of 100% of the equity of such MTE, equity interests constituting at least 95% (or, at the Borrower’s election, such greater interest as permitted in applicable Internal Revenue Service Regulations) of the limited partnership or membership interests in such Property Partnership.

G. The Property Partnerships shall meet all of the criteria for and characteristics of Property Partnerships otherwise set forth in this Agreement and, except as described in Section 5.15.4 , shall meet the minimum investment criteria for Property Partnerships set forth on Exhibit 5.15.4 attached hereto. The Borrower intends that such equity interests it holds directly in such Property Partnerships or directly in such MTEs will be syndicated via Investment Partnerships to third-party investors at a price that will provide such investors with an internal rate of return which is comparable to the prevailing market rate of return for similar investments.

H. The Borrower also intends to make loans directly to various Property Partnerships (“Direct Convertible Loans”) as an alternative to making Direct Investments, or in lieu of making Direct Convertible Loans, to make capital contributions to Middle Tier Entities in exchange for all of the equity interests in such MTEs (such capital contributions hereinafter referred to as “Convertible Loan Contributions” and referred to collectively with Investment Contributions as “Capital Contributions”) so as to permit each such MTE to make loans to one (and only one) Property Partnership (“MTE Convertible Loans” referred to collectively with Direct Convertible Loans as “Convertible Loans”) as an alternative to making Investment Contributions.

I. MuniMae has agreed to cause one or more of the Guarantors to provide the Borrower with Co-Funding Amounts with respect to each Direct Investment, Direct Convertible Loan or Capital Contribution to be made by the Borrower or a MTE under this Agreement. By means of the credit facilities to be established under and subject to this Agreement, the Borrower desires to secure from the Banks Revolving Loans and Letters of Credit for the purpose of obtaining the remaining sums required by the Borrower or a MTE, as the case may be, to fund Direct Investments or Convertible Loans and by the Borrower to fund Capital Contributions. Except as otherwise specifically permitted by the terms of this Agreement, the credit facilities provided hereunder constitute the sole and exclusive warehouse-type facility utilized by any of the Borrower and the Guarantors (or Affiliates under their Control) in connection with any of their business activities relating to tax credit investments in and syndication of Property Partnerships.

J. On the terms and conditions of this Agreement and with the benefit of the security being provided to the Agent, on behalf of the Banks in connection with this Agreement and the other Credit Documents, the Agent and the Banks have agreed to make available to the Borrower a revolving line of credit not to exceed the Maximum Amount (as defined in Section 1.1) for use

- 2 -

by the Borrower, in combination with the Co-Funding Amounts, in making Capital Contributions, Direct Investments and Direct Convertible Loans described in this Agreement.

NOW, THEREFORE, in consideration of the Recitals and of the mutual covenants and conditions therein and set forth below, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, the parties agree as follows:

ARTICLE I: DEFINITIONS

1.1. Certain Defined Terms . In addition to the terms defined in the preamble, Recitals, and Schedule A to this Agreement, the following terms shall have the meanings set forth below:

“ 401(k) Plan ” has the meaning assigned to that term in Section 5.18 .

“ Account Pledge Agreements ” means, collectively, the separate account pledge agreements, each dated as of November 15, 2002, between each entity included in the Borrower, respectively, and Bank of America (in both of its capacities as the depository institution thereunder and the Agent acting on behalf of the Banks hereunder) with respect to the Disbursement Accounts, in each case as modified by (and subject to the terms of) that certain Omnibus Ratification, dated as of the date hereof, as any of the same may have been or may be further ratified, amended, restated or otherwise modified from time to time.

“ Affiliate ” means, with reference to any person (including an individual, a corporation, a partnership, a limited liability company, a trust and a governmental agency or instrumentality) (a) any director, officer, general partner, manager, managing member or employee of that person, (b) any other person controlling, controlled by or under direct or indirect common control of that person, (c) any other person directly or indirectly holding 5% or more of any class of the capital stock or other equity interests (including options, warrants, convertible securities and similar rights) of that person, and (d) any other person 5% or more of any class of whose capital stock or other equity interests (including options, warrants, convertible securities and similar rights) is held directly or indirectly by that person. For purposes of Sections 4.12 and 5.18 hereof, “Affiliate” means, within the meaning of Section 414(b), (c), (m) or (o) of the Code, (i) any member of a controlled group which includes any Borrower or any Guarantor, as applicable, (ii) any trade or business, whether or not incorporated, under common control with any Borrower or any Guarantor, as applicable, (iii) any member of an affiliated service group which includes any Borrower or any Guarantor, as applicable, and (iv) any member of a group created as a single employer by regulation. Notwithstanding the foregoing, “Affiliate” shall not include Midland Affordable Housing Group Trust, a Florida trust, or Midland Multifamily Equity REIT, a Maryland real estate investment trust.

“ Agency ” has the meaning assigned to that term in Section 5.15.5 .

“ Agency Documents ” has the meaning assigned to that term in Section 5.15.5 .

“ Agent ” has the meaning assigned to that term in the preamble and Schedule A to this Agreement.

- 3 -

“ Agreement ” means this Fourth Amended and Restated Revolving Loan and Letter of Credit Agreement, among the Borrower, the Agent, the Banks and the Guarantors, as further amended, restated or otherwise modified from time to time in accordance with the terms hereof.

“ Approved Form of MTE Agreement ” has the meaning assigned to that term in Section 5.15.5 .

“ Approved Form of Property Partnership Agreement ” has the meaning assigned to that term in Section 5.15.3 .

“ Approved MTE Agreement ” has the meaning assigned to that term in Section 5.15.5 .

“ Approved Property Partnership Agreement ” has the meaning assigned to that term in Section 5.15.3 .

“ Asset Management Contracts ” shall mean any contracts, agreements, understandings or arrangements entered into by any of the Borrower or Guarantors or any of their Subsidiaries from time to time, pursuant to which any such entity is entitled to receive payment for performing any asset management or similar services in connection with any LIHTC properties (other than those LIHTC properties with which the Guarantors or any of their Subsidiaries are involved solely as the provider (or originator) of construction or permanent mortgage financing) or Investment Partnerships.

“ Assignee ” has the meaning assigned to that term in Section 8.11 hereof.

“ Banks ” has the meaning assigned to that term in the preamble and in Schedule A to this Agreement.

“ Borrower ” has the meaning assigned to that term in the preamble and in Schedule A to this Agreement.

“ Business Day ” means any day other than a Saturday, Sunday or legal holiday on which the Agent and each of the Banks is open for the transaction of commercial banking business. If any payment hereunder or in the Credit Notes becomes due on a day which is not a Business Day, the due date of such payment shall be extended to the next succeeding Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment.

“ Capital Contribution ” shall mean, collectively, Convertible Loan Contributions and Investment Contributions.

“ Cash Collateral ” has the meaning assigned to that term in Section 2.2.1 .

“ Cash Collateral Account ” has the meaning assigned to that term in Section 2.2.5 .

“ Code ” means the Internal Revenue Code of 1986, as amended.

- 4 -

“ Co-Funding Amount ” means the portion of each Direct Convertible Loan or Direct Investment that shall be provided by the Borrower to a Property Partnership or the portion of each Capital Contribution that shall be provided by the Borrower to a MTE, rather than by a Revolving Loan or Letter of Credit. The Co-Funding Amount associated with any Revolving Loan or Letter of Credit made or issued in order to permit the Borrower to make a Capital Contribution, Direct Investment or Direct Convertible Loan shall equal the percentage of the total principal amount of such Capital Contribution, Direct Investment or Direct Convertible Loan described on Schedule A attached hereto as the co-funding percentage. The Borrower and the Guarantors hereby covenant and agree that all Co-Funding Amounts shall be made available to the Borrower solely by one or more of the Guarantors and that such Guarantor or Guarantors shall provide such Co-Funding Amounts solely by either making a capital contribution to the Borrower or by lending such Co-Funding Amount to the Borrower. In the event that a Guarantor lends Co-Funding Amounts to the Borrower, such loans shall be unsecured and shall be entered on the books of such Guarantor or Guarantors and the Borrower but shall otherwise not be evidenced by any promissory note or other instrument, agreement or writing of any kind (in order to assure that any such loan will not become collateral for any third party creditor of such Guarantor or Guarantors). The Borrower and Guarantors each agree that all Co-Funding Amounts provided by the Borrower, and any obligation of the Borrower to any Guarantor (or to any other entity in the event the Borrower violates its covenant to obtain Co-Funding Amounts solely from any one or more of the Guarantors) regarding any Co-Funding Amounts, shall be and hereby is fully subordinated to any Revolving Loans or Letters of Credit made or issued with respect to the Property Partnership with respect to which such Co-Funding Amount is provided, such that no Co-Funding Amount shall be repaid to the Borrower or any Guarantor (or any such other entity) until such time as the Release Conditions with respect to such Property Partnership have been satisfied. The Co-Funding Amount provided for the issuance of a Letter of Credit shall be held as Cash Collateral pursuant to the terms of Section 2.2.1 .

“ Collateral ” means the property of the Borrower, each MTE and/or the Guarantors securing, from time to time, the Obligations pursuant to the Security Documents.

“ Collateral Assignment, Pledge and Security Agreement ” has the meaning assigned to such term in Section 3.2.5(c) .

“ Commitment ” means, with respect to a particular Bank, that amount as set forth opposite such Bank’s name on Schedule A which equals (a) such Bank’s Commitment Percentage, multiplied by (b) the Maximum Amount.

“ Commitment Percentage ” shall mean in relation to each Bank the percentage set forth opposite its name on Schedule A .

“ Consolidated CAD ” means, for any period of determination, the cash available for distribution for such period of TC Corp. and MEC, on a consolidated basis, as determined using a methodology consistent with that used by MuniMae in determining cash available for distribution, as described in the MuniMae Guaranty; provided, however, that interest and principal payable with respect to Indebtedness consisting of intercompany obligations owed by TC Corp. and MEC to MuniMae and its Subsidiaries shall be disregarded in any calculation of

- 5 -

the Consolidated CAD of TC Corp. and MEC to the extent that such obligations are subordinated to repayment of the Obligations in accordance with the Subordination Agreement.

“ Consolidated Fixed Charges ” means, for any period, without duplication, an amount equal to the sum of: (a) all interest, premium payments, debt discounts, fees, charges and related expenses of TC Corp. and MEC for such period, on a consolidated basis, in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP; plus (b) the portion of rent expense of TC Corp. and MEC, on a consolidated basis, with respect to such period under capital leases that is treated as interest in accordance with GAAP; plus (c) Restricted Payments made with respect to the preferred equity of TC Corp., MEC or any of their Subsidiaries; plus (d) the aggregate amount of regularly scheduled or mandatory principal payments of Indebtedness (excluding optional prepayments and balloon principal payments due on maturity) required to be made during such period); minus (e) interest and principal (i) included on the consolidated income statements of TC Corp. or MEC solely as a result of the application of FASB Interpretation No. 46, and (ii) payable with respect to Indebtedness consisting of intercompany obligations owed by TC Corp. and MEC to MuniMae and its Subsidiaries to the extent that such obligations are subordinated to repayment of the Obligations as provided in the Subordination Agreement.

“ Consolidated Tangible Net Worth ” means, for any period, an amount equal to (a) Consolidated Total Assets (excluding all intangible assets other than goodwill), minus (b) Consolidated Total Liabilities.

“ Consolidated Total Assets ” means, for any period, without duplication, an amount equal to the aggregate amount of all items which, in accordance with GAAP, would be classified as assets on the consolidated balance sheets of MEC and TC Corp. for such period, as determined in accordance with GAAP, but excluding assets included on the consolidated balance sheets of MEC and TC Corp. solely as a result of the application of FASB Interpretation No. 46.

“ Consolidated Total Liabilities ” means, for any period, without duplication, an amount equal to the aggregate amount of all items which, in accordance with GAAP, would be classified as liabilities on the consolidated balance sheets of MEC and TC Corp. for such period, as determined in accordance with GAAP, but excluding (a) liabilities included on the consolidated balance sheets of MEC and TC Corp. solely as a result of the application of FASB Interpretation No. 46, and (b) interest and principal payable with respect to Indebtedness consisting of intercompany obligations owed by TC Corp. and MEC to MuniMae and its Subsidiaries to the extent that such obligations are subordinated to repayment of the Obligations as provided in the Subordination Agreement.

“ Control ” means either (a) having an economic interest in greater than 50% of the equity of an entity and the power and authority to elect or otherwise determine a majority of the board of directors or similar governing body of such entity, or (b) having the power and authority to determine and control the policies and operations of such entity.

“ Convertible Loan Agreement ” means that certain loan agreement between the Borrower (in the case of a Direct Convertible Loan) or a MTE (in the case of a MTE Convertible Loan)

- 6 -

and a Property Partnership evidencing a Convertible Loan, substantially in the form of Exhibit 3.2.5(c)(i) hereto, including all exhibits thereto.

“ Convertible Loan Contribution ” shall mean each capital contribution made by the Borrower to a Middle Tier Entity as contemplated by Recital II.H., the proceeds of which (together with the applicable Co-Funding Amount) such MTE shall use solely to make MTE Convertible Loans in a single Property Partnership.

“ Convertible Loans ” shall mean, collectively, Direct Convertible Loans and MTE Convertible Loans.

“ Credit Documents ” means, collectively, this Agreement, the Credit Notes, the Subordination Agreement, the Security Documents and any other certificates, instruments or documents now or hereafter to be delivered to the Agent or any Bank pursuant to this Agreement or the Security Documents, as each of the same may have been or may be ratified, amended, restated or otherwise modified from time to time.

“ Credit Notes ” means, those certain Fourth Amended and Restated Revolving Credit Notes, in the aggregate principal amount of the Maximum Amount, executed by the Borrower in favor of each of the Banks in the principal amount of each Bank’s Commitment, pursuant to the Original Agreement, as the same may have been or may be amended, restated or otherwise modified from time to time, including as of the date of this Agreement.

“ Date of Issuance ” is the date on which the relevant Letter of Credit is issued by the Agent.

“ Default ” has the meaning assigned to that term in Section 6.1 .

“ Default Rate ” means, with respect to Prime Rate Amounts, the lesser of (a) the Prime Rate plus five percent (5%) or (b) the maximum rate of interest which may be charged or collected in accordance with applicable law; and, with respect to LIBOR Amounts, the lesser of (x) the LIBOR Rate plus five percent (5%) or (y) the maximum rate of interest which may be charged or collected in accordance with applicable law.

“ Delinquent Bank ” means that term as defined in Section 7.4.2 .

“ Direct Convertible Loans ” shall mean the loans made by the Borrower from time to time to Property Partnerships, in accordance with, and as contemplated by, the terms of this Agreement, as an alternative to Direct Investments, as described in Recital II.H.

“ Direct Investment ” means the Borrower’s or a MTE’s investment, from time to time, in a Property Partnership pursuant to which the Borrower or such MTE acquires at least 95% of the limited partnership or membership interests in a Property Partnership in accordance with, and as contemplated by, the terms of this Agreement.

“ Disbursement Account ” means, collectively, account no. 9420369542 established by SPE I with the Agent and account no. 9420369470 established by SPE II with the Agent, in each case for the purposes described in Section 5.31.1 .

- 7 -

“ Disclosure Schedule ” means that certain Disclosure Schedule attached to, and referred to in, this Agreement.

“ Draw Certificate ” means a certificate in the form of Exhibit 3.2 hereto, to be provided by the Borrower to the Agent and each of the Banks pursuant to Section 3.2 hereof in order to request that each Bank make a Revolving Loan or the Agent issue a Letter of Credit pursuant to the terms of this Agreement.

“ Drawing ” means a drawing upon all or a portion of the amount then available under any Letter of Credit.

“ Eligible Property Partnership ” means a Property Partnership that meets the minimum investment criteria set forth in Exhibit 5.15.4 .

“ Encumbrances ” has the meaning assigned to that term in Section 5.1 hereof.

“ Environmental Laws ” has the meaning assigned to that term in Section 5.23.1 below.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder.

“ ERISA Disqualified Person ” shall have the meaning assigned to that term in Section 4.10 hereof.

“ ERISA Party-in-Interest ” shall have the meaning assigned to that term in Section 4.10 hereof.

“ Event of Default ” shall have the meaning assigned to that term in Section 6.1 hereof.

“ Filing Requirement ” has the meaning assigned to that term in Section 5.18 .

“ Future Commitment ” means that term as defined in Section 7.4.2 .

“ GAAP ” means generally accepted accounting principles and practices as applicable under Section 1.2 hereof and as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession. GAAP shall be consistently applied from one accounting period to another.

“ Governmental Authority ” means any regional, national, federal, state, provincial, county or municipal government, or political subdivision thereof, any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality, office, or public body, or any court or administrative tribunal thereof.

“ Guarantors ” has the meaning assigned to that term in the preamble and Schedule A to this Agreement; provided, however, that the term “Guarantors” shall not include MuniMae solely for purposes of Article V hereof.

- 8 -

“ Guaranty ” has the meaning assigned to that term in Section 2.9 hereof.

“ Indebtedness ” with respect to any Person means and includes, without duplication (a) all items which, in accordance with GAAP, would be liabilities on the balance sheet of such Person, but excluding anything in the nature of capital stock or other equity, surplus capital and retained earnings, (b) the face amount of all banker’s acceptances and of all drafts drawn under all banker’s acceptances and of all letters of credit issued by any bank for the account of such Person and, without duplication, all drafts drawn thereunder, (c) the total amount of all indebtedness secured by any encumbrance to which any property or asset of such Person is subject, whether or not the indebtedness secured thereby shall have been assumed, and (d) the total amount of all indebtedness and obligations of others which such Person has directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), discounted with recourse or agreed (contingently or otherwise) to purchase or repurchase or otherwise acquire, including, without limitation, any agreement (i) to provide or supply funds to such other Person to maintain working capital, equity capital, net worth or solvency, or (ii) otherwise to assure or hold harmless such other Person against loss in respect of its obligations.

“ Initial Financial Statements ” has the meaning assigned to that term in Section 4.17 hereof.

“ Insolvent” or “Insolvency ” means that there shall have occurred one or more of the following events with respect to a Person: death; dissolution; termination of existence; insolvency within the meaning of the United States Bankruptcy Code or other applicable statute; such Person’s general inability to pay its debts as they come due; the filing of a petition in bankruptcy or commencement of any proceedings under any bankruptcy or insolvency laws, or any laws relating to the relief of debtors, readjustment of indebtedness or reorganization of debtors, or the offering of a plan to creditors for composition or extension, except for an involuntary proceeding commenced against such person which is dismissed within ninety (90) days after the commencement thereof without the entry of an order for relief or the appointment of a trustee.

“ Interest Period ” means, with respect to Prime Rate Amounts, one (1) day. With respect to LIBOR Rate Amounts, the Interest Period shall be a period commencing on the date so designated by the Borrower in its notice delivered pursuant to Section 2.5 hereof (not sooner than the end of the then existing Interest Period) and ending one month, two months, three months, six months or twelve months later as the Borrower may elect in such notice (said period to be measured from the date specified by the Borrower in each such notice for the commencement of computation of interest at the LIBOR Rate). In no event shall an Interest Period extend beyond the Maturity Date.

“ Investment Contribution ” shall mean each capital contribution made by the Borrower to a Middle Tier Entity as contemplated by Recital II.F., the proceeds of which (together with the applicable Co-Funding Amount) such MTE shall use solely to make Direct Investments in a single Property Partnership.

- 9 -

“ Investment Partnership ” shall mean any limited partnership or limited liability company formed by the Guarantors (or Affiliates of the Guarantors) for the sole purpose of investing either (a) directly in Property Partnerships, or (b) indirectly in Property Partnerships by investing directly in MTEs, and syndicating the equity in such Property Partnerships or MTE’s to Investors, pursuant to the terms of an Offering Memorandum. Each Investment Partnership shall be structured and shall engage solely in such businesses and participate in such transactions on substantially the same terms and conditions, and in substantially the same manner, as MMA Financial Institutional Tax Credit Fund XXIX, a Massachusetts limited partnership, in accordance with the terms of its Confidential Memorandum dated as of April 15, 2005, subject, however, to variations solely for single investor funds in accordance with the past practices of TC Corp. and its Subsidiaries.

“ Investors ” means the limited partners of any Investment Partnership admitted as limited partners in connection with the syndication of such limited partnership interests pursuant to the terms of the applicable Offering Memorandum.

“ Letter of Credit ” means any standby letter of credit issued by the Agent for the account of the Borrower pursuant to this Agreement and subject to the limitations contained herein.

“ Letter of Credit Fee ” has the meaning assigned to that term in Section 2.4.3 .

“ LIBOR ” means, as applicable to any Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) as of 11:00 a.m. London time on the date that is two London Banking Days preceding the first day of such Interest Period; provided, however, if the rate described above does not appear on Reuters on any applicable interest determination date, LIBOR shall be the rate determined on the basis of the offered rates for deposits in U.S. dollars for a period of time comparable to such Interest Period which are offered by four major banks in the London interbank market at approximately 11:00 a.m. London time, on the day that is two (2) London Banking Days preceding the first day of such Interest Period as selected by the Agent. The principal London office of each of the four major London banks will be requested to provide a quotation of its U.S. Dollar deposit offered rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in U.S. Dollars to leading European banks for a period of time comparable to such Interest Period offered by major banks in New York City at approximately 11:00 a.m. New York City time, on the day that is two London Banking Days preceding the first day of such Interest Period. In the event that the Agent is unable to obtain any such quotation as provided above, it will be deemed that LIBOR for such Interest Period cannot be determined. In the event that the Board of Governors of the Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR deposits of the Agent, then for any period during which such Reserve Percentage shall apply, LIBOR shall be equal to the amount determined above divided by an amount equal to 1 minus the Reserve Percentage.

- 10 -

“ LIBOR Rate ” shall be, with respect to any LIBOR Rate Amount, the annual rate of interest equal to LIBOR plus the percentage described on Schedule A attached hereto as the LIBOR margin.

“ LIBOR Rate Amount ” means, in relation to any Interest Period, any portions of the principal amount of the Revolving Loans on which the Borrower elects to pay interest at the LIBOR Rate pursuant to the terms of Section 2.5.2 .

“ LIHTC ” means low income housing tax credits under Section 42 of the Code.

“ London Banking Day ” means any date on which commercial banks in London, England are open for business.

“ Majority Banks ” means any Banks whose Commitment Percentages, in the aggregate, total at least sixty percent (60%); provided, however, that if at any time there are (a) only three Banks, Majority Banks means two of the three Banks as long as such two Banks have an aggregate Commitment Percentage of at least fifty percent (50%), and (b) no more than two Banks, Majority Banks means all of the Banks.

“ Maturity Date ” means the earlier of: (a) November 3, 2006, or in the event that such date is not a Business Day, the Maturity Date shall mean the first Business Day immediately preceding such date; or (b) the date on which repayment of the Obligations has been accelerated under the terms of Section 6.2 hereof. The Borrower may convert Obligations outstanding on the Maturity Date into a term loan upon the terms and conditions set forth in Section 2.12 hereof.

“ Maximum Amount ” means One Hundred Forty Million and 00/100 Dollars ($140,000,000.00).

“ Middle Tier Entity ” or “ MTE ” means a Delaware limited liability company wholly-owned by either SPE I or SPE II and formed as a single purpose entity solely for the purpose of receiving Capital Contributions from the Borrower and using such Capital Contributions to make Direct Investments in one specific Property Partnership.

“ MTE Convertible Loans ” shall mean the loans made by any MTE from time to time in one, and only one, Property Partnership, in accordance with the terms of this Agreement with the proceeds of Convertible Loan Contributions, as an alternative to Direct Investments made with Investment Contributions, as described in Recital II.H.

“ MTE Pledge Agreement ” has the meaning assigned to that term in Section 3.2.4(c) .

“ MuniMae Guaranty ” means that certain Guaranty of even date herewith made by MuniMae in favor of the Agent, on behalf of the Banks.

“ Nonqualified Assignee ” means any Assignee that is not a Qualified Assignee.

“ Obligations ” means any and all of the payment and performance obligations and liabilities of the Borrower or the Guarantors to the Agent and the Banks under the Credit Documents, existing on the date of this Agreement or arising thereafter, direct or indirect,

- 11 -

absolute or contingent, matured or unmatured, liquidated or unliquidated, or secured or unsecured (including, without limitation, obligations incurred in connection with commercial banking services and cash management services provided by any of the Agent or the Banks to the Borrower or any of the Guarantors).

“ Offering Memorandum ” means, as to any Investment Partnership, the limited partnership agreement, confidential offering memorandum, private placement memorandum or similar document, pursuant to the terms of which the limited partnership interests in such Investment Partnership will be offered and sold, which document or documents will have been submitted to and approved by the Agent from time to time.

“ Organizational Documents ” means, with regard to (a) a corporation, its charter and bylaws, (b) a limited partnership, its certificate of limited partnership and agreement of limited partnership and any capital contribution agreement, (c) a limited liability company, its certificate of formation or organization and operating agreement or such similar certificate or agreement as is customary in the jurisdiction of organization for such limited liability company and any capital contribution agreement, (d) a trust, its charter and declaration of trust, and (e) any other type of entity, documents, agreements and certificates serving substantially the same purposes as the foregoing.

“ Original Agreement ” has the meaning assigned to that term in Recital I.A .

“ Participant ” has the meaning assigned to that term in Section 8.14 hereof.

“ Payment Obligations ” means the Obligations of the Borrower to reimburse the Banks for all amounts advanced to the Borrower hereunder, including, without limitation, amounts drawn under any Letter of Credit for the Borrower’s account and to pay to the Agent and the Banks the fees, charges and other amounts, including interest due in respect thereof, provided for in this Agreement.

“ Person ” means an individual, estate, corporation, partnership, limited liability company, association, joint stock company, trust, unincorporated organization or other entity.

“ Plans ” has the meaning set forth in Section 4.10 hereof.

“ Pledge Agreements ” means, collectively: (a) (i) the equity pledge agreement between the Borrower and the Agent, for the benefit of the Banks, with respect to the Borrower’s now owned or hereafter acquired equity interests (including special or administrative interests) in MTEs and Property Partnerships, and (ii) the equity pledge agreement among MEC, MuniMae Affordable Housing Foundation, Inc. (f/k/a MuniMae Foundation, Inc.) and the Agent, for the benefit of the Banks with respect to all equity interests in the Borrower and MSLP, each of which is dated as of November 15, 2002, in each case as modified by, and subject to the terms of, that certain Omnibus Ratification, dated as of the date hereof; and (b) the equity pledge agreement between each MTE and the Agent, for the benefit of the Banks, with respect to each MTE’s now owned or hereafter acquired equity interests (including such MTE’s equity interests in its respective Property Partnership); as the same may have been or may be further ratified, amended, restated or otherwise modified from time to time.

- 12 -

“ Prime Rate ” means the variable per annum rate of interest so designated from time to time by the Agent as its “prime” rate, changing when and as such changes are so announced without notice or demand of any kind. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer.

“ Prime Rate Amount ” means the principal amount of the Revolving Loans bearing interest at the Prime Rate.

“ Project ” means a real estate project engaged in by a Property Partnership to develop and own residential units, which project is intended to qualify for the LIHTC and which conforms to the minimum investment criteria set forth in Exhibit 5.15.4 attached hereto.

“ Property Partnership Pledge ” means each pledge by the Borrower or an MTE to a Property Partnership in which the Borrower or an MTE pledges its equity interests in such Property Partnership to such Property Partnership as collateral security for the Borrower’s or the MTE’s obligation to make contributions to the capital of such Property Partnership. In order to constitute a Property Partnership Pledge under this Agreement, the document evidencing such pledge must contain provisions to the effect that:

(a) The Property Partnership acknowledges that the pledge by the Borrower or the MTE shall only secure the obligations of the Borrower or the MTE to make capital contributions in accordance with such Property Partnership’s Approved Property Partnership Agreement;

(b) The Property Partnership acknowledges the prior pledge of such equity interests by the Borrower or the MTE in favor of the Agent, as described in the definition of Pledge Agreements hereunder and in the Property Partnership’s Approved Property Partnership Agreement;

(c) The Property Partnership agrees that, notwithstanding any contrary provision in the document evidencing the pledge, it will give the Agent written notice (at the following address: Bank of America, N.A., Mail Code: MA5-503-04-16, One Federal Street, Boston, MA 02110, Attention: John F. Simon, Senior Vice President, or at such other address as provided by the Agent) of any default of the Borrower or the MTE under the pledge, and the Agent will have sixty (60) days from its receipt of such notice to cure any such default prior to the Property Partnership’s exercising any of its rights and remedies under the document evidencing the pledge or otherwise at law or in equity, including, without limitation, its right to sell the equity interests pledged by the Borrower or the MTE;

(d) The Property Partnership agrees that the Agent may cure any such default by paying the installment or installments of capital contributions for which the conditions to payment set forth in the Property Partnership’s Approved Property Partnership Agreement have then been satisfied; and

(e) The document evidencing the pledge shall acknowledge that the Agent is an intended third party beneficiary of the foregoing provisions.

- 13 -

“ Property Partnerships ” means those certain limited partnerships or limited liability companies taxed as partnerships (a) to which the Borrower makes Direct Convertible Loans using, in addition to Co-Funding Amounts, the proceeds of Revolving Loans, (b) in which the Borrower makes Direct Investments using, in addition to Co-Funding Amounts, the proceeds of the Revolving Loans or the issuance of Letters of Credit, and (c) in which a MTE makes Direct Investments or MTE Convertible Loans using the proceeds of Capital Contributions. The sole purpose of such entities shall be to develop, maintain and manage affordable multi-family residential developments for which the LIHTC is available and to which a reservation, binding commitment or allocation of LIHTC has been made or for which all action necessary for the LIHTC has occurred pursuant to an allocation of “volume cap” for the issuance of tax exempt bonds or as otherwise approved by the Agent and the Banks as set forth in this Agreement. All Property Partnership governing documents shall provide, without limitation, for (i) the general partner, manager or development sponsor thereof to repurchase the investor’s interest therein under repurchase terms substantially in accordance with those contained in the Approved Form of Property Partnership Agreement, and (ii) the ability of the Agent (and its successors and assigns) for the benefit of the Banks under the agreements described in clauses (a)(i) and (b) of the definition of Pledge Agreements to become, with conditions as set forth in the Approved Form of Property Partnership Agreement, the direct limited partner or member in such Property Partnership.

“ Proposed MTE Agreement ” has the meaning assigned to that term in Section 5.15.5 .

“ Proposed Property Partnership Agreement ” has the meaning assigned to that term in Section 5.15.2 .

“ Qualified Assignee ” means any of (a) a commercial bank organized under the laws of the United States, or any state thereof or the District of Columbia, and having total assets in excess of $1,000,000,000; (b) a savings and loan association or savings bank organized under the laws of the United States, or any state thereof or the District of Columbia, and having a net worth of at least $100,000,000, calculated in accordance with GAAP; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the “OECD”), and having total assets in excess of $1,000,000,000, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; and (d) the central bank of any country which is a member of the OECD. Notwithstanding anything to the contrary, the term Qualified Assignee shall exclude any Person controlling, controlled by or under common control with, the Borrower or any Guarantor.

“ Reimbursement Amount ” means that term as defined in Section 7.4.1 hereof.

“ Release Conditions ” means, for a particular Property Partnership (and, if applicable, its related MTE): (a) repayment and performance in full of all Obligations outstanding with respect to such Property Partnership (and, if applicable, such MTE); (b) receipt by the Agent, for the benefit of the Banks, of Cash Collateral in the full Stated Amount of each outstanding Letter of Credit relating to such Property Partnership (and, if applicable, such MTE) or the return for cancellation of such Letter of Credit to the Agent; and (c) receipt by the Agent of a written commitment from the Borrower that the Borrower does not intend, and shall not be entitled, to

- 14 -

receive any further Revolving Loans or obtain the issuance of any Letter of Credit with respect to such Property Partnership (and, if applicable, such MTE).

“ Repayment Accounts ” means, collectively, account no. 9420369550 established by SPE I in the name of, owned by and with the Agent, and account no. 9420369489 established by SPE II in the name of, owned by and with the Agent, in each case for the purposes described in Section 5.31.1 .

“ Reportable Event ” has the meaning assigned to it in ERISA.

“ Reserve Percentage ” means the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed on member banks of the Federal Reserve System against “Eurocurrency Liabilities” as defined in Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulation relating to such reserve requirements).

“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other equity interest of MuniMae or any of MuniMae’s Subsidiaries, 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 other equity interest or of any option, warrant or other right to acquire any such capital stock or other equity interest.

“ Revolving Loan ” has the meaning set forth in Section 2.1.1 hereof.

“ Revolving Loan Account ” means the account on the books of the Agent in which will be recorded Revolving Loans made by the Banks to the Borrower and the Stated Amount of Letters of Credit issued by the Agent for the account of the Borrower pursuant to this Agreement, payments made on such Revolving Loans, draws on such Letters of Credit and other appropriate debits and credits as provided by this Agreement.

“ Security Documents ” means, collectively, the MuniMae Guaranty, the Guaranty, the Pledge Agreements, the Account Pledge Agreements, each Collateral Assignment, Pledge and Security Agreement and all other agreements and instruments entered into between or among the Borrower and the Agent, for the benefit of the Banks, any of the Guarantors and the Agent, for the benefit of the Banks, any MTE and the Agent, for the benefit of the Banks, or any other person in favor of the Agent, for the benefit of the Banks, to secure the Obligations, all in form and substance satisfactory to the Agent and its counsel, and in each case as the same may have been or may be ratified, amended, restated or otherwise modified from time to time.

“ Stated Amount ” means the maximum amount available to be drawn at the time of determination under the relevant Letter of Credit (without regard to whether any conditions to drawing could then be met).

“ Subordination Agreement ” means the Subordination Agreement dated as of November 29, 2004 among the Agent (for the ratable benefit of the Banks), TC Corp., MEC, MuniMae and any MuniMae Subsidiary now or hereafter owed any Indebtedness by TC Corp. or MEC,

- 15 -

pursuant to which such Indebtedness is subordinated to payment of the Obligations, as modified by (and subject to the terms of) that certain Omnibus Ratification, dated as of the date hereof, as any of the same may have been or may be further ratified, amended, restated or otherwise modified from time to time.

“ Subsidiary ” shall mean, with reference to any person, any corporation, association, joint stock company, business trust or other similar organization of whose total capital stock or voting stock such person directly or indirectly owns or controls more than 50% thereof or any partnership or other entity in which such person directly or indirectly has more than a 50% interest.

“ Supplemental Package ” means the supplemental consolidated financial statements, information and calculations prepared by MuniMae on a quarterly basis and submitted to the Agent and the Banks pursuant to Section 5.6.1 hereof.

“ UCC ” means the Uniform Commercial Code, as adopted in and in effect in the State of New York from time to time.

“ Unused Commitment Fee ” means that term as defined in Section 2.4.4 .

“ Yield Maintenance Fee ” shall have the meaning assigned to that term in Section 2.5.4 .

1.2 Accounting Terms . All accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared (unless otherwise provided herein) in accordance with GAAP as in effect from time to time.

1.3 Interpretation and Construction . For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires:

1.3.1 References to any Person refer to such Person and its successor in title and assigns or (as the case may be) its successors, assigns, heirs, executors, administrators and other legal representatives;

1.3.2 References to this Agreement refer to such document as originally executed and as may be amended, restated or otherwise modified from time to time in accordance with the provisions hereof;

1.3.3 Words importing the singular only shall include the plural and vice versa, and words importing the masculine gender shall include the feminine gender and vice versa, and all references to dollars shall be to United States Dollars; and

1.3.4 Grammatical variations of terms defined in this Agreement shall be defined with reference to and in the context of such defined terms (e.g. “Controlling,” “Controlled,” etc. shall be defined in the context of the definition of the word “Control” to refer to situations in which a Person holds greater than fifty percent (50%) of the equity of an entity and the power and authority to elect or otherwise determine a majority of the board of directors or similar governing body of such entity).

- 16 -

ARTICLE II: LOANS; INTEREST; FEES

2.1 Revolving Loans .

2.1.1 Upon the terms and subject to the conditions of this Agreement, and in reliance upon the representations, warranties and covenants of the Borrower and the Guarantors made herein, the Banks, severally, but not jointly, agree to make loans (“Revolving Loans”, each a “Revolving Loan”) to the Borrower at the Borrower’s request from time to time, provided that the maximum aggregate principal amount of all Revolving Loans outstanding at any time, together with the Stated Amount of any Letter of Credit then outstanding, shall not at any time exceed the Maximum Amount, and provided , further , that at the time the Borrower requests a Revolving Loan or the issuance of a Letter of Credit, and after giving effect to the making or issuance thereof, there has not occurred and is not continuing any Default or Event of Default. The Borrower agrees that it shall be an Event of Default if at any time the debit balance of the Revolving Loan Account at such time shall exceed the Maximum Amount unless the Borrower shall, upon notice of such excess from the Agent, within two (2) Business Days of such notice, pay cash to the Agent, for the benefit of the Banks, to be credited to the Revolving Loan Account in such amount as shall be necessary to eliminate the excess. All requests for Revolving Loans shall be made by the execution and delivery of a Draw Certificate and otherwise shall be in such form and shall be made in such manner as the Agent reasonably may require. All amounts of each Revolving Loan shall be advanced by the Agent pursuant to the terms hereof into the Disbursement Account. The Obligations on account of Revolving Loans and Letters of Credit shall be evidenced by the Credit Notes.

2.1.2 Revolving Loans bearing interest at a rate determined by reference to the Prime Rate may be prepaid in whole or in part at any time and from time to time without premium or penalty. Revolving Loans bearing interest at the LIBOR Rate may be prepaid by the Borrower prior to the last day of any Interest Period applicable to such Loan Advance, subject, however, to the provisions of Section 2.5 hereof. In any event, interest accrued on the amounts so prepaid to the date of such payment and all (if any) outstanding fees and charges must be paid no later than the first day of the month following the month in which such prepayment is made. Amounts so paid and other amounts may be borrowed and re-borrowed from time to time as provided in this Section 2.1 .

2.1.3 All Revolving Loans made to fund Direct Investments or Direct Convertible Loans to a particular Property Partnership, and all Revolving Loans made to fund Capital Contributions to a particular Middle Tier Entity, together with all unpaid interest thereon and other Obligations incurred with respect thereto, shall, in the ordinary course, be repaid with the cash proceeds of Investor contributions to the Investment Partnership investing in such Property Partnership or MTE which shall be paid by such Investment Partnership to the Borrower by the deposit of such payments directly into the appropriate Repayment Account (as contemplated by and in accordance with the terms of Section 5.31.1 ) simultaneously with and in consideration of the assignment by the Borrower to such Investment Partnership of all of the Borrower’s right and title to and interest in the equity in such Property Partnership or MTE, but in any event shall be repaid on or before the first to occur of (a) the 210 ^th day following the making of the first Revolving Loan used to fund a Direct Investment, Direct Convertible Loan or Capital Contribution to such Property Partnership or MTE, as applicable, or (b) the Maturity

- 17 -

Date. The 210 day period described in clause (a) of this Section 2.1.3 applicable to a particular Property Partnership or MTE may, by written notice from the Borrower to the Agent, be extended to 300 days; provided, however, that the principal amount of Revolving Loans and the Stated Amount of Letters of Credit issued with respect to Property Partnerships or MTEs with respect to which the Borrower has provided such written notice (and for which the Release Conditions have not been satisfied) shall not exceed 40% of the Maximum Amount.

2.1.4 Notwithstanding Section 2.1.3 , with respect to each Project that has qualified or is intended to qualify for so-called historic tax credits, the Borrower shall repay all Revolving Loans (together with all accrued and unpaid interest thereon and any other Obligations incurred with respect thereto) made with respect to the related Property Partnership or MTE and cash collateralize all Letters of Credit related to such Property Partnership or MTE not later than 90 days before the projected date on which the certificate of occupancy for the underlying Project is to be issued.

2.2 Letters of Credit .

2.2.1 Upon the terms and subject to the conditions of this Agreement, and upon approval by each of the Banks of the terms and conditions of such Letters of Credit (which approval must be given or denied (with a description of the basis for such denial) by written notice to the Agent within two Business Days after receipt of an appropriate Draw Certificate and may be given or denied via electronic mail; provided, however, that any Bank which fails to give such approval or express such denial within the stated time period shall be deemed to have given such approval and, if and to the extent the Agent has issued the applicable Letter of Credit, shall then have an unconditional obligation to fund its Commitment Percentage of any advances made pursuant to Section 2.2. 3 hereof; and provided further, however, that the Banks agree that if such Draw Certificate, the letter of credit application and agreement and form of letter of credit submitted by the Borrower meet all of the requirements of this Agreement and there does not then exist a Default or Event of Default, such approval shall not be denied), and in reliance upon the representations, warranties and covenants of the Borrower and the Guarantors made herein, the Agent shall issue, in accordance with the Uniform Customs and Practices of the International Chamber of Commerce governing letters of credit (Publication No. 500 or any successor thereto), as a responsibility of the Banks, pro rata in accordance with their respective Commitment Percentages as contemplated by Section 7.4.1 , one or more Letters of Credit upon the application and for the account of the Borrower and for the benefit of a Property Partnership (either directly or through a Middle Tier Entity), as security to such Property Partnership for the Borrower or such MTE to honor its obligation to make Direct Investments in such Property Partnership (as set forth in the Organizational Documents of such Property Partnership), during the period from the date hereof to the Maturity Date in such amounts as may be permitted under this Agreement; provided , that (a) the aggregate Stated Amount of Letters of Credit outstanding at any time shall not at any time exceed $15,000,000; (b) the aggregate Stated Amount of Letters of Credit outstanding at any time shall not at any time exceed, when added to the aggregate principal amount of all Revolving Loans (which shall include the aggregate amount of all unreimbursed draws under Letters of Credit) outstanding at such time, the Maximum Amount; (c) the Borrower and the Guarantors shall deliver to the Agent prior to the issuance of any such Letter of Credit the Co-Funding Amount therefor as cash collateral in a pledged account acceptable to and pledged to the Agent upon terms and conditions acceptable to the Agent in its

- 18 -

sole discretion (the “Cash Collateral”), and (d) at the time the Borrower requests the issuance of a Letter of Credit and after giving effect to the issuance thereof, there has not occurred and is not continuing any Default or Event of Default. All Letters of Credit shall have a stated expiration date not to exceed eighteen (18) months and shall, in any event, expire not later than the Maturity Date, except that a Letter of Credit with a stated expiration date later than the Maturity Date may be issued hereunder if, prior to the issuance, the Borrower agrees to deposit into the Cash Collateral Account not less than thirty (30) days prior to the Maturity Date, without any notice to the Borrower, additional Cash Collateral in an amount so as to cause the aggregate Cash Collateral in the Cash Collateral Account with respect to such Letter of Credit to at least equal the Stated Amount of such Letter of Credit. In addition, the Borrower agrees to deposit into the Cash Collateral Account not less than thirty (30) days prior to the end of the 210-day period (or 300-day period, if applicable) described above in Section 2.1.3 , without any notice to the Borrower, additional Cash Collateral in an amount so as to cause the aggregate Cash Collateral in the Cash Collateral Account with respect to such Letter of Credit to at least equal the Stated Amount of such Letter of Credit.

2.2.2 In order to evidence and obtain the issuance of such Letters of Credit, the Borrower (and, if applicable, each MTE) shall enter into, with the Agent, such agreements and execute such instruments and documents, and pay such charges and fees as are customarily charged by the Agent for like credit accommodations as the Agent reasonably requires, including, but not limited to, a letter of credit application and an agreement for standby letters of credit.

2.2.3 In the event that any Letter of Credit issued pursuant to the terms of this Agreement is drawn upon, in whole or in part, the amount so drawn shall immediately constitute an outstanding Revolving Loan made ratably by each of the Banks according to their respective Commitment Percentages, and such Revolving Loan, along with all interest, fees, charges and other expenses associated with such Letter of Credit and such Revolving Loan, shall be due and payable in full on the next Business Day immediately following such draw.

2.2.4 It is understood and agreed by the parties hereto that, in connection with the syndication to Investors of the equity in an Investment Partnership, upon the transfer by the Borrower to an Investment Partnership of the Borrower’s equity interests in a Property Partnership or MTE with respect to which any Letter of Credit has been issued and remains outstanding, the Borrower shall deliver to the Agent, for the benefit of the Banks, Cash Collateral in an amount so as to cause the amount of such Cash Collateral, plus the Cash Collateral provided as a Co-Funding Amount for such Letters of Credit, to equal 100% of the remaining Stated Amount of such Letters of Credit.

2.2.5 As an additional precondition to the issuance of a Letter of Credit hereunder, the Borrower shall establish, and at all times thereafter maintain, a deposit account with the Agent (in the name of and owned by the Agent) for the purpose of holding all Cash Collateral (the “Cash Collateral Account”). The Borrower and the Guarantors shall deposit, and cause the deposit of, all Cash Collateral into the Cash Collateral Account.

2.3 Revolving Loan Account . The Agent shall enter Revolving Loans (including, without limitation, on account of draws pursuant to or under Letters of Credit) and the Stated

- 19 -

Amount of Letters of Credit issued by the Agent for the account of the Borrower pursuant to this Agreement, and any other advances made by the Agent and the Banks to the Borrower pursuant to this Agreement as debits in the Revolving Loan Account. The Agent shall also record in the Revolving Loan Account all payments made by the Borrower on account of the principal of the Revolving Loans and may also record therein, in accordance with customary accounting practices, other debits and credits, including customary banking charges and all interest, fees, charges and expenses chargeable to the Borrower under this Agreement. The debit balance of the Revolving Loan Account shall reflect the amount of the Borrower’s Obligations from time to time by reason of Revolving Loans and other appropriate charges hereunder. At least once each calendar month, the Agent shall render a statement of account showing as of its date all entries since the last statement of the Revolving Loan Account which, absent manifest error and unless within thirty (30) days of such date notice to the contrary is received by the Agent from the Borrower, shall be presumed correct and accepted by the Borrower and shall be conclusively binding upon it.

2.4 Interest and Fees .

2.4.1 Except as set forth in Section 2.5 , Revolving Loans shall bear interest at a rate per annum equal to the Prime Rate in effect from time to time; provided that if an Event of Default shall occur, then the unpaid balance of Revolving Loans shall bear interest, to the extent permitted by law, compounded monthly at an interest rate equal to the Default Rate in effect on the day such Event of Default occurs, until all then existing Events of Default are cured or waived. Except as set forth in Section 2.5 with respect to LIBOR Rate Amounts, interest on Revolving Loans shall be payable monthly in arrears on the first Business Day of each calendar month.

2.4.2 Without limiting any of the Agent’s or the Banks’ other rights hereunder or by law, if any interest on any Revolving Loan or any portion thereof is not paid within five days after its due date, the Borrower shall pay to the Agent, for the ratable benefit of the Banks, on demand a late payment charge equal to 5% of the amount of the payment due.

2.4.3 The Borrower shall pay to the Agent, for the benefit of the Banks in accordance with their respective Commitment Percentages, an annual letter of credit fee (the “Letter of Credit Fee”) determined by multiplying the initial Stated Amount of each Letter of Credit issued on the Borrower’s behalf by the percentage described on Schedule A attached hereto as the letter of credit percentage, which Letter of Credit Fee shall be prorated for any Letter of Credit which remains outstanding for less than a full twelve-month period. The Letter of Credit Fee shall be paid one quarter on the Date of Issuance of such Letter of Credit and one quarter on each 3-month anniversary thereof thereafter. In the event any Letter of Credit is returned prior to its original intended expiration, any Letter of Credit Fee paid in advance with respect to such Letter of Credit accruing to the period following the date of such earlier return shall be refunded to the Borrower by credit to the Revolving Loan Account. In addition, the Borrower shall pay to the Agent, upon issuance of each Letter of Credit, a Letter of Credit processing fee in the amount of $750 per each Letter of Credit issued. Undrawn Stated Amounts of any Letter of Credit shall not bear interest.

- 20 -

2.4.4 The Borrower shall pay to the Agent (for the benefit of the Banks in accordance with their respective Commitment Percentages), in arrears, on the last Business Day of each calendar quarter and on the Maturity Date, or such other date as all of the Obligations become due and payable, an unused commitment fee (the “Unused Commitment Fee”) equal to the percentage described on Schedule A attached hereto as the unused commitment percentage, times the daily excess of the Maximum Amount over the sum of the then outstanding Revolving Loans and Stated Amount of outstanding Letters of Credit, for each day during such period with respect to which such fee is being calculated.

2.4.5 The Borrower shall pay to the Agent any and all charges customarily made by the Agent against borrowers such as (by way of example only) wire transfer fees, transaction fees and account maintenance fees.

2.4.6 The Borrower authorizes the Agent to charge to the Revolving Loan Account or to any deposit account which the Borrower may maintain with the Agent the interest, fees, charges, taxes and expenses provided for in this Agreement or any other Credit Document. The Agent will notify the Borrower in writing of any such charges; provided, however, that the failure to provide such written notice shall in no way affect or invalidate the Agent’s right to make any such charge.

2.5 LIBOR Pricing Option .

2.5.1 At the option of the Borrower, so long as there has not occurred and is not then continuing any Default or Event of Default, the Borrower may elect to have any portion of the Revolving Loans bear interest at the LIBOR Rate (each such portion, a “LIBOR Rate Amount”). The election by the Borrower to request that any amount of the Revolving Loans bear interest at the LIBOR Rate shall be made by written notice, as provided in Section 8.4 hereof (which shall be irrevocable), to the Agent at least three (3) London Banking Days prior to the first day of the proposed Interest Period applicable to such election or prior to the expiration of the Interest Period then in effect, if applicable, which notice shall specify the duration of the proposed Interest Period. Unless notified to the contrary by the Borrower at least three (3) London Banking Days prior to the expiration of the applicable Interest Period, each LIBOR Rate Amount shall automatically roll over into a Revolving Loan bearing interest at the Prime Rate in accordance with the terms of Section 2.4.1 hereof at the end of such Interest Period. In addition, the Borrower may elect to convert any Prime Rate Amount into a LIBOR Rate Amount by giving at least three (3) London Banking Days prior written notice to the Agent, which notice shall specify the principal amount of the Loan to be converted into a LIBOR Rate Amount and the commencement date and duration of the proposed Interest Period. Interest on each LIBOR Rate Amount shall be payable in arrears on the last Business Day of each 30-day period during the applicable Interest Period and on the last day of the applicable Interest Period. In no event shall the Borrower be entitled to have more than six LIBOR Rate Amounts outstanding at any given time.

2.5.2 If on any date in which the LIBOR Rate would otherwise be set any Bank has notified the Agent that such Bank shall have determined reasonably in good faith (which determination shall be final and conclusive) that, by reason of changes affecting the LIBOR market for dollar deposits, adequate and reasonable means do not exist for ascertaining the

- 21 -

LIBOR Rate, or at any time any Bank has notified the Agent that such Bank shall have determined reasonably in good faith (which determination shall be final and conclusive) that:

(a) (i) the making of a loan subject to a LIBOR Rate has been made impracticable or unlawful by (1) the occurrence of a contingency that materially and adversely affects the LIBOR market for dollar deposits or (2) compliance by such Bank in good faith with any applicable law or governmental regulation, guideline or order or interpretation or change thereof by any Governmental Authority charged with the interpretation or administration thereof or with any request or directive of any such administration thereof or with any request or directive of any such Governmental Authority (whether or not having the force of law); or

(ii) the LIBOR Rate shall no longer represent the effective cost to such Bank for dollar deposits in the LIBOR market for deposits in which it regularly participates; or

(b) Such Bank generally suspends commercial lending at interest rates determined by reference to LIBOR, or if the Agent shall determine that adequate and reasonable means do not exist to be able to determine the LIBOR Rate, then, and in any such event, the Agent shall forthwith so notify the Borrower and the Banks thereof. Until the Agent (or such Bank) notifies the Borrower (and the Agent) that the circumstances giving rise to such notice no longer apply, the obligation of the Agent to allow the selection by the Borrower of a LIBOR Rate pursuant to this Section 2.5 shall be suspended. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given) the Agent shall, with respect to the then outstanding LIBOR Rate Amounts, convert the same to loans bearing interest at a rate determined by reference to the Prime Rate in accordance with Section 2.4.1 hereof and such conversion shall not require any payments by the Borrower pursuant to Section 2.5.4 .

2.5.3 If any Interest Period would otherwise end on a day which is not a Business Day for LIBOR Rate purposes, that Interest Period shall end on the Business Day next preceding or next succeeding such day as determined by the Agent in accordance with its usual practices and as set forth in a written notice to the Borrower and the Banks, at the beginning of such Interest Period.

2.5.4 A Borrower may prepay a LIBOR Rate Amount only upon at least three (3) Business Days prior written notice to Agent (which notice shall be irrevocable). Borrower shall pay to the Agent, on behalf of the Banks pro rata in proportion to their respective Commitment Percentages, upon request of the Agent or any Bank, such amount or amounts as shall be sufficient (in the reasonable opinion of the Agent or any Bank) to compensate the Banks for any loss, cost or expense incurred as a result of: (a) any payment of a LIBOR Rate Amount on a date other than the last day of the Interest Period for such LIBOR Rate Amount; (b) any failure by Borrower to borrow a LIBOR Rate Amount on the date specified by Borrower’s written notice; and/or (c) any failure by Borrower to pay a LIBOR Rate Amount on the date for payment specified in Borrower’s written notice. Without limiting the foregoing, Borrower shall pay to the Agent on behalf of the Banks in proportion to their Commitment Percentages a “Yield Maintenance Fee” in an amount computed as follows: The current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the Interest Period as to which the prepayment is made, shall be

- 22 -

subtracted from the LIBOR Rate in effect at the time of prepayment. If the result is zero or a negative number, there shall be no Yield Maintenance Fee. If the result is a positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid. The resulting amount shall be divided by 360 and multiplied by the number of days remaining in the Interest Period as to which the prepayment is made. Said amount shall be reduced to present value calculated by using the above-referenced current rate United States Treasury securities and the number of days remaining in the Interest Period as to which prepayment is made. The resulting amount shall be the Yield Maintenance Fee due to the Agent, on behalf of the Banks, upon the prepayment of a LIBOR Rate Amount. If by reason of an Event of Default the Agent or the Majority Banks, as applicable, elect to declare the Credit Note to be immediately due and payable, then any Yield Maintenance Fee with respect to a LIBOR Rate Amount shall become due and payable in the same manner as though the Borrower had exercised such right of prepayment.

2.6 Payments and Computations .

2.6.1 The Borrower shall make each payment to the Agent, on behalf of the Banks, hereunder not later than 2:00 p.m. on the day when due to the Agent at One Federal Street, Boston, Massachusetts 02110 (or such other address designated by the Agent by written notice to the Borrower pursuant to Section 8.4 hereof), in lawful currency of the United States of America in immediately available funds. Each payment shall be made without any set-off, counterclaim, withholding or deduction whatsoever. In all events, all outstanding Obligations, including, without limitation, all outstanding amounts of the Revolving Loans together with all unpaid interest thereon and all fees, charges and other amounts due hereunder shall be due and payable on the Maturity Date. All payments (other than proceeds received in connection with the satisfaction of Release Conditions for a Property Partnership or Middle Tier Entity) shall be applied first to the payment of all fees, expenses and other amounts due to the Agent or the Banks (excluding principal and interest), then to accrued interest, then to outstanding principal with respect to such Property Partnerships or MTEs for which Revolving Loans are then outstanding as the Majority Banks (or the Agent in the absence of guidance from the Majority Banks) may determine in their unrestricted discretion, then to the cash collateralization of the Stated Amount of any outstanding Letters of Credit, then to any other Obligation as the Majority Banks (or the Agent in the absence of guidance from the Majority Banks) may determine in their unrestricted discretion, and the balance to the Borrower. All proceeds received in connection with the satisfaction of Release Conditions for a Property Partnership or MTE shall be applied first to the principal outstanding with respect to the Revolving Loans made in connection with Direct Convertible Loans to or Direct Investments in such Property Partnership, or the Capital Contribution to such MTE, then to the cash collateralization of the Stated Amount of any outstanding Letters of Credit related to such Property Partnership or MTE, then to accrued interest, fees and expenses with respect to any of the foregoing, then (if and to the extent there is not then outstanding a Default or an Event of Default) to the repayment to the Borrower (or, if so directed by the Borrower, to such Guarantor or Guarantors) of Co-Funding Amounts related to such Property Partnership or MTE, and the balance as set forth in the immediately preceding sentence. Notwithstanding the foregoing, after demand, payments will be applied to the Obligations of Borrower to the Agent and the Banks as the Majority Banks (or the Agent in the absence of guidance form the Majority Banks) may determine in their unrestricted discretion.

- 23 -

2.6.2 Except as otherwise provided herein, all computations of fees and interest shall be made on the basis of a year of 360 days for the actual number of days elapsed.

2.6.3 Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, unless otherwise provided herein, such payment shall be made on the next succeeding Business Day, and such extension of time shall in each such case be included in the computation of interest or fees.

2.6.4 In the event that payment to the Agent hereunder is made after 2:00 p.m. on a Business Day, such payment shall be deemed received on the immediately following Business Day, and such extension of time shall be included in the computation of interest or fee.

2.6.5 Any rate of interest hereunder based upon or measured by reference to Prime Rate shall change automatically and immediately as and when Prime Rate changes, without prior notice to the Borrower. Any change in Prime Rate shall not affect or alter any of the terms and conditions of this Agreement, all of which shall remain in full force and effect.

2.6.6 The Borrower and the Banks hereby authorize the Agent to withdraw any payments due to the Agent or the Banks hereunder as and when the same become due directly from either of the Repayment Accounts.

2.7 Obligations Absolute . The Payment Obligations of the Borrower under this Agreement shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances: (a) any lack of validity or enforceability of any agreement or other document related to the transaction with respect to which any Revolving Loan is made or any Letter of Credit is issued; (b) any departure from all or any of the terms of any such agreement or document, except any departure resulting from the willful misconduct or gross negligence of the Agent or one of the Banks (provided, however, that such Payment Obligations shall be impaired solely as to the Agent or particular Bank committing such gross negligence or willful misconduct); (c) existence of any claim, setoff, defense or other right which any Borrower may have at any time against the Agent or any of the Banks or any other Person, whether in connection with this Agreement, any such agreement or other document, the transactions contemplated herein or therein or in any unrelated transaction; (d) any statement or any other document presented under any Letter of Credit proving to be forged or fraudulent in any respect or any statement therein being untrue or inaccurate in any respect; provided, however, that the Agent shall furnish the Borrower with prompt notice of any such forgery or fraudulent statement or document; (e) payment by the Agent under any Letter of Credit against presentation of a draft or certificate which does not comply with the terms of such Letter of Credit (provided that the draft or certificate substantially complies with the terms of such Letter of Credit); or (f) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing unless resulting from the gross negligence or willful misconduct of the Agent or any of the Banks (provided, however, that such Payment Obligations shall be impaired solely as to the Agent or particular Bank committing such gross negligence or willful misconduct).

2.8 Grant of Security . As security for the payment and performance of all Obligations, the Agent shall have, for the ratable benefit of the Banks subject to the terms and

- 24 -

conditions set forth in the Security Documents, a continuing first priority perfected lien and security interest in the Collateral described in the Security Documents. In connection with the provision of any Collateral, the Borrower shall also deliver to the Agent any third-party consents (in form and substance satisfactory to the Agent and its counsel) or waivers required for the granting of such security.

2.9 Guaranty . The Obligations of the Borrower to the Agent and the Banks under the Credit Documents shall be guaranteed by the Guarantors pursuant to that certain Joint and Several Guaranty, made by MFH, MEC and MSLP and that certain Subordinated Joint and Several Guaranty, made by TC Corp., BFGLP, BFRP and BFG Investments, each dated as of July 16, 2003, in each case as modified by (and subject to the terms of) that certain Omnibus Ratification, dated as of the date hereof (collectively, as the same may have been or may be ratified, amended, restated or otherwise modified from time to time, the “Guaranty”). The Obligations shall also be guaranteed by MuniMae pursuant to the MuniMae Guaranty.

2.10 Maturity . The Banks’ obligations to make Revolving Loans and the Agent’s obligation (on behalf of the Banks) to issue Letters of Credit, and the Borrower’s right to borrow hereunder shall terminate on the Maturity Date.

2.11 Sublimits on Advances . Notwithstanding any other provision of this Agreement, in no event shall:

2.11.1 The aggregate of all Revolving Loans made, and the aggregate Stated Amount of Letters of Credit issued, in connection with Direct Investments (whether made by the Borrower or a MTE) in a single Property Partnership exceed $15,000,000;

2.11.2 The aggregate Stated Amount of all outstanding Letters of Credit exceed $15,000,000;

2.11.3 The aggregate amount of all Revolving Loans made, and the aggregate Stated Amount of Letters of Credit issued, in connection with Direct Investments in Property Partnerships approved by the Agent as provided in Section 5.15.4 , despite failing to meet the minimum investment criteria, exceed 10% of the Maximum Amount;

2.11.4 Any Revolving Loans or Letters of Credit be outstanding with respect to a Property Partnership in excess of seventy-five percent (75%) of the aggregate amount of all Direct Investments required to be made by the Borrower or a Middle Tier Entity pursuant to the Organizational Documents of such Property Partnership (as in effect on the date of the Borrower’s or such MTE’s initial Direct Investment thereto);

2.11.5 The Borrower utilize any Revolving Loans or Letters of Credit made or issued pursuant to this Agreement in connection with any Property Partnerships receiving any LIHTC equity investments or loans (other than construction or permanent loans entered into in the ordinary course of business) from any other party (including, without limitation, any Investment Partnership, the Guarantors, any Affiliates of the Guarantors or any other LIHTC syndicator);

- 25 -

2.11.6 The aggregate amount of Revolving Loans made, and the aggregate Stated Amount of Letters of Credit issued, in connection with Property Partnerships controlled by a single developer or its Affiliates, exceed 30% of the Maximum Amount;

2.11.7 The aggregate amount of all Revolving Loans made in connection with Convertible Loans exceed 15% of the Maximum Amount; or

2.11.8 The aggregate amount of all Revolving Loans made, and the aggregate Stated Amount of Letters of Credit issued, in connection with Direct Investments in Property Partnerships approved by the Agent as provided in Section 5.15.5 , despite incorporation of Agency approval rights, exceed 10% of the Maximum Amount.

2.12 Optional Term Loan Conversion . The Borrower may elect, by giving written notice to the Agent at least ninety (90) days prior to the Maturity Date, to convert the aggregate outstanding balance of all outstanding Revolving Loans plus the Stated Amount of all outstanding Letters of Credit at the Maturity Date into a term loan, provided, however that (a) there is not at the time of such election or on the Maturity Date any Default or Event of Default existing, and (b) the Borrower pays to the Agent (for the ratable benefit of the Banks pro rata in accordance with their respective Commitment Percentages), on the date of such written notice, a conversion fee equal to the percentage of the aggregate balance of Revolving Loans and the aggregate Stated Amount of Letters of Credit outstanding on the Maturity Date described on Schedule A attached hereto as the conversion percentage. The principal of such term loan shall bear interest as provided in Section 2.4 or, at the Borrower’s election, Section 2.5 . Upon such conversion, the Borrower shall pay to the Agent on the first Business Day of each of the six consecutive months commencing immediately after the Maturity Date an amount equal to one-sixth of the principal amount of such term loan plus all accrued interest thereon, and shall pay all fees, charges, expenses or other Obligations then outstanding, and amounts so paid cannot be reborrowed. Upon conversion to a term loan as provided in this Section, the Banks shall have no further obligation to make Revolving Loans or issue Letters of Credit hereunder.

2.13 Change in Capital Requirements . If the Agent or any Bank shall have determined that the adoption, after the date hereof, of any applicable law, rule, regulation, guideline, directive or request (whether or not having the force of law) regarding capital requirements for banks or bank holding companies, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Agent or any of the Banks, or any of their respective holding companies, with any of the foregoing imposes or increases a requirement by the Agent or any of the Banks, or any of their respective holding companies, to allocate capital resources to such Bank’s commitment to make loans and advances hereunder which has or would have the effect of reducing the return on such Bank’s capital to a level below that which that Bank could have achieved (taking into consideration such Bank’s or such holding company’s then existing policies with respect to capital adequacy and assuming full utilization of such Bank’s capital) but for such adoption, change or compliance by any amount deemed by such Bank to be material, then: (1) such Bank shall promptly after its determination of such occurrence give notice thereof to the Agent and the Borrower; and (2) to the extent that the costs of such increased capital requirements are not reflected in the Prime Rate or the LIBOR Rate, the Borrower and the Agent shall thereafter

- 26 -

attempt to negotiate in good faith, within thirty (30) days following the date the Borrower receives such notice, an adjustment payable hereunder that will adequately compensate such Bank in light of the circumstances. If the Agent (in consultation with such Bank) and the Borrower are unable to agree to such adjustment within thirty (30) days following the date upon which the Borrower receives such notice, then commencing on the date of such notice (but no earlier than the effective date of any such increased capital requirement), the fees payable hereunder shall increase by an amount that will, in the Agent’s reasonable determination, provide adequate compensation. The provisions of this Section 2.13 shall be applied to the Borrower so as not to discriminate against the Borrower vis-a-vis other customers of any of the Banks.

2.14 Change in Laws . Anything hereinbefore to the contrary notwithstanding, if any future applicable law (which expression, as used in this Agreement, includes statutes and rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time heretofore or hereafter made upon or otherwise issued to the Agent or any of the Banks by any central bank or other fiscal, monetary or other authority, whether or not having the force of law) shall (1) subject the Agent or any Bank to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Agreement, the loans or the payment to the Agent or any of the Banks of any amounts due to it hereunder, or (2) materially change the basis of taxation of payments to the Agent or any of the Banks of the principal or the interest on or any other amounts payable to the Agent or any of the Banks hereunder, or (3) impose or increase or render applicable any special or supplemental special deposit or reserve or similar requirements or assessment against assets held by, or deposits in or for the account of, or any liabilities of, or loans by an office of the Agent or any of the Banks in respect of the transactions contemplated herein, or (4) impose on the Agent or any of the Banks any other conditions or requirements with respect to this Agreement, the Maximum Amount, or any loan made hereunder, and the result of any of the foregoing is (a) to increase the cost of making, funding or maintaining all or any part of the Revolving Loans or Letters of Credit, or (b) to reduce the amount of principal, interest or other amount payable to the Agent or any of the Banks hereunder, or (c) to require the Agent or any of the Banks to make any payment or to forego any interest or other sum payable hereunder, the amount of which payment or foregoing interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by the Agent or a Bank from the Borrower hereunder, then, and in each such case not otherwise provided for hereunder, the Borrower will, upon demand made by the Agent accompanied by calculations thereof in reasonable detail, pay to the Agent, for the benefit of the Agent or such Bank, such additional amounts as will be sufficient to compensate the Agent or such Bank for such additional cost, reduction, payment or foregone interest or other sum, provided that the foregoing provisions of this sentence shall not apply in the case of any additional cost, reduction, payment or foregone interest or other sum resulting from any taxes charged upon or by reference to the overall net income, profits or gains of the Agent or such Bank. The provisions of this Section 2.14 shall be applied to the Borrower so as not to discriminate against the Borrower vis-a-vis other customers of the Agent or the Banks.

2.15 Term of Agreement . This Agreement shall remain in full force and effect so long as any Obligations remain outstanding or the Agent or any of the Banks has any commitment to make Revolving Loans or issue Letters of Credit.

- 27 -

ARTICLE III: CONDITIONS PRECEDENT

3.1 Conditions Precedent to Effectiveness of this Agreement . The obligation of the Agent and the Banks to continue the credit facility pursuant to this Agreement is subject to the condition that the Agent and the Banks shall have received, on or before the date hereof, in form and substance satisfactory to the Agent and the Banks:

3.1.1 Fully executed originals of, or the Borrower shall have accomplished or caused to be accomplished, the documents and actions listed on the closing checklist attached hereto as Exhibit 3.1.1 ; and

3.1.2 Such other instruments, documents or actions as the Agent or any Bank or its counsel may reasonably request.

3.2 Conditions Precedent to Making Revolving Loans or Issuing Letters of Credit . The obligation of the Banks to make any Revolving Loans or for the Agent to issue any Letters of Credit is further subject to the fulfillment to the satisfaction of the Agent and the Banks immediately prior to or contemporaneously with the making of such Revolving Loan or the issuance of such Letter of Credit of each of the following conditions:

3.2.1 The representations and warranties contained in this Agreement or otherwise made in writing by or on behalf of the Borrower or the Guarantors pursuant hereto or in connection with the transactions contemplated hereby shall be true and correct in all material respects at the time of the making of each such Revolving Loan and issuance of each such Letter of Credit (except for representations and warranties limited as to time or with respect to a specific event, which representations and warranties shall continue to be limited to such time or event) with and without giving effect to such Revolving Loan or Letter of Credit and the application of the proceeds thereof. The Agent and the Banks may without waiving this condition consider it fulfilled, and a representation by the Borrower and the Guarantors to such effect made, as of the date each Revolving Loan is made and the date each Letter of Credit is issued, if no written notice to the contrary, dated the date of such Revolving Loan or Letter of Credit, is received from the Borrower or Guarantors. In the event that any of the Borrower or the Guarantors submits a written notice as contemplated by the preceding sentence, the conditions set forth in this Section will be considered fulfilled if such notice specifies in detail the exceptions to the representations and warranties as of the date of such Revolving Loan or Letter of Credit, the exceptions as stated in such notice are satisfactory to the Agent and the Banks and the Agent so notifies the Borrower and the Guarantors.

3.2.2 At the time of making each such Revolving Loan or issuing each such Letter of Credit:

(a) the Borrower and each Guarantor shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement or in any of the Credit Documents required to be performed or complied with by it prior to or at such time;

- 28 -

(b) no Default or Event of Default shall have occurred and be continuing or would result from the making of such Revolving Loan or issuance of such Letter of Credit;

(c) there shall have been no material adverse change in the condition (financial or otherwise), business or properties of the Borrower or Guarantors since the date of this Agreement;

(d) the Property Partnership with respect to which such Revolving Loan is made or such Letter of Credit is issued is an Eligible Property Partnership;

(e) the Co-Funding Amount required pursuant to the terms of this Agreement for such Revolving Loan or such Letter of Credit shall have been obtained by the Borrower in accordance with the definition of “Co-Funding Amount” set forth in Section 1.1 hereof, and shall have been deposited in the respective Disbursement Account or the Cash Collateral Account, as applicable, for whichever of SPE I or SPE II is submitting the particular Draw Certificate (in immediately available funds);

(f) with respect to each such Letter of Credit, the agreements required pursuant to Section 2.2.2 hereof shall have been executed and delivered and the applicable Letter of Credit Fee shall have been paid; and

(g) the Agent and each of the Banks shall have received an executed certificate in the form attached hereto as Exhibit 3.2 (a “Draw Certificate”) from an employee or officer of the Borrower with the authority (as established to the Agent’s satisfaction) to execute and deliver Draw Certificates on behalf of the Borrower as to the accuracy of each of the foregoing.

3.2.3 Direct Investment by Borrower. In addition, prior to or concurrently with the making of the first Revolving Loan or issuing each such Letter of Credit in connection with a particular Direct Investment by the Borrower, the Borrower or a Guarantor shall deliver to the Agent’s counsel on behalf of the Agent and the Banks an Approved Property Partnership Agreement and the other Organizational Documents for such Property Partnership. If and to the extent determined by the Agent’s counsel to be necessary or advisable, the Borrower or a Guarantor shall also deliver to the Agent’s counsel on behalf of the Banks an acknowledgement and consent from the Property Partnership that is intended to receive the Direct Investment (and, if determined by the Agent to be necessary or advisable, its equity holders), in the form set forth as Exhibit A to the Pledge Agreement described in clause (a)(i) of the definition of Pledge Agreement.

3.2.4 Investment Contribution by Borrower / Direct Investment by Middle Tier Entity. In addition, prior to the making of the first Revolving Loan or issuing each such Letter of Credit in connection with a Investment Contribution to a particular Middle Tier Entity (and, in turn, a Direct Investment by such MTE to a Property Partnership), the Borrower or a Guarantor will deliver, or cause the applicable MTE to deliver, to the Agent’s counsel on behalf of the Agent and the Banks:

(a) the Organizational Documents of the MTE that is intended to receive the Investment Contribution, including, without limitation, such MTE’s Approved MTE Agreement;

- 29 -

(b) all of the documents required in connection with a Direct Investment by the Borrower as described in Section 3.2.3 , including, without limitation, the Organizational Documents of the Property Partnership that is intended to receive a Direct Investment from the MTE funded with the proceeds of such Capital Contribution;

(c) a Pledge Agreement, executed and delivered by the respective MTE to the Agent (for the ratable benefit of the Banks) substantially in the form of Exhibit 3.2.4(c) attached hereto (a “MTE Pledge Agreement”), evidencing the assignment of and grant of a first priority perfected security interest in all of such MTE’s then owned or thereafter acquired equity interests, including, without limitation, the equity interests in the Property Partnership in which such MTE is intended to make Direct Investments;

(d) such evidence as the Agent may reasonably require establishing that the Agent’s security interest arising under the MTE Pledge Agreement applicable to such MTE has been perfected as a first priority perfected security interest, including, without limitation, (i) a UCC-11 search report conducted in Delaware with respect to the MTE, confirming that there are no security interests, liens, or encumbrances on the MTE other than the security interests granted in the MTE Pledge Agreement (and confirming the filing of a UCC-1 financing statement in favor of the Agent and naming the MTE as debtor), (ii) any consents required under Section 2.4 of the MTE Pledge Agreement with respect to any collateral in which the MTE has rights as of the execution date of the MTE Pledge Agreement, and (iii) without waiving the provisions of Section 3.1(h) of the MTE Pledge Agreement, the certificates, if any, evidencing any collateral held by the MTE as of the execution date of the MTE Pledge Agreement, together with undated assignment(s) thereof executed in blank by the MTE.

3.2.5 Direct Convertible Loans and Convertible Loan Contributions by Borrower / Convertible Loans by MTEs . In addition, prior to or concurrently with the making of the first Revolving Loan in connection with a Direct Convertible Loan to a particular Property Partnership, or in connection with a Convertible Loan Contribution to a particular Middle Tier Entity (and, in turn, a Convertible Loan by such MTE to a Property Partnership), the Borrower or a Guarantor will deliver, or cause the applicable MTE to deliver, to the Agent’s counsel on behalf of the Agent and the Banks:

(a) the Organizational Documents of the Property Partnership that is intended to receive the Convertible Loan;

(b) in the case of a Convertible Loan Contribution, the Organizational Documents of the MTE that is intended to receive such Convertible Loan Contribution, including, without limitation, such MTE’s Approved MTE Agreement;

(c) a Collateral Assignment, Pledge and Security Agreement, executed and delivered to the Agent (for the ratable benefit of the Banks) substantially in the form of Exhibit 3.2.5(c) attached hereto (a “Collateral Assignment, Pledge and Security Agreement”),

- 30 -

evidencing the assignment of and the grant of a first priority perfected security interest in all of the Borrower’s or, as the case may be, MTE’s right, title and interest in and to the following:

(i) the Convertible Loan Agreement, substantially in the form of Exhibit 3.2.5(c)(i) attached hereto, entered into between the Borrower, or as the case may be, the MTE, and the Property Partnership receiving such Convertible Loan;

(ii) the promissory note evidencing such Convertible Loan, which shall be substantially in the form attached to the Convertible Loan Agreement;

(iii) guaranties of repayment of such Convertible Loan from one or more of the developers and equityholders of the Property Partnership receiving such Convertible Loan, which shall be substantially in the form attached to the Convertible Loan Agreement;

(iv) the pledge by all of the equityholders of the Property Partnership receiving such Convertible Loan of their equity interests in such Property Partnership to the Borrower, or as the case may be, such MTE, which pledge shall be substantially in the form attached to the Convertible Loan Agreement, accompanied by, to the extent applicable, delivery of any related security certificates and an instrument of transfer executed in blank therefore; and

(v) any other collateral, security or guaranty which the Borrower, or as the case may be, such MTE receives from the Property Partnership receiving such Convertible Loan (or its equityholders or developer) as security for the repayment of such Convertible Loan;

(d) an allonge to the promissory note evidencing such Convertible Loan, executed in blank;

(e) any UCC Financing Statements or other such instruments, documents, certificates, filings or agreements as the Agent may reasonably require; and

(f) such evidence as the Agent may reasonably require establishing that the Agent’s security interest arising under the Collateral Assignment, Pledge and Security Agreement applicable to such Convertible Loan has been perfected as a first priority perfected security interest, including, without limitation, a UCC-11 search report conducted in Delaware with respect to the Borrower or the MTE, as applicable, confirming (i) the filing of a UCC-1 financing statement in favor of the Agent and naming the Borrower or the MTE, as applicable, as debtor and (ii) that there are no security interests, liens, or encumbrances on the Borrower or the MTE other than the security interests granted in the Collateral Assignment, Pledge and Security Agreement or, in the case of a Borrower, otherwise granted in favor of the Agent for the ratable benefit of the Banks.

3.2.6 Assuming the documents required pursuant to Section 3.2.3, 3.2.4 or 3.2.5 have been delivered with respect to a particular Property Partnership or, if applicable, a particular MTE, the Borrower may request additional Revolving Loans or Letters of Credit with respect to

- 31 -

such Property Partnership or MTE by submitting a Draw Certificate therefor and otherwise complying with the requirements of Sections 3.2.1 and 3.2.2 .

3.3 Delivery of Documents . Drafts of the Draw Certificate and other documents required to be delivered by the Borrower under Sections 3.2.2, 3.2.3, 3.2.4 or 3.2.5 in connection with a request for a Revolving Loan or a Letter of Credit, marked to reflect changes to the forms thereof attached hereto as Exhibits or to the Approved Form of Property Partnership Agreement or the Approved Form of MTE Agreement, as applicable, shall be delivered to the Agent’s counsel (and, as to the drafts of Draw Certificates, the Agent and each of the Banks) at least three (3) Business Days prior to the intended making of such Revolving Loan or issuance of such Letter of Credit. The Borrower shall deliver to the Agent’s counsel (and, as to Draw Certificates, the Agent and each of the Banks) copies of fully-executed counterparts of such documents prior to or on the date of the making of such Revolving Loan or issuance of such Letter of Credit. The copies of fully-executed counterparts of such documents may be delivered via facsimile or electronic mail. If the Agent shall determine, in its reasonable discretion, that a natural disaster or other event has made delivery of a fully-executed Draw Certificate impossible or impractical, then such delivery shall be deemed to have occurred upon receipt by the Agent of confirmation via telephone or electronic mail from an employee or officer of the Borrower with the authority (as established to the Agent’s satisfaction) to execute and deliver Draw Certificates on behalf of the Borrower that the information in the draft of such Draw Certificate is true, complete and accurate.

3.4 Conditions Precedent to Releasing Collateral . Assuming that no Event of Default is then existing, the Agent shall release all of the Collateral (other than any Cash Collateral) relating to a specific Property Partnership or Middle Tier Entity solely upon satisfaction of the Release Conditions applicable thereto. Upon satisfaction of the Release Conditions for a particular Property Partnership or MTE, (a) the Borrower shall make no further Capital Contributions, Direct Investments or Direct Convertible Loans, either through the use of proceeds of Revolving Loans or Letters of Credit or otherwise to such Property Partnership, or MTE; and (b) the Agent shall remit to the Borrower, cash, if and to the extent actually received by the Agent and not required to be applied to the Obligations pursuant to Section 2.6.1 , from the appropriate Repayment Account in an amount equal to the aggregate Co-Funding Amounts deposited therein in connection with all Revolving Loans made to enable the Borrower to make (i) Direct Investments or Direct Convertible Loans to such Property Partnership or (ii) Capital Contributions to such MTE.

3.5 Conditions Precedent to Releasing Cash Collateral . Assuming that no Event of Default is then existing, the Agent shall release all of the Cash Collateral relating to a specific Letter of Credit upon (a) the expiration of the Letter of Credit, or (b) the reduction of the Stated Amount for such Letter of Credit to zero and the repayment and performance in full of all Revolving Loans relating to such Letter of Credit, all interest thereon, and all other Obligations relating to such Letter of Credit.

ARTICLE IV: REPRESENTATIONS AND WARRANTIES

In order to induce the Agent and each of the Banks to enter into this Agreement and to make Revolving Loans and issue Letters of Credit hereunder, the Borrower and Guarantors,

- 32 -

jointly and severally, make the following representations and warranties to the Agent and each of the Banks (which representations and warranties shall survive the execution and delivery of this Agreement and the making of any Revolving Loans and issuance of any Letters of Credit):

4.1 Organization and Qualification .

4.1.1 Each of MFH, MEC, TC Corp., BFRP and MSLP (a) is a corporation, duly organized, validly existing and in good standing under the laws of the state of its organization and is organized in only one jurisdiction, (b) has all requisite corporate power and authority to own its property, conduct its business as now conducted and as presently contemplated, and (c) is duly qualified and in good standing in each jurisdiction (which jurisdictions are listed on Section 4.1 of the Disclosure Schedule) where the nature of its business (present or proposed) requires such qualification under applicable law except where the failure to be so qualified would not have a materially adverse effect on its ability to perform its obligations hereunder. Each of MuniMae, BFGLP, BFG Investments, SPE I, SPE II and each MTE (x) is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its organization, (y) has all requisite power and authority to own its property and conduct its business as now conducted and as presently contemplated; and (z) is duly qualified and in good standing in each jurisdiction (which jurisdictions are listed in Section 4.1 of the Disclosure Schedule) where the nature of its properties or its business (present or proposed) requires such qualification under applicable law except where the failure to be so qualified would not have a materially adverse effect on its ability to perform its obligations hereunder. As of the date hereof, the Borrower’s and each Guarantor’s correct legal name, jurisdiction of organization, principal place of business, chief executive office, federal tax identification number and, if applicable, state organizational number and each other name used by such entity during the five years prior to the date hereof (including any tradename) are set forth in Section 4.1 of the Disclosure Schedule.

4.1.2 The sole purposes of SPE I and SPE II will be (a) to acquire equity interests in Property Partnerships by making Direct Investments, (b) to acquire equity interests in Middle Tier Entities by making Capital Contributions, (c) to make Direct Convertible Loans to Property Partnerships, (d) to convey to Investment Partnerships all of its right, title and interest in and to such Property Partnerships and MTEs upon the admission through syndication of Investors as limited partners of Investment Partnerships on the terms and conditions set forth in the Offering Memorandum for such Investment Partnership, and (e) purposes ancillary to such Capital Contributions, Direct Investments, Direct Convertible Loans and syndications.

4.1.3 MSLP’s sole purposes will be to (a) serve as the so-called “special limited partner”, “administrative limited partner” “special member” or “special administrative member,” as applicable, for each Property Partnership receiving a Direct Investment (and to serve as general partner, manager or managing member, as applicable, if so required or permitted under such Property Partnership’s Organizational Documents), and (b) execute and deliver from time to time letters of intent intended to permit the Borrower or an MTE to make Direct Investments in, or Convertible Loans to, a Property Partnership.

4.1.4 The sole purpose of each Middle Tier Entity will be (a) to receive Capital Contributions from the Borrower, (b) with respect to a single Property Partnership, to use funds

- 33 -

provided by such Capital Contributions to (i) acquire equity interests in a such Property Partnership by making Direct Investments therein and (ii) make MTE Convertible Loans to such Property Partnership, and (c) purposes ancillary to such Direct Investments and MTE Convertible Loans.

4.2 Capitalization . As of the date hereof, all of the issued and outstanding equity and voting rights in the Borrower and each of the Guarantors (other than MuniMae) is held by the Persons and in the amounts or percentages set forth in Section 4.2 of the Disclosure Schedule. There are no outstanding securities or agreements exchangeable for or convertible into or carrying any rights to acquire any equity interests in any of the Borrower or the Guarantors (other than MuniMae). Except as set forth in Section 4.2 of the Disclosure Schedule, and except for Encumbrances permitted pursuant to Section 5.1 hereof, there are no outstanding commitments, options, warrants, calls or other agreements (whether written or oral) binding on the Borrower or any of the Guarantors (other than MuniMae) which require or could require said party to sell, grant, transfer, assign, mortgage, pledge or otherwise dispose of any equity interests of said party. Except as set forth in the Borrower’s or the Guarantors’ Organizational Documents and Section 4.2 of the Disclosure Schedule, no equity interests of any of the Borrower or the Guarantors (other than MuniMae) are subject to any restrictions on transfer or any agreements, voting agreements, trust agreements, trust deeds, irrevocable proxies, or any other similar agreements or interests (whether written or oral), other than (a) Encumbrances permitted pursuant to Section 5.1 hereof, and (b) restrictions and agreements entered into in connection with Indebtedness permitted under Section 5.17 hereof. Until Release Conditions with respect to a MTE have been satisfied, either SPE I or SPE II shall own all of the equity interests in such MTE.

4.3 Authorization . The execution, delivery and performance by the Borrower, each Guarantor and each Middle Tier Entity of each of the Credit Documents and the other documents related thereto or contemplated thereby to which it is or will be a party (a) have been and will be duly authorized by all necessary action on its part; (b) do not and will not conflict with, or result in a violation of, any provision of law or any order, writ, rule or regulation of any court or governmental agency or instrumentality binding upon or applicable to it or its organizational documents; (c) do not and will not conflict with, result in a violation of, or constitute a default under, any agreement, mortgage, indenture or instrument to which it is a party or by which it or its property is bound; and (d) do not and will not result in, or require, the creation or imposition of any lien (other than as permitted, arising under or contemplated by the Credit Documents) upon or with respect to any of its property.

4.4 Title to Properties; Absence of Liens . As of the date of this Agreement, except as set forth in Section 4.4 of the Disclosure Schedule, the Borrower, each Guarantor and each MTE has and will have good title to all of its respective assets and rights of every name and nature now purported to be owned or managed by it, in each case free from all liens, charges and encumbrances whatsoever except for insubstantial defects in title which do not materially detract from the value or impair the use of the affected properties and liens, charges or encumbrances permitted under Section 5.1 hereof. The rights, properties and other assets presently owned, leased, licensed or managed by the Borrower or any Guarantor and described elsewhere in this Agreement, including all Exhibits hereto, include all rights, properties and other assets necessary to permit the Borrower and each Guarantor to conduct its business in all material respects in the

- 34 -

same manner as such business has been conducted prior to the date hereof or as contemplated by this Agreement.

4.5 Compliance . The Borrower, each Guarantor and each MTE has and will have all necessary permits, approvals, authorizations, consents, licenses, franchises, registrations and other rights and privileges (including patents, trademarks, trade names and copyrights, if any) to allow it to own and operate its business without any violation of law or the rights of others (except for any such violation as would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrower, any Guarantor or any MTE); and the Borrower, each Guarantor and each MTE is and will be duly authorized, qualified and licensed under and in compliance with all applicable laws, regulations, authorizations and orders of public authorities, including, without limitation, to the best of the Borrower’s and each Guarantor’s actual knowledge after due inquiry, laws relating to toxic or hazardous wastes, substances or materials and protection of the environment (except where the failure to comply would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of any Borrower or any Guarantor). The Borrower, each Guarantor and each MTE has performed and will perform all obligations required to be performed by it under, and is not in default under or in violation of, its organizational or charter documents or any agreement, lease, mortgage, note, bond, indenture, license, permit, order, authorization or other instrument or undertaking to which it is a party or by which any of it or any of its properties are bound, except for violations which either individually or in the aggregate would not have any material adverse effect on the business, condition (financial or otherwise) or assets of the Borrower, any Guarantor or any MTE.

4.6 Solvency . Each of the Borrower and Guarantors has and, after giving effect to the Revolving Loans and Letters of Credit, will have, assets (both tangible and intangible) having a fair salable value in excess of the amount required to pay the probable liability on its then-existing debts (whether matured or unmatured, liquidated or unliquidated, fixed or contingent); each of the Borrower and Guarantors has and will have access to adequate capital for the conduct of its respective businesses and the discharge of its respective debts incurred in connection therewith as such debts mature.

4.7 Events of Default . As of the date of this Agreement, no Default or Event of Default exists.

4.8 Taxes . (a) The Borrower, each Guarantor and each MTE has filed and will file all federal, state and other material tax returns required to be filed, or has obtained lawful extensions with respect to such filings, and all federal, state and other material taxes, assessments and other such governmental charges due from each of them have been and will be fully paid, (b) neither the Borrower, any Guarantor nor any MTE has executed or will execute any waiver that would have the effect of extending the applicable statute of limitations in respect of its tax liabilities, and (c) the Borrower, each Guarantor and each MTE has established and will establish on its books reserves in accordance with GAAP (except as otherwise disclosed in writing to the Agent and each of the Banks) adequate for the payment of all federal, state and other tax liabilities.

4.9 Restrictions on the Borrower and the Guarantors . Neither the Borrower, any Guarantor, nor any MTE is or will be a party to or bound by any contract, agreement or

- 35 -

instrument, nor subject to any restriction which will, under current or reasonably foreseeable conditions, materially and adversely affect its business, property, assets, operations or conditions, financial or otherwise.

4.10 ERISA . Except as set forth in Section 4.10 of the Disclosure Schedule, the Borrower, each Guarantor, and each “employee pension benefit plan” and each “employee welfare benefit plan” (as defined in ERISA) maintained by the Borrower or any Guarantor (collectively, the “Plans”) are in compliance in all material respects with ERISA, the provisions of the Code applicable to the Plans and the terms of such Plans; neither the Borrower nor any Guarantor nor any Plan has engaged in a “prohibited transaction” (as defined in ERISA and the Code) which would subject the Borrower, any Guarantor, any such Plan or any party in interest (as defined in Section 3(14) of ERISA) (hereinafter “ERISA Party-in-Interest”) or disqualified person (as defined in Section 4975 of the Code) (hereinafter an “ERISA Disqualified Person”) with respect to any such Plan to a tax or penalty; neither the Borrower nor any Guarantor nor any Plan has incurred any “accumulated funding deficiency” (as defined in ERISA); except as set forth in the Initial Financial Statements, the aggregate current value of all assets of the funded Plans of the Borrower and any Guarantor which are single-employer plans is at least equal to the aggregate current value of all accrued benefits under such Plans calculated in accordance with actuarial assumptions current as of the date of this representation and warranty on an on-going Plan basis; neither the Borrower nor any Guarantor has incurred any liability to the Pension Benefit Guaranty Corporation over and above basic benefit premiums required by law Section 4007 of ERISA; and neither the Borrower nor any Guarantor has terminated any Plan, in whole or in part, in a manner which could result in the imposition of a lien on the property of the Borrower or any Guarantor.

4.11 Environmental and Regulatory Compliance . As to each of the real properties in which the Borrower holds a direct or indirect ownership or beneficial interest, except as described in Section 4.11 of the Disclosure Schedule, each such property, to the Borrower’s and each Guarantor’s knowledge (based on third-party environmental reports received at the time each such real property was acquired), is presently in compliance in all material respects with and has in full force and effect all material permits or approvals required by all applicable laws, ordinances or regulations, including, without limitation, building and zoning laws and Environmental Laws (as defined in Section 5.23 ). If any such property is not in compliance with the foregoing, the Borrower and the Guarantors are in the process of performing and/or using their commercially reasonable efforts to cause the general partners of each Property Partnership to perform, their respective obligations relative to such property, and such non-compliance does not have or will not have a material adverse effect on the business of the Borrower or the Guarantors or properties in which the Borrower or any Guarantor holds a direct or indirect ownership or beneficial interest. Except as set forth in Section 4.11 of the Disclosure Schedule, no written inquiry, claim, complaint, court order, request for information, notice or threat to give notice by any Governmental Authority or third party has been received by the Borrower or any Guarantor with respect to the foregoing property, nor does the Borrower or any Guarantor have any knowledge of any oral inquiry, claim, complaint, court order, request for information, notice or threat to give notice by any Governmental Authority or third party with respect to the foregoing property, alleging violation of or asserting any noncompliance with applicable law, ordinances or regulations and Environmental Laws, including, without limitation, any of the foregoing pertaining to building and zoning matters.

- 36 -

4.12 Contracts with Affiliates, Etc. Neither Borrower, any Guarantor nor any MTE is or will be a party to or otherwise bound by any agreement, instrument or contract (whether written or oral) with any Affiliate except (a) as disclosed in the Initial Financial Statements or in the applicable Offering Memorandum, in Section 4.12 of the Disclosure Schedule or in the Organizational Documents of a proposed MTE or Property Partnership, or (b) for any such agreement, instrument or contract as would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrower or any Guarantor.

4.13 Regulatory Approvals . No authorization, consent, approval, permit, license, exemption from or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality is necessary for the valid execution, delivery or performance by the Borrower, any Guarantor or any MTE of the Credit Documents, except for the filing of UCC-1 financing statements.

4.14 Enforceability . Each of the Credit Documents constitutes, and the other documents contemplated thereby to which the Borrower, any Guarantor or any MTE is or will be a party, when executed and delivered by it, does or will constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms, except as such enforceability (but not validity) may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization or other similar laws of general application affecting the rights of creditors and secured parties.

4.15 Liens . Each of the Security Documents, to the extent therein provided, creates valid, binding and enforceable security interests in the Collateral in favor of the Agent, for the ratable benefit of the Banks, except as such enforceability (but not validity) may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization or other similar laws of general application affecting the rights of creditors and secured parties. There are no liens upon any of the Collateral, except liens granted by the Security Documents or disclosed in Section 4.15 of the Disclosure Schedule.

4.16 Litigation . Except as set forth in Section 4.16 of the Disclosure Schedule, there are no suits, actions, proceedings or investigations pending or, to the knowledge of the Borrower or any Guarantor, threatened against or affecting the Borrower, any Guarantor or any MTE or any of their respective properties which would adversely affect any of the transactions contemplated by this Agreement or which, if determined adversely, could have a material adverse effect on the condition (financial or otherwise), properties or operations of the Borrower or any Guarantor or adversely affect the ability of the Borrower or any Guarantor to perform its respective obligations hereunder.

4.17 Financial Statements . The Guarantors have heretofore furnished to the Agent and each of the Banks consolidated and consolidating audited balance sheets for the fiscal year ended December 31, 2004 and consolidated unaudited balance sheets and related statements of income for the period ended June 30, 2005 (such audited statements and unaudited balance sheets and related statements to be referred to collectively herein as the “Initial Financial Statements”); all of which present fairly (after the taking into account that the unaudited information may be subject to adjustment deriving from the audit process) the financial condition, assets, liabilities

- 37 -

and income of the subject thereof as of the dates thereof and for the periods then ended and have been prepared in accordance with GAAP except as otherwise disclosed therein. There has not been any material adverse change in the financial condition, assets, liabilities or income of the Borrower or any Guarantor from the date of its Initial Financial Statements.

4.18 Reliance on Offering Memorandum . The Borrower and each Guarantor hereby represents and warrants that the Borrower has delivered and will deliver true and complete copies of the Offering Memorandum for each Investment Partnership to the Agent on behalf of the Banks, and acknowledges that the Agent and each of the Banks are relying on the accuracy and completeness of the information contained therein (prior to any amendment or modification which may be requested by Investors and consented to by the Agent pursuant to Section 5.14 hereof) in entering into this Agreement. If any of the information contained in the Offering Memorandum is untrue or incomplete in any material respect as of the date the same is made, the Agent shall be entitled to declare an Event of Default hereunder pursuant to Section 6.1 hereof.

ARTICLE V: COVENANTS

So long as any Obligation remains unsatisfied, or the Banks are obligated to make additional Revolving Loans or the Agent is obligated to issue Letters of Credit pursuant to this Agreement, or any Letter of Credit continues to be outstanding (unless Cash Collateral in an amount equal to the Stated Amount of such Letter of Credit has been delivered to the Agent in accordance with the terms of Section 2.2.1 hereof), the Borrower and the Guarantors jointly and severally hereby covenant to the Agent and the Banks as follows:

5.1 Liens . Without the prior written consent of the Agent and the Majority Banks, neither the Borrower, any Middle Tier Entity, MEC, or TC Corp. nor any of their Subsidiaries shall create, incur, assume or suffer to exist any lien, encumbrance, security interest or other encumbrance of any type (“Encumbrances”) upon or with respect to any of its property or assets, real or personal, or assign or otherwise convey any right to receive income, or its rights to profits, distributions and other receivables from any party, including, without limitation, the Borrower, or from any other investments of such entity, except: (a) Encumbrances existing on the date of this Agreement and set forth in Section 4.4 or Section 4.15 of the Disclosure Schedule; (b) liens for taxes, fees, assessments and other governmental charges to the extent that payment of the same is not required in accordance with the provisions of Section 5.3 ;(c) liens, encumbrances, security interests or other encumbrances in favor of the Agent, for the benefit of the Banks; (d) Encumbrances securing Indebtedness for the purchase price of capital assets to the extent such Indebtedness is permitted by Section 5.17 , provided that (i) each Encumbrance is given solely to secure the purchase price of such property, does not extend to any other property and is given at the time of acquisition of the property, and (ii) the Indebtedness secured thereby does not exceed the lesser of the cost of such property or its fair market value at the time of acquisition; (e) liens of mechanics, laborers, materialmen, carriers and warehousemen arising by operation of law to secure payment for labor, materials, supplies or services incurred in the ordinary course of the Borrower’s or such Guarantor’s business, but only if the payment thereof is not at the time required and such liens do not, individually or in the aggregate, materially detract from the value or limit the use of any property subject thereto; (f) deposits made in the ordinary course of the Borrower’s or such Guarantor’s business in connection with workers’ compensation, unemployment insurance, social security and other similar laws; (g)

- 38 -

Encumbrances consisting of Property Partnership Pledges; or (h) Encumbrances on Asset Management Contracts, provided that any such Encumbrance shall not interfere with the Agent’s rights under Section 6.3 hereof.

5.2 Merger; Sale . Without obtaining the prior written consent of the Agent and the Majority Banks in each instance, neither the Borrower nor any Guarantor shall reorganize, be reconstituted, engage in any transaction which would result in a change in Control of such party, or enter into any agreement for the sale or other transfer of substantially all of its assets or equity or for the merger or consolidation of such party with or into another entity, except as permitted under Section 5.27 hereof.

5.3 Taxes; Reserves . The Borrower and each Guarantor shall, and shall cause each MTE to, pay or cause to be paid all taxes, assessments or governmental charges on or against it or its properties prior to the time when they shall become delinquent, except to the extent that failure to make such payments would not reasonably be expected to have a material adverse effect on the business, properties or condition (financial or otherwise) of the Borrower, any Guarantor, or any MTE, and provided that this covenant shall not apply to any tax, assessment or charge which is being contested in good faith and with respect to which adequate reserves have been established and are being maintained in accordance with GAAP.

5.4 Notices .

5.4.1 Defaults . The Borrower and the Guarantors, promptly after obtaining actual knowledge thereof, shall advise the Agent, on behalf of the Banks, of the existence of any default or event of default under any agreement or other document binding upon or executed and delivered by any of the Borrower, the Guarantors, the MTEs, or MuniMae TE Bond Subsidiary, LLC, including any Default or Event of Default hereunder; provided, however, that such notice(s) need not be provided if such default or event of default does not constitute a Default or an Event of Default and: (a) could not reasonably be expected to subject them to liability in excess of $1,000,000 (as to MFH, MEC, TC Corp., BFGLP, BFRP, or BFG Investments) or $10,000,000 (as to MuniMae or MuniMae TE Bond Subsidiary, LLC); (b) does not involve a default by MuniMae TE Bond Subsidiary, LLC on its P-Float ^sm program or any other securitization; or (c) does not occur with respect to any entity under the direct or indirect Control of MuniMae TE Bond Subsidiary, LLC.

5.4.2 Litigation and Judgments . The Borrower and each Guarantor, as the case may be, will give notice to the Agent and each of the Banks in writing, in form and detail satisfactory to the Agent and each Bank, within five Business Days of becoming aware of (a) any litigation or proceedings threatened in writing against it or any pending litigation or proceedings to which it is or becomes a party involving a fully or partially uninsured claim against it; or (b) any litigation or proceeding against any Persons; in either case, which, if adversely determined could materially and adversely affect its financial condition, assets or operations and stating the nature and status of such litigation or proceedings. Each Borrower and each Guarantor, as the case may be, will give notice, in writing, to the Agent and each of the Banks, in form and detail reasonably satisfactory to the Agent and each Bank within five Business Days of any judgments, final or otherwise, against it in an aggregate amount in excess of $100,000 as to the Borrower or

- 39 -

any MTE or $1,000,000 as to any Guarantor which is not fully covered by insurance (other than customary deductibles disclosed to and reasonably acceptable to the Agent).

5.4.3 Material Adverse Change . The Borrower and each Guarantor will promptly notify the Agent, on behalf of the Banks, of any material adverse change which would reasonably be expected to have a material adverse effect on its business, properties or condition (financial or otherwise) or which would cause any Offering Memorandum to be materially incorrect, incomplete or misleading.

5.4.4 Governmental Authorities . The Borrower and each Guarantor will promptly notify the Agent, on behalf of the Banks, of all material notices received from any Governmental Authority and shall provide copies thereof to the Agent, on behalf of the Banks, promptly after receipt thereof.

5.4.5 ERISA . With respect to any Plan, the Borrower or each Guarantor, as the case may be, shall, or shall cause its Affiliates to, furnish to the Agent, on behalf of the Banks, promptly (a) written notice of the occurrence and its obtaining knowledge of a Reportable Event, (b) a copy of any request for a waiver of the funding standards or an extension of the amortization periods required under Section 412 of the Code and Section 302 of ERISA, (c) a copy of any notice of intent to terminate any funded Plan, (d) notice that the Borrower or such Guarantor, as the case may be, or any Affiliate will or may incur any liability to or on account of a Plan, and (e) upon the Agent’s request, a copy of the annual report of each Plan (Form 5500 or comparable form) required to be filed with the Internal Revenue Service and/or the Department of Labor. Any notice to be provided to the Agent under this Section shall include a certificate of the chief financial officer of the Borrower, such Guarantor or such Affiliate, as the case may be, setting forth details as to such occurrence and the action, if any, which the Borrower, such Guarantor, and/or the Affiliate is required or proposes to take, together with any notices required or proposed to be filed with or by the Borrower, and/or any Affiliate, the Pension Benefit Guaranty Corporation, the Internal Revenue Service, the trustee or the Plan administrator with respect thereto. Prior to the adoption of any Plan subject to ERISA, the Borrower or a Guarantor, as the case may be, shall notify the Agent, on behalf of the Banks, of such adoption and of the vesting and funding schedules and other principal provisions thereof.

5.4.6 Environmental Laws . If the Borrower or any Guarantor shall (a) receive notice that any violation of Environmental Laws may have been committed or is about to be committed by the Borrower, any Guarantor or a general partner of any Property Partnership, (b) receive notice that any administrative or judicial complaint or order has been filed or is about to be filed against either the Borrower or any Guarantor alleging a violation of any Environmental Law or requiring the Borrower or any Guarantor to take any action in connection with the release of toxic or hazardous wastes, substances or materials into the environment, or (c) receive any notice from a federal, state, or local governmental agency or private party alleging that either the Borrower or any Guarantor may be liable or responsible for any costs associated with a response to or cleanup of a release of toxic or hazardous wastes, substances or materials into the environment or any damages caused thereby, then the Borrower or such Guarantor, as the case may be, shall provide the Agent and each of the Banks with a copy of such notice within ten (10) days after the Borrower’s or such Guarantor’s, as the case may be, receipt thereof. Within fifteen (15) days after either the Borrower or such Guarantor has learned of the enactment or

- 40 -

promulgation of any Environmental Law which, to Borrower’s or Guarantors’ knowledge, may result in any material adverse change in the business, properties or conditions (financial or otherwise) of the Borrower or such Guarantor or in which the Borrower or such Guarantor holds a direct or indirect ownership or beneficial interest, the Borrower or such Guarantor, as the case may be, shall provide the Agent and each of the Banks with notice thereof.

5.5 Inspection . The Borrower and each Guarantor will permit, and shall cause each MTE to permit, the Agent or its agents, at the Borrower’s expense, to the extent of the Borrower’s, a MTE’s or Guarantor’s rights under a Property Partnership Agreement, to inspect any of its properties, including, without limitation, books and records, computer files and tapes and financial records, to examine and make copies of its books of account and other records and to discuss its affairs, finances and accounts with, and to be advised as to the same by, its officers and other responsible employees and professional advisers at such reasonable times and intervals as the Agent may designate after reasonable notice and during normal business hours; provided, however, that as long as no Default or Event of Default exists, the Borrower and Guarantors shall not be liable for the costs of more than one such inspection and examination during each calendar quarter. The Agent shall use its best efforts to maintain the confidentiality of the information obtained pursuant to such inspections and examinations; provided, however, such information may be disclosed (a) to the Banks, (b) to the Agent’s directors, officers, employees, representatives, agents and attorneys, (c) to the Agent’s independent third party auditors, and their directors, officers, employees, representatives, agents and attorneys, (d) to all federal and state bank examiners and to all parties to whom the Agent is required to disclose such information under any present or future federal and/or state banking law or regulation, as determined by the Agent, (e) in accordance with any subpoena or court order which the Agent in good faith believes requires such disclosure, (f) to potential participants in and assignees of the Agent’s or Banks’ interests hereunder pursuant to the Agent or the Banks’ customary confidentiality practices, and (g) as the Agent and the Majority Banks deems necessary in connection with any exercise of the Banks’ rights and remedies under the Credit Documents.

5.6 Financial Reporting .

5.6.1 The Borrower and each Guarantor shall provide to the Agent:

(a) promptly upon the written request of the Agent or any of the Banks therefor, the Borrower’s and such Guarantor’s federal and state income tax returns;

(b) for each of MFH, MEC and TC Corp., as soon as available, but in any event, within one hundred twenty (120) days after the end of its fiscal year, its income statement, balance sheet and any other related financial statements, prepared in accordance with GAAP (except as otherwise noted therein) and audited by PricewaterhouseCoopers LLP, or such other national accounting firm as may be retained from time to time by MuniMae (which national accounting firm shall be, in the event that MuniMae is not then required to file periodic reports with the United States Securities and Exchange Commission, reasonably acceptable to the Agent);

(c) for each of MFH, MEC and TC Corp., as soon as available, but in any event, within sixty (60) days after the end of the first three fiscal quarters of each fiscal year,

- 41 -

and within ninety (90) days after the end of the fourth fiscal quarter of each fiscal year, management-prepared income statements, balance sheets, and any other related financial statements prepared in accordance with GAAP (subject only to normal year-end audit adjustments and the absence of footnotes), and similar to those required by clause (b) above for and as of the end of such period; which financial statements, in the case of MFH and TC Corp., shall be prepared on a consolidated and consolidating basis;

(d) promptly upon the written request of the Agent therefor, copies of all management letters of substance and other material reports, if any, which are submitted in connection with financial audits of the Borrower or any Guarantor by its independent accountants; and

(e) from time to time, such other financial data and information about any Borrower, any Guarantor, any MTE or any Property Partnership as the Agent or any Bank may reasonably request.

5.6.2 The financial statements to be delivered pursuant to Sections 5.6.1(b) and (c) shall be accompanied by (a) a certification to the Agent and each Bank in the form attached hereto as Exhibit 5.6.2 by the Borrower’s and each Guarantor’s, as applicable, chief financial officer, controller or assistant controller that such financial statements are accurate and complete in all material respects, (b) financial data and calculations evidencing the Borrower’s and the Guarantors’ financial and covenant compliance to be attached as Schedule 1 to the form annexed hereto as Exhibit 5.6.2 , and (c) the Supplemental Package for the fiscal quarter then ended.

5.6.3 The documents required to be delivered pursuant to Section 5.6.1 , and the Supplemental Package required to be delivered under Section 5.6.2 , may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are posted on MuniMae’s website; provided that: (a) the Borrower and Guarantors shall deliver paper copies of such documents to the Agent or any Bank that requests such paper copies until a written request to cease delivering paper copies is given by the Agent or such Bank, and (b) the Borrower and the Guarantors shall notify (which may be by facsimile or electronic mail) the Agent and the Banks of the posting of any such documents and provide to the Agent and the Banks by electronic mail electronic versions of such documents. The Borrower and the Guarantors represent and warrant that all documents and information delivered to the Agent and the Banks electronically via access to MuniMae’s website pursuant to this Section 5.6.3 are true, accurate and complete in all material respects. Notwithstanding anything contained herein, in every instance the Borrower and the Guarantors shall be required to provide paper copies of the compliance certificates described in Section 5.6.2 to the Agent and the Banks.

5.6.4 Upon the Agent’s or any Bank’s written request, the Borrower and the Guarantors shall provide to the Agent and each of the Banks for each Investment Partnership issuing an Offering Memorandum the Borrower’s or Guarantors’ internal unaudited tax benefit projections for such Investment Partnership on an internal rate of return basis prepared in accordance with the Guarantors’ customary standards.

- 42 -

5.6.5 With respect to any development projects for which any of the Guarantors have given or give their respective guaranties, the Guarantors shall provide to the Agent and each of the Banks such financial and other project information as the Agent or any Bank may require.

5.6.6 With respect to any interest rate or other financial derivatives, any hedging or any counterparty transactions, or other similar transactions or other transactions addressed in or contemplated in FASB 133, the Borrower and the Guarantors shall provide to the Agent and each of the Banks such information as the Agent or any Bank may reasonably require.

5.7 Insurance . The Borrower, with respect to Property Partnerships that own or lease real estate, shall use commercially reasonable efforts to ensure that at all times such Property Partnerships maintain (directly or through the Property Partnerships) insurance covering such risks, in such amounts, containing such terms, in such forms, for such periods, and written by such companies as are set forth in Exhibit 5.7 . The Borrower will use its commercially reasonable efforts to attempt to enforce the Property Partnership agreement requiring each of the Property Partnerships in which it or a MTE makes a Direct Investment or Convertible Loan to be at all times insured in such amounts and against such hazards and liabilities and for such purposes as are set forth in Exhibit 5.7 annexed hereto. In the event of failure by the Borrower to provide and maintain insurance as herein provided or to use commercially reasonable efforts to attempt to enforce, for itself or for a MTE, the Property Partnership agreement in connection with insurance requirements thereunder, the Agent may, at its option, or shall at the request of the Majority Banks, obtain such insurance at customary rates and charges and charge the amount thereof to the Borrower. The Agent will notify the Borrower that it has obtained such insurance, provided, however, that the failure of the Agent so to notify the Borrower will in no way detract from or invalidate the Agent’s rights pursuant to this Section 5.7 to declare an Event of Default on account of such failure. In the alternative, the Agent may, and shall at the direction of the Majority Banks, elect to require that the Borrower immediately repay all Revolving Loans made, and deliver Cash Collateral for the Stated Amount of any Letter of Credit issued, in connection with any Direct Investments in or Convertible Loans to such Property Partnership. The Borrower promises to pay to the Agent on demand the amount of any disbursements made by the Agent for such purposes as herein authorized, and the amount of any such disbursements shall constitute Revolving Loans advanced by the Agent on behalf of the Banks in accordance with the terms of this Agreement. Any such payment not received from the Borrower shall bear interest at the then applicable rate of interest accruing with respect to the Prime Rate Amount. The Agent shall not, by the fact of approving, disapproving, or accepting any such insurance, incur any liability for the adequacy or legal sufficiency of insurance contracts, solvency of insurance companies or payment of lawsuits, and the Borrower and the Guarantors hereby jointly and severally expressly assume full responsibility therefor and liability if any, thereunder. The Borrower shall furnish the Agent and each of the Banks, at the Agent’s or any Bank’s request, with certificates of insurance evidencing compliance with the foregoing insurance provision.

5.8 Collateral . The Borrower and each Guarantor will, and will cause each MTE to, duly execute and deliver, or cause to be executed and delivered, appropriate financing statements and other documents and take all other reasonable actions requested by the Agent necessary to enable the Agent, on behalf of the Banks, to maintain continuously perfected security interests in the Collateral hereunder and under the Credit Documents. The Agent may inspect the Collateral at any reasonable time, wherever located, upon reasonable notice. The Borrower and each

- 43 -

Guarantor will, and will cause each MTE to, pay all taxes and assessments upon the Collateral or for its use and/or operation prior to the time when any penalties or interest accrue with respect thereto, or non-payment thereof; provided, however, that, so long as no distraint, foreclosure sale or other levy upon or transfer with respect to the Collateral or any part thereof shall have been effected or threatened, and no Event of Default shall have occurred and be continuing, the Borrower or such Guarantor, as applicable, shall not be required to pay such taxes and assessments if (a) the amount, applicability or validity thereof is currently being contested by the Borrower or such Guarantor, as applicable, in good faith by appropriate legal proceedings, (b) the Borrower or such Guarantor, as applicable, shall have set aside on its books reserves (segregated to the extent required by GAAP, or, if not applicable, sound accounting principles and practices) reasonably deemed by the Agent to be adequate with respect thereto, and (c) the Borrower or such Guarantor, as applicable, shall have provided to the Agent or the applicable taxing authority a bond or other security of such nature and in such amount as the Agent reasonably deems sufficient as security for payment thereof.

5.9 Further Assurances . The Borrower and each Guarantor shall at any time and from time to time execute and deliver, or cause to be executed and delivered, such further instruments and take such further actions, or cause to be taken such further actions, as may reasonably be requested by the Agent, in each case further and more perfectly to effect the purposes of this Agreement and the other Credit Documents.

5.10 Intentionally omitted .

5.11 No Amendments to Certain Documents . Neither the Borrower nor any Guarantor will amend, modify or terminate, or agree to the amendment, modification or termination of (a) its Organizational Documents, (b) the Organizational Documents of (i) any Property Partnership receiving Direct Investments or Convertible Loans or (ii) any Middle Tier Entity receiving Capital Contributions (prior to satisfaction of the Release Conditions with respect to such Property Partnership or MTE), or (c) any other document relating to the transactions with respect to which any Revolving Loan is made or any Letter of Credit is issued, without the prior written consent of the Agent, except in connection with amendments which would not have any adverse impact on the Agent or the Banks, or the Agent’s interest, on behalf of the Banks, in any Collateral.

5.12 Intentionally omitted .

5.13 Change of Jurisdiction of Organization; Name Change; Change of Location . No Borrower nor any Guarantor will, nor will it permit any MTE to, at any time change its jurisdiction of organization, legal name, form of organization, federal identification number or state organizational number, without giving prior written notice to the Agent and each Bank specifying the new jurisdiction of organization, name, form or number.

5.14 Offering Memoranda . Until such time as a particular Investment Partnership has been syndicated and fully capitalized, the Borrower and the Guarantors shall cause each such Investment Partnership to not amend or modify any of the provisions of its Offering Memorandum in any material manner without the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed, except that no such consent shall be

- 44 -

required for amendments that are necessary to correct any inaccuracy or omission in an Offering Memorandum unless such correction consists of a decrease in the projected returns on an investment in such Investment Partnership.

5.15 Property Partnership Approval by Bank .

5.15.1 If approved by the Agent in its discretion, each Property Partnership may be an entity whose tax credit allocation includes so-called historic tax credits solely if and to the extent (a) such historic tax credit allocation comprises no more than 15% of the aggregate amount of tax credit equity provided by low income housing tax credits and historic tax credits allocated to such Property Partnership, and (b) no Revolving Loans shall be made, and no Letters of Credit issued, to fund Borrower’s acquisition of more than 5% of such historic tax credit equity.

5.15.2 Each Property Partnership may be an entity whose tax credit allocation includes so-called state tax credits solely if and to the extent (a) such state tax credit equity comprises no more than 30% of the aggregate amount of tax credit equity provided by federal and state low income housing tax credits allocated to such Property Partnership, and (b) no Revolving Loans shall be made, and no Letters of Credit issued, to fund Borrower’s acquisition of state tax credit equity.

5.15.3 In addition, the Borrower will enter into, and will permit each MTE to enter into, limited partnership or operating agreements with Property Partnerships only on the form of agreement attached hereto as Exhibit 5.15.3 (the “Approved Form of Property Partnership Agreement”) or in such other form as may be approved by the Agent pursuant to this Section 5.15.3 . In the event that the limited partnership or operating agreement for the Property Partnership which the Borrower intends to make, or which the Borrower intends to permit a MTE to make, a Direct Investment in, or a Convertible Loan to (the “Proposed Property Partnership Agreement”) is identical to the Approved Form of Property Partnership Agreement (except with respect to certain non-material, deal-specific factual matters such as the identity of the parties and the filling in of blanks for dates and dollar amounts), the Agent’s approval of such Proposed Property Partnership Agreement shall be deemed furnished. In all other instances, in order to obtain the Agent’s approval of a Proposed Property Partnership Agreement, which approval shall not be unreasonably withheld or delayed, prior to the closing of a Direct Investment or a Convertible Loan by the Borrower or a MTE, the Borrower will furnish the Agent’s counsel with a copy of such finalized Proposed Property Partnership Agreement, together with a copy marked to show all changes from the Approved Form of Property Partnership Agreement, as provided in Section 3.3 , and the Agent will use reasonable efforts to make Agent’s counsel available to review and respond promptly to any such proposed revisions. Each approved Proposed Property Partnership Agreement is referred to in this Agreement as an “Approved Property Partnership Agreement.”

5.15.4 The Borrower, MEC, TC Corp. and their Subsidiaries shall underwrite and perform due diligence for any Property Partnership in or to which the Borrower proposes to make, or which the Borrower proposes to permit a MTE to make, a Direct Investment or a Convertible Loan, in accordance with MEC’s, TC Corp.’s and MSLP’s historical practices. Upon the request of any Bank, and within five (5) Business Days after the funding of a Direct

- 45 -

Investment or a Convertible Loan to a Property Partnership, the Borrower shall provide to such requesting Bank a copy of the Borrower’s underwriting package with respect to such Property Partnership. Such package shall include all information developed by such underwriting and diligence and shall affirmatively demonstrate that such Property Partnership meets the minimum investment criteria set forth on Exhibit 5.15.4 . Failure of any such Property Partnership to meet such criteria in the reasonable judgment of the Agent or the Majority Banks shall constitute an Event of Default hereunder, unless approved by the Agent in its sole discretion, such consent being subject to Section 2.11.3 ; provided, however, that no more than once during any calendar quarter, the Borrower can cure such an Event of Default by paying all Obligations incurred with respect to such Property Partnership to the Agent within five (5) calendar days after the Agent gives written notice to the Borrower of such failure. In addition to providing to such requesting Bank the underwriting package, upon such Bank’s reasonable request, the Borrower shall explain its underwriting and approval policies to such Bank, and the Borrower and the Guarantors will permit, and will use commercially reasonable efforts to cause each developer of a Project for a Property Partnership to permit, such Bank to inspect any such Person’s files relating to a particular Property Partnership at any reasonable time, upon reasonable prior notice. The Borrower and the Guarantors shall deliver such additional information as a requesting Bank may from time to time reasonably request with respect to the business affairs and financial condition of each developer of a Project and the Property Partnership associated therewith.

5.15.5 In certain cases where the federal Department of Housing and Urban Development or a state housing finance agency (an “Agency”) has provided financing arrangements to a Property Partnership, the Agency requires provisions to be added to the Property Partnership’s Organizational Documents giving the Agency approval rights over the admission of any substitute limited partner or member. Notwithstanding the incorporation of such provisions in such Organizational Documents and any conflict with Sections 5.15.3, 5.15.4 or 5.16.4 caused thereby, the Agent may approve the Organizational Documents as an Approved Property Partnership Agreement, in its sole discretion but subject to the borrowing sublimit set forth in Section 2.11.8 hereof. The Agent’s approval will not be withheld if the following conditions are met:

(a) such Organizational Documents otherwise constitute an Approved Property Partnership Agreement;

(b) the Borrower and Guarantors shall cause to be delivered to the Agent a certificate of the Borrower or the manager of the MTE that proposes to make a Direct Investment to such Property Partnership that attaches, and certifies as true and correct, copies of all of the documents evidencing or pertaining to the financing arrangements between the Agency and such Property Partnership that materially affect the Agent’s rights under the Pledge Agreement granting the Agent a security interest in the equity interests of such Property Partnership (the “Agency Documents”);

(c) the Borrower and Guarantors shall cause the Borrower or the manager of the MTE that proposes to make a Direct Investment to such Property Partnership to deliver to the Agent, promptly after the execution thereof, any modification to the Agency Documents; provided, however, that the Borrower and Guarantors acknowledge and agree that all Obligations incurred with respect to such Property Partnership (including, without limitation,

- 46 -

all Revolving Loans used to fund Direct Investments to such Property Partnership) shall be repaid in full promptly upon demand by the Agent if any such modification materially and adversely affects the Agent’s rights and priorities under the Pledge Agreement granting the Agent a security interest in the equity interests of such Property Partnership; and

(d) other than with respect to the approval by the Agency, in the event of the Agent’s exercise of its rights under the Pledge Agreement granting the Agent a security interest in the equity interests of such Property Partnership, of the Agent (or its nominee, successor, transferee or assignee) as a substitute equity holder of the Property Partnership pursuant to a HUD 2530 previous participation certificate, and compliance by the Agent (or its nominee, successor, transferee or assignee) with the transfer of physical assets requirements of the federal Department of Housing and Urban Development, none of the Agency Documents shall restrict or limit (i) the ability of the Borrower or MTE that proposes to make a Direct Investment to such Property Partnership to enter into the Pledge Agreement granting to the Agent a security interest in the equity interests of such Property Partnership, or (ii) the Agent’s right to foreclose upon such equity interests in accordance with the terms of such Pledge Agreement.

5.15.6 The operating agreement of each MTE shall be in the form of agreement attached hereto as Exhibit 5.15.6 (the “Approved Form of MTE Agreement”) or in such other form as may be approved by the Agent pursuant to this Section 5.15.6 . In the event that the operating agreement for the MTE in which the Borrower intends to make a Capital Contribution (the “Proposed MTE Agreement”) is identical to the Approved Form of MTE Agreement (except with respect to certain non-material, deal-specific factual matters such as the identity of the parties and the filling in of blanks for dates and dollar amounts), the Agent’s approval of such Proposed MTE Agreement shall be deemed furnished. In all other instances, in order to obtain the Agent’s approval of a Proposed MTE Agreement, which approval shall not be unreasonably withheld or delayed, prior to the closing of a Capital Contribution by the Borrower to a MTE, the Borrower will furnish the Agent’s counsel with a copy of such finalized Proposed MTE Agreement, together with a copy marked to show all changes from the Approved Form of MTE Agreement, as provided in Section 3.3 , and the Agent will use reasonable efforts to make Agent’s counsel available to review and respond promptly to any such proposed revisions. Each approved Proposed MTE Agreement is referred to in this Agreement as an “Approved MTE Agreement.”

5.16 Conduct of Business .

5.16.1 The Borrower and each Guarantor will duly observe and comply with all applicable laws and all requirements of any governmental authorities relative to its existence, rights and franchises, to the conduct of its business and to the property and assets owned or managed by it (except where the failure to observe and comply would not materially and adversely affect the condition (financial or otherwise), properties, business, or results of the Borrower or any Guarantor, as the case may be, or the ability of the Borrower or any Guarantor to perform its Obligations hereunder to the Agent and the Banks) and will maintain and keep in full force and effect all licenses and permits necessary to the proper conduct of its business.

- 47 -

5.16.2 The Borrower and each Guarantor will maintain its existence and remain or engage in substantially the same business in which it is now engaged, except that any Guarantor may, upon notice to the Agent and the Banks, withdraw from any business activity which its managers, board of directors or general partners, as applicable reasonably deem unprofitable or unsound in the due exercise of their authority; provided, however, such withdrawal shall not impair in any way such entity’s ability to fully pay and perform all of its Obligations. Notwithstanding the foregoing restrictions, any Guarantor may enter into any line of business substantially related or incidental to a line of business in which it is currently engaged.

5.16.3 The Borrower shall, and shall cause each MTE to, have no assets other than those explicitly permitted by this Agreement and shall engage in no business other than to serve as a conduit for funds advanced hereunder and in repayment of such funds and the Co-Funding Amounts, and, with respect to the Borrower, to make Capital Contributions, Direct Investments and Direct Convertible Loans, and with respect to a MTE, to make Direct Investments and MTE Convertible Loans, in the manner provided for in this Agreement.

5.16.4 The Borrower and the Guarantors shall cause each Property Partnership to own no more than one Project and to be a single-purpose entity which shall have no assets or liabilities and conduct no business other than that related to such Project; and cause each Property Partnership and MTE to provide either in its Organizational Documents or by contract in form and substance acceptable to the Agent in its sole discretion:

(a) for the acknowledgement of and consent by each of such entity’s equity holders (if any) to the pledges of equity interests by the Borrower or such MTE to the Agent, for the benefit of the Banks, required under this Agreement and the other Credit Documents;

(b) that the Agent shall have all of the rights of a secured party under the UCC to sell or retain the equity interests so pledged;

(c) for the immediate, automatic and unconditional admission of the Agent (or its nominee, successor, transferee or assignee) as an equity holder of such entity in the event of a foreclosure upon or other disposition of the equity interests so pledged to the Agent; and

(d) that with respect to the equity interests in such MTE or Property Partnership, for so long as any pledge of such interests by the Borrower or MTE to the Agent shall not have been released in accordance with its terms, (i) such equity interests will not be, and will not become, “investment property” and will be and will remain “general intangibles” within the meaning of Article 9 of the UCC, and (ii) any action by any partner or member of such MTE or Property Partnership to cause any of such equity interests to be deemed to be or to be treated as a “security” or as “investment property” within the meanings of Article 8 and Article 9, respectively, of the UCC, shall be void and of no effect unless (A) the Agent has consented to such action, (B) such equity interests are certificated, and (C) the certificates evidencing such equity interests are delivered to the Agent, together with assignments thereof duly executed in blank by the Borrower.

- 48 -

5.16.5 Other than the Borrower, MEC, TC Corp. and any of their Subsidiaries (other than any MTE), none of the Guarantors or any of their Subsidiaries shall enter into any Asset Management Contracts.

5.17 Limitation of Indebtedness

5.17.1 Except with the prior written consent of all of the Banks, the Borrower and MSLP will not create, incur, assume or suffer to exist, or in any manner become or be liable directly or indirectly with respect to, any Indebtedness except for (a) the Obligations and the Co-Funding Amounts (solely to the extent such Co-Funding Amounts have been loaned to the Borrower in accordance with the terms of the definition of Co-Funding Amounts set forth in Section 1.1 ), (b) Indebtedness incurred by MSLP in order to make capital contributions in its capacity as the “special limited partner” or “administrative limited partner” in any Property Partnership, and (c) debt included on the consolidated balance sheets of the Borrower solely as a result of the application of FASB Interpretation No. 46.

5.17.2 Except with the prior written consent of the Majority Banks, MEC and TC Corp. will not create, incur, assume or suffer to exist, or in any manner become or be liable directly or indirectly with respect to any Indebtedness consisting of intercompany obligations owed to MuniMae and its Subsidiaries, unless the same are subordinated to payment of the Obligations as provided in the Subordination Agreement;

5.17.3 No Middle Tier Entity will create, incur, assume or suffer to exist, or in any manner become or be liable directly or indirectly with respect to any Indebtedness except pursuant to its respective MTE Pledge Agreement.

5.18 ERISA Compliance . Neither the Borrower, any Guarantor, nor any Plan or any fiduciary thereof or other ERISA Party-in-Interest or ERISA Disqualified Person with respect to any Plan shall (a) engage in any “prohibited transaction,” (as defined in ERISA and the Code), (b) incur any “accumulated funding deficiency” (as defined in Section 412(a) of the Code and Section 302 of ERISA) whether or not waived, (c) fail to satisfy any additional funding requirements set forth in Section 412 of the Code and Section 302 of ERISA, or (d) terminate, in whole or in part, any “pension benefit plan” (as defined in Section 3(2) of ERISA) in a manner which could result in the imposition of a lien on any property of the Borrower or any Guarantor. Each Plan shall comply in all material respects with ERISA; provided, however, that this covenant shall not be deemed to have been violated by MuniMae’s failure to file audited financial statements with respect to the Municipal Mortgage & Equity, LLC 401(k) Retirement Savings Plan (the “401(k) Plan”) for the 401(k) Plan’s 2001,2002, 2003 and 2004 fiscal years, as required under ERISA rules and regulations applicable to the 401(k) Plan (the “Filing Requirement”), to the extent that MuniMae is working diligently to comply with the Filing Requirement, as demonstrated by (a) MuniMae’s continued retention of Ellin & Tucker Chartered (or another accounting firm reasonably acceptable to the Agent) to audit the 401(k) Plan’s financial statements for the 2001, 2002, 2003 and 2004 fiscal years, and (b) MuniMae’s reasonable cooperation with such auditing firm to complete such audit.

5.19 Intentionally omitted .

- 49 -

5.20 Maintenance of Books and Records . The Borrower and each Guarantor will, and will cause each MTE to, keep adequate books and records of account in which true and complete entries will be made reflecting all of its business and financial transactions, and such entries will be made in accordance with GAAP (except as otherwise disclosed) and applicable law including, without limitation, laws with respect to questionable, improper or corrupt payments.

5.21 Use of Proceeds . The Borrower will use the proceeds of the Revolving Loans and Letters of Credit, together with the Co-Funding Amounts applicable thereto, solely to fund Capital Contributions, Direct Investments and Direct Convertible Loans or, in the case of Letters of Credit, to secure the Borrower’s or a MTE’s obligations to make Direct Investments or Convertible Loans under Approved Property Partnership Agreements. No portion of any Revolving Loan or Letter of Credit shall be used for the purpose of (a) purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations T, U or X of the Board of Governors of the Federal Reserve System, or (b) paying fees or charges to developers of any Project (except for fees payable solely with respect to Project development activity).

5.22 Transactions with Affiliates .

5.22.1 The Borrower and each Guarantor will not, directly or indirectly, enter into any purchase, sale, lease or other transaction with any Affiliate except (a) as would not materially and adversely affect the condition (financial or otherwise), the properties, business or results of operations of the Borrower or such Guarantor, (b) as disclosed in the Offering Memorandum of a particular Investment Partnership, if applicable, (c) as disclosed in the Proposed Property Partnership Agreement or other Organizational Documents of a Property Partnership submitted to the Agent’s counsel for acquisition approval, with such disclosure highlighted in the transmittal notice to the Agent’s counsel, or (d) that certain promissory note, dated on or about July 1, 2003, in the principal face amount of $120,000,000 made by TC Corp. payable to the order of MuniMae, repayment of which is subordinated in accordance with the terms of the Subordination Agreement.

5.22.2 The Borrower and each Guarantor hereby agree that payment and performance of any obligations under any contract, agreement or arrangement (whether written or oral) now or hereafter entered into between Borrower on the one hand and any Guarantor or any Affiliate of any Guarantor on the other hand shall be subordinated to payment and performance of the Obligations. Payment and performance under such contracts, agreements or arrangements may be made and received in the ordinary course of business on a current basis as long as no Default or Event of Default has occurred and is continuing.

5.23 Environmental Regulations . The Borrower and each Guarantor will comply, and shall use their best efforts to cause the general partner of each Property Partnership to comply, in all material respects with all federal, state and local statutory or common laws, regulations, rules, ordinances, permits (including, without limitation, authorizations, approvals, registrations and licenses) related to the protection of public health, worker safety, the environment or the management of pollution or any and all oil, petroleum products, waste oil, hazardous wastes, hazardous substances, toxic substances or hazardous materials (collectively, “Environmental Laws”) in each and every jurisdiction in which they operate now or in the future, and will comply or use their commercially reasonable efforts to cause compliance in all material respects

- 50 -

with all such Environmental Laws that may in the future be applicable to them and to the properties and assets owned, directly or indirectly, or managed by them, except that neither Borrower nor any Guarantor shall be required to take any action which could reasonably be expected to subject such Person to general partner or other liability in respect of an affected Project or Property Partnership.

5.24 Fiscal Year . The Borrower, each MTE and each Guarantor shall have a fiscal year ending on December 31 of each year, and shall not change such fiscal year without the prior written consent of the Agent, unless a different fiscal year is required by the Code.

5.25 Investor Contributions . The Borrower shall direct the Investors to fund all cash capital contributions required to pay all Revolving Loans or to provide full Cash Collateral for all outstanding Letters of Credit, along with all interest, costs, expenses, fees or other Obligations relating to any of the MTEs and Property Partnerships to be placed with the applicable Investment Partnership, into the applicable Repayment Account. In addition, as such capital contributions are funded into such Repayment Account, the Borrower shall cause such Investment Partnership to pay the portion of such cash as may be required in order to purchase from the Borrower all membership interests in MTEs and all limited partnership interests in Property Partnerships then being transferred by the Borrower to such Investment Partnership. Such cash shall be in an amount, at a minimum, as is required to (a) repay the then outstanding principal of all Revolving Loans made, and to cash collateralize the Stated Amount of all Letters of Credit issued, to or for the benefit or account of each such MTE and Property Partnership, and (b) pay all outstanding interest, fees, charges, expenses or other Obligations as may accrue to or have arisen with respect to each such MTE and Property Partnership.

5.26 Restricted Payments . None of the Borrower or any of the Guarantors will make any Restricted Payments if at the time of the making of such Restricted Payment, with or without the making of such Restricted Payment, there shall exist or result a Default or Event of Default.

5.27 Ownership; Control . Without the prior written approval of the Majority Banks, which shall not be unreasonably withheld, neither the Borrower nor any Guarantor will cause or permit any change in the ownership or Control of any such entity, or any MTE, except to the extent that (a) with respect to the Borrower or any Guarantor, following such change MuniMae retains Control (directly or indirectly) of the Borrower and each such Guarantor, and (b) with respect to each MTE, the Release Conditions with respect to such MTE have been satisfied, and provided that, in addition to the foregoing restrictions, MFH shall continue to maintain its ownership and Control of its Subsidiaries other than MEC, MMA Capital Corporation, MMA Financial International, LLC and their respective Subsidiaries.

5.28 Transfer of Property Partnership Interests . The Borrower will not transfer, pledge or assign any interest in a MTE and, other than as contemplated in a Property Partnership Pledge, neither the Borrower nor any MTE will transfer, pledge or assign any interest in a Property Partnership, or any interest in a Convertible Loan to a Property Partnership, prior to the satisfaction of Release Conditions with respect thereto.

5.29 Separate Credit Reliance . The Borrower and each Guarantor acknowledges that the Agent and each of the Banks have entered into the transactions contemplated by this

- 51 -

Agreement, and accepted the Guaranty, in reliance upon Borrower’s, each MTE’s and each Guarantor’s separate and distinct corporate existences and their separate and distinct operations, and, accordingly, the separate credit of Borrower, each MTE and each Guarantor. During the term of this Agreement, the Borrower’s and each MTE’s Organizational Documents shall contain separateness covenants in the form attached hereto as Exhibit 5.29 .

5.30 Financial Covenants .

5.30.1 TC Corp. and MEC, on a consolidated basis, shall at all times maintain Consolidated Net Worth of not less than the amount set forth on Schedule A attached hereto, as determined at the end of each fiscal quarter and annually.

5.30.2 TC Corp. and MEC, on a consolidated basis, shall not at any time permit the ratio of (a) the sum of (i) Consolidated CAD and (ii) Consolidated Fixed Charges, to (b) Consolidated Fixed Charges to be less than the ratio set forth on Schedule A attached hereto, as determined at the end of each fiscal quarter for the four quarters then ending.

5.30.3 TC Corp. and MEC, on a consolidated basis, shall at all times maintain Consolidated CAD of not less than the amount set forth on Schedule A attached hereto, as determined at the end of each fiscal quarter for the four quarters then ending.

5.31 Disbursement and Repayment Accounts .

5.31.1 SPE I and SPE II shall at all times continue to maintain their respective Repayment Accounts and the Disbursement Accounts with the Agent (and in the case of the Repayment Accounts, in the name of and owned by the Agent) as blocked and restricted accounts upon terms and conditions acceptable to the Agent and the Majority Banks. The Borrower and the Guarantors shall deposit, and cause the deposit by each Middle Tier Entity, Property Partnership, Investment Partnership, Investor or other source of repayment, of all payments and repayments of Capital Contributions, Direct Investments and Convertible Loans, and all other Obligations of the Borrower, directly into the appropriate Repayment Account, as applicable. To the extent that any such payments or repayments are received directly by the Borrower or any Guarantor, the same shall be delivered immediately to the Agent in the form received, duly endorsed to the Agent, if necessary, for deposit into the appropriate Repayment Account, as applicable, and for application by the Agent to each of the Banks in accordance with this Agreement. Until so delivered, the Borrower and each Guarantor acknowledges that it holds such payments and repayments in trust for the benefit of the Agent on behalf of the Banks and shall keep such payments and repayments segregated from other funds and property of the Borrower or each Guarantor. The Borrower and the Guarantors shall deposit, and cause the deposit of, all Co-Funding Amounts (other than those constituting Cash Collateral) into the applicable Disbursement Account.

5.31.2 MuniMae and/or MEC shall continue to maintain a cash management system and a web-based fixed income trading system, each of which shall be reasonably acceptable to the Agent and the Banks.

5.32 Warehouse Credit Facilities . This Agreement and the credit facilities described herein shall constitute the sole and exclusive warehouse-type credit facility utilized by the

- 52 -

Borrower, the Guarantors and their Affiliates in connection with the acquisition and syndication of LIHTC; provided, however, that with respect to the Guarantors and their Affiliates (other than the Borrower):

5.32.1 if there shall not then be outstanding any Default or Event of Default, and (a) the aggregate principal amount of all outstanding Revolving Loans plus the aggregate Stated Amounts of all Letters of Credit shall equal the Maximum Amount, then such Persons may utilize warehouse-type facilities provided by other lenders until such time as the aggregate principal amount of all outstanding Revolving Loans plus the aggregate Stated Amount of all Letters of Credit are less than the Maximum Amount, (b) a particular Project or its developer fails to meet the minimum investment criteria set forth on Exhibit 5.15.4 attached hereto, then such Persons may utilize warehouse-type facilities provided by other lenders but solely for such Project; or (c) the Banks shall fail to fund a Revolving Loan for a particular Project in breach of their respective obligations under this Agreement, then such Persons may utilize warehouse-type facilities provided by other lenders but solely for such Project;

5.32.2 such Persons may utilize the proceeds of warehouse-type facilities or other credit facilities provided by other lenders to satisfy Release Conditions with respect to a particular Property Partnership if the other Property Partnerships with respect to which Release Conditions have not been then satisfied are satisfactory to the Agent; and

5.32.3 subject to the terms, covenants and conditions of this Agreement, such Persons may utilize other facilities in order to repay Revolving Loans or to provide Cash Collateral for Letters of Credit with respect to a particular Property Partnership to the extent the time periods set forth in Section 2.1.3 are expiring.

5.33 Special Limited Partner . MSLP shall be the sole “special limited partner”, “administrative limited partner”, “special member”, or “special administrative member”, as applicable, in any Property Partnership receiving a Direct Investment from the Borrower or a MTE.

5.34 Subordination Agreement . The Borrower and the Guarantors shall cause any Subsidiary of MuniMae not already a party to the Subordination Agreement that after the date hereof becomes owed any Indebtedness by TC. Corp. or MEC to (a) join in the Subordination Agreement by executing and delivering a joinder agreement in form and substance satisfactory to the Agent, and (b) insert a legend on any note or instrument at any time evidencing such Indebtedness, indicating that such note or instrument is subject to the terms of the Subordination Agreement, in each case prior to or simultaneously with the creation of such Indebtedness.

- 53 -

ARTICLE VI: DEFAULTS AND REMEDIES

6.1 Events of Default . Each of the following events is hereby defined as, declared to be and shall constitute an “Event of Default”; and “Default” means any act, omission, occurrence or circumstance that, with the passage of time or notice, or both, would be an Event of Default:

6.1.1 Failure by the Borrower to either make any payment when due in respect of its Payment Obligations or to deposit Cash Collateral when required under Section 2.2.1 hereof, and such failure continues uncured for a period of 5 days; or

6.1.2 Failure by the Borrower or any Guarantor to perform or observe (a) any of the terms, covenants, conditions or provisions of Sections 5.2, 5.4, 5.9 through 5.11, 5.13, 5.14, 5.15, 5.16 (except 5.16.1), 5.17, 5.19, 5.21, 5.22, and 5.24 through 5.34 , (b) any Obligation with respect to providing Co-Funding Amounts, (c) material untruthfulness or incompleteness in the Offering Memorandum as set forth in Section 4.18, or (d) material failure to comply with Section 5.15.3 and, except for failures to comply with Sections 5.30, 5.31 and 5.32 (for which there shall be no cure period) and with obligations relating to Co-Funding Amounts (for which there shall be a one Business Day cure period), such failure continues uncured for 10 days; or

6.1.3 Failure by the Borrower or any Guarantor to perform or observe in any material respect (as determined by the Agent or the Majority Banks in their respective unrestricted discretion) any of the terms, covenants, conditions or provisions of Sections 5.1, 5.3, 5.5 through 5.8, 5.16.1, 5.18, 5.20 and 5.23 for a period of 30 days after the Borrower or such Guarantor becomes aware (whether through notice from the Agent or otherwise) of a breach of such Section; or

6.1.4 Failure by the Borrower or any Guarantor to observe and perform in any material respect (as determined by the Agent or the Majority Banks in their respective unrestricted discretion) any other covenant, condition or agreement on its part to be observed or performed under this Agreement for a period of 30 days after written notice specifying such failure and requesting that it be remedied is given to such party by the Agent; provided, however, that if (a) the failure is capable of being cured but cannot reasonably be cured within such 30 days, (b) the failure has not and will not result in the imposition of any liens on the Collateral, and (c) the Borrower has commenced said cure within such 30 days and is diligently prosecuting the same to completion, then said 30 day period shall be extended for such additional time as reasonably necessary to complete the cure but not more than an additional 30 days; or

6.1.5 Any of the representations, warranties or certifications of any of the Borrower, the Guarantors, or the MTEs in this Agreement or the other Credit Documents proves to have been false or misleading in any material respect when made or deemed to be made or re-made; or

6.1.6 The dissolution or liquidation of any of the Borrower and the Guarantors or the failure by any of the Borrower and the Guarantors promptly to obtain the staying or lifting of any execution, garnishment or attachment if such circumstances will, in the judgment of the Agent or the Majority Banks, materially impair its ability to satisfy its Payment Obligations; or

6.1.7 The Insolvency of any of the Borrower and the Guarantors as evidenced by:

(a) its commencement of a voluntary case under Title 11 of the United States Bankruptcy Code, or its authorizing, by appropriate proceedings of its board of directors or other governing body, the commencement of such a voluntary case;

- 54 -

(b) its filing an answer or other pleading admitting or failing to deny the material allegations of a petition filed against it commencing an involuntary case under said Title 11, or seeking, consenting to or acquiescing in the relief therein provided, or its failing to controvert timely the material allegations of any such petition;

(c) the entry of an order for relief against it in any involuntary case commenced under said Title 11 unless the same is dismissed with prejudice within ninety (90) days of the entry thereof;

(d) its seeking relief as a debtor under any applicable law, other than said Title 11, of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors, or its consenting to or acquiescing in such relief;

(e) entry of an order by a court of competent jurisdiction (i) finding it to be bankrupt or insolvent, or (ii) ordering or approving its liquidation, reorganization or any modification or alteration of the rights of its creditors;

(f) the entry of an involuntary order by a court of competent jurisdiction assuming custody of, or appointing a receiver or other custodian for, all or a substantial part of its property that remains undischarged or unstayed for more than 30 days; or

(g) its making an assignment for the benefit of, or entering into a composition with, its creditors, or appointing or consenting to the appointment of a receiver or other custodian for all or a substantial part of its property; or

6.1.8 A breach in any material respect by any of the Borrower, any Middle Tier Entity or any of the Guarantors of: (a) any of the provisions of any Credit Document other than this Agreement (including, without limitation, of the covenants contained in any Guaranty), which breach is not remedied within the applicable cure period, if any, set forth in such other Credit Document; or (b) any other agreement evidencing any Indebtedness of the Borrower or an MTE to any third party (including, without limitation, Borrower’s or a MTE’s obligation to any Property Partnership pursuant to such Property Partnership’s Organizational Document or any Convertible Loan Agreement), not remedied within the applicable cure period, if any, set forth in such other agreement, provided, however, any alleged breach of such obligation shall not constitute an Event of Default hereunder in the event that the Borrower, for itself or on behalf of a MTE, is contesting such obligation in good faith, has established and maintains adequate reserves for the performance or payment of such obligation in accordance with GAAP, and the Borrower provides prompt written notice to the Agent of such alleged breach); or

6.1.9 Any material adverse change from the date hereof in the financial condition or results of operations of the Borrower or any Guarantor which would have a material adverse impact on the Agent or any of the Banks or the Collateral granted to the Agent in connection with the Obligations; or

6.1.10 Any material covenant, agreement or obligation of the Borrower, any Guarantor or any MTE contained in or evidenced by any Security Document relating to this Agreement shall cease to be legal, valid, binding or enforceable in accordance with the terms

- 55 -

thereof, the effect of which has a material adverse impact on the Borrower’s, Guarantor’s or any MTE’s ability to perform its obligations thereunder or on the value of, or rights of the Agent (on behalf of the Banks) in, the Collateral; or

6.1.11 Any Credit Document or any provision thereof shall for any reason cease to be valid and binding on any party thereto or any party bound thereby, or any party to or bound by any Credit Document shall so state in writing or shall state that any Credit Document or any provision thereof is terminated or that any such party has no or no further liability or obligation thereunder; or

6.1.12 A judgment, monetary default or breach shall have occurred (and be continuing beyond any applicable cure period) in the payment or performance of any obligation of any of MEC, MFH, TC Corp., BFGLP, BFRP or BFG Investments that exceeds, in the aggregate, $1,000,000; provided, that, entry of a judgment shall not constitute an Event of Default (a) unless there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect, or (b) if such judgment is covered by insurance and the insurer has confirmed coverage in writing to the Agent; or

6.1.13 A judgment, monetary default or breach shall have occurred (and be continuing beyond any applicable cure period) in the payment or performance of any obligation of MuniMae or MuniMae TE Bond Subsidiary, LLC, that exceeds in the aggregate $10,000,000; provided, that, entry of a judgment shall not constitute an Event of Default (a) unless there is a period of 30 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect, or (b) if such judgment is covered by insurance and the insurer has confirmed coverage in writing to the Agent; or

6.1.14 Such occurrences or circumstances as are referred to elsewhere in this Agreement as Events of Default, including, without limitation, in Sections 2.1.1, 4.18 and 5.15.4 .

6.2 Remedies . Upon the occurrence of an Event of Default:

6.2.1 The Agent may, in its unrestricted discretion, and shall at the written request of the Majority Banks, do any of the following: (a) by notice in writing to the Borrower, declare that an Event of Default has occurred, (b) declare all amounts owing by the Borrower with respect to the Revolving Loans and the Letters of Credit to be immediately due and payable, and (c) require the Borrower and Guarantors to immediately deposit with the Agent Cash Collateral in an amount equal to the then aggregate Stated Amount of all Letters of Credit; provided, that in the event of any Event of Default specified in Section 6.1.7 hereof, all amounts owing by the Borrower with respect to this Agreement shall become immediately and automatically due and payable.

6.2.2 the Agent shall at the written request, or may with the written consent, of the Majority Banks do any of the following: (a) with or without notice (except as specifically provided otherwise herein or by applicable law) to the Borrower or the Guarantors, foreclose upon and liquidate the Collateral in accordance with the terms of the Security Documents, (b) terminate any asset management agreements or other contracts (including, without limitation,

- 56 -

any Asset Management Contracts) between the Borrower on the one hand and any Guarantor or other Affiliate of the Borrower on the other hand, and (c) with or without notice (except as specifically provided otherwise herein or by applicable law) to the Borrower or the Guarantors, pursue any other remedy under this Agreement, at law or otherwise.

6.2.3 The Agent’s rights, powers and remedies specified herein are cumulative and are in addition to those otherwise created or existing by law or agreement.

6.3 Termination of Contracts . Any Asset Management Contract between any Guarantor (or its Subsidiaries) and a Property Partnership that has received a Direct Investment or Convertible Loan and for which the Release Conditions have not then been satisfied shall (at the direction of the Agent (which direction the Agent shall provide upon the request of the Majority Banks)) be terminated, with or without cause, upon the occurrence of any Event of Default.

ARTICLE VII: AGENCY

7.1 Appointment and Authorization. Each of the Banks hereby appoints Bank of America to serve as Agent under this Agreement, the Credit Documents and any other documents, instruments and agreements executed and delivered in connection with the transactions contemplated by this Agreement and irrevocably authorizes the Agent to take such action as agent on each such Bank’s behalf under this Agreement, the other Credit Documents and such other documents, instruments and agreements and to exercise such powers and to perform such duties under this Agreement and such other documents, instruments and agreements as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. Notwithstanding the foregoing or any other provision contained in this Agreement or the Credit Documents to the contrary, the Agent will take or refrain from taking any action (other than routine administrative actions authorized pursuant to this Section 7 ) and exercise or refrain from exercising any rights as Agent under this Agreement or the other Credit Documents as the Majority Banks may direct in writing.

7.2 Resignation of Agent; Removal of Agent; Successor Agent .

7.2.1 The Agent may resign from the performance of all its functions and duties hereunder at any time by giving at least thirty (30) Business Days’ prior written notice to the Banks and Borrower, and shall automatically cease to be the Agent hereunder in the event (1) a petition in bankruptcy shall be filed by or against the Agent or (2) the Federal Deposit Insurance Corporation or any other Governmental Authority shall assume control of the Agent or the Agent’s interests under this Agreement. The Agent may be removed by Banks whose aggregate Commitment Percentages constitute at least sixty percent (60%) of the total Commitment Percentages of all Banks, excluding the Agent and each Affiliate of the Agent, for negligence or willful misconduct at any time by giving at least thirty (30) Business Days’ prior written notice to the Agent, Borrower and all other Banks. If the Agent enters into one or more participations pursuant to Section 8.14 , having the effect of reducing its Commitment or economic interest in this Agreement, to less than TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000.00), then any Bank whose Commitment or economic interest in this Agreement

- 57 -

exceeds that of the Agent may remove the Agent by notice given within thirty (30) days after such Bank receives notice of the assignments or participations which reduce the Agent’s Commitment or economic interest in this Agreement below such level. Such resignation or removal shall take effect upon the acceptance by a successor Agent of appointment pursuant to this Section 7.2 .

7.2.2 Upon any such notice of resignation by or removal of the Agent, the Bank with the largest Commitment (other than the Agent) shall become the successor Agent unless (a) such Bank refuses to become Agent, or (b) the Majority Banks vote that such Bank not become the successor Agent. If such Bank does not become successor Agent pursuant to the preceding sentence then the Bank with the next largest Commitment (other than the Agent) may become successor Agent subject to the same conditions. If two or more Banks would each qualify as successor Agent pursuant to the foregoing and two or more of such Banks are willing to become Agent, the successor Agent shall be chosen by the Majority Banks. If no successor Agent is selected pursuant to the preceding provisions of this Section 7.2 , the Majority Banks shall appoint a successor Agent with the consent of the Borrower, which consent shall not be unreasonably withheld, conditioned or delayed and which consent shall not be required if there shall then exist any Default or Event of Default. Any successor Agent must be a bank (i) the senior unsecured debt obligations of which (or such bank’s parent’s senior unsecured debt obligations) have a Rating of not less than BBB and (ii) which has total assets in excess of TEN BILLION AND NO/100 DOLLARS ($10,000,000,000.00).

7.2.3 If a successor Agent shall not have been so appointed within said thirty (30) Business Day period, the retiring or removed Agent shall then appoint a successor Agent who shall meet the requirements described in this Article and who shall serve as Agent until such time, if any, as a successor Agent shall have been appointed as provided above.

7.3 Agent and Affiliates . Bank of America shall have the same rights and powers under this Agreement and documents, instruments and agreements executed and delivered in connection with the transactions contemplated by this Agreement as each other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and Bank of America and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Affiliate of the Borrower as if it were not the Agent hereunder and under such other documents, instruments or agreements. Except as otherwise provided by the terms of this Agreement, including without limitation on account of prohibitions binding upon the Borrower, nothing herein shall prohibit any of the Banks from accepting deposits from, lending money to or generally engaging in any kind of business with the Borrower or any Affiliate of the Borrower.

7.4 Future Advances .

7.4.1 In order to more conveniently administer the Revolving Loans, each Bank hereby authorizes the Agent to make all Revolving Loans and issue all Letters of Credit under this Agreement in accordance with the terms and conditions of each Draw Certificate approved by the Banks in accordance with the terms hereof. Whether or not this Agreement has been terminated, an Event of Default then exists, the Obligations have been accelerated or the Agent is proceeding to liquidate the Collateral, each Bank hereby irrevocably and unconditionally agrees

- 58 -

to transfer to the Agent, at an account designated for such transfers by the Agent, by no later than 1:00 p.m. (Boston time) on the Business Day next following the date on which the Agent has funded a Revolving Loan pursuant to an approved Draw Certificate in accordance with the terms of this Agreement, an amount (the “Reimbursement Amount”) in immediately available federal funds sufficient to reimburse the Agent for such Bank’s Commitment Percentage of the Revolving Loan requested in such Draw Certificate. In addition:

(a) In the event that a Bank does not provide the Agent with any Reimbursement Amount in accordance with this Section 7.4.1 , and the Agent has advanced a corresponding amount to the Borrower on such Bank’s behalf, such Bank shall pay the Agent interest on such Reimbursement Amount at the rate charged to the Borrower for such corresponding amount under this Agreement for each Business Day on which such Bank fails to provide said Reimbursement Amount, commencing on the Business Day on which said Reimbursement Amount was due to be provided to the Agent;

(b) Funds advanced by the Agent upon presentation of a sight or time draft under a Letter of Credit shall be considered a “Revolving Loan” for purposes of this Section 7.4.1 initially made by the Agent at such time as such funds are actually advanced by the Agent; and

(c) For purposes of calculating interest income and other applicable charges, each Revolving Loan made by the Agent on behalf of any Bank shall be considered a Revolving Loan from the Agent to the Borrower until such time as the Agent receives the Reimbursement Amount allocable to such Revolving Loan from such Bank, and thereafter shall be considered a Revolving Loan from such Bank to the Borrower.

7.4.2 If for any reason any Bank shall fail or refuse to abide by its obligations under this Agreement, including without limitation its obligation to make available to the Agent its Commitment Percentage of any advance requested in a Draw Certificate approved in accordance with this Agreement (a “Delinquent Bank”), and such failure is not cured within ten (10) days of receipt from the Agent of written notice thereof, then, in addition to the rights and remedies that may be available to the Agent, other Banks, the Borrower or any other party at law or in equity, and not as a limitation thereof:

(a) Such Delinquent Bank’s right to participate in the administration of, or decision-making rights related to, the Revolving Loans, the Letters of Credit, this Agreement or the other Credit Documents shall be suspended during the pendency of such failure or refusal (and in furtherance of the foregoing, (i) such Delinquent Bank’s Commitment Percentage shall not be considered in any determination of the term “Majority Banks,” and (ii) such Delinquent Bank shall not be included in any consents, waivers, approvals or determinations requiring the consent of the Majority Banks or of all of the Banks);

(b) Such Delinquent Bank shall be deemed to have assigned any and all payments due to it from the Borrower, whether on account of the outstanding Revolving Loans, interests, fees or otherwise, to the non-delinquent Banks, for application to, and reduction of, their proportionate shares of the outstanding Revolving Loans until, as a result of application of such assigned payments, the Delinquent Bank’s percentage of all of the outstanding Revolving

- 59 -

Loans shall equal its Commitment Percentage. The Delinquent Bank’s decision-making and participation rights to payments as set forth in this Section shall be restored only at such time as (i) the remaining outstanding Revolving Loans advanced by the Delinquent Bank equals its Commitment Percentage of all then outstanding Revolving Loans, and (ii) the Delinquent Bank shall have paid to the Agent (for the pro rata benefit of all of the non-delinquent Banks) an amount equal to the Delinquent Bank’s portion of the Unused Commitment Fee, and any other fee accruing to the period of time during which such Bank is a Delinquent Bank, multiplied by a fraction, the numerator of which is equal to the number of days such Delinquent Bank was delinquent and the denominator of which is equal to 364; and

(c) The non-delinquent Banks shall also have the right, but not the obligation, in their respective, sole and absolute discretion, exercisable by irrevocable written notice to the Agent, the Delinquent Bank and all of the other Banks, to acquire for no cash consideration a portion of the Delinquent Bank’s Commitment to fund future Revolving Loans (the “Future Commitment”) equal to the lesser of (i) the portion of the Future Commitment such electing Bank indicates in its notice of exercise, and (ii) such electing Bank’s share of the Future Commitment determined pro rata in accordance with the Commitment Percentages of all Banks making such an election from time to time. Upon any such purchase of the Commitment of any Delinquent Bank’s Future Commitment, the Delinquent Bank’s share in future Revolving Loans and Letters of Credit and its rights under the Credit Documents with respect thereto shall terminate on the date of purchase, and the Delinquent Bank shall promptly execute all documents reasonably requested to further evidence surrender and transfer of such interest. Each Delinquent Bank shall indemnify the Agent and each non-delinquent Bank from and against any and all loss, damage or expenses, including but not limited to reasonable attorneys’ fees and funds advanced by the Agent or by any non-delinquent Bank, on account of such Delinquent Bank’s failure to timely fund its Commitment Percentage of a Revolving Loan advance or to otherwise perform its obligations under this Agreement or any other Credit Document.

7.4.3 Notwithstanding the provisions hereof, the obligations to make Revolving Loans under the terms of this Agreement shall be the several and not joint obligation of each Bank; provided, however, that during such time as (a) there is no Default or Event of Default outstanding, and (b) (i) the aggregate outstanding principal balance of Revolving Loans funded by each non-delinquent Bank, plus (ii) the then Stated Amount of Letters of Credit times such Bank’s Commitment Percentage is less than such Bank’s Commitment, then such Bank shall fund its ratable portion of any advance of any Delinquent Bank. Any Revolving Loans made by the Agent on behalf of a Bank are strictly for the administrative convenience of the parties and shall in no way diminish such Bank’s liability to the Agent to repay the Agent for such advances.

7.5 Payments . All payments of principal of and interest on the Revolving Loans or other payments made with respect to the Obligations shall be made by transfer of immediately available federal funds to the Repayment Accounts. All such payments received by the Agent after 2:00 p.m. (Boston time) shall be deemed to have been received on the Business Day next following actual receipt. All payments received by the Agent shall be paid by the Agent promptly (using its best efforts to pay on the same Business Day as such payments are received but in any event within two (2) Business Days of such receipt) to each of the Banks pro rata in accordance with their respective Commitment Percentages, provided that each Bank has made the advances required under Section 7.4 hereof. All such payments from the Borrower or as

- 60 -

proceeds of Collateral received by the Agent shall be held in trust for the benefit of the Banks. As each such payment is received by the Agent, the Agent shall promptly charge or credit each of the Banks to the extent necessary to ensure that as between them, each of the Banks holds its respective Commitment Percentage of the outstanding Revolving Loans, based on the then unpaid aggregate principal amounts of the Revolving Loans outstanding. If, after the Agent has paid each Bank’s proportionate share of any payment received or applied by Agent in respect of the Revolving Loans, that payment is rescinded or must otherwise be returned or paid over by the Agent, whether pursuant to any bankruptcy or insolvency law, sharing of payments clause of any loan agreement or otherwise, such Bank shall, at the Agent’s request, promptly return its proportionate share of such payment or application to the Agent, together with such Bank’s proportionate share of any interest or other amount required to be paid by the Agent with respect to such payment or application.

7.6 Interest, Fees and Other Payments. All payments of interest received by the Agent in respect of the Revolving Loans, except as otherwise provided by the terms of this Agreement, and all other fees and premiums received by the Agent hereunder or in respect of the Revolving Loans, except fees pursuant to Sections 2.2.2, 2.4.5, and 8.11.1 herein, shall be shared by the Banks pro rata in accordance with their respective Commitment Percentages, provided that each Bank has made the advances required under Section 7.4 hereof. All payments received by the Agent pursuant to Sections 2.13, 2.14 or 8.7 through 8.9 shall be applied by the Agent to reimburse each Bank, on account of the tax, charge, liability, loss, cost or expense in respect of which such payment is made. Each of the Banks and the Agent hereby agrees that if it should receive any amount (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or bankers lien, by counterclaim or cross-action, by the enforcement of any right under the Credit Documents, or otherwise) in respect of principal, or interest on the Revolving Loans or any fees which are to be shared pro rata among the Banks, which as compared to the amounts theretofore received by the other Banks with respect to such principal, interest or fees, is in excess of such Bank’s Commitment Percentage of such principal, interest or fees, such Bank shall share such excess, less the costs and expenses (including reasonable attorneys fees and disbursements) incurred by such Bank in connection with such realization, exercise, claim or action, pro rata with all other Banks in proportion to their respective Commitment Percentages, provided, however, that if all or any portion of any such excess amount is thereafter recovered from such Bank, such pro rata sharing shall be rescinded and the amounts so shared restored to the extent of such recovery, but without interest.

7.7 Action by Agent .

7.7.1 The obligations of the Agent hereunder are only those expressly set forth herein. The Agent shall have no duty to exercise any right, power or remedy hereunder or under any other document, instrument or agreement executed and delivered in connection with or as contemplated by this Agreement or to take any affirmative action hereunder or thereunder, except as expressly set forth in this Agreement. The Agent shall not have, by reason of this Agreement or otherwise, a fiduciary relationship with respect to any Bank.

7.7.2 The Agent shall keep all records of Revolving Loans, Letters of Credit, other advances and payments hereunder, and shall give and receive notices and other communications to be given or received by the Agent hereunder on behalf of the Banks. The

- 61 -

Agent shall promptly, and in any event within ten (10) Business Days after receipt thereof, send to each Bank copies of any notices or other documents (including, without limitation, interest invoices and tracking reports) given to the Borrower or received by the Agent from the Borrower to the extent that such notices or other documents were not sent directly to such Bank by the Borrower.

7.7.3 Upon the occurrence and during the continuation of an Event of Default, the Majority Banks may exercise their option on behalf of the Banks pursuant to Section 6.2 to declare all Obligations immediately due and payable, and upon such exercise the Agent may take such action as may appear necessary or desirable to collect the Obligations and enforce the rights and remedies of the Agent or the Banks with respect to the Collateral.

7.7.4 Whether or not an Event of Default shall have occurred, the Agent may from time to time exercise the rights of the Agent and Banks hereunder or under the other documents, instruments or agreements executed or delivered in connection with or as contemplated by this Agreement as it may deem necessary or desirable to protect the Collateral and the interests of the Agent and the Banks therein.

7.7.5 The Agent shall give, or shall cause to be given, notice to each of the Banks (which notice can be given by electronic mail) that the Collateral for a particular Revolving Loan has been obtained. Such notice must be received by a Bank before its obligations under Section 7.4.1 shall arise with respect to such advance. The Agent shall deliver to each of the Banks copies of all documents evidencing the Collateral.

7.8 Consultation with Experts . The Agent shall be entitled to retain and consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable to the Banks for any action taken, omitted to be taken or suffered in good faith by it in accordance with the advice of such counsel, accountants or experts. The Agent may employ agents and attorneys-in-fact and shall not be liable to the Banks for the default or misconduct of any such agents or attorneys.

7.9 Liability of Agent . The Agent shall exercise the same care to protect the interests of each Bank as it does to protect its own interests, so that so long as the Agent exercises such care it shall not be under any liability to any Bank, except for the Agent’s gross negligence or willful misconduct, with respect to anything it may do or refrain from doing. Subject to the immediately preceding sentence, neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith in its capacity as Agent. Without limiting the generality of the foregoing, neither the Agent nor any of its directors, officers, agents, representatives or employees shall be responsible for or have any duty to ascertain, inquire into or verify: (A) any statement, warranty or representation made in connection with this Agreement or any other document, instrument or agreement executed and delivered in connection with the transactions contemplated by this Agreement; (B) the performance or observance of any of the covenants or agreements of the Borrower, or any Guarantor; (C) the satisfaction of any condition specified in Section 3 hereof, (D) the validity, effectiveness, enforceability or genuineness of this Agreement, the Credit Notes, the other Credit Documents, or any other document, instrument or agreement executed and delivered in connection with or as contemplated by this Agreement; (E) the existence, value, collectibility or

- 62 -

adequacy of the Collateral or any part thereof or the validity, effectiveness, perfection or relative priority of the liens and security interests of the Banks (through the Agent) therein; or (F) the filing, recording, refiling, continuing or re-recording of any financing statement or other document or instrument evidencing or relating to the security interests or liens of the Agent, on behalf of the Banks, in the Collateral. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be, without limitation, a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties.

7.10 Indemnification . Each Bank agrees to indemnify the Agent (to the extent the Agent is not reimbursed by the Borrower), ratably in accordance with its Commitment Percentage, from and against any cost, expense (including attorneys’ fees and disbursements), claim, demand, action, loss or liability which the Agent may suffer or incur in connection with this Agreement or any document, instrument or agreement executed and delivered in connection with or as contemplated by this Agreement, or any action taken or omitted by the Agent hereunder or thereunder, or the Agent’s relationship with the Borrower hereunder, including, without limitation, the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers and duties hereunder and of taking or refraining from taking any action hereunder, except for any such cost, expense, claim, demand, action, loss or liability arising out of the Agent’s gross negligence or willful misconduct. No payment by any Bank under this Section shall in any way relieve the Borrower of its obligations under this Agreement with respect to the amounts so paid by any Bank, and the Banks shall be subrogated to the rights of the Agent, if any, in respect thereto.

7.11 Independent Credit Decision. Each of the Banks represents and warrants to the Agent that it has, independently and without reliance upon the Agent or any other Bank and based on the financial statements referred to in Section 4.17 and such other documents and information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement. Each of the Banks acknowledges that it has not relied upon any representation by the Agent and that the Agent shall not be responsible for any statements in or omissions from any documents or information concerning the Borrower, this Agreement, the Credit Notes, the other Credit Documents or any other document or instrument executed and delivered in connection with or as contemplated by this Agreement. Each of the Banks acknowledges that it will, independently and without reliance upon the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decision in taking or not taking action under this Agreement. The Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Bank with any credit or other information with respect to the Borrower or any Guarantor.

ARTICLE VIII: MISCELLANEOUS

8.1 Amendments and Waivers .

8.1.1 Under any circumstances where the consent, waiver, approval, determination or similar decision of the Agent or the Banks is required to amend or waive any provision of or give any consent required under this Agreement or any other of the Credit Documents, or any of the other documents, instruments or agreements executed and delivered in

- 63 -

connection with or as contemplated by this Agreement, the consent, waiver, approval or determination of the Majority Banks shall be required, except (a) to the extent otherwise specifically set forth in this Agreement or in such other documents, instruments or agreements, and (b) the prior written consent of all of the Banks shall be required for:

(i) any change in the amount or the due date of any of the Obligations;

(ii) any change in the interest rates or fees accruing to all of the Banks prescribed in any of the Credit Documents;

(iii) any change in the Maximum Amount or in the Commitment Percentage of any of the Banks (other than in accordance with the terms of Sections 8.11 hereof);

(iv) any release or releases of any Collateral, except upon satisfaction of applicable Release Conditions;

(v) any change in this Section 8.1 ;

(vi) any change to the terms of a Guaranty;

(vii) (A) any change to the definitions of any term defined herein that is used in Section 5.30 to the extent that such change would alter the manner in which compliance with the covenants set forth in said Section is measured as of the date hereof or (B) any lowering of the Co-Funding Amounts required hereunder.

The Agent shall, solely for the benefit of the Banks, provide promptly to each of the Banks not participating in any such written consent or approval a copy of each such written consent or approval arising in accordance with the terms of this Section 8.1 . Notwithstanding the foregoing, the terms of Section 7 hereof may be modified, amended or supplemented without the consent or approval of any of the Borrower or any Guarantor upon the prior written consent or approval of the Majority Banks.

8.1.2 Except to the extent specifically provided herein or in any of the other Credit Documents, to the extent the prior written consent of the Majority Banks or all of the Banks is required to take any of the actions contemplated by Section 8.1.1 and the Agent has given such consent, none of the Banks shall unreasonably withhold, condition or delay its decision regarding the giving of any such consent.

8.1.3 The Agent and the Banks may exercise their rights and remedies under this Agreement, the Credit Notes and the Credit Documents without resorting or regard to other interests or sources of reimbursement. The Agent and the Banks shall not be deemed to have waived any of such rights or remedies unless such waiver be in writing and signed by the Agent or such portion of the Banks as required by Section 8.1.1 . No delay or omission on the part of the Agent or any of the Banks in exercising any of such rights or remedies shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right on any future occasion. All such rights and remedies shall be cumulative and may be exercised separately or concurrently.

- 64 -

8.2 Performance by Beneficiary . Neither the Agent nor its correspondents (if any) nor any of the Banks shall be in any way responsible for performance by any beneficiary of a Letter of Credit of that beneficiary’s obligations to the Borrower, nor for the form, sufficiency, correctness, genuineness, authority of persons signing, falsification or legal effect of any documents called for under this Agreement or such Letter of Credit if such documents on their face appear to be in order.

8.3 CONTROLLING LAW . EACH LETTER OF CREDIT WILL BE SUBJECT TO, AND PERFORMANCE BY THE AGENT WILL BE GOVERNED BY, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1994 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NUMBER 500, (THE “UNIFORM CUSTOMS”) EXCEPT TO THE EXTENT THAT IT IS OTHERWISE EXPRESSLY AGREED. THIS AGREEMENT AND EACH LETTER OF CREDIT (REGARDLESS OF ANY CONTRARY PROVISION IN ANY SUCH DOCUMENT, EXCEPT TO THE EXTENT ANY PERSON OTHER THAN THE BORROWER, THE GUARANTORS, THE AGENT OR THE BANKS IS A PARTY THERETO) SHALL BE DEEMED TO CONSTITUTE CONTRACTS MADE UNDER THE LAWS OF THE STATE OF NEW YORK, INCLUDING ARTICLE 5 OF THE UCC, AND SHALL, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW, BUT OTHERWISE WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES).

8.4 Notices . Except as otherwise expressly provided in this Agreement, all notices and other communications made or required to be given pursuant to this Agreement or the other Credit Documents shall be in writing and shall be delivered in hand, mailed by United States registered or certified first-class mail, postage prepaid, return receipt requested, sent by recognized overnight carrier or sent by facsimile (receipt confirmed), addressed as follows:

8.4.1 if to the Borrower or any Guarantor, at the addresses set forth in Section 4.1 of the Disclosure Schedule, Attention: Michael A. Rulf, Vice President (facsimile: 410-727-5387) or at such other address for notice as the Borrower or any Guarantor shall last have furnished in writing to the Person giving the notice, with a copy to Stephen A. Goldberg, Esq., Gallagher Evelius & Jones LLP, 218 North Charles Street, Baltimore, MD 21201 (facsimile: 410-837-3085); and

8.4.2 if to the Agent or any of the Banks, to the names and addresses set forth on Schedule A (or such other address for notice as the Agent or any Bank shall last have furnished in writing to the Person giving the notice).

Any such notice or demand shall be deemed to have been duly given or made and to have become effective (a) if delivered by hand to an officer of the party to which it is directed at the time of the receipt thereof by such officer, (b) if sent by recognized overnight carrier or by registered or certified first-class mail, postage prepaid, upon the date of first attempted delivery, as shown on the return receipt therefor or the returned item itself, or (c) if sent by facsimile at the time of the dispatch thereof with machine-generated confirmation of transmission, if in normal

- 65 -

business hours in the country of receipt, or otherwise at the opening of business on the following Business Day.

8.5 Headings . Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

8.6 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.

8.7 Indemnification .

8.7.1 The Borrower and the Guarantors jointly and severally agree to indemnify and hold harmless the Agent and the Banks and their respective Affiliates and each of their respective officers, directors, employees, agents, advisors and representatives (each, an “ Indemnified Party ”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense with respect thereto, arising out of or in connection with or relating to the Credit Documents or the transactions contemplated hereby or thereby, or any use made or proposed to be made with the proceeds of the Revolving Loans hereunder, whether or not such investigation, litigation or proceeding is brought by the Borrower, any of its respective equity holders or creditors, an Indemnified Party or any other person, or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated, except to the extent such claim, damage, loss, liability or expense is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

8.7.2 Each of the Borrower and the Guarantors further agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Borrower, any Guarantor or any of their respective equity holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is found in a final nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct, or, in the case of any Indemnified Party which is a party to any Credit Document, such Indemnified Party’s breach of such Credit Document.

8.7.3 In case any claim is asserted or any action or proceeding is brought against an Indemnified Party, the Agent or such Bank related to such Indemnified Party shall promptly notify the Borrower of such claim, action or proceeding and send to the Borrower copies of all documents, pleadings or other items relating thereto (provided, however, that the Agent’s or such Bank’s failure to give any such notice shall not relieve the Borrower or the Guarantors of any obligations, liabilities or duties hereunder unless, and except to the extent, such failure to give such notice materially and adversely affects the Borrower’s and the Guarantors’ ability, using their own respective best efforts, to pay, perform or otherwise discharge any such obligation,

- 66 -

liability or duty), and the Borrower and the Guarantors shall resist, settle or defend with counsel reasonably acceptable to the Agent or such Bank, respectively, such claim, action or proceeding. If, within ten days of its receipt of such notice, the Borrower and the Guarantors do not commence and continue diligently to prosecute the defense of such claim, action or proceeding, the Agent or such Bank, respectively, may retain counsel to represent it in such defense and the reasonable fees and expenses of the Agent’s or such Bank’s respective counsel shall be deemed to be a necessary expense for the purpose of this Section 8.7 . Subject to the foregoing, the Agent and the Banks may cooperate and join with the Borrower and the Guarantors, at the expense of the Borrower and the Guarantors, as may be required in connection with any action taken or defended by the Borrower or the Guarantors. The Borrower and the Guarantors each hereby acknowledge and agree that the Agent is issuing the Letters of Credit on behalf of all the Banks in reliance upon the Borrower’s and the Guarantor’s undertakings under this Section 8.7 .

8.8 Liability of the Agent and the Banks . The Borrower and the Guarantors assume all risks of the acts or omissions of the beneficiary or transferee of each Letter of Credit with respect to its use thereof. Neither the Agent nor any Bank, nor any of their respective officers, directors, employees or agents, shall be liable or responsible for the following circumstances, except that notwithstanding anything in this Agreement to the contrary, the Borrower shall have a claim against the Agent or a Bank, and the Agent or a Bank shall be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential, damages suffered by the Borrower which were caused by the Agent’s or such Bank’s respective willful disregard of the standards of the Uniform Customs and applicable law: (a) the use which may be made of such Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the form, sufficiency or genuineness of documents, or of any endorsement thereof, even if such documents should prove to be in any or all respects insufficient, fraudulent or forged; (c) payment by the Agent against presentation of documents which do not bear any reference or adequate reference to such Letter of Credit; or (d) any other circumstances whatsoever in making or failure to make payment under such Letter of Credit. In furtherance and not in limitation of the foregoing, the Agent may accept documents that appear on their face to be in order, without responsibility for further investigation.

8.9 Costs and Expenses . The Borrower and the Guarantors shall pay on demand all expenses of the Agent and the Banks in connection with the preparation, administration, assignment (but not participation), default, collection, waiver or amendment of any terms of this Agreement, or in connection with the Agent’s or a Bank’s exercise, preservation or enforcement of any of their respective rights, remedies or options hereunder, including, without limitation, reasonable fees and expenses of outside legal counsel, accounting, consulting, brokerage or other similar professional fees or expenses, any reasonable fees and expenses associated with travel or other costs relating to any appraisals or examinations conducted in connection with the loan or any Collateral therefor, or fees and expenses pertaining to any action or proceeding relating to a court order, injunction or other process or decree restraining or seeking to restrain the Agent or a Bank from paying any amount under any Letter of Credit, and the amount of all such expenses shall, until paid, bear interest at the Default Rate and be an obligation secured by any Collateral. In addition to the foregoing, the Borrower and the Guarantors shall pay any and all filing fees and other taxes and fees payable or determined to be payable in connection with the granting or releasing of liens upon Collateral.

- 67 -

8.10 Severability . In the event any provision of this Agreement or any other Credit Document shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision hereof or thereof, and this Agreement and the other Credit Documents shall be interpreted and construed as if such provision, to the extent the same shall have been invalid, illegal or unenforceable, had never been contained herein or therein. The parties hereto agree that they will negotiate in good faith to replace any provision so held invalid, illegal or unenforceable with a valid provision which is as similar as possible in substance to the invalid, illegal or unenforceable provision.

8.11 Continuing Obligation; Recourse; Assignment; Survival .

8.11.1 Each of this Agreement and all other Credit Documents is a continuing obligation and shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, transferees and assigns; provided that none of the Borrower or the Guarantors may assign or delegate all or any part of this Agreement or any other Credit Document without the prior written consent of the Agent and the Banks. Each Bank shall have (a) the right, subject only to the consent of the Borrower (which consent shall not be unreasonably withheld, delayed, or conditioned), at any time or from time to time, to assign all or any portion of its rights and obligations hereunder to one or more Nonqualified Assignees, and (b) the unrestricted right at any time or from time to time, and without the Borrower’s consent, to assign all or any portion of its rights and obligations hereunder to one or more Qualified Assignees (each such Nonqualified Assignee and Qualified Assignee, an “Assignee”). Provided that there has not then occurred and is not then continuing an Event of Default or a Default, promptly upon being informed of the identity of a potential Assignee, the Agent will notify the Borrower and Guarantors of such identity; provided, however, the failure to provide such notice shall not limit in any way any Bank’s rights under this Agreement, including, without limitation, its right to assign its interests under this Agreement. Any assigning Bank shall give written notice to the Agent and the Borrower of each assignment made under this Section 8.11.1 , and shall pay to the Agent an assignment fee in the amount of Five Thousand Dollars ($5,000.00) for each such assignment. Any assignment hereunder after the date hereof shall be at the assigning Bank’s sole cost and expense.

8.11.2 The Borrower agrees that it shall execute, or cause to be executed, such documents, including without limitation, amendments to this Agreement and to any other Credit Documents or other documents, instruments and agreements executed in connection herewith as the Agent or such assigning Bank may deem necessary to effect any assignment by a Bank as contemplated by Section 8.11.1 hereof. In addition, at the request of such Bank and any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if such Bank has retained any of its rights and obligations hereunder following such assignment, to such Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by such Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and such Bank after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by the Agent or such Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by an assigning Bank, such Assignee shall be a party to this Agreement and shall have all of the rights and obligations of such Bank hereunder (and

- 68 -

under any and all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by such Bank pursuant to the assignment documentation between such Bank and such Assignee, and such Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.

8.11.3 The Agent may furnish any information concerning the Borrower in its possession from time to time to prospective Assignees, provided that the Agent shall require any such prospective Assignees to agree in writing to maintain the confidentiality of such information.

8.11.4 All representations and warranties of the Borrower and the Guarantors contained herein shall survive the making of this Agreement. All covenants and agreements of the Borrower and the Guarantors contained herein shall continue in full force and effect from and after the date hereof until payment and performance in full of all the Obligations. The agreements and obligations of the Borrower pursuant to Sections 8.7 and 8.9 shall survive the termination of this Agreement.

8.12 Compliance with Usury Laws . All agreements between the Borrower, any Guarantor, the Agent and the Banks are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Agent or the Banks for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. As used herein, the term “applicable law” shall mean the law in effect as of the date hereof, provided , however , that in the event there is a change in the law which results in a higher permissible rate of interest, then the Credit Notes shall be governed by such new law as of its effective date. In this regard, it is expressly agreed that it is the intent of Borrower, the Guarantors, the Agent and the Banks in the execution, delivery and acceptance of the Credit Notes to contract in strict compliance with the laws of the State of New York from time to time in effect. If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Security Documents at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if under or from any circumstances whatsoever the Agent or the Banks should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. This provision shall control every other provision of all Credit Documents between or among the Borrower, a Guarantor, the Agent and the Banks.

8.13 Banks’ Right to Pledge Notes . Each of the Banks may at any time pledge all or any portion of its rights under the Credit Documents including any portion of the Credit Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall release such Bank from its obligations under any of the Credit Documents.

8.14 Banks’ Right to Participate . Each of the Banks shall have the unrestricted right at any time and from time to time, at such Bank’s expense, and without the consent of or notice to the Borrower, any Guarantor, the Agent or any other Bank, to grant one or more banks or other

- 69 -

financial institutions (each, a “Participant”) participating interests in such Bank’s obligation to lend hereunder and/or any or all of the Revolving Loans held by such Bank, or Letter of Credit issued by the Agent hereunder. In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to any Borrower or Guarantor, such Bank shall remain responsible for the performance of its obligations hereunder and the Borrower and Guarantors shall continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations hereunder. Such Bank may furnish any information concerning the Borrower and/or Guarantors in its possession from time to time to prospective Participants, provided that such Bank shall require any such prospective Participant to agree in writing to maintain the confidentiality of such information. Provided that there has not then occurred and is not then continuing an Event of Default or a Default, such Bank will notify the Borrower and Guarantors of the identity of any potential Participant; provided, however, such Bank’s failure to provide such notice shall not limit in any way such Bank’s rights under this Agreement, including without limitation, to grant a participation in this Agreement.

8.15 Replacement Document . Upon receipt of an affidavit of an officer of any Bank as to the loss, theft, destruction or mutilation of the Credit Note or any other Credit Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Credit Note or other Credit Document, the applicable Borrower or Guarantor will issue, in lieu thereof, a replacement Credit Note or other Credit Document in the same principal amount thereof and otherwise of like tenor.

8.16 Setoff . The Borrower and Guarantors hereby grant to the Agent on behalf of the Banks a continuing lien, security interest and right of setoff as security for all liabilities and obligations to the Banks and the Agent, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Agent or any entity under the control of Bank of America Corporation and its successors and assigns, or in transit to any of them. At any time, without demand or notice (any such notice being expressly waived by the Borrower and such Guarantors), the Agent may and, at the direction of the Majority Banks, shall set off the same or any part thereof and apply the same to any liability or obligation of Borrower or such Guarantors even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF A BORROWER OR SUCH GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

8.17 Investment Securities . The Agent may transfer any equity interests which it holds as Collateral into its name or that of its nominee and may receive the income and any distributions thereon and hold the same as Collateral for the Obligations, or apply the same to any Obligation, only if an Event of Default has occurred and is outstanding.

8.18 Entire Agreement . This Agreement, and the Exhibits and Disclosure Schedule (each of which is incorporated herein by reference), the Credit Documents and the agreements, writings, instruments and certificates contemplated hereby and thereby are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this

- 70 -

Agreement. All prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superceded by this Agreement, and no party is relying on any promise, agreement or understanding not set forth in this Agreement or described in this Section.

8.19 WAIVER OF JURY TRIAL; VENUE .

8.19.1 THE BORROWER AND THE GUARANTORS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT OR ANY BANK RELATING TO THE ADMINISTRATION OF THE REVOLVING LOANS OR ENFORCEMENT OF THE LOAN DOCUMENTS. NONE OF THE BORROWER OR THE GUARANTORS WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.

8.19.2 ANY COURT PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENTS SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY OF NEW YORK OR THE COMMONWEALTH OF MASSACHUSETTS LOCATED IN BOSTON (OR THE FEDERAL COURTS LOCATED THEREIN). NOTWITHSTANDING THE FOREGOING FORUM DESIGNATION, EACH OF THE BORROWER AND THE GUARANTORS AGREES THAT THE AGENT OR THE BANKS SHALL HAVE THE RIGHT TO PROCEED AGAINST EACH OF THEM OR THEIR RESPECTIVE PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE AGENT OR SUCH BANK, RESPECTIVELY, TO (1) OBTAIN PERSONAL JURISDICTION OVER ANY OF THEM, (2) REALIZE ON ANY OF THE COLLATERAL OR (3) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE BANK. EACH OF THE BORROWER AND THE GUARANTORS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE VENUE AND LOCATION OF THE COURT IN WHICH THE AGENT OR ANY BANK HAS COMMENCED ANY PROCEEDING.

8.19.3 WITHOUT PREJUDICING THEIR RIGHTS TO ASSERT SUCH COUNTERCLAIMS IN ANY OTHER CONTEXT, EACH OF THE BORROWER AND THE GUARANTORS FURTHER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT OR A BANK TO REALIZE ON ANY COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT OR SUCH BANK.

- 71 -

8.19.4 THE PROVISIONS OF THIS SECTION 8.19 HAVE BEEN FULLY DISCUSSED BY THE BORROWER, THE GUARANTORS, THE AGENT AND THE BANKS, AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS. THE BORROWER AND GUARANTORS CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR THE BANKS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT AND THE BANKS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND AGREEMENTS. THE FOREGOING WAIVERS AND AGREEMENTS CONSTITUTE A MATERIAL INDUCEMENT FOR THE AGENT AND THE BANKS TO ENTER INTO THIS AGREEMENT.

8.20 Reference to Original Agreement . Upon execution of this Agreement, all references in any and all of the Credit Documents to the Original Agreement, however described or identified, shall hereby be deemed to refer to this Agreement, as amended and/or restated from time to time.

[Remainder of page intentionally left blank; signature pages follow]

- 72 -

IN WITNESS WHEREOF, the undersigned have duly executed this Fifth Amended and Restated Revolving Loan and Letter of Credit Agreement under seal as of the date first set forth above.


BORROWER:	MMA FINANCIAL WAREHOUSING, LLC
	By:	MMA Equity Corporation, its sole member

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

	MMA FINANCIAL BOND WAREHOUSING, LLC
	By:	MMA Equity Corporation, its managing member

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

GUARANTORS:	MUNICIPAL MORTGAGE & EQUITY, LLC

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

	MMA FINANCIAL HOLDINGS, INC.

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

	MMA EQUITY CORPORATION

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

(Signatures continued on next page)

S-1


GUARANTORS (continued):	MMA FINANCIAL TC CORP.

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

	MMA FINANCIAL BFGLP, LLC
	By:	MMA Financial TC Corp., its sole member

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

	MMA FINANCIAL BFRP, INC.

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

	MMA FINANCIAL BFG INVESTMENTS, LLC
	By:	MMA Financial TC Corp., its managing member

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

	MMA SPECIAL LIMITED PARTNER, INC.

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

(Signatures continued on next page)

S-2


AGENT AND THE BANKS:	BANK OF AMERICA, N.A., as Agent and as one of the
	Banks

	By:	/s/ J OHN F. S IMON
		John F. Simon, Senior Vice President

	CITICORP USA, INC., as one of the Banks

	By:	/s/ M ARIA M C K EON
		Maria McKeon, Vice President

	MERRILL LYNCH COMMUNITY DEVELOPMENT
	COMPANY, LLC, as one of the Banks

	By:	/s/ M ICHAEL A. S OLOMON
		Michael A. Solomon, Director

	SOVEREIGN BANK, as one of the Banks

	By:	/s/ P AMELA W OODELL
		Pamela Woodell, Vice President

	HSBC BANK USA, as one of the Banks

	By:	/s/ C HRISTOPHER J. M ONTANTE
		Christopher J. Montante, Vice President

	COMERICA BANK, as one of the Banks

	By:	/s/ L ISA M. K OTULA
		Lisa M. Kotula, Vice President

S-3

SCHEDULE A

I.	Borrower :

MMA Financial Warehousing, LLC, a Maryland limited liability company (“SPE I”),

MMA Financial Bond Warehousing, LLC, a Maryland limited liability company (“SPE II”), and

(SPE I and SPE II are individually, and collectively, jointly and severally referred to as the “Borrower”).

II.	Guarantors :

Municipal Mortgage & Equity, LLC, a Delaware limited liability company (“MuniMae”),

MMA Financial Holdings Inc., a Florida corporation (“MFH”),

MMA Equity Corporation, a Florida corporation (“MEC”),

MMA Financial TC Corp., a Delaware corporation (“TC Corp.”),

MMA Financial BFGLP, LLC, a Maryland limited liability Company (“BFGLP”),

MMA Financial BFRP Inc., a Delaware corporation (“BFRP”),

MMA Financial BFG Investments LLC, a Delaware limited liability company (“BFG Investments”), and

MMA Special Limited Partner, Inc., a Florida corporation (“MSLP”)

(MuniMae, MFH, MEC, MSLP, TC Corp., BFGLP, BFRP and BFG Investments are each referred to as a “Guarantor” and are collectively, jointly and severally referred to as the “Guarantors”).

III.	Agent and Banks (including notice information in connection with Section 8.4) :

To the Agent or Bank of America :

Bank of America, N.A.

Mail Code MA5-503-04-16

One Federal Street

Fourth Floor, Boston, MA 02110

Attn: John F. Simon, Senior Vice President

(facsimile: 617-346-4670)

with a copy to:

Nutter, McClennen & Fish, LLP

World Trade Center West

155 Seaport Boulevard

Boston, MA 02210

Attn: Philip R. Rosenblatt, Esq.

(facsimile: 617-310-9806)

A-1

To the Banks :

Citicorp USA, Inc. (“Citicorp”)

c/o Citibank, N.A.

Center for Community Development Enterprise

One Court Square

45 ^th Floor, Zone 11

Long Island City, NY 11120

Attn: Maria McKeon

(facsimile 718-248-4722)

Merrill Lynch Community Development Company, LLC (“Merrill Lynch”)

Four World Financial Center

23 ^rd Floor

New York, NY 10080

Attn: Michael Solomon

(facsimile 212-738-2102)

with a copy to:

Sidley Austin Brown & Wood LLP

Bank One Plaza

Ten South Dearborn Street

Chicago, IL 60603

Attn: Todd R. Plotner, Esq.

(Facsimile 312-853-7036)

Sovereign Bank (“Sovereign”)

601 Penn Street

10-6438-CM9

Reading, PA 19601

Attn: P. Woodell, Vice President

(Facsimile 610-378-6239)

HSBC Bank USA (“HSBC”)

Commercial Real Estate/ Upstate

One HSBC Center

Buffalo, New York 14203-2842

Attn: Christopher J. Montante, Vice President

(Facsimile: 716-841-4199)

with a copy to:

Phillips Lytle LLP

3400 HSBC Center

Buffalo, New York 14203-2887

Attn: Douglas W. Dimitroff, Esq.

(Facsimile: 716-852-6100)

A-2

Comerica Bank (“Comerica”)

Mail Code 3268

500 Woodward Avenue

Detroit, MI 48226

Attn: Lisa M. Kotula, Vice President

Electronic Mail: lmkotula@comerica.com

with a copy to:

Bodman LLP

100 Renaissance Center, 34 ^th Floor

Detroit, MI 48243

Attn: Scott P. Gyorke

(Facsimile: 313-393-7579)

IV.	Commitment Percentages :


Bank	Commitment Percentage		Commitment
Bank of America	28.571428571429	%	$	40,000,000.00
Citicorp	28.571428571429	%	$	40,000,000.00
Merrill Lynch	17.857142857143	%	$	25,000,000.00
Comerica	08.928571428571	%	$	12,500,000.00
HSBC	08.928571428571	%	$	12,500,000.00
Sovereign	07.142857142857	%	$	10,000,000.00
TOTAL:	100	%	$	140,000,000.00

V.	Co-Funding, Margin and Fees :


co-funding percentage:		<[ CONFIDENTIAL ]>%
LIBOR margin:		<[ CONFIDENTIAL ]>%
letter of credit percentage:		<[ CONFIDENTIAL ]>%
unused commitment percentage:		<[ CONFIDENTIAL ]>%
conversion percentage:		<[ CONFIDENTIAL ]>%

VI.	Financial Covenants . The amounts and ratios to be used with respect to the financial covenants of MEC and TC Corp. set forth in Section 5.30 shall be as follows:

Minimum Consolidated Tangible Net Worth: $ <[CONFIDENTIAL]>

Minimum Ratio of Consolidated CAD plus Consolidated Fixed Charges to Consolidated Fixed Charges:

<[CONFIDENTIAL]>

Minimum Consolidated CAD: $ <[CONFIDENTIAL]>

*	The term “ <[CONFIDENTIAL]> ” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

A-3

Exhibit 10.6.2

E XECUTION C OPY

G UARANTY

This Guaranty (“Guaranty”) is made as of November 4, 2005 by Municipal Mortgage & Equity, LLC (“Guarantor”) in favor of Bank of America, N.A., successor by merger to Fleet National Bank, in its capacity as Agent for the Banks (in such capacity, the “Agent”) under the Tax Credit Warehouse Agreement (as defined below). Unless otherwise defined in this Guaranty or in Schedule 1 hereto, capitalized terms used in this Guaranty (including Schedule 1 hereto) shall have the meanings given such terms in the Tax Credit Warehouse Agreement.

RECITALS

WHEREAS, the Banks have extended and propose to extend credit to and have entered into and propose to continue credit arrangements with MMA Financial Warehousing, LLC and MMA Financial Bond Warehousing, LLC (collectively, the “Borrower”), pursuant to and as now or hereafter evidenced by that certain Fifth Amended and Restated Revolving Loan and Letter of Credit Agreement of even date herewith among the Borrower, the Agent, the Banks, the Guarantor and the Other Guarantors (as amended and/or restated from time to time, the “Tax Credit Warehouse Agreement”);

WHEREAS, Guarantor is an affiliate of and controls the Borrower and, will realize substantial economic benefits from the extension of credit and the continuation of the credit arrangements between the Banks and Borrower described in the Credit Documents;

WHEREAS, the execution and delivery of this Guaranty, and the performance by the Guarantor of its obligations hereunder, is necessary and convenient to the conduct, promotion and attainment of the businesses of the Guarantor and Borrower; and

WHEREAS, it is a condition precedent to the effectiveness of the Tax Credit Warehouse Agreement, and the extension and continuation of the credit facilities described in the Credit Documents, that the Guarantor execute and deliver this Guaranty.

NOW, THEREFORE, in order to induce the Banks to enter into the Tax Credit Warehouse Agreement, and to make, extend or continue the credit arrangements evidenced thereby and by the Credit Documents, and in consideration thereof, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Guaranty of Payment and Performance . Guarantor hereby unconditionally and irrevocably guarantees to Agent, as the primary obligor and not secondarily, that Borrower will duly and punctually pay and perform at the place specified therefor, or if no place is specified, at Agent’s address set forth in the Tax Credit Warehouse Agreement, all indebtedness, obligations and liabilities, direct or indirect, matured or unmatured, primary or secondary, certain or contingent, of Borrower under the Credit Documents, whether now or hereafter owing or incurred, including without limitation, all reasonable out-of-pocket fees, costs and expenses incurred by Agent or the Banks in attempting to collect or enforce any of the foregoing (collectively, the “Obligations”). Upon the occurrence of an Event of Default, the liabilities and

*	The term “ <[CONFIDENTIAL]> ” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

obligations of Guarantor hereunder shall, at the option of Agent, become forthwith due and payable to Agent without demand or notice of any nature, all of which are expressly waived by Guarantor. Payments by Guarantor hereunder may be required by Agent on any number of occasions.

2. Enforcement and Collection Costs . Guarantor further agrees, as the principal obligor and not as a guarantor, to pay to Agent, forthwith upon demand, in immediately available federal funds, all reasonable out-of-pocket costs and expenses (including court costs and reasonable legal fees and expenses) incurred or expended by Agent in connection with this Guaranty, and the enforcement hereof and thereof, together with interest on amounts thereon from the time such amounts become due until payment at the Default Rate applicable to Prime Rate Amounts. All such costs and expenses, together with interest thereon, are referred to herein as “Expenses”.

3. Payments . Guarantor covenants and agrees that the Obligations and the Expenses will be paid strictly in accordance with their respective terms regardless of any law, regulation or order now or hereinafter in effect in any jurisdiction affecting any of such terms or the rights of Agent with respect thereto, and that all payments and obligations to Agent with respect to the Obligations and the Expenses, whether by Borrower or Guarantor, will be made in immediately available federal funds on the due date thereof.

4. Taxes . All payments hereunder shall be made without any counterclaim or set-off, free and clear of, and without reduction by reason of, any taxes, levies, imposts, charges and withholdings, restrictions or conditions of any nature (collectively, “Taxes”), which are now or may hereafter be imposed, levied or assessed by any country, political subdivision or taxing authority on payments hereunder, excluding, however, all taxes on or measured by Agent’s (or any Bank’s) net income, all of which will be for the account of and paid by Guarantor. If for any reason any such reduction is made or any Taxes are paid by Agent (or any Bank), Guarantor will pay to Agent (or such Bank) such additional amounts as may be necessary to ensure that Agent (or such Bank) receives the same net amount which it would have received had no reduction been made or Taxes paid.

5. Absolute; Joint and Several . This Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of the Obligations and not of their collectibility only and is in no way conditioned upon any requirement that Agent first attempt to collect any of the Obligations from Borrower or resort to any security, guaranty or other means of obtaining payment of any of the Obligations which Agent now has or may acquire after the date hereof or upon any other contingency whatsoever. Agent has and shall have the absolute right to enforce the liability of Guarantor hereunder without resort to any other right or remedy including any right or remedy under the Credit Documents, the Other Guaranty (as defined below), any other guaranty of the Obligations, or applicable law, and the release or discharge of any guarantor of the Obligations or other person or entity (including, without limitation, Borrower or any of the Other Guarantors (as defined below)) now or hereafter liable (whether in whole or in part, primarily or otherwise) for the Obligations (or the Expenses, as applicable) shall not affect the continuing liability of Guarantor hereunder. The obligations of Guarantor hereunder shall be joint and several with the obligations of 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

- 2 -

Partner, Inc. (collectively, the “Other Guarantors”), which have guaranteed on a joint and several basis the Obligations of the Borrower pursuant to the Guaranty (as defined in the Tax Credit Warehouse Agreement, but defined herein as the “Other Guaranty”). The obligations of Guarantor hereunder and of the Other Guarantors under the Other Guaranty shall be joint and several obligations, and, further, shall be joint and several with the liability of each other party who has guaranteed or who in the future guarantees the Obligations.

6. Effectiveness . The obligations of the Guarantor under this Guaranty (a) shall continue in full force and effect and shall remain in operation until all of the Obligations and Expenses have been paid in full indefeasibly in cash or are otherwise fully satisfied and the Banks shall be under no further obligation to extend credit to or enter into credit arrangements with Borrower under the Credit Documents or otherwise, and (b) shall continue to be effective or be reinstated, as the case may be, if at any time payment or other satisfaction of any of the Obligations or the Expenses is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, or reorganization of Borrower, the Guarantor or any other guarantor of the Obligations (including, without limitation, any of the Other Guarantors), or otherwise, as though such payment had not been made or other satisfaction occurred. No invalidity, irregularity or unenforceability by reason of applicable bankruptcy laws, or any other similar law, or any law or order of any governmental body or agency thereof purporting to reduce, amend or otherwise affect the Obligations or the Expenses shall impair, affect, be a defense to or claim against the obligations of Guarantor under this Guaranty. If acceleration of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of Borrower or any of the Other Guarantors, all such Obligations otherwise subject to such acceleration shall nonetheless be payable by Guarantor.

7. Security; Set-off . The Guarantor grants to Agent, as security for the full and punctual payment and performance of all of Guarantor’s obligations hereunder, a continuing lien on and security interest in all of Guarantor’s right, title and interest in and to amounts, securities and property now or hereafter (a) due to Guarantor from Borrower, (b) belonging to Borrower and held by Guarantor, or (c) belonging to Guarantor and held by any of the Banks, including without limitation, all loans, accounts, accounts receivable, notes, bills, drafts, acceptances, instruments, documents, securities, investment property of any kind, deposits and chattel paper and all proceeds of the foregoing (collectively, the “Guaranty Collateral”). Regardless of the adequacy of any security, guaranty or other means of obtaining repayment of the Obligations or the Expenses, Agent may at any time after the occurrence of an Event of Default set off the whole or any portion or portions of any or all sums due from Agent to Guarantor, including Guaranty Collateral consisting of such sums, against the obligations of Guarantor hereunder.

8. Freedom of Agent to deal with Borrower and Other Parties . Agent shall be at liberty, without giving notice to or obtaining the assent of Guarantor and without relieving Guarantor of any liability hereunder, to deal with Borrower, the Other Guarantors and each other party who now is or after the date hereof becomes liable in any manner for any of the Obligations or Expenses, in such manner as Agent in its sole discretion deems fit, and in furtherance, but not limitation, of this end, Guarantor gives to Agent full authority in its sole discretion to do any or all of the following things: (a) extend credit, make loans and afford other financial accommodations to Borrower at such times, in such amounts and on such terms as Agent may approve, (b) increase the amount of, vary the terms and grant extensions of any

- 3 -

present or future Obligations or Expenses, (c) grant time, waivers and other indulgences in respect to the Obligations or the Expenses to any party, including Borrower, Guarantor, or any of the Other Guarantors, (d) vary, exchange, release or discharge, wholly or partially, or delay in or abstain from perfecting and enforcing any security or guaranty or other means of obtaining payment of any of the Obligations or Expenses which Agent now has or may acquire after the date hereof, including, without limitation, under the Other Guaranty, (e) accept partial payments of the Obligations and the Expenses from Borrower, any of the Other Guarantors, or any other party, (f) release or discharge, wholly or partially, any guarantor of the Obligations or other person or entity (including, without limitation, Borrower, Guarantor, or any of the Other Guarantors) now or hereafter liable (whether in whole or in part, primarily or otherwise) for the Obligations or the Expenses and compromise or make any settlement or other arrangement with Borrower, Guarantor, any of the Other Guarantors, or any such guarantor, other person or entity, and (g) amend, restate, supplement or otherwise modify the Tax Credit Warehouse Agreement, the Other Guaranty, or the other Credit Documents in any respect, including, without limitation, to increase the Maximum Amount, extend or accelerate the Maturity Date or increase the LIBOR Rate or the Prime Rate.

9. Unenforceability of Obligations Against Borrower; Invalidity of Security or Other Guaranties . If for any reason Borrower has no legal existence or is under no legal obligation to discharge any of the Obligations undertaken or purported to be undertaken by it or on its behalf, or if any of the moneys included in the Obligations have become unrecoverable from Borrower by operation of law or for any other reason, this Guaranty shall nevertheless be binding on Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all Obligations. This Guaranty shall be in addition to the Other Guaranty and any other guaranty or other security for the Obligations, and it shall not be prejudiced or rendered unenforceable by the invalidity of the Other Guaranty or any such other guaranty or security, regardless of whether such invalidity results from any failure of Agent to take any steps to perfect or maintain or preserve any rights with respect to the Other Guaranty or such other guaranty or security.

10. Representations, Warranties, Acknowledgments and Covenants . Guarantor hereby represents, warrants and covenants to and with Agent that:

10.1. Guarantor does not currently have (and will not have, upon execution of this Guaranty) any defenses, counterclaims or rights of set-off against Agent in connection with this Guaranty;

10.2. Other than in favor of Agent, Guarantor does not currently have, and shall not at any time after the date of this Guaranty create, assume, incur, or permit to exist, any mortgage, lien, pledge, charge, security interest or other encumbrance of any kind in respect of any of the Guaranty Collateral whether heretofore or hereafter acquired by the Guarantor;

10.3. Guarantor does not now, and shall not while any of the Obligations or Expenses remain outstanding, have, exercise or benefit from, and hereby waives, any security interest in or lien (whether granted consensually by operation of law or otherwise) upon the assets or properties of Borrower; and

10.4. All representations and warranties made herein shall survive until such

- 4 -

time as all of the Obligations and Expenses have been paid in full indefeasibly in cash or are otherwise fully satisfied and Agent shall be under no further obligation to extend credit to or enter into credit arrangements with Borrower under the Credit Documents or otherwise.

10.5. Each warranty and representation made by Guarantor or by the Borrower on Guarantor’s behalf in the Tax Credit Warehouse Agreement or any other Credit Document is true, accurate and complete and is incorporated herein by reference.

10.6. In addition to the covenants and obligations set forth elsewhere in this Guaranty or by which Guarantor is bound under any other Credit Document, Guarantor hereby covenants and agrees that Guarantor shall comply with the additional covenants and obligations set forth on Schedule 1 hereto.

11. Waivers by Guarantor . Guarantor waives: presentment, demand, notice of any delinquency or default by Borrower, any guarantor of the Obligations or any other person or entity now or hereafter liable (whether in whole or in part, primarily or otherwise) for the Obligations or Expenses, notice of acceptance hereof, notice of any action taken or omitted by Agent in reliance hereon, any requirement that Agent be diligent or prompt in making demands hereunder, giving notice of any default by Borrower or asserting any other rights of Agent hereunder. Guarantor also irrevocably waives, to the fullest extent permitted by law, all defenses that at any time may be available in respect of Guarantor’s obligations hereunder by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or hereafter in effect.

12. Waiver of Subrogation Rights . While any Obligations or Expenses are outstanding, notwithstanding any other provision to the contrary contained herein or provided by applicable law, Guarantor hereby irrevocably waives any and all rights it may have at any time (whether arising directly or indirectly, by operation of law or by contract) to assert any claim against Borrower on account of payments made under this Guaranty, including without limitation, any and all rights of or claim for subrogation, contribution, reimbursement, exoneration and indemnity, and further waives any benefit of and any right to participate in any collateral now or hereafter securing the Obligations or the Expenses which may be held by Agent or any agent of Agent. In addition, Guarantor shall not claim any set-off or counterclaim against Borrower in respect of any liability they may now or hereafter have to Borrower.

13. Subordination . Guarantor hereby subordinates its rights to payment of any principal, interest and all other amounts now or hereafter owing from Borrower (including, without limitation, any Co-Funding Amounts) and its rights in and to any collateral therefor (collectively, the “Subordinated Debt”) to Agent’s right to receive payment of all Obligations and Expenses. Until the Obligations and Expenses have been paid in full indefeasibly in cash or are otherwise fully satisfied and Agent shall be under no further obligation to extend credit to or enter into credit arrangements with Borrower under the Credit Documents or otherwise, without the prior written consent of Agent:

13.1. Guarantor shall not demand, nor accept from Borrower or any other person, any payment or transfer of property in payment or satisfaction or otherwise on account of the Subordinated Debt, nor take any action prejudicial to, or inconsistent with,

- 5 -

Agent’s right to have the Obligations and the Expenses fully paid and discharged prior to the Subordinated Debt;

13.2. Should any distribution of Borrower’s property be made to Guarantor other than as specifically permitted by this Guaranty, such property shall be held by Guarantor in trust for Agent, shall not be commingled with any other assets of Guarantor, and shall be delivered immediately to Agent with all necessary assignments and/or endorsements; and

13.3. Guarantor shall not commence nor participate in any bankruptcy, reorganization or insolvency proceeding against Borrower. In the event any such proceeding is commenced by or against Borrower, Guarantor hereby irrevocably authorizes Agent to: (a) enforce claims associated with the Subordinated Debt, either in Agent’s name or in the name of Guarantor, by proof of claim or otherwise; (b) collect all assets of Borrower distributed on account of the Subordinated Debt and apply them to the Obligations and the Expenses, delivering any surplus to Guarantor; (c) vote claims associated with the Subordinated Debt to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition or extension; and (d) take any other action in connection with any such proceeding which Guarantor would otherwise be entitled to take.

Notwithstanding the limitations set forth above in this Section, provided there does not then exist any Default or Event of Default, Guarantor may accept and retain repayment of the Co-Funding Amount advanced in connection with Revolving Loans or Letters of Credit used by Borrower or an MTE in connection with investment in or loans to a particular Property Partnership after the Release Conditions with respect to such Property Partnerships have been satisfied.

14. Demands and Notices . All notices, requests and demands required or permitted under the terms of this Guaranty shall be given and deemed received in accordance with the notice provisions of the Tax Credit Warehouse Agreement.

15. Amendments, Waivers, Etc . No provision of this Guaranty can be changed, waived, discharged or terminated except by an instrument in writing signed by Agent and Guarantor expressly referring to the provision of this Guaranty to which such instrument relates and no such waiver shall extend to, affect or impair any right of Agent with respect to any Obligation which is not expressly dealt with therein. No course of dealing or delay or omission on the part of Agent in exercising any right, power or privilege hereunder or under the Tax Credit Warehouse Agreement or any of the other Credit Documents shall operate as a waiver thereof or otherwise be prejudicial thereto, nor shall any single or partial exercise thereof preclude any other or future exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder.

16. Further Assurances . Guarantor at its sole cost and expense agrees to do all such things and execute, acknowledge and deliver all such documents and instruments as Agent from time to time may reasonably request in order to give full effect to this Guaranty and to perfect and preserve the rights and powers of Agent hereunder.

- 6 -

17. Conflicts . In the event of any conflict between any provision of this Guaranty, the Tax Credit Warehouse Agreement, the other Credit Documents or any other document evidencing the Obligations or Agent’s security interest in the Collateral, it is the express and absolute understanding and agreement of Guarantor that this Guaranty shall be interpreted so as to be consistent with such other agreements and documents and to give full effect to the rights granted to Agent herein and therein.

18. Provisions to Survive . All representations, warranties, covenants and agreements contained in this Guaranty shall survive the execution and delivery hereof and of the Tax Credit Warehouse Agreement, the other Credit Documents and any other document executed in connection herewith or therewith and shall continue until payment in full of the Obligations and the Expenses and the termination of any further commitment to make any Revolving Loans or to issue Letters of Credit under the Tax Credit Warehouse Agreement.

19. Governing Law . This Guaranty is intended to take effect as a sealed instrument to be governed by and construed in accordance with the internal laws of the State of New York (including Sections 5-1401 and 5-1402 of the General Obligations Law, but otherwise without regard to its conflicts of law rules).

20. Miscellaneous Provisions . This Guaranty shall inure to the benefit of Agent, the Banks and their respective its successors and assigns, and shall be binding on Guarantor and its successors, assigns and legal representatives. The rights of the Agent and the Banks hereunder may be transferred to the extent that any of the Obligations are assigned. The Guarantor shall have no right to assign its rights and obligations hereunder without the prior written consent of the Agent. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement. The invalidity or unenforceability of any one or more sections of this Guaranty in their entirety or under certain circumstances shall not affect the validity or enforceability of its remaining provisions or the invalid or unenforceable provisions in different circumstances. Captions are for ease of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Guaranty shall be equally applicable to the singular and plural forms of the terms defined.

21. Default; Cure . It shall be a default hereunder, and an Event of Default under the Tax Credit Warehouse Agreement, if: (a) the Guarantor fails to perform or observe any of its covenants in this Guaranty (other than the covenants set forth in Sections 2, 4, 5, 6, 11.1, 12, 13, 15, 20, 21 and 22 of Schedule 1 to this Guaranty), and such failure continues uncured for 10 days; (b) the Guarantor fails to perform or observe any of its covenants under Sections 2, 4, 5, 6, 11.1, 12, 13 and 15 of this Schedule 1, and such failure continues uncured for a period of 30 days after the Guarantor becomes aware of such failure (whether through notice from the Agent, any Bank or otherwise); or (c) the Guarantor fails to perform or observe any of its covenants under Sections 20, 21 and 22 of Schedule 1 to this Guaranty (for which there shall be no cure period).

[Remainder of page left intentionally blank; signature page follows]

- 7 -

IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of the date first above written.


GUARANTOR:

	MUNICIPAL MORTGAGE & EQUITY, LLC

	By:	/s/ W ILLIAM S. H ARRISON
		(Signature)

		William S. Harrison, EVP
		(Printed Name and Title)

- 8 -

SCHEDULE 1

GUARANTOR COVENANTS

So long as any Obligation remains unsatisfied, or the Banks are obligated to make additional advances or the Agent is obligated to issue letters of credit pursuant to the Tax Credit Warehouse Agreement, or any such letter of credit continues to be outstanding and is not fully cash collateralized, the Guarantor hereby covenants to the Agent and the Banks as follows:

1. Merger; Sale . Without obtaining the prior written consent of the Agent and the Majority Banks under the Tax Credit Warehouse Agreement in each instance, the Guarantor shall not reorganize, be reconstituted, or enter into any agreement for the sale or other transfer of substantially all of its assets or for the merger or consolidation of the Guarantor with or into another entity.

2. Taxes; Reserves . The Guarantor shall pay or cause to be paid all taxes, assessments or governmental charges on or against it or its properties prior to the time when they shall become delinquent, except to the extent that failure to make such payments would not reasonably be expected to have a material adverse effect on the business, properties or condition (financial or otherwise) of the Guarantor; and provided that this covenant shall not apply to any tax, assessment or charge which is being contested in good faith and with respect to which adequate reserves have been established and are being maintained in accordance with GAAP.

3. Notices .

3.1 Defaults . The Guarantor, promptly after obtaining actual knowledge thereof, shall advise the Agent, on behalf of the Banks, of the existence of any default or event of default under any agreement or other document binding upon or executed and delivered by any of the Borrower, the Guarantor, the Other Guarantors, the MTEs, or MuniMae TE Bond Subsidiary, LLC, including any Default or Event of Default under the Tax Credit Warehouse Agreement; provided, however, that such notice(s) need not be provided if such default or event of default does not constitute a Default or an Event of Default and: (a) could not reasonably be expected to subject them to liability in excess of $1,000,000 (as to the Other Guarantors) or $10,000,000 (as to the Guarantor or MuniMae TE Bond Subsidiary, LLC); (b) does not involve a default by MuniMae TE Bond Subsidiary, LLC on its P-Float ^sm program or any other securitization; or (c) does not occur with respect to any entity under the direct or indirect Control of MuniMae TE Bond Subsidiary, LLC.

3.2 Litigation and Judgments . The Guarantor, as the case may be, will give notice to the Agent and each of the Banks in writing, in form and detail satisfactory to the Agent and each Bank, within five Business Days of becoming aware of (a) any litigation or proceedings threatened in writing against it or any pending litigation or proceedings to which it is or becomes a party involving a fully or partially uninsured claim against it; or (b) any litigation or proceeding against any Persons; in either case, which, if adversely determined could materially and adversely affect its financial condition, assets or operations and stating the nature and status of such litigation or proceedings. The Guarantor will give notice, in writing, to the Agent and each of the Banks, in form and detail reasonably satisfactory to the Agent and each Bank within five

- 9 -

Business Days of any judgments, final or otherwise, against it in an aggregate amount in excess of $100,000 as to the Borrower or any MTE or $1,000,000 as to the Guarantor or the Other Guarantors which is not fully covered by insurance (other than customary deductibles disclosed to and reasonably acceptable to the Agent).

3.3 Material Adverse Change . The Guarantor will promptly notify the Agent, on behalf of the Banks, of any material adverse change which would reasonably be expected to have a material adverse effect on its business, properties or condition (financial or otherwise) or which would cause any Offering Memorandum to be materially incorrect, incomplete or misleading.

3.4 Governmental Authorities . The Guarantor will promptly notify the Agent, on behalf of the Banks, of all material notices received from any Governmental Authority and shall provide copies thereof to the Agent, on behalf of the Banks, promptly after receipt thereof.

3.5 ERISA . With respect to any Plan, the Guarantor, shall, or shall cause its Affiliates to, furnish to the Agent, on behalf of the Banks, promptly (a) written notice of the occurrence and its obtaining knowledge of a Reportable Event, (b) a copy of any request for a waiver of the funding standards or an extension of the amortization periods required under Section 412 of the Code and Section 302 of ERISA, (c) a copy of any notice of intent to terminate any funded Plan, (d) notice that the Guarantor or any Affiliate will or may incur any liability to or on account of a Plan, and (e) upon the Agent’s request, a copy of the annual report of each Plan (Form 5500 or comparable form) required to be filed with the Internal Revenue Service and/or the Department of Labor. Any notice to be provided to the Agent under this Section shall include a certificate of the chief financial officer of the Guarantor setting forth details as to such occurrence and the action, if any, which the Guarantor and/or the Affiliate is required or proposes to take, together with any notices required or proposed to be filed with or by the Borrower, and/or any Affiliate, the Pension Benefit Guaranty Corporation, the Internal Revenue Service, the trustee or the Plan administrator with respect thereto. Prior to the adoption of any Plan subject to ERISA, the Guarantor shall notify the Agent, on behalf of the Banks, of such adoption and of the vesting and funding schedules and other principal provisions thereof.

3.6 Environmental Laws . If the Guarantor shall (a) receive notice that any violation of Environmental Laws may have been committed or is about to be committed by the Borrower, the Guarantor, or the Other Guarantors or a general partner of any Property Partnership, (b) receive notice that any administrative or judicial complaint or order has been filed or is about to be filed against either the Borrower, the Guarantor or the Other Guarantors alleging a violation of any Environmental Law or requiring the Borrower, the Guarantor or the Other Guarantors to take any action in connection with the release of toxic or hazardous wastes, substances or materials into the environment, or (c) receive any notice from a federal, state, or local governmental agency or private party alleging that either the Borrower, the Guarantor or Other Guarantors may be liable or responsible for any costs associated with a response to or cleanup of a release of toxic or hazardous wastes, substances or materials into the environment or any damages caused thereby, then the Guarantor shall provide the Agent and each of the Banks with a copy of such notice within ten (10) days after the Borrower’s, the Guarantor’s or the Other Guarantors’, as the case may be, receipt thereof. Within fifteen (15) days after any of the Borrower, the Guarantor or the Other Guarantors have learned of the enactment or promulgation

- 10 -

of any Environmental Law which to Guarantor’s knowledge, may result in any material adverse change in the business, properties or conditions (financial or otherwise) of the Borrower, the Guarantor or the Other Guarantors or in which the Borrower, the Guarantor or the Other Guarantors hold a direct or indirect ownership or beneficial interest, the Guarantor shall provide the Agent and each of the Banks with notice thereof.

4. Inspection . The Guarantor will permit the Agent or its agents, at the Guarantor’s expense, to inspect any of its properties, including, without limitation, books and records, computer files and tapes and financial records, to examine and make copies of its books of account and other records and to discuss its affairs, finances and accounts with, and to be advised as to the same by, its officers and other responsible employees and professional advisers at such reasonable times and intervals as the Agent may designate after reasonable notice and during normal business hours; provided, however, that as long as no Default or Event of Default exists under the Tax Credit Warehouse Agreement, the Guarantor shall not be liable for the costs of more than one such inspection and examination during each calendar quarter. The Agent shall use its best efforts to maintain the confidentiality of the information obtained pursuant to such inspections and examinations; provided, however, such information may be disclosed (a) to the Banks, (b) to the Agent’s directors, officers, employees, representatives, agents and attorneys, (c) to the Agent’s independent third party auditors, and their directors, officers, employees, representatives, agents and attorneys, (d) to all federal and state bank examiners and to all parties to whom the Agent is required to disclose such information under any present or future federal and/or state banking law or regulation, as determined by the Agent, (e) in accordance with any subpoena or court order which the Agent in good faith believes requires such disclosure, (f) to potential participants in and assignees of the Agent’s or Banks’ interests hereunder pursuant to the Agent or the Banks’ customary confidentiality practices, and (g) as the Agent and the Majority Banks under the Tax Credit Warehouse Agreement deems necessary in connection with any exercise of the Banks’ rights and remedies under the Credit Documents.

5. Financial Reporting

5.1. The Guarantor shall provide to the Agent:

(a) promptly upon the written request of the Agent or any of the Banks therefor, the Guarantor’s federal and state income tax returns;

(b) as soon as available, but in any event within one hundred twenty (120) days after the end of its fiscal year, its income statement, balance sheet and any other related financial statements, prepared in accordance with GAAP (except as otherwise noted therein) and audited by PricewaterhouseCoopers LLP, or such other national accounting firm as may be retained from time to time by the Guarantor (which national accounting firm shall be, in the event that the Guarantor is not then required to file periodic reports with the United States Securities and Exchange Commission, reasonably acceptable to the Agent);

(c) as soon as available, but in any event within sixty (60) days after the end of the first three fiscal quarters of each fiscal year, and within ninety (90) days after the end of the fourth fiscal quarter of each fiscal year, management-prepared income statements, balance sheets, a statement of cash flows and related financial statements prepared in accordance

- 11 -

with GAAP (subject only to normal year-end audit adjustments and the absence of footnotes), and similar to those required by clause (b) above for and as of the end of such period;

(e) promptly after the filing thereof, copies of each Form 10-K and Form 10-Q and all other material documents or material correspondence filed by the Guarantor or any of its Subsidiaries with, or received by the Guarantor or any of its Subsidiaries from, the United States Securities and Exchange Commission; and

(f) from time to time, such other financial data and information about the Guarantor as the Agent or any Bank may reasonably request.

5.2 The financial statements to be delivered pursuant to Sections 5.1(b) and (c) of this Schedule 1 shall be accompanied by (a) a certification to the Agent and each Bank in the form attached to this Schedule 1 as Exhibit A by the Guarantor’s chief financial officer, controller or assistant controller that such financial statements are accurate and complete in all material respects, (b) financial data and calculations evidencing the Guarantor’s financial and covenant compliance to be attached as Schedule A to the form annexed to this Schedule 1 as Exhibit A , and (c) the Supplemental Package for the fiscal quarter then ended.

5.3 The documents and information required to be delivered pursuant to Section 5.1 of this Schedule 1 and the Supplemental Package required to be delivered under Section 5.2 of this Schedule 1 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are posted on the Guarantor’s website; provided that: (a) the Guarantor shall deliver paper copies of such documents to the Agent or any Bank that requests such paper copies until a written request to cease delivering paper copies is given by the Agent or such Bank, and (b) the Guarantor shall notify (which may be by facsimile or electronic mail) the Agent and the Banks of the posting of any such documents and provide to the Agent and the Banks by electronic mail electronic versions of such documents. The Guarantor represents and warrants that all documents and information delivered to the Agent and the Banks electronically via access to the Guarantor’s website pursuant to this Section 5.3 are true, accurate and complete in all material respects. Notwithstanding anything contained herein, in every instance the Borrower and the Guarantors shall be required to provide paper copies of the compliance certificates described in Section 5.2 of this Schedule 1 to the Agent and the Banks.

5.4 Upon the Agent’s or any Bank’s written request, the Guarantor shall provide to the Agent and each of the Banks for each Investment Partnership issuing an Offering Memorandum the Guarantor’s (or its Affiliates’) internal unaudited tax benefit projections for such Investment Partnership on an internal rate of return basis prepared in accordance with the Guarantor’s (or its Affiliates’, as applicable) customary standards.

5.5 With respect to any development projects for which the Guarantor has given its guaranty, the Guarantor shall provide to the Agent and each of the Banks such financial and other project information as the Agent or any Bank may require.

- 12 -

5.6 With respect to any interest rate or other financial derivatives, any hedging or any counterparty transactions, or other similar transactions or other transactions addressed in or contemplated in FASB 133, the Guarantor shall provide to the Agent and each of the Banks such information as the Agent or any Bank may reasonably require.

6. Collateral . The Guarantor will, and will cause the Borrower and each MTE to, duly execute and deliver, or cause to be executed and delivered, appropriate financing statements and other documents and take all other reasonable actions requested by the Agent necessary to enable the Agent, on behalf of the Banks, to maintain continuously perfected security interests in the Collateral. The Agent may inspect the Collateral at any reasonable time, wherever located, upon reasonable notice. The Guarantor will pay or cause to be paid all taxes and assessments upon the Collateral or for its use and/or operation prior to the time when any penalties or interest accrue with respect thereto, or non-payment thereof; provided, however, that, so long as no distraint, foreclosure sale or other levy upon or transfer with respect to the Collateral or any part thereof shall have been effected or threatened, and no Event of Default shall have occurred and be continuing, the Guarantor shall not be required to pay or cause to be paid such taxes and assessments if (a) the amount, applicability or validity thereof is currently being contested by the Guarantor in good faith by appropriate legal proceedings, (b) the Guarantor shall have set aside on its books reserves (segregated to the extent required by GAAP, or, if not applicable, sound accounting principles and practices) reasonably deemed by the Agent to be adequate with respect thereto, and (c) the Guarantor shall have provided to the Agent or the applicable taxing authority a bond or other security of such nature and in such amount as the Agent reasonably deems sufficient as security for payment thereof.

7. Further Assurances . The Guarantor shall at any time and from time to time execute and deliver such further instruments and take such further actions as may reasonably be requested by the Agent, in each case further and more perfectly to effect the purposes of the Tax Credit Warehouse Agreement and the other Credit Documents.

8. No Amendments to Certain Documents . The Guarantor will not amend, modify or terminate, or agree to the amendment, modification or termination of (a) its Organizational Documents, (b) the Organizational Documents of (i) any Other Guarantor or the Borrower, (ii) any Property Partnership receiving Direct Investments or Convertible Loans or (ii) any MTE receiving Capital Contributions (prior to satisfaction of the Release Conditions with respect to such Property Partnership or MTE), or (c) any other document relating to the transactions with respect to which any Revolving Loan is made or any Letter of Credit is issued, without the prior written consent of the Agent, except in connection with amendments which would not have any adverse impact on the Agent or the Banks, or the Agent’s interest, on behalf of the Banks, in any Collateral.

9. Change of Jurisdiction of Organization; Name Change; Change in Location . The Guarantor will not, nor will it permit the Borrower, any Other Guarantor or any MTE to, at any time change its jurisdiction of organization, legal name, form of organization, federal identification number or state organizational number, without giving prior written notice to the Agent and each Bank specifying the new jurisdiction of organization, name, form or number.

- 13 -

10. Offering Memoranda . Until such time as a particular Investment Partnership has been syndicated and fully capitalized, the Guarantor shall cause each such Investment Partnership to not amend or modify any of the provisions of its Offering Memorandum in any material manner without the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed, except that no such consent shall be required for amendments that are necessary to correct any inaccuracy or omission in an Offering Memorandum unless such correction consists of a decrease in the projected returns on an investment in such Investment Partnership.

11. Conduct of Business

11.1. The Guarantor will duly observe and comply with all applicable laws and all requirements of any governmental authorities relative to its existence, rights and franchises, to the conduct of its business and to the property and assets owned or managed by it (except where the failure to observe and comply would not materially and adversely affect the condition (financial or otherwise), properties, business, or results of the Guarantor, or the ability of the Guarantor to perform the Obligations or its obligations under the Credit Documents to the Agent and the Banks) and will maintain and keep in full force and effect all licenses and permits necessary to the proper conduct of its business.

11.2. The Guarantor will maintain its existence and remain or engage in substantially the same business in which it is now engaged, except that the Guarantor may, upon notice to the Agent and the Banks, withdraw from any business activity which its managers or board of directors reasonably deem unprofitable or unsound in the due exercise of their authority; provided, however, such withdrawal shall not impair in any way such entity’s ability to fully pay and perform all of its Obligations. Notwithstanding the foregoing, the Guarantor may enter into any line of business substantially related or incidental to a line of business in which it is currently engaged.

11.3. The Guarantor shall cause each Property Partnership to own no more than one Project and to be a single-purpose entity which shall have no assets or liabilities and conduct no business other than that related to such Project; and cause the Borrower, each Property Partnership and each MTE to maintain its Organizational Documents in the form required under the Tax Credit Warehouse Agreement.

12. ERISA Compliance . Neither the Guarantor, nor any Plan or any fiduciary thereof or other ERISA Party-in-Interest or ERISA Disqualified Person with respect to any Plan shall (a) engage in any “prohibited transaction,” (as defined in ERISA and the Code), (b) incur any “accumulated funding deficiency” (as defined in Section 412(a) of the Code and Section 302 of ERISA) whether or not waived, (c) fail to satisfy any additional funding requirements set forth in Section 412 of the Code and Section 302 of ERISA, or (d) terminate, in whole or in part, any “pension benefit plan” (as defined in Section 3(2) of ERISA) in a manner which could result in the imposition of a lien on any property of the Guarantor. Each Plan shall comply in all material respects with ERISA; provided, however, that the Guarantor’s failure to file audited financial statements with respect to the Municipal Mortgage & Equity, LLC 401(k) Retirement Savings Plan (the “401(k) Plan”) for the 401(k) Plan’s 2001,2002, 2003 and 2004 fiscal years, as required under ERISA rules and regulations applicable to the 401(k) Plan (the “Filing Requirement”),

- 14 -

shall not be deemed to violate this covenant to the extent that the Guarantor is working diligently to comply with the Filing Requirement, as demonstrated by (a) the Guarantor’s continued retention of Ellin & Tucker Chartered (or another accounting firm reasonably acceptable to the Agent) to audit the 401(k) Plan’s financial statements for the 2001, 2002, 2003 and 2004 fiscal years, and (b) the Guarantor’s reasonable cooperation with such auditing firm to complete such audit.

13. Maintenance of Books and Records . The Guarantor will keep adequate books and records of account in which true and complete entries will be made reflecting all of its business and financial transactions, and such entries will be made in accordance with GAAP (except as otherwise disclosed) and applicable law including, without limitation, laws with respect to questionable, improper or corrupt payments.

14. Transactions with Affiliates .

14.1. The Guarantor will not, directly or indirectly, enter into any purchase, sale, lease or other transaction with any Affiliate except (a) as would not materially and adversely affect the condition (financial or otherwise), the properties, business or results of operations of the Guarantor, (b) as disclosed in the Offering Memorandum of a particular Investment Partnership, if applicable, (c) as disclosed in the Proposed Property Partnership Agreement or other Organizational Documents of a Property Partnership submitted to the Agent’s counsel for acquisition approval, with such disclosure highlighted in the transmittal notice to the Agent’s counsel, or (d) that certain promissory note, dated on or about July 1, 2003, in the principal face amount of $120,000,000 made by TC Corp. payable to the order of the Guarantor.

14.2. The Guarantor hereby agrees that payment and performance of any obligations under any contract, agreement or arrangement (whether written or oral) now or hereafter entered into between Borrower on the one hand and the Guarantor or any Affiliate of the Guarantor on the other hand shall be subordinated to payment and performance of the Obligations. Payment and performance under such contracts, agreements or arrangements may be made and received in the ordinary course of business on a current basis as long as no Default or Event of Default has occurred and is continuing.

15. Environmental Regulations . The Guarantor will comply, and shall use its best efforts to cause the general partner of each Property Partnership to comply, in all material respects with all Environmental Laws in each and every jurisdiction in which it operates now or in the future, and will comply or use its commercially reasonable efforts to cause compliance in all material respects with all such Environmental Laws that may in the future be applicable to it and to the properties and assets owned, directly or indirectly, or managed by it, except that the Guarantor shall not be required to take any action which could reasonably be expected to subject the Guarantor to general partner or other liability in respect of an affected Project or Property Partnership.

16. Fiscal Year . The Guarantor shall have a fiscal year ending on December 31 of each year, and shall not change such fiscal year without the prior written consent of the Agent, unless a different fiscal year is required by the Code.

- 15 -

17. Restricted Payments . The Guarantor will not make any Restricted Payments of any kind to the holders of any of its equity or their Affiliates if at the time of such Restricted Payments, with or without the making of such Restricted Payments, there shall exist or result a Default or Event of Default involving either (a) the payment of money by the Borrower or a Guarantor, or (b) the breach of any of the covenants set forth in Section 20 of this Schedule 1.

18. Ownership; Control . Without the prior written approval of the Majority Banks under the Tax Credit Warehouse Agreement, which shall not be unreasonably withheld, the Guarantor will not cause or permit any change in the ownership or Control of the Borrower or the Other Guarantors, or any MTE, except to the extent that (a) with respect to the Borrower or the Other Guarantors, following such change the Guarantor retains Control (directly or indirectly) of the Borrower and the Other Guarantors, and (b) with respect to each MTE, the Release Conditions with respect to such MTE have been satisfied, and provided that, in addition to the foregoing restrictions, the Guarantor shall cause MFH to continue to maintain MFH’s ownership and Control of MFH’s Subsidiaries other than MEC, MMA Capital Corporation, MMA Financial International, LLC and their respective Subsidiaries.

19. Separate Credit Reliance . The Guarantor acknowledges that the Agent and each of the Banks have entered into the transactions contemplated by this Guaranty, and accepted this Guaranty in reliance upon Borrower’s, each MTE’s, the Guarantor’s and the Other Guarantors’ separate and distinct corporate existences and their separate and distinct operations, and, accordingly, the separate credit of Borrower, each MTE, the Guarantor and the Other Guarantors.

20. Financial Covenants .

(a) Unencumbered Liquidity . The Guarantor shall not permit the Unencumbered Liquidity of the Guarantor to be less than the amount set forth on Exhibit B to this Schedule 1 at any time.

(b) Minimum Consolidated Tangible Net Worth . The Guarantor shall not permit the Consolidated Tangible Net Worth of the Guarantor to be less than the amount set forth on Exhibit B to this Schedule 1 at any time.

(c) Consolidated Leverage Ratio . The Guarantor shall not permit the Consolidated Leverage Ratio of the Guarantor to be greater than the ratio set forth on Exhibit B to this Schedule 1 at any time.

(d) Consolidated Senior Indebtedness to Consolidated Tangible Net Worth . The Guarantor shall not permit the ratio of Consolidated Senior Indebtedness of the Guarantor to Consolidated Tangible Net Worth of the Guarantor to exceed the ratio set forth on Exhibit B to this Schedule 1 at any time.

(e) Consolidated Interest and Distribution Coverage Ratio . The Guarantor shall not permit the Consolidated Interest and Distribution Coverage Ratio of the Guarantor to be less than the ratio set forth on Exhibit B to this Schedule 1 at any time.

- 16 -

21. Payments; Co-Fundings; Cash Management .

21.1. The Guarantor shall deposit, and cause the deposit by the Borrower, each MTE, Property Partnership, Investment Partnership, Investor or other source of repayment, of all payments and repayments of Capital Contributions, Direct Investments and Convertible Loans, and all other Obligations of the Borrower, directly into the appropriate Repayment Account, as applicable. To the extent that any such payments or repayments are received directly by the Guarantor, the same shall be delivered immediately to the Agent in the form received, duly endorsed to the Agent, if necessary, for deposit into the appropriate Repayment Account, as applicable, and for application by the Agent to each of the Banks in accordance with the Tax Credit Warehouse Agreement. Until so delivered, the Guarantor acknowledges that it holds such payments and repayments in trust for the benefit of the Agent on behalf of the Banks and shall keep such payments and repayments segregated from other funds and property of the Guarantor. The Guarantor shall deposit, and cause the deposit of, all Co-Funding Amounts (other than those constituting Cash Collateral) into the applicable Disbursement Account.

21.2. The Guarantor shall continue to maintain a cash management system and a web-based fixed income trading system, each of which shall be reasonably acceptable to the Agent and the Banks.

22. Warehouse Credit Facilities . The Tax Credit Warehouse Agreement and the credit facilities described therein shall constitute the sole and exclusive warehouse-type credit facility utilized by the Borrower, the Guarantor, the Other Guarantors and their Affiliates in connection with the acquisition and syndication of low income housing tax credits under Section 42 of the Code, except as otherwise provided in the Tax Credit Warehouse Agreement.

23. Subordination Agreement . Guarantor shall cause any Subsidiary of Guarantor not already a party to the Subordination Agreement that after the date of the Tax Credit Warehouse Agreement becomes owed any Indebtedness by TC. Corp. or MEC to (a) join in the Subordination Agreement by executing and delivering a joinder agreement in form and substance satisfactory to the Agent, and (b) insert a legend on any note or instrument at any time evidencing such Indebtedness, indicating that such note or instrument is subject to the terms of the Subordination Agreement, in each case prior to or simultaneously with the creation of such Indebtedness.

24. Definitions . As used in this Guaranty (including this Schedule 1), the following terms shall have the meanings set forth below:

“ 401(k) Plan ” has the meaning set forth in Section 12 of Schedule 1 to this Guaranty.

“ Agent ” has the meaning set forth in the Recitals of this Guaranty.

“ Approved Subordinate Debt ” means Indebtedness subject to the Subordination Agreement and any other Indebtedness which is unsecured and subordinated to payment of the Obligations in a manner acceptable to the Agent in its sole discretion.

“ Attributable Indebtedness ” means, on any date, (a) in respect of any capital lease of the Guarantor, the capitalized amount thereof that would appear on a balance sheet of the Guarantor

- 17 -

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 the Guarantor prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

“ Borrower ” has the meaning set forth in the Recitals of this Guaranty.

“ Consolidated CAD ” means, for any period of determination, the cash available for distribution for such period, as determined in accordance with Guarantor’s policies and procedures for determining cash available for distribution (a) as reflected in its earnings packages furnished to the SEC as supporting documentation for the financial information contained in its periodic filings on Form 10-K or Form 10-Q or any relevant filings on Form 8-K or (b) as otherwise made available to Guarantor’s investors and research analysts from time to time.

“ Consolidated Debt ” means the total liabilities minus deferred taxes of Guarantor and its Subsidiaries, all as determined on a consolidated basis in accordance with GAAP, excluding any liabilities of Guarantor and its Subsidiaries existing solely as a result of the application of FIN46.

“ Consolidated Interest Charges and Distributions ” means, for any period, for the Guarantor and its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt discounts, fees, charges and related expenses of the Guarantor and its Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) the portion of rent expense of the Guarantor and its Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP, and (c) Restricted Payments made with respect to the preferred shares of Guarantor and its Subsidiaries provided, that there shall be excluded any interest which would otherwise have been included herein solely as a result of the application of FIN 46.

“ Consolidated Interest and Distributions Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated CAD for the four fiscal quarters most recently ended for which the Guarantor has delivered or should have delivered financial statements pursuant to Section 4.1 of this Schedule 1, plus Consolidated Interest Charges and Distributions for such period to (b) Consolidated Interest Charges and Distributions for such period.

“ Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Debt as of such date to (b) Consolidated Tangible Net Worth as of such date.

“ Consolidated Senior Indebtedness ” means, as of any date of determination, the aggregate amount of the following liabilities which would be shown on the consolidated balance sheet of the Guarantor and its Subsidiaries prepared in accordance with GAAP: (a) the outstanding principal amount of all obligations, whether current or long term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (b) all purchase money Indebtedness, (c) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business), (d) Attributable Indebtedness in respect of

- 18 -

capital leases and Synthetic Lease Obligations, and (e) all Indebtedness of the types referred to in clauses (a) through (d) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Guarantor or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrowers or such Subsidiary, excluding, however (i) Approved Subordinate Debt and (ii) any such Indebtedness which exists solely as a result of the application of FIN 46.

“ Consolidated Tangible Net Worth ” means, as of any date of determination, for the Guarantor and its Subsidiaries on a consolidated basis, Shareholders’ Equity of the Guarantor and its Subsidiaries on that date minus the Intangible Assets of the Guarantor and its Subsidiaries on that date, provided, that the determination of Consolidated Tangible Net Worth shall be adjusted to exclude the effect of FIN 46.

“ Contingent Obligation ” means, as to the Guarantor, (a) any obligation, contingent or otherwise, of the Guarantor guaranteeing or having the economic effect of guaranteeing 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 the Guarantor, 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 or level of income or cash flow 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 obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Encumbrance on any assets of the Guarantor securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by the Guarantor. The amount of any Contingent 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 Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.

“ Filing Requirement ” has the meaning set forth in Section 12 of Schedule 1 to this Guaranty.

“ FIN 46 ” means the Interpretation of Accounting Research Bulletin no. 51, Consolidated Financial Statements, promulgated by the Financial Accounting Standards Board, as the same may be restated, modified or changed from time to time.

“ GAAP ” means generally accepted accounting principles and practices in the United States of America and as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession. GAAP shall be consistently applied from one accounting period to another.

- 19 -

“ Guarantor ” has the meaning set forth in the Recitals of this Guaranty.

“ Guaranty Collateral ” has the meaning set forth in Section 7 of this Guaranty.

“ Indebtedness ” means, as to the Guarantor at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations of the Guarantor for borrowed money and all obligations of the Guarantor evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) all direct or contingent obligations of the Guarantor arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(d) all obligations of the Guarantor to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

(e) indebtedness (excluding prepaid interest thereon) secured by an Encumbrance on property owned or being purchased by the Guarantor (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by the Guarantor or is limited in recourse;

(f) capital leases and Synthetic Lease Obligations; and

(g) all Contingent Obligations of the Guarantor in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of the Guarantor shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Guarantor is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to the Guarantor. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. 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.

“ Intangible Assets ” means assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents, franchises, licenses, unamortized deferred charges, and unamortized debt discount.

“ Obligations ” has the meaning set forth in Section 1 of this Guaranty.

“ Other Guarantors ” has the meaning set forth in Section 5 of this Guaranty.

“ Other Guaranty ” has the meaning set forth in Section 5 of this Guaranty.

- 20 -

“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other equity interest of the Guarantor or any of the Guarantor’s Subsidiaries, 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 other equity interest or of any option, warrant or other right to acquire any such capital stock or other equity interest.

“ Shareholders’ Equity ” means consolidated shareholders’ equity of the Guarantor and its Subsidiaries as of the date of determination computed in accordance with GAAP.

“ Subordinated Debt ” has the meaning set forth in Section 13 of this Guaranty.

“ 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 a Bank or any Affiliate of a Bank).

“ Synthetic Lease Obligation ” means the monetary obligation of the Guarantor 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 the Guarantor but which, upon the insolvency or bankruptcy of the Guarantor, would be characterized as the indebtedness of the Guarantor (without regard to accounting treatment).

“ Tax Credit Warehouse Agreement ” has the meaning set forth in the Recitals to this Guaranty.

- 21 -

“ Unencumbered Liquidity ” means, as of any date of determination, the aggregate market value of the following assets owned by the Guarantor and which are neither (i) the subject of any Encumbrance nor (ii) being held for the benefit of third parties or otherwise restricted:

(a) cash, and obligations issued or guaranteed by the United States of America,

(b) marketable direct obligations issued or guaranteed by the Guarantor controlled or supervised by and acting as an agency or instrumentality of the United States of America pursuant to authority granted by the Congress of the United States, and maturing within one year of the date of acquisition thereof,

(c) certificates of deposit issued, or banker’s acceptances drawn on and accepted by, or money market accounts or time deposits in, commercial banks which are members of the Federal Deposit Insurance Corporation and which have a combined capital, surplus and undistributed profits of at least $50,000,000, and maturing within one year of the date of acquisition thereof,

(d) repurchase agreements maturing within one year of the date of acquisition thereof with any such commercial bank, or with broker-dealers or other institutions, that are secured by marketable direct obligations issued or guaranteed by the United States of America or an agency or instrumentality thereof,

(e) other money market instruments and mutual funds, substantially all of the assets of which are invested in any or all of the investments described in clauses (a) through (d) above, and

(f) commercial paper (other than commercial paper issued by the Guarantor or any of its Affiliates), maturing no more than ninety (90) days after the date of creation thereof, and with a rating of at least P-1 by Moody’s or A-1 by S&P on the date of acquisition (the value of which shall be determined in accordance with generally accepted accounting principles).

- 22 -

EXHIBIT A TO SCHEDULE 1 TO GUARANTY : COMPLIANCE CERTIFICATE

COMPLIANCE CERTIFICATE

To:	Bank of America, N.A., as Agent

Ladies and Gentlemen:

Reference is made to that certain Guaranty dated as of November 4, 2005 (as amended and/or restated from time to time, the “ Guaranty ;” the terms defined therein being used herein as therein defined), by Municipal Mortgage & Equity LLC, as Guarantor (the “Guarantor”), in favor of Bank of America, N.A., as Agent, pursuant to which the Guarantor has guaranteed payment and performance of the obligations of the Borrower under the Tax Credit Warehouse Agreement.

The undersigned hereby certifies as of the date hereof that he/she is the of the Guarantor, as designated, and that, as such, he/she is authorized to execute and deliver this Compliance Certificate to the Agent and the Banks on the behalf of the Guarantor, and that:

[Use the following paragraph 1 for fiscal year-end financial statements]

1. Attached hereto are the year-end audited financial statements required by Section 5(b) of Schedule 1 to the Guaranty for the fiscal year of the Guarantor ended as of , 20__, together with the report and opinion of an independent certified public accountant required by such section. Such financial statements fairly present the consolidated financial condition and results of operations of the Guarantor in accordance with GAAP as at such date and for such period.

[Use the following paragraph 1 for fiscal quarter-end financial statements]

1. Attached hereto are the unaudited financial statements required by Section 5(c) of Schedule 1 to the Guaranty for the fiscal quarter of the Guarantor ended as of , 20__. Such financial statements fairly present the consolidated financial condition and results of operations of the Guarantor in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

2. The undersigned has reviewed and is familiar with the terms of the Guaranty and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Guarantor during the accounting period covered by the attached financial statements.

3. A review of the activities of the Guarantor during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Guarantor performed and observed all its obligations under the Guaranty, and

[select one:]

[to the best knowledge of the undersigned during such fiscal period, the Guarantor performed and observed each covenant and condition of the Guaranty applicable to it.]

—or—

- 23 -

[the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]

4. The representations and warranties of the Guarantor contained in the Guaranty, or which are contained in any document furnished at any time under or in connection with the Guaranty, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties referring to the Initial Financial Statements shall be deemed to refer to the most recent financial statements furnished pursuant to Sections 5(b) and 5(c) of Schedule 1 to the Guaranty, including the financial statements delivered in connection with this Compliance Certificate.

5. The financial covenant analyses and information set forth on Schedule A attached hereto are true and accurate on and as of the date of this Compliance Certificate.

6. To the extent that any financial statements or other information required to be submitted in connection with this Compliance Certificate are delivered by the Guarantor electronically via access to the Guarantor’s website, as permitted pursuant to Section 5.3 of Schedule 1 to the Guaranty, then the Guarantor hereby represents and warrants that all such documents and information are true, accurate and complete in all material respects.

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as of .


MUNICIPAL MORTGAGE & EQUITY, LLC

By:
		(Signature)


		(Printed Name and Title)

- 24 -

SCHEDULE A to Compliance Certificate dated as of:


I.	Unencumbered Liquidity.

A.	Actual Unencumbered Liquidity:	$_______________

B.	Minimum required Unencumbered Liquidity:	$ <[CONFIDENTIAL]>

C.	Excess (deficiency) for covenant compliance (Line I.A – I.B):	$_______________

II.	Consolidated Tangible Net Worth.

A.	Actual Consolidated Tangible Net Worth:

1.	Shareholders’ Equity:	$_______________

2.	Intangible Assets:	$_______________

3.	Consolidated Tangible Net Worth (Line II.A.1 less Line II.A.2):	$_______________

B.	Minimum required Consolidated Tangible Net Worth:	$ <[CONFIDENTIAL]>

C.	Excess (deficiency) for covenant compliance (Line II.A–II.B):	$_______________

III.	Consolidated Leverage Ratio.

A.	Consolidated Debt:	$_______________

B.	Consolidated Tangible Net Worth (Line II.A.3 above):	________________

C.	Consolidated Leverage Ratio (Line III.A to Line III.B):	to 1

D.	Maximum Consolidated Leverage Ratio:	<[CONFIDENTIAL]>

IV.	Consolidated Senior Indebtedness to Tangible Net Worth

A.	Consolidated Senior Indebtedness:	$_______________

B.	Consolidated Tangible Net Worth (Line II.A.3 above):	$_______________

C.	Consolidated Senior Indebtedness to Consolidated Tangible Net Worth (Line IV.A to Line IV.B):	$_______________

D.	Maximum Consolidated Senior Indebtedness to Consolidated Tangible Net Worth:	<[CONFIDENTIAL]>

V.	Consolidated Interest and Distribution Coverage Ratio.

A.	Consolidated CAD:	$_______________

B.	Consolidated Interest Charges and Distributions:	$_______________

C.	Consolidated Interest and Distribution Coverage Ratio (Line V.A. plus Line V.B to Line V.B):	to 1

D.	Minimum Consolidated Interest and Distribution Coverage Ratio	<[CONFIDENTIAL]>

E.	Amount of Restricted Payments to holders of preferred shares included in the above calculation:	$_______________

*	The term “ <[CONFIDENTIAL]> ” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

- 25 -

EXHIBIT B TO SCHEDULE 1 TO GUARANTY : FINANCIAL COVENANTS

The amounts and ratios to be used with respect to the financial covenants of Guarantor set forth in Section 20 of Schedule 1 to the Guaranty shall be as follows:

Minimum Unencumbered Liquidity: $ <[CONFIDENTIAL]>

Minimum Consolidated Tangible Net Worth: $ <[CONFIDENTIAL]> .

Maximum Consolidated Leverage Ratio: <[CONFIDENTIAL]>

Maximum Consolidated Senior Indebtedness to Consolidated Tangible Net Worth: <[CONFIDENTIAL]> .

Minimum Consolidated Interest and Distribution Coverage Ratio: <[CONFIDENTIAL]> .

*	The term “ <[CONFIDENTIAL]> ” indicates material that has been omitted and for which confidential treatment has been requested. All such omitted material has been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit 10.8

MUNICIPAL MORTGAGE AND EQUITY, L.L.C.

1998 SHARE INCENTIVE PLAN

1. Purpose. The purpose of this 1998 Share Incentive Plan (the “Plan”) of Municipal Mortgage and Equity, L.L.C., a Delaware limited liability company (the “Company”), is to advance the interests of the Company and its shareholders by providing a means to attract, retain, and reward executive officers and other key individuals of the Company and its subsidiaries, to link compensation to measures of the Company’s performance in order to provide additional share-based incentives to such individuals for the creation of shareholder value, and to promote ownership of a greater proprietary interest in the Company, thereby aligning such individuals’ interests more closely with the interests of shareholders of the Company.

2. Definitions. The definitions of awards under the Plan, including Options, SARs (including Limited SARs), Restricted Shares, Deferred Shares, and Shares granted as a bonus or in lieu of other awards are set forth in Section 6 of the Plan. Such awards, together with any other right or interest granted to a Participant under the Plan, are termed “Awards.” The definitions of terms relating to a Change in Control of the Company are set forth in Section 8 of the Plan. In addition to such terms and the terms defined in Section 1, the following are defined terms under the Plan:

(a) “Award Agreement” means any written agreement, contract, notice to a Participant, or other instrument or document evidencing an Award.

(b) “Beneficiary” means the person, persons, trust, or trusts which have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under this Plan upon such Participant’s death. If, upon a Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the Participant’s estate.

(d) “Code” means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code include regulations thereunder and successor provisions and regulations thereto.

(e) “Committee” means the Share Incentive Committee, or such other Board committee as may be designated by the Board to administer the Plan.

(f) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act include rules thereunder and successor provisions and rules thereto.

(g) “Fair Market Value” means, with respect to Shares, Awards, or other property, the fair market value of such Shares, Awards, or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of a Share means, as of any given date, the closing sales price of a Share reported in the table entitled “American Stock Exchange Composite Transactions” contained in The Wall Street Journal (or an equivalent successor table) for such date or, if no such closing sales price was reported for such date, for the most recent trading day prior to such date for which a closing sales price was reported.

(h) “Participant” means a person who, as an executive officer, key employee or key independent contractor of the Company or a subsidiary, has been granted an Award under the Plan which remains outstanding.

(i) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

(j) “Share” means a Growth Share of the Company and such other securities as may be substituted for such Share or such other securities pursuant to Section 4.

3. Administration.

(a) Authority of the Committee. The Plan shall be administered by the Committee. The Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan:

(i) to select Participants to whom Awards may be granted;

(ii) to determine the type or types of Awards to be granted to each Participant;

(iii) to determine the number of Awards to be granted, the number of Shares to which an Award will relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule or performance conditions for the lapse of restrictions or conditions relating to transferability, forfeiture, exercisability, or settlement of an Award, and waivers, accelerations, or modifications thereof, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;

(iv) to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(v) to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Participant;

(vi) to prescribe the form of each Award Agreement, which need not be identical for each Participant;

(vii) to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

(viii) to correct any defect or supply appropriate text for any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder; and

(ix) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

(b) Manner of Exercise of Committee Authority. Unless authority is specifically reserved to the Board under the terms of the Plan, the Company’s Amended and Restated Certificate of Formation and Operating Agreement, or applicable law, the Committee shall have discretion to exercise authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive, and binding on all persons, including the Company, subsidiaries of the Company, Participants, any person claiming any rights under the Plan from or through any Participant, and Shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. To the extent permitted by applicable law, the Committee may delegate to officers or employees of the Company or any subsidiary the authority, subject to such terms as the Committee shall determine, (i) to perform administrative functions, (ii) with respect to Participants not subject to Section 16 of the Exchange Act, to perform such other functions of the Committee as the Committee may determine, and (iii) with respect to Participants subject to Section 16, to perform such other functions of the Committee as the Committee may determine to the extent performance of such functions will not result in the loss of an exemption under Rule 16b-3 otherwise available for transactions by such persons.

(c) Limitation of Liability. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by any officer or other employee of the Company or any subsidiary, the Company’s independent certified public accountants, or any executive compensation consultant, legal counsel, or other professional retained by the Company to assist in the administration of the Plan. No member of the Committee, nor any officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on behalf of the Committee or members thereof shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation.

4. Shares Available Under Plan; Individual Award Limitations; Adjustments.

(a) Shares Reserved for Awards. Subject to adjustment as hereinafter provided, the total number of Shares reserved and available for issuance to Participants in connection with Awards under the Plan shall be 839,000 Shares; provided, however, that the number of Shares issued as Restricted Shares shall not exceed 20% of such total; the number of Shares issued as Awards other than Options (including Restricted Shares) shall not exceed 40% of such total; and the number of Shares with respect to which Awards

of Options and SARs may be granted to any Participant shall not exceed 400,000 during any 12 month period. No Award may be granted if the number of Shares to which such Award relates, when added to the number of Shares to which other then-outstanding Awards relate, exceeds an applicable limitation on the number of Shares then remaining available for issuance under this Section 4. If all or any portion of an Award is forfeited, settled in cash, or terminated without issuance of Shares to the Participant, the Shares to which such Award or portion thereof related shall again be available for Awards under the Plan, and such Award or portion thereof shall not count against the percentage limitations applicable to Restricted Shares and Awards other than Options; provided, however, that Shares withheld in payment of the exercise price of any Option or withholding taxes relating to any Award and Shares equal to the number of Shares surrendered in payment of the exercise price of any Option or withholding taxes relating to any Award shall, for purposes of this provision, be deemed not to have been issued to the Participant in connection with such Awards under the Plan. The Committee may adopt procedures for the counting of Shares relating to any Award to ensure appropriate counting and avoid double counting (in the case of tandem or substitute awards). Any Shares issued pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury Shares, or Shares acquired in the market for the account of the Participant (which treasury Shares or acquired Shares will be deemed to have been “issued” pursuant to such Award).

(b) Adjustments. In the event that the Committee shall determine that any recapitalization, reorganization, merger, consolidation, spin-off, combination, repurchase, exchange of Shares or other securities of the Company, stock split or reverse split, extraordinary dividend (whether in the form of cash, Shares, or other property), liquidation, dissolution, or other similar corporate transaction or event affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of each Participant’s rights under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of Shares remaining reserved and available for issuance under Section 4(a), (ii) the number and kind of outstanding Restricted Shares or Restricted Shares relating to any other outstanding Award in connection with which Restricted Shares may be issued, (iii) the number and kind of Shares that may be issued in respect of other outstanding Awards, and (iv) the exercise price or grant price relating to any Award (or, if deemed appropriate, the Committee may make provision for a cash payment with respect to any outstanding Award). In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any subsidiary or the financial statements of the Company or any subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.

5. Eligibility. Executive officers, other key employees and other key independent contractors of the Company and its subsidiaries, including any director who is also an executive officer or employee, are eligible to be granted Awards under the Plan; provided, however, that members of the Committee are not eligible to be granted Awards under the Plan.

6. Specific Terms of Awards.

(a) General. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 9(f)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment by the Participant or upon the occurrence of other events. In addition, the Committee shall require, as the condition of the issuance of Shares in connection with any Award, that consideration be received by the Company which meets the requirements of the Delaware Limited Liability Company Act.

(b) Options. The Committee is authorized to grant Options (which are not to be treated as incentive options under Section 422 of the Code) to Participants (including “reload” options automatically granted upon the occurrence of specified exercises of options) on the following terms and conditions:

(i) Exercise Price. The exercise price per Share purchasable under an Option shall be determined by the Committee without regard to the Fair Market Value of a Share on the date of grant of the Option.

(ii) Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, the methods by which such exercise price may be paid or deemed to be paid, the form of such payment, including, without limitation, cash, Shares, other Awards or awards granted under other Company plans, or other property (including notes or other contractual obligations of Participants

to make payment on a deferred basis, such as through “cashless exercise” arrangements, to the extent permitted by applicable law), and the methods by which Shares will be delivered or deemed to be delivered to Participants.

(iii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment or contract during the applicable term of the Options, unexercised Options shall be forfeited and again be available for Award by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to the Options will be waived in whole or in part in the event of terminations resulting from specified causes.

(iv) Dividend Equivalents. The Committee may provide that payments in the form of dividend equivalents will be credited in respect of an Option. The amount of the dividend equivalent shall be credited on the dividend payment date in any of the following forms: in cash, or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or in options to acquire additional shares under the Option at no cost based on the dividend payments, or in a reduction of the exercise price of the Option. If the Committee provides for crediting dividend equivalents in the form of additional Options or Shares, such dividend equivalents must be approved by the Committee before such Options or Shares can be credited to the Participant.

(c) Share Appreciation Rights. The Committee is authorized to grant SARs to Participants on the following terms and conditions:

(i) Right to Payment. A SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine, the Fair Market Value of one Share at any time during a specified period before or after the date of exercise), over (B) the grant price of the SAR as determined by the Committee as of the date of grant of the SAR.

(ii) Other Terms. The Committee shall determine the time or times at which a SAR may be exercised in whole or in part, the method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Participants, whether or not a SAR shall be in tandem with any other Award, and any other terms and conditions of any SAR. Limited SARs that may only be exercised upon the occurrence of a Change in Control (as such term is defined in Section 8(b) or as otherwise defined by the Committee) may be granted on such terms, not inconsistent with this Section 6(c), as the Committee may determine. Such Limited SARs may be either freestanding or in tandem with other Awards.

(iii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment or contract during the applicable term of the SARs, unexercised SARs shall be forfeited and again be available for Award by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to the SARs will be waived in whole or in part in the event of terminations resulting from specified causes.

(d) Restricted Shares. The Committee is authorized to grant Restricted Shares to Participants on the following terms and conditions:

(i) Grant and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, or otherwise as the Committee may determine. Except to the extent restricted under the terms of the Plan and any Award Agreement relating to the Restricted Shares, a Participant granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon.

(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited and reacquired by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes.

(iii) Certificates for Shares. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of

the Participant, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, the Company may retain physical possession of the certificate, and the Participant shall have delivered a stock power to the Company, endorsed in blank, relating to the Restricted Shares.

(iv) Dividends and Distributions. Dividends paid on Restricted Shares shall be either paid at the dividend payment date in the form the dividends are paid to other shareholders, in cash, or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or the payment of such dividends shall be deferred and/or the amount or value thereof automatically reinvested in additional Restricted Shares, other Awards, or other investment vehicles, as the Committee shall determine or permit the Participant to elect. Shares distributed in connection with a Share split or Share dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property are distributed.

(e) Deferred Shares. The Committee is authorized to grant Deferred Shares to Participants, subject to the following terms and conditions:

(i) Award and Restrictions. Issuance of Shares will occur upon expiration of the deferral period specified for an Award of Deferred Shares by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Deferred Shares shall be subject to such restrictions as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times, separately or in combination, under such circumstances, in such installments, or otherwise as the Committee may determine.

(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Deferred Shares), all Deferred Shares that are at that time subject to such risk of forfeiture shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Deferred Shares will be waived in whole or in part in the event of terminations resulting from specified causes.

(iii) Dividend Equivalents. The Committee may provide that payments in the form of dividend equivalents will be credited in respect of Deferred Shares, which amounts may be paid or distributed when accrued or deemed reinvested in additional Deferred Shares.

(f) Bonus Shares and Awards in Lieu of Cash Obligations. The Committee is authorized to grant Shares as a bonus, or to grant Shares or other Awards in lieu of Company obligations to pay cash under other plans or compensatory arrangements; provided, however, that, in the case of Participants subject to Section 16 of the Exchange Act, the amount of such Shares or Awards shall be determined by the Committee in a manner conforming to then-applicable requirements of Rule 16b-3. Shares or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee.

7. Certain Provisions Applicable to Awards.

(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for, any other Award granted under the Plan or any award granted under any other plan of the Company, any subsidiary, or any business entity to be acquired by the Company or a subsidiary, or any other right of a Participant to receive payment from the Company or any subsidiary. Awards granted in addition to or in tandem with other Awards or awards may be granted either as of the same time as or a different time from the grant of such other Awards or awards. The per Share exercise price of any Option, grant price of any SAR, or purchase price of any other Award conferring a right to purchase Shares granted in substitution for an outstanding Award or award may be adjusted to reflect the in-the-money value of the surrendered Award or award.

(b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee.

(c) Form of Payment Under Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a subsidiary upon the grant or exercise of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Shares, other Awards, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. Such payments may include, without limitation, provisions for the payment or crediting of

reasonable interest on installment or deferred payments or the grant or crediting of dividend equivalents in respect of installment or deferred payments denominated in Shares.

(d) Rule 16b-3 Compliance. It is the intent of the Company that this Plan comply in all respects with applicable provisions of Rule 16b-3 in connection with any grant of Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange Act (except for transactions exempted under alternative Exchange Act Rules or acknowledged in writing to be non-exempt by such Participant). Accordingly, if, at such time, any provision of this Plan or any Award Agreement relating to an Award does not comply with the requirements of Rule 16b-3 as then applicable to any such transaction, such provision will be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b).

(e) Loan Provisions. With the consent of the Committee, and subject at all times to, and only to the extent, if any, permitted under and in accordance with, laws and regulations and other binding obligations or provisions applicable to the Company, the Company may make, guarantee, or arrange for a loan or loans to a Participant with respect to the exercise of any Option or other payment in connection with any Award, including the payment by a Participant of any or all federal, state, or local income or other taxes due in connection with any Award. Subject to such limitations, the committee shall have full authority to decide whether to make a loan or loans hereunder and to determine the amount, terms, and provisions of any such loan or loans, including the interest rate to be charged in respect of any such loan or loans, whether the loan or loans are to be with or without recourse against the borrower, the terms on which the loan is to be repaid and conditions, if any, under which the loan or loans may be forgiven.

8. Change in Control Provisions.

(a) In the event of a “Change in Control,” as defined in this Section, the following acceleration provisions shall apply:

(i) any Award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested, subject only to the restrictions set forth in Sections 7(d) and 9(a); and

(ii) the restrictions, deferral of settlement, and forfeiture conditions applicable to any other Award granted under the Plan shall lapse and such Award shall be deemed fully vested, and any performance conditions imposed with respect to any Award shall be deemed to be fully achieved, subject to the restrictions set forth in Sections 7(d) and 9(a).

(b) For purposes of the Plan, a “Change in Control” shall have occurred if, after consummation of the Transaction:

(i) Any “Person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a subsidiary, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding voting securities;

(ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this Section 8(b)) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

(iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 75% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such surviving entity; or

(iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).

9. General Provisions.

(a) Compliance With Laws and Obligations. The Company will not be obligated to issue or deliver Shares in connection with any Award or take any other action under the Plan in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any other federal or state securities law, any requirement under any listing agreement between the Company and any stock exchange or automated quotation system, or any other law, regulation, or contractual obligation of the Company, until the Company is satisfied that such laws, regulations, and other obligations of the Company have been complied with in full. Certificates representing Shares issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations, and other obligations of the Company, including any requirement that a legend or legends be placed thereon.

(b) Limitations on Transferability. Awards and other rights under the Plan will not be transferable by a Participant except by will or the laws of descent and distribution (or to a designated Beneficiary in the event of the Participant’s death), and, if exercisable, shall be exercisable during the lifetime of a Participant only by such Participant or his or her guardian or legal representative; provided, however, that such Awards and other rights may be transferred to one or more transferees during the lifetime of the Participant in connection with the Participant’s estate or tax planning, and such transferees may exercise rights thereunder in accordance with the terms thereof, but only if and to the extent consistent with the registration of the offer and sale of Shares on Form S-8, Form S-3, or such other registration form of the Securities and Exchange Commission as may then be filed and effective with respect to the Plan and permitted by the Committee. The Company may rely upon the beneficiary designation last filed in accordance with this Section 9(b). Awards and other rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered by a Participant and shall not be subject to the claims of a Participant’s creditors.

(c) Taxes. The Company and any subsidiary is authorized to withhold from any Award granted or to be settled, any delivery of Shares in connection with an Award, any other payment relating to an Award, or any payroll or other payment to a Participant amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations.

(d) No Right to Continued Employment; Leaves of Absence. Neither the Plan, any Award Agreement, or any action taken hereunder shall be construed as giving any Participant the right to be retained in the employ or contract of the Company or any of its subsidiaries, nor shall it interfere in any way with the right of the Company or any of its subsidiaries to terminate any Participant’s employment or contract at any time. Unless otherwise specified in the applicable Award Agreement, an approved leave of absence shall not be considered a termination of employment for purposes of an Award under the Plan.

(e) No Rights to Awards; No Shareholder Rights. No Participant or employee or independent contractor shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants, employees or independent contractors. No Award shall confer on any Participant any of the rights of a shareholder of the Company unless and until Shares are duly issued or transferred and delivered to the Participant in accordance with the terms of the Award or, in the case of an Option, the Option is duly exercised.

action if such shareholder approval is required by any applicable federal or state law or regulation or the rules of any stock exchange or automated quotation system on which Company securities may then be listed or quoted, and the Board may otherwise determine to submit other such amendments or alterations to shareholders for approval; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant with respect to any Award theretofore granted to him. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate, any Award theretofore granted and any Award Agreement relating thereto; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant under such Award.

(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company’s obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.

(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other compensatory arrangements as it may deem desirable, including the granting of awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

(i) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

(j) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations under the Plan, and any Award Agreement will be determined in accordance with the Delaware Limited Liability Company Act and other laws (including those governing contracts) of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law.

10. Shareholder Approval, Effective Date, and Plan Termination. The Plan will be effective upon June 18, 1998, subject to its approval by the shareholders of the Company. Unless earlier terminated by action of the Board, the Plan will remain in effect until such time as no Shares remain available for issuance under the Plan and the Company and Participants have no further rights or obligations under the Plan.

As adopted by the Board of Directors: March 23, 1998.

Exhibit 10.9

MUNICIPAL MORTGAGE AND EQUITY, L.L.C.

1998 NON-EMPLOYEE DIRECTORS’ SHARE PLAN

1. Purpose. The purpose of this 1998 Non-Employee Directors’ Share Plan (the “Plan”) of Municipal Mortgage and Equity, L.L.C., a Delaware limited liability company (the “Company”), is to advance the interests of the Company and its shareholders by providing a means to attract and retain highly qualified persons to serve as non-employee directors of the Company and to promote ownership by such directors of a greater proprietary interest in the Company, thereby aligning such directors’ interests more closely with the interests of shareholders of the Company.

2 Definitions. In addition to terms defined elsewhere in the Plan, the following are defined terms under the Plan:

(a) “Code” means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code include regulations thereunder and successor provisions and regulations thereto.

(b) For purposes of the Plan, a “Change in Control” shall have occurred if, after consummation of the Transaction:

(i) Any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a subsidiary, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding voting securities;

(ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this Section 2(b)) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

(iii) the shareholders of the Company approve a merger, consolidation, recapitalization, or reorganization of the Company, or a reverse share split of any class of voting securities of the Company, or the consummation of any such transaction if shareholder approval is not obtained, other than any such transaction which would result in at least 75% of the total voting power represented by the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 75% of the combined voting power of the voting securities of the Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each other continuing holder not substantially altered as a result of the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 75% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such surviving entity; or

(c) “Deferred Share” means a credit to a Participant’s deferral account under Section 7 which represents the right to receive one Share upon settlement of the deferral account. Deferral accounts, and Deferred Shares credited thereto, are maintained solely as bookkeeping entries by the Company evidencing unfunded obligations of the Company.

(d) “Exchange Act” means the Securities Exchange Act of 1934, as amended. References to any provision of the Exchange Act include rules thereunder and successor provisions and rules thereto.

(e) “Fair Market Value” of a Share means, as of any given date, the closing sales price of a Share reported in the table entitled “American Stock Exchange Composite Transactions” contained in The Wall Street Journal (or an equivalent successor table) for such date or, if no such closing sales price was reported for such date, for the most recent trading day prior to such date for which a closing sales price was reported.

(f) “Option” means the right, granted to a director under Section 6, to purchase a specified number of Shares at the specified exercise price for a specified period of time under the Plan. All Options will be non-qualified stock Options.

(g) “Participant” means any person who, as a non-employee director of the Company, has been granted an Option or Deferred Shares which remain outstanding or who has elected to be paid fees in the form of Shares or Deferred Shares under the Plan.

(h) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

(i) “Share” means a Growth Share of the Company and such other securities as may be substituted for such Share or such other securities pursuant to Section 8.

3. Shares Available Under the Plan. Subject to adjustment as provided in Section 8, the total number of Shares reserved and available for issuance under the Plan is 50,000. Such Shares may be authorized but unissued Shares, treasury Shares, or Shares acquired in the market for the account of the Participant. For purposes of the Plan, Shares that may be purchased upon exercise of an Option or delivered in settlement of Deferred Shares will not be considered to be available after such Option has been granted or Deferred Share credited, except for purposes of issuance in connection with such Option or Deferred Share; provided, however, that, if an Option expires for any reason without having been exercised in full, the Shares subject to the unexercised portion of such Option will again be available for issuance under the Plan.

4. Administration of the Plan. The Plan will be administered by the Board of Directors of the Company; provided, however, that any action by the Board relating to the Plan will be taken only if, in addition to any other required vote, such action is approved by the affirmative vote of a majority of the directors who are not then eligible to participate in the Plan.

5. Eligibility. Each director of the Company who, on any date on which an Option is to be granted under Section 6 or on which fees are to be paid which could be received in the form of Shares or deferred in the form of Deferred Shares under Section 7, is not an employee of the Company or any subsidiary of the Company will be eligible, at such date, to be granted an Option under Section 6 or receive fees in the form of Shares or defer fees in the form of Deferred Shares under Section 7. No person other than those specified in this Section 5 will be eligible to participate in the Plan.

6. Options. An Option to purchase 2,500 Shares, subject to adjustment as provided in Section 8, will be automatically granted (i) to a person who is first elected or appointed to serve as a member of the Board of Directors of the Company at or after the effective date of the Plan, on the date of such election or appointment, if such director is eligible to be granted an Option at that date, and (ii) to each member of the Board of Directors (which may include a director who also will receive a grant under clause (i) of this sentence), on the date of the final adjournment of the Company’s Annual Meeting of Shareholders each year, if such director is eligible to be granted an Option at that date.

(a) Exercise Price. The exercise price per Share purchasable upon exercise of an Option will be equal to 100% of the Fair Market Value of a Share on the date of grant of the Option.

b. Option Expiration. A Participant’s Option will expire at the earlier of (i) ten years after the date of grant or (ii) one year after the date the Participant ceases to serve as a director of the Company for any reason.

c. Exercisability. No Option may be exercised unless and until it has become exercisable in accordance with this Section 6(c). A Participant’s Option will become exercisable in full on the first anniversary of the date of grant; provided, however, that a Participant’s Option will become immediately exercisable in full at the time the Participant ceases to serve as a director due to death or disability or upon a Change in Control; and provided further, that a Participant’s Option may be exercised after the Participant ceases to serve as a director for any reason other than death or disability only to the extent that the Option was exercisable at the date he or she ceased to

be a director or has become exercisable pursuant to this Section 6(c) within two months after the date he or she ceased to be a director.

d. Method of Exercise. A Participant may exercise an Option, in whole or in part, at such time as it is exercisable and prior to its expiration, by giving written notice of exercise to the Secretary of the Company, specifying the Option to be exercised and the number of Shares to be purchased, and paying in full the exercise price in cash (including by check) or by surrender of Shares already owned by the Participant (except for Shares acquired from the Company by exercise of an Option or other award less than six months before the date of surrender) having a Fair Market Value at the time of exercise equal to the exercise price, or by a combination of cash and Shares.

7. Receipt of Shares or Deferred Shares In Lieu of Fees. Each director of the Company may elect to be paid fees, in his or her capacity as a director (including annual retainer fees for service on the Board, fees for service on a Board committee, fees for service as chairman of a Board committee, and any other fees paid to directors) in the form of Shares or Deferred Shares in lieu of cash payment of such fees, if such director is eligible to do so under Section 5 at the date any such fee is otherwise payable. If so elected, payment of fees in the form of Shares or Deferred Shares shall be made in accordance with this Section 7.

a. Elections. Each director who elects to be paid fees for a given calendar year in the form of Shares or to defer such payment of fees in the form of Deferred Shares for such calendar year must file an irrevocable written election with the Secretary of the Company no later than December 31 of the year preceding such calendar year; provided, however, that any newly elected or appointed director may file an election for any year not later than 30 days after the date such person first became a director, and a director may file an election for the year in which the Plan became effective not later than 30 days after the date of effectiveness. An election by a director shall be deemed to be continuing and therefore applicable to subsequent Plan years unless the director revokes or changes such election by filing a new election form by the due date for such form specified in this Section 7(a). The election must specify the following:

i. A percentage of fees to be received in the form of Shares or deferred in the form of Deferred Shares under the Plan; and

ii. In the case of a deferral, the period or periods during which settlement of Deferred Shares will be deferred (subject to such limitations as may be specified by counsel to the Company).

b. Payment of Fees in the Form of Shares. At any date on which fees are payable to a Participant who has elected to receive such fees in the form of Shares, the Company will issue to such Participant, or to a designated third party for the account of such Participant, a number of Shares having an aggregate Fair Market Value at that date equal to the fees, or as nearly as possible equal to the fees (but in no event greater than the fees), that would have been payable at such date but for the Participant’s election to receive Shares in lieu thereof. If the Shares are to be credited to an account maintained by the Participant and to the extent reasonably practicable without requiring the actual issuance of fractional Shares, the Company shall cause fractional Shares to be credited to the Participant’s account. If fractional Shares are not so credited, any part of the Participant’s fees not paid in the form of whole Shares will be payable in cash to the Participant (either paid separately or included in a subsequent payment of fees, including a subsequent payment of fees subject to an election under this Section 7).

c. Deferral of Fees in the Form of Deferred Shares. The Company will establish a deferral account for each Participant who elects to defer fees in the form of Deferred Shares under this Section 7. At any date on which fees are payable to a Participant who has elected to defer fees in the form of Deferred Shares, the Company will credit such Participant’s deferral account with a number of Deferred Shares equal to the number of Shares having an aggregate Fair Market Value at that date equal to the fees that otherwise would have been payable at such date but for the Participant’s election to defer receipt of such fees in the form of Deferred Shares. The amount of Deferred Shares so credited shall include fractional Shares calculated to at least three decimal places.

d. Crediting of Dividend Equivalents. Whenever dividends are paid or distributions are made with respect to Shares, a Participant to whom Deferred Shares are then credited in a deferral account shall be entitled to receive, as dividend equivalents, an amount equal in value to the amount of the dividend paid or property distributed on a single Share multiplied by the number of Deferred Shares (including any fractional Share) credited to his or her deferral account as of the record date for such dividend or distribution. Such dividend equivalents shall be credited to the Participant’s deferral

account as a number of Deferred Shares determined by dividing the aggregate value of such dividend equivalents by the Fair Market Value of a Share at the payment date of the dividend or distribution.

e. Settlement of Deferred Shares. The Company will settle the Participant’s deferral account by delivering to the Participant (or his or her beneficiary) a number of Shares equal to the number of whole Deferred Shares then credited to his or her deferral account (or a specified portion in the event of any partial settlement), together with cash in lieu of any fractional share remaining at a time when less than one whole Deferred Share is credited to such deferral account. Such settlement shall be made at the time or times specified in the Participant’s election filed in accordance with Section 7(a); provided, however, that a Participant may further defer settlement of Deferred Shares if counsel to the Company determines that such further deferral likely would be effective under applicable federal income tax laws and regulations.

f. Nonforfeitability. The interest of each Participant in any fees paid in the form of Shares or Deferred Shares (and any deferral account relating thereto) at all times will be nonforfeitable.

8. Adjustment Provisions.

a. Corporate Transactions and Events. In the event any recapitalization, reorganization, merger, consolidation, spinoff, combination, repurchase, exchange of Shares or other securities of the Company, share split or reverse split, extraordinary dividend (whether in the form of cash, Shares, or other property), liquidation, dissolution, or other similar corporate transaction or event affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of each Participant’s rights under the Plan, then an adjustment shall be made, in a manner that is proportionate to the change to the Shares and otherwise equitable, in (i) the number and kind of Shares remaining reserved and available for issuance under Section 3, (ii) the number and kind of Shares to be subject to each automatic grant of an Option under Section 6, (iii) the number and kind of Shares issuable upon exercise of outstanding Options, and/or the exercise price per Share thereof (provided that no fractional Shares will be issued upon exercise of any Option), (iv) the kind of Shares to be issued in lieu of fees under Section 7, and (v) the number and kind of Shares to be issued upon settlement of Deferred Shares under Section 7. The foregoing notwithstanding, no adjustment may be made hereunder except as will be necessary to maintain the proportionate interest of the Participant under the Plan and to preserve, without exceeding, the value of outstanding Options and potential grants of Options and the value of outstanding Deferred Shares.

b. Insufficient Number of Shares. If at any date an insufficient number of Shares are available under the Plan for the automatic grant of Options or the receipt of fees in the form of Shares or deferral of fees in the form of Deferred Shares at that date, Options will first be automatically granted proportionately to each eligible director, to the extent Shares are then available (provided that no fractional Shares will be issued upon exercise of any Option) and otherwise as provided under Section 6, and then, if any Shares remain available, fees shall be paid in the form of Shares or deferred in the form of Deferred Shares proportionately among directors then eligible to participate to the extent Shares are then available and otherwise as provided under Section 7.

9. Changes to the Plan. The Board of Directors may amend, alter, suspend, discontinue, or terminate the Plan or authority to grant Options or pay fees in the form of Shares or Deferred Shares under the Plan without the consent of shareholders or Participants, except that any amendment or alteration will be subject to the approval of the Company’s shareholders at or before the next annual meeting of shareholders for which the record date is after the date of such Board action if such shareholder approval is required by any applicable federal or state law or regulation or the rules of any stock exchange or automated quotation system as then in effect, and the Board may otherwise determine to submit other such amendments or alterations to shareholders for approval; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant with respect to any previously granted Option or any previous payment of fees in the form of Shares or Deferred Shares.

10. General Provisions.

a. Agreements. Options, Deferred Shares, and any other right or obligation under the Plan may be evidenced by agreements or other documents executed by the Company and the Participant incorporating the terms and conditions set forth in the Plan, together with such other terms and conditions not inconsistent with the Plan, as the Board of Directors may from time to time approve.

b. Compliance with Laws and Obligations. The Company will not be obligated to issue or deliver Shares in connection with any Option, in

payment of any directors’ fees, or in settlement of Deferred Shares in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any other federal or state securities law, any requirement under any listing agreement between the Company and any stock exchange or automated quotation system, or any other law, regulation, or contractual obligation of the Company, until the Company is satisfied that such laws, regulations, and other obligations of the Company have been complied with in full. Certificates representing Shares issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations, and other obligations of the Company, including any requirement that a legend or legends be placed thereon.

c. Limitations on Transferability. Options, Deferred Shares, and any other right under the Plan will not be transferable by a Participant except by will or the laws of descent and distribution (or to a designated beneficiary in the event of a Participant’s death), and will be exercisable during the lifetime of the Participant only by such Participant or his or her guardian or legal representative; provided, however, that Options and Deferred Shares (and rights relating thereto) may be transferred to one or more trusts or other beneficiaries during the lifetime of the Participant for purposes of the Participant’s estate planning or at the Participant’s death, and such transferees may exercise rights thereunder in accordance with the terms thereof, but only if and to the extent then permitted under Rule 16b-3 and consistent with the registration of the offer and sale of Shares related thereto on Form S-8, Form S-3, or such other registration form of the Securities and Exchange Commission as may then be filed and effective with respect to the Plan. The Company may rely upon the beneficiary designation last filed in accordance with this Section 10(c). Options, Deferred Shares, and other rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to the claims of creditors of any Participant.

d. Compliance with Rule 16b-3. It is the intent of the Company that this Plan comply in all respects with applicable provisions of Rule 16b-3. Accordingly, if any provision of this Plan or any agreement hereunder does not comply with the requirements of Rule 16b-3 as then applicable to a transaction by a Participant, such provision will be construed or deemed amended to the extent necessary, to conform to the applicable requirements with respect to such Participant.

e. No Right To Continue as a Director. Nothing contained in the Plan or any agreement hereunder will confer upon any Participant any right to continue to serve as a director of the Company.

f. No Shareholder Rights Conferred. Nothing contained in the Plan or any agreement hereunder will confer upon any Participant (or any person or entity claiming rights by or through a Participant) any rights of a shareholder of the Company unless and until Shares are in fact issued to such Participant (or person) or, in the case of an Option, such Option is validly exercised in accordance with Section 6.

g. Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board of Directors nor any submission thereof to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other compensatory arrangements for directors as it may deem desirable.

h. Governing Law. The validity, construction, and effect of the Plan and any agreement hereunder will be determined in accordance with the Delaware Limited Liability Company Act and other laws (including those governing contracts) of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law.

11. Effective Date and Plan Termination. The Plan will be effective if, and at such time as, the Company’s 1998 Share Incentive Plan has become effective, subject to its approval by the shareholders of the Company. Unless earlier terminated by action of the Board of Directors, the Plan will remain in effect until such time as no Shares remain available for issuance under the Plan and the Company and Participants have no further rights or obligations under the Plan.

As adopted by the Board of Directors: March 23, 1998

Exhibit 10.10

MUNICIPAL MORTGAGE & EQUITY, LLC

2001 SHARE INCENTIVE PLAN

Purpose.

The purpose of this 2001 Share Incentive Plan (the “Plan”) of Municipal Mortgage & Equity, LLC, a Delaware limited liability company (the “Company”), is to advance the interests of the Company and its shareholders by providing a means to attract, retain, and reward executive officers and other key individuals of the Company and its subsidiaries, to link compensation to measures of the Company’s performance in order to provide additional share-based incentives to such individuals for the creation of shareholder value, and to promote ownership of a greater proprietary interest in the Company, thereby aligning such individuals’ interests more closely with the interests of shareholders of the Company.

2.	Definitions.

The definitions of awards under the Plan, including Options, SARs (including Limited SARs), Restricted Shares, Deferred Shares, and Shares granted as a bonus or in lieu of other awards are set forth in Section 6 of the Plan. Such awards, together with any other right or interest granted to a Participant under the Plan, are termed “Awards.” The definitions of terms relating to a Change in Control of the Company are set forth in Section 8 of the Plan. In addition to such terms and the terms defined in Section 1, the following are defined terms under the Plan:

(a) “Award Agreement” means any written agreement, contract, notice to a Participant, or other instrument or document evidencing an Award.

(e) “Committee” means the Share Incentive Committee, or such other Board committee as may be designated by the Board to administer the Plan.

(g) “Fair Market Value” means, with respect to Shares, Awards, or other property, the fair market value of such Shares, Awards, or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of a Share means, as of any given date, the closing sales price of a Share reported in the table entitled “New York Stock Exchange Composite Transactions” contained in The Wall Street Journal (or an equivalent successor table) for such date or, if no such closing sales price was reported for such date, for the most recent trading day prior to such date for which a closing sales price was reported.

(j) “Share” means a Common Share of the Company and such other securities as may be substituted for such Share or such other securities pursuant to Section 4.

3.	Administration.

(i)

to select Participants to whom Awards may be granted;

(ii)

to determine the type or types of Awards to be granted to each Participant;

(iii)

to determine the number of Awards to be granted, the number of Shares to which an Award will relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule or performance conditions for the lapse of restrictions or conditions relating to transferability, forfeiture, exercisability, or settlement of an Award, and waivers, accelerations, or modifications thereof, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;

(iv)

to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(v)

to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Participant;

(vi)

to prescribe the form of each Award Agreement, which need not be identical for each Participant;

(vii)

to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

(viii)

to correct any defect or supply appropriate text for any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder; and

(ix)

to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

4.	Shares Available Under Plan; Individual Award Limitations; Adjustments.

not exceed 20% of such total; the number of Shares issued as Awards other than Options (including Restricted Shares) shall not exceed 40% of such total; and the number of Shares with respect to which Awards of Options and SARs may be granted to any Participant shall not exceed 500,000 during any 12 month period. No Award may be granted if the number of Shares to which such Award relates, when added to the number of Shares to which other then-outstanding Awards relate, exceeds an applicable limitation on the number of Shares then remaining available for issuance under this Section 4. If all or any portion of an Award is forfeited, settled in cash, or terminated without issuance of Shares to the Participant, the Shares to which such Award or portion thereof related shall again be available for Awards under the Plan, and such Award or portion thereof shall not count against the percentage limitations applicable to Restricted Shares and Awards other than Options; provided, however, that Shares withheld in payment of the exercise price of any Option or withholding taxes relating to any Award and Shares equal to the number of Shares surrendered in payment of the exercise price of any Option or withholding taxes relating to any Award shall, for purposes of this provision, be deemed not to have been issued to the Participant in connection with such Awards under the Plan. The Committee may adopt procedures for the counting of Shares relating to any Award to ensure appropriate counting and avoid double counting (in the case of tandem or substitute awards). Any Shares issued pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury Shares, or Shares acquired in the market for the account of the Participant (which treasury Shares or acquired Shares will be deemed to have been “issued” pursuant to such Award).

5.	Eligibility.

Executive officers, other key employees and other key independent contractors of the Company and its subsidiaries, including any director who is also an executive officer or employee, are eligible to be granted Awards under the Plan; provided, however, that members of the Committee are not eligible to be granted Awards under the Plan.

6.	Specific Terms of Awards.

(i)

Exercise Price. The exercise price per Share purchasable under an Option shall be determined by the Committee without regard to the Fair Market Value of a Share on the date of grant of the Option.

(ii)

Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, the methods by which such exercise price may be paid or deemed to be paid, the form of such payment, including, without limitation, cash, Shares,

other Awards or awards granted under other Company plans, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis, such as through “cashless exercise” arrangements, to the extent permitted by applicable law), and the methods by which Shares will be delivered or deemed to be delivered to Participants.

(iii)

Forfeiture. Except as otherwise determined by the Committee, upon termination of employment or contract during the applicable term of the Options, unexercised Options shall be forfeited and again be available for Award by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to the Options will be waived in whole or in part in the event of terminations resulting from specified causes.

(iv)

Dividend Equivalents. The Committee may provide that payments in the form of dividend equivalents will be credited in respect of an Option. The amount of the dividend equivalent shall be credited on the dividend payment date in any of the following forms: in cash, or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or in options to acquire additional shares under the Option at no cost based on the dividend payments, or in a reduction of the exercise price of the Option. If the Committee provides for crediting dividend equivalents in the form of additional Options or Shares, such dividend equivalents must be approved by the Committee before such Options or Shares can be credited to the Participant.

(c) Share Appreciation Rights. The Committee is authorized to grant SARs to Participants on the following terms and conditions:

(i)

Right to Payment. A SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine, the Fair Market Value of one Share at any time during a specified period before or after the date of exercise), over (B) the grant price of the SAR as determined by the Committee as of the date of grant of the SAR.

(ii)

Other Terms. The Committee shall determine the time or times at which a SAR may be exercised in whole or in part, the method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Participants, whether or not a SAR shall be in tandem with any other Award, and any other terms and conditions of any SAR. Limited SARs that may only be exercised upon the occurrence of a Change in Control (as such term is defined in Section 8(b) or as otherwise defined by the Committee) may be granted on such terms, not inconsistent with this Section 6(c), as the Committee may determine. Such Limited SARs may be either freestanding or in tandem with other Awards.

(iii)

Forfeiture. Except as otherwise determined by the Committee, upon termination of employment or contract during the applicable term of the SARs, unexercised SARs shall be forfeited and again be available for Award by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to the SARs will be waived in whole or in part in the event of terminations resulting from specified causes.

(d) Restricted Shares. The Committee is authorized to grant Restricted Shares to Participants on the following terms and conditions:

(i)

Grant and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, or otherwise as the Committee may determine. Except to the extent restricted under the terms of the Plan and any Award Agreement relating to the Restricted Shares, a Participant granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon.

(ii)

Forfeiture. Except as otherwise determined by the Committee, upon termination of employment during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited and reacquired by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes.

(iii)

Certificates for Shares. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Participant, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, the Company may retain physical possession of the certificate, and the Participant shall have delivered a stock power to the Company, endorsed in blank, relating to the Restricted Shares.

(iv)

Dividends and Distributions. Dividends paid on Restricted Shares shall be either paid at the dividend payment date in the form the dividends are paid to other shareholders, in cash, or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or the payment of such dividends shall be deferred and/or the amount or value thereof automatically reinvested in additional Restricted Shares, other Awards, or other investment vehicles, as the Committee shall determine or permit the Participant to elect. Shares distributed in connection with a Share split or Share dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property are distributed.

(e) Deferred Shares. The Committee is authorized to grant Deferred Shares to Participants, subject to the following terms and conditions:

(i)

Award and Restrictions. Issuance of Shares will occur upon expiration of the deferral period specified for an Award of Deferred Shares by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Deferred Shares shall be subject to such restrictions as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times, separately or in combination, under such circumstances, in such installments, or otherwise as the Committee may determine.

(ii)

Forfeiture. Except as otherwise determined by the Committee, upon termination of employment during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Deferred Shares), all Deferred Shares that are at that time subject to such risk of forfeiture shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Deferred Shares will be waived in whole or in part in the event of terminations resulting from specified causes.

(iii)

Dividend Equivalents. The Committee may provide that payments in the form of dividend equivalents will be credited in respect of Deferred Shares, which amounts may be paid or distributed when accrued or deemed reinvested in additional Deferred Shares.

7.	Certain Provisions Applicable to Awards.

(b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee.

8.	Change in Control Provisions.

(a) In the event of a “Change in Control,” as defined in this Section, the following acceleration provisions shall apply:

(i)

any Award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested, subject only to the restrictions set forth in Sections 7(d) and 9(a); and

(ii)

the restrictions, deferral of settlement, and forfeiture conditions applicable to any other Award granted under the Plan shall lapse and such Award shall be deemed fully vested, and any performance conditions imposed with respect to any Award shall be deemed to be fully achieved, subject to the restrictions set forth in Sections 7(d) and 9(a).

(b) For purposes of the Plan, a “Change in Control” shall have occurred if, after consummation of the Transaction:

(i)

Any “Person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a subsidiary, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding voting securities;

(ii)

during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this Section 8(b)) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

(iii)

the shareholders of the Company approve a merger, consolidation, recapitalization, or reorganization of the Company, or a reverse share split of any class of voting securities of the Company, or the consummation of any such transaction if shareholder approval is not obtained, other than any such transaction which would result in at least 75% of the total voting power represented by the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 75% of the combined voting power of the voting securities of the Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each such continuing holder not substantially altered as a result of the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 75% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such surviving entity; or

(iv)

the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).

9.	General Provisions.

in full. Certificates representing Shares issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations, and other obligations of the Company, including any requirement that a legend or legends be placed thereon.

(f) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue, or terminate the Plan or the Committee’s authority to grant Awards under the Plan without the consent of shareholders or Participants, except that any amendment or alteration will be subject to the approval of the Company’s shareholders at or before the next annual meeting of shareholders for which the record date is after the date of such Board action if such shareholder approval is required by any applicable federal or state law or regulation or the rules of any stock exchange or automated quotation system on which Company securities may then be listed or quoted, and the Board may otherwise determine to submit other such amendments or alterations to shareholders for approval; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant with respect to any Award theretofore granted to him. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate, any Award theretofore granted and any Award Agreement relating thereto; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant under such Award.

10.	Shareholder Approval, Effective Date, and Plan Termination.

The Plan will be effective upon June 14, 2001, subject to its approval by the shareholders of the Company. Unless earlier terminated by action of the Board, the Plan will remain in effect until such time as no Shares remain available for issuance under the Plan and the Company and Participants have no further rights or obligations under the Plan.

As adopted by the Board of Directors: March 21, 2001

Exhibit 10.11

MUNICIPAL MORTGAGE & EQUITY, LLC

2001 NON-EMPLOYEE DIRECTORS’ SHARE PLAN

Purpose .

The purpose of this 2001 Non-Employee Directors’ Share Plan (the “Plan”) of Municipal Mortgage & Equity, LLC, a Delaware limited liability company (the “Company”), is to advance the interests of the Company and its shareholders by providing a means to attract and retain highly qualified persons to serve as non-employee directors of the Company and to promote ownership by such directors of a greater proprietary interest in the Company, thereby aligning such directors’ interests more closely with the interests of shareholders of the Company.

2.	Definitions .

In addition to terms defined elsewhere in the Plan, the following are defined terms under the Plan:

(b) For purposes of the Plan, a “Change in Control” shall have occurred if, after consummation of the Transaction:

(i)

Any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a subsidiary, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding voting securities;

(ii)

during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this Section 2(b)) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

(iii)

the shareholders of the Company approve a merger, consolidation, recapitalization, or reorganization of the Company, or a reverse share split of any class of voting securities of the Company, or the consummation of any such transaction if shareholder approval is not obtained, other than any such transaction which would result in at least 75% of the total voting power represented by the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 75% of the combined voting power of the voting securities of the Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each other continuing holder not substantially altered as a result of the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 75% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such surviving entity; or

(iv)

the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all of substantially all of the Company’s assets (or any transaction having a similar effect).

(d) “Exchange Act” means the Securities Exchange Act of 1934, as amended. References to any provision of the Exchange Act include rules thereunder and successor provisions and rules thereto.

(e) “Fair Market Value” of a Share means, as of any given date, the closing sales price of a Share reported in the table entitled “New York Stock Exchange Composite Transactions” contained in The Wall Street Journal (or an equivalent successor table) for such date or, if no such closing sales price was reported for such date, for the most recent trading day prior to such date for which a closing sales price was reported.

(i) “Share” means a Common Share of the Company and such other securities as may be substituted for such Share or such other securities pursuant to Section 8.

3.	Shares Available Under the Plan .

Subject to adjustment as provided in Section 8, the total number of Shares reserved and available for issuance under the Plan is 150,000. Such Shares may be authorized but unissued Shares, treasury Shares, or Shares acquired in the market for the account of the Participant. For purposes of the Plan, Shares that may be purchased upon exercise of an Option or delivered in settlement of Deferred Shares will not be considered to be available after such Option has been granted or Deferred Share credited, except for purposes of issuance in connection with such Option or Deferred Share; provided, however, that, if an Option expires for any reason without having been exercised in full, the Shares subject to the unexercised portion of such Option will again be available for issuance under the Plan.

4.	Administration of the Plan .

The Plan will be administered by the Board of Directors of the Company; provided, however, that any action by the Board relating to the Plan will be taken only if, in addition to any other required vote, such action is approved by the affirmative vote of a majority of the directors who are not then eligible to participate in the Plan.

5.	Eligibility .

Each director of the Company who, on any date on which an Option is to be granted under Section 6 or on which fees are to be paid which could be received in the form of Shares or deferred in the form of Deferred Shares under Section 7, is not an employee of the Company or any subsidiary of the Company will be eligible, at such date, to be granted an Option under Section 6 or receive fees in the form of Shares or defer fees in the form of Deferred Shares under Section 7. No person other than those specified in this Section 5 will be eligible to participate in the Plan.

Options .

An Option to purchase 7,000 Shares, subject to adjustment as provided in Section 8, will be automatically granted to a person who is first elected or appointed to serve as a member of the Board of Directors of the Company at or after the effective date of the Plan, on the date of such election or appointment, if such director is eligible to be granted an Option at that date and an option to purchase 5,000 Shares to each member of the Board of Directors (which may include a director who also will receive a grant under clause (i) of this sentence), on the date of the final adjournment of the Company’s Annual Meeting of Shareholders each year, if such director is eligible to be granted an Option at that date.

(a) Exercise Price. The exercise price per Share purchasable upon exercise of an Option will be equal to 100% of the Fair Market Value of a Share on the date of grant of the Option.

(b) Option Expiration. A Participant’s Option will expire at the earlier of (i) ten years after the date of grant or (ii) one year after the date the Participant ceases to serve as a director of the Company for any reason.

(c) Exercisability. No Option may be exercised unless and until it has become exercisable in accordance with this Section 6(c). A Participant’s Option received upon initial election or appointment will become exercisable in three equal installments commencing at the earlier of : (a) the next anniversary of the director’s initial election, or (b) at the next Annual Meeting of Shareholders; Options received on the date of each Annual Meeting of Shareholders become exercisable at the earlier of: (a) the next anniversary of the option grant, or (b) at the next Annual Meeting of Shareholders; provided, however, that a Participant’s Option will become immediately exercisable in full at the time the Participant ceases to serve as a director due to death or disability or upon a Change in Control; and provided further, that a Participant’s Option may be exercised after the Participant ceases to serve as a director for any reason other than death or disability only to the extent that the Option was exercisable at the date he or she ceased to be a director or has become exercisable pursuant to this Section 6(c) within two months after the date he or she ceased to be a director.

(d) Method of Exercise. A Participant may exercise an Option, in whole or in part, at such time as it is exercisable and prior to its expiration, by giving written notice of exercise to the Secretary of the Company, specifying the Option to be exercised and the number of Shares to be purchased, and paying in full the exercise price in cash (including by check) or by surrender of Shares already owned by the Participant (except for Shares acquired from the Company by exercise of an Option or other award less than six months before the date of surrender) having a Fair Market Value at the time of exercise equal to the exercise price, or by a combination of cash and Shares.

7.	Receipt of Shares or Deferred Shares In Lieu of Fees .

Each director of the Company may elect to be paid fees, in his or her capacity as a director (including annual retainer fees for service on the Board, fees for service on a Board committee, fees for service as chairman of a Board committee, and any other fees paid to directors) in the form of Shares or Deferred Shares in lieu of cash payment of such fees, if such director is eligible to do so under Section 5 at the date any such fee is otherwise payable. If so elected, payment of fees in the form of Shares or Deferred Shares shall be made in accordance with this Section 7.

(a) Elections. Each director who elects to be paid fees for a given calendar year in the form of Shares or to defer such payment of fees in the form of Deferred Shares for such calendar year must file an irrevocable written election with the Secretary of the Company no later than December 31 of the year preceding such calendar year; provided, however, that any newly elected or appointed director may file an election for any year not later than 30 days after the date such person first became a director, and a director may file an election for the year in which the Plan became effective not later than 30 days after the date of effectiveness. An election by a director shall be deemed to be continuing and therefore applicable to subsequent Plan years unless the director revokes or changes such election by filing a new election form by the due date for such form specified in this Section 7(a). The election must specify the following:

(i) A percentage of fees to be received in the form of Shares or deferred in the form of Deferred Shares under the Plan; and

(ii) In the case of a deferral, the period or periods during which settlement of Deferred Shares will be deferred (subject to such limitations as may be specified by counsel to the Company).

(b) Payment of Fees in the Form of Shares. At any date on which fees are payable to a Participant who has elected to receive such fees in the form of Shares, the Company will issue to such Participant, or to a designated third party for the account of such Participant, a number of Shares having an aggregate Fair Market Value at that date equal to the fees, or as nearly as possible equal to the fees (but in no event greater than the fees), that would have been payable at such date but for the Participant’s election to receive Shares in lieu thereof. If the Shares are to be credited to an account maintained by the Participant and to the extent reasonably practicable without requiring the actual issuance of fractional Shares, the Company shall cause fractional Shares to be credited to the Participant’s account. If fractional Shares are not so credited, any part of the Participant’s fees not paid in the form of whole Shares will be payable in cash to the Participant (either paid separately or included in a subsequent payment of fees, including a subsequent payment of fees subject to an election under this Section 7).

(c) Deferral of Fees in the Form of Deferred Shares. The Company will establish a deferral account for each Participant who elects to defer fees in the form of Deferred Shares under this Section 7. At any date on which fees are payable to a Participant who has elected to defer fees in the form of Deferred Shares, the Company will credit such Participant’s deferral account with a number of Deferred Shares equal to the number of Shares having an aggregate Fair Market Value at that date equal to the fees that otherwise would have been payable at such date but for the Participant’s election to defer receipt of such

fees in the form of Deferred Shares. The amount of Deferred Shares so credited shall include fractional Shares calculated to at least three decimal places.

(d) Crediting of Dividend Equivalents. Whenever dividends are paid or distributions are made with respect to Shares, a Participant to whom Deferred Shares are then credited in a deferral account shall be entitled to receive, as dividend equivalents, an amount equal in value to the amount of the dividend paid or property distributed on a single Share multiplied by the number of Deferred Shares (including any fractional Share) credited to his or her deferral account as of the record date for such dividend or distribution. Such dividend equivalents shall be credited to the Participant’s deferral account as a number of Deferred Shares determined by dividing the aggregate value of such dividend equivalents by the Fair Market Value of a Share at the payment date of the dividend or distribution.

(e) Settlement of Deferred Shares. The Company will settle the Participant’s deferral account by delivering to the Participant (or his or her beneficiary) a number of Shares equal to the number of whole Deferred Shares then credited to his or her deferral account (or a specified portion in the event of any partial settlement), together with cash in lieu of any fractional share remaining at a time when less than one whole Deferred Share is credited to such deferral account. Such settlement shall be made at the time or times specified in the Participant’s election filed in accordance with Section 7(a); provided, however, that a Participant may further defer settlement of Deferred Shares if counsel to the Company determines that such further deferral likely would be effective under applicable federal income tax laws and regulations.

(f) Nonforfeitability. The interest of each Participant in any fees paid in the form of Shares or Deferred Shares (and any deferral account relating thereto) at all times will be nonforfeitable.

8.	Adjustment Provisions .

(a) Corporate Transactions and Events. In the event any recapitalization, reorganization, merger, consolidation, spin-off, combination, repurchase, exchange of Shares or other securities of the Company, share split or reverse split, extraordinary dividend (whether in the form of cash, Shares, or other property), liquidation, dissolution, or other similar corporate transaction or event affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of each Participant’s rights under the Plan, then an adjustment shall be made, in a manner that is proportionate to the change to the Shares and otherwise equitable, in (i) the number and kind of Shares remaining reserved and available for issuance under Section 3, (ii) the number and kind of Shares to be subject to each automatic grant of an Option under Section 6, (iii) the number and kind of Shares issuable upon exercise of outstanding Options, and/or the exercise price per Share thereof (provided that no fractional Shares will be issued upon exercise of any Option), (iv) the kind of Shares to be issued in lieu of fees under Section 7, and (v) the number and kind of Shares to be issued upon settlement of Deferred Shares under Section 7. The foregoing notwithstanding, no adjustment may be made hereunder except as will be necessary to maintain the proportionate interest of the Participant under the Plan and to preserve, without exceeding, the value of outstanding Options and potential grants of Options and the value of outstanding Deferred Shares.

(b) Insufficient Number of Shares. If at any date an insufficient number of Shares are available under the Plan for the automatic grant of Options or the receipt of fees in the form of Shares or deferral of fees in the form of Deferred Shares at that date, Options will first be automatically granted proportionately to each eligible director, to the extent Shares are then available (provided that no fractional Shares will be issued upon exercise of any Option) and otherwise as provided under Section 6, and then, if any Shares remain available, fees shall be paid in the form of Shares or deferred in the form of Deferred Shares proportionately among directors then eligible to participate to the extent Shares are then available and otherwise as provided under Section 7.

9.	Changes to the Plan .

The Board of Directors may amend, alter, suspend, discontinue, or terminate the Plan or authority to grant Options or pay fees in the form of Shares or Deferred Shares under the Plan without the consent of shareholders or Participants, except that any amendment or alteration will be subject to the approval of the Company’s shareholders at or before the next annual meeting of shareholders for which the record date is after the date of such Board action if such shareholder approval is required by any applicable federal or state law or regulation or the rules of any stock exchange or automated quotation system as then in effect, and the Board may otherwise determine to submit other such amendments or alterations to shareholders for approval; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant with respect to any previously granted Option or any previous payment of fees in the form of Shares or Deferred Shares.

10.	General Provisions .

(a) Agreements. Options, Deferred Shares, and any other right or obligation under the Plan may be evidenced by agreements or other documents executed by the Company and the Participant incorporating the terms and conditions set forth in the Plan, together with such other terms and conditions not inconsistent with the Plan, as the Board of Directors may from time to time approve.

(b) Compliance with Laws and Obligations. The Company will not be obligated to issue or deliver Shares in connection with any Option, in payment of any directors’ fees, or in settlement of Deferred Shares in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any other federal or state securities law, any requirement under any listing agreement between the Company and any stock exchange or automated quotation system, or any other law, regulation, or contractual obligation of the Company, until the Company is satisfied that such laws, regulations, and other obligations of the Company have been complied with in full. Certificates representing Shares issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations, and other obligations of the Company, including any requirement that a legend or legends be placed thereon.

(c) Limitations on Transferability. Options, Deferred Shares, and any other right under the Plan will not be transferable by a Participant except by will or the laws of descent and distribution (or to a designated beneficiary in the event of a Participant’s death), and will be exercisable during the lifetime of the Participant only by such Participant or his or her guardian or legal representative; provided, however, that Options and Deferred Shares (and rights relating thereto) may be transferred to one or more trusts or other beneficiaries during the lifetime of the Participant for purposes of the Participant’s estate planning or at the Participant’s death, and such transferees may exercise rights thereunder in accordance with the terms thereof, but only if and to the extent then permitted under Rule 16b-3 and consistent with the registration of the offer and sale of Shares related thereto on Form S-8, Form S-3, or such other registration form of the Securities and Exchange Commission as may then be filed and effective with respect to the Plan. The Company may rely upon the beneficiary designation last filed in accordance with this Section 10(c). Options, Deferred Shares, and other rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to the claims of creditors of any Participant.

(d) Compliance with Rule 16b-3. It is the intent of the Company that this Plan complies in all respects with applicable provisions of Rule 16b-3. Accordingly, if any provision of this Plan or any agreement hereunder does not comply with the requirements of Rule 16b-3 as then applicable to a transaction by a Participant, such provision will be construed or deemed amended to the extent necessary, to conform to the applicable requirements with respect to such Participant.

(e) No Right To Continue as a Director. Nothing contained in the Plan or any agreement hereunder will confer upon any Participant any right to continue to serve as a director of the Company.

(f) No Shareholder Rights Conferred. Nothing contained in the Plan or any agreement hereunder will confer upon any Participant (or any person or entity claiming rights by or through a Participant) any rights of a shareholder of the Company unless and until Shares are in fact issued to such Participant (or person) or, in the case of an Option, such Option is validly exercised in accordance with Section 6.

(g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board of Directors nor any submission thereof to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other compensatory arrangements for directors as it may deem desirable.

(h) Governing Law. The validity, construction, and effect of the Plan and any agreement hereunder will be determined in accordance with the Delaware Limited Liability Company Act and other laws (including those governing contracts) of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law.

11.	Effective Date and Plan Termination .

The Plan will be effective if, and at such time as, the Company’s 2001 Share Incentive Plan has become effective, subject to its approval by the shareholders of the Company. Unless earlier terminated by action of the Board of Directors, the Plan will remain in effect until such time as no Shares remain available for issuance under the Plan and the Company and Participants have no further rights or obligations under the Plan.

As adopted by the Board of Directors: March 21, 2001

Exhibit 31.1

CERTIFICATIONS

Certification of Chief Executive Officer

I, Michael L. Falcone, certify that:

1.	I have reviewed this quarterly report on Form 10-Q 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;

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: November 8, 2005

/s/ M ICHAEL L. F ALCONE

Michael L. Falcone

Chief Executive Officer, President and Director

Exhibit 31.2

CERTIFICATIONS

Certification of Chief Financial Officer

I, William S. Harrison, certify that:

1.	I have reviewed this quarterly report on Form 10-Q 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;

(a)

(b)

(c)

(d)

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)

(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: November 8, 2005

/s/ W ILLIAM S. H ARRISON

William S. Harrison

Chief Financial Officer

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 Quarterly Report of Municipal Mortgage & Equity, LLC, a Delaware limited liability company (the “Company”), on Form 10-Q for the period ended September 30, 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: November 8, 2005

/s/ M ICHAEL L. F ALCONE

Michael L. Falcone

Chief Executive Officer, President and Director

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 Quarterly Report of Municipal Mortgage & Equity, LLC, a Delaware limited liability company (the “Company”), on Form 10-Q for the period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William S. Harrison, 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: November 8, 2005

/s/ W ILLIAM S. H ARRISON

William S. Harrison

Chief Financial Officer