ADVISORY AGREEMENT

THIS AGREEMENT is entered into as of April 9, 1998
by and between AMERICA FIRST MORTGAGE INVESTMENTS INC.,
a Maryland corporation (the "COMPANY"), and AMERICA
FIRST MORTGAGE ADVISORY CORPORATION, a Maryland
corporation (the "ADVISOR").

W I T N E S S E T H:

WHEREAS, the Company is a newly-formed corporation
that intends to qualify as a real estate investment
trust (a "REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "CODE");

WHEREAS, the Company, directly or through its
Subsidiaries, invests in adjustable-rate Mortgage
Securities, Mortgage Loans and other real estate
related investments meeting the investment criteria
established from time to time by its Board of Directors
(collectively, "MORTGAGE ASSETS"); and

WHEREAS, the Company desires to retain the Advisor
to manage the operations and investments of the Company
and its Subsidiaries and to perform administrative
services for the Company and its Subsidiaries, each in
the manner and on the terms set forth in this
Agreement.

NOW THEREFORE, in consideration of the mutual
agreements herein set forth, the parties hereto agree
as follows:

SECTION 1. DEFINITIONS. Capitalized terms used
herein shall have the respective meanings assigned them
in this Section 1:


(a) "Agreement" means this Advisory Agreement
between the Company and the Advisor, as amended from
time to time.

(b) "Closing Date" means April 9, 1998.

(c) "Common Stock" means the common stock, par
value $0.01 per share, of the Company.

(d) "Governing Instruments" means the articles of
incorporation and bylaws, in the case of a corporation,
the limited liability company agreement, in the case of
a limited liability company and the partnership
agreement, in the case of a partnership.


(e) "Independent Directors" means those members
of the Board of Directors of the Company who are
neither executive officers of the Company nor executive
officers or directors of the Advisor.

(f) "Mortgage Loans" means mortgage loans that
are eligible for inclusion in a pool that would
collateralize Mortgage Securities.

(g) "Mortgage Securities" means mortgaged-backed
securities, including adjustable- rate securities and
private-issue securities.

(h) "Net Income" means the net income of the
Company determined in accordance with GAAP before the
Advisor's incentive compensation, the deduction for
dividends paid and any net operating loss deductions
arising from losses in prior periods. The Company's
interest expenses for borrowed money shall be deducted
in calculating Net Income.

(i) "Qualified REIT Subsidiary" means a
corporation 100% of the stock of which is held by the
Company at all times during the existence of the
corporation, consistent with the definition of
Qualified REIT Subsidiary in Section 856(i)(2) of the
Code.

(j) "Return on Equity" for any period means that
amount produced by dividing the Company's Net Income
for such period by its Stockholder's Equity for such
period. For purposes of calculating the incentive
compensation payable to the Advisor, Return on Equity
is not related to the actual distributions received by
stockholders.

(k) "Stockholders' Equity" means the excess of
total assets of the Company minus its total liabilities
as determined in accordance with GAAP.

(l) "Subsidiary" shall mean any corporation,
whether now existing or in the future established, of
which the Company, directly or indirectly, owns more
than 50% of the outstanding voting securities of any
class or classes, any business trust, partnership or
similar non-corporate form in which the Company,
directly or indirectly, owns more than 50% of the
beneficial interests.

(m) "Ten-Year US Treasury Rate" means the average
of the weekly average yield to maturity for U.S.
Treasury securities (adjusted to a constant maturity of
ten years) as published weekly by the Federal Reserve
Board during a quarter.

SECTION 2. GENERAL DUTIES OF THE ADVISOR.
Subject to the supervision of the Board of Directors,
the Advisor shall provide services to the Company, and
to the extent directed by the Board of Directors, shall
provide similar services to any Subsidiary of the
Company as follows:

(a) administer the day-to-day operations of the
Company and its Subsidiaries and perform or supervise
the performance of such administrative functions
necessary in the management of the Company and its

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Subsidiaries as may be agreed upon by the Advisor and
the Board of Directors including, without limitation,
collection of revenues and payment of expenses, debts
and obligations and maintenance of appropriate computer
services to provide such administrative functions;

(b) serve as the Company's consultant with
respect to formulation of investment criteria and
preparation of policy guidelines by the Board of
Directors ("GUIDELINES");

(c) represent the Company in connection with the
purchase, accumulation, financing and securitization of
Mortgage Assets;

(d) furnish reports and statistical and economic
research to the Company regarding the investments,
activities and results of operations of the Company and
its Subsidiaries and the services performed for the
Company and its Subsidiaries by the Advisor;

(e) monitor and provide to the Board of Directors
on an on-going basis price information and other data
regarding the market maintained by certain nationally
recognized dealers in Mortgage Assets identified by the
Board of Directors from time to time, and provide data
and advice to the Board of Directors in connection with
the selection and identification of such dealers;

(f) communicate on behalf of the Company with the
holders of equity and debt securities of the Company as
required to satisfy the continuous reporting and other
requirements of any governmental or regulatory bodies
or agencies and maintain effective relations with such
holders of the Company's securities;

(g) to the extent not otherwise subject to an
agreement executed by the Company, designate a servicer
for those Mortgage Loans sold to the Company by
originators or sellers that have elected not to service
such loans and arrange for the monitoring and
administering of such servicers;

(h) counsel the Company in connection with policy
decisions to be made by the Board of Directors;

(i) upon request by, and in accordance with the
directions of, the Board of Directors, invest or
reinvest any money of the Company;

(j) engage in hedging activities on behalf of the
Company or any of its Subsidiaries consistent with the
Company's qualification as a REIT and any other
directions of the Board of Directors;

(k) arrange for the issuance of Mortgage
Securities from pools of Mortgage Loans acquired by the
Company and its Subsidiaries, and provide to the
Company directly or through another appropriate party
all services in connection with the creation of
Mortgage Securities including:

(i) serving as consultant with respect
to the structuring of each series of
Mortgage Securities;

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(ii) negotiating the rating requirements
with rating agencies with respect to the
rating of each series of Mortgage
Securities;

(iii) accumulating and reviewing all
Mortgage Loans which may secure or
constitute the mortgage pool for each
series of Mortgage Securities;

(iv) negotiating all agreements and
credit enhancements with respect to each
series of Mortgage Securities;

(v) issuing commitments on behalf of
the Company and its Subsidiaries to
purchase Mortgage Loans to be used to
secure or constitute the mortgage pool for
each series of Mortgage Securities;

(vi) organizing and administering all
activities in connection with the closing
of each series of Mortgage Securities,
including all negotiations and agreements
with underwriters, trustees, servicers,
master servicers and other parties; and

(vii) performing such other services
as may be required from time to time for
completing the creation of each series of
Mortgage Securities;

(l) provide to the Company directly or through
another appropriate party all services in connection
with the administration of each series of Mortgage
Securities created by the Company;

(m) provide the executive and administrative
personnel and services required in rendering the
foregoing services to the Company and its Subsidiaries;


(n) supervise compliance with REIT provisions of
the Code and maintain exemption from the Investment
Company Act of 1940, as amended;

(o) qualify and cause the Company to qualify to
do business in all applicable jurisdictions;

(p) cause the Company to retain qualified
accountants and tax experts for at least a two year
period to assist in developing appropriate accounting
procedures and testing systems and conducting quarterly
compliance reviews;

(q) comply with and use its best efforts to cause
the Company to comply with all applicable laws; and

(r) as approved and directed by the Board of
Directors, perform such other services as may be
required from time to time for management and other
activities relating to the assets of the Company and
its Subsidiaries as the Advisor shall deem appropriate
under the particular circumstances.

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SECTION 3. ADDITIONAL ACTIVITIES OF ADVISOR.
Nothing herein shall prevent the Advisor or any of its
affiliates from engaging in other businesses or from
rendering services of any kind to any other person or
entity, including investment in or advisory service to
others investing in any type of real estate investment,
including investments which meet the principal
investment objectives of the Company and its
Subsidiaries. Directors, officers, employees and
agents of the Advisor or affiliates of the Advisor may
serve as directors, officers, employees, agents,
nominees or signatories for the Company or any of its
Subsidiaries, to the extent permitted by its Governing
Instruments, as from time to time amended, or by any
resolutions duly adopted by the Board of Directors
pursuant to the Company's Governing Instruments. When
executing documents or otherwise acting in such
capacities for the Company, such persons shall use
their respective titles in the Company.

SECTION 4. BANK ACCOUNTS. At the direction of
the Board of Directors, the Advisor may establish and
maintain one or more bank accounts in the name of the
Company or any of its Subsidiaries, and may collect and
deposit into any such account or accounts, and disburse
funds from any such account or accounts, under such
terms and conditions as the Board of Directors may
approve; and the Advisor shall from time to time render
appropriate accounting of such collections and payments
to the Board of Directors and, upon request, to the
auditors of the Company or any of its Subsidiaries.

SECTION 5. RECORDS; CONFIDENTIALITY. The Advisor
shall maintain appropriate books of account and records
relating to services performed hereunder, and such
books of account and records shall be accessible for
inspection by representatives of the Company or any of
its Subsidiaries at any time during normal business
hours. The Advisor shall keep confidential any and all
information it obtains from time to time in connection
with the services it renders under this Agreement and
shall not disclose any portion thereof to non-
affiliated third parties except with the prior written
consent of the Company or any of its Subsidiaries.

SECTION 6. OBLIGATIONS OF ADVISOR.

(a) The Advisor shall require each seller or
transferor of Mortgage Assets to the Company to make
such representations and warranties regarding such
Mortgage Assets as may, in the judgment of the Advisor,
be necessary and appropriate. In addition, the Advisor
shall take such other action as it deems necessary or
appropriate with regard to the protection of the
Company's Mortgage Assets and other investments.

(b) The Advisor shall refrain from any action
which, in its sole judgment made in good faith, would
adversely affect the status of the Company as a REIT
or, if applicable, any of its Subsidiaries as either a
Qualified REIT Subsidiary or a partnership for federal
income tax purposes or which, in its sole judgment made
in good faith, would violate any law, rule or
regulation of any governmental or regulatory body or
agency having jurisdiction over the Company or any such
Subsidiary or which would otherwise not be permitted by
the Company's or any such Subsidiary's Governing
Instruments. If the Advisor is ordered to take any
such action by the Board of Directors, the Advisor
shall promptly notify the Board of Directors of the
Advisor's judgment that such action would adversely
affect the status of the Company or any of its
Subsidiaries under the Code or violate any such law,
rule or regulation or the Governing Instruments.
Notwithstanding the foregoing, the Advisor, its

5


directors, officers, stockholders and employees shall
not be liable to the Company, any Subsidiary of the
Company, the Independent Directors or the Company's or
any Subsidiary's stockholders for any act or omission
by the Advisor, its directors, officers, stockholders
or employees except as provided in Section 11 of this
Agreement.

SECTION 7. COMPENSATION.

(a) The Company shall pay to the Advisor, for
services rendered under this Agreement, an annual base
management fee in an amount equal to 1.10% of the first
$300 million of Stockholders' Equity of the Company,
plus .80% of the portion of Stockholders' Equity of the
Company above $300 million, payable each month (pro
rated based on the number of days elapsed during any
partial month) in arrears, commencing with the month in
which the Closing Date occurs. The base management fee
shall be calculated by the Advisor within 15 days after
the end of each month, and such calculation shall be
promptly delivered to the Company. The Company shall
pay the base management fee payable pursuant to this
Section 7(a) for each month within 30 days after the
end of each month.

(b) If the Company's annualized Return on Equity
for any fiscal quarter (computed by multiplying the
Return on Equity for such fiscal quarter by four) is in
excess of the Ten-Year U.S. Treasury Rate plus 1%, the
Company shall pay the Advisor as incentive compensation
for such quarter an amount equal to 20% of the dollar
amount by which the annualized Return on Equity of the
Company for such fiscal quarter exceeds the amount
necessary to provide an annualized Return on Equity
equal to the Ten-Year U.S. Treasury Rate plus 1%. The
Advisor shall compute the incentive compensation
payable under this Section 7(b) within 45 days after
the end of each fiscal quarter. The Company shall pay
the incentive compensation with respect to each fiscal
quarter within 15 days following the delivery to the
Company of the Advisor's written statement setting
forth the computation of the incentive fee for such
quarter.

(c) If loans are made to the Company by an
affiliate of the Advisor, the maximum amount of
interest that may be charged by such affiliate shall be
the prime rate publicly announced by Citibank, N.A.
from time to time plus 1% per year.

SECTION 8. EXPENSES OF THE COMPANY. The Company
or any of its Subsidiaries shall pay all of its
expenses and shall reimburse the Advisor for documented
expenses of the Advisor incurred on its behalf.
Notwithstanding the foregoing, the Advisor shall be
responsible for paying the compensation of the
Company's officers and other personnel required for the
Company's day-to-day operations.

SECTION 9. REIMBURSEMENT OF EXPENSES INCURRED BY
THE ADVISOR.

Expenses incurred by the Advisor on behalf of the
Company shall be reimbursed monthly to the Advisor
within 30 days after the end of each month. The
Advisor shall prepare a statement documenting the
expenses of the Company and those incurred by the
Advisor on behalf of the Company during each month, and
shall deliver such statement to the Company within 15
days after the end of each month.

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SECTION 10. MONITORING SERVICING. The Advisor
will monitor and administer the servicing of the
Company's Mortgage Loans, other than those Mortgage
Loans pooled to back Mortgage Securities. Such
monitoring and administrative services will include,
but not be limited to, the following activities:
serving as the Company's consultant with respect to the
servicing of Mortgage Loans; collection of information
and submission of reports pertaining to the Mortgage
Loans and to moneys remitted to the Advisor or the
Company by servicers; periodic review and evaluation of
the performance of each servicer to determine its
compliance with the terms and conditions of the
Servicing Agreement and, if deemed appropriate,
recommending to the Company the termination of such
Servicing Agreement; acting as a liaison between
servicers and the Company and working with servicers to
the extent necessary to improve their servicing
performance; review of and recommendations as to fire
losses, easement problems and condemnation, delinquency
and foreclosure procedures with regard to the Mortgage
Loans; review of servicers' delinquency, foreclosing
and other reports on Mortgage Loans; supervising claims
filed under any mortgage insurance policies; and
enforcing the obligation of any servicer to repurchase
Mortgage Loans from the Company. The Advisor may enter
into subcontracts with other parties, including its
affiliates, to provide any such services for the
Advisor.

SECTION 11. LIMITS OF ADVISOR RESPONSIBILITY.

(a) The Advisor assumes no responsibility under
this Agreement other than to render the services called
for hereunder in good faith and shall not be
responsible for any action of the Board of Directors in
following or declining to follow any advice or
recommendations of the Advisor, including as set forth
in Section 6(b) of this Agreement. The Advisor and its
directors, officers, stockholders and employees will
not be liable to the Company, any of its Subsidiaries,
the Independent Directors or the Company's or its
Subsidiary's stockholders for any acts or omissions by
the Advisor, its directors, officers, stockholders or
employees under or in connection with this Agreement,
except by reason of acts or omissions constituting bad
faith, willful misconduct, gross negligence or reckless
disregard of their duties. The Company or its
Subsidiary shall reimburse, indemnify and hold harmless
the Advisor and its stockholders, directors, officers
and employees of and from any and all expenses, losses,
damages, liabilities, demands, charges and claims of
any nature whatsoever (including, without limitation,
reasonable attorneys' fees) in respect of or arising
from any acts or omissions of the Advisor or its
stockholders, directors, officers and employees made in
good faith in the performance of the Advisor's duties
under this Agreement and not constituting bad faith,
willful misconduct, gross negligence or reckless
disregard of its duties.

(b) The Advisor shall reimburse, indemnify and
hold harmless the Company, any Subsidiary, or any of
their stockholders, directors, officers and employees
from any and all expenses, losses, damages,
liabilities, demands, charges and claims (including,
without limitation, reasonable attorneys' fees) arising
out of any intentional misstatements of fact made by
the Advisor in connection with this Agreement and the
services to be rendered hereunder.

SECTION 12. NO JOINT VENTURE. The Company and
the Advisor are not partners or joint venturers with
each other and nothing herein shall be construed to
make them such partners or joint venturers or impose
any liability as such on either of them.

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SECTION 13. TERM. This Agreement shall commence
on the Closing Date and shall continue in force for a
period of five years and thereafter it may be extended
only with the consent of the Advisor and by the
affirmative vote of a majority of the Board of
Directors, including a majority of the Independent
Directors. Each extension shall be executed in writing
by the parties hereto before the expiration of this
Agreement or any extension thereof. Each such
extension shall be effective for a period corresponding
to the fiscal year of the Company, but in no case
exceeding one year.

SECTION 14. TERMINATION BY COMPANY FOR CAUSE. At
the option of the Company, this Agreement or any
extension hereof shall be and become terminated upon 60
days' written notice of termination from the Board of
Directors to the Advisor if any of the following events
shall occur:

(a) if the Advisor shall materially breach any
provision of this Agreement and, after notice of such
breach, shall not cure such breach within 30 days; or

(b) there is entered an order for relief or
similar decree or order with respect to the Advisor by
a court having competent jurisdiction in an involuntary
case under the federal bankruptcy laws as now or
hereafter constituted or under any applicable federal
or state bankruptcy, insolvency or other similar laws;
or the Advisor (i) ceases or admits in writing its
inability to pay its debts as they become due and
payable, or makes a general assignment for the benefit
of, or enters into any composition or arrangement with,
creditors, (ii) applies for or consents (by admission
of material allegations of a petition or otherwise) to
the appointment of a receiver, trustee, assignee,
custodian, liquidator or sequestrator (or other similar
official) for itself or for any substantial part of its
assets or authorizes such an application or consent,
(iii) authorizes or files a voluntary petition in
bankruptcy, or applies for or consents (by admission of
material allegations of a petition or otherwise) to the
application of any bankruptcy, reorganization,
arrangement, readjustment of debt, insolvency,
dissolution, liquidation or other similar law of any
jurisdiction, or authorizes such application or
consent, or (iv) permits or suffers all or any
substantial part of its assets to be sequestered or
attached by court order and the order remains
undismissed for 30 days; or proceedings seeking the
appointment of a receiver, trustee, assignee,
custodian, liquidator or sequestrator (or other similar
official) for the Advisor or for any substantial part
of its assets are commenced without authorization,
consent or application against the Advisor and continue
undismissed for 30 days; or proceedings to sequester or
attach all or any substantial part of the Advisor's
assets are instituted against the Advisor without
authorization, consent and application and are approved
as properly instituted and remain undismissed for 30
days or result in adjudication of bankruptcy or
insolvency.

If any of the events specified in this Section 14 shall
occur, the Advisor shall give prompt written notice
thereof to the Board of Directors upon the happening of
such event.

SECTION 15. TERMINATION WITHOUT CAUSE. Either
party may terminate this Agreement without cause upon
60 days prior written notice, by (i) in the case of
termination by the Company, a majority vote of the
Independent Directors or by a vote of the holders of a
majority of the outstanding shares of the Company's
Common Stock, and (ii), in the case of termination by

8

the Advisor, by a majority vote of the Board of
Directors of the Advisor. In the event this Agreement
is terminated by the Company without cause, or in the
event this Agreement is not renewed by the Company
without cause, the Company, in addition to its
obligations under Section 17, shall pay the Advisor a
termination or non-renewal fee determined by an
independent appraisal. Such appraisal shall be
conducted by a nationally-recognized appraisal firm
mutually agreed upon by the parties and the costs of
such appraisal shall be borne equally by the parties.
If the parties are unable to agree upon such appraisal
firm within 30 days following notice of termination or,
in the event of non-renewal, the termination date, then
each party shall as soon as reasonably practicable, but
in no event more than 45 days following notice of
termination or, in the event of non-renewal, the
termination date, choose a nationally-recognized
independent appraisal firm to conduct an appraisal. In
such event, (i) the termination fee shall be deemed to
be the average of the appraisals as conducted by each
party's chosen appraiser and (ii) each party shall pay
the costs of its appraiser so chosen. Any appraisal
conducted hereunder shall be performed no later than 45
days following selection of the appraiser or
appraisers.

SECTION 16. ASSIGNMENTS.

(a) Except as set forth in Section 16(b) of this
Agreement, this Agreement shall terminate automatically
in the event of its assignment, in whole or in part, by
the Advisor, unless such assignment is consented to in
writing by the Company with the approval of a majority
of the Independent Directors. Any such assignment
shall bind the assignee hereunder in the same manner as
the Advisor is bound. In addition, the assignee shall
execute and deliver to the Company a joinder agreement
to this Agreement naming such assignee as Advisor.
This Agreement shall not be assigned by the Company
without the prior written consent of the Advisor,
except in the case of assignment by the Company to a
REIT or other organization which is a successor (by
merger, consolidation or purchase of assets) to the
Company, in which case such successor organization
shall be bound hereunder and by the terms of such
assignment in the same manner as the Company is bound
hereunder.

(b) Notwithstanding any provision of this
Agreement, the Advisor may subcontract and assign any
or all of its responsibilities under Sections 2(k),
2(l) and 10 of this Agreement to any of its affiliates,
and the Company hereby consents to any such assignment
and subcontracting.

SECTION 17. ACTION UPON TERMINATION. From and
after the effective date of termination of this
Agreement, pursuant to Sections 14, 15 or 16 of this
Agreement, the Advisor shall not be entitled to
compensation for further services hereunder, but shall
be paid all compensation accruing to the date of
termination, including deferred incentive compensation
which is recoverable in accordance with Section 7(c) of
this Agreement. Upon such termination, the Advisor
shall forthwith:

(a) after deducting any accrued compensation and
reimbursement for its expenses to which it is then
entitled, pay over to the Company or any of its

9


Subsidiaries all money collected and held for the
account of the Company or any of its Subsidiaries
pursuant to this Agreement;

(b) deliver to the Board of Directors a full
accounting, including a statement showing all payments
collected by it and a statement of all money held by
it, covering the period following the date of the last
accounting furnished to the Board of Directors with
respect to the Company or any of its Subsidiaries; and

(c) deliver to the Board of Directors all
property and documents of the Company or any of its
Subsidiaries then in the custody of the Advisor.

SECTION 18. RELEASE OF MONEY OR OTHER PROPERTY
UPON WRITTEN REQUEST. The Advisor agrees that any
money or other property of the Company or any of its
Subsidiaries held by the Advisor under this Agreement
shall be held by the Advisor as custodian for the
Company or any such Subsidiary, and the Advisor's
records shall be appropriately marked clearly to
reflect the ownership of such money or other property
by the Company or any such Subsidiary. Upon the
receipt by the Advisor of a written request signed by a
duly authorized officer of the Company requesting the
Advisor to release to the Company or any of its
Subsidiaries any money or other property then held by
the Advisor for the account of the Company or any of
its Subsidiaries under this Agreement, the Advisor
shall release such money or other property to the
Company or any of its Subsidiaries within a reasonable
period of time, but in no event later than 60 days
following such request. The Advisor shall not be
liable to the Company, any Subsidiary of the Company,
the Independent Directors, or the Company's or its
Subsidiary's stockholders for any acts performed or
omissions to act by the Company or any of its
Subsidiaries in connection with the money or other
property released to the Company or any of its
Subsidiaries in accordance with this Section 18. The
Company and any of its Subsidiaries shall indemnify the
Advisor, its directors, officers, stockholders and
employees against any and all expenses, losses,
damages, liabilities, demands, charges and claims of
any nature whatsoever, which arise in connection with
the Advisor's release of such money or other property
to the Company or any of its Subsidiaries in accordance
with the terms of this Section 18. Indemnification
pursuant to this provision shall be in addition to any
right of the Advisor to indemnification under Section
11 of this Agreement.

SECTION 19. REPRESENTATIONS AND WARRANTIES.

(a) The Company hereby represents and warrants to
the Advisor as follows:

(i) The Company is duly incorporated,
validly existing and in good standing under the laws of
Maryland, has full corporate power and authority to own
its assets and to transact the business in which it is
now engaged and is duly qualified or registered as a
foreign corporation and in good standing under the laws
of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such
qualification or registration, except where the failure
to be so qualified or registered would not in the
aggregate have a material adverse effect on the
business, operations, assets or financial condition of
the Company and its Subsidiaries, taken as a whole.
The Company does not do business under any fictitious
business name.

(ii) The Company has the corporate power and
authority to execute, deliver and perform this

10

Agreement and all obligations required hereunder and
has taken all necessary corporate action to authorize
this Agreement on the terms and conditions hereof and
the execution, delivery and performance of this
Agreement and all obligations required hereunder. No
consent of any other person including, without
limitation, stockholders and creditors of the Company,
and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration,
filing or declaration with, any governmental or
regulatory authority or agency is required by the
Company in connection with this Agreement or the
execution, delivery, performance, validity or
enforceability of this Agreement and all obligations
required hereunder. This Agreement has been, and each
instrument or document required hereunder will be,
executed and delivered by a duly authorized officer of
the Company, and this Agreement constitutes, and each
instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally
valid and binding obligation of the Company enforceable
against the Company in accordance with its terms,
except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or similar laws now
or hereafter in effect relating to the rights and
remedies of creditors generally, and general principles
of equity.

(iii) The execution, delivery and
performance of this Agreement and the documents or
instruments required hereunder, will not violate any
provision of any existing law or regulation binding on
the Company, or any order, judgment, award or decree of
any court, arbitrator or governmental or regulatory
authority or agency binding on the Company, or the
Governing Instruments of, or any securities issued by,
the Company or any of its subsidiaries, or any
mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the
Company or any of its Subsidiaries is a party or by
which the Company, any Subsidiary of the Company or any
of their assets may be bound, the violation of which
would have a material adverse effect on the business
operations, assets or financial condition of the
Company and its Subsidiaries, taken as a whole, and
will not result in, or require, the creation or
imposition of any lien on any of their property, assets
or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.

(b) The Advisor hereby represents and warrants to
the Company as follows:

(i) The Advisor is duly incorporated,
validly existing and in good standing under the laws of
Maryland, has full corporate power and authority to own
its assets and to transact the business in which it is
now engaged and is duly qualified or registered to do
business and is in good standing under the laws of each
jurisdiction where its ownership or lease of property
or the conduct of its business requires such
qualification or registration, except where the failure
to be so qualified or registered would not in the
aggregate have a material adverse effect on the
business, operations, assets or financial condition of
the Advisor and its Subsidiaries, taken as a whole.
The Advisor does not do business under any fictitious
business name.

(ii) The Advisor has the corporate power and
authority to execute, deliver and perform this
Agreement and all obligations required hereunder and
has taken all necessary partnership action to authorize
this Agreement on the terms and conditions hereof and
the execution, delivery and performance of this
Agreement and all obligations required hereunder. No

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consent of any other person including, without
limitation, partners and creditors of the Advisor, and
no license, permit, approval or authorization of,
exemption by, notice or report to, or registration,
filing or declaration with, any governmental or
regulatory authority or agency is required by the
Advisor in connection with this Agreement or the
execution, delivery, performance, validity or
enforceability of this Agreement and all obligations
required hereunder. This Agreement has been and each
instrument or document required hereunder will be
executed and delivered by a duly authorized agent of
the Advisor, and this Agreement constitutes, and each
instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally
valid and binding obligation of the Advisor enforceable
against the Advisor in accordance with its terms.

(iii) The execution, delivery and
performance of this Agreement and the documents or
instruments required hereunder, will not violate any
provision of any existing law or regulation binding on
the Advisor, or any order, judgment, award or decree of
any court, arbitrator, or governmental or regulatory
authority or agency binding on the Advisor, or the
partnership agreement of, or any securities issued by,
the Advisor or any of its Subsidiaries, or any
mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the
Advisor or any of its Subsidiaries is a party or by
which the Advisor or any Subsidiary of the Advisor or
any of its assets may be bound, the violation of which
would have a material adverse effect on the business
operations, assets or financial condition of the
Advisor and its Subsidiaries, taken as a whole, and
will not result in, or require, the creation or
imposition of any lien on any of their property, assets
or revenues pursuant to the provisions of any such
mortgage indenture, lease, contract or other agreement,
instrument or undertaking.

SECTION 20. NOTICES. Unless expressly provided
otherwise herein, all notices, request, demands and
other communications required or permitted under this
Agreement shall be in writing and shall be deemed to
have been duly given, made and received when delivered
against receipt or upon actual receipt of registered or
certified mail, postage prepaid, return receipt
requested. The parties may deliver to each other
notice by electronically transmitted facsimile copies
provided that such facsimile notice is followed within
24 hours by any type of notice otherwise provided for
in this paragraph. Any notice shall be duly addressed
to the parties as follows:


(a) If to the Company:

399 Park Avenue
New York, New York 10022
Attention: Stewart Zimmerman
Telephone: (212) 935-8760

with a copy given in the manner
prescribed above, to:

Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: Jay L. Bernstein, Esq.
Telephone: (212) 878-8223



(b) If to the Advisor:

399 Park Avenue
New York, New York 10022
Attention: Stewart Zimmerman
Telephone: (212) 935-8760

with a copy given in the manner
prescribed above, to:

Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: Jay L. Bernstein, Esq.
Telephone: (212) 878-8223

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Either party may alter the address to which
communications or copies are to be sent by giving
notice of such change of address in conformity with the
provisions of this Section 20 for the giving of notice.

SECTION 21. BINDING NATURE OF AGREEMENT:
SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal
representatives, successors and assigns as provided
herein.

SECTION 22. ENTIRE AGREEMENT. This Agreement
contains the entire agreement and understanding among
the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions,
express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any
course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This
Agreement may not be modified or amended other than by
an agreement in writing.

SECTION 23. CONTROLLING LAW. This Agreement
and all questions relating to its validity,
interpretation, performance and enforcement shall be
governed by and construed, interpreted and enforced in
accordance with the laws of the State of Maryland,
notwithstanding any Maryland or other conflict of law
provisions to the contrary.

SECTION 24. SCHEDULES AND EXHIBITS. All
Schedules and Exhibits referred to herein or attached
hereto are hereby incorporated by reference into, and
made a part of, this Agreement.

SECTION 25. NO WAIVER. Neither the failure nor
any delay on the part of a party to exercise any right,
remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the

13

same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed
as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall
be effective unless it is in writing and is signed by
the party asserted to have granted such waiver.

SECTION 26. TITLES NOT TO AFFECT
INTERPRETATION. The titles of paragraphs and
subparagraphs contained in this Agreement are for
convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction
or interpretation hereof.

SECTION 27. EXECUTION IN COUNTERPARTS. This
Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original as against any party whose signature appears
thereon, and all of which shall together constitute one
and the same instrument. This Agreement shall become
binding when one or more counterparts hereof,
individually or taken together, shall bear the
signatures of all of the parties reflected hereon as
the signatories.

SECTION 28. PROVISIONS SEPARABLE. The
provisions of this Agreement are independent of and
separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue
of the fact that for any reason any other or others or
them may be invalid or unenforceable in whole or in
part.

SECTION 29. GENDER. Words used herein
regardless of the number and gender specifically used,
shall be deemed and construed to include any other
number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires.

SECTION 30. COMPUTATION OF INTEREST. Interest
will be computed on the basis of a 360-day year
consisting of twelve months of thirty days each.

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IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first written
above.


Company:

AMERICA FIRST MORTGAGE
INVESTMENTS, INC.
a Maryland corporation


By: /s/ Stewart Zimmerman
------------------------


Name: Stewart Zimmerman
Title: President and Chief
Executive Officer


Advisor:

AMERICA FIRST MORTGAGE ADVISORY
CORPORATION
a Maryland corporation


By: /s/ Stewart Zimmerman
-------------------------

Name: Stewart Zimmerman
Title: President and Chief
Executive Officer


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