8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): December 29, 2008

WILLIAM LYON HOMES

(Exact name of registrant as specified in charter)

Delaware	001-31625	33-0864902
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4490 Von Karman Avenue, Newport Beach, California	92660
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 833-3600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Item 1.01 Entry into a Material Definitive Agreement.

Amendments to Loan Agreements

On December 29, 2008, William Lyon Homes, Inc. (“California Lyon”), a California Corporation and wholly-owned subsidiary of William Lyon Homes (“WLH”), entered into agreements to modify its revolving credit facilities (the “Modified Credit Facilities”) with each of its lenders, with such agreements to be effective as of the dates set forth below. California Lyon has six revolving credit facilities which previously had an aggregate maximum loan commitment of $230.0 million. Each of the revolving credit facilities requires WLH to comply with a number of financial covenants, which were also amended (see discussions below).

Under the Modified Credit Facilities, the aggregate maximum loan commitment is reduced from $230.0 to $185.0 million and WLH is required to comply with certain financial covenants, the most restrictive of which require the Company to maintain:

• A tangible net worth, as defined, of $90.0 million;

• A ratio of total liabilities to tangible net worth, each as defined, not to be measured until January 1, 2010; and

• Minimum liquidity, as defined, of at least $30.0 million.

First Modification of Amended and Restated Loan Agreement with Guaranty Bank

Effective December 5, 2008, California Lyon entered into that certain First Modification of Amended and Restated Loan Agreement, with Guaranty Bank, a federal savings bank (the “Guaranty Modification”). The Guaranty Modification modifies the Amended and Restated Loan Agreement dated January 28, 2008, with Guaranty Bank (the “Guaranty Agreement”). Pursuant to the Guaranty Modification, the maximum loan commitment was reduced from $50.0 million to $40.0 million (and hereafter reducing to $30.0 million on the Facility Expiration Date), the Facility Expiration Date, as defined, was extended to May 3, 2009 and various financial covenants under the Guaranty Loan Agreement were modified, including but not limited to the covenants listed above. The Guaranty Modification also requires WLH to maintain a ratio of total liabilities to tangible net worth of less than 4.00 to 1 on a quarterly basis beginning January 1, 2010.

Fifth Amendment to Borrowing Base Agreement with Wachovia Bank

Effective December 15, 2008, California Lyon entered into that certain Fifth Amendment to Borrowing Base Revolving Line of Credit Agreement, with Wachovia Bank, National Association (the “Wachovia Amendment”). The Wachovia Amendment amends the Borrowing Base Revolving Line of Credit Agreement dated September 29, 2006, with Wachovia Bank (the “Wachovia Agreement”). Pursuant to the Wachovia Amendment, the maximum loan commitment is $25.0 million, and the financial covenants listed above were amended. The Wachovia amendment also requires WLH to maintain a ratio of total liabilities to tangible net worth of less than 5.00 to 1 on a quarterly basis beginning January 1, 2010.

Modification with California Bank & Trust

Effective December 17, 2008, California Lyon agreed to that certain side letter amendment to Amended and Restated Revolving Line of Credit Loan Agreement, with California Bank & Trust (the “CBT Letter”). The CBT Letter amends the Amended and Restated Revolving Line of Credit Loan Agreement, dated as of September 16, 2004, with California Bank & Trust (the “CBT Loan Agreement”). Pursuant to the CBT Letter, the maximum loan commitment under the CBT Loan Agreement is $30.0 million and the financial covenants listed above were amended. The CBT letter also requires WLH to maintain a ratio of total liabilities to tangible net worth of less than 5.00 to 1 on a quarterly basis beginning January 1, 2010.

Tenth Modification Agreement with JPMorgan Chase Bank

Effective December 19, 2008, California Lyon entered into that certain Tenth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, with JPMorgan Chase Bank, N.A., a national banking association (the “JPM Modification”). The JPM Modification modifies the Borrowing Base Revolving Line of Credit Agreement dated June 28, 2004, with JP Morgan Chase Bank, N.A., (the “JPM Agreement”). Pursuant to the JPM Modification, the maximum loan commitment was reduced from $40.0 million to $30.0 million, the Maturity Date, as defined, was shortened from June 28, 2010 to December 28, 2009 and the financial covenants listed above were modified.

Third Amendment Agreement with Comerica Bank

Effective December 22, 2008, California Lyon entered into that certain Third Amendment Agreement with Comerica Bank (the “Comerica Amendment”). The Comerica Amendment amends the Revolving Line of Credit Loan Agreement dated as of March 8, 2006, with Comerica Bank (the “Comerica Agreement”). Pursuant to the Comerica Amendment, the maximum loan commitment was reduced from $35.0 million to $30.0 million (and hereafter reducing $4.0 million every three months beginning March 31, 2009 through December 31, 2009, whereby the commitment amount will not exceed $14.0 million), and the financial covenants listed above were amended.

Third Modification Agreement with California National Bank

Effective December 23, 2008, California Lyon entered into that certain Third Modification Agreement, with California National Bank, a national banking association (the “CNB Modification”). The CNB Modification modifies the Borrowing Base Revolving Line of Credit Agreement dated July 10, 2006, with California National Bank (the “CNB Agreement”). Pursuant to the CNB Modification, the maximum loan commitment was reduced from $50.0 million to $30.0 million and the financial covenants listed above were modified.

Item 2.03 Creation of a Direct Financial Obligation

To the extent applicable, the contents of Item 1.01 above are incorporated into this Item 2.03 by this reference.

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Item 9.01 Exhibits

(d) Exhibits

Exhibit No.	Description
10.1	First Modification of Amended and Restated Loan Agreement dated as of December 5, 2008, by and between William Lyon Homes, Inc., a California Corporation and Guaranty Bank, a federal savings bank.
10.2	Fifth Amendment to Borrowing Base Revolving Line of Credit Agreement, dated as of December 15, 2008, between William Lyon Homes, Inc., a California Corporation, and Whitney Ranch Village 5, LLC, a Delaware limited liability company (individually and collectively as the context may require) and Wachovia Bank, National Association, a national banking association.
10.3	Side Letter Amendment to Amended and Restated Revolving Line of Credit Loan Agreement dated as of December 17, 2008, by and between William Lyon Homes, Inc., a California corporation and California Bank & Trust, a California Banking Corporation.
10.4	Tenth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement dated December 19, 2008, by and between JPMorgan Chase Bank, N.A., a national banking association, and William Lyon Homes, Inc., a California Corporation.
10.5	Third Amendment Agreement dated as of December 22, 2008, by and between William Lyon Homes, Inc., a California Corporation, and Comerica Bank.
10.6	Third Modification Agreement dated as of December 23, 2008, by and between William Lyon Homes, Inc., a California Corporation and California National Bank, a national banking association.

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SIGNATURES

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

Date: January 5, 2009

WILLIAM LYON HOMES
By:	/s/    MICHAEL D. GRUBBS
Name:	Michael D. Grubbs
Its:	Senior Vice President, Chief Financial Officer and Treasurer

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EXHIBIT INDEX

Exhibit No.	Description
10.1	First Modification of Amended and Restated Loan Agreement dated as of December 5, 2008, by and between William Lyon Homes, Inc., a California Corporation and Guaranty Bank, a federal savings bank.
10.2	Fifth Amendment to Borrowing Base Revolving Line of Credit Agreement, dated as of December 15, 2008, between William Lyon Homes, Inc., a California Corporation, and Whitney Ranch Village 5, LLC, a Delaware limited liability company (individually and collectively as the context may require) and Wachovia Bank, National Association, a national banking association.
10.3	Side Letter Amendment to Amended and Restated Revolving Line of Credit Loan Agreement dated as of December 17, 2008, by and between William Lyon Homes, Inc., a California corporation and California Bank & Trust, a California Banking Corporation.
10.4	Tenth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement dated December 19, 2008, by and between JPMorgan Chase Bank, N.A., a national banking association, and William Lyon Homes, Inc., a California Corporation.
10.5	Third Amendment Agreement dated as of December 22, 2008, by and between William Lyon Homes, Inc., a California Corporation, and Comerica Bank.
10.6	Third Modification Agreement dated as of December 23, 2008, by and between William Lyon Homes, Inc., a California Corporation and California National Bank, a national banking association.

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EX-10.1

Exhibit 10.1

William Lyon Homes, Inc.

Loan No. 906-0100

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

This Agreement for First Modification of Amended and Restated Loan Agreement, Deeds of Trust and Other Loan Instruments (this “Modification” or “First Modification”) is made as of December 5, 2008 by and between WILLIAM LYON HOMES, INC., a California corporation (“Borrower”) and GUARANTY BANK, a federal savings bank organized and existing under the laws of the United States (“Lender”), and effective upon recordation of the Memorandum (as defined below) against each Deed of Trust (as defined below) encumbering each Property, subject to Section 2 of this Modification, with reference to the following facts:

A. Borrower and Lender entered into an Amended and Restated Master Loan Agreement dated as of January 28, 2008 (the “Loan Agreement”), which provides for a loan of FIFTY MILLION DOLLARS ($50,000,000.00) (the “Loan”) to Borrower on the terms and conditions specified therein. The Loan is evidenced and secured by a revolving promissory note and other loan instruments (collectively, the “Loan Instruments”). Upon full execution, this Modification shall constitute one of the Loan Instruments. All defined terms used in this Modification shall have the meanings ascribed to them in the Loan Agreement unless the context requires otherwise.

B. At Borrower’s request, Lender has agreed to modify one or more of the Loan Instruments, as herein provided.

NOW, THEREFORE, in consideration of the premises and mutual agreements herein, the parties hereby agree as follows:

1. Modifications. The Loan Instruments specified in Exhibit “A” attached hereto and incorporated herein by this reference are modified as set forth therein, effective upon timely satisfaction of the conditions set forth in Section 2 below. As used in this Modification and the attached Exhibit “A,” the term “Deeds of Trust” refers to the Construction Deeds of Trust (With Security Agreement, Fixture Filing and Assignment of Rents and Leases) each executed by Borrower for the benefit of Lender:

(1) (1132) a certain Deed of Trust dated February 9, 2004 and recorded in the Official Records of Clark County, Nevada, on February 27, 2004 as Instrument No. 2004-0227-04201;

as modified by a Memorandum of Seventh Modification of Deeds of Trust and Other Loan Instruments dated October 6, 2004 and recorded in the Official Records of:

(aa) Clark County, Nevada, on October 25, 2004, as Instrument No. 2004-1025-0003273;

(2) (1161) a certain Deed of Trust dated November 8, 2004 and recorded in the Official Records of Placer County, California, on December 30, 2004 as Instrument No. 2004-0175175;

as modified by a Memorandum of Eighth Modification of Deeds of Trust and Other Loan Instruments dated October 14, 2005 and recorded in the Official Records of:

(bb) Clark County, Nevada, on January 18, 2006, as Instrument No. 2006-0118-0001686; and

(cc) Placer County, California, on November 21, 2005, as Document No. 2005-0156045;

(3) (1187 & 1188) a certain Deed of Trust dated February 2, 2006 and recorded in the Official Records of Clark County, Nevada, on March 17, 2006 as Instrument No. 2006-0317-0003388;

as modified by a Memorandum of Ninth Modification of Deeds of Trust and Other Loan Instruments dated October 31, 2006 and recorded in the Official Records of:

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(ddd) Clark County, Nevada, on December 5, 2006, as Instrument No. 2006-1205-0001692;

(eee) Placer County, California, on December 7, 2006, as Document No. 2006-0131198-00;

as modified by a Memorandum of Tenth Modification of Deeds of Trust and Other Loan Instruments dated April 3, 2007 and recorded in the Official Records of:

(fff) Clark County, Nevada, on June 19, 2007, as Instrument No. 2007-0619-0001338; and

(ggg) Placer County, California, on June 19, 2007, as Document No. 2007-0061630-00;

(8) (1189) a certain Deed of Trust dated April 17, 2007 and recorded in the Official Records of San Bernardino County, California, on July 10, 2007 as Instrument No. 2007-0403960;

(9) (2360) a certain Deed of Trust dated June 20, 2007 and recorded in the Official Records of Los Angeles County, California, on July 9, 2007 as Instrument No. 2007-1620873;

(10) (1190) a certain Deed of Trust dated July 12, 2007 and recorded in the Official Records of Maricopa County, Arizona, on July 20, 2007 as Instrument No. 2007-0826703; and

as modified by a Memorandum of Modification of Deeds of Trust and Other Loan Instruments dated as of January 28, 2008 and recorded in the Official Records of:

(iii) Placer County, California, on March 19, 2008, as Instrument No. 2008-0021877;

(jjj) San Bernardino County, California, on March 19, 2008, as Instrument No. 2008-0120413;

(kkk) Los Angeles County, California, on March 19, 2008, as Instrument No. 2008-0467815;

(mmm) Maricopa County, Arizona, on March 19, 2008, as Instrument No. 2008-0241638; and

(hhh) Clark County, Nevada, on March 28, 2008, as Instrument No. 2008-0328-0001914.

(11) (1191) a certain Deed of Trust dated September 16, 2008 and recorded in the Official Records of Maricopa County, Arizona, on September 26, 2008 as Instrument No. 2008-0833940.

2. Conditions. The modifications of Section 1 above shall take effect only upon Borrower’s satisfaction, at its expense, of all of the following conditions not later than the date of this Modification:

(a) if required by Lender, delivery to Lender of one or more endorsements to the Title Policy (whether one or more) insuring the lien of the Deeds of Trust as may be required by Lender, all in form and of content acceptable to Lender, insuring that, except as set forth in this Modification, the priority of such lien is unaffected by the modifications set forth herein and that the Title Policy insuring the Deeds of Trust remains in full force and effect in the full amount of the Loan;

(b) if required by Lender, delivery to Lender of one or more duly executed recordable memorandums of this Modification (collectively, the “Memorandum”);

(c) satisfaction of such other conditions as may be set forth on Exhibit “B” attached hereto and incorporated herein by this reference, if any;

(d) if the Loan has been guarantied (or indemnities given) or if there are junior liens encumbering the property which is encumbered by the Deeds of Trust, delivery to Lender of duly executed

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consents to the modifications set forth in this Modification by the guarantor(s) and/or junior lienors, as applicable, as may be set forth in Exhibit “C” attached hereto or as may be attached to the Memorandum, each incorporated herein by this reference;

(e) Borrower has obtained the approval of, and Borrower hereby represents that it has obtained the approval of, any creditor of Borrower, Guarantor or any of their affiliates to the reduction in Guarantor’s Tangible Net Worth requirement and Lender’s waiver of the ratio of Guarantor’s total liabilities to Guarantor’s Tangible Net Worth effective for the quarters ending December 31, 2008 through December 31, 2009 pursuant to paragraphs B and C of “Additional Loan Covenants – Paragraph 15 of the Loan Agreement” of the Specific Loan Terms (as set forth below in Section 3(iii) of Exhibit “A” to this Modification). Borrower shall have provided Lender with satisfactory evidence of such approval by January 15, 2009, provided that such evidence shall not be required to be provided as a condition to the closing of this Modification; and

(f) Neither Borrower, Guarantor nor any of their affiliates (collectively, “Borrower Affiliates”) shall have entered into any agreement with an existing or future lender, where the subject loan has the effect of establishing financial covenants that are more restrictive on Borrower Affiliates or are otherwise more favorable to such lender (the “Additional Lender Rights”) than the financial covenants under the Loan Instruments, including without limitation, provisions relating to recourse liability and restrictive covenants; provided, however, the terms of any loan extended by Residential Funding Corporation (“RFC”) shall not be considered for purposes of the foregoing. Borrower hereby represents and warrants that no Borrower Affiliate has entered into any agreement with an existing or future lender, other than RFC, which provides for Additional Lender Rights.

3. Representations and Warranties. Borrower hereby represents and warrants that no default, event of default, breach or failure of condition has occurred, or would exist with notice or the lapse of time or both, under any of the Loan Instruments; and all representations and warranties herein and in the other Loan Instruments are true and correct, which representations and warranties shall survive execution of this Modification. All parties who execute this Modification and any other documents required hereunder on behalf of Borrower represent and warrant that they have full power and authority to execute and deliver such documents, and that all such documents are enforceable in accordance with their terms. As of the date of this Modification, Borrower hereby acknowledges and agrees that it has no defenses, offsets or claims against Lender or the enforcement of the Loan Instruments and that Lender has not waived any of its rights or remedies under any such documents, except as expressly provided in this Modification.

4. No Impairment. Except as expressly provided herein, nothing in this Modification shall alter or affect any provision, condition or covenant contained in the Loan Instruments or affect or impair any of Lender’s rights, powers or remedies thereunder. It is the intent of the parties hereto that the provisions of the Loan Instruments shall continue in full force and effect except as expressly modified hereby.

5. Miscellaneous. This Modification and the other Loan Instruments shall be governed by and interpreted in accordance with the laws of the State of California, except as they may be preempted by federal law. In any action brought or arising out of this Modification or the Loan Instruments, Borrower, and, if applicable, the general partners, members and joint venturers of Borrower, hereby consent to the jurisdiction of any federal or state court having proper venue within the State of California and also consent to the service of process by any means authorized by California or federal law. The headings used in this Modification are for convenience only and shall be disregarded in interpreting the substantive provisions of this Modification. Time is of the essence of each term of the Loan Instruments, including this Modification. If any provision of this Modification or any of the other Loan Instruments shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed therefrom and the remaining parts shall remain in full force as though the invalid, illegal, or unenforceable portion had never been a part thereof. This Modification may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same Modification.

6. Integration; Interpretation. The Loan Instruments, including this Modification, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated herein and supersede all prior negotiations. The Loan Instruments shall not be modified except by written instrument executed by all parties. Any reference to the Loan Instruments in any of the Loan Instruments includes this Modification and any amendments, renewals or extensions approved by Lender hereunder.

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7. Set-Offs. Notwithstanding any provision of any Loan Document or applicable law to the contrary, including, without limitation, Section 12 of the Loan Agreement, in no event shall Lender, whether with or without demand or notice to Borrower, exercise any right to set-off and apply deposits (whether certificates of deposit, demand, general, savings, special, time, or other, and whether provisional or final) held by Lender for Borrower or any other liabilities or other obligations of Lender to Borrower against or to Borrower’s obligations with respect to the Loan. By its signature below, Lender hereby waives any right it may have to set-off and apply such deposits or other liabilities against or to Borrower’s obligations with respect to the Loan.

[Signature pages to follow.]

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IN WITNESS WHEREOF, this Agreement for First Modification of Amended and Restated Loan Agreement, Deeds of Trust and Other Loan Instruments is executed as of the date first hereinabove written.

LENDER:	GUARANTY BANK,
	a federal savings bank organized and existing
	under the laws of the United States
	By:	/s/ Kara P. Van Duzee
	Name:	Kara P. Van Duzee
	Title:	Vice President
BORROWER:	WILLIAM LYON HOMES, INC.,
	a California corporation
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President

5 Agreement for First Modification

William Lyon Homes, Inc.

Loan No. 906-0100

EXHIBIT “A”

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Modifications)

Loan Instrument Modified		Modification
1.	Revolving Promissory Note	(i)	Facility Expiration Date. The Facility Expiration Date is hereby extended to May 3, 2009.
		(ii)	Definitions.
		A.	New Definition. The following language shall be added immediately before the “Base Interest Rate” definition:
			““Average Deposit Balance”: The average daily balance of funds maintained in Borrower’s deposit account with Lender over a one-month period for purposes of determining the LIBOR Interest Rate Spread or Base Rate Spread, as applicable, measured monthly on a trailing basis.”
		B.	Base Interest Rate Definitions.
		1.	Base Interest Rate. The definition of “Base Interest Rate” is hereby amended to add the following language at the end of the definition:
			“Notwithstanding the foregoing, in no event shall the Base Interest Rate be less than 5.50%.”
		2.	Base Rate Spread. The definition of “Base Rate Spread” is hereby amended and restated as follows:
			“Base Rate Spread”: The percentage rate to be added to the Base Rate to determine the Base Interest Rate, calculated as follows:

Average Deposit Balance	Base Rate Spread
Greater than or equal to $10,000,000.00	0.00	%
Greater than or equal to $5,000,000.00, and less than $10,000,000.00	0.75	%

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Greater than or equal to $2,500,000.00, and less than $5,000,000.00	1.00	%
Less than $2,500,000.00	1.50	%

C.	New LIBOR Interest Rate Definitions. The definitions of “Euro-Dollar Amount”, “Euro-Dollar Business Day”, “Euro-Dollar Interest Rate” and “Euro-Dollar Interest Rate Spread” are hereby deleted in their entirety and replaced with the following:
	““LIBOR Amount”: Each portion of the Principal Amount bearing interest at the applicable LIBOR Interest Rate pursuant to a LIBOR Rate Request. There shall be no more than three (3) portions of the Principal Amount bearing interest at an applicable LIBOR Interest Rate outstanding at any time.
	“LIBOR Business Day”: Any day on which commercial banks are open for domestic and international business (including dealings in U.S. Dollar deposits) in New York City and Dallas, Texas.
	“LIBOR Interest Rate”: With respect to any LIBOR Amount, the rate per annum (expressed as a percentage) determined by Lender to be equal to the sum of (a) the quotient of the LIBOR Rate for the applicable LIBOR Amount and the applicable Interest Period, divided by (1 minus the applicable Reserve Requirement), rounded up to the nearest 1/100 of 1%, plus (b) the applicable Assessments, plus (c) the applicable LIBOR Interest Rate Spread. Notwithstanding the foregoing, in no event shall the Euro-Dollar Interest Rate be less than 5.50%.
	“LIBOR Interest Rate Spread”: The percentage rate to be added to the LIBOR Rate to determine the LIBOR Interest Rate, calculated as follows, and effective as of the first (1st) day of each month:

Average Deposit Balance	LIBOR Interest Rate Spread
Greater than or equal to $10,000,000.00	3.00	%

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Greater than or equal to $5,000,000.00, and less than $10,000,000.00	3.50	%
Greater than or equal to $2,500,000.00, and less than $5,000,000.00	4.00	%
Less than $2,500,000.00	4.50	%

	In connection with the foregoing, all references to (i) (1) “Euro-Dollar Amount”, (2) “Euro-Dollar Business Day”, (3) “Euro-Dollar Interest Rate”, (4) “Euro-Dollar Interest Rate Spread”, (5) “Euro-Dollar Rate”, (6) “Euro-Dollar Rate Request”, (7) “Euro-Dollar Rate Request Amount”, and (8) “Euro-Dollar Reference Source”, are hereby deleted and replaced with (ii) (1) “LIBOR Amount”, (2) “LIBOR Business Day”, (3) “LIBOR Interest Rate”, (4) “LIBOR Interest Rate Spread”, (5) “LIBOR Rate”, (6) “LIBOR Rate Request”, (7) “LIBOR Rate Request Amount”, and (8) “LIBOR Reference Source”, respectively.
D.	Extension Option. The following is hereby added as a new paragraph following the last paragraph of the Note:
	“Extension Option. The Facility Expiration Date may be extended (and such later date shall be the “Facility Expiration Date” for purposes of this Note) on the following terms and conditions:
	a. Subject to Lender’s receipt of written request therefor from Borrower, delivered not later than thirty (30) days prior to the original Facility Expiration Date, Borrower may request one (1) extension of the Facility Expiration Date from Lender. Such request shall be accompanied by current Financial Statements of Borrower and all Guarantor(s), if requested by Lender.
	b. Upon such request from Borrower, Lender may, in its sole discretion, extend the Facility Expiration Date to December 3, 2009, provided that each of the following conditions is satisfied as of the then-applicable Facility Expiration Date:

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			i. There shall exist no act, event or condition which would, with or without the giving of notice, the passage of time or both, constitute an Event of Default hereunder.
			ii. There shall exist no adverse change in Borrower’s or any Guarantor’s financial condition as compared to the date of this Note, as determined by Lender in its reasonable discretion.”
2.	Loan Agreement	(i)	Paragraph 19 – Fees and Expenses. Clause (b) of Paragraph 19 is hereby amended and restated as follows:
			“(b) an annual non-refundable Loan Facility Fee to Lender of thirty-five hundredths of one percent (0.35%) of the committed amount of the Loan each calendar year during the term (or extended term if permitted by Lender) of the Loan, payable quarterly in arrears at the rate of 0.875% per quarter,”
		(i)	Paragraph 23 – Letters of Credit. Paragraph 23 is hereby deleted in its entirety.
3.	Exhibit “A” to Loan Agreement	(i)	Lot/Residence Limitation – Paragraph 4.
		A.	Residences - Paragraph 4(A)(i). Paragraph 4(A)(i) is hereby amended and restated as follows:
			“A. Residences.
			(i) Maximum number of Residences at any one time in all Approved Subdivisions:
			Two hundred (200)”
		B.	Spec Residences - Paragraph 4(B)(ii). Paragraph 4(B)(ii) is hereby amended and restated as follows:
			“(ii) Maximum number of Specs at any one time in all Approved Subdivisions:
			Sixty (60)”
		C.	Maximum Loan Allocations - Paragraph 4(E)(i). Paragraph 4(E)(i) is hereby amended and restated as follows:

Subdivisions	Loan Amount Per Approved Subdivision		Maximum for All Approved
“For Finished Lots and Actively Developed:	$	10,000,000	$	10,000,000”

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(ii) Financial Statements and Tax Return Requirements – Paragraph 12. The following paragraph is hereby added immediately after the last paragraph:
	“Quarterly: Borrower shall deliver and cause Guarantor to deliver to Lender cash flow projections for at least the next six (6) months, within 30 days after the end of each quarter.”
(iii) Additional Loan Covenants – Paragraph 16. Paragraph 16 is hereby amended and restated as follows:
	“ADDITIONAL LOAN COVENANTS Paragraph 15 of the Loan Agreement.
	Borrower shall fully perform and satisfy, or caused to be fully performed and satisfied, the following “Additional Loan Covenants”:
	A. Borrower covenants and agrees not to permit the occurrence of any material adverse change in the financial condition of Borrower.
	B. The Tangible Net Worth of Guarantor, at all times shall be not less than NINETY MILLION DOLLARS ($90,000,000.00).
	C. Guarantor shall maintain a ratio of total liabilities to Tangible Net Worth of not more than 4.0 to 1 on a quarterly basis; provided, however, such ratio requirement shall be waived for all quarters through the quarter ending December 31, 2009.
	D. Guarantor shall maintain a minimum liquidity of THIRTY MILLION DOLLARS ($30,000,000.00). For purposes of the foregoing covenant, “liquidity” shall mean and include certified available funds from lenders, amounts due from title companies for escrow closings in the ordinary course, marketable securities and unrestricted cash.
	E. Guarantor shall at all times maintain a limitation on investments in joint ventures of twenty-five percent (25%) of Guarantor’s Tangible Net Worth.
	F. William Lyon and William H. Lyon

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	shall maintain a combined ownership of at least forty percent (40%) of the outstanding stock of Guarantor.
	G. Guarantor shall be profitable, as measured on a semi-annual basis. Notwithstanding the foregoing, the profitability covenant shall be waived for the fiscal years ending December 31, 2008 and December 31, 2009.
	H. Neither Borrower nor any Guarantor shall make any equity distributions or dividends to any shareholders, except solely for the purpose of paying taxes and assessments.
	I. Borrower shall not enter into any agreement with any existing or future lender (other than Residential Funding Corporation), for a loan that has the effect of establishing financial covenants that are more restrictive on Borrower, Guarantor or any of their affiliates or are otherwise more favorable to such lender (the “Additional Lender Rights”) than the financial covenants under the Loan Instruments. Borrower shall immediately give written notice to Lender of any offer received from any existing or future lender to enter into any agreement that provides for Additional Lender Rights.
	Tangible Net Worth is defined as the Generally Accepted Accounting Principles (“GAAP”) determination of net worth minus intangible assets. All other accounting terms used herein above shall have the meanings commonly ascribed to them under GAAP.
	Any failure to comply with the covenants of this Paragraph 16 shall constitute an automatic Event of Default, without the benefit of any notice or cure periods.”
(iv) Loan Reductions – Paragraph 19. Paragraph 19 is hereby amended and restated as follows:
	“LOAN REDUCTIONS Introductory Paragraph of Loan Agreement.
	Effective as of the date of the closing of the First Modification, the Loan Amount shall be reduced to FORTY MILLION DOLLARS ($40,000,000.00), and

11 Agreement for First Modification

	aggregate Loan Allocations shall not exceed FORTY MILLION DOLLARS ($40,000,000.00).
	Effective as of May 3, 2009, the Loan Amount shall be reduced to THIRTY MILLION DOLLARS ($30,000,000.00), and aggregate Loan Allocations shall not exceed THIRTY MILLION DOLLARS ($30,000,000.00).
	Pursuant to Paragraph 8 of the Loan Agreement, Borrower shall pay down the principal balance as required in order to reduce such balance to the Loan Amount and comply with the maximum Loan Allocation restrictions on or prior to the dates that the Loan Amounts and maximum Loan Allocations are reduced. Such required pay down shall include any payment of any amounts necessary on or before the Effective Date in order to repay amounts under the Prior Loan Agreement, which payment shall be a condition to closing under the Loan Agreement.”
(v)	Restrictions on Availability - Paragraph 20. The last sentence of Paragraph 20 is hereby amended and restated as follows:
	“For purposes hereof, “Other Loan” means, collectively, any other loan or loans which may hereafter extended by Lender to Borrower, provided that in no event shall the aggregate maximum principal amount of such loan or loans exceed TEN MILLION DOLLARS ($10,000,000.00).

12 Agreement for First Modification

William Lyon Homes, Inc.

Loan No. 906-0100

EXHIBIT “B”

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Other Conditions to Modifications)

1. Legal Fees. Borrower shall pay all legal fees and costs incurred by Lender in connection with the preparation and negotiation of this Modification.

2. Title Endorsements/Recording Fees. Borrower shall pay all title charges and recording fees and costs incurred by Lender in connection with the requirements of Paragraphs 2(a) and 2(b) of this Modification. The Recordation of the Memorandum against each Property that is subject to a Deed of Trust.

3. Consent of Guarantor(s). Guarantors of the Loan shall execute and deliver the attached Consent of Guarantor to Lender and the attached Consent to the Memorandum hereof described in Paragraph 2(d) of this Modification (suitable for recording).

4. Consent of Junior Lienholder(s). If indicated on the attached Exhibit “C” or otherwise required by Lender, Junior Lienholders shall execute and deliver the attached Consent of Junior Lienholder and the attached Consent to the Memorandum hereof described in Paragraph 2(d) of this Modification (suitable for recording).

13 Agreement for First Modification

William Lyon Homes, Inc.

Loan No. 906-0100

EXHIBIT “C”

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Consents to Modifications)

CONSENT OF GUARANTOR

The undersigned Guarantor confirms its guaranties of Borrower’s obligations to, and indemnities in favor of, Lender under the Loan Agreement and the other Loan Instruments referenced in, and as modified by the foregoing Modification and Memorandum described therein, and consents to and accepts the foregoing modifications.

GUARANTOR:	WILLIAM LYON HOMES,
	a Delaware corporation
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President

14 Agreement for First Modification

William Lyon Homes, Inc.

Loan No. 906-0100

EXHIBIT “C”

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Consents to Modifications)

CONSENT OF JUNIOR LIENHOLDER

The undersigned is the holder of an obligation secured by a lien (the “Junior Lienholder”) against the same property, which secures, in a senior priority position (subject to all of the terms of the following Subordination and Intercreditor Agreement between Lender and Junior Lienholder), Borrower’s obligations to Lender under the Loan Agreement and the other Loan Instruments. The undersigned consents to and accepts the modifications set forth in the foregoing Memorandum and the Modification described therein, and agrees that, notwithstanding such modifications, the undersigned’s lien shall be and remain junior and subordinate to the lien of Lender to secure Borrower’s obligations, as modified herein, to the extent provided in and subject to all of the terms of the following Subordination Agreement, which Agreement remains in effect:

A) Whitney Ranch: (1161) dated November 8, 2004 and recorded in the Official Records of Placer County, California on December 30, 2004 as Instrument No 2004-0175176.

JUNIOR LIENHOLDER:	SUNSET RANCHOS INVESTORS, LLC,
	a Delaware limited liability company, dba
	Whitney Ranch Associates
	By:	/s/ illegible
	Name:
	Its:	Authorized Representative
	By:	/s/ illegible
	Name:
	Its:	Authorized Representative

15 Agreement for First Modification

William Lyon Homes, Inc.

Loan No. 906-0100

EXHIBIT “C”

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Consents to Modifications)

CONSENT OF JUNIOR LIENHOLDER

The undersigned is the holder of an obligation secured by a lien (the “Junior Lienholder”) against the same property, which secures, in a senior priority position, Borrower’s obligations (subject to all of the terms of the following Subordination and Intercreditor Agreement between Lender and Junior Lienholder) to Lender under the Loan Agreement and the other Loan Instruments. The undersigned consents to and accepts the modifications set forth in the foregoing Memorandum and the Modification described therein, and agrees that, notwithstanding such modifications, the undersigned’s lien shall be and remain junior and subordinate to the lien of Lender to secure Borrower’s obligations, as modified herein, to the extent provided in and subject to all of the terms of the following Subordination and Intercreditor Agreement, which Agreement remains in effect:

A) Three Sixty° @ South Bay - The Flats: (2360) dated June 20, 2007 and recorded in the Official Records of Los Angeles County, California on July 9, 2007 as Instrument No. 2007-1620874.

JUNIOR LIENHOLDER:	SAMS VENTURE, LLC,
	a Delaware limited liability company
	By:
	Name:
	Title:
	By:
	Name:
	Title:

16 Agreement for First Modification

William Lyon Homes, Inc.

Loan No. 906-0100

EXHIBIT “C”

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Consents to Modifications)

CONSENT OF JUNIOR LIENHOLDER

The undersigned is the holder of an obligation secured by a lien (the “Junior Lienholder”) against the same property, which secures, in a senior priority position, Borrower’s obligations (subject to all of the terms of the following Subordination and Intercreditor Agreement between Lender and Junior Lienholder) to Lender under the Loan Agreement and the other Loan Instruments. The undersigned consents to and accepts the modifications set forth in the foregoing Memorandum and the Modification described therein, and agrees that, notwithstanding such modifications, the undersigned’s lien shall be and remain junior and subordinate to the lien of Lender to secure Borrower’s obligations, as modified herein, to the extent provided in and subject to all of the terms of the following Subordination and Intercreditor Agreement, which Agreement remains in effect:

A) Acacia @ Lyon’s Gate: (1190) dated July 12, 2007 and recorded in the Official Records of Maricopa County, Arizona on July 20, 2007 as Instrument No. 2007-0826702.

JUNIOR LIENHOLDER:	WILLIAM LYON SOUTHWEST, INC.,
	an Arizona corporation
	dba WILLIAM LYON HOMES
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President

17 Agreement for First Modification

William Lyon Homes, Inc.

Loan No. 906-0100

EXHIBIT “C”

AGREEMENT FOR FIRST MODIFICATION OF AMENDED AND RESTATED LOAN AGREEMENT,

DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS

(Consents to Modifications)

CONSENT OF JUNIOR LIENHOLDER

The undersigned is the holder of an obligation secured by a lien (the “Junior Lienholder”) against the same property, which secures, in a senior priority position, Borrower’s obligations (subject to all of the terms of the following Subordination Agreement between Lender and Junior Lienholder) to Lender under the Loan Agreement and the other Loan Instruments. The undersigned consents to and accepts the modifications set forth in the foregoing Memorandum and the Modification described therein, and agrees that, notwithstanding such modifications, the undersigned’s lien shall be and remain junior and subordinate to the lien of Lender to secure Borrower’s obligations, as modified herein, to the extent provided in and subject to all of the terms of the following Subordination Agreement, which Agreement remains in effect:

A) Sahara @ Lyon’s Gate: (1191) dated September 16, 2008 and recorded in the Official Records of Maricopa County, Arizona on September 26, 2008 as Instrument No. 2008-0833941.

JUNIOR LIENHOLDER:	WILLIAM LYON SOUTHWEST, INC.,
	an Arizona corporation
	dba WILLIAM LYON HOMES
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President

18 Agreement for First Modification

EX-10.2

Exhibit 10.2

FIFTH AMENDMENT TO BORROWING BASE

REVOLVING LINE OF CREDIT AGREEMENT

This Fifth Amendment to Borrowing Base Revolving Line of Credit Agreement (“Amendment”) is entered into as of December 15, 2008 between WILLIAM LYON HOMES, INC., a California corporation, and WHITNEY RANCH VILLAGE 5 LLC, a Delaware limited liability company (individually and collectively as the context may require, “Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (“Lender”), formerly referenced as Agent for Wachovia Financial Services, Inc., a North Carolina corporation, which Amendment is consented to by Guarantor WILLIAM LYON HOMES, a Delaware corporation (“Guarantor”).

RECITALS:

A. Borrower has received a revolving line of credit from Lender in the maximum commitment amount of $25,000,000.00 (the “Loan”) for the acquisition and development of Approved Subdivisions pursuant to the terms of that certain Borrowing Base Revolving Line of Credit Agreement dated as of February 14, 2006, between Borrower and Lender, and as amended by that certain First Amendment to Borrowing Base Revolving Line of Credit Agreement dated as of September 29, 2006, as further amended by that certain Second Amendment to Borrowing Base Revolving Line of Credit Agreement dated as of March 30, 2007, as further amended by that certain Third Amendment to Borrowing Base Revolving Line of Credit Agreement dated as of January 23, 2008, and as further amended by that certain Fourth Amendment to Borrowing Base Revolving Line of Credit Agreement dated as of May 14, 2008 (as the same may be further amended, modified, extended, renewed, restated or supplemented from time to time, the “Loan Agreement”) and as further evidenced by that certain Amended and Restated Borrowing Base Secured Promissory Note executed by Borrower and payable to the order of Lender (as amended, restated and otherwise modified from time to time, the “Note”). Borrower Whitney Ranch Village 5 LLC (“Whitney Ranch”) became party to the Loan Agreement and the Loan Documents pursuant to that certain Joinder and Assumption Agreement by and among Lender, Whitney Ranch and Borrower William Lyon Homes, Inc. (“William Lyon”) dated as of September 30, 2008. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Loan Agreement.

B. The Loan is secured by, among other things, duly recorded Construction Deeds of Trust and Fixture Filing (With Assignment of Rents and Security Agreement), duly filed UCC-1 Financing Statements naming Borrower as Debtor and Lender as Secured Party, and certain other assignments (collectively, as amended, restated and otherwise modified from time to time, the “Security Documents”).

C. Guarantor has executed certain documents in favor of Lender in connection with the Loan, including that certain Payment and Completion Guaranty Agreement (together with any other documents executed by any Guarantor in favor of Lender in connection with the Loan, each as may be amended, restated and otherwise modified from time to time, the “Guarantor Documents”).

D. The Note, the Security Documents, the Guarantor Documents, and all other agreements, documents, and instruments evidencing, securing, or otherwise relating to the Loan, as may be amended, modified, extended or restated from time to time, are sometimes referred to individually and collectively as the “Loan Documents”. Hereinafter, the Loan Documents shall mean such documents as modified in this Amendment.

E. The parties desire to modify the Loan Agreement and the Loan Documents as set forth below.

AGREEMENT:

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. ACCURACY OF RECITALS.

Borrower and Lender acknowledge the accuracy of the recitals.

2. MODIFICATION OF LOAN AGREEMENT AND LOAN DOCUMENTS.

2.1 Definitions.

2.1.1 The following definition of “Borrower Senior Credit Facility” is hereby added to Section 1.1 of the Loan Agreement:

“Borrower Senior Credit Facility” means individually and collectively (a) that certain Indenture dated as of March 17, 2003 among William Lyon Homes, Inc., the Guarantors (as defined therein), and U.S. Bank National Association, as Trustee (as amended, restated and otherwise modified from time to time); (b) that certain Indenture dated as of February 6, 2004 among William Lyon Homes, Inc., the Guarantors (as defined therein), and U.S. Bank National Association, as Trustee (as amended, restated and otherwise modified from time to time); and (c) and that certain Indenture dated as of November 22, 2004 among William Lyon Homes, Inc., the Guarantors (as defined therein), and U.S. Bank National Association, as Trustee (as amended, restated and otherwise modified from time to time).

2.1.2 The definition of “Compensating Balances” in Section 1.1 of the Agreement is hereby amended and restated as follows:

“Compensating Balances” means the aggregate amount of deposits of WLH and any Affiliate of WLH maintained with Lender, including deposits in any interest-bearing account; provided, however, that such amount shall exclude the amount of any collateralized funds in any deposit account, including, without limitation, those funds in which Borrower has granted Lender a security interest in exchange for the issuance of any letter of credit.

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2.1.3 The following definition of “Gardenia Project” is hereby added to Section 1.1 of the Loan Agreement:

“Gardenia Project” means that certain Approved Subdivision located in Los Angeles County, California added to the Borrowing Base pursuant to that certain Project Addendum by and between Lender and William Lyon dated as of August 22, 2007.

2.1.4 The definition of “Guarantor Senior Credit Facility” in Section 1.1 of the Loan Agreement is hereby deleted in its entirety.

2.1.5 The definition of “Interest Rate” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to provide as follows:

“Interest Rate” means, at the election of Borrower in connection with any Advance Request pursuant to Section 2.2(a) (and otherwise subject to the provisions of Section 2.3 and Section 3 of the Note), either:

(a) At such time as the amount of Compensating Balances is equal to or greater than $10,000,000, (i) the LIBOR Rate plus 3.00%, or (ii) the Prime Rate plus 1.50%, in either case, rounded upwards to the nearest one-eighth percent (.125%), or

(b) At such time as the amount of Compensating Balances is equal to or greater than $5,000,000 but less than $10,000,000, (i) the LIBOR Rate plus 3.50%, or (ii) the Prime Rate plus 2.00%, in either case, rounded upwards to the nearest one-eighth percent (.125%), or

(c) At such time as the amount of Compensating Balances is less than $5,000,000, (i) the LIBOR Rate plus 4.00%, or (ii) the Prime Rate plus 2.50%, in either case, rounded upwards to the nearest one-eighth percent (.125%);

provided, however, that in no event shall the Interest Rate be less than five and one-half of one percent (5.5%).

As used herein, “LIBOR Based Rate” means an Interest Rate based on the LIBOR Rate, and “Prime Based Rate” means an Interest Rate based on the Prime Rate. LIBOR Based Rates shall be adjusted from time to time as of each Interest Rate Adjustment Date. Prime Based Rates shall be adjusted from time to time as and when the Prime Rate is adjusted. Borrower may not elect to convert or otherwise change the Interest Rate except in connection with an Advance Request. Interest shall accrue on the entire outstanding balance of the Loan at the Interest Rate selected by Borrower until such time as Borrower elects to convert such Interest Rate to the other available Interest Rate (i.e., LIBOR Based Rate or Prime Based Rate); provided that the applicable Interest Rate shall be the Default Rate at any time an Event of Default has occurred and is continuing. In the

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event no such Interest Rate election is made by Borrower, the Interest Rate shall be deemed to be the LIBOR Based Rate.

2.1.6 The definition of “Maximum Allowed Advance” in Section 1.1 of the Loan Agreement is hereby amended to add the following subsection (f):

(f) Notwithstanding anything herein to the contrary, the maximum advance rate with respect to any Land Under Development, A&D Completed Lots or Model Units within the Gardenia Project shall be equal to the following:

(i) With respect to all Land Under Development, regardless of plan type:

(A) 65% of the Appraised Value of such Land Under Development until December 31, 2008, on which date the advance rate shall be reduced to 25% of the Appraised Value of such Land Under Development; and

(B) 25% of the Appraised Value of such Land Under Development from January 1, 2009 until March 31, 2009, on which date the advance rate shall be reduced to 0% of the Appraised Value of such Land Under Development.

(ii) With respect to all A&D Completed Lots, regardless of plan type:

(A) 75% of the Appraised Value of such A&D Completed Lots until December 31, 2008, on which date the advance rate shall be reduced to 40% of the Appraised Value of such A&D Completed Lots; and

(B) 40% of the Appraised Value of such A&D Completed Lots from January 1, 2009 until March 31, 2009, on which date the advance rate shall be reduced to 0% of the Appraised Value of such A&D Completed Lots.

(iii) With respect to all Model Units only, regardless of plan type:

(A) 75% of the Appraised Value of such Model Units until December 31, 2008, on which date the advance rate shall be reduced to 40% of the Appraised Value of such Model Units; and

(B) 40% of the Appraised Value of such Model Units from January 1, 2009 until March 31, 2009, on which date the advance rate shall be reduced to 0% of the Appraised Value of such Model Units.

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2.2 Reduction in Availability. Borrower acknowledges and agrees that the current Available Commitment Amount with respect to the Gardenia Project is $5,944,525. Notwithstanding anything in the Loan Agreement to the contrary, including without limitation Section 2.4(b)(ii) thereof, as a result of the reduction in the Maximum Allowed Advance with respect to the Gardenia Project, the Available Commitment Amount with respect to the Gardenia Project shall be reduced to $2,939,900 on December 31, 2008, and shall be further reduced to $0 on March 31, 2009.

2.3 Financial Covenants.

2.3.1 Section 7.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:

7.1 Minimum Tangible Net Worth Covenant. WLH will maintain at all times, on a consolidating basis, a minimum Tangible Net Worth equal to or greater than $90,000,000.00.

2.3.2 Section 7.2 of the Loan Agreement is hereby amended and restated in its entirety as follows:

7.2 Leverage Ratio. WLH will maintain at all times from January 1, 2010 through June 30, 2010, on a consolidating basis, a ratio of (a) Total Liabilities to (b) Tangible Net Worth that is equal to or less than 5.00 to 1. From and after July 1, 2010, WLH will maintain at all times, on a consolidating basis, a ratio of (a) Total Liabilities to (b) Tangible Net Worth that is equal to or less than 3.25 to 1. As used herein, the term “Total Liabilities” shall mean the book value of WLH’s assets less (i) Tangible Net Worth, (ii) “off-balance sheet” liabilities complying with the Financial Accounting Standards For Financial Interpretation No. 46 and (iii) minority interests in WLH consolidated entities, all as determined in accordance with GAAP. WLH shall not be required to maintain a leverage ratio during any time periods preceding January 1, 2010.

2.3.3 Section 7.4 of the Loan Agreement is hereby amended and restated in its entirety as follows:

7.4 Minimum Liquidity. WLH shall maintain, on a consolidating basis, at all times minimum Available Liquidity which is equal to or greater than Thirty Million Dollars ($30,000,000); provided, however, notwithstanding anything to the contrary set forth in the definition of Available Liquidity, Ten Million Dollars ($10,000,000) of such Available Liquidity shall be in the form of unrestricted cash and cash equivalents only.

2.4 Cross-Default to Borrower Senior Credit Facility. The following Section 9.1(u) is hereby added to the Loan Agreement:

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9.1(u) Cross-Default to Borrower Senior Credit Facility. Any default (after expiration of all applicable notice and cure periods) by any Borrower under any Borrower Senior Credit Facility.

3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.

The Loan Documents are ratified and affirmed by Borrower and will remain in full force and effect as modified herein, and as those Loan Documents may have been amended, restated or otherwise modified. Any property or rights to or interest in property granted as security in the Loan Documents will remain as security for the Loan and the obligations of Borrower in the Loan Documents. Each reference in any Loan Document to any other Loan Document will be a reference to such Loan Document as modified by this Amendment or as otherwise restated, amended or modified.

4. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Lender:

4.1 To the best of its knowledge, no Event of Default under the Loan Agreement, as modified herein, or any other Loan Document, as those Loan Documents may have been amended, restated or otherwise modified, has occurred and is continuing.

4.2 There has been no Material Adverse Change as of the date hereof.

4.3 Each and all representations and warranties of Borrower in the Loan Documents, as such Loan Documents may have been amended, restated or otherwise modified, are accurate on the date hereof in all material respects.

4.4 Borrower has no claims, counterclaims, defenses, or set-offs with respect to the Loan Documents as modified by this Amendment or otherwise amended, restated or modified.

4.5 The Loan Documents, as modified by this Amendment or as otherwise amended, restated or modified, are the legal, valid, and binding obligation of Borrower, enforceable against Borrower in accordance with their terms.

4.6 Borrower is validly existing under the laws of the state of its formation and has the requisite power and authority to execute and deliver this Amendment and to perform the Loan Documents, as modified herein or as otherwise amended, restated or modified. Each of the certificates and resolutions previously delivered to Lender in connection with the Loan continue to be true and accurate in all material respects, have not been rescinded, revoked, terminated, limited, restricted or otherwise modified and continue in full force and effect. The execution and delivery of this Amendment and the performance of the Loan Documents, as modified herein or as otherwise amended, restated or modified, have been duly authorized by all requisite action by or on behalf of Borrower and all other requisite persons. This Amendment has been duly executed and delivered on behalf of Borrower.

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5. COVENANTS.

Borrower covenants with Lender that Borrower shall execute, deliver, and provide to Lender such additional agreements, documents, and instruments as reasonably required by Lender to effectuate the intent of this Amendment.

6. RELEASE.

Borrower represents and warrants that Borrower has no claims, counterclaims, defenses, or offsets with respect to the enforcement by Lender against Borrower of the Loan or the Loan Documents. Borrower further fully, finally and forever releases and discharges Lender and its respective successors, assigns, directors, officers, employees, agents, and representatives from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, and suits, of whatever kind or nature in law or equity that it has or in the future may have, whether known or unknown, with respect to the Loan and the Loan Documents or the actions or omissions of Lender in respect thereof to the extent such claims, counterclaims, defenses or offsets arose from events occurring prior to the date of this Agreement. It is the intention of Borrower that the above release shall be effective as a full and final release of each and every matter specifically and generally referred to in this paragraph. Borrower acknowledges and represents that it has been advised by independent legal counsel with respect to the agreements contained herein and with respect to the provisions of California Civil Code Section 1542, which provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” Borrower, being aware of said code section, expressly waives any and all rights it may have thereunder, as well as under any other statute or common law principle of similar effect, with respect to any of the matters released herein. The Agreement shall act as a release of all included claims, rights and causes of action, whether such claims are currently known, unknown, foreseen or unforeseen and regardless of any present lack of knowledge as to such claims. Borrower understands and acknowledges the significance and consequence of this waiver of California Civil Code Section 1542, and hereby assumes full responsibility for any injuries, damages, losses or liabilities released herein.

7. CONDITIONS PRECEDENT TO THIS AMENDMENT.

This Amendment shall become effective and binding on Lender only upon satisfaction, as determined by Lender in its sole and absolute discretion, of the following conditions precedent:

7.1 No Event of Default. No Event of Default, Unmatured Event of Default or Material Adverse Change shall have occurred and be continuing as of the date of this Amendment.

7.2 No Mechanics’ Lien and/or Labor Claims against the Land. Borrower shall provide evidence to Lender, in a form and manner satisfactory to Lender in its sole and absolute discretion, that, there are no mechanic lien claims, labor claims or other claims for

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service or goods that could result in a lien or encumbrance against the Land (as that term is defined in the Loan Agreement).

7.3 Execution and Delivery of Amendment. Borrower shall have delivered to Lender a fully executed original of this Amendment and the attached Consent and Agreement. Lender shall have executed and delivered a fully executed copy of this Amendment to Borrower.

7.4 Payment of Lender Costs. Borrower shall have paid, in immediately available funds, to Lender all of Lender’s fees, costs and charges incurred by Lender in connection herewith, including without limitation reasonable attorneys’ fees and costs.

7.5 Other Documents and Information. Borrower shall have delivered to Lender such other documents and information as Lender may reasonably require as a condition to the effectiveness of this Amendment.

8. ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.

The Loan Documents, as modified herein, and as otherwise amended, restated or modified, contain the entire understanding and agreement of Borrower in respect of the subject matter thereto and supersedes all prior representations, warranties, agreements, arrangements, and understandings. No provision of such Loan Documents may be further changed, discharged, supplemented, terminated, or waived except in a writing signed by Lender and Borrower.

9. BINDING EFFECT.

The Loan Documents as modified herein are binding upon, and inure to the benefit of Borrower and Lender and their respective successors and assigns.

10. CHOICE OF LAW.

This Amendment and the attached Consent is governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts of law principles.

11. COUNTERPART EXECUTION.

This Amendment and the attached Consent may be executed in one or more counterparts, each of which is deemed an original and all of which together constitute one and the same document. Signature pages may be detached from the counterparts and attached to a single copy of this Amendment and the attached Consent to physically form one document.

[Signature Page Follows]

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DATED as of the date first above stated.

BORROWER:
WILLIAM LYON HOMES, INC., a California corporation
By:	/s/ Michael D. Grubbs
Name:	Michael D. Grubbs
Its:	Senior Vice President
By:	/s/ Richard S. Robinson
Name:	Richard S. Robinson
Its:	Senior Vice President
WHITNEY RANCH VILLAGE 5 LLC, a Delaware limited liability company
By:	WILLIAM LYON HOMES, INC., a California corporation, its sole member
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President

[Signature Pages Continue on Following Page]

Signature Page to Fifth Amendment to Borrowing Base

Revolving Line of Credit Agreement

LENDER:
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association
By:	/s/ Linda B. Hersh
Name:	Linda B. Hersh
Its:	Director

[End of Signature Pages – Consent and Agreement of Guarantor Follows]

Signature Page to Fifth Amendment to Borrowing Base

Revolving Line of Credit Agreement

CONSENT AND AGREEMENT OF GUARANTOR

Guarantor hereby consents to the foregoing Fifth Amendment to Borrowing Base Revolving Line of Credit Agreement (“Amendment”) and agrees to the terms and conditions thereof. Guarantor further represents, warrants and covenants to Lender as follows:

1. To the best of Guarantor’s knowledge, no Event of Default has occurred and is continuing.

2. There has been no Material Adverse Change with respect to Borrower or the Land.

3. Borrower continues to be validly existing under the laws of the state of its formation or organization and (1) Borrower has the requisite power and authority to execute and deliver the Amendment and to perform the Loan Documents as modified by the Amendment, and (2) the Guarantor has the requisite power and authority to execute and deliver this Consent and Agreement of Guarantor and to perform the Loan Documents to which it is a party, as those Loan Documents may have been amended, restated or otherwise modified.

4. Guarantor acknowledges: (i) receiving a copy of and reading the Amendment and all other Loan Documents, including any new Loan Documents and any restatements, amendments or modifications with respect to any existing Loan Documents, (ii) the accuracy of the Recitals in the Amendment, and (iii) the continued effectiveness of the Loan Documents to which the Guarantor is a party as those Loan Documents may have been amended, restated or otherwise modified by the Amendment or otherwise, and any other agreements, documents, or instruments securing or otherwise relating to thereto (collectively, the “Guarantor Loan Documents”).

5. Guarantor consents to the modification of the Loan Documents as set forth in the Amendment, and as set forth in any restatements, amendments or modifications with respect to any existing Loan Documents or Guarantor Documents, and as to all other matters as set forth in the Amendment and affirms and covenants to Lender that: (a) such Loan Documents and Guarantor Loan Documents (as restated, amended or otherwise modified) continue to be the legal, valid and binding obligation of Borrower and Guarantor (as applicable), enforceable against Borrower and the Guarantor (as applicable) in accordance with their terms, subject only to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors’ rights generally and by equitable principles of general application, and (b) any property or rights to or interests in property granted as security in the Guarantor Documents shall remain as security.

6. Guarantor represents and warrants that Guarantor has no claims, counterclaims, defenses, or off-sets with respect to the enforcement against Guarantor of the Guarantor Loan Documents. Guarantor further fully, finally and forever releases and discharges Lender and its successors, assigns, directors, officers, employees, agents, and representatives from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, and suits, of whatever kind or nature in law or equity that it has or in the future may have, whether known or unknown, with respect to the Loan and the Loan Documents (including without limitation, the Guarantor

-1-

Loan Documents) or the actions or omissions of Lender in respect thereof to the extent such claims, counterclaims, defenses or off-sets arose from events occurring prior to the date of the Amendment. It is the intention of Guarantor that the above release shall be effective as a full and final release of each and every matter specifically and generally referred to in this paragraph. Guarantor acknowledges and represents that he has been advised by independent legal counsel with respect to the agreements contained herein and with respect to the provisions of California Civil Code Section 1542, which provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” Guarantor, being aware of said Code section, expressly waives any and all rights he may have thereunder, as well as under any other statute or common law principle of similar effect, with respect to any of the matters released herein.

[Signature Page Follows]

-2-

DATED as of the date of the Amendment.

GUARANTOR:
WILLIAM LYON HOMES, a Delaware corporation
By:	/s/ Michael D. Grubbs
Name:	Michael D. Grubbs
Title:	Senior Vice President
By:	/s/ Richard S. Robinson
Name:	Richard S. Robinson
Title:	Senior Vice President

Signature Page to Consent and Agreement of Guarantor

EX-10.3

Exhibit 10.3

	Roxana K. Chamouille Direct: (949) 223-7224 roxana.chamouille@bryancave.com
December 17, 2008 VIA E-MAIL Mr. Richard S. Robinson and Mr. Michael D. Grubbs William Lyon Homes, Inc. 4490 Von Karman Avenue Newport Beach, California 92660 Re:   That certain Revolving Line of Credit Loan (Borrowing Base) in an amount not to exceed $30,000,000 (“Loan”) by CALIFORNIA BANK & TRUST, a California banking corporation (“Lender”), to WILLIAM LYON HOMES, INC., a California corporation (“Borrower”) Dear Messrs. Robinson and Grubbs: As you know, this firm represents Lender in connection with the Loan. The Loan is being administered pursuant to the terms of that certain Amended and Restated Revolving Line of Credit Loan Agreement (Borrowing Base Loan) dated as of September 16, 2004, by and between Borrower and Lender (as the same has been and may be further amended from time to time, “Loan Agreement”). The Loan is evidenced by that certain Eighth Amended and Restated Construction Loan Promissory Note (Construction Revolving Line of Credit) dated as of September 17, 2008, given by Borrower to Lender (as the same has been and may be further amended from time to time, “Note”). All present and future agreements relating to the Loan, including without limitation the Loan Agreement and the Note, collectively shall be referred to in this letter as the “Loan Documents.” Unless otherwise specified herein, all capitalized terms shall have such meanings as provided in the Loan Agreement. Borrower and Lender has discussed and agreed to certain modifications to the Loan Documents from and after the date hereof. This letter agreement sets forth the terms and conditions of said modifications and, once executed by all parties, this letter agreement shall be included as one of the Loan Documents. Modifications to the Loan Agreement: The Loan Documents provide that Borrower shall comply with certain ongoing Financial Covenants as described in Section 6.15 of the Loan Agreement.

Messrs. Richard S. Robinson and Michael D. Grubbs December 17, 2008 Page 2

Borrower has requested modification of the following financial covenants set forth in Section 6.15 of the Loan Agreement (“Financial Covenants”): (1) a one-time waiver of the compliance requirement with regard to the “Maximum Total Liabilities-to-Tangible Net Worth Ratio” (as set forth in Section 6.15 of the Loan Agreement and as defined below) for the quarterly reporting period ending on December 31, 2008 through the quarterly reporting period ending on December 31, 2009; and (2) modification of the “Minimum Tangible Net Worth” (as set forth in Section 6.15 of the Loan Agreement and defined below) requirements from the current amount of One Hundred Seventy-Five Million Dollars ($175,000,000.00) to the revised amount of Ninety Million Dollars ($90,000,000.00) for the quarterly reporting period ending on December 31, 2008, and continuing thereafter during the remaining term of the Loan.

Lender has agreed to these modifications, and the Financial Covenants chart set forth in Section 6.15 of the Loan Agreement shall be revised as follows:

Covenant Party	Covenant Type	Covenant Requirement
Borrower and its subsidiaries	Maximum Total Liabilities-to-Tangible Net Worth Ratio (with the Total Liabilities to be exclusive of consolidated liabilities of variable interest entities)	Not in excess of 5.0:1.0 (Notwithstanding any other provision of the Loan Documents to the contrary, Borrower shall not be required to comply with the Maximum Total Liabilities-to-Tangible Net Worth Ratio until on and after January 1, 2010, and continuing thereafter during the remaining term of the Loan.)
Borrower	Minimum Tangible Net Worth	Not less than $90,000,000.00
Borrower	Minimum Liquidity	Not less than $30,000,000.00 (At least $10,000,000 cash on hand and the remaining $20,000,000 may consist of either cash and/or availabilities under the lines of credit)

Notwithstanding any other provision of the Loan Documents to the contrary, Borrower shall not be required to comply with the Maximum Total Liabilities-to-Tangible Net Worth Ratio until on and after January 1, 2010, and continuing thereafter during the remaining term of the Loan.

Messrs. Richard S. Robinson and Michael D. Grubbs December 17, 2008 Page 3

In addition to the modifications to Section 6.15 of the Loan Agreement set forth above, Borrower and Lender have agreed to modify the Loan Agreement by adding a new section, Section 16, to the Loan Agreement. The Loan Agreement is hereby modified by adding the following new section as Section 16:

“16. NO RIGHT TO SET-OFF. Notwithstanding any provision of any Loan Document or applicable law to the contrary, in no event shall Lender, whether with or without demand or notice to Borrower, exercise any right to set-off and apply deposits (whether certificates of deposit, demand, general, savings, special, time, or other, and whether provisional or final) held by Lender for Borrower against or to the Obligations, to the extent that such deposits are not held as collateral for the Loan. By its signature below, Lender hereby waives any right it may have to set-off and apply such deposits against or to the Obligations.”

Modifications to the Note:

In addition to the modifications to the Loan Agreement set forth above, Borrower and Lender have agreed to modify the Note pursuant to the terms set forth below.

The following definition of “Applicable Spread” shall be added to the Note:

“Applicable Spread” shall mean, for any Fixed Rate or Base Floating Rate during the term of this Note, the following interest spread, which shall be determined by Lender on a daily basis based upon the total aggregate amount of all deposit funds held in various checking accounts by Lender in the name of Borrower:

Deposit Amount	Applicable Rate Spread		Base Floating Rate
Less than $2,500,000.00	4.50	%	1.50	%
$2,500,000.00 to $4,999,999.99	4.00	%	1.00	%
$5,000,000.00 to $9,999,999.99	3.50	%	0.75	%
Greater than $10,000,000.00	3.00	%	0.00	%

The definitions of “Applicable Rate Spread” and “Base Floating Rate” in Sections 1.2 and 1.1.1 of the Note, respectively, shall be deleted in their entirety and replaced by the following definitions:

“Applicable Rate Spread” means the rate set forth above in the definition of the Applicable Spread (subject to adjustment to the Floor Rate, as applicable).

Messrs. Richard S. Robinson and Michael D. Grubbs December 17, 2008 Page 4

“Base Floating Rate” means the rate set forth above in the definition of the Applicable Spread (subject to adjustment to the Floor Rate, as applicable).

The Note is hereby further modified to provide that at no time shall the Fixed Rate or Base Floating Rate, as calculated herein, be less than the “Floor Rate” (as defined below).

As used herein and as added to the Note, the term “Floor Rate” means a rate not less than 5.50% per annum.

Except as may otherwise specifically be provided herein, the Loan Documents are in full force and effect and shall be enforceable in accordance with their terms and provisions. Furthermore, by its execution and delivery of this letter agreement, Borrower hereby reaffirms all of the terms, conditions, obligations, responsibilities, indemnities and duties imposed on Borrower under the Loan Documents (“Obligations”), without qualification or condition, and said Obligations shall continue to be the primary responsibility and liability of Borrower. Borrower’s failure to comply with the terms and conditions of this letter agreement shall constitute an Event of Default under the Loan Agreement.

Please execute this letter agreement in the spaces provided below to indicate Borrower’s agreement to the terms set forth herein. This letter agreement, once signed by Borrower, shall be included as one of the Loan Documents evidencing or relating to the Loan.

Please feel free to contact me with any questions.

Very truly yours,

Roxana K. Chamouille

For the Firm

[Signatures continued on the following page.]

Messrs. Richard S. Robinson and Michael D. Grubbs December 17, 2008 Page 5

ACKNOWLEDGED AND AGREED AS OF
December 17, 2008:
BORROWER:
WILLIAM LYON HOMES, INC., a California corporation
By:	/s/ Richard S. Robinson
Name:	Richard S. Robinson
Title:	Senior Vice President
By:	/s/ Michael D. Grubbs
Name:	Michael D. Grubbs
Title:	Senior Vice President
LENDER:
CALIFORNIA BANK & TRUST, a California banking corporation
By:	/s/ Frank W. Henry
Name:	Frank W. Henry
Title:	Executive Vice President

EX-10.4

Exhibit 10.4

TENTH MODIFICATION AGREEMENT TO BORROWING BASE REVOLVING LINE OF

CREDIT AGREEMENT

DATE:	December 19, 2008
PARTIES:
	Borrower:	WILLIAM LYON HOMES, INC., a California corporation
	Guarantor:	WILLIAM LYON HOMES, a Delaware corporation
	Bank:	JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago, Illinois)), a national banking association

JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago, Illinois)), a national banking association (“Bank”), and WILLIAM LYON HOMES, INC., a California corporation (“Borrower”), hereby enter into this Tenth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement (the “Modification”) to the Borrowing Base Revolving Line of Credit Agreement dated as of June 28, 2004, as modified by a Modification Agreement, dated as of December 7, 2004, by a Second Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of July 14, 2005, by a Third Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of October 23, 2006, by a Fourth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of April 26, 2007, by a Fifth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of November 6, 2007, by a Sixth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of February 20, 2008, by a Seventh Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of March 12, 2008, by an Eighth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of June 5, 2008, and by a Ninth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement, dated as of September 16, 2008 (the “Loan Agreement”), with the consent of guarantor WILLIAM LYON HOMES, a Delaware corporation (“Guarantor”).

RECITALS

A. Bank has extended to Borrower credit (“Loan”) up to the maximum principal amount of Seventy Million Dollars ($70,000,000) pursuant to the Loan Agreement, as presently evidenced by that certain Amended and Restated Promissory Note dated as of July 14, 2005 (the “Note”) executed by Borrower and payable to the order of Bank.

B. The Loan is secured by, among other things, certain Construction Deeds of Trust and Fixture Filing (With Assignment of Rents and Security Agreement) executed by

Borrower as Trustor for the benefit of Bank (such Deeds of Trust, as amended to dated, shall be hereinafter referred to, individually, as a “Deed of Trust” and, collectively, as the “Deeds of Trust”). The Loan is further secured by the personal property described in certain UCC-1 Financing Statements relating to the property encumbered by the Deeds of Trust naming Borrower as Debtor and Bank as Secured Party (as amended to date, the “UCC Financing Statements”). The Deeds of Trust, the UCC Financing Statements, and such other agreements, documents and instruments securing the Loan are referred to individually and collectively as the “Security Documents”).

C. Repayment of the Loan and the completion of the improvements have been, and continue to be, guaranteed by the Repayment Guaranty dated as of June 28, 2004 and executed by Guarantor in favor of Bank (the “Guaranty”). The Guaranty and any other agreements, documents and instruments guarantying the Loan are referred to individually and collectively as the “Guaranty Documents”.

D. The Loan Agreement, the Note, the Security Documents, the Guaranty Documents, any environmental certification and indemnity agreement, and all other agreements, documents, and instruments evidencing, securing, or otherwise relating to the Loan, as may be amended, modified, extended or restated from time to time, are sometimes referred to individually and collectively as the “Loan Documents”. Hereinafter, the Loan Documents shall mean such documents as modified in this Modification.

E. The Borrower and the Bank have agreed to modify the Loan as provided herein.

F. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Loan Agreement.

AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Bank agree as follows:

1. ACCURACY OF RECITALS.

Borrower acknowledges the accuracy of the Recitals.

2. MODIFICATION OF LOAN DOCUMENTS.

2.1 The Commitment Amount is hereby reduced from $40,000,000 to $30,000,000. In no event shall the Bank be obligated to make any disbursement of the Loan which would cause the outstanding principal balance of the Loan to exceed the Commitment Amount, as reduced hereby.

2.2 The Maturity Date is hereby shortened from June 28, 2010 to December 28, 2009. All principal, interest and Other Amounts shall be immediately due and payable on the Maturity Date, as shortened hereby.

2.3 The definition of “Interest Rate” set forth in Section 1.1 of the Loan Agreement is deleted in its entirety and replaced with the following:

“‘Interest Rate’ means the LIBOR Rate or the Floating Rate, as applicable, provided that the Interest Rate shall never be less than 5.5% per annum.”

2.4 The definition of “Floating Rate” set forth in Section 1.1 of the Loan Agreement is deleted in its entirety and replaced with the following:

“‘Floating Rate’ means, for any day, a rate per annum equal to the sum of (a) the Prime Rate for such day, plus (b) the Applicable Margin; provided that the Floating Rate shall never be less than the Applicable Margin plus the Adjusted One Month LIBOR Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in the Floating Rate due to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall be effective from and including the effective date of such change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.”

2.5 The following definition is hereby added to Section 1.1 of the Loan Agreement:

“‘Adjusted One Month LIBOR Rate’ means, an interest rate per annum equal to the sum of (i) 2.50% per annum plus (ii) the LIBOR Base Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day); provided that, for the avoidance of doubt, the LIBOR Base Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at approximately 11:00 a.m. London time on such day.”

2.6 Section 2.3(a) of the Loan Agreement is hereby deleted in its entirety and restated to provide as follows:

“(a) Rate of Interest. Each Advance will bear interest from the date of the Advance at a per annum Interest Rate which is either the LIBOR Rate or the Floating Rate, as elected by Borrower in accordance with Section 2.4, provided that the Interest Rate shall never be less than 5.5% per annum.”

2.7 Section 2.11(d) of the Loan Agreement is hereby deleted in its entirety and restated to provide as follows:

“(d) Payments During Term Out. From and after the Revolving Credit Termination Date, the Borrower shall make the following principal payments:

(i) On the last day of the second Calendar Month after the Revolving Credit Termination Date, on the last day of each fourth Calendar Month after the Revolving Credit Termination Date, and on the Maturity Date, the Borrower will make a principal payment, as necessary to reduce the Outstanding Loan Borrowings to an amount no greater than the Commitment Amount. For the purposes of this Section 2.11(d), on the last day of the second Calendar Month after the Revolving Credit Termination Date, the Commitment Amount shall be

reduced to an amount equal to Twenty Million Dollars ($20,000,000), and on the last day of the fourth Calendar Month after the Revolving Credit Termination Date, the Commitment Amount shall be reduced to an amount equal to Ten Million Dollars ($10,000,000); and

(ii) To the extent that the Outstanding Loan Borrowings exceed the Available Commitment at any time, then within one (1) Business Day the Borrower shall make a principal payment in the amount of the excess.”

2.8 Section 7.1 of the Loan Agreement is deleted in its entirety and replaced with the following:

“7.1 Minimum Tangible Net Worth Covenant. Guarantor shall maintain a Tangible Net Worth of at least $90,000,000.00.”

2.9 Section 7.2 of the Loan Agreement is deleted in its entirety and replaced with the following:

“7.2 [Intentionally Omitted.]”

2.10 Section 7.3 of the Loan Agreement is deleted in its entirety and replaced with the following:

“7.3 Minimum Available Liquidity Covenant. On the Effective Date and at all times thereafter, Guarantor will have Available Liquidity of no less than $30,000,000.00, of which no less than $10,000,000.00 shall consist of consolidated aggregate unpledged, unreserved, and unrestricted cash and unpledged, unreserved, and unrestricted Cash Equivalents, and the balance of which may consist of either (a) consolidated aggregate unpledged, unreserved, and unrestricted cash and unpledged, unreserved, and unrestricted Cash Equivalents, (b) the unadvanced portion of any revolving lines of credit loans available to Guarantor as a borrower with respect to which (i) all conditions precedent to such advance have been satisfied (with the exception of a request for such advance) and (ii) no default, event of default or unmatured event of default has occurred, or (c) a combination of the Available Liquidity described in clauses (a) and (b) above.”

2.4 The Pricing Schedule set forth in Exhibit C of the Loan Agreement is deleted in its entirety and replaced with the Pricing Schedule attached hereto as Appendix I.

2.5 Notwithstanding any provision in the Loan Agreement or in any other Loan Document to the contrary, with respect to the Approved Subdivision commonly known as “The Lofts,” which was approved as an Approved Subdivision pursuant to that certain Project Loan Addendum dated as of June 20, 2007, (i) the Maximum Allowed Advance for the MFR A&D Lots in such Approved Subdivision included in the Borrowing Base is hereby reduced to $0.00, (ii) the Maximum Allowed Advance for each MFR Spec Unit in such Approved Subdivision included in the Borrowing Base is hereby reduced to the lesser of (A) 50% of the Appraised Value for that Unit or (B) 50% of the Unit Cost for that Unit, and (iii) the Maximum Allowed Advance for each MFR Model Unit in such Approved Subdivision included in the Borrowing

Base is hereby reduced to the lesser of (A) 50% of the Appraised Value for that Unit or (B) 50% of the Unit Cost for that Unit.

2.6 Each reference in the Loan Documents to any of the Loan Documents shall be a reference to such document as modified herein.

3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.

The Loan Documents are ratified and affirmed by Borrower and shall remain in full force and effect as modified herein. Any property or rights to or interests in property granted as security in the Loan Documents shall remain as security for the Loan and the obligations of Borrower in the Loan Documents.

4. CONDITIONS PRECEDENT.

Before this Agreement becomes effective and any party becomes obligated under it, all of the following conditions shall have been satisfied at Borrower’s sole cost and expense in a manner acceptable to Bank in the exercise of Bank’s sole judgment:

4.1 Bank shall have received such assurance as Bank may require that the validity and priority of the Deeds of Trust have not been and will not be impaired by this Agreement or the transactions contemplated by it, including the issuance by the title company of CLTA Endorsement No. 110.5 to be attached to Bank’s title policies insuring the liens of the Deeds of Trust.

4.2 Bank shall have received fully executed and, where appropriate, acknowledged originals of this Modification, the attached consents signed by Guarantor, certain Modification Agreements (Short Form) dated of even date herewith (the “Short Form Modifications”) relating to each of the Deeds of Trust, and any other documents which Bank may require or request in accordance with this Agreement or the other Loan Documents.

4.3 The Short Form Modifications shall have been recorded in the Official Records of the Counties in which the Deeds of Trust were originally recorded, in addition to all other documents which Bank may require to be recorded.

4.4 Bank shall have received reimbursement, in immediately available funds, of all costs and expenses incurred by Bank in connection with this Agreement, including charges for title insurance (including endorsements), recording, filing and escrow charges, fees for appraisal, architectural and engineering review, construction services and environmental services, mortgage taxes, and legal fees and expenses of Bank’s counsel. Such costs and expenses may include the allocated costs for services of Bank’s in-house staffs, such as legal, appraisal, construction services and environmental services. Borrower acknowledges that any extension and modification fees payable in connection with this transaction do not include the amounts payable by Borrower under this subsection.

5. ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.

The Loan Documents as modified herein contain the entire understanding and agreement

of Borrower and Bank in respect of the Loan and supersede all prior representations, warranties, agreements, arrangements, and understandings. No provision of the Loan Documents as modified herein may be changed, discharged, supplemented, terminated, or waived except in a writing signed by Bank and Borrower.

6. BINDING EFFECT.

The Loan Documents as modified herein shall be binding upon, and inure to the benefit of, Borrower and Bank and their respective successors and assigns.

7. CHOICE OF LAW.

This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts of law principles.

8. COUNTERPART EXECUTION.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document.

[Signatures on following page]

DATED as of the date first above stated.

BORROWER:	WILLIAM LYON HOMES, INC.,
	a California corporation
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President
BANK:	JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago, Illinois)), a national banking association
	By:	/s/ Kimberlee Edwards
	Name:	Kimberlee Edwards
	Title:	Senior Vice President

CONSENT AND AGREEMENT OF GUARANTOR

With respect to that certain Tenth Modification Agreement to Borrowing Base Revolving Line of Credit Agreement (hereinafter, the “Modification”) between WILLIAM LYON HOMES, INC., a California corporation (“Borrower”), and JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago, Illinois)), a national banking association (“Bank”), to which this Consent is attached, the undersigned (“Guarantor”), hereby (i) ratifies and reaffirms all of its obligations to Bank under the Guaranty, (ii) consents to the execution and delivery by Borrower of the attached Modification, and (iii) confirms that the Guaranty remains in full force and effect notwithstanding Borrower’s execution of the attached Modification. The undersigned agrees that the execution of this Consent and Agreement of Guarantor (the “Consent”) is not necessary for the continued validity and enforceability of the Guaranty, but it is executed to induce Bank to enter into the Modification.

This Consent may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. Signature pages may be detached from the counterparts and attached to a single copy of this Consent to physically form one document. Facsimile transmission of the signed original of this Consent or the retransmission of any signed facsimile transmission will be deemed the same as delivery of an original.

IN WITNESS WHEREOF, Guarantor has executed this Agreement as of the date set forth on the attached Tenth Modification Agreement.

“Guarantor”	WILLIAM LYON HOMES, a Delaware corporation
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President

APPENDIX I

PRICING SCHEDULE

APPLICABLE MARGIN	LEVEL I STATUS		LEVEL II STATUS		LEVEL III STATUS		LEVEL IV STATUS
LIBOR Rate	4.50	%	4.00	%	3.50	%	3.00	%
Floating Rate	2.00	%	1.50	%	1.00	%	0.50	%

The Applicable Margin shall be determined on a quarterly basis, commencing as of December 1, 2008 and on each March 1, June 1, September 1 and December 1 thereafter, and shall be determined based on the weighted average of the dollar deposits maintained by Borrower in deposit accounts established with Bank during the preceding three (3) month period, all as determined by Bank.

For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:

“Level I Status” exists for each three (3) month period that the weighted average of the dollar deposits maintained by Borrower in deposit accounts established with Bank during the preceding three (3) month period, as determined by Bank, is less than or equal to $2,499,999.99.

“Level II Status” exists for each three (3) month period that the weighted average of the dollar deposits maintained by Borrower in deposit accounts established with Bank during the preceding three (3) month period, as determined by Bank, is greater than $2,499,999.99 but less than or equal to $4,999,999.99.

“Level III Status” exists for each three (3) month period that the weighted average of the dollar deposits maintained by Borrower in deposit accounts established with Bank during the preceding three (3) month period, as determined by Bank, is greater than $4,999,999.99 but less than or equal to $9,999,999.99.

“Level IV Status” exists for each three (3) month period that the weighted average of the dollar deposits maintained by Borrower in deposit accounts established with Bank during the preceding three (3) month period, as determined by Bank, is greater than $10,000,000.00.

“Status” means either Level I Status, Level II Status, Level III Status, or Level IV Status.

APPENDIX I

EX-10.5

Exhibit 10.5

THIRD AMENDMENT AGREEMENT

This Third Amendment Agreement (this “Third Amendment Agreement”) is entered into as of December 22, 2008, by and between WILLIAM LYON HOMES, INC., a California corporation (“Borrower”), and COMERICA BANK (“Lender”). This Third Amendment Agreement is made with reference to the following facts:

RECITALS

A. Lender has made a revolving line of credit available to Borrower in the initial maximum outstanding principal amount of $50,000,000 (the “Loan”), pursuant to the terms of that certain Revolving Line of Credit Loan Agreement (Borrowing Base Loan) dated as of March 8, 2006 (as amended by the First Amendment Agreement and Second Amendment Agreement described below and by this Third Amendment Agreement, the “Loan Agreement”). Capitalized terms used in this Third Amendment Agreement and not defined shall have the meanings assigned to such terms in the Loan Agreement.

B. Pursuant to that certain Amendment Agreement dated as of February 28, 2008, by and between Borrower and Lender (the “First Amendment Agreement”), among other things (i) the maximum Commitment Amount was reduced to $35,000,000, (ii) certain adjustments were made to the Borrowing Base, and (iii) the Initial Line Maturity Date was extended by twelve (12) months to and until April 3, 2009.

C. The Loan Agreement was further modified pursuant to that certain Second Amendment Agreement dated as of September 2, 2008, by and between Borrower and Lender (the “Second Amendment Agreement”) to make certain additional changes to the Borrowing Base.

D. Subject to the terms and conditions contained in this Third Amendment Agreement, Borrower and Lender have agreed to further modify the Loan Agreement and other Loan Documents as set forth herein.

E. As used in this Third Amendment Agreement, the term “Loan Documents” means the Loan Agreement, the Note, the Deeds of Trust, the other Security Documents, the Environmental Indemnity, the Guaranty, and the other “Loan Documents” described in the Loan Agreement. This Third Amendment Agreement and the “Short Forms” and “Amended and Restated Note” described below shall also constitute Loan Documents.

AGREEMENT

NOW, THEREFORE, with reference to the foregoing Recitals and information, and in consideration of the mutual covenants and agreements contained in this Third Amendment Agreement, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender agree as follows:

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1. Recitals; Representations and Warranties. The above statement of facts set forth in the Recitals is true and correct, and the Recitals are hereby incorporated herein as an agreement of Borrower and Lender. Borrower hereby represents and warrants to Lender that (a) no Event of Default or Unmatured Event of Default has occurred or exists, and (b) all representations and warranties of Borrower contained in the Loan Agreement or in any of the other Loan Documents (as the Loan Agreement and such other Loan Documents are amended hereby) are true and correct as of the date hereof.

2. Amendments to Loan Agreement. Borrower and Lender hereby amend the Loan Agreement as follows:

2.1 The definition of “Commitment Amount” set forth in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“‘Commitment Amount’ means (a) through March 30, 2009, the sum of Thirty Million Dollars ($30,000,000.00), (b) from March 31, 2009, through June 29, 2009, the sum of Twenty-Six Million Dollars ($26,000,000.00), (c) from June 30, 2009 through September 29, 2009, the sum of Twenty-Two Million Dollars ($22,000,000.00), (d) from September 30, 2009 through December 30, 2009, the sum of Eighteen Million Dollars ($18,000,000.00), and (e) from and after December 31, 2009, the sum of Fourteen Million Dollars ($14,000,000.00).”

2.2 The definition of “Commitment Fee” set forth in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“‘Commitment Fee’ means that certain quarterly facility fee payable in advance pursuant to Section 2.5.1, below in an amount equal to 0.0875% of the then applicable Commitment Amount.”

2.3 The definition of “Draw Request” set forth in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“‘Draw Request’ means a completed, written request for an Advance from Borrower to Lender, which request shall be substantially in the form attached as Exhibit A to the Note, and shall be accompanied by such other documents and information as Lender may require or specify from time to time.”

2.4 The subheading entitled “LOTS UNDER DEVELOPMENT” within the definition of “Maximum Allowed Advance” set forth in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following new subheading:

“– LOTS UNDER DEVELOPMENT: The sum of all Advances for Lots Under Development shall not exceed (a) for all Qualified Projects other than the Qualified Projects commonly known as ‘Gallery Walk’ and ‘Plaza Walk’ in Elk Grove, California, and ‘Promenade North’ in San Diego, California, the lesser of (i) eighty percent (80%) of Total Project Costs, or (ii) sixty-five percent (65%) of the Bulk Finished Lot Value for Lots Under Development, subject to Lender’s approval, (b) for the Qualified Projects commonly known as ‘Gallery Walk’ and ‘Plaza Walk’ in Elk

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Grove, California, $0, and (c) for the Qualified Project commonly known as ‘Promenade North’ in San Diego, California, the lesser of (i) eighty percent (80%) of Total Project Costs, or (ii) (A) through June 29, 2009, forty percent (40%) of the Bulk Finished Lot Value for Lots Under Development, subject to Lender’s approval, (B) from June 30, 2009 through December 30, 2009, twenty percent (20%) of the Bulk Finished Lot Value for Lots Under Development, subject to Lender’s approval, and (C) from and after December 31, 2009, $0.”

2.5 The definition of “Reduction Period” set forth in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“‘Reduction Period’ shall mean, as set forth in Section 2.1.7 below, that twelve (12) month period (commencing immediately following the Initial Line Maturity Date).”

2.6 The last sentence of Section 2.1.2(b) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“No new Qualified Project will be approved for inclusion in the Borrowing Base after December 1, 2008.”

2.7 Section 2.5.1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“2.5.1 COMMITMENT FEE. On the first day of each calendar quarter (commencing January 1, 2009), Borrower shall pay to lender a Commitment Fee equal to 0.0875% of the then applicable Commitment Amount.”

2.8 Section 6.15 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“6.15 FINANCIAL COVENANTS. Financial covenants described in this Section 6.15, together with all other financial covenants and restrictions set forth in this Agreement, shall be monitored quarterly by Lender upon receipt of the financial statements to be provided hereunder.

COVENANT PARTY	COVENANT TYPE	COVENANT REQUIREMENT
Guarantor	Minimum Tangible Net Worth	Not less than $90,000,000
Guarantor	Minimum Liquidity	Not less than $30,000,000, at least $10,000,000 of which must be cash on hand”

Upon the satisfaction of all of the conditions precedent set forth in Section 7, below, the effective date of the replacement of Section 6.15 of the Loan Agreement shall be deemed to be December 1, 2008.

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2.9 Section 6.4.6 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“6.4.6 BORROWING BASE CERTIFICATE. (i) By the fifteenth (15th) day of each Calendar Month, a current Borrowing Base Certificate reflecting the Property included in the Borrowing Base as of the last day of the immediately preceding Calendar Month, and (ii) by the last day of each Calendar Month, a current Borrowing Base Certificate reflecting the Property included in the Borrowing Base as of the fifteenth (15th) day of such Calendar Month. In addition, by the forty-fifth (45th) day of the end of each Calendar Quarter, together with such certificate, a detailed computation of the financial covenant requirements set forth in Section 6.15 below.”

2.10 Exhibit “B” to the Loan Agreement is hereby deleted in its entirety and replaced with Exhibit “B” attached hereto.

3. Amended and Restated Note. The Note is being amended, restated and replaced in its entirety by that certain Amended and Restated Note Secured by Deed of Trust of even date herewith, executed by Borrower and payable to Lender, in the face principal amount of $30,000,000.00 (the “Amended and Restated Note”).

4. Lender’s Waiver of Set-off Rights. Notwithstanding any provision of any Loan Document or applicable law to the contrary, in no event shall Lender, whether with or without demand or notice to Borrower, exercise any right to set-off and apply deposits (whether certificates of deposit, demand, general, savings, special, time, or other, and whether provisional or final) held by Lender for Borrower or any other liabilities or other obligations of Lender to Borrower against or to the Obligations. By its signature below, Lender hereby waives any right it may have to set-off and apply such deposits or other liabilities against or to the Obligations.

5. Security Documents. Each Deed of Trust, and all other Security Documents, shall secure, in addition to all other indebtedness and obligations secured thereby, the payment and performance of all present and future indebtedness and obligations of Borrower under (a) this Third Amendment Agreement, (b) the Amended and Restated Note, (c) any and all amendments, modifications, renewals and/or extensions of the Loan Agreement, regardless of whether any such amendment, modification, renewal or extension is evidenced by a new or additional instrument, document or agreement, and (d) all other Loan Documents (other than the Guaranty and the Environmental Indemnity, the obligations under which continue to remain unsecured by each Deed of Trust), as amended by this Third Amendment Agreement and by the Short Forms.

6. Definitions. Except as provided in this Third Amendment Agreement, all references in the Loan Agreement and in the other Loan Documents (a) to the Deeds of Trust shall mean the Deeds of Trust, as amended by this Third Amendment Agreement, (b) to the Loan shall mean the Loan, as the maximum principal amount thereof has been reduced pursuant to this Third Amendment Agreement, (c) to the Loan Agreement shall mean the Loan Agreement as amended by this Third Amendment Agreement, (d) to the Note shall mean the Amended and

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Restated Note, (e) to the Loan Documents shall mean the Loan Documents as such term is defined in this Third Amendment Agreement, and (f) to any particular Loan Document shall mean such Loan Document as modified by this Third Amendment Agreement or any document executed pursuant hereto.

7. Conditions Precedent. Lender’s obligation to modify the terms of the Loan Agreement and the other Loan Documents as set forth herein is subject to the satisfaction of all of the following conditions precedent (any of which may be waived by Lender in its sole discretion):

7.1 Lender shall have received a fully executed original of this Third Amendment Agreement (including an original of the executed Guarantor’s Consent attached hereto).

7.2 Lender have received an original of each Third Amendment Agreement (Short Form), of even date herewith (collectively, the “Short Forms”), fully executed and acknowledged by Borrower and consented to by all applicable Subordinate Rights Holders.

7.3 The Short Forms shall have been recorded in the official records of the counties in which each Project is located in accordance with Lender’s instructions to the Title Company, in addition to all other documents which Lender may reasonably request to be recorded.

7.4 Lender shall have received such endorsements to each existing Title Policy (or commitments by the Title Company to issue the same in form acceptable to Lender) as Lender shall reasonably request to insure the validity and continuing first position liens of the Deeds of Trust, as amended hereby, including without limitation a CLTA 110.5 endorsement (or its local equivalent).

7.5 Lender shall have received current good standing certificates of Borrower issued by the California Secretary of State and the Secretary of State of each other state in which a Qualified Project included in the Borrowing Base is located.

7.6 No change shall have occurred in the financial condition of Borrower, Guarantor or any Project, which would have, in Lender’s sole judgment, a material adverse effect on such Project or on Borrower’s or Guarantor’s ability to repay the Loan or otherwise perform their respective obligations under the Loan Documents as of the date hereof.

7.7 No condemnation or adverse zoning or usage change proceeding shall have occurred or shall have been threatened against any Project; no Project shall have suffered any significant damage by fire or other casualty which has not been repaired; no law, regulation, ordinance, moratorium, injunctive proceeding, restriction, litigation, action, citation or similar proceeding or matter shall have been enacted, adopted, or threatened by any governmental authority, which would have, in Lender’s judgment, a material adverse effect on Borrower or any Project as of the date hereof.

7.8 The representations and warranties contained in the Loan Agreement and in all other Loan Documents shall remain true and correct as of the date hereof.

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7.9 No Event of Default or Unmatured Event of Default shall have occurred and be continuing.

7.10 Borrower shall have reimbursed Lender for all costs and expenses incurred by Lender in connection with the transaction contemplated by this Third Amendment Agreement, including title insurance costs, recording fees, and attorneys’ fees and costs.

8. Non-Impairment. Except as expressly provided herein, nothing in this Third Amendment Agreement shall alter or affect any provision, condition or covenant contained in the Loan Agreement or the other Loan Documents or affect or impair any rights, powers or remedies thereunder, and the parties hereto intend that the provisions of the Loan Agreement and the other Loan Documents shall continue in full force and effect except as expressly modified hereby.

9. Miscellaneous. This Third Amendment Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. The headings used in this Third Amendment Agreement are for convenience only and shall be disregarded in interpreting the substantive provisions of this Third Amendment Agreement. If any provision of this Third Amendment Agreement shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed herefrom and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable provision had never been a part hereof. As used in this Third Amendment Agreement, the term “include(s)” shall mean “include(s), without limitation,” and the term “including” shall mean “including, but not limited to.”

10. Integration; Interpretation. The Loan Documents, including this Third Amendment Agreement, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein, and supersede all prior negotiations. No reference to this Third Amendment Agreement is necessary in any instrument or document at any time referring to a Loan Document. Any reference to a Loan Document (including in any other Loan Document) shall be deemed a reference to such document as amended hereby.

11. Counterparts. This Third Amendment Agreement may by executed in any number of counterparts, all of which shall be considered one in the same instrument. The original, executed signature pages of exact copies of this Third Amendment Agreement may be attached to one of such copies to form one document.

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IN WITNESS WHEREOF, Borrower and Lender have executed this Third Amendment Agreement as of the day and year first set forth above.

BORROWER:
WILLIAM LYON HOMES, INC., a California corporation
By:	/s/ Michael D. Grubbs
Name:	Michael D. Grubbs
Title:	Senior Vice President
By:	/s/ Richard S. Robinson
Name:	Richard S. Robinson
Title:	Senior Vice President

LENDER:
COMERICA BANK
By:	/s/ David Plattner
Name:	David Plattner
Its:	VP – Western Market

S-1

EXHIBIT “B”

BORROWING BASE CERTIFICATE FORMAT

Submission Date:                    

Category:	Project Name	Appraised Value (Already Factored)		Budgeted Costs (Already Factored)		Availability Amount (Lesser of Value or Cost)		Available Per Completion
Entitled Land
	Project 1	$	0	$	0	$	0
	Project 2	$	0	$	0	$	0
	Project 3	$	0	$	0	$	0
	Project 4	$	0	$	0	$	0
	Project 5	$	0	$	0	$	0
	Project 6	$	0	$	0	$	0
	SUB-TOTAL	$	0	$	0	$	0
Lots Under Development
	Project 1	$	0	$	0	$	0
	Project 2	$	0	$	0	$	0
	Project 3	$	0	$	0	$	0
	Project 4	$	0	$	0	$	0
	Project 5	$	0	$	0	$	0
	Project 6	$	0	$	0	$	0
	SUB-TOTAL	$	0	$	0	$	0
Developed Lots
	Project 1	$	0	$	0	$	0
	Project 2	$	0	$	0	$	0
	Project 3	$	0	$	0	$	0
	Project 4	$	0	$	0	$	0
	Project 5	$	0	$	0	$	0
	Project 6	$	0	$	0	$	0
	SUB-TOTAL	$	0	$	0	$	0
X. Total Lot Inventory						$	0	$	0
I. Spec Homes
	Project 1	$	0	$	0	$	0
	Project 2	$	0	$	0	$	0
	Project 3	$	0	$	0	$	0
	Project 4	$	0	$	0	$	0
	Project 5	$	0	$	0	$	0
	Project 6	$	0	$	0	$	0
	SUB-TOTAL	$	0	$	0	$	0
II. Model Homes
	Project 1	$	0	$	0	$	0
	Project 2	$	0	$	0	$	0
	Project 3	$	0	$	0	$	0
	Project 4	$	0	$	0	$	0
	Project 5	$	0	$	0	$	0
	Project 6	$	0	$	0	$	0
	SUB-TOTAL	$	0	$	0	$	0
III. Presold Homes
	Project 1	$	0	$	0	$	0
	Project 2	$	0	$	0	$	0
	Project 3	$	0	$	0	$	0
	Project 4	$	0	$	0	$	0
	Project 5	$	0	$	0	$	0
	Project 6	$	0	$	0	$	0
	SUB-TOTAL	$	0	$	0	$	0
Y. Total Home Inventory						$	0	$	0
A. Total Borrowing Base (X+Y)		$	0.00
B. Less Outstanding Advances		$	0.00
C. Less Outstanding Letters of Credit		$	0.00			$	0.00
D. Less Adjustments under Section 2.1.3(d)		$	0.00
E. Plus funds deposited into Borrower's Funds account		$	0.00
	Availability / (Deficiency):	$	0.00

B-1

CERTIFICATION OF BORROWER

Borrower hereby certifies as follows with respect to the information contained in this Borrowing Base Certificate:

1. All Lot and Home inventory is located in Qualified Projects.

2. All Lot and Home inventory is owned by Borrower free of any liens or encumbrances, other than liens and encumbrances in favor of Lender as security for the Loan, or outstanding liens that have been bonded over, or outstanding liens that are subject to signed released delivered to Borrower.

3. Borrower has received lien waivers for all major scopes of construction work in process with respect to the subject Property.

4. As to any Lots Under Development, construction of the A&D Improvements has begun or is scheduled to begin within ninety (90) days of inclusion in the Borrowing Base as Lots Under Development.

5. As to any Homes, construction of the Home Improvements has begun or is scheduled to begin within ninety (90) days of inclusion in the Borrowing Base as Homes.

6. As to any Presold Homes and High End Presold Homes, such Homes were in compliance with all requirements for Presold Homes or High End Presold Homes, as applicable, as of the date of inclusion in the Borrowing Base as Presold Homes or High End Presold Homes, as applicable, and remain in compliance as of the date hereof.

The undersigned hereby certifies to Lender that the foregoing information on this Borrowing Base Certificate as of (check one) (i) ¨ the Calendar Month ending                     , 20    , or (ii) ¨                      15, 20    , is true and correct and was provided from financial information prepared according to GAAP. All capitalized terms not defined herein shall have the meanings given to such terms in that certain Revolving Line of Credit Loan Agreement dated as of March 8, 2006 (“Loan Agreement”) by and between COMERICA BANK (“Lender”) and WILLIAM LYON HOMES, INC., a California corporation (“Borrower”), as the same has been modified or amended to date.

WILLIAM LYON HOMES, INC., a California corporation
By:	/s/ Michael D. Grubbs
Name:	Michael D. Grubbs
Title:	Senior Vice President
By:	/s/ Richard S. Robinson
Name:	Richard S. Robinson
Title:	Senior Vice President

B-2

GUARANTOR’S CONSENT

WILLIAM LYON HOMES, a Delaware corporation (“Guarantor”), hereby consents to the terms, conditions and provisions of the foregoing Third Amendment Agreement (“Third Amendment Agreement”) and the transactions contemplated by the Third Amendment Agreement. Guarantor hereby reaffirms the full force and effectiveness of its Guaranty dated as of March 8, 2006 (the “Guaranty”), in light of the Third Amendment Agreement, including without limitation all waivers, authorizations and agreements set forth therein. Guarantor hereby confirms and agrees that all references in the Guaranty to the Loan Agreement and other Loan Documents shall hereafter be deemed references to the Loan Agreement and other Loan Documents as amended by the Third Amendment Agreement. In addition, Guarantor acknowledges that its obligations under the Guaranty are separate and distinct from those of Borrower on the Loan.

Dated as of December 22, 2008

GUARANTOR:
WILLIAM LYON HOMES, a Delaware corporation
By:	/s/ Michael D. Grubbs
Name:	Michael D. Grubbs
Title:	Senior Vice President
By:	/s/ Richard S. Robinson
Name:	Richard S. Robinson
Title:	Senior Vice President

CONSENT

EX-10.6

Exhibit 10.6

Borrower:	WILLIAM LYON HOMES, INC.
Loan No.:	7600004024

THIRD MODIFICATION AGREEMENT

THIS THIRD MODIFICATION AGREEMENT (the “Amendment”) is dated December 23, 2008, by and between WILLIAM LYON HOMES, INC., a California corporation (“Owner”), and CALIFORNIA NATIONAL BANK, a national banking association (“Lender”).

RECITALS

A. Owner and Lender entered into that certain Borrowing Base Revolving Line of Credit Agreement dated July 10, 2006 (as heretofore amended by the First Amendment, First Modification and Second Modification (each as defined below), the “Loan Agreement”), pursuant to which Lender agreed to extend to Owner a maximum Commitment Amount of $50,000,000.00 (the “Loan”), upon the terms and conditions set forth in said Loan Agreement, for the purpose of providing funds for financing the development of certain Approved Subdivisions and construction of Improvements thereon. The Loan is evidenced by that certain Borrowing Base Secured Promissory Note dated July 10, 2006, in the principal amount of $50,000,000.00 made by Owner in favor of Lender (the “Original Note”). The Loan, the Loan Agreement and the Note are secured by, among other things, certain Deeds of Trust, executed by Owner, as “Trustor” in favor of Lender, as “Beneficiary,” encumbering the Approved Subdivisions and Improvements more particularly described therein. The Deeds of Trust securing the Loan and executed by Owner as of the dated of this Agreement are set forth on Schedule 1 hereto. The Deeds of Trust and all other documents executed and delivered by Owner in connection with the Loan and the Note which provide security for the Loan are hereinafter collectively referred to as the “Security Instruments.”

B The Loan Agreement was amended pursuant to a First Amendment to Borrowing Base Revolving Line of Credit Agreement dated February 20, 2007 (“First Amendment”), an Extension and Modification Agreement dated August 2, 2007 (the “First Modification”), and a Second Extension and Modification Agreement dated May 21, 2008 (the “Second Modification”), each executed by Owner and Lender. The Original Note, the Loan Agreement, the First Amendment, the First Modification, the Second Modification, the Security Instruments and all other documents executed by or on behalf of Owner in connection with the Loan are hereinafter collectively referred to as the “Loan Documents.” Unless otherwise defined herein, capitalized terms used in this Amendment shall have the same meanings as set forth in the Loan Agreement and the Note.

C. Lender is the holder of the Note, and the secured party under each and all of the Security Instruments.

D. As of the date hereof, the outstanding principal balance of the Note is Ten Million Seven Hundred Twenty-Six Thousand Six Hundred Fifty-Nine and 37/100 Dollars ($10,726,659.37) and Thirty-One Million Eight Hundred Seventy-Four Thousand Seven Hundred Ninety-Six and 63/100 Dollars ($31,874,796.63) remains undisbursed.

E. Owner and Lender now desire to make certain modifications to the Note and the Loan Agreement in consideration of Owner’s agreements hereinafter described and payment to Lender of the sums hereinafter described.

NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and Lender hereby agree as follows:

1. Amended and Restated Note. Subject to the satisfaction of the conditions precedent set forth in Section 5 below, the Original Note is amended and restated in its entirety pursuant to that Amended and Restated Borrowing Base Secured Promissory Note of even date herewith in the principal amount of $30,000,000.00 (the “Note”), a true and correct copy of which is attached hereto as Exhibit “A”.

2. Commitment Agreement; Interest Rate; Facility Increase. Subject to the satisfaction of the conditions precedent set forth in Section 5 below, Article 1 [Definitions] of the Loan Agreement is amended as follows:

(a) Commitment Agreement. The defined term “Commitment Amount” is deleted in its entirety and replaced with the following:

“Commitment Amount” means THIRTY MILLION AND NO/100THS DOLLARS ($30,000,000.00).”

(b) Interest Rate. The defined term “Interest Rate” is deleted in its entirety and replaced with the following:

“Interest Rate” means the Reference Rate plus one percent (1.0%), with such interest rate being adjusted from time to time as and when the Reference Rate is adjusted.”

(c) Facility Increase. The defined term “Facility Increase” is deleted in its entirety.

3. Deletion of Increase in Commitment Amount. Subject to the satisfaction of the conditions precedent set forth in Section 5 below, Article 2 [Loan Facility] is amended by deleting Section 2.1(d) in its entirety and replacing it with the following:

“d. [Intentionally Omitted.]”

4. Financial Covenants. Subject to the satisfaction of the conditions precedent set forth in Section 5 below, Article 7 [Financial Covenants] of the Loan Agreement is amended as follows:

(a) Minimum Tangible Net Worth. Section 7.1 is deleted in its entirety and replaced with the following:

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“7.1 Minimum Tangible Net Worth Covenant. WLH will maintain, on a consolidating basis, a minimum Tangible Net Worth equal to or greater than Ninety Million Dollars ($90,000,000.00).”

(b) Leverage Ratio. Section 7.2 is deleted in its entirety and replaced with the following:

“7.2 [Intentionally Omitted.]”

(c) Minimum Liquidity. Section 7.4 is deleted in its entirety and replaced with the following:

“7.4 Minimum Liquidity. WLH shall maintain, on a consolidating basis, at all times, Available Liquidity which, is equal to or greater than Thirty Million Dollars ($30,000,000).”

5. No Set Off. Section 12.1 is deleted in its entirety and replaced with the following:

“Notwithstanding any provision of any Loan Document or applicable law to the contrary, in no event shall Lender, whether with or without demand or notice to Borrower, exercise any right to set-off and apply deposits (whether certificates of deposit, demand, general, savings, special, time, or other, and whether provisional or final) held by Lender for Borrower or any other liabilities or other obligations of Lender to Borrower against or to the Obligations. By its signature below, Lender hereby waives any right it may have to set-off and apply such deposits or other liabilities against or to the Obligations.”

6. Conditions Precedent. The effectiveness of this Amendment is subject to satisfaction of the following conditions precedent and other requirements of Lender set forth herein:

(a) Owner shall deposit with Lender concurrently with its execution and delivery of this Amendment:

(i) The Note fully executed by Owner;

(ii) A Reaffirmation of Guarantees, fully executed by William Lyon Homes, a Delaware corporation; and

(iii) Any and all additional documents and items as Lender may reasonably require in connection with this Amendment.

(b) Owner shall pay or cause to be paid to Lender on or before its execution and delivery of this Amendment, all legal, title, escrow, documentation, and other costs incurred by or on behalf of Lender in connection with this transaction including without limitation, the preparation of this Amendment and all other documents prepared in connection herewith.

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7. Application of Payments. From and after the date of this Amendment, all payments under the Note shall be applied in accordance with its terms and the terms of the Loan Agreement as amended by this Amendment.

8. Reaffirmations. Owner hereby reaffirms to Lender the continued truth and accuracy of the representations and warranties made by Owner in the Loan Agreement and each and all of the other Loan Documents, with the understanding that Lender is relying upon the continued truth and accuracy of all such representations and warranties in entering into this Amendment. Owner hereby further affirms and certifies that as of the date of this Amendment, no default or Event of Default as described in the Note, the Loan Agreement or any of the other Loan Documents exists or would be existing with the passage of time or the giving of notice or both.

9. Acknowledgments and Waivers.

(a) Owner acknowledges and confirms that it is fully liable under the Note, as amended hereby, including, without limitation, that it is obligated to pay all amounts of principal and interest, late charges, and other sums which may now or hereafter become due and owing under the Note, as amended hereby, and all taxes, insurance premiums and other sums that may be due and payable under the provisions of the Deeds of Trust and other Loan Documents; Owner acknowledges and admits the indebtedness evidenced by the Note, as amended hereby, and unconditionally promises and agrees to pay the same with interest thereon within the time and in the manner required in the Note, as amended hereby, together with attorneys’ fees, costs of collection, and any other sums secured by the Deeds of Trust and other Security Instruments; and Owner further acknowledges and agrees that upon any default or Event of Default under the Note or any of the other Loan Documents from and after the date of this Amendment, Lender, in addition to any other rights it may have under the Loan Documents, at law or in equity, shall have the right to declare the entire unpaid balance of principal and interest under the Note immediately due and payable.

(b) Owner, on behalf of itself and on behalf of its officers, directors, shareholders, agents, employees, successors and assigns (collectively, the “Owner Parties”), and each of them, and anyone claiming through or under them, hereby releases, acquits and forever discharges Lender and its principals, officers, directors, shareholders, agents, employees, successors and assigns (collectively, the “Lender Parties”) and each of them, of and from any and all claims, causes of action in law or equity, suits, debts, liens, obligations, promises, demands, liabilities, damages, losses, costs and expenses of every nature, character and description whatsoever in existence as of the execution of this Amendment, known or unknown, fixed or contingent, which the Owner Parties, or any of them, may have or may hereafter acquire against the Lender Parties and each of them based on or arising out of the Note, the Loan Agreement, the other Loan Documents, this Amendment and the transactions contemplated by said documents, existing prior to the date of this Amendment. With respect to the foregoing release, Owner, on behalf of itself and on behalf of the Owner Parties and each of them hereby acknowledges and waives the provisions of California Civil Code Section 1542, which states:

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“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

Owner acknowledges that it has been advised or has had the opportunity to be advised by its attorneys concerning the foregoing, and in light thereof, expressly acknowledges the aforementioned waiver and release of any and all rights it may have under California Civil Code Section 1542 or any other State or Federal statute or legal principle of similar effect with respect to the foregoing.

(c) In further consideration of the extension of the Maturity Date under the Note, the provisions of Section 3511 of the Commercial Code of California requiring presentment of said Note to Owner, demand of payment, protest, notice, notice of dishonor, and notice of nonpayment are hereby waived.

10. Independent Security. Owner hereby agrees that any and all security for the Note including, without limitation, each Deed of Trust, may be enforced by Lender concurrently or independently in such order as Lender may determine; and with reference to any such security in addition to each Deed of Trust, Lender may, without consent of or notice to Owner, exchange, substitute or release such security without affecting the liability of Owner, and Lender may release any one or more parties hereto or to the above obligation, or permit the liability of said party or parties to terminate without affecting the liability of any other party or parties liable thereon.

11. Amendment Not a Novation; Ratification. This Amendment is an extension and deferment only, and not a novation. Except as modified by this Amendment, the terms and provisions of the Note, the Loan Agreement, the Deeds of Trust and each and all of the other Loan Documents are hereby ratified and affirmed in all respects by the parties hereto, and shall remain binding and controlling on the parties.

12. Reaffirmation of Environmental Indemnity Agreement. In connection with the Loan, Owner executed an Environmental Indemnity Agreement in favor of Lender dated July 10, 2006. Owner hereby reaffirms that the terms, covenants, conditions and obligations of the Environmental Indemnity Agreement remain binding upon Owner and are in full force and effect, notwithstanding the modification of the Loan Documents pursuant to this Amendment.

13. Miscellaneous. Owner and Lender agree to deliver such additional documents and instruments and to do or cause to be done such other acts and things as may be reasonably necessary to assure the parties hereto of the benefit of the agreements contained in this Amendment. This Amendment constitutes the entire agreement between the parties with respect to the subject matter hereof. Each of the parties to this Amendment acknowledges that it has had the opportunity to seek legal advice as to the terms of this Amendment, and this Amendment shall be construed fairly as to each of the parties, regardless of which party prepared this Amendment. Neither this Amendment nor any of the provisions hereof may be changed, waived, discharged or terminated, except by an instrument in writing signed by the party against whom the enforcement of the change, waiver, discharge or termination is sought. No waiver of

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any right hereunder shall constitute waiver of any other or future right. In any dispute arising out of or related to this Amendment or any of the terms and provisions contained herein, the prevailing party in such dispute shall be entitled to recover from the losing party, in addition to any other relief, all attorneys’ fees and costs incurred by the prevailing party in connection with said dispute. All provisions of this Amendment shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, legal representatives, successors and assigns. This Amendment shall be governed by and construed in accordance with the laws of the State of California.

[SIGNATURE PAGE FOLLOWS]

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

LENDER:	CALIFORNIA NATIONAL BANK, a national banking association
	By:	/s/ Andrew Zinn
	Name:	Andrew Zinn
	Its:	Vice President
OWNER:	WILLIAM LYON HOMES, INC., a California corporation
	By:	/s/ Michael D. Grubbs
	Name:	Michael D. Grubbs
	Title:	Senior Vice President
	By:	/s/ Richard S. Robinson
	Name:	Richard S. Robinson
	Title:	Senior Vice President

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SCHEDULE 1

DEEDS OF TRUST

1. Verona – Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated July 10, 2006, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Sacramento County on July 25, 2006 at Book 20060725, Page 2243.

2. Kingwood – Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated July 10, 2006, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Clark County, Nevada on July 25, 2006, as Instrument No. 20060725-0004149.

3. Serafina -

a. Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated July 10, 2006, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Riverside County, California on August 7, 2006, as Document Number 2006-0578867.

b. First Amendment to Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated January 16, 2007, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Riverside County on January 24, 2007, as Document Number 2007-0055265.

c. Second Amendment to Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated June 6, 2007, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Riverside County on June 29, 2007, as Document Number 2007-0429419.

d. Third Amendment to Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated August 23, 2007, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Riverside County on August 24, 2007, as Document Number 2007-0544971.

4. Sage Court

a. Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated July 23, 2007, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Los Angeles County, California on July 25, 2007, as Instrument Number 07-1753723.

b. Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated August 29, 2007, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of Los Angeles County, California on August 29, 2007, as Instrument Number 07-0215838.

5. Vinter’s Grove

a. Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated July     , 2007, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of San Bernardino County, California on July     , 2007, as Instrument Number                 .

b. Construction Loan Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated July     , 2007, by William Lyon Homes, Inc., a California corporation, as Trustor, in favor of California National Bank, a national banking association, as Beneficiary, and recorded in the Official Records of San Bernardino County, California on July     , 2007, as Instrument Number                 .

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