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): February 17, 2010 (February 12, 2010)

Comstock Homebuilding Companies, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	1-32375	20-1164345
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
11465 SUNSET HILLS ROAD, FIFTH FLOOR RESTON, VIRGINIA		20910
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (703) 883-1700

(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 ( See General Instruction A.2. below):

¨ 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))

Item 1.01 Entry into a Material Definitive Agreement.

On February 12, 2010, Comstock Homebuilding Companies, Inc. (the “Company”) entered into a binding term sheet (“Loan Modification Agreement”) with Stonehenge Funding, LC (the “Subordinate Lender”), an entity wholly-owned by Christopher Clemente, the Chairman and Chief Executive Officer of the Company providing for the modification of one certain senior unsecured note in the outstanding principal amount of approximately $9,000,000.00, plus accrued and unpaid interest, as more particularly described in that certain Amended and Restated Indenture between the Company and JP Morgan Ventures (“JPMV”) dated March 14, 2008 (the “JP Morgan Debt”) which was purchased by the Subordinate Lender on December 23, 2009. The purchase of the JP Morgan Debt also resulted in the transfer to the Subordinate Lender of a warrant previously issued to JPMV for the purchase of one million five hundred thousand (1,500,000) shares of the Company’s Class A Common Stock (the “JP Morgan Warrant”). Gregory Benson, the Company’s Chief Operating Officer and a member of the Company’s Board of Directors, subsequently purchased a participation interest in the JP Morgan Debt and the JP Morgan Warrant from the Subordinate Lender.

Under the terms of the Loan Modification Agreement, Stonehenge agreed to forgive $4,500,000 of the principal balance of the JP Morgan Debt due from the Company; reducing the principal balance by 50% to $4,500,000; and to forgive all past due interest, late fees and penalties accruing through the date of the Loan Modification Agreement (“Interest and Loan Fees”). The Interest and Loan Fees as of December 31, 2009 approximated $874,800. The Loan Modification Agreement further provides that effective January 1, 2010, the interest rate will be reduced by approximately fifty percent (50%) to 300 basis points above the 1 year LIBOR on a floating basis and that all cash interest payments due from the Company to the Subordinate Lender under the JP Morgan Debt will now be deferred and allowed to accrue until 90 days after all restrictions imposed upon the Subordinate Lender by two separate Subordination and Standstill Agreements (individually a “Subordination Agreement” and collectively the “Subordination Agreements”) for the benefit of the Company, and its secured lenders, Key Bank, N.A. and Guggenheim Corporate Funding (“Secured Lenders”) have expired. The Subordinate Lender may, on a quarterly basis, elect to accept stock of the Company (or warrants for the purchase thereof) with a cumulative value equal to the value of the scheduled interest payment rather than allowing such scheduled payment of interest to continue to accrue. The Subordinate Lender has also agreed to eliminate or forbear upon the enforcement of all financial covenant violations contained in the JP Morgan Debt. The maturity date of the JP Morgan Debt remains unchanged at March 14, 2013, provided however, if the restrictions imposed upon the Subordinate Lender by the Secured Lenders remain in effect at the maturity date, the Company shall be entitled to two six month extensions in exchange for the payment of Company stock (or warrants for the purchase thereof) with a net cumulative value equal to 9% of the then outstanding balance due Subordinate Lender under the JP Morgan Note, payable at the time the Company elects to exercise its right to an extension. The negotiations regarding the Loan Modification Agreement were handled by the independent members of the Board of Directors of the Company.

Additional details related to the JP Morgan Debt were previously reported by the Company on Form 8-K filed December 30, 2009 as amended on Form 8-K/A filed on January 5, 2010.

On February 17, 2010 the Company issued a press release regarding the Loan Modification Agreement, a copy of which is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Press Release by Comstock Homebuilding Companies, Inc., dated February 17, 2010

SIGNATURES

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

Date: February 17, 2010

COMSTOCK HOMEBUILDING COMPANIES, INC.
By:	/s/    Christopher Clemente
	Christopher Clemente,
	Chief Executive Officer

EX-99.1

Exhibit 99.1

NEWS RELEASE

Comstock Homebuilding Successfully Completes Strategic Realignment Plan to Stabilize Company; Final Loan Restructurings Eliminate $5.4 Million of Debt and Enhance Cashflow

RESTON, VA, February 17, 2010 (MARKETWIRE via COMTEX) — Comstock Homebuilding Companies, Inc. (the “Company”) (Nasdaq: CHCI) today announced that it has entered into a binding agreement (“Modification Agreement”) to modify the terms of the Company’s senior unsecured note with Stonehenge Funding, LC (“Stonehenge”), an entity wholly-owned by Christopher Clemente, the Chairman and Chief Executive Officer of the Company. On December 23, 2009 Stonehenge acquired the senior unsecured note from JP Morgan Ventures (“JPMV”) which had a $9,000,000 principal balance as described in the Amended and Restated Indenture between the Company and JPMV dated March 14, 2008 (the “JP Morgan Debt”). The purchase of the JP Morgan Debt also resulted in the transfer to Stonehenge of a warrant previously issued to JPMV for the purchase of 1,500,000 shares of the Company’s Class A Common Stock with a strike price of $0.70 per share (“JP Morgan Warrant”). Gregory Benson, the Company’s Chief Operating Officer and a member of the Company’s Board of Directors, subsequently purchased a participation interest in the JP Morgan Debt and the JP Morgan Warrant from Stonehenge.

Under the terms of the Modification Agreement, Stonehenge has agreed to forgive $4,500,000 of the principal balance due from the Company under the JP Morgan Debt; a 50% reduction of the principal balance. Stonehenge also agreed to forgive an additional amount due from the Company of approximately $875,000 representing all past due interest, late fees and penalties accruing through December 31, 2009 (“Interest and Loan Fees”) under the JP Morgan Debt. Stonehenge further agreed to reduce the interest rate, effective January 1, 2010, to 300 basis points (“Interest Rate Spread”) above the one year LIBOR on a floating basis, representing a 50% reduction of the Interest Rate Spread. In addition, to ensure the Company’s ability to comply with certain restrictions placed upon the Company by KeyBank and Guggenheim Corporate Funding (collectively “Secured Lenders”) in connection with previously announced loan modifications enhancing cashflow to the Company, Stonehenge agreed to allow all future interest payments due from the Company under the JP Morgan Debt to accrue until at least 90 days the Secured Lenders have been fully repaid. In connection therewith, Stonehenge may, on a quarterly basis, elect to accept stock of the Company (or warrants for the purchase thereof) with a cumulative value equal to the value of the scheduled interest payment in lieu of accruing the applicable future cash payment of quarterly interest.

Further, the Modification Agreement provides for the elimination or forbearance upon the enforcement of all financial covenants relating to the JP Morgan Debt and all previously reported covenant violations by the Company. The maturity date of the JP Morgan Debt remains unchanged at March 14, 2013, provided however, the Modification Agreement also provides the Company with two optional extension periods of six months each to further assist the Company with its compliance with the conditions of the loan modifications with the Secured Lenders.

The Company also announced that it has reached an agreement in principle with Bank of America (“BOA”) regarding the modification of the terms of one certain unsecured loan with an approximate principal balance of $3,700,000 (“Line of Credit”). In connection therewith the Company agreed to pay an extension fee of $100,000 and BOA agreed to delay for one year, until January 2011, the commencement of repayments of all previously unpaid interest accruing since the date of the Company’s previously reported modification of the Line of Credit in November 2008. The maturity date remains unchanged at December 28, 2018.

Additionally, on February 12, 2010, the Company received a federal income tax refund of approximately $861,000 related to the passage of the Unemployment Insurance Extension Act of 2009. This legislation has extended the net operating loss (NOL) carry back period for federal income tax from two years to five years for 2008 or 2009 NOLs. The Company expects to carry forward tax losses that will eliminate or greatly reduce the Company’s tax liability associated with up to $35 million of potential future taxable income.

“These agreements represent the final two loan modifications needed to complete our Strategic Realignment Plan and effectively stabilize Comstock,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “Overall our Strategic Realignment Plan results in total debts being reduced from more than $330 million in 2006 to approximately $45 million. Additional benefits of our Strategic Realignment Plan include; enhanced cashflow from operations, reduced operating costs and the potential to return Comstock to profitability in the near term. Now that we have succeeded in stabilizing Comstock, we intend to focus our energy on identifying new opportunities that will enhance results in current and future periods. We will report results for Q4-2009 and fiscal 2009 next month, and I am confident the upcoming reports will demonstrate benefits of our efforts over the past two years and our ability to rebuild shareholder value through near and long term positive operating results.”

About Comstock Homebuilding Companies, Inc.

Established in 1985, Comstock Homebuilding Companies, Inc. is a publicly traded real estate development firm with a focus on a variety of for-sale residential products. The company currently actively markets its products under the Comstock Homes brand in the Washington, D.C. metropolitan area. Comstock Homebuilding Companies, Inc. trades on NASDAQ under the symbol CHCI. For more information on the Company or it projects please visit www.comstockhomebuilding.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains “forward-looking” statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. Additional information concerning these and other important risks and uncertainties can be found under the heading “Risk Factors” in the Company’s most recent Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2009. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Contact:

Jeff Dauer

Chief Financial Officer

703.883.1700 ext: 1229

SOURCE: Comstock Homebuilding Companies, Inc.