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                                                                    EXHIBIT 10.2

                               SERVICES AGREEMENT

                  THIS SERVICES AGREEMENT (this "Agreement"), dated as of July
1, 2003, is made by and among ARBOR REALTY TRUST, INC., a Maryland corporation
("Parent REIT"), ARBOR REALTY LIMITED PARTNERSHIP, a Delaware limited
partnership ("Arbor OP", and together with Parent REIT, collectively, the
"Company"), and ARBOR COMMERCIAL MORTGAGE, LLC, a New York limited liability
company ("ACM").

                  WHEREAS, ACM provides certain management and advisory services
to Parent REIT and Arbor OP pursuant to that certain Management and Advisory
Agreement, dated as of July 1, 2003 (the "Management Agreement"), by and among
the parties hereto;

                  WHEREAS, ACM desires to avail itself of the experience, advice
and assistance of the asset management group of the Company to manage and
service certain of ACM's assets consisting of sub- and non-performing mortgage
loans (the "Serviced Assets"); and

                  WHEREAS, the Company is willing to perform the Services (as
defined below) on the terms and conditions hereinafter set forth.

                  NOW THEREFORE, in consideration of the mutual agreements
herein set forth and intending to be legally bound, the parties hereto hereby
agree as follows:

         1.       Services.

                  (a)      In exchange for ACM's agreement with respect to the
Management Fee, as defined in and payable by the Company pursuant to the terms
of the Management Agreement, the Company agrees to provide the following asset
management services (the "Services") to ACM with respect to the Serviced Assets:

                           (i)      reviewing loan files of the Serviced Assets
         to: (A) assess ACM's rights in and to collateral securing the subject
         loans, including bank accounts, letters of credit and funds held in
         escrow; and (B) identify guarantees, other credit support and
         additional sources of equity, if any;

                           (ii)     conducting due diligence with respect to the
         Serviced Assets with an emphasis on exit strategies and exploring,
         developing and implementing strategic opportunities and plans to
         restructure debt and equity positions;

                           (iii)    reviewing current operating statements of
         profit and loss and past and current rent rolls to assess operating and
         financial performance and the impact of existing and potential
         financial and operational issues relating to the collateral for the
         Serviced Assets;

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                           (iv)     recommending short- and long-term strategic
         alternatives for the management and disposition of the Serviced Assets
         based on the relevant market and market trends;

                           (v)      overseeing rehabilitation projects and
         assessing whether new appraisals or environmental assessment or
         physical needs reports are necessary with respect to the collateral for
         the Serviced Assets;

                           (vi)     formulating appropriate courses of action
         and conducting negotiations among all concerned parties regarding the
         workout of Serviced Assets;

                           (vii)    structuring workout proposals and preparing
         analyses indicating the viability thereof;

                           (viii)   evaluating liquidity concerns and capital
         adequacy and reserve requirements and performing liquidity analyses of
         properties and ownership entities with respect to the collateral for
         the Serviced Assets; and

                           (ix)     performing such other services as may be
         required from time to time for management and other activities relating
         to the Serviced Assets as ACM shall reasonably request.

                  (b)      The Company, for and on behalf of the asset
management group, makes no, and shall not be deemed to have made, any warranty
regarding the quality of, and shall not be subject to any other standards or
requirements of quality with respect to the performance of the Services;
provided, however, the Company shall perform the Services (i) with the same
degree of care and skill as it uses or would use in the performance of similar
services relating to the management of the Company's assets, and (ii) in
accordance with all applicable foreign, federal, state and local laws and
regulations.

                  (c)      The Board of Directors will periodically review the
scope of the Services being provided to ACM and the time required of the asset
management group of the Company to perform the same. If the Board of Directors
determine by a majority vote that the nature of the Services and the asset
management group's devotion of time with respect thereto have exceeded the Board
of Directors' anticipated levels, as factored into the calculation of the
Management Fee, by more than fifteen percent (15%) of such anticipated levels
per fiscal quarter, then the Company shall deliver to ACM written notice thereof
describing its findings in reasonable detail and indicating its desire to
renegotiate the Management Fee or to reduce the scope of the Services, the
quantity of the Serviced Assets or the time required to be devoted to the
Services by the asset management group. Thereupon, the Company and ACM shall
endeavor to renegotiate such matters in good faith. The Company and ACM agree to
execute and deliver an amendment to the Management Agreement, if applicable,
setting forth any revised Management Fee promptly upon reaching an agreement
regarding same.

2.       Term. This Agreement shall become effective on the date hereof, remain
in full force and effect throughout the term of the Management Agreement as
extended in accordance

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therewith and terminate simultaneously with the expiration or earlier
termination of the Management Agreement; provided, however, that this Agreement
shall remain in full force and effect during the origination period described in
Section 3(e) of the Management Agreement.

3.       Indemnification.

                  (a)      By the Company. The Company shall, to the full extent
lawful, reimburse, indemnify and hold ACM, its members, managers, officers and
employees and each other Person, if any, controlling ACM harmless for and from
any and all expenses, losses, damages, liabilities, demands, charges and claims
of any nature whatsoever (including reasonable attorneys' fees and
disbursements) in respect of or arising out of (i) the Company's or any of its
partner's, shareholder's, director's, officer's or employee's bad faith, willful
misconduct, gross negligence or material breach of the Company's duties under
this Agreement, and (ii) any claims by the Company's employees relating to the
terms and conditions of their employment by the Company.

                  (b)      By ACM. ACM shall, to the full extent lawful,
reimburse, indemnify and hold the Company, its partners, shareholders,
directors, officers and employees and each other Person, if any, controlling the
Company (each, a "Company Indemnified Party") harmless for and from any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including reasonable attorneys' fees and disbursements),
excluding any claims by the Company's employees relating to the terms and
conditions of their employment by the Company, in respect of or arising out of
(i) any acts or omissions of such Company Indemnified Party made in good faith
in the performance of the Company's duties hereunder and not constituting such
Company Indemnified Party's bad faith, willful misconduct, gross negligence or
material breach of the Company's duties under this Agreement, and (ii) ACM's or
any of its member's, manager's, officer's or employee's bad faith, willful
misconduct, gross negligence or material breach of ACM's obligations under this
Agreement.

4.       Confidentiality.

                  (a)      The Company shall keep confidential any nonpublic
information obtained relating to the Serviced Assets and its performance of the
Services and shall not disclose any such information (or use the same except in
furtherance of its duties under this Agreement), except: (i) with ACM's prior
written consent; (ii) to legal counsel, accountants and other professional
advisors, so long as the Company informs such Persons of the confidential nature
of such information and directs them to treat such information confidentially;
(iii) to appraisers in the ordinary course of business; (iv) to governmental
officials having jurisdiction over the Company; (v) as required by law or legal
process to which the Company or any Person to whom disclosure is permitted
hereunder is a party or in connection with the Company's assertion in any
judicial or nonjudicial proceeding of any claim, counterclaim or defense against
ACM; or (vi) information which has previously become available through the
actions of a Person other than the Company not resulting from the Company's
violation of this Section 4(a). The provisions of this Section 4(a) shall
survive the expiration or earlier termination of this Agreement.

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                  (b)      Promptly after the expiration or earlier termination
of this Agreement, the Company shall return to ACM all confidential and
proprietary information provided to or obtained by the Company pursuant to or in
connection with this Agreement and the performance of the Services hereunder,
including all copies and extracts thereof in whatever form, in its possession or
under its control.

5.       Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and mailed, faxed or
delivered by hand or courier service:

         (a)      if to Parent REIT or Arbor OP, to:

                  Arbor Realty Trust, Inc.
                  333 Earle Ovington Blvd., Suite 900
                  Uniondale, New York 11553
                  Attention: Chairman of the Board of Directors

         (b)      If to ACM:

                  Arbor Commercial Mortgage, LLC
                  333 Earle Ovington Blvd., Suite 900
                  Uniondale, New York 11553
                  Attention: Frederick C. Herbst

6.       Cooperation; Further Assurances. Each party hereto shall cooperate with
and provide assistance to the other parties consistent with the terms and
conditions hereof to enable (a) the full performance of all obligations
hereunder, and (b) the review and audit of books and records as they relate to
the provision of the Services; such cooperation and assistance to include,
without limitation, providing the other parties and their respective
representatives and agents (including, without limitation, outside auditors)
with reasonable access, during normal business hours and upon reasonable advance
notice, to its employees, representatives and agents and its books, records,
offices and properties relating to the Services.

7.       Entire Agreement. Except for the terms of the Management Agreement
relating to the calculation of the Management Fee, this Agreement shall
constitute the entire agreement among the parties relating to the subject matter
hereof and shall supersede all other prior or contemporary agreements,
understandings, negotiations and discussions whether oral or written.

8.       Amendment and Modification; Assignment. Neither this Agreement nor any
of the terms or provisions hereof may be changed, supplemented, waived, modified
or assigned except by a written instrument executed by the parties hereto (or in
the case of a waiver, by the party granting such waiver); provided, however, (a)
ACM may assign this Agreement to any Person to whom ACM assigns the Management
Agreement (pursuant to the terms thereof) and who acquires the Serviced Assets,
and (b) Parent REIT may assign this Agreement to any Person to whom Parent REIT
assigns the Management Agreement (pursuant to the terms thereof).

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9.       Counterparts. This Agreement may be executed in two or more
counterparts, each of which may be signed by any of the parties hereto, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.

10.      Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by,
construed, interpreted and enforced in accordance with the laws of the State of
New York, notwithstanding any New York or other conflict-of-law provisions to
the contrary.

11.      Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
hereof and the remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.

12.      Definitions and Interpretation.

(a)      Defined Terms. Capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the Management Agreement.

(b)      Singular and Plural Forms. The use herein of the singular form shall
also denote the plural form, and the use herein of the plural form shall denote
the singular form, as in each case the context may require.

                         [NO FURTHER TEXT ON THIS PAGE]

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

                                    Parent REIT:

                                    ARBOR REALTY TRUST, INC.,
                                    a Maryland corporation

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------
                                    Name: Frederick C. Herbst
                                    Title: Chief Financial Officer

                                    Arbor OP:

                                    ARBOR REALTY LIMITED PARTNERSHIP,
                                    a Delaware limited partnership

                                    By:  Arbor Realty GPOP, Inc.,
                                         a Delaware corporation,
                                         its general partner

                                         By: /s/ Frederick C. Herbst
                                             -----------------------------
                                         Name: Frederick C. Herbst
                                         Title: Secretary and Treasurer

                                    ACM:

                                    ARBOR COMMERCIAL MORTGAGE, LLC,
                                    a New York limited liability company

                                         By: /s/ Frederick C. Herbst
                                             -----------------------------
                                         Name: Frederick C. Herbst
                                         Title: Chief Financial Officer

