NOTE 3.

NOTES AND INTEREST RECEIVABLE

A portion of our assets are invested in mortgage notes receivable, principally secured by real estate. We may originate mortgage loans in conjunction with providing purchase money financing of property sales. Notes receivable are generally collateralized by real estate or interests in real estate and personal guarantees of the borrower and, unless noted otherwise, are so secured Management intends to service and hold for investment the mortgage notes in our portfolio. A majority of the notes receivable provide for principal to be paid at maturity. Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands).


Borrower	Maturity Date		Interest Rate			Amount			Security
Performing loans:
Miscellaneous non-related party notes		Various		Various			4,986		Various security interests
Miscellaneous related party notes⁽¹⁾		Various		Various			2,829		Various security interests
Realty Advisors Management, Inc.		12/16		4.00	%		20,387		Unsecured
Unified Housing Foundation, Inc. (Cliffs of El Dorado)⁽¹⁾		12/27		5.25	%		2,469		100% Interest in Unified Housing of McKinney, LLC
Unified Housing Foundation, Inc. (Cliffs of El Dorado)⁽¹⁾		09/10		15.00	%		2,990		100% Interest in Unified Housing of McKinney, LLC
Unified Housing Foundation, Inc. (Echo Station)⁽¹⁾		12/27		5.25	%		1,481		100% Interest in Unified Housing of Temple, LLC
Unified Housing Foundation, Inc. (Inwood on the Park)⁽¹⁾		12/27		5.25	%		5,059		100% Interest in Unified Housing Inwood, LLC
Unified Housing Foundation, Inc. (Kensington Park)⁽¹⁾		12/27		5.25	%		3,936		100% Interest in Unified Housing Kensington, LLC
Unified Housing Foundation, Inc. (Lakeshore Villas)⁽¹⁾		12/27		5.25	%		2,000		Unsecured
Unified Housing Foundation, Inc. (Lakeshore Villas)⁽¹⁾		12/27		5.25	%		9,096		Membership interest in Housing for Seniors of Humble, LLC
Unified Housing Foundation, Inc. (Limestone Canyon)⁽¹⁾		07/15		5.25	%		3,057		100% Interest in Unified Housing of Austin, LLC
Unified Housing Foundation, Inc. (Limestone Canyon)⁽¹⁾		12/27		5.25	%		4,663		100% Interest in Unified Housing of Austin, LLC
Unified Housing Foundation, Inc. (Limestone Ranch)⁽¹⁾		07/15		5.25	%		2,250		100% Interest in Unified Housing of Vista Ridge, LLC
Unified Housing Foundation, Inc. (Limestone Ranch)⁽¹⁾		12/27		5.25	%		6,000		100% Interest in Unified Housing of Vista Ridge, LLC
Unified Housing Foundation, Inc. (Parkside Crossing)⁽¹⁾		12/27		5.25	%		2,272		100% Interest in Unified Housing of Parkside Crossing, LLC
Unified Housing Foundation, Inc. (Sendero Ridge)⁽¹⁾		07/15		5.25	%		5,174		100% Interest in Unified Housing of Sendero Ridge, LLC
Unified Housing Foundation, Inc. (Sendero Ridge)⁽¹⁾		12/27		5.25	%		4,812		100% Interest in Unified Housing of Sendero Ridge, LLC
Unified Housing Foundation, Inc. (Timbers of Terrell)⁽¹⁾		12/27		5.25	%		1,323		100% Interest in Unified Housing of Terrell, LLC
Unified Housing Foundation, Inc. (Tivoli)⁽¹⁾		12/27		5.25	%		7,965		100% Interest in Unified Housing of Tivoli, LLC
Unified Housing Foundation, Inc. (Reserve at White Rock Phase I)⁽¹⁾		12/27		5.25	%		2,524		100% Interest in Unified Housing of Harvest Hill I, LLC
Unified Housing Foundation, Inc. (Reserve at White Rock Phase II)⁽¹⁾		12/27		5.25	%		2,555		100% Interest in Unified Housing of Harvest Hill, LLC
Unified Housing Foundation, Inc. (Trails at White Rock)⁽¹⁾		12/27		5.25	%		3,815		100% Interest in Unified Housing of Harvest Hill III, LLC
Accrued interest							8,493

Total Performing						$	110,136
Non-Performing loans:
130 Windmill Farms, L.P.		10/11		7.00	%		507		Unsecured
Dallas Fund XVII L.P.⁽²⁾		10/09		9.00	%		1,432		Assignment of partnership interests
Leman Development, Ltd.		07/11		7.00	%		1,500		Unsecured
Tracy Suttles		12/11		0.00	%		1,077		Unsecured
Miscellaneous non-related party notes		Various		Various			133		Various security interests
Accrued interest							138

Total Non-Performing						$	4,787
Allowance for estimated losses							(13,383	)

Total						$	101,540

⁽¹⁾	Related Party notes

⁽²⁾	Note matured and an allowance was taken for estimated losses at full value of note

Junior Mortgage Loans. We may invest in junior mortgage loans, secured by mortgages that are subordinate to one or more prior liens either on the fee or a leasehold interest in real estate. Recourse on such loans ordinarily includes the real estate on which the loan is made, other collateral and personal guarantees by the borrower. The Board of Directors restricts investment in junior mortgage loans, excluding wraparound mortgage loans, to not more than 10.0% of our assets. At December 31, 2011, 9.2% of our assets were invested in junior and wraparound mortgage loans.

Effective 2009, interest income is recorded when cash is received, and no accrued interest income is recorded on non-performing notes receivables. If the notes for the years 2011 and 2010 had been performing and if interest was recorded as accrued, an additional interest income totaling $1.1 million and $2.7 million, respectively, would have been recognized.

As of December 31, 2011, the obligors on $96.7 million or 90.9% of the mortgage notes receivable portfolio were due from affiliated entities. Also at that date, $4.5 million or 3.9% of the mortgage notes receivable portfolio was non-performing. At December 31, 2011, approximately 8.2% of our assets were invested in notes and interest receivable.