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<SEC-DOCUMENT>0000318673-07-000033.txt : 20071116
<SEC-HEADER>0000318673-07-000033.hdr.sgml : 20071116
<ACCEPTANCE-DATETIME>20071116125756
ACCESSION NUMBER:		0000318673-07-000033
CONFORMED SUBMISSION TYPE:	10-Q/A
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20071115
FILED AS OF DATE:		20071116
DATE AS OF CHANGE:		20071116

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SECURITY NATIONAL FINANCIAL CORP
		CENTRAL INDEX KEY:			0000318673
		STANDARD INDUSTRIAL CLASSIFICATION:	FINANCE SERVICES [6199]
		IRS NUMBER:				870345941
		STATE OF INCORPORATION:			UT
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-09341
		FILM NUMBER:		071252319

	BUSINESS ADDRESS:	
		STREET 1:		PO BOX 57220
		CITY:			SALT LAKE CITY
		STATE:			UT
		ZIP:			84157
		BUSINESS PHONE:		8012641060

	MAIL ADDRESS:	
		STREET 1:		PO BOX 57220
		CITY:			SALT LAKE CITY
		STATE:			UT
		ZIP:			84157

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SNL FINANCIAL CORP
		DATE OF NAME CHANGE:	19910401
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q/A
<SEQUENCE>1
<FILENAME>snfc10qa0607.txt
<TEXT>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                     For the quarter ended June 30, 2007, or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the Transition Period from _____ to ______

                         Commission file number: 0-9341

                     SECURITY NATIONAL FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

            UTAH                                          87-0345941
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification No.)

5300 South 360 West, Suite 250 Salt Lake City, Utah           84123
- ---------------------------------------------------        -------------
(Address of principal executive office)                      (Zip Code)

Registrant's telephone number, including area code:      (801) 264-1060

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No___

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Securities  Exchange Act
of 1934. (Check one)

Large accelerate filer  [ ] Accelerated filer [ ] Non-accelerated filer [X}

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of 1934): Yes No [X] ---

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date.

Class A Common Stock, $2.00 par vae                  6,297,729
- -----------------------------------                  ---------
       Title of Class                     Number of Shares Outstanding as of
                                                    July 31, 2007

Class C Common Stock, $.20 par value                 7,500,000
- ------------------------------------                 ---------
       Title of Class                     Number of Shares Outstanding as of
                                                    July 31, 2007

  ============================================================================


<PAGE>


            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q

                           QUARTER ENDED JUNE 30, 2007

                                TABLE OF CONTENTS


                         PART I - FINANCIAL INFORMATION



Item 1       Financial Statements                                 Page No.
- ------                                                            --------

     Condensed Consolidated Balance Sheets June 30, 2007
     and December 31, 2006, (unaudited)....................................3-4

     Condensed Consolidated Statements of Earnings -
     Three and Six Months ended June 30, 2007 and 2006 (unaudited)...........5

     Condensed Consolidated Statements of Cash Flows -
     Six Months ended June 30, 2007 and 2006 (unaudited).....................6

     Notes to Condensed Consolidated Financial Statements (unaudited).....7-14

Item 2
- -------

      Management's Discussion and Analysis of Financial Condition
      and Results of Operations..........................................15-20

Item 3
- ------

      Quantitative and Qualitative Disclosures about Market Risk............20

Item 4
- ------

      Controls and Procedures...............................................20


                           PART II - OTHER INFORMATION

      Other Information..................................................20-26

      Signature Page........................................................27

      Certifications.....................................................28-30




<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                               June 30,          December 31,
Assets                                                                           2007                2006
                                                                              -----------        ------------
  Investments:
<S>                                                                           <C>                 <C>
    Fixed maturity securities, held to maturity, at amortized cost            $ 94,611,167        $ 98,317,519
    Fixed maturity securities, available for sale, at estimated fair value       2,903,281           3,417,531
    Equity securities, available for sale, at estimated fair value               5,588,669           5,261,695
    Mortgage loans on real estate and construction  loans,
       net of allowances for losses
                                                                                70,190,705          85,135,011
    Real estate, net of accumulated depreciation                                 4,869,973           5,002,853
    Policy, student and other loans net of allowance
       for doubtful accounts
                                                                                12,597,159          12,846,986
    Short-term investments                                                       7,008,869           4,586,828
    Accrued investment income                                                    3,004,393           2,684,029
                                                                              ------------         -----------
    Total investments                                                          200,774,216         217,252,452
                                                                              ------------         -----------
    Cash and cash equivalents                                                    7,260,800          10,376,585
    Mortgage loans sold to investors                                            81,468,491          59,817,248
    Receivable, net                                                             17,273,249          14,878,118
    Restricted assets of cemeteries and mortuaries                               5,691,643           5,430,870
    Cemetery perpetual care trust investments                                    1,424,536           1,306,984
    Receivable from reinsurers                                                     718,112             700,850
    Cemetery land and improvements sold to investors                             9,084,112           8,745,424
    Deferred policy and pre-need contract acquisition costs                     29,650,710          28,395,762
    Property and equipment, net                                                 14,887,037          14,059,529
    Cost of insurance acquired                                                  11,395,705          11,882,047
    Goodwill                                                                       683,191             683,191
    Other                                                                        5,272,072           3,866,123
                                                                              ------------        ------------
    Total assets                                                              $385,583,874        $377,395,183
                                                                              ============        ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
                                   (Unaudited)
<TABLE>
<CAPTION>



                                                                                  June 30,        December 31,
                                                                                   2007             2006
                                                                                ------------     ------------
   Liabilities and Stockholders' Equity
   <S>                                                                          <C>                   <C>
   Liabilities
   Future life, annuity, and other benefits                                     $272,144,533          $268,403,765
   Unearned premium reserve                                                        4,807,565             4,519,387
   Bank loans payable                                                              8,115,089             6,923,344
   Notes and contracts payable                                                       621,159               747,188
   Deferred pre-need cemetery and mortuary contract revenues                      12,169,581            11,533,798
   Accounts payable                                                                1,562,118             1,820,178
   Other liabilities and accrued expenses                                         11,619,716            11,611,033
   Income taxes                                                                   16,955,923            16,587,284
                                                                                ------------        --------------
   Total liabilities                                                             327,995,684           322,145,977
                                                                                ------------         -------------

   Non-Controlling Interest in Perpetual Care Trusts                               2,352,529             2,278,510
                                                                                ------------        --------------

   Stockholders' Equity:
   Common stock:
   Class A: $2.00 par value, 10,000,000 shares
       authorized; issued 7,537,394 shares in 2007 and
       7,533,230 shares in 2006

                                                                                  15,074,788            15,066,460
    Class   B non-voting common stock-$1.00 par value; 5,000,000 shares
        authorized; none issued or outstanding
                                                                                      --                    --
    Class   C: convertible common stock - $0.20 par value; 7,500,000 shares
        authorized; issued 7,500,000 shares in 2007 and 7,117,591
        shares in 2006

                                                                                   1,500,000             1,423,518
    Additional paid-in capital                                                    17,075,572            17,064,488
    Accumulated other comprehensive income and other items                         2,368,249             1,703,155
    Retained earnings                                                             22,174,740            20,495,063
    Treasury stock at cost - 1,239,665 Class A shares and
       -0- Class C shares in 2007; 1,195,127 Class A shares and
       145,045 Class C shares in 2006

                                                                                  (2,957,688)           (2,781,988)
                                                                                ------------         -------------
          Total stockholders' equity                                              55,235,661            52,970,696
                                                                                ------------         -------------
     Total Liabilities and Stockholders' Equity                                 $385,583,874          $377,395,183
                                                                                ============          ============

</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                   (Unaudited)
<TABLE>
<CAPTION>




                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
Revenues:                                                          2007           2006            2007           2006
                                                                   ----           ----            ----           ----
<S>                                                              <C>            <C>            <C>            <C>
Insurance premiums and other considerations                      $7,906,334     $7,403,252     $15,868,609    $14,957,522
Net investment income                                              9,009,038      5,504,372      16,952,496     10,579,058
Net mortuary and cemetery sales                                    3,434,182      3,154,220       6,945,119      6,209,018
 Realized gains on investments and other assets                      758,199         60,255         736,668         57,671
Mortgage fee income                                               33,079,231     17,930,096      62,601,118     34,559,687
Other                                                                128,904         94,254         258,030        187,186
                                                                 -----------   --- --------    ------------    -----------
Total revenues                                                    54,315,888     34,146,449     103,362,040     66,550,142
                                                                 -----------   ------------    ------------    -----------

Benefits and expenses:
Death benefits                                                     4,081,699      3,567,731       8,173,978      7,389,690
Surrenders and other policy benefits                                 463,580        410,236       1,072,202        997,361
Increase in future policy benefits                                 2,930,517      3,014,873       5,673,985      5,347,880
 Amortization of deferred policy and pre-need
 acquisition costs and cost of insurance acquired                  1,362,645        757,542       2,723,485      1,564,997
General and administrative expenses:
      Commissions                                                 24,855,478     13,686,056      47,295,202     26,048,316
      Salaries                                                     5,901,947      4,247,101      11,686,845      8,489,853
      Other                                                        8,538,985      5,909,659      15,746,867     11,200,425
Interest expense                                                   4,158,004      1,087,760       7,257,325      2,108,551
Cost of goods and services sold-
      Mortuaries and cemeteries
                                                                     663,183        572,624       1,314,923      1,208,045
                                                                 -----------    -----------    ------------    -----------
Total benefits and expenses                                       52,956,038     33,253,582     100,944,812     64,355,118
                                                                 -----------    -----------    ------------    -----------

Earnings before income taxes                                       1,359,850        892,867       2,417,228      2,195,024
Income tax expense                                                  (328,822)      (169,228)       (641,659)      (457,719)
                                                                  ----------      ----------    -----------    ------------
Net earnings                                                     $ 1,031,028      $ 723,639     $ 1,775,569    $ 1,737,305
                                                                 ===========      =========     ===========    ===========

Net earnings per class A equivalent common share                       $0.15          $0.10           $0.25          $0.25
                                                                       =====          =====           =====          =====

 Net earnings per class A equivalent common
     share-assuming dilution                                           $0.14          $0.10           $0.24          $0.25
                                                                       =====          =====           =====          =====

 Weighted-average Class A equivalent common
     shares outstanding                                            7,049,416      6,914,442       7,047,167      6,914,441
                                                                 ===========      =========     ===========      =========

 Weighted-average Class A equivalent common
     shares outstanding assuming-dilution                          7,321,334      7,099,143       7,306,302      7,050,468
                                                                 ===========      =========     ===========      =========
</TABLE>


Earnings per share  amounts have been adjusted  retroactively  for the effect of
annual stock dividends.  The  weighted-average  shares outstanding  includes the
weighted-average  Class A common shares and the weighted-average  Class C common
shares  determined on an equivalent Class A common stock basis. Net earnings per
common share  represent net earnings per  equivalent  Class A common share.  Net
earnings per Class C common share is equal to one-tenth (1/10) of such amount.

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                     SECURITY NATIONAL FINANCIAL CORPORATION
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>



                                                                                        Six Months Ended June 30,
                                                                                      2007                   2006
                                                                                     ------                 ------
    Cash flows from operating activities:
<S>                                                                               <C>                    <C>
       Net cash provided by (used in) operating activities                        $(16,613,660)          $12,925,511
                                                                                 -------------           -----------

  Cash flows from investing activities: Securities held to maturity:
       Purchase - fixed maturity securities                                          (2,026,486)          (6,874,419)
       Calls and maturities - fixed maturity securities                               5,756,249            1,926,606
  Securities available for sale:
       Purchase - fixed maturity securities                                             (76,974)            (134,262)
       Sales - equity securities                                                        789,494            9,164,900
  Purchases of short-term investments                                               (10,817,321)          (7,387,637)
  Sales of short-term investments                                                     8,395,280                --
  Purchases of restricted assets                                                       (243,851)              12,500
  Change in assets for perpetual care trusts                                            (89,321)              19,897
  Amount received for perpetual care trusts                                              74,019               57,475
  Mortgage, policy, and other loans made                                            (32,831,713)         (36,282,485)
  Payments received for mortgage, policy, and other loans                            47,986,468           22,858,386
  Purchases of property and equipment                                                (1,981,495)            (664,104)
  Disposal of property and equipment                                                    730,242                 --
  Purchases of real estate                                                          (1,219,465)           (1,686,113)
  Sale of real estate                                                                 1,195,183            2,039,638
                                                                                   ------------         -------------
    Net cash provided by (used in) investing activities                              15,640,309          (16,949,618)
                                                                                   ------------         -------------

  Cash flows from financing activities:
  Annuity contract receipts                                                           2,954,809            2,992,944
  Annuity contract withdrawals                                                       (6,136,505)          (5,013,124)
  Sale of treasury stock                                                                 --                   19,619
  Repayment of bank loans and notes and
      contracts payable                                                                (787,138)          (1,270,089)
  Proceeds from borrowing on bank loans                                               1,826,400              750,000
                                                                                   ------------         ------------
  Net cash used in financing activities                                              (2,142,434)          (2,520,650)
                                                                                   ------------          -----------

  Net change in cash and cash equivalents                                            (3,115,785)          (6,544,757)

  Cash and cash equivalents at beginning of period                                   10,376,585           16,632,966
                                                                                   ------------         ------------
         Cash and cash equivalents at end of period                                $  7,260,800          $10,088,209
                                                                                   ============          ===========
</TABLE>


See accompanying notes to condensed consolidated financial statements.


<PAGE>



            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                            June 30, 2007 (Unaudited)

1.   Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim  financial  information and with the instructions to Form
10-Q and Article 10 of Regulation S-X.  Accordingly,  they do not include all of
the  information  and disclosures  required by accounting  principles  generally
accepted in the United  States of America  for  complete  financial  statements.
These financial  statements  should be read in conjunction with the consolidated
financial  statements  of the  Company  and  notes  thereto  for the year  ended
December 31, 2006,  included in the  Company's  Annual Report on Form 10-K (file
number 0-9341).  In the opinion of management,  all  adjustments  (consisting of
normal recurring  accruals)  considered  necessary for a fair  presentation have
been  included.  Operating  results for the three and six months  ended June 30,
2007 are not necessarily  indicative of the results that may be expected for the
year ending December 31, 2007.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

The estimates  susceptible to  significant  change are those used in determining
the liability for future policy  benefits and claims,  those used in determining
valuation  allowances  for  mortgage  loans on real  estate,  and those  used in
determining  the  estimated  future  costs for  pre-need  sales.  Although  some
variability  is inherent in these  estimates,  management  believes  the amounts
provided are fairly stated in all material respects.

Certain 2006 amounts have been  reclassified  to bring them into conformity with
the 2007 presentation.

2.   Recent Accounting Pronouncements

In July 2006,  the FASB  issued FIN 48,  Accounting  for  Uncertainty  in Income
Taxes, which attempts to set out a consistent  framework for preparers to use to
determine the appropriate level of valuation  allowance tax reserves to maintain
for deferred tax assets relating to uncertain tax positions. This interpretation
for FASB  Statement  No. 109 uses a two-step  approach  wherein a tax benefit is
recognized  if a position  is  more-than-likely-than-not  to be  sustained.  The
amount of the benefit is then  measured to be the highest tax benefit,  which is
greater  than  fifty  percent  likely  to be  realized.  FIN 48  also  sets  out
disclosure requirements to enhance transparency of an entity's tax reserves. The
Company  adopted  this  Interpretation  as of January 1,  2007.  Management  has
considered  the  amounts and the  probabilities  of the  outcomes  that could be
realized upon ultimate  settlement and believes that it is  more-likely-than-not
that the Company's  recorded income tax benefits will be fully  realized.  There
were no  unrecognized  tax  benefits at the  beginning  or at the end of the six
months ended June 30, 2007.

The Company records interest earned on income-tax  refunds in other income,  and
penalties and interest  charged on tax deficiencies in interest  expense.  As of
the date of adoption,  there were no amounts  accrued for  penalties or interest
related to unrecognized tax benefits.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements  ("SFAS
157").  SFAS 157 defines fair value,  establishes a framework for measuring fair
value, and expands disclosures about fair value  measurements.  SFAS 157 will be
applied prospectively and is effective for fiscal years beginning after November
15,  2007,  and interim  periods  within  those  fiscal  years.  SFAS 157 is not
expected  to have a  material  impact on the  Company's  consolidated  financial
statements.



<PAGE>


            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                            June 30, 2007 (Unaudited)


In  February  2007,  the FASB  issued  SFAS No 159,  The Fair  Value  Option for
Financial  Assets and  Financial  Liabilities  - including  an amendment of FASB
Statement  No 115 ("SFAS  159").  SFAS 159 allows  measurement  at fair value of
eligible  financial  assets and liabilities  that are not otherwise  measured at
fair value. If the fair value option for an eligible item is elected, unrealized
gains and losses for that item shall be  reported  in current  earnings  at each
subsequent reporting date. SFAS 159 also establishes presentation and disclosure
requirements  designed  to draw  comparison  between the  different  measurement
attributes the Company elects for similar types of assets and liabilities.  This
statement is effective for fiscal years  beginning  after November 15, 2007. The
Company is in the process of evaluating the application of the fair value option
and its effect on its financial position and results of operations.

3.   Comprehensive Income

For the three months ended June 30, 2007 and 2006,  total  comprehensive  income
amounted to $1,134,604 and $450,827, respectively. This increase of $683,777 was
primarily  the result of an increase in net income of  $307,419,  an increase in
derivatives  of  $111,927,  and an  increase in  unrealized  gains and losses in
securities available for sale of $264,431.

For the six months  ended June 30,  2007 and 2006,  total  comprehensive  income
amounted to $2,440,663 and $2,660,626,  respectively.  This decrease of $219,963
was primarily the result of an increase in net income of $38,294,  a decrease in
derivatives  of  $121,887,  and a  decrease  in  unrealized  gains and losses in
securities available for sale of $136,370.

4.   Stock-Based Compensation

The Company  accounts for its  stock-based  compensation  plans according to the
provisions of Statement of Financial Accounting Standards No. 123R, "Share-Based
Payment" ("FAS 123R") for its stock-based  compensation  plans. Under SFAS 123R,
all stock-based  compensation  is measured at the grant date,  based on the fair
value of the option or award,  and is  recognized as an expense in earnings over
the requisite service, which is typically through the date the options vest.

The Company adopted SFAS 123R using the modified  prospective method. Under this
method, for all stock-based  options and awards granted prior to January 1, 2006
that remain outstanding as of that date, compensation cost is recognized for the
unvested  portion  over  the  remaining  requisite  service  period,  using  the
grant-date fair value measured under the original provisions of SFAS 123 for pro
forma and  disclosure  purposes.  Furthermore,  compensation  costs will also be
recognized  for any awards  issued,  modified,  repurchased  or cancelled  after
January 1, 2006.

The Company  utilized the  Black-Scholes-Merton  model for  calculating the fair
value of stock awards and stock options.

No options were granted for the three and six months ended June 30, 2007.  Total
compensation costs relating to stock-based  compensation was not material during
the three and six months ended June 30, 2007.



<PAGE>


            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                            June 30, 2007 (Unaudited)

The  Company's  Board of  Directors  granted  stock  options in 2004 to Scott M.
Quist, the Company's  President and Chief Operating  Officer,  to purchase up to
1,000,000  shares of Class C common  stock at exercise  prices of $.323 and $.36
per share.  On May 31, 2007, Mr. Quist made a cashless  exercise of such options
to  purchase  a total of  1,157,625  shares of Class C common  stock that he was
entitled to receive,  after  adjustments for 5% stock dividends  issued in 2005,
2006 and 2007.

In connection with the exercise of such options on a cashless  basis,  Mr. Quist
delivered a total of 58,376  shares of Class A common  stock to the Company that
he held in  exchange  for all the Class C shares he would be entitled to receive
for exercising the options.  Inasmuch as there were 6,966,849  shares of Class C
common  stock  outstanding  as of May  31,  2007  out of a  total  of  7,500,000
authorized  shares of Class C common stock, the Company could legally issue only
533,151  shares of Class C common  stock to Mr.  Quist,  leaving  a  balance  of
624,474 Class C common shares owing to him.

In order to issue the  additional  shares of Class C common  shares owing to Mr.
Quist,  the Board of  Directors  approved on July 13, 2007 an  amendment  to the
Company's  Articles of  Incorporation  to increase  the number of Class C common
shares from 7,500,000 shares to 15,000,000 shares.  Because stockholder approval
is also required to amend the Company's  Articles of Incorporation,  the Company
has  scheduled a special  stockholders  meeting on September 21, 2007 to approve
the  amendment  to the  Articles  of  Incorporation  to  increase  the number of
authorized  shares of Class C common stock from  7,500,000  shares to 15,000,000
shares.

If the stockholders approve the amendment at the special  stockholders  meeting,
the Company will issue Mr. Quist the additional 624,474 shares of Class C common
stock that are owed pursuant to his exercise of stock options.  If the amendment
is  not  approved  at  the  special  stockholders  meeting,  the  Company  will,
alternatively,   issue  Mr.  Quist  62,487  shares  of  Class  A  common  stock,
representing 10% of the 624,474 Class C common shares that are owed to Mr. Quist
based on the conversion  ratio set forth in the Articles of Incorporation of one
share of Class A common stock for each ten shares of Class C common stock. As of
June 30,  2007,  the  Company  has  recorded  the fair  value of the  derivative
liability in the amount of $175,700 to reflect the Company's obligation to issue
the shares of Class C common stock or,  alternatively,  shares of Class A common
stock owed to Mr.  Quist  pursuant to the  exercise of the stock  options.  This
liability  is  included  in  other  liabilities  and  accrued  expenses  in  the
accompanying condensed consolidated balance sheet.

<PAGE>
<TABLE>
<CAPTION>

5.    Earnings Per Share

The basic and diluted earnings per share amounts were calculated as follows:

                                                                        Three Months Ended June 30,
                                                                    2007                   2006
                                                                   ------                ------
  Numerator:
<S>                                                              <C>                  <C>
       Net income                                                $ 1,031,028          $   723,639
                                                                 ===========          ===========
  Denominator:
       Basic weighted-average shares outstanding                   7,049,416            6,914,442
                                                                 -----------            ---------
  Effect of dilutive securities:
       Employee stock options                                        257,075              183,470
       Stock appreciation rights                                       --                   1,231
       Employee deferred compensation rights                          14,843                --
                                                                 -----------           ----------
  Dilutive potential common shares                                   271,918              184,701
                                                                 -----------          -----------
       Diluted weighted-average shares outstanding                 7,321,334            7,099,143
                                                                 ===========          ===========

  Basic earnings per share                                             $0.15                $0.10
                                                                       =====                =====

  Diluted earnings per share                                           $0.14                $0.10
                                                                       =====                =====
</TABLE>


Earnings  per share  amounts  have been  adjusted for the effect of annual stock
dividends.
<TABLE>
<CAPTION>

                                                                        Six Months Ended June 30,
                                                                       2007                  2006
                                                                      -----                 -----
  Numerator:
<S>                                                               <C>                  <C>
       Net income                                                 $1,775,569           $1,737,305
                                                                  ==========           ==========
  Denominator:
       Basic weighted-average shares outstanding                   7,047,167            6,914,441
                                                                 -----------          -----------
  Effect of dilutive securities:
       Employee stock options                                        244,292              134,946
       Stock appreciation rights                                        --                   1,081
       Employee deferred compensation rights                          14,843              --
                                                                 -----------         ------------
  Dilutive potential common shares                                  259,135              136,027
                                                                ------------         ------------
       Diluted weighted-average shares outstanding                7,306,302            7,050,468
                                                                 ===========          ===========

  Basic earnings per share                                            $0.25                $0.25
                                                                      =====                =====

       Diluted earnings per share                                     $0.24                $0.25
                                                                      =====                =====
</TABLE>


Earnings per share amounts have been adjusted for the effect of annual stock
dividends.


<PAGE>
<TABLE>
<CAPTION>


            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                            June 30, 2007 (Unaudited)

6. Business Segment
                                                         Life         Cemetery/                   Reconciling
                                                       Insurance      Mortuary     Mortgage          Items       Consolidated

   <S>                                                <C>            <C>         <C>            <C>             <C>
   For the Three Months Ended
   June 30, 2007
   Revenues from
      external customers                              $11,428,079    $4,347,795   $38,540,014   $      --        $54,315,888

   Intersegment revenues                                 1,767,705       23,001       122,184     (1,912,890)        --

   Segment profit (loss)
      Before income taxes                               1,039,469       588,153      (267,772)        --           1,359,850

   For the Three Months Ended
   June 30, 2006
   Revenues from
      external customers                               $10,698,047   $3,452,483   $19,995,919      $  --          $34,146,449

    Intersegment revenues                                1,264,601       23,001       121,182     (1,408,784)        --

    Segment profit (loss)
      Before income taxes                                 947,324       233,273      (287,730)        --               892,867

    For the Six Months Ended
    June 30, 2007
    Revenues from
      external customers                              $23,227,261    $8,127,011   $72,007,768  $     --          $103,362,040

    Intersegment revenues                               3,105,062        46,002       242,344     (3,393,408)        --

    Segment profit (loss)
       before income taxes
                                                       1,645,114      1,018,730      (246,616)        --            2,417,228
    Identifiable assets                              359,542,165     58,490,187    22,721,012    (55,169,490)     385,583,874

    For the Six Months Ended
    June 30, 2006
    Revenues from
      external customers                             $21,609,384     $6,769,172   $38,171,586       $ --          $66,550,142

    Intersegment revenues                              2,654,467         46,002       212,61    (2,913,087)           --

    Segment profit (loss)
       before income taxes                             2,053,401        605,128     (463,505)          --            2,195,024

    Identifiable assets                              352,247,310     51,897,683   18,891,648  (56,761,440)         366,275,201

</TABLE>


<PAGE>


            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                           June 30, 2007, (Unaudited)


7.   Other Business Activity

On March 5, 2007, the Company received a proposed consent order from the Florida
Office of Insurance  Regulation  concerning  the New Success Life  Program,  the
higher education  product currently being marketed and sold by Southern Security
Life. The proposed order states that as a result of an investigation the Florida
Office has determined  that Southern  Security Life violated  Florida law (i) by
knowingly making statements, sales presentations,  omissions or comparisons that
misrepresented  the  benefits,  advantages,  or  terms of the New  Success  Life
Program,  and  (ii)  by  knowingly  making,  advertisements,  announcements,  or
statements containing representations that were untrue or misleading.

The proposed order would require  Security  National Life and Southern  Security
Life to  immediately  cease and  desist  from  making  any  false or  misleading
representations  to  Florida  consumers  suggesting  that the New  Success  Life
Program would  accumulate  enough value to pay for college expenses in full. The
proposed order would also require Security  National Life and Southern  Security
Life to agree to no longer  market or sell the New Success  Life  Program in the
State of Florida. In addition, Security National Life and Southern Security Life
would be required to send a written  notice to Florida  consumers  who purchased
the New Success Life Program on or after January 1, 1998 stating that the higher
education  program is a whole life  insurance  product,  with a term and annuity
rider, and not a college trust fund, savings plan, or other program,  and it may
not necessarily pay college expenses in full from the accumulated value.

Moreover,  the  written  notice is to provide  an  opportunity  for the  Florida
consumers who purchased the New Success Life Program on or after January 1, 1998
to cancel their policy and be given a full refund,  including all premiums paid,
together with interest at the agreed upon rate in the original contract. If each
of the Florida  consumers  who  purchased  the New Success  Life  Program  after
January 1, 1998 was to cancel his or her policy and  receive a refund,  the cost
to the  Company  to refund  all  premiums  paid,  including  interest,  would be
approximately $8,200,000, an amount in excess of the assets of Southern Security
Life.

The  proposed  consent  order  would also  require  Security  National  Life and
Southern  Security  Life to  issue  refunds  including  interest  to the  eleven
policyholders  whose affidavits were taken in connection with the administrative
complaint that the Florida  Office had  previously  filed against Franz Wallace,
the former National Sales Director of Southern Security Life.  Security National
Life and Southern Security Life would additionally be required to issue refunds,
including interest,  to any Florida policyholder in the New Success Life Program
who had filed a complaint with the Florida  Department of Financial  Services or
whose  coverage had lapsed.  Furthermore,  Security  National  Life and Southern
Security Life would be required to notify the state insurance department in each
state in which the New  Success  Life  Program is  marketed of the order and any
complaint that Southern  Security Life received relating to the New Success Life
Program from  policyholders in that state.  Finally,  Security National Life and
Southern  Security Life would be required to pay the Florida Office a penalty of
$100,000 and administrative costs of $5,000.

The Company disputes the terms of the proposed consent order. The Company is not
aware of specific concerns that the Florida Office has with the New Success Life
Program  because it has received no specific  administrative  complaint from the
Florida Office nor is it aware of any recent market conduct examination that the
Florida  Office has conducted  relative to the program.  The Company  intends to
vigorously  oppose the proposed consent order. The Company is currently  engaged
in discussions with the Florida Office in an effort to settle the dispute


<PAGE>


            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                           June 30, 2007, (Unaudited)


7.   Other Business Activity (continued)

concerning the proposed  order. If the Company is unable to reach a satisfactory
resolution  with the Florida  Office with  respect to the terms of the  proposed
consent order and the Florida Office issues a similar order, the Company intends
to take  action  necessary  to  protect  its  rights  and  interests,  including
requesting a hearing before an administrative law judge to oppose the order. The
Company  believes any potential  liability would be limited to the net assets of
Southern Security Life, which are approximately $3,914,000.

In June 2007,  the  Company  completed  the sale of the  Colonial  Funeral  Home
property to the Utopia Station  Development  Corp. for $730,242,  net of selling
costs of $44,758.  The Colonial Funeral Home ceased  operations in July 2006 and
has been  inactive  since  that  date.  The  carrying  amount  on the  Company's
financial statements on June 20, 2007 was $148,777.  As a result of the sale and
after the related selling expenses,  the Company  recognized a gain of $581,465.
The Company received a down payment of $15,242 with the remaining $715,000 to be
received in a lump sum within one year.  The gain has been included as a part of
Realized  Gains on  Investments  and  Other  Assets in the  Company's  condensed
consolidated statement of earnings.

8.   Subsequent Event

On July 16,  2007,  the  Company  completed  a purchase  transaction  with C & J
Financial, LLC, an Alabama limited liability company ("C & J Financial").  C & J
Financial  operates a factoring  business with offices in Rainbow City,  Alabama
with an emphasis on providing financing for funeral homes and mortuaries.  Under
the terms of the Unit Purchase  Agreement  dated July 16, 2007,  (the  "Purchase
Agreement")  among the Company,  C & J Financial,  Henry Culp, Jr.  ("Culp") and
Culp  Industries,  Inc. ("Culp  Industries"),  the Company  purchased all of the
outstanding member units of C & J Financial for a purchase  consideration of (i)
$1,250,000  in cash,  (ii) a  promissory  note from the  Company  to Culp in the
amount of $381,500  plus  interest at the rate of 5% per annum,  payable  over a
period of 24 months in monthly payments of $16,737,  including  interest,  until
paid in  full,  and  (iii) a quit  claim  deed  from C & J  Financial  to  Culp,
conveying  ownership  of the building and  surrounding  property  located in the
Jester Commercial Park in Rainbow City, Alabama, where C & J Financial currently
maintains its business offices. At closing, Culp Industries entered into a lease
agreement with C & J Financial to lease to C & J Financial  approximately  5,000
square feet in the building located at the Jester  Commercial Park. The lease is
for a term of three years for which C & J Financial,  as tenant,  is required to
make monthly payments of $1,200, for a total lease payment of $43,200.

The Purchase Agreement  additionally  required Culp to deliver to the Company at
closing a promissory  note (the "Note") in the  principal  amount of  $1,755,236
plus interest at the rate of 8.25% per annum from C & J Financial,  as borrower,
to Culp,  as lender,  with such note to be cancelled  and marked "paid in full".
Moreover,  the agreement  provides for the  possibility of  adjustments.  If the
total equity on the balance sheet of C & J Financial as of May 31, 2007, defined
as total  assets  minus  total  liabilities,  is greater  than the amount of the
equity on the balance  sheet of C & J Financial as of the closing  date, or July
16,  2007,  Culp agrees to pay to the Company the  difference  between the total
equity  on the  balance  sheet as of May 31,  2007 and the  total  equity on the
balance  sheet as of July 16,  2007 by  reducing  the amount of the Note by such
difference  in the amounts of the total  equity on such balance  sheets.  If the
amount of the total equity on the balance sheet of C & J Financial as of May 31,
2007 is less than the amount of the total  equity on the balance  sheet of C & J
Financial as of July 16,  2007,  the Company  agrees to pay Culp the  difference
between the total  equity on the balance  sheet as of May 31, 2007 and the total
equity on the balance sheet as of July 16, 2007 by increasing  the amount of the
Note  payable by such  difference  in the  amounts  of the total  equity on such
balance sheets.


<PAGE>


            SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                           June 30, 2007, (Unaudited)


The  Purchase  Agreement  further  requires  each  unitholder  to deliver to the
Company  a  non-competition  and  confidentiality   agreement   prohibiting  the
unitholder  from  competing with C & J Financial for a period of five years from
July 16, 2007 through  July 16,  2012.  The Company also entered into a one year
consulting  agreement  with  Culp,  which  requires  Culp to  provide  part-time
consulting  services  for C & J  Financial  at $50.00 per hour,  and a five year
employment  agreement  with Kevin O. Smith  ("Smith"),  Vice  President of C & J
Financial, who will continue to serve in that position. The employment agreement
requires  C & J  Financial  to pay Smith an  annual  salary  of  $96,000  plus a
discretionary bonus and a monthly car allowance of $1,161.

Finally, the Purchase Agreement requires the Company, C & J Financial,  Culp and
Culp  Industries  to  acknowledge  the  existence of a business  loan  agreement
between  Regions  Bank,  as lender,  and Culp  Industries,  as  borrower,  which
provides for a line of credit for C & J Financial.  The  outstanding  balance on
the line of credit  as of July 16,  2007 was  $1,931,764.  The line of credit is
secured by, among other assets,  the accounts  receivable of C & J Financial and
is personally  guaranteed by Culp.  The Company has received  confirmation  that
Regions Bank will not authorize  any further  advances or sweeps with respect to
the line of credit.  The  Company  agrees  that it will pay off the  outstanding
balance of the line of credit with Regions Bank  relating to the business of C &
J Financial. The Company will initially attempt to pay off the line of credit by
means of applying the payments  from the accounts  receivable of C & J Financial
as such payments are made in the ordinary course of business.

At June 30, 2007,  total  assets of C & J Financial  were  $3,197,000  and total
liabilities  were  $3,526,000,  which includes the Note to Culp in the amount of
$1,755,000  that was  cancelled  at  closing.  For the seven  month  period from
November  1,  2006 to May 31,  2007,  total  revenues  of C & J  Financial  were
$775,000 and total expenses were  $764,000,  resulting in net income of $11,000.
For the fiscal year ended  October 31, 2006,  total  revenues of C & J Financial
were $1,397,000 and total expenses were  $1,351,000,  resulting in net income of
$46,000.  For the fiscal year ended  October 31, 2005,  total  revenues of C & J
Financial were $1,137,000 and total expenses were  $1,114,000,  resulting in net
income  of  $23,000.  The  Company  anticipates   utilizing  the  employees  and
operations  of C & J  Financial  to expand its fast  funding  operations,  which
provide financing for funeral homes and mortuaries.


<PAGE>

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations
        -----------------------------------------------------------------------

Overview

The Company's  operations  over the last several years  generally  reflect three
trends or events which the Company expects to continue:  (i) increased attention
to "niche" insurance  products,  such as the Company's funeral plan policies and
traditional  whole-life  products;   (ii)  emphasis  on  cemetery  and  mortuary
business; and (iii) originating and refinancing mortgage loans.

Mortgage Operations

During the three months ended June 30, 2007,  Security National Mortgage Company
("SNMC")  experienced an increase in revenue and expenses due to the increase in
loan volume of its operations.  SNMC is a mortgage lender incorporated under the
laws of the State of Utah. SNMC is approved and regulated by the Federal Housing
Administration  (FHA), a department of the U.S.  Department of Housing and Urban
Development  (HUD),  to originate  mortgage  loans that  qualify for  government
insurance in the event of default by the borrower.  SNMC obtains loans primarily
from independent brokers and correspondents.  SNMC funds the loans from internal
cash flows and lines of credit from financial  institutions.  SNMC receives fees
from the  borrowers  and other  secondary  fees from third party  investors  who
purchase  the loans from SNMC.  SNMC  primarily  sells all of its loans to third
party  investors  and does not retain  servicing to these  loans.  SNMC pays the
brokers and  correspondents  a commission  for loans that are  brokered  through
SNMC.  SNMC originated and sold 10,755 loans  ($1,985,066,000  total volume) and
6,002 loans ($993,094,000 total volume),  respectively, for the six months ended
June 30, 2007 and 2006.

The mortgage industry is currently experiencing substantial change due to higher
than expected  delinquencies  from subprime  loans.  The market for new subprime
loans has been  substantially  reduced  and  several  mortgage  companies  whose
primary product was subprime mortgage  originations have ceased operations.  The
Company funded $4.2 million (.2% of the Company's  production) in subprime loans
during the six months ending June 30, 2007 and has currently eliminated subprime
loans from its product offerings. The Company believes that its potential losses
from subprime loans are minimal.

The industry  problem with subprime  mortgages has created a volatile  secondary
market for other high risk products,  especially alternative  documentation (Alt
A) loans.  Alt A loans are  typically  offered to qualified  borrowers  who have
relatively high credit scores but are not required to provide full documentation
to support  personal  income and  assets  owned.  Alt A loans can have a loan to
value ratio as high as 100%. There is currently a smaller market for Alt A loans
and the Company's warehouse line providers have shortened the allowable time for
the Company to sell these  products to investors.  As a result of these changes,
the Company is only offering these loans on a limited basis.

Alt A loans represented  approximately  21% of the Company's  production for the
six months  ended  June 30,  2007.  The  Company is  currently  experiencing  an
increase in production of its other mortgage  products.  This increased mortgage
production will offset some of the loss of income related to the  discontinuance
of Alt A loans.  As of August 13,  2007,  the Company had  originated a total of
$60,400,000  in Alt A loans  that  had not been  settled  by  investors.  If the
Company  were  unable to sell its Alt A loans it would be required to assume the
risk of holding and servicing such loans.  The Company  believes it has adequate
liquidity,  however,  through its life insurance  operations to carry such loans
until purchased by investors if warehousing lines are not available.


<PAGE>

The Company expects the current  mortgage market  conditions to continue for the
remainder  of  2007.  Under  these  circumstances  it is  difficult  to  predict
profitability.  Profitability  may be impacted by volume  reduction,  changes in
margins, increased borrowing costs and future loans losses. Management has taken
and will  continue  to take a number of  actions,  however,  in  response to the
changing  market  conditions.  These  include  offering Alt A loans on a limited
basis, closing unprofitable branch offices, obtaining new warehousing agreements
at a lower interest rates, and expense reduction initiatives.

During the six months ending June 30, 2007, the Company  experienced loan losses
of  $2,459,000.  This amount was charged  against the provision for loan losses.
The balance of the reserve for loan losses at June 30, 2007 was $1,594,000.  The
provision  for loan  losses is  included  in other  general  and  administrative
expenses.  The Company  adds  approximately  $165,000 per month to its loan loss
reserves.  The Company  believes the loan loss reserves are  sufficient to cover
reasonably  foreseeable  future loan losses and that its formula for determining
the provision for such reserves is adequate.

Results of Operations

Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006

Total revenues increased by $20,169,000,  or 59.1%, to $54,316,000 for the three
months ended June 30, 2007, from $34,147,000 for the three months ended June 30,
2006. Contributing to this increase in total revenues was a $15,149,000 increase
in mortgage  fee income,  a $503,000  increase in  insurance  premiums and other
considerations,  a $3,505,000 increase in investment income, a $280,000 increase
in net mortuary and cemetery sales, a $34,000 increase in other revenues,  and a
$698,000 increase in realized gains on investments and other assets.

Insurance premiums and other considerations  increased by $503,000,  or 6.8%, to
$7,906,000  for the three months ended June 30, 2007,  from  $7,403,000  for the
comparable  period in 2006.  This increase was  primarily due to the  additional
premiums realized from new insurance sales.

Net investment  income increased by $3,505,000,  or 63.7%, to $9,009,000 for the
three months ended June 30, 2007, from  $5,504,000 for the comparable  period in
2006.  This increase was primarily  attributable  to additional  interest income
from increased  long-term bond and mortgage purchases over the comparable period
in 2006.

Net mortuary and cemetery  sales  increased by $280,000,  or 8.9%, to $3,434,000
for the three months ended June 30, 2007,  from  $3,154,000  for the  comparable
period in 2006. This increase was due to increased at-need sales in the cemetery
and  mortuary  operations  and  increased  pre-need  land sales in the  cemetery
operations.

Realized gains on investments and other assets increased by $698,000,  or 1,163%
to  $758,000  for the three  months  ended June 30,  2007 from  $60,000  for the
comparable period in 2006. This was primarily due to a gain of $581,000 from the
sale of Colonial Funeral Home in Salt Lake City.

Mortgage fee income  increased by $15,149,000,  or 84.5%, to $33,079,000 for the
three months ended June 30, 2007, from $17,930,000 for the comparable  period in
2006.  This increase was primarily  attributable to an increase in the number of
loan originations during the second quarter of 2007 as new mortgage offices were
opened and production increased in existing mortgage offices,  which resulted in
the financing of a greater number of mortgage loans.


<PAGE>

Other revenues increased by $34,000, or 35.8% to $129,000,  for the three months
ended  June 30,  2007 from  $95,000  for the  comparable  period  in 2006.  This
increase  was due to increases in several  small  income  items  throughout  the
Company's operations.

Total benefits and expenses were  $52,956,000,  or 97.5% of total revenues,  for
the three months ended June 30, 2007,  as compared to  $33,254,000,  or 97.4% of
total  revenues,  for the  comparable  period in 2006.  This increase  primarily
resulted from increased loan costs at SecurityNational Mortgage Company due to a
greater number of loan originations.

Death  benefits,  surrenders and other policy  benefits,  and increase in future
policy  benefits  increased by an aggregate of $483,000,  or 6.9%, to $7,476,000
for the three months ended June 30, 2007,  from  $6,993,000  for the  comparable
period in 2006. This increase was primarily due to increased  insurance business
and to the  expected  increase in reserves for  policyholder  benefits and death
claims.

Amortization  of  deferred  policy and  pre-need  acquisition  costs and cost of
insurance acquired increased by $605,000,  or 79.8%, to $1,363,000 for the three
months ended June 30, 2007,  from  $758,000 for the  comparable  period in 2006.
This  increase  was  primarily  due  to  increased  deferred  acquisition  costs
associated with interest sensitive products and pre-need cemetery contracts.

General and  administrative  expenses  increased by  $15,454,000,  or 64.8%,  to
$39,296,000 for the three months ended June 30, 2007,  from  $23,843,000 for the
comparable period in 2006. This increase  primarily resulted from an increase in
commission  expenses of $11,169,000,  from $13,686,000 in 2006 to $24,855,000 in
2007,  due  to  a  greater  number  of  mortgage  loan   originations   made  by
SecurityNational  Mortgage  Company during the second quarter of 2007.  Salaries
increased by $1,655,000 from $4,247,000 in 2006 to $5,902,000 in 2007, primarily
due to merit increases in salaries of existing employees, and an increase in the
number of employees necessitated by the Company's expanding business operations.
Other expenses  increased by $2,629,000 from $5,910,000 in 2006 to $8,539,000 in
2007.  The increase in other  expenses  primarily  resulted from  increased loan
costs at  SecurityNational  Mortgage  Company  due to a  greater  number of loan
originations.

Interest expense increased by $3,070,000, or 282.3%, to $4,158,000 for the three
months ended June 30, 2007, from  $1,088,000 for the comparable  period in 2006.
This increase was primarily due to increased  warehouse lines of credit required
for a greater number of warehoused mortgage loans by  SecurityNational  Mortgage
Company.

Cost of goods and services sold of the mortuaries  and  cemeteries  increased by
$91,000,  or 15.8%,  to $663,000 for the three months ended June 30, 2007,  from
$572,000 for the comparable  period in 2006.  This increase was primarily due to
increased at-need cemetery sales.

Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

Total revenues  increased by $36,812,000,  or 55.3%, to $103,362,000 for the six
months ended June 30, 2007,  from  $66,550,000 for the six months ended June 30,
2006. Contributing to this increase in total revenues was a $28,042,000 increase
in mortgage  fee income,  a $911,000  increase in  insurance  premiums and other
considerations,  a $6,373,000 increase in investment income, a $736,000 increase
in net mortuary and cemetery sales, a $71,000 increase in other revenues,  and a
$679,000 increase in realized gains on investments and other assets.

Insurance premiums and other considerations  increased by $911,000,  or 6.1%, to
$15,869,000  for the six months ended June 30, 2007,  from  $14,958,000  for the
comparable  period in 2006.  This increase was  primarily due to the  additional
insurance premiums realized from new insurance sales.


<PAGE>

Net investment income increased by $6,373,000,  or 60.2%, to $16,952,000 for the
six months ended June 30, 2007, from  $10,579,000  for the comparable  period in
2006.  This increase was primarily  attributable  to additional  interest income
from increased  long-term bond and mortgage purchases over the comparable period
in 2006.

Net mortuary and cemetery sales  increased by $736,000,  or 11.9%, to $6,945,000
for the six months  ended June 30,  2007,  from  $6,209,000  for the  comparable
period in 2006. This increase was due to increased at-need sales in the cemetery
and  mortuary   operations  and  increased   pre-need  land  sales  in  cemetery
operations.

Realized  gains on  investments  and other  assets  increased  by  $679,000,  or
1,170.7%,  to $737,000  for the six months  ended June 30, 2007 from $58,000 for
the  comparable  period in 2006.  This was  primarily  due to a one time gain of
$581,000 from the sale of Colonial Funeral Home in Salt Lake City.

Mortgage fee income  increased by $28,042,000,  or 81.1%, to $62,601,000 for the
six months ended June 30, 2007, from  $34,559,000  for the comparable  period in
2006.  This increase was primarily  attributable to an increase in the number of
loan  originations  during the six months of 2006 as new  mortgage  offices were
opened and production increased in existing mortgage offices,  which resulted in
the financing of a greater number of mortgage loans.

Other revenues  increased by $71,000,  or 38.0%,  to $258,000 for the six months
ended  June 30,  2007 from  $187,000  for the  comparable  period in 2006.  This
increase  was due to increases in several  small  income  items  throughout  the
Company's operations.

Total benefits and expenses were $100,945,000,  or 97.7% of total revenues,  for
the six months  ended June 30,  2007,  as compared to  $64,355,000,  or 96.7% of
total  revenues,  for the  comparable  period in 2006.  This increase  primarily
resulted from increased loan costs at SecurityNational Mortgage Company due to a
greater number of loan originations.

Death  benefits,  surrenders and other policy  benefits,  and increase in future
policy benefits increased by an aggregate of $1,185,000, or 8.6%, to $14,920,000
for the six months  ended June 30, 2007,  from  $13,735,000  for the  comparable
period in 2006. This increase was primarily due to increased  insurance business
and to the  expected  increase in reserves for  policyholder  benefits and death
claims.

Amortization  of  deferred  policy and  pre-need  acquisition  costs and cost of
insurance acquired increased by $1,158,000,  or 74.0%, to $2,723,000 for the six
months ended June 30, 2007, from  $1,565,000 for the comparable  period in 2006.
This  increase  was  primarily  due  to  increased  deferred  acquisition  costs
associated  with  interest-sensitive  products  from the  recapture  of the Mega
reinsurance  agreement  in the first  quarter  of 2006,  and  pre-need  cemetery
contracts.

General and  administrative  expenses  increased by  $28,990,000,  or 63.4%,  to
$74,729,000  for the six months ended June 30, 2007,  from  $45,739,000  for the
comparable period in 2006. This increase  primarily resulted from an increase in
commission  expenses by $21,247,000  from  $26,048,000 in 2006 to $47,295,000 in
2007,  due  to  a  greater  number  of  mortgage  loan   originations   made  by
SecurityNational  Mortgage Company during the first six months of 2007. Salaries
increased  by  $3,197,000  from  $8,490,000  in 2006  to  $11,687,000  in  2007,
primarily  due to merit  increases  in salaries of  existing  employees,  and an
increase in the number of  employees  necessitated  by the  Company's  expanding
business operations.  Other expenses increased by $4,546,000 from $11,201,000 in
2006 to $15,747,000 in 2007. The increase in other expenses  primarily  resulted
from increased loan costs at SecurityNational  Mortgage Company due to a greater
number of loan originations.

Interest expense  increased by $5,149,000,  or 244.3%, to $7,257,000 for the six
months ended June 30, 2007, from  $2,108,000 for the comparable  period in 2006.
This increase was primarily from increased  warehouse  lines of credit  required
for a greater number of warehoused mortgage loans by  SecurityNational  Mortgage
Company.


<PAGE>

Cost of goods and services sold by the mortuaries  and  cemeteries  increased by
$107,000,  or 8.9%, to $1,315,000  for the six months ended June 30, 2007,  from
$1,208,000 for the comparable period in 2006. This increase was primarily due to
increased cemetery and mortuary sales.

Liquidity and Capital Resources

The Company's life insurance subsidiaries and cemetery and mortuary subsidiaries
realize  cash flow  from  premiums,  contract  payments  and  sales on  personal
services  rendered  for  cemetery  and  mortuary  business,  from  interest  and
dividends  on  invested  assets,  and from the  proceeds  from the  maturity  of
held-to-maturity   investments  or  sale  of  other  investments.  The  mortgage
subsidiary realizes cash flow from fees generated by originating and refinancing
mortgage loans and interest  earned on mortgages sold to investors.  The Company
considers these sources of cash flow to be adequate to fund future  policyholder
and  cemetery and mortuary  liabilities,  which  generally  are  long-term,  and
adequate to pay current policyholder claims,  annuity payments,  expenses on the
issuance of new policies,  the maintenance of existing  policies,  debt service,
and to meet operating expenses.

During the six months ended June 30, 2007, the Company's operations used cash of
$16,614,000,  while cash totaling  $12,926,000 was provided by operations during
the six months  ended June 30,  2006.  This is due to an increase in the accrual
for mortgage  loans sold to investors of  $21,651,000,  which is attributed to a
higher  mortgage  loan volume for the first six months of 2007  versus  mortgage
loan  volume  during the first six months of 2006.  The  increase in the accrual
resulted from an increase in mortgage  loans  originated  but not yet settled by
investors as of June 30, 2007.

The  Company  attempts  to  match  the  duration  of  invested  assets  with its
policyholder  and  cemetery  and  mortuary  liabilities.  The  Company  may sell
investments other than those  held-to-maturity  in the portfolio to help in this
timing;  however,  to date, that has not been necessary.  The Company  purchases
short-term  investments  on a  temporary  basis  to  meet  the  expectations  of
short-term requirements of the Company's products.

The  Company's  investment  philosophy  is intended to provide a rate of return,
which will persist during the expected duration of policyholder and cemetery and
mortuary liabilities regardless of future interest rate movements.

The Company's  investment  policy is to invest  predominantly  in fixed maturity
securities,  mortgage  loans,  and warehousing of mortgage loans on a short-term
basis before selling the loans to investors in accordance with the  requirements
and laws governing the life insurance subsidiaries. Bonds owned by the insurance
subsidiaries   amounted  to  $97,514,000  as  of  June  30,  2007,  compared  to
$101,735,000  as of December 31, 2006.  This  represents  48.6% and 46.8% of the
total  investments  as of June 30, 2007,  and  December 31, 2006,  respectively.
Generally,  all bonds owned by the life insurance  subsidiaries are rated by the
National Association of Insurance Commissioners. Under this rating system, there
are six  categories  used for rating bonds.  At June 30, 2007 0.9% (or $893,000)
and at December 31,  2006,  2.3% (or  $2,402,000)  of the  Company's  total bond
investments were invested in bonds in rating categories three through six, which
are considered non-investment grade.

The Company has  classified  certain of its fixed income  securities,  including
high-yield  securities,  in its  portfolio  as  available  for  sale,  with  the
remainder  classified as held to maturity.  However,  in accordance with Company
policy,  any such securities  purchased in the future will be classified as held
to maturity.  Business conditions,  however, may develop in the future which may
indicate a need for a higher level of liquidity in the investment portfolio.  In
that event the  Company  believes  it could  sell  short-term  investment  grade
securities before liquidating higher-yielding longer-term securities.

The Company is subject to risk based capital guidelines established by statutory
regulators  requiring  minimum  capital  levels based on the  perceived  risk of
assets, liabilities, disintermediation, and business risk. At June 30, 2007, and
December  31,  2006,  the life  insurance  subsidiary  exceeded  the  regulatory
criteria.


<PAGE>



The Company's total  capitalization of stockholders'  equity,  and bank debt and
notes payable was $63,972,000 as of June 30, 2007, as compared to $60,641,000 as
of December 31, 2006.  Stockholders' equity as a percent of total capitalization
was 86 % and 87% as of June 30, 2007 and December 31, 2006, respectively.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period. The Company's lapse rate for life insurance in 2006 was 8.4% as compared
to a rate of 7.9% for 2005.  The 2007 lapse rate to date has been  approximately
the same as 2006.

At June 30, 2007, $19,497,000 of the Company's consolidated stockholders' equity
represents  the statutory  stockholders'  equity of the Company's life insurance
subsidiaries.  The life  insurance  subsidiaries  cannot pay a  dividend  to its
parent company without the approval of insurance regulatory authorities.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no  significant  changes since the annual report Form 10-K filed
for the year ended December 31, 2006.

Item 4.   Controls and Procedures

     (a)  Evaluation  of  disclosure  controls and  procedures  - The  Company's
principal  executive  officer and principal  financial officer have reviewed and
evaluated the effectiveness of the Company's  disclosure controls and procedures
(as defined in Rule 13a-15(e) or 15d-15(e) under the Securities  Exchange Act of
1934 (the "Exchange  Act") as of June 30, 2007.  Based on that  evaluation,  the
principal  executive officer and the principal  financial officer have concluded
that the Company's  disclosure controls and procedures are effective,  providing
them with  material  information  relating  to the  Company  as  required  to be
disclosed in the reports the Company  files or submits under the Exchange Act on
a timely basis.

     (b) Changes in internal controls - There were no significant changes in the
Company's  internal  controls over financial  reporting or in other factors that
could  significantly  affect the  Company's  internal  controls  and  procedures
subsequent  to the date of their  most  recent  evaluation,  nor were  there any
significant  deficiencies  or  material  weaknesses  in the  Company's  internal
controls. As a result, no corrective actions were required or undertaken.


                            Part II Other Information

Item 1.        Legal Proceedings

On March 5, 2007, the Company received a proposed consent order from the Florida
Office of Insurance  Regulation  concerning  the New Success Life  Program,  the
higher education  product currently being marketed and sold by Southern Security
Life. The proposed order states that as a result of an investigation the Florida
Office has determined  that Southern  Security Life violated  Florida law (i) by
knowingly making statements, sales presentations,  omissions or comparisons that
misrepresented  the  benefits,  advantages,  or  terms of the New  Success  Life
Program,  and  (ii)  by  knowingly  making,  advertisements,  announcements,  or
statements containing representations that were untrue or misleading.


<PAGE>

The proposed order would require  Security  National Life and Southern  Security
Life to  immediately  cease and  desist  from  making  any  false or  misleading
representations  to  Florida  consumers  suggesting  that the New  Success  Life
Program would  accumulate  enough value to pay for college expenses in full. The
proposed order would also require Security  National Life and Southern  Security
Life to agree to no longer  market or sell the New Success  Life  Program in the
State of Florida. In addition, Security National Life and Southern Security Life
would be required to send a written  notice to Florida  consumers  who purchased
the New Success Life Program on or after January 1, 1998 stating that the higher
education  program is a whole life  insurance  product,  with a term and annuity
rider, and not a college trust fund, savings plan, or other program,  and it may
not necessarily pay college expenses in full from the accumulated value.

Moreover,  the  written  notice is to provide  an  opportunity  for the  Florida
consumers who purchased the New Success Life Program on or after January 1, 1998
to cancel their policy and be given a full refund,  including all premiums paid,
together with interest at the agreed upon rate in the original contract. If each
of the Florida  consumers  who  purchased  the New Success  Life  Program  after
January 1, 1998 was to cancel his or her policy and  receive a refund,  the cost
to the  Company  to refund  all  premiums  paid,  including  interest,  would be
approximately $8,200,000, an amount in excess of the assets of Southern Security
Life.

The  proposed  consent  order  would also  require  Security  National  Life and
Southern  Security  Life to  issue  refunds  including  interest  to the  eleven
policyholders  whose affidavits were taken in connection with the administrative
complaint that the Florida  Office had  previously  filed against Franz Wallace,
the former National Sales Director of Southern Security Life.  Security National
Life and Southern Security Life would additionally be required to issue refunds,
including interest,  to any Florida policyholder in the New Success Life Program
who had filed a complaint with the Florida  Department of Financial  Services or
whose  coverage had lapsed.  Furthermore,  Security  National  Life and Southern
Security Life would be required to notify the state insurance department in each
state in which the New  Success  Life  Program is  marketed of the order and any
complaint that Southern  Security Life received relating to the New Success Life
Program from  policyholders in that state.  Finally,  Security National Life and
Southern  Security Life would be required to pay the Florida Office a penalty of
$100,000 and administrative costs of $5,000.

The Company disputes the terms of the proposed consent order. The Company is not
aware of specific concerns that the Florida Office has with the New Success Life
Program  because it has received no specific  administrative  complaint from the
Florida Office nor is it aware of any recent market conduct examination that the
Florida  Office has conducted  relative to the program.  The Company  intends to
vigorously  oppose the proposed consent order. The Company is currently  engaged
in  discussions  with the  Florida  Office in an effort  to settle  the  dispute
concerning the proposed  order. If the Company is unable to reach a satisfactory
resolution  with the Florida  Office with  respect to the terms of the  proposed
consent order and the Florida Office issues a similar order, the Company intends
to take  action  necessary  to  protect  its  rights  and  interests,  including
requesting a hearing before an administrative law judge to oppose the order. The
Company  believes any potential  liability would be limited to the net assets of
Southern Security Life, which are approximately $3,914,000.

Except for the  proposed  consent  order from the  Florida  Office of  Insurance
Regulation, the Company is not a party to any material legal proceedings outside
the  ordinary  course of business or to any other  legal  proceedings,  which if
adversely  determined,  would have a material  adverse  effect on its  financial
condition or results of operation.

Item 1A.       Risk Factors

Due to changes in the mortgage industry from higher than expected  delinquencies
in  subprime  loans,   the  Company  may  be  unable  to  sell  its  alternative
documentation loans to investors,  which would require the Company to assume the
risk of holding and servicing such loans.

<PAGE>

The mortgage industry is currently experiencing substantial change due to higher
than expected  delinquencies  from subprime  loans.  The market for new subprime
loans has been  substantially  reduced  and  several  mortgage  companies  whose
primary product was subprime mortgage  originations have ceased operations.  The
Company funded $4.2 million (.2% of the Company's  production) in subprime loans
during the six months ending June 30, 2007 and has currently eliminated subprime
loans from its product offerings. The Company believes that its potential losses
from subprime loans are minimal.

The industry  problem with subprime  mortgages has created a volatile  secondary
market for other high risk products,  especially alternative  documentation (Alt
A) loans.  Alt A loans are  typically  offered to qualified  borrowers  who have
relatively high credit scores but are not required to provide full documentation
to support  personal  income and  assets  owned.  Alt A loans can have a loan to
value ratio as high as 100%. There is currently a smaller market for Alt A loans
and the Company's warehouse line providers have shortened the allowable time for
the Company to sell these  products to investors.  As a result of these changes,
the Company is only offering these loans on a limited basis.

Alt A loans represented  approximately  21% of the Company's  production for the
six months  ended  June 30,  2007.  The  Company is  currently  experiencing  an
increase in production of its other mortgage  products.  This increased mortgage
production will offset some of the loss of income related to the  discontinuance
of Alt A loans.  As of August 13,  2007,  the Company had  originated a total of
$60,400,000  in Alt A loans  that  had not been  settled  by  investors.  If the
Company  were  unable to sell its Alt A loans it would be required to assume the
risk of holding and servicing such loans.  The Company  believes it has adequate
liquidity,  however,  through its life insurance  operations to carry such loans
until purchased by investors if warehousing lines are not available.

Item 2.        Changes in Securities and Use of Proceeds

               None

Item 3.        Defaults Upon Senior Securities

               None

Item 4.        Submission of Matters to a Vote of Security Holders

               None

Item 5.        Other Information

Acquisition of C & J Financial, LLC

On July 16,  2007,  the  Company  completed  a purchase  transaction  with C & J
Financial, LLC, an Alabama limited liability company ("C & J Financial").  C & J
Financial  operates a factoring  business with offices in Rainbow City,  Alabama
with an emphasis on providing financing for funeral homes and mortuaries.  Under
the terms of the Unit  Purchase  Agreement  dated July 16,  2007 (the  "Purchase
Agreement")  among the Company,  C & J Financial,  Henry Culp, Jr.  ("Culp") and
Culp  Industries,  Inc. ("Culp  Industries"),  the Company  purchased all of the
outstanding member units of C & J Financial for a purchase  consideration of (i)
$1,250,000 in cash, (ii) a

<PAGE>

promissory note from the Company to Culp in the amount of $381,500 plus interest
at the rate of 5% per  annum,  payable  over a period of 24  months  in  monthly
payments of $16,737,  including  interest,  until paid in full, and (iii) a quit
claim deed from C & J Financial to Culp, conveying ownership of the building and
surrounding  property  located in the Jester  Commercial  Park in Rainbow  City,
Alabama,  where C & J Financial  currently  maintains its business  offices.  At
closing,  Culp Industries entered into a lease agreement with C & J Financial to
lease to C & J Financial approximately 5,000 square feet in the building located
at the Jester  Commercial Park. The lease is for a term of three years for which
C & J Financial,  as tenant, is required to make monthly payments of $1,200, for
a total lease payment of $43,200.

The Purchase Agreement  additionally  required Culp to deliver to the Company at
closing a promissory  note (the "Note") in the  principal  amount of  $1,755,236
plus interest at the rate of 8.25% per annum from C & J Financial,  as borrower,
to Culp,  as lender,  with such note to be cancelled  and marked "paid in full".
Moreover,  the agreement  provides for the  possibility of  adjustments.  If the
total equity on the balance sheet of C & J Financial as of May 31, 2007, defined
as total  assets  minus  total  liabilities,  is greater  than the amount of the
equity on the balance  sheet of C & J Financial as of the closing  date, or July
16,  2007,  Culp agrees to pay to the Company the  difference  between the total
equity  on the  balance  sheet as of May 31,  2007 and the  total  equity on the
balance  sheet as of July 16,  2007 by  reducing  the amount of the Note by such
difference  in the amounts of the total  equity on such balance  sheets.  If the
amount of the total equity on the balance sheet of C & J Financial as of May 31,
2007 is less than the amount of the total  equity on the balance  sheet of C & J
Financial as of July 16,  2007,  the Company  agrees to pay Culp the  difference
between the total  equity on the balance  sheet as of May 31, 2007 and the total
equity on the balance sheet as of July 16, 2007 by increasing  the amount of the
Note  payable by such  difference  in the  amounts  of the total  equity on such
balance sheets.

The  Purchase  Agreement  further  requires  each  unitholder  to deliver to the
Company  a  non-competition  and  confidentiality   agreement   prohibiting  the
unitholder  from  competing with C & J Financial for a period of five years from
July 16, 2007 through  July 16,  2012.  The Company also entered into a one year
consulting  agreement  with  Culp,  which  requires  Culp to  provide  part-time
consulting  services  for C & J  Financial  at $50.00 per hour,  and a five year
employment  agreement  with Kevin O. Smith  ("Smith"),  Vice  President of C & J
Financial, who will continue to serve in that position. The employment agreement
requires  C & J  Financial  to pay Smith an  annual  salary  of  $96,000  plus a
discretionary bonus and a monthly car allowance of $1,161.

Finally, the Purchase Agreement requires the Company, C & J Financial,  Culp and
Culp  Industries  to  acknowledge  the  existence of a business  loan  agreement
between  Regions  Bank,  as lender,  and Culp  Industries,  as  borrower,  which
provides for a line of credit for C & J Financial.  The  outstanding  balance on
the line of credit  as of July 16,  2007 was  $1,931,764.  The line of credit is
secured by, among other assets,  the accounts  receivable of C & J Financial and
is personally  guaranteed by Culp.  The Company has received  confirmation  that
Regions Bank will not authorize  any further  advances or sweeps with respect to
the line of credit.  The  Company  agrees  that it will pay off the  outstanding
balance of the line of credit with Regions Bank  relating to the business of C &
J Financial. The Company will initially attempt to pay off the line of credit by
means of applying the payments  from the accounts  receivable of C & J Financial
as such payments are made in the ordinary course of business.

At June 30, 2007,  total  assets of C & J Financial  were  $3,197,000  and total
liabilities  were  $3,526,000,  which includes the Note to Culp in the amount of
$1,755,000  that was  cancelled  at  closing.  For the seven  month  period from
November  1,  2006 to May 31,  2007,  total  revenues  of C & J  Financial  were
$775,000 and total expenses were  $764,000,  resulting in net income of $11,000.
For the fiscal year ended  October 31, 2006,  total  revenues of C & J Financial
were $1,397,000 and total expenses were  $1,351,000,  resulting in net income of
$46,000.  For the fiscal year ended  October 31, 2005,  total  revenues of C & J
Financial were $1,137,000 and total expenses were  $1,114,000,  resulting in net
income  of  $23,000.  The  Company  anticipates   utilizing  the  employees  and
operations  of C & J  Financial  to expand its fast  funding  operations,  which
provide financing for funeral homes and mortuaries.


<PAGE>

Exercise of Stock Options and Special Stockholders Meeting

The  Company's  Board of  Directors  granted  stock  options in 2004 to Scott M.
Quist, the Company's  President and Chief Operating  Officer,  to purchase up to
1,000,000  shares of Class C common  stock at exercise  prices of $.323 and $.36
per share.  On May 31, 2007, Mr. Quist made a cashless  exercise of such options
to  purchase  a total of  1,157,625  shares of Class C common  stock that he was
entitled to receive,  after  adjustments for 5% stock dividends  issued in 2005,
2006 and 2007.

In connection with the exercise of such options on a cashless  basis,  Mr. Quist
delivered a total of 58,376  shares of Class A common  stock to the Company that
he held in  exchange  for all the Class C shares he would be entitled to receive
for exercising the options.  Inasmuch as there were 6,966,849  shares of Class C
common  stock  outstanding  as of May  31,  2007  out of a  total  of  7,500,000
authorized  shares of Class C common stock, the Company could legally issue only
533,151  shares of Class C common  stock to Mr.  Quist,  leaving  a  balance  of
624,474 Class C common shares owing to him.

In order to issue the  additional  shares of Class C common  shares owing to Mr.
Quist,  the Board of  Directors  approved on July 13, 2007 an  amendment  to the
Company's  Articles of  Incorporation  to increase  the number of Class C common
shares from 7,500,000 shares to 15,000,000 shares.  Because stockholder approval
is also required to amend the Company's  Articles of Incorporation,  the Company
has  scheduled a special  stockholders  meeting on September 21, 2007 to approve
the  amendment  to the  Articles  of  Incorporation  to  increase  the number of
authorized  shares of Class C common stock from  7,500,000  shares to 15,000,000
shares.

If the stockholders approve the amendment at the special  stockholders  meeting,
the Company will issue Mr. Quist the additional 624,474 shares of Class C common
stock that are owed pursuant to his exercise of stock options.  If the amendment
is  not  approved  at  the  special  stockholders  meeting,  the  Company  will,
alternatively,   issue  Mr.  Quist  62,487  shares  of  Class  A  common  stock,
representing 10% of the 624,474 Class C common shares that are owed to Mr. Quist
based on the conversion  ratio set forth in the Articles of Incorporation of one
share of Class A common stock for each ten shares of Class C common stock. As of
June 30,  2007,  the  Company  has  recorded  the fair  value of the  derivative
liability in the amount of $175,700 to reflect the Company's obligation to issue
the shares of Class C common stock or,  alternatively,  shares of Class A common
stock owed to Mr.  Quist  pursuant to the  exercise of the stock  options.  This
liability  is  included  in  other  liabilities  and  accrued  expenses  in  the
accompanying condensed consolidated balance sheet.

Item 6. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(1) Financial Statements

         See "Table of Contents - Part I - Financial Information" under page 2
above

(a)(2) Financial Statement Schedules

       None

     All other schedules to the consolidated  financial  statements  required by
     Article 7 of Regulation S-X are not required under the related instructions
     or are inapplicable and therefore have been omitted.


<PAGE>



    (3)  Exhibits

     The  following  Exhibits  are  filed  herewith  pursuant  to  Rule  601  of
     Regulation S-K or are incorporated by reference to previous filings.

      3.1  Articles of Restatement of Articles of Incorporation (4)
      3.2  Amended Bylaws (6)
      4.1  Specimen Class A Stock Certificate (1)
      4.2  Specimen Class C Stock Certificate (1)
      4.3  Specimen Preferred Stock Certificate and Certificate of
           Designation of Preferred Stock (1)
     10.1  Restated and Amended Employee Stock Ownership Plan and Trust
           Agreement (1)
     10.2  2003 Stock Option Plan (5)
     10.3  2006 Director Stock Option Plan
     10.4  Deferred Compensation Agreement with George R. Quist (2)
     10.5  Deferred Compensation Plan (3)
     10.6  Employment agreement with J. Lynn Beckstead, Jr. (7)
     10.7  Employment agreement with Scott M. Quist (8)
     10.8  Stock Purchase  Agreement  among Security  National Life Insurance
           Company,  Southern  Security Life Insurance  Company, Memorial
           Insurance Company of America, and the shareholders of Memorial
           Insurance Company (9)
     10.9  Reinsurance Agreement between Security National Life Insurance
           Company and Memorial Insurance Company of America (10)
    10.10  Trust Agreement between Security National Life Insurance Company and
           Memorial Insurance Company of America (10)
    10.11  Promissory Note between Memorial Insurance Company as Maker and
           Security National Life Insurance Company as Payee (10)
    10.12  Security Agreement between Memorial Insurance Company as Debtor and
           Security National Life Insurance Company as Secured Party (10)
    10.13  Surplus Contribution Note between Memorial Insurance Company of
           America as Maker and Southern Security Life Insurance Company as
           Payee (10)
    10.14  Guaranty Agreement by Security National Life Insurance Company and
           Southern Security Life Insurance Company as Guarantors (10)
    10.15  Administrative Services Agreement between Security National Life
           Insurance Company and Memorial Insurance Company of America (10)
    10.16  Reinsurance Agreement between Security National Life Insurance
           Company and Southern Security Life Insurance Company (11)
    10.17  Trust Agreement among Security National Life Insurance Company,
           Southern Security Life Insurance Company and Zions First National
           Bank (11)
    10.18  Stock Purchase Agreement among Security National Life Insurance
           Company, Southern Security Life Insurance Company and American
           Network Insurance Company (12)
    10.19  Escrow Agreement among Security  National Life Insurance Company,
           Southern Security Life Insurance  Company, American Network Insurance
           Company and Mackey Price Thompson & Ostler (12)
    10.20  Escrow Agreement among American Network Insurance Company,  Security
           National Life Insurance Company, Southern Security Life Insurance
           Company, and Preferred Insurance Capital Consultants, LLC (12)
    10.21  Agreement and Plan of Complete Liquidation of Southern Security Life
           Insurance Company into Security  National Life Insurance Company (12)
    10.22  Assignment between Southern Security Life Insurance Company and
           Security National Life Insurance Company (12)

<PAGE>



    10.23  Assignment between Southern Security Life Insurance Company and
           Security National Life Insurance Company (12)
    10.24  Unit Purchase Agreement among Security National Financial
           Corporation,  C&J Financial,  LLC, Henry Culp, Jr., and Culp
           Industries, Inc. (13)
    10.25  Loan Agreement between Zions First National Bank as Lender and
           Security National Life Insurance Company as Borrower
    10.26  Promissory Note between Security National Life Insurance Company
           as Maker and Zions First National Bank as Payee
    10.27  Security Agreement among Security National Life Insurance Company as
           Borrower, Security National Financial Corporation as Guarantor, and
           Zions First National Bank as Lender
    10.28  Guarantee by Security National Financial Corporation as Guarantor

     31.1  Certification pursuant to 18 U.S.C. Section 1350, as enacted by
           Section 302 of the Sarbanes-Oxley Act of 2002
     31.2  Certification pursuant to 18 U.S.C. Section 1350, as enacted by
           Section 302 of the Sarbanes-Oxley Act of 2002
     32.1  Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
           to Section 906 of the Sarbanes-Oxley Act of 2002
     32.2  Certification pursuant to 18 U.S.C. Section 1350, as adopted
           pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

      ----------

      (1)  Incorporated by reference from Registration Statement on Form S-1,
           as filed on June 29, 1987
      (2)  Incorporated by reference from Annual Report on Form 10-K, as filed
           on June 30, 1989
      (3)  Incorporated by reference from Annual Report on Form 10-K, as filed
           on April 3, 2002
      (4)  Incorporated by reference from Report on Form 8-K/A as filed on
           January 8, 2003
      (5)  Incorporated by reference from Schedule 14A Definitive Proxy
           Statement, Filed on June 5, 2003, relating to the Company's Annual
           Meeting of Shareholders
      (6)  Incorporated by reference from Report on Form 10-Q, as filed on
           November 14, 2003
      (7)  Incorporated by reference from Report on Form 10-K, as filed on
           March 30, 2004
      (8)  Incorporated by reference from Report on Form 10-Q, as filed on
           August 13, 2004
      (9)  Incorporated by reference from Report on Form 8-K, as filed on
           September 27, 2005
     (10)  Incorporated by reference from Report on Form 8-K, as filed on
           January 5, 2006
     (11)  Incorporated by reference from Report on Form 8-K, as filed on
           January 11, 2006
     (12)  Incorporated by reference from Report on Form 8-K, as filed on
           January 12, 2007
     (13)  Incorporated by reference from Report on Form 8-K, as filed on
           August 8, 2007

    (b) Reports on Form 8-K:

           No reports were filed by the Company during the quarter ended June
           30, 2007.


<PAGE>



                                   SIGNATURES

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


                                   REGISTRANT

                     SECURITY NATIONAL FINANCIAL CORPORATION
                                   Registrant


Dated: November15, 2007               By:  s/s George R. Quist
                                           ---------------------
                                           George R. Quist
                                           Chairman of the Board and Chief
                                           Executive Officer
                                           (Principal Executive Officer)


Dated: November 15, 2007              By:  s/s Stephen M. Sill
                                           ---------------------
                                           Stephen M. Sill
                                           Vice President, Treasurer and Chief
                                           Financial Officer
                                           (Principal Financial and Accounting
                                            Officer)


<PAGE>


                                  Exhibit 31.1

                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                                  AS ENACTED BY
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, George R. Quist, certify that:

1. I have  reviewed  this  quarterly  report on Form 10-Q of  Security  National
Financial Corporation.

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15-d-15(e)) for the registrant to have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period covered in which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  registrant's  internal
control over financial  reporting  that occurred  during the  registrant's  most
recent fiscal quarter (the registrant's  fourth fiscal quarter in the case of an
annual  report)  that  has  materially  affected,  or is  reasonably  likely  to
materially affect, the registrant's  internal control over financial  reporting;
and

5. The registrant's other certifying officers and I have disclosed, based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):

     (a) All significant  deficiencies and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     (b) Any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the registrant's internal controls over
financial reporting.



Dated: August 14, 2007                     By:    George R. Quist
                                                  Chairman of the Board and
                                                  Chief Executive Officer



<PAGE>


                                  Exhibit 31.2

                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                                  AS ENACED BY
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Stephen M. Sill, certify that:

1. I have  reviewed  this  quarterly  report on Form 10-Q of  Security  National
Financial Corporation.

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15-d-15(e)) for the registrant to have:

     (a)  Designed  such  disclosure  controls  and  procedures,  or caused such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period covered in which this report is being prepared;

     (b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     (c)  Disclosed  in this  report  any  change in the  registrant's  internal
control over financial  reporting  that occurred  during the  registrant's  most
recent fiscal quarter (the registrant's  fourth fiscal quarter in the case of an
annual  report)  that  has  materially  affected,  or is  reasonably  likely  to
materially affect, the registrant's  internal control over financial  reporting;
and

5. The registrant's other certifying officers and I have disclosed, based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):

     (a) All significant  deficiencies and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     (b) Any fraud,  whether or not material,  that involves management or other
employees who have a significant role in the registrant's internal controls over
financial reporting.


Dated: August 14, 2007                  By:    Stephen M. Sill
                                               Vice President, Treasurer and
                                               Chief Financial Officer


<PAGE>



                                  EXHIBIT 32.1
                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with  the  Quarterly  Report  of  Security  National   Financial
Corporation (the "Company") on Form 10-Q for the period ending June 30, 2007, as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"), I, George R. Quist, Chairman of the Board and Chief Executive Officer
of the Company,  certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge
and belief:

     (1)  the Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
          material respects, the financial condition and result of operations of
          the Company.


Dated: August 14, 2007                   By:   George R. Quist
                                               Chairman of the Board and Chief
                                               Executive Officer



                                  EXHIBIT 32.2
                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection  with  the  Quarterly  Report  of  Security  National   Financial
Corporation (the "Company") on Form 10-Q for the period ending June 30, 2007, as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  I, Stephen M. Sill,  Vice  President,  Treasurer and Chief Financial
Officer of the Company,  certify,  pursuant to 18 U.S.C.  ss.  1350,  as adopted
pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002, that, to the best of
my knowledge and belief:

          (1)  the Report fully complies with the  requirements of Section 13(a)
               or 15(d) of the Securities Exchange Act of 1934; and

          (2)  the information  contained in the Report fairly presents,  in all
               material  respects,   the  financial   condition  and  result  of
               operations of the Company.

Dated: August 14, 2007                  By:   Stephen M. Sill
                                              Vice President, Treasurer and
                                              Chief Financial Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>zlnagr.txt
<TEXT>
                                 LOAN AGREEMENT

                                     Between

                            ZIONS FIRST NATIONAL BANK
                                     Lender

                                       and

                    SECURITY NATIONAL LIFE INSURANCE COMPANY
                                    Borrower

                          Effective Date: June 12, 2007



<PAGE>


23

                                 LOAN AGREEMENT

     This Loan  Agreement  is made and entered  into by and between  Zions First
National Bank and Security  National Life Insurance  Company as of June 12, 2007
(the "Effective Date").

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

1.       Definitions

1.1      Definitions

     Terms defined in the singular  shall have the same meaning when used in the
plural and vice versa. As used herein, the term:

     "Acknowledgment"  means a  written  statement,  substantially  in the  form
attached  hereto as  Exhibit  B,  executed  by the maker of an  Underlying  Note
acknowledging  that Borrower has  collaterally  assigned the Underlying  Note as
payable to the order of Lender and has further  collaterally  assigned to Lender
all  rights as  beneficiary  under the  Underlying  Deed of Trust  securing  the
Underlying  Note together with all right,  title and interest of Borrower in and
to all other documents, instruments and agreements executed and delivered by the
maker of the Underlying Note. In the  alternative,  Borrower may insert into any
Underlying  Notes  language  wherein  the  Maker  acknowledges  that the Note is
assignable,  such as "borrower  acknowledges that lender has the right to assign
an interest in this note to another lender."

     "Banking Business Day" means any day not a Saturday,  Sunday, legal holiday
in the State of Utah,  or day on which  national  banks in the State of Utah are
authorized to close.

     "Borrower" means Security National Life Insurance  Company,  including each
of its successors, and, if permitted, assigns.

     "Borrowing Base" means the aggregate of the following:

     (a) for Eligible Notes that are Underlying  Notes  encumbered by Underlying
Property that is Commercial  Property,  the lesser of seventy-five percent (75%)
of the  face  amount  of such  Eligible  Notes  or  sixty  percent  (60%) of the
appraised value of the Underlying Property.

     (b) for Eligible Notes that are Underlying  Notes  encumbered by Underlying
Property that is Residential Property,  Construction Property, or Land Property,
twenty percent (20%) of the face amount of such Eligible Notes, with the portion
of the Borrowing Base attributable to such Eligible Notes not exceeding,  in the
aggregate,  Two Million Dollars  ($2,000,000.00) . (Underlying  Property that is
Construction  Property  may be included  under this  subsection  (b) or the next
subsection (c).)

     (c) Underlying Notes encumbered by Underlying Property that is Construction
Property,  the lesser of one hundred  percent  (100%) of the  amounts  loaned by
Borrower on the Underlying  Note or eighty percent (80%) of the appraised  value
of the Underlying  Property.  The portion of the Borrowing Base  attributable to
Construction  Property  under  this  subsection  (c)  may  not  exceed,  in  the
aggregate, Ten Million Dollars ($10,000,000.00).

     (d) The maximum amount of any individual Eligible Note that may be added to
the  Borrowing   Base  is  limited  to  not  more  than  Five  Million   Dollars
($5,000,000.00).

     (e) No Eligible  Note that is more than Ninety (90) days past the  Eligible
Note's maturity date may be included within the Borrowing Base.

     "Borrowing Base Certificate" means a certificate  executed by Borrower,  as
set forth in Section 6.7 Financial Statements and Reports, in a form approved by
Lender  and  including  information  such as the exact name of the maker of each
Underlying Note,  including the maker's address; the date of the funding of each
Underlying  Note or advance based upon the Underlying  Note; the amount advanced
by Lender on each Underlying Note; the identity, values, and the amount advanced
by Lender on all Real Estate Owned; the Underlying  Notes collateral  value; and
the current Loan-to-Value ratio of the Loan.

     "Collateral" shall have the meaning set forth in Section 3.1 Collateral.

     "Collateral  Pool Report" means a report created by Borrower,  as set forth
in Section 6.7 Financial  Statements  and Reports,  in a form approved by Lender
and including the information set forth in section 6.7(e).

     "Commercial  Property"  means  Underlying  Property  upon  which  there are
existing  improvements  that are  designed  for and  suited  for  commercial  or
business use and for which  necessary or applicable  land use or zoning approval
has been obtained.

     "Construction  Property"  means  Underlying  Property  for  which the funds
derived from the Underlying Note would be used to construct new  improvements on
the Underlying Property.

     "Effective Date" shall mean the date the parties intend this Loan Agreement
to become binding and enforceable,  which is the date stated in the introductory
paragraph of this Loan Agreement.

     "Eligible  Note"  means an  Underlying  Note  described  on the most recent
Borrowing Base Certificate  delivered to Lender in accordance herewith and which
at all times meets the following requirements:

          a. The Underlying Note is secured by an Underlying Deed of Trust which
     is in form and  content  acceptable  to  Lender  in its  sole and  absolute
     discretion  and which is otherwise  sufficient  to create a first  priority
     lien in and to the  Underlying  Property  described  therein  in  favor  of
     Borrower, subject only to Permitted Encumbrance; however, Lender shall also
     accept an Underlying Note where the Underlying Deed of Trust is in a second
     priority  lien  position  so long as the  Borrower  also  holds  the  first
     priority lien position on the Underlying  Property,  and the  Loan-to-Value
     ratio from both liens is not more than 75%;

          b.  Borrower  has (i)  collaterally  assigned the  Underlying  Note as
     payable  to the order of  Lender,  which  endorsement  shall be in the form
     attached hereto as Exhibit C;

          c.  Borrower  has  collaterally  assigned  to  Lender  all  rights  as
     beneficiary or mortgagee  under the  Underlying  Deed of Trust securing the
     Underlying Note together with all right,  title and interest of Borrower in
     and to  all  other  documents,  instruments  and  agreements  executed  and
     delivered by the maker of the Underlying Note, which assignment shall be in
     the form attached hereto as Exhibit D;

          d. Borrower has delivered to Lender for all Underlying Notes where the
     Underlying  Deed  of  Trust  encumbers   either   Commercial   Property  or
     Construction  Property  for  which  100% of the  face  value  or 80% of the
     appraised  value has been  applied  to the  Borrowing  Base,  the  original
     Underlying  Note, the Assignment of the Underlying  Note, the Assignment of
     Deed  of  Trust,  and a copy of the  recorded  Underlying  Deed  of  Trust,
     provided  that Lender will not record an Assignment of Deed of Trust except
     in the case of an Event of  Default  pursuant  to  paragraph  7.1 or in the
     event that  Lender has  reasonable  cause to  believe  it is  justified  in
     receiving  notice of any possible  claims or issues  involving title to the
     Underlying  Property  and the  applicable  state  does  not  provide  for a
     "request for notice" or similar type document to be recorded;

          e.  The  loan  represented  by  the  Underlying  Note  must  meet  all
     applicable  provisions and requirements set forth in the Borrower's written
     loan policy for underwriting loans secured by Commercial, Residential, Land
     or Construction Loans;

          f. No  default  in  payment  or  performance  by the  maker  under the
     Underlying  Note, and no condition,  which with notice,  passage of time or
     both would  constitute  a default in  payment or  performance  by the maker
     under  the  Underlying  Note  has  occurred  and is  continuing  under  the
     Underlying  Note,  except that defaults are allowed under which Borrower in
     the ordinary  course of business has imposed a default  interest rate or an
     extension of time,  or other  classes or types of defaults for which Lender
     has consented to Borrower in writing;

          g.  For  an   Underlying   Note  whose  face  amount  is  Two  Hundred
     Fifty-Thousand  Dollars  ($250,000.00) or more, the Underlying Property has
     had  an  appraisal  performed  that  supports  the  value  assigned  to the
     Underlying Property, and, in the case of Commercial Property, the appraisal
     has been submitted to the Lender's  Appraisal  Review  Department  (who may
     review  the  appraisal  to  assure  compliance  with  requirements  of  the
     Financial  Institution  Reform  Recovery and  Enforcement Act and any other
     applicable  laws,  regulations,  or  standards).  Lender  may  periodically
     provide  Borrower with lists of appraisers from whom Lender will not accept
     appraisals,  and the appraisal may be rejected on the basis of the identity
     of the appraiser;  otherwise,  Lender may not reject any  appraisals  based
     solely upon the identity of the appraiser;

          h. For an  Underlying  Note whose face amount is less than Two Hundred
     Fifty-Thousand Dollars ($250,000.00),  the value assigned to the Underlying
     Property has been established by  documentation  that sets forth the square
     footage of any  improvements to the Underlying  Property and the acreage if
     the Underlying  Property is Land Property,  the  tax-assessed  value of the
     Underlying  Property;  and  either  (i) a sales  price  within the last six
     months of the Underlying  Property,  or (ii)  documentation of two sales of
     comparable properties;

          i. The Underlying  Property encumbered by the Underlying Deed of Trust
     accompanying   the  Underlying   Note  consists  of  Commercial   Property,
     Construction    Property,    Residential   Property,   or   Land   Property
     (specifically, no recreation property is allowed); and

          j. Each of the representations and warranties of Borrower set forth in
     Section 5.13 Underlying  Notes and Underlying Deeds of Trust, and Standards
     for Collateral  Examination hereof with respect to the Underlying Notes and
     the  Underlying  Deeds of Trust is true and  correct  as of the date of the
     most recent Borrowing Base Certificate.

     "Environmental Condition" shall mean any condition involving or relating to
Hazardous Materials and/or the environment affecting the Real Property,  whether
or not yet  discovered,  which could or does result in any damage,  loss,  cost,
expense,  claim, demand, order, or liability to or against Borrower or Lender by
any  third  party  (including,   without  limitation,  any  government  entity),
including,  without  limitation,  any condition  resulting from the operation of
Borrower's  business  and/or  operations  in the  vicinity of the Real  Property
and/or any activity or operation  formerly  conducted by any person or entity on
or off the Real Property.

     "Environmental Health and Safety Law" shall mean any legal requirement that
requires or relates to:

          a.  advising  appropriate  authorities,  employees,  or the  public of
     intended or actual releases of Hazardous Materials, violations of discharge
     limits or other prohibitions,  and of the commencement of activities,  such
     as resource  extraction or construction,  that do or could have significant
     impact on the environment;

          b.  preventing  or  reducing  to  acceptable  levels  the  release  of
     Hazardous Materials;

          c. reducing the quantities,  preventing the release, or minimizing the
     hazardous  characteristics  of  wastes  or  Hazardous  Materials  that  are
     generated or are present in the environment;

          d. assuring that products are designed, formulated, packaged, and used
     so that  they do not  present  unreasonable  risks to human  health  or the
     environment when used or disposed of;

          e. protecting resources, species, or ecological amenities;

          f.  use,   generation,   storage,   transportation,   sale,  disposal,
     treatment,  or transfer of Hazardous Materials or other potentially harmful
     substances;

          g. cleaning up Hazardous Materials that have been released, preventing
     the  threat  of  release,  and/or  paying  the  costs  of such  clean up or
     prevention;

          h.  conducting  remedial  investigations,  feasibility  studies,  risk
     assessments,  and any other such study or  investigation as consistent with
     applicable  state or federal law to  characterize  or examine the actual or
     potential release or presence of Hazardous Materials in the environment; or

          i. making  responsible  parties pay for damages  done to the health of
     others or the environment or permitting  self-appointed  representatives of
     the public interest to recover for injuries done to public assets.

     "Event of  Default"  shall have the meaning set forth in Section 7.1 Events
of Default.

     "Hazardous  Materials" means (i) "hazardous  waste" as defined by the Solid
Waste Disposal Act, as amended by the Resource  Conservation and Recovery Act of
1976 (42 U.S.C. Section 6901 et. seq.), including any future amendments thereto,
and regulations  promulgated  thereunder,  and as the term may be defined by any
contemporary  state  counterpart  to such act;  (ii)  "hazardous  substance"  as
defined by the Comprehensive Environmental Response,  Compensation and Liability
Act of 1980 (42 U.S.C.  Section 9601 et. seq.),  including any future amendments
thereto, and regulations promulgated thereunder,  and as the term may be defined
by any  contemporary  state  counterpart  of  such  act;  (iii)  asbestos;  (iv)
polychlorinated  biphenyls;  (v)  underground  or above  ground  storage  tanks,
whether  empty or  filled  or  partially  filled  with any  substance;  (vi) any
substance the presence of which is or becomes prohibited by any federal,  state,
or local law,  ordinance,  rule, or  regulation;  and (vii) any substance  which
under any federal,  state, or local law, ordinance,  rule or regulation requires
special  handling  or  notification  in  its  collection,   storage,  treatment,
transportation, use or disposal.

     "Land   Property"  means   Underlying   Property  on  which  no  structural
improvements  exist   (specifically   excluding  such   infrastructure  such  as
utilities, parking areas, or adjacent roads).

     "Lender" means Zions First National Bank, its successors, and assigns.

     "Loan" means the loan to be made pursuant to Section 2 Loan Description, in
the maximum principal amount of the Loan Amount.

     "Loan  Agreement"  means  this  agreement,   together  with  any  exhibits,
amendments, addendums, and modifications.

     "Loan   Amount"   means  the  amount  of  up  to  Forty   million   dollars
($40,000,000.00),  to be disbursed  pursuant to the terms and conditions of this
Loan  Agreement,  plus any sum in  addition  thereto  advanced  by Lender in its
discretion in accordance with the Loan Documents.

     "Loan Availability  Amount" means the lesser of (i) the Loan Amount or (ii)
the Borrowing Base.

     "Loan  Documents"  means the Loan Agreement,  Promissory  Note,  Guarantee,
Security  Documents,   Acknowledgments,   all  other  agreements  and  documents
contemplated   by  any  of  the  aforesaid   documents,   and  all   amendments,
modifications,  addendums,  and  replacements,  whether  presently  existing  or
created in the future.

     "Loan-to-Value  Ratio"  means  the  ratio  of (i) the  face  amount  of the
Underlying Note (or, if the context requires,  the aggregate of debt encumbering
the Underlying Property) to (ii) the value of the Underlying Property.

     "Organizational Documents" means, in the case of Borrower as a corporation,
its Articles or Certificate of Incorporation and By-Laws.  For any other entity,
the  Organizational  Documents  shall consist of all  documents of  organization
filed in the entity's  state of creation,  any operating  agreements,  governing
articles, partnership agreements, a Trust Agreement or Declaration of Trust.

     "Permitted  Encumbrances" means, with respect to any particular  Underlying
Deed of Trust, (a) any matters other than monetary liens set forth in the policy
of title insurance issued to the beneficiary  under the Underlying Deed of Trust
insuring  such  beneficiary's  interest in the  Underlying  Property,  which are
acceptable to Lender as of the date of the related Underlying Note, (b) the lien
of current real  property  taxes and  assessments  not yet due and payable,  (c)
first priority liens as specifically allowed in this Agreement and (d) any other
lien or encumbrance that Lender shall expressly approve in its sole and absolute
discretion.

     "Promissory  Note"  means the  promissory  note to be  executed by Borrower
pursuant to Section 2.4 Promissory  Note in the form of Exhibit A hereto,  which
is  incorporated  herein by  reference,  and any and all  renewals,  extensions,
modifications, and replacements thereof.

     "Real Property" means any and all real property and  improvements  thereon,
owned or leased by Borrower or in which  Borrower has any other  interest of any
nature whatsoever.

     "Residential  Property"  means  Underlying  Property  that has an  existing
improvement designed for residential use and is zoned or otherwise designated by
the appropriate land use authority for residential use.

     "Security Documents" means all security agreements,  assignments,  pledges,
financing  statements,  deeds of trust,  mortgages,  and other  documents  which
create or evidence any security interest,  assignment, lien or other encumbrance
in  favor  of  Lender  to  secure  any  or all of  the  obligations  created  or
contemplated  by any of the Loan Documents,  and all amendments,  modifications,
addendums,  and  replacements,  whether  presently  existing  or  created in the
future.

     "Underlying  Deed of Trust" means a deed of trust or mortgage which creates
a lien in favor of Borrower in and to the Underlying  Property described therein
and which secures the related Underlying Note.

     "Underlying   Documents"  means  the  Underlying  Deed  of  Trust  and  the
Underlying Note

     "Underlying Note" means a promissory note originally issued or subsequently
assigned to Borrower,  which is executed and  delivered by an owner or purchaser
of  Underlying  Property to evidence the owner's or  purchaser's  obligation  to
repay a loan  made to such  purchaser  or  owner  and  which  is  secured  by an
Underlying Deed of Trust.

     "Underlying  Property" means the real property together with all buildings,
fixtures, and improvements thereon; all waters and water rights on, relating, or
appertaining  thereto;  all  easements,  licenses  and rights of way relating or
appertaining  thereto;  all rents,  issues,  royalties,  income and profits; all
awards made for taking by eminent  domain or any  proceeding or purchase in lieu
thereof; the proceeds of any insurance;  all tenements,  hereditaments,  rights,
privileges,  and appurtenances belonging or relating thereto or any improvements
thereon;  and  including any of the foregoing now existing or created or arising
in the future,  if any,  which are described in an Underlying  Deed of Trust and
which act as security for an Underlying Note.

2. Loan Description

2.1 Amount of Loan

     Upon  fulfillment  of all  conditions  precedent  set  forth  in this  Loan
Agreement,  and so long as no Event of Default  exists,  and no other breach has
occurred under the Loan Documents,  Lender agrees to loan Borrower up to, in the
aggregate, the Loan Availability Amount.

2.2 Nature and Duration of Loan

     The Loan shall be a revolving  loan  payable in full upon the date and upon
the terms and conditions  provided in the Promissory  Note.  Lender and Borrower
intend the Loan to be in the nature of a line of credit under which Borrower may
repeatedly  draw funds on a  revolving  basis in  accordance  with the terms and
conditions of this Loan Agreement and the Promissory Note. The right of Borrower
to draw funds and the  obligation  of Lender to advance  funds  shall not accrue
until  all of  the  conditions  set  forth  in  Section  4  Conditions  to  Loan
Disbursements  have  been  fully  satisfied,   and  shall  terminate:  (i)  upon
occurrence of an Event of Default or (ii) upon maturity of the Promissory  Note,
unless the Promissory Note is renewed or extended by Lender,  in which case such
termination  shall occur upon the maturity of the final  renewal or extension of
the Promissory Note. Upon such termination,  any and all amounts owing to Lender
pursuant to the Promissory  Note and this Loan Agreement  shall thereupon be due
and payable in full.

2.3 Redetermination of Borrowing Base

     Lender  shall  redetermine  the  Borrowing  Base and the Loan  Availability
Amount at monthly  meetings  with  Borrower (or more often as Lender may agree).
Such meetings shall be scheduled to accommodate Lender's requirements as to time
and  place.   Lender  shall  redetermine  the  Borrowing  Base,  and  upon  such
redetermination, Borrower shall make any required payments to Lender pursuant to
Section 2.7  Prepayment  of Principal to reduce the  outstanding  balance of the
Loan to no more than the amounts  permitted  hereunder.  Lender  shall also make
available  as provided  herein all  advances  under the Loan as supported by the
redetermined Borrowing Base.

2.4 Promissory Note and Interest Rate

     The Loan shall be evidenced by the Promissory  Note.  The  Promissory  Note
shall be  executed  by  Borrower  on the form as  supplied  by Lender,  and such
Promissory Note shall be delivered to Lender upon execution and delivery of this
Loan Agreement.

     Interest shall accrue from the date of disbursement of the principal amount
or portion  thereof until paid,  both before and after  judgment,  in accordance
with the terms set forth herein.  The interest rate on the Promissory  Note will
be subject to change from time to time based on changes in an independent  index
which  is  the 1  year  LIBOR  rate.  Lender's  LIBOR  rate  is  to be  strictly
interpreted  and is not  intended to serve any purpose  other than  providing an
index to determine  the interest rate used herein.  Lender's  LIBOR rate may not
necessarily  be the  same as the  quoted  offered  side in the  Eurodollar  time
deposit  market by any  particular  institution  or  service  applicable  to any
interest  period.  As used herein,  Lender's LIBOR rate shall mean the rates per
annum  quoted by Lender as Lender's 1 year LIBOR rate based upon quotes from the
London  Interbank  Offered Rate from the British  Bankers  Association  Interest
Settlement  Rates, as quoted for U.S. Dollars by Bloomberg,  or other comparable
services selected by the Lender (the "Index").  The Index is not necessarily the
lowest rate  charged by Lender on its loans.  If the Index  becomes  unavailable
during the term of this loan,  Lender may  designate  a  substitute  index after
notifying Borrower. The interest rate change will not occur more often than each
year.  Borrower  understands  that Lender may make loans based on other rates as
well.  Borrower  understands  that Lender may make loans based on other rates as
well.  The interest rate to be applied to the unpaid  balance of the  Promissory
Note will be a rate of 1.64 percentage points (1.64%) over the Index.

2.5 Notice and Manner of Borrowing

     Borrower  shall be able to obtain  advances  under this Loan  Agreement  by
setting up with Lender a loan sweep account using Lender's  documentation (or in
any other manner agreed to by Lender).

2.6 Fees

          a. Commitment Fee. Upon execution and delivery of this Loan Agreement,
     Borrower  shall  pay  Lender  a loan fee  representing  fourteen-and-a-half
     hundreths  of  one  percent  (0.145%)  of the  Loan  Amount,  which  fee is
     Fifty-eight  Thousand Dollars  ($58,000.00),  with a credit of Twenty-three
     thousand Dollars for prior commitment fees paid on prior loans, which shall
     make the Commitment Fee due Thirty-five thousand Dollars ($35,000.00). This
     Commitment  Fee from  Borrower is due upon  entering  this Loan  Agreement,
     notwithstanding any other provision in this Loan Agreement, payment of this
     Commitment  Fee is a condition  precedent  to any  disbursements  under the
     Loan,  and Lender is under no  obligation  to make any  advances  until the
     Commitment  Fee is paid.  No portion of such fee shall be  refunded  in the
     event of early  termination  of this Loan  Agreement or any  termination or
     reduction  of the right of  Borrower  to request  advances  under this Loan
     Agreement. The Commitment Fee may be paid through an advance on the Loan.

          b.  Loan Fee.  Borrower  shall pay to Lender a fee for the Loan for so
     long as this  Loan  Agreement  is in  effect.  The loan fee shall be amount
     equal to one-quarter of one percent (0.25%) per annum of the unused portion
     of the Loan,  calculated on the average unused portion of the Loan for each
     calendar month. The loan fee shall be payable  quarterly,  in arrears,  and
     shall be due upon receipt of a statement therefor from Lender.

2.7 Prepayment of Principal and Curtailments

          a.  Discretionary.  Borrower  may  prepay  all or any  portion  of the
     principal amount of the Loan at any time without premium or penalty.

          b. Mandatory. In the event the aggregate outstanding principal balance
     of the Loan  exceeds  the Loan  Availability  Amount at any time,  Borrower
     shall, unless Lender shall otherwise consent in writing,  without notice or
     demand of any kind,  immediately  make such  repayments of the Loan or take
     such other actions as shall be necessary to eliminate such excess.

3. Security for Loan

3.1 Collateral

     The Loan,  Promissory  Note, and all obligations of Borrower under the Loan
Documents  shall be secured by such  collateral  as is provided in the  Security
Documents (the  "Collateral"),  which shall  include,  without  limitation,  the
following:

          a. The Underlying Notes.

          b. The Underlying Deeds of Trust.

     Lender  will not record the  Assignments  of Deeds of Trust,  except in the
event of default  pursuant  to  paragraph  7.1 or in the event  that  Lender has
reasonable  cause to believe it is justified in receiving notice of any possible
claims or issues  involving title to the Underlying  Property and the applicable
state does not provide for a "request for notice" or similar type document to be
recorded.

3.2 Release of Collateral

     Borrower may request the release of an Underlying Note,  whether or not the
same is deemed  at the time of such  release  to be an  Eligible  Note,  and the
release,  reassignment,  and/or  reconveyance of any related  Underlying Deed of
Trust from the lien and encumbrance of the Security Documents from time to time,
as  well  as the  physical  return  of any  such  Underlying  Note  and  related
Underlying  Deed of Trust.  Lender's  obligation  to  release  any such items of
Collateral is subject to the following:

          a. Qualified  Release.  Lender shall release any  Underlying  Note and
     Underlying Deed of Trust if each of the following  conditions precedent are
     satisfied:

               i.  Borrower  has  notified  Lender in writing  of the  requested
          release or has otherwise  noted the need for the Qualified  Release in
          the Borrowing Base Certificate;

               ii.  Borrower has been paid all amounts due under the  Underlying
          Documents; and

               iii.  Borrower agrees to make all payments  required  pursuant to
          Section 2.7(b) Prepayment of Principal - Mandatory after giving effect
          to such release.

          b.  Discretionary  Release.  Collateral  not  eligible  to be released
     pursuant to the  conditions  specified  in  subparagraph  (a) above will be
     released  upon such terms and  conditions  and for payment as determined by
     Lender in its sole and absolute discretion.

          c. Adjustment to Borrowing Base. Any Underlying Note released shall no
     longer  be  available  for  consideration  as  an  Eligible  Note  and,  if
     necessary,  the  Borrowing  Base  shall be  immediately  and  automatically
     redetermined to reflect such release.

          d. Prompt  Release.  Lender shall make available to Borrower  within 2
     business  days and upon  notice  from  Borrower  all  Underlying  Documents
     qualifying  for  release,  together  with all  releases,  assignments,  and
     reconveyances necessary to effectuate the release.

4. Conditions to Loan Disbursements

4.1 Conditions to Loan Disbursements

     Lender's  obligation  to disburse any of the Loan is expressly  subject to,
and shall  not  arise  until all of the  conditions  set forth  below  have been
satisfied.  All of  the  documents  referred  to  below  must  be in a form  and
substance acceptable to Lender.

          a. Lender is allowed to perform an  examination  of the Collateral and
     the Borrowing Base,  including any analysis of Borrower's lending practices
     and  operations  (in  which  Lender  shall be able to exam  any  Underlying
     Documents  and other  documents as required by Lender in order to determine
     the initial  Borrowing  Base to Lender's  satisfaction),  and  Borrower has
     satisfied any of Lender's concerns. The Parties acknowledge that Lender has
     performed an initial Collateral  Examination prior to the execution of this
     Loan  Agreement,  and the  representations  and  warranties in section 5.13
     relating  thereto (and to any subsequent  Collateral  Examination)  must be
     correct.  Lender may perform subsequent  Collateral  Examinations as Lender
     determines at its discretion.

          b. Borrower shall have paid the Commitment Fee.

          c. Borrower has complied with its obligations to deliver to Lender the
     Borrowing Base  Certificate  and the Collateral  Pool Report and to present
     all required reporting under Section 6.7 Financial Statements and Reports.

          d.  The  Loan  must be used to pay  off  immediately  the  three-month
     Fifteen  Million  Dollar  ($15,000,000.00)  bridge  loan  that  Lender  has
     extended to Borrower, and no funds will be made available to Borrower under
     this Loan that would not allow the bridge  loan to be paid in full from the
     funds of this Loan.

          e. All of the Loan Documents and all other  documents  contemplated to
     be  delivered  to Lender  prior to  funding  have been fully  executed  and
     delivered to Lender.

          f.  All of the  documents  contemplated  by the Loan  Documents  which
     require  filing or recording  have been properly filed and recorded so that
     all of the liens and  security  interests  granted to Lender in  connection
     with the Loan  will be  properly  created  and  perfected  and will  have a
     priority acceptable to Lender.

          g. All other conditions  precedent  provided in or contemplated by the
     Loan Documents or any other agreement or document have been performed.

          h. As of the date of  disbursement  of all or any portion of the Loan,
     the  following  shall  be true and  correct:  (i) all  representations  and
     warranties  made by Borrower and  Guarantor in the Loan  Documents are true
     and  correct  as of the  date of such  disbursement;  and  (ii) no Event of
     Default has occurred  and no  conditions  exist and no event has  occurred,
     which,  with the  passage of time or the giving of notice,  or both,  would
     constitute an Event of Default,  except those  defaults,  such as instances
     where  the  Borrower  in  the  ordinary  course  of  business  has  granted
     extensions of time or imposed default rates of interest, as provided for in
     this Loan Agreement.

     All  conditions  precedent set forth in this Loan  Agreement and any of the
Loan Documents are for the sole benefit of Lender and may be waived unilaterally
by Lender.

4.2 No Default, Adverse Change, False or Misleading Statement

     Lender's  obligation to advance any funds at any time pursuant to this Loan
Agreement and the Promissory Note shall, at Lender's sole discretion,  terminate
upon the  occurrence  of any  Event of  Default  or upon the  occurrence  of any
material adverse change in Borrower's or any Guarantor's organization or affairs
or in any matter  concerning which an agreement,  covenant,  representation,  or
warranty has been made herein,  or upon the  determination by Lender that any of
Borrower's or any Guarantor's  representations made in any of the Loan Documents
were false or materially misleading when made.

5. Representations and Warranties

5.1 Organization and Qualification

     Borrower represents and warrants that it is a corporation duly incorporated
and existing in good standing  under the laws of the State of Utah,  and that it
is qualified and in good standing to do business in the State of Utah.

     Borrower  represents  and warrants that it is duly qualified to do business
in each jurisdiction where the conduct of its business requires qualification.

     Borrower  represents  and warrants that it has the full power and authority
to own its  properties  and to conduct  the  business in which it engages and to
enter into and perform its obligations under the Loan Documents.

     Borrower  represents  and  warrants  that it has  delivered  to  Lender  or
Lender's  counsel  accurate and  complete  copies of  Borrower's  Organizational
Documents which are operative and in effect as of the Effective Date.

5.2 Authorization

     Borrower  represents  and  warrants  that  the  execution,   delivery,  and
performance  by the  respective  entity  of the Loan  Documents  has  been  duly
authorized  by all  necessary  action  on the part of the  Borrower  and are not
inconsistent  with the  Borrower's  Organizational  Documents  or any  operating
agreement,  do not and will not  contravene  any  provision  of, or constitute a
default under, any indenture,  mortgage,  contract, or other instrument to which
the  Borrower is a party or by which it is bound,  and that upon  execution  and
delivery thereof,  the Loan Documents will constitute legal,  valid, and binding
agreements and obligations of the Borrower, enforceable in accordance with their
respective terms.

5.3 No Governmental Approval Necessary

     Borrower represents and warrants that no consent by, approval of, giving of
notice to,  registration  with, or taking of any other action with respect to or
by any  federal,  state,  or local  governmental  authority or  organization  is
required for the  Borrower's  execution,  delivery,  or  performance of the Loan
Documents.

5.4 Accuracy of Financial Statements

     Borrower  represents  and  warrants  that  all  of  its  audited  financial
statements  heretofore delivered to Lender have been prepared in accordance with
generally  accepted  accounting  principles  consistently  applied and fully and
fairly represent  Borrower's  financial condition as of the date thereof and the
results of Borrower's operations for the period or periods covered thereby.

     Borrower  represents  and  warrants  that  all of its  unaudited  financial
statements  heretofore  delivered  to Lender  fully  and  fairly  represent  the
Borrowing entity's financial condition as of the date thereof and the results of
the Borrowing entity's  operations for the period or periods covered thereby and
are consistent with other financial statements previously delivered to Lender.

     Borrower  represents  and warrants  that since the dates of the most recent
audited and unaudited financial  statements  delivered to Lender, there has been
no material adverse change in its financial condition.

     Borrower  represents  and  warrants  that  all of its pro  forma  financial
statements  heretofore delivered to Lender have been prepared  consistently with
the Borrower's  actual  financial  statements and fully and fairly represent the
Borrower's  anticipated  financial  condition and the anticipated results of the
Borrower's operation for the period or periods covered thereby.

5.5 No Pending or Threatened Litigation

     Borrower  represents  and warrants that except as Lender has been otherwise
advised in writing,  together with an analysis by Borrower's counsel,  there are
no  actions,   suits,  or  proceedings  pending  or,  to  Borrower's  knowledge,
threatened  against  or  affecting  the  Borrower  in any  court or  before  any
governmental  commission,  board, or authority  which, if adversely  determined,
would have a material  adverse  effect on the  Borrower's  financial  condition,
conduct of its business,  or ability to perform its  obligations  under the Loan
Documents.  Lender  has been  advised  in  writing  of  pending  litigation  and
proceedings  through delivery of Security National Financial  Corporation's Form
10-K for the year 2006.

5.6 Full and Accurate Disclosure

     Borrower  represents and warrants that this Loan  Agreement,  the financial
statements referred to herein, any loan application submitted to Lender, and all
other statements  furnished by Borrower to Lender in connection herewith contain
no untrue  statement of a material fact and omit no material  fact  necessary to
make the  statements  contained  therein  or  herein  not  misleading.  Borrower
represents  and warrants that it has not failed to disclose in writing to Lender
any fact that  materially  and adversely  affects,  or is  reasonably  likely to
materially and adversely affect,  Borrower's business,  operations,  properties,
prospects,  profits,  condition (financial or otherwise),  or ability to perform
its  obligations  under this Loan Agreement,  the Promissory  Note, the Security
Documents,  or  any  other  agreement,   document,  obligation,  or  transaction
contemplated by this Loan Agreement.

5.7 Compliance with ERISA

     Borrower  represents  and warrants  that  Borrower is in  compliance in all
material  respects with all  applicable  provisions  of the Employee  Retirement
Income  Security Act of 1974  ("ERISA"),  as amended,  and the  regulations  and
published interpretations thereunder. Neither a Reportable Event as set forth in
Section 4043 of ERISA or the regulations  thereunder  ("Reportable Event") nor a
prohibited  transaction  as set forth in Section 406 of ERISA or Section 4975 of
the Internal  Revenue Code of 1986,  as amended,  has occurred and is continuing
with respect to any employee benefit plan established,  maintained,  or to which
contributions  have been made by Borrower  or any trade or business  (whether or
not  incorporated)  which  together with  Borrower  would be treated as a single
employer under Section 4001 of ERISA ("ERISA Affiliate") for its employees which
is  covered  by Title I or Title IV of ERISA  ("Plan");  no  notice of intent to
terminate  a Plan  has been  filed  nor has any Plan  been  terminated  which is
subject to Title IV of ERISA; no  circumstances  exist that  constitute  grounds
under Section 4042 of ERISA entitling the Pension Benefit  Guaranty  Corporation
("PBGC")  to  institute  proceedings  to  terminate,  or  appoint a  trustee  to
administer a Plan,  nor has the PBGC  instituted any such  proceedings;  neither
Borrower nor any ERISA  Affiliate has  completely or partially  withdrawn  under
Section 4201 or 4204 of ERISA from any Plan  described in Section  4001(a)(3) of
ERISA which covers employees of Borrower or any ERISA Affiliate ("Multi-employer
Plan");   Borrower  and  each  ERISA  Affiliate  has  met  its  minimum  funding
requirements  under ERISA with  respect to all of its Plans and the present fair
market  value of all Plan  assets  equals or exceeds  the  present  value of all
vested benefits under or all claims reasonably anticipated against each Plan, as
determined on the most recent  valuation date of the Plan and in accordance with
the  provisions  of ERISA  and the  regulations  thereunder  and the  applicable
statements of the Financial  Accounting Standards Board ("FASB") for calculating
the  potential  liability  of  Borrower or any ERISA  Affiliate  under any Plan;
neither  Borrower nor any ERISA Affiliate has incurred any liability to the PBGC
(except payment of premiums, which is current) under ERISA.

     Borrower,  each ERISA  Affiliate  and each group health plan (as defined in
ERISA Section 733) sponsored by Borrower and each ERISA  Affiliate,  or in which
Borrower or any ERISA Affiliate is a participating  employer,  are in compliance
with,  have  satisfied  and continue to satisfy (to the extent  applicable)  all
requirements  for  continuation  of group health coverage under Section 4980B of
the  Internal  Revenue  Code  and  Sections  601 et seq.  of  ERISA,  and are in
compliance  with, have satisfied and continue to satisfy Part 7 of ERISA and all
corresponding  and  similar  state  laws  relating  to  portability,  access and
renewability of group health benefits and other requirements included in Part 7.

5.8 Compliance with USA Patriot Act

     Borrower  represents  and  warrants  that  it is not  subject  to any  law,
regulation, or list of any government agency (including, without limitation, the
U.S.  Office of Foreign Asset Control list) that prohibits or limits Lender from
making  any  advance  or  extension  of credit  to  Borrower  or from  otherwise
conducting business with Borrower.

5.9 Compliance with All Other Applicable Law

     Borrower  represents  and warrants that it has complied with all applicable
statutes,  rules,  regulations,  orders,  and  restrictions  of any  domestic or
foreign government, or any instrumentality or agency thereof having jurisdiction
over the conduct of  Borrower's  business or the  ownership  of its  properties,
which may have a  material  impact  or effect  upon the  conduct  of  Borrower's
business or the  ownership  of its  properties,  including,  but not limited to,
compliance by Borrower,  with respect to the origination of each Underlying Note
and associated loan and transaction,  with the Federal  Truth-in-Lending Act and
any state  counterpart  or similar  law; the Equal  Credit  Opportunity  Act and
Federal Reserve Board  Regulation B; the Fair Credit  Reporting Act; the Federal
Trade  Commission Act; the FTC Credit  Practices Trade  Regulation Rule; the FTC
Trade  Regulation  Rule  Concerning the  Preservation  of Consumers'  Claims and
Defenses; the Real Estate Settlement Procedures Act and any state counterpart or
similar law; state  adaptations of, or analogies to, any title or chapter of the
Federal  Consumer Credit  Protection Act; state laws  proscribing  unfair and/or
deceptive acts or practices;  state laws  regulating  consumer sales  practices;
state  co-signer  laws,  and any  other  applicable  consumer  credit,  consumer
protection and insurance  laws,  rules and  regulations.  To the extent that the
loan evidenced by an Underlying  Note was serviced by Borrower prior to the date
hereof,  it was  serviced  by Borrower in  compliance  with all such  applicable
consumer credit, consumer protection, debt collection, insurance and other laws,
rules and regulations.

5.10 Environmental Representations and Warranties

     Borrower  represents  and  warrants  that no  Hazardous  Materials  are now
located  on,  in, or under  the Real  Property,  nor is there any  Environmental
Condition  on, in, or under the Real  Property  and  neither  Borrower  nor,  to
Borrower's knowledge, after due inquiry and investigation,  any other person has
ever caused or  permitted  any  Hazardous  Materials to be placed,  held,  used,
stored,  released,  generated,  located or  disposed of on, in or under the Real
Property, or any part thereof, nor caused or allowed an Environmental  Condition
to exist on, in or under the Real  Property,  except in the  ordinary  course of
Borrower's  business  under  conditions  that  are  generally  recognized  to be
appropriate  and  safe and that are in  strict  compliance  with all  applicable
Environmental  Health and Safety Laws.  Borrower further represents and warrants
that no  investigation,  administrative  order,  consent  order  and  agreement,
litigation  or  settlement  with  respect  to  Hazardous   Materials  and/or  an
Environmental  Condition is proposed,  threatened,  anticipated  or in existence
with respect to the Real Property.

5.11 Operation of Business

     Borrower  represents  and warrants  that  Borrower  possesses all licenses,
permits, franchises, patents, copyrights, trademarks, and trade names, or rights
thereto, to conduct its business substantially as now conducted and as presently
proposed to be  conducted,  and Borrower is not in violation of any valid rights
of others with respect to any of the foregoing. The foregoing shall include, but
not be  limited  to, a  representation  and  warranty  by  Borrower  that it has
obtained, and at all relevant times has possessed and maintained,  all necessary
licenses and/or approvals (including,  as applicable,  finance company licenses)
in all  jurisdictions in which the ownership or lease of property or the conduct
of Borrower's  business  (including  the extension of credit or  origination  of
loans to third parties) requires such licenses and/or approvals.

5.12 Payment of Taxes

     Borrower  represents  and warrants  that Borrower has filed all tax returns
(federal,  state,  and  local)  required  to be filed  and has  paid all  taxes,
assessments,  and  governmental  charges  and  levies,  including  interest  and
penalties,  on Borrower's assets,  business and income, except such as are being
contested in good faith by proper  proceedings and as to which adequate reserves
are maintained.

5.13 Underlying  Notes,  Underlying Deeds of Trust, and Standards for Collateral
Examination

     Borrower  represents and warrants to Lender that for those Underlying Notes
and Underlying  Deeds of Trust, if any,  presented for the initial or subsequent
Collateral Examinations,  or in the Borrowing Base Certificate or the Collateral
Pool Report, the following will be true:

          a. Schedule of Underlying  Notes and  Underlying  Deeds of Trust.  The
     information  concerning  each  Underlying  Note and each Underlying Deed of
     Trust set forth in any list or schedule of Underlying  Notes and Underlying
     Deeds of Trust provided to Lender for the Collateral Examination, Borrowing
     Base Certificate,  or Collateral Pool Report will be true and correct as of
     the date presented.  The information  concerning the payment history of any
     Underlying  Note provided to Lender by Borrower will be true and correct in
     all material respects.

          b. Enforceability.
          The  Underlying  Documents are genuine and represent the legal,  valid
     and binding  obligation  of the relevant  maker of an  Underlying  Note and
     trustor  of  an  Underlying  Deed  of  Trust  (as  applicable,  "Obligor"),
     enforceable  against such Obligor in accordance  with their terms except as
     such  enforcement  may be limited  by  fraudulent  conveyance,  moratorium,
     bankruptcy, insolvency,  reorganization or other similar laws affecting the
     enforcement of creditors' rights generally and by general equity principles
     (regardless  of whether such  enforcement  is considered in a proceeding in
     equity  or at law).  Lender  may  review  any of the  forms  of  Underlying
     Documents  employed  by  Borrower  and  may,  at  its  discretion,  require
     reasonable  revisions or adjustments to such forms, or, in the alternative,
     require an opinion by legal counsel  suitable to Lender that such forms are
     enforceable,  in compliance with applicable laws,  requirements,  and other
     regulations,  and will work for the  purposes  of this Loan  Agreement.  No
     Underlying   Document  has  been  satisfied,   subordinated,   assigned  or
     rescinded, in whole or in part, or altered, waived, canceled or modified in
     any material  respect that is not reflected in a writing also  presented to
     Lender with such Document, nor, to Borrower's knowledge.

          c. No Encumbrances; Liens.

               i.  Each of the  Underlying  Documents  is free and  clear of all
          encumbrances, except for Permitted Encumbrances.  Borrower is the sole
          owner of the  right to  receive  all  principal,  interest,  and other
          amounts  required to be paid to the holder under each Underlying Note.
          Borrower is the sole owner and  beneficiary of each Underlying Deed of
          Trust.  Borrower  has the full  right  and  authority,  subject  to no
          interest or  participation  of, or agreement with, any third party, to
          sell,  transfer and assign the Underlying  Documents  pursuant to this
          Loan Agreement.

               ii. The security interest granted by the relevant Obligor in each
          Underlying  Property is and shall  remain,  as of the date  hereof,  a
          valid,  perfected security interest.  No broker or other individual or
          entity is entitled to any unpaid commission or other compensation with
          respect to any Underlying Document.

          d. Condemnation;
               Casualty  Loss. To Borrower's  knowledge,  there is no pending or
          threatened  condemnation  proceeding or similar proceedings  affecting
          any Underlying  Property or any part of any Underlying  Property which
          could  have a  material  adverse  effect  upon  such  interest  in the
          Underlying  Property.  To  Borrower's  knowledge,  there  has  been no
          uninsured  destruction  or  loss  of  any  Underlying  Property.  Each
          Underlying Property which contains any improvements thereon is insured
          by a fire and extended perils insurance  policy, in an amount not less
          than  the  replacement  cost and the  amount  necessary  to avoid  the
          operation  of  any  co-insurance   provisions  with  respect  to  such
          Underlying   Property;   each   Underlying   Property  is  covered  by
          comprehensive   general  liability   insurance  in  amounts  generally
          required  by  institutional  lenders  for  similar  properties;   each
          Underlying Property is also covered by flood insurance if necessary if
          located in a flood zone; to Borrower's knowledge, all premiums on such
          insurance policies required to be paid as of the date hereof have been
          paid;  such insurance  policies  require at least ten (10) days' prior
          written notice to Borrower of termination or cancellation, and no such
          notice has been  received by Borrower  with respect to any  Underlying
          Properties;  such insurance names the beneficiary under the Underlying
          Deeds  of  Trust as a named or  additional  insured  under a  standard
          mortgage endorsement;  each related Underlying Note or Underlying Deed
          of Trust obligates  Obligor  thereunder to maintain all such insurance
          and,  at such  Obligor's  failure to do so,  authorizes  the lender or
          beneficiary thereunder,  as applicable,  to maintain such insurance at
          Obligor's  cost and expense and to seek  reimbursement  therefor  from
          such Obligor.

               e. Guarantees.
               No notice to or  consent  of any  guarantor  under any  guarantee
          related to the  Underlying  Documents  is required to  consummate  the
          transactions  contemplated  herein or,  except as may be  required  by
          applicable law, to proceed against the Underlying Property or any such
          guarantor in an event of default under the Underlying Documents.

               f. Underlying Documents.
               Before or at any  disbursement  under the  Loan,  Borrower  shall
          deliver to Lender the  original or copies of the  original  Underlying
          Documents  assigned to Lender,  as required  by this  Agreement.  Each
          Underlying  Note that is delivered  to Lender is the only  original of
          such  Underlying  Note (or if a copy is delivered to Lender,  there is
          only one  original  that is  retained  by  Borrower).  The  Underlying
          Documents are the only documents executed by Borrower and Obligor with
          respect  to  the  Underlying  Property  covered  thereby.  The  entire
          agreement  between  Borrower  and each  Obligor  is  contained  in the
          Underlying  Documents and any  additional  documents  executed by such
          Obligor  and made  available  to Lender  and there are no  warranties,
          agreements or options  related thereto that are not set forth therein.
          Other than such documents, there are no agreements with respect to the
          Underlying Property between Borrower and any Obligor.

g.         No Defenses. No Obligor has asserted in writing to Borrower nor, to
           Borrower's knowledge, does any Obligor have any basis to assert, any
           defense, right of rescission, counterclaim or set off to its
           obligations under any Underlying Document.

               h. Security Interests.

                    i.   Borrower  has taken all  actions and  precautions  with
                         respect to the  Underlying  Notes secured by Underlying
                         Property that a reasonably prudent lender would take to
                         protect and  preserve the  security  interest  therein,
                         including   filing  for  record  with  all  appropriate
                         governmental entities in all jurisdictions in which the
                         related  Underlying  Deed of  Trust is  required  to be
                         filed  and  recorded  to  create a valid,  binding  and
                         enforceable  lien on the related  Underlying  Property,
                         and  each  Underlying  Deed of Trust  creates  a valid,
                         binding and enforceable lien in the related  Underlying
                         Property  (except as such enforcement may be limited by
                         fraudulent    conveyance,    moratorium,    bankruptcy,
                         insolvency,   reorganization   or  other  similar  laws
                         affecting  the   enforcement   of   creditors'   rights
                         generally   and  by   general   principles   of  equity
                         (regardless   of   whether   such   enforceability   is
                         considered in a proceeding in equity or at law).

                    ii.  No  Underlying  Note is  cross-collateralized  with any
                         other loan or  extension  of credit that is not also an
                         Underlying Note

                    iii. Each  Underlying  Note  is  a  whole  loan  and  not  a
                         participation    certificate    or   subject   to   any
                         participation interest except as Lender may consent.

          i. Taxes.  To Borrower's  knowledge,  there are no  delinquent  taxes,
     ground rents,  water or sewer  charges,  assessments  or other  outstanding
     charges payable to a governmental entity affecting any Underlying Property.

          j. Environmental Laws.
          To Borrower's knowledge,  neither the current condition nor use of any
     Underlying  Property violates any  Environmental  Health and Safety Laws or
     could  reasonably  be  expected  to result in the owner or  occupant of the
     Underlying  Property  incurring  material liability under any Environmental
     Health and Safety Laws.  To  Borrower's  knowledge,  no material  amount of
     Hazardous Materials have been disposed of or identified on, under or at any
     Underlying Property.  To Borrower's  knowledge,  there is no remediation in
     progress on any Underlying Property nor is there any pending or in-progress
     remediation disclosed or identified in any environmental report or analysis
     performed in connection with any Underlying Property or necessary to comply
     with any Environmental Health and Safety Laws.

     k. Underlying Documents.

          i.   To Borrower's knowledge, no Obligor under any Underlying Document
               is involved in  bankruptcy or other  similar  proceeding,  and no
               bankruptcy,  insolvency or other similar proceeding is pending or
               contemplated by or against any Obligor.

          ii.  Each Underlying Document arose out of and constitutes a bona fide
               business  transaction  entered  into in the  ordinary  course  of
               Borrower's business.

          iii. All  principal,  interest  and any other  amounts  due under each
               Underlying Note are payable in United States dollars in regularly
               scheduled installments as set forth in the Underlying Note.

          l. Use of Underlying Property.

          i.   To Borrower's  knowledge,  with respect to each Underlying  Note,
               the related Underlying Property is being used for the purpose set
               forth in the related loan  application or loan commitment or such
               other  documentation  as Borrower may have required in connection
               with the origination of the Underlying Note.

          ii.  To Borrower's knowledge, and in reliance on any applicable policy
               of title insurance,  survey and other  certificates,  instruments
               and reports issued by governmental officials or other independent
               third  parties  relating  to the  Underlying  Property  and  such
               Obligor:

                    (1)  the related Underlying  Property is in compliance with,
                         and is  used  and  occupied  in  accordance  with,  all
                         material   contractual   obligations   and  restrictive
                         covenants applicable to such Underlying  Property,  and
                         in material compliance with all applicable laws;

                    (2)  Obligor is in possession  of, and in  compliance  with,
                         all  material   licenses,   permits,   franchises   and
                         certificates  and  other  governmental   authorizations
                         (including   but  not   limited  to   certificates   of
                         occupancy)  necessary or required by applicable law for
                         the use, occupancy, development,  construction, repair,
                         or improvement  of such  Underlying  Property,  and the
                         Underlying   Property   is  lawfully   occupied   under
                         applicable law; and all such material licenses, permits
                         and other  authorizations  are valid and in full  force
                         and effect; and

                    (3)  no improvement located on the Underlying Property is in
                         violation of any applicable zoning law or regulation.

          iii. Borrower  has not  received  notification  from any  governmental
               entity that the Underlying Property is in non-compliance with any
               laws or  regulations,  or is being  used,  operated  or  occupied
               unlawfully.

m. Title Insurance.

          i.   Borrower  has,  with  respect  to each  Underlying  Deed of Trust
               presented  in  the  Collateral  Examination,   a  Borrowing  Base
               Certificate, or a Collateral Pool Report, a valid and enforceable
               ALTA (or state equivalent  where ALTA is not available)  lender's
               policy of title  insurance  which (a) has been issued by and is a
               binding  obligation of a title insurer in the jurisdiction  where
               the related  Underlying  Property is located in  connection  with
               such  Underlying  Deed of Trust in an  amount  not less  than the
               original  principal  amount  secured by such  Underlying  Deed of
               Trust,  (b) is  presently  in full  force  and  effect,  (c) with
               respect  to which  all  premiums  have  been paid in full and (d)
               insures  Borrower,  and its successors and assigns (as limited by
               applicable  law),  that the  Underlying  Deed of  Trust  relating
               thereto  is a  valid  lien  on the  related  Underlying  Property
               therein  described  and that the related  Underlying  Property is
               otherwise  free and clear of all  encumbrances  and liens  having
               priority over the lien of the Underlying  Deed of Trust,  subject
               only to Permitted  Encumbrances  (each such policy is referred to
               in this Section 5.13 as a "Title Policy").

          ii.  To  Borrower's  knowledge,  there is no reason Lender will not be
               able to obtain an  endorsement  of the Title Policies in Lender's
               name.  Any  additional  costs and premiums  associated  with such
               endorsements shall be at Lender's expense.

     n. Review and  Delivery of  Underlying  Documents.  Borrower  will  provide
Lender,  if requested,  the  opportunity  to review all of Borrower's  books and
records relating to each Underlying Document, including, without limitation, all
files,  payment histories,  credit reports and other  documentation  relating to
each  Underlying  Document.  Borrower  will provide to Lender copies of any such
documentation requested by Lender, including, without limitation, correspondence
to or from any Obligor relating to any Underlying Document.

     o. Litigation. There is no action, suit, legal or arbitration proceeding or
administrative  proceeding or investigation pending to which Borrower is a party
or,  to  Borrower's  knowledge,  threatened  against  Borrower  relating  to  or
affecting any Underlying Document, Obligor or Underlying Property. To Borrower's
knowledge,  there  is no  action,  suit,  legal  or  arbitration  proceeding  or
administrative  proceeding or  investigation  pending or threatened  against any
person other than  Borrower  relating to or affecting any  Underlying  Document,
Obligor or Underlying Property.

     p. Compliance With Laws.

          i.   Each  Underlying  Document  has been  originated  and serviced in
               compliance with all applicable laws and regulations. Borrower has
               not  received  any  written  notice  of  violation  of any law or
               regulation  relating to any of the  Underlying  Documents  or the
               ownership or operation thereof.

          ii.  Borrower is not subject to any judgment, writ, decree, injunction
               or  order  of any  federal,  foreign,  state  or  local  court or
               governmental  entity  relating  to the  acquisition,  collection,
               administration  or  enforcement  of any  Underlying  Note  or the
               foreclosure,   acquisition   or  disposition  of  any  Underlying
               Property  or,  in  each  case,  any  transactions  or  activities
               incidental thereto.

     q. No Change.

          i.   Since the date of origination of each Underlying  Note,  Borrower
               has  administered  and  serviced  each  Underlying  Note  in  the
               ordinary course of its business,  consistent with past practices,
               and has not (i) amended,  modified or waived any provision of, or
               extended,  renewed,   supplemented,   reduced,  subordinated,  or
               terminated  the term of, or  anticipated  the  payments  under or
               accepted the surrender of, any Underlying  Note,  except that the
               Parties  acknowledge  and  recognize  that  Borrower  will  issue
               extensions of time for up to 12 months in the ordinary  course of
               business  and will also  impose  default  rates of  interests  as
               responses to some defaults, (ii) disposed of any Underlying Note,
               (iii)  commenced or initiated  any lawsuit,  action or proceeding
               with  respect to any  Underlying  Note except in the ordinary and
               usual course of business or (iv) taken  possession  of, or caused
               any other person to take  possession of, any Underlying  Property
               or other  collateral  securing a related  Underlying  Note, other
               than insurance proceeds, except for those properties that qualify
               as Real Estate Owned.

          ii.  Since the date of origination of each Underlying  Note,  Borrower
               has not through its action or inaction  created any  encumbrances
               on any Underlying Property.

     r. Confirmation of Representations  and Warranties.  Borrower's delivery of
each  Borrowing Base  Certificate  under this Loan  Agreement  shall  constitute
Borrower's  confirmation  that each of the  representations  and warranties made
pursuant  to this  Section  5.13  are  true  and  correct  with  respect  to the
Underlying  Notes  described in such Borrowing  Base  Certificate as of the date
thereof.

6. Borrower's Covenants

     Borrower makes the following agreements and covenants, which shall continue
so long as this Loan  Agreement is in effect and so long as Borrower is indebted
to Lender for obligations arising out of, identified in, or contemplated by this
Loan Agreement.

6.1 Use of Proceeds

     Borrower  shall  use the  proceeds  of the  Loan  solely  for the  purposes
identified to Lender in applying for the Loan.

     Borrower shall not, directly or indirectly,  use any of the proceeds of the
Loan for the purpose of  purchasing  or  carrying  any margin  stock  within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
or to extend  credit to any person or entity for the  purpose of  purchasing  or
carrying  any  such  margin  stock  or for any  purpose  which  violates,  or is
inconsistent  with,  Regulation X of said Board of  Governors,  or for any other
purpose not  permitted by Section 7 of the  Securities  Exchange Act of 1934, as
amended,  or by any of the rules and  regulations  respecting  the  extension of
credit promulgated thereunder.

6.2 Continued Compliance with ERISA

     Borrower  covenants  that, with respect to all Plans (as defined in Section
5.7  Compliance  with ERISA)  which  Borrower or any ERISA  Affiliate  currently
maintains  or to which  Borrower  or any  ERISA  Affiliate  is a  sponsoring  or
participating employer,  fiduciary,  party in interest or disqualified person or
which  Borrower or any ERISA  Affiliate may hereafter  adopt,  Borrower and each
ERISA Affiliate  shall continue to comply with all applicable  provisions of the
Internal Revenue Code and ERISA and with all representations made in Section 5.7
Compliance  with ERISA,  including,  without  limitation,  conformance  with all
notice and reporting  requirements,  funding standards,  prohibited  transaction
rules,  multi-employer plan rules,  necessary reserve  requirements,  and health
care continuation, coverage and portability requirements.

6.3 Compliance with USA Patriot Act

     Borrower  shall  (a) not be or  become  subject  at any  time  to any  law,
regulation, or list of any government agency (including, without limitation, the
U.S.  Office of Foreign Asset Control list) that prohibits or limits Lender from
making  any  advance  or  extension  of credit  to  Borrower  or from  otherwise
conducting  business  with  Borrower,  and (b)  provide  documentary  and  other
evidence of  Borrower's  identity as may be  requested  by Lender at any time to
enable Lender to verify Borrower's identity or to comply with any applicable law
or regulation, including, without limitation, Section 326 of the USA Patriot Act
of 2001, 31 U.S.C. Section 5318.

6.4 Continued Compliance with Applicable Law

     Borrower  shall  conduct its  business  in a lawful  manner and in material
compliance  with all  applicable  federal,  state,  and local laws,  ordinances,
rules, regulations, and orders; shall maintain in good standing all licenses and
organizational or other qualifications  reasonably necessary to its business and
existence;  and shall not engage in any  business not  authorized  by and not in
accordance with its Organizational Documents and other governing documents.

6.5 Amendment or Change of Organizational Documents

     In the  event of an  alteration  of  Borrower's  Organizational  Documents,
Borrower  shall provide to Lender,  within a reasonable  time after the same has
been adopted by Borrower, the revised Organizational Documents.

6.6 Payment of Taxes and Obligations

     Borrower  shall  pay  when due all  taxes,  assessments,  and  governmental
charges and levies on Borrower's assets,  business, and income, and all material
obligations of Borrower of whatever  nature,  except such as are being contested
in good  faith by  proper  proceedings  and as to which  adequate  reserves  are
maintained.

6.7 Financial Statements and Reports

     Borrower shall provide Lender with such financial statements and reports as
Lender may reasonably request. Audited financial statements and reports shall be
prepared in accordance with generally accepted  accounting  principles (GAAP) or
in accordance with statutory  accounting  principles  (SAP) as designated (or if
not  designated,  as Lender shall require,  and if Lender has not designated the
requirement,  as is  appropriate  to the  context)  and shall  fully and  fairly
represent  Borrower's financial condition as of the date thereof and the results
of Borrower's  operations for the period or periods covered  thereby.  Unaudited
financial  statements  and reports shall fully and fairly  represent  Borrower's
financial  condition  as of the  date  thereof  and the  results  of  Borrower's
operations  for the period or periods  covered  thereby and shall be  consistent
with other  financial  statements  previously  delivered to Lender and compliant
with GAAP or SAP as designated by Lender.

     Until requested  otherwise by Lender,  Borrower shall provide the following
financial statements and reports to Lender:

          a. Annual audited financial statements with an unqualified opinion for
     each fiscal year of Borrower from an independent  accounting  firm and in a
     form acceptable to Lender and compliant with SAP, to be delivered to Lender
     within one hundred sixty (160) days of the end of the fiscal year. Borrower
     shall  also  submit to Lender  copies of any  management  letters  or other
     reports submitted to Borrower by independent  certified public  accountants
     in connection with examination of the financial statements of Borrower made
     by such accountants.

          b. Quarterly financial  statements for each fiscal quarter prepared by
     Borrower,  statements  to be  compliant  with both  GAAP and SAP,  in forms
     acceptable  to Lender,  to be delivered to Lender within sixty (60) days of
     the end of the quarter.  The quarterly financial statements shall include a
     certification by the chief financial  officer or chief executive officer of
     Borrower that the quarterly financial statements fully and fairly represent
     Borrower's  financial  condition  as of the date thereof and the results of
     operations  for the period covered  thereby and are  consistent  with other
     financial statements previously delivered to Lender.

          c.  Within  fifteen  (15)  days  of the end of  each  fiscal  quarter,
     Borrower  shall  submit  to  Lender  a  compliance  certificate  in a  form
     acceptable to Lender  certifying  that  Borrower is in compliance  with all
     terms and conditions of this Loan Agreement,  including compliance with the
     financial  covenants  provided in Section  6.14  Financial  Covenants.  The
     compliance  certificate shall include the data and calculations  supporting
     all financial covenants,  whether in compliance or not, and shall be signed
     by the chief executive officer or chief financial officer of Borrower.

          d.  Borrower  shall  submit  to  Lender  on a  monthly  basis (or more
     frequently if requested by Lender)  within  fifteen (15) days of the end of
     each month a Borrowing Base Certificate in a form provided by or acceptable
     to Lender  demonstrating  that the  outstanding  balance  on the Loan is in
     compliance  with the terms and  conditions  of this  Loan  Agreement.  Such
     Borrowing Base Certificate must contain at a minimum the following  details
     for each loan in the  Borrowing  Base  where  the  Underlying  Property  is
     Commercial Property::

          i.   The exact name and address of the maker of each Underlying Note;

          ii.  The funding date of the Underlying Note;

          iii. The original face amount of the  Underlying  Note and the current
               outstanding  amount under the loan  represented by the Underlying
               Note;

          iv.  The  Loan-to-Value   ratio  of  each  loan  in  relation  to  the
               Underlying Property;

          v.   The maturity date of the Underlying Note; and

          vi.  Any delinquency or charge-off information on the Underlying Note.

     The  Borrowing  Base  Certificate  shall also  contain  for all  Underlying
Property  that is also  Commercial  Property a  description  both by  individual
property  and in  the  aggregate  of  the  collateral  value  of the  Underlying
Property;  the amount entered into the  Collateral  Pool, and an aging status of
the Underlying Notes.

     Where  the  Underlying  Property  is  Residential,  Construction,  or  Land
Property,  the Borrowing Base Certificate must contain at a minimum a summary of
outstanding  principal  balance  of  the  Underlying  Notes,  a  summary  of the
Loan-to-Value  ratios of all  Underlying  Notes to the  value of the  Underlying
Property,  and a  summary  of  delinquency  and  charge-off  information  on the
Underlying Notes.

          e.  Borrower  shall  submit to Lender  on a  quarterly  basis (or more
     frequently if requested by Lender)  within  fifteen days of the end of each
     quarter a Collateral  Pool Report in a form  provided by or  acceptable  to
     Lender  demonstrating  that  the  outstanding  balance  on the  Loan  is in
     compliance  with the terms and  conditions  of this  Loan  Agreement.  Such
     Collateral Pool Report shall contain at a minimum the following:

          i.   The exact name and address of the maker of each Underlying Note;

          ii.  The funding date of the Underlying Note;

          iii. The original face amount of the  Underlying  Note and the current
               outstanding  amount under the loan  represented by the Underlying
               Note;

          iv.  The  Loan-to-Value   ratio  of  each  loan  in  relation  to  the
               Underlying Property;

          v.   The maturity date of the Underlying Note; and

          vi.  Any delinquency or charge-off information on the Underlying Note.

     The Collateral Pool Report shall also contain for all Underlying Property a
description  both by individual  property and in the aggregate of the collateral
value  of  the  Underlying  Property  (using  appraised  values  for  Commercial
Property) and an aging status of the Underlying Notes.

6.8 Depository Relationship

     Borrower  shall  use its best  efforts  to move at least  one of its (or an
affiliate's)  significant  depository  bank  accounts to Lender within 12 months
from the date of this Loan  Agreement,  so long as Lender is able to provide the
services required by Borrower for any such accounts.

6.9 Insurance

     Borrower shall  maintain  insurance  with  financially  sound and reputable
insurance  companies or  associations in such amounts and covering such risks as
are usually carried by companies  engaged in the same or a similar  business and
similarly  situated,  which  insurance may provide for reasonable  deductibility
from coverage thereof.

6.10 Inspection

     Borrower shall at any  reasonable  time and from time to time permit Lender
or any representative of Lender to examine and make copies of and abstracts from
the records and books of account  of, and visit and inspect the  properties  and
assets of,  Borrower,  and to discuss the  affairs,  finances,  and  accounts of
Borrower  with any of  Borrower's  officers and  directors  and with  Borrower's
independent accountants.

6.11 Operation of Business

     Borrower  shall  maintain  all  licenses,  permits,  franchises,   patents,
copyrights,  trademarks,  and trade  names,  or  rights  thereto,  necessary  or
advisable  to conduct  its  business  and  Borrower  shall not violate any valid
rights of others with respect to any of the  foregoing.  Borrower shall continue
to engage in a business of the same general type as now conducted.

6.12 Maintenance of Records and Properties

     Borrower shall keep adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting principles
consistently  applied,   reflecting  all  financial  transactions  of  Borrower.
Borrower shall maintain,  keep and preserve all of its properties  (tangible and
intangible)  necessary  or useful in the proper  conduct of its business in good
working order and condition, ordinary wear and tear excepted.

6.13 Notice of Claims

     Borrower shall promptly  notify Lender in writing of all actions,  suits or
proceedings  filed or threatened  against or affecting  Borrower in any court or
before any  governmental  commission,  board,  or authority  which, if adversely
determined,  would  have a  material  adverse  effect  on  Borrower's  financial
condition,  conduct of its business, or ability to perform its obligations under
the Loan Documents.

6.14 Environmental Covenants

     Borrower covenants that it will:

          a. Not permit the presence,  use, disposal,  storage or release of any
     Hazardous  Materials  on,  in,  or under the Real  Property,  except in the
     ordinary course of Borrower's  business under conditions that are generally
     recognized  to be  appropriate  and safe and that are in strict  compliance
     with all applicable Environmental Health and Safety Laws.

          b. Not permit any substance,  activity or Environmental  Condition on,
     in,  under or  affecting  the Real  Property  which is in  violation of any
     Environmental Health and Safety Laws.

          c. Comply with the provisions of all  Environmental  Health and Safety
     Laws.

          d. Notify Lender immediately of any discharge of Hazardous  Materials,
     Environmental Condition, or environmental complaint or notice received from
     any governmental agency or any other party.

          e. Upon any discharge of Hazardous Materials or upon the occurrence of
     any  Environmental  Condition,  immediately  contain and remove the same in
     strict compliance with all Environmental  Health and Safety Laws,  promptly
     pay any fine or penalty assessed in connection  therewith,  and immediately
     notify Lender of such events.

          f. Permit Lender to inspect the Real Property for Hazardous  Materials
     and Environmental  Conditions, to conduct tests thereon, and to inspect all
     books, correspondence, and records pertaining thereto.

          g. Immediately advise Lender of any additional,  supplemental, new, or
     other  information  concerning  any  Hazardous  Materials or  Environmental
     Conditions relating to the Real Property.

6.15 Financial Covenants

     Except as otherwise  provided herein,  each of the accounting terms used in
this Section 6.14 Financial Covenants shall have the meanings used in accordance
with generally  accepted  accounting  principles  consistent  with those used in
preparation of the financial statements of Borrower submitted to Lender.

          a.  Risk-Based  Capital  Ratio.  Borrower  shall maintain a Risk-Based
     Capital  Ratio  greater than or equal to 300% based upon and in  accordance
     with  current  period  NAIC  guidelines.   The  Risk-Based   Capital  Ratio
     calculation,  with  accompanying  detail,  will be prepared by Borrower and
     provided to Lender with Borrower's annual financial statements.

          b. Net  Income.  Net Income as measured  annually  will be One Million
     Dollars ($1,000,000.00) measured on a GAAP basis.

6.16 Mergers, Consolidations, and Purchase and Sale of Assets

     Borrower shall not wind up,  liquidate,  or dissolve itself; or reorganize,
merge,  or  consolidate  with or into any other  entity  without  the consent of
Lender,  which shall not be  unreasonably  withheld;  or convey,  sell,  assign,
transfer, lease, or otherwise dispose of (whether in one transaction or a series
of transactions)  all or  substantially  all of its assets (whether now owned or
hereafter acquired) to any person or entity.

6.17 No Forgiveness of Amounts Owing or Release of Liens

     Borrower shall not,  without  Lender's prior written  consent,  forgive any
amounts owing to Borrower under any Underlying  Note or release,  in whole or in
part,  the lien and  encumbrance  of any  Underlying  Deed of  Trust;  provided,
however, that (i) the lien and encumbrance of an Underlying Deed of Trust may be
released upon satisfaction of the conditions set forth in Section 3.2 Release of
Collateral;  and (ii)  Borrower  may also in the  course  of  ordinary  business
forgive up to 30 days' of interest on any Underlying Note.

7. Default

7.1 Events of Default

     Time is of the essence of this Loan Agreement. The occurrence of any of the
following  events shall constitute a default under this Loan Agreement and under
the Loan Documents and shall be termed an "Event of Default":

          a. Borrower  fails in the payment or  performance  of any  obligation,
     covenant, agreement, or liability created by any of the Loan Documents.

          b. Any representation,  warranty, or financial statement made by or on
     behalf  of  Borrower  in  any  of  the  Loan  Documents,  or  any  document
     contemplated  by the Loan  Documents,  is  materially  false or  materially
     misleading.

          c. Default  occurs or Borrower fails to comply with any term in any of
     the Loan Documents.

          d. Guarantor  fails to perform any of its  obligations or covenants in
     the Guarantee or this Loan Agreement or is otherwise in default of with any
     provisions of the Guarantee or the Loan Agreement.

          e. Borrower is dissolved or substantially ceases business operations.

          f. A receiver,  trustee,  or custodian  is  appointed  for any part of
     Borrower's property, or any part of Borrower's property is assigned for the
     benefit of creditors.

          g. Any  proceeding is commenced or petition filed under any bankruptcy
     or insolvency law by or against Borrower.

          h. Any judgment or regulatory fine is entered  against  Borrower which
     may materially affect Borrower's ability to perform under this Agreement.

          i.  Borrower  becomes  insolvent  or  fails  to pay its  debts as they
     mature.

          j. Any material  adverse change occurs in Borrower's  condition or any
     event  occurs  which  may cause a  material  adverse  change in  Borrower's
     condition.

          k. Any of the foregoing events occur concerning any Guarantor.

7.2 No Waiver of Event of Default

     No course of  dealing  or delay or  failure  to assert any Event of Default
shall constitute a waiver of that Event of Default or of any prior or subsequent
Event of Default.

8. Remedies

8.1 Remedies upon Event of Default

     Upon the occurrence of an Event of Default, and at any time thereafter, all
or any portion of the  obligations due or to become due from Borrower to Lender,
whether  arising under this Loan  Agreement,  the Promissory  Note, the Security
Documents or otherwise,  at the option of Lender and without  notice to Borrower
of the  exercise of such  option,  shall  accelerate  and become at once due and
payable in full,  and Lender  shall have all rights and  remedies  created by or
arising from the Loan Documents,  and all other rights and remedies  existing at
law, in equity, or by statute.

     Lender shall have the immediate  remedy to take all its  assignments of any
Underlying  Deeds of Trust and to record  such  Assignments  and to collect  all
payments under the Underlying Documents.

8.2 Rights and Remedies Cumulative

     The rights and remedies  herein  conferred are cumulative and not exclusive
of any other  rights or remedies  and shall be in addition to every other right,
power, and remedy that Lender may have, whether  specifically  granted herein or
hereafter existing at law, in equity, or by statute. Any and all such rights and
remedies  may be  exercised  from time to time and as often and in such order as
Lender may deem expedient.

8.3 No Waiver of Rights

     No delay or omission in the  exercise or  pursuance by Lender of any right,
power,  or remedy  shall  impair any such  right,  power,  or remedy or shall be
construed to be a waiver thereof.

9. General Provisions

9.1 Governing Agreement

     In the event of conflict or  inconsistency  between this Loan Agreement and
the other Loan Documents,  excluding the Promissory Note, the terms,  provisions
and intent of this Loan Agreement shall govern.

9.2 Borrower's Obligations Cumulative

     Every obligation,  covenant,  condition,  provision,  warranty,  agreement,
liability,  and undertaking of Borrower contained in the Loan Documents shall be
deemed  cumulative  and not in  derogation or  substitution  of any of the other
obligations,   covenants,  conditions,   provisions,   warranties,   agreements,
liabilities, or undertakings of Borrower contained herein or therein.

9.3 Payment of Expenses and Attorney's Fees

     In the  event of a  dispute  regarding  this  Agreement  or any part of the
documentation  of this Loan,  the prevailing  party shall be awarded  reasonable
attorney fees and costs in prosecuting or defending the claims  involved in such
dispute.  Upon  occurrence  of an Event of Default,  Borrower  agrees to pay all
costs and  expenses,  including  reasonable  attorney  fees and legal  expenses,
incurred by Lender in enforcing,  or  exercising  any remedies  under,  the Loan
Documents, and any other rights and remedies.

     Borrower agrees to pay all expenses, including reasonable attorney fees and
legal  expenses,  incurred by Lender in any  bankruptcy  proceedings of any type
involving Borrower, Guarantor, the Loan Documents, or the Collateral, including,
without  limitation,  expenses  incurred in modifying  or lifting the  automatic
stay, determining adequate protection, use of cash collateral or relating to any
plan of reorganization.

9.4 Right to Perform for Borrower

     Lender may, in its sole  discretion and without any duty to do so, elect to
discharge taxes, tax liens,  security  interests,  or any other encumbrance upon
the  Collateral or any other  property or asset of Borrower,  to pay any filing,
recording,  or other  charges  payable  by  Borrower,  or to  perform  any other
obligation  of  Borrower  under  this  Loan  Agreement  or  under  the  Security
Documents.

9.5 Assignability

     Borrower may not assign or transfer any of the Loan  Documents and any such
purported assignment or transfer is void.

     Lender may assign or transfer  any of the Loan  Documents.  Funding of this
Loan may be provided by an affiliate of Lender.

9.6 Third Party Beneficiaries

     The Loan Documents are made for the sole and exclusive benefit of Borrower,
Lender and Guarantor  and are not intended to benefit any other third party.  No
third  party  may  claim any right or  benefit  or seek to  enforce  any term or
provision of the Loan Documents.

9.7 Governing Law

     The Loan  Documents  shall be governed by and construed in accordance  with
the laws of the  State of Utah,  except  to the  extent  that any such  document
expressly provides otherwise.

9.8 Severability of Invalid Provisions

     Any provision of this Loan Agreement  which is prohibited or  unenforceable
in any jurisdiction  shall, as to such jurisdiction only, be ineffective only to
the extent of such  prohibition or  unenforceability  without  invalidating  the
remaining   provisions   hereof  or  thereof,   and  any  such   prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

9.9 Interpretation of Loan Agreement

     The article and section  headings in this Loan  Agreement  are inserted for
convenience  only and shall not be considered  part of the Loan Agreement nor be
used in its interpretation.

     All  references in this Loan  Agreement to the singular  shall be deemed to
include the plural when the context so requires,  and vice versa.  References in
the  collective or  conjunctive  shall also include the  disjunctive  unless the
context otherwise clearly requires a different interpretation.

9.10 Survival and Binding Effect of Representations, Warranties, and Covenants

     All agreements,  representations,  warranties, and covenants made herein by
Borrower  shall survive the  execution  and delivery of this Loan  Agreement and
shall  continue in effect so long as any  obligation to Lender  contemplated  by
this Loan Agreement is outstanding and unpaid,  notwithstanding  any termination
of  this  Loan  Agreement.  All  agreements,  representations,  warranties,  and
covenants  made herein by Borrower  shall  survive  any  bankruptcy  proceedings
involving Borrower. All agreements,  representations,  warranties, and covenants
in this Loan Agreement shall bind the party making the same, its successors and,
in Lender's  case,  assigns,  and all rights and remedies in this Loan Agreement
shall  inure to the benefit of and be  enforceable  by each party for whom made,
their respective successors and, in Lender's case, assigns.

9.11 Indemnification

     Borrower shall indemnify Lender for any and all claims and liabilities, and
for damages which may be awarded or incurred by Lender,  and for all  reasonable
attorney fees,  legal expenses,  and other  out-of-pocket  expenses  incurred in
defending such claims, arising from or related in any manner to the negotiation,
execution,  or  performance by Borrower or by Lender in good faith of any of the
Loan  Documents,  but  excluding any such claims based upon breach or default by
Lender or gross negligence or willful misconduct of Lender.

9.12 Environmental Indemnification

     Borrower shall indemnify Lender for any and all claims and liabilities, and
for damages which may be awarded or incurred by Lender,  and for all  reasonable
attorney fees, legal expenses,  and other out-of-pocket expenses arising from or
related in any  manner,  directly  or  indirectly,  to (i)  Hazardous  Materials
located on, in, or under the Real Property; (ii) any Environmental Condition on,
in, or under the Real Property;  (iii) violation of or  non-compliance  with any
Environmental  Health and Safety Law;  (iv) any breach or  violation  of Section
5.10   Environmental   Representations   and  Warranties   and/or  Section  6.14
Environmental Covenants;  and/or (v) any activity or omission, whether occurring
on or off the Real  Property,  whether  prior to or during the term of the loans
secured hereby, and whether by Borrower or any other person or entity,  relating
to  Hazardous  Materials  or an  Environmental  Condition.  The  indemnification
obligations  of Borrower  under this  Section  shall  survive any  reconveyance,
release,  or  foreclosure  of  the  Real  Property,  any  transfer  in  lieu  of
foreclosure, and satisfaction of the obligations secured hereby.

9.13 Interest on Expenses and Indemnification, Collateral, Order of Application

     All  expenses,  out-of-pocket  costs,  attorneys  fees and legal  expenses,
amounts advanced in performance of obligations of Borrower,  and indemnification
amounts  owing by Borrower to Lender  under or pursuant to this Loan  Agreement,
the Promissory Note, and/or any Security Documents shall be due and payable upon
demand. If not paid upon demand, all such obligations shall bear interest at the
default rate provided in the Promissory Note from the date of disbursement until
paid to Lender, both before and after judgment. Lender is authorized to disburse
funds under the Promissory Note for payment of all such obligations.

     Payment of all such  obligations  shall be secured by the Collateral and by
the Security Documents.

     All payments and  recoveries  shall be applied to payment of the  foregoing
obligations,  the  Promissory  Note,  and all other  amounts  owing to Lender by
Borrower in such order and priority as  determined  by Lender.  Unless  provided
otherwise  in the  Promissory  Note,  payments on the  Promissory  Note shall be
applied first to accrued interest and the remainder, if any, to principal.

9.14 Limitation of Consequential Damages

     Lender and its officers, directors, employees, representatives, agents, and
attorneys,  shall not be liable to Borrower or any Guarantor  for  consequential
damages arising from or relating to any breach of contract, tort, or other wrong
in connection with the negotiation, documentation,  administration or collection
of the Loan.

9.15 Waiver and Release of Claims

     Borrower (i) represents that it has no current knowledge of any defenses to
or setoffs against any indebtedness or other  obligations owing to Lender or its
affiliates (the "Obligations"),  nor claims against Lender or its affiliates for
any matter whatsoever,  related or unrelated to the Obligations.  This provision
shall not apply to claims for  performance  of express  contractual  obligations
owing to Borrower by Lender or its affiliates.

9.16 Revival Clause

     If the  incurring  of any debt by  Borrower  or the payment of any money or
transfer of property to Lender by or on behalf of Borrower or  Guarantor  should
for any reason  subsequently  be determined to be "voidable" or  "avoidable"  in
whole or in part within the  meaning of any state or federal  law  (collectively
"voidable transfers"),  including, without limitation, fraudulent conveyances or
preferential  transfers  under the United  States  Bankruptcy  Code or any other
federal or state law,  and Lender is required  to repay or restore any  voidable
transfers or the amount or any portion  thereof,  or upon the advice of Lender's
counsel is advised to do so, then,  as to any such amount or property  repaid or
restored, including all reasonable costs, expenses, and attorneys fees of Lender
related  thereto,  the  liability of Borrower and  Guarantor,  and each of them,
shall  automatically  be revived,  reinstated  and  restored  and shall exist as
though the voidable transfers had never been made.

9.17 Arbitration

ARBITRATION DISCLOSURES:

          i.   ARBITRATION  IS FINAL AND  BINDING ON THE  PARTIES AND SUBJECT TO
               ONLY VERY LIMITED REVIEW BY A COURT.

          ii.  IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN
               COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.

          iii. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.

          iv.  ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
               REASONING  IN  THEIR  AWARDS.  THE  RIGHT  TO  APPEAL  OR TO SEEK
               MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED.

          v.   A PANEL OF ARBITRATORS  MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
               AFFILIATED WITH THE BANKING INDUSTRY.

          vi.  IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR
               THE AMERICAN ARBITRATION ASSOCIATION.

          a. Any claim or controversy  ("Dispute")  between or among the parties
     and their employees,  agents, affiliates,  and assigns,  including, but not
     limited  to,  Disputes  arising  out  of  or  relating  to  the  Loan,  the
     Collateral, the Loan Documents, Section 9.7 Governing Law, this arbitration
     provision  ("arbitration clause"), or any related agreements or instruments
     relating hereto or delivered in connection herewith ("Related Agreements"),
     and  including  but not  limited to a Dispute  based on or arising  from an
     alleged  tort,  shall at the  request of any party be  resolved  by binding
     arbitration  in accordance  with the  applicable  arbitration  rules of the
     American Arbitration  Association (the "Administrator").  The provisions of
     this  arbitration  clause  shall  survive any  termination,  amendment,  or
     expiration of this Loan Agreement or Related Agreements.  The provisions of
     this  arbitration  clause shall supersede any prior  arbitration  agreement
     between or among the parties.

          b. The arbitration  proceedings  shall be conducted in a city mutually
     agreed  by the  parties.  Absent  such an  agreement,  arbitration  will be
     conducted in Salt Lake City,  Utah or such other place as may be determined
     by the  Administrator.  The Administrator and the arbitrator(s)  shall have
     the authority to the extent  practicable  to take any action to require the
     arbitration  proceeding to be completed and the arbitrator(s)' award issued
     within one hundred  fifty (150) days of the filing of the Dispute  with the
     Administrator.  The  arbitrator(s)  shall  have  the  authority  to  impose
     sanctions  on any party that fails to comply with time  periods  imposed by
     the Administrator or the arbitrator(s), including the sanction of summarily
     dismissing any Dispute or defense with prejudice.  The arbitrator(s)  shall
     have the authority to resolve any Dispute  regarding the terms of this Loan
     Agreement,  this arbitration clause, or Related  Agreements,  including any
     claim or  controversy  regarding  the  arbitrability  of any  Dispute.  All
     limitations  periods  applicable  to any  Dispute  or  defense,  whether by
     statute or agreement,  shall apply to any arbitration  proceeding hereunder
     and the  arbitrator(s)  shall  have the  authority  to decide  whether  any
     Dispute  or  defense  is  barred by a  limitations  period  and,  if so, to
     summarily  enter an award  dismissing any Dispute or defense on that basis.
     The doctrines of compulsory  counterclaim,  res  judicata,  and  collateral
     estoppel  shall apply to any  arbitration  proceeding  hereunder  so that a
     party must state as a counterclaim in the arbitration  proceeding any claim
     or controversy  which arises out of the  transaction or occurrence  that is
     the  subject  matter  of  the  Dispute.   The   arbitrator(s)  may  in  the
     arbitrator(s)'  discretion and at the request of any party: (i) consolidate
     in a single arbitration  proceeding any other claim arising out of the same
     transaction  involving  another party that is substantially  related to the
     Dispute  where that  other  party to that  transaction  that is bound by an
     arbitration clause with Lender,  such as borrowers,  guarantors,  sureties,
     and  owners of  collateral  and (ii)  consolidate  or  administer  multiple
     arbitration  claims or  controversies  as a class action in accordance with
     the provisions of Rule 23 of the Federal Rules of Civil Procedure.

          c. The arbitrator(s) shall be selected in accordance with the rules of
     the  Administrator  from panels maintained by the  Administrator.  A single
     arbitrator shall have expertise in the subject matter of the Dispute. Where
     three arbitrators conduct an arbitration  proceeding,  the Dispute shall be
     decided by a majority vote of the three  arbitrators,  at least one of whom
     must have  expertise in the subject  matter of the Dispute and at least one
     of whom must be a practicing attorney. The arbitrator(s) shall award to the
     prevailing party recovery of all costs and fees (including  attorneys' fees
     and costs,  arbitration  administration  fees and costs, and arbitrator(s)'
     fees).  The  arbitrator(s),  either during the pendency of the  arbitration
     proceeding or as part of the arbitration  award, also may grant provisional
     or ancillary  remedies  including but not limited to an award of injunctive
     relief, foreclosure,  sequestration,  attachment, replevin, garnishment, or
     the appointment of a receiver.

          d.  Judgment  upon an  arbitration  award may be  entered in any court
     having jurisdiction,  subject to the following limitation:  the arbitration
     award is binding  upon the parties  only if the amount does not exceed four
     million dollars ($4,000,000.00); if the award exceeds that limit, any party
     may demand the right to a court trial. Such a demand must be filed with the
     Administrator within thirty (30) days following the date of the arbitration
     award; if such a demand is not made within that time period,  the amount of
     the arbitration award shall be binding. The computation of the total amount
     of an arbitration  award shall include  amounts awarded for attorneys' fees
     and costs,  arbitration  administration  fees and costs, and arbitrator(s)'
     fees.

          e. No provision of this  arbitration  clause,  nor the exercise of any
     rights hereunder,  shall limit the right of any party to: (i) judicially or
     non-judicially  foreclose against any real or personal property  collateral
     or other  security;  (ii) exercise  self-help  remedies,  including but not
     limited to  repossession  and setoff  rights;  or (iii) obtain from a court
     having  jurisdiction   thereover  any  provisional  or  ancillary  remedies
     including but not limited to injunctive relief, foreclosure, sequestration,
     attachment,  replevin,  garnishment, or the appointment of a receiver. Such
     rights  can be  exercised  at any time,  before or after  initiation  of an
     arbitration proceeding, except to the extent such action is contrary to the
     arbitration  award.  The  exercise of such rights  shall not  constitute  a
     waiver of the right to submit any Dispute to arbitration,  and any claim or
     controversy related to the exercise of such rights shall be a Dispute to be
     resolved under the  provisions of this  arbitration  clause.  Any party may
     initiate  arbitration  with the  Administrator.  If any  party  desires  to
     arbitrate  a  Dispute   asserted   against   such  party  in  a  complaint,
     counterclaim,  cross-claim,  or  third-party  complaint  thereto,  or in an
     answer  or other  reply to any  such  pleading,  such  party  must  make an
     appropriate motion to the trial court seeking to compel arbitration,  which
     motion must be filed with the court within  forty-five (45) days of service
     of the pleading,  or amendment  thereto,  setting  forth such  Dispute.  If
     arbitration is compelled after commencement of litigation of a Dispute, the
     party obtaining an order compelling  arbitration shall commence arbitration
     and pay the  Administrator's  filing fees and costs within  forty-five (45)
     days of entry of such order.

          f.  Notwithstanding  the  applicability  of any other law to this Loan
     Agreement,  the arbitration  clause, or Related Agreements between or among
     the parties,  the Federal  Arbitration  Act, 9 U.S.C. ss. 1 et. seq., shall
     apply to the construction and interpretation of this arbitration clause. If
     any  provision  of this  arbitration  clause  should  be  determined  to be
     unenforceable, all other provisions of this arbitration clause shall remain
     in full force and effect.

9.18 Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah Courts

     Borrower and  Guarantor  acknowledge  that by execution and delivery of the
Loan Documents  Borrower and Guarantor have transacted  business in the State of
Utah and Borrower and Guarantor voluntarily submit to, consent to, and waive any
defense  to the  jurisdiction  of courts  located in the State of Utah as to all
matters  relating to or arising from the Loan Documents  and/or the transactions
contemplated thereby. EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT
AS PROVIDED IN THE ARBITRATION  PROVISIONS  ABOVE,  THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE  JURISDICTION  OF ANY
AND ALL CLAIMS,  DISPUTES,  AND CONTROVERSIES,  ARISING UNDER OR RELATING TO THE
LOAN  DOCUMENTS  AND/OR  THE  TRANSACTIONS  CONTEMPLATED  THEREBY.  NO  LAWSUIT,
PROCEEDING,  OR ANY OTHER ACTION RELATING TO OR ARISING UNDER THE LOAN DOCUMENTS
AND/OR THE TRANSACTIONS  CONTEMPLATED  THEREBY MAY BE COMMENCED OR PROSECUTED IN
ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.

9.19 Joint and Several Liability

     Borrower and Guarantor  shall each be jointly and severally  liable for all
obligations and liabilities arising under the Loan Documents.

9.20 Notices

     All notices or demands by any party to this Loan Agreement shall, except as
otherwise  provided  herein,  be in writing and may be sent by  certified  mail,
return  receipt  requested.  Notices  so mailed  shall be deemed  received  when
deposited  in a  United  States  post  office  box,  postage  prepaid,  properly
addressed  to Borrower or Lender at the mailing  addresses  stated  herein or to
such other  addresses  as  Borrower  or Lender may from time to time  specify in
writing.  Any notice so addressed and otherwise  delivered shall be deemed to be
given when actually received by the addressee.

         Mailing addresses:

         Lender:
                  Zions First National Bank
                  Commercial Loan Center
                  310 South Main Street, Suite 1400
                  Salt Lake City, Utah  84101
                  Attention:  Todd Harris

         Borrower:

                  Security National Life Insurance Company
                  5300 South 360 West
                  Salt Lake City, Utah  84123
                  Attention:  Scott M. Quist

9.21 Duplicate Originals

     Two or more duplicate  originals of the Loan Documents may be signed by the
parties,  each duplicate of which shall be an original but all of which together
shall constitute one and the same instrument.

9.22 Disclosure of Financial and Other Information

     Borrower and  Guarantor  hereby  consent to Lender  disclosing to any other
lender  who may  participate  in the  Loan any and all  information,  knowledge,
reports,  and records,  including,  without  limitation,  financial  statements,
relating in any manner whatsoever to the Loan, Borrower, and Guarantor.

9.23 Integrated Agreement and Subsequent Amendment

     The Loan Documents constitute the entire agreement between Lender, Borrower
and  Guarantor,  and may not be altered or amended  except by written  agreement
signed by Lender, Borrower, and, if applicable, Guarantor. PURSUANT TO UTAH CODE
SECTION 25-5-4,  BORROWER AND GUARANTOR ARE NOTIFIED THAT THESE AGREEMENTS ARE A
FINAL  EXPRESSION OF THE AGREEMENT  BETWEEN  LENDER,  BORROWER AND GUARANTOR AND
THESE  AGREEMENTS  MAY NOT BE  CONTRADICTED  BY  EVIDENCE  OF ANY  ALLEGED  ORAL
AGREEMENT.

     All prior and contemporaneous  agreements,  arrangements and understandings
between  the  parties  hereto as to the subject  matter  hereof  are,  except as
otherwise expressly provided herein, rescinded.

     IN WITNESS WHEREOF,  Lender and Borrower have caused this Loan Agreement to
be duly executed and delivered as of the date first above written.

                                     Lender:

                                     Zions First National Bank



                                     By:  s/s Todd Harris
                                          ---------------
                                          Todd Harris
                                          Vice President



                                     Borrower:

                                     Security National Life Insurance Company


                                     By:  s/s Scott M. Quist
                                          -------------------
                                          Scott M. Quist
                                          President


                                     Guarantor:

                                     Security National Financial Corporation


                                     By: s/s Scott M. Quist
                                         ------------------
                                         Scott M. Quist
                                         President
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>zpromnote.txt
<TEXT>
                                 Promissory Note
                           (Revolving Line of Credit)

                                  June 12, 2007


Borrower:  Security National Life Insurance Company

Lender:  Zions First National Bank

Amount:  $40,000,000.00

Maturity:  June 12, 2008


     For  value  received,  Borrower  promises  to pay to the order of Lender at
Zions First National Bank,  Commercial Banking Division,  One South Main Street,
Second  Floor,   Salt  Lake  City,  Utah,  the  sum  of  Forty  Million  dollars
($40,000,000.00) or such other principal balance as may be outstanding hereunder
in lawful money of the United  States with  interest  thereon at a variable rate
computed on the basis of a 365/360 basis;  that is, by applying the ratio of the
annual  interest  rate over a year of 360 days,  multiplied  by the  outstanding
principal  balance,  multiplied  by the  actual  number  of days  the  principal
balances is outstanding.

     Interest shall accrue from the date of disbursement of the principal amount
or portion  thereof until paid,  both before and after  judgment,  in accordance
with the terms set forth  herein.  The interest  rate on this Note is subject to
change from time to time based on changes in an independent index which is the 1
year LIBOR rate.  Lender's LIBOR rate is to be strictly  interpreted  and is not
intended to serve any purpose  other than  providing an index to  determine  the
interest rate used herein.  Lender's LIBOR rate may not  necessarily be the same
as the  quoted  offered  side  in the  Eurodollar  time  deposit  market  by any
particular  institution or service  applicable to any interest  period.  As used
herein,  Lender's  LIBOR rate shall mean the rates per annum quoted by Lender as
Lender's 1 year LIBOR rate based upon quotes from the London  Interbank  Offered
Rate from the British Bankers  Association  Interest Settlement Rates, as quoted
for U.S.  Dollars by Bloomberg,  or other  comparable  services  selected by the
Lender (the "Index").  The Index is not  necessarily  the lowest rate charged by
Lender on its loans.  If the Index becomes  unavailable  during the term of this
loan, Lender may designate a substitute index after notifying  Borrower.  Lender
will tell Borrower the current Index rate upon Borrower's request.  The interest
rate change will not occur more often than each year. Borrower  understands that
Lender may make loans based on other rates as well.  Borrower  understands  that
Lender may make loans  based on other  rates as well.  The  interest  rate to be
applied  to the unpaid  balance  of this Note will be a rate of 1.64  percentage
points (1.64%) over the Index.  Whenever  increases  occur in the interest rate,
Lender may increase Borrower's payments to cover accruing interest.

     Principal and interest shall be payable as follows:  Interest accrued is to
be paid  monthly  commencing  July 12,  2007,  and on the same day of each month
thereafter.  All principal and unpaid interest shall be paid in full on June 12,
2008.

     All payments  shall be applied first to late charges,  if any, then accrued
interest and the remainder, if any, to principal.

     This  Promissory  Note  shall be a  revolving  line of credit  under  which
Borrower may repeatedly draw and repay funds, so long as no default has occurred
under the Loan Agreement of even date herewith  between Lender and Borrower (the
"Loan Agreement") and so long as the aggregate, outstanding principal balance at
any time does not exceed the  principal  amount of this  Promissory  Note or the
Borrowing  Base (as  defined in the Loan  Agreement).  Disbursements  under this
Promissory Note shall be made in accordance with the Loan Agreement.

     This  Promissory  Note is made in accordance with the Loan Agreement and is
secured by the collateral identified in and contemplated by the Loan Agreement.

         Borrower may prepay all or any portion of this Promissory Note at any
time without penalty. Any prepayment received by Lender after 2:00 p.m. Mountain
Time shall be deemed received on the following Banking Business Day (as defined
in the Loan Agreement).

     If any Event of Default (as  defined in the Loan  Agreement)  occurs,  time
being the essence  hereof,  then the entire  unpaid  balance,  with  interest as
aforesaid,  shall,  at the election of the holder  hereof and without  notice of
such election, become immediately due and payable in full.

     Upon default in payment of any principal or interest when due,  whether due
at stated maturity,  by acceleration,  or otherwise,  all outstanding  principal
shall bear  interest at a default  rate from the date when due until paid,  both
before and after  judgment,  which  default rate shall be equal to three percent
(3.0%) per annum  above the  interest  rate  otherwise  in effect,  as  provided
herein, adjusted as of the date of any change in the LIBOR rate.

     If any Event of Default occurs, Borrower agrees to pay to the holder hereof
all collection costs,  including reasonable attorney fees and legal expenses, in
addition to all other sums due hereunder.

     This  Promissory Note shall be governed by and construed in accordance with
the laws of the State of Utah.

     Borrower  acknowledges  that by execution  and delivery of this  Promissory
Note  Borrower  has  transacted  business  in the  State  of Utah  and  Borrower
voluntarily  submits to, consents to, and waives any defense to the jurisdiction
of courts located in the State of Utah as to all matters  relating to or arising
from this Promissory  Note.  EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND
EXCEPT AS PROVIDED IN THE  ARBITRATION  PROVISIONS  IN THE LOAN  AGREEMENT,  THE
STATE  AND  FEDERAL  COURTS  LOCATED  IN THE STATE OF UTAH  SHALL  HAVE SOLE AND
EXCLUSIVE  JURISDICTION  OF ANY AND ALL  CLAIMS,  DISPUTES,  AND  CONTROVERSIES,
ARISING UNDER OR RELATING TO THIS PROMISSORY  NOTE. NO LAWSUIT,  PROCEEDING,  OR
ANY OTHER  ACTION  RELATING  TO OR  ARISING  UNDER THIS  PROMISSORY  NOTE MAY BE
COMMENCED OR PROSECUTED IN ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING
BY LENDER.

     Borrower and all endorsers,  sureties and guarantors  hereof hereby jointly
and severally waive presentment for payment, demand, protest, notice of protest,
notice of protest and of non-payment and of dishonor,  and consent to extensions
of time, renewal, waivers or modifications without notice and further consent to
the release of any collateral or any part thereof with or without substitution.

     IN WITNESS  WHEREOF,  Borrower has executed and delivered  this  Promissory
Note as of the day and year first above written.


                  SECURITY NATIONAL LIFE INSURANCE COMPANY,
                  a Utah corporation



                  By: s/s Scott M. Quist
                      ------------------
                     Scott M. Quist, President
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>zsecagr.txt
<TEXT>
                               Security Agreement


     This Security  Agreement (the "Security  Agreement") is made as of June 12,
2007, between Security National Life Insurance Company, a Utah corporation,  the
"Borrower"  under a Loan Agreement with Lender of the same date of this Security
Agreement, and Security National Financial Corporation, a Utah corporation,  the
"Guarantor" under that Loan Agreement (collectively, "Grantor"), and Zions First
National  Bank  ("Lender"),  pursuant to a Loan  Agreement of even date herewith
between Borrower and Lender (the "Loan Agreement").

     For  good  and   valuable   consideration,   receipt  of  which  is  hereby
acknowledged, Grantors and Lender hereby agree as follows:

     1. Definitions.  Except as otherwise provided herein,  terms defined in the
Loan Agreement  shall have the same meanings when used herein.  Terms defined in
the singular shall have the same meaning when used in the plural and vice versa.
Terms  defined in the Uniform  Commercial  Code which are used herein shall have
the  meanings  set forth in the Uniform  Commercial  Code,  except as  expressly
defined otherwise. As used herein, the term:

     "Collateral" means the collateral described in Section 2, Grant of Security
Interest, below.

     "Default  Rate" means the default  interest rate provided in the Promissory
Note.

     "Financial Obligations Collateral" means all Underlying Notes, instruments,
deeds of trust, mortgages,  guarantees, and security agreements that are part of
the Collateral.

     "Liquidation  Costs" means the reasonable  costs and out of pocket expenses
incurred by Lender in obtaining  possession  of any  Collateral,  in storage and
preparation for sale, lease or other disposition of any Collateral, in the sale,
lease, or other  disposition of any or all of the Collateral,  and/or  otherwise
incurred in foreclosing on any of the Collateral, including, without limitation,
(a) reasonable attorneys fees and legal expenses, (b) transportation and storage
costs, (c) advertising  costs, (d) sale  commissions,  (e) sales tax and license
fees, (f) costs for improving or repairing any of the Collateral,  and (g) costs
for preservation and protection of any of the Collateral.

     "Permitted  Encumbrances" means liens for taxes and assessments not yet due
and  payable or, if due and  payable,  those  being  contested  in good faith by
appropriate  proceedings  and for which  appropriate  reserves  are  maintained,
security  interests  and  liens  created  by the Loan  Documents,  and  security
interests and liens authorized in writing by Lender.

     "Uniform  Commercial Code" means the Uniform Commercial Code as adopted now
or in the future in the State of Utah or any other state in which the Collateral
is located.

     2. Grant of Security  Interest.  Grantors hereby grant to Lender a security
interest in the following personal property of Grantors (the "Collateral"):

          a. Any and all Underlying Notes and instruments payable to or owing to
     Security  National Life Insurance Company or held by Security National Life
     Insurance Company;

          b. Any and all Underlying Notes and instruments payable to or owing to
     Security  National  Mortgage Company that have been assigned to or are held
     by Security  National  Life  Insurance  Company  and which also  qualify as
     Underlying Notes under the Loan Agreement of the same date herewith between
     Lender and Borrower;

          c. Any and all deeds of trust,  mortgages,  and  security  agreements,
     collateral that secure any of the foregoing obligations;

          d. All guarantees and supporting  obligations  that are related to any
     of the foregoing obligations; and

          e. All amendments, modifications,  renewals, extensions, replacements,
     additions, and accessions to the foregoing and all proceeds thereof.

     Grantors  and Lender  acknowledge  their  mutual  intent that all  security
interests  contemplated  herein are given as a contemporaneous  exchange for new
value to Grantors,  regardless of when advances to Grantors are actually made or
when the Collateral is acquired.

     3. Debts Secured.  The security interest granted by this Security Agreement
shall secure the following  debts,  obligations and liabilities of Grantors,  to
Lender,  including,  without limitation,  (a) the Promissory Note of Borrower in
favor of Lender of even date herewith in the original  principal amount of Forty
Million Dollars  ($40,000,000.00)  (the  "Promissory  Note"),  and all renewals,
extensions, modifications and replacements thereof (including any which increase
the original  principal  amount),  (b) all  obligations of Borrower or Guarantor
arising from or relating to the Loan Documents,  including,  without limitation,
this Security  Agreement,  (c) advances of the same kind and quality or relating
to  this  transaction,  and  (d)  all  overdrafts  on any  account  of  Grantors
maintained with Lender, now existing or hereafter arising.

     Grantors and Lender  expressly  acknowledge  their  mutual  intent that the
security  interest created by this Security  Agreement secure any and all future
debts,  obligations,  and liabilities of Grantors to Lender only upon the mutual
agreement  of the  parties at the time  Lender  extends  such  future  credit to
Grantors.

     4. Location of Grantors and  Collateral.  Grantors  represents and warrants
that:

          a. Borrower and Guarantor are corporations incorporated under the laws
     of the State of Utah.

          b. The complete and exact name of Borrower is Security  National  Life
     Insurance  Company.  The  complete  and exact name of Guarantor is Security
     National Financial Corporation.

          c.  During  the five (5)  years  preceding  the date of this  Security
     Agreement:

               i. Grantors has not been known by nor used any legal,  fictitious
          or trade name;

               ii. Grantors has not changed its name in any respect;

               iii.  Grantors has not been the  surviving  entity of a merger or
          consolidation;

          d. Grantors' chief executive office and principal place of business is
     located at 5300 South 360 West, Salt Lake City, Utah, 84157.

          e. Grantors' place of business is located at 5300 South 360 West, Salt
     Lake City, Utah, 84157.

          f.  During  the five (5)  years  preceding  the date of this  Security
     Agreement, there has not been any change in any of the above locations.

     Grantors agrees that they will not change its state of organization,  name,
or any of the above  locations  or create  any new  locations  for such  matters
without giving Lender at least thirty (30) days prior written notice thereof.

     5. Representations and Warranties Concerning Collateral. Grantors represent
and warrant that:

          a. Grantors are the sole owner of the Collateral.

          b. The Collateral is not subject to any security interest, lien, prior
     assignment,  or other encumbrance of any nature whatsoever except Permitted
     Encumbrances.

          c. The Financial Obligations Collateral,  if any, are each a bona fide
     obligation of the obligor  identified  therein for the amount identified in
     the records of Grantors,  except for normal and  customary  disputes  which
     arise in the ordinary course of business and which do not affect a material
     portion of the Financial Obligations Collateral.

          d. There are no  defenses  or  setoffs  to  payment  of the  Financial
     Obligations Collateral,  if any, which can be asserted by way of defense or
     counterclaim  against  Grantors or Lender,  except for normal and customary
     disputes  which arise in the  ordinary  course of business and which do not
     affect a material portion of the Financial Obligations Collateral.

          e. Grantors have no knowledge of any fact or circumstance  which would
     materially  impair the ability of any obligor on the Financial  Obligations
     Collateral,  if any, to timely perform its obligations  thereunder,  except
     those  which  arise in the  ordinary  course of  business  and which do not
     affect a material portion of the Financial Obligations Collateral.

          f. Any services  performed or goods sold giving rise to the  Financial
     Obligations  Collateral,  if any,  have been rendered or sold in compliance
     with  applicable  laws,  ordinances,  rules,  and  regulations  and  in the
     ordinary course of Grantors' business.

     6. Covenants Concerning Collateral. Grantors covenant that:

          a.  Grantors  will keep the  Collateral  free and clear of any and all
     security  interests,  liens,  assignments  or  other  encumbrances,  except
     Permitted Encumbrances.

          b. Grantors  agree to furnish Lender with any  information  reasonably
     needed  to  identify  Collateral  that  Lender  wishes to  describe  in its
     financing  statement  promptly  upon  request.  Grantors  will  execute and
     deliver  any  documents  (properly  endorsed,   if  necessary)   reasonably
     requested by Lender for perfection or enforcement of any security  interest
     or lien, give good faith,  diligent cooperation to Lender, and perform such
     other acts reasonably requested by Lender for perfection and enforcement of
     any security interest or lien,  including,  without  limitation,  obtaining
     control for purposes of perfection with respect to Collateral consisting of
     investment property, letter-of-credit rights, and electronic chattel paper.
     Lender is authorized to file,  record,  or otherwise utilize such documents
     as it deems  necessary to perfect and/or  enforce any security  interest or
     lien in the Collateral.  Grantors acknowledges that they are not authorized
     to file any financing statement or amendment or termination  statement with
     respect to any financing  statement  without the prior  written  consent of
     Lender and agrees that it will not do so without the prior written  consent
     of Lender,  subject to Grantors'  rights under U.C.A.  ss. 70A-9-509 of the
     Utah  Uniform   Commercial  Code  or  equivalent  section  of  the  Uniform
     Commercial  Code in any other  jurisdiction.  Grantors will pay the cost of
     recording and filing the same in all public offices  wherever  recording or
     filing is deemed by Lender to be necessary or desirable.

          c. Borrower  shall submit to Lender reports as to the  Collateral,  at
     such times and in such form as Lender may reasonably request. Grantors will
     at all times keep accurate and complete  records of the Collateral.  Lender
     or its  representatives  may, at any time and from time to time,  enter any
     premises  where  the  Collateral  and/or  the  records  pertaining  to  the
     Collateral  are located and inspect,  inventory,  audit,  check,  copy, and
     otherwise review the Collateral and the records concerning the Collateral.

          d.  Upon the  occurrence  of an Event of  Default  and when  Lender so
     requests, all collections and other proceeds from the Financial Obligations
     Collateral, if any, shall be deposited into an account designated by Lender
     (the "Cash Collateral Account"),  which account shall be under the sole and
     exclusive  control of Lender.  Such proceeds and  collections  shall not be
     commingled  with any  other  funds  and  shall  be  promptly  and  directly
     deposited into such account in the form in which received by Grantors. Such
     proceeds and  collections  shall not be deposited in any other  account and
     said  Cash  Collateral  Account  shall  contain  no funds  other  than such
     proceeds  and  collections.  All or any  portion of the funds on deposit in
     said Cash  Collateral  Account may, in the sole  discretion  of Lender,  be
     applied  from  time to time as  Lender  elects to  payment  of  obligations
     secured  by this  Security  Agreement  or Lender  may elect to turn over to
     Grantors, from time to time, all or any portion of such funds.

          e.  Grantors  agree to use diligent and good faith  efforts to collect
     the Financial Obligations Collateral, if any. Until written notice is given
     by Lender,  Grantors are  authorized to collect the  Financial  Obligations
     Collateral in a commercially  reasonable manner. Lender, in its discretion,
     may terminate such authority at any time whereupon  Lender is authorized by
     Grantors,  without  further act, to notify any and all account  debtors and
     obligors to make payment thereon directly to Lender, and to take possession
     of all proceeds from the Financial Obligations Collateral,  and to take any
     action  which  Grantors  might  or  could  take to  collect  the  Financial
     Obligations  Collateral,  including  the  right  to  make  any  compromise,
     discharge, or extension.  Lender may exercise such collection rights at any
     time,  when either  Grantor is in default under this Security  Agreement or
     the Loan Documents.  Upon request of Lender,  Grantors agree to execute and
     deliver to Lender a notice to the account debtors and obligors  instructing
     said account debtors and obligors to pay Lender.  Grantors further agree to
     execute  and  deliver to Lender all other  notices  and  similar  documents
     requested by Lender to facilitate  collection of the Financial  Obligations
     Collateral.

          f. All costs of collection of the Financial Obligations Collateral, if
     any, including attorneys fees and legal expenses,  shall be borne solely by
     Grantors,  whether such costs are incurred by or for Grantors or Lender. In
     the event Lender  elects to undertake  direct  collection  of the Financial
     Obligations  Collateral,  Grantors  agree  to  deliver  to  Lender,  if  so
     requested,  all books,  records,  and documents in Grantors'  possession or
     under its control as may relate to the Financial Obligations  Collateral or
     as may be helpful  to  facilitate  such  collection.  Lender  shall have no
     obligation  to cause an  attorneys  demand  letter to be sent,  to file any
     lawsuit,  or to take any other legal action in  collection of the Financial
     Obligations  Collateral.  It is agreed  that  collection  of the  Financial
     Obligations Collateral in a commercially reasonable manner does not require
     that any such legal action be taken.

          g.  Grantors do hereby make,  constitute,  and appoint  Lender and its
     designees as Grantors' true and lawful attorney in fact, with full power of
     substitution,  such power to be exercised in the following manner: (1) upon
     occurrence of an Event of Default,  Lender may institute procedures whereby
     payments and other proceeds of the Financial  Obligations  Collateral shall
     be paid under a remittance  account or lock box arrangement with Lender, or
     Lender's  agent,  and pursuant to which  Lender shall  receive and open all
     mail  addressed  to  Grantors  and remove  therefrom  any  payments  of the
     Financial Obligations  Collateral,  if any; (2) upon occurrence of an Event
     of Default,  Lender may cause mail  relating to the  Financial  Obligations
     Collateral  to be delivered to a designated  address of Lender where Lender
     may open all such mail and remove  therefrom  any payments of the Financial
     Obligations Collateral;  (3) upon occurrence of an Event of Default, Lender
     may endorse Grantors' names upon notes, checks, acceptances,  drafts, money
     orders, or other forms of payment of the Financial Obligations  Collateral;
     (4) upon  occurrence  of an Event of  Default,  Lender may settle or adjust
     disputes or claims in respect to the Financial  Obligations  Collateral for
     amounts  and  upon  such  terms  as  Lender,  in good  faith,  deems  to be
     advisable,  in such case crediting Grantors with only the proceeds received
     and  collected  by Lender  after  deduction  of Lender's  costs,  including
     reasonable attorneys fees and legal expenses; and (5) Lender may do any and
     all other things  necessary or proper to perfect and, upon occurrence of an
     Event of Default,  to protect the liens and rights of Lender  created under
     this Security Agreement.

          h.  Prior to the  advancing  of any funds  under  the Loan  Agreement,
     Grantors shall deliver to Lender the original of any of such instruments or
     notes that are  secured by  Commercial  Property or  Construction  Property
     under the Loan  Agreement that are being used as part of the Borrowing Base
     as set forth in the Loan Agreement. For all other instruments or notes that
     are  secured by  Underlying  Property  that is not  Commercial  Property or
     Construction  Property,  Grantors may retain the original document or note.
     Lender  grants  Grantors a revocable  license to receive  payments or rents
     under all instruments or notes.  Lender may revoke such license at any time
     upon an  occurrence  of default under the Note,  the Loan  Agreement,  this
     Security  Agreement.  Upon such a revocation,  Grantors  shall  immediately
     endorse  and  deliver  all  instruments  or notes to Lender as  required by
     Lender, along with all profits,  payments,  rents, or other monies received
     by  Grantors  pursuant  to  such  instruments  or  notes.  For  such  other
     instruments  retained in original form by Grantors,  Grantors may also sell
     or assign such  instruments or notes in the ordinary  course of business as
     long as Grantors are not in default under this Security Agreement, the Loan
     Agreement, or the Promissory Note. In such instances, Lender will cooperate
     with  Grantors in allowing for the security  interest in any such  specific
     instruments  or  chattel  that are being sold to a bona fide  purchaser  to
     terminate.

          i. Grantors  shall,  immediately  upon  obtaining  knowledge  thereof,
     report to Lender in writing any material  claim or dispute  asserted by any
     obligor on any item of that Collateral, and any other material matters that
     may affect  the  value,  enforceability  or  collectability  of any of that
     Collateral.  Grantors shall also immediately report to Lender (which may be
     accomplished in any meetings with Lender to report on Collateral  under the
     Loan Agreement) any default on any item of Financial Obligations Collateral
     under  which   Grantors  shall  take  such  action  as  foreclosing  on  or
     repossessing any such Collateral.

          j. Grantors shall not,  without  Lender's  written  consent,  make any
     material  settlement,  compromise  or  adjustment  of any item of Financial
     Obligations  Collateral  or  grant  any  material  discounts,   extensions,
     allowances or credits  thereon.  Grantors,  however,  may take such actions
     that are  customary  and  normal in its  ordinary  course and  practice  of
     business without the Lender's written consent,  such as granting extensions
     of time for up to one year  consistent  with the Loan Agreement or imposing
     default rates of interest in the event of default.

     7. Right to Perform for Grantors.  Lender may, in its sole  discretion  and
without  any duty to do so,  elect  to  discharge  taxes,  tax  liens,  security
interests,  or any other  encumbrance  upon the Collateral,  perform any duty or
obligation  of Grantors,  pay filing,  recording,  insurance  and other  charges
payable by Grantors, or provide insurance as provided herein if Grantors fail to
do so. Any such  payments  advanced by Lender  shall be repaid by Grantors  upon
demand,  together  with  interest  thereon  from the date of the  advance  until
repaid, both before and after judgment, at the Default Rate.

     8.  Default.  Time  is of the  essence  of  this  Security  Agreement.  The
occurrence  of any  Event of  Default  shall  constitute  a default  under  this
Security Agreement.

     No course of dealing or any delay or failure to assert any Event of Default
shall constitute a waiver of that Event of Default or of any prior or subsequent
Event of Default.

     9. Remedies.  Upon the occurrence of an Event of Default, Lender shall have
the following rights and remedies,  in addition to all other rights and remedies
existing at law, in equity, or by statute or provided in the Loan Documents:

          a. Lender shall have all the rights and remedies  available  under the
     Uniform Commercial Code;

          b. Lender  shall have the right to enter upon any  premises  where the
     Collateral  or  records  pertaining  to the  Collateral  may  be  and  take
     possession of the Collateral and such records;

          c. Upon request of Lender, Grantors shall, at the expense of Grantors,
     assemble the Collateral and records pertaining to the Collateral at a place
     designated by Lender and tender the  Collateral and such records to Lender;
     and

          d. Lender may sell,  lease or  otherwise  dispose of any or all of the
     Collateral and, after deducting the Liquidation  Costs, apply the remainder
     to pay, or to hold as a reserve  against,  the obligations  secured by this
     Security Agreement.

     Grantors  shall be liable  for all  deficiencies  owing on any  obligations
secured by this Security  Agreement after liquidation of the Collateral.  Lender
shall not have any  obligation to clean-up or otherwise  prepare any  Collateral
for sale, lease, or other disposition.

     The rights and remedies  herein  conferred are cumulative and not exclusive
of any other  rights and remedies and shall be in addition to every other right,
power and remedy herein  specifically  granted or hereafter  existing at law, in
equity,  or by statute which Lender might  otherwise  have, and any and all such
rights and remedies may be exercised  from time to time and as often and in such
order as Lender may deem expedient.  No delay or omission in the exercise of any
such right,  power or remedy or in the  pursuance of any remedy shall impair any
such right,  power or remedy or be  construed  to be a waiver  thereof or of any
default or to be an acquiescence therein.

     Upon the  occurrence  of any Event of  Default,  Grantors  agree to pay all
costs and expenses,  including  reasonable  attorneys  fees and legal  expenses,
incurred by or on behalf of Lender in  enforcing,  or  exercising  any  remedies
under, this Security Agreement, and any other rights and remedies. Additionally,
Grantors agree to pay all Liquidation  Costs. Any and all such costs,  expenses,
and  Liquidation  Costs shall be payable by Grantors upon demand,  together with
interest  thereon  from the date of the advance  until  repaid,  both before and
after judgment, at the Default Rate.

     Regardless of the occurrence of any Event of Default, Grantors agree to pay
all expenses,  including reasonable attorneys fees and legal expenses,  incurred
by Lender in any  bankruptcy  proceedings of any type  involving  Grantors,  the
Collateral, or this Security Agreement,  including, without limitation, expenses
incurred  in  modifying  or lifting the  automatic  stay,  determining  adequate
protection, use of cash collateral, or relating to any plan of reorganization.

     10. Notices. All notices or demands by any party hereto shall be in writing
and shall be sent as provided in the Loan Agreement.

     11. Indemnification. Grantors shall indemnify Lender for any and all claims
and liabilities, and for damages which may be awarded or incurred by Lender, and
for all reasonable  attorneys  fees,  legal  expenses,  and other  out-of-pocket
expenses  incurred in  defending  such  claims,  arising  from or related in any
manner to the negotiation, execution, or performance by Grantors or by Lender in
good faith of this Security Agreement,  but excluding any such claims based upon
breach or default by Lender or gross negligence or willful misconduct of Lender.

     12.  General.  This  Security  Agreement is made for the sole and exclusive
benefit of Grantors  and Lender and is not  intended to benefit any third party.
No such third  party may claim any right or benefit or seek to enforce  any term
or provision of this Security Agreement.

     Lender and its officers, directors, employees, representatives, agents, and
attorneys,  shall not be liable to Grantors or any Guarantor  for  consequential
damages arising from or relating to any breach of contract, tort, or other wrong
in connection with or relating to this Security Agreement or the Collateral.

     If the  incurring  of any debt by  Grantors  or the payment of any money or
transfer of  property  to Lender by or on behalf of  Grantors  or any  Guarantor
should for any reason subsequently be determined to be "voidable" or "avoidable"
in whole or in part within the meaning of any state or federal law (collectively
"voidable transfers"),  including, without limitation, fraudulent conveyances or
preferential  transfers  under the United  States  Bankruptcy  Code or any other
federal or state law,  and Lender is required  to repay or restore any  voidable
transfers or the amount or any portion  thereof,  or upon the advice of Lender's
counsel is advised to do so, then,  as to any such amount or property  repaid or
restored, including all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Grantors and Guarantor,  and each of them, and
this Security Agreement, shall automatically be revived, reinstated and restored
and shall exist as though the voidable transfers had never been made.

     This  Security  Agreement  shall be governed by and construed in accordance
with the laws of the State of Utah.

     Any   provision  of  this  Security   Agreement   which  is  prohibited  or
unenforceable  in any  jurisdiction  shall,  as to such  jurisdiction  only,  be
ineffective  to the  extent  of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

     All  references in this Security  Agreement to the singular shall be deemed
to include the plural if the context so requires and vice versa.  References  in
the  collective or  conjunctive  shall also include the  disjunctive  unless the
context otherwise clearly requires a different interpretation.

     All agreements, representations,  warranties and covenants made by Grantors
shall survive the execution and delivery of this Security Agreement,  the filing
and consummation of any bankruptcy proceedings,  and shall continue in effect so
long as any  obligation to Lender  contemplated  by this  Security  Agreement is
outstanding  and  unpaid,  notwithstanding  any  termination  of  this  Security
Agreement.  All  agreements,  representations,  warranties and covenants in this
Security  Agreement  shall  bind the  party  making  the same and its  heirs and
successors,  and shall be to the benefit of and be enforceable by each party for
whom made and their respective heirs, successors and assigns.

     This Security Agreement,  together with the Loan Documents,  constitute the
entire agreement between Grantors and Lender as to the subject matter hereof and
may not be altered or amended except by written agreement signed by Grantors and
Lender.  All  other  prior and  contemporaneous  agreements,  arrangements,  and
understandings  between the parties  hereto as to the subject matter hereof are,
except as otherwise expressly provided herein, rescinded.



     IN WITNESS WHEREOF, Lender and Grantors have caused this Security Agreement
to be duly executed and delivered as of the date first above written.

                                     Lender:

                                     Zions First National Bank



                                     By: s/s Todd Harris
                                         ---------------
                                         Todd Harris
                                         Vice President



                                    Grantors:

                                    Security National Life Insurance Company,
                                    a Utah corporation



                                    By: s/s Scott M. Quist
                                        ------------------
                                        Scott M. Quist, President


                                    Security National Financial Corporation,
                                    a Utah corporation



                                    By:  s/s Scott M. Quist
                                         ------------------
                                         Scott M. Quist, President
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>zguarantee.txt
<TEXT>
                                    Guarantee


     This Guarantee is made as of June 12, 2007, by Security National  Financial
Corporation,  a Utah  corporation  ("Guarantor"),  to Zions First  National Bank
("Lender"),  as an inducement to Lender to enter into a Loan  Agreement with and
to loan monies to Security National Life Insurance  Company,  a Utah corporation
("Borrower").

     Lender,  Borrower, and Guarantor are entering into a Loan Agreement of even
date herewith (the "Loan Agreement") pursuant to which Lender has agreed to make
a loan to Borrower  evidenced  by a Promissory  Note in the  original  principal
amount of Forty Million Dollars ($40,000,000.00).

     For  good  and   valuable   consideration,   receipt  of  which  is  hereby
acknowledged, Guarantor agrees as follows:

     1. Definitions.  Except as otherwise provided herein,  terms defined in the
Loan Agreement  shall have the same meanings when used herein.  Terms defined in
the singular shall have the same meaning when used in the plural and vice versa.
As used herein, the term:

     "Collateral"  includes,  in  addition  to the meaning set forth in the Loan
Agreement,  any other collateral for the Indebtedness  which may be taken in the
future.

     "Guarantee"  includes,  in  addition  to the  meaning set forth in the Loan
Agreement, any other guarantee of the Indebtedness, now existing or given in the
future.

     "Guarantor"  includes,  in  addition  to the  meaning set forth in the Loan
Agreement, any other person or entity who guarantees the Indebtedness, now or in
the future.

         "Indebtedness" means all liabilities, obligations, and indebtedness of
Borrower arising under the Loan Documents, including the Promissory Note and
including all costs and expenses, including reasonable attorneys fees and legal
expenses, for which Borrower is liable under the Loan Documents.

2. Guarantee. Guarantor absolutely and unconditionally guarantees to Lender that
Borrower shall promptly and fully perform, pay and discharge the Indebtedness.
If Borrower fails to pay any Indebtedness promptly as the same becomes due,
Guarantor agrees to pay the Indebtedness on demand.

3. Guarantee Unconditional. This Guarantee is an absolute and unconditional
guarantee of payment and not of collectability. The liability of Guarantor
hereunder is not conditional or contingent upon the genuineness, validity, or
enforceability of the Indebtedness or any of the Loan Documents or the value or
sufficiency of any Collateral.

     4. Agreement to Pay Attorneys Fees.  Guarantor agrees to pay all collection
costs,  including  reasonable  attorneys  fees and legal  expenses,  incurred by
Lender in enforcing this Guarantee.

     Guarantor  agrees to pay all expenses,  including  attorneys fees and legal
expenses, incurred by Lender in any bankruptcy proceedings of any type involving
Guarantor,  including,  without  limitation,  expenses  incurred in modifying or
lifting  the  automatic  stay,  determining  adequate  protection,  use of  cash
collateral, or relating to any plan of reorganization.

     5.  Waiver  by  Guarantor.  Guarantor  expressly  and  absolutely,  without
affecting the liability of Guarantor hereunder:

          a.  Waives  notice  of  acceptance  of this  Guarantee,  the  offer of
     guarantee contemplated by this Guarantee,  or any other notice which may be
     required relative to the acceptance of this Guarantee;

          b.  Waives  demand,  protest,  notice of  dishonor  or  nonpayment  or
     presentment for payment of the Promissory Note or any other evidence of the
     Indebtedness;

          c. Waives notice of transactions which have occurred under or relating
     to or affecting this Guarantee;

          d. Waives notice of any adverse change in the condition,  financial or
     otherwise,  of  Borrower  or  any  Guarantor,  any  change  concerning  any
     Collateral,   or  of  any  other  fact  which  might  materially   increase
     Guarantor's risk, whether or not Lender has knowledge of the same;

          e. Waives any right to require Lender to (i) proceed against  Borrower
     by suit or otherwise, (ii) foreclose, proceed against, liquidate or exhaust
     any Collateral,  or (iii)  exercise,  pursue or enforce any right or remedy
     Lender may have against Borrower, any Collateral,  any Guarantor, any other
     person or entity, or otherwise, prior to proceeding against Guarantor; and

     6. Consent to Lender's Acts.  Guarantor  hereby  authorizes and consents to
Lender at any time and from time to time,  without notice or further  consent of
Guarantor,  doing the  following  and  Guarantor  agrees that the  liability  of
Guarantor shall not be released or affected by:

          a. The  taking  or  accepting,  or the  failure  by  Lender to take or
     accept, any other Collateral or Guarantee for the Indebtedness;

          b. Any modifications,  amendments, extensions, renewals, replacements,
     or termination of any of the Loan  Documents,  to the granting of any other
     credit, and to the acceleration of maturity of the Indebtedness;

          c. Any  complete  or  partial  release,  substitution,  subordination,
     impairment,  loss,  compromise,  or other modification of any Collateral or
     any Guarantee;

          d. The complete or partial  release or substitution of Borrower or any
     Guarantor;

          e. Any renewal, extension,  modification,  replacement,  acceleration,
     consolidation, adjustment, indulgence, forbearance, waiver or compromise of
     the payment of any part or all of the Indebtedness, or any liability of any
     Guarantor,  or  the  performance  of any  covenant  contained  in the  Loan
     Documents;

          f. Any neglect, delay, omission, failure, or refusal of Lender to take
     or prosecute any action for the collection of the  Indebtedness or any part
     thereof,  or for  the  enforcement  of  any  provision  of any of the  Loan
     Documents,  or  any  action  in  connection  with  any  Collateral  or  any
     Guarantee,  including, without limitation, the failure of Lender to perfect
     any security interest in any Collateral;

          g.  Any   increase  or  decrease  in  the  rate  of  interest  on  the
     Indebtedness;

          h. Acceptance of any partial and/or late payments on the Indebtedness;

          i.  Application  of payments by, or recoveries  from,  Borrower or any
     Guarantor, or any sums realized from any Collateral,  in such manner and in
     such  order  of  priority  as  Lender  deems  proper,  whether  or not  the
     obligation  to which the  payment or recovery is applied is due at the time
     of such application; and

          j. Lender  exercising  any and all rights and  remedies  available  to
     Lender by law, at equity or by agreement,  even if the exercise thereof may
     affect,  modify, or eliminate any Guarantor's right of subrogation  against
     Borrower or any other party.

     7. Term of Guarantee.  This Guarantee shall remain in full force and effect
until all  Indebtedness has been fully paid. No termination of this Guarantee by
Guarantor shall be effective.

     8.  Cumulative  Rights.  The  rights  and  remedies  herein  conferred  are
cumulative  and not  exclusive of any other rights or remedies,  and shall be in
addition to every other right,  power, and remedy that Lender may have,  whether
specifically  granted  herein,  or hereafter  existing at law, in equity,  or by
statute;  and any and all such rights and remedies may be exercised from time to
time and as often and in such order as Lender may deem expedient.

     No delay or omission in the  exercise or  pursuance by Lender of any right,
power,  or remedy  shall  impair any such  right,  power,  or remedy or shall be
construed to be a waiver thereof.

     9.  Governing  Law.  This  Guarantee  shall be governed by and construed in
accordance with the laws of the State of Utah.

     10. Binding Effect.  This Guarantee may be executed and delivered to Lender
prior to the execution and delivery of the Loan Documents.  This Guarantee shall
nonetheless  be binding  and  enforceable  upon its  execution  and  delivery to
Lender.

     11. Revival Clause. If the incurring of any debt by Borrower or the payment
of any money or  transfer  of  property  to Lender by or on behalf of  Borrower,
Guarantor,  or any other party should for any reason  subsequently be determined
to be  "voidable" or  "avoidable"  in whole or in part within the meaning of any
state or federal law (collectively  "voidable  transfers"),  including,  without
limitation,  fraudulent  conveyances or preferential  transfers under the United
States Bankruptcy Code or any other federal or state law, and Lender is required
to repay or restore any voidable transfers or the amount or any portion thereof,
or upon the advice of Lender's counsel is advised to do so, then, as to any such
amount or property repaid or restored, including all reasonable costs, expenses,
and attorneys fees of Lender related  thereto,  the liability of Guarantor shall
automatically be revived,  reinstated and restored and shall exist as though the
voidable transfers had never been made.

     12.  Financial  Reports of  Guarantor.  Audited  financial  statements  and
reports  shall be prepared in  accordance  with  generally  accepted  accounting
principles and shall fully and fairly represent  Guarantor's financial condition
as of the date thereof and the results of Borrower's  operations  for the period
or periods covered  thereby.  Unaudited  financial  statements and reports shall
fully and fairly represent Guarantor's  Borrower's financial condition as of the
date thereof and the results of Borrower's  operations for the period or periods
covered  thereby  and  shall  be  consistent  with  other  financial  statements
previously delivered to Lender.

     Guarantor shall provide the following  financial  statements and reports to
Lender:

          (a)  Annual  audited   consolidating   financial  statements  with  an
     unqualified  opinion for each fiscal year of Borrower  from an  independent
     accounting  firm and in a form  acceptable  to Lender,  to be  delivered to
     Lender within one hundred sixty (160) days of the end of the fiscal year.

          (b) Quarterly  financial  statements for each fiscal quarter in a form
     acceptable  to Lender,  to be delivered to Lender within sixty (60) days of
     the end of the quarter.  The quarterly financial statements shall include a
     certification by the chief financial  officer or chief executive officer of
     Borrower that the quarterly financial statements fully and fairly represent
     Borrower's  financial  condition  as of the date thereof and the results of
     operations  for the period covered  thereby and are  consistent  with other
     financial statements previously delivered to Lender.

     13. Financial  Covenants of Guarantor.  Guarantor  covenants to comply with
the following financial covenants.

          (a) Guarantor  shall maintain a ratio of less than or equal to 1.25 of
     funded senior debt to net worth (thereby allowing senior debt of up to 125%
     of net worth) measured quarterly, compliance to be measured at a minimum on
     Guarantor's quarterly and annual financial statements.

          (b)  Guarantor  shall  maintain a minimum  net worth of Fifty  Million
     Dollars  ($50,000,000.00)  as measured  by  generally  accepted  accounting
     principles, compliance to be measured at a minimum on Guarantor's quarterly
     and  annual  financial  statements.  Minimum  net worth is defined as total
     assets minus total liabilities.

          (c) Guarantor shall maintain a Trailing Twelve Month EBITDA of greater
     than Thirteen Million Dollars  ($13,000,000.00),  compliance to be measured
     at a minimum on  Guarantor's  quarterly  and annual  financial  statements.
     "EBITDA" means earnings (excluding  extraordinary gains and losses realized
     other than in the  ordinary  course of business and  excluding  the sale or
     writedown  of  intangible  or  capital  assets)  before  interest,   taxes,
     depreciation,  and  amortization,  determined in accordance  with generally
     accepted accounting principles.

     14. Severability and Interpretation.  Any provision of this Guarantee which
is  prohibited  or  unenforceable   in  any  jurisdiction   shall,  as  to  such
jurisdiction  only, be  ineffective  only to the extent of such  prohibition  or
unenforceability  without  invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render  unenforceable such provision in any other jurisdiction.  The headings in
this  Guarantee  are inserted for  convenience  only and shall not be considered
part of the Guarantee nor be used in its interpretation.  All references in this
Guarantee to the singular shall be deemed to include the plural when the context
so requires,  and vice versa.  References in the collective or conjunctive shall
also include the disjunctive  unless the context  otherwise  clearly  requires a
different interpretation.

     15. Continuing Agreement. All agreements, representations,  warranties, and
covenants  made herein by Guarantor  shall survive the execution and delivery of
this Guarantee and shall continue in effect so long as the  Indebtedness  or any
portion  thereof is outstanding  and unpaid.  All  agreements,  representations,
warranties,  and covenants made herein by Guarantor shall survive any bankruptcy
proceedings.  This  Guarantee  shall  bind the party  making  the same,  and its
successors, assigns, heirs, executors, and personal representatives.  The death,
insolvency,  bankruptcy,  disability,  or lack of  corporate  power of Borrower,
Guarantor,  or any other  person or  entity  at any time  will not  affect  this
Guarantee.

     16. Joint and Several  Liability.  Guarantor shall be jointly and severally
liable  with  Borrower  for  the   Indebtedness  and  for  all  obligations  and
liabilities arising under this Guarantee.

     17.  Disclosure  of  Information.   Guarantor  hereby  consents  to  Lender
disclosing  to any financial  institution  or investor  providing  financing for
Lender,  any and all  information,  knowledge,  reports and records,  including,
without limitation, financial statements, concerning Guarantor.

     18. Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah Courts.
Guarantor  acknowledges  that by  execution  and  delivery  of  this  Guarantee,
Guarantor has transacted business in the State of Utah and Guarantor voluntarily
submits to,  consents to, and waives any defense to the  jurisdiction  of courts
located in the State of Utah as to all matters  relating to or arising from this
Guarantee.  EXCEPT AS  EXPRESSLY  AGREED IN  WRITING  BY  LENDER  AND  EXCEPT AS
PROVIDED IN THE  ARBITRATION  PROVISIONS  IN THE LOAN  AGREEMENT,  THE STATE AND
FEDERAL  COURTS  LOCATED  IN THE STATE OF UTAH  SHALL  HAVE  SOLE AND  EXCLUSIVE
JURISDICTION OF ANY AND ALL CLAIMS,  DISPUTES, AND CONTROVERSIES,  ARISING UNDER
OR  RELATING TO THIS  GUARANTEE.  NO LAWSUIT,  PROCEEDING,  OR ANY OTHER  ACTION
RELATING TO OR ARISING  UNDER THIS  GUARANTEE  MAY BE COMMENCED OR PROSECUTED IN
ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.

     19. Entire Agreement.  This Guarantee together with the Loan Agreement (and
any other loan documents referenced in the Loan Agreement) constitute the entire
agreement between Lender and Guarantor  concerning the subject matter hereof and
may not be altered or amended except by written  agreement  signed by Lender and
Guarantor.  All other prior and contemporaneous  agreements,  arrangements,  and
understandings  between the parties  hereto as to the subject  matter hereof are
rescinded.



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Guarantee to be
duly executed and delivered as of the date first above written.

                                   Guarantor:

                                   Security National Financial Corporation





                                   By:  s/s Scott M. Quist
                                        ------------------
                                        Scott M. Quist
                                        President
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
