Chapter 11 Q & A

What is Chapter 11?

First and foremost it does NOT mean that the Company is going out of business. Chapter 11 is a legal mechanism for court-supervised reorganization or restructuring of a company's obligations. Chapter 11 provides a way for companies to address their financial challenges in order to become a viable entity, while continuing day-to-day operations

In other words, we filed for Chapter 11 to preserve and strengthen our businesses by addressing our current financial situation and our operational opportunities.

Why did you file for Chapter 11?

TOUSA took this action to preserve the value of the Company and deleverage the balance sheet. TOUSA is determined to maintain its competitiveness in the challenging homebuilding industry, and the key to accomplishing that goal is restructuring the balance sheet to allow the Company to operate efficiently and aggressively in its markets.

Do you have enough money to stay in business?

Citigroup Global Markets Inc. has agreed to provide the Company with up to $150 million in debtor-in-possession financing. If approved by the Court, the Company will have access to the funds to implement its restructuring plan and pay normal operating expenses, including employee wages and payments to suppliers. The financing requires court approval.

Does this mean you are going out of business?

Absolutely not. We filed for Chapter 11 to preserve and strengthen our business by addressing our current financial situation and our operational opportunities.

What happens during Chapter 11?

The Chapter 11 filing triggers a "stay," which generally prevents anyone from collecting debts owed by the company before the petition date, such as loan payments it would ordinarily make to creditors and bondholders, and payments to suppliers for goods or services received before the filing.

Chapter 11 permits, and in fact encourages, daily operations to continue. We will continue to serve our customers, pay our associates, and pay for goods and services purchased after the filing date in the ordinary course of business.

While operating the business, management will work with the Company's creditors to finalize a plan to restructure or reduce its debt. The restructuring plan is called a plan of reorganization. When the plan is accepted by the creditors and approved by the Court, it is said to be confirmed and TOUSA emerges from Chapter 11 as a reorganized company.

How long will the Company be in Chapter 11?

TOUSA has announced a pre-negotiated deal with its senior bondholders to implement a restructuring and will work hard to emerge from Chapter 11 reorganization as soon as possible.

Which entities are included in the filing?

TOUSA Homes, Inc. and Newmark Homes LP, and related businesses Engle Homes; Newmark Homes; Fedrick, Harris Estate Homes and Trophy Homes are included in the filing.

TOUSA's affiliates that provide financial services are not included in the filing and will not be affected by it. This includes Universal Land Title, Inc., Preferred Home Mortgage Company and Alliance Insurance and Information Services.

Do companies ever emerge from Chapter 11?

Yes. Many companies, including NVR, Inc. (Ryan Homes), Continental Airlines, Texaco, Macy's, Amerco, Inc. (U-Haul), The Southland Corp (7- Eleven) and K-Mart have successfully reorganized under Chapter 11.

Who will run the company? Will management remain in place?

One of the key aspects of Chapter 11 is that management remains in place. Our management remains committed to the future success of the business.

I have a lawsuit pending against TOUSA. What happens now?

Under the U.S. Bankruptcy code, all lawsuits and other legal matters are stayed for the entirety of the reorganization, absent a court order granting relief from the automatic stay. We suggest you discuss these matters with your attorney.

Where can I find Chapter 11 case information?

TOUSA has set up a special Reorganization Information page on the Company website, www.tousa.com, which contains a variety of information on our Chapter 11 restructuring. TOUSA has also set up a toll-free information hotline for inquiries at (866) 588-9290. Additional information can be found at www.tousadocket.com. These resources are designed to provide information on the restructuring to suppliers, associates, customers, shareholders and any other interested parties.

How can I get a copy of the petitions?

Copies of the Chapter 11 petitions and other documents filed with the Court will be available shortly after the filing at www.tousa.com. The petitions are also accessible at the Court's website, www.flsb.uscourts.gov, through an account obtained from Pacer Service Center at (800) 676-6856. Also see www.tousadocket.com.