Engle/Newmark/Trophy Customer Questions & Answers

What did TOUSA announce today?

TOUSA announced today that it will shift its focus from build-to-order new sales and starts, to closing homes currently under construction, selling its remaining inventory of spec homes, and monetizing its land assets over time.

Why did TOUSA make this decision?

The ongoing economic downturn continues to hurt businesses of all sizes, across industries. The homebuilding industry has been particularly hard hit. Weak sales, high foreclosure rates, increasing job losses, and the ever-tightening mortgage market have caused many in our industry to re-evaluate existing operation models, including TOUSA.

I have a home that has started construction but is not yet complete, will TOUSA finish it?

Yes. TOUSA will finish all homes that are currently under construction. Today's announcement should have no impact on you.

Will the home be completed according to the terms of my contract and include any upgrades/changes I requested?

Yes. Your home will be built and completed according to the specifications laid out in your contract including use of the same materials.

How do I know TOUSA won't cut corners in finishing my home?

Because TOUSA is standing by its obligation to you. We understand that purchasing a home is one of the largest and most valuable investments you will ever make. TOUSA has been building homes for families for more than 40 years. You can be assured that the know-how and commitment to excellence that went into all of those homes will go into yours as well.

You should feel confident knowing that your home will be built and completed according to the specifications laid out in your contract, including use of the same materials.

Along with completing my home, will TOUSA finish other projects in my development (streets/clubhouse/pool, etc.)?

Please contact your normal TOUSA representative for news relating to specific developments.

TOUSA hasn't started building my home. Will it still be built?

Unfortunately, after consultation with the Company's creditors, it was determined that the Company will not be able to complete the unstarted backlogs as planned. We deeply regret this, but would like you to know that we will be refunding 100% of your deposit. Please contact your local sales office for further information.

When will I receive my deposit?

You will receive your deposit shortly.

How do I find out if my home is one of the homes that will no longer be built?

TOUSA has sent notifications to customers. If you have not received a letter, please contact your local sales office.

I have spent a lot of money on the purchase of the home (home inspections, architect, etc.), will TOUSA cover those costs in addition to returning my deposit?

If you have been notified that your home will not be started and completed, TOUSA will refund 100% of your deposit. Amounts incurred beyond the TOUSA contract are not included in the deposit refund. We apologize for any inconvenience this may cause.

Do you have any homes that were just built that are available for purchase? In other words, if you aren't building my new home, do you have other options for me?

In many cases, yes. Please contact your local sales office for additional details.

What is the impact on the warranty program? Will you still honor warranties?

For homebuyers who have purchased (or will purchase) a home from us after January 29, 2008, we have taken steps to assure the continuation of your warranty coverage by purchasing on your behalf, warranty coverage for your home. This new coverage is subject to Court authorization but we fully expect this to be granted and have already received approval from our key creditors.

Once authorized by the court, the coverage will be provided per the terms and conditions of the Builder's Limited Warranty document (PWC Form 107, 107H, 107TX, or 107H TX) that has been or will be provided to you. The warranty program is administered by Professional Warranty Service Corporation (PWC) and is insured by Steadfast Insurance Company, a member of the Zurich Financial Services Group, and rated A (Excellent) by A. M. Best and Company.

What if I purchased and closed my home before January 29, 2008?

Unfortunately, under the Bankruptcy Code, warranties on homes that were purchased and closed prior to January 29, 2008 are no longer effective. However, in the event of a sale of TOUSA assets any warranty coverage will be at the discretion of the buyer. Please contact the TOUSA information hotline at 866-588-9290 if you have additional questions.

What can I sign that shows me I have this new warranty?

Once we receive Court authorization, you will be provided a completed application as part of your closing package. There is nothing new for you to sign at this time.

My development is half-finished and it looks like TOUSA won't be building more homes here. Will any other builder step in and finish the development?

The Company will continue to market and solicit offers for its assets during this process but we cannot speak to what other developers or investors will do.

If amenities in my development aren't completed, will my HOA dues go down?

Currently, HOA dues are set based on the budget to operate the community. If the amenities are not complete, the budget will be adjusted in consideration of that.

Will (TOUSA/Brand) continue to fund the HOA?

Unfortunately, I do not have an answer for you at this moment. I will know more as we move through this process

What will happen to the HOA without (TOUSA/Brand's) involvement?

Either the HOA will be turned over to the Homeowners, or TOUSA or the new owner of the development will retain the Declarant rights. Again, I will know more as we move through this process.

Can a new owner change the HOA dues and policies without my approval?

Only if the new owner is the Declarant. And even in that case, there are limitations. I would suggest you seek legal advice on this question.

What is going on with the financial services companies?

TOUSA's financial services companies Universal Land Title, Inc., Preferred Home Mortgage Company, and Alliance Insurance and Information Services are involved in preliminary sale negotiations and will continue with normal operations.

Any other sale talks going on?

The Company's homebuilding operations in Texas, which serve the Houston, San Antonio, and Austin markets under the Newmark and Trophy brands, are currently engaged in discussions with various parties regarding a sale.

What is the impact on my mortgage through Preferred Home Mortgage Company? How about my closing schedule?

Any mortgage you applied for through Preferred Home Mortgage Company is secure. Additionally, scheduled closings at Universal Land Title, Inc. will take place as planned. Today's announcement will have no impact on your mortgage and title process.

Will an insurance company still insure my home?

TOUSA's announcement should not be reason for insurance being denied on this residence.