Customer Q & A

I have heard you are bankrupt. Are you going out of business?

Chapter 11 is a tool that enables us to continue uninterrupted operations while our corporate parent restructures its debt. Like the vast majority of companies that go through Chapter 11, we fully expect to emerge as a stronger, more viable organization with long-term financial strength and stability.

Why did you file for Chapter 11 protection?

Our corporate parent, TOUSA, needed to fix its balance sheet, not its operations. Like virtually every other homebuilder in our business, sales have been negatively impacted by the housing downturn. As a result, we carried too much debt on our balance sheet at the corporate level relative to current revenues and our ability to service that debt.

What's going to happen while you are still in Chapter 11?

It is business as usual. In fact, we are stronger today than we were before we filed because the cloud of uncertainty has been removed and we can focus our time and energy exclusively on our homebuilding activities. We are seeking authority from the courts to pay associate salaries, wages and benefits. We will continue to purchase materials and services from our suppliers and serve our customers. In Chapter 11 we have the ability to conduct business after the filing of the petition.

What will happen to my pre-approved mortgage from Preferred Home Mortgage Company?

TOUSA's affiliates that provide financial services, which include Universal Land Title, Preferred Home Mortgage Company and Alliance Insurance, are not included in the filing. They have their own separate revenues and will not be impacted by TOUSA's filing. Your closing will take place as scheduled.

I have retained Universal Land and Title to provide my title insurance. How does the Chapter 11 filing impact me?

Universal Land Title is not included in the Chapter 11 filing and will continue normal operations. Your relationship with Universal Land and Title will not change as a result of the filing.

How do I know that you are not going to cut corners and try to save money now that you are in bankruptcy?

We have every intention of being around for the long haul, and not only would such actions be unethical, but they would also be very counter-productive, as we are known for quality homebuilding and referrals from delighted customers are a big part of our business.

Will you be cutting back on service and warranties?

We have asked for Court authority to continue to honor all commitments to our current and prospective homeowners. We do not intend to modify these commitments in any way as a result of the Chapter 11 filing.

To help ensure that you have added confidence in the home you purchase from a TOUSA brand in addition to seeking authority to continue all of our customer programs the Company has contracted with the Administrator of its current Home Builder's Limited Warranty program to provide at no cost to the customer a ten year transferable supplementary warranty to those TOUSA homebuyers with contracts of sale currently in force as well as those customers who sign a contract of sale between now and April 30, 2008.

The new program is insured by one of the member companies of Zurich North America, one of the largest insurance organizations in the United States and rated "A/positive" (Excellent) by A.M. Best and Company, the leading independent insurance company rating service. In the event that TOUSA fails to fulfill its obligations to "eligible" homebuyers under its existing program, the insurer will perform according to the terms and conditions contained within the supplemental document.

I am still leery about buying something as valuable as a new home from someone who is in bankruptcy.

I totally understand your concerns, but want to assure you that our operations will continue as normal. In fact, we are stronger today than we were before we filed to reorganize under Chapter 11. Prior to filing, our suppliers and vendors were nervous about getting paid. But now that we have filed, they are assured of payment for goods and services going forward. In addition, now that we have put our balance sheet issues behind us, we are able to focus all of our time and energy on building and delivering the high-quality homes for which we are known.

I am still uncomfortable with the current situation and I would like to cancel my contract and get a refund.

I am very sorry that you feel uncomfortable. We are operating the business as usual and your home should be completed on schedule. Requests for refunds of customer deposits will be treated according to the terms of the sales contracts, consistent with our normal business practices.

What about commitments and incentives you offered before the filing?

We intend to stand behind all commitments and incentives we offered prior to the filing. Our customers continue to be our number one priority.

How about your contractors? Are they sticking with you?

Now that we have filed, they are assured of getting paid for goods and services. We are a better credit risk today than we were before the filing.

Will I receive all the options, upgrades and selections I made, or will you make substitutions because you had to switch suppliers?

It is our intention to honor every one of your specific requests, as we know how important these critical details are to you. We have no intention of switching suppliers as a result of the Chapter 11 filing.

What happens if for some reason you don't finish building my house?

We have taken the steps to make sure we are able to finish all home under construction.

How safe is my deposit?

We are seeking Court authority to continue to maintain customer deposits under existing practices and refund customer deposits if warranted by the terms of the sales contracts, consistent with our normal business practices.

Are you going to be raising your prices now that you have filed for Chapter 11?

Our prices have always been market-driven and they will remain that way in order for us to remain competitive.

What assurances do I have that amenities, roads (including final paving), utilities, and other common area improvements will be completed in the manner described at the time of purchase of my home?

We intend to stand by our commitments to build any facilities or infrastructure that were a vital part of your decision to purchase your home.

I understand you still control the homeowners' association and are funding a significant portion of its expenses. Will you continue to do so in bankruptcy? Who will make up any shortfalls if you don't?

TOUSA has requested that the Bankruptcy Court enter an order authorizing it to maintain all of its customer programs, including its practice of covering homeowner association dues for unsold homes in communities. We plan to continue to offer the same customer programs and high level of customer service we have always provided to our customers.

I Intend to have an independent inspection of the home by a third party engineer prior to accepting delivery because of your bankruptcy filing. Will you pay for this inspection?

We have requested a court order authorizing us to continue to honor all obligations to customers.

My contract allows you to increase my purchase price if you experience increased costs. Do you intend to invoke this provision of the contract, and if you do, will you distinguish between increases due to general conditions and increases due to your bankruptcy?

We intend to comply with our customer contracts as we always have and have no intention of passing bankruptcy related costs to our customers. We expect our suppliers to continue to provide us with goods and services on favorable market terms because they have the added protection of assured payment while we are operating in Chapter 11.

I waived escrow on my deposit. I now want that amount put back into escrow. How can I get this done? Am I assured it will be applied against my purchase price even though it wasn't escrowed?

Monies held will be applied against purchased price.

Joe Salesperson promised to do __________ & __________ as part of the closing. Will this be honored?

We have requested a court order authorizing us to continue to honor all obligations to customers and to take any other reasonable actions that may be necessary to effectuate closings under current contracts, including modifying such contracts at or before closing to address market conditions or other negotiating changes consistent with the company's business judgment and past practice.

Why did the NYSE suspend TOUSA's shares?

The shares were suspended on Nov. 19, 2007 in view of the fact that the Company was previously notified by NYSE Regulation that it had fallen below the NYSE continued listing standard for an average closing price of less than $1.00 over a consecutive 30 trading day period. In addition, NYSE Regulation also considered the "abnormally low" trading level of the common stock, which closed at $0.12 on November 15, 2007, with a resultant market capitalization of $7.2 million.

Furthermore, the NYSE noted that the Company had also fallen below the NYSE's continued listing standard for average market capitalization of less than $75 million over a consecutive 30 trading day period and stockholders' equity of $75 million based on its recently reported results for the quarter ended September 30, 2007.

For more information please see www.nyse.com.

Which of the NYSE continued listing standards did TOUSA no longer meet?

The NYSE determined to suspend trading based on the abnormally low pricing levels for the common stock. The NYSE noted that it may, at any time, suspend a security if it believes continued dealings in that security on the NYSE are not advisable.

For general questions about Chapter 11 click here.