1046578--3/20/2007--TECHNICAL_OLYMPIC_USA

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{condition, economic, financial}

{interest, director, officer}

{cost, contract, operation}

{financial, litigation, operation}

{debt, indebtedness, cash}

{gas, price, oil}

{operation, natural, condition}

{cost, operation, labor}

{regulation, change, law}

{provision, law, control}

{customer, product, revenue}

{stock, price, operating}

We may incur significant damages and expenses due to the purported class action complaints that were filed against us and certain of our officers. The homebuilding industry is experiencing deteriorating conditions that may continue for an indefinite period and may further adversely affect our business and results of operations compared to prior periods. Changes in economic or other business conditions could cause our current and proposed levels of debt to adversely affect our financial condition and prevent us from fulfilling our debt service obligations. Our debt instruments impose significant operating and financial restrictions, which may limit our ability to finance future operations or capital needs and pursue business opportunities, thereby limiting our growth. We are dependent on the continued availability and satisfactory performance of our subcontractors, which, if unavailable, could have a material adverse effect on our business. Changes in accounting rules relating to the consolidation of assets associated with option contracts and joint ventures, or a change in the interpretation or application of such rules, could adversely affect our financial condition and limit our use of such arrangements, which could impact our future growth. In the event that tax liabilities arise in connection with the October 2003 restructuring, there can be no assurance that we will not be liable for such amounts. Our revenues and profitability may be adversely affected by natural disasters or weather conditions. Technical Olympic S.A., our majority stockholder, can cause us to take, or prevent us from taking, actions without the approval of the other stockholders and may have interests that could conflict with the interests of our other stockholders. Control of our company by Technical Olympic S.A. and/or our issuance of preferred stock could make it difficult for a third party to acquire us. Our common stock price has been and could continue to be volatile. Risks Related to Our Industry We are subject to substantial risks with respect to the land and home inventories we maintain, and fluctuations in market conditions may affect our ability to sell our land and home inventories at expected prices, if at all, which would reduce our profit margins. Changes in the mortgage market could adversely impact us by increasing the supply of inventory housing, negatively impacting pricing conditions, as well as decreasing the demand for our homes, which would adversely affect our revenues and profitability. Supply risks and shortages relating to labor and materials can harm our business by delaying construction and increasing costs. The competitive conditions in the homebuilding industry could increase our costs, reduce our revenues, and otherwise adversely affect our results of operations. We are subject to product liability and warranty claims arising in the ordinary course of business that could adversely affect our results of operations. States, cities, and counties in which we operate have, or may adopt, slow or no growth initiatives that would reduce our ability to build in these areas and could adversely affect our future revenues. Our business is subject to governmental regulations that may delay, increase the cost of, prohibit or severely restrict our development and homebuilding projects. Special Note Regarding Forward Looking Statements

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1046578--3/20/2007--TECHNICAL_OLYMPIC_USA_INC