MODIFICATION AGREEMENT

This Modification Agreement ("Agreement") is made as of December 3, 2074, by and between THE NEW HOME COMPANY INC., a Delaware corporation ("Borrower"), and U.S.BANK NATIONAL ASSOCIATION D/B/A HOUSING CAPITAL COMPANY, in its capacity as Administrative Agent (the "Administrative Agent'), for the benefit of Lenders under the Credit Agreement described below, LC Issuer, Swing Line Lender and a Lender.

A.     Under that certain Credit Agreement dated as of June 26,2014 (as amended, restated or otherwise modified, the "Credit Agreement"), by and among Borrower, Administrative Agent and the financial institutions from time to time party thereto (collectively, the "Lenders"), Administrative Agent and the Lenders agreed to make a loan to Borrower (the "Loan"). Capitalized terms used herein without definition have the meanings ascribed to them in the Credit Agreement.

B.     The Loan is evidenced by that ceftain Promissory Note dated as of June 26,2014, made by Borrower and payable to the order of a Lender, in the original principal amount of One Hundred Twenty-Five Million and No/l00 Dollars ($125,000,000.00) (as amended, restated, supplemented, substituted, or otherwise modified, the "Note").

C.     The Note, the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) and any other documents executed in connection with the Loan, including those which evidence, guarantee, secure or modify the Loan, as any or all of them may have been amended to date, are sometimes referred to herein as the "Loan Documents". This Agreement is a Loan Document.

D.     As of the date hereof, the outstanding principal balance of the Loan is $100,473,559.83.

E.     Borrower has requested that Administrative Agent and the Lenders modify the Loan as provided herein. Administrative Agent and the Lenders have agreed to modify the Loan on the terms and conditions set forth herein.

F.     Borrower, Administrative Agent and the Lenders now wish to modify the Loan as set forth below.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufhciency of which are hereby acknowledged, including the mutual covenants herein contained, Borrower and Lender hereby agree to the following terms and conditions:

1.     Recitals. The recitals set forth above in the Recitals are true, accurate and correct.

2.     Reaffirmation of Loan. Borrower reaffirms all of its obligations under the Loan Documents, and Borrower acknowledges that it has no claims, offsets or defenses with respect to the payment of sums due under the Credit Agreement, the Note or any other Loan Document.

"Notwithstanding anything to the contrary, in the event the Eurocurrency Base Rate shall be less than zero, such Eurocurrency Base Rate shall be deemed to be zero for the purposes of this Agreement."

(ii) The definition of the following terms are hereby added to Article I of the Credit Agreement in alphabetical order thereto, each of which shall read as follows:

"Anti-Corruption Laws" means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

"Sanctions" means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty's Treasury of the United Kingdom.

"Sanctioned Country" means, at any time, a country or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Cuba, Iran. North Korea. Sudan and Syria).

"Sanctioned Person" means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).

(b)     Section 5.13 of the Credit Agreement is hereby amended and restated in its entirety as follows:

"Section 5.13 Compliance With Laws. The Borrower and the Guarantors are in compliance with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or ageltcy thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property, the violation of which would reasonably be expected to have a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions."

"Section 5.22 Anti-Corruption and Sanctions. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and, to the knowledge of the Borrower, its directors and agents, ate in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Advance or Facility LC, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

(d)     Section 6.2 of the Credit Agreement is hereby amended and restated in its entirety as follows:

"Section 6.2 Use of Proceeds. The Borrower will, and will cause each Subsidiary to, use the proceeds of the Credit Extensions for general corporate purposes. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any "margin stock" (as defined in Regulation U). The Borrower will not request any Advance or Facility LC, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Advance or Facility LC (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of rnoney, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto "

(e)     Section 6.21 of the Credit Agreement is hereby modified to strike the Section 6.15(xx).

(f)     Section 7.1(c) of the Credit Agreement is hereby amended and restated in its entirety as follows:

"(c) The breach of any of the covenants set forth in Section 6.19 (other than as provided in Section 6.19(f)) or in Section 6.2."

(e)     CUSIP Information. The following information is hereby added to the upper right-hand corner of the cover page of the Credit Agreement:

4.     Conditions Precedent. Before this Agreement becomes effective and any party becomes obligated under it, all of the following conditions shall have been satisfied at Borrower's sole cost and expense in a manner acceptable to Administrative Agent in the exercise of Administrative Agent's sole judgment:

(a)     Administrative Agent shall have received fully executed and where appropriate, acknowledged originals of this Agreement and the attached Guarantors' Consent.

(b)     The representations and warranties contained in the Loan Documents and this Agreement are true and correct as of the effective date of this Agreement.

(c)     All payments due and owing to Administrative Agent and the Lenders under the Loan Documents have been paid current as of the effective date of this Agreement.

(d)     Administrative Agent shall have received reimbursement, in immediately available funds, of all costs and expenses incurred by Administrative Agent and the Lenders in connection with this Agreement, including, legal fees and expenses of Administrative Agent's and Lenders' counsel.

5.     Representations and Warranties. Borrower represents and warrants to Administrative Agent and the Lenders as follows:

(a)     Loan Documents. All representations and warranties made and given by Borrower in the Loan Documents are true, accurate and correct as of the date of this Agreement.

(b)     No Event of Default. No Event of Default has occurred and is continuing and no event has occurred and is continuing which, with notice or the passage of time or both, would be an Event of Default.

(c)     Borrowing Entity. Borrower is a corporation which is duly organized and validly existing under the laws of the State of Delaware. Except as otherwise disclosed to Administrative Agent in writing plior to the date hereof, there have been no changes in the organization, composition, ownership structure or formation documents of Borrower since the inception of the Loan.

6.     Remedies. Upon a default under this Agreement, the Note or any of the other Loan Documents, Lender may enforce all rights and remedies under any applicable law. The rights and remedies specified herein are cumulative and are not exclusive of any rights or remedies which Lender would otherwise have under the Loan Documents or applicable law.

7 .     Incorporation. This Agreement shall form a part of each Loan Document, and all references to a given Loan Document shall mean that document as hereby modified.

8.     Effect of this Agreement. The terms and conditions of the Credit Agreement and the other Loan Documents are modified only to the extent specifically set forth herein and on the condition that such modification shall not prejudice any other existing or future rights, remedies, benefits or powers belonging or accruing to Administrative Agent and the Lenders under the terms of the Credit Agreement and the other Loan Documents, as hereby modified.

9.     No Impairment; Reaffirmation and Ratification. Except as set forth herein, the terms of the Note, the Credit Agreement and the other Loan Documents shall remain in full force and effect and apply to this Agreement, and the Note and the other Loan Documents are ratified and affirmed by the parties hereto.

10.     Indemnification. Borrower shall indemnify, defend, protect and hold Administrative Agent and the Lenders (individually and collectively, the "Indemnified Party") harmless from and against any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements of any kind or nature whatsoever, including, without limitation, attorneys' fees and other costs of defense, incurred or accruing by reason of any acts performed by Indemnified Party pursuant to the provisions of this Agreement regardless of whether legal action is commenced in any coutl, including, without limitation, those arising from the joint, concurrent or comparative negligence of Indemnified Party, except as a result of Indemnified Party's gross negligence or willful misconduct.

12.     Purpose and Effect of Administrative Agent's and Lenders' Approval. Administrative Agent's and/or Lenders' approval of any matter in connection with the Loan shall be for the sole purpose of protecting Administrative Agent's and Lenders' security and rights. Neither the execution and delivery of this Agreement by Administrative Agent or any Lender, nor any approval by Administrative Agent or any Lender of any matter in connection with the Loan shall result in a waiver of any Event of Default. In no event shall Administrative Agent's or any Lender's approval be a representation of any kind with regard to the matter being approved.

13.     Integration. The Loan Documents, including this Agreement: (a) integrate all the terms and conditions mentioned in or incidental to the Loan Documents; (b) supersede all oral negotiations and prior and other writings with respect to their subject matter; and (c) are intended by the parties as the final expression of the agreement with respect to the terms and conditions set forth in those documents and as the complete and exclusive statement of the terms agreed to by the parties. If there is any conflict between the terms, conditions and provisions of this Agreement and those of any other agreement or instrument, including any of the other Loan Documents, the terms, conditions and provisions of this Agreement shall prevail.

14.     Authorization. By signing below, each party hereto represents to the other that the individual executing this Agreement on its behalf is the duly appointed signatory of such party and that such individual is authorized to execute this Agreement by or on behalf of such party and to take all action required by the terms of this Agreement.

15.     Miscellaneous. This Agreement may be executed in counterparts, and all

counterparts shall constitute but one and the same document. If any court of competent jurisdiction determines any provision of this Agreement or any of the other Loan Documents to be invalid, illegal or unenforceable, that portion shall be deemed severed from the rest, which shall remain in full force and effect as though the invalid, illegal or unenforceable portion had never been a part of the Loan Documents. This Agreement shall be governed by the laws of the State of California, without regard to the choice of law rules of that State. As used herein, the word "include(s)" means "includes(s), without limitation," and the word "including" means "including, but not limited to."

IN WITNESS WHEREOF, Borrower, Administrative Agent, Swing Line Lender, LC Issuer and Lenders have executed this Agreement as of the date first above written.

The undersigned (collectively, “Guarantor”) consents to the foregoing Modification Agreement and the transactions contemplated thereby and reaffirms its obligations under the Guaranty dated as of June 26, 2014 (as amended, restated or otherwise modified, the “Guaranty”), and its waivers, as set forth in the Guaranty, of each and every one of the possible defenses to such obligations. Guarantor further reaffirms that its obligations under the Guaranty are separate and distinct from Borrower’s obligations.

Dated as of: December 3, 2014