EMPLOYMENT AGREEMENT - Ronald A. Klein
 
      THIS EMPLOYMENT AGREEMENT (this "Agreement") by and between Origen
Financial, Inc., a Delaware corporation ("Parent"), ORIGEN FINANCIAL L.L.C., a
Delaware limited liability company (the "Company") and Ronald A. Klein
("Executive") is made and entered into on July 14, 2006 (the "Effective Date").
 
                                    RECITAL:
 
      A. Company desires to employ Executive, and Executive desires to be
employed by Company, in accordance with the terms of this Agreement.
 
      NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
 
      1. Employment.
 
            (a) Company agrees to employ Executive and Executive accepts the
employment, on the terms and subject to the conditions set forth below. During
the term of employment hereunder, Executive shall serve as the Chief Executive
Officer of Company, and shall do and perform diligently all such services, acts
and things as are customarily done and performed by the Chief Executive Officer
of companies in similar business and in size to Company, together with such
other duties as may reasonably be requested from time to time by the Board of
Directors of Company (the "Board"), which duties shall be consistent with
Executive's position as set forth above. Executive will report and be
subordinate to the Board. The Board will define and refine Executive's job
duties and responsibilities from time to time. Executive shall also serve as the
Chief Executive Officer of Parent without additional compensation therefor.
 
            (b) For service as an officer and employee of Company, Executive
shall be entitled to the full protection of the applicable indemnification
provisions of the Certificate of Incorporation of Company, as it may be amended
from time to time. Company agrees that Executive will be named as an additional
insured under Company's Directors' and Officers' Errors and Omissions Insurance
during his employment hereunder.
 
      2. Term of Employment.
 
            (a) Subject to the provisions for termination provided below, the
term of Executive's employment under this Agreement shall commence on the
Effective Date and shall continue thereafter until the third anniversary of the
Effective Date; provided however, that the term of this Agreement shall be
automatically extended for successive terms of one (1) year each, unless either
party notifies the other party in writing of its desire to terminate this
Agreement at least one hundred eighty (180) days before the end of the term then
in effect. The date that this Agreement is scheduled to expire in accordance
with the foregoing sentence is referred to as the "Contract Term Date". In the
event that the term of this Agreement is automatically extended pursuant to this
paragraph 2(a), the Base Salary (as defined in paragraph 4(b) below) then in
effect shall be increased by five percent (5%) for each successive one-year
extension.
 
            (b) Executive acknowledges and agrees that Executive is an "at-will"
employee and that Executive's employment may be terminated, with or without
Cause (as defined in paragraph 7(b) below), at the option of Executive or
Company.
 
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      3. Devotion to Company's Business.
 
            The Executive shall devote his best efforts, knowledge, skill, and
his entire productive time, ability and attention to the business of the Company
during the term of this Agreement; provided, however, the Executive's
expenditure of reasonable amounts of time to various charitable and other
community activities, to service on boards of directors of other companies, or
to the Executive's own personal investments and projects, shall not be deemed a
breach of this Agreement so long as the amount of time so devoted does not
materially impair, detract or adversely affect the performance of Executive's
duties under this Agreement.
 
      4. Compensation.
 
            (a) General Statement. During the term of this Agreement, Company
shall pay or provide, as the case may be, to Executive the compensation and
other benefits and rights set forth in paragraphs 4, 5 and 6 of this Agreement.
 
            (b) Base Compensation. As compensation for the services to be
performed hereafter, Company shall pay to Executive, during his employment
hereunder, an annual base salary (the "Base Salary") payable in accordance with
Company's usual pay practices (and in any event no less frequently than monthly)
at the rate of:
 
                        (i)         Four Hundred Ninety Five Thousand Dollars
                                    ($495,000.00) for the period beginning on
                                    the Effective Date and ending on the day
                                    prior to the first anniversary of the
                                    Effective Date;
 
                        (ii)        Five Hundred Twenty Thousand Dollars
                                    ($520,000.00) for the period beginning on
                                    the first anniversary of the Effective Date
                                    and ending on the day prior to the second
                                    anniversary of the Effective Date; and
 
                        (ii)        Five Hundred Forty Five Thousand Dollars
                                    ($545,000.00) thereafter.
 
            (c) Target Bonus. Executive shall be eligible to receive an annual
incentive bonus up to 100% of his then-current Base Salary (the "Target Bonus"),
as determined by the Board of Parent based on the Company and Parent achieving
certain performance criteria, the Executive's performance and such other
criteria as the Board of Parent shall determine. Executive also shall be
eligible to receive such other bonus compensation as may be determined by the
Board of Parent from time to time.
 
            (d) Equity Compensation. Parent has established the 2003 Equity
Incentive Plan, as amended (as it may be amended or restated from time to time,
the "Equity Incentive Plan"). Concurrently with the execution of this Agreement,
Parent has granted Executive one hundred seventy five thousand (175,000)
restricted shares of Parent's common stock, in accordance with the terms and
conditions of the Equity Incentive Plan and that certain Restricted Stock Award
Agreement between Executive and Parent of even date herewith. Executive shall be
eligible to receive future option grants and/or restricted share grants as
approved by Parent's Compensation Committee.
 
            (f) Disability. During any period that Executive is Disabled (as
defined below) (the "Disability Period"), Executive shall continue to receive
his full Base Salary, Target Bonus and other benefits at the rate in effect for
such period until his employment is terminated by Company pursuant to paragraph
7(a)(ii) hereof; provided, however, that payments so made to
 
                                      -2-
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Executive during the Disability Period shall be reduced by the sum of the
amounts, if any, which were paid to Executive at or prior to the time of any
such payment under disability benefit plans of Company. For purposes of this
Agreement, Executive shall be deemed to be "Disabled" if he is eligible to
receive disability benefits under any disability benefit plan or policy provided
by Company to its employees generally or to Executive specifically (a "Company
Sponsored Plan"). If Company does not provide coverage to Executive under a
Company Sponsored Plan, Executive shall be deemed to be "Disabled" if he is
unable to perform the essential functions of his duties hereunder (with or
without reasonable accommodation by Company) as a result of incapacity due to
physical or mental illness.
 
      5. Benefits.
 
            (a) Insurance. Company shall provide to Executive life, disability,
medical, hospitalization and dental insurance for himself, his spouse and
eligible family members as may be determined by the Board to be consistent with
Company's standard policies.
 
            (b) Benefit Plans. Executive, at his election, may participate,
during his employment hereunder, in all retirement plans, 401(K) plans and other
benefit plans of Company generally available from time to time to other
executive employees of Company, Parent or their subsidiaries (the
"Subsidiaries") and for which Executive qualifies under the terms of the plans
(and nothing in this Agreement shall or shall be deemed to in any way affect
Executive's right and benefits under any such plan except as expressly provided
herein). Executive shall also be entitled to participate in any equity incentive
plan, option plan or other employee benefit plan that is generally available to
senior executives, as distinguished from general management, of Company, Parent
or the Subsidiaries. Executive's participation in and benefits under any such
plan shall be on the terms and subject to the conditions specified in the
governing document of the particular plan.
 
            (c) Annual Vacation. Executive shall be entitled to six (6) weeks of
vacation time each year without loss of compensation. In the event that
Executive is unable for any reason to take the total amount of vacation time
authorized herein during any year, he may accrue such unused time and add it to
the vacation time for any following year; provided, however, that no more than
twenty (20) business days of accrued vacation time may be carried over at any
time (the "Carry-Over Limit"). Upon any termination of this Agreement for any
reason whatsoever, accrued and unused vacation time (not to exceed thirty (30)
business days) shall be paid to Executive within ten (10) days of such
termination based on the Base Salary in effect on the date of such termination.
 
      6. Reimbursement of Business Expenses.
 
            Company shall reimburse Executive or provide him with an expense
allowance during the term of this Agreement for travel, entertainment, business
development and other expenses reasonably and necessarily incurred by Executive
in connection with Company's business. Executive shall furnish such
documentation with respect to reimbursement to be paid hereunder as Company
shall reasonably request.
 
      7. Termination of Employment.
 
            (a) This Agreement and Executive's employment hereunder may be
terminated:
 
                  (i) by either Executive or Company at any time for any reason
      whatsoever or for no reason upon not less than sixty (60) days written
      notice;
 
                  (ii) by Company at any time for "Cause" without prior notice;
      and
 
                                      -3-
<PAGE>
 
                  (iii) upon Executive's death or if Executive has been Disabled
      for a total of at least 120 days in any twelve month period.
 
            (b) For purposes of this Agreement, for "Cause" means (i) a material
breach of any provision of this Agreement by Executive (if the breach is
curable, it will constitute Cause only if it continues uncured for a period of
twenty (20) days after Executive's receipt of written notice of such breach from
Company), (ii) Executive's failure or refusal, in any material manner, to
perform all lawful services required of him pursuant to this Agreement, which
failure or refusal continues for more than twenty (20) days after Executive's
receipt of written notice of such deficiency, (iii) Executive's commission of
fraud, embezzlement or theft, or a crime constituting moral turpitude, in any
case whether or not involving Company, that in the reasonable good faith
judgment of the Board of Parent or the Board of Company, renders Executive's
continued employment harmful to Company, (iv) Executive's misappropriation of
Company assets or property, including, without limitation, obtaining
reimbursement through fraudulent vouchers or expense reports, or (v) Executive's
conviction or the entry of a plea of guilty or no contest by Executive with
respect to any felony or other crime that, in the reasonable good faith judgment
of the Board of Parent or the Board of Company, adversely affects Company,
Parent and/or either of its reputation or business.
 
      8. Compensation Upon Termination.
 
            (a) If Company terminates this Agreement pursuant to paragraph
7(a)(i) hereof, if Company terminates this Agreement pursuant to paragraph
7(a)(iii) hereof, or if Executive voluntarily terminates this Agreement for Good
Reason (as defined below) then (i) Company shall pay to Executive or his estate,
as applicable, within thirty (30) days after the effective date of such
termination any unpaid Base Salary accrued and earned by him hereunder up to and
including the effective date of such termination plus a pro rata amount of the
Target Bonus (determined by multiplying the Target Bonus amount by the number of
days elapsed in the year of the term of this Agreement and dividing by 365) (the
"Pro Rata Target Bonus Amount"), (ii) Company shall continue to pay Executive or
his estate, as applicable, the Base Salary plus a pro rata amount of the Target
Bonus (determined by multiplying the Target Bonus amount by the number of days
in each applicable interval period and dividing by 365) (the "Interval Target
Bonus Amount") at the usual intervals during the Severance Period (as defined
below), but only if Executive fully complies with paragraph 10 of this
Agreement, (iii) if applicable, during the Severance Period, Company shall pay
Executive's COBRA premiums for medical insurance benefits in effect on the date
of termination (provided that, to the extent permitted under applicable law, the
Severance Period will run concurrently with, count against, and not be in
addition to, the 18-month statutory COBRA period), and continue to provide
Executive with such other employee benefits for which Executive continues to
qualify during the Severance Period, but only if Executive fully complies with
paragraph 10 of this Agreement, and (iv) Executive's outstanding stock options
and restricted shares shall accelerate and be fully vested upon a termination
without "Cause". Notwithstanding any other provision of this Agreement to the
contrary, (A) Company's obligations under this paragraph 8(a) shall be
contingent on Executive executing and delivering to Company a general release of
claims, substantially in the form attached hereto as Exhibit A, and (B) if
Executive engages in full-time employment after the termination of this
Agreement (whether as an executive or as a self-employed person), any employee
benefit and welfare benefits received by Executive in consideration of such
employment which are similar in nature to the employee benefit and welfare
benefits provided by Company will relieve Company of its obligations under
paragraph 8(a)(iii) to provide comparable benefits to the extent of the benefits
so provided. For purposes of this Agreement, (1) the "Severance Period" means
the period commencing on the date of termination of this Agreement and ending on
the second anniversary of the date of termination of this Agreement. For
purposes of this Section 8 only, "Good Reason" means the occurrence of any of
the
 
                                      -4-
<PAGE>
 
following events: (a) a substantial adverse change, not consented to by
Executive, in the nature or scope of Executive's responsibilities, authorities
or duties hereunder, (b) a substantial involuntary reduction in Executive's Base
Salary except for an across-the-board salary reduction similarly affecting all
or substantially all employees, or (b) the relocation of Executive's principal
place of employment to another location of Company outside a sixty (60) mile
radius from the location of Executive's principal place of employment as of the
date hereof.
 
            (b) If Executive voluntarily terminates this Agreement pursuant to
paragraph 7(a)(i) for any reason other than Good Reason or Company terminates
this Agreement pursuant to paragraph 7(a)(ii), (i) Executive shall be entitled
to no further compensation or other benefits under this Agreement, other than
any unpaid Base Salary and the Pro Rata Target Bonus Amount accrued and earned
by Executive hereunder for the period up to and including the effective date of
such termination, and (ii) Executive shall forfeit all unvested stock options
and restricted shares awarded under the Equity Incentive Plan.
 
            (c) If this Agreement is terminated on a Contract Term Date because
Company notifies Executive that this Agreement will not be renewed pursuant to
paragraph 2(a), (i) Company shall pay to Executive within thirty (30) days after
the effective date of such termination any unpaid Base Salary and Target Bonus
accrued and earned by him hereunder up to and including the effective date of
such termination, (ii) Company shall continue to pay Executive the Base Salary
at the usual intervals for the period up to the first anniversary of the
termination, but only if Executive fully complies with paragraph 10 of this
Agreement, and (iii) Executive's outstanding stock options and restricted shares
shall accelerate and be fully vested.
 
            (d) Except as otherwise specified in this paragraph 8 and, if
applicable, paragraph 9 below, Executive shall not be entitled to any other
compensation or benefits upon the termination of his employment with Company for
any reason whatsoever. If payable, the payments under this paragraph 8 shall be
in addition to, and not in lieu of, the payment to which Executive is entitled
under paragraph 9 below.
 
            (e) Immediately upon the cessation of Executive's employment with
the Company for any reason whatsoever, notwithstanding anything else to the
contrary contained in this Agreement or otherwise, Executive will stop serving
the functions of his terminated or expired position(s) and shall be without any
of the authority or responsibility for such position(s). Upon request, at any
time following the cessation of his employment for any reason, Executive shall
resign from the Board if then a member.
 
            (f) Notwithstanding anything to the contrary in this paragraph 8,
Company's obligation to pay, and Executive's right to receive, any compensation
under this paragraph 8, shall terminate upon Executive's breach of any provision
of paragraph 10 hereof. In addition, Executive shall promptly forfeit any
compensation received from Company under this paragraph 8 upon Executive's
breach of any provision of paragraph 10 hereof.
 
      9. Change in Control.
 
            (a) On the first anniversary (the "Change in Control Payment Date")
of a Change in Control (as such term is defined below), if Executive is still
employed by Parent or the Company, the Company will pay Executive a lump-sum
cash amount equal to (i) the sum of (A) Executive's Base Salary as of the Change
of Control and (B) 50% of Executive's Target Bonus amount as of the Change of
Control, multiplied by (ii) 2.99 (the "Change in Control Payment").
 
            (b) If (i) Executive resigns with Good Reason (as defined below)
from employment with the Parent or the Company during the one-year period
following a Change in
 
                                      -5-
<PAGE>
 
Control, (ii) Parent and the Company terminate Executive's employment without
Cause during the one-year period following a Change in Control, (iii) Executive
dies or becomes Disabled during the one-year period following a Change in
Control, or (iv) Executive's employment is terminated by Parent or the Company
in anticipation of a Change in Control at any time from the date that is 30 days
immediately preceding the execution of a definitive agreement with respect to a
Change of Control that actually occurs and the closing of such Change of
Control, then the Company shall pay Executive the Change in Control Payment. The
Change in Control Payment will not be paid to Executive if he resigns without
Good Reason or is terminated for Cause. The Change in Control Payment shall be
made within 30 days of the effective date of the termination of Executive's
employment, the date of Executive's death or the date Executive becomes
Disabled, as applicable. For purposes of this Section 9 only, "Good Reason"
means the occurrence of any of the following events: (a) a substantial
involuntary reduction in Executive's Base Salary except for an across-the-board
salary reduction similarly affecting all or substantially all employees, or (b)
the relocation of Executive's principal place of employment to another location
of Company outside a sixty (60) mile radius from the location of Executive's
principal place of employment as of the date hereof.
 
            (c) Anything to the contrary in this Agreement notwithstanding, in
no event shall more than one Change in Control Payment be made to Executive
under this Agreement, regardless of whether more than one event constituting a
Change in Control occurs during the term of this Agreement.
 
            (d) If Executive is entitled to any payments upon a Change in
Control or other substantially similar event pursuant to the Origen Financial,
Inc. Retention Plan or any other plan, program, agreement or arrangement with
Parent, the Company or their subsidiaries, the Company shall not be obligated to
make change in control payments to Executive under both this Agreement and such
other plan, program, agreement or arrangement. Instead, the Company shall be
obligated to pay Executive only the greater of the amounts payable as determined
under this Agreement and such other plan, program, agreement or arrangement.
 
            (e) If payable, the Change in Control Payment shall be in addition
to, and not in lieu of, the severance payments to which Executive is entitled
under paragraph 8 above or any other plan, program, agreement or arrangement
with Parent, the Company or their subsidiaries.
 
            (f) Prior to and as a condition of any payment under this paragraph
9, Executive shall execute and deliver to Company a general release of claims to
other change in control payments in a form acceptable to the Company and, if
Executive's employment has been terminated, a general release of claims,
substantially in the form attached hereto as Exhibit A.
 
            (g) For purposes hereof, all of the following will be deemed a
"Change in Control":
 
                  (i) An event or series of events by which any "person," as
      such term is used in Section 13(d) and 14(d) of the Securities Exchange
      Act of 1934, as amended (the "Exchange Act") (other than the Parent, any
      Parent subsidiary, or any trustee, fiduciary or other person or entity
      holding securities under any employee benefit plan or trust of the
      Parent), together with all "affiliates" and "associates" (as such terms
      are defined in Rule 12b-2 of the Exchange Act) of such person, shall
      become the "beneficial owner" (within the meaning of Rule 13d-3 under the
      Exchange Act), directly or indirectly, of more than 50% of the combined
      voting power of Parent's then outstanding securities having the right to
      vote in an election of Parent's Board (other than as a result of an
      acquisition of securities directly from Parent);
 
                                      -6-
<PAGE>
 
                  (ii) The consummation of: (1) any consolidation or merger of
      Parent in which the stockholders of Parent immediately prior to the
      consolidation or merger would not, immediately after the consolidation or
      merger, "beneficially own" (as such term is defined in Rule 13d-3 of the
      Exchange Act), directly or indirectly, shares representing in the
      aggregate more than fifty percent (50%) of the voting shares of the
      corporation issuing cash or securities in the consolidation or merger (or
      of its ultimate parent corporation, if any) or (2) any sale, lease,
      exchange or other transfer to an unrelated party (in one transaction or a
      series of transactions contemplated or arranged by any party as a single
      plan) of all or substantially all of Parent's assets;
 
                  (iii) The approval of Parent's stockholders of any plan or
      proposal for the liquidation or dissolution of Parent; or
 
                  (iv) Where the persons who, as of the Effective Date (as
      defined below), constitute Parent's Board of Directors (the "Incumbent
      Directors") cease for any reason, including, without limitation, as a
      result of a tender offer, proxy contest, merger or similar transaction, to
      constitute at least a majority of the Board, provided that any person
      becoming a director of Parent subsequent to such date shall be considered
      an Incumbent Director if such person's election was approved by or such
      person was nominated for election by either (1) a vote of at least
      two-thirds of the Incumbent Directors or (2) a vote of at least a majority
      of the Incumbent Directors who are members of a nominating committee of
      the Board comprised, in the majority, of Incumbent Directors; provided
      further, however, that notwithstanding the foregoing, any director
      designated by a person or entity that has entered into an agreement with
      the Company to effect a transaction described in clauses (i), (ii) or
      (iii) above, shall not be deemed to be an Incumbent Director.
 
      10. Covenant Not To Compete and Confidentiality.
 
            (a) Executive acknowledges Company's and Parent's reliance and
expectation of Executive's continued commitment to performance of his duties and
responsibilities under this Agreement. In light of such reliance and expectation
on the part of Company and Parent, Executive agrees to the provisions set forth
below.
 
                  (i) Executive shall not compete with Company or Parent, as
      defined in paragraph 10(a)(ii) below, for a period commencing on the
      Effective Date and ending upon:
 
                  (A) if this Agreement terminates on the Contract Term Date
                  having run its full course, the first anniversary of the
                  termination date,
 
                  (B) if this Agreement is terminated by Company under paragraph
                  7(a)(ii) or by Executive under paragraph 7(a)(i), the later to
                  occur of (I) the Contract Term Date or (II) one year from the
                  date of termination, or
 
                  (C) if Company terminates this Agreement under paragraph
                  7(a)(i), the first anniversary of the termination date.
 
                  (ii) The phrase "shall not compete with Company or Parent"
      means that Executive shall not, directly or indirectly, engage in, or have
      an interest in or be associated with (whether as an officer, director,
      stockholder, partner, associate, employee, consultant, owner or otherwise)
      any corporation, firm or enterprise which is
 
                                      -7-
<PAGE>
 
      engaged in the manufactured housing finance business or any other business
      activity of Company or Parent in which Executive has any involvement
      during the term of this Agreement anywhere within the continental United
      States or Canada (the "Business"); provided, however, that (A) Executive
      shall not be prohibited from serving as an employee of, independent
      contractor of, or consultant to, a company that has a subsidiary or
      affiliate engaged in the Business, so long as Executive (x) does not serve
      as an employee, independent contractor or consultant for such subsidiary
      or affiliate engaged in the Business, and (y) is not otherwise involved in
      any way in the Business on behalf of such company, (B) Executive shall be
      permitted to make investments that do not interfere or conflict with the
      performance of Executive's duties or directly compete with the Business,
      and (C) Executive shall be permitted to make passive investments in the
      stock of any publicly traded business (including a competitive business),
      so long as the stock investment in any competitive business does not rise
      above one percent (1%) of the outstanding shares of such business.
 
                  (iii) Executive shall not at any time, for so long as any
      Confidential Information (as defined below) shall remain confidential or
      otherwise remain wholly or partially protectable, either during the term
      of this Agreement or thereafter, use or disclose any Confidential
      Information, directly or indirectly, to any person outside of Company,
      Parent or any company owned or controlled by Company or Parent or under
      common control with Company, Parent or the Subsidiaries (an "Affiliate").
 
                  (iv) Promptly upon the termination of this Agreement for any
      reason, Executive (or in the event of Executive's death, his personal
      representative) shall return to Company any and all copies (whether
      prepared by or at the direction of Company or Executive) of all records,
      drawings, materials, memoranda and other data constituting or pertaining
      to Confidential Information.
 
                  (v) For a period commencing on the Effective Date and ending
      upon the expiration of 18 months from the termination of this Agreement
      for any reason, or in the event that the Executive is terminated without
      "Cause", then for such period as the Executive is covered by the Severance
      Payment, Executive shall not, either directly or indirectly, divert, or by
      aid to others, do anything which would tend to divert, from Company,
      Parent or any Affiliate any trade or business with any customer or
      supplier with whom Executive had any contact or association during the
      term of Executive's employment with Company or with any party whose
      identity or potential as a customer or supplier was confidential or
      learned by Executive during his employment by Company.
 
                  (vi) For a period commencing on the Effective Date and ending
      upon the expiration of 18 months from the termination of this Agreement
      for any reason, or in the event that the Executive is terminated without
      "Cause", then for such period as the Executive is covered by the Severance
      Payment, Executive shall not, either directly or indirectly, employ,
      solicit for employment, or advise or recommend to any other person that
      such other person employ or solicit for employment, any person employed by
      Company during the term of this Agreement.
 
      As used in this Agreement, the term "Confidential Information" shall mean
all business information of any nature and in any form which at the time or
times concerned is not generally known to those persons engaged in business
similar to that conducted or contemplated by Company, Parent or any Affiliate
(other than by the act or acts of an employee not authorized by Company to
disclose such information) and which relates to any one or more of the aspects
of the business of Company, Parent or any of the Affiliates or any of their
respective predecessors, including, without limitation, patents and patent
applications, inventions and improvements
 
                                      -8-
<PAGE>
 
(whether or not patentable), development projects, policies, processes,
formulas, techniques, know-how, and other facts relating to sales, advertising,
promotions, financial matters, customers, customer lists, customer purchases or
requirements, and other trade secrets.
 
            (b) Executive agrees and understands that the remedy at law for any
breach by him of this paragraph 10 will be inadequate and that the damages
flowing from such breach are not readily susceptible to being measured in
monetary terms. Accordingly, Executive acknowledges that Company shall be
entitled to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this paragraph 10 shall
be deemed to limit Company's remedies at law or in equity for any breach by
Executive of any of the provisions of this paragraph 10 which may be pursued or
availed of by Company.
 
            (c) Executive acknowledges and agrees that the covenants set forth
above are reasonable and valid in geographical and temporal scope and in all
other respects. If any court determines that any of the covenants, or any part
of any covenant, is invalid or unenforceable, the remainder of the covenants
shall not be affected and shall be given full effect, without regard to the
invalid portion. If any court determines that any of the covenants, or any part
of any covenant, is unenforceable because of its duration or geographic scope,
such court shall have the power to reduce the duration or scope, as the case may
be, and, enforce such provision in such reduced form. Executive and Company
intend to and hereby confer jurisdiction to enforce the covenants upon the
courts of any jurisdiction within the geographical scope of such covenants. If
the courts of any one or more of such jurisdictions hold the covenants, or any
part of any covenant, unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Executive and Company that such determination
not bar or in any way affect the right of Company to the relief provided above
in the courts of any other jurisdiction within the geographical scope of such
covenants as to breaches of such covenants in such other respective
jurisdictions. For this purpose, such covenants as they relate to each
jurisdiction shall be severable into diverse and independent covenants.
 
      11. Excise Tax Payment. Anything in this Agreement to the contrary
notwithstanding, if any of the payments or benefits received or to be received
by Executive in connection with a Change in Control and/or Executive's
termination or resignation of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with Parent, the Company
or their subsidiaries) (the "Aggregate Payment") is determined to constitute a
"parachute payment" as such term is deemed in Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company shall pay to
Executive, prior to the time an excise tax imposed by Section 4999 of the Code
("Excise Tax") is payable with respect to such Aggregate Payment, an additional
amount which, after the imposition of all income and excise taxes thereon, is
equal to the Excise Tax on the Aggregate Payment. The determination of whether
the Aggregate Payment constitutes a parachute payment and, if so, the amount to
be paid to Executive and the time of payment pursuant to this paragraph 9(d)
shall be made by a nationally recognized United States public accounting firm
selected by the Company which has not, during the two years preceding the date
of its selection, acted in any way on behalf of Parent, the Company or any
affiliate thereof.
 
      12. No Conflicting Agreements. Executive represents and warrants that
other than his position as an executive of Parent, he is not a party to any
agreements, contracts, understandings or arrangements, whether written or oral,
in effect which would prevent him from rendering exclusive services to Company
during the term hereof, and that he has not made and will not make any
commitment to do any act in conflict with this Agreement.
 
      13. Arbitration. The parties agree that any and all disputes,
controversies or claims of any nature whatsoever relating to, or arising out of,
this Agreement or Executive's employment, whether in contract, tort, or
otherwise (including, without limitation, claims of wrongful
 
                                      -9-
<PAGE>
 
termination of employment, claims under Title VII of the Civil Rights Act, the
Fair Labor Standards Act, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, or comparable state or federal laws, and any
other laws dealing with employees' rights and remedies), shall be settled by
mandatory arbitration administered by the American Arbitration Association under
its National Rules for the Resolution of Employment Disputes (the "Rules") and
the following provisions: (A) a single arbitrator (the "Arbitrator"), mutually
agreeable to Company and Executive, shall preside over the arbitration and shall
make all decisions with respect to the resolution of the dispute, controversy or
claim between the parties; (B) in the event that Company and Executive are
unable to agree on an Arbitrator within fifteen (15) days after either party has
filed for arbitration in accordance with the Rules, they shall select a truly
neutral arbitrator in accordance with the rules for the selection of neutral
arbitrators, who shall be the "Arbitrator" for the purposes of this paragraph
13; (C) the place of arbitration shall be Southfield, Michigan unless mutually
agreed otherwise; (D) judgment may be entered on any award rendered by the
Arbitrator in any federal or state court having jurisdiction over the parties;
(E) all fees and expenses of the Arbitrator shall be shared equally between
Company and Executive; (F) the decision of the Arbitrator shall govern and shall
be conclusive and binding upon the parties; (G) the parties shall be entitled to
reasonable levels of discovery in accordance with the Federal Rules of Civil
Procedure or as permitted by the Arbitrator, provided, however, that the time
permitted for discovery shall not exceed eight (8) weeks and each party shall be
limited to two (2) depositions; and (H) this provision shall be enforceable by
specific performance and/or injunctive relief, and shall constitute a basis for
dismissal of any legal action brought in violation of the duty to arbitrate. The
parties hereby acknowledge that it is their intent to expedite the resolution of
any dispute, controversy or claim hereunder and that the Arbitrator shall
schedule the timing of discovery and of the hearing consistent with that intent.
Notwithstanding anything to the contrary herein, nothing contained in this
paragraph shall be construed to preclude Company from obtaining injunctive or
other equitable relief to secure specific performance or to otherwise prevent
Executive's breach of paragraph 10 of this Agreement.
 
      14. Notice. All notices, requests, consents and other communications,
required or permitted to be given under this Agreement shall be personally
delivered in writing or shall have been deemed duly given when received after it
is posted in the United States mail, postage prepaid, registered or certified,
return receipt requested addressed as set forth below. In addition, a party may
deliver a notice via another reasonable means that results in the recipient
party receiving actual notice, as conclusively demonstrated by the party giving
such notice.
 
                  If to Company:
 
                           Origen Financial L.L.C.
                           27777 Franklin Road, Suite 1700
                           Southfield, Michigan 48034
 
                  If to Parent:
 
                           Origen Financial, Inc.
                           27777 Franklin Road, Suite 1700
                           Southfield, Michigan 48034
                           Attn: Board of Directors
 
                                      -10-
<PAGE>
 
                  If to Executive:
 
                           Ronald A. Klein
                           27777 Franklin Road, Suite 1700
                           Southfield, Michigan 48034
 
                  In all events, with a copy to:
 
                           Jackier, Gould, Bean, Upfal & Eizelman
                           121 West Long Lake Road, Second Floor
                           Bloomfield Hills, Michigan 48304
                           Attn:  Lawrence S. Jackier
 
                  and to:
 
                           Jaffe, Raitt, Heuer & Weiss,
                             Professional Corporation
                           27777 Franklin Road, Suite 2500
                           Southfield, Michigan 48034
                           Attn:  Arthur A. Weiss
 
      15. Indemnification. Company shall indemnify Executive, to the maximum
extent permitted by applicable law, against all costs, charges and expenses
incurred or sustained by Executive, including the cost of legal counsel selected
and retained by Executive, in connection with any action, suit or proceeding to
which Executive may be made a party by reason of Executive being or having been
an officer, director, or employee of Company.
 
      16. Cooperation in Future Matters. Executive hereby agrees that for a
period of 18 months following his termination of employment he shall cooperate
with Company's reasonable requests relating to matters that pertain to
Executive's employment by Company, including, without limitation, providing
information or limited consultation as to such matters, participating in legal
proceedings, investigations or audits on behalf of Company, or otherwise making
himself reasonably available to Company for other related purposes. Any such
cooperation shall be performed at scheduled times taking into consideration
Executive's other commitments, and Executive shall be compensated at a
reasonable hourly or per diem rate to be agreed upon by the parties to the
extent such cooperation is required on more than an occasional and limited
basis. Executive shall not be required to perform such cooperation to the extent
it conflicts with any requirements of exclusivity of services for another
employer or otherwise, nor in any manner that in the good faith belief of
Executive would conflict with his rights under or ability to enforce this
Agreement.
 
      17. Miscellaneous.
 
            (a) The provisions of this Agreement are severable and if any one or
more provisions may be determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions and any partially unenforceable
provision to the extent enforceable in any jurisdiction nevertheless shall be
binding and enforceable.
 
            (b) The rights and obligations of Company under this Agreement shall
inure to the benefit of, and shall be binding on, Company and its successors and
assigns. This Agreement is personal to Executive and he may not assign his
obligations under this Agreement in any manner whatsoever and any purported
assignment shall be void. For all purposes under this Agreement, the term
"Company" shall include any successor to Company's business and/or assets that
assumes Company's rights and obligations under this Agreement.
 
                                      -11-
<PAGE>
 
            (c) The failure of any party to enforce any provision or protections
of this Agreement shall not in any way be construed as a waiver of any such
provision or provisions as to any future violations thereof, nor prevent that
party thereafter from enforcing each and every other provision of this
Agreement. The rights granted the parties herein are cumulative and the waiver
of any single remedy shall not constitute a waiver of such party's right to
assert all other legal remedies available to it under the circumstances.
 
            (d) This Agreement sets forth the entire understanding and agreement
of Executive and Company with respect to its subject matter and supersedes all
prior understandings and agreements, whether written or oral, in respect
thereof, including, without limitation, the Employment Agreement dated October
8, 2003 among Executive, parent and Company. If the terms of this Agreement
shall conflict with the terms of any other agreement between the Executive and
either Parent or Company or any compensation plan, arrangement or policy of
Parent or Company applicable to the Executive, the provisions of this Agreement
shall control.
 
            (e) This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan, without regard to its conflicts of law
principles.
 
            (f) Captions and section headings used herein are for convenience
and are not a part of this Agreement and shall not be used in construing it.
 
            (g) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Copies (whether photostatic, facsimile or
otherwise) of this Agreement may be made and relied upon to the same extent as
an original.
 
            (h) Company will pay or reimburse Executive for all of his
reasonable legal fees incurred in connection with the negotiation and execution
of this Agreement.
 
            (i) Company may withhold such amounts as may be required under
federal, state and local law to be withheld from the payments made under this
Agreement.
 
            (j) No modification, termination or attempted waiver of this
Agreement shall be valid unless in writing and signed by the party against whom
the same is sought to be enforced.
 
            (k) Notwithstanding anything to the contrary herein, the parties
shall amend this Agreement as necessary to comply in good faith with any
applicable provisions of Section 409A of the Code, including related final
Treasury Regulations and other governmental guidance and authority that may be
published.
 
            (l) The provisions of paragraphs 10, 13, 15, 16 and 17 of this
Agreement shall survive the termination of this Agreement, notwithstanding
anything to the contrary herein.
 
                         [SIGNATURES ON FOLLOWING PAGE]
 
                                      -12-
<PAGE>
 
      IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the date first written above.
 
                                   COMPANY:
 
                                   ORIGEN FINANCIAL L.L.C., a Delaware limited
                                   liability company
 
                                   By:  /s/ W. Anderson Geater, Jr.
                                        ----------------------------------------
                                   Its: Chief Financial Officer
                                        ----------------------------------------
                                   PARENT:
 
                                   ORIGEN FINANCIAL, INC., a Delaware
                                   corporation
 
                                   By:  /s/ W. Anderson Geater, Jr.
                                        ----------------------------------------
                                   Its: Chief Financial Officer
                                        ----------------------------------------
                                   EXECUTIVE:
 
                                   /s/ Ronald A. Klein
                                   ---------------------------------------------
                                   RONALD A. KLEIN
 
                                      -13-
</TEXT>
</DOCUMENT>