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Item 1.01 Entry into a Material Definitive Agreement.

September 16, 2010 Letter Agreement

On September 16, 2010, the Registrant and its subsidiary, Franklin Credit Management Corporation (“FCMC”), entered into a letter agreement (the “Letter Agreement”) with The Huntington National Bank (the “Bank”), Franklin Mortgage Asset Trust 2009-A, an indirect subsidiary of the Bank (the “Trust”), Thomas J. Axon, the Chairman and President of the Registrant and FCMC (“TJA”), and Bosco Credit II, LLC (“Bosco II”) an entity of which TJA is the sole member.

The Letter Agreement was entered into in connection with discussions regarding a proposed sale, to be consummated with an effective date of September 1, 2010, of all of the subordinate lien consumer loans (“Loans”) owned by the Trust and serviced by FCMC under an amended and restated servicing agreement, dated as of August 1, 2010 (the “Servicing Agreement”), to Bosco II (with funds from a third party lender) (the “Loan Sale”). Although the Bank could have terminated the Letter Agreement if the conditions and transactions contemplated by the Letter Agreement had not been satisfied and consummated by September 22, 2010, the conditions and transactions were consummated on September 22, 2010.

Pursuant to the Letter Agreement:

Contemporaneously with the consummation of the Loan Sale, and after obtaining the requisite agreement of syndicate members under the Legacy Credit Agreement (as defined in the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009), FCHC’s pledge of 70% of the outstanding shares of FCMC as security for the Legacy Credit Agreement will be released, in consideration of and subject to:

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The Bank also agreed that, in consideration of its receipt of the Closing Cash Payment, the August Servicing Rebate Payment, the Deferred Payment Agreement, and either the Real Estate Release Payment or delivery of the TJA Note upon closing, the “EBITDA Payment” described in the July 16, 2010 letter agreement (the “July Letter Agreement”) among the Registrant, FCMC, TJA, the Bank and the Trust (which was described in the Registrant’s Current Report on Form 8-K filed on July 16, 2010) would be waived.

Additionally,

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In the Letter Agreement, FCMC also waived any additional notice of the termination of the Servicing Agreement with respect to the Loans, and any fees or other amounts in respect thereof with respect to any period from and after the closing of the Loan Sale.

In consideration of TJA’s undertaking the obligations required of him under the Letter Agreement, and various guarantees and concessions previously provided by TJA for the Registrant’s benefit, the Registrant’s Audit Committee has agreed, subject to specific terms to be negotiated with the Company and TJA, to the transfer to TJA of a number of shares of FCMC common stock currently held by the Registrant representing 10% of FCMC’s outstanding shares, effective upon the Closing of the Loan Sale and the release of FCHC’s pledge of 70% of the outstanding shares of FCMC as security for the Legacy Credit Agreement .

The foregoing summary of the Letter Agreement is qualified in its entirety by reference to the complete copy of such agreement, filed as Exhibits 10.1 to this Form 8-K.

September 22, 2010 Implementing Agreements

On September 22, 2010, the Registrant and FCMC entered into various agreements implementing the transactions contemplated by the Letter Agreements (the “Implementing Agreements”). These agreements are described below.

Restructuring Agreement

On September 22, 2010, the Letter Agreement was superseded by the execution and delivery of an agreement, in a form and under terms substantially similar to the Letter Agreement, to implement the terms and conditions agreed to under the Letter Agreement and to attach as exhibits the form of the agreements that had been referenced therein (the “Restructure Agreement”).

Deferred Payment Agreement

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On September 22, 2010, FCMC entered into the Deferred Payment Agreement with the Bank, in its capacity as Administrative Agent under the Legacy Credit Agreement, and TJA.

The Deferred Payment Agreement has a term expiring March 20, 2019, and provides that FCMC will pay to the Bank in respect of a “qualifying transaction” (as defined in the Deferred Payment Agreement) consummated during the term of the agreement an amount equal to ten percent of (i) the aggregate value, as determined in accordance with the Deferred Payment Agreement, of the qualifying transaction minus (ii) $4 million.

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Additionally, pursuant to the Deferred Payment Agreement, TJA guarantied prompt and full payment to the Bank of each required deferred payment when due.

Legacy Credit Agreement

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Licensing Credit Agreement

Amendment to Servicing Agreement with the Bank

EBIDTA Payment

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Servicing Agreement with Bosco II

The foregoing summaries of the Implementing Agreements are qualified in their entirety by reference to the complete copies of such agreements, filed as Exhibits 10.2 through 10.11 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, Franklin Credit Holding Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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