GOVERNANCE AND NOMINATING COMMITTEE CHARTER

(Adopted April 28, 2005)

Objectives
The Governance and Nominating Committee (the "Committee") is a committee of the Board of Directors ("Board") of Desert Capital REIT, Inc. (the "Company").  The Board has delegated to the Committee its responsibilities relating to corporate governance and criteria for Board selection.  The primary function of the Committee is to develop and recommend to the Board a set of corporate governance principles applicable to the Company, identify qualified candidates for Board membership and recommend to the Board director nominees to be voted on at the annual meeting of stockholders, and communicate with members of the Board regarding Board and Committee meeting format and procedures.  Further, the Committee shall consider any nominations submitted by the stockholders to the Corporate Secretary in accordance with the Company's Bylaws.

Membership and Policies
The Board shall appoint the Chairperson and members of the Committee annually.  The Committee shall consist of a minimum of two and a maximum of four members of the Board.  In accordance with the rules of the New York Stock Exchange ("NYSE"), each member shall be "independent" as that term is defined under such rules.  A quorum of the Committee will consist of at least 50% of the members of the Committee.  Members of the Committee may be removed from the Committee (with or without cause) by action of the full Board.

The Committee shall meet at such times as the Chairperson shall determine, preferably in conjunction with regular Board meetings.  Meetings may, at the discretion of the Committee, include members of management, independent consultants and such other persons as the Committee shall determine.  The Committee, in discharging its responsibilities, may meet privately for advice and counsel with independent consultants, lawyers, or any other persons knowledgeable in the matters under consideration.  The Committee may also meet by telephone conference call or any other means permitted by law or the Company's Bylaws.  The Committee may also act by unanimous written consent of its members without a meeting.

A Secretary, who need not be a member of the Committee, shall be appointed by the Committee to keep minutes of all meetings of the Committee and such other records as the Chairperson deems necessary or appropriate.

The Committee may designate a subcommittee consisting of at least one member to address specific issues on behalf of the Committee.

The Committee shall report periodically to the Board on its activities.

Functions
The Committee shall have the following duties and responsibilities:

• The Committee shall develop and recommend to the Board a set of Corporate Governance Guidelines applicable to the Company, and, as appropriate, recommend to the Board certain criteria (in addition to those criteria required by applicable law) to determine a director's independence.

• Subject to actions by the Board and stockholders, the Committee shall assure that the Board is composed of a majority of independent directors in accordance with the rules adopted by the NYSE.

• The Committee shall monitor the size and composition of the Board.

• Identify potential candidates for Board membership.  The Committee will select new director candidates who satisfy the following criteria:  (i) have significant business or public experience that is relevant and beneficial to the Board and the Company, (ii) are willing and able to make a sufficient time commitment to the affairs of the Company in order to effectively perform the duties of a director, including regular attendance of Board meetings and committee meetings, (iii) are committed to the long-term growth and profitability of the Company, (iv) are individuals of character and integrity, (v) are individuals with inquiring minds who are willing to speak their minds and challenge and stimulate management; and (vi) represent the interests of the Company as a whole and not only the interests of a particular shareholder or group. 

• The Committee shall consider new director candidates recommended by the Company's stockholders to the extent such recommendations are made in compliance with applicable laws, rules and regulations, the Company's Bylaws and procedures established by the Committee.  Director candidates recommended by stockholders shall be evaluated by the Committee based on the same criteria outlined above to be applied to director candidates identified by the Committee.

• The Committee shall provide a recommendation to the Board for the director nominees for the next annual meeting of stockholders or otherwise to fill a vacancy on the Board, which nominees shall satisfy the foregoing criteria.

• The Committee has the ultimate authority and responsibility to select, evaluate and, where appropriate, terminate or replace any search firm to be used to identify qualified director candidates, including the sole authority to approve the search firm's fees and other retention terms.

• Review the performance of incumbent directors in determining whether to recommend them for re-election to the Board.  In making this determination, the Committee will consider the director's attendance, involvement and contributions to the effectiveness of the Board, and will also evaluate incumbent directors based on the same criteria applied to the evaluation of new director candidates.  When necessary or appropriate, the Committee will recommend to the Board removal of a director or a member of a Board committee.

• Periodically review and make recommendations to the Board concerning (i) director tenure, retirement and succession policies, (ii) committee membership, structure and operations, and (iii) policies to promote effective communication between the Board and management.

• The Committee shall develop and recommend to the Board a policy on potential conflicts of interest, including, but not limited to, the policies on (1) Company loans to officers and employees (if allowed by law), (2) related-party transactions (including any dealings with directors, officers or employees), and (3) such other transactions that could have the appearance of a potential conflict of interest.

• The Committee shall monitor and report to the Board whether there is any current relationship between any non-management director and the Company that may adversely affect the independent judgment of the director.

• The Committee shall communicate, from time to time, with members of the Board regarding Board meeting format and procedures.

• The Committee shall review the need for any changes in the number, charters, or titles of Board committees and provide a recommendation to the Board for consideration.

• The Committee shall review and assess the adequacy of the Committee charter periodically.

• The Committee shall oversee the evaluation of the Board and shall oversee the Board's evaluation of management in fulfilling their respective duties to the Company and its stockholders.  The Committee will (i) assist the Board of Directors in its self-evaluation, and (ii) review the evaluation results and present such results, along with any Committee recommendations, to the Board.

• The Committee shall conduct an annual performance evaluation of the Committee, the results of which shall be reported to the full Board.

• The Committee shall ensure that the chairperson of each other Board committee conducts a performance evaluation of his or her committee, the results of which shall be reported to the full Board.

• The Committee will perform such other functions as assigned by law, the Company's certificate of incorporation, its Bylaws or the Board.

• The Committee shall take such other actions necessary or appropriate to assure that other activities prescribed by the Corporate Governance Guidelines are carried out.