Exhibit 10.2

COMPLETION GUARANTY

THIS COMPLETION GUARANTY (“Guaranty”) is made as of January 30, 2007, by JOHN K. ANDERSON, individually and with LOIS A. ANDERSON, as co-trustees of THE ANDERSON FAMILY TRUST dated February 28, 2001 (“Anderson”), WILLIAM A. SILVA, individually and with KRISANTA K. L. SILVA, as co-trustees of THE SILVA FAMILY TRUST dated April 7, 2000 (“William Sylva”), MARILYN J. SILVA, individually and as sole trustee of THE MARILYN J. SILVA LIVING TRUST dated April 22, 1991 (“Marilyn Silva”), WOODMAN DEVELOPMENT COMPANY, LLC, a California limited liability company (“Woodman LLC”), and WOODMAN DEVELOPMENT COMPANY, INC., a California corporation (Woodman Inc.” and, together with Anderson, William Silva, Marilyn Silva and Woodman LLC, collectively, “Woodman”), and LYON EAST GARRISON COMPANY I, LLC, a California limited liability company (“Lyon East Garrison”), and WILLIAM LYON HOMES, INC., a California corporation (“Lyon Homes” and, together with Lyon East Garrison, collectively, “Lyon”; and Lyon and Woodman are collectively referred to herein as “Guarantor”), in favor of RESIDENTIAL FUNDING COMPANY, a Delaware limited liability company (“Lender”).

R E C I T A L S:

A. Lender has made a revolving loan in the principal amount of Seventy-Five Million Dollars ($75,000,000) (the “Loan”) to East Garrison Partners I, LLC, a California limited liability company (“Borrower”), pursuant to the terms of a Loan Agreement dated of even date herewith (as amended, renewed, replaced or otherwise modified from time to time, the “Loan Agreement”) between the Lender and the Borrower. The Loan is being made to finance (i) Borrower’s acquisition of certain real property located in Monterey County, California (the “Land”), and (ii) the performance by Borrower upon the Land of certain development work (the Land, together with the improvements, is referred to in this Guaranty as the “Project”).

B. The Loan is evidenced by a Revolving Promissory Note dated of even date herewith from Borrower to Lender (as amended, renewed, replaced or otherwise modified from time to time, the “Note”) and is secured, among other security, by a certain Construction Deed of Trust, Security Agreement and Fixture Filing With Assignment of Rents, Proceeds and Agreements dated of even date herewith (as amended or otherwise modified from time to time, the “Security Instrument”) made by Borrower in favor of Lender.

C. Guarantor has a substantial interest in Borrower and will derive benefit from the Loan.

D. As a condition to making the Loan, Lender has required that Guarantor execute and deliver this Guaranty.

E. To induce Lender to make the Loan and make disbursements under the Loan Agreement, and to accept the Note, the Loan Agreement and the Security Instrument, Guarantor has agreed to give this Guaranty.

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AGREEMENT:

NOW, THEREFORE, to induce Lender to enter into the Loan Agreement and to make the Loan, and in consideration thereof, Guarantor agrees as follows:

Section 1 Defined Terms

Unless otherwise defined in this Guaranty, all capitalized terms used in this Guaranty have the meanings ascribed to those terms in the Loan Agreement.

Section 2 Guaranty

(a) Guarantor absolutely and unconditionally guarantees the Completion of the Applicable Development Work (as defined below) at the times and subject to the terms and conditions set forth in the Loan Agreement (such obligation of Guarantor is referred to in this Guaranty as the “Completion Obligation”). As used in this Guaranty, “Completion of the Applicable Development Work” means that the following conditions are satisfied with respect to (i) all Development Work described in the Phase Commitment for Phase 1, (ii) all Development Work described in each other Phase Commitment, if any, executed and delivered by Lender, (iii) all Development Work (x) for which Lender has disbursed Loan proceeds or (y) for which Loan proceeds have been budgeted pursuant to a Phase Commitment executed and delivered by Lender, (iv) if Development Work has been commenced in a Phase, which Development Work was not described in a Phase Commitment executed and delivered by Lender, then all Development Work and any and all other work, including, without limitation, any and all on site or off site infrastructure work, that must be completed with respect to such Phase so there is no restriction on the ability of Borrower to sell and close escrow on the sale of all Lots in such Phase, and (v) all other Development Work, including, without limitation, any and all on-site or off-site infrastructure work, that must be completed so there is no restriction on (x) the ability of Borrower to sell and close escrow on the sale of all Lots (A) described in each Phase Commitment executed and delivered by Lender, or (B) included in any Phase with respect to which Borrower or any Guarantor commenced Development Work, or (y) the issuance of a building permit for each Home to be constructed on a Lot:

(1) all of the Development Work has been performed and completed (i) in a good and workerlike manner in accordance with all applicable laws, rules, regulations, ordinances and other applicable governmental requirements and private restrictions, including all Hazardous Materials Laws, and (ii) in accordance with the Plans and Specifications furnished to Lender by Borrower pursuant to the terms of the Loan Agreement, without substantial deviation therefrom;

(2) the Development Work is diligently pursued by Guarantor to completion pursuant to a revised Construction Progress Schedule approved by Lender in the exercise of its reasonable discretion, with respect to which Construction Progress Schedule Lender shall not withhold approval solely because it fails to require Guarantor to remedy any delay in the progress of the Development Work that may have existed at the time Lender delivered to Guarantor the notice described in Section 3(a) ;

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(3) all notices of completion have been filed and all statutory lien periods have expired;

(4) all costs of acquiring and performing the Development Work as required by the Loan Agreement have been paid;

(5) final lien waivers have been obtained from all contractors performing work at the Project; and

(6) the Development Work has been completed in accordance with all applicable Hazardous Materials Laws, which obligation includes the obligation to ensure that (i) the Development Work and the Project are free and clear of Hazardous Materials and Hazardous Materials Claims, (ii) remedial work, that may have been required has been completed in accordance with all Hazardous Materials Laws and with any written plan for the remedial work approved by any public agencies having jurisdiction, and (iii) all costs and expenses of the foregoing have been paid in full, including any fines or penalties imposed in connection with any required remedial work and the costs of testing or monitoring resulting from any such remedial work or the existence at any time of Hazardous Materials on, under or about the Project.

(b) In addition, Guarantor agrees to pay all costs and expenses incurred by Lender, including reasonable attorneys’ and paralegals’ fees, court costs and all other litigation expenses (including reasonable expert witness fees, exhibit preparation, and courier, postage, communication and document copying expenses), in enforcing this Guaranty (the Completion Obligation, together with the obligations set forth in this Section 2(b) , are collectively referred to herein as the “Guaranteed Obligations”) and the obligations set forth in Section 4(a) are referred to herein as the “ Limited Guaranty Obligations ”). The Guaranteed Completion Obligations and the Limited Guaranty Obligations are collectively referred to herein as the “ Guaranteed Obligations .”

Section 3 Performance of Completion Obligations Upon Default by Borrower

(a) If Completion of the Applicable Development Work is not accomplished by Borrower in accordance with the Loan Documents, or if Lender takes possession of the Project as permitted under the Loan Documents before the Completion of the Applicable Development Work, then Guarantor, promptly upon receipt of written notice thereof from Lender, will perform its Completion Obligation. Guarantor will take whatever actions may be necessary to perform the Completion Obligation, including the following:

(1) diligently and expeditiously proceed to ensure the Completion of the Applicable Development Work, at Guarantor’s sole cost and expense, at the times and subject to the terms and conditions set forth in the Loan Agreement;

(2) fully pay and discharge all direct and indirect costs incurred or required to be incurred in connection with the Completion of the Applicable Development Work; provided, however, that Guarantor will be entitled to receive disbursements of the Loan in connection therewith pursuant and subject to the conditions set forth in the Loan Agreement as more fully described in subsection (b) below;

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(3) pay any amounts necessary to release and discharge any mechanics’, material providers’ or other liens that may exist or come into existence in connection with the Completion of the Applicable Development Work, or in the alternative contest the same subject to the terms and conditions set forth in the Loan Agreement; and

(4) perform or procure performance of compliance with the obligations set forth in clause (6) of Section 2(a) and pay such amounts as may become payable in connection therewith.

(b) If Lender calls upon Guarantor to perform its Completion Obligation pursuant to the terms of subsection (a) above, then Guarantor will have the right to receive disbursements of the Loan, and disbursements of the Loan shall be made to pay interest accrued on the Loan in accordance with the Interest Reserve provisions set forth in Section 2.6(c) of the Loan Agreement, subject to the following terms and conditions:

(1) Lender will be under no obligation to disburse proceeds of the Loan to the Guarantor unless Guarantor has cured every Event of Default and Potential Default by Borrower, including Events of Default relating to failure of Borrower to pay principal, interest, fees and/or expenses of the Lender relating to the Loan that are required to be paid by Borrower pursuant to the Loan Agreement or any other Loan Document; provided, however, that Guarantor shall not be obligated to cure any failure by Borrower solely to comply with Section 1.1(b), 2.8(2), 2.8(3) or 2.8(5) of the Loan Agreement.

(2) Lender will be under no obligation to disburse proceeds of the Loan to Guarantor if Guarantor is in default under any of the Loan Documents;

(3) Lender will be under no obligation to disburse proceeds of the Loan to Guarantor if receipt of such amounts by Guarantor is prohibited by law or by any process, order or judgment of any court binding on Lender; and

(4) proceeds of the Loan will be disbursed to Guarantor only pursuant and subject to the terms and conditions of the Loan Agreement.

Guarantor acknowledges that the Completion Obligation of Guarantor hereunder is a joint and several obligation. Guarantor expressly grants to Douglas F. Bauer and Richard S. Robinson, either acting alone, of Lyon and William A. Silva of Woodman (which names may be changed pursuant to Section 14 from the applicable Guarantor) (collectively, the “Guarantor Representatives”) the right to issue jointly all notices and to receive all disbursements of the Loan under this Section 3(b) regarding the Completion of the Applicable Development Work; provided, however, that if the Guarantor Representatives give conflicting instructions or if any Guarantor makes a request or demand of Lender with respect to this Section 3(b) that Lender perceives to conflict or be inconsistent with a request or demand with respect to this Section 3(b) made by the Guarantor Representatives, then Lender may require, as a condition to (x) permitting the Guarantor Representatives to procure the Completion of the Applicable Development Work under this Section 3(b) , or (y) making disbursements of the Loan under this Section 3(b) , that each Guarantor concur in writing with the logistics of the Completion of the Applicable Development Work and/or with the requested disbursement of Loan proceeds

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hereunder, as Lender may require, and in the absence of such joint request or concurrence, or if Lender is given conflicting requests, Lender may decide, in its sole and absolute discretion, whether and to what extent (1) to permit any Guarantor, which Lender may select in its sole and absolute discretion, to procure the Completion of the Applicable Development Work, or (2) to advance funds to such Guarantor in respect of the performance of the Completion of the Applicable Development Work; provided further, however, that Lender shall follow the requests and instructions of a single Guarantor if such Guarantor is so designated in a final binding arbitration ruling, non-appealable judicial determination or other procedure satisfactory to Lender. Lender shall not be obligated to permit any Guarantor to procure the Completion of the Applicable Development Work to the extent any other Guarantor procures the Completion of the Applicable Development Work. Lender shall not be obligated to make disbursements of the Loan to any Guarantor to the extent disbursements are made to any other Guarantor under this Guaranty.

(c) Guarantor’s obligations under this Guaranty will remain in full force and effect regardless of whether the Guarantor or any other Person determines that Completion of the Applicable Development Work is impossible. For purposes of this Guaranty, “impossibility” which impossibility includes the following matters: (i) a casualty that affects, or discovery of unanticipated, soils conditions, or (ii) Laws and Regulations or court orders applicable to the Project, or (iii) other events or circumstances beyond the control of Borrower or Guarantor relating to the Project (but specifically excluding lack of funds or other monetary considerations or any other events, circumstances or constraints affecting Borrower, Guarantor or another Person as opposed to the Project). In such an event, Guarantor will immediately notify Lender in writing of the event and, in lieu of accomplishing Completion of the Applicable Development Work as required pursuant to Section 3(a)(1) above, Guarantor will pay to Lender an amount equal to the Impossibility In-Lieu Payment (as defined below) immediately upon written notice from Lender.

As used herein, “Impossibility In-Lieu Payment” means an amount equal to the result obtained by subtracting the “as-is” value of the Project (to the extent that any Development Work has been performed) on a bulk sale basis from the lesser of (x) the outstanding principal balance of the Loan, or (y) the “as-if completed” value of the Project on a bulk sale basis (assuming that the impossibility precluding Completion of the Applicable Development Work did not exist), based on an Appraisal Report paid for by Guarantor. In no event, however, shall the Impossibility In-Lieu Payment be less than zero.

Section 4 Limited Guaranty of Payment

(a) In addition to the Guaranteed Completion Obligations, from and after the occurrence of any of the following events, Guarantor hereby unconditionally and irrevocably guarantees to Lender (i) the full and prompt payment of the principal sum of the obligations of Borrower under the Loan Documents (the “ Borrower Obligations ”) in accordance with the terms of the Loan Documents when due, by acceleration or otherwise, together with all interest and other charges accrued thereon pursuant to the Loan Documents and (ii) the full and prompt payment of all other Borrower Obligations and all other sums, together with interest accrued thereon, and the performance of all other Borrower Obligations, when due pursuant to the terms of the Loan Documents upon the occurrence of any of the following; provided, however, that

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with respect to the occurrence of the events described in clauses (1) through (6) of this Section 4(a) , Guarantor’s liability for payment shall be limited to all damages or loss, cost or expense incurred by Lender, including reasonable attorneys’ and paralegals’ fees, court costs and all other reasonable litigation expenses (including expert witness fees, exhibit preparation, and courier, postage, communication and document copying expenses) in enforcing this Guara