WMF GROUP LTD, 10-12G, 1997-05-14

WMF GROUP LTD
10-12G, 1997-05-14

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

----------

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934

The WMF Group, Ltd.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)

Delaware 54-1647759
- ---------------------------------------------------- ------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

1593 Spring Hill Road, Suite 400, Vienna, Virginia 22182
- ---------------------------------------------------- -----------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code (703) 610-1400
----------------------------

Securities to be registered pursuant to Section 12(b) of the Act: None

Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------

- ---------------------------------- ------------------------------------------

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class)

- --------------------------------------------------------------------------------
(Title of Class)
<PAGE> 2

INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10

<TABLE>
<CAPTION>
ITEM NO. CAPTION LOCATION IN INFORMATION STATEMENT
------- ------- ---------------------------------
<S> <C> <C>
1. Business Summary; Risk Factors; The Distribution; Management's Discussion
and Analysis of Financial Condition and Results of Operations;
Industry Overview; Business

2. Financial Information Selected Financial Data; Management's Discussion and Analysis of
Financial Condition and Results of Operations

3. Properties Business

4. Security Ownership of Certain Principal Stockholders of the Company; Risk Factors
Beneficial Owners and Management

5. Directors and Executive Officers Management of the Company; Description of the Company Capital
Stock

6. Executive Compensation Management of the Company; Principal Stockholders of the Company

7. Certain Relationships and Related Summary; Related Party Transactions; The Distribution;
Transactions Arrangements between NHP and the Company after the Share
Distribution; Risk Factors

8. Legal Proceedings Business

9. Market Price of and Dividends on the Summary; Risk Factors; The Distribution; Management of the
Registrant's Common Equity and Company; Principal Stockholders of the Company; Description of
Related Stockholder Matters Company Capital Stock

10. Recent Sales of Unregistered Not applicable
Securities

11. Description of Registrant's Description of Company Capital Stock; The Distribution;
Securities to be Registered Arrangements between NHP and the Company after the Share
Distribution
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NO. CAPTION LOCATION IN INFORMATION STATEMENT
------- ------- ---------------------------------
<S> <C> <C>
12. Indemnification of Directors and Description of Company Capital Stock
Officers

13. Financial Statements and Summary; Summary Financial Information; Capitalization; Selected
Supplementary Data Financial Data; Management's Discussion and Analysis of
Financial Condition and Results of Operations; Financial Statements

14. Changes in and Disagreements with Independent Public Accountants
Accountants on Accounting and
Financial Disclosure

15. Financial Statements and Exhibits Financial Statements; Index to Exhibits
</TABLE>
<PAGE> 4

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.

The WMF Group, Ltd.

By: /s/ SHEKAR NARASIMHAN
--------------------------
Name: Shekar Narasimhan
Title: President and Chief
Executive Officer

May 14, 1997
<PAGE> 5
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
No. Description
- --------- -----------
<S> <C>
2.1 Rights Agreement dated as of April 21, 1997 by and between NHP Incorporated, NHP Financial Services, Ltd. and The
First National Bank of Boston (1)

3.1 Certificate of Incorporation of The WMF Group, Ltd.

3.2 * By-laws of The WMF Group, Ltd.

4.1 * Form of certificate representing shares of Common Stock of The WMF Group, Ltd.

11 * Statement re computation of per share earnings

16 * Letter re change in certifying accountant

21 Subsidiaries of the registrant

27 * Financial data schedule

99.1 Information Statement of The WMF Group, Ltd. dated as of May __, 1997
</TABLE>
- --------------------
* To be filed by amendment

(1) Incorporated by reference to Exhibit 2.2 to Report on Form 8-K of NHP
Incorporated filed April 24, 1997.

<PAGE> 1
EXHIBIT 3.1

RESTATED CERTIFICATE OF INCORPORATION
OF
NHP FINANCIAL SERVICES, LTD.

(Originally incorporated on October 20, 1992
under the name WMF HOLDINGS LTD.)

This Restated Certificate of Incorporation restates and further amends
the Certificate of Incorporation of this Corporation. The text of the
Certificate of Incorporation as amended or supplemented heretofore is further
amended hereby to read as herein set forth in full:

ARTICLE FIRST

The name of the corporation (herein called the "Corporation") is The
WMF Group, Ltd.

ARTICLE SECOND

The address of the registered office of the Corporation in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.

ARTICLE THIRD

The period of duration is perpetual.

ARTICLE FOURTH

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
law.

ARTICLE FIFTH

The total number of shares of all classes of stock that the
Corporation shall have authority to issue is Thirty-Seven Million Five Hundred
Thousand (37,500,000) shares consisting of (a) Twelve Million Five Hundred
Thousand (12,500,000) shares of Preferred Stock, $.01 par value (the "Preferred
Stock"), and (b) Twenty-Five Million (25,000,000) shares of Common Stock, $.01
par value (the "Common Stock").

The designations, powers preferences and relative participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof in respect of the Preferred Stock and the Common Stock are
as follows:
<PAGE> 2
1. The Board of Directors may, except as otherwise provided
below, by resolution from time to time classify or reclassify and issue in one
or more series any unissued shares of Preferred Stock and may fix or alter in
one or more respects, from time to time before reissuance of those shares, the
number and designation of any series or classification, liquidation and
dividend rights, preference rights, voting rights, redemption rights,
conversion rights, and any other rights, restrictions and qualifications of and
the terms of any purchase, retirement, or sinking fund which may be provided
for those shares of Preferred Stock.

2. No holder of stock of the Corporation shall be entitled as a
matter of right, preemptive or otherwise, to subscribe for or purchase any part
of any stock authorized to be issued, or shares of stock authorized to be
issued, held in the treasury of the Corporation or securities convertible into
stock, whether issued for cash or other consideration or by way of dividend or
otherwise.

3. The holders of shares of Preferred Stock and the holders of
shares of Common Stock shall possess full voting rights and powers on all
matters voted on by the stockholders of the Corporation (including the election
of Directors), shall be entitled to notice of stockholders' meetings and shall
vote together. Each holder of Common Stock shall be entitled to one vote for
each share of Common Stock held. Each holder of Preferred Stock shall be
entitled to the voting rights fixed by the Board of Directors but in no event
more than one vote for each share of Preferred Stock held.

ARTICLE SIXTH

The number of directors of the Corporation shall be such as from time
to time shall be fixed in the manner provided in the By-laws of the
Corporation. The election of Directors of the Corporation need not be by
ballot unless the By-laws so require.

ARTICLE SEVENTH

A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware General Corporation Law is
amended after the date of filing of this Certificate of Incorporation to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.

The Corporation shall, to the fullest extent permitted by Section 145
of the Delaware General Corporation Law, as the same may be amended and
supplemented, indemnify any and all

2
<PAGE> 3
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to
in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified
may be entitled under any By-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be director, officer, employee,
or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.

Any repeal or modification of the foregoing paragraphs by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.

ARTICLE EIGHTH

For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation and of its directors and stockholders, it is further
provided:

(a) In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered:

(i) to make, alter, amend or repeal the By-laws in any
manner not inconsistent with the laws of the State of Delaware or this Restated
Certificate of Incorporation;

(ii) to determine whether any, and if any, what part, of
the net profits of the Corporation or of its surplus shall be declared in
dividends and paid to the stockholders, and to direct and determine the use and
disposition of any such net profits or such surplus; and

(iii) to fix from time to time the amount of net profits of
the Corporation or of its surplus to be reserved as working capital or for any
other lawful purpose; and

(iv) without the assent or vote of the stockholders, to
authorize and issue securities and obligations of the Corporation, secured or
unsecured, and to include therein such provisions as to redemption, conversion
or other terms thereof as to authorize the mortgaging or pledging, as security
therefor, of any property of the Corporation, real or personal, including
after-acquired property.

In addition to the powers and authorities herein or by statute
expressly conferred upon it, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the laws of the State
of Delaware, of this Restated Certificate of Incorporation and of the By-Laws
of the Corporation.

3
<PAGE> 4
(b) Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at any time in such
manner as shall be provided in the By-laws of the Corporation.

(c) From time to time any of the provisions of this Restated
Certificate of Incorporation may be altered, amended or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted, in the manner and at the time prescribed by said
laws, and all rights at any time conferred upon the stockholders of the
Corporation by this Restated Certificate of Incorporation are granted subject
to the provisions of this paragraph (c).

ARTICLE NINTH

Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholder or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in an summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code, or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Section 279 of Title 8 of
the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourth in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree on any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.

4
<PAGE> 5
IN WITNESS WHEREOF, this Restated Certificate of Incorporation which
restates and integrates and also further amends the Certificate of
Incorporation of the Corporation having been duly adopted in accordance with
the provisions of Sections 242 and 245 of the General Corporation Law of the
State of Delaware, has been signed by Shekar Narasimhan, its President, and
attested by Barbara Ekstrom, its Secretary, this ____ day of May, 1997.

ATTEST:

- --------------------------------- ---------------------------------
Barbara Ekstrom Shekar Narasimhan
Secretary President

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF NHP FINANCIAL SERVICES, LTD. AS OF MAY 13, 1997

NHP FINANCIAL SERVICES, LTD. (A DELAWARE CORPORATION)

WASHINGTON MORTGAGE FINANCIAL GROUP, LTD. (A DELAWARE
CORPORATION)

WMF/HUNTOON, PAIGE ASSOCIATES LIMITED (A DELAWARE
CORPORATION)

WMF PROCTOR, LTD. (A MICHIGAN CORPORATION)

PROCTOR & ASSOCIATES OF WESTERN MICHIGAN, INC. (A
MICHIGAN CORPORATION)

Note: An entity is a "subsidiary" of another entity if a majority interest is
owned by the other entity.

<PAGE> 1
EXHIBIT 99.1

Preliminary Copy dated May 14, 1997

INFORMATION STATEMENT

THE WMF GROUP, LTD.

1593 SPRING HILL ROAD, SUITE 400
VIENNA, VIRGINIA 22182
(703) 610-1400

This information statement is being furnished by NHP
Incorporated, a Delaware corporation ("NHP"), in connection with the
distribution (the "Share Distribution") by NHP to the holders of shares of NHP
Common Stock, par value $.01 per share (the "NHP Common Stock"), of all of the
issued and outstanding common stock, par value $.01 per share (the "Company
Common Stock"), of The WMF Group, Ltd. (formerly known as NHP Financial
Services, Ltd. and WMF Holdings, Ltd.), a Delaware corporation and a
wholly-owned subsidiary of NHP (along with its subsidiaries the "Company"). On
May 9, 1997, NHP distributed to each holder of record of NHP Common Stock ("NHP
Stockholders") on May 2, 1997, one right (a "Right") for each share of NHP
Common Stock pursuant to a Rights Agreement, dated as of April 21, 1997 between
NHP, the Company and The First National Bank of Boston (the "Rights
Agreement"). Subject to certain conditions, each holder of Rights is entitled
to one-third of a share of Company Common Stock for each Right at the earlier of
(i) the effective time of the proposed Merger between NHP and a wholly owned
subsidiary of Apartment Management and Investment Company ("AIMCO") and (ii)
December 1, 1997 (such time being referred to as the "Maturity Time"). NHP
Stockholders will receive cash in respect of fractional shares of Company Common
Stock that would otherwise be distributed at the rate of $9.15 per share of
Company Common Stock.

The NHP Stockholders will not be required to pay any
consideration for the shares of Company Common Stock they receive in the
Distribution. There is no current public trading market for the Company Common
Stock. WMF intends to seek approval for quotation of the shares of Company
Common Stock on the Nasdaq Stock Market upon issuance, but there is no
assurance that such approval will be obtained or that an active market will
develop following the Share Distribution.

IN REVIEWING THIS INFORMATION STATEMENT, STOCKHOLDERS SHOULD
CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 5.

THIS INFORMATION STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS
ABOUT BUSINESS STRATEGIES, MARKET POTENTIAL, FUTURE FINANCIAL PERFORMANCE AND
OTHER MATTERS. SUCH STATEMENTS INVOLVE MANY RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH STATEMENTS, INCLUDING,
WITHOUT LIMITATION, THOSE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING
"RISK FACTORS" BEGINNING ON PAGE 5.

--------------------

THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
INFORMATION STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

--------------------

THE DATE OF THIS INFORMATION STATEMENT IS ________________, 1997
<PAGE> 2
ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange
Commission (the "SEC") a Registration Statement on Form 10 (including exhibits,
schedules and amendments thereto, the "Company Form 10") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") with respect
to the Company Common Stock. This Information Statement, while forming a part
of the Company Form 10, does not contain all of the information set forth in
the Company Form 10. Reference is hereby made to the Company Form 10 for
further information with respect to the Company and the securities to be
distributed to the NHP Stockholders in the Share Distribution. Statements
contained herein concerning the provisions of documents filed as exhibits to
the Company Form 10 are necessarily summaries of such documents, and each such
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the SEC.

The Company Form 10 is available for inspection and copying at
the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the Regional Offices of the
SEC at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such information can be obtained by mail from the Public
Reference Branch of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549
at prescribed rates, or on the Internet at http://www.sec.gov.

Following the Share Distribution, the Company will be subject
to the informational requirements of the Exchange Act, and, in accordance
therewith, will file reports, proxy statements and other information with the
SEC that will be available for inspection and copying at the SEC's public
reference facilities referred to above. Copies of such material can be obtained
by mail at prescribed rates by writing to the Public Reference Branch of the
SEC at the address referred to above. In addition, it is expected that
reports, proxy statements and other information concerning the Company will be
available for inspection at the Nasdaq Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006.

Questions concerning the Share Distribution should be directed
to Ann Torre Grant at (703) 394- 2420. After the Share Distribution, holders
of Company Common Stock having inquires related to their investment in the
Company should contact Michael D. Ketcham at (703) 610-1400.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS INFORMATION STATEMENT, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED.
<PAGE> 3
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

THE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARRANGEMENTS BETWEEN NHP AND THE COMPANY AFTER THE SHARE DISTRIBUTION . . . . . . . . . . . . 16

CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION . . . . 21

INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

MANAGEMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

PRINCIPAL STOCKHOLDERS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

DESCRIPTION OF THE COMPANY CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . 47

INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
<PAGE> 4
SUMMARY

The following summary is qualified in its entirety by the more
detailed information and financial information appearing elsewhere in this
Information Statement. Except as set forth in the financial statements or as
otherwise noted herein, all information contained in this Information Statement
gives effect to a 789.94 for one stock split of the Company Common Stock (as
defined herein), which is the stock split that would have taken place if the
Share Distribution (as defined herein) had occurred on March 7, 1997. The
actual stock split that will occur at the time of the Share Distribution will
depend on the number of shares of NHP Common Stock issued and outstanding at
the time of the Share Distribution. Unless the context requires otherwise,
references to the "Company" refer to The WMF Group, Ltd. (formerly known as NHP
Financial Services, Ltd.) and its subsidiaries.

THE COMPANY

The Company is one of the largest independent commercial
mortgage bankers in the United States based on a survey (the "MBA Survey")
published by the Mortgage Bankers Association of America (the "MBA") and the
largest originator of multifamily and healthcare loans insured by the Federal
Housing Administration (the "FHA") based on statistics provided by the U.S.
Department of Housing and Urban Development. The Company originates,
underwrites, structures, places, sells and services multifamily and commercial
real estate loans. Through its relationships with government sponsored
entities ("GSEs"), investment banks, life insurance companies, commercial banks
and other investors, the Company provides and arranges financing to owners of
multifamily and commercial real estate on a nationwide basis using both a
retail and wholesale network. The Company generates revenues through
origination fees, servicing fees, net interest income on loans held for sale
and placement fees. As of June 1996, the Company was the tenth largest
servicer of multifamily and commercial real estate loans in the country based
on the MBA Survey. In the year ended December 31, 1996, the Company originated
$1.1 billion of multifamily and commercial real estate mortgages.

The Company believes that it is well positioned to compete
effectively in the commercial real estate financing industry based on its
capitalization, geographic scope and services provided. The commercial and
multifamily mortgage banking industry is increasingly characterized by
expensive technological demands, large and sophisticated infrastructure for
real estate underwriting and risk evaluation, and the rapid emergence of the
securitized market. These developments will, in the Company's judgment, lead
to the creation of sophisticated and well-capitalized mortgage finance
enterprises. The Company seeks to use its existing infrastructure and leverage
its market position to increase market share of its established businesses and
grow its non-multifamily commercial business.

The Company seeks to increase reported earnings and cash flow
through (i) acquisitions and internal growth, (ii) design and delivery of new
mortgage products, and (iii) expansion into related businesses. As a result of
acquisitions and internal growth, the Company has increased loan originations
from approximately $240 million in 1992 to approximately $1.1 billion in 1996,
or a compound annual growth rate of 46.9 percent and its servicing portfolio
from approximately $3.0 billion to $6.2 billion for a compound annual growth
rate of 20.0 percent. In 1996 alone, the Company increased its portfolio of
serviced mortgages from $4.4 billion to $6.2 billion primarily as a result of
the acquisitions of Proctor & Associates of Michigan, Inc. ("Proctor") and
American Capital Resource, Inc. ("ACR") (the acquisitions of Proctor and ACR
are referred to herein as the "Proctor Acquisition" and the "ACR Acquisition,"
respectively.) In April 1997 the Company acquired substantially all of the
mortgage banking assets of Askew Investment Company (the "Askew Acquisition"),
further increasing its mortgage servicing portfolio by approximately $425
million.

The Company is a Delaware corporation formed in October 1992
to hold the operations of WMF Huntoon, Paige Associates Limited ("WMF Huntoon
Paige") and Washington Mortgage Financial Group, Ltd. ("Washington Mortgage").
WMF Huntoon Paige has carried on the business of originating and servicing
multifamily and healthcare mortgages insured by the FHA under various owners
and under various names since 1979. Washington Mortgage, either directly or
through its affiliate, Vienna Mortgage Corporation, has carried on the business
of originating and servicing multifamily and commercial mortgages under various
owners and under
<PAGE> 5
various names since 1984. The Company was acquired by NHP Incorporated ("NHP")
on April 1, 1996. The principal executive offices of the Company are located
at 1593 Spring Hill Road, Suite 400, Vienna, Virginia 22182, phone (703)
610-1400.

THE DISTRIBUTION

DESCRIPTION OF THE DISTRIBUTION

On May 9, 1997, NHP distributed to each holder of record of
NHP Common Stock at the close of business on May 2, 1997, one right (a "Right")
for each outstanding share of NHP Common Stock (the "Rights Distribution").
Each Right entitles the holder to receive from the Company, or any successor
thereof, a distribution (the "Share Distribution" and, with the Rights
Distribution, the "Distribution") of one-third of a share of Company Common
Stock, subject to the terms of a Rights Agreement, dated as of April 21, 1997
(the "Rights Agreement") between NHP, the Company and The First National Bank of
Boston, as Rights Agent. The Rights distributed on May 9, 1997 are evidenced
by the certificates of NHP Common Stock then outstanding. NHP Common Stock
issued after May 9, 1997 and prior to the Maturity Time (as defined below) will
have a legend and reference to the Rights Agreement. Subject to certain
conditions, the Rights will mature at the earlier of (i) the effective time of
the Merger (as defined below) and (ii) December 1, 1997 (such time being
referred to as the "Maturity Time").

REASONS FOR THE DISTRIBUTION

Apartment Investment and Management Company ("AIMCO"), a
wholly-owned subsidiary of AIMCO and NHP have entered into an Agreement and
Plan of Merger, dated as of April 21, 1997 (the "Merger Agreement") pursuant to
which the AIMCO subsidiary will, subject to the terms and conditions provided
in the Merger Agreement, merge with and into NHP (the "Merger"), thereby making
NHP, as the surviving corporation, a wholly-owned subsidiary of AIMCO (the
"Surviving Corporation"). In addition, AIMCO purchased 51 percent of the
shares of NHP Common Stock on May 5, 1997 pursuant to a stock purchase
agreement among AIMCO, Demeter Holdings Corporation ("Demeter") and Capricorn
Investors, L.P. ("Capricorn"). AIMCO required that the Rights Distribution
occur as a condition to the Merger and the purchase of shares of NHP Common
Stock and NHP believes that completion of the Merger while allowing current
shareholders of NHP the opportunity to retain an interest in the business of
the Company maximizes the value that shareholders of NHP will receive in
connection with the Merger. In addition, even if NHP were not acquired by
AIMCO, NHP believes that the Share Distribution, and the Company's subsequent
status as a public company, will allow investors to evaluate better the merits
and outlook of the Company's business. The Share Distribution would also give
NHP Stockholders and other potential investors the flexibility to direct their
investment to their specific area of interest, property management or
financial services, or to continue to retain an interest in both areas.

FEDERAL INCOME TAX CONSEQUENCES

NHP expects to recognize gain as a result of the Rights
Distribution combined with the later maturity of the Rights. The amount of
gain recognized by NHP will be the excess of the fair market value of the
Company over NHP's tax basis in the Company. NHP's tax basis in the Company
Common Stock as of December 31, 1996 was approximately $23,400,000, and is
subject to further adjustment reflecting the Company's 1997 earnings and
distributions. NHP expects to have regular federal income tax net operating
losses available in a sufficient amount to offset the gain under the regular
federal income tax, but does not expect to have sufficient alternative minimum
tax net operating losses available to offset the gain under the federal
alternative minimum tax.

2
<PAGE> 6
NHP. The amount of the distribution is the fair market value of the Company on
the date of the distribution of the Rights (the "Rights Distribution Date").
The portion of the Rights Distribution that will be treated as a dividend
cannot be finally determined until the end of NHP's taxable year that includes
the Rights Distribution. The portion of the Rights Distribution in excess of
the amount treated as a dividend will be treated as a tax free return of basis
to the extent of an NHP Stockholder's basis in NHP Common Stock, and as a
capital gain to the extent such portion exceeds the NHP Stockholder's basis in
NHP Common Stock. For a more complete discussion of certain federal income tax
consequences of the Distribution, see "The Distribution -- Federal Income Tax
Consequences of the Rights Distribution and the Maturity of the Rights." NHP
Stockholders are urged to consult their own tax advisors.

RELATIONSHIP BETWEEN NHP AND THE COMPANY AFTER THE SHARE DISTRIBUTION

As a result of the Share Distribution, the Company will cease
to be a subsidiary of or otherwise affiliated with NHP and will thereafter
operate as an independent, publicly held company. However, as indicated under
"Management," one director of NHP is a director of the Company and will
continue in such dual capacity at least until the Merger if the Share
Distribution occurs before the Merger. The Company and NHP will also enter
into certain agreements providing for (a) the orderly separation of NHP and the
Company and the making of the Share Distribution and (b) the allocation of
certain tax and other liabilities. See "Arrangements Between NHP and the
Company after the Share Distribution."

DIVIDEND POLICY

The Company does not anticipate declaring and paying cash
dividends on the Company Common Stock in the foreseeable future. The decision
whether to apply any legally available funds to the payment of dividends on the
Company Common Stock will be made by the Board of Directors of the Company (the
"Company Board") from time to time in the exercise of its business judgment,
taking into account the Company's financial condition, results of operations,
existing and proposed commitments for use of the Company's funds and other
relevant factors. See "Description of Company Capital Stock -- Common Stock."
The Company's ability to pay dividends may be restricted from time to time by
financial covenants in its credit agreements or in arrangements with or
regulations of government sponsored entities.

RISK FACTORS

In reviewing this Information Statement, stockholders should
carefully consider the matters described under the heading "Risk Factors"
beginning on p. 5.

SUMMARY FINANCIAL INFORMATION

The following table sets forth selected financial and
operating data of the Company as of and for each of the years in the four-year
period ended December 31, 1995, as of and for the three-month period ended
March 31, 1996 and as of and for the nine-month period ended December 31, 1996.
The data for the three-month period ended March 31, 1996 and the nine-month
period ended December 31, 1996 are presented separately as a result of the
acquisition of the Company, which was formerly known as WMF Holdings Ltd., by
NHP effective April 1, 1996 (the "Acquisition.") The table also sets forth pro
forma income statement data for the year ended December 31, 1996 giving effect
to the Acquisition as though it occurred January 1, 1996. The selected
financial data of the Company as of and for each of the years in the four-year
period ended December 31, 1995, as of and for the three-month period ended
March 31, 1996 and as of and for the nine-month period ended December 31, 1996
were derived from the Company's consolidated financial statements. The pro
forma data (which are unaudited) are derived from the footnotes to the
Company's consolidated financial statements contained elsewhere in this
Information Statement. The pro forma results are not necessarily indicative of
operating results that would have been achieved had the Acquisition actually
occurred on January 1, 1996. Additionally, the pro forma operating results are
not intended to be a projection of results of future operations. The selected
financial and operating data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements, pro forma financial statements and related notes
included elsewhere herein.

3
<PAGE> 7

Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
THE COMPANY WMF HOLDINGS LTD. AND SUBSIDIARIES
---------------------------- ------------------------------------------------------------------
9 MONTHS 3 MONTHS
PRO FORMA ENDED ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, MARCH 31, ----------------------------------------------------
INCOME STATEMENT DATA 1996 (1) 1996 1996 1995 1994 1993 1992
----------- ------------ ---------- --------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 30,301 $ 23,473 $ 6,828 $ 21,999 $ 17,061 $ 16,271 $ 10,655
Expenses $ 29,416 $ 22,318 $ 6,523 $ 21,222 $ 17,223 $ 15,550 $ 10,612
Net income (loss) $ 885 $ 1,155 $ 305 $ 777 $ (162) $ 721 $ 43
Net income (loss) per share (2) $ 0.21 $ 0.27 $ 0.07 $ 0.16 $ (0.03) $ 0.12 $ 0.01
Weighted average shares 4,217,479 4,217,479 4,217,479 4,717,312 6,216,812 6,216,812 6,216,812
outstanding (2)

<CAPTION>
DECEMBER 31,
DECEMBER 31, MARCH 31, -----------------------------------------------------
BALANCE SHEET DATA 1996 1996 1995 1994 1993 1992
------------ ----------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans held for sale $ 40,263 $ 23,116 $ 32,462 $ 5,110 $ 44,738 $ 32,401
Servicing rights $ 22,460 $ 8,477 $ 8,466 $ 8,100 $ 7,150 $ 8,319
Total assets $ 88,097 $ 48,976 $ 57,176 $ 31,689 $ 65,347 $ 50,233
Total debt (3) $ 46,136 $ 34,108 $ 43,304 $ 15,271 $ 51,652 $ 39,059
Shareholder's equity $ 22,528 $ 4,324 $ 4,018 $ 6,241 $ 6,403 $ 5,682

OTHER DATA
EBITDA (4) $ 8,256 $ 6,502 $ 1,754 $ 4,743 $ 2,497 $ 3,481 $ 1,829
</TABLE>

(1) Adjusted to reflect results of operations for the twelve months ended
December 31, 1996, as if the acquisition had occurred January 1, 1996.
Adjustments include all income amounts for the three months ended March
31,1996 and additional amortization of $575,648.
(2) Gives effect to a 789.94 per share stock split, which is the stock split
that would have been required pursuant to the terms of the Rights Agreement
if the Share Distribution had occurred on March 7, 1997. The actual
stock split will be such that the number of shares of Company Common Stock
held by NHP on the Share Distribution date will equal one-third of the
number of shares of NHP Common Stock outstanding on such date.
(3) Includes $5,000,000 of notes to the Company's former shareholder as of
March 31, 1996 and December 31, 1995, and $2,000,000 of notes to the
Company's former shareholder as of December 31, 1994 and 1993 all of which
were repaid in conjunction with the Acquisition.
(4) EBITDA consists of income from operations before non-warehouse interest
expense, income taxes, depreciation and amortization. EBITDA is included
because it is used in the industry as a measure of a company's operating
performance, but should not be construed as an alternative either (i) to
income from operations (determined in accordance with generally accepted
accounting principles) as a measure of profitability or (ii) to cash flows
from operating activities (determined in accordance with generally accepted
accounting principles). EBITDA does not take into account the Company's
debt service requirements and other commitments and, accordingly, is not
necessarily indicative of amounts that may be available for discretionary
uses.

4
<PAGE> 8
RISK FACTORS

An investment in the Company Common Stock involves certain
risks, including those described below, which can adversely affect the value of
the Company Common Stock. Neither NHP nor the Company makes, nor is any other
person authorized to make, any representation as to the future market value of
the Company Common Stock.

ABSENCE OF PRIOR TRADING MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the date of this Information Statement and until the
Share Distribution, the Company has been and will be a part of NHP and there
has been no trading market for the Company Common Stock. The Company is unable
to predict the extent of the market for the Company Common Stock or the prices
at which such shares will trade. The price at which the Company Common Stock
trades will be determined by the marketplace and may be influenced by many
factors, including, among others, the number of shares available in the market,
the trading volume of the Company Common Stock, investor perception of the
Company and of the business and general economic and market conditions. The
prices at which the Company Common Stock trades may fluctuate broadly.

Although the Company intends to apply for the Company Common
Stock to be quoted on the Nasdaq National Market, there can be no assurance
that the application will be granted or, if granted, that the Company will
continue to meet the requirements for the quotation of the Company Common Stock
on Nasdaq. Regardless of whether the Company Common Stock is quoted on the
Nasdaq National Market or trades in the over- the-counter market with
quotations being published in the OTC Bulletin Board and the NQB Pink Sheets,
there can be no assurance that an effective trading market will develop or, if
one does develop, that it will be maintained, nor can there be any assurance as
to the prices at which the Company Common Stock will trade following the Share
Distribution.

A "when-issued" trading market in the Company Common Stock may
develop on or about the effective date of the registration statement of which
this information statement is a part. The existence of such a market means
that shares can be traded prior to the time certificates are actually available
or issued. Whether or not there is a "when-issued" market prior to the
availability of certificates, until an orderly market for the Company Common
Stock develops, the prices at which shares of such stock will trade may be
affected by an imbalance of supply and demand.

NEED FOR ADDITIONAL CAPITAL

General. The Company's ability to execute its business
strategy depends to a significant degree on its ability to incur indebtedness
and obtain equity capital. Prior to the Share Distribution, the Company had
access to the resources of NHP including NHP's cash flow, borrowings under
NHP's credit facility and NHP's access to the debt and equity markets.
Following the Share Distribution, the Company will have to rely on its own
resources to obtain capital. Other than as described in "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources," the Company has no commitments for additional
borrowings or sales of equity capital and there can be no assurance that the
Company will be successful in consummating any future financing transactions on
terms satisfactory to the Company, if at all. Factors which could affect the
Company's access to the capital markets, or the costs of such capital, include
changes in interest rates, general economic conditions and the perception in
the capital markets of the Company's business, results of operations, leverage,
financial condition and business prospects. Each of these factors is to a
large extent subject to economic, financial, competitive and other factors
beyond the Company's control. In addition, covenants under the Company's
future debt securities and credit facilities may significantly restrict the
Company's ability to incur additional indebtedness and to issue preferred
stock. The Company's ability to repay its outstanding indebtedness at maturity
may depend on its ability to refinance such indebtedness, which could be
adversely affected if the

5
<PAGE> 9
Company does not have access to the capital markets for the sale of additional
debt or equity securities through public offerings or private placements on
terms reasonably satisfactory to the Company.

Dependence on Warehouse Financing. The Company's mortgage
lending business depends upon warehouse facilities with financial institutions
or institutional lenders to finance the Company's temporary holding of loans
between loan closing and mortgage investor funding. Implementation of the
Company's growth strategy requires continued availability of warehouse
facilities and may require increases in the capacity of warehouse facilities.
The present warehouse facilities expire within one year. Although the Company
has successfully renewed its warehouse credit agreements in the past, there can
be no assurance that such financing will be available on terms reasonably
satisfactory to the Company. The inability of the Company to arrange
additional warehouse facilities or to extend or replace existing facilities
when they expire would have a material adverse effect on the Company's
business, financial condition and results of operations and on the Company's
outstanding securities.

CHALLENGES OF BUSINESS INTEGRATION AND MANAGEMENT OF GROWTH

The Company has implemented a strategy of expanding its
business both internally and through acquisitions of other mortgage originating
and servicing companies and intends to continue to seek additional acquisition
candidates. In addition, the Company is increasing its presence in origination
and servicing of commercial mortgages other than mortgages on multifamily
properties, which had traditionally been the focus of the Company's business.
The process of integrating acquired businesses with differing markets, customer
bases, financial products, systems and managements into the Company's
operations may result in unforeseen difficulties and may require a
disproportionate amount of management's attention and the Company's resources.
These difficulties may be particularly acute in connection with the Company's
expansion into business lines outside of its traditional multifamily business.
The Company's ability to support, manage and control continued growth is
dependent upon, among other things, its ability to hire, train, retain,
supervise and manage its workforce and to continue to develop the skills
necessary for the Company to compete successfully in its new business lines.
In particular, the success of certain acquisitions may be dependent upon the
Company's ability to retain and motivate key employees of the acquired
business. No assurance can be given that the Company will successfully meet
all of these challenges. Nor can assurance be given that additional suitable
acquisition candidates can be identified, financed and purchased on acceptable
terms, or that future acquisitions, if completed, will be successful.

CYCLICAL NATURE OF MORTGAGE ORIGINATION BUSINESS AND OTHER EFFECTS OF GENERAL
ECONOMIC CONDITIONS

Periods of economic slowdown or recession, rising interest
rates or declining demand for real estate will adversely affect the Company's
business. In particular, an economic slowdown will generally reduce the
Company's origination and sales of mortgages, which generated approximately
half of the Company revenue in 1996. In addition, periods of economic slowdown
or recession, whether general, regional or industry-related, may increase the
risk of default on multifamily and commercial mortgage loans, which may also
have an adverse effect on the Company's business, financial condition and
results of operations. The Company may experience losses as a result of
reduced servicing fees from mortgages that are foreclosed and may experience
losses from non-payment on mortgages in the Delegated Underwriting and
Servicing ("DUS") Program described under "-- Risk of Loss on Certain Mortgage
Loans Sold." Such periods also may be accompanied by decreased demand for
multifamily or commercial properties, resulting in declining values of
properties securing outstanding loans, thereby weakening collateral coverage
and increasing the possibility of losses in the event of default. Significant
increases in properties for sale during recessionary economic periods may
depress the prices at which foreclosed properties may be sold or delay the
timing of such sales. There can be no assurance that the multifamily or
commercial markets will be adequate for the sale of foreclosed properties and
any material deterioration of such markets could reduce recoveries from the
sale of repossession inventory.

Changes in the relationship between short-term and long-term
interest rates could also affect the Company's results of operations. The
Company earns net interest income, typically based upon long-term rates earned
on loans net of the short-term borrowing costs to finance such loans, on loans
held between loan closing and

6
<PAGE> 10
mortgage investor funding. If long-term interest rates decreased relative to
short-term interest rates, the Company's net interest income would, under
certain circumstances, decline and could, under certain circumstances, become a
net interest expense. Additionally, decreases in short-term interest rates
would reduce the Company's income from placement fees.

IMPAIRMENT OF MORTGAGE SERVICING RIGHTS

Pursuant to generally accepted accounting principles ("GAAP")
mortgage banking firms are required to recognize as a separate asset the right
to service mortgage loans, whether those rights are retained upon sale of
mortgages originated by the firm or acquired by purchase, if it is practicable
to determine the fair value of the servicing rights. Accordingly, upon
origination and sale of a mortgage and to the extent that it is practicable to
determine the fair value of the servicing rights, the Company is required to
recognize income equal to the value of the retained rights, and to amortize the
value of the rights over the life of the retained rights. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations --
New Accounting Standards." The value of this asset is evaluated for impairment
based on the excess of the carrying amount of the mortgage servicing rights
over their fair value. The fair value may be affected by various factors
including changes in mortgage prepayments (which tend to increase as prevailing
long-term interest rates decline and decrease as such interest rates rise),
higher than expected loan defaults, lower than expected short-term interest
rates, and other factors which impact the net cash flow generated from such
servicing rights. Other key factors that impact the estimated fair value of
commercial and multifamily mortgage servicing rights include prepayment penalty
terms (including lockout and yield maintenance requirements), the underlying
loans' average custodial balances and short-term interest rates. The Company's
operating results will be adversely affected to the extent that impairment
occurs. No assurance can be given that the factors that cause impairment will
approximate the Company's estimates or that such capitalized mortgage servicing
rights could be sold at their stated value, if at all.

RISK OF LOSS ON CERTAIN MORTGAGE LOANS SOLD

The Company is an approved lender under the Federal National
Mortgage Association's ("Fannie Mae") DUS Program. Under this program, the
Company originates, places and services multifamily loans for Fannie Mae
without having to obtain Fannie Mae's prior approval for each loan. This
program requires the Company to share the risk of loss by paying a portion of
the losses on mortgages it originates under the program, up to 20 percent of
the original principal balance of the loan. Additionally, as previously
discussed, changes in the Company's estimates of defaults under the DUS Program
could materially impact the value of rights to service. The Company is
required to maintain a letter of credit or cash balances sufficient to cover a
probability based assessment of its portion of any such losses. As of December
31,1996, the unpaid principal balance of loans placed in the DUS Program by the
Company totaled $776.5 million (out of a total of $6.2 billion principal
balance of all loans serviced by the Company). As of December 31, 1996, the
Company had a reserve to provide for future loan losses under the DUS Program
of $4.4 million and a $4.2 million letter of credit to secure losses under the
program. While the Company believes that this reserve is sufficient, actual
loan losses under the DUS Program could exceed this reserve and could have a
materially adverse effect on the Company's performance.

RETAINED RISKS OF MORTGAGE LOANS SOLD

In connection with the Company's origination and sale of
certain mortgage loans, the Company must make certain representations and
warranties concerning mortgages originated by the Company and sold to mortgage
investors. These representations and warranties cover such matters as title to
mortgaged property, lien priority, environmental reviews and certain other
matters. The Company's representations and warranties rely in part on similar
representations and warranties made by the borrower or others. The Company
would have a claim against the borrower or another party in the event of a
breach of any representations or warranties that are made by the borrower or
others; however, the Company's ability to recover on any such claim would be
dependent upon the financial condition of the party against which such claim is
asserted. In addition, the Company makes some representations and warranties
even though it does not receive similar representations and warranties from

7
<PAGE> 11
borrowers or others, and the Company is not entitled to indemnity with respect
to violations of such representations and warranties. There can be no
assurance that the Company will not experience a material loss as a result of
representations and warranties it makes.

REQUIREMENT TO ADVANCE CERTAIN FUNDS

When borrowers are delinquent in making monthly payments on
multifamily and commercial mortgage loans serviced by the Company, the Company
may be required to advance interest payments with respect to such delinquent
loans to the extent that the Company deems such advances ultimately
recoverable. In addition, the Company may be required to advance funds for the
payment of real estate taxes and insurance. At December 31, 1996, the Company
had made principal, interest and other servicing advances of $2.0 million.
These advances require funding from the Company's capital resources but have
priority of repayment to the Company from collections or recoveries on the
loans.

TERMINATION OF CERTAIN SERVICING CONTRACTS

Mortgage servicing contracts covering approximately $1.1
billion or 18 percent of the principal balance of mortgages serviced by the
Company are terminable upon 30 days notice by the holder of the serviced
mortgage. These contracts are generally for the servicing of mortgages held by
insurance companies. The percentage of mortgages covered by contracts with
such termination provisions may increase to the extent the Company increases
its servicing of mortgages held by insurance companies. The remainder of the
Company's mortgages are for a term equal to the life of the mortgage and are
terminable by the holder of the mortgage only for cause, upon payment to the
Company of a termination fee or upon prepayment or other early termination of
the mortgage.

GOVERNMENT REGULATION AND CHANGES IN GOVERNMENTAL PROGRAMS

The operations of the Company are subject to regulation by
federal, state and local government authorities (such as the FHA and the
Government National Mortgage Association ("Ginnie Mae")), various laws and
judicial and administrative decisions, and regulations of government sponsored
entities (such as Fannie Mae and the Federal Home Loan Mortgage Corporation
("Freddie Mac")) that purchase mortgages originated and/or serviced by the
Company. See "Business -- Regulation." These laws, regulations and decisions
require the Company, among other things, to maintain a minimum net worth and
minimum lines of credit, to submit financial reports, and to maintain a quality
control plan for the underwriting, origination and servicing of loans. These
laws and regulations also impose requirements and restrictions affecting, among
other things, the Company's loan originations, credit activities, maximum
interest rates, finance and other charges, disclosures to customers, the terms
of secured transactions, collection, repossession and claims handling
procedures, personnel qualifications, and other trade practices. Although the
Company believes that it is in compliance in all material respects with
applicable local, state and federal laws, rules and regulations and with the
requirements of entities purchasing mortgages, there can be no assurance that
more restrictive laws, rules, regulations or requirements will not be adopted
in the future that could make compliance more difficult or expensive, restrict
the Company's ability to originate, purchase, sell or service loans, further
limit or restrict the amount of interest and other charges earned on loans
originated or purchased by the Company, further limit or restrict the terms of
loan agreements, or otherwise adversely affect the business or prospects of the
Company. If the Company were unable to comply with these regulations, or were
found to be in violation of the regulations, the Company could lose the
opportunity to originate, sell or service mortgages in certain jurisdictions or
to originate mortgages on behalf of, sell mortgages to or service mortgages
held by certain institutions. The inability to originate, sell or service
mortgages with respect to a participating jurisdiction or a particular entity
could have a material adverse effect on the Company.

As of December 31, 1996, the Company's tangible net worth was
less than that required for continued servicing of loans held by Freddie Mac.
Freddie Mac has advised the Company that the Company has financial strengths
not recognized in its adjusted net worth calculation, and that Freddie Mac
does not

8
<PAGE> 12
consider the Company to be out of compliance as of December 31, 1996. As of
that date, the Company serviced loans held by Freddie Mac with a principle
balance of approximately $246 million. Freddie Mac has advised the Company
that it will re-evaluate the Company's compliance with the net worth
requirement after financial results for 1997 are available. There can be no
assurance that the Company will meet the net worth requirement at that time, or
that Freddie Mac will consider the Company to be in compliance if it does not
meet the standard.

Approximately 44.8 percent of loans originated by the Company
in 1996 and approximately 53.1 percent of loans serviced by the Company as of
December 31, 1996 were insured by the FHA. A change in the law governing FHA
programs, regulations relating to those programs or other changes to the
programs could affect the availability of, or the ability of the Company to
originate or service, FHA-insured mortgages. Any such change could therefore
have a material adverse effect on the Company and its results of operations.

The Company must obtain the prior consent of Fannie Mae,
Freddie Mac and the State of Arizona prior to a change in control of the
Company, which may include the Share Distribution. The Company has no reason
to believe that any such consents required in connection with the Share
Distribution will not be granted.

RELIANCE ON KEY PERSONNEL

The Company is dependent upon the efforts and abilities of a
number of its current key management, including J. Roderick Heller, III, the
Company's Chairman, and Shekar Narasimhan, the Company's President and Chief
Executive Officer. The success of the Company depends to a large extent upon
its ability to retain and continue to attract key employees. The loss of
certain of these employees or the Company's inability to retain or attract key
employees in the future could have an adverse effect upon the Company's
operations.

DEPENDENCE ON SALES STAFF

The Company is dependent upon the efforts and abilities of its
twenty-eight person sales staff. The success of the Company depends to a large
extent upon its ability to retain and continue to attract sales personnel. If
sales staff responsible for a significant portion of the Company's annual loan
origination volume were to terminate their employment with the Company for any
reason, the Company's loan origination volume, and thus its operating results,
could be adversely affected.

COMPETITION

The Company's competition varies by geographic market.
Generally, competition is fragmented with very few national competitors, and
many local and regional competitors. The profile and business practices of
competitors may change, however, because the multifamily and commercial
mortgage industry is undergoing a period of consolidation. Certain of the
Company's competitors are larger and have greater financial resources,
including greater access to and lower cost of capital, than the Company. In
addition, the Company's business is characterized by low barriers to entry, and
new competitors have recently been successful in raising the capital necessary
to enter the business.

RISKS OF SECURITIZATION

The Company has historically received commitments from
third-party mortgage investors to purchase loans at predetermined prices prior
to origination. In the future, the Company may decide to securitize mortgage
loans by pooling and subsequently selling them in the secondary market without
pre-existing investor purchase commitments. Adverse changes in interest rates,
the secondary market or in the assets securing the mortgages could impair the
Company's ability to sell these loans on profitable terms or on a timely basis.
Any such impairment could have a material adverse effect upon the Company's
business and results of operations.

9
<PAGE> 13
RISK OF HEDGING TRANSACTIONS

The Company may in the future enter into hedging instruments
designed to reduce the effects of interest rate movements. Such transactions
could cause the Company to recognize losses depending on the terms of the
instrument and actual interest rate movements.

RELATIONSHIP WITH NHP; POTENTIAL CONFLICTS OF INTEREST

From April 1, 1996 until the Maturity Time, the Company has
operated as a subsidiary of NHP. On or before the Maturity Time, the Company
and NHP will enter into the Separation Agreement. See "Arrangements Between
NHP and the Company After the Share Distribution." This agreement is expected
to provide, among other things, for NHP and the Company to indemnify each other
from tax and other liabilities relating to their respective businesses prior to
and following the Share Distribution. The terms of the agreement that will
govern the relationship between the Company and NHP will be established by NHP
in consultation with the Company's management prior to the Share Distribution,
while the Company is a wholly-owned subsidiary of NHP, and will not be the
result of arms'-length negotiations. Accordingly, there can be no assurance
that the terms and conditions of the agreement will not be more or less
favorable to the Company than those that might have been obtained from
unaffiliated third parties. Adverse developments or material disputes with NHP
following the Share Distribution could have a material adverse effect on the
Company.

CONTROL BY MAJORITY STOCKHOLDERS

After the Share Distribution, Demeter will own approximately
39.3 percent of the outstanding Common Stock of the Company. See "Principal
Stockholders of the Company." In addition, Capricorn will hold approximately
9.1 percent of the outstanding Common Stock of the Company, but the Company
understands that Capricorn intends to distribute these shares to its partners.
Capricorn's partners include an affiliate of Demeter, which has a 20 percent
interest in Capricorn. Capricorn Investors II, L.P. ("Capricorn II"), a
partnership controlled by the general partner of Capricorn, has entered into a
commitment pursuant to which it would, following the negotiation and execution
of definitive documentation and subject to the satisfaction of the conditions
that will be specified therein, acquire additional shares of the Company, as a
result of which it would hold approximately 11.5 percent of the issued and
outstanding shares of the Company. Messrs. Eisenson and Palmer, directors of
the Company, are officers of Demeter and Phemus Corporation an a affiliate of
Demeter ("Phemus"), and Mr. Winokur, also a director of the Company, controls
the managing general partner of Capricorn and is the manager of the general
partner of Capricorn II. In addition, Phemus owns limited partnership
interests in Capricorn and Capricorn II, and Mr. Winokur is a member of the
board of directors of Harvard Management Company, Inc., an affiliate of
Demeter and Phemus. If Capricorn II were to complete the proposed investment,
then Demeter and Capricorn II would together have the requisite votes to
elect all the Company's directors and to approve or disapprove stockholder
matters with respect to the affairs and policies of the Company that are
determined by majority votes of the stockholders of the Company. Furthermore,
because of their shareholdings, Demeter and Capricorn II will likely have the
ability to cause or prevent a sale of the Company or other transaction
resulting in a change of control even if such a transaction is in the interest
of other stockholders. Moreover, given the size of its holding, Demeter may
exercise effective control over such matters on its own.

NO ANTICIPATED STOCKHOLDER DISTRIBUTIONS

It is not anticipated that the Company will pay cash dividends
on Company Common Stock in the foreseeable future. The decision whether to
apply legally available funds to the payment of dividends on the Company Common
Stock will be made by the Board of Directors of the Company from time to time
in exercise of its business judgment, taking into account, among other things,
the Company's results of operations and financial condition, any then existing
or proposed commitments by the Company for the use of available funds, and the
Company's obligations with respect to the holders of any then outstanding
indebtedness or preferred stock. The Company's ability to pay dividends may
be restricted from time to time by financial covenants in its credit
agreements or in arrangements with or regulations of government sponsored
entities.

10
<PAGE> 14
SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Company Common Stock in the
public market following the Share Distribution could have an adverse effect on
the market price of the Common Stock. Of the approximately 4.8 million shares
to be outstanding after the Share Distribution and the Capricorn Transaction
(as defined below), approximately 2.9 million shares will be held by Demeter,
Capricorn (prior to any distribution of shares to its partners) and Capricorn
II. These shares will be subject to sale either without restriction or subject
to the volume limitations of Rule 144 under the Securities Act of 1933, as
amended (the "Securities Act"), if Demeter and Capricorn are considered
affiliates of the Company as that term is defined in Rule 144.

THE DISTRIBUTION

DESCRIPTION OF THE DISTRIBUTION

The Share Distribution will be made at the earlier of (i) the
effective time of the proposed Merger between NHP and a wholly owned subsidiary
of AIMCO and (ii) December 1, 1997 (such time being referred to as the
"Maturity Time") to holders of Rights on the basis of one-third of a share of
Company Common Stock for each Right. The Share Distribution is conditioned on
receipt of all necessary consents, and therefore may not be completed until
consent to the Share Distribution is received from the lenders under NHP's bank
credit facility. Accordingly, if this consent is not received prior to the
earlier of the effective time of the Merger or December 1, 1997, the Maturity
Time will be deferred until the consent is received.

If the Maturity Time is the effective time of the Merger, NHP
Stockholders will receive their shares of Company Common Stock when they
exchange their NHP Common Stock for AIMCO Common Stock. If the Maturity Time
is December 1, 1997, NHP Stockholders of record immediately prior to the
Maturity Time will receive certificates evidencing the shares of Company Common
Stock. No certificates or scrip representing fractional shares of Common Stock
will be issued. NHP Stockholders will receive cash in lieu of fractional
shares of Company Common Stock that would otherwise be distributed at a rate of
$9.15 per share of Company Common Stock.

The Rights were issued May 9, 1997 to stockholders of record
of NHP Common Stock on May 2, 1997 on the basis of one Right for each share of
NHP Common Stock. In addition, one Right was attached to and issued with each
share of NHP Common Stock issued after May 2, 1997, and one Right will be
issued with each share of NHP Common Stock issued prior to the Maturity Time.
At the close of business on May 9, 1997, 12,655,439 shares of NHP Common
Stock were outstanding and held of record by 49 holders. NHP believes there
are approximately 400 beneficial owners of shares of NHP Common Stock as of
May 9, 1997. If the Share Distribution occurred on that date, an aggregate of
approximately 4,218,479 shares of Company Common Stock would have been
distributed to such holders. NHP is prohibited by the Rights Agreement and the
Merger Agreement from issuing additional shares of NHP Common Stock, except in
connection with the exercise of outstanding stock options. NHP therefore
believes the number of shares of Company Common Stock to be issued in the Share
Distribution will not differ significantly from the amount set forth above.

Capricorn II has entered into a commitment pursuant to which
it will, following the negotiation and execution of definitive documentation
and subject to the satisfaction of the conditions that will be specified
therein, purchase 546,448 shares of Company Common Stock at the time of the
Share Distribution for a price of $9.15 per share (the "Capricorn
Transaction"). The Company also expects to issue at a nominal purchase price
pursuant to the terms and conditions of an Employee Stock Purchase Plan (the
"ESPP") it intends to adopt prior to the Share Distribution, twenty-five
shares of Company Common Stock to each employee of the Company who is not
eligible for participation in a Key Employee Incentive Plan the Company also
intends to adopt. In addition, the ESPP is expected to provide that each
employee will have an option to acquire up to 1,000 shares of Company Common
Stock for a price of $9.15 per share, which option shall be exercisable for 10
business days commencing upon effectiveness of an appropriate registration
statement under the Securities Act.

11
<PAGE> 15
In connection with the Rights Distribution, Demeter and
Capricorn have agreed that they will not, for a period ending April 1, 1998,
purchase any shares of Common Stock at a price of less than $9.15 per share
and that, except in certain situations, for a period of one year following the
Share Distribution, they will not sell, in one or more related transactions,
more than 50 percent of the shares held by them at the Maturity Time without
requiring the purchaser of the shares to offer to purchase the shares of all
holders of the Company's Common Stock or propose a merger, each on terms
comparable to those on which Demeter or Capricorn sells. In addition,
Capricorn II has agreed that, if the Capricorn Transaction is completed for a
period of 90 days following the Share Distribution, it will not purchase any
shares of Company Common Stock on the open market unless it has been notified
by the Company that the Company will not be buying any shares of Company Common
Stock in open market transactions. Capricorn II has also agreed that, if
during the period of one year following the Share Distribution it (together
with its affiliates, which shall not include Capricorn for this purpose) is the
single largest shareholder of the Company and holds more than 20% of the shares
of the Company, it will not sell, in one or more related transactions, more
than 50 percent of the shares held by it at the time of the sale without
requiring the purchaser of the shares to offer to purchase the shares of all
holders of the Company's Common Stock on terms comparable to those on which
Capricorn II sells.

EXPENSES OF THE DISTRIBUTION

It is estimated that the direct legal, financial advisory,
accounting, printing, mailing and other expenses (including the fees of NHP's
and the Company's transfer agents) will total approximately $500,000, and will
be borne by NHP. These expenses do not include any of the costs associated
with the time spent by NHP's and the Company's officers and legal, accounting
and other personnel in connection with the Distribution or other internal costs
of NHP or the Company. Upon request, NHP will pay the reasonable expenses of
brokerage firms, custodians, nominees and fiduciaries who are record holders of
NHP shares for forwarding this Information Statement to the beneficial owners
of such shares.

REASONS FOR THE DISTRIBUTION

AIMCO, a wholly owned subsidiary of AIMCO and NHP have entered
into an Agreement and Plan of Merger, dated as of April 21, 1997 (the "Merger
Agreement") pursuant to which AIMCO's wholly owned subsidiary will, subject to
the terms and conditions provided in the Merger Agreement, merge with and into
NHP (the "Merger"), thereby making NHP, as the surviving corporation, a
wholly-owned subsidiary of AIMCO (the "Surviving Corporation"). AIMCO required
that the Rights Distribution occur as a condition to the Merger and NHP
believes that completion of the Merger while allowing current shareholders of
NHP the opportunity to retain an interest in the business of the Company
maximizes the value that shareholders of NHP will receive in connection with
the Merger. In addition, even if NHP were not acquired by AIMCO, NHP believes
that the Share Distribution, and the Company's subsequent status as a public
company, will allow investors to evaluate better the merits and outlook of the
Company's business. The Share Distribution would also give NHP Stockholders
and other potential investors the flexibility to direct their investment to
their specific area of interest, property management or financial services, or
to continue to retain an interest in both areas.

FEDERAL INCOME TAX CONSEQUENCES OF THE RIGHTS DISTRIBUTION AND THE MATURITY OF
THE RIGHTS

The following summary describes certain United States federal
income tax consequences of the Rights Distribution by NHP to NHP Stockholders
and the maturity of the Rights. The summary is based on the Internal Revenue
Code of 1986, as amended (the "Code"), and regulations, rulings, and judicial
decisions as of the date hereof, all of which may be repealed, revoked, or
modified so as to result in federal income tax consequences different from
those described below. Such changes could be applied retroactively in a manner
that could adversely affect an NHP Stockholder. In addition, the authorities
on which this summary is based are subject to various interpretations. It is
therefore possible that the federal income tax treatment of the distribution,
holding, and disposition of the Rights and the Company Common Stock may differ
from the treatment described below.

This summary applies only to NHP Stockholders who own NHP
Common Stock held as a capital asset, and does not deal with special
situations, such as those of dealers in securities or currencies, financial

12
<PAGE> 16
institutions, insurance companies, persons holding the Company Common Stock as
part of a hedging or conversion transaction or a straddle, persons whose
"functional currency" is not the U.S. dollar, foreign investors, and certain
U.S. expatriates.

This summary is for general information only. It does not
address all aspects of U.S. federal income taxation that may be relevant to
holders of NHP Common Stock in light of their particular circumstances, nor
does it address any tax consequences arising under the laws of any state,
local, or foreign taxing jurisdiction. NHP Stockholders should consult their
tax advisors about the particular United States federal income tax consequences
to them of the Rights Distribution, the maturity of the Rights, or the holding
and disposition of the Company Common Stock, as well as any tax consequences
arising under the laws of any state, local, or foreign taxing jurisdiction.

Effect of the Rights Distribution and Maturity of the Rights on NHP

NHP expects to recognize gain for federal income tax purposes
as a result of the Rights Distribution combined with the later maturity of the
Rights. The amount of gain recognized by NHP will be the excess of the fair
market value of the Company over NHP's tax basis in the Company. NHP's tax
basis in the Company Common Stock as of December 31, 1996 was approximately
$23,400,000, and is subject to further adjustment reflecting the Company's 1997
earnings and distributions. The gain so recognized will be a capital gain, and
will be added to the regular taxable income and the alternative minimum taxable
income of NHP for the taxable year in which the Rights Distribution occurs.
NHP does not expect to have sufficient alternative minimum tax net operating
losses available to offset such gain, so that the 20 percent federal
alternative minimum tax will likely apply to most or all of such gain. NHP
does expect to have regular federal income tax net operating losses available
in a sufficient amount to offset such gain under the regular federal income
tax, although the amount of available loss carryovers has not been finally
determined by the IRS or the courts. In the event that the fair market value
of the Company is less than NHP's tax basis, NHP will not be permitted to claim
any loss for federal income tax purposes.

Effect of the Rights Distribution and Maturity of the Rights on NHP
Stockholders

The Rights Distribution is expected to be treated for federal
income tax purposes as a dividend to the NHP stockholders of record on May 2,
1997 to the extent of the current and accumulated earnings and profits of NHP.
The amount of the distribution is the fair market value of the Company shares
covered by the Rights on the Rights Distribution Date. The portion of the
Rights Distribution that will be treated as a dividend cannot be finally
determined until the end of NHP's taxable year that includes the Rights
Distribution (including the determination of the amount of gain, if any,
recognized by NHP by reason of the Rights Distribution). The portion of the
Rights Distribution in excess of the amount treated as a dividend will be
treated as a tax free return of basis to the extent of an NHP Stockholder's
basis in NHP Common Stock, and as a capital gain to the extent such portion
exceeds the NHP Stockholder's basis in NHP Common Stock. Such capital gain
will be a long-term capital gain to the extent the NHP Stockholder holds NHP
Common Stock in which the holding period exceeds one year. An NHP
Stockholder's basis in NHP Common Stock will be reduced (but not below zero) by
the portion of the Distribution in excess of the amount treated as a dividend.

Domestic corporations that satisfy the holding period rules of
Internal Revenue Code section 246(c) with respect to NHP Common Stock, and that
receive a Rights Distribution, will generally be entitled to a 70 percent
dividends received deduction for the dividend portion of the distribution.
However, if the corporation's NHP Common Stock is "debt-financed portfolio
stock" for the purposes of Internal Revenue Code section 246A, the
corporation's dividends received deduction will be reduced to the extent
provided by that section. In addition, the dividend portion of the
distribution may be an "extraordinary dividend" for the purpose of Internal
Revenue Code section 1059, which would require a corporation owning NHP Common
Stock for less than 2 years before the "announcement date" of the Rights
Distribution to reduce its basis in its NHP Common Stock by the nontaxed
portion of the dividend. Domestic corporations that are NHP Stockholders
should consult their tax advisors concerning these issues.

13
<PAGE> 17
A NHP stockholder will have basis in the Rights equal to the
amount of the Rights Distribution to such stockholder. The maturity of the
rights should not be a taxable event to NHP stockholders. A stockholder of NHP
will have basis in the shares of Company Common Stock equal to such
stockholder's basis in the Rights prior to the maturity of the Rights.

EFFECT ON OUTSTANDING NHP OPTIONS

Certain directors, officers and employees of NHP and its
subsidiaries (including the Company) have been granted options to purchase
shares of NHP Common Stock (the "NHP Options"). The NHP Options have been
granted pursuant to various stock option plans of NHP (the "NHP Plans").
Immediately prior to the Share Distribution, each NHP Option will be divided
into two separately exercisable options: (i) an option to purchase Company
Common Stock (an "Add-on Company Option"), exercisable for the number of shares
of Company Common Stock that would have been issued in the Share Distribution
in respect of the shares of NHP Common Stock subject to the applicable NHP
Option, if such NHP Option had been exercised in full immediately prior to the
Maturity Time, and containing substantially equivalent terms as the existing
NHP Option, and (ii) an option to purchase NHP Common Stock (the "Adjusted NHP
Option"), exercisable for the same number of shares of NHP Common Stock as the
corresponding NHP Option had been. The per share exercise price of such NHP
Option will be allocated between the Add-on Company Option and the Adjusted NHP
Option based on a ratio of the assumed value of Company Common Stock to the
combined value of Company Common Stock and NHP Common Stock, and all other
terms of such NHP Option will remain the same in all material respects.
Adjusted NHP Options held by employees of the Company who will no longer be
employees of NHP after the Share Distribution and Add-on Company Options held
by employees of NHP who are not employees of the Company will vest at the time
of the Share Distribution and will be exercisable for a period of ninety days
following the Share Distribution. In connection with the Merger, the Adjusted
NHP Option will be converted into an option to receive AIMCO Common Stock, with
each option to acquire one share of NHP Common Stock being converted into an
option to acquire .74766 of a share of AIMCO Common Stock with the exercise
price adjusted accordingly.

As a result of the foregoing, certain persons who remain NHP
(or AIMCO) employees or non employee directors after the Share Distribution and
certain persons who were NHP employees prior to the Share Distribution but
become employees of the Company after the Share Distribution will hold both
Adjusted NHP (or AIMCO) Options and separate Add-on Company Options. The
obligations with respect to the Adjusted NHP (or AIMCO) Options and Add-on
Company Options will be the obligations of NHP (or AIMCO) and the Company,
respectively.

CERTAIN CONSEQUENCES OF THE SHARE DISTRIBUTION

As a result of the Share Distribution, NHP's interests in the
financial services business will be owned and operated by a separate publicly
held company. Excluding the effect of the Capricorn Transaction and the
Merger, the NHP Stockholders would own the same interest in each of the Company
and NHP that they held in NHP immediately prior to the Maturity Time, but in
the form of separate securities, NHP Common Stock and Company Common Stock.
The transfer agent and registrar for the Company Common Stock is expected to be
The First National Bank of Boston.

Excluding the effect of the Merger, the Share Distribution
would not affect the number of outstanding shares of NHP Common Stock or the
rights of any NHP Stockholder with respect thereto.

RESTRICTIONS ON TRANSFER

Shares of the Company Common Stock distributed to the NHP
Stockholders pursuant to the Share Distribution will be freely transferable
under the Securities Act, except for shares received by any persons who may be
deemed to be "affiliates" of the Company as that term is defined in Rule 144
promulgated under the Securities Act. Persons who may be deemed to be
affiliates of the Company after the Share Distribution generally include

14
<PAGE> 18
individuals or entities that control, are controlled by, or are under common
control with, the Company and may include certain officers and directors of the
Company as well as principal stockholders of the Company. Persons who are
affiliates of the Company will be permitted to sell their shares of the Company
Common Stock only pursuant to an effective registration statement under the
Securities Act or an exemption from the registration requirements of the
Securities Act. Demeter, Capricorn and Capricorn II will also be subject to
certain restrictions on their sales of shares as described under "The
Distribution--Description of the Distribution."

15
<PAGE> 19
ARRANGEMENTS BETWEEN NHP AND
THE COMPANY AFTER THE SHARE DISTRIBUTION

Following the Share Distribution, the Company and NHP (which,
is currently owned 51 percent by AIMCO and which, following the Merger, will be
a wholly-owned subsidiary of AIMCO) will operate independently, and neither will
have any stock ownership, beneficial or otherwise, in the other. For the
purposes of governing certain of the ongoing relationships between the Company
and NHP after the Share Distribution, and to provide mechanisms for an orderly
transition, on or before the Maturity Time, the Company and NHP will enter into
a Separation Agreement (the "Separation Agreement"). The terms of the
Separation Agreement have not yet been determined, and pursuant to the Merger
Agreement, the terms must be reasonably acceptable to AIMCO. The Separation
Agreement will be agreed to while the Company is a wholly-owned subsidiary of
NHP and therefore will not be the result of arms'-length negotiations between
independent parties. See "Risk Factors -- Relationship With NHP; Potential
Conflicts of Interest."

Although the terms of the Separation Agreement are not
expected to be determined until shortly before the date of the Share
Distribution, the Company currently expects that the terms will include the
following. There can be no assurance that the terms of the Separation Agreement
will not be less favorable to the stockholders of the Company than the terms
set out below.

Indemnification. The Separation Agreement is expected to
provide for cross indemnification designed to place with the Company the
responsibility for liabilities of the business carried on by the Company prior
to the Share Distribution and place on NHP responsibility for liabilities of
all other business carried on by NHP prior to the Share Distribution. In
addition, the Separation Agreement is expected to provide for indemnification
by the Company of NHP and its officers, directors and controlling persons
relating to this Information Statement, except as to certain matters, for which
NHP is expected to indemnify the Company.

Tax Sharing Arrangement. The Separation Agreement is also
expected to provide for the payment by the Company to NHP of tax liabilities of
the Company, computed on a stand-alone basis, for periods when the Company is
affiliated with NHP, and for certain procedural matters relating to the
preparation of tax returns and responses to Internal Revenue Service
proceedings relating to taxes incurred by NHP or the Company prior to or in
connection with the Share Distribution.

Treatment of NHP and Company Options. The Separation
Agreement is expected to provide for the amendment of all issued and
outstanding options issued to NHP employees and directors so that each option
to acquire shares of NHP Common Stock will be converted into an option to
receive the same number of shares of NHP Common Stock (or, if the Maturity Time
is the Effective Time of the Merger, a number of shares of AIMCO Common Stock
equal to 0.74766 times the number of shares of NHP Common Stock) and an option
to receive the number of shares of Company Common Stock the option holder would
have been entitled to receive in the Share Distribution if the option had been
exercised immediately prior to the Share Distribution, all on the terms and
conditions set forth in "The Distribution -- Effect on Outstanding NHP
Options."

Repayment of Borrowing. At December 31, 1996, the Company
owed NHP approximately $3.4 million. This indebtedness was incurred in
connection with the Company's acquisition of Proctor on December 31, 1996. The
Company incurred an additional $4.6 million of indebtedness to NHP on April 16,
1997 in connection with the Askew Acquisition. The Separation Agreement is
expected to require the Company to repay all amounts owing NHP at the time of
the Share Distribution.

Contribution of Excess Cash Flow. The Merger Agreement
relating to the AIMCO Merger contains a provision requiring NHP to contribute
to the Company an amount equal to free cash flow (as defined in the Merger
Agreement) since February 1, 1997 to the extent it exceeds the transaction
costs incurred by NHP in connection with the Merger. Amounts owing to NHP
under the Separation Agreement are expected to offset any amounts NHP is
required to pay pursuant to this provision of the Merger Agreement.

16
<PAGE> 20
CAPITALIZATION

The following table sets forth the capitalization of the
Company at December 31, 1996. This table should be read in conjunction with
the Consolidated Financial Statements of the Company.

<TABLE>
<CAPTION>
DECEMBER 31,
DECEMBER 31, 1996
1996(1) (AS ADJUSTED)(2)
---- -------------
<S> <C> <C>
LONG-TERM DEBT:
Servicing acquisition term loan $ 6,211,745 $ 6,211,745
Servicing acquisition/working capital
line-of-credit -- 9,000,000

Shareholder's equity:
Common stock, $.01 par value, 7,899,380 shares authorized,
4,217,479 issued and outstanding 42,175 42,175
Additional paid-in capital 21,330,690 21,330,690
Retained earnings 1,155,165 1,155,165
----------- -----------
Total stockholder's equity 22,528,030 22,528,030
----------- -----------
Total capitalization $28,739,775 $37,739,775
=========== ===========
</TABLE>

(1) Gives effect to a 789.94 per share stock split which is the stock split
that would have been required pursuant to the terms of the Rights Agreement
if the Share Distribution had ocurred on March 7, 1997. The actual
stock split will be such that the number of shares of Company Common Stock
held by NHP on the Share Distribution Date will equal one-third of the
number of shares of NHP Common Stock outstanding on such date.

(2) Gives effect to borrowings of $9,000,000 to repay intercompany payables to
NHP prior to the Share Distribution.

17
<PAGE> 21
SELECTED FINANCIAL DATA

The following table sets forth selected financial and
operating data of the Company as of and for each of the years in the four-year
period ended December 31, 1995, as of and for the three-month period ended
March 31, 1996 and as of and for the nine-month period ended December 31, 1996.
The data for the three-month period ended March 31, 1996 and the nine-month
period ended December 31, 1996 are presented separately as a result of the
Acquisition. The table also sets forth pro forma income statement data for the
year ended December 31, 1996 giving effect to the Acquisition as though it
occurred January 1, 1996. The selected financial data of the Company as of and
for each of the years in the four-year period ended December 31, 1995, as of
and for the three- month period ended March 31, 1996 and as of and for the
nine-month period ended December 31, 1996 were derived from the Company's
consolidated financial statements. The pro forma data (which are unaudited)
are derived from the footnotes to the Company's consolidated financial
statements contained elsewhere in this Information Statement. The pro forma
results are not necessarily indicative of operating results that would have
been achieved had the Acquisition actually occurred on January 1, 1996.
Additionally, the pro forma operating results are not intended to be a
projection of results of future operations. The selected financial and
operating data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements, pro forma financial statements and related notes included elsewhere
herein.

18
<PAGE> 22

Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

OTHER DATA
EBITDA (4) $ 8,256 $ 6,502 $ 1,754 $ 4,743 $ 2,497 $ 3,481 $ 1,829
</TABLE>

<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION

OVERVIEW

On April 1, 1996, NHP acquired all of the outstanding capital
stock of the Company for consideration of approximately $21 million, in the
form of $16.8 million in cash and 210,000 shares of NHP Common Stock. (For
periods prior to NHP's acquisition of the Company, the Company is referred to
as "WMF Holdings.")

The following discussion and analysis presents the significant
changes in financial condition and results of operations of the Company for the
nine months ended December 31, 1996, and the significant changes in financial
condition and results of operations of WMF Holdings for the three months ended
March 31, 1996 and the years ended December 31, 1995 and 1994. The results of
operations of acquired businesses are included in the Company's and WMF
Holdings' Consolidated Financial Statements from the date of acquisition. This
discussion should be read in conjunction with the Company's Consolidated
Financial Statements and notes thereto included in this Information Statement.

As discussed in "Business," the Company has experienced
significant growth in its net income, revenues, annual production volume and
servicing volume during each of the three years ended December 31, 1996, 1995
and 1994. The Company seeks to continue to expand its business through (i)
acquisitions and internal growth; (ii) design and delivery of new mortgage
products; and (iii) expansion into related businesses. On a going-forward
basis, to the extent that the Company is successful in completing acquisitions,
the Company will experience increased expenses associated with the amortization
of goodwill and acquired mortgage servicing rights and, if the acquisitions are
financed by additional indebtedness, an increase in interest expense. Through
the acquisitions, the Company's primary focus is to increase its mortgage
origination capabilities and servicing portfolio. As such, acquisitions may
result in a short-term decrease in income from operations during the period
from acquisition through a period necessary to integrate the acquired
companies.

RESULTS OF OPERATIONS - SUMMARY

The Company's primary business activities are commercial and
multifamily loan servicing, loan origination, and sales of the loans to
investors in the secondary market. Revenues from mortgage banking activities
are earned from the origination of commercial and multifamily real estate
mortgage loans and the servicing of such loans. The Company's revenue includes
loan servicing fees, gains on sale of mortgage loans, interest income on loans
prior to sale, "placement fees" (revenue earned relating to utilization of
escrow funds), origination fee income and other income.

The Company's revenue is significantly influenced by the
timing of origination and sales of mortgage loans. Approximately 47.8 percent
of the Company's revenue in 1996 was derived from such transactions (through
loan origination fees, interest income on loans prior to sale, and gains on
sale of mortgage loans). The remaining 52.2 percent of the Company's revenue
in 1996 was derived from mortgage loan servicing and such revenue is generally
more stable than revenues from the origination and sale of mortgage loans. The
Company's revenue is somewhat sensitive to economic factors such as the general
level of interest rates and demand for commercial and multifamily real estate.
As a result, future revenues may fluctuate due to changes in these factors.
See "Risk Factors -- Cyclical Nature of Mortgage Origination Business and Other
Effects of General Economic Conditions." Therefore, the Company's 1996 results
may not be indicative of future periods.

The following table sets forth information derived from the
Company's consolidated statements of operations for each of the periods
presented in dollars and as a percentage of revenue.

20
<PAGE> 24
SUMMARY FINANCIAL INFORMATION
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
The Company WMF Holdings Ltd. and Subsidiaries
----------------- -----------------------------------------------------------
Period From Period From Year Ended December 31,
April 1, 1996 to January 1, 1996 --------------------------------------
December 31, 1996 to March 31, 1996 1995 1994
----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE
Servicing fees, net $ 7,274 31.0% $2,055 30.1% $ 7,860 35.7% $ 6,182 36.2%
Gain on sale of
mortgage loans, net 8,113 34.6 2,107 30.9 6,334 28.8 4,532 26.6
Interest income 3,388 14.4 862 12.6 3,291 15.0 2,089 12.2
Placement fee income 3,823 16.3 1,136 16.6 3,999 18.2 2,244 13.2
Other 875 3.7 668 9.8 515 2.3 2,014 11.8
------- ------ ------ ------- ------- ------- ------- -------
Total revenue 23,473 100.0 6,828 100.0 21,999 100.0 17,061 100.0
------- ------ ------ ------- ------- ------- ------- -------
EXPENSES
Salaries and employee
benefits 9,975 42.5 2,770 40.5 9,208 41.9 7,324 42.9
General and
administrative 5,237 22.3 1,168 17.1 5,153 23.4 4,314 25.3
Provision for loan
servicing losses 969 4.1 285 4.2 856 3.9 654 3.9
Interest 1,012 4.3 308 4.5 2,144 9.7 2,250 13.2
Depreciation and
amortization 3,981 17.0 551 8.1 2,369 10.8 1,926 11.3
Losses from Beverly
Hills Securities - 0.0 600 8.8 692 3.1 720 4.2
------- ------ ----- ------- ------- ------- ------- -------
Total expenses 21,174 90.2 5,682 83.2 20,422 92.8 17,188 100.8
------- ------ ----- ------- ------- ------- ------- -------
Income (loss) before
income taxes 2,299 9.8 1,146 16.8 1,577 7.2 (127) (0.8)
Income taxes 1,144 4.9 841 12.3 800 3.6 35 0.2
------- ------ ------ ------- ------- ------- ------- -------

Net Income (loss) $ 1,155 4.9% $305 4.5% $777 3.6% ($162) (1.0%)
======= ====== ====== ======= ======= ======= ======= =======
</TABLE>

1996 RESULTS COMPARED TO 1995

As a result of the April 1, 1996 acquisition of the Company by
NHP, all assets and liabilities acquired were recorded at their fair value
which resulted in an increase of the recorded value of the Company's servicing
rights of $10.7 million and goodwill of $5.1 million. The increase in these
assets has resulted in additional amortization expense during the nine months
ended December 31, 1996 of $1.7 million. No other income statement amounts
have been impacted by the acquisition.

21
<PAGE> 25
Consolidated revenue was $23.5 million and $6.8 million for
the nine months ended December 31, 1996 and the three months ended March 31,
1996, respectively. Combined revenues were $30.3 million for the twelve months
ended December 31, 1996, a 37.7 percent increase over consolidated revenue of
$22.0 million for the year ended December 31, 1995. These increases reflected
the increased servicing portfolio which resulted from acquisitions and the
increased loan origination activity in 1996.

Servicing fees were $7.3 million for the nine months ended
December 31, 1996 and $2.0 million for the three months ended March 31, 1996.
Servicing fee income for the twelve months ended December 31, 1996 was $9.3
million, an increase of $1.4 million or 18.7 percent from $7.9 million in 1995.
Revenue related to mortgage servicing is based upon the unpaid principal
balance of loans serviced. The principal balance on these loans was $6.2
billion at December 31, 1996, as compared to $4.5 billion at March 31, 1996,
and $4.4 billion at December 31, 1995. The increases are attributable
primarily to loan originations of $962 million for the nine months ended
December 31, 1996, $168 million for the three months ended March 31, 1996, and
the Proctor and ACR Acquisitions which added rights to service loans with
principal balances of $1.3 billion as of December 31, 1996.

Gain on sale of mortgage loans of $8.1 million for the nine
months ended December 31,1996 and $2.1 million for the three months ended March
31, 1996 was the result of the loan originations discussed above. Gain on sale
of mortgage loans for the twelve months ended December 31, 1996 was $10.2
million, an increase of $3.9 million or 61.4 percent from $6.3 million in 1995
due to the increased gains from origination of permanent FHA loans and
increased originations of $326 million during 1996 relative to 1995. In
addition, the Company began allocating the cost to originate loan servicing to
a separate asset for originated permanent FHA mortgage loans pursuant to the
Company's adoption of SFAS No. 122 on January 1, 1996. See Note 2 to the
Consolidated Financial Statements appearing elsewhere in this Information
Statement for more information. Prior to 1996, the Company treated all costs
incurred to originate loans and loan servicing as a component of the loan
originated. As a result, the basis of permanent FHA loans originated was
lower, resulting in additional gains of $2.7 million and $150,000 for the nine
months ended December 31, 1996 and the three months ended March 31, 1996,
respectively.

Interest income of $3.4 million for the nine months ended
December 31,1996 and $0.9 million for the three months ended March 31, 1996
increased because the average amount of loans held for sale increased from
$37.3 million to $48.1 million for the three months ended March 31, 1996 and
the nine months ended December 31, 1996. Combined interest income of $4.3
million for the twelve months ended December 31, 1996 was $1.0 million or 29.1
percent greater than 1995 interest income of $3.3 million because of higher
average amounts of mortgage loans held for sale.

Placement fee income of $3.8 million for the nine months ended
December 31,1996 and $1.1 million for the three months ended March 31, 1996 was
the result of earnings on invested mortgagor escrow amounts. Placement fee
income for the twelve months ended December 31, 1996 was $4.9 million, an
increase of $0.9 million or 24.0 percent from $4.0 million in 1995. Earnings
on such amounts have increased as the mortgage servicing portfolio has
increased.

Other income of $0.9 million for the nine months ended
December 31, 1996 and $0.7 million for the three months ended March 31, 1996
was the result of income from loan modifications, prepayment penalties and
recoveries. Other income for the twelve months ended December 31, 1996 was
$1.5 million, an increase of $1.0 million or 199.3 percent from $0.5 million in
1995. Approximately $0.5 million of this increase is attributable to a
recovery of escrow advances during 1996 that had previously been written off
and the remainder is primarily attributable to an increase of approximately
$0.5 million in termination and extension fees during 1996.

The Company's total expenses consist of salaries and benefits
(including commissions), other general and administrative expenses, operating
interest expense, provision for loan servicing losses, amortization of mortgage
servicing rights, and other depreciation and amortization.

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<PAGE> 26
Salaries and benefits, the largest category of costs for the
Company, increase with loan production due primarily to the payment of
commissions on loan originations. Salaries and employee benefits of $10.0
million and $2.8 million for the nine months ended December 31, 1996 and the
three months ended March 31, 1996, respectively, were 42.5 percent and 40.5
percent of total revenues, respectively. Salaries and employee benefits for
the twelve months ended December 31, 1996 were $12.8 million, an increase of
$3.6 million or 38.4 percent from $9.2 million in 1995. The increase in these
costs is directly correlated to the increase in revenue since most of the
Company's sales professionals are compensated based on loan origination fees.
Combined salaries and employee benefits on a consolidated basis remained
relatively constant as a percent of total revenues at 42.1 percent in 1996 and
41.9 percent for 1995.

General and administrative expenses consist of professional
fees, travel, management information systems, occupancy, telephone and
equipment rental, and other expenses. General and administrative expenses were
$5.2 million and $1.2 million for the nine months ended December 31,1996 and
the three months ended March 31, 1996. General and administrative expenses for
the twelve months ended December 31, 1996 were $6.4 million, an increase of
$1.3 million or 24.3 percent from $5.1 million in 1995 resulting from the costs
associated with acquisitions, the acquisition of additional offices, and
increased production volume during 1996.

The Company increased the provision for loan servicing losses
by $1.0 million in the nine months ended December 31, 1996 and $0.3 million for
the three months ended March 31, 1996. The provision for loan servicing losses
for the twelve months ended December 31, 1996 was $1.3 million, an increase of
$0.4 million or 46.4 percent from $0.9 million in 1995. The increase is due to
the increase of the related principal balance of Fannie Mae DUS loans in the
servicing portfolio which was $776 million at December 31, 1996, $647 million
at March 31, 1996, and $648 million at December 31, 1995.

Interest expense of $1.0 million and $0.3 million for the nine
months ended December 31,1996 and the three months ended March 31, 1996,
respectively increased due to the increase in the average amount of loans held
for sale discussed above. Combined interest expense of $1.3 million for the
twelve months ended December 31, 1996 was $0.8 million or 38.5 percent less
than interest expense of $2.1 million for the year ended December 31, 1995 due
to the repayment of a $5.0 million loan from the Company's previous shareholder
in the first quarter of 1996 partially offset by the increase in average amount
of mortgage loans held for sale.

Depreciation and amortization of $4.0 million and $0.5 million
for the nine months ended December 31, 1996 and the three months ended March
31, 1996, respectively increased due to the increased asset bases as a result
of the acquisition of the Company by NHP discussed above. Combined
depreciation and amortization of $4.5 million for the twelve months ended
December 31, 1996 was $2.1 million or 91.3 percent greater than depreciation
and amortization of $2.4 million for the year ended December 31, 1995. Most of
this increase is attributable to the $1.7 million of additional amortization
expense resulting from both goodwill and the increased value of mortgage
servicing rights after the acquisition of the Company by NHP. The acquisition
costs of both the ACR and Proctor Acquisitions were allocated to the acquired
assets based upon their fair values. Such assets are being amortized over the
life of the related assets which is based upon the period of expected fees from
servicing rights or loans included in the production pipeline. The impact of
such acquisitions was not material to 1996 operations.

In July 1994, the Company exchanged its stock in WMF
Residential Mortgage Corporation ("Residential"), a wholly-owned subsidiary,
for a 40 percent limited partnership interest in Beverly Hills Securities
Company, Ltd. ("Beverly"). Residential and Beverly specialized in the
origination, purchase, sale, and servicing of single family residential
mortgage loans. No gain or loss was recognized on the exchange. The Company
recognized $692,000 and $720,000 in equity losses relating to Beverly during
1995 and 1994, respectively. At December 31, 1995, the carrying value of the
Company's investment in Beverly was written off as a result of operating losses
and concerns about the recoverability of the investment. The Company's
exposure was limited to its original investment amount in and advances to
Beverly. The Company had advanced approximately $1,086,000

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<PAGE> 27
to Beverly at December 31, 1995. During 1996, approximately $532,000 of the
advance to Beverly was collected and the remaining balance was written off.

1995 RESULTS COMPARED TO 1994

Consolidated revenue for the year ended December 31, 1995 was
$22.0 million, a 28.9 percent increase over consolidated revenue of $17.1
million for the year ended December 31, 1994. The increase reflected the
increased servicing portfolio and the increased origination and loan sale
activity in 1995.

For the year ended December 31, 1995, the Company originated
$803.0 million in commercial and multifamily loans, a 55.0 percent increase
over the $518.0 million of origination volume for 1994. The increased
origination level was primarily attributable to the additional sales and
refinancing activity in the marketplace. All servicing rights associated with
the 1995 originations were retained by the Company in its servicing portfolio.
The 1995 activity resulted in an increase in servicing fees, gain on sale of
mortgage loans, interest income and placement fee income.

Servicing fees, net of guarantee fees and pool insurance fees,
on a consolidated basis in 1995 were $7.9 million, an increase of $1.7 million
or 27.1 percent from $6.2 million in 1994. The increase in servicing fees is
attributable to a $787.4 million or 22.0 percent increase in the Company's
servicing portfolio since December 31, 1994, resulting from both servicing
portfolio acquisitions and loan origination volume.

Gain on sale of mortgage loans was $6.3 million in 1995, an
increase of $1.8 million or 39.8 percent from $4.5 million in 1994. The
increase in gain on sale of mortgage loans is attributable to a $285.0 million,
or 55.0 percent increase in 1995 production volume compared to 1994 production
volume of $518.0 million.

Interest income was $3.3 million in 1995, an increase of $1.2
million or 57.6 percent from $2.1 million in 1994. The increase in interest
income occurred because the average monthly balance of mortgage loans held for
sale in 1995 increased $13.9 million or 104.2 percent as a result of the
increase in production volume in 1995.

Placement fee income was $4.0 million in 1995, an increase of
$1.8 million or 78.2 percent from $2.2 million in 1994. This increase was the
result of increased earnings on invested mortgagor escrow amounts. Earnings on
such amounts have increased as the mortgage servicing portfolio increased to
$4.4 billion at December 31, 1995, an increase of approximately $787.4 million
or 22.0 percent over the $3.6 billion in loans serviced at December 31, 1994.
In addition, the Company was able to negotiate a more favorable earnings rate
for invested escrow funds during 1995.

Other income was $0.5 million in 1995, a decrease of $1.5
million or 74.4 percent from $2.0 million in 1994. The decrease in other
income is primarily attributable to (1) a decrease of $0.7 million in
prepayment penalties from 1994 as a result of the refinance activity caused by
lower interest rates during 1994 relative to 1995, and (2) a decrease of $0.7
million in rental income on the Sheffield Court Apartments due to the sale of
that property in February 1995, as discussed below.

Sheffield Acquisition Corp. (SAC) was incorporated on October
7, 1992 as a wholly-owned subsidiary of Washington Mortgage, to acquire and
manage one multifamily property known as the Sheffield Court Apartments. This
apartment complex was the underlying collateral for a loan originated and
serviced by the Company and sold to a life insurance company. The Company
maintained a 20 percent recourse liability on the loan. The loan subsequently
defaulted and the life insurance company acquired and then sold the property to
SAC for a purchase price of $2,000,000, with participation debt of $1,800,000
provided by the life insurance company. The Company guaranteed $400,000 of the
note. In February 1995, the Company sold the Sheffield Court

24
<PAGE> 28
Apartments for $2,464,000, paid off the note with the life insurance company
and realized a loss of approximately $54,000. Washington Mortgage dissolved
SAC in 1996.

Salaries and employee benefits on a consolidated basis in 1995
were $9.2 million, an increase of $1.9 million or 25.7 percent from $7.3
million in 1994. The increase in these costs is directly correlated to the
increase in revenue since most of the Company's sales professionals are
compensated based on loan origination fees. Salaries and employee benefits on
a consolidated basis remained relatively constant as a percent of total
revenues at 41.9 percent and 42.9 percent for 1995 and 1994, respectively.

General and administrative expenses on a consolidated basis in
1995 were $5.1 million, an increase of $0.8 million or 19.5 percent from $4.3
million in 1994, representing 23.4 percent and 25.3 percent of total revenue,
respectively. The increase is primarily attributable to a legal settlement of
$550,000 in 1995, and the related legal fees, as discussed below.

In October 1990, the Federal Deposit Insurance Corporation
("FDIC") terminated a servicing agreement between Vienna Mortgage Corporation
("VMC"), a former subsidiary of the Company, and The National Bank of
Washington ("NBW"), which had been placed into receivership. The FDIC
disavowed the contract of NBW, and VMC disputed the authority of the FDIC to
terminate the loan servicing agreement without the payment of a $770,000
termination fee, which was stipulated in the servicing agreement with NBW.
VMC, using set-off provisions, held back the $770,000 on the date of transfer
of the terminated servicing rights to the FDIC. In July 1991, the FDIC filed
suit and in December 1991 obtained a judgment against VMC for the $770,000 plus
accrued interest. VMC appealed the U.S. District Court judgment to the U.S.
Court of Appeals for the Fourth Circuit, which affirmed the District Court's
decision. VMC subsequently petitioned the United States Supreme Court for a
hearing, but the petition was denied in the fall of 1993. During 1995, the
Company settled the judgment by paying $550,000 on behalf of VMC. The Company
has no further liability in this matter. VMC was dissolved after the
settlement with the FDIC.

Interest expense decreased from $2.3 million in 1994 to $2.1
million in 1995, a decrease of 4.7 percent. Even though the average loans held
for sale increased in 1995 from 1994 balances, the Company was able to
negotiate more favorable interest rates thereby resulting in a decreased
interest expense.

Depreciation and amortization expense increased from $1.9
million in 1994 to $2.4 million in 1995, an increase of $0.5 million or 23.0
percent as a result of additional purchased mortgage servicing rights in 1995.
However, depreciation and amortization expense remained relatively constant as
a percent of total revenue at 10.8 percent and 11.3 percent for 1995 and 1994,
respectively,

Losses from Beverly Hills Securities of $692,000 in 1995 and
$720,000 in 1994 relate to equity losses in the Company's investment in
Beverly, as discussed previously.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operating activities for the period January 1,
1996 through March 31, 1996 of $0.8 million and $10.7 million for the period
from April 1, 1996 through December 31, 1996, or $11.5 million on a combined
basis, increased by $6.5 million as compared to $5.0 million for the year ended
December 31, 1995. Such increase was due to: 1) higher operating income from
increased loan originations; 2) collection of advances related to loan
servicing activities; and 3) working capital provided by NHP.

The Company's principal capital needs are the financing of
loan funding activities, servicing advances, and the acquisition of commercial
and multifamily mortgage companies and servicing portfolios. To meet these
needs, the Company currently utilizes the following warehouse lines of credit,
credit lines and term loans.

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<PAGE> 29
The Company currently maintains two warehouse lines of credit,
amounting to $165 million. The warehouse lines are secured by the related
mortgage loans held for sale and bear interest at a rate equal to (i) the
London Interbank Offered Rate ("LIBOR") plus one to one and one-half percentage
points (with respect to one facility for $150 million) and (ii) the prime rate
(with respect to the other facility for $15 million). To the extent the
Company maintains compensating balances, the rate on the $150 million line is
reduced to the amount of the spread over LIBOR and the rate on the $15 million
line is reduced to one and one half percent. The lines have one year terms and
expire August 1997 in the case of the $150 million facility and March 31, 1997
in the case of the $15 million facility. The credit limit for the $150
million line has been temporarily increased at times to allow increased
borrowings beyond the limit. The Company recently completed an agreement for a
third warehouse line of credit for $35 million for 1997. The purpose of this
line of credit is to fund multifamily and commercial mortgages originated by
the Company, fund advances required by the Company as a primary servicer, and
fund liquidity advances required by the Company as a master servicer of
collateralized mortgage-backed securities. The base interest rates on this
line of credit are 0.50 to 0.75 percent for balance-funded borrowings and LIBOR
plus 50 to 75 basis points for non-balance-funded borrowings.

The Company maintains a $10 million credit line for working
capital purposes and to fund acquisitions of servicing rights (the "Working
Capital Line"), which is secured by related servicing rights acquired. The
Working Capital Line bears interest at LIBOR plus three and one-half percent
(or three and one-half percent to the extent compensating balances are
maintained). The Working Capital Line renews annually until June 2001, when it
converts to a term loan due in quarterly installments through June 2006. The
Company has another credit line available for working capital purposes
providing for $0.5 million of revolving credit. The interest rate on this line
is equal to the prime rate, and all borrowings must be paid off annually with
interest payments due monthly.

The Company is also obligated on a $6.2 million term loan that
was converted from a credit line in October 1996. This loan bears interest at
LIBOR plus three to three and one-half percent (or three to three and one-half
percent to the extent compensating balances are maintained) and is secured by
servicing rights relating to loans with an approximate unpaid principal balance
of $1.1 billion. The loan is repayable in quarterly installments on a 10-year
amortization schedule with the remaining balance due in June 2001.

At December 31, 1996, the Company had approximately $12.1
million available for working capital purposes, which consisted of
approximately $6.6 million in cash and $5.5 million of borrowings available
under the Company's various credit facilities, excluding its warehouse lines of
credit. At December 31, 1996, the Company had negative working capital of $1.4
million, primarily due to payables to NHP.

The Company has received a commitment for a secured term loan
for 1997 for up to $50 million, subject to certain conditions, including
completion of satisfactory documentation, the absence of material adverse
changes and the sale of participations in the loan. The purpose of this line
of credit is to finance the acquisition of commercial mortgage banking
companies. The availability of this line will depend on the value of the
assets being purchased and servicing rights available as security for this
line. The interest rates on this line of credit are expected to be 3.0 percent
for balance-funded borrowings and LIBOR plus 3.0 percent for non balance-funded
borrowings. There can be no assurance that the conditions will be satisfied
and the loan completed.

The Company has also established a letter of credit of $4.2
million as of December 31, 1996 on behalf of Fannie Mae to fund any loan losses
incurred under the DUS Program. This letter of credit, which was increased to
$4.8 million as of March 31, 1997, is secured by cash and mortgage-backed
securities with a market value of $5.1 million.

Concurrent with the Share Distribution, Capricorn is expected
to purchase 546,448 newly issued shares of Company Common Stock at a price of
$9.15 per share pursuant to a commitment entered into by Capricorn which is
subject to certain conditions. This transaction would provide the Company with
additional equity of $5 million. See "The Distribution -- Description of the
Distribution."

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<PAGE> 30
During the three months ended March 31, 1996 and the nine
months ended December 31, 1996, the Company used $0.4 million and $6.6 million
respectively for the acquisition of ACR and various mortgage servicing
acquisitions. Additionally, the origination of mortgage servicing rights
resulted in investments by the Company of $0.2 million and $2.7 million for the
three months ended March 31, 1996 and the nine months ended December 31, 1996,
respectively.

The Company believes its funds on hand at December 31, 1996,
cash flow from operations, its unused borrowing capacity under its credit
lines, and its continuing ability to obtain financing will be sufficient to
meet its anticipated operating needs and capital expenditures, as well as
planned new acquisitions and investments, for at least the next twelve months.
The magnitude of the Company's acquisition and investment program will be
governed to some extent by the availability of capital.

At December 31, 1996, the Company had a liability of $3.4
million due to NHP as a result of a loan from NHP to fund the acquisition of
Proctor. On April 16, 1997, the Company completed the Askew Acquisition for
approximately $4.6 million, which was funded by a borrowing from NHP. The
Company will repay the indebtedness in connection with the Share Distribution.
Pursuant to the Merger Agreement between NHP and AIMCO, the Company will
receive a portion of the cumulative free cash flow produced by NHP during the
period from February 1, 1997 to the effective time of the Merger. See
"Arrangements Between NHP and the Company after the Share Distribution." These
proceeds will be used to reduce the intercompany payable from the Company to
NHP. The Company intends to fund the repayment of the borrowings from NHP
through a combination of working capital, NHP Free Cash Flow, draws on
available credit lines and/or proceeds from the Capricorn Transaction.

INFLATION

The Company has generally been able to offset cost increases
due to inflation with increases in revenues. Accordingly, management does not
believe that inflation has had a material effect on its results of operations
to date. However, a significant portion of the Company's revenue is somewhat
sensitive to economic factors including real estate market conditions and the
general level of interest rates. To the extent future inflation increases the
general level of interest rates, it could negatively impact the Company's
results of operations. In addition, there can be no assurance that the
Company's other operations will not be adversely affected by inflation in the
future.

NEW ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and Assets to be Disposed
of," which requires the adjustment of the carrying value of long-lived assets
and certain identifiable intangibles if their value is determined to be
impaired as defined by the standard. The Company's adoption of SFAS No. 121 on
January 1, 1996 did not have a material effect on the Company's financial
position or results of operations.

In May 1995, the FASB issued SFAS No. 122, "Accounting for
Mortgage Servicing Rights," which is effective for fiscal years beginning after
December 15, 1995. This statement amends SFAS No. 65, "Accounting for Certain
Mortgage Banking Activities," to require that a mortgage banking enterprise
recognize as separate assets the rights to service mortgage loans, however
those rights are acquired. The Company adopted SFAS No. 122 in 1996. The
primary change resulting from SFAS No. 122 is that servicing rights retained by
the Company after the origination and sale of the related loan are required to
be capitalized by allocating the total cost incurred between the loan and the
servicing rights based on their relative fair value if it is practicable to
determine

27
<PAGE> 31
the fair value of the mortgage servicing rights. If it is not practicable to
determine the servicing right's fair value, then no value is allocated to the
servicing rights. The Company has determined that it is only practicable to
estimate the fair value of servicing rights related to permanent FHA originated
loans as other loan types have a limited secondary market. The Company
capitalized approximately $2.8 million in originated servicing rights during
1996. SFAS No. 122 also requires the Company to evaluate all mortgage servicing
rights for impairment by comparing the carrying value to fair value and
recording a valuation allowance if fair value is less.

In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which is effective for fiscal years beginning after
December 15, 1995. SFAS No. 123 encourages, but does not require, a fair
value-based method of accounting for employee stock options or similar equity
instruments. It also allows an entity to elect to continue to measure
compensation cost under Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," ("APB No. 25"), but requires pro forma
disclosures of net income and earnings per share as if the fair value-based
method of accounting had been applied. Adoption of this statement did not
impact the financial statements of the Company, since it did not have a stock
option plan at December 31, 1996. In connection with the Share Distribution,
the Company plans to institute a new employee stock option plan. Management
believes that the new stock option plan will not have a material effect on the
Company's financial position or results of operations in 1997.

In June 1996, the FASB issued SFAS No. 125, "Accounting for
Transfers of Financial Assets and the Extinguishment of Liabilities," which
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities based on consistent
application of a "financial-components" approach that focuses on control.
Under that approach, after a transfer of financial assets, an entity recognizes
the financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. The new standard is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996. Management does not expect the new standard
to have a material effect on the Company's financial position or results of
operations.

In February 1997, FASB issued SFAS No. 128, "Earnings per
Share." This statement changes the requirements for calculation and
disclosure of earnings per share. This statement eliminates the calculation of
primary earnings per share and requires the disclosure of basic earnings per
share and diluted earnings per share. There will be no impact to the Company's
earnings per share as a results of adoption.

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<PAGE> 32
INDUSTRY OVERVIEW

The Company believes that the financing of commercial and
multifamily real estate offers significant growth opportunities. Commercial
and multifamily real estate encompasses a wide spectrum of assets including
multifamily, office, industrial, retail and hospitality. These assets are
financed by an estimated $1.0 trillion of outstanding commercial real estate
debt. During the past ten years, total commercial mortgage originations have
averaged approximately $210 billion annually, of which approximately 80 percent
to 85 percent consist of non-multifamily assets. The Company anticipates that
on a stabilized basis, the commercial real estate market will require debt
financing for existing properties of approximately $120 to $140 billion
annually, plus additional amounts for new construction.

Commercial mortgage banks have arranged a significant portion
of the debt financing for commercial real estate. Historically, commercial
mortgage banks originated and serviced loans for life insurance companies in
specified geographic regions. In addition to providing loans to life insurance
companies, some commercial mortgage banks acted as originators for GSEs such as
Fannie Mae and Freddie Mac, and also acted as brokers for other lenders. As a
result, a fragmented industry has developed which is comprised of small local
and regional firms.

However, since the early 1990s the commercial mortgage banking
industry has experienced significant change, in part due to the growth in
commercial mortgage securitization, the expanded involvement of GSEs, increased
borrower sophistication and advances in information technology. Many of the
existing firms lack the capital and financial sophistication to compete
effectively in today's rapidly changing market. Accordingly, the Company
believes the commercial mortgage industry is going through a period of
consolidation similar to that experienced in the residential mortgage industry.

The industry is already showing signs of consolidation. For
example, the MBA reported that as of June 1996, ten commercial mortgage banks
(including the Company) had servicing portfolios greater than $5 billion,
compared to three companies in June 1992. Moreover, as measured by unpaid
principal balance of loans serviced, the top ten companies serviced 52 percent
of the outstanding commercial loans administered by the 100 largest companies
involved in commercial loan servicing. In 1992, the ten largest servicers
accounted for 21 percent of the loans serviced by the 100 largest companies.

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<PAGE> 33
BUSINESS

COMPANY OVERVIEW

The Company is one of the largest independent commercial
mortgage bankers in the United States based on the MBA Survey and is the
largest originator of FHA-insured multifamily and healthcare loans based on
statistics provided by the U.S. Department of Housing and Urban Development.
The Company originates, underwrites, structures, places, sells and services
multifamily and commercial real estate loans. Through its relationships with
GSEs, investment banks, life insurance companies, commercial banks and other
investors, the Company provides and arranges financing to owners of multifamily
and commercial real estate on a nationwide basis using both a retail and
wholesale network. The Company generates revenues through origination fees,
servicing fees, net interest income on loans held for sale and placement fees.
As of June 1996, the Company was the tenth largest servicer of multifamily and
commercial real estate loans in the country based on the MBA Survey. In the
year ended December 31, 1996, the Company originated $1.1 billion of
multifamily and commercial real estate mortgages.

The Company believes that it is well positioned to compete
effectively in the commercial real estate financing industry based on its
capitalization, geographic scope and services provided. The commercial and
multifamily mortgage banking industry is increasingly characterized by
expensive technological demands, large and sophisticated infrastructure for
real estate underwriting and risk evaluation and the rapid emergence of the
securitized market. These developments will, in the Company's judgment, lead
to the creation of sophisticated and well-capitalized mortgage finance
enterprises. The Company seeks to use its existing infrastructure and leverage
its market position to increase market share of its established businesses and
grow its commercial business.

The Company is a Delaware corporation formed in October 1992
to hold the operations of WMF Huntoon Paige and Washington Mortgage. WMF
Huntoon Paige has carried on the business of originating and servicing
multifamily mortgages insured by the FHA under various owners and under various
names since 1979. Washington Mortgage, either directly or through its
affiliate, Vienna Mortgage Corporation, has carried on the business of
originating and servicing multifamily and commercial mortgages under various
owners and under various names since 1984. The Company was acquired by NHP on
April 1, 1996. The principal executive offices of the Company are located at
1593 Spring Hill Road, Suite 400, Vienna, Virginia 22182, phone (703) 610-1400.

STRATEGIC OBJECTIVES

Acquisitions. The Company has pursued a strategy of acquiring
both multifamily and commercial mortgage businesses which either serve key real
estate markets in the United States or provide niche or specialized services
that enhance its product line, and of acquiring additional servicing
portfolios. As a result of acquisitions and internal growth, the Company has
increased loan originations from approximately $240 million in 1992 to
approximately $1.1 billion in 1996, or a compound annual growth rate of 46.9
percent and its servicing portfolio from approximately $3.0 billion to $6.2
billion for a compound annual growth rate of 20.0 percent. The characteristics
of firms the Company seeks to acquire include active and productive loan
origination staffs, significant market share and servicing portfolios of $250
million or more.

During 1996, the Company increased its portfolio of serviced
mortgages by 40.9 percent from $4.4 billion to $6.2 billion, primarily as a
result of the Proctor and ACR Acquisitions, as well as new originations.

- On December 31, 1996, the Company acquired all of the
common stock of Detroit-based Proctor, the 37th
largest commercial mortgage banking firm in the
United States based on the MBA Survey. The Company
paid approximately $3.7 million in cash to acquire

30
<PAGE> 34
Proctor. The acquisition brought to the Company a
$1.1 billion loan servicing portfolio of multifamily,
retail and office building mortgages, as well as 17
active correspondent relationships with life
insurance companies. Proctor originated
approximately $221 million in commercial mortgage
loans in 1996.

- On May 13, 1996, the Company completed the purchase
of a portion of the loan production pipeline and
servicing, as well as certain other assets, of ACR
for approximately $4.2 million plus potential future
payments based on realization of loans closed from
the pipeline through August 1997. The acquired
pipeline and loan production offices originated
approximately $138 million in multifamily and
healthcare loans for the Company in 1996.

- On April 16, 1997, the Company purchased
substantially all of the mortgage banking assets of
Askew Investment Company ("Askew") in Dallas, Texas
for $4.6 million, excluding transaction costs. Askew
is a multifamily and commercial mortgage bank with
correspondent relationships with 14 insurance
companies, which originated $375 million of mortgages
in 1996. The Askew Acquisition increased the
Company's mortgage servicing portfolio by $425
million and gives the Company access to the
traditional insurance company whole-loan buyers in
the markets served by Askew as well as a new source
of loans for securitization through the Company's
capital market relationships.

The Company also grows its servicing portfolio through the
acquisition of servicing rights. Since 1992, the Company has acquired
servicing rights on approximately $1.3 billion of mortgages in over 44
transactions.

Design and delivery of new mortgage products. Since 1992, the
Company has been involved in developing more than eight new products including
one of the first whole-loan conduits (Common Sense(SM)), a revolving credit
facility for REITs and a forward commitment program for tax-credit new
construction. Using these products, the Company has originated loans totaling
over $600 million from 1992 to 1996. In the past six months, the Company has
enhanced its bridge loan product for multifamily lending as well as added a
number of life company products and a securitized loan product with a major
Wall Street conduit for commercial lending. Within the multifamily and
commercial mortgage business, the Company intends to develop new financing
products in response to changing market conditions.

Expand into related businesses. The Company seeks to build
upon its competency in evaluating real estate to expand its services and
develop related products. The Company has used its expertise to provide due
diligence services for institutional clients and is investigating opportunities
to expand its presence in the commercial mortgage-backed securities market.
Other possible businesses may include real estate advisory services, master
servicing of securitized loans, asset management, commercial leasing and
management and the purchase and retention of commercial mortgage-backed
securities. Expansion may occur through a combination of acquisitions,
strategic alliances and internal business development. There can be no
assurance that the Company will seek to undertake any specific line of
business, or that, if it undertakes a particular line of business, that the
business will be successful.

MORTGAGE ORIGINATION

The Company's staff of 28 loan originators targets a wide
variety of borrowers including developers, local entrepreneurial owners, large
portfolio owners and public companies such as REITs. Currently, the Company
originates mortgages through two channels - retail and wholesale. The Company
directly solicits owners of real estate, as well as local multifamily and
commercial mortgage brokers, through its loan originators based in ten offices
located throughout the country. The Company believes that having a local
presence within a market significantly adds to its understanding of the local
economic, demographic and real estate trends, thus

31
<PAGE> 35
allowing it to serve borrowers and investors better. A local presence also
facilitates the development of borrower relationships as well as the
identification of new customers. In those markets where the Company does not
have a retail presence, it acts through a correspondent relationship with local
mortgage brokers. In this relationship, a local commercial mortgage broker
serves as a source of loans for the Company. Currently, the Company originates
loans through 37 correspondents throughout the United States. The Company
believes that multiple sourcing systems and a diverse menu of loan products
attract borrowers and helps retain their business.

Once potential borrowers have been identified, the Company
determines which of its mortgage products best meets the borrowers' needs.
After identifying a suitable product, the Company works with the borrower and a
mortgage investor to prepare a loan application. Upon acceptance by the
borrower, the application is forwarded to the Company's underwriters for due
diligence or, in the case of FHA insured loans, to the FHA, which conducts the
due diligence and makes decisions on commitments. See "-- Mortgage
Underwriting." The loan is evaluated, and if appropriate, submitted to a loan
committee consisting of senior officers of the Company. If a loan is approved,
the Company issues a commitment to the borrower and normally commits the loan
for sale to an appropriate investor at the same time. This essentially
simultaneous commitment from both a borrower and a mortgage investor enables
the Company to eliminate its exposure to interest rate changes for each
transaction. Typical investors include insurance companies, banks, credit
corporations, GSEs and other institutional investors. Closing on a loan
typically occurs 15 to 30 days after the Company commits to make the loan. At
the time of the closing, the Company funds the loan using its warehouse lines
of credit and the Company is paid an origination fee, typically one percent of
the principal amount of the loan, by the borrower.

Within ten to forty-five days after the closing on a loan, the
Company typically completes the sale of the loan to an investor. In connection
with such sales, the Company makes certain representations and warranties to
investors covering matters such as title to mortgaged property, lien priority,
environmental reviews and certain other matters. See "Risk Factors -- Retained
Risks of Mortgage Loans Sold." The Company bases these representations and
warranties on representations and warranties from borrowers and on independent
studies from third-party consultants. The Company may also retain certain
other liabilities with respect to loans it sells to investors, as it does under
the Fannie Mae DUS Program. See "Risk Factors -- Risk of Loss on Certain
Mortgage Loans Sold" and "Conventional Multifamily," below. After selling a
mortgage loan, the Company typically retains the right to service the loan.
See "-- Mortgage Servicing."

The Company provides a diverse range of products to borrowers
through three business units: Conventional Multifamily, FHA Multifamily and
Healthcare and Commercial. The following table sets forth information
regarding loan origination volume by business unit for each of the last three
years.

LOAN ORIGINATION VOLUME BY BUSINESS UNIT
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Conventional Multifamily $ 505.4 $ 448.0 $ 223.3
FHA and Healthcare 505.6 325.5 252.0
Commercial 117.5 29.0 42.6
-------- ------- -------
Total $1,128.5 $ 802.5 $ 517.9
======== ======= =======
</TABLE>

Conventional Multifamily. This business unit originates
financing for multifamily properties that are not supported by governmental
insurance or guarantees. The Company sells such loans to a variety of mortgage
investors. One of the Company's most active conventional products is Fannie
Mae's DUS Program. Currently, there are only 26 companies approved to
participate in this program. In 1996, total DUS Program production was $4.4
billion, of which the Company produced $281.3 million. Under the DUS Program,
Fannie Mae delegates its authority to these 26 companies to approve, close and
service loans on multifamily mortgages that meet predetermined criteria.
Fannie

32
<PAGE> 36
Mae is committed to subsequently purchase these loans from participating
companies. As part of the program, Fannie Mae requires that each company
maintain a specified capital base and share in the risk of loss on the loan.
In return for sharing the risk of loss, the participants receive a servicing
fee that is significantly higher than what is typically found in the industry.
The Company underwrites each loan (as described on the following pages) to
manage its loss exposure and enhance its return on servicing. See "-- Mortgage
Underwriting," below.

In addition to its participation in Fannie Mae's DUS Program,
the Company is a Fannie Mae Prior Approval Lender and is one of the designated
post closing review lenders for the Fannie Mae Aggregation Facility (the
"Aggregation Facility"). These programs allow the Company to sell certain
loans to Fannie Mae that it would not otherwise fund through the DUS Program.
Unlike DUS, however, Prior Approval and Aggregation Facility do not require
that the Company share in the risk of loss.

The Company is one of six multifamily mortgage companies which
sell mortgage loans to NationsBanc Capital Markets, Inc. specifically for
subsequent securitization This program was created in conjunction with the
Company by NationsBank, N. A. in 1994 when NationsBank launched its
securitization efforts. In 1996, the Company originated loans totaling $87.7
million through this program.

The Company is also a Freddie Mac Program Plus Seller/Servicer
with authorization to service loans in territories reporting to Freddie Mac's
Northeast, Southeast and Western Regional offices. The Company is permitted to
originate loans under "Program Plus" agreements in the greater New York City
metropolitan area and in southern California. In addition, the Company is able
to provide financing to multifamily owners in specified parts of the country
through its 17 life insurance company relationships.

FHA Multifamily and Healthcare. The Company, through WMF
Huntoon Paige, is the largest provider of FHA-insured multifamily and
healthcare financing in the country. The Company originates and services
construction and permanent loans. In 1996, the Company acquired certain assets
of ACR, the third largest originator of FHA financing. Together, these
companies originated 13.8 percent of all FHA multifamily and healthcare insured
debt financing in 1996.

The Company operates FHA lending as a separate business unit
because typical property characteristics, borrower requirements, licensing, and
approval processes differ significantly between FHA and conventional
multifamily financing.

Commercial. With the acquisition of Proctor in 1996 and the
acquisition of the assets of Askew in 1997, the Company has substantially
increased its presence in the market for commercial, non-multifamily financing.
The Company has originated loans for three programs that target mortgages
secured by a variety of asset classes including office buildings, retail
centers, hotels, warehouses and nursing homes. Both Proctor and Askew bring a
variety of established insurance company relationships to the Company,
including: UNUM, Canada Life, CIGNA, American General, Nationwide, Berkshire
Life, Government Personnel Mutual and Century Life. Historically, banks,
insurance companies and, more recently, conduits, have been the primary sources
of capital for this segment. Insurance companies are particularly active
investors in the segment through the regional commercial mortgage banks.

MORTGAGE UNDERWRITING

The Company's originators work in conjunction with
underwriters whose responsibility is to perform due diligence on all loans
prior to commitment and approval. The Company's underwriters complete a
comprehensive assessment of the proposed loan including a review of (1)
borrower financial position and credit history, (2) past operating performance
of the underlying collateral, (3) potential changes in project economics and
(4) appraisal, environmental, and engineering studies completed by a
pre-approved list of third-party consultants. Additionally, underwriters
complete an independent market assessment which includes a property inspection,
review of tenant and lease files, survey of market comparables and an analysis
of area economic and demographic trends. Each proposed

33
<PAGE> 37
loan is reviewed and approved by a loan committee consisting of the senior
officers of the Company. These executives average 18 years experience in
lending.

In 1996, these underwriting procedures contributed to the
Company achieving a loan delinquency rate (i.e., loans delinquent over 60 days)
equal to only 0.75 percent of its entire conventional multifamily and
commercial portfolios. For the DUS portfolio, where the Company is exposed to
potential loss sharing with Fannie Mae, the Company has not experienced any
losses or delinquencies on its new originations since its approval as a DUS
lender in 1990. During this period, the Company originated over 175 DUS loans
with original principal balances in excess of $928 million. The Company has
experienced one loss of $0.3 million on a DUS loan. The loan was originated by
another lender and the Company acquired the risk-sharing obligation as part of
its DUS approval in 1990.

The Company's underwriting procedures are generally not
applied to FHA insured loans. These loans are examined by the FHA, which makes
a decision as to whether to provide insurance. The Company therefore relies on
the FHA review and the fact that FHA insurance covers losses on these loans,
rather than subjecting them to the Company's underwriting process.

MORTGAGE SERVICING

As a mortgage servicer, the Company performs both primary and
master servicing functions. Primary servicing involves the collection of
mortgage payments, the maintenance of escrow accounts for the payment of ad
valorem taxes and insurance premiums, the remittance of payments of principal
and interest, the reporting to investors on financial and property issues and
general loan administration. The primary servicer must inspect properties,
determine the adequacy of insurance coverage, monitor delinquent accounts and,
in cases of extreme delinquency, institute and complete either forbearance
arrangements or foreclosure proceedings on behalf of investors.

Master servicers administer and report on securitized pools of
mortgage-backed securities. Normally, the actual mortgages underlying
mortgage-backed securities are serviced by individual primary servicers.
Master servicing agreements typically provide for the primary servicer to
retain responsibility for administering the mortgage loans and the master
servicer functions as an intermediary, supervising the work of primary
servicers by monitoring their compliance with the servicing contract and
consolidating all accounting and reporting to the securities issuer.

The Company provides servicing pursuant to contracts with
owners of mortgages and originators of mortgage-backed securities. The
contracts are generally for a term equal to the term of the serviced mortgage
or the mortgage-backed security, as appropriate, except that all contracts are
terminable for cause and contracts with insurance company owners of mortgages
(amounting to approximately 18 percent of mortgages held as of December 31,
1996) are customarily terminable on 30 days notice by the owner, in many
instances without cause, subject to payments of termination fees in certain
circumstances. Pursuant to these agreements, the Company receives a fee for
primary servicing typically ranging from ten basis points to forty basis points
of the unpaid principal amount annually. Fees for master servicing typically
range from one to ten basis points of the unpaid principal balance of the loans
underlying the securities.

As of December 31, 1996, the Company acted as the primary
servicer for approximately $6.0 billion of loans and the master servicer for an
additional $214 million of loans. These loans were obtained through the
Company's origination network and through the purchase of servicing rights. A
breakdown of the servicing portfolio as of December 31, 1996 is shown below.

34
<PAGE> 38
SERVICING PORTFOLIO BY PRODUCT TYPE
$ IN MILLIONS

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Conventional Multifamily $ 1,644 $ 1,409 $ 1,004
FHA -- Ginnie Mae 3,076 2,657 2,206
Commercial 1,267 201 ------
Master Servicing 214 145 368
------- --------- -------
Total $ 6,201 $ 4,412 $ 3,578
======= ========= =======
</TABLE>

The Company processes servicing transactions primarily through
facilities in Vienna, Virginia and Edison, New Jersey, and it employs
approximately 52 persons in servicing capacities. As of December 31, 1996, the
Company serviced 2,136 loans, each of which normally involves monthly payments
for 143 investors. As part of its servicing functions on these loans, the
Company managed escrow accounts totaling $228 million as of December 31, 1996
and processed approximately $38 million in principal and interest payments each
month. The Company continuously reviews its servicing operations and seeks to
implement improvements in its systems and business processes.

REGULATION

The Company, through its subsidiaries, is an FHA-approved
mortgagee and, as such, must comply with the applicable requirements of the
National Housing Act (the "Housing Act"), and the regulations and policies of
the FHA which are promulgated pursuant to the Housing Act. The Housing Act's
regulations and policies require, among other things, the maintenance of a
minimum net worth and minimum warehouse lines of credit by each approved
mortgagee, the employment of trained personnel competent to perform their
assigned responsibilities, the submission to FHA of an annual audit report and
financial statements in a form acceptable to FHA, the maintenance and use of
escrow funds in a prescribed manner and the maintenance of a quality control
plan for the underwriting, origination and servicing of mortgage loans.

In addition to being an FHA-approved mortgagee, one of the
Company's subsidiaries is approved by Ginnie Mae as an issuer of Ginnie
Mae-guaranteed mortgage-backed securities ("Ginnie Mae MBSs"). As an approved
issuer of Ginnie Mae MBSs, the Company must comply with the eligibility
requirements of Ginnie Mae which, among other things, mandate that the
subsidiary be an FHA-approved mortgagee in good standing, that it be a Fannie
Mae- or Ginnie Mae-approved mortgage servicer in good standing, and that it
maintain a minimum net worth in assets acceptable to Ginnie Mae in an indexed
amount which is related by Ginnie Mae policy to the amount of Ginnie Mae MBSs
which the Company has issued.

As a mortgage banker engaged on a national level, the Company
must comply with the laws of the various states which may be applicable to the
activities of mortgage bankers within each respective state. These laws may
require authorizations or licenses to conduct business in a state.

Although the Company believes that it is in compliance in all
material respects with applicable laws relating to FHA and Ginnie Mae
requirements, and with applicable laws of the various jurisdictions in the
United States, there can be no assurance that laws will not be adopted in the
future that could make compliance more difficult or expensive, restrict the
Company's ability to originate, sell, purchase, broker or service mortgage
loans or Ginnie Mae MBSs, limit or restrict the amount of interest and other
charges earned on mortgage loans or Ginnie Mae MBSs originated, sold, purchased
or serviced by the Company, or otherwise adversely affect the business or
prospects of the Company. If the Company were unable to comply with the laws,
or were found to be in violation of law, the Company could lose the opportunity
to originate, sell, purchase, broker or service mortgage

35
<PAGE> 39
loans or Ginnie Mae MBSs generally, or in the applicable jurisdiction, and
could be compelled to forfeit or forgo revenues earned on transactions which
were determined by FHA, Ginnie Mae or the authorities in a particular
jurisdiction, as applicable, to be in violation of law or engaged in by the
Company in violation of law, and it and certain of its officers could be
subject to fines and other penalties, including restrictions on or prohibition
from doing future business with FHA or Ginnie Mae, or in the jurisdiction. The
inability of, or restrictions on the ability of, the Company to originate,
sell, purchase or service mortgage loans or Ginnie Mae MBSs could have a
material adverse effect on the Company.

In addition to legal requirements with which they must comply,
the Company's arrangements with investors (including Fannie Mae and Freddie
Mac) require the Company to comply with certain standards including among other
things, minimum net worth requirements, minimum liquid reserves, underwriting
guidelines, servicing systems and controls, experienced personnel and minimum
requirements with respect to errors and omissions and fidelity insurance.

There can be no assurance that requirements will not be
adopted in the future that could make compliance more difficult or expensive,
restrict the Company's ability to originate, sell, purchase or service mortgage
loans, limit or restrict the amount of interest and other charges earned on
mortgage loans originated, purchased or serviced by the Company, or otherwise
adversely affect the business or prospects of the Company. If the Company were
unable to comply with the requirements, or were found to be in violation of any
of the requirements, the Company could lose the opportunity to originate and
sell, or broker, and service mortgage loans for Fannie Mae, Freddie Mac or any
other investor, and could be compelled to forfeit or forgo revenues earned on
transactions with respect to which the actions of the respective corporation
were determined to be not in compliance with the applicable contract with
Fannie Mae, Freddie Mac or other investor. The inability of the Company to
originate and sell, or broker, and service mortgage loans with respect to
Fannie Mae, Freddie Mac or any particular investor could have a material
adverse effect on the Company.

COMPETITION

The Company's competition varies by geographic market.
Generally, competition is fragmented with very few national competitors, and
many local and regional competitors. In addition, the Company's business is
characterized by low barriers to entry, and new competitors have recently been
successful in raising the capital necessary to enter the business. Moreover,
certain of the Company's competitors are larger and have greater financial
resources than the Company, including the commercial mortgage banking arms of
General Motors, General Electric, Mellon Bank, Banc One and CB Commercial. The
Company competes largely on the basis of its experience in purchasing and
servicing mortgages supported by various government guarantees, and on its
ability to respond promptly to changing market conditions. Although management
believes that the Company is well positioned to continue to compete effectively
in the multifamily and commercial mortgage banking businesses, there can be no
assurance that it will do so or that the Company will not encounter further
increased competition in the future which could limit its ability to maintain
or increase its market share.

LEGAL PROCEEDINGS

The Company is involved from time to time in legal proceedings
arising in the ordinary course of business. In connection with the Company's
loan servicing activities, the Company is indemnified to varying degrees by the
party on whose behalf the Company is acting. The Company also maintains
insurance that management believes is adequate for the Company's operations.
None of the legal proceedings in which the Company is currently involved,
either individually or in the aggregate (and after consideration of available
indemnities and insurance), is expected to have a material adverse effect on
the Company's business or financial condition; however, any claims asserted in
the future may result in legal expenses or liabilities which could have a
material adverse effect on the Company's business or financial condition.

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<PAGE> 40
EMPLOYEES

At December 31, 1996, the Company employed 196 persons. Most
of these people work in professional, administrative and technical positions
and no employee is represented by a labor union or subject to a collective
bargaining agreement. The Company believes that its employee relations are
generally good.

PROPERTIES

The Company's headquarters are currently located in Vienna,
Virginia where the Company leases approximately 28,559 square feet of office
space under a lease expiring on December 31, 2000. Additional corporate
offices are located in Edison, New Jersey, where the Company leases
approximately 15,206 square feet of office space under a lease expiring on May
1, 2005. In addition to its offices in Vienna and Edison, the Company has nine
additional offices located throughout the United States.

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<PAGE> 41
MANAGEMENT OF THE COMPANY

DIRECTORS AND EXECUTIVE OFFICERS

As of the Maturity Time, it is anticipated that the directors
and executive officers of the Company will be as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
J. Roderick Heller, III 59 Chairman of the Board

Shekar Narasimhan 43 Director, President and Chief Executive Officer

Mohammed A. Al-Tuwaijri 41 Director

Michael R. Eisenson 41 Director

Tim R. Palmer 39 Director

John D. Reilly 54 Director

Herbert S. Winokur, Jr. 53 Director

James L. Clouser 55 Executive Vice President

Michael D. Ketcham 38 Executive Vice President, Chief Financial Officer and
Treasurer

Douglas J. Moritz 47 Executive Vice President

Howard S. Perkins 48 Executive Vice President

Clarke B. Welburn 48 Executive Vice President

Joan C. May 39 Senior Vice President

Elizabeth Whitbred-Snyder 43 Senior Vice President and Controller
</TABLE>

J. Roderick Heller, III has served as Chairman of the Board
since 1996. He has served as a Director, President and Chief Executive Officer
of NHP since its organization in 1986 and has served as Chairman of NHP's Board
since 1988. From 1982 until 1985, Mr. Heller served as President and Chief
Executive Officer of Bristol Compressors, Inc., a Bristol, Virginia-based
company involved in the manufacturing of air conditioning compressors. From
1971 until 1982, he was a partner in the Washington, D.C. law firm of Wilmer,
Cutler & Pickering. Mr. Heller is a director of Auto-Trol Technology
Corporation and Community First Bank, N.A. Mr. Heller is also Chairman of
public television station WETA and is trustee of numerous housing related and
other non-profit institutions.

Shekar Narasimhan has served as a director, President and
Chief Executive Officer of the Company since 1992 and as Director, President
and Chief Executive Officer of Washington Mortgage since its incorporation. He
has also served as an Executive Vice President of NHP since 1996. Mr.
Narasimhan has 18 years of experience in property management and real estate
mortgage finance, primarily for multi-family properties. He

38
<PAGE> 42
has been a member of the Board of Governors of the MBA since 1995 and was the
1996 recipient of the MBA's Burton C. Wood Legislative Service Award.

Mohammed A. Al-Tuwaijri has served as a director of the
Company since 1992. He also served as a director of the Company's
subsidiaries, Washington Mortgage and WMF Huntoon Paige from 1991 to 1996. Mr.
Al-Tuwaijri has been President of Dar Al-Majd Consulting Engineers since 1981.

Michael R. Eisenson will serve as a director of the Company as
of the Maturity Time. He also served as a director of NHP from 1990 until May
1997. Mr. Eisenson is the President and Chief Executive Officer of Harvard
Private Capital Group, Inc. ("Harvard Capital"), which manages the private
equities and real estate portfolios of the Harvard University endowment fund,
and which Mr. Eisenson joined in 1986. Harvard Capital is the investment
advisor for Demeter. Mr. Eisenson is a director of Harken Energy Corporation,
ImmunoGen, Inc., Somatix Therapy Corporation, and United Auto Group, Inc.

Tim R. Palmer has served as a director of the Company since
1996. He also served as a director of NHP from 1990 until May 1997. Mr.
Palmer is a Managing Director of Harvard Capital, which he joined in 1990.
From 1987 to 1990, Mr. Palmer was Manager, Business Development, at The Field
Corporation, a private investment firm.

John D. Reilly has served as a director of the Company since
1996. He is President of Reilly Investment Corporation, a real estate
investment company, and from 1991 through 1994 he was Executive Director of
Reilly Mortgage Group, Inc., a mortgage banking and servicing company. Mr.
Reilly serves as a director of Allied Capital Commercial Corporation and Allied
Capital Corporation II.

Herbert S. Winokur, Jr. is expected to serve as a director of
the Company as of the Maturity Time. He also served as a director of NHP from
1991 until May 1997. Since 1987, he has served as the President of Winokur &
Associates, Inc., an investment and management services firm, and Winokur
Holdings, Inc., which is the managing general partner of Capricorn, a private
investment partnership. Mr. Winokur is also the manager of Capricorn Holdings
LLC, which is the general partner of Capricorn II, a separate investment
partnership. Mr. Winokur serves as a director of DynCorp, Enron Corporation
and NacRe Corporation.

James L. Clouser will serve as Executive Vice President of the
Company as of the Maturity Time. He joined WMF Huntoon Paige in 1979 and has
been President since 1989. Mr. Clouser has 22 years of real estate finance
experience. He is active in the MBA and sits on the Insured Project and Income
Producing Loan Subcommittee. Mr. Clouser is a regular speaker at MBA seminars
and conventions and was contributing editor to the MBA Servicing Handbook.

Michael D. Ketcham will serve as Executive Vice President,
Chief Financial Officer and Treasurer of the Company as of the Maturity Time.
He has served as Senior Vice President and Treasurer of the Company since 1996.
Mr. Ketcham has also served as Executive Vice President Operations, Chief
Financial Officer and Treasurer of Washington Mortgage since 1996. Prior to
joining the Company, Mr. Ketcham served as Vice President of Corporate
Financial Planning at Marriott Corporation and one of its successor companies,
Marriott International, from 1992 to 1994 and Vice President Treasury at
Marriott International from 1994 to 1996. Mr. Ketcham joined Marriott
Corporation in 1986. He has 15 years of corporate finance experience.

Douglas J. Moritz will serve as Executive Vice President of
the Company as of the Maturity Time. He currently serves as Executive Vice
President, Multifamily/Conventional of Washington Mortgage. Mr. Moritz joined
Washington Mortgage in 1988, serving as Executive Vice President, Lending from
1990 to 1996. Mr. Moritz has 25 years of experience in the multifamily
industry, with 14 years of experience in multifamily finance. He has served on
the Board of Governors of the Mortgage Bankers Association of Metropolitan
Washington, Inc. since 1993, was the Chairman of the Income Property Committee
in 1995 and 1996 and currently serves as the Association's President. Mr.
Moritz has been a member of the Fannie Mae DUS Lenders' Advisory Council since
1996.

39
<PAGE> 43
Howard S. Perkins will serve as Executive Vice President of
the Company as of the Maturity Time. He currently serves as Executive Vice
President, Commercial Mortgage Finance for Washington Mortgage. From 1990 to
1996, he served as Executive Vice President, Chief Financial Officer and
Treasurer of Washington Mortgage. Mr. Perkins joined Washington Mortgage in
1987. He has 19 years of lending experience.

Clarke B. Welburn will serve as Executive Vice President of
the Company as of the Maturity Time. He currently serves as Executive Vice
President, Risk Management for Washington Mortgage. From 1990 to 1996, he
served as Executive Vice President, Credit Policy for Washington Mortgage. Mr.
Welburn joined Washington Mortgage in 1988. Mr. Welburn has 25 years of
lending experience.

Joan C. May will serve as Senior Vice President of the Company
as of the Maturity Time. Since 1992, she has served as Senior Vice President,
Chief Underwriter of Washington Mortgage. Ms. May joined Washington Mortgage
in 1989, serving as Vice President, Underwriting from 1990 to 1992. She has 13
years of real estate lending experience.

Elizabeth Whitbred-Snyder, CPA, will serve as Senior Vice
President and Controller of the Company as of the Maturity Time. She has
served as Senior Vice President of Washington Mortgage since 1992 and
Controller since 1990. From 1990 to 1992, Ms. Whitbred-Snyder served as Vice
President of Washington Mortgage. She has 12 years of financial services
experience.

Directors are elected for one year terms and hold office until
their successors have been elected and qualified or until such director's
earlier resignation or removal. Executive officers are elected annually and
hold office until the next annual meeting of stockholders or until such
executive officer's earlier resignation or removal.

The Board of Directors has created an Audit Committee which,
after the Share Distribution, is expected to consist of Messrs. Reilly,
Al-Tuwaijri and Palmer. The Audit Committee is charged with reviewing the
Company's annual audit and meeting with the Company's independent accountants
to review the Company's internal controls and financial management practices.

The Board of Directors has created a Compensation Committee
which, after the Share Distribution, is expected to consist of Messrs.
Eisenson, Winokur and Heller. The Compensation Committee is charged with
making recommendations to the Board of Directors regarding the compensation of
executive officers of the Company and administering any stock option plan the
Company may adopt.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the
compensation paid by the Company for services rendered during the year ended
December 31, 1996 to the Chief Executive Officer and to each of the four other
most highly compensated executive officers of the Company (the "Named
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
------------------- COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) OPTIONS(#)(2) COMPENSATION (3)
- --------------------------- ---- ------ --------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Shekar Narasimhan 1996 $240,000 $110,000 26,666 $6,533
President and Chief
Executive Officer
</TABLE>

40
<PAGE> 44
<TABLE>
<S> <C> <C> <C> <C> <C>
Howard S. Perkins 1996 195,000 70,000 6,666 2,730
Executive Vice President

Douglas J. Moritz 1996 165,000 70,000 6,666 5,675
Executive Vice President

James L. Clouser 1996 145,000 70,000 5,000 15,431
Executive Vice President

Clarke B. Welburn 1996 155,000 50,000 6,666 5,626
Executive Vice President
</TABLE>

(1) The amounts reported were paid in 1997 with respect to the
year ended December 31, 1996.

(2) All options were granted as options to acquire NHP Common
Stock and are being converted into options to acquire shares
of NHP Common Stock and options to acquire shares of Company
Common Stock in connection with the Share Distribution.

(3) These amounts represent the Company's payment of life
insurance premiums and matching contributions to the Company's
401(k) Retirement Plan.

The following table sets forth certain information regarding
options granted to the Named Officers during the year ended December 31, 1996.
All options were granted by NHP as options to acquire NHP Common Stock and will
be converted into options to acquire shares of NHP Common Stock and shares of
Company Common Stock in connection with the Share Distribution. See "The
Distribution -- Effect on Outstanding NHP Options."

OPTIONS GRANTED IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
PERCENT OF APPRECIATION FOR
TOTAL OPTIONS OPTION TERM
OPTIONS GRANTED IN EXERCISE EXPIRATION -----------
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH)(1) DATE 5%($) 10%($)
- ---- ----------- ----------- --------------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Shekar Narasimhan 26,666 16.20% $ 5.19 3/31/06 $ 87,037 $ 220,568
Howard S. Perkins 6,666 4.05 5.19 3/31/06 21,758 55,138
Douglas J. Moritz 6,666 4.05 5.19 3/31/06 21,758 55,138
James L. Clouser 5,000 3.04 5.19 3/31/06 16,320 41,358
Clarke B. Welburn 6,666 4.05 5.19 3/31/06 21,758 55,138
</TABLE>

- --------------------
(1) The Exercise Price of Options for shares of Company Common Stock will
depend on the allocation of the exercise price on existing options for NHP
Common Stock between Company options and NHP options, which determination will
be made at the time of the Share Distribution based on the fair vlaue of shares
of the Company Common Stock and NHP Common Stock at such time. See "The
Distribution -- Effect on Outstanding NHP Options." For purposes of this
table, the fair value of NHP Common Stock is assumed to be equal to the market
value of shares of AIMCO Common Stock on May 12, 1997 times .74766, the
exchange ratio in the Merger, and the fair value of Company Common Stock is
assumed to be equal to three times the difference between the market value of
NHP Common Stock on [May 12, 1997 and the assumed value of NHP Common Stock] as
determined above.

41
<PAGE> 45
The following table sets forth certain information
regarding unexercised options held by the Named Officers at December 31, 1996.
All options were granted by NHP as options to acquire NHP Common Stock and are
being converted into options to acquire shares of NHP Common Stock and shares
of Company Common Stock in connection with the Share Distribution. See "The
Distribution -- Effect on Outstanding NHP Options." No options were exercised
by the Named Officers during the year ended December 31, 1996.

AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN THE MONEY OPTIONS
AT DECEMBER 31, 1996 AT DECEMBER 31, 1996
-------------------- --------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shekar Narasimhan 0 26,666 $ 0 $ 105,597
Howard S. Perkins 0 6,666 0 26,397
Douglas J. Moritz 0 6,666 0 26,397
James L. Clouser 0 5,000 0 19,800
Clarke B. Welburn 0 6,666 0 26,397
</TABLE>

DIRECTORS COMPENSATION

Non-management directors will be granted options to purchase
5,000 shares per year of Company Common Stock for their services as directors.
The options will vest six months after grant and will be exercisable for ten
years at a price equal to the market price on the date of issuance. Options
for 1997 will be issued concurrent with the Share Distribution at an exercise
price of $9.15. Non-management directors will also be reimbursed for all
out-of-pocket expenses related to their service as directors. The Chairman of
the Board will receive compensation in the amount of $50,000 per year for his
service as Chairman.

EMPLOYMENT CONTRACTS AND RELATED MATTERS

Although none of the Named Officers will have employment
contracts with the Company after the Share Distribution, the Company expects to
provide certain severance arrangements for its Chief Executive Officer ("CEO"),
Executive Vice Presidents ("EVP"), Senior Vice Presidents ("SVP") and Group
Vice Presidents ("GVP"). If such an employee is terminated without "cause" (as
defined below), he will be paid his then current salary for two years if he is
the CEO, for one year if he is an EVP, for six months if he is a SVP or for
three months if he is a GVP. If there is a "transfer of control" of the Company
(as defined below) and such an employee is terminated within 180 days of such
change, he will be paid his then current salary for three years if he is the
CEO, for two years if he is an EVP, for one year if he is a SVP or for six
months if he is a GVP. The Company expects to require each of the CEO, EVPs,
SVPs and GVPs to agree to refrain from competing in the business of mortgage
origination and servicing during his employment with the Company and for the
greater of one year or the period during which such employee is receiving
severance benefits. In addition, the Company expects to require such officers
to agree to refrain from disclosing confidential information about the Company
during their employment and indefinitely thereafter. For purposes of the
severance arrangements, "cause" will be defined as (i) the engaging by the
employee in any act of dishonesty in connection with the performance of his
employment duties and responsibilities, (ii) the conviction of the employee of a
felony, (iii) the failure of the employee to perform his duties or
responsibilities, or (iv) the inability of the employee to perform his duties or
responsibilities for a period of more than 120 consecutive days due to physical
or mental illness or incapacity. For purposes of the severance arrangements,
"transfer of control" will be defined as (i) a transfer of a majority of the
Company's voting stock outstanding on the day of the transfer, (ii) a sale of
substantially all of the Company's assets, to any entity or person unaffiliated
with the Company, (iii) the consolidation of the Company with or its merger into
any unaffiliated corporation or (iv) the dissolution of the Company.

42
<PAGE> 46
Each of the CEO, EVPs, SVPs and GVPs will be entitled to
participate in a Key Employee Incentive Plan the Company expects to adopt (the
"Company Plan"). Options awarded pursuant to the Company Plan will be
exercisable for ten years at a price equal to the market price on the date of
issuance. Options for 1997 will be issued concurrently with the Share
Distribution at an exercise price of $9.15. Such options will vest ratably
over five years, but will be immediately vested upon a change of control of the
Company (as defined in the Company Plan). If an employee is terminated by the
Company without cause (as defined in the Company Plan), his options will vest
immediately and will expire 90 days after such termination. Effective as of
the Maturity Time, options will be granted to Mr. Narasimhan for 84,000 shares
and for each of Messrs. Perkins, Moritz, Clouser and Welburn for 21,000 shares.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors has created a Compensation Committee
which, after the Share Distribution, is expected to consist of Messrs.
Eisenson, Winokur and Heller. The Compensation Committee is charged with
determining the compensation of all executive officers. No member of the
Compensation Committee has ever been an officer of the Company or any of its
subsidiaries.

RELATED PARTY TRANSACTIONS

Since December 31, 1993, the Company has engaged in the
following transactions with persons who are, or are members of the immediate
family of, directors, persons expected to become a director, officers or
beneficial owners of 5 percent or more of the Company Common Stock issued and
outstanding, or with entities in which such persons or certain of their
relatives have interests.

Prior to the Share Distribution, the Company will be a
wholly-owned subsidiary of NHP. Mr. Heller is, and prior to May 6, 1997,
Messrs. Palmer and Winokur were directors of both the Company and NHP and Mr.
Heller is President and Chief Executive Officer of NHP and Chairman of the
Company. Following the Share Distribution, Messrs. Heller, Palmer and Winokur
- -- as well as Mr. Eisenson (who was a director of NHP until May 6, 1997) --
will serve as directors of the Company. As of May 1, 1997, the Company owed
NHP approximately $8 million as a result of loans made by NHP to the Company to
fund the acquisition of Proctor and Askew. As of December 31, 1996, the
Company also owed NHP approximately $900,000 in respect of taxes paid by NHP on
the Company's behalf. These amounts, net of any cumulative free cash flow
produced by NHP between February 1, 1997 and the Effective Time of the Merger,
are being repaid in connection with the Share Distribution. See "Arrangements
Between NHP and the Company After the Share Distribution."

In addition, following the Share Distribution the Company will
have certain other arrangements with NHP as described above in "Arrangements
Between NHP and the Company After the Share Distribution."

43
<PAGE> 47
PRINCIPAL STOCKHOLDERS OF THE COMPANY

The following table sets forth the number and percentage of
outstanding shares of the Company's Common Stock which are expected to be
beneficially owned by (i) all persons known by the Company to own beneficially
more than 5 percent of the Company's Common Stock, (ii) each director and each
Named Officer who is a stockholder, and (iii) all directors and executive
officers as a group. The table reflects shares of NHP Common Stock owned as of
May 9, 1997, plus the 546,448 shares of newly issued Company Common Stock
proposed to be purchased by Capricorn II at the time of the Share Distribution,
except for shares of NHP Common Stock beneficially owned by AIMCO. AIMCO has
agreed to hold all Rights in trust for Demeter and Capricorn and deliver to
them the shares of Company Common Stock AIMCO would be entitled to receive in
the Share Distribution. Accordingly, the table reflects the shares Demeter and
Capricorn will receive in respect of Rights held by AIMCO. Except as otherwise
indicated, the business address of each of the following is 1593 Spring Hill
Road, Suite 400, Vienna, VA 22182.

<TABLE>
<Caption
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ ------ -------
<S> <C> <C>
Demeter Holdings Corporation 1,873,231 39.3%
600 Atlantic Ave.
Boston, MA 02210

Capricorn Investors, L.P. 435,796 9.1%
30 East Elm Street
Greenwich, CT 06830

Capricorn Investors II, L.P. 546,448 11.5%
30 East Elm Street
Greenwich, CT 06830

Warburg, Pincus Counsellors, Inc. 508,166 10.7%
466 Lexington Ave.
New York, NY 10017

Wallace R. Weitz & Company 246,666 5.2%
1125 South 103rd Street
Omaha, NE 68124

J. Roderick Heller, III (1) 204,166 4.2%
8065 Leesburg Pike
Vienna, VA 22182

Shekar Narasimhan (2) 96,666 2.0%

Mohammed A. Al-Tuwaijri (3) 70,000 1.5%
P.O. Box 60212
Tamaneen Street
Riyadh 11545
Saudi Arabia

Michael R. Eisenson (4) 1,873,231 39.3%
600 Atlantic Ave.
Boston, MA 02210

Tim R. Palmer (4) 1,873,231 39.3%
600 Atlantic Ave.
Boston, MA 02210

</TABLE>

44
<PAGE> 48

Herbert S. Winokur, Jr. (5) 982,244 20.6%
30 East Elm Street
Greenwich, CT 06830

John D. Reilly 33 *
5335 Wisconsin Avenue, N.W. #440
Washington, D.C. 20015

James L. Clouser (6) 5,000 *
379 Thornall Street, 10th Floor
Edison, NJ 08837

Douglas J. Moritz (7) 6,666 *

Howard S. Perkins (8) 6,666 *

Clarke B. Welburn (9) 6,666 *

Michael D. Ketcham (10) 8,333 *

All directors and executive officers as
a group (12 persons) 3,189,671 64.4%
</TABLE>

- ------------------
* Less than 1%

(1) Includes 125,416 shares subject to options that are exercisable
currently or within 60 days of the date of this Information
Statement and 33,750 shares held in trusts for the benefit of
Mr. Heller's children. Mr. Heller disclaims beneficial
ownership of the shares held in these trusts. The total
excludes shares Mr. Heller has the right to acquire pursuant
to a performance vesting option.

(2) Includes 26,666 shares subject to options that are exercisable
currently or within 60 days of the date of this Information
Statement. On September 30, 1996, Mr. Narasimhan acquired 8%
of the common stock of Commonwealth Overseas Trading Company
Limited ("Commonwealth"), which owns 210,000 shares of NHP
Common Stock. Pursuant to an agreement with Mr. Al-Tuwaijri,
the other owner of Commonwealth, Mr. Narasimhan shares power
to vote all shares of NHP Common Stock held by Commonwealth.
Therefore, Mr. Narasimhan has indirect interest in all 210,000
shares of NHP Common Stock which is included in the total. Of
these shares, 105,000 are in escrow and are currently held
subject to reduction under certain circumstances.

(3) Mr. Al-Tuwaijri owns 92% of the common stock of Commonwealth,
which owns 210,000 shares of NHP Common Stock. Pursuant to an
agreement with Mr. Narasimhan, the other owner of
Commonwealth, Mr. Al-Tuwaijri shares power to vote all of the
shares of the NHP Common Stock held by Commonwealth.
Therefore, Mr. Al-Tuwaijri has indirect interest in all
210,000 shares of NHP Common Stock which is included in this
total. Of these shares, 105,000 are held in escrow and are
currently held subject to reductions under certain
circumstances.

(4) Includes all shares held by Demeter Holdings Corporation.
Messrs. Eisenson and Palmer disclaim beneficial ownership of
all the shares held by Demeter.

(5) Includes all shares held by Capricorn and Capricorn II. Mr.
Winokur disclaims beneficial ownership of all shares held by
Capricorn and Capricorn II. The Company understands that
Capricorn intends to distribute all of its shares of the
Company to its partners at or about the time of the Share
Distribution.

45
<PAGE> 49
(6) Includes 5,000 shares subject to options that are exercisable
currently or within 60 days of the date of the Information
Statement.

(7) Includes 6,666 shares subject to options that are exercisable
currently or within 60 days of the date of the Information
Statement.

(8) Includes 6,666 shares subject to options that are exercisable
currently or within 60 days of the date of the Information
Statement.

(9) Includes 6,666 shares subject to options that are exercisable
currently or within 60 days of the date of the Information
Statement.

(10) Includes 8,333 shares subject to options that are exercisable
currently or within 60 days of the date of the Information
Statement.

DESCRIPTION OF THE COMPANY CAPITAL STOCK

GENERAL

At the Maturity Time, the authorized capital stock of the
Company will consist of 25,000,000 shares of Common Stock, $.01 par value, of
which [4,217,479] shares will be issued and outstanding immediately prior to
the Share Distribution and the Capricorn Transaction, and 12,500,000 shares of
Preferred Stock, $.01 par value, none of which are outstanding.

COMMON STOCK

Holders of shares of Company Common Stock are entitled to one
vote at all meetings of shareholders for each share held and are not entitled
to cumulative voting. Holders of Company Common Stock have no preemptive
rights and have no other rights to subscribe for additional shares of the
Company, nor does the Company Common Stock have any conversion rights or rights
of redemption. Holders of Company Common Stock are entitled to share ratably
in such dividends as may be declared by the Board of Directors out of assets
legally available therefor. Upon liquidation, all holders of Company Common
Stock are entitled to participate ratably and equally in the assets and funds
of the Company available for distribution. All of the outstanding shares of
Company Common Stock are, and the shares to be issued pursuant to this offering
will be, when issued, fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors is authorized, subject to any
limitations prescribed by law, from time to time to issue up to an aggregate of
12,500,000 shares of Preferred Stock with such powers, designations,
preferences and relative, participating, option or other special rights and
such qualifications, limitations or restrictions thereof, as shall be
determined by the Board of Directors in a resolution or resolutions providing
for the issue of such Preferred Stock. Thus, any series may, if so determined
by the Board of Directors, have full voting rights with the Company Common
Stock or superior or limited voting rights, be convertible into Company Common
Stock or another security of the Company, and have such other preferences,
relative rights, and limitations as the Company's Board of Directors shall
determine. As a result, any series of Preferred Stock could have rights which
would adversely affect the voting power of the Company Common Stock. The
shares of any class or series of Preferred Stock need not be identical. The
issuance of the Preferred Stock could have the effect of delaying or preventing
a change of control of the Company without any further action by shareholders.
The Company has no present intention to issue any Preferred Stock.

46
<PAGE> 50
DIRECTOR AND OFFICER LIABILITY

The Certificate of Incorporation includes a provision which
eliminates the personal liability of the Company's directors and officers for
monetary damages resulting from breaches of their fiduciary duty, provided that
such provision does not eliminate liability for breaches of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, violations of Section 174 of the
General Corporation Law of the State of Delaware (the "GCL"), or for any
transaction from which the director derived an improper personal benefit. If
the GCL is amended to further permit limitations on the liability of directors,
then the Certificate of Incorporation shall be read to eliminate personal
liability of the director to the fullest extent permitted by law. This
provision does not limit or eliminate the right of the Company or any
stockholder to seek non-monetary relief such as rescission in the event of a
breach of a director's duty of care. The By-Laws of the Company also provide
that the Company shall indemnify its directors and officers for all expenses
actually incurred in the defense of actions against them in their capacity as
directors or officers unless the action results in a finding that
indemnification is not proper in the circumstances because such person has not
met the standard of conduct for such indemnification established by applicable
law. The Company believes that these provisions are necessary to attract and
retain qualified persons as directors and officers.

CERTAIN PROVISIONS AFFECTING STOCKHOLDERS

Under the business combination provision contained in Section
203 of the GCL ("Section 203"), a Delaware corporation may not engage in any
business combination with any interested stockholder for a period of three
years following the date such stockholder became an interested stockholder,
unless (i) prior to such date the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85 percent of the voting
stock of the corporation outstanding at the time the transaction commenced
(excluding for determining the number of shares outstanding (a) shares owned by
persons who are directors and officers and (b) employee stock plans, in certain
instances), or (iii) on or subsequent to such date the business combination is
approved by the board of directors and authorized at an annual or special
meeting of the stockholders by at least 66 percent of the affirmative voting
stock that is not owned by the interested stockholder. An interested
stockholder is defined in Section 203 as any person who (i) owns, directly or
indirectly, 15 percent or more of the outstanding voting stock of a corporation
or (ii) is an affiliate or associate of a corporation and was the owner of 15
percent or more of the outstanding voting stock at any time within the
three-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder; and the affiliates
and the associates of such person. The restrictions imposed by Section 203
will not apply to a corporation if (i) the corporation's original certificate
of incorporation contains a provision expressly electing not to be governed by
this section; and (ii) the corporation by the action of its stockholders
holding a majority of the outstanding voting stock adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed
by Section 203 (such amendment will not be effective until 12 months after
adoption and shall not apply to any business combination between such
corporation and any person who became an interested stockholder of such
corporation on or prior to such adoption).

The Company has not elected out of the statute, and therefore
the restrictions imposed by Section 203 apply to the Company.

TRANSFER AGENT AND REGISTRAR

The First National Bank of Boston is expected to serve as
transfer agent and registrar of the Common Stock.

47
<PAGE> 51
INDEPENDENT PUBLIC ACCOUNTANTS

Prior to the acquisition of the Company by NHP, the Company's
accountants were KPMG Peat Marwick LLP. In July 1996 Arthur Andersen LLP,
NHP's accountants, were retained as accountants for the Company. During the
Company's two most recent fiscal years and during the subsequent interim period
preceding the date of retention of Arthur Andersen LLP, there were no
disagreements on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of KPMG Peat Marwick LLP, would have caused it
to make reference to the subject matter of the disagreement in connection with
their report. The report of KPMG Peat Marwick LLP on the Company's financial
statements for the years ended December 31, 1995 and 1994 were unqualified.
Prior to the retention of Arthur Andersen LLP, neither the Company nor anyone
on the Company's behalf consulted Arthur Andersen LLP regarding either the
application of accounting principles related to a specified transaction,
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements.

48
<PAGE> 52
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY, AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)
<S> <C>
Report of Independent Public Accountants
As of and for the Year Ended December 31, 1996, and
As of and for the Three Months Ended March 31, 1996 F - 1

Report of Independent Public Accountants
As of December 31, 1995, and
For the Years Ended December 31, 1995 and 1994 F - 2

Consolidated Balance Sheets
As of December 31, 1996, March 31, 1996, and December 31, 1995 F - 3

Consolidated Statements of Operations
Pro Forma for the Year Ended December 31, 1996 (unaudited),
The Period April 1, 1996, to December 31, 1996,
The Period January 1, 1996, to March 31, 1996, and
The Years Ended December 31, 1995 and 1994 F - 4

Consolidated Statements of Stockholder's Equity
For the Years Ended December 31, 1994 and 1995,
The Period Ending March 31, 1996, and
The Year Ended December 31, 1996 F - 5

Consolidated Statements of Cash Flows
For the Period April 1, 1996, to December 31, 1996,
The Period January 1, 1996, to March 31, 1996, and
The Years Ended December 31, 1995 and 1994 F - 6

Notes to Consolidated Financial Statements F - 8
</TABLE>
<PAGE> 53
After the contemplated stock split discussed in Note 15 to The WMF Group, Ltd.
and Subsidiary (formerly NHP Financial Services, Ltd., and Subsidiary)
consolidated financial statements is determined and effected, we expect to be
in a position to render the following audit report.

ARTHUR ANDERSEN LLP
May 14, 1997

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
The WMF Group, Ltd., and Subsidiary:

We have audited the accompanying consolidated balance sheets of The WMF Group,
Ltd., and Subsidiary (the "Company") (formerly NHP Financial Services, Ltd. and
Subsidiary and formerly WMF Holdings Ltd., and Subsidiaries - see Note
1) as of December 31, 1996, and March 31, 1996, and the related consolidated
statements of operations, changes in shareholder's equity and cash flows for
the periods April 1, 1996, to December 31, 1996, and January 1, 1996, to March
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1996, and March 31, 1996, and the results of its operations and
its cash flows for the periods April 1, 1996, to December 31, 1996, and January
1, 1996, to March 31, 1996, in conformity with generally accepted accounting
principles.

As explained in Note 2 to the consolidated financial statements, effective
January 1, 1996, the Company changed its method of accounting for originated
mortgage servicing rights to comply with Statement of Financial Accounting
Standard No. 122, "Accounting for Mortgage Servicing Rights."

Washington, D.C.
February 28, 1997 (except with
respect to the matters discussed in
Note 15, as to which the date is
April 15, 1997, April 21, 1997, May 5, 1997,
May 9, 1997 and __, 1997)

F-1
<PAGE> 54
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
WMF Holdings Ltd. and Subsidiaries:

We have audited the accompanying consolidated balance sheet of WMF Holdings
Ltd. (a wholly owned subsidiary of Commonwealth Overseas Trading Company
Limited), and subsidiaries (collectively "the Company") as of December 31,
1995, and the related consolidated statements of operations, changes in
stockholder's equity and cash flows for the years ended December 31, 1995 and
1994. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of WMF
Holdings Ltd. and subsidiaries as of December 31, 1995, and the results of its
operations and its cash flows for the years ended December 31, 1995 and 1994,
in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Washington, D.C.
March 27, 1996

F-2
<PAGE> 55
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY
NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
ASSETS
AS OF AS OF AS OF
DECEMBER 31, MARCH 31, DECEMBER 31,
1996 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 6,601,044 $ 5,435,954 $ 5,197,153

RESTRICTED CASH EQUIVALENTS 1,193,549 922,509 863,000

MORTGAGE-BACKED SECURITIES, at amortized cost, pledged 3,909,863 3,888,488 3,892,805

MORTGAGE LOANS HELD FOR SALE, pledged 40,262,782 23,116,296 32,461,676

PRINCIPAL, INTEREST AND OTHER SERVICING ADVANCES 2,012,440 3,720,228 2,795,796

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net of
accumulated depreciation of $312,756, $928,593, and $938,035,
respectively 1,484,613 887,336 893,463

SERVICING RIGHTS, net of accumulated amortization of $3,062,096,
$5,549,284 and $5,078,367, respectively 22,460,014 8,477,403 8,465,663

DUE FROM AFFILIATES - 228,366 1,108,573

GOODWILL, net of accumulated amortization of $578,356, $32,099
and $28,391, respectively 7,704,847 438,582 441,515

OTHER ASSETS 2,467,489 1,860,711 1,056,589
----------- ----------- -----------
Total assets $88,096,641 $48,975,873 $57,176,233
=========== =========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
<S> <C> <C> <C>
LIABILITIES:
Accounts payable and accrued expenses $ 2,609,350 $ 4,440,372 $ 2,728,540
Warehouse lines of credit 39,924,736 22,660,974 31,830,868
Servicing acquisition line of credit 6,211,745 6,412,764 6,439,114
Notes payable to stockholder - 5,034,000 5,034,000
Deferred fees 2,786,071 1,876,900 3,034,216
Allowance for loan servicing portfolio losses 4,395,749 3,426,921 3,141,578
Due to affiliates 872,000 - -
Other liabilities 5,585,075 800,391 949,575
Deferred tax liability, net 3,183,885 - -
----------- ----------- -----------
Total liabilities 65,568,611 44,652,322 53,157,891
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDER'S EQUITY:
Common stock, $.01 par value, 7,899,380 shares authorized,
4,217,478 issued and outstanding 42,175 42,175 42,175
Additional paid-in capital 21,330,690 2,639,679 2,639,679
Retained earnings 1,155,165 1,641,697 1,336,488
----------- ----------- -----------
Total shareholder's equity 22,528,030 4,323,551 4,018,342
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $88,096,641 $48,975,873 $57,176,233
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 56
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY
NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
PRO FORMA
FOR THE YEAR FOR THE PERIOD
ENDED APRIL 1, 1996 TO FOR THE PERIOD YEARS ENDED
DECEMBER 31, DECEMBER 31, JANUARY 1, 1996 TO ---------------------------
1996 1996 MARCH 31, 1996 1995 1994
----------- ---------------- ------------------ ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES:
Servicing fees $ 9,329,248 $ 7,274,217 $ 2,055,031 $ 7,859,856 $ 6,182,197
Gain on sale of mortgage loans, net 10,220,455 8,112,735 2,107,720 6,244,208 4,532,240
Gain on sale of servicing - - - 89,998 -
Interest income 4,249,980 3,388,219 861,761 3,290,774 2,088,728
Placement fee income 4,959,067 3,823,335 1,135,732 3,999,268 2,244,119
Other income 1,542,361 874,663 667,698 515,240 2,013,203
----------- ----------- ----------- ----------- -----------
30,301,111 23,473,169 6,827,942 21,999,344 17,060,487
----------- ----------- ----------- ----------- -----------

EXPENSES:
Salaries and employee benefits 12,744,963 9,974,957 2,770,006 9,208,024 7,324,035
General and administrative 4,811,034 3,884,199 926,835 4,181,202 3,427,829
Occupancy 1,593,193 1,352,015 241,178 972,306 885,931
Provision for loan servicing losses 1,254,172 968,828 285,343 856,462 654,186
Interest 1,319,498 1,012,179 307,320 2,143,773 2,249,913
Amortization of servicing rights 3,913,642 3,062,096 470,917 2,096,540 1,528,531
Depreciation and amortization 1,195,204 919,608 80,578 272,610 397,382
Losses from Beverly Hills
Securities investment/advances 600,125 - 600,125 691,549 720,000
----------- ----------- ----------- ----------- -----------
27,431,831 21,173,882 5,682,302 20,422,466 17,187,807
----------- ----------- ----------- ----------- -----------

INCOME (LOSS) BEFORE INCOME TAX EXPENSE 2,869,280 2,299,287 1,145,640 1,576,878 (127,320)

INCOME TAX EXPENSE 1,984,553 1,144,122 840,431 799,871 34,520
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 884,727 $ 1,155,165 $ 305,209 $ 777,007 $ (161,840)
=========== =========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE $ .21 $ .27 $ .07 $ .16 $ (.03)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 4,217,478 4,217,478 4,217,478 4,717,312 6,216,812
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 57
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY
NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $62,168 $5,619,686 $ 721,321 $ 6,403,175
Net loss - - (161,840) (161,840)
--------- ----------- ---------- -----------
BALANCE AT DECEMBER 31, 1994 62,168 5,619,686 559,481 6,241,335
Stock repurchase (19,993) (2,980,007) - (3,000,000)
Net income - - 777,007 777,007
--------- ----------- ---------- -----------
BALANCE AT DECEMBER 31, 1995 42,175 2,639,679 1,336,488 4,018,342
Net income - - 305,209 305,209
--------- ----------- ---------- -----------
BALANCE AT MARCH 31, 1996 42,175 2,639,679 1,641,697 4,323,551
============================================================================================================
Elimination of equity upon sale (42,175) (2,639,679) (1,641,697) (4,323,551)
Initial investment 42,175 21,330,690 - 21,372,865
Net income - - 1,155,165 1,155,165
--------- ----------- ---------- -----------
BALANCE AT DECEMBER 31, 1996 $42,175 $21,330,690 $1,155,165 $22,528,030
========= =========== ========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 58
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY
NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
APRIL 1, 1996 JANUARY 1, 1996
TO TO YEARS ENDED
DECEMBER 31, MARCH 31, ------------------------------
1996 1996 1995 1994
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,155,165 $ 305,209 $ 777,007 $ (161,840)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities-
Depreciation and amortization of furniture,
equipment and leasehold improvements 312,756 77,192 245,242 385,650
Amortization of servicing rights 3,062,096 470,917 2,096,540 1,528,531
Provision for loan servicing losses 968,828 285,343 856,462 640,412
DUS loss settlement - - (336,148) -
Amortization of goodwill 578,356 2,933 11,732 11,732
Amortization of bond issuance costs - - - 333,646
Losses from investments/advances - 600,125 691,549 857,733
Additions to excess servicing fees - - - (93,702)
Gain on sale of mortgage servicing rights - - (89,998) -
Change in assets and liabilities:
(Increase) decrease in restricted cash
equivalents (271,040) (59,509) 3,937,000 (4,800,000)
Decrease (increase) in principal, interest and
other servicing advances 1,707,788 (924,432) (1,575,591) (240,668)
Decrease (increase) in other assets 1,210,079 (805,023) 467,570 (133,765)
Decrease (increase) in due from affiliates 228,366 280,082 (633,609) 22,867
Increase in due to affiliates 872,000 - - -
Increase (decrease) in accounts payable and
accrued expenses (1,831,022) 1,711,832 967,413 (793,337)
Increase (decrease) in deferred fees 909,171 (1,157,316) 2,147,116 (1,184,415)
Increase (decrease) in warehouse lines of
credit, net 17,263,762 (9,169,894) 26,862,106 (38,644,467)
Increase (decrease) in other liabilities 1,681,526 (143,907) (4,091,591) 3,888,771
Mortgage loans originated (657,217,058) (176,724,231) (804,891,535) (526,651,388)
Mortgage loans sold 640,070,572 186,069,611 777,540,096 566,278,732
------------- ------------- ------------- -------------
Net cash provided by
operating activities 10,701,345 818,932 4,981,361 1,244,492
------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of servicing rights (3,727,581) (332,569) (2,470,149) (2,411,982)
Origination of servicing rights (2,659,529) (150,088) - -
Purchase of ACR production system and pipeline (2,000,000) - - -
Sale of mortgage servicing rights - - 97,481 -
Investment property dispositions (additions) - - 2,146,581 (173,954)
Sheffield mortgage pay-off - - (1,800,000) -
Purchase of furniture, equipment and leasehold
improvements (910,033) (71,065) (389,605) (252,872)
Purchase of mortgage-backed securities - - - (1,981,789)
Principal from mortgage-backed securities 20,873 5,218 22,978 -
Sale of short-term investments - - - 1,997,604
Decrease (increase) of investment in affiliates - - 50,000 (239,645)
------------- ------------- ------------- -------------
Net cash used for investing activities (9,276,270) (548,504) (2,342,714) (3,062,638)
------------- ------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 59
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY
NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
APRIL 1, 1996 JANUARY 1, 1996
TO TO YEARS ENDED
DECEMBER 31, MARCH 31, --------------------------
1996 1996 1995 1994
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to servicing acquisition line of credit $ 3,747,987 $ - $ 944,510 $ 6,400,000
Repayment of servicing acquisition line of credit (3,949,006) (26,350) (905,396) -
Repayment of servicing compensation rights payable - - - (4,136,301)
Payment on notes payable (34,000) - (68,000) -
Payments on capital lease (24,966) (5,277) (16,625) -
----------- ------------ ---------- -----------
Net cash (used for) provided by
financing activities (259,985) (31,627) (45,511) 2,263,699
----------- ------------ ---------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,165,090 238,801 2,593,136 445,553

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,435,954 5,197,153 2,604,017 2,158,464
----------- ------------ ---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,601,044 $ 5,435,954 $5,197,153 $ 2,604,017
=========== ============ ========== ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for interest $ 990,212 $ 473,539 $1,579,655 $ 1,933,000
Cash paid during the period for income taxes 1,008,000 935,070 9,275 622,819
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE> 60
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY
NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996, MARCH 31, 1996, AND DECEMBER 31, 1995

1. ORGANIZATION:

On April 1, 1996, NHP Incorporated ("NHP"), a Delaware Corporation, acquired
all the outstanding capital stock of WMF Holdings Ltd. ("Holdings"), a
Delaware corporation, for consideration of approximately $21 million in the
form of $16.8 million in cash and 210,000 shares of NHP's common stock.
Holdings was subsequently renamed NHP Financial Services, Ltd. and NHP
Financial Services, Ltd. has subsequently been renamed The WMF Group, Ltd.
(the "Company"). The Company's principal business activities are mortgage loan
origination, secondary marketing, and servicing.

The Company has one wholly owned subsidiary, Washington Mortgage Financial
Group, Ltd. ("Washington Mortgage Financial"), which is incorporated under the
laws of Delaware. Washington Mortgage Financial's subsidiaries are
WMF/Huntoon, Paige Associates Limited ("WMF/Huntoon"), Sheffield Acquisition
Corp. ("SAC"), and Proctor & Associates of Michigan, Inc. ("Proctor") which are
incorporated under the laws of the states of Delaware, Tennessee and Michigan,
respectively. SAC discontinued operations in 1995 and was dissolved in 1996.
The Company has offices in eight states.

As a result of the acquisition on April 1, 1996, all assets acquired were
recorded at their estimated fair value which resulted in recording an asset of
approximately $19.1 million related to acquired servicing rights. In addition,
the Company also recorded approximately $5.1 million of goodwill related to the
transaction and a deferred tax liability of approximately $3.2 million. The
goodwill is being amortized over seven years. The acquired servicing rights
are being amortized over periods up to seven years. Both are amortized based
upon the estimated life of the servicing rights acquired. As a result of the
acquisition, shareholder's equity as of March 31, 1996, was eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

METHOD OF ACCOUNTING

The consolidated financial statements of the Company are prepared on the
accrual basis of accounting in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period, particularly with respect to the
provision for loan servicing losses (see Note 8). Actual results could differ
from those estimates.

F-8
<PAGE> 61
PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary or subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation. Certain prior
year amounts have been reclassified to conform with the current year
presentation.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with initial maturities of
90 days or less to be cash equivalents. These include cash, demand deposits
and overnight repurchase agreements.

RESTRICTED CASH EQUIVALENTS

Restricted cash equivalents are money market funds that are collateral on a
Federal National Mortgage Association ("Fannie Mae") Delegated Underwriting and
Servicing ("DUS") letter of credit.

MORTGAGE-BACKED SECURITIES

The Company classifies its mortgage-backed securities as held-to-maturity as it
has the ability and the intent to hold the securities until maturity.
Held-to-maturity securities are recorded at amortized cost. Premiums and
discounts are amortized using the effective interest rate method over the term
of the security.

MORTGAGE LOANS HELD FOR SALE

Mortgage loans held for sale are carried at the lower of aggregate cost or
market as determined by outstanding commitments from investors or current
investor yield requirements.

FURNITURE, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS

Furniture, equipment and leasehold improvements are stated at cost, net of
accumulated amortization and depreciation. Depreciation of furniture and
equipment is recognized using the straight-line method over the estimated
useful life of the asset, approximately five years. Leasehold improvements are
amortized over the estimated useful life of the asset or the lease term,
whichever is less. Cost of maintenance and repairs are charged to expense as
incurred.

SERVICING RIGHTS

The Company adopted Statement of Financial Accounting Standard ("SFAS") No.
122, "Accounting for Mortgage Servicing Rights," on January 1, 1996. The
primary change resulting from SFAS No. 122 is that servicing rights retained by
the Company after the origination and sale of the related loan are required to
be capitalized by allocating the total cost incurred between the loan and the
servicing rights based on their relative fair value if it is practicable to
determine the mortgage servicing rights' fair value. If it is not practicable
to determine the servicing rights' fair value then no value is allocated to the
servicing rights. The Company has determined that it is only practicable to
estimate the fair value of servicing rights related to permanent Federal
Housing Administration ("FHA") originated loans as other loan types have a
limited secondary market. The capitalization of these originated mortgage
servicing rights

F-9
<PAGE> 62
increases net income for the period by the amount capitalized less related
amortization and impairment if any. Prior to 1996, no allocation was made to
originated mortgage servicing rights. Purchased servicing rights continue to
be accounted for at their purchase price. Servicing rights are amortized in
proportion to and over the seven-year period of anticipated estimated net
servicing income.

Under SFAS No. 122, all capitalized mortgage servicing rights are evaluated for
impairment based on the excess of the carrying amount of the mortgage servicing
rights over their fair value. In measuring impairment, the servicing rights
are stratified based on the interest rate and loan type of the underlying loan.
The assumptions used in estimating the net cash flows are based on market
conditions and actual experience. Impairment is recognized through a valuation
allowance for each individual stratum. Prior to 1996, the impairment valuation
required no level of disaggregation and any impairment was recorded directly
against the asset.

GOODWILL

The Company evaluates the impairment of goodwill whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Goodwill is amortized on a straight-line basis primarily over seven to twenty
years.

ALLOWANCE FOR LOAN SERVICING PORTFOLIO LOSSES

The Company bears a portion of the credit loss risk associated with the loans
it services as a result of its participation in the Fannie Mae DUS multifamily
loan program. The allowance for loan servicing portfolio losses represents
management's estimate of the losses which may be incurred on recourse loans
underwritten to date. Management believes the current reserve is adequate to
provide for such future losses. Management regularly reviews the adequacy of
this allowance, considering such items as economic conditions and collateral
value, and makes adjustments to the allowance as considered necessary.

SERVICING FEES

Servicing fee income represents fees earned for servicing multi-family and
commercial real estate mortgage loans owned by institutional investors,
including subservicing fees, net of guarantee fees, pool insurance fees and
trustee fees. The fees are generally calculated on the outstanding principal
balances of the loans serviced and are recorded as income when collected. Late
charge income is recognized as income when collected and is included in
servicing fee income.

GAINS ON SALE OF MORTGAGE LOANS

Gains on sale of mortgage loans are recognized based upon the difference
between the selling price and the carrying value of the related mortgage loans
sold, net of the allocation to servicing rights for permanent FHA originated
loans. Deferred origination fees and expenses, net of commitment fees paid in
connection with the sale of the loans, are recognized at the time of sale in
the gain or loss determination.

F-10
<PAGE> 63
PLACEMENT FEE INCOME

Placement fee income represents revenue earned relating to utilization of
escrow funds. Income is recognized during the period in which it is earned.

INCOME TAXES

Since acquisition, the Company files a consolidated tax return with NHP, its
parent. However, the Company records income taxes as if it filed a return on a
stand-alone basis. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Prior to
the acquisition, the Company filed a consolidated tax return together with its
subsidiaries.

NET INCOME PER SHARE

Net income per share is computed using the weighted average number of common
shares outstanding during each period.

NEW ACCOUNTING STATEMENTS

SFAS No. 123, "Accounting for Stock-Based Compensation," effective for fiscal
years beginning after December 15, 1995, encourages, but does not require, a
fair-value based method of accounting for employee stock options or similar
equity instruments. It also allows an entity to elect to continue to measure
compensation cost under Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," ("APB No. 25"), but requires pro forma
disclosures of net income and earnings per share as if the fair value based
method of accounting had been applied. Adoption of this statement does not
impact the Company since there are currently no stock options outstanding.

During 1996 the Financial Accounting Standards Board ("FASB") issued SFAS No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." This statement provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities using a financial components approach that
focuses on control. This statement provides consistent standards for
distinguishing transfers of financial assets that are sold from transfers that
are secured borrowings. Adoption of this statement is required on a prospective
basis in fiscal years beginning after December 31, 1996. Management intends to
adopt the statement in the fiscal year ending December 31, 1997, and does not
believe that the impact of such adoption will be material to the financial
statements.

In February 1997, FASB issued SFAS No. 128, "Earnings per Share." This
statement changes the requirements for calculation and disclosure of earnings
per share. This statement eliminates the calculation of primary earnings per
share and requires the disclosure of basic earnings per share and diluted
earnings per share. There will be no impact to the Company's earnings per share
as a results of adoption.

F-11
<PAGE> 64
3. ACQUISITIONS AND DISPOSITIONS:

Washington Mortgage Financial was incorporated on October 3, 1990, and was
capitalized on December 31, 1990. During 1993, all outstanding shares of
preferred stock of Washington Mortgage Financial were exchanged for shares of
common stock of Washington Mortgage Financial. In addition, the majority
shareholder purchased the minority shareholder's interest in Washington
Mortgage Financial and exchanged all outstanding shares of Washington Mortgage
Financial for common stock in Holdings, thus making Washington Mortgage
Financial a wholly owned subsidiary of Holdings.

On October 1, 1991, Washington Mortgage Financial acquired 100 percent of the
outstanding stock of WMF/Huntoon for $1,175,276 in cash and a note payable for
$170,000 to the seller. The $170,000 acquisition note matured in 1996 and had
an interest rate of 2 percent. Principal payments were made in equal
installments of $34,000 a year. The principal balance of the note at December
31, 1996, March 31, 1996, and December 31, 1995, is $0, $34,000, and $34,000,
respectively.

Holdings was incorporated on October 20, 1992, and was capitalized on December
3, 1992. Holdings was a wholly owned subsidiary of Commonwealth Overseas
Trading Company Limited before it was acquired by NHP.

SAC was incorporated in 1992 and its principal business activity was owning and
managing a multifamily property located in Memphis, Tennessee. Washington
Mortgage Financial entered into an agreement to sell the property in December
1994. The property was sold in February 1995 for $2,464,000. After adjusting
the sales proceeds for selling expenses and a participation interest in the
property, Washington Mortgage Financial realized a loss of $54,233. This loss
was accrued at December 31, 1994. SAC discontinued operations in 1995 and was
dissolved in 1996.

In July 1994, Washington Mortgage Financial exchanged its stock in a wholly
owned subsidiary, WMF Residential Mortgage Corporation ("Residential") for an
ownership interest in Beverly Hills Securities Company, Ltd. ("Beverly").
Residential and Beverly specialize in the origination, purchase, sale, and
servicing of single family residential loans. No gain or loss was recognized
on the exchange. The Company owns approximately a 40 percent limited
partnership interest in Beverly and is accounting for its investment under the
equity method. As of March 31, 1996, the carrying value of the Company's
investment in and advances to Beverly had been reduced to $0 as a result of
operating losses and concerns about the recoverability of the investment and
advances. The Company has no additional exposure related to Beverly.

In May 1996, WMF/Huntoon purchased the loan production system and pipeline, as
well as certain fixed assets of American Capital Resource ("ACR") for
approximately $2.2 million cash. In connection with the purchase, WMF/Huntoon
also acquired approximately $2.0 million of servicing rights. As a result,
WMF/Huntoon recorded assets of approximately $4.2 million representing the fair
value of the assets acquired. The servicing rights acquired are being
amortized over seven years, which is the estimated life of the servicing rights
acquired. The loan production system and pipeline acquired are being amortized
in proportion to the loans originated from the acquired pipeline. These costs
are expected to be fully amortized by August 1997. ACR specializes in the
origination and servicing of commercial loans.

F-12
<PAGE> 65
On December 31, 1996, the Company purchased 100 percent of Proctor for
approximately $3.7 million. NHP paid cash for the purchase on January 2, 1997,
on behalf of the Company. As such, the Company has accrued approximately $3.7
million as of December 31, 1996, $3.4 million of which is included in other
liabilities as NHP funded that portion of the purchase. The acquisition was
accounted for as a purchase and accordingly, the acquired assets and
liabilities have been recorded at their estimated fair values at the date of
acquisition. As a result, tangible assets of approximately $600,000, current
liabilities of $200,000, and goodwill of $3.1 million were recorded. The
goodwill will be amortized on a straight-line basis over twenty years. The
twenty year amortization period is the estimated life of the mortgage loan
production operations acquired. Proctor specializes in the origination and
servicing of commercial loans.

4. MORTGAGE-BACKED SECURITIES:

Mortgage-backed securities consist of Government National Mortgage Association
("Ginnie Mae") securities. The market value of the securities is $3,898,019,
$3,950,804, and 3,988,943 at December 31, 1996, March 31, 1996, and December
31, 1995, respectively. The securities held at December 31, 1996, mature in
periods from 2028 to 2029 and are collateral for a letter of credit established
on behalf of Fannie Mae for loans originated under the DUS program. These
securities carry a AAA credit rating.

5. FURNITURE, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS:

Furniture, equipment and leasehold improvements consist of the following as of:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, DECEMBER 31,
1996 1996 1995
------------ ---------- -----------
<S> <C> <C> <C>
Furniture and equipment $1,533,773 $1,543,643 $1,559,212
Capital lease 125,091 150,109 150,109
Leasehold improvements 138,505 122,177 122,177
---------- ---------- ----------
1,797,369 1,815,929 1,831,498
Less- Accumulated depreciation and
amortization 312,756 928,593 938,035
---------- ---------- ----------
$1,484,613 $ 887,336 $ 893,463
========== ========== ==========
</TABLE>

6. DEBT FACILITIES:

The Company has a warehouse line of credit which can be drawn for purposes of
originating loans that had an $80 million credit limit in 1995 that was
subsequently increased to $150 million in the third quarter of 1996. This
credit limit has been temporarily increased at times to allow increased
borrowings beyond the credit limit. The warehouse line of credit is secured by
mortgage loans held for sale and is required to be repaid with interest upon
sale of the mortgage loans. The interest rate on the warehouse line of credit
was 1 to 1-1/2 percent in 1996 and 1-1/2 to 2 percent in 1995 to the extent
compensating balances are maintained or was equal to the London InterBank
Offered Rate ("LIBOR") plus 1 to 1-1/2 percent in 1996 and LIBOR plus 1-1/2 to
2 percent in 1995 for amounts borrowed in excess of compensating balances.

F-13
<PAGE> 66
The Company has an additional warehouse agreement providing $15 million of
revolving credit at 1-1/2 percent in 1996 and at 1-5/8 percent in 1995 to the
extent compensating balances are maintained and at prime for amounts borrowed
in excess of compensating balances. This warehouse line of credit is secured
by mortgage loans held for sale and is required to be repaid with interest upon
the sale of the mortgage loans.

As of March 31, 1996, the Company had two mortgage loans held for sale with an
unpaid principal balance of $8,679,611 warehoused under a repurchase agreement.
These two loans were subsequently sold in October and December of 1996
resulting in a net gain of $46,147.

The Company has a separate $10 million line of credit which was used
exclusively for servicing acquisitions. In October 1996, this facility was
converted to a term loan. The debt is to be repaid in twenty equal quarterly
installments based on a 10-year amortization schedule beginning on October 31,
1996, with the remaining balance due in June 2001. The interest rate on the
servicing acquisition line of credit was 3 to 3-1/2 percent in 1996 and 3-1/2
percent in 1995 to the extent compensating balances are maintained or was equal
to LIBOR plus 3 to 3-1/2 percent in 1996 and LIBOR plus 3-1/2 percent in 1995
for amounts borrowed in excess of compensating balances. Interest is payable
monthly. The servicing acquisition line is collateralized by servicing rights
relating to loans with an approximate unpaid principal balance of $1.1 billion
as of December 31, 1996. Because this facility was converted to a term loan,
the Company cannot borrow any additional amounts under this line. This
facility will mature as follows as of December 31, 1996: $1 million in each
year from 1997 through 2000 and $2,211,745 in 2001.

The Company has a $10 million revolving credit agreement to be used for
servicing acquisitions or working capital purposes. There have been no
borrowings under this facility. The revolving credit agreement is renewable
annually through June 2001 and requires monthly interest payments. Any
principal balance outstanding in June 2001 would be converted to a term loan
due in quarterly installments through June 2006. The interest rate on the term
loan is 3-1/2 percent for amounts borrowed to the extent compensating balances
are maintained or is equal to LIBOR plus 3-1/2 percent for amounts borrowed in
excess of compensating balances. The term loan is collateralized by any
servicing rights acquired through the facility.

The Company has a $500,000 additional line of credit agreement available for
working capital purposes. The interest rate on the loan is the prime rate and
all borrowings must be paid off annually with interest payments due monthly.

The Company is currently negotiating an additional $35 million warehouse line
for the purpose of originating loans. The terms would be similar to the $150
million and $15 million warehouse facilities.

Included in notes payable at March 31, 1996, and December 31, 1995, is a $2
million, 10 percent interest bearing note dated December 9, 1993, payable to a
stockholder of Holding's parent. Also, included in notes payable at March 31,
1996, and December 31, 1995, is a $3 million, 12 percent interest bearing note
dated April 1, 1995, which is payable to Holding's parent. This note was
issued to repurchase 1,999,333 shares of common stock. As part of NHP's
acquisition of the Company on April 1, 1996, these notes were paid-off by NHP
and both the Company's obligation and interest payable for the period January
1, 1996, to March 31, 1996, were forgiven.

F-14
<PAGE> 67
The Company has also established a letter of credit of $4,200,000 and
$3,800,000 on behalf of Fannie Mae for the DUS program as of December 31, 1996
and 1995, respectively. This letter of credit is secured by cash equivalents
and mortgage-backed securities with a market value of $5,091,568 and $4,911,452
as of December 31, 1996, and 1995, respectively.

The Company's debt agreements require the maintenance of certain financial
ratios relating to liquidity, leverage, working capital, and net worth among
other restrictions, all of which were met at December 31, 1996.

Following is certain information relating to the Company's various credit
agreements for the period April 1, 1996, to December 31,1996, January 1, 1996,
to March 31, 1996, and for the year ended December 31, 1995.

<TABLE>
<CAPTION>
AVERAGE MAXIMUM INTEREST AVERAGE
BALANCE AT BALANCE BALANCE RATE AT INTEREST
DECEMBER 31, OUTSTANDING OUTSTANDING DECEMBER 31, RATE DURING
1996 FOR PERIOD FOR PERIOD 1996 PERIOD
----------- ----------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C>
$150 million
warehouse line $39,924,736 $43,326,846 $52,885,171 1.0% 1.2%

$15 million
warehouse - 3,764,825 7,100,000 1.5% 1.5%

$10 million
servicing loan 6,211,745 8,884,286 9,959,731 3.0% 3.2%

<CAPTION>
AVERAGE MAXIMUM INTEREST AVERAGE
BALANCE AT BALANCE BALANCE RATE AT INTEREST
MARCH 31, OUTSTANDING OUTSTANDING MARCH 31, RATE DURING
1996 FOR PERIOD FOR PERIOD 1996 PERIOD
----------- ----------- ----------- -------- -------
<S> <C> <C> <C> <C> <C>
$80 million
warehouse line $12,054,363 $33,669,834 $50,944,777 1.5% 1.5%

$15 million
warehouse 1,927,000 2,929,086 10,965,000 1.5% 1.5%

$10 million
servicing
acquisition line 6,412,764 6,440,414 6,439,114 3.5% 3.5%

<CAPTION>
AVERAGE MAXIMUM INTEREST AVERAGE
BALANCE AT BALANCE BALANCE RATE AT INTEREST
DECEMBER 31, OUTSTANDING OUTSTANDING DECEMBER 31, RATE DURING
1995 FOR PERIOD FOR PERIOD 1995 PERIOD
----------- ----------- ----------- -------- -------
<S> <C> <C> <C> <C> <C>
$80 million
warehouse line $31,830,868 $26,194,661 $96,766,452 2.0% 2.0%

$15 million
warehouse - 2,393,356 9,105,000 1.6% 1.6%

$10 million
servicing
acquisition line 6,439,114 6,663,245 7,061,301 3.5% 3.5%
</TABLE>

F-15
<PAGE> 68
7. SERVICING RIGHTS:

The activity for servicing rights consists of the following:

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
APRIL 1, 1996, TO JANUARY 1, 1996, TO YEAR ENDED
DECEMBER 31, 1996 MARCH 31, 1996 DECEMBER 31, 1995
----------------- ------------------- -----------------
<S> <C> <C> <C>
Beginning balance, net $ 8,477,403 $8,465,663 $8,099,539
Increase due to acquisition 10,657,597 - -
Purchases 3,727,581 332,569 2,470,149
Originations 2,659,529 150,088 -
Sale - - (7,485)
Amortization (3,062,096) (470,917) (2,096,540)
----------- ---------- ----------
Ending balance, net $22,460,014 $8,477,403 $8,465,663
=========== ========== ==========
</TABLE>

The fair value of the mortgage servicing rights was $28,549,292 at December 31,
1996. During 1995, Washington Mortgage Financial received capitalized
servicing from WMF/Huntoon with a book value of $137,545. Washington Mortgage
Financial reduced the investment in WMF/Huntoon by this amount and recognized
no gain or loss on the transfer.

8. LOAN ADMINISTRATION:

The Company's portfolio of mortgage loans serviced for institutional investors
aggregated approximately $6.2 billion, $4.5 billion, and $4.4 billion at
December 31, 1996, March 31, 1996, and December 31, 1995, respectively.
Included in the Company's portfolio are approximately $5.8 billion, $4.1
billion, and $3.9 billion of multifamily and commercial loans, and $396
million, $413 million, and $515 million in construction loans at December 31,
1996, March 31, 1996, and December 31, 1995, respectively.

The principal balances of mortgage loans serviced for others are summarized by
investor as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1996 DECEMBER 31, 1995
----------------------- ----------------------- ------------------------
UNPAID UNPAID UNPAID
NUMBER PRINCIPAL NUMBER PRINCIPAL NUMBER PRINCIPAL
OF LOANS BALANCE OF LOANS BALANCE OF LOANS BALANCE
-------- ----------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investor:
Federal
National
Mortgage
Association 299 $1,305,976,298 283 $1,146,884,992 240 $ 956,431,808
Government
National
Mortgage
Association 318 1,275,179,590 250 837,769,000 246 816,996,796
Federal Home
Loan
Mortgage
Corporation 248 245,697,852 306 277,964,249 323 287,110,622
Other investors 1,271 3,374,584,096 977 2,257,563,518 1,008 2,352,289,428
------- -------------- ----- -------------- ------ --------------
Total loans serviced for
others 2,136 $6,201,437,836 1,816 $4,520,181,759 1,817 $4,412,828,654
======= ============== ===== ============== ====== ==============
</TABLE>

F-16
<PAGE> 69
The Company's mortgage servicing portfolio has the following geographic and
interest rate concentrations based on the book value of the servicing rights as
of December 31, 1996:

<TABLE>
<CAPTION>
<S> <C>
STATE:
New York 11.2%
Texas 11.9%
Other 76.9%
------
100%
======

INTEREST RATE:
Less than 7.5% 23.2%
7.5% to 9.49% 71.4%
greater than 9.49% 5.4%
------
100%
======
</TABLE>

In connection with the construction loan portfolio, the Company makes certain
advances. On FHA insured construction loans, the Company advances construction
funds pending security holder purchases. Such advances amounted to $4,240,193,
$2,629,879, and $2,456,826 at December 31, 1996, March 31, 1996, and December
31, 1995, respectively. The Company is obligated to advance approximately
another $258 million and $212 million on construction loans administered at
December 31, 1996, and December 31, 1995, respectively.

In addition, the Company makes voluntary advances under certain of its
servicing agreements pending receipt from the mortgagors. Such advances
amounted to $2,012,440, $3,720,228 and $2,795,796 at December 31, 1996, March
31, 1996, and December 31, 1995, respectively.

Related escrow funds of approximately $228 million, $203 million and $207
million at December 31, 1996, March 31, 1996, and December 31, 1995,
respectively, are on deposit in escrow bank accounts and are not included in
the accompanying consolidated balance sheet. The Company carries blanket bond
insurance coverage of $5 million and errors and omissions insurance coverage in
the amount of $10 million.

The Company bears the Level I risk of loss associated with the loans it
services under the Fannie Mae DUS program. The Level I risk of loss imposes a
lender deductible of 5 percent of the unpaid principal balance and limits the
maximum loss to 20 percent of the original mortgage. The unpaid principal
balance of the Fannie Mae DUS loan servicing portfolio was approximately $776
million, $647 million, and $648 million at December 31, 1996, March 31, 1996,
and December 31, 1995, respectively. The DUS loans are secured by first liens
on the underlying multifamily properties. The Company's portfolio includes one
state (Texas) comprising over 10 percent of the total portfolio. No other
state comprises over 10 percent of the portfolio. One Fannie Mae DUS loan with
an unpaid principal balance of approximately $2.5 million was foreclosed upon
in 1995. The Company satisfied its servicing responsibilities and the loan was
assigned to Fannie Mae. No Fannie Mae DUS loans were delinquent as of December
31, 1996, March 31, 1996 and December 31, 1995. The Company has provided a
reserve for losses of $4,395,749, $3,426,921, and $3,141,578 as of December 31,
1996, March 31, 1996, and December 31, 1995, respectively. This reserve
represents management's estimate of losses which may be incurred on loans
underwritten to date that are currently being serviced. This reserve is
assessed monthly and is based on current market conditions.

F-17
<PAGE> 70
Activity in the allowance for losses is summarized as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
APRIL 1, 1996, TO JANUARY 1, 1996, TO YEAR ENDED
DECEMBER 31, MARCH 31, DECEMBER 31,
1996 1996 1995
----------------- ---------------- --------------
<S> <C> <C> <C>
Balance, beginning of period $3,426,921 $3,141,578 $2,621,264
Provisions for possible loan
servicing losses 968,828 285,343 856,462
Charge-off on Level I Risk for
foreclosed loans - - (336,148)
----------- ----------- -----------
Balance, end of period $4,395,749 $3,426,921 $3,141,578
=========== =========== ===========
</TABLE>

9. INCOME TAXES:

Income tax expense for the period April 1, 1996, to December 31, 1996, January
1, 1996 to March 31, 1996, and the year ended December 31, 1995, was
$1,144,122, $840,431, and $799,871, respectively, which consisted of $143,015,
$226,748, and $259,871 in state taxes and $1,001,107, $613,683, and $540,000 in
Federal taxes, respectively. The following is a summary of the tax effects of
temporary differences that give rise to significant portions of the deferred
tax assets and deferred tax liabilities.

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, DECEMBER 31,
1996 1996 1995
----------- ---------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Book reserve for loan servicing portfolio
losses $ 1,758,300 $1,370,768 $1,068,000
Losses on investment in Beverly 351,000 111,000
----------- ---------- ----------
Total gross deferred tax assets 1,758,300 1,721,768 1,179,000
Less- Valuation allowance - (1,037,751) (581,000)
----------- ---------- ----------
Net deferred tax assets 1,758,300 684,017 598,000
Deferred tax liabilities:
Furniture and equipment, principally due to
differences in depreciation (16,465) (13,452) (12,000)
Originated mortgage servicing rights (1,053,125) (41,684) -
Purchased servicing rights, principally due
to purchase price adjustments (3,830,239) (628,881) (586,000)
Other (42,356) - -
----------- ---------- ----------
Total gross deferred tax liabilities (4,942,185) (684,017) (598,000)
----------- ---------- ----------
Net deferred tax liabilities $(3,183,885) $ - $ -
=========== ========== ==========
</TABLE>

The differences between the effective income tax rates and the Federal
statutory income tax rates are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
APRIL 1, 1996, TO JANUARY 1, 1996, TO YEAR ENDED
DECEMBER 31, 1996 MARCH 31, 1996 DECEMBER 31, 1995
----------------- ------------------- ------------------
<S> <C> <C> <C>
Federal income tax rate 35% 35% 34%
State income tax rate 5 5 5
Valuation allowance - 25 12
Goodwill amortization 10 8 -
------ ----- -----
Effective income tax rate 50% 73% 51%
====== ===== =====

</TABLE>

F-18
<PAGE> 71
Prior to April 1, 1996, a valuation allowance equal to the deferred tax asset
was established due to the uncertainty surrounding the Company's ability to
generate sufficient taxable income in future years to realize such assets. As
a result of the acquisition of the Company by NHP, management believes that the
valuation allowance is no longer necessary because of the deferred tax
liabilities generated and the projected economies of scale from the Company's
acquisitions.

The Company had no net operating loss carryforwards available to offset future
income as of December 31, 1996, March 31, 1996, and December 31, 1995.

10. COMMITMENTS AND CONTINGENCIES:

LEASES

The Company is obligated under noncancelable leases for office space, furniture
and equipment. Minimum future lease payments are as follows as of December 31,
1996.

<TABLE>
<S> <C>
YEAR
-------------
1997 $1,225,961
1998 1,139,104
1999 1,135,468
2000 1,055,866
2001 351,146
Thereafter 1,091,283
-----------
Total $5,998,828
===========
</TABLE>

Rent expense was approximately $975,000, $230,000, and $922,000 in the period
April 1, 1996, to December 31, 1996, January 1, 1996, to March 31, 1996, and
the year ended December 31, 1995.

LOAN COMMITMENTS

At December 31, 1996, and December 31, 1995, the Company had floating rate
commitments outstanding to originate approximately $8,048,000 and $53,190,000,
respectively, in multifamily and commercial mortgage loans and mandatory
delivery commitments in the amount of approximately $48,210,000 and
$32,462,000, respectively, to cover the Company's origination commitments and
loans held for sale.

LITIGATION

The Company is involved in litigation related to the normal course of business.
Management is of the opinion that the litigation will not have a material
adverse impact on the Company's financial position or operating results. No
amounts have been accrued because the loss, if any, cannot be reasonably
estimated.

F-19
<PAGE> 72
One of the Company's previous subsidiaries, Vienna Mortgage Corporation
("VMC"), was involved in a dispute with the FDIC over a terminated servicing
agreement in 1991. The Company settled a judgment for the FDIC by paying
$550,000 on behalf of VMC in 1995. The Company has no further liability in
this matter.

EMPLOYEE BENEFIT PLANS

The Company has initiated a defined contribution plan under Section 401(k) of
the Internal Revenue Code covering substantially all employees. Employees may
contribute to the plan up to 15 percent of their salary up to the maximum
allowable by the Internal Revenue Code. The Company will match employee
contributions at 50 percent for an amount up to 5 percent of each employee's
salary. Company contributions vest 20 percent after the first year of
employment and an additional 20 percent in each subsequent year until fully
vested in the fifth year. Contributions by the Company were approximately
$75,360, $18,840, and $97,000 for the period April 1, 1996, to December 31,
1996, January 1, 1996, to March 31, 1996, and the year ended December 31, 1995,
respectively.

11. DUE FROM (TO) AFFILIATES:

As of December 31, 1995, the Company had advanced funds of $1,085,795 to
Beverly. The Company collected $485,670 in 1996, and wrote the remainder of
the receivable off resulting in a $600,125 loss in 1996.

As of December 31, 1996, the Company has accrued in other liabilities,
approximately $3.4 million payable to NHP as NHP funded the purchase of Proctor
on January 2, 1997. The $872,000 of due to affiliate as of December 31, 1996,
represents a payable to NHP for taxes paid on behalf of the Company.

12. DISCLOSURES OF FAIR VALUE OF FINANCIAL INSTRUMENTS:

SFAS No. 107 requires that the Company disclose estimated fair values for its
financial instruments. The basic assumptions used and the estimates disclosed
in the fair value balance sheets represent management's best judgment of
appropriate valuation methods. These estimates are based on pertinent
information available to management. In certain cases, fair values are not
subject to precise quantification or verification and may change as economic
and market factors, and management's evaluation of those factors change.

F-20
<PAGE> 73
Although management uses its best judgment in estimating the fair value of
these financial instruments, there are inherent limitations in any estimation
technique. Therefore, these fair value estimates are not necessarily
indicative of the amounts that the Company would realize in a market
transaction. The following fair value balance sheet does not represent an
estimate of the overall market value of the Company as a going concern, which
would take into account future business opportunities.
<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1996 DECEMBER 31, 1995
------------------------ ------------------------ -------------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE VALUE VALUE
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash, cash
equivalents, and
restricted cash
equivalents $ 7,794,593 $ 7,794,593 $ 6,358,463 $ 6,358,463 $ 6,060,153 $ 6,060,153
Mortgage-backed
securities 3,909,863 3,898,019 3,888,488 3,950,804 3,892,805 3,988,943
Mortgage loans
held for sale 40,262,782 40,262,782 23,116,296 23,116,296 32,461,676 32,461,676
Servicing rights 22,460,014 28,549,292 8,477,403 19,135,431 8,465,663 15,400,381

Liabilities:
Warehouse line of
credit 39,924,736 39,924,736 22,660,974 22,660,974 31,830,868 31,830,868
Servicing
acquisition line
of credit 6,211,745 6,211,745 6,412,764 6,412,764 6,439,114 6,439,114
Notes payable - - 5,034,000 5,034,000 5,034,000 5,034,000

Off-balance sheet
instruments:
Commitments to
extend credit - - - - - -
</TABLE>

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate the
value.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH EQUIVALENTS

For cash, cash equivalents, and restricted cash equivalents, the carrying
amount is a reasonable estimate of fair value due to the relatively short time
between the origination of the instruments and their expected realization.

MORTGAGE-BACKED SECURITIES

The fair value of the mortgage-backed securities is estimated based on bid
quotations received from securities dealers.

MORTGAGE LOANS HELD FOR SALE

For mortgage loans held for sale, fair value was estimated based on outstanding
commitments from investors or current inventory yield requirements calculated
on an aggregate basis.

F-21
<PAGE> 74
SERVICING RIGHTS

The estimated fair value was determined using a discounted cash flow valuation
model incorporating prepayment, default, cost to service, and interest rate
assumptions of the underlying loans.

WAREHOUSE LINE OF CREDIT AND SERVICING ACQUISITION LINE OF CREDIT.

The estimated fair value of the warehouse line of credit and servicing
acquisition line of credit, both of which are short-term liabilities,
approximates their carrying values.

NOTES PAYABLE

The estimated fair value of the notes payable approximates their carrying
values as the notes were paid off on April 1, 1996, at carrying value.

COMMITMENTS TO EXTEND CREDIT

The fair value of commitments is estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counter parties. For
fixed-rate loan commitments, fair value also considers the difference between
current levels of interest rates and the committed rates.

13. BALANCE SHEET CLASSIFICATION:

The Company prepares its consolidated balance sheet using an unclassified
balance sheet presentation as is customary in the mortgage banking industry. A
classified presentation would have aggregated current assets, current
liabilities, and net working capital as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, DECEMBER 31,
1996 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Current assets $51,343,755 $34,361,555 $41,740,490
Current liabilities 52,762,432 30,214,856 38,907,624
----------- ----------- -----------
Net working capital $(1,418,677) $ 4,146,699 $ 2,832,866
=========== =========== ===========

</TABLE>

F-22
<PAGE> 75
14. PRO FORMA PRESENTATION (UNAUDITED):

The unaudited pro forma income statement has been presented to reflect results
of operations for the twelve months ended December 31, 1996 as if the
acquisition of Holdings by NHP had occurred on January 1, 1996. The
adjustments to the period April 1, 1996, to December 31, 1996, include (1)
income from January 1, 1996, through March 31, 1996, of the acquired entity,
and (2) an additional three months of amortization of the purchase accounting
adjustments for the period January 1, 1996, through March 31, 1996. The
following table summarizes these pro forma adjustments:

<TABLE>
<CAPTION>
HISTORICAL
--------------------------
FOR THE FOR THE
PERIOD PERIOD PRO FORMA FOR
APRIL 1, JANUARY 1, THE YEAR
1996, TO 1996 TO THREE MONTHS ENDED
DECEMBER 31, MARCH 31, ADDITIONAL DECEMBER 31,
1996 1996 AMORTIZATION 1996
------------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue $23,473,169 $6,827,942 $ - $30,301,111
----------- ---------- ---------- -----------
Amortization/Depreciation 3,981,704 551,495 575,647 5,108,846
Other expenses 18,336,300 5,971,238 - 24,307,538
----------- ---------- ---------- -----------
Total expenses 22,318,004 6,522,733 575,647 29,416,384
----------- ---------- ---------- -----------
Net income $ 1,155,165 $ 305,209 $ (575,647) $ 884,727
=========== ========== ========== ===========
</TABLE>

15. SUBSEQUENT EVENTS ON APRIL 15, 1997, APRIL 21, 1997, May 5, 1997,
MAY 9, 1997, AND RETROACTIVE APPLICATION OF STOCK SPLIT (____, 1997):

Apartment Investment and Management Company ("AIMCO"), a wholly-owned
subsidiary of AIMCO and NHP have entered into an Agreement and Plan of Merger,
dated as of April 21, 1997 (the "Merger Agreement") pursuant to which the AIMCO
subsidiary will, subject to the terms and conditions provided in the Merger
Agreement, merge with and into NHP (the "Merger"), thereby making NHP, as the
surviving corporation, a wholly-owned subsidiary of AIMCO (the "Surviving
Corporation"). In addition, AIMCO purchased 51 percent of the shares of NHP
Common Stock on May 5, 1997 pursuant to a stock purchase agreement among AIMCO,
Demeter Holdings Corporation and Capricorn Investors, L.P. ("Capricorn"). AIMCO
required that a rights distribution occur as a condition to the Merger. On May
9, 1997, NHP distributed to each holder of record of NHP Common Stock at the
close of business on May 2, 1997, one right (a "Right") for each outstanding
share of NHP Common Stock (the "Rights Distribution"). Each Right entitles the
holder to receive from the Company, or any successor thereof, a distribution
(the "Share Distribution" and, with the Rights Distribution, the
"Distribution") of one-third of a share of Company Common Stock, subject to
the terms of a Rights Agreement, dated as of April 21, 1997 (the "Rights
Agreement") between NHP, the Company and The First National Bank of Boston, as
Rights Agent. The Rights distributed on May 9, 1997 are evidenced by the
certificates of NHP Common Stock then outstanding. NHP Common Stock issued
after May 9, 1997 and prior to the Maturity Time (as defined below) will have a
legend and reference to the Rights Agreement. Subject to certain conditions,
the Rights will mature at the earlier of (i) the effective time of the Merger
(as defined below) and (ii) December 1, 1997 (such time being referred to as
the "Maturity Time"). Capricorn II, an affiliate of Capricorn, has entered into
a commitment pursuant to which it will, subject to certain conditions,
purchase 546,448 shares of Company common stock at the time of the Share
Distribution for a price of $9.15 per share.

Pursuant to the Rights Agreement, NHP will distribute all of the issued
and outstanding shares of the Company's Common Stock held by NHP to holders of
Rights as governed by the Rights Agreement ("Share Distribution"). NHP
Stockholders will receive cash in respect of fractional shares of Company
Common Stock that would otherwise be distributed at the rate of $9.15 per share
of Company Common Stock. The NHP stockholders will not be required to pay any
consideration for the shares of Company Common Stock they receive in the Share
Distribution. Simultaneous with the merger, the Company's Board of Directors
anticipates approving a 789.94 per share stock split. Such split represents
the stock split that would have taken place if the Share Distribution had
occurred on March 7, 1997. The actual stock split amount will depend on the
number of shares outstanding at the time of the Share Distribution. The split
has been applied retroactively to all periods presented.

On April 15, 1997, the Company purchased ASKEW Investment in Dallas, Texas for
$5.6 million. In accordance with the purchase agreement, $4.6 million of the
purchase price was paid upon closing with the remaining $1.0 million due in the
future based upon the origination of specific amounts of mortgage loans. The
acquisition will be accounted for as a purchase. ASKEW Investment is a
multifamily and commercial mortgage bank with correspondent relationships with
fourteen insurance companies, which originated $374 million of mortgages in
1996.

F-23