ANTHRACITE CAPITAL INC, S-4/A, 2000-04-11

ANTHRACITE CAPITAL INC
S-4/A, 2000-04-11
REAL ESTATE INVESTMENT TRUSTS

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As filed with the Securities and Exchange Commission on April 10, 2000.
Registration No. 333-33596
- ------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

Amendment No. 1

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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ANTHRACITE CAPITAL, INC.
(Exact name of registrant as specified in its charter)

MARYLAND 6162 13-3978906
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION OR INDUSTRIAL CLASSIFICATION IDENTIFICATION
ORGANIZATION) CODE NUMBER) NUMBER)

345 PARK AVENUE, 29TH FLOOR
NEW YORK, NEW YORK 10154
(212) 754-5560
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

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

HUGH R. FRATER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ANTHRACITE CAPITAL, INC.
345 PARK AVENUE, 29TH FLOOR
NEW YORK, NEW YORK 10154
(212) 754-5560
(Name, address, including zip code, and telephone number, including
area code, of agent for service)

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

Copies to:

J. GREGORY MILMOE, ESQ. BARBARA J. BRIGGS, ESQ.
SKADDEN, ARPS, SLATE MEAGHER & FLOM LLP MILBANK, TWEED, HADLEY & MCCLOY LLP
FOUR TIMES SQUARE ONE CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10036 NEW YORK, NEW YORK 10005
(212) 735-3000 (212) 530-5142

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effectiveness of this registration statement
and the satisfaction or waiver of all other conditions to the merger
contemplated by the agreement and plan of merger, dated as of February 8,
2000, described herein.
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. |_|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|

<TABLE>
<CAPTION>
CALCULATION OF FILING FEE
===================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO WHICH AMOUNTS TO OFFERING PRICE AGGREGATE VALUE REGISTRATION
TRANSACTION APPLIES BE REGISTERED PER SHARE OF TRANSACTION FEE (5)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anthracite Capital, Inc.
Common Stock par value
$.001 per share........... 4,183,000 (1) NA $75,126,680 (3) $22,538
Anthracite Capital, Inc.
10% Series B Cumulative
Convertible Redeemable
Preferred Stock par
value $.001 per share..... 2,260,997 (2) NA $56,524,925 (4) $16,958
Anthracite Capital, Inc.
Common Stock par value
$.001 per share........... 3,307,726 (6) NA (7) (7)
- ---------------------------------------------------------------------------------------------------

Total....................... $131,651,605 $39,496 (8)

- ---------------------------------------------------------------------------------------------------
</TABLE>

(1) The maximum number of shares of common stock, par value $.001 per
share, of Anthracite Capital, Inc. that may be issued and distributed
to stockholders of CORE Cap, Inc. pursuant to the exchange ratio
defined in the agreement and plan of merger to which this
registration statement relates.
(2) The maximum number of shares of 10% Series B Cumulative Convertible
Redeemable Preferred Stock, par value $.001 per share of Anthracite
Capital, Inc. that may be issued and distributed to stockholders of
CORE Cap, Inc., based on (1) a total number of outstanding shares of
CORE Cap, Inc. 10% Cumulative Convertible Series A Preferred Stock,
par value $.01 per share, 2,260,997 of which will be treated as
2,260,997 shares of Anthracite Capital, Inc. 10% Series B Cumulative
Convertible Redeemable Preferred Stock.
(3) Estimated solely for the purpose of computing the registration fee,
based upon the book value of CORE Cap, Inc. common stock of $17.96
per share as of March 23, 2000, in accordance with Rule 457(f)(2)
under the Securities Act of 1933, as amended. The maximum aggregate
value represents the value of CORE Cap, Inc.'s common stock, plus
shares represented by options and warrants, that are being exchanged
for Anthracite Capital, Inc. common stock in the merger.
(4) Estimated solely for the purpose of computing the registration fee,
based upon the book value of CORE Cap, Inc. preferred stock of $25
per share as of March 23, 2000, in accordance with Rule 457(f)(2)
under the Securities Act of 1933, as amended.
(5) Calculated pursuant to Rule 457(f) under the Securities Act.
(6) The maximum number of shares of Anthracite common stock that may be
issued upon conversion of the 10% Series B Cumulative Convertible
Redeemable Preferred Stock pursuant to the articles supplementary
based on the liquidation preference of a share of the preferred stock
divided by a fraction, the numerator of which is $21.93 and the
denominator of which is the exchange ratio.
(7) Pursuant to Rule 457(i), no registration fee for the common stock
issuable upon conversion of the CORE Cap, Inc. preferred stock is
payable.

(8) Previously paid.

|X| Fee paid previously with preliminary materials.

|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. MAY
DETERMINE.
=============================================================================

[FLAG]

THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. ANTHRACITE CAPITAL, INC. MAY NOT SELL THESE SECURITIES UNTIL
THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

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

PROXY STATEMENT/PROSPECTUS

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

PROXY STATEMENT/PROSPECTUS DATED APRIL 11, 2000.

April 11, 2000

Dear Stockholders:

You are cordially invited to attend a special meeting of the
stockholders of CORE Cap, Inc., which we will hold at 10:00 a.m., local time,
on May 10, 2000, at One Chase Manhattan Plaza, 48th Floor, New York, New York
10005.

At the special meeting, we will ask you to approve the merger of CORE
Cap with Anthracite Capital, Inc. Anthracite common stock is quoted on The
New York Stock Exchange under the trading symbol "AHR." On April 10, 2000,
Anthracite common stock closed at $6 7/8 per share. After the proposed
merger, CORE Cap will be a wholly-owned subsidiary of Anthracite, and you
will be a stockholder of Anthracite. In the merger, for each share of CORE
Cap common stock you hold, you will receive a number of shares of
Anthracite common stock equal to the exchange ratio, which will be based on
CORE Cap and Anthracite's respective net asset values around the date of
the special meeting. Holders of shares of CORE Cap preferred stock will
receive one share of a corresponding class of Anthracite preferred stock
whose terms and conditions (with the exception of restrictions on
conversion as described in this proxy statement/prospectus) are
substantially identical to those of the CORE Cap preferred stock.

We anticipate that approximately 4,183,000 shares of Anthracite
common stock will be issued to CORE Cap stockholders in connection with the
merger. After the merger, the current CORE Cap common stockholders will own
approximately 19% and the current Anthracite common stockholders will own
approximately 81% of the outstanding shares of common stock of the combined
company.

Your board of directors has determined that the merger is consistent
with, and advances, the long-term business strategy of CORE Cap and
recommends that you vote in favor of the merger at the special meeting.
GMAC Mortgage Corporationand GMAC Commercial Mortgage Corporation, together
holders of approximately 39.3% of the shares of CORE Cap common stock
outstanding, have agreed to vote in favor of the merger. The merger cannot
be completed unless a majority of the stockholders of CORE Cap vote to
approve it.

The attached proxy statement/prospectus provides you with detailed
information about Anthracite and the proposed merger. YOU SHOULD READ THIS
DOCUMENT, PARTICULARLY THE SECTION DESCRIBING RISK FACTORS RELATING TO THE
MERGER. We look forward to the successful combination of CORE Cap and
Anthracite and to your continued support as a stockholder of the combined
company.

FOR YOUR VOTE TO BE COUNTED, IT IS IMPORTANT THAT YOU SIGN AND RETURN
THE PROXY CARD CONTAINED HEREIN.

Sincerely,

/s/ John E. Robson
John E. Robson
Chairman of the Board of Directors

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED THE MERGER, NOR HAVE THEY DETERMINED IF
THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the stockholders of CORE Cap, Inc.:

A special meeting of the stockholders of CORE Cap, Inc. will be held
at 10:00 a.m. local time, on May 10, 2000, at One Chase Manhattan Plaza, 48th
Floor, New York, New York 10005, to consider and vote on a proposal to approve
an agreement and plan of merger dated as of February 8, 2000 among CORE Cap,
Anthracite Capital, Inc. and Anthracite Acquisition Corp., a wholly-owned
subsidiary of Anthracite, and to approve the merger and other transactions
described in the merger agreement.

We will transact no other business at the special meeting, except for
business properly brought before the special meeting or any adjournment or
postponement of the special meeting by the CORE Cap board of directors.

Your board of directors has determined that the merger is consistent
with, and advances, the long-term business strategy of CORE Cap and
recommends that you vote in favor of the merger at the special meeting.
GMAC Mortgage Corporation and GMAC Commercial Mortgage Corporation, together
holders of approximately 39.3% of the shares of CORE Cap common stock
outstanding, have agreed to vote in favor of the merger. The merger cannot
be completed unless a majority of the stockholders of CORE Cap vote to
approve it.

The close of business on April 10, 2000 is the record date for
determining which stockholders are entitled to vote at the meeting and at
any adjournment or postponement of the meeting. A list of stockholders
entitled to vote at the meeting will be available for your examination at
CORE Cap's headquarters for a period of ten days before the meeting during
regular business hours.

PLEASE READ THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS AND THE MERGER
AGREEMENT ATTACHED AS APPENDIX I FOR INFORMATION RELATING TO CORE CAP,
ANTHRACITE AND THE TERMS AND CONDITIONS OF THE MERGER, AS WELL AS APPENDIX
II SETTING FORTH YOUR RIGHTS TO DISSENT FROM THE MERGER. OTHER IMPORTANT
INFORMATION IS INCORPORATED BY REFERENCE FROM OTHER DOCUMENTS. IN ORDER TO
OBTAIN A COPY OF THE DOCUMENTS CONTAINING INFORMATION INCORPORATED BY
REFERENCE, YOU MUST REQUEST THE INFORMATION NO LATER THAN FIVE BUSINESS
DAYS BEFORE THE DATE OF THE STOCKHOLDER MEETING. PLEASE REVIEW ALL THESE
MATERIALS BEFORE COMPLETING THE ENCLOSED PROXY CARD.

By order of the Board of Directors,

/s/ John E. Robson
John E. Robson
Chairman of the Board of Directors

April 11, 2000

To assure your representation at the special meeting, please
complete, sign, date and return the enclosed proxy card promptly in the
enclosed self-addressed, stamped envelope or via facsimile to (215)
682-1515, attn. Irina Burns. In the event that you deliver the proxy card
via facsimile, please call Irina Burns prior to sending at (215) 682-3608.
The delivery of the proxy will not affect your right to attend the meeting,
or, if you choose to revoke the proxy, your right to vote in person. Please
do not send in your stock certificates with your proxy card.

This proxy statement/prospectus is dated April 11, 2000 and is first
being mailed to stockholders on or about April 12, 2000.

TABLE OF CONTENTS

Page

QUESTIONS AND ANSWERS ABOUT THE MERGER......................................7

SUMMARY.....................................................................8
The Companies.........................................................8
Structure of the Transaction..........................................8
CORE Cap's Recommendation to Stockholders.............................8
Reasons for the Merger................................................9
Opinion of CORE Cap's Financial Advisor...............................9
Appraisal Rights......................................................9
Interests of GMAC and Certain Directors of CORE Cap in the
Merger..............................................................9
Procedure for Casting Your Vote......................................10
Procedure for Changing Your Vote.....................................10
Vote Required for Approval...........................................10
Procedure for Exchanging Your Stock Certificates.....................10
Conditions to the Merger.............................................10
Termination of the Merger Agreement..................................10
Non-Solicitation of Competing Transactions...........................10
Federal Tax Consequences of the Merger...............................10
Additional Agreements................................................10
Differences in the Rights of Stockholders............................10
Forward-Looking Statements May Prove Inaccurate......................11
Completion and Effectiveness of the Merger...........................11
Market Data..........................................................12
Anthracite Selected Historical Consolidated Financial Information....13
CORE Cap Selected Historical Consolidated Financial Information......14
Anthracite Summary Selected Pro Forma Condensed Consolidated
Financial Information..............................................15
Unaudited Pro Forma Comparative Per Share Information................16

RISK FACTORS...............................................................17
Risk Factors Relating to the Merger Between Anthracite and CORE
Cap................................................................17

Risk Factors Relating to Anthracite's Business.......................18
Risk Factors Relating to the Combined Company........................19

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS..................21

THE CORE CAP MEETING.......................................................22

THE MERGER.................................................................24
Structure............................................................24
Background of the Merger.............................................24
Recommendations of the CORE Cap Board of Directors; Reasons for
the Merger.........................................................25
Opinion of CORE Cap's Financial Advisor..............................27
Interests of GMAC and Certain Directors of CORE Cap in the Merger....30
Restrictions on Ownership and Transfer of Anthracite Capital Stock...31
Appraisal Rights.....................................................32
Accounting Treatment.................................................34
Material U.S. Federal Income Tax Consequences of the Merger to
CORE Cap Stockholders..............................................34

THE MERGER AGREEMENT.......................................................36
Exchange Procedures..................................................36
Conduct of Business; Covenants.......................................36
No Solicitation......................................................37
Conditions to the Merger.............................................37
Representations and Warranties.......................................38
Termination, Termination Fees........................................40
Effect of Termination................................................41
Additional Agreements................................................41

ANTHRACITE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION..........42

DESCRIPTION OF ANTHRACITE PREFERRED STOCK..................................46

MANAGEMENT AND CERTAIN SECURITY HOLDERS OF ANTHRACITE......................50

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF CORE CAP....54

THE COMPANIES..............................................................56
Business of Anthracite...............................................56
Business of CORE Cap.................................................57

COMPARISON OF RIGHTS OF STOCKHOLDERS OF ANTHRACITE AND CORE CAP
STOCKHOLDERS.............................................................63

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF CORE CAP........................................76

QUANTITATIVE AND QUALITATIVE DISCLOSURES OF CORE CAP ABOUT MARKET RISK.....78

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES.............................79

Taxation of Anthracite...............................................79

LEGAL MATTERS..............................................................93

EXPERTS....................................................................93

WHERE YOU CAN FIND MORE INFORMATION........................................93

FINANCIAL STATEMENTS

Appendix I - Agreement and Plan of Merger
Exhibit A - Articles Supplementary
Schedule I

Appendix II - Dissenters' Rights

Appendix III - Fairness Opinion of PaineWebber Incorporated

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHY ARE CORE CAP AND ANTHRACITE PROPOSING TO MERGE? HOW WILL I BENEFIT?

A: We believe that the merger with Anthracite creates an opportunity for
CORE Cap stockholders to invest, on attractive terms, in a larger,
publicly- traded entity. The merger will create liquidity for holders of
CORE Cap's common shares, increase the capital base for CORE Cap's
holders of preferred shares and build a new company with strategic
relationships and greater financial resources.

Q: WHAT WILL I RECEIVE IN THE MERGER?

A: In the merger, you will receive a number of Anthracite common shares for
each share of CORE Cap common stock as determined by the exchange ratio.
For each share of CORE Cap preferred stock you hold you will receive one
share of a corresponding class of Anthracite preferred stock whose terms
and conditions, with the exception of restrictions on conversion, are
substantially identical to those of the CORE Cap preferred stock. After
the merger, the current CORE Cap common stockholders will own
approximately 19% and the current Anthracite stockholders will own
approximately 81% of the outstanding shares of common stock of the
combined company.

Q: HOW WILL THE EXCHANGE RATIO BE DETERMINED?

A: The exchange ratio will be calculated around the time of the stockholder
vote and will be equal to the product of 1.05 and the net asset value
per share of CORE Cap common stock divided by the net asset value per
share of Anthracite common stock, as defined in the agreement and plan
of merger to which this proxy statement/prospectus relates. However, the
number of shares of Anthracite common stock exchanged for each share of
CORE Cap common stock will not exceed 1.2833 shares. If the exchange
ratio would require that Anthracite issue more than 1.2833 shares, CORE
Cap will reduce its net asset value by distributing a cash dividend to
its stockholders in an amount such that the exchange ratio will not
exceed 1.2833.

Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A: We are working toward completing the merger as quickly as possible.
However, we do not yet know when the merger will be completed because
many conditions to the merger are beyond our control. We expect it to be
completed within three days following the date of the special meeting of
stockholders.

Q: WHAT DO I NEED TO DO NOW?

A: Please vote. For your vote to be counted, it is important that you sign
and return a proxy card. Indicate on your proxy card how you want to
vote, and sign, date and mail the proxy card in the enclosed return
envelope or send it via facsimile to (215) 682-1515, attn: Irina Burns.
In the event that you deliver the proxy card via facsimile, please call
Irina Burns at (215) 682-1515 prior to sending. You may attend the
meeting and vote in person rather than voting by proxy. In addition, you
may revoke your proxy and change your vote before or at the special
meeting.

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. After the merger is completed, you will receive instructions on how
to exchange your CORE Cap stock certificates for Anthracite stock
certificates.

Q: WHO CAN HELP ANSWER MY QUESTIONS?

A: If you have questions about the merger, you should contact:

CORE Cap, Inc.
c/o GMAC Mortgage Asset Management, Inc.
100 Witmer Road
P.O. Box 963
Horsham, PA 19044-0963
Attn.: Irina Burns
(215) 682-3608

SUMMARY

This section summarizes selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the terms of the merger, you should read this document,
including the appendices and other documents to which it refers. We have
included in this document a copy of the agreement and plan of merger to
which this proxy statement/prospectus relates as Appendix I. The merger
agreement, and not this document, is the document that governs the merger.
For information on how to obtain the documents that Anthracite has filed
with the SEC, see "Where You Can Find More Information."

THE COMPANIES

ANTHRACITE CAPITAL, INC.

345 Park Avenue, 29th Floor
New York, New York 10154
(212) 409-3333
http://www.blackrock.com

Anthracite, a Maryland corporation, was formed in November 1997 to
invest in multifamily, commercial and residential mortgage loans,
mortgage-backed securities and other real estate related assets in both
U.S. and non- U.S. markets. Anthracite is taxed as a real estate investment
trust (referred to in this proxy statement/prospectus as a REIT) under the
Internal Revenue Code of 1986, as amended (referred to in this proxy
statement/prospectus as the Code), and will generally not be subject to
Federal income tax to the extent that it distributes its net income to its
stockholders and qualifies for taxation as a REIT. Anthracite's operations
are managed by BlackRock Financial Management, Inc. which is referred to in
this proxy statement/prospectus as BlackRock.

For additional information about Anthracite and its businesses, see "THE
COMPANIES--Business of Anthracite" and "Where You Can Find More
Information."

CORE CAP, INC.

c/o GMAC Mortgage Asset Management, Inc.
100 Witmer Road
P.O. Box 963
Horsham, PA 19044-0963
(215) 682-3608
http://www.gmac-into.com

CORE Cap was incorporated in the State of Delaware in August 1997 and is
taxed as a REIT under the Code. The day-to-day business of CORE Cap is
managed by GMAC Mortgage Asset Management, Inc., which is referred to in
this proxy statement/prospectus as GMAC Management.

CORE Cap acquires residential mortgage loans primarily from GMAC
Mortgage Corporation, which is referred to in this proxy
statement/prospectus as GMAC Mortgage, and commercial mortgage loans
primarily from GMAC Commercial Mortgage Corporation, which is referred to
in this proxy statement/prospectus as GMAC Commercial.

For additional information about CORE Cap and its businesses, see "THE
COMPANIES--Business of CORE Cap."

STRUCTURE OF THE TRANSACTION

The merger agreement is attached at the back of this proxy
statement/prospectus as Appendix I. We encourage you to read the merger
agreement as it is the legal document that governs the merger.

CORE Cap will merge with a subsidiary of Anthracite and become a
wholly-owned subsidiary of Anthracite. Following the merger, stockholders
of CORE Cap will become stockholders of Anthracite.

For additional information, see "THE MERGER--Structure."

CORE CAP'S RECOMMENDATION TO STOCKHOLDERS

Your board of directors has determined that the merger is consistent
with, and advances, the long-term business strategy of CORE Cap and is fair
to you. Your board of directors has by a unanimous vote of all directors
participating approved the merger and recommends that you vote in favor of
the merger. PaineWebber Incorporated, referred to in this proxy
statement/prospectus as PaineWebber, delivered its opinion to the board on
February 8, 2000 to the effect that the exchange ratio as provided for in
the merger agreement is fair from a financial point of view.

For additional information, see "THE MERGER--Recommendations of the CORE
Cap Board of Directors; Reasons for the Merger."

REASONS FOR THE MERGER

Your board of directors considered a number of factors in determining to
approve the merger and recommend it to you, including the following:

o The merger will provide CORE Cap's stockholders with an ownership
interest in a large mortgage REIT. Anthracite is one of the largest
publicly traded mortgage REITs, with an equity capital base of
approximately $168 million and a market capitalization of
approximately $140 million as of December 31, 1999 . On a pro forma
basis, the combined companies would have approximately $250 million
of capital.

o The transaction will provide CORE Cap common stockholders with a
security that is publicly traded on The New York Stock Exchange with
approximately 25 million pro forma shares of capital stock
outstanding.

o CORE Cap's common stockholders will receive shares of Anthracite
common stock based upon a calculation which places a premium on CORE
Cap's net asset value over Anthracite's net asset value. This premium
will also be reflected in the new preferred stock conversion ratio.

o The merger will provide CORE Cap's preferred stockholders greater
financial support for their shares of stock. While the existing
shares of CORE Cap preferred stock represent approximately 64% of
CORE Cap's total marked-to-market equity, total preferred equity in
the combined company will represent only 30% of total pro forma
marked-to-market equity.

The board also considered some potential drawbacks to the merger
including the following:

o The pro forma earnings per equivalent share of the combined company
would be below those of CORE Cap.

o The value of the consideration to be received by CORE Cap
stockholders in the merger, based on estimated exchange ratios and
the trading price of Anthracite common stock at the time the
consideration is to be exchanged, would be below the average price
received by CORE Cap stockholders who participated in CORE Cap's
share repurchase program in 1999.

o CORE Cap has obtained the right to require GMAC Management to assign
its management contract with CORE Cap to BlackRock. If, as expected,
CORE Cap exercises the right, GMAC Management would have no
management role with the combined company.

Nonetheless, the board concluded that these considerations were
mitigated by the benefits of the merger. After reviewing potential
alternative strategies for CORE Cap, the board concluded that the merger
was in the best interests of the stockholders of CORE Cap.

For additional information, see "THE MERGER-- Recommendations of the
CORE Cap Board of Directors; Reasons For The Merger."

OPINION OF CORE CAP'S FINANCIAL ADVISOR

CORE Cap engaged PaineWebber to act as financial advisor to assist the
CORE Cap board of directors in evaluating the merger. PaineWebber presented
to the board of directors an opinion that the exchange ratio as provided
for in the merger agreement is fair to the stockholders from a financial
point of view.

For additional information, see "THE MERGER--Opinion of CORE Cap's
Financial Advisor."

APPRAISAL RIGHTS

Delaware law permits you to dissent from the merger and have the fair
value of your shares of CORE Cap stock appraised by a court and paid to you
in cash. To do this, you must follow the procedures set forth under
Delaware law, including filing specific notices and not voting your shares
in favor of the merger. The relevant provisions of the Delaware law
governing this process are attached to this proxy statement/prospectus as
Appendix II.

For additional information, see "THE MERGER--Appraisal Rights."

INTERESTS OF GMAC AND CERTAIN DIRECTORS OF CORE CAP IN THE MERGER

GMAC and certain directors of CORE Cap may have interests in the merger
that are different from or in addition to yours and which may represent
conflicts of interest.

For more information about these conflicts, see "THE MERGER--Interests
of GMAC and CORE Cap Directors in the Merger."

PROCEDURE FOR CASTING YOUR VOTE

Please mail your signed proxy card in the enclosed return envelope or
deliver your proxy via facsimile to (215) 682-1515 as soon as possible, so
that your shares of CORE Cap common stock may be represented at the special
meeting. If you do not include instructions on how to vote your properly
executed proxy, your shares will be voted FOR adoption of the merger
agreement.

For additional information, see "THE CORE CAP MEETING--Voting Your
Shares and How Proxies are Counted."

PROCEDURE FOR CHANGING YOUR VOTE

If you want to change your vote, send the secretary of CORE Cap a signed
proxy card before the special meeting or attend the special meeting in
person. You may also revoke your proxy by sending written notice to the
secretary of CORE Cap before the special meeting.

For additional information, see "THE CORE CAP MEETING--Revoking Your
Proxy."

VOTE REQUIRED FOR APPROVAL

To approve the merger, the affirmative vote of a majority of the shares
of CORE Cap common stock outstanding on the record date is required. GMAC
Mortgage and GMAC Commerical which together hold 39.3% of CORE Cap common
stock outstanding have agreed to vote in favor of the merger.

For additional information, see "THE CORE CAP MEETING--Voting Your
Shares and How Proxies are Counted."

PROCEDURE FOR EXCHANGING YOUR STOCK CERTIFICATES

After the merger is completed, we will send you written instructions for
exchanging your CORE Cap stock certificates for Anthracite stock
certificates. Do not send your CORE Cap stock certificates now.

For additional information, see "THE MERGER--Exchange Procedures."

CONDITIONS TO THE MERGER

The merger will be completed only if the conditions set forth in the
merger agreement are satisfied or, to the extent permissible, waived.

For additional information, see "THE MERGER AGREEMENT -- Conditions to
the Merger."

TERMINATION OF THE MERGER AGREEMENT

The merger agreement contains provisions addressing the circumstances
under which Anthracite or CORE Cap may terminate the merger agreement.

CORE Cap generally must pay Anthracite a termination fee if it
terminates the merger agreement to accept an alternative proposal.
Furthermore, if CORE Cap stockholders fail to approve the merger, CORE Cap
must reimburse Anthracite for its expenses.

For additional information, see "THE MERGER AGREEMENT--Termination;
Termination Fees."

NON-SOLICITATION OF COMPETING TRANSACTIONS

The merger agreement generally restricts CORE Cap's ability to discuss
alternative proposals for the sale of CORE Cap to third parties except as
required by the CORE Cap board of directors' fiduciary duties. CORE Cap
must inform Anthracite of the terms of any alternative proposal it receives
from a third party.

For additional information, see "THE MERGER AGREEMENT--No Solicitation."

FEDERAL TAX CONSEQUENCES OF THE MERGER

As a result of the merger, you will recognize gain or loss for U.S.
federal income tax purposes in an amount by which the fair market value of
the Anthracite stock or cash you receive in the merger exceeds, or is less
than, your tax basis in your CORE Cap stock. Since the tax consequences of
the merger to you will depend, in part, on the facts of your own situation,
we urge you to consult your tax advisor.

For additional information, see "THE MERGER-- Material U.S. Federal
Income Tax Consequences of the Merger to CORE Cap stockholders."

ADDITIONAL AGREEMENTS

For a complete description of other agreements entered into in
connection with the merger, see "THE MERGER AGREEMENT--Additional
Agreements."

DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS

There are differences between your rights as a CORE Cap stockholder
under Delaware law and CORE Cap's amended and restated certificate of
incorporation and bylaws, and the rights you will have as a stockholder of
Anthracite under Maryland law and Anthracite's amended and restated
articles of incorporation and bylaws.

For a description, see "Comparison of Rights of Stockholders."

FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE

Anthracite has made forward-looking statements in this proxy
statement/prospectus and in the documents to which we have referred you.
Forward-looking statements include information concerning possible or
assumed future results of operations of Anthracite, and the combined
company following the merger. Many factors could affect the future
financial results of Anthracite and the combined company and could cause
those results to differ materially from those expressed in the forward-
looking statements contained or incorporated by reference in this proxy
statement/prospectus.

For additional information, see "Forward-Looking Statements."

COMPLETION AND EFFECTIVENESS OF THE MERGER

We will complete the merger when all of the conditions to the merger are
satisfied or waived. The merger will become effective when we file a
certificate of merger with the State of Delaware.

MARKET DATA

Anthracite common stock is listed on The New York Stock Exchange under
the symbol "AHR." CORE Cap common stock is not traded in any public market
or exchange. The table below sets forth, for the calendar quarters
indicated, the high and low sales prices per share reported on The New York
Stock Exchange Composite Tape, and the dividends declared on Anthracite
common stock for each quarter during which Anthracite has reported as well
as the dividends declared on CORE Cap common stock for each quarter during
which CORE Cap has paid dividends.

CORE Cap
Anthracite common stock common stock
High Low Dividends Dividends
----------- ----------- ------------ ------------
1998:
First Quarter........ $ 15 1/4 $ 15 $ 0.427
Second Quarter....... 15 1/2 13 3/8 $ 0.270 0.446
Third Quarter 13 15/16 8 1/4 0.360 0.120
Fourth Quarter....... 8 3/8 3 5/8 0.290 0.170
1999:
First Quarter........ $ 7 15/16 $ 6 3/8 $ 0.290 $ 0.860
Second Quarter....... 7 11/16 6 1/2 0.290 1.310
Third Quarter........ 7 1/8 6 1/2 0.290 0.800
Fourth Quarter....... 6 15/16 6 0.290 0.750
2000:
First Quarter........ $ 7 1/2 $ 6 1/4 $ 0.290 $ 1.17

The last reported closing sales price of Anthracite common stock on The
New York Stock Exchange on February 8, 2000, the last trading day before
public announcement of the merger, was $6 5/8. On April 10, 2000, the
last day for which it was practicable to obtain the closing sales price of
Anthracite common stock prior to the mailing of this proxy
statement/prospectus, the closing sales price per share was $6 7/8.

Because the exchange ratio in the merger is variable and because the
market price of Anthracite common stock is subject to fluctuation, the
market value of the shares of Anthracite common stock you will receive in
the merger will fluctuate before and after the merger.

ANTHRACITE

SELECTED HISTORICAL CONSOLIDATED
FINANCIAL INFORMATION

Anthracite is providing the following consolidated financial information
to aid you in analyzing the financial aspects of the merger. This
information was derived from audited consolidated financial statements for
the years 1999 and 1998. This information is only a summary, and you should
read it in conjunction with Anthracite's historical consolidated financial
statements and related notes contained in its annual reports and other
information filed with the SEC. See "Where You Can Find More Information."

YEAR ENDED
DECEMBER 31,
-------------------------------------
1999 1998
----------------- -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net income/(loss)...................... $ 26,673 $ (1,389)
Earnings per share:
Basic............................... $ 1.27 $ (0.07)
Diluted............................. 1.26 (0.07)
Cash dividends per common share........ 1.16 0.92
BALANCE SHEET DATA:
Total assets........................... $ 679,662 $ 956,395
Total liabilities...................... 481,379 774,666
Redeemable convertible preferred stock.... $ 30,022 N/A

RATIO OF EARNINGS TO FIXED CHARGES AND PREFERENCE DIVIDENDS

The following table displays Anthracite's ratio of earnings to fixed
charges and preference dividends.

FOR THE PERIOD
MARCH 24, 1998
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1999 1998
------------ --------------
Ratio of earnings to fixed charges
and preference dividends............... 2.01x .94x

Earnings were inadequate to cover fixed charges for the period from
March 24, 1998 (commencement of operations) to December 31, 1998, during
which time Anthracite did not pay any preference dividends. The additional
earnings required to pay fixed charges in that period was $139,000. The
earnings for this period included a non-recurring realized loss primarily
from the sale of securities for $18.44 million. Excluding this
non-recurring loss, the ratio of earnings to fixed charges and preference
dividends would have been 1.69x.

CORE CAP
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

CORE Cap is providing the following consolidated financial information
to aid you in analyzing the financial aspects of the merger. This
information is derived from CORE Cap's audited consolidated financial
statements for the years 1997 (beginning on September 24, 1997) through
1999. The information is only a summary, and you should read it in
conjunction with CORE Cap's historical consolidated financial statements
and related notes contained in this proxy statement/prospectus. See "Where
You Can Find More Information."

AT OR FOR YEAR ENDED
DECEMBER 31,
-------------------------------------
1999 1998 1997
---------- ---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net interest income................. $ 20,034 $ 16,311 $ 2,517
Net income.......................... 20,016 15,373 1,781

Earnings per share:
Basic............................... $ 3.32 $ 0.98 $ 0.02
Diluted............................. 2.72 0.98 0.02
Cash dividends per common share..... 3.72 1.16 N/A

BALANCE SHEET DATA:
Total assets........................... $1,395,211 $2,601,900 $1,846,219
Total liabilities...................... $1,280,189 $2,412,742 $1,646,818
Convertible preferred stock............ $ 56,525 $ 56,525 $ 56,525

ANTHRACITE
SUMMARY SELECTED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial
information is provided to give you a better picture of what the results of
operations and financial position of Anthracite might have been had the
merger occurred on the dates assumed. The unaudited pro forma condensed
consolidated statement of operations combines information from the
historical statements of operations of Anthracite and CORE Cap giving
effect to the merger as if it had been completed on January 1, 1999. The
unaudited pro forma condensed consolidated balance sheet combines
information from the historical balance sheets of Anthracite and CORE Cap
giving effect to the merger as if it had been completed on December 31,
1999.

This information is provided for illustrative purposes only. This
information does not necessarily reflect

o what the results of operations or financial position of Anthracite
would have been if the merger had actually occurred on the dates
noted above, or

o what Anthracite's actual future consolidated results of operations or
financial position will be.

This information also does not reflect

o any dispositions of assets or repayments of borrowings that may occur
after the merger,

o any transition or restructuring costs associated with combining
Anthracite and CORE Cap, or

o the effect of any potential changes in revenues or any operating
savings which may be achieved by combining the resources of
Anthracite and CORE Cap.

The merger will be accounted for as a purchase of CORE Cap by
Anthracite. In connection with the merger, the purchase price will be
allocated to the assets acquired and liabilities assumed based upon their
estimated fair values at the completion of the merger.

The information set forth below is only a summary, and you should read
it in conjunction with the information contained in the section entitled
"Pro Forma Condensed Consolidated Financial Information," and the
respective audited financial statements of Anthracite and CORE Cap. The
audited consolidated financial statements of Anthracite are incorporated in
this proxy statement/prospectus by reference and those of CORE Cap are
attached at the back of this proxy statement/prospectus beginning on page
F-1. See "Where You Can Find More Information."

AS OF AND
FOR THE YEAR ENDED
DECEMBER 31, 1999
---------------------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
PRO FORMA INCOME STATEMENT DATA:
Net interest income............................ $53,203
Income available to common stockholders........ 41,587
Income available to common stockholders
per common share:
Basic..................................... $1.66
Diluted................................... 1.66
Cash dividends per common share................
PRO FORMA BALANCE SHEET DATA:
Total assets................................... $2,043,330
Short-term borrowings.......................... 1,730,940
Stockholders' equity........................... 243,996

UNAUDITED PRO FORMA COMPARATIVE PER SHARE INFORMATION

The following table sets forth historical and pro forma Anthracite
information, and historical and pro forma equivalent CORE Cap information,
on a per share basis for earnings, dividends declared and book value.

Pro forma net income per share amounts were taken from the pro forma
information presented in the section titled "Pro Forma Condensed
Consolidated Financial Information." Pro forma cash dividends per share is
calculated as the total common stock dividends declared during 1999 by
Anthracite and CORE Cap, divided by the weighted average of Anthracite
common shares outstanding during 1999 plus the weighted average of CORE Cap
common shares outstanding during 1999 as adjusted for the pro forma
exchange ratio, 1.2833. Pro forma book value per share is calculated as
total December 31, 1999 pro forma stockholders' equity of Anthracite after
the merger, less the book value of the preferred stock issued in the
merger, divided by the number of Anthracite common shares assumed to be
outstanding after the merger. Anthracite common shares assumed to be
outstanding after the merger include Anthracite's common shares outstanding
at December 31, 1999, plus Anthracite common shares issued to CORE Cap
shareholders, based on the number of CORE Cap's common shares outstanding
and the pro forma exchange ratio of 1.2833. The historical and pro forma
book values per share do not necessarily represent the respective company's
net asset value per share computed on a fair value basis, because each
company has had, and the merged company will have, certain assets that are
carried on the historical cost basis.

Pro forma equivalent cash dividends, earnings and book value per share
information for CORE Cap were calculated by multiplying the pro forma
combined per share amounts by 1.2833, the maximum exchange ratio of CORE
Cap common stock for Anthracite common stock in the merger. This pro forma
exchange ratio is based on the net asset values of CORE Cap and Anthracite
as of February 8, 2000, the date the merger was announced, assumes the
issuance of special dividends, and does not necessarily represent the
actual exchange ratio, which will be calculated around the time of the CORE
Cap stockholders' vote on the merger.

AS OF AND FOR THE YEAR
ENDED
DECEMBER 31, 1999
----------------------
(IN DOLLARS)
HISTORICAL:
Per share of Anthracite common stock:
Book value....................................... $8.03
Cash dividends................................... 1.16
Net income per share:
Basic.......................................... 1.27
Diluted........................................ 1.26
Per share of CORE Cap common stock:
Book value....................................... 17.96
Cash dividends................................... 3.72
Net earnings:
Basic.......................................... 3.32
Diluted........................................ 2.72
PRO FORMA:
Per share of Anthracite common stock:
Book value....................................... $7.79
Cash dividends................................... 1.50
Net income per share:
Basic.......................................... 1.66
Diluted........................................ 1.66
Per equivalent share of CORE Cap common stock:
Book value....................................... 10.00
Cash dividends................................... 1.93
Net income per share:
Basic.......................................... $2.13
Diluted........................................ $2.10

RISK FACTORS

By voting in favor of the merger, you will be choosing to invest in
Anthracite stock. An investment in Anthracite stock involves a degree of
risk. In addition to the other information contained in or incorporated by
reference into this proxy statement/prospectus, you should carefully
consider the following risk factors in deciding whether to vote for the
merger.

RISK FACTORS RELATING TO THE MERGER BETWEEN ANTHRACITE AND CORE CAP

FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT CORE CAP'S FUTURE
BUSINESS AND OPERATIONS.

If the merger is not completed, CORE Cap may be subject to a number
of material risks, including either one but not both of the following:

o if CORE Cap terminates the merger agreement to pursue an
alternative transaction, CORE Cap may be required to pay
Anthracite a break-up fee of $2 million;

o if CORE Cap stockholders fail to approve the merger, CORE Cap
must pay Anthracite's costs related to the merger, such as
legal and accounting fees, up to $400,000, as well as its own
costs.

Further, if the merger is terminated and CORE Cap's board of
directors determines to seek another merger or business combination, there
is a risk that CORE Cap will not be able to find a partner willing to pay
an equivalent or more attractive price than that which Anthracite has
agreed to pay. In addition, while the merger agreement is in effect,
subject to limited exceptions described in the section titled "THE MERGER
AGREEMENT -- No Solicitation" CORE Cap may not solicit, initiate or
knowingly encourage or enter into extraordinary transactions such as a
merger, sale of assets or other business combination with any party other
than Anthracite.

AT THE TIME THEY VOTE, STOCKHOLDERS WILL NOT KNOW THE VALUE OF THE
CONSIDERATION THEY WOULD RECEIVE IN THE MERGER.

The number of shares of Anthracite common stock to be issued in the
merger for each share of CORE Cap common stock will be based on the net
asset values of the respective companies around the time of closing and
will not have been fixed at the time of the meeting. In addition, the
trading price of Anthracite common stock varies, and the exchange ratio can
be adjusted if the price of Anthracite common stock decreases below $6.00.
If the average closing sales price of Anthracite common stock on the ten
consecutive New York Stock Exchange trading days ending three trading days
before the closing date is below $6.00, at the option of CORE Cap the
exchange ratio will be multiplied by a fraction the numerator of which is
$6.00 and the denominator of which is that average. Accordingly,
stockholders may have difficulty valuing the consideration to be received
in the merger.

THE ANTHRACITE PREFERRED STOCK TO BE ISSUED IN THE MERGER WILL NOT BECOME
CONVERTIBLE UNLESS CONVERSION IS APPROVED AFTER THE MERGER BY ANTHRACITE'S
STOCKHOLDERS.

Under rules of The New York Stock Exchange, Anthracite cannot list
shares of its common stock in a transaction involving the issuance of more
than 19.9% of the number of shares outstanding without stockholder
approval. As a result of this restriction, the Anthracite preferred stock
issuable in the merger in exchange for CORE Cap's preferred stock will not
be convertible into Anthracite common stock until this approval is
obtained. The parties expect that the conversion privilege of the preferred
stock to be issued in the merger will be substantially out of the money at
the time of the merger. Anthracite has agreed to use its reasonable best
efforts to have the shares of common stock that are issuable upon
conversion listed, and the dividend rate on the new preferred stock will
increase if Anthracite does not fulfill its obligation to list the shares.

AFTER THE MERGER, GMAC MANAGEMENT WILL NO LONGER MANAGE CORE CAP'S
OPERATIONS.

At present GMAC Management, under its management agreement with CORE
Cap, manages CORE Cap's operations. CORE Cap believes it has benefitted
from its association with GMAC. On consummation of the merger, CORE Cap has
the right to terminate the management agreement with GMAC Management. If
GMAC Management does not manage the combined company, the benefits of CORE
Cap's association with GMAC would correspondingly diminish.

MORTGAGE PURCHASE AND SERVICING AGREEMENTS WITH GMAC COMMERCIAL
WILL TERMINATE

Currently residential mortgage loans are acquired from GMAC Mortgage
under the residential mortgage purchase and servicing agreement, and
commercial loans are purchased from GMAC Commercial under the commercial
purchase and servicing agreement. After the completion of the merger, only
the residential mortgage purchase and servicing agreement with GMAC
Mortgage will remain in effect.

RISK FACTORS RELATING TO ANTHRACITE'S BUSINESS

Although Anthracite's operation as a REIT exposes its stockholders to
types of investment risks that are similar to those to which CORE Cap's
stockholders are subject, some of the risks associated with an investment
in Anthracite may differ in type or degree from those of CORE Cap.
Prospective investors in Anthracite common stock should review the
description of risks presented below.

o Anthracite invests a greater portion of its assets than CORE
Cap in commercial assets which are generally deemed of higher
risk.

o Anthracite's amended and restated articles of incorporation do
not expressly limit borrowings. Anthracite leverages its
investments and thereby increases the volatility of its income
and net asset value which may result in operating or capital
losses. If borrowing costs increase, or if the cash flow
generated by Anthracite's assets decreases, Anthracite's use of
leverage will increase the likelihood that Anthracite will
experience reduced or negative cash flow and reduced liquidity.

o Anthracite and BlackRock have common officers and directors,
which may present conflicts of interest in Anthracite's
dealings with BlackRock and its affiliates, including
Anthracite's purchase of assets originated by affiliates. For
example, Anthracite may purchase certain mortgage assets from
PNC Bank, which owns 70% of the outstanding capital stock of
BlackRock. PNC Bank will be able to influence the investment
decisions of Anthracite.

o Anthracite acquires mortgage loans and non-investment grade
mortgage backed securities, which are subject to greater risk
of credit loss on principal and non-payment of interest in
contrast to investments in senior investment grade securities.

o Assets purchased by Anthracite from PNC Bank and its affiliates
in some cases do not have a readily determinable fair market
value.

o The yield on investments in mortgage loans and mortgage-backed
securities and thus the value of Anthracite's common stock is
sensitive to changes in prevailing interest rates and changes
in prepayment rates, which results in a divergence between
Anthracite's borrowing rates and asset yields, consequently
reducing income derived from Anthracite's investments.

o Unlike CORE Cap, Anthracite invests in mortgage loans secured
by real property located outside the United States, which
exposes Anthracite to currency conversion risks and the
uncertainty of foreign laws.

o Delinquency and loss ratios on Anthracite's mortgage loans are
affected by the performance of third-party servicers and
special servicers.

o Anthracite uses hedging strategies that involve risk and that
may not be successful in insulating Anthracite from exposure to
changing interest and prepayment rates.

o Anthracite's investment and operating policies and the
strategies that BlackRock uses to implement those policies may
be changed at any time without the consent of stockholders.

o The management agreement between Anthracite and BlackRock
provides for base management fees payable to BlackRock without
consideration of the performance of Anthracite's portfolio and
also provides for incentive fees based on certain performance
criteria, which could result in BlackRock recommending riskier
or more speculative investments.

o Termination of the management agreement between Anthracite and
BlackRock by Anthracite would result in the payment of a
substantial termination fee, which could adversely affect
Anthracite's financial condition. Termination of the management
agreement by Anthracite could adversely affect Anthracite if
Anthracite were unable to find a suitable replacement.

o Stockholders will be subject to significant potential dilution
from future equity offerings, including offerings of preferred
stock and conversions of preferred stock or exercises of
options or warrants which may have an adverse effect on the
market price of the common stock.

o Failure to maintain an exemption from the Investment Company
Act of 1940 would adversely affect Anthracite's ability to
operate.

o BlackRock manages funds that are authorized to invest in
certain of the assets in which Anthracite may invest. There may
be investment opportunities that are favorable to each of
Anthracite and certain other funds managed by BlackRock. In
that case, BlackRock will allocate investment opportunities
among the potential investors based upon the investors' primary
investment objectives, applicable investment restrictions, and
other factors that BlackRock deems appropriate and fair under
the circumstances.

o BlackRock is not prohibited from managing or advising REITs or
other entities that may compete with Anthracite for assets,
including entities that may have investment objectives similar
to those of Anthracite.

RISK FACTORS RELATING TO THE COMBINED COMPANY

IF THE COMBINED COMPANY WERE TO LOSE ITS TAX STATUS AS A REIT IT WOULD HAVE
SIGNIFICANT ADVERSE CONSEQUENCES TO THE COMBINED COMPANY AND THE VALUE OF
ITS STOCK.

If the combined company failed to qualify as a REIT, the following
would occur:

o The combined company would not be allowed a deduction for
distributions to stockholders in computing its taxable income and
would be subject to federal income tax at regular corporate rates;

o The combined company could be subject to the federal alternative
minimum tax and possibly increased state and local taxes; and

o Unless the combined company were entitled to relief under the Code,
it could not elect to be subject to tax as a REIT for four taxable
years following the year during which it was disqualified.

As a result of all these factors, the combined company's failure to
qualify as a REIT could impair the combined company's ability to expand its
business and raise capital, could substantially reduce the funds available
for distribution to its stockholders, including former CORE Cap
stockholders, and could adversely affect the value of the combined
company's capital stock following the merger.

In addition, if the combined company fails to qualify as a REIT, all
distributions to stockholders would be subject to tax as ordinary income to
the extent of the combined company's current and accumulated earnings and
profits; the combined company would not be required to make distributions
to stockholders; and corporate distributees could be eligible for the
dividends-received deduction.

Although Anthracite believes that it was organized and has operated
in such a manner as to qualify for taxation as a REIT under the Code, and
intends to continue to operate in such a manner, no assurance can be given
that the combined company will continue to be organized or be able to
operate in a manner so as to qualify or remain qualified as a REIT for tax
purposes.

As a condition to closing Skadden, Arps, Slate, Meagher & Flom LLP
(with respect to Anthracite) and Milbank, Tweed, Hadley & McCloy LLP (with
respect to CORE Cap) at closing will render opinions that, commencing with
Anthracite's taxable year ended December 31, 1998 and CORE Cap's taxable
year ending December 31, 1997, Anthracite and CORE Cap have been organized
and have operated in conformity with the requirements for qualification and
taxation as a REIT under the Code and that Anthracite's and CORE Cap's
proposed method of operation will enable them to continue to meet the
requirements for qualification and taxation as a REIT under the Code.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains or incorporates by reference
statements that, to the extent that they are not recitations of historical
fact, constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934. The words "believe," "estimate," "anticipate," "project," "intend,"
"expect" and similar expressions are intended to identify forward-looking
statements. All forward- looking statements involve risks and uncertainties
particularly with respect to pro forma data, which does not necessarily
reflect what the combined company's results of operations or financial
condition will be in the future.

You are cautioned not to place undue reliance on forward-looking
statements because they are operative only as of the date of this proxy
statement/prospectus. As for forward-looking statements that relate to
future financial results and other projections, actual results will be
different due to the inherent nature of projections and may be better or
worse than projected. The forward-looking statements represent estimates
and assumptions only as of the date they were made. In addition, the
forward-looking statements that relate to future financial results and
other projections are not financial statements and were not audited or
prepared in accordance with generally accepted accounting principles. See
Anthracite's Form 10-K filed with the SEC on March 29, 2000, including the
section in the Form 10-K titled, "Quantitative and Qualitative Disclosures
About Market Risk," which is incorporated by reference in this proxy
statement/prospectus for a discussion of factors that may cause actual
results to vary from this financial outlook. Anthracite does not undertake
any obligation to publicly release any revisions to forward-looking
statements to reflect events, circumstances or changes in expectations
after the date of this proxy statement/prospectus, or to reflect the
occurrence of unanticipated events. Anthracite intends that forward-looking
statements in this document, and documents incorporated by reference, be
subject to the safe harbor protection provided by Sections 27A of the
Securities Act and 21E of the Exchange Act. For a discussion identifying
additional important factors that could cause actual results to vary
materially from those anticipated in any forward-looking statements, you
should read Anthracite's SEC filings.

THE CORE CAP MEETING

This proxy statement/prospectus is being provided in connection with
the solicitation of proxies from you by the CORE Cap board of directors for
use at the special meeting.

WHEN AND WHERE THE MEETING WILL BE HELD

The special meeting will be held at 10:00 a.m., local time, on
May 10, 2000, at One Chase Manhattan Plaza, 48th Floor, New York, New York
10005.

WHAT WILL BE VOTED UPON

At the special meeting, you will be asked to consider and vote upon a
proposal to approve the merger, in which CORE Cap will become a
wholly-owned subsidiary of Anthracite.

ONLY STOCKHOLDERS OF RECORD AS OF THE RECORD DATE ARE ENTITLED TO VOTE

The CORE Cap board of directors has fixed the close of business on
April 10, 2000 as the record date. Only CORE Cap common stockholders of
record on the record date are entitled to notice of and to vote at the
special meeting. On the record date, there were outstanding 3,237,158
shares of class A common stock, held of record by approximately 29 persons,
and 20,500 shares of class B common stock held of record by approximately
111 persons.

VOTES REQUIRED FOR APPROVAL

The merger must be approved by the affirmative vote, in person or by
proxy, of the holders of a majority of the shares of CORE Cap common stock
outstanding on the record date and entitled to vote at the special meeting.
GMAC Mortgage and GMAC Commercial which together hold 39.3% of CORE Cap
common stock, have agreed to vote in favor of the merger.

You are entitled to one vote per common share that you own.

If fewer shares of CORE Cap common stock are voted in favor of the
merger proposal than the number required for approval, the special meeting
may be postponed or adjourned to give additional time to solicit and obtain
additional proxies or votes. At any subsequent reconvening of the special
meeting, the proxy holders will vote all proxies in the same manner as we
would have voted the proxies at the special meeting, except for any proxies
that have effectively been revoked or withdrawn.

VOTING YOUR SHARES AND HOW PROXIES ARE COUNTED

You must submit a proxy card to have your vote counted at the
meeting. A proxy card is enclosed for that purpose.

The proxy holders will vote all shares of CORE Cap common stock
represented by properly executed proxies received before or at the special
meeting and not revoked as instructed on the proxies. If no instructions
are indicated on a properly executed and returned proxy, the proxy holders
will vote the proxy in favor of the merger proposal.

A properly executed proxy marked "Abstain," although counted for
purposes of determining a quorum, will not be voted in favor of or against
any proposal. However, because the affirmative vote of a majority of the
shares of CORE Cap common stock outstanding is required for approval of the
merger proposal, a proxy marked "Abstain" will have the effect of a vote
against the merger proposal.

REVOKING YOUR PROXY

You may revoke your proxy at any time before you use it:

o by delivering to CORE Cap a signed notice of revocation,

o by a later dated vote by proxy, signed and returned, or

o by attending the special meeting and voting in person.

Your attendance at the special meeting will not in itself constitute
the revocation of a proxy.

SOLICITING PROXIES

In addition to solicitation by mail, directors, officers and
employees of CORE Cap may solicit proxies in person without additional
compensation. CORE Cap may also request by telephone or telegram the return
of proxies. The extent to which this will be necessary depends entirely
upon how promptly proxies are returned. Anthracite will pay the cost of SEC
registration fees related to the Anthracite common stock to be issued in
the merger. The costs of printing and mailing this proxy
statement/prospectus and soliciting proxies will be paid by Anthracite.

YOU SHOULD NOT SEND ANY CERTIFICATES REPRESENTING CORE CAP COMMON
STOCK WITH THE ENCLOSED PROXY CARD. A letter of transmittal with
instructions for the surrender of stock certificates for CORE Cap common
stock will be mailed to you as soon as practicable after the completion of
the merger.

THE MERGER

This section of the proxy statement/prospectus describes the material
aspects of the proposed merger and some of the material terms of the merger
agreement. You should read the merger agreement which is attached as
Appendix I to this proxy statement/prospectus and is incorporated by
reference.

STRUCTURE

CORE Cap will merge with a subsidiary of Anthracite and become a
wholly-owned subsidiary of Anthracite. Following consummation of the
merger, you will become a stockholder of Anthracite. In the merger, you
will receive an amount of Anthracite common stock for each share of CORE
Cap common stock equal to the exchange ratio, the terms of which are
described under the sub-heading "Calculation of the Exchange Ratio" below.
Holders of a share of 10% cumulative convertible series A preferred stock
of CORE Cap, which is referred to in this proxy statement/prospectus as the
CORE Cap preferred stock, will receive one share of Anthracite 10%
cumulative convertible series B preferred stock, which is referred to in
this proxy statement/prospectus as the series B preferred stock. The series
B preferred stock has the terms and designations specified in the form of
articles supplementary that is attached as Exhibit A to the merger
agreement. The articles supplementary provide that the conversion price of
the series B preferred stock will be $21.93 divided by the exchange ratio
for shares of common stock in the merger.

Upon satisfaction or waiver by both Anthracite and CORE Cap of the
conditions set forth in the merger agreement, the merger will be
consummated on the third business day following the stockholder meeting,
which is referred to as the closing date. By virtue of the merger, all
shares of CORE Cap's common stock as well as all shares of CORE Cap's
preferred stock that CORE Cap owns as treasury stock will be canceled and
retired and will cease to exist.

Calculation of the Exchange Ratio

Each issued and outstanding share of CORE Cap common stock will be
converted into the right to receive a number of shares of Anthracite common
stock determined by the exchange ratio. The number of shares of Anthracite
common stock exchanged for each share of CORE Cap common stock will not
exceed 1.2833 shares. If the exchange ratio would require that Anthracite
issue more than 1.2833 shares, CORE Cap will reduce its net asset value by
distributing a cash dividend to its stockholders in an amount such that the
exchange ratio will not exceed 1.2833. The exchange ratio is calculated to
equal the product of 1.05 and the net asset value per share of CORE Cap
common stock divided by the net asset value per share of Anthracite common
stock. The mechanism by which the net asset values of shares of Anthracite
and CORE Cap common stock are determined is fully described in the merger
agreement and Schedule I attached thereto; we encourage you to read the
merger agreement closely. In summary, the net asset values of a share of
Anthracite and CORE Cap common stock are intended to be equivalent to the
applicable companies' stockholder book values as utilized in determining
the amount of cash that stockholders of the applicable company would
receive in an orderly liquidation of assets. Accordingly, net asset values
are calculated as a function of the market value of the assets of the
applicable company less liabilities and net of the value of hedging
instruments used to minimize the risk on the applicable company's
investments.

Additionally, if the mean average sales price of a whole share of
Anthracite common stock on the ten consecutive trading days ending three
days before the closing date is below $6.00 per share, CORE Cap, at its
option, may adjust the exchange ratio by multiplying it by a fraction, the
numerator of which is the benchmark price of $6.00 and the denominator of
which is the mean average sales price. If CORE Cap elects to have this
adjustment made, Anthracite may terminate the merger agreement.

BACKGROUND OF THE MERGER

In May 1999, in response to stockholder requests to increase the
liquidity of their investment, CORE Cap conducted a share repurchase
program through which it reduced by approximately 33% of its equity
capital. Funding this program required the sale of approximately $835
million of portfolio assets. This program satisfied the short-term goal of
increased liquidity but depleted CORE Cap's equity capital reserve.

On July 1, 1999, CORE Cap began to explore strategic alternatives. At
that time, CORE Cap engaged PaineWebber to act as financial advisor. In
August 1999, PaineWebber presented to the board a list of potential merger
candidates. Following this meeting, on CORE Cap's behalf, PaineWebber
contacted a selected list of ten publicly traded REITs deemed to be
potential merger partners, eight of which requested and received materials
to review.

In September 1999, CORE Cap received preliminary merger proposals
from the potential merger partners. In early October 1999, the board
narrowed this list to five potential partners. From October 4, 1999, to
October 8, 1999, each of the identified potential partners conducted formal
due diligence either through a visit to CORE Cap in Horsham, Pennsylvania,
or through a conference call with management. On October 12, 1999, CORE Cap
received non-binding offers from each of these potential merger partners.

On October 15, 1999, the board and PaineWebber reviewed the five
non-binding offers from the potential merger partners. The non-binding
offers submitted covered such issues as the amount and form of
consideration, proposed business strategy, the GMAC Mortgage mortgage
purchase and servicing relationship, the GMAC Management management
agreement and governance issues. Following this meeting, the board narrowed
the list to three potential merger partners and decided to enter into
negotiations with these parties. From October 16, 1999, through November
11, 1999, CORE Cap, through GMAC Management and PaineWebber, provided
additional materials to and conducted numerous telephone meetings with each
of the three potential merger partners.

On November 12, 1999, following meetings with each of the three
potential merger partners at PaineWebber's offices in New York City, the
board decided to enter into exclusive negotiations with Anthracite.
Throughout the remainder of November and December, both CORE Cap and
Anthracite conducted extensive due diligence on each others' operations,
including site visits and numerous telephone meetings. On December 21,
1999, CORE Cap and PaineWebber conducted formal due diligence at
Anthracite's headquarters in New York City. Topics of negotiation with
Anthracite included such matters as the method of computing the companies'
respective net asset values for exchange ratio purposes, the treatment of
outstanding stock options, the effect of Anthracite's common stock price
dropping below the benchmark level, arrangements in respect of the
termination of the GMAC Management management agreement, the effect of
failure to obtain consents from CORE Cap lenders and termination and
expense reimbursement provisions in the merger agreement.

On January 13, 2000, the board reviewed its duties with counsel and
considered a draft merger agreement and related documents, including
documents relating to termination of the GMAC Management management
agreement. PaineWebber also presented a detailed financial analysis of the
proposed transaction later used to support its fairness opinion, presented
on February 6, 2000 to the CORE Cap board of directors.

On February 6, 2000, the board convened to review the proposed
definitive agreement and related documents. The board reviewed its duties
with counsel and considered various aspects of the merger agreement.
Representatives from PaineWebber reviewed the proposed transaction from a
financial point of view, and delivered its oral opinion (which was
confirmed by a written opinion) stating that, subject to the various
factors set forth in the opinion letter (see Appendix III attached at the
back of this proxy statement/prospectus), the exchange ratio provided in
the merger agreement was fair from a financial point of view to the CORE
Cap stockholders. After deliberating with respect to the merger agreement
and related transactions, the board, absent the participation of the
director designated by GMAC Management yet with a GMAC Management officer
in attendance as an observer, approved the merger agreement and the related
transactions. On February 8, 2000, CORE Cap and Anthracite signed the
definitive agreement and related documents.

RECOMMENDATIONS OF THE CORE CAP BOARD OF DIRECTORS; REASONS FOR THE MERGER

The board of directors by unanimous vote of all directors
participating recommends that you vote for the merger. In the board's view,
the merger offers a number of benefits to CORE Cap's stockholders, most
significantly:

o The merger will provide CORE Cap's stockholders with an
ownership interest in a large mortgage REIT. Anthracite is one
of the largest publicly traded mortgage REITs, with an equity
capital base of approximately $168 million and a market
capitalization of approximately $140 million as of December 31,
1999. On a pro forma basis, the combined companies would have
approximately $250 million of capital.

o The merger will provide CORE Cap common stockholders a security
that is publicly traded on The New York Stock Exchange with
approximately 25 million pro forma shares of capital stock
outstanding.

o The merger will provide CORE Cap's stockholders greater
financial support for their shares of preferred stock. The
shares of Anthracite preferred stock to be exchanged for CORE
Cap preferred stock in the merger will be supported by a
greater common equity base. While the existing shares of CORE
Cap preferred stock represent approximately 64% of CORE Cap's
total marked-to-market equity as of November 30, 1999, total
preferred equity in the combined company will represent only
30% of total pro forma marked-to-market equity.

o CORE Cap's common stockholders will receive shares of
Anthracite common stock based upon a calculation which places a
premium on CORE Cap's net asset value over Anthracite's net
asset value. This premium will also be reflected in the new
preferred stock conversion ratio.

o CORE Cap has obtained for $2.15 million the right to require
GMAC Management to assign its management agreement with CORE
Cap to BlackRock. Under the terms of this assignment, BlackRock
would pay GMAC Management $12.5 million in installments over
ten years. The combined company's assets would be managed by
BlackRock under its existing agreement with Anthracite.
Consequently, over 85% of the fees and expenses associated with
cancellation of the management agreement between CORE Cap and
GMAC Management would be avoided by CORE Cap stockholders.

o CORE Cap's common stockholders' interests will be represented
in the combined company, since Anthracite has agreed to name to
its board one of CORE Cap's current independent directors along
with a GMAC Management designee. In addition, GMAC Mortgage
will retain a significant equity stake in the combined company.

o The combined CORE Cap and Anthracite entity would have strong
corporate sponsorships through affiliations with GMAC Mortgage,
BlackRock and PNC Bank. In addition, Anthracite has strong
relationships with large funding sources to assist in the
continued growth of the combined company following the merger.

o The merger is structured as a taxable stock-for-stock
transaction. As a result, CORE Cap's stockholders will be able
to recognize a capital loss and related tax benefits, if
applicable.

In reviewing the Anthracite proposal, the board also focused on other
considerations, including PaineWebber's fairness opinion, the business and
prospects of the two companies, the historical performance of Anthracite's
stock and the proposed treatment of the GMAC Management management
contract.

The board also considered a number of possible drawbacks of the
transaction, including the following:

o the pro forma earnings per equivalent share of the combined
company would be below those of CORE Cap,

o the value of the consideration to be received by CORE Cap
stockholders in the merger, based on estimated exchange ratios
and the trading price of Anthracite stock at the time the
consideration is to be exchanged, would be below the average
price received by CORE Cap stockholders who participated in
CORE Cap's share repurchase program in 1999, and

o CORE Cap has obtained the right to require GMAC Management to
assign its management contract with CORE Cap to BlackRock. If,
as expected, CORE Cap exercises the right, GMAC Management will
have no management role with the combined company.

Nonetheless, the board concluded that these considerations were mitigated
by the benefits of the merger. Accordingly, the board concluded that the
merger was in the best interests of the stockholders of CORE Cap.

The board also considered a number of alternative strategies for CORE
Cap, including liquidation, an initial public offering and remaining
independent. However, in the event of a liquidation GMAC Management
indicated that it would demand the full termination fee required under its
management contract, making this alternative financially burdensome. The
board was advised by its financial advisor that an initial public offering
was not a viable option given prevailing market conditions, and that it was
not possible to predict when such an offering would be feasible. The board
also determined that, as a private company operating independently, CORE
Cap could have difficulty obtaining sufficient capital to pursue its
objectives, particularly following the retirement of capital under the
stock repurchase program. Accordingly, the board concluded that the merger
was the superior alternative.

OPINION OF CORE CAP'S FINANCIAL ADVISOR

The full text of the PaineWebber opinion, dated February 8, 2000,
which sets forth the assumptions made, procedures followed, matters
considered and limitations on the review undertaken, is attached as
Appendix III to this proxy statement/prospectus. This summary of the
PaineWebber opinion is qualified in its entirety by reference to the full
text of the PaineWebber opinion. The PaineWebber opinion does not
constitute a recommendation to any shareholder as to how to vote on the
merger.

Pursuant to an engagement letter dated July 1, 1999, CORE Cap
retained PaineWebber to act as financial advisor to CORE Cap. In connection
with PaineWebber's engagement, CORE Cap requested PaineWebber to render an
opinion as to whether the exchange ratio in the merger is fair from a
financial point of view to CORE Cap stockholders. At a meeting of CORE
Cap's board on January 13, 2000, PaineWebber reviewed various valuation
analyses with the board and delivered its oral opinion on February 6, 2000,
confirmed by a written opinion dated February 8, 2000. Based upon and
subject to the assumptions and limitations described in the opinion,
PaineWebber opined that the exchange ratio as provided for in the merger
agreement was fair to CORE Cap stockholders from a financial point of view.
Holders of CORE Cap are urged to read the opinion in its entirety for a
description of factors considered and assumptions made by PaineWebber in
rendering the opinion.

The opinion does not address the relative merits of the merger and
any other transactions or business strategies discussed by the board as
alternatives to the merger or the decision of the board to proceed with the
merger. No opinion is expressed as to the price of the securities to be
issued in the merger. In rendering the opinion, PaineWebber was not engaged
to act as agent or fiduciary of, and the CORE Cap board of directors has
expressly waived any duties or liabilities that PaineWebber may otherwise
be deemed to have had to CORE Cap's stockholders or any other third party.
CORE Cap did not place any limitations upon PaineWebber with respect to the
procedures followed or factors considered in rendering the PaineWebber
opinion.

In arriving at the opinion, PaineWebber, among other things:

o reviewed CORE Cap's 1998 annual report and 1999 monthly reports
through November 1999,

o reviewed Anthracite's annual report, Form 10-K and related
financial information for the fiscal year ended December 31,
1998 and Anthracite's Form 10-Q and the related unaudited
financial information for the nine months ended September 30,
1999,

o reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets and
prospects of CORE Cap and Anthracite, furnished to PaineWebber
by CORE Cap and Anthracite,

o conducted discussions with members of senior management of CORE
Cap and Anthracite concerning their respective businesses and
prospects,

o reviewed the historical market prices and trading activity for
Anthracite shares and compared them with those of certain
publicly traded companies which PaineWebber deemed relevant,

o compared the financial position and results of operations of
CORE Cap and Anthracite with those of certain companies which
PaineWebber deemed relevant,

o compared the financial terms of the proposed transaction
contemplated by the merger agreement with the financial terms
of certain other mergers and acquisitions which PaineWebber
deemed relevant,

o reviewed a draft of the merger agreement dated February 4,
2000,

o reviewed the terms and conditions of the management agreement
assignment agreement with GMAC Management and BlackRock, and

o reviewed other financial studies and analyses and performed
other investigations and took into account other matters as it
deemed necessary. PaineWebber did not, however, review the loan
files of either CORE Cap or Anthracite.

In preparing the PaineWebber opinion, PaineWebber relied on the
accuracy and completeness of all information supplied or otherwise made
available to it by CORE Cap and Anthracite, and PaineWebber did not assume
any responsibility to independently verify such information. With respect
to the financial forecasts examined by PaineWebber, PaineWebber assumed
that they were reasonably prepared and reflect the best currently available
estimates and good faith judgments of the management of CORE Cap and
Anthracite, respectively, as to the future performance of CORE Cap and
Anthracite. PaineWebber also relied upon assurances of the management of
CORE Cap and Anthracite that they are unaware of any facts that would make
the information or financial forecasts provided to PaineWebber incomplete
or misleading. PaineWebber did not make any independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of CORE
Cap or Anthracite. PaineWebber also assumed with CORE Cap's consent that

o the merger will be accounted for under the purchase method of
accounting,

o the merger will not be a tax-free reorganization and

o any material liabilities (contingent or otherwise) of CORE Cap
and Anthracite are as set forth in the consolidated financial
statements of CORE Cap and Anthracite, respectively.

The opinions of PaineWebber are necessarily based upon market,
economic, and other conditions as they existed on, and could be evaluated
as of, their dates. PaineWebber's opinions are directed only to the board
of CORE Cap and do not constitute a recommendation to any holder of CORE
Cap or Anthracite common stock as to how such stockholder should vote on
the merger.

The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analysis and
the application of those methods to the particular circumstances and,
therefore, such an opinion is not readily susceptible to summary
description. Furthermore, in arriving at its fairness opinions, PaineWebber
did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Accordingly,
PaineWebber believes that its analyses must be considered as a whole and
that considering any portions of such analyses and of the factors
considered, without considering all analyses and factors together, could
create a misleading or incomplete view of the process underlying its
fairness opinion. In its analyses, PaineWebber made numerous assumptions
with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of CORE
Cap and Anthracite. Any estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
in the analyses. Accordingly, these estimates are inherently subject to
substantial uncertainty and neither CORE Cap, Anthracite nor PaineWebber
assume responsibility for the accuracy of these estimates. In addition,
analyses relating to the value of businesses do not purport to be
appraisals or to reflect the prices at which businesses actually may be
sold.

The following paragraphs summarize certain of the financial
comparative analyses performed by PaineWebber in arriving at its opinion
dated February 8, 2000, as to the fairness, from a financial point of view,
of the exchange ratio in the merger. The following does not purport to be a
complete description of the analyses performed, or the matters considered,
by PaineWebber in arriving at its opinions.

Liquidation Analysis: PaineWebber performed an analysis to calculate
a range of values per share assuming CORE Cap were to undertake an orderly
liquidation of its portfolio. The liquidation analysis was characterized by
PaineWebber as its primary valuation method. The range was calculated by
using market values of each asset class estimated by management as of
November 30, 1999, and then adjusting the values to consider varying
liquidation-specific adjustments that included: termination of the GMAC
Management management agreement (estimated at $25 million) and costs
associated with a liquidation including legal and banking fees. Applying
this process, PaineWebber calculated the liquidation value per share of
CORE Cap common stock to range between $1.78 per share (reflecting these
adjustments) and $10.07 per share.

Trading Comparables Analysis: Using publicly available information,
PaineWebber compared certain ratios of financial performance to stock
market capitalization as of January 7, 2000, with the following selected
mortgage REITs deemed relevant by PaineWebber: American Residential
Investment Trust, Inc., America First Mortgage Investments, Inc., AMRESCO
Capital Trust, Annaly Mortgage Management, Inc., Anthracite, Apex Mortgage
Capital, Inc., Capstead Mortgage Corporation, Clarion Commercial Holdings,
Inc., Dynex Capital, Inc., Hanover Capital Mortgage Holdings, Inc., Laser
Mortgage Management, Inc., Novastar Financial, Inc., Redwood Trust, Inc.,
Resource Asset Investment Trust, Thornburg Mortgage Asset Corporation and
Wilshire Real Estate Investment Trust, Inc., all of which together are
referred to in this proxy statement/prospectus as the Comparable Companies.
The comparisons focused primarily on market capitalization to book value
ratios with a range of 60% to 70% for the Comparable Companies. Applying
this range for the comparable group, PaineWebber calculated the value per
share of CORE Cap common stock to range from $6.04 to $7.05 per share.

PaineWebber also applied a control premium, based upon acquisitions
of U.S. real estate finance companies, mortgage banks and brokers of up to
$500 million in deal value since January 1, 1992, as reported by Securities
Data Corporation. Based on this data, PaineWebber applied a 25% control
premium to the aforementioned CORE Cap common stock values and calculated
the value per share of CORE Cap common stock to range from $7.55 to $8.81.

The market capitalization ratios for the Comparable Companies were
based on trading prices as of January 7, 2000 and balance sheet data dated
as of September 30, 1999. In connection with this analysis, all CORE Cap
balance sheet data was dated as of November 30, 1999, and book value
calculations were adjusted to reflect estimated portfolio markdowns.

Transaction Comparables Analysis: Using publicly available
information, PaineWebber compared certain ratios of financial performance
to purchase prices paid to acquire companies deemed to be comparable in the
following selected transactions deemed relevant by PaineWebber: the
announced purchase on July 22, 1999 of Imperial Credit Commercial Mortgage
Investment Corp. by Imperial Credit Industries, Inc. and the announced
purchase on July 26, 1999 of Ocwen Asset Investment Corp. by Ocwen
Financial Corporation. The comparisons focused primarily on purchase price
to book value ratios with a range of 50% to 80% for the comparable
transactions. Applying this range for the comparable transactions,
PaineWebber calculated the value per share of CORE Cap common stock to
range from $5.03 per share to $8.05 per share.

Discounted Cash Flow Analysis: PaineWebber performed an analysis to
calculate a range of present values of cash flows per share for CORE Cap
common stock assuming CORE Cap continued to operate on a stand-alone basis
under four different earnings and leverage scenarios. The scenarios
consisted of the following:

o The first scenario assumed CORE Cap continued to operate at existing
leverage levels without taking into consideration any trading gains
from the sale of residential securities and the hedging instruments
linked to those positions.

o The second scenario assumed CORE Cap continued to operate at existing
leverage levels but included trading gains from the sale of
residential securities and the hedges of those positions.

o The third scenario assumed CORE Cap operated at reduced leverage
levels in line with publicly traded comparable companies without
taking into consideration any trading gains from the sale of
residential securities and the hedges of those positions.

o The fourth scenario assumed CORE Cap operated at reduced leverage
levels but included trading gains from the sale of residential
securities and the hedges of those positions.

PaineWebber believes acquirers would give less weight to trading
gains because they are less likely to recur. The range of values was
calculated by adding, for each of the annual periods from 2000 through
2004, the present value of the estimated cumulative common stock earnings
per share through the end of each annual period and a terminal value for
each scenario. In all scenarios, PaineWebber assumed discount rates ranging
from 10.8% to 16.8% and terminal value multiples ranging from 60% to 70% of
book value. Terminal value multiples were derived from comparable publicly
traded mortgage REITs as of January 7, 2000. The group of comparable
mortgage REITs which PaineWebber deemed relevant consisted of the
Comparable Companies. Applying these discount rates and terminal values,
PaineWebber calculated a per share value of CORE Cap common stock ranging
from $8.37 to $14.62 per share.

Preferred Analysis: PaineWebber also analyzed the series B preferred
stock to be issued in the merger in exchange for the CORE Cap preferred
stock from the standpoint of its credit and financial support and in terms
of the 0.50% annual increase in dividend rate if Anthracite's stockholders
do not approve the adoption of a conversion feature for the new series B
preferred stock (see "DESCRIPTION OF ANTHRACITE PREFERRED STOCK--Conversion
Rights"). PaineWebber noted that the total amount of Anthracite preferred
stock will represent a lesser portion of Anthracite's total equity capital
than the CORE Cap preferred stock represents as a portion of CORE Cap's
total equity capital. PaineWebber also noted that, since the series B
preferred stock's conversion feature will be far "out of the money" at the
time of the merger, the value of the feature if it is never restored by
stockholder vote is less than the value of the compensatory increase in the
dividend rate.

PaineWebber has acted as financial advisor to CORE Cap in connection
with the merger. As compensation for its services, CORE Cap has agreed to
pay PaineWebber in accordance with its July 1, 1999 engagement letter

o a non-refundable retainer fee of $75,000,

o $100,000 upon the signing of the fairness opinion letter, and

o a transaction fee based on the final transaction value in the event
of a purchase,

which fee would be approximately $1.0 million if calculated as of February
6, 2000, based on a share price of $6.625 (the closing price per share of
Anthracite common stock reported on The New York Stock Exchange on February
4, 2000), and net asset values of $9.65 and $7.89 as of December 31, 1999
for CORE Cap and Anthracite, respectively.

CORE Cap has paid PaineWebber $75,000 to date. All fees paid to
PaineWebber prior to closing the transaction will be deducted in whole from
the transaction fee. In addition, CORE Cap has agreed to reimburse
PaineWebber for all out-of-pocket expenses incurred in connection with the
merger and to indemnify PaineWebber, its affiliates and each of the
directors, officers and employees and each person, if any, controlling
PaineWebber or any of its affiliates against certain liabilities, including
liabilities that may arise under federal securities laws.

PaineWebber is an internationally recognized investment banking firm
and, as part of its investment banking activities, PaineWebber is regularly
engaged in the valuation of businesses and their securities in connection
with mergers and acquisitions, negotiated underwritings, competitive bids,
secondary distributions of listed and unlisted securities, private
placements, and valuations for corporate and other purposes. CORE Cap's
board selected PaineWebber because of its expertise, its reputation, and
its familiarity with CORE Cap and the mortgage REIT industry in general.

In the past, PaineWebber and its affiliates have provided various
financial services to CORE Cap, specifically in connection with its share
repurchase program, and it received a fee for rendering these services. In
the ordinary course of business, PaineWebber may trade in the securities of
Anthracite for its own account and for the accounts of others and,
accordingly, may at any time hold a long or short position in such
securities.

INTERESTS OF GMAC AND CERTAIN DIRECTORS OF CORE CAP IN THE MERGER

GMAC and CORE Cap's directors have certain interests in the merger in
addition to those of the CORE Cap stockholders generally.

CORE Cap has agreed to pay to GMAC Management $2.15 million for the
right to require GMAC Management to assign its management agreement with
CORE Cap to BlackRock. Under the terms of this assignment, BlackRock would
pay GMAC Management $12.5 million in installments over ten years.
Anthracite has further agreed to pay BlackRock an amount equal to any of
the outstanding installment payments due to GMAC Management if the
management agreement between Anthracite and BlackRock is cancelled for any
reason. In addition, GMAC Mortgage has agreed to maintain with the combined
company CORE Cap's current residential mortgage loan purchase and servicing
agreement, while GMAC Commercial has agreed to terminate CORE Cap's current
commercial mortgage loan purchase and servicing agreement.

In addition, GMAC Management and CORE Cap's directors hold options to
purchase CORE Cap common stock. At the time of the merger the GMAC
Management options will be cancelled in consideration of a cash payment of
$150,000. The directors' options under the CORE Cap Director Stock Option
Plan will be converted into options to acquire Anthracite common stock,
with the number of shares and exercise price adjusted to reflect the common
stock exchange ratio.

Additionally, Anthracite has agreed for a period of six years after
the merger to

o indemnify CORE Cap's former directors and officers against
liability incurred in these capacities to the fullest extent
permitted by law,

o maintain in effect the indemnification provisions in CORE Cap's
existing amended and restated articles of incorporation and
bylaws, and

o obtain insurance for CORE Cap's former directors and officers.

Anthracite has agreed to cause its board of directors at the
effective time to designate Leon T. Kendall, a current director of CORE
Cap, or any other current independent director of CORE Cap, a class I
director for a term continuing until Anthracite's annual meeting of
stockholders in 2001. Anthracite has also agreed to cause its board to
designate David M. Applegate, chief operating officer and chairman of the
board of directors of GMAC Mortgage, a class II director for a term
continuing until Anthracite's annual meeting of stockholders in 2002.

RESTRICTIONS ON OWNERSHIP AND TRANSFER OF ANTHRACITE CAPITAL STOCK

Shares of Anthracite capital stock which CORE Cap stockholders
receive in the merger will be subject to various restrictions on transfer
as a result of Anthracite's qualification as a REIT. Two of the
requirements for qualification as a REIT are that

o during the last half of each taxable year for which a REIT election
is made, not more than 50% in value of the outstanding shares may be
owned directly or indirectly by five or fewer individuals, and

o there must be at least 100 stockholders on 335 days of each taxable
year of 12 months, other than the first taxable year for which a REIT
election is made.

To assist Anthracite in meeting these requirements, the amended and
restated articles of incorporation of Anthracite prohibit any person from
acquiring or holding, directly or indirectly, in excess of 9.8%, in value
or in number of shares, whichever is more restrictive, of the number of
Anthracite's outstanding shares of common stock or any series of preferred
stock. For this purpose, the term "ownership" is defined in accordance with
the REIT provisions of the Code and the constructive ownership provisions
of section 544 of the Code, as modified by section 856(h)(1)(B) of the
Code. Subject to certain limitations, Anthracite's board of directors may
modify the ownership limitations provided such action does not affect
Anthracite's qualification as a REIT. Accordingly, Anthracite's board of
directors may, from time to time, waive the 9.8% limit on beneficial
ownership of shares of Anthracite Capital Stock. Specifically, Anthracite's
board of directors intends to exempt GMAC Mortgage, GMAC Commercial and
other current holders of more than 9.8% of the CORE Cap preferred stock
from the 9.8% ownership limit in connection with the issuance of its series
B preferred stock.

For purposes of the five or fewer test, the constructive ownership
provisions applicable under section 544 of the Code require the following
actions:

o attribute ownership of securities owned by a corporation,
partnership, estate or trust proportionately to its stockholders,
partners or beneficiaries,

o attribute ownership of securities owned by certain family members to
other members of the same family, and

o treat securities with respect to which a person has an option to
purchase as actually owned by that person.

These rules will be applied in determining whether a person holds
shares of common stock or preferred stock in violation of the ownership
limitations specified in the amended and restated articles of incorporation
of Anthracite. Accordingly, under certain circumstances, shares of common
stock or preferred stock owned by a person who individually owns less than
9.8% of the shares outstanding may nevertheless be in violation of the
ownership limitations specified in the amended and restated articles of
incorporation. Ownership of shares of common stock through such attribution
is generally referred to as constructive ownership. The 100 stockholder
test is determined by actual, and not constructive, ownership.

The amended and restated articles of incorporation of Anthracite
further provide that if a transfer of shares of capital stock would

o result in any person beneficially or constructively owning shares of
capital stock in excess or in violation of the 9.8% ownership
limitations described above,

o result in Anthracite's stock being beneficially owned by fewer than
100 persons, determined without reference to any rules of
attribution, or

o result in Anthracite being "closely held" under section 856(h) of the
Code,

then that number of shares of capital stock, the beneficial or constructive
ownership of which otherwise would cause such person to violate such
limitations, rounded to the nearest whole shares, must be automatically
transferred to a trustee as trustee of a trust for the exclusive benefit of
one or more charitable beneficiaries, and the intended transferee must not
acquire any rights in the subject shares.

APPRAISAL RIGHTS

Under Section 262 of the Delaware General Corporation Law, any holder
of CORE Cap stock who does not wish to accept the consideration to be paid
under the merger agreement may elect to have the fair value of its shares
of CORE Cap stock, exclusive of any element of value arising from the
accomplishment or expectation of the merger, judicially determined and paid
in cash, together with a fair rate of interest, if any, provided that the
stockholder complies with the provisions of Section 262.

The following discussion is not a complete statement of the law
pertaining to appraisal rights under Delaware law, and is qualified in its
entirety by the full text of Section 262, which is provided in its entirety
as Appendix II to this proxy statement/prospectus. All references in
Section 262 and in this summary to a "stockholder" are to the record holder
of the shares of CORE Cap stock as to which appraisal rights are asserted.

Under Section 262, where a proposed merger is to be submitted for
approval at a meeting of stockholders, a constituent corporation must
notify each of its stockholders of record who were such as of the record
date for such meeting and for whom appraisal rights are available, not less
than 20 days prior to the meeting, that appraisal rights are available, and
must include in the notice a copy of Section 262. This proxy
statement/prospectus constitutes notice to stockholders of CORE Cap of
their appraisal rights. Any stockholder who wishes to exercise appraisal
rights or preserve the right to do so should review carefully Appendix II
to this proxy statement/prospectus. Failure to comply with the procedures
specified in Section 262 on a timely and proper basis will result in the
loss of appraisal rights. Moreover, because of the complexity of the
procedures for exercising the right to seek appraisal, CORE Cap believes
that stockholders who consider exercising such rights should seek the
advice of counsel.

Any holder of CORE Cap stock wishing to exercise the right to dissent
from the merger and demand appraisal under Section 262 of the DGCL must
satisfy each of the conditions listed below.

o The stockholder must deliver to CORE Cap a written demand for
appraisal of its shares before the vote on the merger agreement at
the CORE Cap special meeting. This written demand for appraisal must
be in addition to and separate from any proxy or vote against the
merger agreement. Merely voting against, abstaining from voting or
failing to vote in favor of adoption of the merger agreement will not
constitute a demand for appraisal within the meaning of Section 262.

o The stockholder must not vote for adoption of the merger agreement. A
failure to vote will satisfy this requirement, but a vote in favor of
the merger agreement, or the return of a signed proxy that does not
specify a vote either against adoption of the merger agreement or in
abstention, will constitute a waiver of the stockholder's right of
appraisal because the delivery of a blank proxy card will cause the
delivering stockholder's shares to be voted in favor of the proposal.
Accordingly, a stockholder who desires to perfect appraisal rights
must follow the procedural steps involved in the perfection of
appraisal rights by either refraining from executing and returning
the enclosed proxy card in favor of the merger or checking either the
"Against" or the "Abstain" boxes on the proxy card.

o The stockholder must continuously hold the shares from the date of
making the demand through the effective time of the merger.
Accordingly, a record holder of shares of CORE Cap stock on the date
the written demand for appraisal is made who thereafter transfers the
shares prior to the effective time will lose its right to appraisal.

A demand for appraisal should be executed by or on behalf of the
stockholder of record, fully and correctly, in the stockholder's name as it
appears on its stock certificates, specifying the stockholder's mailing
address, number of shares owned and the intention to demand appraisal. If
the shares are owned of record in a fiduciary capacity, for example by a
trustee, guardian or custodian, execution of the demand should be made in
that capacity, and if the shares are owned of record by more than one
person, for example in a joint tenancy or tenancy in common, the demand
should be executed by or on behalf of all owners. An authorized agent,
including one or more joint owners, may execute a demand for appraisal on
behalf of a stockholder; however, the agent must identify the record owner
or owners and expressly disclose the fact that, in executing the demand,
the agent is acting as agent for the owner or owners.

A record holder such as a broker who holds shares as nominee for
several beneficial owners may exercise appraisal rights with respect to the
shares held for one or more beneficial owners while not exercising the
rights with respect to the shares held for one or more beneficial owners;
in such case, the written demand should set forth the number of shares as
to which appraisal is sought, and where no number of shares is expressly
mentioned the demand will be presumed to cover all shares held in the name
of the record owner. Stockholders who hold their shares in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights
are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by the nominee.

A stockholder who elects to exercise appraisal rights should mail or
deliver a written demand to: CORE Cap, Inc. c/o GMAC Mortgage Asset
Management, Inc., 100 Witmer Road, P.O. Box 963, Horsham, PA 19044-0963.

Within ten days after the effective time, CORE Cap must give written
notice that the merger has become effective to each stockholder who has
complied with Section 262. Any stockholder entitled to appraisal rights
may, within 20 days after the date of mailing the notice, demand in writing
from CORE Cap the appraisal of its shares. Within 120 days after the
effective time, but not thereafter, either CORE Cap or any stockholder who
has complied with the requirements of Section 262 may file a petition in
the Delaware Court of Chancery demanding a determination of the value of
the shares of CORE Cap stock held by all dissenting stockholders. CORE Cap
does not presently intend to file a petition, and stockholders seeking to
exercise appraisal rights should not assume that CORE Cap will file a
petition or that CORE Cap will initiate any negotiations with respect to
the fair value of the shares. Accordingly, stockholders who desire to have
their shares appraised should initiate any petitions necessary for the
perfection of their appraisal rights within the time periods and in the
manner prescribed in Section 262. Since CORE Cap has no obligation to file
a petition, the failure of a stockholder to do so within the period
specified could nullify the stockholder's previous written demand for
appraisal. In any event, at any time within 60 days after the effective
time, or at any time thereafter with the written consent of CORE Cap, any
stockholder who has demanded appraisal has the right to withdraw the demand
and to accept payment of the consideration provided in the merger
agreement.

Within 120 days after the effective time, any stockholder who has
complied with the provisions of Section 262 to that point in time will be
entitled to receive from CORE Cap, upon written request, a statement
setting forth the aggregate number of shares not voted in favor of the
merger agreement and with respect to which demands for appraisal have been
received and the aggregate number of holders of such shares. CORE Cap must
mail such statement to the stockholder within 10 days of receipt of the
request.

If a petition for an appraisal is timely filed, after a hearing on
such petition, the Delaware Chancery Court will determine which
stockholders are entitled to appraisal rights and will appraise the "fair
value" of their shares, exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair
value. The costs of the action may be determined by the Delaware Chancery
Court and taxed upon the parties as the Delaware Chancery Court deems
equitable. Upon application of a dissenting stockholder, the Delaware
Chancery Court may also order that all or a portion of the expenses
incurred by any stockholder in connection with the appraisal proceeding,
including reasonable attorneys' fees and the fees and expenses of experts,
be charged pro rata against the value of all of the shares entitled to
appraisal. STOCKHOLDERS THAT ARE CONSIDERING SEEKING APPRAISAL SHOULD BE
AWARE THAT THE FAIR VALUE OF THEIR SHARES AS DETERMINED UNDER SECTION 262
COULD BE MORE THAN, THE SAME AS, OR LESS THAN THE CONSIDERATION THAT THEY
WOULD RECEIVE PURSUANT TO THE MERGER AGREEMENT IF THEY DID NOT SEEK
APPRAISAL OF THEIR SHARES AND THAT THE OPINION RENDERED BY PAINEWEBBER IS
NOT AN OPINION AS TO FAIR VALUE UNDER SECTION 262.

In determining fair value, the Delaware Chancery Court is to take
into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware
Supreme Court discussed the factors that could be considered in determining
fair value in an appraisal proceeding, stating that "proof of value by any
techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be
considered, and that "fair price obviously requires consideration of all
relevant factors involving the value of a company." The Delaware Supreme
Court stated that, in making this determination of fair value, the court
must consider market value, asset value, dividends, earnings prospects, the
nature of the enterprise and any other facts which could be ascertained as
of the date of the merger that throw any light on future prospects of the
merged corporation. In Weinberger, the Delaware Supreme Court stated that
"elements of future value, including the nature of the enterprise, which
are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." Section 262 provides that fair
value is to be "exclusive of any element of value arising from the
accomplishment or expectation of the merger." In Cede & Co. v. Technicolor,
Inc., the Delaware Supreme Court stated that such exclusion is a "narrow
exclusion [that] does not encompass known elements of value."

Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time, be entitled to vote the
shares that are the subject to the demand for any purpose nor will it be
entitled to the payment of dividends or other distributions on those shares
(except dividends or other distributions payable to holders of record of
shares as of a record date prior to the effective time).

At any time within 60 days after the effective time, any stockholder
will have the right to withdraw such demand for appraisal and to accept the
terms offered in the merger; after this period, the stockholder may
withdraw the demand for appraisal only with the consent of CORE Cap. If no
petition for appraisal is filed with the Delaware Chancery Court within 120
days after the effective time, or if the stockholder has withdrawn the
demand for appraisal as discussed in the preceding sentence, stockholders'
rights to appraisal will cease, and all holders of shares of CORE Cap
common stock will be entitled to receive the merger consideration. Any
stockholder may withdraw its demand for appraisal by delivering to CORE Cap
a written withdrawal of its demand for appraisal and acceptance of the
merger, except that any such attempt to withdraw made more than 60 days
after the effective time will require written approval of CORE Cap. No
appraisal proceeding in the Delaware Chancery Court may be dismissed as to
any stockholder without the approval of the Delaware Chancery Court, and
the approval may be conditioned upon terms the Delaware Chancery Court
deems just. If CORE Cap does not approve a stockholder's request to
withdraw a demand for appraisal when the approval is required and the
Delaware Chancery Court does not approve the dismissal of an appraisal
proceeding, the stockholder is entitled to receive only the appraised value
determined in the appraisal proceeding. This value could be lower than the
value of the merger consideration.

Failure to comply strictly with the procedures set forth in Section
262 will result in the loss of a stockholder's statutory appraisal rights.

ACCOUNTING TREATMENT

The merger will be accounted for as a purchase of CORE Cap by
Anthracite. Accordingly, the purchase price, consisting of the estimated
fair value of Anthracite's common and preferred shares issued to CORE Cap's
stockholders, will be allocated to the CORE Cap assets and liabilities
acquired based on their estimated fair values at the completion of the
merger.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO CORE
CAP STOCKHOLDERS

The following is a summary of the material U.S. federal income tax
consequences of the merger to holders of CORE Cap stock. This summary is
based on the Code, regulations of the U.S. Treasury Department,
administrative rulings and pronouncements, and judicial decisions, all as
of the date of this proxy statement/prospectus and all of which are subject
to change, possibly with retroactive effect. This summary assumes that CORE
Cap stockholders hold their stock as capital assets. Generally, capital
assets are property held for investment. This summary does not address all
aspects of U.S. federal income taxation that may be relevant to particular
holders of CORE Cap stock that are subject to special treatment under the
Code and that may be subject to tax rules that differ significantly from
those described below. These include financial institutions, tax-exempt
organizations, insurance companies, broker-dealers, regulated investment
companies, foreign corporations, persons not citizens or residents of the
United States, and persons holding CORE Cap stock as part of a "straddle,"
"hedge," "conversion transaction," "synthetic security" or other integrated
investment. This summary also does not discuss any state, local or foreign
income or other tax consequences of the merger. You are urged to consult
your tax advisors with respect to the particular tax consequences to you of
the merger, including the application and effect of any state, local or
foreign income tax laws, and of changes in applicable tax laws.

The receipt of Anthracite stock in exchange for CORE Cap stock
pursuant to the merger will be a taxable transaction for U.S. federal
income tax purposes. Accordingly, you will recognize capital gain or loss
equal to the difference between your adjusted tax basis in the CORE Cap
stock and the fair market value of the Anthracite stock or cash received.
If you are an individual who has held CORE Cap stock for more than one
year, net capital gain you recognize in the merger generally will be taxed
at a maximum U.S. federal income tax rate of 20%. If you have held your
CORE Cap stock for one year or less, generally gain you recognize in the
merger will be taxed at ordinary income tax rates. There are limitations on
the deductibility of capital losses for both individual and corporate
taxpayers.

Payments made in connection with the merger will be subject to backup
withholding at a rate of 31% unless a holder of CORE Cap stock is a
corporation or qualifies for an exempt category and, when required,
demonstrates this fact, or provides a correct taxpayer identification
number to the exchange agent and otherwise complies with applicable backup
withholding rules. If you do not provide a correct taxpayer identification
number you may also be subject to penalties imposed by the Internal Revenue
Service. Any amount paid as backup withholding does not constitute an
additional tax and will generally be creditable against the stockholder's
U.S. federal income tax liability. You may generally avoid backup
withholding by completing a substitute IRS Form W-9 or, for foreign
persons, an IRS Form W-8 and submitting it to the exchange agent when you
submit your CORE Cap stock certificate(s). Recently issued Treasury
regulations regarding the backup withholding rules as applied to non-U.S.
holders alter backup withholding compliance mechanics and will be effective
for payments made after December 31, 2000.

Anthracite, like CORE Cap, has elected to be taxed as a REIT. For
special considerations relating to the holding of stock in a REIT as well
as to the taxation of a REIT, see "MATERIAL U.S. FEDERAL INCOME TAX
CONSEQUENCES -- Taxation of Anthracite."

THE MERGER AGREEMENT

We believe this summary describes all material terms of the merger
agreement. However, we recommend that you read the merger agreement. The
merger agreement is attached as Appendix I.

EXCHANGE PROCEDURES

Anthracite will appoint an exchange agent reasonably acceptable to
CORE Cap before the date the merger is completed. On that date, Anthracite
will deposit with the exchange agent certificates representing shares of
Anthracite stock that will be issued to you in exchange for your
certificates of CORE Cap stock. After the completion of the merger, the
exchange agent will send you a letter that contains instructions on how to
surrender your CORE Cap stock certificates to the exchange agent and
receive your certificates for Anthracite stock and, if applicable, cash for
your fractional shares. You should not send in your CORE Cap stock
certificates until you receive a letter from the exchange agent.

You will not be entitled to receive any dividends on shares of
Anthracite stock until you exchange your CORE Cap stock certificates for
Anthracite stock certificates. After you deliver your CORE Cap stock
certificates to the exchange agent, you will, subject to applicable laws,
receive any accumulated dividends or distributions less the amount of any
withholding taxes, without interest.

CONDUCT OF BUSINESS; COVENANTS

Until the merger is completed, CORE Cap and Anthracite have agreed to
generally conduct their businesses in the ordinary course. CORE Cap and
Anthracite will use commercially reasonable efforts to:

o preserve intact their business organizations and goodwill;

o maintain satisfactory relationships with those persons having
business relationships with them; and

o comply with all requirements imposed by governmental and
regulatory authorities.

Furthermore, except as required by the merger, CORE Cap and
Anthracite have agreed not to:

o amend their charters or bylaws;

o issue securities or pay dividends, except regular quarterly
cash dividends and, in CORE Cap's case, special dividends to
distribute current earnings and reduce net asset value, before
the closing date;

o redeem, repurchase, split, combine or reclassify shares of
capital stock;

o adopt or amend any employment agreements or employee benefit
plans;

o adopt any plans of liquidation, merger, restructuring or other
reorganization;

o dispose of lines of business or assets other than in the
ordinary course or make any significant acquisitions of assets;

o make any material tax elections or settle any tax liabilities;

o change investment, tax or accounting methods;

o pay or incur indebtedness other than in the ordinary course; or

o acquire any business or any other business organization other
than in the ordinary course.

CORE Cap has further agreed not to:

o make any capital expenditures for additions to plant, property
or equipment except in the ordinary course of business; or

o enter into any contract or engage in any new transaction except
in the ordinary course of business.

NO SOLICITATION

CORE Cap has agreed not to initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any
proposal or offer with respect to a merger, consolidation or other business
combination involving the purchase of

o all or any significant portion of its assets; or

o 20% or more of the outstanding shares of CORE Cap common stock.

In addition to refraining from soliciting any alternative proposal,
CORE Cap agreed not to engage in any negotiations concerning or provide any
confidential information to, or have any discussions with, any person or
group in relation to an alternative proposal. CORE Cap will immediately
terminate any existing discussions or negotiations with respect to any
alternative proposal, and it will take the necessary steps to inform such
parties of its obligations under the merger agreement. CORE Cap will notify
Anthracite immediately if it receives any inquiries or alternative
proposals.

However, the merger agreement does not prohibit the board of
directors from furnishing information pursuant to a confidentiality
agreement or from entering into discussions or negotiations with any person
that makes an unsolicited bona fide alternative proposal, if, and only to
the extent that:

o the board, based upon the advice of outside counsel, determines
in good faith that such action is required for the board to
comply with its fiduciary duties to stockholders;

o before furnishing information to, or entering into discussions
or negotiations with, any person or group, CORE Cap provides
written notice to Anthracite; and

o CORE Cap keeps Anthracite informed of the status and all
material information with respect to any discussions or
negotiations.

CONDITIONS TO THE MERGER

The parties' obligations to effect the merger are subject to the
following conditions:

o a majority of CORE Cap common stockholders must approve the
merger;

o shares of Anthracite common stock issued in the merger must be
authorized for listing on The New York Stock Exchange;

o no injunction and no pending or threatened material proceeding
that could reasonably be expected to have a material adverse
effect on the consummation of the merger may exist;

o the representations and warranties made by the other party in
the merger agreement, taken as a whole, must be true and
correct in all respects material to the business, assets,
financial condition and results of operation, and the validity
and enforceability of the merger agreement as of the closing
date;

o the other party must have performed, in all material aspects,
the agreements, covenants and obligations required by the
merger agreement;

o each party must receive from the other party's counsel
customary opinions including opinions as to the other party's
qualification as a REIT;

o the management agreement, as amended, between GMAC Management
and CORE Cap, as well as the assignment agreement providing for
assignment of the management agreement from GMAC Management to
BlackRock must both be in full force and effect upon
consummation of the merger.

o Anthracite must receive documents pursuant to which Societe
Generale and ABN AMRO BANK N.V. have consented to the merger
agreement without any material change in the economic terms of
the financing arrangements in place on the effective date of
the merger, or CORE Cap must demonstrate that:

o ABN AMRO BANK N.V. has consented to the merger agreement
without any material change in the economic terms of the
financing arrangements as of the effective date and has
agreed to provide financing under its existing
arrangement with CORE Cap to substitute for the financing
arrangement between CORE Cap and Societe Generale; or

o CORE Cap has settled the sale of the loans financed under
the financing arrangements with those parties that do not
consent to the merger agreement.

REPRESENTATIONS AND WARRANTIES

CORE Cap and Anthracite each made a number of representations and
warranties in the merger agreement regarding aspects of their respective
businesses, financial condition, structure and other facts pertinent to the
merger.

The representations given by CORE Cap cover the following topics,
among others, as they relate to CORE Cap:

o corporate organization, qualification and authority to do
business, charter and bylaws,

o capitalization,

o authorization of the merger agreement by CORE Cap's board of
directors,

o approvals required to complete the merger,

o consistency of the merger with contracts of CORE Cap and
applicable law,

o financial statements,

o absence of changes and material adverse effects on CORE Cap's
business since December 31, 1999,

o undisclosed liabilities,

o legal proceedings,

o information supplied by CORE Cap in this proxy
statement/prospectus and the related registration statement
filed by Anthracite,

o exemption from the Investment Company Act of 1940,

o contracts,

o mortgage-backed securities,

o mortgage loans,

o indebtedness,

o taxes,

o employee benefit plans,

o labor matters,

o absence of owned real property,

o intellectual property,

o voting requirements for approval of the merger,

o opinion of CORE Cap's financial advisor,

o affiliate transactions,

o absence of any beneficially owned shares of Anthracite, and

o compliance of the merger with CORE Cap's charter and Delaware law.

The representations given by Anthracite cover the following topics,
among others, as they relate to Anthracite and its subsidiaries:

o corporate organization, qualification and authority to do
business, charter and bylaws,

o capitalization,

o authorization of the merger agreement by Anthracite's board of
directors,

o consistency of the merger with contracts of Anthracite and
under applicable law,

o absence of regulatory approvals required to complete the merger,

o Anthracite's financial statements and filings with the
Securities and Exchange Commission,

o absence of changes and material adverse effects on Anthracite's
business since September 30, 1999,

o undisclosed liabilities,

o undisclosed legal proceedings,

o information supplied by Anthracite in this proxy
statement/prospectus and the related registration statement
filed by Anthracite,

o possession of and compliance with permits required to conduct
Anthracite's business,

o exemption from the Investment Company Act of 1940,

o contracts,

o mortgage backed securities,

o mortgage loans,

o taxes,

o employee benefit plans,

o labor matters,

o environmental liabilities,

o intellectual property,

o opinion of Anthracite's financial advisor as to the merger,

o absence of any beneficially owned shares of CORE Cap common
stock,

o affiliate transactions, and

o compliance of the merger with Anthracite's charter and Maryland
law.

TERMINATION, TERMINATION FEES

Anthracite and CORE Cap may terminate the merger agreement and the
merger at any time prior to the effective time under the following
circumstances:

o by mutual written agreement if authorized by their respective
boards of directors,

o upon notification to the non-terminating party by the
terminating party under the following circumstances:

o at any time after June 30, 2000 if the merger is not
consummated by that date and failure to consummate the
merger does not result from a breach of the merger
agreement by the terminating party,

o failure to obtain CORE Cap stockholder approval resulting
from a failure to obtain the requisite vote at a meeting
of stockholders,

o if there has been a material, incurable breach of any
representation, warranty, covenant or agreement set forth
in the merger agreement on the part of the
non-terminating party, or

o if any regulatory authority issues an order restricting
or prohibiting the merger or if any court issues an order
making illegal the merger,

CORE Cap may terminate the merger agreement and the merger

o if the board of directors determines in good faith, based upon
the written opinion of outside counsel, that termination of the
merger agreement is required for the board of directors to
comply with its fiduciary duties to stockholders by reason of
an unsolicited bona fide alternative proposal (as detailed more
fully in the merger agreement), or

o if the average sales price of a share of Anthracite common
stock on the ten consecutive trading days ending three trading
days prior to the closing date is below $6.00 per share.

Anthracite may terminate the merger agreement and the merger

o if the board of directors of CORE Cap withdraws or modifies in
a manner materially adverse to Anthracite its approval or
recommendation of the merger or recommends an alternative
proposal to its stockholders, or

o if CORE Cap adjusts the exchange ratio.

EFFECT OF TERMINATION

CORE Cap generally must pay Anthracite a termination fee of $2
million if it terminates the merger agreement to accept an alternative
proposal. Furthermore, if CORE Cap stockholders fail to approve the merger
CORE Cap must reimburse Anthracite for its reasonable and documented
out-of-pocket expenses up to $400,000. In no event, however, will CORE Cap
be required to pay both fees.

ADDITIONAL AGREEMENTS

Each of CORE Cap and Anthracite agreed to use its best efforts to
obtain all consents and make all filings with and give all notices to
governmental or regulatory authorities or any other public or private third
parties, including, in the case of CORE Cap, Societe Generale and ABN-Amro.

Each of Anthracite and CORE Cap represented, as to itself, that no
agent, broker, investment banker, financial advisor or other firm or person
will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by the
merger agreement except PaineWebber, whose fees and expenses will be paid
by CORE Cap, and Prudential Securities, Inc., whose fees and expenses will
be paid by Anthracite.

CORE Cap must use its commercially reasonable efforts to cause to be
delivered to Anthracite "comfort" letters of PricewaterhouseCoopers LLP,
CORE Cap's independent public accountants. Anthracite must use its
commercially reasonable efforts to cause to be delivered to CORE Cap
"comfort" letters of Deloitte & Touche LLP, Anthracite's independent public
accountants.

In addition, Anthracite must use its best efforts to cause the shares
of Anthracite common stock issuable:

o in connection with the merger;

o under the options to be exchanged in the merger; and

o upon conversion of the preferred stock to be exchanged in the
merger

to be listed on The New York Stock Exchange.

Under rules of The New York Stock Exchange, Anthracite cannot list
shares of its common stock in a transaction involving the issuance of more
than 19.9% of the number of shares outstanding without stockholder
approval. As a result of this restriction, the Anthracite preferred stock
issuable in the merger in exchange for CORE Cap's preferred stock will not
be convertible into Anthracite common stock until this approval is
obtained. Anthracite has agreed to use its reasonable best efforts to have
the shares of common stock that are issuable upon conversion listed
(including by submitting the conversion of the preferred stock to a vote by
the stockholders of Anthracite), and the dividend rate on the new preferred
stock will increase if Anthracite does not fulfill its obligation to list
the shares.

RELATED TRANSACTIONS

CORE Cap has agreed to pay GMAC Management $2.15 million for the
right to require GMAC Management to assign its management agreement with
CORE Cap to BlackRock. Under the terms of this assignment, BlackRock would
pay GMAC Management $12.5 million in installments over ten years. In
consideration of the assignment, Anthracite and BlackRock have further
agreed that if BlackRock ceases to be the manager of Anthracite for any
reason during the ten years following assignment of the management
agreement, then Anthracite will immediately pay to BlackRock an amount
equal to the outstanding balance of the installment payments due to GMAC
Managment.

ANTHRACITE PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION

This information is provided for illustrative purposes only. This
information does not necessarily reflect

o what the results of operations or financial position of
Anthracite would have been if the merger had actually occurred
on the dates noted above, or

o what Anthracite's actual future consolidated results of
operations or financial position will be.

This information also does not reflect

o any dispositions of assets or repayments of borrowings that may
occur after the merger,

o any transition or restructuring costs associated with combining
Anthracite and CORE Cap, or

o the effect of any potential changes in revenues or any
operating savings which may be achieved by combining the
resources of Anthracite and CORE Cap.

ANTHRACITE
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999

PRO FORMA ANTHRACITE
ASSETS ANTHRACITE CORE CAP ADJUSTMENTS PRO FORMA
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents $22,265 $15,006 ($5,800)(1a) $31,471

Mortgage-backed securities 577,195 923,170 (42,668)(1b) 1,457,697

Mortgage loans 69,611 444,904 (12,896)(1b) 501,619

Other assets 10,591 12,131 29,821 (1b) 52,543
----------- ----------- ------------ -----------
Total assets $679,662 $1,395,211 ($31,543) $2,043,330
=========== =========== ============ ===========

LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Short-term borrowings $471,533 $1,259,407 $1,730,940
Other liabilities 9,846 20,782 $7,744 (1c) 38,372
----------- ----------- -----------
481,379 1,280,189 7,744 1,769,312
----------- ----------- -----------

Redeemable convertible
preferred stock 30,022 - 30,022
----------- ----------- -----------

Stockholders' equity
Preferred stock - par - 41 (39)(1d) 2

Common stock - par 22 51 (47)(1e) 26

Other stockholders' equity 168,239 114,930 (39,201)(1f) 243,968
----------- ----------- ------------ -----------
Total stockholders' equity 168,261 115,022 (39,287) 243,996
----------- ----------- ------------ -----------
Total liabilities and
stockholders' equity $679,662 $1,395,211 ($31,543) $2,043,330
=========== =========== ============ ===========

See accompanying notes to pro forma condensed consolidated financial statements.
</TABLE>

ANTHRACITE CAPITAL, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

PRO FORMA ANTHRACITE
ANTHRACITE CORE CAP ADJUSTMENTS PRO FORMA
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Interest income $54,325 $113,975 $6,141 (2) $174,441
Interest expense (21,768) (93,941) (5,529)(3) (121,238)
----------- ---------- ------------ -----------
Net interest income 32,557 20,034 612 53,203
----------- ---------- ------------ -----------

Trading 2,070 8,084 10,154
Other losses (550) (767) (1,317)
Management fee (4,565) (5,101) 251 (4) (9,415)
Other income (expense) (2,839) (2,234) 1,141 (5) (3,932)
----------- ---------- ------------ -----------
Net income 26,673 20,016 2,004 48,693
----------- ---------- ------------ -----------

Less preferred stock dividends 284 6,822 7,106

----------- ---------- ------------ -----------
Income available to common
stockholders $26,389 $13,194 $2,004 $41,587
----------- ---------- ------------ -----------

Net income per share:
Basic $1.27 $3.32 $1.66
Diluted $1.26 $2.72 $1.66

Weighted average number of
shares outstanding:
Basic 20,814 3,970 24,997
Diluted 21,150 7,363 28,641

See accompanying notes to pro forma condensed consolidated financial statements.
</TABLE>

ANTHRACITE CAPITAL, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND FOR THE YEAR THEN ENDED
(IN THOUSANDS, EXCEPT PER SHARE DATA)

(1) Represents adjustments to allocate the purchase price to the assets
and liabilities of CORE Cap acquired. The purchase price is
calculated as follows:

Anthracite common shares issued 4,183
Anthracite common shares price $ 6.625
--------
Total common stock 27,710
Estimated value of Anthracite
preferred stock issued 48,025
Transaction costs 4,450
--------
Total purchase price $ 80,185

The number of shares of Anthracite common stock assumed to be issued,
4,183, is based on the net asset values of Anthracite and CORE Cap as
of December 31, 1999 and is subject to change. The price of
Anthracite's common shares reflects the average of the closing prices
for the three days before and two days after the merger was announced
(February 8, 2000). The value of the preferred stock to be issued has
been estimated by Anthracite's management and is subject to
adjustment on receipt by Anthracite of a third-party valuation. The
adjustments to allocate the purchase price reflect the following:

(a) A reduction in cash of $5,800, to record the payment of $4,450 of
transaction costs, including the expected payment of $2,150 to GMAC
Management upon assignment of CORE Cap's management agreement with
GMAC Management to BlackRock. The reduction in cash also reflects an
assumed cash dividend distribution of $1,350 by CORE Cap to its
stockholders immediately prior to the transaction, as provided for
under the merger agreement, to result in an exchange ratio of 1.2833.

(b) Adjustments to the carrying value of certain mortgage
backed-securities, mortgage loans and other assets (principally
interest rate swap agreements) acquired, to reflect their estimated
fair values at December 31, 1999.

(c) An adjustment of $7,744 to other liabilities to reflect the
excess of the estimated fair value of the net assets acquired over
the purchase price (negative goodwill). No adjustment is recorded to
short-term borrowings or other liabilities acquired, because their
carrying value is believed to approximate fair value at December 31,
1999.

(d) An adjustment of $39 to preferred stock-par value, to reflect the
$2 aggregate par value of the 2,261 shares of Anthracite 10% series B
preferred stock, par value $.001 per share, assumed to be issued in
the merger.

(e) An adjustment of $47 to common stock-par value, to reflect the $4
aggregate par value of the 4,183 shares of Anthracite common stock,
par value of $.001 per share, assumed to be issued in the merger.

(f) An adjustment of $39,201 to other stockholders' equity, to record
the additional paid-in capital of $27,706 and $48,023 attributable to
the common stock and preferred stock, respectively, assumed to be
issued in the merger, offset by entries needed to eliminate the CORE
Cap historical equity accounts, such as additional paid-in capital,
retained earnings, treasury stock and accumulated other comprehensive
loss.

The purchase price and its allocation as described above are preliminary.
The actual purchase price will be determined at the merger date based on
the exchange ratio, the actual number of shares issued and their valuations
at that date, and the allocation of such purchase price and the amount of
negative goodwill will be based on the estimated fair values of the assets
and liabilities acquired as of the merger date.

(2) Represents the estimated impact on interest income resulting from the
purchase accounting adjustments made to the mortgage-backed
securities and mortgage loans acquired in the merger, which are
allocated to the assets acquired and amortized over their weighted
average lives, estimated as 11.4 years for the mortgage-backed
securities and 5.3 years for the mortgage loans.

(3) Represents the estimated impact on interest expense resulting from
the purchase accounting adjustments made to the other assets
acquired, primarily interest rate swap agreements, which are
allocated to the assets acquired and amortized over their weighted
average lives, estimated as 5.5 years.

(4) Represents the reduction in management fees estimated to result from
the assignment of the management agreement from GMAC Management to
BlackRock when the combined entity exercises its right to have GMAC
Management assign the management agreement as expected.

(5) Represents the amortization of the negative goodwill assumed to be
recorded in the merger, using the straight-line method over the
estimated weighted average lives of the assets acquired in the
merger, 6.8 years.

DESCRIPTION OF ANTHRACITE PREFERRED STOCK

The following summary sets forth the material terms and provisions of
Anthracite's series B preferred stock, and is qualified in its entirety by
reference to the terms and provisions of the articles supplementary
establishing the shares. The articles supplementary is attached to this
proxy statement/prospectus as Exhibit A of the merger agreement which is
attached as Appendix I hereto.

10% SERIES B CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK

Anthracite is authorized to issue 100,000,000 shares of preferred
stock, 1,200,000 shares of which are currently issued and outstanding as
10.5% series A senior cumulative convertible redeemable preferred stock
issued on December 2, 1999. Anthracite's board of directors has the
authority, without further action by the stockholders, to issue shares of
preferred stock in one or more series. In connection with the merger,
Anthracite intends to issue fully paid and non- assessable shares of a new
series of preferred stock designated as series B preferred stock.

RANKING

The series B preferred stock will rank, with respect to dividend
rights and rights upon liquidation, dissolution or winding-up,

o senior to Anthracite's common stock and to all other stock of any
class or series of Anthracite the terms of which specifically provide
that such securities rank junior to the series B preferred stock,

o on a parity with Anthracite's 10.5% series A senior cumulative
convertible redeemable preferred stock and all other stock of any
class or series of Anthracite the terms of which specifically provide
that such securities rank on a parity, and

o junior to all stock of any class or series of Anthracite the terms of
which specifically provide that such securities rank senior.

Anthracite may issue parity stock without the approval of the holders
of the series B preferred stock but is not permitted to issue any stock
ranking senior without the approval of the holders of two-thirds of the
series B preferred stock.

DIVIDENDS

Holders of shares of series B preferred stock are entitled to
receive, when and as declared by the board of directors out of assets
legally available, cash dividends at the rate of 10% per annum of the
initial liquidation preference of $25.00 per share (equivalent to $2.50 per
share per annum). Dividends on the series B preferred stock are payable
quarterly on the last days of March, June, September and December. If
Anthracite fails to pay any dividend, it may not pay distributions on or
acquire shares of any class of stock ranking junior to the series B
preferred stock, and dividends on all classes of parity preferred stock
must be declared ratably.

If the shares of common stock issuable upon conversion of the series
B preferred stock have not been listed on The New York Stock Exchange
following approval by the stockholders of Anthracite to that effect, then
on June 15 of each year beginning with the year 2000, the dividend rate
will be increased by 0.50%. If the shares thereafter are listed, the
dividend rate will be reduced to 10%.

CONVERSION RIGHTS

Subject to the approval of holders of Anthracite's common stock with
respect to the issuance of shares of common stock upon conversion of shares
of the series B preferred stock to the extent required for listing of such
shares, holders of shares of the series B preferred stock have the right to
convert all or a portion of their shares into shares of Anthracite common
stock.

The number of shares of common stock convertible for each share of
the series B preferred stock is obtained by dividing the liquidation
preference for each share of the series B preferred stock by a conversion
price equal to $21.93 divided by the common stock conversion number as set
forth in the merger agreement. In lieu of any fractional share of common
stock issuable upon conversion of the shares of the series B preferred
stock, Anthracite will pay to the holder an amount in cash based upon the
market value of the common stock on the date of conversion.

The conversion price is subject to adjustment upon certain events,
including:

o distributions payable in common stock,

o the issuance to all holders of Anthracite common stock of
rights or warrants entitling them to subscribe for or purchase
Anthracite common stock at a price per share less than the fair
market price of Anthracite common stock,

o subdivisions, combinations and reclassifications of Anthracite
common stock, and

o distributions to all holders of Anthracite common stock of debt
or assets other than cash or Anthracite common stock. However,
instead of making an adjustment to the conversion price,
Anthracite may provide that each holder that converts its
shares will be entitled to receive on conversion, in addition
to Anthracite common stock, an appropriate amount of debt or
other assets.

Anthracite is not required to make any adjustments of the conversion price
for the issuance of any options, rights or Anthracite common stock pursuant
to any stock option, stock purchase or other stock-based plan.

In case Anthracite is a party to any reclassification, merger or sale
of substantially all of Anthracite's assets, each share of series B
preferred stock, if convertible after the consummation of the transaction,
will be convertible into the kind and amount of securities and other
property receivable upon the consummation of the transaction by a holder of
Anthracite common stock.

If Anthracite takes any action affecting the common stock which, in
the opinion of the board of directors, would materially adversely affect
the conversion rights of the holders of series B preferred stock, then the
conversion price may be adjusted as the board determines.

CONVERSION BY ANTHRACITE

If a conversion of the series B preferred stock would cause benefit
plan investors to own in excess of 24.9% of the aggregate number of
outstanding shares of series B preferred stock (excluding for this purpose
any shares held by persons exercising investment management authority over
the assets of Anthracite or providing investment advice for a fee with
respect to such assets and any affiliates of such person), Anthracite will
have the right to cause the shares of series B preferred stock that are
held by benefit plan investors to be converted into common stock so that
following conversion benefit plan investors do not own more than 24.9% of
the outstanding series B preferred stock. If fewer than all the outstanding
shares of series B preferred stock that are held by benefit plan investors
are to be converted, the number of shares of series B preferred stock to be
converted will be determined by the board of directors and the shares will
be converted on a pro-rata basis.

In the event Anthracite exercises its right to cause the conversion
of shares of series B preferred stock, notice of such exercise will be
given and no failure to give notice or any defect therein will affect the
validity of the conversion.

RIGHTS UPON LIQUIDATION

In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of Anthracite, holders of the series B preferred stock will
be entitled to receive liquidating distributions in the amount of the
initial liquidation preference, plus accrued and unpaid dividends, to the
extent that liquidating distributions are available out of assets of
Anthracite.

o These distributions will be made

o before any distribution of assets is made to holders of common stock
or any other class of stock ranking junior to the series B preferred
stock, and

o simultaneous with distributions on all other classes or series of
capital stock of Anthracite ranking on a parity with the series B
preferred stock so that the holders of the series B preferred stock
and these other classes or series will share ratably in any
distribution of assets.

The consolidation or merger of Anthracite with any other entity, the
consolidation or merger of any other entity with Anthracite or the sale of
all or substantially all of the property or business of Anthracite will not
be deemed a liquidation, dissolution or winding-up of Anthracite.

REDEMPTION

The series B preferred stock will not be redeemable prior to
September 30, 2002. On and after September 30, 2002, Anthracite, at its
option, may redeem shares of series B preferred stock by payment in cash of
a redemption price equal to the initial liquidation preference plus accrued
and unpaid dividends. If fewer than all of the outstanding shares of series
B preferred stock are to be redeemed, Anthracite will redeem pro rata from
the holders of record of series B preferred stock. In the alternative, the
board of directors in its sole discretion will determine another equitable
method to redeem the series B preferred stock.

If dividends on shares of series B preferred stock are in arrears, no
shares of series B preferred stock may be redeemed unless all outstanding
shares of series B preferred stock are simultaneously redeemed, and
Anthracite may not acquire any shares of series B preferred stock except by
conversion. However, Anthracite may acquire shares of series B preferred
stock pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of series B preferred stock.

VOTING RIGHTS

Except as expressly required by applicable law, or except as
indicated below, the holders of the series B preferred stock are not
entitled to vote. In the event the holders of series B preferred stock are
entitled to vote as indicated below, each share of series B preferred stock
will be entitled to one vote on matters on which holders of the series B
preferred stock are entitled to vote.

If Anthracite fails to pay full dividends on the shares of series B
preferred stock on six consecutive dividend payment dates, the board of
directors is required to take all requisite action in accordance with
Maryland law to increase by two the number of directors then constituting
the board of directors. Thereafter, the holders of the series B preferred
stock, voting together with the holders of any other outstanding parity
stock as a single class, will have the right to elect two additional
directors at an annual meeting of stockholders or a special meeting held in
place thereof or at a properly called special meeting of the holders of
Anthracite's preferred stock. This right will continue at each subsequent
annual meeting of stockholders or a special meeting held in place thereof.
Once all accrued dividends on the series B preferred stock have been paid
in full, the voting rights of the holders of the series B preferred stock
will terminate, subject to revesting, and the term of office of the
directors elected by the holders of the series B preferred stock and any
parity stock will terminate unless otherwise required by law.

The holders of at least 66 2/3% of the outstanding series B preferred
stock must approve

o the issuance of any preferred stock ranking senior to the series B
preferred stock as to dividends or upon liquidation, dissolution or
winding-up, or

o any change to Anthracite's amended and restated articles of
incorporation (including the articles supplementary establishing the
series B preferred stock) that adversely affects the voting powers,
preferences or special rights of the holders of the series B
preferred stock.

Holders of series B preferred stock will not have any voting rights
if, at or prior to the time of any vote, all outstanding series B preferred
stock has been redeemed.

RESTRICTIONS ON OWNERSHIP AND TRANSFER OF ANTHRACITE PREFERRED STOCK

For a discussion of the restrictions on the transfer or resale of the
series B preferred stock, see "The Merger -- Restrictions on Ownership and
Transfer of Anthracite Capital Stock."

MANAGEMENT AND CERTAIN SECURITY HOLDERS OF ANTHRACITE

Anthracite has agreed to include two persons designated by CORE Cap
on the Anthracite board of directors, increasing membership of the board of
directors from eight to ten persons.

Leon T. Kendall, a current director of CORE Cap, will be designated a
class I director for a term continuing until Anthracite's annual meeting of
stockholders in 2001. David M. Applegate, the chief operating officer and
chairman of the board of directors of GMAC Management, will be designated a
class II director for a term continuing until Anthracite's annual meeting
of stockholders in 2002.

The following are biographical descriptions of each of Messrs.
Kendall and Applegate:

Leon T. Kendall, DBA was elected to serve as a Director of CORE Cap
in September 1997. Dr. Kendall has been Professor of Finance and Real
Estate at the J.L. Kellogg Graduate School of Management, Northwestern
University. Dr. Kendall's current corporate directorships include The
Chicago Board Options Exchange and Avatar Corporation.

David M. Applegate serves as chief operating officer of GMAC Mortgage
and is a director of GMAC Residential Holding Corp. and its subsidiaries,
GMAC Mortgage and GMAC Home Services. He is the chairman of the board of
directors of GMAC Management. In 1995, Mr. Applegate was the senior vice
president of capital markets for GMAC Mortgage, responsible for servicing
hedging, valuation and acquisition, trading and asset sales, investor
relationships, structured finance and loan delivery. Mr. Applegate became
chief financial officer in 1996 responsible for capital markets, legal,
accounting, tax, finance, treasury, strategic planning and mergers and
acquisitions. In early 1999, Mr. Applegate became chief administrative
officer, and was responsible for all finance, legal and capital markets
functions including the corporate quality office and information
technology. In addition, he is responsible for other diversified businesses
including reinsurance operations. In late 1999, Mr. Applegate became chief
operating officer of GMAC Mortgage and is responsible for all aspects of
mortgage operations including lending, servicing and capital markets.

Information concerning the names, ages, terms, positions with
Anthracite and business experience of the members of the board of directors,
is set forth below. Mr. Fink was elected to the board of directors in
November 1997. Mr. Frater was elected in February 1998, and Mr. Rifkin
was elected in December 1999. Except for Mr. Rifkin, each other director
has served continuously with Anthracite since his first election in March
1998.

Term
Name Age Position Expires
- -----------------------------------------------------------------------------
Inside Directors:
Laurence D. Fink 47 Chairman of the Board of Directors 2000
Hugh R. Frater 44 President, Chief Executive Officer 2002
and Director
Unaffiliated Directors:
Donald G. Drapkin 52 Director 2001
Carl F. Geuther 53 Director 2001
Jeffrey C. Keil 56 Director 2002
Kendrick R. Wilson III 53 Director 2000
Andrew P. Rifkin 40 Director 2000

Laurence D. Fink, chairman, is also chairman and chief
executive officer of BlackRock, chairman of BlackRock's management
committee and co-chair of BlackRock's investment strategy group. In
addition, Mr. Fink serves on the asset liability committee of PNC Bank. He
is also chairman of the board and a director of BlackRock's family of
closed-end mutual funds, and a director of BlackRock's offshore funds,
BlackRock Asset Investors, BlackRock MQE Investors and BlackRock Fund
Investors I, II and III. Prior to founding BlackRock in 1988, Mr. Fink was
a member of the management committee and a managing director of The First
Boston Corporation. Mr. Fink is currently a member of the Boards of
Trustees of New York University Medical Center, Dwight-Englewood School in
Englewood, New Jersey, the National Outdoor Leadership School and Phoenix
House, and a director of VIMRX Pharmaceuticals, Inc. and Innovir
Laboratories, Inc. Mr. Fink earned a B.A. degree in political science from
the University of California at Los Angeles in 1974 and an M.B.A. degree
with a concentration in real estate from U.C.L.A. in 1976.

Hugh R. Frater, president and chief executive officer, is a
managing director and a member of the management committee of BlackRock,
where he was co-head of the BlackRock Account Management Group. Mr.
Frater's primary responsibilities included developing investment products
and marketing investment services for BlackRock's Institutional Asset
Management clients. Prior to joining BlackRock in 1988, Mr. Frater was a
vice president in investment banking at Lehman Brothers in the financial
institutions department. Mr. Frater earned a B.A. degree in English from
Dartmouth College in 1978 and an M.B.A. degree in finance from Columbia
University in 1985.

Donald G. Drapkin has been a director and vice chairman of
MacAndrews & Forbes Holdings Inc. and various of its affiliates since 1987.
Prior to joining MacAndrews & Forbes, Mr. Frapkin was a partner in the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP for more than five years.
Mr. Drapkin is also a director of the following corporations: Algos
Pharmaceutical Corporation, Black Rock Asset Investors, The Molson
Companies Limited, Nexell Therapeutics Inc., Playboy Enterprises, Inc.,
Revlon Consumer Products Corporation, Revlon, Inc., The Warnaco Group, Inc.
and Weider Nutrition International Inc.

Carl F. Geuther is a former executive vice president and chief
financial officer of WMC Mortgage Corp., a mortgage banking company. Mr.
Geuther had been vice chairman and chief financial officer, and previously
executive vice president, of Great Western Financial Corporation and Great
Western Bank since 1987. Mr. Geuther joined Great Western following its
acquisition of Aristar, Inc., a consumer finance and insurance company in
1983, where he served as executive vice president and chief financial
officer and in other financial management positions since 1974. He received
an M.B.A from Lehigh University in 1968 and a B.A. from Ursinus College in
1967.

Jeffrey C. Keil was chairman of the executive committee of
International Real Returns, LLC, investment advisor to an investment
company organized by Lazard Freres & Co., since January 1998. From 1996 to
January 1998, Mr. Keil was a general partner of Keil Investment Partners, a
private fund which invested in the financial sector in Israel. From 1984 to
1996, Mr. Keil was president, director and chairman of the finance
committee of Republic New York Corporation and vice chairman and a member
of the executive committee of Republic National Bank of New York. Mr. Keil
earned a B.S. degree in economics at the University of Pennsylvania in
1965, pursued graduate studies in mathematical statistics, operations
research and international economics from the London School of Economics,
and earned an M.B.A. degree with a concentration in Finance from Harvard
Graduate School of Business Administration in 1968.

Kendrick R. Wilson, III was a managing director of Goldman
Sachs & Co. in the Financial Institutions Group since 1998. From 1989 to
1998, Mr. Wilson was vice chairman and member of the management committee
of Lazard Freres & Co. Mr. Wilson is a director of Celanese AG and American
Marine Holdings Corp. Mr. Wilson is also a director of the following
corporations: BlackRock Asset Investors, BlackRock Fund Investors I, II and
III. He is a Trustee of the Montana Land Reliance, Middlebury College and
the Hospital for Special Surgery. Mr. Wilson received an M.B.A. from
Harvard Business School and a B.A. from Dartmouth College.

Andrew P. Rifkin is a Managing Director at Donaldson, Lufkin &
Jenrette. Mr. Rifkin is responsible for the acquisition efforts of DLJ's
Real Estate Capital Partners, a $2 billion dollar real estate opportunity
fund sponsored by Donaldson, Lufkin & Jenrette.

Compensation of directors

Directors are elected for a term of three years, and hold
office until their successors are elected and qualified. All officers serve
at the discretion of the board of directors. Although Anthracite may in the
future have salaried employees, it currently does not. Anthracite pays an
annual director's fee to each unaffiliated director of $20,000 and a fee
of $1,000 for each meeting of the board that a director attends. Affiliated
directors are not compensated by Anthracite other than through Anthracite's
stock option plan.

Executive Officers

The following table sets forth certain information with respect
to the executive officers of Anthracite who are not also directors.

Name Age Position
- ---------------------------------------------------------------------------
Richard M. Shea 40 Chief operating officer and chief financial
officer
Edwin O. Bergman 34 Vice president
Robert L. Friedberg 39 Vice president and secretary
Chris A. Milner 33 Vice president
Mark S. Warner 38 Vice president

Because BlackRock maintains principal responsibility for
managing the affairs of Anthracite, Anthracite does not employ full-time
personnel, and the officers listed above perform only ministerial functions
as officers of Anthracite, such as executing contracts and filing reports
with regulatory agencies. Notwithstanding the foregoing, the persons listed
above, who are officers of Anthracite and will be compensated by BlackRock,
are expected in their capacities as officers of BlackRock, fulfilling
duties of BlackRock under the management agreement, to devote a substantial
amount of their time to the affairs of Anthracite. As officers of
BlackRock, the persons listed above have no fiduciary obligations to
Anthracite or its stockholders.

Richard M. Shea, Esq., chief operating officer and chief
financial officer, is a managing director of BlackRock and a member of the
risk management and analytics group. Prior to joining BlackRock in 1993,
Mr. Shea was an associate vice president and tax counsel at Prudential
Securities, Inc.

Edwin O. Bergman, vice president - risk management, is also a
director in BlackRock's risk management and analytics group. Prior to
joining BlackRock in October 1996, Mr. Bergman worked as an associate in
Booz, Allen & Hamilton's financial services and technology practice. Prior
to working at Booz, Allen & Hamilton, Mr. Bergman was a vice president in
Goldman, Sachs & Co.'s mortgage research group from December, 1992 to
February, 1995.

Robert L. Friedberg, vice president and secretary, is also a
vice president of BlackRock. Prior to joining BlackRock in 1999, Mr.
Friedberg was treasurer of Vornado Realty Trust, where he was responsible
for corporate and property finance. Mr. Friedberg joined Vornado in 1997.
Prior to working at Vornado Realty Trust, Mr. Friedberg was managing
director at Crown Northcorp, Inc. a rated special servicer of commercial
mortgage backed securities.

Chris A. Milner, vice president - acquisitions, is also a vice
president and manager of PNC Real Estate Capital Markets, where he is
responsible for managing PNC's Commercial Mortgage-Backed Securities
Program and is a member of the real estate executive committee. Prior to
co-founding PNC's Commercial Mortgage-Backed Securities Program in 1995,
Mr. Milner was a vice president in PNC's real estate asset management
subsidiary.

Mark S. Warner, vice president, is a director and portfolio
manager of BlackRock, where his primary responsibility is managing client
portfolios, specializing in the commercial mortgage and non-agency
residential mortgage sectors.

Executive Compensation

During 1999 and 1998, Anthracite did not pay any cash
compensation to its executive officers but may, in the future, pay annual
compensation to Anthracite's executive officers for their services as
executive officers. Anthracite may from time to time, at the discretion of
the compensation committee of the board of directors, grant options to
purchase shares of Anthracite's common stock to the executive officers
pursuant to the 1998 Stock Option Plan.

Stock beneficially owned by principal stockholders

The following table sets forth the beneficial ownership of
Anthracite's common stock, as of March 20, 2000, by any person who is known
to Anthracite to be the beneficial owner of more than five percent of the
issued and outstanding shares of common stock.

Number of Shares Percent
Name and Address of Common Stock of Class
- ----------------------------------------------------------------------------
Merrill Lynch & Co., Inc. ("ML&Co.")
(on behalf of Merrill Lynch Asset
Management Group)(1), 2,113,000 10.06%
Friedman, Billings, Ramsey Group,
Inc.(2), 1,581,846 7.55%
James Grosfeld & Nancy Grosfeld,
joint tenants 1,371,800 6.55%

1. Based on information contained in Amendment No. 1 to Schedule 13G,
dated February 4, 2000.

2. Based on information contained in Amendment No. 1 to Schedule 13G,
dated February 16, 2000.

Stock beneficially owned by directors and officers

The following table sets forth the beneficial ownership of Anthracite's
common stock, as of March 20, 2000, by each director and each executive
officer, and all directors and executive officers as a group. Unless
otherwise indicated, the shares of common stock are owned directly and the
indicated person has sole voting and investment power.

Number of Shares of
Common Stock Percent
Beneficially Owned(1) of Class

Laurence D. Fink 57,922 *
Hugh R. Frater 202,500 *
Donald G. Drapkin 10,745 *
Carl F. Geuther 10,745 *
Jeffrey C. Keil 10,745 *
Andrew P. Rifkin 0 *
Kendrick R. Wilson III 10,745 *
Richard M. Shea 118,650 *
Robert L. Friedberg 0 *
Edwin O. Bergman 61,000 *
Chris A. Milner 118,000 *
Mark S. Warner 60,500 *
All directors 661,552 3.16%
and executive officers as a
group (11 persons)

* Less than 1%.

1. Includes shares issuable upon the exercise of options that are
currently exercisable or that will become exercisable within 60 days.
Such shares are held as follows: Mr. Fink (17,922); Mr. Frater
(150,000); Mr. Drapkin (10,000); Mr. Geuther (10,000); Mr. Keil
(10,000); Mr. Wilson (10,000)(; Mr. Shea (115,000); Mr. Bergman
(57,500); Mr. Milner (112,500); and Mr. Warner (57,500). Shares
issuable upon the exercise of options that are currently exercisable or
that will become exercisable within 60 days are treated as outstanding
for purposes of computing the percentage of outstanding shares. All
directors and executive officers of Anthracite have sole voting and
investment power with respect to the shares of common stock held by
them.

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF CORE CAP

Holders of shares of common stock of CORE Cap are entitled to one vote
in respect of the merger for each share of common stock they hold as of the
record date established to determine stockholders of record. There are
currently 3,257,658 shares of CORE Cap's common stock outstanding held by
29 class A common stockholders and 111 class B common stockholders. The
holders of shares of CORE Cap's preferred stock are not entitled to vote on
the merger.

The following table presents information concerning the stockholders of
CORE Cap that own at least 5% of its class A common stock and the number of
shares of capital stock they hold as of March 24, 2000.

CLASS A PERCENT OF
STOCKHOLDER COMMON STOCK COMMON STOCK
- ----------- ------------ ------------

GMAC Mortgage and GMAC
Commercial 1,264,099 39.3%

OCH-ZIFF MANAGEMENT, L.P. 384,257 11.8%
153 East 53rd Street, 43rd Floor
New York, NY 10022

JP MORGAN INVESTMENT MANAGEMENT 333,332 10.2%
INC.
522 Fifth Avenue
New York, NY 10036

STATE STREET RESEARCH 300,000 9.2%
One Financial Center, 31st floor
Boston, MA 02110

AIG GLOBAL INVESTMENT CORP 222,222 6.8%
175 Water Street
New York, NY 10038

The directors of CORE Cap own, in the aggregate, 21,913 shares of class
A common stock and 21,913 shares of series A preferred stock, representing
.67% of the shares of class A and class B common stock outstanding and .97%
of the series A preferred stock outstanding.

The following CORE Cap directors own the number of shares of class A
common stock listed below.

Class A
common
Director stock

Alan L. Gosule 300
Silas Keehn 1,264
Leon T. Kendall 17,198
John E. Robson 3,151

THE COMPANIES

BUSINESS OF ANTHRACITE

Anthracite's operations are managed by BlackRock, which is a subsidiary
of PNC Bank, National Association, which is itself a wholly owned
subsidiary of PNC Bank Corp. Established in 1988, BlackRock is a registered
investment adviser and is one of the largest fixed-income investment
management firms in the United States. BlackRock engages in investment and
risk management as its sole businesses and specializes in the management of
domestic and offshore fixed- income assets for pension and profit sharing
plans, financial institutions such as banking and insurance companies and
mutual funds for retail and institutional investors.

Anthracite's business strategy is to purchase and originate
multifamily, commercial and residential term loans, referred to as mortgage
loans, and interests in multifamily and commercial mortgage-backed
securities. Anthracite also invests in interests in residential
mortgage-backed securities using its mortgage loans as collateral to create
its own mortgage-backed securities. Historically, one of Anthracite's
primary investment focuses has been the acquisition of non- investment
grade commercial mortgage-backed securities. On a going-forward basis,
Anthracite plans to maintain approximately half of its total investments in
high quality residential mortgage loans and securities.

Anthracite invests in assets other than mortgage loans and
mortgage-backed securities. For example, Anthracite invests in and provides

o loans that are used to finance construction,

o loans secured by real property and used as temporary financing, and

o loans secured by junior liens on real property.

Anthracite also invests in multifamily and commercial mortgage loans
that are in default, or for which the borrower is making monthly payments
in accordance with a forbearance plan. For hedging and other purposes,
Anthracite invests in derivative mortgage securities such as interest-only
strips, principal-only strips, and other securities with significant
exposure to changes in mortgage prepayment rates.

A portion of Anthracite's mortgage assets consist of foreign
mortgage-backed securities and foreign mortgage loans. Similarly,
Anthracite evaluates and, from time to time, pursues investments in real
property located outside the United States and multifamily, commercial and
other real property, including net leased real estate, properties acquired
at foreclosure or by deed-in-lieu of foreclosure and other underperforming
or otherwise distressed real property both in the United States and abroad.
Anthracite considers investments in registered investment companies,
partnerships and other investment funds and other types of non-mortgage
related assets and engages in hedging transactions to reduce interest rate,
prepayment and currency exchange rate risks, subject to provisions of the
Code that regulate REITs and the requirements for exemption from the
Investment Company Act of 1940, as amended.

BUSINESS OF CORE CAP

CORE Cap was incorporated in Delaware in August 1997 and elected to be
taxed as a REIT under the Code. The day-to-day business of CORE Cap is
managed by GMAC Management. The principal executive offices of CORE Cap are
located at 757 Fifth Avenue, 24th Floor, New York, New York 10153.

CORE Cap acquires, holds and manages a diversified, leveraged portfolio
of mortgage assets comprised of residential mortgage loans, commercial
mortgage loans, residential mortgage-backed securities and commercial
mortgage-backed securities. CORE Cap maintains between 65% and 90% of its
portfolio in residential mortgage loans and residential mortgage-backed
securities and 10% to 35% in commercial mortgage loans and commercial
mortgage-backed securities.

CORE Cap's principal business objective has been to enhance stockholder
value and increase profitability and cash available for distribution to
stockholders by leveraging its equity and managing the interest rate spread
between the mortgage assets it acquires and the cost of funding its
portfolio of mortgage assets.

CORE Cap acquires residential mortgage loans primarily from GMAC
Mortgage and commercial mortgage loans primarily from GMAC Commercial. CORE
Cap acquires mortgage-backed securities from a variety of secondary market
sources and, in the case of GMAC residential mortgage-backed securities,
directly from the issuing or guaranteeing agency.

INVESTMENT POLICIES

In administering CORE Cap's mortgage assets, GMAC Management has a high
degree of autonomy, subject to the terms of the management agreement
between CORE Cap and GMAC Management. The investment policies, however,
guide GMAC Management with respect to:

o portfolio composition and quality;

o mortgage asset acquisition;

o pricing procedures;

o underwriting and quality control procedures;

o leverage and liquidity management;

o risk management;

o potential conflicts of interest; and

o other policies.

The investment policies, which are discussed below, may be revised from
time to time at the discretion of the board of directors acting without the
vote of any affiliated director and without a vote of CORE Cap's
stockholders.

PORTFOLIO COMPOSITION AND QUALITY

Substantially all of CORE Cap's mortgage loans are acquired from GMAC
Mortgage and GMAC Commercial. Substantially all of CORE Cap's mortgage
assets are either residential mortgage loans, commercial mortgage loans or
mortgage-backed securities. Substantially all of CORE Cap's residential
mortgage-backed securities have implied or actual ratings from Standard &
Poor's of AA or AAA, which are the two highest Standard & Poor's rating
categories, or equivalent ratings from other rating agencies. Substantially
all of CORE Cap's commercial mortgage-backed securities have implied or
actual ratings from Standard & Poor's of BBB or higher or equivalent
ratings from other rating agencies. Generally, CORE Cap does not acquire
real estate mortgage investment conduit residual interests within the
meaning of Section 860D(a) of the Code or collateralized mortgage
obligation residual interests that may give rise to "excess inclusion
income" as defined by Section 860E of the Code. However, following
securitizations by CORE Cap of its mortgage loans, CORE Cap may hold these
residual interests not in excess of 20% of its portfolio. Substantially all
of the mortgage assets acquired by CORE Cap are secured by properties
located within the United States. CORE Cap may also acquire mortgage assets
secured by properties in foreign countries and CORE Cap explores
opportunities to acquire mortgage assets originated by GMAC, its affiliates
and others in certain foreign countries.

CORE Cap maintains between 65% and 90% of its portfolio in residential
mortgage loans and residential mortgage- backed securities and 10% to 35%
in commercial mortgage loans and commercial mortgage-backed securities. As
market conditions change and as business opportunities arise, these
portfolio allocations may be modified by the board of directors. However,
CORE Cap must maintain at least 55% of its portfolio in a combination of
residential mortgage loans, commercial mortgage loans and mortgage-backed
securities that represent all of the securities with respect to the
underlying pool of mortgages.

MORTGAGE ASSET ACQUISITION

Generally, CORE Cap purchases residential mortgage loans from GMAC
Mortgage and commercial mortgage loans from GMAC Commercial, although
mortgage loans may be acquired from unaffiliated third parties. These
acquisitions are funded out of proceeds of indebtedness incurred by CORE
Cap, proceeds received in connection with the repayment or disposition of
mortgage loans and proceeds from the issuance of additional shares of
common stock and preferred stock. Residential mortgage loans acquired from
GMAC Mortgage are acquired under the residential mortgage purchase and
servicing agreement, and commercial mortgage loans acquired from GMAC
Commercial are acquired under the commercial mortgage purchase and
servicing agreement. Any additional mortgage loans purchased from GMAC and
its affiliates must be purchased on terms that are no less favorable than
those that could be obtained by CORE Cap if these loans were purchased from
third parties unaffiliated with CORE Cap. CORE Cap may purchase any type of
mortgage loan product currently originated by GMAC Mortgage or GMAC
Commercial or developed by GMAC Mortgage or GMAC Commercial in the future.

Every three months CORE Cap enters into a forward purchase agreement
with GMAC Mortgage under which, during the three-month period following,
CORE Cap will purchase all of the specified types of residential mortgage
loans originated by GMAC Mortgage during the period, in the form of either
whole loans or GMAC residential mortgage-backed securities, at GMAC
Mortgage's election.

Under the forward purchase agreements entered into between CORE Cap and
GMAC Mortgage, GMAC Mortgage originates residential mortgage loans intended
for sale on a "flow" basis to CORE Cap. The forward purchase agreements for
residential mortgage loans and GMAC residential mortgage-backed securities
obligate CORE Cap to purchase all of the specified types of residential
mortgage loans originated by GMAC Mortgage, in the form of either whole
loans or GMAC residential mortgage-backed securities at GMAC Mortgage's
election, for a specific period of time. The forward purchase agreements
also obligate GMAC Mortgage to use commercially reasonable efforts to
originate residential mortgage loans in conformity with the terms and
underwriting guidelines specified in the forward purchase agreement. The
forward purchase agreements contain GMAC Mortgage's good faith estimate of
the projected originations for the covered period and in no event will CORE
Cap be obligated to purchase more than $900 million in principal amount in
any such period. The margin, index and price for the origination and
acquisition of residential mortgage loans are established by GMAC Mortgage
and CORE Cap on a monthly basis. If there is no agreement on the margin,
index and price for a particular month, GMAC Mortgage has no obligation to
sell residential mortgage loans originated during such month to CORE Cap.

Under the forward purchase agreements, the transfers of originated
residential mortgage loans to and payments by CORE Cap occur on a monthly
basis. The purchase price paid by CORE Cap is adjusted to reflect that CORE
Cap is entitled to receive the interest earned on these loans and that CORE
Cap will reimburse GMAC Mortgage an amount determined to be GMAC Mortgage's
"cost of capital" for these loans, in each case from the date of
origination to the date of transfer. Based on information provided to CORE
Cap by GMAC Mortgage, CORE Cap believes that GMAC Mortgage's "cost of
capital" is less than the interest earned by CORE Cap with respect to each
period. In addition, CORE Cap believes that GMAC Mortgage's "cost of
capital" applied as described above is less than CORE Cap's cost of funding
such residential mortgage loans.

The mortgage purchase and servicing agreements provide that before
selling mortgage loans or entering into forward purchase agreements with
third parties, GMAC Mortgage and GMAC Commercial must first offer these
loans to CORE Cap. Under the residential mortgages right of first offer,
GMAC Mortgage is required to provide notice to CORE Cap specifying the
types and the approximate principal amount of mortgage loans it expects to
originate during the specified 90-day period, the preliminary pricing
parameters and other material terms for the sale. Three business days after
the delivery of the offer notice and at approximately 30-day intervals
thereafter during the 90-day period covered by the offer, GMAC Mortgage
must send a pricing notice to CORE Cap specifying the price, which may be a
specified spread over a specified index, at which it will originate and
sell these mortgage loans for a 30-day period. CORE Cap has one business
day to respond to each pricing notice and elect to purchase the offered
residential mortgage loans on the offered terms.

Under the commercial right of first offer, GMAC Commercial is required
to provide notice to CORE Cap specifying the commercial mortgage loans GMAC
Commercial wishes to sell, certain underwriting criteria and loan
characteristics relevant to the sale, the purchase price and the other
material terms for the sale. CORE Cap has three business days to respond to
the notice and elect to purchase the offered commercial mortgage loans on
the offered terms, subject to completion of due diligence on the offered
commercial mortgage loans. Under the commercial right of first offer, CORE
Cap has 15 days from the election to purchase to complete its due diligence
and, if the commercial mortgage loans are consistent with the terms set
forth in GMAC Commercial's notice and otherwise comply with the
requirements of the commercial mortgage purchase and servicing agreement,
to purchase the loans. If CORE Cap does not timely elect to purchase the
offered loans or does not acquire the offered commercial mortgage loans
based on its due diligence, the loans may be sold by GMAC Mortgage or GMAC
Commercial to third parties. However, GMAC Mortgage or GMAC Commercial may
not sell these loans to third parties if the non-price terms are materially
more favorable to the third parties than the non-price terms offered to
CORE Cap, without first reoffering the loans to CORE Cap on the new terms.
CORE Cap has one business day to respond to any reoffer.

CORE Cap, GMAC Mortgage and GMAC Commercial agree to act in good faith
in implementing the rights of first offer. The rights of first offer will
terminate on the earliest of termination of the management agreement,
termination by CORE Cap of either the servicing provisions or mortgage
purchase provisions in the relevant mortgage loan purchase and servicing
agreement, or October 2002. CORE Cap may also acquire from GMAC Mortgage
and GMAC Commercial from time to time mortgage loans other than those
covered by the rights of first offer.

CORE Cap does not acquire the right to service any mortgage loan it
acquires. Instead, GMAC Mortgage and GMAC Commercial act as servicer of the
mortgage loans acquired from them. CORE Cap believes that the mortgage
purchase and servicing agreements entered into with GMAC Mortgage and GMAC
Commercial are fair to CORE Cap.

CORE Cap also acquires mortgage-backed securities. These securities are
acquired in the secondary market, except for the GMAC residential
mortgage-backed securities which are acquired directly from the issuing
agency.

PRICING PROCEDURES

The quarterly forward purchase agreements to acquire residential
mortgage loans originated by GMAC Mortgage and GMAC residential
mortgage-backed securities establish on a monthly basis the margin, the
index and the price at which each type of residential mortgage loan is to
be originated by GMAC Mortgage and acquired by CORE Cap. CORE Cap
calculates and posts the rate and price for each type of residential
mortgage loan using the agreed-upon margin, index and price on a daily
basis and GMAC Mortgage's originations under the forward purchase
agreements are based on the posted rates and prices. Commercial mortgage
loans are not acquired under quarterly forward purchase agreements, but
rather on a bulk purchase basis with prices determined by arm's-length
negotiations. In negotiating the pricing for mortgage loans to be acquired
by CORE Cap, CORE Cap takes into consideration such factors as funding,
hedging and loan loss reserve costs to determine the maximum price under
which a mortgage asset will still produce the required return on equity.
With the return on equity analysis as a benchmark, market analyses are
performed to refine CORE Cap's pricing parameters. These analyses include
reviews of trends in market rates, credit quality, analyses of available
information on mortgage asset transactions occurring in the market and
market pricing information implied from recently completed securitizations.
Surveys are also completed or obtained from third party vendors which
document the current pricing of mortgage loan products offered by
competitive lenders. Documentation of the data analyzed to determine
pricing is summarized and provided to the board of directors for periodic
review.

UNDERWRITING AND QUALITY CONTROL PROCEDURES

GMAC Management follows an underwriting and quality control process to
evaluate the quality of underwriting of the mortgage loans CORE Cap
acquires. The Bank of Maryland, the custodian, has custody of the note and
the assignment for each residential mortgage loan owned by CORE Cap and the
loan documents for each commercial mortgage loan owned by CORE Cap. To
facilitate borrowings by CORE Cap, CORE Cap engages one or more agents, who
are not affiliates of GMAC, to conduct legal document reviews of a sample
of the mortgage loans acquired in order to verify the accuracy and
completeness of the information contained in the mortgage notes, security
instruments and other documents in the mortgage loan files. As a condition
of purchase, CORE Cap utilizes a nationally recognized underwriting review
firm to select a sample of mortgage loans targeted for acquisition for a
compliance check of underwriting and review of income, asset, and appraisal
information. Additional due diligence is performed as deemed necessary by
GMAC Management in accordance with the investment policies. The investment
policies generally require additional due diligence on mortgage loans
having a high risk profile or if the compliance check indicates that
further due diligence should be conducted.

LEVERAGE AND LIQUIDITY MANAGEMENT

CORE Cap finances the acquisition of mortgage assets with the net
proceeds of equity offerings, as well as the proceeds of debt financing
obtained by CORE Cap. Substantially all of CORE Cap's leverage is achieved
pursuant to reverse repurchase agreements with nationally recognized
lenders. CORE Cap may initiate securitizations of its mortgage assets as an
alternative funding source.

GMAC Management attempts to strike a balance between the
under-utilization of leverage, which reduces potential returns to
stockholders, and the over-utilization of leverage, which could reduce CORE
Cap's ability to meet its obligations. CORE Cap maintains a ratio of the
value of its equity to assets of between 6.5% and 11.5%, which CORE Cap
believes results in the highest leverage that is prudent. This range for
the equity-to-assets percentage provides several hundred basis points of
equity, as a percentage of assets, in excess of the minimum ratios required
by lenders in the reverse repurchase agreement funding market to provide a
margin in the event that the market value of CORE Cap's collateral pledged
to secure its borrowings declines. Hedging costs are reduced as the
equity-to-assets reserve is increased and the likelihood of a margin call
on assets declines. For purposes of calculating the equity-to-assets
percentage, CORE Cap's equity is equal to its investment portfolio on a
market-to-market basis, less the book value of its obligations under
reverse repurchase agreements and related borrowings. Leverage attributable
to the issuance of collateralized mortgage obligations by CORE Cap or other
securitization structures which CORE Cap may consider using to diversify
its funding sources is reflected in CORE Cap's financial reporting
documents. The investment policies limit CORE Cap's ability to acquire
additional mortgage assets when this percentage falls below 6.5%. If the
percentage falls below 6.5% or increases above 11.5% at any time, GMAC
Management will submit a plan to the board of directors to bring leverage
back into compliance with the investment policies.

RISK MANAGEMENT

Asset/Liability Management

Credit Risk Management. CORE Cap is exposed to credit risk, special
hazard risk and fraud. CORE Cap reviews the credit risk and other risks of
loss associated with each investment and determines the appropriate
provisions for loss and allocation of capital to apply to such investment.
In addition, CORE Cap obtains representations and warranties and other
appropriate documentation in connection with its acquisition of mortgage
assets. In its hedging transactions, CORE Cap follows procedures designed
to limit credit exposure to counterparties, including contracting only with
counterparties whose financial strength meets CORE Cap's requirements.

Interest Rate Risk Management

CORE Cap attempts to structure its debt financing to have interest rate
adjustment characteristics that, on an aggregate basis, generally
correspond to the interest rate adjustment characteristics of its mortgage
assets. To the extent consistent with its election to qualify as a REIT,
CORE Cap enters into hedging transactions to mitigate the potential
detrimental effects of interest rate changes. GMAC Management develops
procedures designed to implement efficient hedging strategies. Hedging is
used in selected instances to seek to mitigate declines in the market value
of CORE Cap's mortgage assets during periods of increasing interest rates
or to limit or cap the rate on its borrowings. These hedging transactions
include the use of interest rate swaps and the purchase or sale of interest
rate collars, caps or floors. CORE Cap also uses financial futures
contracts, options and forward contracts and mortgage-backed securities,
including "interest only" classes, as a hedge against future interest rate
changes. No hedging strategy can eliminate interest rate risk, and CORE
Cap's ability to enter into such hedging transactions may be limited by
provisions in the Code relating to qualifying assets and qualifying income
for REITs.

PREPAYMENT RISK MANAGEMENT

CORE Cap seeks to minimize the effects of prepayment rates that are
different than anticipated through structuring a diversified portfolio with
a variety of prepayment characteristics. CORE Cap also invests in
commercial mortgage loans and commercial mortgage-backed securities
representing interests in commercial mortgage loans which generally provide
for prepayment prohibitions, penalties and yield maintenance charges.
Prepayment risk is monitored by GMAC Management through periodic review of
the impact of a variety of prepayment scenarios on CORE Cap's revenues, net
earnings, dividends, cash flow and balance sheet.

Although CORE Cap believes GMAC Management has a cost-effective
asset/liability management program to provide a level of protection against
interest rate and prepayment risks, no strategy can completely insulate
CORE Cap from the effects of interest rate changes, prepayments and
defaults by counterparties. Further, the federal income tax requirements
that CORE Cap must satisfy to qualify as a REIT limit CORE Cap's ability to
fully hedge its interest rate and prepayment risks. CORE Cap regularly
monitors and evaluates the results of its asset/liability management
hedging strategy and as a result may have to adjust its asset/liability
management program as it deems in the best interests of the stockholders of
CORE Cap.

POTENTIAL CONFLICT OF INTEREST POLICIES

Because of the nature of CORE Cap's relationships with affiliates of
GMAC, conflicts of interest arise. These conflicts include CORE Cap's
acquisition of mortgage loans from, or disposition of mortgage loans to,
GMAC Mortgage and GMAC Commercial or their affiliates and the modification
or termination of the management agreement or either mortgage purchase and
servicing agreements. It is CORE Cap's policy that any agreements and
transactions between CORE Cap, on the one hand, and GMAC Mortgage, GMAC
Commercial or their affiliates, on the other hand, including the management
agreement and the mortgage purchase and servicing agreements, be fair to
CORE Cap. In addition, CORE Cap may not enter into, modify or terminate the
management agreement or the mortgage purchase and servicing agreements
without the approval of the board of directors acting without the vote of
any affiliated director. The execution of forward purchase agreements, term
sheets and other documents under the mortgage purchase and servicing
agreements for the purchase of mortgage loans do not require approval of
the board of directors.

The policy that certain actions of CORE Cap be taken without the vote
of any affiliated director is intended to ensure fair dealings among CORE
Cap and GMAC Mortgage, GMAC Commercial and their respective affiliates.
However, there is a risk that such an agreement or transaction will not be
on terms as favorable to CORE Cap as would have been obtained from
unaffiliated third parties.

As described herein, GMAC and its affiliates have direct interests in
transactions with CORE Cap, including the sale of mortgage assets to CORE
Cap. However, none of the officers or directors of CORE Cap have any
interests in these assets, other than indirect interests through their
ownership of common shares.

OTHER POLICIES

CORE Cap operates in a manner that will not subject it to regulation
under the Investment Company Act of 1940. CORE Cap does not invest in the
securities of other issuers for the purpose of exercising control,
underwrite securities of other issuers, actively trade in loans or other
investments, offer securities in exchange for property or make loans to
third parties, including officers, directors or other affiliates of CORE
Cap. Repurchasing of capital stock occurs only in conformity with
applicable federal and state laws and regulations and the requirements for
qualifying as a REIT.

CORE Cap operates in a manner that will not subject it to regulation
under the Commodity Exchange Act.

CORE Cap publishes and distributes to its stockholders quarterly and
annual reports containing financial statements prepared in accordance with
generally accepted accounting principles. The annual financial statements
of CORE Cap are audited by its independent auditors.

CORE Cap makes investments and operates its business in a manner
consistent with the requirements of the Code to qualify as a REIT. CORE Cap
cannot change its policy of seeking to maintain its qualification as a REIT
without the approval of the holders of two-thirds of the outstanding class
A common shares, class B common shares and series A preferred shares, each
class of common shares voting separately as long as a controlled affiliate
of GMAC Mortgage serves as CORE Cap's manager.

COMPARISON OF RIGHTS OF STOCKHOLDERS OF ANTHRACITE AND CORE CAP STOCKHOLDERS

Anthracite is incorporated in Maryland and CORE Cap is incorporated in
Delaware. Upon consummation of the merger, your rights as a stockholder,
which are currently governed by Delaware law, the CORE Cap amended and
restated certificate of incorporation and the CORE Cap bylaws, will be
governed by Maryland law and the Anthracite amended and restated articles
of incorporation and bylaws. The following information summary provides an
overview of the rights of holders of Anthracite capital stock compared with
the rights of holders of CORE Cap capital stock. The summary is not a
complete description of the differences between the rights of Anthracite
stockholders and CORE Cap stockholders. For a full review of the
differences you should read relevant provisions of Maryland law, Delaware
law, the Anthracite amended and restated articles of incorporation and
bylaws as well as the CORE Cap amended and restated certificate of
incorporation and bylaws, all of which are available upon request.

Maryland law and the Anthracite amended and restated articles of
incorporation and bylaws contain provisions that may be deemed to have an
anti-takeover effect and may delay, defer or prevent a change in control of
Anthracite or other transactions that an Anthracite stockholder might
consider is in its best interest, including a transaction that might result
in a premium over the market price for the shares held by Anthracite
stockholders. These provisions are expected to discourage various types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of Anthracite to negotiate first with
Anthracite's board. Anthracite's management believes that the benefits of
these provisions outweigh the potential disadvantages of these provisions,
because, among other things, negotiation with Anthracite's board might
result in an improvement of the terms received by Anthracite stockholders.

AUTHORIZED CAPITAL STOCK

ANTHRACITE

400,000,000 shares of common stock, par value $.001 per share.
100,000,000 shares of preferred stock, par value $.001 per share. 1,200,000
shares of the preferred stock is designated 10.5% Series A Senior
Cumulative Convertible Redeemable Preferred Stock.

Subject to applicable Rules of The New York Stock Exchange, the
Anthracite board may issue, in its discretion, additional shares of
Anthracite common stock or Anthracite preferred stock; provided, that the
total number of shares issued does not exceed the authorized number of
shares of capital stock.

CORE CAP

20,000,000 shares of class A comon stock. 25,000 shares of class B
common stock 12,000,000 shares of preferred stock, of which 2,260,997 have
been designated as series A preferred stock.

VOTING RIGHTS

ANTHRACITE/MARYLAND LAW

Maryland law provides that, unless otherwise provided in a
corporation's amended and restated articles of incorporation:

o each share of its capital stock is entitled to one vote;

o the presence in person or by proxy of stockholders entitled to cast a
majority of all the votes entitled to be cast at a meeting constitutes a
quorum; and

o in matters other than the election of directors or the approval of
extraordinary transactions, a majority of all the votes cast at a
meeting at which a quorum is present is sufficient to approve a matter
which properly comes before a stockholder meeting.

Maryland law limits the voting rights of "control shares" held by
persons who, directly or indirectly, have the power to exercise:

o one-fifth or more, but less than one-third;
o one-third or more, but less than a majority; or
o a majority or more of all voting power in the election of directors.

There is no similar limitation under Delaware law.

Anthracite's bylaws exempt holders of Anthracite's capital stock from
the limitations on the voting rights of "control shares." Subject to
Maryland law, each holder of Anthracite common stock is entitled to one
vote per share. Anthracite's amended and restated articles of incorporation
permits the board of directors to classify and issue Anthracite preferred
stock in one or more series that may have voting rights that differ from
that of the Anthracite common stock. Except as may otherwise be provided in
the articles supplementary of a series of Anthracite preferred stock,
holders of outstanding Anthracite preferred stock generally have the right
to elect one director to the Anthracite board.

CORE CAP/DELAWARE LAW

Delaware law provides that a corporation may designate the voting
rights of each class of stock and must specify the voting rights of such
class of stock in the certificate of incorporation or the board resolutions
providing for the issuance of stock. Each holder of CORE Cap common stock
is entitled to one vote per share. CORE Cap's amended and restated
certificate of incorporation provides that so long as:

o a controlled affiliate as defined in the certificate of incorporation of
GMAC Mortgage serves as the manager of CORE Cap, and

o there are outstanding shares of class B common stock,

the entire voting power to elect one director of CORE Cap will be vested
exclusively in the holders of the shares of class B common stock and the
entire voting power for the election of the remaining directors will be
vested exclusively in the holders of the shares of class A common stock.
CORE Cap's amended and restated certificate of incorporation permits the
CORE Cap board to issue CORE Cap preferred stock in one or more series that
may have voting power that differs from that of the CORE Cap common stock.
CORE Cap's amended and restated certificate of incorporation permits the
CORE Cap board to designate the extent, if any, to which the holders of the
shares of preferred stock will be entitled to vote as a class or otherwise
with respect to the election of directors or otherwise.

ADVANCE NOTICE PROVISION

ANTHRACITE/MARYLAND LAW

The Anthracite bylaws provide that nominations of persons for
election to the board of directors and the proposal of business to be
considered by stockholders may be made at an annual meeting of
stockholders:

o pursuant to Anthracite's notice of the meeting,
o by the board of directors or
o by a stockholder who is entitled to vote at the meeting and has complied
with the procedures set forth in the bylaws.

Only the business specified in the notice of meeting may be brought
before a special meeting of stockholders.

Nominations of persons for election to the board of directors may be
made at a special meeting of stockholders:

o pursuant to the notice of meeting,
o by the board of directors or
o provided that the board of directors has determined that directors will
be elected the special meeting, by a stockholder who is entitled to vote
at the meeting and has complied with the advance written notice provisions
set forth in the bylaws.

Under the Anthracite bylaws, in order for a stockholder to nominate a
candidate for election as a director or propose business for consideration at
any annual meeting, the stockholder must generally give notice to
Anthracite's secretary not more than 90 days or less than 60 days from the
first anniversary of the last annual meeting.

CORE CAP/DELAWARE LAW

Delaware law provides that special meetings of the stockholders of a
corporation may be called by the corporation's board of directors or by
such other persons as may be authorized in the corporation's certificate of
incorporation or bylaws.

At special meetings of stockholders, only the business specified in
the notice of meeting may be brought before the meeting of stockholders.

SIZE OF THE BOARD OF DIRECTORS

ANTHRACITE/MARYLAND LAW

Under Maryland law, a corporation must generally have at least three
directors at all times. Subject to this provision, a corporation's bylaws
may alter the number of directors and authorize a majority of the entire
board of directors to alter within specified limits the number of directors
set by the corporation's amended and restated articles of incorporation or
its bylaws. The number of persons currently constituting the Anthracite
board is seven. The Anthracite amended and restated articles of
incorporation provides that the number of persons constituting the Anthracite
board may not be less than three nor more than nine unless changed by an
amendment to the Anthracite bylaws.

CORE CAP/DELAWARE LAW

Delaware law provides that the certificate of incorporation or the
bylaws of a corporation may allow the stockholders or the board of directors
to fix or change the number of directors, but a corporation must have at
least one director. The CORE Cap bylaws provide that the number of members
of the board of directors will be five.

CLASSIFICATION OF THE BOARD OF DIRECTORS

ANTHRACITE/MARYLAND LAW

The directors of Anthracite are divided into three classes, with
approximately one-third of the directors elected by the stockholders
annually. Consequently, members of the board of directors serve staggered
three-year terms.

Classification of the Anthracite board is intended to assure the
continuity and stability of Anthracite's business strategies and policies
as determined by the board of directors. The classified board provision of
the Anthracite amended and restated articles of incorporation could also
have the effect of making the replacement of incumbent directors more time
consuming and difficult, which could delay, defer or prevent an attempt by
a third party to obtain control of Anthracite or to pursue another
transaction, even though such an attempt or other transaction might be
beneficial to Anthracite or its stockholders. At least two annual meetings
of stockholders, instead of one, will generally be required to effect a
change in a majority of the board of directors. Thus, the classified board
provision could increase the likelihood that incumbent directors will
retain their positions.

CORE CAP/DELAWARE LAW

Under Delaware law, directors, unless their terms are staggered, are
elected at each annual stockholders meeting. The certificate of
incorporation may authorize the election of directors by one or more
classes or series of shares, and the certificate of incorporation, an
initial bylaw or a bylaw adopted by a vote of the stockholders may provide
for staggered terms for the directors. The CORE Cap bylaws provide that all
the directors of CORE Cap are elected at each annual stockholder meeting.

ELECTION OF THE BOARD OF DIRECTORS

ANTHRACITE/MARYLAND LAW

Maryland law provides that a corporation's directors will be elected
by a plurality of the votes cast at a meeting at which a quorum is present.

Under Maryland law, a corporation's amended and restated articles of
incorporation may provide that stockholders of a corporation can elect
directors by cumulative voting. The Anthracite amended and restated
articles of incorporation does not grant cumulative voting rights with
respect to the election of directors to holders of Anthracite common stock.
Maryland law permits the bylaws of the corporation to provide for the term
of office a director may serve, except that (1) the term of office of a
director may not be longer than five years or, except in the case of an
initial or substitute director, shorter than the period between annual
meetings and (2) the term of office of at least one class of directors will
expire each year. The Anthracite amended and restated articles of
incorporation provides for a classified board. The holders of the series A
preferred stock are entitled to separately elect one director who serves
for a term of three years.

CORE CAP/DELAWARE LAW

Elections for the CORE Cap board are decided by a plurality of the
votes cast.

Under Delaware law, stockholders do not have cumulative voting rights
unless the certificate of incorporation so provides. The CORE Cap amended
and restated certificate of incorporation does not grant cumulative voting
rights to holders of CORE Cap common stock.

The CORE Cap amended and restated certificate of incorporation
provides that so long as:

o a controlled affiliate of GMAC Mortgage serves as manager of CORE Cap,
and
o there are outstanding shares of class B common stock,

REMOVAL OF DIRECTORS

ANTHRACITE/MARYLAND LAW

Under Maryland law, unless the corporation's amended and restated
articles of incorporation provides otherwise, the stockholders of a
corporation with a classified board of directors may remove a director,
only for cause, by the affirmative vote of a majority of all the votes
entitled to be cast for the election of directors. The Anthracite amended
and restated articles of incorporation provides that directors may be
removed only by the affirmative vote of the holders of two-thirds of the
votes entitled to be cast in the election of the directors.

CORE CAP/DELAWARE LAW

Under Delaware law, in the case of a corporation whose board of
directors is classified, except as otherwise provided in a corporation's
certificate of incorporation, the stockholders may remove any director only
for cause by the vote of a majority of all the votes entitled to be cast in
the election of the directors. CORE Cap's bylaws provide that directors may
be removed at any time, with or without cause, by vote at a meeting or by
written consent of the holders of stock entitled to vote on the election of
directors.

FILLING VACANCIES

ANTHRACITE/MARYLAND LAW

Under the Anthracite amended and restated articles of incorporation
and bylaws, vacancies in the Anthracite board caused by the removal or
resignation of a director may be filled by the vote of a majority of the
remaining directors or, if the vacancy is caused by the removal of a
director, by the stockholders at an annual or special meeting, and the
appointee shall hold office for the unexpired term of his predecessor, or
until his successor is elected or appointed.

Newly created directorships may be filled by a majority of the entire
Anthracite board and the appointee shall hold office for the remainder of
the full term of the class of directors in which the vacancy occurred.

CORE CAP/DELAWARE LAW

Under Delaware law, unless the certificate of incorporation or bylaws
provide otherwise, the board of directors of a corporation may fill any
vacancy on the board, including vacancies resulting from an increase in the
number of directors.

Subject to the rights of the holders of any series of preferred stock
or any other series or class of stock as set forth in the CORE Cap amended
and restated certificate of incorporation to elect directors under
specified circumstances, the CORE Cap bylaws provide that vacancies and
newly created directorships resulting from any increase in the authorized
number of directors may be filled by election at a meeting of stockholders
or by written consent of the holders of stock entitled to vote thereon in
lieu of a meeting.

Vacancies and newly created directorships may be filled by the
directors, whether or not a quorum, by majority vote or by a sole remaining
director.

STANDARD OF CONDUCT FOR DIRECTORS

ANTHRACITE/MARYLAND LAW

The standard of conduct for directors is set forth in Section
2-405.1(a) of the Maryland law, which requires that a director of a
Maryland corporation perform his or her duties in "good faith," with "a
reasonable belief" that his or her actions are "in the best interests of
the corporation" and with the care of an "ordinarily prudent person in a
like position under similar circumstances."

CORE CAP/DELAWARE LAW

Under Delaware law, the standards of conduct for directors have
developed through written opinions of the Delaware courts in cases decided
by them. Generally, directors of Delaware corporations are subject to a
duty of loyalty, a duty of care and a duty of candor to stockholders. The
duty of loyalty requires directors to refrain from self-dealing. According
to the Delaware Supreme Court, the duty of care requires "directors in
managing the corporate affairs to use that amount of care which
ordinarily careful and prudent men would use in similar circumstances" and
the duty of candor requires directors "to disclose fully and fairly all
material information within the board's control when it seeks stockholder
action." More recent case law has established "gross negligence" as the
test for breach of the standard for the duty of care in the process of
decision-making by directors.

LIABILITY OF DIRECTORS; INDEMNIFICATION OF
DIRECTORS AND OFFICERS; INSURANCE

ANTHRACITE/MARYLAND LAW

Maryland law requires a corporation, unless its amended and restated
articles of incorporation provides otherwise, to indemnify a director or
officer who has been successful, on the merits or otherwise, in the defense
of any proceeding to which he is made a party by reason of his service in
that capacity. Maryland law permits a corporation to indemnify its present
and former directors and officers, among others, in connection with any
proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that:

o the act or omission of the director or officer was material to the
matter giving rise to the proceeding and was committed in bad faith or
was the result of active and deliberate dishonesty,
o the director or officer actually received an improper personal benefit
in money, property or services, or
o in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.

The indemnity may include judgments, penalties, fines, settlements
and reasonable expenses actually incurred by the director or officer in
connection with the proceeding; provided, however, that if the proceeding
is one by or in the right of the corporation, indemnification is not
permitted with respect to any proceeding in which the director or officer
has been adjudged to be liable to the corporation. In addition, a director
or officer may not be indemnified with respect to any proceeding charging
improper personal benefit to the director or officer in which the director
or officer was adjudged to be liable on the basis that personal benefit was
improperly received. The termination of any proceeding by conviction or
upon a plea of nolo contendere or its equivalent or an entry of an order of
probation prior to judgment creates a rebuttable presumption that the
director or officer did not meet the requisite standard of conduct required
for permitted indemnification. The termination of any proceeding by
judgment, order or settlement, however, does not create a presumption that
the director or officer failed to meet the requisite standard of conduct
for permitted indemnification.

In addition, Maryland law requires Anthracite, as a condition to
advancing expenses, to obtain a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by Anthracite and a written statement by or
on his behalf to repay the amount paid or reimbursed by Anthracite if it is
ultimately determined that the standard of conduct was not met.

Anthracite's amended and restated articles of incorporation provides
that to the fullest extent of Maryland law, Anthracite will indemnify, and
advance expenses to its present and former directors and officers on
account of any proceeding to which they are a party, by reason of the fact
that such person is or was a director or officer of Anthracite, or is or
was serving any other entity at the request of Anthracite.

CORE CAP/DELAWARE LAW

Delaware law provides that a corporation may indemnify any person
made a party or threatened to be made a party to any type of proceeding,
other than an action by or in the right of the corporation, because he or
she is or was an officer, director, employee or agent of the corporation or
was serving at the request of the corporation in that capacity for another
entity, against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such proceeding if:

o he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation, and

o in the case of a criminal proceeding, he or she had no reasonable cause
to believe that his conduct was unlawful.

A corporation may indemnify any person made a party or threatened to
be made a party to any threatened, pending or completed action or suit
brought by or in the right of the corporation because he was an officer,
director, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation or other entity, against expenses actually and
reasonably incurred in connection with such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation.

A corporation must indemnify a director, officer, employee or agent
who successfully defends himself or herself in a proceeding to which he or
she was a party because he or she was a director, officer, employee or
agent of the corporation against expenses actually and reasonably incurred
by him or her. Expenses incurred by an officer or director, or other
employees or agents as deemed appropriate by the board of directors, in
defending a civil or criminal proceeding may be paid by the corporation in
advance of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.

The indemnification and expense advancement provisions of Delaware
law are not exclusive of any other rights which may be granted by bylaws, a
vote of stockholders or disinterested directors or otherwise. Under
Delaware law, termination of any proceeding by conviction or upon a plea of
nolo contendere or its equivalent shall not, of itself, create a
presumption that such person is prohibited from being indemnified.

The CORE Cap amended and restated certificate of incorporation
provides that each director, officer and employee of the corporation shall
be indemnified by the corporation to the fullest extent permitted by
Delaware law.

LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND OFFICERS

ANTHRACITE/MARYLAND LAW

Maryland law permits a Maryland corporation's amended and restated
articles of incorporation to include a provision expanding or limiting the
liability of its directors and officers to the corporation or its
stockholders for money damages, except for liability resulting from:

o actual receipt of an improper benefit or profit in money, property, or
services, in which case recovery is limited to the actual amount of the
benefit or profit actually received, or

o a judgment or other final adjudication adverse to the person that is
entered in a proceeding based on a finding in the proceeding that the
person's action, or failure to act, was the result of active and
deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding.

The Anthracite amended and restated articles of incorporation
provides that, to the fullest extent permitted by law, Anthracite directors
and officers are not liable to Anthracite or its stockholders for money
damages. However, such provisions do not limit the availability of
equitable relief to Anthracite or its stockholders.

CORE CAP/DELAWARE LAW

As permitted under Delaware law, CORE Cap's amended and restated
certificate of incorporation eliminates the personal liability of directors
for monetary damages for breach of such directors' fiduciary duty, except
liability for:

o any breach of the director's duty of loyalty to the corporation or its
stockholders,

o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,

o liability under Section 174 of Delaware law for unlawful payment of
dividends or stock purchases, or

o any transaction from which the director derived an improper personal
benefit.

The certificate of incorporation further provides for the elimination
or limitation of a director's liability to CORE Cap to the fullest extent
permitted by Delaware law.

INSPECTION OF BOOKS AND RECORDS

ANTHRACITE/MARYLAND LAW

Maryland law provides that persons who together have been
stockholders for more than six months and own at least 5% of the
outstanding stock of any class of a Maryland corporation may inspect and
copy the corporation's books of account and stock ledger, request and
receive a statement of the corporation's affairs and in the case of a
corporation which does not maintain the original or a duplicate stock
ledger at its principal office, request and receive a list of its
stockholders. In addition, any stockholder of a Maryland corporation may
inspect and copy the bylaws, minutes of the proceedings of stockholders and
annual statements of affairs of a corporation and request the corporation
to provide a sworn statement showing all stock and other securities issued
during a specified period, the consideration received by the corporation
per share, and the value of any consideration received by the corporation,
other than money, as set in a resolution of the board.

CORE CAP/DELAWARE LAW

Delaware law allows any stockholder, upon written demand under oath
stating the purpose thereof, the right during usual hours for business to
inspect for any proper purpose the corporation's stock ledger, a list of
its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose means a purpose reasonably related to
such person's interest as a stockholder.

AMENDED AND RESTATED ARTICLES OF INCORPORATION AMENDMENTS

ANTHRACITE/MARYLAND LAW

Maryland law allows amendment of a corporation's amended and restated
articles of incorporation if its board of directors adopts a resolution
setting forth the amendment proposed, declaring it advisable and directing
that the proposed amendment be submitted for consideration at either an
annual or special meeting of the stockholders. Unless a lesser or greater
proportion of votes is specified in a corporation's amended and restated
articles of incorporation, the proposed amendment must be approved by
two-thirds of all votes entitled to vote on the matter at any such meeting.

Under most circumstances, Anthracite's amended and restated articles
of incorporation requires the affirmative vote of holders of not less than
a majority of the voting stock of Anthracite to amend Anthracite's amended
and restated articles of incorporation.

CORE CAP/DELAWARE LAW

Delaware law provides that unless a higher vote is required in the
certificate of incorporation, an amendment to the certificate of
incorporation of a corporation may be approved by a majority of the
outstanding shares and a majority of the outstanding shares of each class
entitled to vote upon the proposed amendment.

CORE Cap's amended and restated certificate of incorporation does not
contain any provisions regarding amendment of CORE Cap's amended and
restated certificate of incorporation.

BYLAW AMENDMENTS

ANTHRACITE/MARYLAND LAW

Under Maryland law, the power to change the bylaws is vested with the
stockholders, except to the extent the amended and restated articles of
incorporation or bylaws vest it in the board.

The Anthracite bylaws have vested the power to change the Anthracite
bylaws in the Anthracite board and the stockholders. Generally, this power
may only be exercised by a majority of the board then in office or by a
vote of the holders of two-thirds of the stock entitled to vote.

CORE CAP/DELAWARE LAW

Delaware law provides that a corporation's bylaws may be amended by
that corporation's stockholders, or, if so provided in the corporation's
certificate of incorporation, the corporation's directors.

CORE Cap's amended and restated certificate of incorporation provides
that the directors will have power to make, alter or repeal bylaws, except
as may otherwise be provided in the bylaws. CORE Cap's bylaws require a
majority vote of the whole board of directors to make, alter or repeal
bylaws.

VOTE ON MERGER OR SALE OF SUBSTANTIALLY ALL ASSETS

ANTHRACITE/MARYLAND LAW

Under Maryland law, the board must adopt a resolution that declares a
merger or sale of substantially all of a corporation's assets advisable and
direct that the proposed transaction be submitted for consideration at
either an annual or special meeting of the corporation's stockholders. At
such meeting, unless the corporate amended and restated articles of
incorporation states otherwise, the holders of two-thirds of the shares of
the corporation entitled to vote are required to approve the following:

o sale, lease, exchange or transfer of all or substantially all of the
assets of a corporation not in the ordinary course of business
conducted by it, and

o any merger, consolidation or share exchange involving the corporation.

Anthracite's amended and restated articles of incorporation does not
contain any exception to this provision.

Maryland law also provides that the vote of the stockholders of a
surviving corporation is not required to approve a merger if (1) the plan
of merger does not reclassify or change its outstanding stock or otherwise
amend the corporation's amended and restated articles of incorporation and
(2) the number of shares of common stock to be issued or transferred in the
merger does not increase by more than 20% the number of its shares of the
same class or series outstanding immediately before the merger becomes
effective.

CORE CAP/DELAWARE LAW

Delaware law provides that, unless otherwise specified in a
corporation's certificate of incorporation, a sale or other disposition of
all or substantially all of the corporation's assets, a merger or
consolidation of the corporation with another corporation or a dissolution
of the corporation requires the affirmative vote of the board of directors
(except in limited circumstances) plus, with exceptions, the affirmative
vote of a majority of the outstanding stock entitled to vote thereon.

LIMITS ON OWNERSHIP AND TRANSFER OF SHARES

ANTHRACITE/MARYLAND LAW

Anthracite's amended and restated articles of incorporation provide
that no person may beneficially own, directly or indirectly, 9.8% or more
of the outstanding shares of common stock, or 9.8% in value or in number of
shares, whichever is more restrictive, of the outstanding shares of any
class or series of preferred stock.

CORE CAP/DELAWARE LAW

The CORE Cap amended and restated certificate of incorporation
provides that no person may beneficially own in excess of 9.8% of the
shares of any class or series of common stock or preferred stock.

STOCKHOLDER MEETINGS

ANTHRACITE/MARYLAND LAW

The Anthracite bylaws provide that an annual meeting of stockholders
is to be held each year at such time and place as shall be designated by
the Anthracite board.

Under Maryland law, a special meeting of stockholders may be called
by the president, the board of directors or any other person specified in
the corporation's amended and restated articles of incorporation or bylaws.

Under the Anthracite bylaws, a special meeting of the stockholders of
Anthracite may be called at any time by:

o the Chief Executive Officer,
o the President,
o the board of directors or
o a majority of the unaffiliated directors.

The Secretary of Anthracite is required to call special meeting of
stockholders upon the written request of stockholders entitled to cast at
least 50% of all the votes entitled to be cast at a special meeting. Such a
request must state the purpose of the meeting and matters proposed to be
acted on. The stockholders calling such a special meeting are required to
reimburse Anthracite for the costs of preparing and mailing a notice of
such a meeting to the stockholders.

Unless requested by stockholders entitled to cast a majority of all
the votes entitled to be cast at a special meeting of the stockholders, a
special meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any special meeting of the
stockholders held during the preceding twelve months.

CORE CAP/DELAWARE LAW

The CORE Cap bylaws provide that an annual meeting of stockholders
for the election of directors and for the transaction of any other proper
business shall be held at such time and date in each year as the board of
directors, the chairman or the president may from time to time determine.

Subject to the rights of the holders of any series of preferred stock
or any other series or class of stock as set forth in CORE Cap's amended
and restated certificate of incorporation to elect additional directors
under specified circumstances, a special meeting of the stockholders
entitled to vote on any business to be considered at any such meeting may
be called by the chairman, the president or any vice president, and shall
be called by the chairman, the president or the secretary when directed to
do so by resolution of the board of directors or at the written request of
directors representing a majority of the whole board of directors. Any such
request shall state the purpose or purposes of the proposed special
meeting.

CORPORATE ACTION WITHOUT A MEETING

ANTHRACITE/MARYLAND LAW

Under Maryland law, any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting if (1) a unanimous
written consent setting forth the action and signed by each stockholder
entitled to vote on such matters and (2) a written waiver of any right to
dissent signed by each stockholder entitled to notice of the meeting but
not entitled to vote at it, are filed with the records of the stockholders
meeting.

It is unlikely that stockholders of Anthracite will be able to take
action by written consent under Maryland law. This provision of Maryland
law may deter hostile takeovers, as a holder or group of holders
controlling a majority of Anthracite common stock will not be able to amend
the Anthracite bylaws or remove directors pursuant to a stockholders'
written consent unless they obtain a unanimous written consent of all
stockholders or call a special meeting of the stockholders. Any effect that
this provision may have on the operations of Anthracite, however, is
virtually eliminated because the rules of The New York Stock Exchange, Inc.
generally prohibit listed companies from using written consents in lieu of
meetings.

CORE CAP/DELAWARE LAW

Any action required by statute to be taken at any annual or special
meeting of the stockholders, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting
forth the action taken is signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.

DIVIDENDS

ANTHRACITE/MARYLAND LAW

Under Maryland law the board of directors has the power to authorize
and cause the corporation to pay, out of funds legally available therefor,
distributions in cash, property or securities of the corporation unless the
declaration of such distributions would be restricted by the amended and
restated articles of incorporation. Maryland law further provides that no
distribution may be made (1) if the corporation would become unable to pay
its debts as they become due in the usual course of business or (2) the
corporation's total assets would be less than the sum of its liabilities
plus, unless the amended and restated articles of incorporation permits
otherwise, the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of stockholders whose preferential rights on
dissolution are superior to those receiving the distribution.

CORE CAP/DELAWARE LAW

Subject to any restrictions contained in a corporation's certificate
of incorporation, Delaware law generally provides that a corporation may
declare and pay dividends out of "surplus," which means the excess of net
assets over capital, or when no surplus exists, out of new profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal
year. Dividends may not be paid, however, out of net profits if the capital
of the corporation is less than the amount of capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets. In accordance with Delaware law, "capital" is
determined by the board of directors and may not be less than the aggregate
par value of the outstanding capital stock of the corporation having par
value.

The CORE Cap amended and restated certificate of incorporation
provides that the holders of shares of common stock are entitled to
receive, when and if declared by the board of directors, out of the assets
of CORE Cap which are by law available therefor, dividends payable either
in cash, in stock or otherwise. The holders of the class A common stock and
the class B common stock are entitled to participate equally in any
dividends and, subject to the preferential rights of the holders of
preferred stock, to share ratably in the assets of CORE Cap legally
available for distribution to its stockholders in the event of its
liquidation, dissolution or winding up.

APPRAISAL OR DISSENTERS' RIGHTS

ANTHRACITE/MARYLAND LAW

Under Maryland law, stockholders of a corporation are entitled to
dissenters' rights of appraisal in connection with a:

o merger or consolidation,
o share exchange,
o transfer of assets requiring stockholder approval,
o amendment of amended and restated articles of incorporation which
alters the contract rights of any outstanding stock and substantially
adversely affects stockholder rights if the right to do so is not
reserved in the amended and restated articles of incorporation or
o business combination transaction.

However, except with respect to transactions involving an interested
stockholder, stockholders generally have no dissenter's right of appraisal
with respect to their shares if:

o the shares are listed on a national securities exchange or are
designated as a national market system security on an interdealer
quotation system by the NASD or
o the shares are that of the successor in the merger, unless (1) the
merger alters the contractual rights of the shares as expressly set
forth in the amended and restated articles of incorporation and the
amended and restated articles of incorporation does not reserve the
right to do so or (2) the shares are to be changed or converted in
whole or in part in the merger into something other than either shares
in the successor or cash, scrip, or other rights or interests arising
out of provisions for the treatment of fractional shares in the
successor. Accordingly, Anthracite stockholders are not generally
entitled to appraisal rights.

CORE CAP/DELAWARE LAW

Under Delaware law, a stockholder of a Delaware corporation may be
entitled to demand appraisal and obtain payment of the judicially
determined fair value of his or her shares in the event of any plan of
merger or consolidation in which the corporation, the shares of which he or
she holds, is a party, provided such stockholder continuously holds such
shares through the effective date of the merger, otherwise complies with
the requirements of Delaware law for the perfection of appraisal rights and
does not vote in favor of the merger. However, this right to demand
appraisal does not apply to stockholders if:

o they are stockholders of a surviving corporation and if a vote of the
stockholders of such corporation is not necessary to authorize the
merger or consolidation, or
o the shares held by the stockholders are of a class or series listed on
a national securities exchange, designated as a national market system
security on an interdealer quotation system by the NASD or are held of
record by more than 2,000 stockholders on the date set to determine the
stockholders entitled to vote on the merger or consolidation. However,
appraisal rights are available for the shares of any class or series of
stock of a Delaware corporation if the holders are required by the
terms of the agreement of merger or consolidation to accept for their
stock anything except:

o shares of stock of the corporation surviving or resulting from the
merger or consolidation; or
o shares of stock of any other corporation which at the effective
date of the merger or consolidation will be listed on The New York
Stock Exchange or the American Stock Exchange, designated as a
national market system security on an interdealer quotation system
by the NASD or are held of record by more than 2,000 stockholders;
o cash in lieu of fractional shares of the corporation surviving or
resulting from the merger or consolidation; or
o any combination of shares of stock and cash in lieu of fractional
shares described in the first or second bullet points listed
above.

A Delaware corporation may provide in its certificate of
incorporation that appraisal rights shall be available for the shares of
any class or series of its stock as the result of an amendment to its
certificate of incorporation, any merger or consolidation to which the
corporation is a party or a sale of all or substantially all of the assets
of the corporation.

DERIVATIVE SUITS

ANTHRACITE/MARYLAND LAW

There is no statutory right to bring a derivative suit under Maryland
law; however, there is a clear common law right in Maryland to bring a
derivative suit

CORE CAP/DELAWARE LAW

Under Delaware law, CORE Cap stockholders have the right to bring a
derivative suit.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CORE CAP

GENERAL

The following discussion should be read in conjunction with the
accompanying audited financial statements and accompanying notes. The
statements in this discussion that are not purely historical are forward
looking statements, which are made under the Safe Harbor provisions of the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those included in those forward-looking statements. Forward
looking statements involve risks and uncertainties including changes in the
markets that affect the value of the interest earning portfolio of CORE
Cap, interest rates affecting the ability of CORE Cap to finance its
mortgage assets and CORE Cap's ability to acquire quality mortgage assets.

CORE Cap was initially capitalized on September 24, 1997 and
commenced operations on October 31, 1997 upon closing its private equity
placement. CORE Cap has elected to be taxed as a REIT under the Code. CORE
Cap will not be subject to federal income taxes on its income to the extent
that it distributes 95% of its tax-basis net income to its stockholders and
meets other conditions required to maintain its REIT status. GMAC
Management manages the day to day operations of CORE Cap.

In May 1999, CORE Cap's board of directors approved a share
repurchase program that resulted in the return of a portion of the
stockholders' original investment. CORE Cap funded the share repurchase
program with proceeds from the sale of mortgage-backed securities available
in its portfolio and from cash generated from operations. The total cost of
the share repurchase program resulted in a net return of investor capital,
including program expenses, in excess of 30% of CORE Cap's equity. These
transactions reduced the size and affected the composition of CORE Cap's
asset portfolio in 1999. The smaller size of the portfolio resulted in
lower interest earnings in 1999 and will continue to do so in the future.

RESULTS OF OPERATIONS

Comparison of 1999 to 1998:

For the year ended December 31, 1999, CORE Cap recorded net income of
$20,016. This compares to net income of $15,373 for the year ended December
31, 1998.

For the year ended December 31, 1999, basic earnings per share
totaled $3.32, resulting in yields of 16.62% per share and 12.94% per unit
of common stock and preferred stock, in each case based on their original
offering prices.

For the year ended December 31, 1998, basic earnings per share
totaled $0.98, resulting in yields of 4.90% and 7.73% on a per share and
per unit basis.

CORE Cap invests in various interest-bearing assets, including
primarily agency adjustable rate and fixed rate mortgage backed securities,
residential whole loans, senior interests in commercial participation
certificates, and residential and commercial non-agency mortgage-backed
securities. CORE Cap finances its assets through the use of repurchase
agreements and other borrowings, using CORE Cap's mortgage assets as
collateral against the outstanding obligations.

For the year ended December 31, 1999, CORE Cap's net interest spread,
the difference between the interest income earned from CORE Cap's interest
earnings assets less the cost of financing those assets, net of provisions
for loss, increased to $19,267 from $16,036 for 1998. During 1999, CORE
Cap's yield on interest earning assets increased to 6.28% from 6.19% for
the corresponding prior year period ended December 31, 1998. In addition,
during 1999, CORE Cap's weighted- average cost of funds, decreased to 5.35%
from 5.77% for the corresponding prior year period ended December 31, 1998.
As a result, CORE Cap's net interest spread, the arithmetic difference
between the yield on interest earning assets less the cost of funds
increased 51bps during 1999. Accordingly, CORE Cap's net interest margin,
net interest income as a percentage of average interest earning assets,
increased 52bps during 1999.

As of December 31, 1999, total assets of CORE Cap totaled $1,395,211,
as against $2,601,900 at year-end 1998. For the year ended December 31,
1999, CORE Cap's return on average interest earning assets increased to
1.10% from 0.62%, an increase of 48bps from the corresponding period ended
December 31, 1998.

CORE Cap intends to purchase high quality mortgages assets and manage
those assets to generate profitable returns for CORE Cap's stockholders.
During 1999 and 1998, CORE Cap repositioned its portfolio to account for
asset prepayment, interest rate sensitivity, asset yields, liquidity, and
internal directives which included CORE Cap's share repurchase program. As
a result, CORE Cap sold $1,960,921 and $1,048,097 mortgage backed
securities, mortgage loans, and interest rate agreements during 1999 and
1998, which resulted in a net gain of $8,084 and $3,812 from the
corresponding prior year period.

CORE Cap's operating expenses consist primarily of management fees
paid to GMAC Management. Under the management agreement, GMAC Management is
entitled to a base and incentive management fee, calculated quarterly in
arrears. For the years ended December 31, 1999 and 1998, CORE Cap recorded
management fees of $5,101 and $3,146, comprising approximately 70% of CORE
Cap's total operating expenses. Other operating expenses include legal,
audit and professional fees incurred by CORE Cap.

Comparison of 1998 to 1997:

CORE Cap commenced operations in October 1997. Within its initial two
months of operation ended on December 31, 1997, CORE Cap increased its
investment portfolio to $1.8 billion through the purchase of agency
mortgage backed securities and residential whole loans purchased from GMAC
Mortgage and the secondary market. GAAP net income for the two months ended
December 31, 1997 was $1,781, or $.02 per weighted average common share.
The initial 10% Cumulative Convertible Series A preferred stock dividend of
$.417 was made on December 31, 1997. Results for the twelve months ended
December 31, 1998 varied significantly from 1997 results as CORE Cap
completed its first full twelve calendar months of operations on December
31, 1998. For comparability, 1998 results of operations are discussed in
the "Comparison of 1999 to 1998" located herein.

LIQUIDITY

CORE Cap's business objective is to generate stable levels of income
for stockholders by leveraging its equity and managing the interest rate
spread between its mortgage asset portfolio and the cost of funding its
portfolio. CORE Cap finances its portfolio of mortgage backed securities
and mortgage loans through the use of short term reverse repurchase
agreements and other borrowings, respectively. At December 31, 1999 CORE
Cap had four uncommitted short-term reverse repurchase agreements
outstanding totaling $842,093. At December 31, 1999 no individual
investment banking firm had more than 38% of the total outstanding
principal. At December 31, 1999 CORE Cap had two committed finance
agreements outstanding totaling $417,314. Under the terms of the
agreements, CORE Cap receives the proceeds from the sale of commercial
paper issues by the lenders, which utilize CORE Cap mortgage loans as the
underlying collateral. The terms of the commercial paper facility are
renewed annually. CORE Cap utilizes various hedging strategies to manage
its cost of funds, including interest rate cap agreements and interest rate
swaps. CORE Cap is required to distribute 95% of its taxable income as
dividends in order to maintain its status as a REIT as indicated elsewhere
in this proxy statement/prospectus.

CORE Cap's sources of capital remained intact as of December 31, 1999.
CORE Cap continues to meet the criteria necessary to maintain its strategic
financing relationships. These financing relationships are the key
components in generating a competitive return on shareholder investment.

QUANTITATIVE AND QUALITATIVE DISCLOSURES OF CORE CAP ABOUT MARKET RISK

The investment portfolio of CORE Cap is subject to two primary market
risks: market value risk and earnings risk. CORE Cap does not have exposure
to foreign currency, commodities, or holdings in equity securities. The
volatility of interest rates that impact the performance of CORE Cap is
driven by numerous factors including the domestic and international
economic climate, domestic monetary and fiscal policy, and global fixed
income and equity market trends.

With CORE Cap's portfolio significantly invested in fixed rate
assets, higher interest rates may lead to a deterioration in the market
value of its investments, while lower rates may lead to an appreciation in
the value of its portfolio. In addition, higher interest rates may lead to
an increase in financing expenses, while lower rates may result in lower
funding costs for CORE Cap. CORE Cap's borrowings bear interest of
short-term money market rates (LIBOR and commercial paper), and thus
movements in interest rates affect the net interest income of CORE Cap.

Management uses a variety of financial instruments to mitigate market
risk. Interest rate swaps, caps, floors and mortgage options are employed
to ease volatility in market value and earnings due to interest rate
fluctuations. However, these instruments also have market value risk
elements. Instruments positioned as hedges may not entirely offset the
change in value of the item to be hedged and may entail credit risk. Credit
risk is assumed to the extent that the hedge has positive value that could
not be realized if the counter-party were to default on its obligations.

The following tables are designed to quantify the risk elements for
CORE Cap in terms of December 31, 1999 market value and forecast 2000 net
interest income. Net interest income is defined as income earned from
assets, inclusive of premium amortization, minus interest expense on all
liabilities inclusive of hedge instruments. For financial statement
purposes, interest rate floors and mortgage options are carried at fair
value with mark-to-market adjustments recorded as a component of trading
gains and losses, and are not included in net interest income.

CHANGE IN VALUE OF EQUITY
(BASED ON PARALLEL SHIFTS OF U.S. TREASURY CURVE)

-200 BPS -100 BPS -50 BPS BASE +50 BPS +100 BPS +200 BPS
------------------------------------------------------------------
($3,748) $3,481 $2,516 $0 ($3,819) ($8,539) ($20,034)
(4.30%) 3.99% 2.89% 0% (4.38%) (9.79%) (22.98%)

CHANGE IN FORECAST 2000 NET INTEREST INCOME
(BASED ON PARALLEL SHIFTS OF U.S. TREASURY CURVE)

-200 BPS -100 BPS -50 BPS BASE +50 BPS +100 BPS +200 BPS
------------------------------------------------------------------
$4,137 $2,001 $301 $0 ($580) ($1,229) ($2,311)
26.55% 12.84% 1.93% 0% (3.72%) (7.89%) (14.83%)

Balance Sheet Risk Management

The portfolio strategy of CORE Cap is to generate a stable income
stream for investors while maintaining a prudent market risk profile. This
objective is accomplished by creating a balance sheet structure that
performs well even in significantly volatile market environments.
Management closely monitors the market value, earnings, and liquidity
position of the balance sheet and attempts to respond in a timely manner to
changes in the market environment. CORE Cap uses sophisticated portfolio
management systems in determining the market value and earnings sensitivity
of the balance sheet. The systems employed measure duration, convexity, and
prepayment sensitivity along with the earnings and liquidity profile. Such
measures provide for constant reassessment of the balance sheet structure,
which should facilitate disciplined management of the portfolio.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material U.S. federal income tax
consequences relating to the holding, and disposition of common stock of
Anthracite. The discussion contained herein does not address all aspects of
taxation that may be relevant to particular stockholders in light of their
personal investment or tax circumstances, or, except as discussed below, to
certain types of stockholders (including insurance companies, tax-exempt
organizations, financial institutions or broker-dealers and foreign
corporations and persons who are not citizens or residents of the United
States) subject to special treatment under the U.S. federal income tax
laws.

The statements in this discussion and the opinion of counsel are
based on current provisions of the Internal Revenue Code, existing,
temporary, and currently proposed Treasury regulations promulgated under
the Internal Revenue Code, the legislative history of the Internal Revenue
Code, existing administrative rulings and practices of the Internal Revenue
Service, and judicial decisions.

YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF THE OWNERSHIP AND SALE OF ANTHRACITE COMMON STOCK
INCLUDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME, AND OTHER TAX
CONSEQUENCES OF SUCH OWNERSHIP AND SALE, AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.

TAXATION OF ANTHRACITE

GENERAL

Anthracite elected to be taxed as a REIT (referred to below as a
REIT) under the Code commencing with its initial taxable year ended
December 31, 1998. Anthracite believes that it has been organized and has
operated in such a manner as to qualify for taxation as a REIT, and intends
to continue to operate in such a manner.

The sections of the Code relating to qualification and operation as a
REIT are highly technical and complex. The following discussion sets forth
the material aspects of the Code sections and Treasury regulations that
govern the U.S. federal income tax treatment of a REIT and its
stockholders. The discussion is qualified in its entirety by the applicable
Code provisions, Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all of which are
subject to change prospectively or retroactively.

As a condition to closing, Skadden, Arps, Slate, Meagher & Flom LLP
will render an opinion that Anthracite is organized in conformity with the
requirements for qualification as a REIT, and its proposed method of
operation will enable it to meet the requirements for qualification and
taxation as a REIT under Section 856 through 860 of the Code. Investors
should be aware, however, that opinions of counsel are not binding upon the
Internal Revenue Service or any court. It must be emphasized that the
opinion of Skadden Arps is based on and is conditioned upon certain
assumptions and representations made by Anthracite as to factual matters,
including assumptions and representations regarding the nature of
Anthracite's properties and the future operation of Anthracite's business
in accordance with REIT requirements, which are described in this
Prospectus. Anthracite's qualification and taxation as a REIT depend on its
ability on a continuing basis to meet various qualification requirements
imposed on REITs under the Code as discussed below. Skadden Arps will not
review Anthracite's compliance with those tests on a continuing basis.
Accordingly, no assurance can be given that the actual results of
Anthracite's operations for any particular taxable year will satisfy such
requirements. For a discussion of the tax consequences of failure to
qualify as a REIT, see "--Failure to Qualify."

If Anthracite qualifies for taxation as a REIT, it generally will not
be subject to U.S. federal corporate income tax on REIT taxable income that
is distributed currently to its stockholders. This treatment substantially
eliminates the "double taxation" (i.e., taxation at both the corporate and
stockholder levels) that generally results from an investment in a
corporation. Anthracite will be subject, however, to U.S. federal income
taxation as follows:

o Anthracite will be taxed at regular corporate rates on any
undistributed REIT taxable income, including undistributed net
capital gains.

o Anthracite may be required to pay the "alternative minimum tax" on
our undistributed items of tax preference, if any.

o If Anthracite has (i) net income from the sale or other
disposition of "foreclosure property" that is held primarily for
sale to customers in the ordinary course of business or (ii) other
nonqualifying income from foreclosure property, it will be
required to pay tax at the highest corporate rate on such income.

o Anthracite will be required to pay a 100% tax on any net income
from prohibited transactions. In general, prohibited transactions
are sales or other taxable dispositions of property (other than
foreclosure property) held primarily for sale to customers in the
ordinary course of business.

o If Anthracite fails to satisfy the 75% or the 95% gross income
test (as discussed below), but has maintained its qualification as
a REIT it will be required to pay a 100% tax on an amount equal to
(a) the gross income attributable to the greater of the amount by
which it fails the 75% or 95% gross income test multiplied by (b)
a fraction intended to reflect its profitability.

o Anthracite will be required to pay a 4% excise tax in the amount
by which its annual distributions to its stockholders is less than
the sum of (i) 85% of its REIT ordinary income for the year, (ii)
95% of its REIT capital gain net income for such year (other than
long-term capital gains that it elects to retain and pay the tax
thereon), and (iii) any undistributed taxable income from prior
periods. To the extent that it elects to retain and pay income tax
on its net capital gain, such retained amounts will be treated as
having been distributed for purposes of the 4% excise tax.

o If Anthracite acquires an asset from a C corporation (i.e., a
corporation generally subject to full corporate-level tax) in a
merger or other transaction in which the basis of the asset in its
hands is determined by reference to the basis of the asset (or any
other asset) in the hands of the C corporation and it recognizes
gain on the disposition of such asset during the 10-year period
beginning on the date on which it acquired such asset, then to the
extent of such asset's net unrealized "built-in-gain" (i.e., the
excess of the fair market value of such asset at the time of
acquisition by it over the adjusted basis in such asset at such
time), Anthracite will be subject to tax at the highest regular
corporate rate applicable. The results described above with
respect to the tax on net unrealized "built-in-gain" assume that
Anthracite will elect pursuant to recently issued Treasury
regulations to be subject to the rules described in the preceding
sentence if Anthracite were to make such an acquisition.

o Anthracite will generally be subject to tax at the highest
marginal corporate rate on the portion of any "excess inclusion"
income derived from an investment in residual interests in real
estate mortgage investment conduits to the extent its stock is
held by specified tax exempt organizations not subject to tax on
unrelated business taxable income (such as the United States, any
state or political subdivision thereof, any foreign government or
any international organization, any agency or instrumentality of
any of the foregoing.) Any such tax on the portion of any "excess
inclusion" income allocable to its stock held by a such a tax
exempt organization will reduce the amount of cash it has
available for distribution to its stockholders.

REQUIREMENTS FOR QUALIFICATION

The Code defines a REIT as a corporation, trust, or association:

o that is managed by one or more trustees or directors;

o the beneficial ownership of which is evidenced by transferable
shares, or by transferable certificates of beneficial interest;

o that would be taxable as a domestic corporation, but for its
election to be taxed as a REIT;

o that is neither a financial institution nor an insurance company
subject to certain provisions of the Code;

o the beneficial ownership of which is held by 100 or more persons;

o not more than 50% in value of the outstanding shares of which is
owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last
half of each taxable year;

o that makes an election to be a REIT (or has made such election for
a previous taxable year) and satisfies all relevant filing and
other administrative requirements established by the Service that
must be met in order to elect and maintain REIT status;

o that uses a calendar year for U.S. federal income tax purposes and
complies with the recordkeeping requirements of the Code and
Treasury regulations; and

o that meets certain other tests, described below, regarding the
nature of its income and assets.

Conditions in the first four bullet points must be met during the
entire taxable year and the condition in the fifth bullet point must be met
during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. For purposes
of the sixth bullet point, tax-exempt entities are generally treated as
individuals, subject to a "look-through" exception for pension funds.

Anthracite's amended and restated articles of incorporation provides
for restrictions regarding ownership and transfer of Anthracite's stock.
These restrictions are intended to assist Anthracite in satisfying the
share ownership requirements described in the fifth and sixth bullet points
above. These stock ownership and transfer restrictions are described in "
The Merger-Restrictions on Ownership and Transfer of Anthracite Capital
Stock." These restrictions, however, may not ensure that Anthracite will,
in all cases, be able to satisfy the share ownership requirements described
in these points. If Anthracite fails to satisfy these share ownership
requirements, its status as a REIT would terminate. If, however, Anthracite
complies with the rules contained in applicable Treasury regulations that
require it to determine the actual ownership of its shares and it does not
know, or would not have known through the exercise of reasonable diligence,
that it failed to meet the requirement described in the sixth bullet point,
it would not be disqualified as a REIT.

QUALIFIED REIT SUBSIDIARIES

The Code provides that a corporation that is a "Qualified REIT
Subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a "Qualified
REIT Subsidiary" shall be treated as assets, liabilities, and items of
income, deduction, and credit of the REIT. A "Qualified REIT Subsidiary" is
a corporation, all of the capital stock of which is owned by a REIT. Thus,
in applying the requirements described herein, any "Qualified REIT
Subsidiaries" of Anthracite's will be ignored, and all assets, liabilities,
and items of income, deduction, and credit of such subsidiaries will be
treated as Anthracite's assets, liabilities, and items of income,
deduction, and credit. Recently enacted legislation would allow REITs,
beginning in 2001, to elect to treat corporate subsidiaries that are
wholly-owned as either separate taxable REIT subsidiary corporations, or
as transparent qualified REIT subsidiaries.

OWNERSHIP OF A PARTNERSHIP INTEREST

In the case of a REIT that is a partner in a partnership, Treasury
regulations provide that the REIT will be deemed to own its proportionate
share of the assets of the partnership and will be deemed to be entitled to
the gross income of the partnership attributable to such share. In
addition, the assets and gross income of the partnership will retain the
same character in the hands of the REIT for purposes of Section 856 of the
Code, including satisfying the gross income and asset tests described
below.

INCOME TESTS

Anthracite must meet two annual gross income requirements to qualify
as a REIT. First, at least 75% of its gross income (excluding gross income
from prohibited transactions) for each taxable year must consist of defined
types of income derived directly or indirectly from investments relating to
real property or mortgages on real property (including "rents from real
property" and interest on obligations secured by mortgages on real property
or on interests in real property) or temporary investment income. Second,
at least 95% of its gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from such real
property, mortgages on real property, or temporary investments, and from
dividends, other types of interest, and gain from the sale or disposition
of stock or securities, or from any combination of the foregoing.

The term "interest," as defined for purposes of the 75% and 95% gross
income tests, generally does not include any amount received or accrued
(directly or indirectly) if the determination of such amount depends in
whole or in part on net income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales. In addition, an amount received or accrued generally
will not be excluded from the term "interest" solely by reason of being
based on the income or profits of a debtor if the debtor derives
substantially all of its gross income from the related property through the
leasing of substantially all of its interests in the property, to the
extent the amounts received by the debtor would be characterized as rents
from real property if received by a REIT. Anthracite has represented that
it will not receive or accrue any interest where the determination of the
amount of interest depends, in whole or in part, on the net income or
profit of any person, to the extent the receipt of such interest would
jeopardize its status as a REIT.

Interest on obligations secured by mortgages on real property or on
interests in real property is qualifying income for purposes of the 75%
gross income test. Any amount includible in gross income with respect to a
regular or residual interest in a real estate mortgage investment conduit
generally is treated as interest on an obligation secured by a mortgage on
real property. If, however, less than 95% of the assets of a real estate
mortgage investment conduit consists of real estate assets, Anthracite will
be treated as receiving directly a proportionate share of the income of the
real estate mortgage investment conduit. In addition, if Anthracite
receives interest income with respect to a mortgage loan that is secured by
both real property and other property and the highest principal amount of
the loan outstanding during a taxable year exceeds the fair market value of
the real property on the date Anthracite purchased the mortgage loan, the
interest income will be apportioned between the real property and the other
property, which apportionment may cause Anthracite to recognize income that
is not qualifying income for purposes of the 75% gross income test.

In general, the interest, original issue discount, and market
discount income that Anthracite derives from its investments in mortgage
backed securities and mortgage loans will be qualifying interest income for
purposes of both the 75% and the 95% gross income tests, except to the
extent that less than 95% of the assets of a real estate mortgage
investment conduit in which Anthracite holds an interest consists of real
estate assets (determined as if Anthracite held such assets), and its
proportionate share of the income of the real estate mortgage investment
conduit includes income that is not qualifying income for purposes of the
75% and 95% gross income tests. In some cases, however, the loan amount of
a mortgage loan may exceed the value of the real property securing the
loan, which will result in a portion of the interest income from the loan
being classified as qualifying income for purposes of the 95% gross income
test, but not for purposes of the 75% gross income test. It is also
possible that, in some instances, the interest income from a distressed
mortgage loan may be based in part on the borrower's profits or net income,
which generally will disqualify the income from the loan for purposes of
both the 75% and the 95% gross income tests.

Anthracite may acquire construction loans or mezzanine loans that
have shared appreciation provisions. To the extent interest from a loan
that is based on the cash proceeds from the sale of property constitutes a
"shared appreciation provision" (as defined in the Code), income
attributable to such participation feature will be treated as gain from the
sale of the secured property, which generally is qualifying income for
purposes of the 75% and 95% gross income tests.

Anthracite also may employ, to the extent consistent with the REIT
provisions of the Code, other forms of securitizations under which a "sale"
of an interest in the mortgage loans occurs, and a resulting gain or loss
is recorded on our balance sheet for accounting purposes at the time of
sale. In a "sale" securitization, only the net retained interest in the
securitized mortgage loans would remain on its balance sheet. Anthracite
may elect to conduct certain of its securitization activities, including
such sales, through one or more taxable subsidiaries or through "Qualified
REIT Subsidiaries," as defined under the REIT provisions of the Code,
formed for such purpose. To the extent consistent with the REIT provisions
of the Code, such entity would elect to be taxed as a real estate mortgage
investment conduit or a financial asset securitization investment trust.

Rents Anthracite receives from the tenants of its real property will
qualify as "rents from real property" in satisfying the gross income tests
for a REIT described above only if several conditions are met:

o Generally, the amount of rent must not be based, in whole or in part,
on the income or profits of any person. However, an amount received
or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage
or percentages of receipts or sales.

o The Code provides that the rent received from a tenant will not
qualify as "rents from real property" in satisfying the gross income
tests if the REIT, or a direct or indirect owner of 10% or more of
the REIT, owns 10% or more of the ownership interests in such tenant,
taking into account both direct and constructive ownership.

o If rent attributable to personal property, leased in connection with
a lease of real property, is greater than 15% of the total rent
received under the lease, then the portion of rent attributable to
such personal property will not qualify as "rents from real
property."

o For the rent to qualify as "rents from real property," a REIT
generally must not operate or manage the real property or furnish or
render services to the tenants of such real property, other than
through an "independent contractor" who is adequately compensated and
from whom it derives no revenue. The "independent contractor"
requirement, however, does not apply to the extent the services
provided by a REIT are "usually or customarily rendered" in
connection with the rental or space for occupancy only and are not
otherwise considered "rendered to the occupant." In addition, a REIT
may render a "de minimis" amount of impermissible services without
violating the independent contractor requirement. Moreover, pursuant
to recently enacted legislation, a REIT will be permitted, beginning
in 2001, to provide services to tenants or others through an electing
taxable REIT subsidiary corporation without disqualifying the rental
income received from tenants for purposes of the REIT income
requirements.

Anthracite has represented that it will not charge rent for any
portion of any real property that is based, in whole or in part, on the
income or profits of any person (except by reason of being based on a fixed
percentage or percentages of receipts or sales, as described above) to the
extent that the receipt of such rent would jeopardize its status as a REIT.
In addition, Anthracite has represented that, to the extent that it
receives rent from a related party tenant, such rent will not cause it to
fail to satisfy either the 75% or 95% gross income test. Anthracite also
has represented that it will not allow the rent attributable to personal
property leased in connection with any lease of real property to exceed 15%
of the total rent received under the lease, if the receipt of such rent
would cause it to fail to satisfy either the 75% or 95% gross income test.
Furthermore, as a result of restrictions on the ownership of Anthracite
stock, no person may own, directly or indirectly, more than 9.8% of
Anthracite's outstanding stock so that no tenant should be a related party
tenant. Finally, Anthracite has represented that it will not operate or
manage real property or furnish or render noncustomary services to the
tenants of real property other than through an "independent contractor," to
the extent that such operation or the provision of such services would
jeopardize its status as a REIT.

FORECLOSURE PROPERTY

REITS generally are subject to tax at the maximum corporate rate on
any income from foreclosure property (other than income that would be
qualifying income for purpose of the 75% gross income test), less expenses
directly connected with the production of such income. "Foreclosure
property" is defined as any real property (including interests in real
property) and any personal property incident to such real property

o that is acquired by a REIT as the result of such REIT having bid on
such property at foreclosure, or having otherwise reduced such
property to ownership or possession by agreement or process of law,
after there was a default (or default was imminent) on a lease of
such property or on an indebtedness owed to the REIT that such
property secured,

o for which the related loan was acquired by the REIT at a time when
default was not imminent or anticipated, and

o for which such REIT makes a proper election to treat such property as
foreclosure property.

Anthracite does not anticipate that it will receive any income from
foreclosure property that is not qualifying income for purposes of the 75%
gross income test, but, if it were to receive any such income, it would
make an election to treat the related property as foreclosure property. If
the property were not eligible for the election to be treated as
foreclosure property because the related loan was acquired by the REIT at a
time when default was imminent or anticipated, income received with respect
to such ineligible property may not be qualifying income for purposes of
the 75% or 95% gross income test.

PROHIBITED TRANSACTION INCOME

Anthracite will generally be subject to a 100% tax on net income
derived from a prohibited transaction. The term "prohibited transaction"
generally includes a sale or other disposition of property (other than
foreclosure property) that is held primarily for sale to customers in the
ordinary course of a trade or business. In general, the assets owned by
Anthracite should not be considered held for sale to customers and any such
sale should not be in the ordinary course of Anthracite's business. Whether
property is held "primarily for sale to customers in the ordinary course of
a trade or business" depends, however, on the facts and circumstances in
effect from time to time, including those related to a particular property.
There is a risk that Anthracite will not comply with the safe-harbor
provisions of the Code or avoid owning property that may be characterized
as property held "primarily for sale to customers in the ordinary course of
a trade or business." In addition, it should be noted that a real estate
mortgage investment conduit or financial asset securitization investment
trust securitization of Anthracite's whole loans could be considered a
"prohibited transaction."

HEDGING TRANSACTIONS

It is possible that Anthracite may enter into hedging transactions
with respect to one or more of its assets or liabilities. Any such hedging
transactions could take a variety of forms, including an interest rate swap
or cap agreement, option, futures contract, forward rate agreement, or
similar financial instrument. To the extent that Anthracite enters into
such a hedging arrangement to reduce the interest rate risk on indebtedness
incurred or to be incurred to acquire or carry real estate assets, any
periodic income or gain from the disposition of such a hedging arrangement
should be qualifying income for purposes of the 95% gross income test, but
not the 75% gross income test.

Anthracite may receive income not described above that is not
qualifying income for purposes of the 75% and 95% gross income tests.
Anthracite will monitor the amount of nonqualifying income produced by its
assets and has represented that it will manage its portfolio in order to
comply at all times with the gross income tests.

If Anthracite fails to satisfy one or both of the 75% and 95% gross
income tests for any taxable year, Anthracite nevertheless may qualify as a
REIT for such year if it is entitled to relief under certain provisions of
the Code. Those relief provisions generally will be available if its
failure to meet such tests is due to reasonable cause and not due to
willful neglect, Anthracite attaches a schedule of the sources of its
income to its return, and Anthracite anticipates that any incorrect
information on the schedule will not be due to fraud with intent to evade
tax. It is not possible, however, to state whether in all circumstances
Anthracite would be entitled to the benefit of such relief provisions. As
discussed above in "Material U.S. Federal Income Tax Consequences--Taxation
of Anthracite," even if such relief provisions apply, a 100% tax would be
imposed on the gross income attributable to the greater of the amount by
which Anthracite fails the 75% or 95% gross income test, multiplied by a
fraction intended to reflect its profitability.

ASSET TESTS

At the close of each quarter of each taxable year, Anthracite also
must satisfy, either directly or through partnerships in which Anthracite
has an interest, two tests relating to the nature of its assets. First, at
least 75% of the value of its total assets must be represented by cash or
cash items (including certain receivables), government securities, "real
estate assets," or, in cases where Anthracite raises new capital through
stock or long-term (at least five-year) debt offerings, temporary
investments in stock or debt instruments during the one-year period
following Anthracite's receipt of such capital. The term "real estate
assets" includes interests in real property, interests in mortgages on real
property to the extent the principal balance of a mortgage does not exceed
the fair market value of the associated real property, regular or residual
interests in a real estate mortgage investment conduit (except that, if
less than 95% of the assets of a real estate mortgage investment conduit
consists of "real estate assets" (determined as if Anthracite held such
assets), Anthracite will be treated as holding directly its proportionate
share of the assets of such real estate mortgage investment conduit), and
shares of other REITS. For purposes of the 75% asset test, the term
"interest in real property" includes an interest in mortgage loans or land
and improvements thereon, such as buildings or other inherently permanent
structures (including items that are structural components of such
buildings or structures), a leasehold of real property, and an option to
acquire real property (or a leasehold of real property). An "interest in
real property" also generally includes an interest in mortgage loans
secured by controlling equity interests in entities treated as partnerships
for U.S. federal income tax purposes that own real property, to the extent
that the principal balance of the mortgage does not exceed the fair market
value of the real property that is allocable to the equity interest.
Second, of the investments not included in the 75% asset class, the value
of any one issuer's securities owned by Anthracite may not exceed 5% of the
value of Anthracite's total assets, and Anthracite may not own more than
10% of any one issuer's outstanding voting securities (except for interests
in any partnership and any Qualified REIT Subsidiary). Recent legislation
effective in 2001 adds the requirement that Anthracite generally can not
own more than 10% of the total value of the outstanding securities of any
one corporate issuer. The 5% and 10% asset limitations described above do
not apply to wholly-owned qualified REIT subsidiary corporations, or
effective in 2001, to electing taxable REIT subsidiary corporations. The
value of the stock held by a REIT in taxable REIT subsidiary corporations,
may not, however, exceed, in the aggregate, 20% of the value of a REIT's
total assets. See "Legislative or other Actions Affecting REITS.

Anthracite expects that any mortgage backed securities, distressed
real property and temporary investments that it acquires generally will be
qualifying assets for purposes of the 75% asset test, except to the extent
that less than 95% of the assets of a real estate mortgage investment
conduit in which it owns an interest consists of "real estate assets." In
that case, it will include in its proportionate share assets that are
nonqualifying assets held by such real estate mortgage investment conduit
for purposes of the 75% asset test. Mortgage loans (including distressed
mortgage loans, construction loans, bridge loans and mezzanine loans) also
will be qualifying assets for purposes of the 75% asset test to the extent
that the principal balance of each mortgage loan does not exceed the value
of the associated real property. Anthracite owns 100% of the non- voting
common stock and 5% of the voting common stock of Anthracite Securitization
Corporation. The remaining voting common stock of Anthracite Securitization
Corporation is owned by BlackRock Financial Management, Inc. As long as
BlackRock Financial Management, Inc. owns, directly or indirectly, less
than 10% of Anthracite stock, Anthracite will not be deemed to own more
than 10% of the voting stock of Anthracite Securitization Corporation. In
addition, Anthracite believes that the value of its Anthracite
Securitization Corporation stock will not exceed 5% of the total value of
its assets. As discussed above, effective 2001, a REIT generally cannot own
more than 10% of the value of any one issuer. Although Anthracite owns more
than 10% of the value of Anthracite Securitization Corporation, Anthracite
anticipates that Anthracite Securitization Corporation will be dissolved
prior to 2001. Anthracite will monitor the status of the assets that
Anthracite acquires for purposes of the various asset tests and has
represented that Anthracite will manage its portfolio in order to comply at
all times with such tests.

Anthracite anticipates that it may securitize all or a portion of the
mortgage loans which it acquires, in which event it will likely retain
certain of the subordinated and "interest only"classes of mortgage backed
security interests which may be created as a result of such securitization.
The securitization of the mortgage loans may be accomplished through one or
more real estate mortgage investment conduits or, if a non-real estate
mortgage investment conduit securitization is desired, through one or more
Qualified REIT Subsidiaries. The securitization of the mortgage loans
through either one or more real estate mortgage investment conduits or one
or more Qualified REIT Subsidiaries should not affect Anthracite's
qualification as a REIT or result in the imposition of corporate income tax
under the taxable mortgage pool rules. Income realized by Anthracite from a
real estate mortgage investment conduit securitization could, however, be
subject to a 100% tax as a "prohibited transaction."

If Anthracite should fail to satisfy the asset tests at the end of a
calendar quarter, such a failure would not cause Anthracite to lose its
REIT status if (i) it satisfied the asset tests at the close of the
preceding calendar quarter and (ii) the discrepancy between the value of
its assets and the asset test requirements arose from changes in the market
values of its assets and was not wholly or partly caused by the acquisition
of one or more nonqualifying assets. If the condition described in clause
(ii) of the preceding sentence were not satisfied, Anthracite still could
avoid disqualification by eliminating any discrepancy within 30 days after
the close of the calendar quarter in which it arose.

DISTRIBUTION REQUIREMENTS

In order to avoid corporate income taxation of Anthracite's earnings,
it is required to distribute with respect to each taxable year dividends
(other than capital gain dividends and retained capital gains) to its
stockholders in an aggregate amount at least equal to

o the sum of (A) 95% of its "REIT taxable income" (computed without
regard to the dividends paid deduction and its net capital gain) and
(B) 95% of the net income (after tax), if any, from foreclosure
property, minus

o the sum of certain items of noncash income.

Recent legislation would decrease the 95% distribution requirement to
90% effective in 2001. Such distributions must be paid in the taxable year
to which they relate, or in the following taxable year if declared before
Anthracite timely files its U.S. federal income tax return for such year
and if paid on or before the first regular dividend payment date after such
declaration. To the extent that Anthracite does not distribute all of its
net capital gain or distributes at least 95% (or 90% after 2000), but less
than 100%, of its "REIT taxable income," as adjusted, it will be subject to
tax thereon at regular ordinary and capital gains corporate tax rates.
Furthermore, if Anthracite should fail to distribute during each calendar
year (or, in the case of distributions with declaration and record dates
falling in the last three months of the calendar year, by the end of the
January immediately following such year) at least the sum of

o 85% of its REIT ordinary income for such year,

o 95% of its REIT capital gain net income for such year, and

o any undistributed taxable income from prior periods,

Anthracite would be subject to a 4% nondeductible excise tax on the excess
of such required distribution over the amounts actually distributed.
Anthracite may elect to retain, however, rather than distribute, all or a
portion of its net long-term capital gains and pay the tax on such
undistributed gains, in which case its stockholders would include their
proportionate share of such undistributed long-term capital gains in income
and receive a credit for their share of the tax paid by Anthracite. For
purposes of the 4% excise tax described above, any such retained amounts
would be treated as having been distributed. Anthracite intends to make
timely distributions sufficient to satisfy the annual distribution
requirements.

It is possible that, from time to time, Anthracite may experience
timing differences between

o the actual receipt of income and actual payment of deductible
expenses, and

o the inclusion of that income and deduction of such expenses in
arriving at its REIT taxable income.

For example, Anthracite will recognize taxable income in excess of
its cash receipts when, as frequently happens, original issue discount
accrues with respect to certain of its subordinated mortgage backed
security interests, including "principal only" securities and certain
"interest only" securities. Mezzanine loans may also be deemed to have
original issue discount for U.S. federal income tax purposes. Original
issue discount generally will be accrued using a methodology that does not
allow credit losses to be reflected until they are actually incurred.
Anthracite may also be required to accrue interest income from distressed
mortgage loans even though the borrowers fail to pay the full amounts due.
In addition, Anthracite may recognize taxable market discount income upon
the receipt of proceeds from the disposition of, or principal payments on,
mortgage backed securities and distressed mortgage loans that are "market
discount bonds" (i.e., obligations with an adjusted issue price that is
greater than its tax basis in such obligations), but not have any cash
because such proceeds may be used to make non-deductible principal payments
on related borrowings. Market discount income is treated as ordinary income
and not as capital gain and, thus, is subject to the 95% (90% after 2000)
distribution requirement. Furthermore, Anthracite would have income without
the receipt of cash to the extent of the market discount attributable to
debt securities held by a real estate mortgage investment conduit in which
Anthracite holds a residual interest.

Anthracite also may recognize "excess inclusion" income or other
taxable income in excess of cash flow from real estate mortgage investment
conduit residual interests or its retained interests in non-real estate
mortgage investment conduit securitization transactions. From time to time,
Anthracite may also recognize net capital gain attributable to the sale of
depreciated property that exceeds its cash receipts from the sale. In
addition, pursuant to certain Treasury regulations, Anthracite may be
required to recognize the amount of any payment to be made pursuant to a
shared appreciation provision over the term of the related loan using the
constant yield method. Finally, Anthracite may recognize taxable income
without receiving a corresponding cash distribution if it forecloses on or
makes a "significant modification" (as specifically defined in the Treasury
regulations) to a loan, to the extent that the fair market value of the
underlying property or the principal amount of the modified loan, as
applicable, exceeds its basis in the original loan. Therefore, Anthracite
may have less cash than is necessary to meet its annual 95% (90% after
2000) distribution requirement. In such a situation, Anthracite may find it
necessary to arrange for short-term (or possibly long-term) borrowings or
to raise funds through the issuance of preferred stock or additional common
stock or through the sale of assets.

Under certain circumstances, Anthracite may be able to rectify a
failure to meet the distribution requirements for a year by paying
"deficiency dividends" to its stockholders in a later year, which may be
included in its deduction for dividends paid for the earlier year. Although
Anthracite may be able to avoid being taxed on amounts distributed as
deficiency dividends, it will be required to pay to the Internal Revenue
Service interest based upon the amount of any deduction taken for
deficiency dividends.

RECORDKEEPING REQUIREMENTS

Under the Treasury regulations, Anthracite must maintain certain
records and request on an annual basis certain information from its
stockholders designed to disclose the actual ownership of its outstanding
stock. Anthracite has complied and intends to continue to comply with such
requirements.

FAILURE TO QUALIFY

If Anthracite fails to qualify for taxation as a REIT in any taxable
year, and certain relief provisions do not apply, Anthracite will be
subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. Distributions to Anthracite's
stockholders in any year in which it fails to qualify as a REIT will not be
deductible by Anthracite and will not be required to be made. In such
event, to the extent of its current and accumulated earnings and profits,
all distributions to stockholders will be taxable as ordinary income and,
subject to certain limitations of the Code, corporate distributees may be
eligible for the dividends received deduction. Unless entitled to relief
under specific statutory provisions, Anthracite also will be disqualified
from taxation as a REIT for the four taxable years following the year
during which it ceased to qualify as a REIT. It is not possible to state
whether in all circumstances Anthracite would be entitled to such statutory
relief.

TAXATION OF TAXABLE U.S. STOCKHOLDERS

As long as Anthracite qualifies as a REIT, distributions made to its
taxable U.S. stockholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends or retained capital
gains) will be taken into account by such U.S. stockholders as ordinary
income and will not be eligible for the dividends received deduction
generally available to corporations. As used herein, the term "U.S.
stockholder" means a holder of common stock that for U.S. federal income
tax purposes is

o a citizen or resident of the U.S.,

o a corporation, partnership, or other entity created or organized in
or under the laws of the U.S. or of any political subdivision
thereof,

o an estate whose income from sources without the United States is
includible in gross income for U.S. federal income tax purposes
regardless of its connection with the conduct of a trade or business
within the United States, or

o any trust with respect to which (A) a U.S. court is able to exercise
primary supervision over the administration of such trust and (B) one
or more U.S. fiduciaries have the authority to control all
substantial decisions of the trust.

Distributions that are designated as capital gain dividends will be
taxed as long-term capital gains (to the extent they do not exceed our
actual net capital gain for the taxable year) without regard to the period
for which the stockholder has held his common stock. Corporate
stockholders, however, may be required to treat up to 20% of certain
capital gain dividends as ordinary income. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a
stockholder to the extent that they do not exceed the adjusted basis of the
stockholder's common stock, but rather will reduce the adjusted basis of
such stock. To the extent that such distributions in excess of current and
accumulated earnings and profits exceed the adjusted basis of a
stockholder's common stock, such distributions will be included in income
as long- term capital gain (or short-term capital gain if the common stock
had been held for one year or less), provided that the common stock is a
capital asset in the hands of the stockholder. In addition, any
distribution declared by Anthracite in October, November, or December of
any year and payable to a stockholder of record on a specified date in any
such month shall be treated as both paid by Anthracite and received by the
stockholder on December 31 of such year, as long as the distribution is
actually paid by Anthracite during January of the following calendar year.

Stockholders may not include in their individual income tax returns
any of Anthracite's net operating losses or capital losses. Instead,
Anthracite would carried over such losses for potential offset against
future income (subject to certain limitations). Taxable distributions and
gain from the disposition of the common stock received by Anthracite's
stockholders will not be treated as passive activity income and, therefore,
stockholders generally will not be able to apply any "passive activity
losses" (such as losses from certain types of limited partnerships in which
a stockholder is a limited partner) against such income. Taxable
distributions made by Anthracite generally will be treated as investment
income for purposes of the investment interest limitations. Capital gains
from the disposition of common stock (or distributions treated as such),
however, will be treated as investment income only if the stockholder so
elects, in which case such capital gains will be taxed at ordinary income
rates. Anthracite will notify stockholders after the close of its taxable
year as to the portions of the distributions attributable to that year that
constitute ordinary income or capital gain dividends.

Anthracite may elect to retain and pay income tax on its net
long-term capital gains. If Anthracite make this election, its stockholders
would include in their income as long-term capital gain their proportionate
share of the long-term capital gain as designated by Anthracite. Each
stockholder will be deemed to have paid the stockholder's share of the tax,
which could be credited or refunded to the stockholder. The basis of the
stockholder's shares is increased by the amount of the undistributed
long-term capital gains (less the amount of capital gains tax paid).

Anthracite's investment in mortgage backed securities may cause it,
under certain circumstances, to recognize phantom income and to experience
an offsetting excess of economic income over its taxable income in later
years. As a result, stockholders may from time to time be required to pay
U.S. federal income tax on distributions that economically represent a
return of capital, rather than a dividend. Such distributions would be
offset in later years by distributions representing economic income that
would be treated as returns of capital for U.S. federal income tax
purposes. Accordingly, if Anthracite receives phantom income, its
stockholders may be required to pay U.S. federal income tax with respect to
such income on an accelerated basis, i.e., before such income is realized
by the stockholders in an economic sense. If one takes into account the
time value of money, such an acceleration of U.S. federal income tax
liabilities would cause stockholders to receive an after-tax rate of return
on an investment in Anthracite that would be less than the after-tax rate
of return on an investment with an identical before-tax rate of return that
did not generate phantom income. In general, as the ratio of Anthracite's
phantom income to its total income increases, the after-tax rate of return
received by a taxable stockholder will decrease. Anthracite will consider
the potential effects of phantom income on its taxable stockholders in
managing its investments.

If Anthracite owns real estate mortgage investment conduit residual
interests, it is possible that stockholders would not be permitted to
offset certain portions of the dividend income they derive from Anthracite
with their current deductions or net operating loss carryovers or
carrybacks. The portion of a stockholder's dividends that would be subject
to this limitation would equal his allocable share of any excess inclusion
income derived by Anthracite with respect to the real estate mortgage
investment conduit residual interests. Anthracite's excess inclusion income
for any calendar quarter will equal the excess of its income from a real
estate mortgage investment conduit residual interest over its "daily
accruals" with respect to such real estate mortgage investment conduit
residual interest for the calendar quarter. Daily accruals for a calendar
quarter are computed by allocating to each day on which a real estate
mortgage investment conduit residual interest is owned a ratable portion of
the product of (i) the "adjusted issue price" of the real estate mortgage
investment conduit residual interest at the beginning of the quarter and
(ii) 120% of the long-term federal interest rate (adjusted for quarterly
compounding) on the date of issuance of the real estate mortgage investment
conduit residual interest. The adjusted issue price of a real estate
mortgage investment conduit residual interest at the beginning of a
calendar quarter equals the original issue price of the real estate
mortgage investment conduit residual interest, increased by the amount of
daily accruals for prior quarters and decreased by all prior distributions
to Anthracite with respect to the real estate mortgage investment conduit
residual interest. To the extent provided in future Treasury regulations,
the excess inclusion income with respect to any real estate mortgage
investment conduit residual interests owned by Anthracite that do not have
significant value will equal the entire amount of the income derived from
such real estate mortgage investment conduit residual interest.
Furthermore, to the extent that Anthracite (or a Qualified REIT Subsidiary)
acquires or originates mortgage loans and uses those loans to collateralize
one or more multiple-class offerings of mortgage backed securities for
which no real estate mortgage investment conduit election is made, it is
possible that, to the extent provided in future Treasury regulations,
stockholders will not be permitted to offset certain portions of the
dividend income that they derive from Anthracite that are attributable to
such non-real estate mortgage investment conduit transactions with current
deductions or net operating loss carryovers or carrybacks. Although no
applicable Treasury regulations have yet been issued, no assurance can be
provided that such regulations will not be issued in the future or that, if
issued, such regulations will not prevent Anthracite's stockholders from
offsetting some portion of their dividend income with deductions or losses
from other sources.

TAXATION OF STOCKHOLDERS ON THE DISPOSITION OF THE COMMON STOCK

In general, any gain or loss realized upon a taxable disposition of
the common stock by a stockholder who is not a dealer in securities will be
treated as long-term capital gain or loss if the common stock has been held
for more than one year and otherwise as short-term capital gain or loss.
Any loss upon a sale or exchange of common stock by a stockholder who has
held such shares for six months or less (after applying certain holding
period rules), however, will be treated as a long-term capital loss to the
extent of distributions from Anthracite required to be treated by such
stockholder as long-term capital gain. All or a portion of any loss
realized upon a taxable disposition of the common stock may be disallowed
if other shares of common stock are purchased within 30 days before or
after the disposition.

CAPITAL GAINS AND LOSSES

The highest marginal individual income tax rate (which applies to
ordinary income and gain from the sale or exchange of capital assets held
for one year or less) is 39.6%. The maximum regular income tax rate on
capital gains derived by non-corporate taxpayers is 20% for sales and
exchanges of capital assets held for more than one year. Any long- term
capital gains from the sale or exchange of depreciable real property that
would be subject to ordinary income taxation (i.e., "depreciation
recapture") if treated as personal property will be subject to a maximum
tax rate of 25% instead of the 20% maximum rate. For taxable years
beginning after December 31, 2000, the maximum regular capital gains rate
for assets which are held more than 5 years is 18%. This rate will
generally only apply to assets for which the holding period begins after
December 31, 2000. With respect to distributions designated by Anthracite
as capital gain dividends and any retained capital gains that Anthracite is
deemed to distribute, Anthracite may designate (subject to certain limits)
whether such a distribution is taxable to its individual stockholders at a
federal income tax rate of 20%, or 25%. Thus, the tax rate differential
between capital gains and ordinary income for non-corporate taxpayers may
be significant. In addition, the characterization of income as capital gain
or ordinary income may affect the deductibility of capital losses. Capital
losses not offset by capital gains may be deducted against a non-corporate
taxpayer's ordinary income only up to a maximum annual amount of $3,000.
Unused capital losses may be carried forward indefinitely by non-corporate
taxpayers. All net capital gain of a corporate taxpayer is subject to tax
at ordinary corporate income tax rates. A corporate taxpayer can deduct
capital losses only to the extent of capital gains, with unused losses
being carried back three years and forward five years.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

Anthracite will report to its U.S. stockholders and to the Internal
Revenue Service the amount of distributions paid during each calendar year,
and the amount of tax withheld, if any. Under the backup withholding rules,
a stockholder may be subject to backup withholding at the rate of 31% with
respect to distributions paid unless such holder (i) is a corporation or
comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with the applicable requirements of the backup withholding rules.
A stockholder who does not provide Anthracite with his correct taxpayer
identification number also may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding will be
creditable against the stockholder's income tax liability. In addition,
Anthracite may be required to withhold a portion of capital gain
distribution to any stockholders who fail to certify their non-foreign
status to Anthracite. The Internal Revenue Service has issued final
Treasury regulations regarding the backup withholding rules as applied to
non-U.S. stockholders. Those regulations alter the current system of backup
withholding compliance and will be effective for payments made after
December 31, 2000.

TAXATION OF TAX-EXEMPT STOCKHOLDERS

Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts, generally are exempt
from U.S. federal income taxation. However, they are subject to taxation on
their unrelated business taxable income. While many investments in real
estate generate unrelated business taxable income, the Internal Revenue
Service has ruled that dividend distributions from a REIT to an exempt
employee pension trust do not constitute unrelated business taxable income,
provided that the shares of the REIT are not otherwise used in an unrelated
trade or business of the exempt employee pension trust. Based on that
ruling, amounts distributed by Anthracite to exempt organizations generally
should not constitute unrelated business taxable income. However, if an
exempt organization finances its acquisition of the common stock with debt,
a portion of its income from Anthracite will constitute unrelated business
taxable income pursuant to the "debt-financed property" rules. Furthermore,
social clubs, voluntary employee benefit associations, supplemental
unemployment benefit trusts, and qualified group legal services plans that
are exempt from taxation under paragraphs (7), (9), (17) and (20),
respectively, of Internal Revenue Code Section 501(c) are subject to
different unrelated business taxable income rules, which generally will
require them to characterize distributions from Anthracite as unrelated
business taxable income. In addition, in certain circumstances, a pension
trust that owns more than 10% of Anthracite's stock is required to treat a
percentage of the dividends from Anthracite as unrelated business taxable
income. Such a percentage is the gross income derived by Anthracite from an
unrelated trade or business (determined as if Anthracite was a pension
trust) divided by Anthracite's gross income for the year in which the
dividends are paid. The unrelated business taxable income rule applies to a
pension trust holding more than 10% of Anthracite's stock only if

o the percentage (described above) is at least 5%,

o Anthracite qualify as a REIT be reason of the modification of the
REIT stock ownership rules that allows the beneficiaries of the
pension trust to be treated as holding shares of a REIT in proportion
to their actuarial interest in the pension trust, and

o either (A) one pension trust owns more than 25% of the value of our
stock or (B) a group of pension trusts, each individually holding
more than 10% of the value of Anthracite's stock, collectively owns
more than 50% of the value of our stock.

Any dividends received by an exempt organization that are allocable
to excess inclusion income will be treated as unrelated business taxable
income. In addition, Anthracite will be subject to tax at the highest
marginal corporate rate on the portion of any excess inclusion income
derived by Anthracite from real estate mortgage investment conduit residual
interests that is allocable to Anthracite's stock and held by certain
exempt organizations that are not subject to tax (such as the United
States, any state or political subdivision thereof, any foreign government,
any international organization, or any agency or instrumentality of any of
the foregoing). Any such tax would be deductible by Anthracite against
income that is not excess inclusion income.

If Anthracite derives excess inclusion income from real estate
mortgage investment conduit residual interests, a tax similar to the tax
described in the preceding paragraph may be imposed on stockholders who are

o pass-through entities (i.e., partnerships, estates, trusts, regulated
investment companies, REITS, common trust funds, and certain types of
cooperatives (including farmers' cooperatives described in Section
521 of the Code)) in which certain exempt organizations (as described
in the preceding paragraph) are record holders of shares or
interests, and

o nominees who hold common stock on behalf of such organizations.

Consequently, a brokerage firm that holds shares of common stock in a
"street name" account for such an exempt organization may be subject to
U.S. federal income tax on the excess inclusion income derived from those
shares.

The Treasury Department has been authorized to issue regulations
regarding issuances by a REIT of multiple-class mortgage-backed securities
in non-real estate mortgage investment conduit transactions. If such
Treasury regulations are issued in the future allocating Anthracite's
excess inclusion income from non-real estate mortgage investment conduit
transactions pro rata among Anthracite's stockholders, some percentage of
the dividends paid by Anthracite would be treated as unrelated business
taxable income in the hands of stockholders that are exempt organizations.
See "--Taxation of Taxable U.S. Stockholders."

TAXATION OF NON-U.S. STOCKHOLDERS

The rules governing U.S. federal income taxation of non-U.S.
stockholders, such as, nonresident alien individuals, foreign corporations,
foreign partnerships, and other foreign stockholders are complex and no
attempt will be made herein to provide more than a summary of such rules.
PROSPECTIVE NON-U.S. STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX
ADVISORS TO DETERMINE THE EFFECT OF U.S. FEDERAL, STATE, AND LOCAL INCOME
TAX LAWS WITH REGARD TO OWNERSHIP OF ANTHRACITE COMMON STOCK, INCLUDING ANY
REPORTING REQUIREMENTS.

Distributions to non-U.S. stockholders that are not attributable to
gain from sales or exchanges by Anthracite of U.S. real property interests
and are not designated by Anthracite as capital gain dividends or retained
capital gains will be treated as dividends of ordinary income to the extent
that they are made out of Anthracite's current or accumulated earnings and
profits. Such distributions ordinarily will be subject to a withholding tax
equal to 30% of the gross amount of the distribution unless an applicable
tax treaty reduces or eliminates that tax. If, however, income from the
investment in the common stock is treated as effectively connected with the
non-U.S. stockholder's conduct of a U.S. trade or business, the non-U.S.
stockholder generally will be subject to U.S. federal income tax at
graduated rates, in the same manner as U.S. stockholders are taxed with
respect to such distributions (and also may be subject to the 30% branch
profits tax in the case of a non-U.S. stockholder that is a corporation).
Anthracite expects to withhold U.S. income tax at the rate of 30% on the
gross amount of any such distributions made to a non-U.S. stockholder
unless a lower treaty rate applies and any required form evidencing
eligibility for that reduced rate is filed with Anthracite, or the non-U.S.
stockholder files an Internal Revenue Service Form 4224 with Anthracite
claiming that the distribution is effectively connected income.

Any portion of the dividends paid to non-U.S. stockholders that is
treated as excess inclusion income will not be eligible for exemption from
the 30% withholding tax or a reduced treaty rate. In addition, if Treasury
regulations are issued in the future allocating excess inclusion income
from non-real estate mortgage investment conduit transactions among
stockholders, some percentage of dividends would not be eligible for
exemption from the 30% withholding tax or a reduced treaty withholding tax
rate in the hands of non-U.S. stockholders. See "--Taxation of Taxable U.S.
Stockholders."

Distributions in excess of Anthracite's current and accumulated
earnings and profits will not be taxable to a stockholder to the extent
that such distributions do not exceed the adjusted basis of the
stockholder's common stock, but rather will reduce the adjusted basis of
such shares. To the extent that distributions in excess of current and
accumulated earnings and profits exceed the adjusted basis of a non-U.S.
stockholder's common stock, such distributions will give rise to tax
liability if the non-U.S. stockholder would otherwise be subject to tax on
any gain from the sale or disposition of his common stock, as described
below. Because it generally cannot be determined at the time a distribution
is made whether or not such distribution will be in excess of current and
accumulated earnings and profits, the entire amount of any distribution
normally will be subject to withholding at the same rate as a dividend.
Amounts so withheld are refundable to the extent that it is subsequently
determined that such distribution was, in fact, in excess of Anthracite's
current and accumulated earnings and profits. Anthracite is required to
withhold 10% of any distribution in excess of its current and accumulated
earnings and profits. Consequently, although Anthracite intends to withhold
at a rate of 30% on the entire amount of any distribution, to the extent
that it does not do so, any portion of a distribution not subject to
withholding at a rate of 30% will be subject to withholding at a rate of
10%.

For any year in which Anthracite qualifies as a REIT, distributions
that are attributable to gain from sales or exchanges by Anthracite of a
U.S. real property interest (which includes certain interests in real
property but does not include mortgage loans or mortgage backed securities)
will be taxed to a non-U.S. stockholder under the provisions of the Foreign
Investment in Real Property Tax Act of 1980. Under the Foreign Investment
in Real Property Tax Act, distributions attributable to gain from sales of
U.S. real property interests are taxed to a non-U.S. stockholder as if such
gain were effectively connected with a U.S. business. Non-U.S. stockholders
thus would be taxed at the normal capital gain rates applicable to U.S.
stockholders (subject to applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals).
Distributions subject to the Foreign Investment in Real Property Tax Act
also may be subject to the 30% branch profits tax in the hands of a
non-U.S. corporate stockholder not entitled to treaty relief or exemption.
Anthracite is required to withhold 35% of any distribution that is
designated by it as a U.S. real property capital gains dividend. The amount
withheld is creditable against the non-U.S. stockholder's Foreign
Investment in Real Property Tax Act tax liability.

Gain recognized by a non-U.S. stockholder upon a sale of his common
stock generally will not be taxed under the Foreign Investment in Real
Property Tax Act if Anthracite is a "domestically controlled REIT," defined
generally as a REIT in which at all times during a specified testing period
less than 50% in value of the stock was held directly or indirectly by
non-U.S. persons. Because the common stock will be publicly traded, no
assurance can be given that Anthracite will be or remain a "domestically
controlled REIT." In addition, a non-US stockholder that owns, actually or
constructively, 5% or less of Anthracite stock throughout a specified
"look-back" period will not recognize taxable gain on the sale of his stock
under the Foreign Investment in Real Property Tax Act if the shares are
traded on an established securities market. Furthermore, gain not subject
to the Foreign Investment in Real Property Tax Act will be taxable to a
non-U.S. stockholder if

o investment in the common stock is effectively connected with the
non-U.S. stockholder's U.S. trade or business, in which case the
non-U.S. stockholder will be subject to the same treatment as U.S.
stockholders with respect to such gain, or

o the non-U.S. stockholder is a nonresident alien individual who was
present in the U.S. for 183 days or more during the taxable year and
certain other conditions apply, in which case the nonresident alien
individual will be subject to a 30% tax on the individual's capital
gains.

If the gain on the sale of the common stock were to be subject to
taxation under the Foreign Investment in Real Property Tax Act, the
non-U.S. stockholder would be subject to the same treatment as U.S.
stockholders with respect to such gain (subject to applicable alternative
minimum tax, a special alternative minimum tax in the case of nonresident
alien individuals, and the possible application of the 30% branch profits
tax in the case of non-U.S. corporations).

STATE AND LOCAL TAXES

Anthracite or its stockholders may be subject to state and local tax
in various states and localities, including those states and localities in
which it or they transact business, own property, or reside. The state and
local tax treatment of Anthracite and its stockholders in such
jurisdictions may differ from the U.S. federal income tax treatment
described above. Consequently, prospective stockholders should consult
their own tax advisors regarding the effect of state and local tax laws
upon ownership of Anthracite common stock.

LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS

Congress recently enacted legislation, generally effective in 2001,
that will, among other things:

o allow REITs to own and control taxable REIT subsidiary
corporations that could provide services to REIT tenants and
others without disqualifying the rents that the REIT receives from
its tenants for purposes of the REIT income tests;

o add a requirement that a REIT generally can not own securities
having a value of more than 10% of the total value of the
outstanding securities of any one corporate issuer (other than a
qualified REIT subsidiary or an electing taxable REIT subsidiary);
o provide that no more than 20 percent of the value of a REIT's
assets can be represented by securities of the taxable REIT
subsidiaries; and

o reduce from 95% to 90% the percentage of income that REITs are
required to distribute annually.

In February 2000, President Clinton released his budget proposal for
fiscal year 2001. One of the provisions contained in the proposal would, if
enacted into law, generally require a REIT to distribute 98% of its
ordinary income and capital gain net income for a calendar year in order to
avoid the 4% excise tax. As discussed above, the excise tax does not apply
under current law if the REIT timely distributes at least 85% of its
ordinary income and 95% of its capital gain net income.

The rules dealing with U.S. federal income taxation are constantly
under review by persons involved in the legislative process and by the
Internal Revenue Service and the Treasury Department. Changes to the U.S.
federal tax laws and interpretations of U.S. federal tax laws could
adversely affect an investment in Anthracite.

LEGAL MATTERS

The validity of the Anthracite common stock and the preferred stock
to be issued in connection with the merger has been passed upon by Miles &
Stockbridge PC, Maryland counsel to Anthracite.

EXPERTS

The financial statements incorporated in this proxy
statement/prospectus by reference from Anthracite's Annual Report on Form
10-K for the year ended December 31, 1999 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
on the report of such firm given upon their authority as experts in
accounting and auditing.

The financial statements of CORE Cap as of December 31, 1999 and 1998
and for each of the two years in the period ended December 31, 1999 and
1998 and the period from September 24, 1997 to December 31, 1997 included
in this Prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

Anthracite files reports, proxy statements, and other information
with the SEC. Such reports, proxy statements, and other information
concerning Anthracite can be read and copied at the Securities and Exchange
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information
on the Public Reference Room. The Securities and Exchange Commission
maintains an internet site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding issuers
that file electronically with the Securities and Exchange Commission,
including Anthracite's. Anthracite's common stock is listed and traded on
The New York Stock Exchange. These reports, proxy statements and other
information are also available for inspection at the offices of The New
York Stock Exchange, 20 Broad Street, New York, New York 10005.

This prospectus is part of a registration statement filed with the
Securities and Exchange Commission by Anthracite. The full registration
statement can be obtained from the Securities and Exchange Commission as
indicated above, or from Anthracite.

The Securities and Exchange Commission allows Anthracite to
"incorporate by reference" the information Anthracite files with the
Securities and Exchange Commission. This permits Anthracite to disclose
important information to you by referencing these filed documents. Any
information referenced this way is considered part of this prospectus and
any information filed with the Securities and Exchange Commission
subsequent to this prospectus will automatically be deemed to update and
supersede this information. Anthracite incorporates by reference the
following documents which have been filed with the Securities and Exchange
Commission:

o Annual Report on Form 10-K for the year ended December 31, 1999,

o the description of Anthracite's common stock contained in
Anthracite's registration statement on Form 8-A dated March 5, 1998
and the prospectus filed pursuant to rule 424(b), dated March 24,
1998, and

o the description of Anthracite's preferred stock contained in
Anthracite's registration statement on Form S-3, dated March 10,
2000.

Anthracite incorporates by reference the documents listed above and
any future filings made with the SEC pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act of 1934 from the date of this prospectus until
it files a post-effective amendment which indicates the termination of the
offering of the securities made by this prospectus.

Any statement contained in a document incorporated or considered to
be incorporated by reference in this registration statement will be
considered to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this registration statement or in
any subsequently filed document that is or is considered to be incorporated
by reference modifies or supersedes the statement. Any statement that is so
modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.

Anthracite will provide without charge upon written or oral request a
copy of any or all of the documents which are incorporated by reference to
this proxy statement/prospectus, other than exhibits which are not
specifically incorporated by reference into such documents. You may direct
your requests to Investor Relations, Anthracite Capital, Inc., 345 Park
Avenue, 29th Floor, New York, New York 10154 (telephone number (212)
409-3333).

INDEX TO FINANCIAL STATEMENTS

Report of Independent Accountants............................... F-2

Consolidated Balance Sheets of CORE Cap, for the years
ended December 31, 1999 and December 31, 1998................. F-3

Consolidated Statements of Operation of CORE Cap for the years
ended December 31, 1999, December 31, 1998 and
December 31, 1997............................................. F-4

Consolidated Statements of Changes in Stockholders' Equity of
CORE Cap for the year ended December 31, 1997, December 31,
1998 and December 31, 1999..................................... F-5

Consolidated Statements of Cash Flows of CORE Cap for the
years ended December 31, 1999, December 31, 1998 and
December 31, 1997............................................... F-6

Notes to Consolidated Financial Statements........................ F-8

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of CORE Cap, Inc.:

In our opinion, the accompanying balance sheets and the related statements
of operation, of stockholders' equity, and of cash flows present fairly, in
all material respects, the financial position of CORE Cap, Inc. ("the
Company") at December 31, 1999 and 1998, and the results of its operations
and its cash flows for the two years ended December 31,1999 and the period
from September 24, 1997 and December 31, 1997 in conformity with accounting
principles generally accepted in the United States. 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 of these statements in accordance
with auditing standards generally accepted in the United States, which
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, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying information on page
II-5 of the Registration Statement on Form S-4 of Anthracite Capital, Inc.
is presented for purposes of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects
in relation to the basic financial statements taken as a whole.

PricewaterhouseCoopers LLP
January 18, 2000, except as to Note 14, which is as of February 8, 2000

<TABLE>
<CAPTION>
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(dollars in thousands, except share and par value amounts) 1999 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents
Unrestricted $ 15,006 $ 74,438
Restricted - 90,888
Interest receivable 7,881 14,516
Accounts receivable 3,303 7,256
Mortgage-backed securities - available-for-sale 579,964 1,557,090
Mortgage-backed securities - held-to-maturity, net of
provision for credit losses of of $172 and $198 343,206 343,543
Mortgage loans held for investment, net of provision
for credit losses of $988 and $194 444,904 512,407
Interest rate agreements 380 1,242
Other assets 567 520
-------------- ------------
Total assets $ 1,395,211 $ 2,601,900
============== ============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Reverse repurchase agreements $ 842,093 $ 1,900,837
Other borrowings 417,314 496,214
Interest payable 2,995 15,000
Other liabilities 17,787 691
-------------- ------------
Total liabilities 1,280,189 2,412,742

STOCKHOLDERS' EQUITY
Preferred stock
10% cumulative convertible Series A preferred stock,
$.01 par value, 12,000,000 shares authorized and
2,260,997 outstanding at December 31, 1999
(4,132,600 in 1998) 41 41
Common stock

Class A common stock, $.01 par value, 20,000,000
shares authorized and 3,237,158 outstanding at
December 31, 1999 (5,108,761 in 1998) 51 51

Class B common stock, $.01 par value, 20,500 shares
authorized and outstanding at December 31, 1999 and
1998 - -

Additional paid in capital 200,060 200,060
(Deficit)/retained earnings (1,398) 8
Treasury stock at cost (1,871,603 preferred and 1,871,603
common shares) (66,030) -
Accumulated other comprehensive loss:
Unrealized loss on securities available-for-sale (17,702) (11,002)
--------------- -------------
Total stockholders' equity 115,022 189,158
--------------- -------------
Total liabilities and stockholders' equity $ 1,395,211 $ 2,601,900
============== =============

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>
INCOME STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND THE PERIOD FROM
SEPTEMBER 24, 1997 (INCEPTION) TO DECEMBER 31, 1997
(in thousands, except per share amounts) 1999 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest on mortgage-backed securities $ 74,661 $ 132,721 $ 8,180
Interest on mortgage loans 36,940 19,749 741
Interest on short-term investments 2,374 3,169 760
---------- ---------- ---------
Total interest income 113,975 155,639 9,681
---------- ---------- ---------

INTEREST EXPENSE
Interest on reverse repurchase agreements
& other borrowings 93,149 136,317 7,031
Amortization of interest rate agreements 792 3,011 133
---------- ---------- ---------
Total interest expense 93,941 139,328 7,164
---------- ---------- ---------

Net interest income 20,034 16,311 2,517
Provision for credit losses 767 275 117
---------- ---------- ---------
Net interest income after provision for credit losses 19,267 16,036 2,400
---------- ---------- ---------

Gain / (loss) on sale of mortgage-backed securities (13,765) 2,697 -
Gain on sale of mortgage loans 277 - -
Gain on interest rate agreements 21,572 1,115 -
---------- ---------- ---------
Total income after provision for credit losses 27,351 19,848 2,400
---------- ---------- ---------

OPERATING EXPENSES
Management fees 5,101 3,146 434
Other 2,234 1,329 185
---------- ---------- ---------
Total operating expenses 7,335 4,475 619
---------- ---------- ---------

Net income $ 20,016 $ 15,373 $ 1,781
Less dividends paid on cumulative convertible
preferred stock 6,822 10,332 1,722
---------- ---------- ---------
Net income available to common stockholders $ 13,194 $ 5,041 59

Earnings per share
Basic $ 3.32 $ 0.98 $ 0.02

Diluted $ 2.72 $ 0.98 $ 0.02

Weighted average number of shares outstanding
Basic 3,970 5,129 3,194
Diluted 7,363 5,138 3,221

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(dollars in thousands)

10%
Cumulative Accumulated
Convertible Common Common Additional Compre- (Deficit)/ Other
Preferred Stock Stock Paid-in Treasury hensive Retained Comprehensive
Stock Class A Class B Capital Stock Income Earnings Income (Loss) Total
----------- --------- -------- ----------- -------- -------- ---------- ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issued 4,132,600 shares
@ .01 par value $ 41 $ 103,274 $103,315
Issued 5,108,761 shares
@ .01 par value $ 51 102,214 102,175
Issued 20,500 shares
@ $.01 par value (rounded) 410 410
Issuance costs (5,936) (5,936)
Comprehensive income:
Net income
Other comprehensive income (loss): $ 1,781 $ 1,781 1,781
Unrealized loss on securities (622) (622) (622)
--------
Comprehensive income $ 1,159
--------
Dividends paid (1,722) (1,722)
-------- -------- -------- ----------- ------- --------- -------- --------- ------
Balance at December 31, 1997 41 51 - 199,872 - - 59 (622) 199,401
--------- -------- -------- ----------- -------- ---------- --------- --------- --------
Compensation expense - stock
options issued for services 188 188
Comprehensive income:
New income $15,373 $15,373 15,373
Other comprehensive income (loss):
Unrealized loss on sec$rities (10,380) (10,380) (10,380)
----------
Comprehensive income $ 4,993
----------
Dividends paid (15,424) (15,424)
--------- -------- -------- ------------ ------ --------- -------- --------- -------
Balance at December 31, 1998 41 51 - 200,060 - - 8 (11,002) 189,158
--------- --------- -------- ------------- ------ -------- -------- --------- -------
Comprehensive income:
Net income $ 20,016 20,016 20,016
Other comprehensive
income (loss):
Unrealized loss on securities (6,700) (6,700) (6,700)
----------
Comprehensive income $13,316
----------
Purchase of treasury stock (66,030) (66,030)
Dividends paid (21,422) (21,422)
--------- -------- -------- ------------ -------- --------- --------- ------- -------
Balance at December 31, 1999 $ 41 $ 51 $ - $ 200,060 $(66,030) - $(1,398) $(17,702) $ 15,022
========= ======== ======== ========= ========= ========== =========== ======== =========

The accompanying notes are an integral part of these financial statements.
</TABLE>

<TABLE>
STATEMENTS OF CASH FLOW
(dollars in thousands) 1999 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 20,016 $ 15,373 $ 1,781
Adjustments to reconcile net income to
net cash provided by operating
activities:
(Gain)/loss on sale of mortgage-backed
securities 13,765 (2,697) -
Gain on sale of mortgage loans (277) - -
Gain on interest rate agreements (21,572) (1,115) -
Premium amortization, net of discount
accretion of mortgage assets 3,968 9,739 475
Amortization of interest rate agreements 792 3,011 133
Amortization of other assets 861 465 30
Provision for credit losses 767 275 117
(Increase)/decrease in:
Restricted cash 90,888 (90,888) -
Interest receivable 6,635 (4,014) (10,529)
Accounts receivable 3,953 (6,983) (59)
Other assets (908) (731) (282)
Increase/(decrease) in:
Interest payable (12,005) 12,006 2,994
Other liabilities 17,096 (6,336) 7,240
----------- ----------- ------------
Net cash provided by (used in)
operating activities 123,979 (71,895) 1,900
----------- ----------- ------------
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase)/decrease in:
Purchases of mortgage-backed securities
- available-for-sale (1,043,829) (2,027,861) (1,705,957)
Principal payments on mortgage-backed
securities - available-for-sale 276,541 751,415 14,710
Proceeds on sale of mortgage-backed
securities - available-for-sale 1,719,711 1,048,097 -
Principal payments on mortgage-backed
securities - held-to maturity 488 - -
Purchases of mortgage loans held for
investment (299,970) (447,526) (138,424)
Principal payments on mortgage loans
held for investment 125,892 72,928 666
Proceeds on sale of mortgage loans
held for investment 241,210 - -
----------- ----------- ------------
Net cash provided by (used in)
investing activities 1,020,043 (602,947) (1,829,005)
----------- ----------- ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase/(decrease) in:
Net borrowings from reverse repurchase
agreements (1,058,744) 264,253 1,636,584
Other borrowings (78,900) 496,214 -
Net purchases of interest rate agreements (970) (5,226) (2,254)
Proceeds on sale of interest rate
agreements 22,612 3,996 -
Proceeds from issuance of Series A
preferred stock - - 103,315
Proceeds from issuance of Class A common
stock - - 102,175
Proceeds from issuance of Class B common
stock - - 410
Issuance costs - - (5,936)
Purchase of treasury stock (66,030) - -
Dividends paid (21,422) (15,424) (1,722)
----------- ----------- ------------
Net cash provided by (used in)
financing activities (1,203,454) 743,813 1,832,572
----------- ----------- ------------
Net increase/(decrease) in cash and cash
equivalents (59,432) 68,971 5,467
----------- ----------- ------------
Cash and cash equivalents at beginning of
year 74,438 5,467 -
----------- ----------- ------------
Cash and cash equivalents at end of year $ 15,006 $ 74,438 $ 5,467
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ 100,649 $124,311 $ 4,096
Non-cash transactions:
Transfer of mortgage-backed securities -
available-for-sale to mortgage-backed
securities - held-to-maturity $ - $345,901 $ -
Transfer of provision for credit losses
from mortgage-backed securities
held-to-maturity to mortgage loans
held for investment $ 127

The accompanying notes are an integral part of these financial statements.
</TABLE>

NOTES TO THE FINANCIAL STATEMENTS

1 . ORGANIZATION

CORE Cap was incorporated in the state of Delaware on August 12, 1997
and its operations commenced on September 24, 1997. CORE Cap has elected to
be taxed as a Real Estate Investment Trust ("REIT") under the Internal
Revenue Code of 1986, as amended. CORE Cap is engaged in the activity of
acquiring, holding, and managing a diversified portfolio of residential and
commercial mortgage assets. Pursuant to terms of a management agreement,
CORE Cap has engaged GMAC Management, a wholly-owned subsidiary of GMAC
Mortgage, to manage the day-to-day operations of CORE Cap.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION - CORE Cap's accounting and reporting policies
reflect industry practices and conform in all material respects to
generally accepted accounting principles (GAAP). Certain amounts for the
prior year have been reclassified to conform to the 1999 presentation.

RISKS AND UNCERTAINTIES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. CORE Cap's
estimates and assumptions primarily arise from risks and uncertainties
associated with interest rate volatility and credit exposure. Future
changes in market trends and conditions may occur which could cause actual
results to differ materially.

CASH AND CASH EQUIVALENTS - Cash and cash equivalents classified as
restricted consist of cash pledged as collateral on certain reverse
repurchase agreements. Cash and cash equivalents classified as unrestricted
consist of cash in banks and highly liquid investments with original
maturities of less than 90 days.

MORTGAGE-BACKED SECURITIES - CORE Cap classifies its portfolio of
mortgage-backed securities in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments
in Debt and Equity Securities. This standard requires CORE Cap to classify
its mortgage securities as either trading investments, available-for-sale
securities, or held-to-maturity investments.

Discounts and premiums associated with the acquisition of
mortgage-backed securities are deferred and amortized over the estimated
life of the security. This amortization is based on an effective yield
methodology and is recorded as an adjustment to interest income. On an
ongoing basis, CORE Cap evaluates the effective yield for the entire
portfolio based upon specific attributes of each mortgage security or loan
such as actual and estimated prepayment activity, interest rate resets, and
other cash flow attributes. Changes in estimated yield are calculated over
the remaining life of the investment with any cumulative adjustments
recognized at the date of change. Cumulative adjustments are calculated
from the original investment date to the date of change.

Realized gains or losses on the sale of mortgage-backed securities
are recognized on a specific identification method based on the difference
between the sales proceeds and carrying value of the security.

Interest income is accrued based on the outstanding principal balance
of the mortgage-backed securities and their contractual terms.

MORTGAGE-BACKED SECURITIES - AVAILABLE-FOR-SALE - CORE Cap's
portfolio of available-for-sale securities consists of agency
adjustable-rate and fixed-rate mortgage-backed securities which CORE Cap
has acquired in the secondary market and from its sponsor GMAC Mortgage.
Management has made the determination that these securities should be
designated as available-for-sale in order to be prepared to respond to
potential future opportunities in the market, to sell mortgage-backed
securities in order to optimize the portfolio's total return and to retain
its ability to respond to economic conditions that may require CORE Cap to
sell assets in order to maintain an appropriate level of liquidity. CORE
Cap carries its available-for-sale securities portfolio at fair value, with
unrealized gains and losses excluded from earnings and reported as a
component of accumulated other comprehensive income within stockholders'
equity.

MORTGAGE PUT AND MORTGAGE CALL OPTIONS - During 1999, CORE Cap
entered various mortgage option positions which included mortgage put
options, sold by CORE Cap, covered and uncovered call options, sold by CORE
Cap, and mortgage call options, purchased by CORE Cap. CORE Cap accounts
for these instruments under mark-to-market accounting. Fees paid or
received to acquire or sell these instruments are capitalized and amortized
over the life of the instrument. Fair value adjustments are recorded in the
period in which they occur as an adjustment to trading gains or losses.
During 1999, one mortgage call option, sold by CORE Cap, was exercised.
Gains and losses resulting from CORE Cap's obligation to sell
mortgage-backed securities are recorded as an adjustment to trading gains
and losses in the period in which they occur.

MORTGAGE-BACKED SECURITIES - HELD-TO-MATURITY - CORE Cap's portfolio
of held-to-maturity securities consists of commercial and residential fixed
rate non-agency mortgage-backed securities. These securities are of high
investment quality, generally rated BBB or higher by the respective
issuer's rating agency. The underlying collateral for a majority of these
securities contains certain prepayment prohibitions, penalties and yield
maintenance charges. CORE Cap's intent is to hold these securities to
maturity based on its current capital levels and availability of financing
sources. CORE Cap carries its held-to-maturity securities portfolio at
amortized cost.

MORTGAGE LOANS HELD FOR INVESTMENT - Mortgage loans held for
investment include adjustable-rate residential mortgage loans and senior
participation interests in commercial floating rate mortgage loans. CORE
Cap carries these loans at amortized cost.

Discounts and premiums associated with the acquisition of loans is
deferred and amortized over the estimated life of the loans in the
portfolio. This amortization is based on an effective yield methodology and
is recorded as an adjustment to interest income. The effective yield of the
portfolio is evaluated on an ongoing basis consistent with CORE Cap's
mortgage-backed securities portfolio described previously and amortization
is adjusted accordingly.

Interest income is accrued for loans not more than 60 days delinquent
based on the outstanding principal balance and their contractual terms.

In 1999, CORE Cap sold adjustable-rate mortgage loans and senior
participation interests in commercial floating rate mortgage loans on two
separate occasions. In conjunction with CORE Cap's share repurchase program
(see note to the financial statements #10 - Capital Transactions), senior
participation interests in commercial floating rate mortgage loans were
sold in order to maintain compliance with Company investment policies.
Adjustable-rate residential mortgage loans were sold based upon portfolio
management re-investment decisions to reposition CORE Cap in higher yield /
higher coupon mortgage loans and securities. CORE Cap maintains it has the
intent and ability to hold existing loans classified as held for investment
until maturity.

ALLOWANCE FOR CREDIT LOSSES - CORE Cap establishes an allowance for
credit loss at the time of acquisition on certain residential and
commercial mortgage assets maintained in the held for investment portfolio
for which CORE Cap has exposure to credit risk. The allowance is
established based on management's evaluation of the pertinent factors
underlying the quality of the mortgage assets, including delinquency and
foreclosure status, actual loss experience, comparable industry statistics,
current economic conditions, detailed analysis of individual loans and
securities for which collectibility may not be assured, and determination
of the existence and realizable value of the collateral and guarantees
securing such loans. On an ongoing basis, CORE Cap evaluates the
performance of the loan portfolio and adjusts the allowance, as necessary,
through charges to earnings in the period the adjustment is considered
necessary. When a loan or a portion of a loan is deemed to be
uncollectible, the portion deemed to be uncollectible is charged against
the allowance and subsequent recoveries, if any, are credited to the
allowance.

Provisions for credit losses do not reduce tax-basis income and thus
do not affect the dividends paid by CORE Cap to shareholders. Actual losses
realized by CORE Cap do reduce tax-basis income in the period the actual
loss is realized and would affect the dividends paid to shareholders for
that tax year.

INTEREST RATE CAP AGREEMENTS - CORE Cap purchases interest rate cap
agreements to manage interest rate risk associated with the funding of its
portfolio. At the time of acquisition, these agreements are designated to
hedge specific liabilities. CORE Cap accounts for these agreements under
the accrual method. Fees paid to acquire these instruments are capitalized
and amortized over the life of the instrument. Amortization of capitalized
fees paid as well as payments received under these agreements are recorded
as an adjustment to interest expense.

INTEREST RATE FLOOR AGREEMENTS - CORE Cap purchases interest rate
floor agreements to manage interest rate risk associated with the funding
of its portfolio. CORE Cap accounts for these instruments under
mark-to-market accounting. Fees paid to acquire these instruments are
capitalized and amortized over the life of the instrument. Amortization of
capitalized fees are recorded as an adjustment to interest expense. Fair
value adjustments are recorded in the period in which they occur as an
adjustment to gains or losses on interest rate agreements.

INTEREST RATE SWAP AGREEMENTS - CORE Cap enters into interest rate
swap agreements in order to manage its interest rate exposure when
financing purchases of mortgage assets. At the time of acquisition, these
agreements are designated to hedge specific liabilities. CORE Cap's
portfolio of interest rate swap agreements involves the exchange of fixed
interest payments for floating interest payments. CORE Cap accounts for
revenues and expenses from the interest rate swap agreements under the
accrual basis over the period to which the payment relates. Gains or losses
on terminated interest rate swap agreements are either (i) recognized
immediately as a component of trading income in instances when the
underlying financing arrangement is sold or matures or (ii) deferred and
recognized over the remaining life of the financing arrangement to which
they were designated. CORE Cap has not deferred any gains or losses from
the termination of interest rate swaps.

REVERSE REPURCHASE AGREEMENTS - CORE Cap has entered into short-term
reverse repurchase agreements to finance acquisitions of a portion of its
mortgage asset portfolio. Interest is accrued based on the outstanding
principal balance of these agreements and their contractual terms. CORE Cap
does not surrender control of the assets collateralizing these agreements,
and as such, the transfer of assets made in exchange for the reverse
repurchase obligations is not accounted for as a sale.

INCOME TAXES - CORE Cap has elected to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code (the "Code"). As a
REIT, CORE Cap is subject to a number of organizational and operational
requirements, including a requirement that it distribute at least 95% of
its annual tax-basis net income. CORE Cap complies with the REIT provisions
of the Code and the corresponding provisions of state law, and accordingly,
will not be subject to federal or state income tax to the extent of its
distributions to stockholders.

STOCK-BASED COMPENSATION - CORE Cap has adopted SFAS 123, Accounting
for Stock-Based Compensation for its Long-Term Incentive Stock Option Plan
which provides for the grant of non-qualified stock options to GMAC
Management. This statement establishes the measurement principles for
transactions in which equity instruments are issued in exchange for the
receipt of goods or services. SFAS No. 123 does not, however, prescribe the
measurement date or provide guidance on recognition of the cost of those
transactions. EITF 96-18 Accounting For Equity Instruments That Are Issued
to Other Than Employees for Acquiring, or in Conjunction With Selling,
Goods or Services addresses the measurement date and recognition approach
for transactions whereby the counterparty to the transaction is other than
an employee. EITF 96-18 stipulates that equity instruments issued in
exchange for the receipt of goods or services be measured at the fair value
of the goods or services received or the fair value of the equity
instruments issued, whichever is more reliably measurable. In accordance
with this guidance, compensation cost is measured at the grant date based
on the fair value of the options awarded. On a quarterly basis, the fair
value of the options is determined using an options pricing model and
compensation expense is adjusted accordingly. The total value of these
options charged to earnings is shown as additional paid in capital-stock
options in the accompanying financial statements. Compensation expense
charged to earnings does not reduce tax-basis net income and thus does not
affect the dividends paid by CORE Cap to stockholders.

EARNINGS PER SHARE - CORE Cap computes and reports earnings per share
("EPS") in accordance with SFAS No. 128, Earnings Per Share. This statement
requires the calculation and presentation of both basic and diluted EPS on
the face of the statement of operations. Basic EPS is calculated by
dividing net income available to common shareholders by the weighted
average number of common shares outstanding during the year. Diluted EPS is
calculated by dividing net income by the weighted average number of shares
of common stock outstanding and the dilutive potential common shares
related to outstanding stock options and convertible prefered shares. The
dilutive effect of outstanding stock options is calculated using the
treasury stock method. The dilutive effect of converting the series A
preferred stock outstanding is calculated using the "if-converted method."
Following is information about the computation of the EPS data for the
years ended December 31, 1999, 1998 and the period September 24, 1997 to
December 31, 1997.

(Amounts in thousands, except per share data)

Income Shares Per Share
(Numerator) (Denominator) Amount
--------- ----------- ---------
1999

Net Income $ 20,016
Less: preferred stock dividends (6,822)
---------
Basic EPS 13,194 3,970 $ 3.32
---------

Effect of dilutive securities
Stock options - 3
10% convertible Series A
preferred shares 6,822 3,390
--------- ---------
Diluted EPS $ 20,016 7,363 $ 2.72
========= ========= =========
1998

Net Income $ 15,373
Less: preferred stock dividends (10,332)
---------
Basic EPS $ 5,041 5,129 $ 0.98
========= ========= =========

1997

Net Income $ 1,781
Less: preferred stock dividends (1,722)
---------
Basic EPS $ 59 5,129 $ 0.02
========= ========= =========

CORE Cap has granted options to directors of CORE Cap and to GMAC
Management to purchase a total of 191,771, 12,000, and 560,000 shares of
common stock at a price of $11.69, $20.32, and $20.00 for the years ended
December 31, 1999, 1998, and 1997, respectively. The market price exceeds
the strike price for only stock options granted in 1999 and therefore only
stock options granted to the Manager in 1999 are included in the
calculation of diluted EPS. The exercise price of all other options granted
exceed the current average market price and are therefore excluded from the
calculation of diluted EPS, as their inclusion results in an antidilutive
EPS effect for the periods presented.

FINANCIAL INSTRUMENTS - In accordance with SFAS No. 107, Disclosure
about Fair Value of Financial Instruments, and SFAS No. 119, Disclosure
about Derivative Financial Instruments and Fair Value of Financial
Instruments, CORE Cap has provided fair value estimates and information
about valuation methodologies in Note 9 to the financial statements. The
estimated fair value amounts have been determined using available market
information and appropriate valuation methodologies. In some instances,
considerable judgment is required in interpreting market data to develop
estimates of fair value. As such, the estimates are not necessarily
indicative of the amounts that would be realized in a current market
exchange. The effect of using different valuation assumptions may
materially impact the estimated fair value amounts and will likely reduce
the comparability of fair value disclosures between CORE Cap and other
financial services companies. Fair value information presented herein is
based on information available as of December 31, 1999 and assumes that the
financial instruments would be sold between a willing buyer and a willing
seller. Such amounts have not been updated since then, and therefore, the
current estimates of fair value at dates subsequent to December 31, 1999
may differ significantly from the amounts presented herein.

RECENT ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, effective for fiscal years
beginning after June 15, 1999. The new standard requires that all companies
record derivatives on the balance sheet as assets or liabilities, measured
at fair value. Gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. Management is
currently assessing the impact of SFAS No. 133 on the financial statements
of CORE Cap. CORE Cap will adopt this accounting standard prior to or on
January 1, 2001, as amended by SFAS No. 137 Accounting for Derivative
Instruments and Hedging Activities Deferral of the Effective Date of FASB
Statement No. 133, An Amendment of FASB Statement No. 133.

3. MORTGAGE-BACKED SECURITIES - AVAILABLE-FOR-SALE

Mortgage-backed securities - available-for-sale as of December 31 consist
of the following:

<TABLE>
<CAPTION>
1999
---------------------------------------------------
Fannie Mae Ginnie Mae Freddie Mac Total
------------ --------- ----------- -----------
<S> <C> <C> <C> <C>
Mortgage-backed securities, par $ 378,724 $ 26,375 $ 187,807 $ 592,906
Unamortized premium 3,057 336 1,727 5,120
Unamortized discount (152) - (208) (360)
--------- ------- -------- --------
Amortized cost 381,629 26,711 189,326 597,666
Gross unrealized losses (8,925) (159) (8,618) (17,702)
--------- ------- -------- --------
Total $ 372,704 $ 26,552 $ 180,708 $ 579,964
========= ======= ======== ========

Weighted average coupon 6.83% 6.75% 6.22% 6.63%
========= ======= ======== ========

1998
---------------------------------------------------
Fannie Mae Ginnie Mae Freddie Mac Total
------------ --------- ----------- -----------
Mortgage-backed securities, par $ 931,783 $432,224 $ 176,268 $1,540,275

Unamortized premium 13,391 11,263 3,229 27,883
Unamortized discount (66) - - (66)
--------- ------- -------- --------
Amortized cost 945,108 443,487 179,497 1,568,092
Gross unrealized gains 432 - 135 567
Gross unrealized losses (3,022) (7,276) (1,271) (11,569)
--------- ------- -------- --------
Total unrealized loss (2,590) (7,276) (1,136) (11,002)
--------- ------- -------- --------
Total $ 942,518 $436,211 $ 178,361 $1,557,090
========= ======= ======== ========

Weighted average coupon 6.59% 6.45% 6.63% 6.56%
========= ======= ======== ========
</TABLE>

As of December 31, 1999 and 1998 all investments in mortgage-backed
securities - available-for-sale consist of securitized adjustable-rate and
fixed-rate mortgages on residential properties.

4. MORTGAGE-BACKED SECURITIES - HELD-TO-MATURITY

Mortgage-backed securities - held-to-maturity as of December 31, consist
of the following:

<TABLE>
<CAPTION>
1999
COMMERCIAL RESIDENTIAL TOTAL
------------ ----------- ----------
<S> <C> <C> <C>
Mortgage-backed securities, par $ 303,861 $ 41,491 $345,352
Unamortized premium 1,607 188 1,795
Unamortized discount (3,769) - (3,769)
--------- -------- -------
Amortized cost 301,699 41,679 343,378
Allowance for credit losses - (172) (172)
--------- -------- -------
Total $ 301,699 $ 41,507 $343,206
========= ======== =======

Weighted average coupon 6.93% 7.00% 6.94%
========= ======== =======

1998
COMMERCIAL RESIDENTIAL TOTAL
------------ ----------- ----------
Mortgage-backed securities, par $ 303,861 $ 41,980 $345,841
Unamortized premium 1,930 202 2,132
Unamortized discount (4,232) - (4,232)
--------- -------- -------
Amortized cost 301,559 42,182 343,741
Allowance for credit losses (127) (71) (198)
--------- -------- -------
Total $ 301,432 $ 42,111 $343,543
========= ======== =======

Weighted average coupon 6.93% 7.00% 6.94%
========= ======== =======
</TABLE>

5. MORTGAGE LOANS HELD FOR INVESTMENT

Mortgage loans held for investment as of December 31 consist of the
following:

<TABLE>
<CAPTION>
1999
----------------------------------------------
Residential Commercial Total
------------ ------------- ------------
<S> <C> <C> <C>
Loans held for investment, gross $ 406,950 $ 39,213 $ 446,163
Unamortized premium 697 - 697
Unamortized discount (968) - (968)
--------- --------- ---------
Amortized cost 406,679 39,213 445,892
Allowance for credit losses (979) (9) (988)
--------- --------- ---------
Total $ 405,700 $ 39,204 $ 444,904
========= ========= =========

Weighted average coupon 6.40% 7.01% 6.45%
========= ========= =========

1998
----------------------------------------------
Residential Commercial Total
------------ ------------- ------------
Loans held for investment, gross $ 284,199 $ 228,248 $ 512,447
Unamortized premium 924 - 924
Unamortized discount (770) - (770)
--------- --------- ---------
Amortized cost 284,353 228,248 512,601
Allowance for credit losses (185) (9) (194)
--------- --------- ---------
Total $ 284,168 $ 228,239 $ 512,407
========= ========= =========

Weighted average coupon 6.57% 6.87% 6.70%
========= ========= =========
</TABLE>

As of December 31, 1999 and 1998 mortgage loans held for investment
consist of adjustable-rate residential mortgage loans and senior interests
in commercial mortgage participation certificates. The underlying
commercial loans are secured by health care and hotel properties. As of
December 31, 1999 and 1998 all mortgage loans held for investment were
purchased from either GMAC Mortgage or GMAC Commercial.

Generally, interest rate adjustments on residential mortgage loans
are limited by periodic and lifetime caps. Interest rates on the commercial
mortgage loans are adjusted monthly and are indexed to the one-month London
Inter-bank Offered Rate ("LIBOR").

Collateral for 23% and 20% of residential mortgage loans outstanding
as of December 31, 1999 was located in the states of California and
Michigan, respectively. Collateral for 34% and 20% of commercial loans
outstanding as of December 31, 1999 was located in the states of California
and Pennsylvania, respectively.

Collateral for 23% and 20% of residential mortgage loans outstanding
as of December 31, 1998 was located in the states of Michigan and
California, respectively. Collateral for 26% and 16% of commercial loans
outstanding as of December 31, 1998 was located in the states of California
and Texas, respectively.

6. ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the activity in the allowance for credit
losses for the period ended December 31, 1999 and 1998:

1999 1998
--------- ----------
Beginning of period $ 393 $ 118
Provision for credit losses 767 275
Charge-offs - -
--------- ----------
End of period $ 1,160 $ 393
========= ==========

7. INTEREST RATE AGREEMENTS

Interest rate agreements as of December 31 consist of the following:

----------------------------------------------------------
INTEREST RATE CAP AGREEMENTS -- PURCHASED OPTIONS
----------------------------------------------------------
Weighted
Average
Notional Remaining Term Low Cap High Cap
Value (Days) Strike Rate Strike Rate

1999 $240,000 137 5.25% 6.50%
1998 $1,385,000 345 5.45% 6.63%

---------------------------------------------------------
INTEREST RATE CAP AGREEMENTS -- WRITTEN OPTIONS
---------------------------------------------------------
Weighted
Average
Notional Remaining Term Low Cap High Cap
Value (Days) Strike Rate Strike Rate

1999 $120,000 29 6.01% 6.50%
1998 $360,000 365 6.01% 6.63%

INTEREST RATE FLOOR AGREEMENTS -- PURCHASED OPTIONS
---------------------------------------------------
Weighted
Average
Notional Remaining Term
Value (Days) Strike Rate

1999 $200,000 350 5.50%

-----------------------------------------------------
INTEREST RATE SWAP AGREEMENTS
-----------------------------------------------------
Weighted Weighted
Average Average
Notional Remaining Term Interest Rate
Value (Years)
Receivable Payable
1999 $1,156,000 5.4 6.14% 6.20%
1998 $686,000 5.7 5.27% 5.50%

For the years ended December 31, 1999 and 1998 interest rate cap
agreements consisted of $120,000 and $1,025,000 (notional value) of
purchased interest rate cap agreements, recorded at amortized cost, and
$120,000 and $360,000 (notional value) of offsetting purchased and written
interest rate cap agreements, recorded at fair value, respectively. CORE
Cap purchased interest rate cap agreements and sold interest rate cap
agreements by incurring or receiving a one-time fee, or premium, which is
amortized over the life of the instrument. At December 31, 1999 and 1998,
the unamortized premium remaining on these agreements totaled $364 and
$1,242, respectively. Amortization expense on these agreements is recorded
as an adjustment to interest expense. For the years ended December 31, 1999
and 1998 CORE Cap recorded amortization expense of $788 and $3,011
respectively. CORE Cap will receive cash payments under these agreements
should the one-month LIBOR exceed the contract strike rates of the cap
agreements. These payments are recorded as an adjustment to interest
expense. For the years ended December 31, 1999 and 1998 CORE Cap received
cash payments of $58 and $377, respectively under these agreements.

CORE Cap purchased an interest rate floor agreement by incurring a
one time fee, or premium, which is amortized over the life of instrument.
CORE Cap accounts for this instrument under mark-to-market accounting.
Amortization of capitalized fees paid under this agreement are recorded as
an adjustment to interest expense with fair value gains and losses recorded
in earnings in the period in which they occur as an adjustment to trading
gains and losses. CORE Cap's interest rate floor is carried at a fair
market value of $16. For the year ended December 31, 1999 CORE Cap recorded
amortization expense of $4. CORE Cap will receive cash payments should
one-month LIBOR drop below the contract strike rate. These payments are
recorded as an adjustment to interest expense. For the year ended December
31, 1999 CORE Cap did not receive cash payments under this agreement.

Interest rate swap agreements are considered an off-balance sheet
derivative instrument and involve the exchange of fixed interest payments
for floating interest payments. CORE Cap pays fixed interest payments to
the counter-party on a quarterly or semi-annual basis, in exchange for
receiving floating interest payments on a quarterly basis from the counter-
party. CORE Cap records income and expense associated with its interest
rate swap agreements under the accrual method as an adjustment to interest
expense. At December 31, 1999 and 1998 accrued net interest payable equaled
$144 and $1,368, respectively.

Occasionally, counter-parties will require CORE Cap or CORE Cap will
require counter-parties to provide collateral for the interest rate swap
agreements in the form of margin deposits. Net deposits are recorded as a
component of accounts receivable or other liabilities in the accompanying
financial statements, respectively. Should the counter-party fail to return
deposits paid, CORE Cap would be at risk for the fair market value of that
asset. At December 31, 1999 and 1998 the balance of such net margin
deposits received from counter-parties as collateral under these agreements
totaled $14,638 and $7,168.

Interest rate agreements contain an element of risk in the event that
the counter-parties to the agreements do not perform their obligations
under the agreements. CORE Cap minimizes its risk exposure by entering into
agreements with parties rated at least A+ by Standard & Poor's Rating
Services. Furthermore, CORE Cap has interest rate agreements established
with several different counter-parties in order to reduce the risk of
credit exposure to any one counter-party. Management does not expect any
counter-party to default on their obligations and, therefore, does not
expect to incur a loss.

8. REVERSE REPURCHASE AGREEMENTS & OTHER BORROWINGS

REVERSE REPURCHASE AGREEMENTS

CORE Cap has entered into short-term reverse repurchase agreements to
finance acquisitions of a portion of its mortgage assets. These agreements
typically have original maturities of one month. At December 31, 1999 and
1998, respectively all reverse repurchase agreements outstanding had
remaining maturities of less than 30 days. These agreements are
collateralized by a portion of CORE Cap's mortgage assets and bear interest
rates that are based on variations of LIBOR. At December 31, 1999 and 1998,
mortgage assets pledged had an estimated fair value of approximately
$880,502 and $1,976,562, respectively. At December 31, 1999 and 1998 CORE
Cap provided margin deposits to counter-parties as collateral under these
agreements totaling $0 and $83,720.

Reverse repurchase agreements at December 31 consist of the following:

1999 1998
-------- ---------
Principal outstanding $842,093 $1,900,837
Weighted average borrowing rate 6.43% 5.37%
Weighted average original maturity 36 days 52 days
Accrued interest payable $1,462 $10,111

At December 31, 1999 and 1998, CORE Cap had short-term reverse
repurchase agreements with four and seven investment banking firms,
respectively. At December 31, 1999 and 1998 respectively, no individual
investment banking firm had more than 38% and 30% of the total outstanding
principal, respectively.

OTHER BORROWINGS

As of December 31, 1999 CORE Cap has two committed finance agreements
outstanding with lenders to finance the purchase of residential and
commercial loans. The contractual terms of these finance agreements are
renewed on an annual basis. Under terms of the agreements, CORE Cap
receives financing from the proceeds of the sale of commercial paper issued
by the lenders. The residential and commercial mortgage loans placed in
these facilities serve as the underlying collateral for the amounts
borrowed. At December 31, 1999 and 1998, loans pledged as collateral had an
estimated fair value of approximately $432,008 and $515,641, respectively.

Interest is accrued based on the principal balance of the amounts
borrowed and contractual terms of the underlying financing agreements. In
general, the term and interest rate applied to the outstanding amounts
borrowed is equal to the term and yield of the outstanding commercial paper
issued. CORE Cap is charged a facility usage fee calculated on the
outstanding principal balance as a component of the total committed
financing available.

Amounts outstanding under this agreement at December 31, 1999 and 1998 are
as follows:

1999 1998
--------- ---------
Principal outstanding $417,314 $496,214
Weighted average borrowing rate 6.12% 5.54%
Weighted average original maturity 47days 71 days
Accrued interest payable $1,390 $3,520

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount and estimated fair value of CORE Cap's financial
instruments as of December 31 are as follows:

<TABLE>
<CAPTION>
1999 1998
----------------------------------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Cash and cash equivalents $ 15,006 $ 15,006 $ 165,326 $ 165,326
Mortgage-backed securities -
available for sale 579,964 579,964 1,557,090 1,557,090
Mortgage-backed securities -
held-to-maturity 343,206 300,538 343,543 327,490
Mortgage loans held for
investment 444,904 432,008 512,407 515,157
Interest rate agreements 380 695 1,242 561
---------- ---------- ---------- ----------
$1,383,460 $1,328,211 $2,579,608 $2,565,624
========== ========== ========== ==========

FINANCIAL LIABILITIES:
Reverse repurchase agreements $ 842,093 $ 842,093 $1,900,837 $1,900,837
Other borrowings 417,314 417,314 496,214 496,214
---------- ---------- ---------- ----------
$1,259,407 $1,259,407 $2,397,051 $2,397,051
========== ========== ========== ==========
</TABLE>

1999 1998
----------------------------------------------
NOTIONAL FAIR NOTIONAL FAIR
VALUE VALUE VALUE VALUE
---------- -------- -------- ---------
OFF-BALANCE SHEET INSTRUMENTS:
Interest rate swap agreement $1,156,000 $29,506 $686,000 $(12,301)
========== ======= ======== ========

CASH AND CASH EQUIVALENTS - The fair value of these financial instruments
was determined to be their carrying values which are a reasonable
estimation of fair value.

MORTGAGE-BACKED SECURITIES - AVAILABLE-FOR-SALE & MORTGAGE-BACKED
SECURITIES - HELD-TO-MATURITY

The carrying amount of mortgage-backed securities -
available-for-sale is their fair value, whereas the carrying amount of
mortgage-backed securities - held-to-maturity is their amortized cost.

The fair value of these financial instruments is based upon actual
prices received from recent purchases of mortgage-backed securities and
projected prices which could be obtained through current market estimates.
Fair value information assumes that these securities would be sold between
a willing buyer and a willing seller. These estimates consider the current
interest rates, coupon, loan type, credit quality and discounted cash flow
analysis based on prepayment and interest rate assumptions used in the
market place for similar securities with similar credit ratings. Such
estimates are further supported by periodic broker quotations on portions
of the portfolio.

MORTGAGE LOANS HELD FOR INVESTMENT - The fair value of these instruments
was determined based upon recent purchases of mortgage loans and projected
prices which could be obtained through the then current market estimates
considering interest rates, coupon, loan type, credit quality, prepayment
estimates and market discount rates. Fair value information assumes that
these loans would be sold between a willing buyer and a willing seller. For
purposes of valuation, these instruments are stratified by coupon, term,
and product type.

INTEREST RATE AGREEMENTS - Carrying amount and fair value presented
pertains to purchased interest rate cap agreements, written interest rate
cap agreements, and interest rate floor agreements. Fair value of interest
rate swap agreements is presented as an off-balance sheet financial
instrument. The fair value of interest rate agreements was determined
through the utilization of an option pricing model using current market
interest rate volatility estimates. The model incorporates historical as
well as projected interest rate volatility information obtained from
published market sources. Such estimates are further supported by broker
quotations.

REVERSE REPURCHASE AGREEMENTS & OTHER BORROWINGS - Short-term borrowings
are all adjustable-rate instruments tied to current short-term indices and
accordingly the fair value was determined to be equal to carrying value.

OFF-BALANCE SHEET INSTRUMENTS:

INTEREST RATE SWAP AGREEMENTS - The fair value of these instruments is
based on market values provided by dealers who are familiar with the terms
of the swap agreement and the underlying financing agreement.

10. CAPITAL TRANSACTIONS

In May 1999, the Board of Directors of CORE Cap approved CORE Cap's
share repurchase program. A total of 2,168,854 units of stock were tendered
by shareholders, of which 297,251 units were purchased by CORE Cap's
shareholders and directors, with the remaining 1,871,603 units repurchased
by CORE Cap at a weighted average price of $34.73 per unit. At the
completion of the program 1,871,603 shares remained with CORE Cap and are
presented as treasury shares in the accompanying financial statements.

CORE Cap adopted the "cost method" of accounting for the acquisition
of treasury shares. As such, treasury shares are recorded in the
accompanying financial statements at cost to CORE Cap. In addition, CORE
Cap capitalized certain direct costs incurred with respect to administering
the repurchase program. These costs totaled approximately $1.030 million
and are recorded treasury shares in the accompanying financial statements.

Transactions with affiliates resulting from CORE Cap's share
repurchase program are discussed in note to the financial statements No. 11
"Transactions with Affiliates."

CORE Cap is subject to provisions of the Internal Revenue Code
pertaining to REIT's which require it to adhere to various organizational
and operational requirements. One such requirement is that CORE Cap
distribute at least 95% of its tax-basis income to stockholders in order to
be exempt from taxation on earnings. Dividends declared during the periods
ended December 31, 1997 to December 31, 1999 are as follows:

<TABLE>
<CAPTION>
DIVIDENDS PER SHARE
---------------------------------
10% CUMULATIVE
CONVERTIBLE CLASS A & B
DECLARATION RECORD PAYABLE DIVIDENDS SERIES A COMMON
DATE DATE DATE PAID PREFERRED STOCK STOCK
- ----------- --------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>

12/19/97 12/19/97 12/31/97 $1,722 $0.417
3/16/98 3/25/98 3/31/98 2,583 0.625
4/16/98 4/27/98 5/27/98 2,190 $0.427
6/24/98 6/18/98 6/30/98 2,583 0.625
7/20/98 7/31/98 8/21/98 2,288 0.446
9/22/98 9/25/98 9/30/98 2,583 0.625
10/28/98 11/2/98 11/24/98 615 0.120
12/14/98 12/18/98 12/31/98 2,583 0.625
2/7/99 2/3/99 2/17/99 873 0.170
3/23/99 3/23/99 3/31/99 2,583 0.625
4/6/99 4/8/99 4/26/99 4,411 0.860
6/18/99 6/18/99 6/30/99 1,413 0.625
7/9/99 7/9/99 8/3/99 4,267 1.310
9/20/99 9/20/99 9/30/99 1,413 0.625
10/5/99 10/9/99 10/29/99 2,606 0.800
12/17/99 12/17/99 12/31/99 3,856 0.625 0.750
</TABLE>

The 10% cumulative convertible Series A preferred shares have a
dividend rate of 10%, paid quarterly in arrears. For federal income tax
purposes, dividend amounts above represent ordinary income to CORE Cap's
shareholders.

11. TRANSACTIONS WITH AFFILIATES

MANAGEMENT AGREEMENT - GMAC Management, a wholly owned subsidiary of GMAC
Mortgage, manages the day-to-day operations of CORE Cap, pursuant to the
Management Agreement (the "Agreement") entered into between CORE Cap and
the Manager. Under the terms of the Agreement, the Manager is primarily
involved in two activities: (i) asset/liability management - oversight of
CORE Cap's acquisition, financing, management and disposition of CORE Cap's
mortgage assets, including credit risk management, and (ii) capital
management - oversight of CORE Cap's capital structure, capital raising and
investor relations.

For performing these services, GMAC Management receives a base
management fee and an incentive management fee. The base management fee is
calculated and paid quarterly in arrears in accordance with a formula based
on CORE Cap's net worth. The incentive management fee is calculated
quarterly in arrears before any income distributions are made to
stockholders in accordance with a formula based on tax-basis net income and
return on equity targets. The management agreement was renewed
automatically for a one-year period on December 31, 1999 and will continue
to be renewed automatically for additional one year periods unless notice
of non-renewal is delivered by either party.

During 1999 and 1998, CORE Cap recorded base and incentive management fee
expense of $5,101 and $3,146, respectively.

MORTGAGE PURCHASE AND SERVICING AGREEMENTS - During 1997 CORE Cap entered
into Mortgage Purchase and Servicing Agreements with GMAC Mortgage and GMAC
Commercial. The Residential Purchase and Servicing Agreement with GMAC
Mortgage grants CORE Cap the right of first offer to acquire at fair value
residential and adjustable-rate mortgage loans originated by GMAC Mortgage
either in the form of whole loans or mortgage-backed securities. The
Commercial Mortgage Purchase and Servicing Agreement grants CORE Cap the
right of first offer to acquire at fair value floating rate commercial
mortgages secured by multi-family properties.

In February, 1998 CORE Cap entered into a Participation Mortgage Loan
Master Purchase and Servicing Agreement with GMAC Commercial. The agreement
grants CORE Cap the right of first offer to acquire at fair value floating
rate commercial loans or interests therein.

CORE Cap acquires mortgage loans and securities from GMAC Mortgage
and acquires participations from GMAC Commercial on a servicing retained
basis. Servicing fees under these agreements are the normal and customary
service fees charged by GMAC Mortgage and GMAC Commercial. These agreements
also provide for customary servicing fees with respect to servicing of
mortgage loans held by CORE Cap that are purchased from third parties.

During 1999 and 1998 CORE Cap purchased $299,970 and $447,526,
respectively in whole loans and participations and $233,030 and $282,601,
respectively in mortgage-backed securities from GMAC Mortgage and GMAC
Commercial under terms of the agreements.

ASSET SALES - During 1999, CORE Cap sold $143,842 in floating rate
commercial mortgage participations to GMAC Commercial and recorded a loss
on sale of mortgage loans of $(25).

STOCK OPTIONS - As defined in the Agreement, under the terms of the Manager
incentive plan, CORE Cap granted 179,771 options to purchase class A common
shares in February 1999. The stock options have an exercise price of
$11.69. As determined by CORE Cap's Board of Directors, the options will
vest at a rate of one-third on the first, second, and third anniversary of
the date of the grant so long as the agreement is in effect.

SHARE REPURCHASE PROGRAM - Of the 2,168,854 units of stock tendered by CORE
Cap's shareholders, within the terms of the share repurchase program (see
note to the financial statements No. 10 "Capital Transactions"), GMAC
Mortgage purchased 287,938 units at the weighted average price of $34.73.
As a result, GMAC Mortgage and GMAC Commercial combined series A preferred
and class A and B common stock ownership increased to 12.74% and 39.26%,
respectively.

12. STOCK OPTION PLAN

In 1997, CORE Cap adopted a Director Stock Option Plan (the "Director
Plan"), which provides for the grant of stock options to non-affiliated
directors and a Long-Term Incentive Plan (the "Incentive Plan"), which
provides for the grant of non-qualified stock options to the GMAC
Management. The Director Plan and the Incentive Plan are administered by
the Board of Directors. Unless previously terminated by the Board of
Directors, both plans will terminate on December 31, 2000 and no options
shall be granted under either Plan thereafter.

DIRECTOR PLAN

Under the terms of the Director Plan, CORE Cap authorized the grant
of options to purchase an aggregate of 200,000 class A common shares.
During the years ended December 31, 1999 and 1998 there were 12,000 options
granted to purchase class A common shares (i.e. 3,000 class A common shares
to each non-affiliated director) each year. The exercise prices of $11.69
and $20.32 are equal to the fair market value at the date of grant. These
options become fully vested on the date of grant. On October 31, 1997 the
Company granted option to purchase 60,000 class A common shares (i.e.
15,000 class A common shares to each non-affiliated director). The exercise
price of $20.00 is equal to the fair market value at the date of grant.
These options vest in three equal installments of 20,000 shares (i.e. 5,000
shares per each non-affiliated director), on the first, second, and third
anniversaries of the original grant date. As of December 31, 1999 CORE Cap
had 84,000 options outstanding at exercise prices of $20.00, $20.32, and
$11.69, 64,000 of which were exercisable. No options were exercised under
this plan during 1999 or 1998.

CORE Cap has adopted the disclosure only provisions of SFAS No. 123
"Accounting for Stock-Based Compensation" for the Director Plan.
Accordingly, no compensation expense has been recognized for this plan in
1999, 1998 or 1997. Had compensation expense for CORE Cap's Director Plan
been determined based on the fair value at the grant date for awards in
1999, 1998 or 1997, CORE Cap's net earnings and earnings per share would
have been reduced as follows:

1999 1998 1997
------- ------- ------
Net earnings as reported $20,016 $15,374 $1,781
Net earnings pro forma 19,947 15,328 1,775
Basic earnings per share as reported 3.32 0.98 0.02
Basic earnings per share pro forma 3.31 0.97 0.02
Diluted earnings per share as reported 2.72 0.98 0.02
Diluted earnings per share pro forma 2.72 0.97 0.02

Fair value is estimated at the grant date using the Black-Scholes
option-pricing model. The assumptions used for grants awarded in March
1999, April 1998 and October 1997 under the Director Plan include the
following:

1999 1998 1997
--------- -------- ---------
Dividend yield 11.83% 8.82% 10.00%
Expected volatility 25% 25% 25%
Risk-free interest rate 6.44% 5.59% 6.19%
Expected life 10 years 10 years 10 years

INCENTIVE PLAN

Under the terms of the Incentive Plan, CORE Cap authorized the grant
of options to purchase an aggregate of 1,000,000 class A common shares to
GMAC Management. Each grant of options will vest at a rate of one-third on
the first, second, and third anniversaries of the grant date. The number of
options to be granted will be calculated by dividing 10% of the total base
and incentive management fees paid to GMAC Management for the prior
calendar year by the value of an option to acquire one class A share at the
exercise price as determined by the Board of Directors. If the number of
options exceed plan limitations, plan limits will be amended subject to
shareholder approval or payments will be made in amounts equal to the value
of the options on the first, second and third anniversaries of the grant so
long as the Management Agreement is in effect.

During 1999, CORE Cap granted 179,771 options to purchase class A
common shares to GMAC Management. The exercise price of $11.69 is equal to
the fair market value at the date of grant. During 1997, the Company
granted 500,000 options to acquire one class A share at the exercise price
as determined by the Board of Directors. As of December 31, 1999, CORE Cap
had 679,771 options outstanding at exercise prices of $11.69 and $20.00,
333,333 of which are exercisable. No options were exercised under this plan
during 1999, 1998 or 1997.

CORE Cap has adopted SFAS No. 123 for the Incentive Plan. During 1999
and 1998, CORE Cap recognized compensation expense for this plan of $0 and
$188, respectively. This expense has been calculated based on the fair
value of the Incentive Plan option grants estimated at December 31 of the
respective periods using the Black-Scholes option-pricing model.

13. COMMITMENTS AND CONTINGENCIES

As of December 31, 1999 and 1998:

CORE Cap had outstanding commitments to purchase mortgage-backed
securities totaling $150,000 and $0, respectively. The fair value of these
commitments totaled $150,000 and $0, respectively.

CORE Cap had outstanding commitments to purchase mortgage loans held
for investment under its forward purchase agreement with GMAC Mortgage and
GMAC Commercial totaling $0 and $147,257, respectively. These commitments
consist of commitments to purchase funded loans of $0 and $124,248,
respectively and commitments to purchase loans which have not funded of $0
and $23,009, respectively.

CORE Cap had outstanding commitments to purchase interest rate swap
agreements of $125,000 and $100,000 (notional values), respectively. The
fair value of these commitments totaled $(27) and $(208), respectively.

CORE Cap had outstanding commitments to sell interest rate swap
agreements of $125,000 and $0 (notional values), respectively. The fair
value of these commitments totaled $1,400 and $0, respectively.

As of December 31, 1999 and 1998 management is not aware of any
claims, assessments, or pending actions against CORE Cap.

14. SUBSEQUENT EVENTS

On February 8, 2000 CORE Cap entered into a definitive merger
agreement with Anthracite Capital, Inc. ("Anthracite"). The merger
agreement provides for Anthracite to acquire 100% of the outstanding common
shares of CORE Cap in exchange for common shares of Anthracite. Each issued
and outstanding share of CORE Cap's common stock will be converted into the
right to receive the number of shares of Anthracite common stock, which
have a Net Asset Value equal to 1.05 multiplied by the Net Asset Value of
one share of CORE Cap's common stock. CORE Cap's cumulative convertible
series A preferred stock will be exchanged for a new series of Anthracite
preferred stock with substantially identical terms in accordance with the
merger agreement. The merger is expected to close at a date yet to be
determined, subject to the approval of CORE Cap's shareholders.

Upon the close of the merger agreement and approval from CORE Cap's
shareholders, CORE Cap will require GMAC Management to assign the
management agreement (see note to the financial statements No. 1
"Organization") to BlackRock Financial Management, Inc. ("BlackRock"). The
terms of this assignment agreement amend the termination or non-renewal fee
defined in the management agreement. This amendment requires BlackRock to
pay GMAC Management $12,500, in ten annual installment payments.
Additionally, the surviving merged entity will pay GMAC Management $2,150
upon assignment of CORE Cap's management agreement with BlackRock.

APPENDIX I

AGREEMENT AND PLAN OF MERGER

dated as of February 8, 2000

by and among

ANTHRACITE CAPITAL, INC.,

ANTHRACITE ACQUISITION CORP.

and

CORE CAP, INC.

TABLE OF CONTENTS

This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.

Page
No.

ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Certificate of Incorporation and Bylaws of the Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Directors and Officers of the Surviving Corporation . . . . . . 2
1.06 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . 3
1.07 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . 3
2.01 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . 3
2.02 Exchange of Certificates . . . . . . . . . . . . . . . . . . . 7

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 10
3.01 Organization and Qualification . . . . . . . . . . . . . . . 10
3.02 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 11
3.03 Authority Relative to This Agreement . . . . . . . . . . . . 11
3.04 Non-Contravention; Approvals and Consents . . . . . . . . . . 12
3.05 Financial Reports . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Absence of Certain Changes or Events . . . . . . . . . . . . 14
3.07 Absence of Undisclosed Liabilities . . . . . . . . . . . . . 14
3.08 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 15
3.09 Information Supplied . . . . . . . . . . . . . . . . . . . . 15
3.10 Compliance with Laws and Orders . . . . . . . . . . . . . . . 16
3.11 Investment Company Act . . . . . . . . . . . . . . . . . . . 16
3.12 Compliance with Agreements; Certain Agreements . . . . . . . 16
3.13 Mortgage Backed Securities . . . . . . . . . . . . . . . . . 17
3.14 Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . 18
3.15 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 19
3.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.17 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . 21
3.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 22
3.19 Real Property; Mortgage Loans . . . . . . . . . . . . . . . . 23
3.20 Intellectual Property Rights . . . . . . . . . . . . . . . . 23
3.21 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . 23
3.22 Financial Advisor . . . . . . . . . . . . . . . . . . . . . . 23
3.23 Ownership of Parent Common Stock . . . . . . . . . . . . . . 24
3.24 Affiliate Transactions . . . . . . . . . . . . . . . . . . . 24
3.25 Article FIFTH of the Company's Certificate of Incorporation
and Section 203 of the DGCL Not Applicable . . . . . . . . . 24

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB . . . . 24
4.01 Organization and Qualification . . . . . . . . . . . . . . . 24
4.03 Authority Relative to This Agreement . . . . . . . . . . . . 26
4.04 Non-Contravention; Approvals and Consents . . . . . . . . . . 27
4.05 SEC Reports and Financial Statements . . . . . . . . . . . . 28
4.06 Absence of Certain Changes or Events . . . . . . . . . . . . 29
4.07 Absence of Undisclosed Liabilities . . . . . . . . . . . . . 29
4.08 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 29
4.09 Information Supplied . . . . . . . . . . . . . . . . . . . . 30
4.10 Compliance with Laws and Orders . . . . . . . . . . . . . . . 30
4.11 Investment Company Act . . . . . . . . . . . . . . . . . . . 31
4.12 Compliance with Agreements; Certain Agreements . . . . . . . 31
4.13 Mortgage Backed Securities . . . . . . . . . . . . . . . . . 32
4.14 Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . 32
4.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.16 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . 35
4.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 35
4.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . 35
4.19 Intellectual Property Rights . . . . . . . . . . . . . . . . 36
4.20 Opinion of Financial Advisor . . . . . . . . . . . . . . . . 37
4.21 Ownership of Company Common Stock . . . . . . . . . . . . . . 37
4.22 Affiliate Transactions . . . . . . . . . . . . . . . . . . . 37
4.23 Ownership Limit Restrictions of Parent's Articles of
Incorporation and Section 3-602 of the Maryland General
Corporation Law Not Applicable . . . . . . . . . . . . . . . 37

ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.01 Conduct of Business by the Company . . . . . . . . . . . . . 37
5.02 Conduct of Business by Parent and Sub . . . . . . . . . . . . 40
5.03 Covenants of the Company and Parent . . . . . . . . . . . . . 42
5.04 No Solicitations . . . . . . . . . . . . . . . . . . . . . . 44
5.05 Purchases of Common Stock of the Other Party . . . . . . . . 45
5.06 Management Agreement Assignment Agreement . . . . . . . . . . 45

ARTICLE VI ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . 45
6.01 Access to Information . . . . . . . . . . . . . . . . . . . . 45
6.02 Preparation of Registration Statement and Proxy Statement . . 46
6.03 Approval of Stockholders . . . . . . . . . . . . . . . . . . 47
6.04 Company Affiliates . . . . . . . . . . . . . . . . . . . . . 47
6.05 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . 47
6.06 Regulatory and Other Approvals . . . . . . . . . . . . . . . 48
6.07 Company Option Plan . . . . . . . . . . . . . . . . . . . . . 48
6.08 Directors' and Officers' Indemnification and Insurance . . . 49
6.09 Parent Governance . . . . . . . . . . . . . . . . . . . . . . 51
6.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.11 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . 52
6.12 Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . 52
6.13 Conveyance Taxes . . . . . . . . . . . . . . . . . . . . . . 52
6.14 Letters of Accountants . . . . . . . . . . . . . . . . . . . 53
6.15 Coordination of Dividends . . . . . . . . . . . . . . . . . . 53

ARTICLE VII CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 53
7.01 Conditions to Each Party's Obligation to Effect the Merger . 53
7.02 Conditions to Obligation of Parent and Sub to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.03 Conditions to Obligation of the Company to Effect the
Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . 57
8.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.02 Effect of Termination . . . . . . . . . . . . . . . . . . . . 59
8.03 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.04 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 61
9.01 Non-Survival of Representations, Warranties, Covenants and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.03 Entire Agreement; Incorporation of Exhibits . . . . . . . . . 63
9.04 Public Announcements . . . . . . . . . . . . . . . . . . . . 63
9.05 No Third Party Beneficiary . . . . . . . . . . . . . . . . . 63
9.06 No Assignment; Binding Effect . . . . . . . . . . . . . . . . 63
9.07 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.08 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . 64
9.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 64
9.10 Enforcement of Agreement . . . . . . . . . . . . . . . . . . 64
9.11 Certain Definitions . . . . . . . . . . . . . . . . . . . . . 64
9.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 66

EXHIBITS

EXHIBIT A Form of Articles Supplementary for Parent Preferred Stock
EXHIBIT C Form of Opinion of Company's Counsel
EXHIBIT D Form of REIT Opinion of Company's Counsel
EXHIBIT E Form of Opinion of Parent's Counsel
EXHIBIT F Form of REIT Opinion of Parent's Counsel
EXHIBIT G Form of Opinion of Parent's Local Counsel

SCHEDULES

SCHEDULE I Computation of Net Asset Value
SCHEDULE 7.01(E)

GLOSSARY OF DEFINED TERMS

The following terms, when used in this Agreement, have the
meanings ascribed to them in the corresponding Sections of this Agreement
listed below:

"affiliate" -- Section 9.11(a)
"Affiliate Agreement" -- Section 6.04
"Agreement" -- Preamble
"Alternative Proposal" -- Section 5.04
"Appraisals" -- Section 2.01(c)(i)
"Appraisers" -- Section 2.01(c)(i)
"Benchmark Price" -- Section 2.01(c)(i)
"beneficially" -- Section 9.11(b)
"Break-up Fee" -- Section 8.02(b)
"business day" -- Section 9.11(c)
"Certificate of Merger" -- Section 1.03
"Certificates" -- Section 2.02(b)
"Class A Common Stock" -- Section 2.01(b)
"Class B Common Stock" -- Section 2.01(b)
"Closing" -- Section 1.02
"Closing Date" -- Section 1.02
"Code" -- Section 2.02(f)
"Common Stock Conversion Number" -- Section 2.01(c)(i)
"Company" -- Preamble
"Company Affiliates" -- Section 6.04
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.01
"Company Employee Benefit Plans" -- Section 3.17(d)(i)
"Company Financial Information" -- Section 3.05
"Company MBS" -- Section 3.13(a)
"Company MBS Certificates" -- Section 3.13(a)
"Company Mortgage Files" -- Section 3.14(a)
"Company Mortgage Loans" -- Section 3.14(a)
"Company Mortgage Notes" -- Section 3.14(a)
"Company Permits" -- Section 3.10
"Company Permitted Liens" -- Section 3.13(a)
"Company Principal MBS Agreements" -- Section 3.13(b)
"Company Series A Preferred Stock" -- Section 2.01(b)
"Company Stock" -- Section 2.01(b)
"Company Stock Option" -- Section 6.07
"Company Stockholders' Approval" -- Section 6.03
"Company Stockholders' Meeting" -- Section 6.03
"Confidentiality Agreement" -- Section 6.01
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"control," "controlling," "controlled
by" and "under common control with" -- Section 9.11(a)
"DGCL" -- Section 1.01
"Disputed Values" -- Section 2.01(c)(i)
"Dissenting Share" -- Section 2.01(d)(i)
"Effective Time" -- Section 1.03
"Environmental Laws" -- Section 4.18(e)
"Environmental Liability" -- Section 4.18(a)
"ERISA" -- Section 3.17(d)(i)
"Evaluation Material" -- Section 6.01
"Exchange Act" -- Section 4.05
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"Expense Fee" -- Section 8.02(b)
"Governmental or Regulatory Authority" -- Section 3.04(a)
"group" -- Section 9.11(g)
"Indebtedness" -- Section 3.15
"Indemnified Liabilities" -- Section 6.08(a)
"Indemnified Parties" -- Section 6.08(a)
"Indemnifying Party" -- Section 6.08(a)
"Intellectual Property" -- Section 3.20
"knowledge" -- Section 9.11(d)
"laws" -- Section 3.04(a)
"Liens" -- Section 9.11(e)
"Management Agreement Assignment
Agreement" -- Section 5.06
"material", "material adverse
effect" and "materially adverse" -- Section 9.11(f)
"MBS" -- Section 3.13(a)
"Merger" -- Preamble
"Mortgage Loan" -- Section 7.02(f)
"Net Asset Value" -- Section 2.01(c)(i)
"Net Asset Valuation" -- Section 2.01(c)(i)
"New Parent Preferred Stock" -- Section 2.01(c)(i)
"NYSE" -- Section 2.01(c)(i)
"Options" -- Section 3.02(a)
"orders" -- Section 3.04(a)
"Parent" -- Preamble
"Parent Common Stock" -- Section 2.01(c)(i)
"Parent Disclosure Letter" -- Section 4.01
"Parent Financial Statements" -- Section 4.05
"Parent MBS" -- Section 4.13(a)
"Parent MBS Certificates" -- Section 4.13(a)
"Parent Mortgage Files" -- Section 4.14(a)
"Parent Mortgage Loans" -- Section 4.14(a)
"Parent Mortgage Notes" -- Section 4.14(a)
"Parent Permits" -- Section 4.10
"Parent Permitted Liens" -- Section 4.13(a)
"Parent Preferred Stock" -- Section 4.02(a)
"Parent Principal MBS Agreements" -- Section 4.13(b)
"Parent SEC Reports" -- Section 4.05
"Parent Stock" -- Section 2.01(c)(i)
"person" -- Section 9.11(g)
"Plan" -- Section 3.17(d)(ii)
"Proxy Statement" -- Section 3.09
"Purchased Loans" -- Section 7.02(f)
"Registration Statement" -- Section 3.09
"Representatives" -- Section 9.11(h)
"Sales Price" -- Section 2.01(c)(i)
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.03
"Securities Act" -- Section 3.04(b)
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Subsidiary" -- Section 9.11(i)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Taxes" -- Section 3.16(b)
"Termination Fee" -- Section 8.02(c)
"Termination Fee Opinion" -- Section 8.02(c)
"Termination Year" -- Section 8.02 (c)
"Trading Day" -- Section 2.01(c)(i)
"Transfer Taxes" -- Section 6.13

This AGREEMENT AND PLAN OF MERGER dated as of February 8, 2000
("this Agreement") is made and entered into by and among Anthracite
Capital, Inc., a Maryland corporation ("Parent"), Anthracite Acquisition
Corp., a Delaware corporation wholly owned by Parent ("Sub"), and CORE Cap,
Inc., a Delaware corporation (the "Company").

WHEREAS, the Boards of Directors of Parent, Sub and the Company
have each determined that it is advisable and in the best interests of
their respective stockholders to consummate, and have approved, the
business combination transaction provided for herein in which Sub would
merge with and into the Company and the Company would become a wholly-owned
subsidiary of Parent (the "Merger");

WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent
with their respective long-term business strategies and is fair to and in
the best interests of their respective stockholders, and Parent has
approved this Agreement and the Merger as the sole stockholder of Sub;

WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger;

WHEREAS, Parent intends at all times following the Effective
Time to maintain 50% or more of its investments in high quality
residential mortgage loans and securities;

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE I
THE MERGER

1.01 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, Sub shall be merged with and into
the Company in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"). At the Effective Time, the separate existence of
Sub shall cease and the Company shall continue as the surviving corporation
in the Merger (the "Surviving Corporation"). Sub and the Company are
sometimes referred to herein as the "Constituent Corporations". As a
result of the Merger, the outstanding shares of capital stock of the
Constituent Corporations shall be converted or cancelled in the manner
provided in Article II.

1.02 Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.01, subject to Section 2.01(c), and subject to the satisfaction
or waiver (where applicable) of the conditions set forth in Article VII,
the closing of the Merger (the "Closing") will take place at the offices of
Milbank, Tweed, Hadley & McCloy LLP, One Chase Manhattan Plaza, New York,
NY 10005 at 10:00 a.m., local time, on the third business day following the
first day upon which all of the conditions set forth in Sections 7.01(a)
and 7.02(f) have been satisfied (assuming satisfaction of all other
conditions), unless another date, time or place is agreed to in writing by
the parties hereto (the "Closing Date"). At the Closing there shall be
delivered to Parent, Sub and the Company the certificates and other
documents and instruments required to be delivered under Article VII.

1.03 Effective Time. At the Closing, a certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by the
Surviving Corporation and thereafter delivered to the Secretary of State of
the State of Delaware (the "Secretary of State") for filing, as provided in
Section 251 of the DGCL, as soon as practicable on the Closing Date. The
Merger shall become effective at the time of the filing of the Certificate
of Merger with the Secretary of State (the date and time of such filing
being referred to herein as the "Effective Time").

1.04 Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, (i) the Certificate of Incorporation
of the Company as in effect immediately prior to the Effective Time shall
be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of
Incorporation, and (ii) the Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.

1.05 Directors and Officers of the Surviving Corporation. The
directors of Sub and the officers of Sub immediately prior to the Effective
Time shall, from and after the Effective Time, be the directors and
officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.

1.06 Effects of the Merger. Subject to the foregoing, the effects
of the Merger shall be as provided in the applicable provisions of the
DGCL.

1.07 Further Assurances. Each party hereto will, either prior to
or after the Effective Time, execute such further documents, instruments,
deeds, bills of sale, assignments and assurances and take such further
actions as may reasonably be requested by one or more of the others to
consummate the Merger, to vest the Surviving Corporation with full title to
all assets, properties, privileges, rights, approvals, immunities and
franchises of either of the Constituent Corporations or to effect the other
purposes of this Agreement.

ARTICLE II
CONVERSION OF SHARES

2.01 Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof:

(a) Capital Stock of Sub. Each issued and outstanding share of
the common stock, par value $.001 per share, of Sub ("Sub Common Stock")
shall be converted into and become one fully paid and nonassessable share
of common stock, par value $.01 per share, of the Surviving Corporation
("Surviving Corporation Common Stock"). Each certificate representing
outstanding shares of Sub Common Stock shall at the Effective Time
represent an equal number of shares of Surviving Corporation Common Stock.

(b) Cancellation of Treasury Stock and Stock Owned by Parent and
Subsidiaries. All shares of Class A common stock, par value $.01 per
share, of the Company (the "Class A Common Stock"), all shares of Class B
common stock, par value $.01 per share, of the Company ( the "Class B
Common Stock", and collectively, the "Company Common Stock") and all shares
of 10% Cumulative Convertible Series A Preferred Stock, par value $.01 per
share, of the Company (the "Company Series A Preferred Stock", and together
with the Company Common Stock, the "Company Stock") that are owned by the
Company as treasury stock and any shares of Company Common Stock owned by
Parent, Sub or any other wholly-owned Subsidiary of Parent shall be
canceled and retired and shall cease to exist, and no stock of Parent or
other consideration shall be delivered in exchange therefor.

(c) Exchange Ratio for Company Stock. (i) Each issued and
outstanding share of Company Common Stock (other than shares to be canceled
in accordance with Section 2.01(b) and other than Dissenting Shares) shall
be converted into the right to receive the number (the "Common Stock
Conversion Number") of fully paid and nonassessable shares of common stock,
par value $.001 per share, of Parent ("Parent Common Stock") which have an
aggregate Net Asset Value equal to 1.05 multiplied by the Net Asset Value
of one share of Company Common Stock (as adjusted pursuant to the proviso
at the end of this sentence, provided, however, that if the mean average of
the Sales Prices of a whole share of Parent Common Stock on the ten
consecutive Trading Days ending three Trading Days prior to the Closing
Date is below $6.00 per share (the "Benchmark Price"), at the option of the
Company the Common Stock Conversion Number shall be multiplied by a
fraction the numerator of which is the Benchmark Price, subject to
adjustment as provided in paragraph (ii) below, and the denominator of
which is that mean average of such Sales Prices. The term "Net Asset
Value" shall mean net asset value per share of common stock and shall be
computed for each of the Company's and Parent's shares by each of the
Company and Parent, as of the latest date of the satisfaction of the
conditions described in Sections 7.01(a) and 7.02(f),such computation to be
determined within three business days and to be made in the manner provided
in Schedule I to this Agreement (the "Net Asset Valuations"). The Company
and Parent shall use their best efforts to resolve any differences and
reach agreement regarding their respective Net Asset Value calculations for
each of the Company and Parent. If the Company and Parent are unable to
arrive at the same value for any of the Company's and/or Parent's items
referred to in Schedule I ("Disputed Values"), the aggregate value for such
Disputed Values shall be determined as follows: the Company and Parent
each shall select a nationally recognized investment banking firm with
experience in such computations that is independent of each of the Company
and Parent and that within the past three years has not performed, and is
not contemplated to perform, any services for either the Company or Parent
(collectively, the "Appraisers") to compute the value of the Disputed
Values in the manner provided in Schedule I (the "Appraisals"). The
average of the parties' two valuations and the two Appraisals for each
Disputed Value shall be the value for such Disputed Value for purposes of
computing Net Asset Value. This determination for each Disputed Value
shall be conclusive and binding. The Appraisers shall complete the
Appraisals within five business days following their appointment and in the
event that the Appraisals are required, the Closing shall be postponed
until the Appraisals are completed. Each of the Company and Parent shall
give the other party and the Appraisers, if necessary, access to its books
and records for the purpose of computing the Net Asset Value. The Company
and Parent shall share the fees and expenses of the Appraisers and each
party shall have its Net Asset Value reduced by 50% of the amount of the
fees and expenses of the Appraisers in connection with the Appraisals. The
term "Sales Price" shall mean, on any Trading Day, the closing sales price
of Parent Common Stock reported on the New York Stock Exchange, Inc.
("NYSE") Composite Tape on such day. The term "Trading Day" shall mean any
day on which securities are traded on the NYSE. Each issued and
outstanding share of Company Series A Preferred Stock shall be converted
into the right to receive one fully paid and nonassessable share of 10%
Cumulative Convertible Series B Preferred Stock of Parent having the terms
and designations specified in the form of Articles Supplementary attached
as Exhibit A hereto (such preferred stock, the "New Parent Preferred
Stock", and together with the Parent Common Stock, the "Parent Stock").
Parent shall cause the Articles Supplementary for the New Parent Preferred
Stock to be filed with the Secretary of State of the State of Maryland at
or prior to the Effective Time.

(ii) If, prior to the Effective Time, Parent shall pay a dividend
in, subdivide, combine into a smaller number of shares or issue by
reclassification of its shares, any shares of Parent Common Stock, the
Common Stock Conversion Number shall be multiplied by, and the Benchmark
Price shall be divided by, a fraction the numerator of which shall be the
number of shares of Parent Common Stock outstanding immediately after, and
the denominator of which shall be the number of such shares outstanding
immediately before, the occurrence of such event, and the resulting product
shall from and after the date of such event be the Common Stock Conversion
Number and the resulting quotient shall from and after the date of such
event be the Benchmark Price, subject to further adjustment in accordance
with this sentence.

(iii) All shares of Company Stock converted in accordance with
paragraph (i) of this Section 2.01(c) shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to
have any rights with respect thereto, except the right to receive the
shares of Parent Stock and any cash in lieu of fractional shares of Parent
Stock to be issued or paid in consideration therefor (determined in
accordance with Section 2.02(e)), upon the surrender of such certificate in
accordance with Section 2.02, without interest.

(d) Dissenting Shares. (i) Notwithstanding any provision of this
Agreement to the contrary, each outstanding share of Company Stock the
holder of which has not voted in favor of the Merger, has perfected such
holder's right to an appraisal of such holder's shares in accordance with
the applicable provisions of the DGCL and has not effectively withdrawn or
lost such right to appraisal (a "Dissenting Share"), shall not be converted
into or represent a right to receive shares of Parent Stock pursuant to
Section 2.01(c), but the holder thereof shall be entitled only to such
rights as are granted by the applicable provisions of the DGCL; provided,
however, that any Dissenting Share held by a person at the Effective Time
who shall, after the Effective Time, withdraw the demand for appraisal or
lose the right of appraisal, in either case pursuant to the DGCL, shall be
deemed to be converted into, as of the Effective Time, the right to receive
shares of Parent Stock pursuant to Section 2.01(c).

(ii) The Company shall give Parent (x) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to the applicable provisions of the DGCL
relating to the appraisal process received by the Company and (y) the
opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. The Company will not voluntarily
make any payment with respect to any demands for appraisal and will not,
except with the prior written consent of Parent, settle or offer to settle
any such demands.

(e) Stock Option Plan. The 1997 Long Term Incentive Plan, the
stock option agreements executed pursuant thereto and each option to
purchase Company Common Stock granted thereunder that is outstanding at the
Effective Time shall be cancelled by Parent in exchange for a payment in
the amount of $150,000 to GMAC Mortgage Asset Management, Inc., the holder
of such outstanding options. Subject to the terms and conditions of the
Company's Director Stock Option Plan and the stock option agreements
executed pursuant thereto, the Director Stock Option Plan and each option
to purchase Company Common Stock granted thereunder that is outstanding at
the Effective Time shall be assumed by Parent and continued in accordance
with their respective terms and each such option shall become a right to
purchase a number of shares of Parent Common Stock equal to the Common
Stock Conversion Number multiplied by the number of shares of Company
Common Stock subject to such option immediately prior to the Effective
Time, as more fully described in Section 6.07.

2.02 Exchange of Certificates.

(a) Exchange Agent. Promptly following the Effective Time, Parent
shall make available to the Surviving Corporation for deposit with The Bank
of New York or such other bank or trust company designated before the
Closing Date by Parent and reasonably acceptable to the Company (the
"Exchange Agent") certificates representing the number of duly authorized
whole shares of Parent Stock issuable in connection with the Merger plus an
amount of cash equal to the aggregate amount payable in lieu of fractional
shares in accordance with Section 2.02(e), to be held for the benefit of
and distributed to such holders in accordance with this Section. The
Exchange Agent shall agree to hold such shares of Parent Stock and funds
(such shares of Parent Stock and funds, together with earnings thereon,
being referred to herein as the "Exchange Fund") for delivery as
contemplated by this Section and upon such additional terms as may be
agreed upon by the Exchange Agent, the Company and Parent.

(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding
shares of Company Stock (the "Certificates") whose shares are converted
pursuant to Section 2.01(c) into the right to receive shares of Parent
Stock (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as the Surviving Corporation
may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
shares of Parent Stock and cash in lieu of fractional shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal duly executed and completed in accordance
with its terms, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing that number of whole shares
of Parent Stock, plus the cash amount payable in lieu of fractional shares
in accordance with Section 2.02(e), which such holder has the right to
receive pursuant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be canceled. In no event shall the holder
of any Certificate be entitled to receive interest on any funds to be
received in the Merger. In the event of a transfer of ownership of Company
Stock which is not registered in the transfer records of the Company, a
certificate representing that number of whole shares of Parent Stock, plus
the cash amount payable in lieu of fractional shares in accordance with
Section 2.02(e), may be issued to a transferee if the Certificate
representing such Company Stock is presented to the Exchange Agent
accompanied by all documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.02(b), each Certificate
shall be deemed at any time after the Effective Time for all corporate
purposes of Parent, except as limited by paragraph (c) below, to represent
ownership of the number of shares of Parent Stock into which the number of
shares of Company Stock shown thereon have been converted as contemplated
by this Article II. Notwithstanding the foregoing, Certificates
representing Company Stock surrendered for exchange by any person
constituting an "affiliate" of the Company for purposes of Section 6.04
shall not be exchanged until Parent has received an Affiliate Agreement as
provided in Section 6.04.

(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time
with respect to Parent Stock with a record date on or after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.02(e) until the holder of record of such Certificate
shall surrender such Certificate in accordance with this Section. Subject
to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of
dividends or other distributions, if any, with a record date on or after
the Effective Time which theretofore became payable, but which were not
paid by reason of the immediately preceding sentence, with respect to such
whole shares of Parent Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date on or after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Stock.

(d) No Further Ownership Rights in Company Stock. All shares of
Parent Stock issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash paid pursuant to
Section 2.02(e)) shall be deemed to have been issued at the Effective Time
in full satisfaction of all rights pertaining to the shares of Company
Stock represented thereby, subject, however, to the Surviving Corporation's
obligation to pay any dividends which may have been declared by the Company
on such shares of Company Stock in accordance with the terms of this
Agreement and which remained unpaid at the Effective Time. From and after
the Effective Time, the stock transfer books of the Company shall be closed
and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Stock
which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation
for any reason, they shall be canceled and exchanged as provided in this
Section.

(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock will be issued in the Merger upon
the surrender for exchange of Certificates, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent. In lieu of any such fractional shares, each holder
of Certificates who would otherwise have been entitled to a fraction of a
share of Parent Common Stock in exchange for such Certificates pursuant to
this Section shall receive from the Exchange Agent a cash payment in lieu
of such fractional share determined by multiplying (A) the Sales Price of a
whole share of Parent Common Stock on the last Trading Day immediately
preceding the Closing Date by (B) the fractional share interest to which
such holder would otherwise be entitled.

(f) Withholding. Parent or the Exchange Agent shall be entitled
to deduct and withhold from any merger consideration or cash paid on
Dissenting Shares and any dividends or distributions otherwise payable
pursuant to this Agreement to any stockholders of the Company such amounts
as Parent or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign
tax law. To the extent amounts are so withheld by Parent or the Exchange
Agent, such withheld amount shall be treated for all purposes of this
Agreement as having been paid to the stockholder of the Company in respect
of which such deduction and withholding was made by Parent or the Exchange
Agent.

(g) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the stockholders of the Company for six
months after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any stockholders of the Company who have not
theretofore complied with this Article II shall thereafter look only to the
Surviving Corporation (subject to abandoned property, escheat and other
similar laws) for payment of their claim for Parent Stock, any cash in lieu
of fractional shares of Parent Stock and any dividends or distributions
with respect to Parent Stock. Neither Parent nor the Surviving Corporation
shall be liable to any holder of shares of Company Stock for shares of
Parent Stock (or dividends or distributions with respect thereto) or cash
payable in respect of fractional share interests delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Sub as follows:

3.01 Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation and has full corporate power and
authority to conduct its business as and to the extent now conducted and to
own, use and lease its assets and properties, except for such failures to
be so incorporated, existing and in good standing or to have such power and
authority which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on the
Company. The Company has no Subsidiaries. The Company is duly qualified,
licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures
to be so qualified, licensed or admitted and in good standing which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the Company. As
of the date hereof, except as disclosed in Section 3.01 of the letter dated
the date hereof and delivered to Parent and Sub by the Company concurrently
with the execution and delivery of this Agreement (the "Company Disclosure
Letter"), the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity (other than (i) non-controlling investments in the
ordinary course of business and corporate partnering, development,
cooperative marketing and similar undertakings and arrangements entered
into in the ordinary course of business and (ii) other investments of less
than $100,000). The Company has previously delivered to Parent correct and
complete copies of the certificate or articles of incorporation and bylaws
(or other comparable charter documents) of the Company.

3.02 Capital Stock.

(a) The authorized capital stock of the Company consists solely of
20,000,000 shares of Class A Common Stock, 25,000 shares of Class B Common
Stock, and 12,000,000 shares of Company Series A Preferred Stock (and no
other shares of preferred stock). As of December 31, 1999, 2,260,997
shares of Company Series A Preferred Stock, 3,237,158 shares of Class A
Common Stock and 20,500 shares of Class B Common Stock of the Company were
issued and outstanding, 1,871,603 shares of Company Series A Preferred
Stock, 1,871,603 shares of Class A Common Stock and no shares of Class B
Common Stock of the Company were held in the treasury of the Company and no
shares of Company Series A Preferred Stock, no shares of Class A Common
Stock and no shares of Class B Common Stock of the Company were reserved
for issuance. Since such date, except as set forth in Section 3.02 of the
Company Disclosure Letter, there has been no change in the number of issued
and outstanding shares of Company Stock or shares held in treasury or
reserved for issuance. All of the issued and outstanding shares of Company
Stock are, and all shares reserved for issuance will be, upon issuance in
accordance with the terms specified in the instruments or agreements
pursuant to which they are issuable, duly authorized, validly issued, fully
paid and nonassessable. Except pursuant to this Agreement and except as
set forth in Section 3.02 of the Company Disclosure Letter, there are no
outstanding subscriptions, options, warrants, rights (including "phantom"
stock rights), preemptive rights or other contracts, commitments,
understandings or arrangements, including any right of conversion or
exchange under any outstanding security, instrument or agreement (together,
"Options"), obligating the Company to issue or sell any shares of capital
stock of the Company or to grant, extend or enter into any Option with
respect thereto.

(b) Except as disclosed in Section 3.02 of the Company Disclosure
Letter, there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of Company Stock or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other person.

3.03 Authority Relative to This Agreement. The Company has full
corporate power and authority to enter into this Agreement and, subject to
obtaining the Company Stockholders' Approval, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors of the
Company, the Board of Directors of the Company has recommended adoption of
this Agreement by the stockholders of the Company and directed that this
Agreement be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of the
Company or its stockholders are necessary to authorize the execution,
delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby, other
than obtaining the Company Stockholders' Approval. This Agreement has been
duly and validly executed and delivered by the Company and, subject to the
obtaining of the Company Stockholders' Approval, constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

3.04 Non-Contravention; Approvals and Consents.

(a) The execution and delivery of this Agreement by the Company do
not, and the performance by the Company of its obligations hereunder and
the consummation by it of the transactions contemplated hereby will not,
conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give
to any person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any Lien upon any of the assets or properties of the Company
under, any of the terms, conditions or provisions of (i) the certificates
or articles of incorporation or bylaws (or other comparable charter
documents) of the Company, or (ii) subject to the obtaining of the Company
Stockholders' Approval and the taking of the actions described in
paragraph (b) of this Section, (x) any statute, law, rule, regulation or
ordinance (together, "laws"), or any judgment, decree, order, writ, permit
or license (together, "orders"), of any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the
United States, any foreign country or any domestic or foreign state,
county, city or other political subdivision (a "Governmental or Regulatory
Authority") applicable to the Company or any of its assets or properties,
or (y) any note, bond, mortgage, security agreement, indenture, license,
franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind (together, "Contracts") to which the
Company is a party or by which the Company or any of its assets or
properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations and creations and impositions of Liens which, individually or
in the aggregate, could not be reasonably expected to have a material
adverse effect on the Company or on the ability of the Company to
consummate the transactions contemplated by this Agreement.

(b) Except (i) for the filing of the Registration Statement with
the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), the declaration of the effectiveness of
the Registration Statement by the SEC and filings with various state
securities authorities that are required in connection with the
transactions contemplated by this Agreement, (ii) for the filing of the
Certificate of Merger and other appropriate merger documents required by
the DGCL with the Secretary of State and appropriate documents with the
relevant authorities of other states in which the Constituent Corporations
are qualified to do business, and (iii) as disclosed in Section 3.04 of the
Company Disclosure Letter, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority or other public or
private third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or
Regulatory Authority or any Contract to which the Company is a party or by
which the Company or any of its assets or properties is bound for the
execution and delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder or the consummation of the
transactions contemplated hereby, other than such consents, approvals,
actions, filings and notices which the failure to make or obtain, as the
case may be, individually or in the aggregate, could not be reasonably
expected to have a material adverse effect on the Company or on the ability
of the Company to consummate the transactions contemplated by this
Agreement.

3.05 Financial Reports. The Company delivered to Parent prior to
the execution of this Agreement a true and complete copy of the Company's
Annual Report for the year ended December 31, 1998 and the Company's
Financial Reporting Package dated December 1999 (the "Company Financial
Information"). The Company's audited financial statements and unaudited
interim financial statements (including, in each case, the notes, if any,
thereto) included in the Company Financial Information were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly present (subject, in the case
of the interim unaudited financial statements, to normal, recurring year-
end audit adjustments (which are not expected to be, individually or in the
aggregate, materially adverse)) the financial position of the Company as at
the respective dates thereof and the results of its operations and cash
flows for the respective periods then ended. As of its respective dates,
the Company Financial Information (other than such financial statements)
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Since December 31, 1999 and prior to the date
hereof, there has not been any material change, or any application or
request for any material change, by the Company in accounting principles,
methods or policies for financial accounting or tax purposes (except as
required by generally accepted accounting principles or otherwise disclosed
in the Company's financial statements and subject, in the case of unaudited
interim financial statements, to normal year-end adjustments).

3.06 Absence of Certain Changes or Events. Except as disclosed in
the Company Financial Information, since December 31, 1999, there has not
been any change, event or development having, or that could be reasonably
expected to have, individually or in the aggregate, a material adverse
effect on the Company, other than those occurring as a result of general
economic or financial conditions which are not unique to the Company but
also affect other persons who participate or are engaged in the lines of
business in which the Company participates or is engaged, and except as
disclosed in Section 3.06 of the Company Disclosure Letter, between such
date and the date hereof (i) the Company has conducted its business only in
the ordinary course consistent with past practice and (ii) the Company has
not taken any action which, if taken after the date hereof, would
constitute a breach of any provision of clause (ii) of Section 5.01(b).

3.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended
December 31, 1999 included in the Company Financial Information or the
notes thereto or as disclosed in Section 3.07 of the Company Disclosure
Letter, the Company has not at such date, nor incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of the Company (including the notes thereto), except
liabilities or obligations (i) which were incurred in the ordinary course
of business consistent with past practice or (ii) which have not been, and
could not be reasonably expected to be, individually or in the aggregate,
materially adverse to the Company.

3.08 Legal Proceedings. Except as disclosed in Section 3.08 of the
Company Disclosure Letter, (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of the Company, threatened
against, relating to or affecting, nor to the knowledge of the Company are
there any Governmental or Regulatory Authority investigations or audits
pending or threatened against, relating to or affecting, the Company or any
of its assets and properties which, individually or in the aggregate, could
be reasonably expected to have a material adverse effect on the Company or
on the ability of the Company to consummate the transactions contemplated
by this Agreement, and (ii) the Company is not subject to any order of any
Governmental or Regulatory Authority which, individually or in the
aggregate, is having or could be reasonably expected to have a material
adverse effect on the Company or on the ability of the Company to
consummate the transactions contemplated by this Agreement.

3.09 Information Supplied. The information relating to the Company
set forth in the proxy statement relating to the Company Stockholders'
Meeting, as amended or supplemented from time to time (as so amended and
supplemented, the "Proxy Statement") included in the Registration Statement
on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of shares of Parent Stock in the Merger, as amended or
supplemented from time to time (as so amended and supplemented, the
"Registration Statement"), except as the Company shall otherwise advise in
writing, complies in all material respects with the requirements of the
Securities Act and will not, taken together with any additional information
supplied by the Company expressly for inclusion therein, on the date of its
filing or, in the case of the Registration Statement, at the time it
becomes effective under the Securities Act, at the date the Proxy Statement
is mailed to stockholders and at the time of the Company Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading, and any other documents to be filed by the
Company or information supplied in writing by the Company to be included in
documents to be filed by Parent with any Governmental or Regulatory
Authority in connection with the Merger and the other transactions
contemplated hereby will not, on the date of its filing or, in the case of
the Proxy Statement, at the date it is mailed to stockholders and at the
time of the Company Stockholders' Meeting or at the time the stockholders'
consent is effective, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.

3.10 Compliance with Laws and Orders. The Company holds all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
its business (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the Company. The
Company is in compliance with the terms of the Company Permits, except
failures so to comply which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material adverse
effect on the Company. Except as disclosed in the Company Financial
Information and in Section 3.10 of the Company Disclosure Letter, the
Company is not in violation of or default under any law or order of any
Governmental or Regulatory Authority, except for such violations or
defaults which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on the
Company.

3.11 Investment Company Act. The Company (i) is not an "investment
company" or a company "controlled" by an investment company within the
meaning of the Investment Company Act of 1940, as amended, (ii) a "holding
company" or a "subsidiary company" of a holding company or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act of
1935, as amended, or (iii) subject to regulation under the Federal Power
Act or the Interstate Commerce Act.

3.12 Compliance with Agreements; Certain Agreements. (a) Section
3.12(a) of the Company Disclosure Letter sets forth a list of contracts to
which the Company is a party that involve expected annual payments to or
from the Company which are greater than $100,000 and cannot be terminated
within 90 days after giving notice without resulting in any material cost
or penalty to the Company and are material to the business, properties,
assets, financial position or results of the Company. Except as disclosed
in the Company Financial Information, neither the Company nor, to the
knowledge of the Company, any other party thereto is in breach or violation
of, or in default in the performance or observance of any term or provision
of, and no event has occurred which, with notice or lapse of time or both,
could be reasonably expected to result in a default under, (i) the
certificates or articles of incorporation or bylaws (or other comparable
charter documents) of the Company or (ii) any Contract to which the Company
is a party or by which the Company or any of its assets or properties is
bound, except in the case of clause (ii) for breaches, violations and
defaults which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on the
Company.

(b) Except as disclosed in Section 3.12(b) of the Company
Disclosure Letter or in the Company Financial Information or as provided
for in this Agreement, as of the date hereof, the Company is not a party to
any oral or written (i) management or consulting agreement not terminable
on 30 days' or less notice involving the payment of more than $100,000 per
annum or $500,000 per annum in the aggregate for all such agreements, (ii)
agreement with any executive officer or other key employee of the Company
the benefits of which are contingent or vest, or the terms of which are
materially altered, upon the occurrence of a transaction involving the
Company of the nature contemplated by this Agreement, (iii) agreement with
respect to any executive officer or other key employee of the Company
providing any term of employment or compensation guarantee extending for a
period longer than one year and for the payment of more than $100,000 per
annum or $500,000 per annum in the aggregate for all such agreements or
(iv) agreement or plan, including any stock option, stock appreciation
right, restricted stock or stock purchase plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.

3.13 Mortgage Backed Securities. (a) Except as set forth in
Section 3.13(a) of the Company Disclosure Letter, the Company is on the
date hereof the sole owner of each of the mortgage backed securities
("MBS") identified in Section 3.13(a) of the Company Disclosure Letter
("Company MBS") and the related certificates and other instruments
evidencing ownership of the Company MBS (the "Company MBS Certificates"),
free and clear of any adverse claims, Liens, pledges, assignments, charges
or security interests of any nature (including, without limitation, Liens
arising under the federal tax laws or ERISA), other than any Company
Permitted Liens. The term "Company Permitted Liens" shall mean (i) Liens
set forth in the Company Disclosure Letter, and (ii) mechanics', carriers',
workmen's, repairmen's and materialmens' liens and other Liens and other
limitations of any kind, if any, which, individually or in the aggregate,
would not be reasonably likely to result in a material adverse effect on
the Company.

(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Letter, the Company to its knowledge is not in default in the
performance of any of its obligations under any pooling and servicing
agreements, trust and servicing agreements, trust agreements, servicing
agreements or other similar documents providing for the creation of the MBS
or the servicing of the mortgage loans underlying the MBS (the "Company
Principal MBS Agreements") and has not received any notice of any default
by any master servicer of any Company MBS, the effect of which,
individually or in the aggregate, could reasonably be expected to be
materially adverse to the Company.

(c) Except as set forth in Section 3.13(c) of the Company
Disclosure Letter, as of the date hereof, there are no material agreements
(other than the Company Principal MBS Agreements) between Company and the
master servicer with respect to any series of Company MBS.

3.14 Mortgage Loans

(a) Except as set forth in Section 3.14(a) of the Company
Disclosure Letter, the Company is the sole owner of each of the mortgage
loans reflected in the most recent monthly report delivered to Parent or
made or acquired since such date (the "Company Mortgage Loans") and is the
sole owner or beneficiary of or under any related notes (the "Company
Mortgage Notes"), deeds of trust, mortgages, security agreements,
guaranties, indemnities, financing statements, assignments, endorsement,
bonds, letters of credit, accounts, insurance contracts and policies,
credit reports, tax returns, appraisals, escrow documents, participation
agreements (if applicable), loan files, servicing files and all other
documents evidencing or securing the Company Mortgage Loans (the "Company
Mortgage Files"), except (i) any Company Mortgage Loans disposed of in the
ordinary course since the date of such financial statements, and (ii) to
the extent any Company Mortgage Loan is prepaid in full or subject to a
completed foreclosure action (or non-judicial proceeding or deed in lieu of
foreclosure) in which case the Company shall be the sole owner of the real
property securing such foreclosed loan or shall have received the proceeds
of such action to which the Company was entitled, in each case free and
clear of any adverse claims or Liens except Company Permitted Liens.

(b) Except as set forth in Section 3.14(b) to the Company
Disclosure Letter, to the knowledge of the Company, (i) the lien of each
Company Mortgage is subject only to "Permitted Exceptions" which consist of
the following: (A) Company Permitted Liens; (B) covenants, conditions,
restrictions, reservations, rights, Liens, easements, encumbrances,
encroachments, and other matters affecting title acceptable to prudent
mortgage lending institutions generally; (C) rights of tenants with no
options to purchase or rights of first refusal to purchase, except as
disclosed in the Company Mortgage Files; and (D) other matters which, in
the aggregate, would not be reasonably likely to result in a material
adverse effect on the Company; (ii) each of the Company Mortgage Loans has
generally been serviced in accordance with the terms of the related
mortgage note and pooling and servicing agreements and otherwise in
accordance with industry accepted servicing practices except for events
that, individually or in the aggregate, would not be reasonably likely to
result in a material adverse effect on the Company; and (iii) there is no
delinquency in the payments of principal and interest required to be made
under the terms of any Company Mortgage Loan in excess of 30 days beyond
the applicable due date that has occurred since origination or in any other
payments required to be made under the terms of any Company Mortgage Loan
(inclusive of any applicable grace or cure period) that would be reasonably
likely to result in a material adverse effect on the Company.

(c) Except as set forth in Section 3.14(c) of the Company
Disclosure Letter or in the applicable Company Mortgage File, the Company
has no knowledge of (i) any written notice asserting any offset, defense
(including the defense of usury), claim (including claims of lender
liability), counterclaim, or right to rescission with respect to any
Company Mortgage Loan, Company Mortgage Note or other related agreements,
(ii) any uncured monetary default in excess of 30 days or event of
acceleration existing under any Company Mortgage or the related Company
Mortgage Note or (iii) any uncured non-monetary default, breach, violation
or event of acceleration existing beyond the applicable grace or cure
period under any Company Mortgage or the related Company Mortgage Note,
except for notices, violations, breaches, defaults or events of
acceleration that would not, individually or in the aggregate, be
reasonably likely to result in a material adverse effect on the Company.

3.15 Indebtedness. Section 3.15 of the Company Disclosure Letter
sets forth as of January 31, 2000 (x) a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any Indebtedness of the Company, other than
Indebtedness payable to the Company, in an aggregate principal amount in
excess of $100,000 per item, is outstanding or may be incurred and (y) the
respective principal amounts outstanding thereunder. For purposes of this
Agreement, "Indebtedness" shall mean, with respect to any Person, without
duplication, (A) all indebtedness of such Person for borrowed money,
whether secured or unsecured, (B) all obligations of such Person under
conditional sale or other title retention agreements relation to property
purchased by such Person, (C) all capitalized lease obligations of such
Person, (D) all obligations of such Person under interest rate or currency
hedging transactions (valued at the termination value thereof) and (E) all
guarantees of such Person of any such indebtedness of any other Person
other than endorsements for collection in the ordinary course.

3.16 Taxes.

(a) The Company has filed all tax returns and reports required to
be filed by it, or requests for extensions to file such returns or reports
have been timely filed or granted and have not expired, the Company has
paid all Taxes shown as due thereon, and all tax returns and reports are
complete and accurate in all respects, except to the extent that such
failures to file, have extensions granted that remain in effect, pay Taxes
shown as due or be complete and accurate in all respects, as applicable,
individually or in the aggregate, would not have a material adverse effect
on the Company. The information contained in the Company Financial
Information reflects adequate reserves for all Taxes payable by the Company
for all taxable periods and portions thereof accrued through the date of
such financial statements, and no deficiencies for any taxes have been
proposed, asserted or assessed against the Company that are not adequately
reserved for, except for inadequately reserved taxes and inadequately
reserved deficiencies that would not, individually or in the aggregate,
have a material adverse effect on the Company. True, correct and complete
copies of all income and other material federal, state and local tax
returns and reports for the Company, and all written communications in the
Company's possession relating thereto, have been delivered or made
available to representatives of Parent. Since the date of the most recent
financial statements included in the Company Financial Information, the
Company has incurred no liability for taxes under Sections 857(b), 860(c)
or 4981 of the Code, and the Company has not incurred any material
liability for Taxes other than in the ordinary course of business. To the
knowledge of the Company, no event has occurred, and no condition or
circumstance exists, which presents a material risk that any material Tax
described in the preceding sentence will be imposed upon the Company. No
requests for waivers of the time to assess any taxes against the Company
have been granted or are pending, except for requests with respect to such
taxes that have been adequately reserved for in the most recent financial
statements, or, to the extent not adequately reserved, the assessment of
which would not, individually or in the aggregate, have a material adverse
effect on the Company.

(b) As used in this Agreement, "Taxes" shall include all federal,
state, local and foreign income, franchise, property, sales, use, excise
and other taxes, including obligations for withholding taxes from payments
due or made to any other person and any interest, penalties or additions to
tax with respect thereto.

(c) The Company (A) for all taxable years commencing with the year
ending December 31, 1997 has been subject to taxation as a REIT within the
meaning of the Code and has satisfied all requirements to qualify as a REIT
for such years, (B) has operated, and intends to continue to operate, in
such a manner as to qualify as a REIT for the tax year ending on the
Closing Date, and (C) has not taken or omitted to take any action which
would reasonably be expected to result in loss of its status as a REIT, and
to the Company's knowledge, no such challenge is pending or threatened.
The Company does not hold any material asset (x) the disposition of which
would be subject to rules similar to Section 1374 of the Code as a result
of an election under Internal Revenue Service ("IRS") Notice 88-19 or (y)
that is subject to a consent filed pursuant to Section 341(f) of the Code
and the regulations thereunder.

3.17 Employee Benefit Plans; ERISA

(a) Section 3.17 of the Company Disclosure Letter contains a true
and complete list of all Company Employee Benefit Plans. Except as would
not have a material adverse effect on the Company, (i) all Company Employee
Benefit Plans are in compliance with all applicable requirements of law,
including ERISA and the Code and have been operated in accordance with
their terms, and (ii) the Company does not have any liabilities or
obligations with respect to any such Company Employee Benefit Plans,
whether accrued, contingent or otherwise, and to the Company's knowledge no
circumstances exist that could reasonably be expected to result in any such
liabilities or obligations being incurred. The execution of, and
performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any Company Employee Benefit Plan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any employee.
The only severance agreements or severance policies applicable to the
Company are the agreements and policies specifically referred to in Section
3.17 of the Company Disclosure Letter.

(b) Each of the Company Employee Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) or Section 501(c)(9) of
the Code is so qualified, and no circumstances exist that could reasonably
be expected to result in the revocation of any such determination.

(c) Except as disclosed in Section 3.17(c) of the Company
Disclosure Letter or as disclosed in the Company Financial Information,
other than continuation coverage required to be provided under Section
4980B of the Code or Part 6 of Title I of ERISA or otherwise as provided by
state law or as incidental benefits under a qualified plan, none of the
Company Employee Benefit Plans that are "welfare plans," within the meaning
of Section 3(1) of ERISA provides for any benefits with respect to current
or former employees for periods extending beyond their retirement or other
termination of service, other than benefits the full cost of which is borne
by such former employees.

(d) As used herein:

(i) "Company Employee Benefit Plan" means any Plan entered into,
established, maintained, sponsored, contributed to or required to be
contributed to by the Company for the benefit of the current or former
employees or directors of the Company and existing on the date of this
Agreement or at any time subsequent thereto and on or prior to the
Effective Time and, in the case of a Plan which is subject to Part 3 of
Title I of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder ("ERISA"), Section 412
of the Code or Title IV of ERISA, at any time during the five-year
period preceding the date of this Agreement; and

(ii) "Plan" means any employment, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights,
phantom stock, leave of absence, layoff, vacation, day or dependent
care, legal services, cafeteria, life, health, medical, accident,
disability, workmen's compensation or other insurance, severance,
separation, termination, change of control or other benefit plan,
agreement, practice, policy, program or arrangement of any kind, whether
written or oral, including, but not limited to, any "employee benefit
plan" within the meaning of Section 3(3) of ERISA.

3.18 Labor Matters. Except for those individuals listed in
Section 3.18 of the Company Disclosure Letter, the Company has no
employees. Except as set forth in Section 3.18 of the Company Disclosure
Letter, no officer or director of the Company has received or is (or could
become) entitled to receive compensation, severance, bonus, indemnification
or employment benefits from the Company.

3.19 Real Property; Mortgage Loans. The Company owns no real
property. With respect to environmental matters, all of the Mortgage Loans
included in the Company's portfolio conformed to the Underwriting
Guidelines (as defined in the Mortgage Loan Master Purchase and Servicing
Agreements to which the Company is a party) as in effect at the time of
their purchase by the Company, except where such failures to conform could
not, in the aggregate, reasonably be expected to have a material adverse
effect on the Company.

3.20 Intellectual Property Rights. The Company has all right,
title and interest in, or a valid and binding license to use, all
Intellectual Property (as defined below) individually or in the aggregate
material to the conduct of the businesses of the Company. The Company is
not in default (or with the giving of notice or lapse of time or both,
would not be in default) under any license to use such Intellectual
Property, such Intellectual Property is not being infringed by any third
party, and the Company is not infringing any Intellectual Property of any
third party, except for such defaults and infringements which, individually
or in the aggregate, are not having and could not be reasonably expected to
have a material adverse effect on the Company. For purposes of this
Agreement, "Intellectual Property" means patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights,
copyrights and copyright rights and other proprietary intellectual property
rights and all pending applications for and registrations of any of the
foregoing.

3.21 Vote Required. Assuming the accuracy of the representation
and warranty contained in Section 4.21, the affirmative vote of the holders
of record of at least a majority of the outstanding shares of Company Stock
and of Class B Common Stock with respect to the adoption of this Agreement
is the only vote of the holders of any class or series of the capital stock
of the Company required to adopt this Agreement and approve the Merger and
the other transactions contemplated hereby.

3.22 Financial Advisor. The Company has received the opinion of
PaineWebber Incorporated, dated the date hereof, to the effect that, as of
the date hereof, the consideration to be received in the Merger by the
stockholders of the Company is fair from a financial point of view to the
stockholders of the Company.

3.23 Ownership of Parent Common Stock. Neither the Company nor any
affiliates beneficially owns any shares of Parent Common Stock.

3.24 Affiliate Transactions. Except as set forth in the Section
3.24 of the Company Disclosure Letter, as of the date hereof, there is no
material transaction and no material transaction is now proposed, to which
the Company is or is to be a party to which any current shareholder
(holding in excess of 10% of the Company Stock or any securities
convertible into or exchangeable for such Company Stock), director or
executive officer of the Company is a party.

3.25 Article FIFTH of the Company's Certificate of Incorporation
and Section 203 of the DGCL Not Applicable. The Company has taken all
necessary actions so that neither the provisions of Article FIFTH of the
Company's Certificate of Incorporation nor the provisions of Section 203 of
the DGCL will, before the termination of this Agreement, apply to this
Agreement, the Merger or the other transactions contemplated hereby or
thereby.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Parent and Sub represent and warrant to the Company as follows:

4.01 Organization and Qualification. Each of Parent and its
Subsidiaries (including Sub) is a corporation or limited liability company
duly incorporated or duly formed, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has full corporate
power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, except for
such failures to be so incorporated, existing and in good standing or to
have such power and authority which, individually or in the aggregate, are
not having and could not be reasonably expected to have a material adverse
effect on Parent and its Subsidiaries taken as a whole. Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated hereby. Each of Parent and its
Subsidiaries is duly qualified, licensed or admitted to do business and is
in good standing in each jurisdiction in which the ownership, use or
leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary,
except for such failures to be so qualified, licensed or admitted and in
good standing which, individually or in the aggregate, are not having and
could not be reasonably expected to have a material adverse effect on
Parent and its Subsidiaries taken as a whole. Section 4.01 of the letter
dated the date hereof and delivered by Parent and Sub to the Company
concurrently with the execution and delivery of this Agreement (the "Parent
Disclosure Letter") sets forth a complete and correct list of all
Subsidiaries of Parent and Parent's interests therein. Except for
interests in the Subsidiaries of Parent and as disclosed in Section 4.01 of
the Parent Disclosure Letter, Parent does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity. The restated articles of incorporation, dated as of March 20,
1998, provided by Parent to the Company and the bylaws filed by Parent in
Parent's Annual Report on Form 10-K for the year ended December 31, 1998
are complete and correct as of the date hereof.

4.02 Capital Stock.

(a) The authorized capital stock of Parent consists solely of
400,000,000 shares of Parent Common Stock par value $.001 per share, and
100,000,000 shares of preferred stock, par value $.001 per share ("Parent
Preferred Stock"). As of December 31, 1999, 1,200,000 shares of Parent
Preferred Stock and 20,961,534 shares of Parent Common Stock were issued
and outstanding, no shares of Parent Preferred Stock and no shares of
Parent Common Stock were owned by Parent or any Subsidiary and no shares of
Parent Preferred Stock and no shares of Parent Common Stock were reserved
for issuance. Since such date, except as set forth in Section 4.02 of the
Parent Disclosure Letter, there has been no change in the number of issued
and outstanding shares of Parent Preferred Stock or Parent Common Stock or
shares of Parent Preferred Stock or Parent Common Stock held in treasury or
reserved for issuance. All of the issued and outstanding shares of Parent
Preferred Stock and Parent Common Stock are, and all shares reserved for
issuance, including shares issuable on conversion of the Parent Preferred
Stock and shares issuable on conversion of the New Parent Preferred Stock
referred to in Section 2.01(c), will be, upon issuance in accordance with
the terms specified in the instruments or agreements pursuant to which they
are issuable, duly authorized, validly issued, fully paid and
nonassessable. Except pursuant to this Agreement and except as set forth
in the Parent SEC Reports or Section 4.02 of the Parent Disclosure Letter,
there are no outstanding Options obligating Parent or any of its
Subsidiaries to issue or sell any shares of capital stock of Parent or to
grant, extend or enter into any Option with respect thereto.

(b) Except as disclosed in the Parent SEC Reports filed prior to
the date hereof, or in Section 4.02 of the Parent Disclosure Letter, all of
the outstanding shares of capital stock of each Subsidiary of Parent are
duly authorized, validly issued, fully paid and nonassessable and are
owned, beneficially and of record, by Parent or a Subsidiary wholly owned,
directly or indirectly, by Parent, free and clear of any Liens. Except as
disclosed in the Parent SEC Reports filed prior to the date hereof, or in
Section 4.02 of the Parent Disclosure Letter, there are no (i) outstanding
Options obligating Parent or any of its Subsidiaries to issue or sell any
shares of capital stock of any Subsidiary of Parent or to grant, extend or
enter into any such Option or (ii) voting trusts, proxies or other
commitments, understandings, restrictions or arrangements in favor of any
person other than Parent or a Subsidiary wholly owned, directly or
indirectly, by Parent with respect to the voting of or the right to
participate in dividends or other earnings on any capital stock of any
Subsidiary of Parent.

(c) Except as disclosed in the Parent SEC Reports filed prior to
the date hereof, or in Section 4.02 of the Parent Disclosure Letter, there
are no outstanding contractual obligations of Parent or any Subsidiary of
Parent to repurchase, redeem or otherwise acquire any shares of Parent
Common Stock or Parent Preferred Stock or any capital stock of any
Subsidiary of Parent or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary of
Parent or any other person.

4.03 Authority Relative to This Agreement. Each of Parent and Sub
has full corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and, subject to obtaining stockholder
approval with respect to the listing of shares of Parent Common Stock
issuable upon conversion of the New Preferred Stock, to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by each of Parent, Sub and their affiliates, as
applicable, and the consummation by each of Parent, Sub and their
affiliates, as applicable, of the transactions contemplated hereby and
thereby have been duly and validly approved by their respective Boards of
Directors and by Parent in its capacity as the sole stockholder of Sub, and
no other corporate proceedings on the part of either of Parent or Sub or
their stockholders are necessary to authorize the execution, delivery and
performance of the Basic Agreements by Parent, Sub and their affiliates and
the consummation by them of the transactions contemplated hereby other than
stockholder approval with respect to the listing of shares of Parent Common
Stock issuable upon conversion of the New Preferred Stock. This Agreement
has been duly and validly executed and delivered by each of Parent, Sub and
their affiliates and constitute legal, valid and binding obligations of
each of Parent, Sub and their affiliates enforceable against each of them
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

4.04 Non-Contravention; Approvals and Consents.

(a) The execution and delivery of this Agreement by each of
Parent, Sub and their affiliates do not, and the performance by each of
them of their obligations hereunder and the consummation by it of the
transactions contemplated hereby and thereby will not, conflict with,
result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of payment or reimbursement, termination, cancellation, modification
or acceleration of, or result in the creation or imposition of any Lien
upon any of their assets or properties under, any of the terms, conditions
or provisions of (i) their certificates or articles of incorporation or
bylaws (or other comparable charter documents), or (ii) subject to the
taking of the actions described in paragraph (b) of this Section, (x) any
laws or orders of any Governmental or Regulatory Authority applicable to
them or any of their respective assets or properties, or (y) any Contracts
to which any of them is a party or by which any of them or any of their
respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not be reasonably
expected to have a material adverse effect on Parent and its Subsidiaries
taken as a whole or on the ability of Parent, Sub and their affiliates to
consummate the transactions contemplated by this Agreement.

(b) Except (i) for the filing of the Registration Statement with
the SEC pursuant to the Securities Act, the declaration of the
effectiveness of the Registration Statement by the SEC and filings with
various state securities authorities that are required in connection with
the transactions contemplated by this Agreement and (ii) for the filing of
the Certificate of Merger and other appropriate merger documents required
by the DGCL with the Secretary of State and appropriate documents with the
relevant authorities of other states in which the Constituent Corporations
are qualified to do business, no consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority or other public
or private third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or
Regulatory Authority or any Contract to which Parent, any of its
Subsidiaries or any of its affiliates is a party or by which any of them or
any of their respective assets or properties is bound for the execution and
delivery of this Agreement by each of Parent, Sub or any of its affiliates,
the performance by each of them of its obligations thereunder or the
consummation of the transactions contemplated hereby, other than such
consents, approvals, actions, filings and notices which the failure to make
or obtain, as the case may be, individually or in the aggregate, could not
be reasonably expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole or on the ability of Parent, Sub and their
affiliates to consummate the transactions contemplated by this Agreement.

4.05 SEC Reports and Financial Statements. The forms, reports,
schedules, registration statements, definitive proxy statements and other
documents (together with all amendments thereof and supplements thereto)
filed by Parent or any of its Subsidiaries with the SEC since November 1997
(as such documents have since the time of their filing been amended or
supplemented, the "Parent SEC Reports"), are all of the documents (other
than preliminary material) that Parent and its Subsidiaries were required
to file with the SEC since such date. As of their respective dates, the
Parent SEC Reports (i) complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "Exchange
Act"), as the case may be, and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated
financial statements (including, in each case, the notes, if any, thereto)
included in the Parent SEC Reports (the "Parent Financial Statements")
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted
by Form 10-Q of the SEC) and fairly present (subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end audit
adjustments (which are not expected to be, individually or in the
aggregate, materially adverse to Parent and its Subsidiaries taken as a
whole)) the consolidated financial position of Parent and its consolidated
subsidiaries as at the respective dates thereof and the consolidated
results of their operations and cash flows for the respective periods then
ended. Except as set forth in the Parent SEC Reports or Section 4.05 of
the Parent Disclosure Letter, each Subsidiary of Parent is treated as a
consolidated subsidiary of Parent in the Parent Financial Statements for
all periods covered thereby.

4.06 Absence of Certain Changes or Events. Except as disclosed in
the Parent SEC Reports filed prior to the date of this Agreement, (a) since
September 30, 1999 there has not been any change, event or development
having, or that could be reasonably expected to have, individually or in
the aggregate, a material adverse effect on Parent and its Subsidiaries
taken as a whole, other than those occurring as a result of general
economic or financial conditions or other developments which are not unique
to the Company and the Subsidiaries but also affect other persons who
participate or are engaged in the lines of business in which the Company
and the Subsidiaries participate or are engaged and (b) between such date
and the date hereof (i) Parent and its Subsidiaries have conducted their
respective businesses only in the ordinary course consistent with past
practice and (ii) neither Parent nor any of its Subsidiaries has taken any
action which, if taken after the date hereof, would constitute a breach of
any provision of Section 5.02.

4.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended
September 30, 1999 included in the Parent Financial Statements, neither
Parent nor any of its Subsidiaries had at such date, or has incurred since
that date, any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of any
nature that would be required by generally accepted accounting principles
to be reflected on a consolidated balance sheet of Parent and its
consolidated subsidiaries (including the notes thereto), except liabilities
or obligations (i) which were incurred in the ordinary course of business
consistent with past practice or (ii) which have not been, and could not be
reasonably expected to be, individually or in the aggregate, materially
adverse to Parent and its Subsidiaries taken as a whole.

4.08 Legal Proceedings. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement, (i) there are no
actions, suits, arbitrations or proceedings pending or, to the knowledge of
Parent, threatened against, relating to or affecting, nor to the knowledge
of Parent are there any Governmental or Regulatory Authority investigations
or audits pending or threatened against, relating to or affecting, Parent
or any of its Subsidiaries or any of their respective assets and properties
which, individually or in the aggregate, could be reasonably expected to
have a material adverse effect on Parent and its Subsidiaries taken as a
whole or on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement, and (ii) neither Parent nor any of its
Subsidiaries is subject to any order of any Governmental or Regulatory
Authority which, individually or in the aggregate, is having or could be
reasonably expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole or on the ability of Parent and Sub to
consummate the transactions contemplated by this Agreement.

4.09 Information Supplied. The Registration Statement and any
other documents to be filed by Parent with the SEC or any other
Governmental or Regulatory Authority in connection with the Merger and the
other transactions contemplated hereby will (in the case of the
Registration Statement and any such other documents filed with the SEC
under the Securities Act or the Exchange Act) comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act, respectively, and will not, on the date of its filing or,
in the case of the Registration Statement, at the time it becomes effective
under the Securities Act, at the date the Proxy Statement is mailed to
stockholders and at the time of the Company Stockholders' Meeting or at the
time the stockholders' consent is effective, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information
supplied in writing by or on behalf of the Company expressly for inclusion
therein.

4.10 Compliance with Laws and Orders. Parent and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of
all Governmental and Regulatory Authorities necessary for the lawful
conduct of their respective businesses (the "Parent Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on Parent and
its Subsidiaries taken as a whole. Parent and its Subsidiaries are in
compliance with the terms of the Parent Permits, except failures so to
comply which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on Parent and
its Subsidiaries taken as a whole. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement, Parent and its
Subsidiaries are not in violation of or default under any law or order of
any Governmental or Regulatory Authority, except for such violations or
defaults which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on Parent and
its Subsidiaries taken as a whole.

4.11 Investment Company Act. Parent (i) is not an "investment
company" or a company "controlled" by an investment company within the
meaning of the Investment Company Act of 1940, as amended, (ii) a "holding
company" or a "subsidiary company" of a holding company or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act of
1935, as amended, or (iii) subject to regulation under the Federal Power
Act or the Interstate Commerce Act.

4.12 Compliance with Agreements; Certain Agreements. (a) Except
as disclosed in the Parent SEC Reports filed prior to the date of this
Agreement, neither Parent nor any of its Subsidiaries nor, to the knowledge
of Parent, any other party thereto is in breach or violation of, or in
default in the performance or observance of any term or provision of, and
no event has occurred which, with notice or lapse of time or both, could be
reasonably expected to result in a default under, (i) the certificates or
articles of incorporation or bylaws (or other comparable charter documents)
of Parent or any of its Subsidiaries or (ii) any Contract to which Parent
or any of its Subsidiaries is a party or by which Parent or any of its
Subsidiaries or any of their respective assets or properties is bound,
except in the case of clause (ii) for breaches, violations and defaults
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole.

(b) Except for the Investment Advisory Agreement, dated as of
March 27, 1998, as amended, between Parent and BlackRock Financial
Management, Inc., as of the date hereof, neither Parent nor any of its
Subsidiaries is a party to any oral or written (i) management or consulting
agreement not terminable on 30 days or less notice involving the payment of
more than $100,000 per annum or $500,000 per annum in the aggregate for all
such agreements, (ii) agreement with any executive officer or other key
employee of Parent or any of its Subsidiaries the benefits of which are
contingent or vest, or the terms of which are materially altered, upon the
occurrence of a transaction involving Parent or any of its Subsidiaries of
the nature contemplated by this Agreement, (iii) agreement with respect to
any executive officer or other key employee of Parent or any of its
Subsidiaries providing any term of employment or compensation guarantee
extending for a period longer than one year and for the payment of more
than $100,000 per annum or $500,000 per annum in the aggregate for all such
agreements or (iv) agreement or plan, including any stock option, stock
appreciation right, restricted stock or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement.

4.13 Mortgage Backed Securities.

(a) Parent is on the date hereof the sole owner of each of its MBS
("Parent MBS") and the related certificates and other instruments
evidencing ownership of Parent MBS (the "Parent MBS Certificates"), free
and clear of any adverse claims, Liens, pledges, assignments, charges or
security interests of any nature (including, without limitation, Liens
arising under the federal tax laws or ERISA), other than any Parent
Permitted Liens. For purposes of this Agreement, "Parent Permitted Liens"
means (i) Liens set forth in the Parent Disclosure Letter, and (ii)
mechanics', carriers', workmen's, repairmen's and materialmens' liens and
other Liens and other limitations of any kind, if any, which, individually
or in the aggregate, would not be reasonably likely to result in a material
adverse effect on Parent.

(b) Parent to its knowledge is not in default in the performance
of any of its obligations under any pooling and servicing agreements, trust
and servicing agreements, trust agreements, servicing agreements or other
similar documents providing for the creation of the MBS or the servicing of
the mortgage loans underlying the MBS (the "Parent Principal MBS
Agreements") and has not received any notice of any default by any master
or special servicer of any Parent MBS the effect of which, individually or
in the aggregate could reasonably be expected to be materially adverse to
Parent.

(c) As of the date hereof, there are no material agreements (other
than Parent Principal MBS Agreements) between Parent and the master
servicer or any special servicer with respect to any series of Parent MBS.

4.14 Mortgage Loans.

(a) Except as set forth in Section 4.14(a) of Parent Disclosure
Letter, Parent is the sole owner of each of the mortgage loans reflected in
the most recent financial statements in the Parent Financial Statements or
made or acquired since such date (the "Parent Mortgage Loans") and is the
sole owner or beneficiary of or under any related notes (the "Parent
Mortgage Notes"), deeds of trust, mortgages, security agreements,
guaranties, indemnities, financing statements, assignments, endorsement,
bonds, letters of credit, accounts, insurance contracts and policies,
credit reports, tax returns, appraisals, environmental reports, escrow
documents, participation agreements (if applicable), loan files, servicing
files and all other documents evidencing or securing Parent Mortgage Loans
(the "Parent Mortgage Files"), except (i) any Parent Mortgage Loans
disposed of in the ordinary course since the date of such financial
statements, and (ii) to the extent any Parent Mortgage Loan is prepaid in
full or subject to a completed foreclosure action (or non-judicial
proceeding or deed in lieu of foreclosure) in which case Parent shall be
the sole owner of the real property securing such foreclosed loan or shall
have received the proceeds of such action to which Parent was entitled, in
each case free and clear of any adverse claims or Liens except Parent
Permitted Liens.

(b) To the knowledge of Parent, (i) the lien of each Parent
Mortgage is subject only to "Permitted Exceptions" which consist of the
following: (A) Parent Permitted Liens; (B) covenants, conditions,
restrictions, reservations, rights, Liens, easements, encumbrances,
encroachments, and other matters affecting title acceptable to prudent
mortgage lending institutions generally; (C) rights of tenants with no
options to purchase or rights of first refusal to purchase, except as
disclosed in Parent Mortgage File; and (D) other matters which, in the
aggregate, would not be reasonably likely to result in a material adverse
effect on Parent; (ii) each of Parent Mortgage Loans has generally been
serviced in accordance with the terms of the related mortgage note and
pooling and servicing agreements and otherwise in accordance with industry
accepted servicing practices except for events that, individually or in the
aggregate, would not be reasonably likely to result in a material adverse
effect on Parent; and (iii) there is no delinquency in the payments of
principal and interest required to be made under the terms of any Parent
Mortgage Loan in excess of 30 days beyond the applicable due date that has
occurred since origination or in any other payments required to be made
under the terms of any Parent Mortgage Loan (inclusive of any applicable
grace or cure period) that would be reasonably likely to result in a
material adverse effect on Parent.

(c) Except as set forth in the applicable Parent Mortgage File,
Parent has no knowledge of (i) any written notice asserting any offset,
defense (including the defense of usury), claim (including claims of lender
liability), counterclaim, or right to rescission with respect to any Parent
Mortgage Loan, Parent Mortgage Note or other related agreements, (ii) any
uncured monetary default in excess of 30 days or event of acceleration
existing under any Parent Mortgage or the related Parent Mortgage Note or
(iii) any uncured non-monetary default, breach, violation or event of
acceleration existing beyond the applicable grace or cure period under any
Parent Mortgage or the related Parent Mortgage Note, except for notices,
violations, breaches, defaults or events of acceleration that would not,
individually or in the aggregate, be reasonably likely to result in a
material adverse effect on Parent.

4.15 Taxes

(a) Each of Parent and its Subsidiaries has filed all tax returns
and reports required to be filed by it, or requests for extensions to file
such returns or reports have been timely filed or granted and have not
expired, each of Parent and its Subsidiaries has paid all Taxes shown as
due thereon, and all tax returns and reports are complete and accurate in
all respects, except to the extent that such failures to file, have
extensions granted that remain in effect, pay Taxes shown as due or be
complete and accurate in all respects, as applicable, individually or in
the aggregate, would not have a material adverse effect on Parent and its
Subsidiaries taken as a whole. The most recent financial statements
contained in the Parent SEC Reports reflect an adequate reserve for all
Taxes payable by Parent and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements, and
no deficiencies for any taxes have been proposed, asserted or assessed
against Parent or any of its Subsidiaries that are not adequately reserved
for, except for inadequately reserved taxes and inadequately reserved
deficiencies that would not, individually or in the aggregate, have a
material adverse effect on Parent and its Subsidiaries taken as a whole.
True, correct and complete copies of all income and other material federal,
state and local tax returns and reports for Parent and each of its
Subsidiaries, and all written communications in the Parent's possession
relating thereto, have been delivered or made available to representatives
of Company. Since the date of the most recent financial statements
included in the Parent SEC Reports, Parent has incurred no liability for
tax under Sections 857(b), 860(c) or 4981 of the Code, and neither Parent
nor any of its Subsidiaries has incurred any material liability for Taxes
other than in the ordinary course of business. To the knowledge of Parent,
no event has occurred, and no condition or circumstance exists, which
presents a material risk that any material Tax described in the preceding
sentence will be imposed upon Parent or any of its Subsidiaries. No
requests for waivers of the time to assess any taxes against Parent or any
of its Subsidiaries have been granted or are pending, except for requests
with respect to such taxes that have been adequately reserved for in the
most recent financial statements contained in the Parent SEC Reports, or,
to the extent not adequately reserved, the assessment of which would not,
individually or in the aggregate, have a material adverse effect on Parent
and its Subsidiaries taken as a whole.

(b) Parent (A) for all taxable years commencing with the year
ending December 31, 1998 has been subject to taxation as a REIT within the
meaning of the Code and has satisfied all requirements to qualify as a REIT
for such years, (B) has operated, and intends to continue to operate, in
such a manner as to qualify as a REIT for the tax year ending December 31,
2000, and (C) has not taken or omitted to take any action which would
reasonably be expected to result in loss of its status as a REIT, and to
Parent's knowledge, no such challenge is pending or threatened. Parent
does not hold any material asset (x) the disposition of which would be
subject to rules similar to Section 1374 of the Code as a result of an
election under Internal Revenue Service ("IRS") Notice 88-19 or (y) that is
subject to a consent filed pursuant to Section 341(f) of the Code and the
regulations thereunder.

4.16 Employee Benefit Plans; ERISA. There is no Plan entered into,
established, maintained, sponsored, contributed to or required to be
contributed to by Parent or any of its Subsidiaries for the benefit of the
current or former employees or directors of Parent or any of its
Subsidiaries and existing on the date of this Agreement or at any time
subsequent thereto and on or prior to the Effective Time and, in the case
of a Plan which is subject to Part 3 of Title I of ERISA, Section 412 of
the Code or Title IV of ERISA, at any time during the five-year period
preceding the date of this Agreement.

4.17 Labor Matters. Except for those individuals listed in Section
4.17 of the Parent Disclosure Letter, Parent has no employees. Except as
set forth in Section 4.17 of the Parent Disclosure Letter, no officer or
director of Parent has received or is (or could become) entitled to receive
compensation, severance, bonus, indemnification or benefits from Parent.

4.18 Environmental Matters. Parent owns no real property. With
respect to any Mortgage Loan secured by real property, except as disclosed
in Section 4.18 of the Parent Disclosure Letter:

(a) Parent conducted, at or prior to the making of such Mortgage
Loan, reasonable and customary due diligence with respect to potential
environmental liabilities associated with property in which Parent holds a
security interest and determined that such properties did not expose the
Parent or owner, operator or lessee of such property to any material
liabilities relating to investigation, response, removal, abatement,
remediation or cleanup (an "Environmental Liability");

(b) Parent's loan agreements and mortgages relating to such
Mortgage Loan contain reasonable and customary representations, covenants,
indemnifications and remedies obligating borrowers owning, operating or
leasing such properties to comply with Environmental Laws, report material
Environmental Liabilities to the Parent, and indemnify and hold the Parent
harmless from and against material Environmental Liabilities;

(c) Parent is not aware of any condition related to the condition,
ownership or operation of such properties that constitutes a material
violation of Environmental Laws, could expose the Parent or owner, operator
or lessee with respect to such properties to material Environmental
Liabilities, or has resulted or could reasonably be expected to result in
any claim, proceeding, litigation or suit, or the imposition of any fines
or liens upon or with respect to such properties, that could reasonable be
expected to have a material adverse effect; and

(d) Parent has not engaged in activities relating to the workout
of any such Mortgage Loan, has not directed the business or operations of
the borrower with respect to such Mortgage Loan and has not directly
controlled the business or operations conducted at such properties, except
as could not lead to Parent becoming directly responsible for Environmental
Liabilities.

(e) As used herein "Environmental Laws" means any law or order of
any Governmental or Regulatory Authority relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes.

4.19 Intellectual Property Rights. Parent and its Subsidiaries
have all right, title and interest in, or a valid and binding license to
use, all Intellectual Property individually or in the aggregate material to
the conduct of the businesses of Parent and its Subsidiaries taken as a
whole. Neither Parent nor any Subsidiary of Parent is in default (or with
the giving of notice or lapse of time or both, would be in default) under
any license to use such Intellectual Property, such Intellectual Property
is not being infringed by any third party, and neither Parent nor any
Subsidiary of Parent is infringing any Intellectual Property of any third
party, except for such defaults and infringements which, individually or in
the aggregate, are not having and could not be reasonably expected to have
a material adverse effect on Parent and its Subsidiaries taken as a whole.

4.20 Opinion of Financial Advisor. Parent has received the opinion
of Prudential Securities, Inc., dated the date hereof, to the effect that,
as of the date hereof, the consideration to be paid in the Merger by Parent
is fair from a financial point of view to Parent.

4.21 Ownership of Company Common Stock. Neither Parent nor any of
its Subsidiaries or other affiliates beneficially owns any shares of
Company Common Stock.

4.22 Affiliate Transactions. As of the date hereof, there is no
material transaction and no transaction is now proposed, to which Parent is
or is to be a party to which any current shareholder (holding in excess of
10% of Parent Stock or any securities convertible into or exchangeable for
such Parent Stock), director or executive officer of Parent is a party.

4.23 Ownership Limit Restrictions of Parent's Articles of
Incorporation and Section 3-602 of the Maryland General Corporation Law Not
Applicable. Parent has taken all necessary actions so that neither the
Ownership Limit (as such term is defined in Section 6.1.2(a) of Parent's
Articles of Incorporation) of Article VI of Parent's Articles of
Incorporation (subject to the satisfaction of the requirements set forth in
Article VI, Section 6.1.7 of Parent's Articles of Incorporation) nor the
provisions of Section 3-602 of the Maryland General Corporation Law will,
before the termination of this Agreement, apply to this Agreement, the
Merger or the other transactions contemplated hereby.

ARTICLE V
COVENANTS

5.01 Conduct of Business by the Company. At all times from and
after the date hereof until the Effective Time, the Company covenants and
agrees as to itself that (except as expressly contemplated or permitted by
this Agreement, or to the extent that Parent shall otherwise previously
consent in writing):

(a) Ordinary Course. The Company shall conduct its business only
in, and shall not take any action except in, the ordinary course consistent
with past practice.

(b) Certain Activities. Without limiting the generality of
paragraph (a) of this Section, the Company (i) shall use all commercially
reasonable efforts to preserve intact in all material respects its present
business organization and reputation, to keep available the services of its
key officers and employees, to maintain its assets and properties in good
working order and condition, ordinary wear and tear excepted, to maintain
insurance on its tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve its
relationships with customers and suppliers and others having significant
business dealings with it and to comply in all material respects with all
laws and orders of all Governmental or Regulatory Authorities applicable to
it, and (ii) shall not, except as otherwise expressly provided for in this
Agreement:

(A) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other comparable corporate charter
documents);

(B) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, except that the
Company may continue the declaration and payment of regular quarterly
cash dividends (subject to Schedule I attached hereto) plus special
dividends to distribute current earnings before the Closing Date on
Company Stock (and reduce the Company's Net Asset Value in order to have
Section 312.03(c)(1) of the NYSE Listed Company Manual not apply to
Parent), in each case with usual record and payment dates for such
dividends in accordance with past dividend practice, (x) split, combine,
reclassify or take similar action with respect to any of its capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, (y) adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or (z) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock or any securities
convertible into, or rights, warrants or options to acquire, any such
shares;

(C) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into, or rights, warrants or options to acquire, any such
shares (other than (w) the issuance of Company Stock pursuant to Company
Stock Options outstanding on the date of this Agreement and in
accordance with their present terms, and (x) the issuance of options
under the Company's 1997 Long Term Incentive Plan), or modify or amend
any right of any holder of outstanding shares of capital stock or
securities convertible into, or rights, warrants or options to acquire,
any such shares);

(D) acquire (by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets
of, or by any other manner) any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets other than
in the ordinary course of its business consistent with past practice;

(E) other than dispositions in the ordinary course of its business
consistent with past practice, sell, lease, grant any security interest
in or otherwise dispose of or encumber any of its assets or properties;

(F) except to the extent required by applicable law (x) settle any
shareholder derivative or class action claims arising out of or in
connection with any of the transactions contemplated hereby, (y) permit
any material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating any
bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes or (z) make or rescind any material Tax
election (unless required by law or necessary to preserve the Company's
status as a REIT under Section 856(i) of the Code), or settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes or
materially change any method of reporting income or deductions for
federal income tax purposes from those employed in the preparation of
its federal income tax return for the most recent completed taxable year
except as may be required by the SEC, applicable law or GAAP;

(G) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness other than in the ordinary course of its business
consistent with past practice, or (y) voluntarily purchase, cancel,
prepay or otherwise provide for a complete or partial discharge in
advance of a scheduled repayment date with respect to, or waive any
right under, any indebtedness for borrowed money other than in the
ordinary course of its business consistent with past practice;

(H) enter into, adopt, amend in any material respect (except as
may be required by applicable law) or terminate any Company Employee
Benefit Plan or other agreement, arrangement, plan or policy between the
Company and one or more of its directors, officers or employees, or,
except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to such party and
its Subsidiaries taken as a whole, increase in any manner the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any plan or arrangement in effect as of
the date hereof;

(I) enter into any Contract or amend or modify any existing
Contract, or engage in any new transaction outside the ordinary course
of business consistent with past practice or not on an arm's length
basis, with any affiliate of the Company or any of such affiliate's
Subsidiaries;

(J) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets except in the
ordinary course of business consistent with past practice;

(K) make any change in the lines of business in which it
participates or is engaged; or

(L) enter into any Contract, commitment or arrangement to do or
engage in any of the foregoing.

5.02 Conduct of Business by Parent and Sub. At all times from and
after the date hereof until the Effective Time, Parent covenants and agrees
as to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement, or to the extent that the Company shall
otherwise previously consent in writing):

(a) Ordinary Course. Parent and each of its Subsidiaries shall
conduct their respective businesses only in, and shall not take any action
except in, the ordinary course consistent with past practice. Without
limiting the generality of the foregoing Parent and its Subsidiaries shall
use all commercially reasonable efforts to preserve intact in all material
respects their present business organizations and reputation, to keep
available the services of their key officers and employees, to maintain
their assets and properties in good working order and condition, ordinary
wear and tear excepted, to maintain insurance on their tangible assets and
businesses in such amounts and against such risks and losses as are
currently in effect, to preserve their relationships with customers and
suppliers and others having significant business dealings with them and to
comply in all material respects with all laws and orders of all
Governmental or Regulatory Authorities applicable to them. Notwithstanding
the foregoing, Parent shall not, nor shall it permit any of its
Subsidiaries to, except as otherwise expressly provided for in this
Agreement:

(A) amend or propose to amend Parent's certificate or articles of
incorporation or bylaws (or other comparable charter documents);

(B) settle any shareholder or derivative or class action claims
arising out of or in connection with any of the transactions
contemplated hereby;

(C) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, except that Parent
may continue the declaration and payment of regular quarterly cash
dividends, in each case with usual record and payment dates for such
dividends in accordance with past dividend practice, (x) split, combine,
reclassify or take similar action with respect to any of its capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, (y) adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or (z) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock or any securities
convertible into, or rights, warrants or options to acquire, any such
shares;

(F) except to the extent required by applicable law, make or
rescind any material Tax election (unless required by law or necessary
to preserve Parent's status as a REIT or the status of any of its
Subsidiaries as a "qualified REIT subsidiary" under Section 856(i) of
the Code, as the case may be), or settle or compromise any material
claim, action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes or materially change any method
of reporting income or deductions for federal income tax purposes from
those employed in the preparation of its federal income tax return for
the most recent completed taxable year except as may be required by the
SEC, applicable law or GAAP;

(G) enter into any Contract or amend or modify any existing
Contract, or engage in any new transaction outside the ordinary course
of business consistent with past practice or not on an arm's length
basis, with any affiliate of Parent or any of its Subsidiaries or any of
such affiliate's Subsidiaries; or

(H) enter into any Contract, commitment or arrangement to do or
engage in any of the foregoing.

(b) Conduct of Business of Sub. Prior to the Effective Time,
except as may be required by applicable law and subject to the other
provisions of this Agreement, Parent shall cause Sub to (a) perform its
obligations under this Agreement in accordance with its terms, (b) not
incur directly or indirectly any liabilities or obligations other than
those incurred in connection with the Merger and (c) not engage directly or
indirectly in any business or activities of any type or kind and not enter
into any agreements or arrangements with any person, or be subject to or
bound by any obligation or undertaking, which is not contemplated by this
Agreement.

5.03 Covenants of the Company and Parent.

(a) Advice of Changes. Each party shall confer on a regular and
frequent basis with the other with respect to its business and operations
and other matters relevant to the Merger, and shall promptly advise the
other, orally and in writing, of any change, matter or event, including,
without limitation, any complaint, investigation or hearing by any
Governmental or Regulatory Authority (or communication indicating the same
may be contemplated) or the institution or threat of litigation, (i)
having, or which, insofar as can be reasonably foreseen, could have, a
material adverse effect on the Company or Parent, as the case may be, and
its Subsidiaries taken as a whole or on the ability of the Company or
Parent, as the case may be, to consummate the transactions contemplated
hereby or (ii) which, if existing or known at the date of this Agreement,
would have been required to be set forth or described in the Company
Disclosure Letter or the Parent Disclosure Letter, as the case may be;
provided that no party shall be required to make any disclosure to the
extent such disclosure would constitute a violation of any applicable law.

(b) Other Actions. Each of the Company and Parent shall not, and
shall use commercially reasonable efforts to cause its respective
Subsidiaries and joint ventures not to, knowingly take any action that
would result in (i) any of the representations and warranties of such party
(without giving effect to any "knowledge" qualification) set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of
such representations and warranties (without giving effect to any
"knowledge" qualification) that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the other party's
obligation set forth in Article VII not being satisfied.

(c) Notice and Cure. Each of Parent and the Company will notify
the other of, and will use all commercially reasonable efforts to cure
before the Closing, any event, transaction or circumstance, as soon as
practical after it becomes known to such party, that causes or will cause
any covenant or agreement of Parent or the Company under this Agreement to
be breached or that renders or will render untrue any representation or
warranty of Parent or the Company contained in this Agreement. Each of
Parent and the Company also will notify the other in writing of, and will
use all commercially reasonable efforts to cure before the Closing, any
violation or breach, as soon as practical after it becomes known to such
party, of any representation, warranty, covenant or agreement made by
Parent or the Company. No notice given pursuant to this paragraph shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.

(d) Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will take or
cause to be taken all commercially reasonable steps necessary or desirable
and proceed diligently and in good faith to satisfy each condition to the
other's obligations contained in this Agreement and to consummate and make
effective the transactions contemplated by this Agreement, and neither
Parent nor the Company will, nor will it permit any of its Subsidiaries to,
take or fail to take any action that could be reasonably expected to result
in the nonfulfillment of any such condition.

5.04 No Solicitations. Prior to the Effective Time, the Company
agrees (a) that neither it nor any of its Subsidiaries or other affiliates
shall, and it shall use its best efforts to cause their respective
Representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal
or offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, consolidation or other business
combination including the Company or any of its Subsidiaries or any
acquisition or similar transaction (including, without limitation, a tender
or exchange offer) involving the purchase of (i) all or any significant
portion of the assets of the Company and its Subsidiaries taken as a whole,
(ii) 20% or more of the outstanding shares of Company Common Stock or (iii)
20% of the outstanding shares of the capital stock of any Subsidiary of the
Company (any such proposal or offer being hereinafter referred to as an
"Alternative Proposal"), or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions
with, any person or group relating to an Alternative Proposal (excluding
the transactions contemplated by this Agreement), or otherwise facilitate
any effort or attempt to make or implement an Alternative Proposal; (b)
that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties with respect to
any of the foregoing, and it will take the necessary steps to inform such
parties of its obligations under this Section; and (c) that it will notify
Parent immediately if any such inquiries, proposals or offers are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it or any of such
persons; provided, however, that nothing contained in this Section 5.04
shall prohibit the Board of Directors of the Company from (i) furnishing
information to (but only pursuant to a confidentiality agreement in
customary form) or entering into discussions or negotiations with any
person or group that makes an unsolicited bona fide Alternative Proposal,
if, and only to the extent that, (A) the Board of Directors of the Company,
based upon the advice of outside counsel, determines in good faith that
such action is required for the Board of Directors to comply with its
fiduciary duties to stockholders imposed by law, (B) prior to furnishing
such information to, or entering into discussions or negotiations with,
such person or group, the Company provides written notice to Parent to the
effect that it is furnishing information to, or entering into discussions
or negotiations with, such person or group, and (C) the Company keeps
Parent informed of the status and all material information with respect to
any such discussions or negotiations; and (ii) to the extent required,
complying with Rule 14e-2 promulgated under the Exchange Act with regard to
an Alternative Proposal. Nothing in this Section 5.04 shall (x) permit the
Company to terminate this Agreement (except as specifically provided in
Article VIII), (y) permit the Company to enter into any agreement with
respect to an Alternative Proposal for so long as this Agreement remains in
effect (it being agreed that for so long as this Agreement remains in
effect, the Company shall not enter into any agreement with any person or
group that provides for, or in any way facilitates, an Alternative Proposal
(other than a confidentiality agreement under the circumstances described
above)), or (z) affect any other obligation of the Company under this
Agreement.

5.05 Purchases of Common Stock of the Other Party. During the
period from the date hereof through the Effective Time, neither Parent nor
any of its Subsidiaries or other affiliates will purchase any shares of
Company Common Stock, and neither the Company nor any of its Subsidiaries
or other affiliates will purchase any shares of Parent Common Stock.

5.06 Management Agreement Assignment Agreement. From the date
hereof through the Effective Time, Parent will not permit BlackRock
Financial Management, Inc. to amend or terminate the Management Agreement
Assignment Agreement between GMAC Mortgage Asset Management, Inc. and
BlackRock Financial Management, Inc. (the "Management Agreement Assignment
Agreement").

ARTICLE VI
ADDITIONAL AGREEMENTS

6.01 Access to Information. Each of the Company and Parent shall,
and shall cause each of its Subsidiaries to, throughout the period from the
date hereof to the Effective Time, (i) provide the other party and its
Representatives with full access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants
of the Company or Parent, as the case may be, and its Subsidiaries and
their respective assets, properties, books and record, but only to the
extent that such access does not unreasonably interfere with the business
and operations of the Company or Parent, as the case may be, and its
Subsidiaries, and (ii) furnish promptly to such persons (x) a copy of each
report, statement, schedule and other document filed or received by the
Company or Parent, as the case may be, or any of its Subsidiaries pursuant
to the requirements of federal or state securities laws and each material
report, statement, schedule and other document filed with any other
Governmental or Regulatory Authority, and (y) all other information and
data (including, without limitation, copies of Contracts or Company
Employee Benefit Plans, as the case may be, and other books and records)
concerning the business and operations of the Company or Parent, as the
case may be, and its Subsidiaries as the other party or any of such other
persons reasonably may request. No investigation pursuant to this
paragraph or otherwise shall affect any representation or warranty
contained in this Agreement or any condition to the obligations of the
parties hereto. Any such information or material obtained pursuant to this
Section 6.01 that constitutes "Evaluation Material" (as such term is
defined in the letter agreement dated as of October 19, 1999 between the
Company and Parent (the "Confidentiality Agreement")) shall be governed by
the terms of the Confidentiality Agreement, provided that following the
Effective Time Parent and the Surviving Corporation shall have all the
rights of the Company with respect thereto.

6.02 Preparation of Registration Statement and Proxy Statement.
The Company and Parent shall prepare the Proxy Statement and Parent shall
prepare and file with the SEC as soon as reasonably practicable after the
date hereof the Registration Statement, in which the Proxy Statement will
be included as the prospectus. Parent and the Company shall use their best
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable after such filing. Parent shall also take any
action (other than qualifying as a foreign corporation or taking any action
which would subject it to service of process in any jurisdiction where
Parent is not now so qualified or subject) required to be taken under
applicable state blue sky or securities laws in connection with the
issuance of Parent Common Stock in connection with the Merger. If at any
time prior to the Effective Time any event shall occur that should be set
forth in an amendment of or a supplement to the Registration Statement,
Parent with the cooperation of the Company shall prepare and file with the
SEC such amendment or supplement as soon thereafter as is reasonably
practicable. Parent, Sub and the Company shall cooperate with each other
in the preparation of the Registration Statement and the Proxy Statement
and any amendment or supplement thereto, and Parent shall notify the
Company of the receipt of any comments of the SEC with respect to the
Registration Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information, and shall provide to the
Company promptly copies of all correspondence between Parent or any of its
Representatives with respect to the Registration Statement. Parent shall
give the Company and its counsel the opportunity to review the Registration
Statement and all responses to requests for additional information by and
replies to comments of the SEC before their being filed with, or sent to,
the SEC. Each of the Company, Parent and Sub agrees to use its reasonable
best efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC and to cause (x)
the Registration Statement to be declared effective by the SEC at the
earliest practicable time and to be kept effective as long as is necessary
to consummate the Merger, and (y) the Proxy Statement to be mailed to the
holders of Company Common Stock entitled to vote at the meeting of the
stockholders of the Company at the earliest practicable time.

6.03 Approval of Stockholders. The Company shall, through its Board
of Directors, either duly call, give notice of, convene and hold a meeting
of its stockholders (the "Company Stockholders' Meeting" for the purpose of
voting on, or solicit written consents required for, the adoption of this
Agreement (the "Company Stockholders' Approval") as soon as reasonably
practicable after the date hereof. Subject to the exercise of fiduciary
obligations under applicable law as advised by outside counsel, the Company
shall, through its Board of Directors, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the
stockholders of the Company adopt this Agreement, and shall use its best
efforts to obtain such adoption.

6.04 Company Affiliates. At least 30 days prior to the Closing
Date the Company shall deliver a letter to Parent identifying all persons
who, at the time of the Company Stockholders' Meeting, may, in the
Company's reasonable judgment, be deemed to be "affiliates" (as such term
is used in Rule 145 under the Securities Act) of the Company ("Company
Affiliates"). The Company shall use its best efforts to cause each Company
Affiliate to deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form and to the effect of Exhibit B hereto
(an "Affiliate Agreement"). Parent shall be entitled to place legends as
specified in such Affiliate Agreements on the certificates evidencing any
Parent Common Stock to be received by such Company Affiliates pursuant to
the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Parent Common Stock, consistent
with the terms of such Affiliate Agreements.

6.05 Stock Exchange Listing. Parent shall use its best efforts to
cause the shares of Parent Common Stock to be issued in connection with the
Merger and under the Director Stock Option Plan after the Merger in
accordance with this Agreement, to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Closing Date. Parent
shall use its reasonable best efforts after the Closing to cause the shares
of Parent Common Stock issuable upon conversion of the New Parent Preferred
Stock issued pursuant to Section 2.01(c) to be listed on the NYSE,
including by submitting the conversion of the New Parent Preferred Stock
for adoption by the requisite vote of, and recommending such adoption to,
the stockholders of Parent.

6.06 Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of
Sections 6.02 and 6.03, each of the Company and Parent will proceed
diligently and in good faith to, as promptly as practicable, (a) obtain all
consents, approvals or actions of, make all filings with and give all
notices to Governmental or Regulatory Authorities or any other public or
private third parties, including Societe Generale and ABN AMRO Bank N.V.,
required of Parent, the Company or any of their Subsidiaries to consummate
the Merger and the other matters contemplated hereby, and (b) provide such
other information and communications to such Governmental or Regulatory
Authorities or other public or private third parties as the other party or
such Governmental or Regulatory Authorities or other public or private
third parties may reasonably request in connection therewith.

6.07 Company Option Plan.

(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock (a "Company Stock Option") under the
Director Stock Option Plan, whether vested or unvested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, a number of shares of Parent
Common Stock equal to the product (rounded down to the nearest whole share)
of (i) the number of shares of Company Common Stock issuable upon exercise
of the option immediately prior to the Effective Time and (ii) the Common
Stock Conversion Number; and the option exercise price per share of Parent
Common Stock at which such option is exercisable shall be the amount
(rounded up to the nearest whole cent) obtained by dividing (iii) the
option exercise price per share of Company Common Stock at which such
option is exercisable immediately prior to the Effective Time by (iv) the
Common Stock Conversion Number.

(b) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Company Stock Options a notice stating that the
agreements evidencing the grant of the Company Stock Options shall continue
in effect on the same terms and conditions (subject to the adjustments, if
any, required by this Section after giving effect to the Merger and the
terms of the Director Stock Option Plan).

(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for
delivery under the Director Stock Option Plan as adjusted in accordance
with this Section. As soon as practicable after the Effective Time, Parent
shall file a registration statement on Form S-8 promulgated by the SEC
under the Securities Act (or any successor or other appropriate form) with
respect to the Parent Common Stock subject to such options held by
individuals and shall use reasonable best efforts to maintain the
effectiveness of such registration statement or registration statements
(and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. With
respect to those individuals who subsequent to the Merger will be subject
to the reporting requirements under Section 16(a) of the Exchange Act,
where applicable, Parent shall administer the Director Stock Option Plan in
a manner that complies with Rule 16b-3 promulgated under the Exchange Act.

6.08 Directors' and Officers' Indemnification and Insurance.

(a) From and after the Effective Time and until the sixth
anniversary of the Effective Time and for so long thereafter as any claim
for indemnification asserted on or prior to such date has not been fully
adjudicated, Parent and the Surviving Corporation (each, an "Indemnifying
Party") shall indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to
the Effective Time, a director or officer of the Company or any of its
Subsidiaries (the "Indemnified Parties") against (i) all losses, claims,
damages, costs and expenses (including attorneys' fees), liabilities,
judgments and settlement amounts that are paid or incurred in connection
with any claim, action, suit, proceeding or investigation (whether civil,
criminal, administrative or investigative and whether asserted or claimed
prior to, at or after the Effective Time) that is based in whole or in part
on, or arises in whole or in part out of, the fact that such Indemnified
Party is or was a director or officer of the Company or any of its
Subsidiaries and relates to or arises out of any action or omission
occurring at or prior to the Effective Time ("Indemnified Liabilities"),
and (ii) all Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to this Agreement or the
transactions contemplated hereby, in each case to the full extent a
corporation is permitted under applicable law to indemnify its own
directors or officers, as the case may be; provided that no Indemnifying
Party shall be liable for any settlement of any claim effected without its
written consent, which consent shall not be unreasonably withheld; and
provided, further, that no Indemnifying Party shall be liable for any
Indemnified Liabilities which occur as a result of the gross negligence or
willful misconduct of any Indemnified Party or conduct with respect to
which the Company would not be permitted to indemnify the Indemnified Party
under the Company's Certificate of Incorporation on the date hereof.
Without limiting the foregoing, in the event that any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Party
(whether arising prior to or after the Effective Time), (w) the
Indemnifying Parties will pay expenses in advance of the final disposition
of any such claim, action, suit, proceeding or investigation to each
Indemnified Party to the full extent permitted by applicable law; provided
that the person to whom expenses are advanced provides any undertaking
required by applicable law to repay such advance if it is ultimately
determined that such person is not entitled to indemnification; (x) the
Indemnified Parties shall retain counsel reasonably satisfactory to the
Indemnifying Parties; (y) the Indemnifying Parties shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties (subject to
the final sentence of this paragraph) promptly as statements therefor are
received; and (z) the Indemnifying Parties shall use all commercially
reasonable efforts to assist in the defense of any such matter. Any
Indemnified Party wishing to claim indemnification under this Section, upon
learning of any such claim, action, suit, proceeding or investigation,
shall notify the Indemnifying Parties, but the failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any
liability which it may have under this paragraph except to the extent such
failure irreparably prejudices such Indemnifying Party. The Indemnified
Parties as a group may retain only one law firm (together with appropriate
local counsel) to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more Indemnified
Parties in which case the Indemnified Parties may retain more than one law
firm; provided, however, that the Indemnifying Parties shall be required to
pay the reasonable fees and expenses of only one law firm as determined by
the Indemnifying Parties.

(b) Except to the extent required by law, until the sixth
anniversary of the Effective Time, Parent will not take any action so as to
amend, modify or repeal the provisions for indemnification of directors,
officers or employees contained in the certificates or articles of
incorporation or bylaws (or other comparable charter documents) of the
Surviving Corporation (which as of the Effective Time shall be no more
favorable to such individuals than those maintained by the Company on the
date hereof) in such a manner as would adversely affect the rights of any
individual who shall have served as a director, officer or employee of the
Company or any of its Subsidiaries prior to the Effective Time to be
indemnified by such corporations in respect of their serving in such
capacities prior to the Effective Time.

(c) Parent and the Surviving Corporation shall, until the sixth
anniversary of the Effective Time and for so long thereafter as any claim
for insurance coverage asserted on or prior to such date has not been fully
adjudicated, cause to be maintained in effect, to the extent available, the
policies of directors' and officers' liability insurance maintained by the
Company as of the date hereof (or policies of at least the same coverage
and amounts containing terms that are no less advantageous to the insured
parties) with respect to claims arising from facts or events that occurred
on or prior to the Effective Time; provided that in no event shall Parent
or the Surviving Corporation be obligated to expend in order to maintain or
procure insurance coverage pursuant to this paragraph any amount per annum
in excess of 200% of the aggregate premiums payable by the Company in 1999
(on an annualized basis) for such purpose.

(d) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and each
party entitled to insurance coverage under paragraph (c) above,
respectively, and his or her heirs and legal representatives, and shall be
in addition to any other rights an Indemnified Party may have under the
certificate or articles of incorporation or bylaws of the Surviving
Corporation, under the DGCL or otherwise.

6.09 Parent Governance. Parent's Board of Directors shall take
action to cause the full Board of Directors of Parent at the Effective Time
to include Leon T. Kendall or any other current independent director of the
Company, or such other individual designated by the Company and approved by
Parent (who shall be designated a Class I Director on Parent's Board of
Directors) for a term continuing until the Parent's annual meeting of
stockholders in 2001 and David M. Applegate or such other individual
designated by the Company and approved by Parent (who shall be designated a
Class II Director on Parent's Board of Directors) for a term continuing
until Parent's annual meeting of stockholders in 2002 or until their
successors are elected.

6.10 Expenses. Except as set forth in Section 8.02, whether or not
the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such cost or expense.

6.11 Brokers or Finders. Each of Parent and the Company
represents, as to itself and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this
Agreement except PaineWebber Incorporated, whose fees and expenses will be
paid by the Company in accordance with the Company's agreement with such
firm (a true and complete copy of which has been delivered by the Company
to Parent prior to the execution of this Agreement), and Prudential
Securities, Incorporated, whose fees and expenses will be paid by Parent in
accordance with Parent's agreement with such firm (a true and complete copy
of which has been delivered by Parent to the Company prior to the execution
of this Agreement), and each of Parent and the Company shall indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other such fee or commission or expenses
related thereto asserted by any person on the basis of any act or statement
alleged to have been made by such party or its affiliate.

6.12 Takeover Statutes. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute or
regulation shall become applicable to the transactions contemplated hereby,
the Company, Parent and the members of their respective Boards of Directors
shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated hereby and thereby and
otherwise act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby and thereby.

6.13 Conveyance Taxes. The Company and Parent shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or
gains, sales, use, transfer, value added, stock transfer and stamp taxes,
any transfer, recording, registration and other fees, and any similar taxes
which become payable in connection with, and are solely and directly
related to, the transactions contemplated by this Agreement ("Transfer
Taxes") that are required or permitted to be filed on or before the
Effective Time.

6.14 Letters of Accountants.

(a) The Company shall use its commercially reasonable efforts to
cause to be delivered to Parent "comfort" letters of
PriceWaterhouseCoopers, the Company's independent public accountants, dated
and delivered the date on which the Registration Statement shall become
effective and as of the Effective Time, and addressed to Parent, in form
and substance reasonably customary in scope and substance for letters
delivered by independent public accountants in connection with transactions
such as those contemplated by this Agreement.

(b) Parent shall use its commercially reasonable efforts to cause
to be delivered to the Company "comfort" letters of Deloitte & Touche LLP,
Parent's independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the Effective Time,
and addressed to the Company, in form and substance reasonably customary in
scope and substance for letters delivered by independent public accountants
in connection with transactions such as those contemplated by this
Agreement.

6.15 Coordination of Dividends. Each of the Company and Parent
shall coordinate with the other regarding the declaration and payment of
dividends in respect of Company Common Stock and Parent Common Stock and
the record dates and payment dates relating thereto, it being the intention
of the Company and Parent that except as contemplated by Section
5.01(b)(ii)(B)(w), any holder of Company Common Stock or Parent Common
Stock, as the case may be, shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with respect to such
holder's Company Common Stock or Parent Common Stock.

ARTICLE VII
CONDITIONS

7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions:

(a) Stockholder Approval. This Agreement shall have been adopted
by the requisite vote of the stockholders of the Company under the DGCL.

(b) Registration Statement; State Securities Laws. The
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order suspending such
effectiveness shall have been issued and remain in effect and no proceeding
seeking such an order shall be pending or threatened. Parent shall have
received all state securities or blue sky permits and other authorizations
necessary to issue the Parent Stock pursuant to this Agreement and under
the Company Stock Plans after the Merger.

(c) Exchange Listing. The shares of Parent Common Stock issuable
to the Company's stockholders in the Merger and under the Director Stock
Option Plan after the Merger in accordance with this Agreement shall have
been authorized for listing on the NYSE.

(d) No Injunctions or Restraints; Material Proceedings. No court
of competent jurisdiction or other competent Governmental or Regulatory
Authority shall have enacted, issued, promulgated, enforced or entered any
law or order (whether temporary, preliminary or permanent) which is then in
effect and has the effect of making illegal or otherwise restricting,
preventing or prohibiting consummation of the Merger or the other
transactions contemplated by this Agreement, and there shall be no pending
or threatened material proceedings that could reasonably be expected to
have a material adverse effect on the consummation of the Merger.

(e) Governmental and Regulatory and Other Consents and Approvals.
Other than the filing provided for by Section 1.03, all consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority or any other public or private third parties listed in Schedule
7.01(e) to this Agreement shall have been obtained, all in form and
substance reasonably satisfactory to Parent and the Company.

7.02 Conditions to Obligation of Parent and Sub to Effect the
Merger. The obligation of Parent and Sub to effect the Merger is further
subject to the fulfillment, at or prior to the Closing, of each of the
following additional conditions (all or any of which may be waived in whole
or in part by Parent and Sub in their sole discretion).

(a) Representations and Warranties. The representations and
warranties made by the Company in this Agreement taken as a whole shall be
true and correct in all respects material to the business, assets,
financial condition or results of operation of the Company and the validity
and enforceability of this Agreement as of the Closing Date as though made
on and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on
and as of such earlier date, except as affected by the transactions
contemplated by this Agreement, and the Company shall have delivered to
Parent a certificate, dated the Closing Date and executed in the name and
on behalf of the Company by its President, to such effect.

(b) Performance of Obligations. The Company shall have performed
and complied with, in all material respects, its agreements, covenants and
obligations required by this Agreement to be so performed or complied with
by the Company at or prior to the Closing, and the Company shall have
delivered to Parent a certificate, dated the Closing Date and executed in
the name and on behalf of the Company by its President, to such effect.

(c) Management Agreement Assignment Agreement. The Management
Agreement Assignment Agreement shall be in full force and effect.

(d) Opinion of the Company's Counsel. Parent shall have received
an opinion from Milbank, Tweed, Hadley & McCloy LLP, legal counsel to the
Company, substantially in the form attached hereto as Exhibit C (with
customary exceptions, assumptions, qualifications and based upon customary
representations).

(e) REIT Opinion. Parent shall have received an opinion from
Milbank, Tweed, Hadley & McCloy LLP, substantially in the form attached
hereto as Exhibit D.

(f) Societe Generale and ABN AMRO Bank N.V. Consents. Either (i)
Parent shall have (x) received copies of documents pursuant to which
Societe Generale and ABN AMRO Bank N.V. have consented to the Merger
Agreement without any material change in the economic terms of the
financing arrangements in place as of the Effective Time between the
Company and Societe Generale and the Company and ABN AMRO Bank N.V. or (y)
received copies of the documents pursuant to which ABN AMRO Bank N.V. has
consented to the Merger Agreement without any material change in the
economic terms of the financing arrangements in place as of the Effective
Date between the Company and ABN AMRO Bank N.V. and ABN AMRO Bank N.V. has
agreed to provide financing under its existing arrangement with the Company
with respect to the Mortgage Loans financed under the financing
arrangements as of the date hereof between the Company and Societe Generale
or (ii) the Company shall have settled the sale of the Purchased Loans and
the Mortgage Loans underlying the amounts indicated as outstanding under
the CP Facilities in Section 3.15 of the Company Disclosure Letter with the
party or parties that have not so consented to the Merger Agreement. For
purposes of this Section 7.02(f), "Mortgage Loans" shall have the meaning
under the financing agreements between the Company and Societe Generale and
"Purchased Loans" shall have the meaning under the financing agreements
between the Company and ABN AMRO Bank N.V.

7.03 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger is further subject to
the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in
part by the Company in its sole discretion):

(a) Representations and Warranties. The representations and
warranties made by Parent and Sub in this Agreement taken as a whole shall
be true and correct in all respects material to the business, assets,
financial condition or results of operation of Parent and the validity and
enforceability of this Agreement as of the Closing Date as though made on
and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on
and as of such earlier date, except as affected by the transactions
contemplated by this Agreement, and Parent and Sub shall each have
delivered to the Company a certificate, dated the Closing Date and executed
in the name and on behalf of Parent by its Chairman of the Board, President
or any Senior Executive Officer and in the name and on behalf of Sub by its
Chairman of the Board, President or any Vice President, to such effect.

(b) Performance of Obligations. Parent and Sub each shall have
performed and complied with, in all material respects, its agreements,
covenants and obligations required by this Agreement to be so performed or
complied with by Parent or Sub at or prior to the Closing, and Parent and
Sub shall each have delivered to the Company a certificate, dated the
Closing Date and executed in the name and on behalf of Parent by its
Chairman of the Board, President or any Senior Executive Officer and in the
name and on behalf of Sub by its Chairman of the Board, President or any
Vice President, to such effect.

(c) The Management Agreement Assignment Agreement. The Management
Agreement Assignment Agreement shall be in full force and effect and shall
not have been amended or terminated since its original date of execution.

(d) Opinion of Parent's Counsel. The Company shall have received
an opinion from Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to
Parent, or local Maryland counsel to Parent acceptable to the Company,
substantially in the form attached hereto as Exhibit E (with customary
exceptions, assumptions, qualifications and based upon customary
representations).

(e) REIT Opinion. The Company shall have received an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, substantially in the form
attached hereto as Exhibit F.

(f) Opinion of Parent's Local Counsel. The Company shall have
received an opinion from Miles & Stockbridge P.C., Maryland counsel to
Parent, substantially in the form attached hereto as Exhibit G.

ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER

8.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Stockholders'
Approval:

(a) By mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors;

(b) By either the Company or Parent upon notification to the non-
terminating party by the terminating party:

(i) at any time after June 30, 2000 if the Merger shall not have
been consummated on or prior to such date and such failure to consummate
the Merger is not caused by a breach of this Agreement by the
terminating party;

(ii) if the Company Stockholders' Approval shall not be obtained by
reason of the failure to obtain the requisite vote upon a vote held at a
meeting of such stockholders, or any adjournment thereof, called
therefor;

(iii) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the non-
terminating party set forth in this Agreement, which breach is not
curable or, if curable, has not been cured within 30 days following
receipt by the non-terminating party of notice of such breach from the
terminating party; or

(iv) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order making
illegal or otherwise restricting, preventing or prohibiting the Merger
and such order shall have become final and nonappealable;

(c) By the Company if the Board of Directors of the Company
determines in good faith, based upon the written opinion of outside counsel
(a copy of which shall be provided promptly to Parent), that termination of
the Agreement is required for the Board of Directors to comply with its
fiduciary duties to stockholders imposed by law by reason of an unsolicited
bona fide Alternative Proposal if such Alternative Proposal is not
conditioned on the receipt of financing and the Board of Directors has
reasonably concluded in good faith that the person or group making such
Alternative Proposal will have adequate sources of financing to consummate
such Alternative Proposal and that such Acquisition Proposal is more
favorable to the Company's stockholders than the Merger, and the Board of
Directors has received a written opinion from a nationally-recognized
investment banking firm (a copy of which shall be provided promptly to
Parent) to the effect that the consideration to be received by stockholders
of the Company in connection with such Alternative Proposal is superior,
from a financial point of view, to the consideration to be received by them
in the Merger; provided that the Company shall have complied with the
provisions of clauses (B) and (C) of Section 5.04 and shall notify Parent
promptly of its intention to terminate this Agreement or enter into a
definitive agreement with respect to such Alternative Proposal, but in no
event shall such notice be given less than 48 hours prior to the public
announcement of the Company's termination of this Agreement; and provided
further that the Company's ability to terminate this Agreement pursuant to
this paragraph (c) is conditioned upon the prior payment by the Company to
Parent of any amounts owed by it pursuant to Section 8.02(b);

(d) By Parent if the Board of Directors of the Company (or any
committee thereof) shall have withdrawn or modified in a manner materially
adverse to the terminating party its approval or recommendation of this
Agreement or the Merger or shall have recommended an Alternative Proposal
to its stockholders;

(e) By the Company if the average Sales Price of a share of Parent
Common Stock on the ten consecutive Trading Days ending three Trading Days
prior to the Closing Date is below the Benchmark Price; or

(f) By Parent if the Company adjusts the Common Stock Conversion
Number in accordance with Section 2.01(c)(i).

8.02 Effect of Termination.

(a) If this Agreement is validly terminated by either the Company
or Parent pursuant to Section 8.01, this Agreement will forthwith become
null and void and there will be no liability or obligation on the part of
either the Company or Parent (or any of their respective Representatives or
affiliates), except (i) that the provisions of Sections 6.01, 6.11 and 6.12
and this Section 8.02 will continue to apply following any such
termination, (ii) that nothing contained herein shall relieve any party
hereto from liability for willful breach of its representations,
warranties, covenants or agreements contained in this Agreement and (iii)
as provided in paragraphs (b) and (c) below.

(b) In the event that any person or group shall have made an
Alternative Proposal and thereafter (i) this Agreement is terminated (x) by
the Company pursuant to Section 8.01(c), (y) by Parent pursuant to Section
8.01(b)(iii) or Section 8.01(d) or (z) by either party pursuant to
Section 8.01(b)(ii) as a result of the Company Stockholders' Approval not
being obtained, then the Company shall owe to Parent a "Break-up Fee" in
the amount of $2,000,000. In the event that this Agreement is terminated
by either party pursuant to Section 8.01(b)(ii) as a result of the Company
Stockholders' Approval not being obtained, then the Company shall owe to
Parent an "Expense Fee" in the amount equal to the aggregate amount of all
reasonable documented out of pocket expenses and fees incurred by Parent
and Sub in connection with this Agreement and the transaction contemplated
hereby (including, without limitation, reasonable fees and expenses payable
to all banks, investment banking firms and other financial institutions and
persons and their respective agents and counsel for acting as Parent's
financial advisor with respect to, or arranging or committing to provide or
providing any financing for, the Merger), provided that in no event shall
the amount of such reimbursable fees and expenses exceed $400,000 in the
aggregate. The total of the Break-up Fee and the Expense Fee shall in no
event exceed $2,000,000.

(c) If Parent is owed either the Break-up Fee or the Expense Fee
(the "Termination Fee") from the Company pursuant to Section 8.02(b), the
Company shall pay to Parent by wire transfer of same day funds, either on
the date contemplated in Section 8.01(c) if applicable, or otherwise,
within two business days after such amount becomes due, an amount equal to
the lesser of (i) the Termination Fee and (ii) the sum of (A) the maximum
amount that can be paid to Parent in the year in which this Agreement is
terminated (the "Termination Year") and in all relevant taxable years
thereafter without causing it to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code (the "REIT Requirements") for such year,
determined as if the payment of such amount did not constitute income
described in Section 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code
("Qualifying Income"), as determined by independent accountants to Parent,
and (B) in the event Parent receives an opinion of counsel (a "Termination
Fee Opinion") to the effect that its receipt of the Termination Fee would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of the REIT Requirements, the Termination Fee less the
amount payable under clause (A) above. If the amount payable for the
Termination Year under the preceding sentence is less than the Termination
Fee, Parent shall notify the Company in writing and the Company shall place
the remaining portion of the Termination Fee in escrow and shall not
release any portion thereof to Parent. Parent shall not be entitled to any
such amount unless and until the Company receives either of the following:
(i) a letter from Parent's independent accountants indicating the maximum
amount that can be paid at that time to Parent without causing Parent to
fail to meet the REIT Requirements for any relevant taxable year, in which
event the Company shall pay such maximum amount, or (ii) a Termination Fee
Opinion, in which event the Company shall pay to the Parent the unpaid
Termination Fee. The Company's obligation to pay any unpaid portion of the
Termination Fee shall terminate ten years from the date of this Agreement
and the Company shall have no obligation to make any further payments
notwithstanding that the entire Termination Fee has not been paid as of
such date.

8.03 Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the respective Boards of
Directors of the parties hereto at any time prior to the Effective Time,
whether prior to or after the Company Stockholders' Approval shall have
been obtained, but after such adoption and approval only to the extent
permitted by applicable law. No such amendment, supplement or modification
shall be effective unless set forth in a written instrument duly executed
by or on behalf of each party hereto.

8.04 Waiver. At any time prior to the Effective Time any party
hereto, by action taken by or on behalf of its Board of Directors, may to
the extent permitted by applicable law (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
of the other parties hereto contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the covenants,
agreements or conditions of the other parties hereto contained herein. No
such extension or waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party extending the time of
performance or waiving any such inaccuracy or non-compliance. No waiver by
any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion.

ARTICLE IX
GENERAL PROVISIONS

9.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Merger but shall terminate at the Effective
Time, except for the agreements contained in Article I and Article II, in
Sections 6.07, 6.08, 6.09, 6.10, 6.11 and 6.13, this Article IX and the
agreements of the "affiliates" of the Company delivered pursuant to Section
6.04, which shall survive the Effective Time.

9.02 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given
only if delivered personally or by facsimile transmission or mailed (first
class postage prepaid) to the parties at the following addresses or
facsimile numbers:

If to Parent or Sub, to:

Anthracite Capital, Inc.
345 Park Avenue
29th Floor
New York, NY 10154
Facsimile No.: (212) 754-8758
Attn: Richard Shea, Chief Financial Officer and Chief Operating
Officer

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10019
Facsimile No.: (212) 735-2000
Attn: J. Gregory Milmoe, Esq.

If to the Company, to:

CORE Cap, Inc.
100 Witmer Road
P.O. Box 963
Horsham, PA 19044-0963
Facsimile No.: (215) 682-1151
Attn: Brian Kuelbs

with a copy to:

Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, NY 10005
Facsimile No.: (212) 530-5219
Attn: Barbara Briggs, Esq.

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given upon receipt, and (iii)
if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is
received by any other person to whom a copy of such notice, request or
other communication is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.

9.03 Entire Agreement; Incorporation of Exhibits.

(a) This Agreement supersedes all prior discussions and agreements
among the parties hereto with respect to the subject matter hereof and is
the sole and entire agreement among the parties hereto with respect to the
subject matter hereof.

(b) The Company Disclosure Letter, the Parent Disclosure Letter
and any Exhibit attached to this Agreement and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein.

9.04 Public Announcements. Except as otherwise required by law or
the rules of any applicable securities exchange or national market system,
so long as this Agreement is in effect, Parent and the Company will not,
and will not permit any of their respective Representatives to, issue or
cause the publication of any press release or make any other public
announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not
be unreasonably withheld. Parent and the Company will cooperate with each
other in the development and distribution of all press releases and other
public announcements with respect to this Agreement and the transactions
contemplated hereby, and will furnish the other with drafts of any such
releases and announcements as far in advance as practicable.

9.05 No Third Party Beneficiary. The terms and provisions this
Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as provided in
Sections 6.08 and 6.09 (which are intended to be for the benefit of the
persons entitled to herein, and may be enforced by any of such persons), it
is not the intention of the parties to confer third-party beneficiary
rights upon any other person.

9.06 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any
attempt to do so will be void, except that Sub may assign any or all of its
rights, interests and obligations hereunder to another direct or indirect
wholly-owned Subsidiary of Parent, provided that any such Subsidiary agrees
in writing to be bound by all of the terms, conditions and provisions
contained herein. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and assigns.

9.07 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or
limit the provisions hereof.

9.08 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future
law or order, and if the rights or obligations of any party hereto under
this Agreement will not be materially and adversely affected thereby, (i)
such provision will be fully severable, (ii) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and (iii) the remaining
provisions of this Agreement will remain in full force and effect and will
not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.

9.09 Governing Law. Except to the extent that the DGCL is
mandatorily applicable to the Merger and the rights of the stockholders of
the Constituent Corporations, this Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable
to a contract executed and performed in such State, without giving effect
to the conflicts of laws principles thereof.

9.10 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specified terms or
was otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.

9.11 Certain Definitions. As used in this Agreement:

(a) except as provided in Section 6.04, the term "affiliate," as
applied to any person, shall mean any other person directly or indirectly
controlling, controlled by, or under common control with, that person; for
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of that person, whether through the ownership of voting
securities, by contract or otherwise;

(b) a person will be deemed to "beneficially" own securities if
such person would be the beneficial owner of such securities under
Rule 13d-3 under the Exchange Act, including securities which such person
has the right to acquire (whether such right is exercisable immediately or
only after the passage of time);

(c) the term "business day" means a day other than Saturday,
Sunday or any day on which banks located in the State of New York are
authorized or obligated to close;

(d) the term "knowledge" or any similar formulation of "knowledge"
shall mean, with respect to the Company, the actual knowledge of the
persons named in Section 9.11(d) of the Company Disclosure Letter, and with
respect to Parent, the actual knowledge of the persons named in Section
9.11(d) of the Parent Disclosure Letter;

(e) the term "Liens" means any mortgage, pledge, assessment,
security interest, lease, lien, adverse claim, levy, charge or other
encumbrance of any kind, or any conditional sale Contract, title retention
Contract or other Contract to give any of the foregoing;

(f) any reference to any event, change or effect being "material"
or "materially adverse" or having a "material adverse effect" on or with
respect to an entity (or group of entities taken as a whole) means such
event, change or effect is material or materially adverse, as the case may
be, to the business, assets, financial condition or results of operations
of such entity (or of such group of entities taken as a whole);

(g) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);

(h) the "Representatives" of any entity means such entity's
directors, officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives; and

(i) the term "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated,
of which more than 50% of either the equity interests in, or the voting
control of, such corporation or other organization is, directly or
indirectly through Subsidiaries or otherwise, beneficially owned by such
party.

9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

IN WITNESS WHEREOF, each party hereto has caused this Agreement to
be signed by its officer thereunto duly authorized as of the date first
above written.

Attest: ANTHRACITE CAPITAL, INC.

/s/ Robert Friedberg By: /s/ Hugh R. Frater
- ------------------------ --------------------------------------------
Secretary Name: Hugh R. Frater
Title: President and Chief Executive Officer

Attest: ANTHRACITE ACQUISITION CORP.

/s/ Robert Friedberg By: /s/ Hugh R. Frater
- ------------------------ --------------------------------------------
Secretary Name: Hugh R. Frater
Title: President and Chief Executive Officer

Attest: CORE CAP, INC.

/s/ Robert Friedberg By: /s/ Brian P. Kuelbs
- ------------------------ --------------------------------------------
Secretary Name: Brian P. Kuelbs
Title: President

EXHIBIT A

FORM OF

ARTICLES SUPPLEMENTARY

ANTHRACITE CAPITAL, INC.

Anthracite Capital, Inc., a Maryland corporation (the "Corporation"),
certifies as follows:

FIRST: Under the authority set forth in Article FIFTH of the charter
of the Corporation, as heretofore amended (which, as hereinafter amended or
restated from time to time is, together with the Articles Supplementary,
herein called the "Articles"), the Board of Directors of the Corporation on
__________, 2000, by resolution duly designated and classified [NUMBER OF
SHARES OF CORE CAP PREFERRED OUTSTANDING AT THE EFFECTIVE TIME] of the
authorized, but unissued shares of the preferred stock, par value $.001 per
share, of the Corporation as the "10% Cumulative Convertible Series B
Preferred Stock" (the "Series B Preferred Stock") and has authorized the
issuance and sale of such shares.

SECOND: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and other
provisions of shares of Series B Preferred Stock shall be included as part
of Article FIFTH of the Articles and are as follows:

1. Designation. A series of preferred shares designated as 10%
Series B Cumulative Convertible Redeemable Preferred Stock is hereby
established (the "Series B Preferred Stock") and the number of shares
constituting the Series B Preferred Stock shall be [NUMBER OF SHARES
OF CORE CAP PREFERRED OUTSTANDING AT EFFECTIVE TIME]. Shares of the
Series B Preferred Stock shall have a liquidation preference of $25.00
(the "Initial Liquidation Preference") plus an amount equal to the
accrued and unpaid dividends, if any, thereon. The number of
authorized shares of the Series B Preferred Stock may be reduced by
further resolution duly adopted by the Board of Directors and by the
filing of a certificate pursuant to the provisions of the Maryland
General Corporation Law stating that such reduction has been so
authorized, but the number of authorized shares of the Series B
Preferred Stock shall not be increased.

2. Dividends. (a) For each quarterly dividend period (a
"Dividend Period"), dividends payable on the shares of the Series B
Preferred Stock shall be payable at a rate of 10% of the Initial
Liquidation Preference per annum (i.e., an amount equivalent to $2.50
per share per annum) (as adjusted pursuant to the proviso at the end
of this sentence, the "Dividend Rate"), provided, however, that if the
shares of Common Stock issuable on conversion of the shares of the
Series B Preferred Stock have not been listed as required by Section
4(k) hereof, then on June 15 of each year beginning with the year 2000
the Dividend Rate shall be increased by 0.50%. If the shares of
Common Stock issuable on conversion of the shares of the Series B
Preferred Stock thereafter are listed in accordance with Section 4
hereof then the Dividend Rate will immediately be reduced to 10%. In
the event that two Dividend Rates are in effect during a Dividend
Period, the Dividend Rate for such Dividend Period shall be the
weighted average of the two Dividend Rates that are in effect during
such Dividend Period. The amount of dividends per share for each full
Dividend Period shall be computed by dividing the Dividend Rate per
annum by four. The Dividend Periods shall commence on the first day
of the months of January, April, July and October of each year and
shall end on and include the last day of each of the months of March,
June, September and December of each year (except that the first
Dividend Period shall commence on the date immediately following the
last day of the dividend period with respect to which dividends were
last paid on the 10% Cumulative Convertible Series A Preferred Stock
of CORE Cap, Inc., a Delaware corporation). Dividends shall be
cumulative from such date and shall be payable, when and as declared
by the Board of Directors out of funds legally available therefor, on
the last day of each Dividend Period, commencing on [MARCH 31], 2000.
Each such dividend shall be paid to the holders of record of shares of
the Series B Preferred Stock as they appear on the stock ledger of the
Corporation on such record date, not exceeding 45 days preceding the
payment date thereof, as shall be fixed by the Board of Directors.
Undeclared dividends on account of arrears for any past Dividend
Periods may be declared and paid at any time, without reference to any
regular dividend payment date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof, as may be fixed
by the Board of Directors.

(b) Dividends payable on the Series B Preferred Stock for any
period greater or less than a full Dividend Period shall be computed
on the basis of a 360-day year consisting of twelve 30-day months.

(c) When dividends are not paid in full (or a sum sufficient for
such full payment is not set apart) upon the shares of the Series B
Preferred Stock and any other series of Preferred Stock ranking on a
parity as to dividends with the Series B Preferred Stock, all
dividends declared upon shares of the Series B Preferred Stock and any
other series of Preferred Stock ranking on a parity as to dividends
with the Series B Preferred Stock shall be declared pro rata so that
the amount of dividends declared per share on the Series B Preferred
Stock and such other Preferred Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on
the shares of the Series B Preferred Stock and such other Preferred
Stock bear to each other.

(d) So long as any shares of the Series B Preferred Stock are
outstanding, no dividend (other than a dividend in common stock or in
any other stock ranking junior to the Series B Preferred Stock as to
dividends and upon liquidation, dissolution or winding up and other
than as provided in paragraph (c) of this Section 2) shall be declared
or paid or set aside for payment and no other distribution declared or
made upon the common stock or upon any other stock ranking junior to
or on a parity with the Series B Preferred Stock as to dividends or
amounts upon liquidation, dissolution or winding up, nor shall any
common stock or any other stock of the Corporation ranking junior to
or on a parity with the Series B Preferred Stock as to dividends or
amounts upon liquidation, dissolution or winding up, be redeemed,
purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of
any shares of any such stock) by the Corporation or any subsidiary
(except by conversion into or exchange for stock of the Corporation
ranking junior to the Series B Preferred Stock as to dividends and
amounts upon liquidation, dissolution or winding up) unless, in each
case, the full cumulative dividends on all outstanding shares of the
Series B Preferred Stock shall have been paid or declared and set
aside for payment for all past Dividend Periods and the then current
Dividend Period.

(e) Holders of shares of the Series B Preferred Stock shall not
be entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on
the Series B Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or
payments on the Series B Preferred Stock which may be in arrears.

3. Redemption. (a) The shares of the Series B Preferred Stock
are not redeemable prior to September 30, 2002. The Corporation, at
its option, may redeem shares of the Series B Preferred Stock out of
funds legally available therefor, as a whole or in part, at any time
or from time to time, on or after September 30, 2002, at a redemption
price equal to the Initial Liquidation Preference per share plus
accrued and unpaid dividends thereon to the date fixed for redemption.

(b) If fewer than all the outstanding shares of the Series B
Preferred Stock are to be redeemed, the number of shares to be
redeemed shall be determined by the Board of Directors and such shares
shall be redeemed pro rata from the holders of record of such shares
in proportion to the number of such shares held by such holders (as
nearly as may be practicable without creating fractional shares) or by
any other method as may be determined by the Board of Directors in its
sole discretion to be equitable.

(c) In the event the Corporation shall redeem shares of the
Series B Preferred Stock, notice of such redemption shall be given by
first class mail, postage prepaid, mailed not less than 30 or more
than 60 days prior to the redemption date, to each holder of record of
the shares to be redeemed, at such holder's address as the same
appears on the stock ledger of the Corporation. No failure to give
such notice or any defect therein or the mailing thereof will affect
the validity of the proceeding for the redemption of any shares of the
Series B Preferred Stock except as to the holder to whom notice was
defective or not given. Each such notice shall state: (i) the
redemption date; (ii) the number of shares of the Series B Preferred
Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for payment
of the redemption price; (v) that dividends on the shares to be
redeemed will cease to accrue on the redemption date; and (vi) that
the conversion right of the holders of shares of the Series B
Preferred Stock shall terminate on the redemption date.

(d) If notice of redemption has been given as aforesaid and if
the funds necessary for such redemption have been set aside by the
Corporation in trust for the benefit of the holders of any shares so
called for redemption, then from and after the redemption date
dividends on the shares of the Series B Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall terminate. Any moneys so set
aside in trust which remain unclaimed by the holders of shares of the
Series B Preferred Stock at the end of two years after the redemption
date will be returned by the trustee thereof to the Corporation and
the holders of such shares of the Series B Preferred Stock will be
entitled to look only to the Corporation for the payment thereof.
Upon surrender in accordance with said notice of the certificates for
any shares so redeemed (properly endorsed or assigned for transfer, if
the Board of Directors shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the
redemption price aforesaid. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the
holder thereof.

(e) Notwithstanding the foregoing provisions of this Section 3,
if any dividends on the Series B Preferred Stock are in arrears, no
shares of the Series B Preferred Stock shall be redeemed unless all
outstanding shares of the Series B Preferred Stock are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire
any shares of the Series B Preferred Stock (except by conversion of
such shares); provided, however, that the Corporation may purchase or
acquire shares of the Series B Preferred Stock pursuant to a purchase
or exchange offer made on the same terms to holders of all outstanding
shares of the Series B Preferred Stock.

4. Conversion by Holders. Subject to the approval of holders
of the Corporation's Common Stock with respect to the issuance of
shares of Common Stock upon conversion of shares of the Series B
Preferred Stock to the extent required for listing of such shares, the
holders of shares of the Series B Preferred Stock shall have the right
to convert all or a portion of such shares into shares of Common
Stock, par value $.001 per share (the "Common Stock"), as follows:

(a) Subject to and upon compliance with the provisions of this
Section 4, a holder of shares of the Series B Preferred Stock shall
have the right, at such holder's option, at any time, to convert such
shares, in whole or in part, into the number of fully paid and non-
assessable shares of authorized but previously unissued shares of
Common Stock per each share of the Series B Preferred Stock obtained
by dividing the Initial Liquidation Preference per share of the Series
B Preferred Stock by a conversion price of [$21.93 DIVIDED BY THE
COMMON STOCK CONVERSION NUMBER SET FORTH IN THE MERGER AGREEMENT](1) per
share, as the same may be adjusted and as in effect at the time and on
the date provided for in the last subparagraph of Section 4(b) or in
the last subparagraph of Section 5(d), as the case may be (the
"Conversion Price"), and by surrendering such shares to be converted,
such surrender to be made in the manner provided in paragraph (b) of
this Section 4; provided, however, that the right to convert shares of
the Series B Preferred Stock called for redemption shall terminate as
provided in the notice of redemption.

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

1 If prior to the Effective Time (as defined in the Agreement and
Plan of Merger by and among the Corporation, Sub and CORE Cap,
Inc., dated as of February 8, 2000 (the "Merger Agreement")) any of
the events referred to in Section 4(d) occurs, the initial
Conversion Price shall be adjusted at the time of issuance as if
the Series B Preferred Stock had been outstanding at the time of
such event.

(b) In order to exercise the conversion right, the holder of
each share of the Series B Preferred Stock to be converted shall
surrender the certificate representing such share, duly endorsed or
assigned to the Corporation or in blank, at the office of the transfer
agent, accompanied by written notice to the Corporation that the
holder thereof elects to convert such share of the Series B Preferred
Stock. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of the Series B
Preferred Stock is registered, each share surrendered for conversion
shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such holder's duly
authorized attorney and an amount sufficient to pay any transfer or
similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).

As promptly as practicable after the surrender of certificates
for shares of the Series B Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver at such office to such
holder, or send on such holder's written order, a certificate or
certificates for the number of full shares of Common Stock issuable
upon the conversion of such shares of the Series B Preferred Stock,
and any fractional interest in respect of a share of Common Stock
arising upon such conversion shall be settled as provided in paragraph
(c) of this Section 4.

Each conversion pursuant to this Section 4 shall be deemed to
have been effected immediately prior to the close of business on the
date on which the certificates for shares of the Series B Preferred
Stock shall have been surrendered and such notice received by the
Corporation as aforesaid, and the person or persons in whose name or
names any certificate or certificates or shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such
time on such date and such conversion shall be at the Conversion Price
in effect at such time on such date, unless the stock transfer books
of the Corporation shall be closed on that date in which event such
person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day
on which such transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which such shares shall
have been surrendered and such notice received by the Corporation.
The Corporation will make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for
dividends on the Common Stock issued upon such conversion.

(c) No fractional share of common stock or scrip representing
fractions of a share of Common Stock shall be issued upon conversion
of the shares of the Series B Preferred Stock whether pursuant to this
Section 4 or Section 5. Instead of any fractional interest in a share
of Common Stock that would otherwise be deliverable upon the
conversion of shares of the Series B Preferred Stock, the Corporation
shall pay to the holder of such share an amount in cash based upon the
market value of the Common Stock on the date of conversion. If more
than one share shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate
number of shares of the Series B Preferred Stock so surrendered.

(d) The Conversion Price shall be adjusted from time to time as
follows:

(i) If the Corporation shall, after the date the shares of
the Series B Preferred Stock are issued, (A) pay a dividend or
make a distribution on its capital stock in shares of Common
Stock, (B) subdivide its outstanding Common Stock into a greater
number of shares, (C) combine its outstanding Common Stock into a
smaller number of shares or (D) issue any shares of Common Stock
by reclassification of its outstanding Common Stock, the
Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders
entitled to receive such dividend or distribution or at the
opening of business on the day following the day on which the
subdivision, combination or reclassification becomes effective,
as the case may be, shall be adjusted so that the holder of any
share of the Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of
Common Stock (or fraction of a share of Common Stock) that such
holder would have owned or would have been entitled to receive
after the happening of any of the events described above had such
share of the Series B Preferred Stock been converted immediately
prior to the record date in the case of dividend or distribution
or the effective date in the case of a subdivision, combination
or reclassification. An adjustment made pursuant to this
paragraph (d)(i) shall become effective immediately after the
opening of business on the day next following the record date
(except as provided in paragraph (h) below) in the case of a
dividend distribution and shall become effective immediately
after the opening of business on the day next following the
effective date in the case of a subdivision, combination or
reclassification.

(ii) If the Corporation shall issue, after the date the
shares of the Series B Preferred Stock are issued, rights,
options or warrants to all holders of Common Stock entitling them
to subscribe for or purchase Common Stock at a price per share
less than the market price per share of the Common Stock on the
record date for the determination of the shareholders entitled to
receive such rights, options or warrants, then the Conversion
Price in effect at the opening of business on the day next
following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect
immediately prior to the opening of business on the day following
the date fixed for such determination by (B) a fraction, the
numerator of which shall be the sum of (X) the number of shares
of common stock outstanding on the close of business on the date
fixed for such determination and (Y) the number of shares that
could be purchased at such market price from the aggregate
proceeds to the Corporation from the exercise of such rights,
options or warrants for Common Stock, and the denominator of
which shall be the sum of (XX) the number of shares of Common
Stock outstanding on the close of business on the date fixed for
such determination and (YY) the number of additional shares of
Common Stock offered for subscription or purchase pursuant to the
such rights or warrants. Such adjustment shall become effective
immediately after the opening of business on the date next
following such record date (except as provided in paragraph (h)
below). In determining whether any rights, options or warrants
entitle the holders of Common Stock to subscribe for or purchase
Common Stock at less than the market price, there shall be taken
into account any consideration received by the Corporation upon
the issuance and upon exercise of such rights, options or
warrants, the value of such consideration, if other than cash, to
be determined in good faith by the Board of Directors.

(iii) If the Corporation shall, after the date the
shares of the Series B Preferred Stock are issued, make a
distribution on its Common Stock other than in cash or shares of
Common Stock (including any distribution in securities other than
rights, options or warrants as set forth above) (each of the
foregoing being referred to herein as the "Securities"), then the
Conversion Price in effect at the opening of business on the next
day following the record date for the determination of the
shareholders entitled to receive such distribution of Securities
shall be adjusted to equal the price determined by multiplying
(A) the Conversion Price in effect immediately prior to the
opening of business on the day following the record date by (B) a
fraction, the numerator of which shall be the amount obtained by
subtracting the per share value of the property being distributed
by (bb) the market price per share of Common Stock on the record
date, and the denominator of which shall be the market price of
Common Stock outstanding on the close of business on the record
date; provided, however, that the Corporation may, in lieu of the
foregoing adjustment, make adequate provision such that each
holder of shares of the Series B Preferred Stock shall have the
right to receive the amount and kind of property such holder
would have received had such holder converted each such share of
the Series B Preferred Stock immediately prior to the record date
for determination of the shareholders entitled to receive such
distribution of property. Such adjustment shall become effective
immediately after the opening of business on the day next
following such record date (except as provided below). The value
of the property being distributed shall be as determined in good
faith by the Board of Directors. Neither the issuance by the
Corporation of rights, options or warrants to subscribe for or
purchase securities of the Corporation nor the exercise thereof
shall be deemed a distribution of Securities under this
paragraph.

(iv) Notwithstanding any other provision of this Section 4,
no adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any
adjustments that by reason of this paragraph (d)(iv) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment until made; and provided,
further, that any adjustment shall be required and made in
accordance with the provisions of this Section 4 not later than
such time as may be required in order to preserve the tax free
nature of a distribution to the holders of shares of Common
Stock. Notwithstanding any other provisions of this Section 4,
the Corporation shall not be required to make any adjustment for
the Conversion Price for the issuance of (A) any shares of Common
Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation
and the investment of optional amounts in shares of Common Stock
under such plan or (B) any options, rights or shares of Common
Stock pursuant to any stock option, stock purchase or any stock-
based plan maintained by the Corporation. All calculations under
this Section 4 shall be made to the nearest cent (with $.005
being rounded upward), or to the nearest one tenth of a share
(with .05 of a share being rounded upward), as the case may be.
Anything in this paragraph (d) of this Section 4 to the contrary
notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion
Price, in addition to those required by this paragraph (d), as it
in its discretion shall determine to be advisable in order that
any stock dividends, subdivision of shares, reclassification or
combination of shares, distribution of other assets (other than
cash dividends) hereafter made by the Corporation to its
shareholders shall not be taxable, or if that is not possible, to
diminish any income taxes that are otherwise payable because of
such event.

(e) If the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share
exchange, issuer or self tender offer for all or a substantial portion
of the shares of Common Stock outstanding, sale of all or
substantially all of the Corporation's assets or recapitalization of
the Common Stock, but excluding any transaction as to which paragraph
(d)(i) of this Section 4 applies) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of
which shares of Common Stock shall be converted into or shall have the
right to receive stock, securities or other property (including cash
or any combination thereof), each share of the Series B Preferred
Stock, if convertible after the consummation of the Transaction, shall
thereupon be convertible into the kind and amount of shares of stock,
securities and other property (including cash or any combination
thereof) receivable upon consummation of such Transaction by a holder
of that number of shares or fraction thereof of Common Stock into
which one share of the Series B Preferred Stock was convertible
immediately prior to such Transaction. The Corporation shall not be a
party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this paragraph (e), and it shall not
consent or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders
of shares of the Series B Preferred Stock that remain outstanding
after such Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect immediately
prior to such Transaction. The provisions of this paragraph (e) shall
similarly apply to successive Transactions.

(f) If:

(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than cash dividends and
cash distributions); or

(ii) the Corporation shall authorize the granting to all
holders of the Common Stock of rights or warrants to subscribe
for or purchase any shares of any class or series of capital
stock or any other rights or warrants; or

(iii) there shall be any reclassification of the
outstanding Common Stock or any consolidation or merger to which
the Corporation is a party and for which approval of any
shareholders of the Corporation is required, or a statutory share
exchange, or an issuer or self tender offer by the Corporation
for all or a substantial portion of its outstanding shares of
Common Stock ( or an amendment thereto changing the maximum
number of shares sought or the amount or type of consideration
being offered therefor) or the sale or transfer of all or
substantially all of the assets of the Corporation as an
entirety; or

(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,

then the Corporation shall cause to be filed with the transfer agent
and shall cause to be mailed to each holder of shares of the Series B
Preferred Stock at such holder's address as shown on the stock records
of the Corporation, as promptly as possible but at least 15 days prior
to the applicable date hereinafter specified, a notice stating (A) the
record date for the payment of such dividend, distribution or rights
or warrants, or, if a record date is not established, the date as of
which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights or warrants are to be determined or
(B) the date on which such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which
it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer,
liquidation, dissolution, or winding up or (C) the date on which such
tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the
other material terms thereof (or the material terms of any amendment
thereto). Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceeding
described in this Section 4(f).

(g) Whenever the Conversion Price is adjusted as herein
provided, the Corporation (i) shall promptly file with the transfer
agent an officer's certificate describing in reasonable detail such
adjustment, setting forth the adjusted Conversion Price and the date
such adjustment became effective, which certificate shall be
conclusive evidence of the correctness of such adjustment of the
Conversion Price and (ii) shall mail by first class mail, postage
prepaid, as soon as practicable, such notice of such adjustment of the
Conversion Price to each holder's last address as shown on the stock
records of the Corporation.

(h) In any case in which paragraph (d) of this Section 4
provides that an adjustment shall become effective on the next day
following the record date for an event, the Corporation may defer
until the occurrence of such event (A) issuing to the holder of any
share of the Series B Preferred Stock converted after such record date
and before the occurrence of such event of the additional Common Stock
issuable upon such conversion by reason of the adjustment required by
such event over and above the Common Stock issuable upon the
conversion before giving effect to such adjustment and (B) paying to
such holder any amount of cash in lieu of any fraction pursuant to
paragraph (c) of this Section 4.

(i) There shall be no adjustment of the Conversion Price in case
of the issuance of any stock of the Corporation in a reorganization,
acquisition or other similar transaction, except as specifically set
forth in this Section 4.

(j) If the Corporation shall take any action affecting the
Common Stock, other than action described in this Section 4, that in
the opinion of the Board of Directors would materially adversely
affect the conversion rights of the holders of shares of the Series B
Preferred Stock, the Conversion Price may be adjusted, to the extent
permitted by law, in such manner, if any, and at such time as the
Board of Directors, in its sole discretion, may determine to be
applicable under the circumstances, it being understood that the Board
of Directors shall have no obligation to make such adjustment.

(k) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock solely for the purpose of
effecting conversion of the shares of the Series B Preferred Stock,
the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of the Series B Preferred Stock.
The number of shares of Common Stock deliverable upon the conversion
of all outstanding shares of the Series B Preferred Stock shall be
computed as if at the time of computation all such outstanding shares
were held by a single holder (and without regard to the limitation
with respect to the Ownership Limit set forth in the Charter of the
Corporation).

The Corporation covenants that any shares of Common Stock issued
upon conversion of the shares of the Series B Preferred Stock shall be
validly issued, fully paid and nonassessable. The Corporation will
not be required to permit conversion unless the Common Stock issuable
upon conversion of the shares of the Series B Preferred Stock is
listed on any securities exchange on which the Common Stock is then
listed.

(l) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock or other securities or property on
conversion or redemption of shares of the Series B Preferred Stock;
provided, however, that the Corporation shall not be required to pay
any tax that may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock or other securities or
property in a name other than that of the holder of the shares of the
Series B Preferred Stock to be converted or redeemed, and no such
issue or delivery shall be made unless and until the person requesting
such issue or delivery has paid to the Corporation the amount of any
such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.

5. Conversion by the Corporation. (a) If, at any time, the
Corporation in good faith determines that a conversion pursuant to
Section 4 will cause Benefit Plan Investors to own in excess of 24.9%
of the aggregate number of outstanding shares of the Series B
Preferred Stock (excluding for this purpose any shares held by persons
exercising investment management authority over the assets of the
Corporation or providing investment advice for a fee with respect to
such assets and any affiliates of such persons), the Corporation shall
have the right to cause shares of the Series B Preferred Stock that
are held by Benefit Plan Investors (as determined by the Corporation
in good faith) to be converted into Common Stock (without the
necessity of any action on behalf of the holders of such shares) so
that following such conversion Benefit Plan Investors do not own more
than 24.9% of the outstanding shares of the Series B Preferred Stock
(excluding for this purpose any shares held by persons exercising
investment management authority over the assets of the Corporation or
providing investment advice for a fee with respect to such assets and
any affiliates of such persons). Each share of the Series B Preferred
Stock to be converted pursuant to this Section 5 shall be converted
into the number of fully paid and non-assessable shares of authorized
but previously unissued shares of Common Stock obtained by dividing
the Initial Liquidation Preference per share of the Series B Preferred
Stock plus accrued and unpaid dividends thereon to the Conversion Date
by the Conversion Price.

(b) If fewer than all the outstanding shares of the Series B
Preferred Stock that are held by Benefit Plan Investors (as determined
by the Corporation in good faith) are to be converted, the number of
shares to be converted shall be determined by the Board of Directors
and such shares shall be converted pro rata from the holders of such
shares that are Benefit Plan Investors (as determined by the
Corporation in good faith) in proportion to the number of such shares
held by such holders (as nearly as may be practicable without creating
fractional shares) or by any other method as may be determined by the
Board of Directors in its sole discretion to be equitable.

(c) The Corporation shall exercise its right to convert shares
of the Series B Preferred Stock pursuant to this Section 5 by
resolution or written consent of the Board of Directors or a duly
authorized committee thereof or as otherwise authorized by the Board
of Directors. In the event the Corporation shall exercise its right
to cause the conversion of shares of the Series B Preferred Stock
pursuant to this Section 5, notice of such exercise shall be given by
first class mail, postage prepaid, mailed as soon as practicable
following such exercise, to each holder of shares of the Series B
Preferred Stock that is a Benefit Plan Investor (as determined by the
Corporation in good faith), at the address of such holder as the same
appears on the stock ledger of the Corporation. No failure to give
such notice or any defect therein or the mailing thereof will affect
the validity of the conversion of shares of the Series B Preferred
Stock pursuant to this Section 5. Each such notice shall state: (i)
the Conversion Date (defined below); (ii) the number of shares of the
Series B Preferred Stock held by such holder that were converted;
(iii) the Conversion Price; and (iv) the place or places where
certificates for shares of the Series B Preferred Stock are to be
surrendered.

(d) The holder of any share of the Series B Preferred Stock that
has been converted pursuant to this Section 5 shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the transfer agent
immediately following receipt of the notice described in Section 5(c).
Unless the shares issuable on conversion are to be issued in the same
name as the name in which such share of the Series B Preferred Stock
is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly
authorized attorney and an amount sufficient to pay any transfer or
similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).

As promptly as practicable after the surrender of certificates
for shares of the Series B Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver at such office to such
holder, or send on such holder's written order, (i) a certificate or
certificates for the number of full shares of Common Stock issuable
upon the conversion of such shares of the Series B Preferred Stock and
(ii) if necessary, a certificate or certificates for the number of
full shares of the Series B Preferred Stock that were not subject to
conversion, and any fractional interest in respect of a share of
Common Stock arising upon such conversion shall be settled as provided
in Section 4(c).

Each conversion pursuant to this Section 5 shall be deemed to
have been effected on the date that the Corporation exercises its
right to convert shares of the Series B Preferred Stock in accordance
with this Section 5 (the "Conversion Date"), unless the stock transfer
books of the Corporation shall be closed on that date in which event
such person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day
on which such transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which that the
Corporation exercised its rights under this Section 5. Except as
provided above, the Corporation will make no payment or allowance for
unpaid dividends, whether or not in arrears, on converted shares or
for dividends on the Common Stock issued upon such conversion.

(e) From the Conversion Date to the time that a holder
surrenders its shares in accordance with this Section 5(d), the
Corporation shall treat for all purposes the certificate(s) held by
such holder as representing both (i) the number of shares of the
Series B Preferred Stock that are not subject to conversion and (ii)
the number of shares of Common Stock that were issuable upon
conversion.

(f) For purposes of this Section 5, the following terms shall
have the following meanings:

"Benefit Plan Investor" means any employee benefit plan as
defined in Section 3(3) of ERISA, whether or not subject to ERISA
and Section 4975 of the Internal Revenue Code of 1986, as amended
(including without limitation foreign plans and governmental
plans), and any entity whose underlying assets include the assets
of any such plan by reason of the plan's direct or indirect
investment in such entity (but only to the extent of the plan's
interest in such entity).

"ERISA" means the Employee Retirement Income Security Act of
1974, as amended or any successor law.

6. Liquidation Rights. (a) Upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders
of the shares of the Series B Preferred Stock shall be entitled to
receive and to be paid out of the assets of the Corporation legally
available for distribution to its stockholders, before any payment or
distribution shall be made on the common stock or on any other class
of stock ranking junior to the Series B Preferred Stock upon
liquidation, liquidating distributions in the amount of the Initial
Liquidation Preference, plus accrued and unpaid dividends thereon, if
any, to the date of liquidation.

(b) After the payment to the holders of the shares of the Series
B Preferred Stock of the full preferential amounts provided for in
this Section 6, the holders of the Series B Preferred Stock as such
shall have no right or claim to any of the remaining assets of the
Corporation.

(c) If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the liquidating
distribution on the shares of the Series B Preferred Stock and the
corresponding amounts payable on any other shares of stock of the
Corporation ranking as to any such distribution on a parity with the
shares of the Series B Preferred Stock are not paid in full, the
holders of the shares of the Series B Preferred Stock and of such
other shares will share ratably in any such distribution of assets of
the Corporation in proportion to the full respective liquidating
distributions to which they are entitled.

(d) Neither the sale of all or substantially all the property or
business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation,
shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, for the purposes of this Section 6.

7. Ranking. For purposes of this resolution, any stock of any
class or classes of the Corporation shall be deemed to rank:

(a) prior to the shares of the Series B Preferred Stock, either
as to dividends or upon liquidation, if the holders of such class or
classes shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the
holders of shares of the Series B Preferred Stock;

(b) on a parity with shares of the Series B Preferred Stock,
either as to dividends or upon dissolution, liquidation or winding up,
whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions,
if any, be different from those of the Series B Preferred Stock, if
the holders of such stock shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or
winding up of the Corporation, as the case may be, without preference
or priority, one over the other, as between the holders of such stock
and the holders of shares of the Series B Preferred Stock (any stock
on a parity as to both dividends and amounts payable upon dissolution,
liquidation or winding up shall be hereinafter referred to as "Parity
Stock"). The 101/2% Series A Senior Cumulative Convertible Redeemable
Preferred Stock of the Corporation shall be deemed to rank pari passu
with shares of the Series B Preferred Stock; and

(c) junior to shares of the Series B Preferred Stock, either as
to dividends or upon liquidation, if such class shall be common stock
or if the holders of shares of the Series B Preferred Stock shall be
entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case
may be, in preference or priority to the holders of shares of such
class or classes.

8. Voting Rights. The shares of the Series B Preferred Stock
shall not have any voting powers, either general or special, except as
set forth below. In the event that the holders of shares of the
Series B Preferred Stock are entitled to vote as set forth below, each
share will be entitled to one vote on such matters.

(a) If the Corporation fails to pay full dividends on the shares
of the Series B Preferred Stock on six consecutive dividend payment
dates, then in accordance with the bylaws of the Corporation, the
Board of Directors shall take all requisite action in accordance with
the Maryland General Corporation Law to increase by two the number of
directors of the Corporation and the holders of the shares of the
Series B Preferred Stock, voting together with the holders of any
other outstanding Parity Stock that share this right as a single
class, shall have the right to elect two additional directors of the
Corporation to fill such newly created directorships at an annual
meeting of stockholders or special meeting held in place thereof or at
a properly called special meeting of the holders of the shares of the
Series B Preferred Stock and of any such Parity Stock, and at each
subsequent annual meeting of stockholders or special meeting held in
place thereof. Once all accrued dividends on the shares of the Series
B Preferred Stock have been paid in full, (i) the voting rights of the
holders of the shares of the Series B Preferred Stock shall, without
further action, terminate, subject to revesting and (ii) the term of
office of the directors elected by the holders of the shares of the
Series B Preferred Stock and any such Parity Stock (the "Preferred
Directors") shall, without further action, terminate unless otherwise
required by law. Any Preferred Director may be removed by, and shall
not be removed except by, the vote of the holders of record of the
outstanding shares of the Series B Preferred Stock and any such Parity
Stock, voting together as a single class, at a meeting of the
Corporation's stockholders, or of the holders of shares of the Series
B Preferred Stock and of any such Parity Stock, called for the
purpose. So long as a default in any preference dividends on the
shares of the Series B Preferred Stock shall exist, (i) any vacancy in
the office of a Preferred Director may be filled (except as provided
in the following clause (ii)) by an instrument in writing signed by
the remaining Preferred Director and filed with the Corporation and
(ii) in the case of the removal of any Preferred Director, the vacancy
may be filled by the vote of the holders of the outstanding shares of
the Series B Preferred Stock and any such Parity Stock, voting
together as a single class, at the same meeting at which such removal
shall be voted. Each director appointed as aforesaid by the remaining
Preferred Director shall be deemed, for all purposes hereof, to be a
Preferred Director.

(b) Without the consent of the holders of shares entitled to
cast at least 66 2/3% of the votes entitled to be cast by the holders
of the total number of shares of the Series B Preferred Stock then
outstanding, the Corporation may not (i) create any class or series of
stock which shall have preference as to dividends or upon liquidation,
dissolution or winding up over shares of the Series B Preferred Stock
or (ii) alter or change the provisions of the Charter of the
Corporation so as to adversely affect the voting power, preferences or
special rights of the holders of shares of the Series B Preferred
Stock.

(c) The foregoing voting provisions will not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required is effected, all outstanding shares of the
Series B Preferred Stock have been redeemed or called for redemption
and sufficient funds have been deposited in trust to effect such
redemption pursuant to Section 3.

IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf on this ___ day of
_____, 2000 by its President who acknowledges that these Articles
Supplementary are the act of the Corporation and to the best of his
knowledge, information and belief and under penalties for perjury, all
matters and facts contained in these Articles Supplementary are true in all
material respects.

ANTHRACITE CAPITAL, INC.

By_________________________
Name: Hugh Frater
Title: President

ATTEST:

By________________________
Name:
Title: Secretary

SCHEDULE I

GENERAL METHODOLOGY
Net Asset Value shall be the market value of assets less liabilities, net
of the value of hedging instruments, less Dividend Income Accrued. All
asset valuations shall be as of 3:00 p.m. on the date provided in Section
2.01(c) of the Agreement (the "Asset Valuation Date").

DIVIDEND INCOME ACCRUED
For each entity the Dividend Income Accrued shall be equal to $0.29 per
share per quarter for AHR and $0.29 per exchanged share per quarter for
CORE Cap. In the event that the exchange ratio is greater than 1.2833 CORE
Cap shall distribute an amount equal to the excess of the amount required
to result in an exchange rate of 1.2833 after reducing its NAV for the
dividend income accrued.

TREASURY INTEREST RATES
U.S. Treasury yields used to determine portfolio asset and liability values
shall be derived from Salomon Analytics Yield Book system, where bid side
rates as of 3:00 p.m. on the Asset Valuation Date are provided by Rover.

LIBOR RATES / SWAP SPREADS
London Interbank Offered Rate (swap curve) and swap spreads used to
determine interest-rate swap values shall be derived from the
Bridge/Telerate page 19901 as of 3:00 p.m. on the Asset Valuation Date.
Yields used for pricing on page 19901 are mid-market Treasury yields. Swap
spreads used for interest-rate swap valuation shall be bid side (receive
fixed) spreads plus 1 basis point.

VOLATILITY
Volatility levels used to determine interest-rate cap and floor values
shall be derived from the Bridge/Telerate page 19903 as of 3:00 p.m. on the
Asset Valuation Date. The average of three dealer marks are to be used.

SCHEDULE 7.01(E)

None.

APPENDIX II

DISSENTERS' APPRAISAL RIGHTS
UNDER SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW

262 APPRAISAL RIGHTS

(a) Any stockholder of a corporation of this State who hold shares
of stock on the date of the making of a demand pursuant to subsection (d)
of this section with respect to such shares, who continuously holds such
shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to ss.228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of the stockholder's shares of
stock under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of
nonstock corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership or membership
interest of a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the
depository.

(b) Appraisal rights shall be available for the shares of any
class or series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to ss.251 (other than a merger
effected pursuant to ss.251 (g) of this title), ss.252, ss.254, ss.257,
ss.258, ss.263 or ss.264 of this title:

(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of stock,
which stock, or depository receipts in respect thereof, at the record date
fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided on subsection (f) of ss.251 of this title.

(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares of
any class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
consolidation pursuant to ss.ss.251, 252, 254, 257, 258, 263 and 264 of
this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository
receipts at the effective date of the merger or
consolidation will be either listed on a national securities
exchange or designated as a national market system security
on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by
more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a.and b.
of this paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a., b., and c. of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss.253 of this title is not
owned by the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.

(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall
be available for the shares of any class or series of its
stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all
or substantially all of the assets of the corporation. If
the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as
nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be submitted for
approval at a meeting of stockholders, the corporation, not less than 20
days prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for which
appraisal rights are available pursuant to subsections (b) or (c) hereof
that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's1 shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand for appraisal
of such stockholder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
stockholder's shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such
action must do so by a separate written demand as herein provided. Within
10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or

------------------
1 Ch. 339, L. '98 eff. 7-1-98, added
matter in italic and deleted "his" and "he".

(2) If the merger or consolidation was approved pursuant to
ss.228 or ss.253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall also notify such stockholders of
the effective date of the merger or consolidation. Any stockholder entitled
to appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective
date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are entitled
to appraisal rights of the effective date of the merger or consolidation of
(ii) the surviving or resulting corporation shall send such a second notice
to all such holders on or within 10 days after such effective date;
provided however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice
that such notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided, that if the notice
is given on or after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is fixed and
the notice is given prior to the effective date, the record date shall be
the close of business on the day next preceding the day on which the notice
is given.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw such stockholder's demand for appraisal
and to accept the terms offered upon the merger or consolidation. Within
120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and
(d) hereof, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor
of the merger of consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is
received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.

(f) Upon the filing of any such petition by a stockholder, service
of a copy thereof shall be made upon the surviving or resulting
corporation, which shall within 20 days after such service file in the
office of the Register in Chancery in which the petition was filed a duly
verified list containing the names and addresses of all stockholders who
have demanded payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or resulting
corporation, the petition shall be accompanied by such a duly verified
list. The Register in Chancery, if so ordered by the Court, shall give
notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and
to the stockholders shown on the list at the addresses therein stated. Such
notice shall also be given by 1 or more publications at least 1 week before
the day of the hearing, in a newspaper of general circulation published in
the City of Wilmington, Delaware or such publication as the Court deems
advisable. The forms of the notices by mail and by publication shall be
approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholders.

(h) After determining the stockholders entitled to an appraisal,
the Court shall appraise the shares, determining their fair value exclusive
of any element of value arising from the accomplishment or expectation of
the merger or consolidation, together with a fair rate of interest, if any,
to be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of
the proceeding. Upon application by the surviving or resulting corporation
or by any stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificate of stock to the Register in
Chancery, if such is required, may participate fully in all proceeding
until it is finally determined that such stockholder is not entitled to
appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and
the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates represented by such stock.
The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation
be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and
taxed on the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights as provided
in subsection (d) of this section shall be entitled to vote such stock for
any purpose or to receive payment of dividends or other distributions on
the stock (except dividends or other distributions payable to stockholders
of record at a date which is prior to the effective date of the merger or
consolidation); provided, however, that if no petition for an appraisal
shall be filed within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of such stockholder's demand for an
appraisal and an acceptance of the merger or consolidation, either within
60 days after the effective date of the merger or consolidation is provided
in subsection (e) of this section or thereafter with the written approval
of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms
as the Court deems just.

(l) The shares of the surviving or resulting corporation to which
the shares of such objecting stockholders would have been converted had
they assented to the merger or consolidation shall have the status of
authorized and unissued shares of the surviving or resulting corporation.
(Last amended by Ch. 339, L. '98, eff. 7-1-
98.)

CH. 339, L. '98 SYNOPSIS OF SECTION 262

The amendments to these Sections eliminate masculine references in
the statutes, and replace them with gender neutral references.

ED. NOTE: This section is effective only with respect to mergers or
consolidations consummated pursuant to an agreement of merger or consolidation
entered into after July 1, 1987.

CH. 120, L. '97 SYNOPSIS OF SECTION 262

The amendments to Section 262(b)(2)b clarifies that, assuming the
requirements of Section 262(b)(1) are satisfied, appraisal rights are not
available for shares held by a depository if in the merger such shares are
to be converted into or exchanged for shares of another corporation
(whether or not widely-held or publicly traded) in respect of which
depository receipts will be widely-held or publicly traded at the effective
time.

CH. 349, L. '96 SYNOPSIS OF SECTION 262

The amendment to Section 262(d) provides a mechanism for sending
separate notices with respect to (a) the approval and (b) the effective
date of a merger or consolidation approved pursuant to Section 228 or
Section 253, in order to permit the start of the twenty day period for
appraisal demands where the effective date is not known at the time the
notice of the approval of the merger is sent. The amendment also (1)
provides for the fixing of a record date for determining the stockholders
to whom the notices provided for in this subsection shall be sent (and
provides that notices given prior to the effective date shall be given by
the appropriate constituent corporation rather than by the surviving
corporation, as previously provided), and (2) eliminates the requirement
that notices be sent by certified or registered mail, return receipt
requested (and provides that, as in Section 222(b), an affidavit of the
Secretary, Assistant Secretary or Transfer Agent shall constitute evidence
of the giving of such notice).

CH. 299, L. '95 SYNOPSIS OF SECTION 262

The amendments to Section 262(b) and Section 262(b)(1) correct
certain oversights in the 1995 amendment to Section 262(b)(1) and implement
the stated objective of the 1995 amendment that appraisal rights not be
available for the shares of a constituent corporation to a merger effected
in accordance with Section 251(g).

CH. 79, L. '95 SYNOPSIS OF SECTION 262

New Section 251(g) permits a Delaware corporation to reorganize by
merging with or into a direct or indirect wholly-owned subsidiary of a
holding company (as defined) without stockholder approval, unless the
corporation's certificate of incorporation, by explicit reference to a
holding company reorganization of the type provided for in this subsection,
requires such a vote. The provisions of the new statute are intended to
insure that the rights of the stockholders of the corporation are not
changed by or as a result of such a reorganization . . .

APPENDIX III

February 8, 2000

Confidential

Board of Directors
CORE Cap, Inc.
100 Witmer Road
Horsham, PA 19044-0963

Gentlemen:

CORE Cap, Inc. (the "Company") and Anthracite Capital, Inc.
(the "Acquiring Company") propose to enter into an agreement (the
"Agreement") pursuant to which the Company will be merged with the
Acquiring Company in a transaction (the "Merger") in which (i) each share
of the Company's Class A common stock, par value $0.01 per share,
outstanding and each share of the Company's Class B common stock, par value
$0.01 per share, outstanding (collectively, the "Common Shares"), will be
converted, based on a floating exchange ratio calculated at closing by
dividing 105% of CORE Cap's fully-marked book value per share by 100% of
AHR's fully-marked book value per share, into the right to receive shares
of the Acquiring Company's common stock, par value $0.001 per share (the
"Common Exchange Ratio"), and (ii) each share of the Company's 10%
Cumulative Convertible Series A Preferred Stock, par value $0.01 per share,
outstanding will be converted into the right to receive one share of the
Acquiring Company's 10% Cumulative Convertible Preferred Stock, par value
$0.001 (the "Preferred Shares") to be authorized by the Acquiring Company
in connection with the Merger (the "Preferred Exchange Ratio"). The
Preferred Shares, subject to approval by an affirmative vote of the new
holders of a majority of the Acquiring Company, shall have the right to
convert all or a portion of such shares into shares of the Acquiring
Company's common stock, par value $0.001. The Common Exchange Ratio and the
Preferred Exchange Ratio are collectively referred to as the "Exchange
Ratio." The Merger is expected to be considered by the Shareholders of the
Company at a special meeting and consummated shortly thereafter.

You have asked us whether or not, in our opinion, the
Exchange Ratio is fair to the shareholders of the Company from a financial
point of view.

In arriving at the opinion set forth below, we have, among
other things:

(1) Reviewed the Company's 1998 Annual Report and 1999
Monthly Reports through November 1999;

(2) Reviewed the Acquiring Company's Annual Report, Forms
10K and related financial information for the fiscal
year ended December 31, 1998 and the Acquiring
Company's Form 10Q and the related unaudited
financial information for the nine months ended
September 30, 1999;

(3) Reviewed certain information, including financial
forecasts, relating to the business, earnings, cash
flow, assets and prospects of the Company and the
Acquiring Company, furnished to us by the Company and
the Acquiring Company;

(4) Conducted discussions with members of senior
management of the Company and the Acquiring Company
concerning their respective businesses and prospects;

(5) Reviewed the historical market prices and trading
activity for the Acquiring Company Shares and
compared them with those of certain publicly traded
companies which we deemed to be relevant;

(6) Compared the financial position and results of
operations of the Company and the Acquiring Company
with those of certain companies which we deemed to be
relevant;

(7) Compared the financial terms of the proposed
transaction contemplated by the Agreement with the
financial terms of certain other mergers and
acquisitions which we deemed to be relevant;

(8) Reviewed a draft of the Agreement dated February 4,
2000;

(9) Reviewed the terms and conditions of the Management
Agreement Assignment Agreement with GMAC Mortgage
Asset Management, Inc. and BlackRock Financial
Management, Inc.; and

(10) Reviewed such other financial studies and analyses
and performed such other investigations and took into
account such other matters as we deemed necessary. We
have not, however, reviewed the loan files of either
the Company or the Acquiring Company.

In preparing our opinion, we have relied on the accuracy and
completeness of all information that was publicly available or supplied or
otherwise made available to us by the Company and the Acquiring Company,
and we have not assumed any responsibility to independently verify such
information. With respect to the financial forecasts examined by us, we
have assumed that they were reasonably prepared and reflect the best
currently available estimates and good faith judgments of the management of
the Company and the Acquiring Company, respectively, as to the future
performance of the Company and the Acquiring Company, respectively. We have
also relied upon assurances of the management of the Company and the
Acquiring Company, respectively, that they are unaware of any facts that
would make the information or financial forecasts provided to us incomplete
or misleading. We have not made any independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of the Company or the
Acquiring Company. We have also assumed with your consent, that (i) the
Merger will be accounted for under the purchase method of accounting, (ii)
the Merger will not be a tax free reorganization and (iii) any material
liabilities (contingent or otherwise, known or unknown) of the Company and
the Acquiring Company are as set forth in the consolidated financial
statements of the Company and the Acquiring Company, respectively. This
opinion does not constitute a recommendation to any shareholder of the
Company as to how any such shareholder should vote on the Merger. No
opinion is expressed herein as to the price at which the securities to be
issued in the Merger to the shareholders of the Company may trade at any
time. Our opinion is based on economic, monetary and market conditions
existing on the date hereof.

Our opinion is directed to the Board of Directors of the
Company, and this opinion does not address the relative merits of the
Merger and any other transactions or business strategies discussed by the
Board of Directors of the Company as alternatives to the Merger or the
decision of the Board of Directors of the Company to proceed with the
Merger.

In rendering this opinion, we have not been engaged to act
as an agent or fiduciary of, and the Board of Directors has expressly
waived any duties or liabilities we may otherwise be deemed to have had to,
the Company's equity holders or any other third party.

In the ordinary course of business, PaineWebber Incorporated
may trade in the securities of the Company and the Acquiring Company for
our own account and for the accounts of our customers and, accordingly, may
at any time hold long or short positions in such securities.

PaineWebber Incorporated is currently acting as financial
advisor to the Company in connection with the Merger and will be receiving
a fee in connection with the rendering of this opinion and upon
consummation of the Merger. In the past, PaineWebber Incorporated and its
affiliates have provided investment banking and other financial services to
the Company and have received fees for rendering these services

On the basis of, and subject to the foregoing, we are of the
opinion that the Exchange Ratio to be received by the shareholders of the
Company is fair to such shareholders from a financial point of view.

This opinion has been prepared for the information of the
Board of Directors of the Company in connection with the Merger and shall
not be reproduced, summarized, described or referred to, provided to any
person or otherwise made public or used for any other purpose without the
prior written consent of PaineWebber Incorporated, provided, however, that
this letter may be reproduced in full in the Proxy Statement related to the
Merger.
Very truly yours,
PAINEWEBBER INCORPORATED

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by the Maryland General Corporation Law (the "MGCL"),
the registrant's amended and restated articles of incorporation obligates
it to indemnify its present and former directors and officers and the
manager and its employees, officers, directors and controlling persons and
to pay or reimburse reasonable expenses for such persons in advance of the
final disposition of a proceeding to the maximum extent permitted from time
to time by Maryland law. The MGCL permits a corporation to indemnify its
present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by
them in connection with any proceeding to which they may be made a party by
reason of their service in those or other capacities, unless it is
established that (a) the act or omission of the director or officer was
material to the matter giving rise to such proceeding and (i) was committed
in bad faith, or (ii) was the result of active and deliberate dishonesty,
(b) the director or officer actually received an improper personal benefit
of money, property or services, or (c) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that
the act or omission was unlawful. The registrant's Bylaws implement the
provisions relating to indemnification contained in its amended and
restated articles of incorporation. The MCGL permits the amended and
restated articles of incorporation of a Maryland corporation to include a
provision limiting the liability of its directors and officer to the
corporation and its stockholders for money damages, except to the extent
that (i) the person actually received an improper benefit or profit in
money, property or services, or (ii) a judgment or other final adjudication
is entered in a proceeding based on a finding that the person's act, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. The
registrant's amended and restated articles of incorporation contains a
provision providing for elimination of liability of its directors or
officers to it or its stockholders for money damages to the maximum extent
permitted by Maryland law from time to time.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits
See Exhibit Index.

(b) Schedule required by Rule 12-29, attached on page II-5 herein.

ITEM 22. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Filing Fee" table in the
effective registration statement.

(iii) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.

(iv) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

(4) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

(5) The undersigned registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report, to security holders
that is incorporated by reference in the prospectus and furnished pursuant
to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X is not set forth in
the prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.

(6) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.

(7) The registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

(8) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.

(9) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
in Item 20 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable. If a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in a successful
defense of any action, suit or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
Anthracite Capital, Inc. certifies that it has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, in the
State of New York on April 10, 2000.

ANTHRACITE CAPITAL, INC.

By: /s/ Richard M. Shea
------------------------------------
Name: Richard M. Shea
Title: Chief Operating Officer and
Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Richard M. Shea his true and lawful
attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and to file the same with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof. This power of attorney may be executed
in counterparts.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and the on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ * Chairman of the Board April 10, 2000
----------------------
Laurence D. Fink

President and Chief Executive April 10, 2000
/s/ * Officer and Director (Principal
-------------------- Executive Officer)
Hugh R. Frater

Chief Operating Officer and Chief April 10, 2000
/s/ * Financial Officer (Principal
--------------------- Financial Officer and Principal
Richard M. Shea Accounting Officer)

/s/ * Director April 10, 2000
-----------------------
Donald G. Drapkin

/s/ Carl Guether Director April 10, 2000
------------------
Carl Guether

/s/ * Director April 10, 2000
---------------------
Jeffrey C. Keil

/s/ * Director April 10, 2000
- -----------------------------
Kendrick R. Wilson, III

/s/ * Director April 10, 2000
----------------------
Andrew P. Rifkin
</TABLE>

EXHIBIT INDEX

EXHIBIT

2.1 Agreement and Plan of Merger, dated as of February 8, 2000,
by and among Anthracite Capital, Inc, Anthracite Acquisition
Corp. and CORE Cap, Inc. (Included as Appendix I to the
proxy statement/ prospectus forming a part of this
registration statement and incorporated herein by
reference).

3.1 Amended and Restated Articles of Incorporation of Anthracite
Capital, Inc. (1)

3.2 By-Laws of Anthracite Capital, Inc. (1)

3.3 Form of Articles Supplementary of Anthracite Capital, Inc.
establishing 10% Cumulative Convertible Redeemable Preferred
Stock. (Included as Exhibit A in Appendix I of the proxy
statement/prospectus forming a part of this registration
statement and incorporated herein by reference).

5.1 Opinion of Miles and Stockbridge PC as to the legality of
the shares of Anthracite Capital, Inc. common stock being
registered hereby.*

12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges.(2)

23.1 Consent of PricewaterhouseCoopers LLP.(2)

23.2 Consent of Deloitte & Touche LLP.(2)

23.3 Consent of Miles & Stockbridge PC (included as part of its
opinion filed as Exhibit 5.1 and incorporated herein by
reference).

23.4 Consent of persons named as directors.(2)

24.1 Power of attorney (included in the signature page attached
hereto).

99.1 Form of Proxy.(2)
- ------------
(1) Incorporated by reference herein to the various filings listed in
the proxy statement/prospectus to which this registration statement
relates in the section titled "Where You Can Find More Information."

(2) Previously filed.

* Filed herewith.

MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
Principal
amount of
loans subject
Final Periodic Face Carrying amount to delinquent
maturity payment of of principal
Description Interest rate date terms Prior liens mortgages mortgages(2)(3) and interest
- ------------------------- ---------------- -------- -------- ----------- ---------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Single Family First
Mortgages(1) 5% - 8.625% 10/9/28 Varying $ - $409,128 $405,700 $1,497

Commercial First
Mortgage - Hotel One month LIBOR + 9/1/01 Varying $ - $7,851 $7,207 $ -
210 bps
Commercial First 9/30/00 -
Mortgage - Health Care Oneemonth LIBOR + 10/1/02 Varying $ - $36,697 $32,006 $ -
135 bps
Total $453,676 $444,913 $1,497
======== ======== ======
- --------------
(1) No Single Family First Mortgages had original amounts of less than $100,000.

(2) Balance at beginning of $eriod 512,407
New mortgage loans 299,509
Other
Deductions during the period
Collections of principal (125,387)
Provision for loan loss (793)
Cost of mortgages sold (240,933)
Amortization of premium 101
-----------

Balance at close of peri$d 444,904

(3) The aggregate cost of the mortgages for federal income tax purposes is $453,676.
</TABLE>

EXHIBIT 5.1

April 10, 2000

Anthracite Capital, Inc.
345 Park Avenue, 29th Floor
New York, New York 10154

Ladies and Gentlemen:

We have acted as special Maryland counsel to Anthracite Capital,
Inc., a Maryland corporation (the "Company"), in connection with the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of 7,490,726 shares of the Company's Common Stock, par value $.001
per share (the "Common Shares") and 2,260,997 shares of the Company's 10%
Cumulative Convertible Series B Preferred Stock, par value $.001 per share
(the "Preferred Shares"), as described in the Company's Registration
Statement on Form S-4 (the "Registration Statement") filed with the
Securities and Exchange Commission. The Company proposes to issue the
Common Shares and the Preferred Shares to the stockholders of CORE Cap,
Inc., a Delaware corporation ("CORE Cap"), in connection with the merger of
Anthracite Acquisition Corp., a Delaware corporation ("Sub"), and a
wholly-owned subsidiary of the Company with and into CORE Cap (the
"Merger"), pursuant to the terms of the Agreement and Plan of Merger dated
as of February 8, 2000, among the Company, Sub and CORE Cap.

In delivering this opinion we have examined and relied upon executed
originals, counterparts and photocopies of documents and records that we
considered necessary or appropriate in order to enable us to express the
opinions set forth herein. We have also relied as to certain matters on
information obtained from public officials and officers of the Company. We
express no opinion with respect to the laws of, or the effect or
applicability of the laws of, any jurisdiction other than the laws of the
State of Maryland.

Based on that examination, it is our opinion that:

1. The Common Shares to be offered by the Company in connection with
the Merger have been duly authorized and, when issued under the
circumstances contemplated in the Registration Statement, will be legally
issued, fully paid and non-assessable; and

2. When appropriate articles supplementary to the Charter of the
Company relating to the Preferred Shares (the "Articles Supplementary")
have been duly adopted by the Board of Directors, and the Articles
Supplementary have been filed with and accepted for record by the State
Department of Assessments and Taxation of the State of Maryland, the
Preferred Shares will be duly authorized and, when issued under the
circumstances contemplated in the Registration Statement, will be legally
issued, fully paid and non-assessable.

We hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus forming a part of the Registration Statement and
to the filing of this opinion letter with the Registration Statement as
Exhibit 5.1 thereto. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of
the Securities Act or the rules and regulations of the Securities and
Exchange Commission thereunder. The opinion expressed herein is limited to
the matters set forth in this letter and no other opinion should be
inferred beyond the matters expressly stated.

Very truly yours,

Miles & Stockbridge P.C.

By:/s/John B. Frisch
---------------------------
Principal