CM CORP, 10-K, 1997-04-15

CM CORP
10-K, 1997-04-15
ASSET-BACKED SECURITIES

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

For Annual Report and Transition Reports
Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934

(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1996

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ___________________ to ___________________.

Commission File Number 2-67676

C.M. CORP.

(Exact name of registrant as specified in its charter)

Delaware 59-1995931
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

311 Park Place Boulevard, Suite 500, Clearwater, Florida 34619
(Address of principal executive offices, including zip code)

(813) 791-2111
(Telephone Number)

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.

Aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 31, 1997:None

Number of shares outstanding of the registrant's common stock as of March 31,
1997:

Class Outstanding at March 31, 1997
Common Stock, $1 par value 1,000 shares
Documents Incorporated by Reference

Registrant's prospectus, dated July 23, 1980 (Registration No. 2-67676), is
incorporated by reference in Part I.

Page 1 of 60
Exhibit Index Located on Pages 36 through 50

<PAGE> 2

PART I

Item 1. Business

General -

C.M. Corp., a Delaware corporation (the "Company"), is a wholly-owned
subsidiary of U.S. Home Mortgage Corporation ("Mortgage"), which in turn
is a wholly-owned subsidiary of U.S. Home Corporation ("U.S. Home"). The
Company was organized primarily to facilitate the financing of residential
mortgage loans on single-family residences sold by U.S. Home through the
purchase of such loans and the issuance and sale of mortgage-backed bonds.
Since 1982, the Company has not engaged in activities other than
activities with respect to the outstanding bonds and does not intend to
engage in the purchase of loans or issuance and sale of additional
mortgage-backed bonds or any other business activities.

The Company's business is conducted from the offices of Mortgage in
Clearwater, Florida.

During the period from August 1, 1980 through July 31, 1981, pursuant
to an Indenture, dated as of July 15, 1980, between the Company and The
First National Bank of Chicago as Trustee (the "Trustee") as amended and
supplemented (the "Indenture"), the Company issued and sold an aggregate
principal amount of $100,000,000 of mortgage-backed bonds ("Bonds") of
which $3,396,000 and $525,300 was outstanding at December 31, 1996 and
March 31, 1997, respectively.

Each series of Bonds was secured, at the time of issuance, by
assignment to the Trustee of a separate security package consisting of
pledged residential mortgage loans, the related primary and blanket
mortgage insurance policies, the Company's rights under the applicable
servicing agreement with Mortgage, as servicer, and a cash reserve fund.
The foregoing is a summary of certain of the terms of the Bonds issued
under the Indenture by the Company. Although certain of the terms may vary
by series, each series of Bonds has substantially similar terms. A more
complete description of the Bonds and security package may be found on
pages 6 through 15 in the Company's prospectus dated July 23, 1980
(Registration No. 2-67676) which is incorporated herein by reference.

Event of Default -

A significant number of conventional residential mortgage loans in
which the Company invested in, and pledged to secure the Bonds, had high
loan-to-value ratios and were secured by property located in
energy-related areas, primarily in Texas, Colorado and Louisiana, which in
the mid 1980's experienced a sharp decline in real estate values and high
foreclosure rates. During 1987, the Company projected that, based on its
recent accelerated claims experience, it would exhaust the blanket
mortgage insurance coverage for the conventional mortgage pools securing
each series of Bonds.

The Company does not have, nor expect to have, any significant assets
other than the mortgage loans, reserve funds and primary mortgage
insurance policies pledged as collateral for each remaining series of
Bonds. Accordingly, the Company's ability to pay the principal and
interest on the Bonds when due depends on the ongoing cash flows and any
liquidation proceeds generated by the pledged loans and funds available
from the reserve funds and coverage under the primary mortgage insurance
policies. Substantially all of the pledged mortgage loans are insured by
primary mortgage insurance coverage for mortgagor payment defaults down to
approximately 72% of the original value of the underlying properties on
the date of origination of the loans.

<PAGE> 3

Under the terms of the Indenture, the Company agreed to provide the
Trustee with the periodic reports filed with the Securities and Exchange
Commission ("SEC") and to provide an annual statement to the bondholders.
However, the Company does not have, nor does it expect to have, the cash
funds to pay for the costs and expenses of (a) the annual audit of its
financial statements required to be included in the annual report filed
with the SEC or (b) the annual statement to be provided to the
bondholders. Accordingly, the accompanying financial statements and those
included in the Company's annual reports filed with the SEC since 1991 are
unaudited and the Company did not and no longer intends to provide annual
statements to the bondholders which results in non-compliance with a
covenant under the Indenture, permitting the Trustee or holders of 25% of
the Bonds to accelerate their maturity.

The remaining Series A and Series B Bonds have stated maturities of
July 31, and August 31, 2000, respectively. On May 28, 1992, the Trustee
notified the Company that an Event of Default (as defined in the
Indenture) had occurred and declared the outstanding principal balance of
all of the remaining Bonds issued under the Indenture to be immediately
due and payable.

Loan Sale -

At the end of 1996, the Company obtained bids from unaffiliated
investors/brokers to purchase the remaining loans pledged to secure the
Bonds since most of these loans were current and had good recent payment
histories. The Company requested the consent of the Trustee to sell the
loans at an above par purchase price to the investor with the highest bid
offering to purchase all of the loans which were not in foreclosure.

The Trustee disclosed in Special Reports to the bondholders that prior
to granting its consent to this proposed sale, the Trustee requested its
mortgage banking affiliate, experienced in the sale of residential
mortgage loans, to review the process by which the Company obtained the
bids to determine if it was likely to have resulted in receipt of bids
fairly reflecting the market for such loans and assess the fairness of the
bid. The Trustee also stated this affiliate concluded that the bid
solicitation process employed by the Company was appropriate and that the
accepted bid was fair. Accordingly, the Trustee exercised its rights under
Section 6.04 of the Indenture and consented to the sale.

On February 7, 1997, the Company sold without recourse all of its
mortgage loans to this investor except for one loan pledged to secure the
Series B Bonds which is in the process of foreclosure. During February and
March, 1997, the Trustee used the proceeds from this sale together with
payments collected on these loans prior to the sale and funds from the
respective cash reserve funds to pay the Series A Bonds in full and to
make a principal prepayment of $1,642,200 on the Series B Bonds. At March
31, 1997, the outstanding principal balance of the Series B Bonds was
$525,300.

<PAGE> 4

The Company does not have, nor expect to have, any assets available to
make further payments on the Series B Bonds other than the one remaining
pledged mortgage loan in the process of foreclosure with an outstanding
principal balance of $36,100 (and with an estimated net realizable value
of $14,000). The Trustee expects, and the Company agrees, that the
proceeds from the liquidation of this loan will not be sufficient to repay
the remaining principal of the Series B Bonds in full. The Trustee also
informed the Series B bondholders that, due to such insufficiency, there
will be no further payments of interest on the Series B Bonds. Therefore,
at March 31, 1997, the outstanding bond principal balance of $525,300 and
interest accruing on the Series B Bonds is substantially not recoverable
and is expected to result in a loss to the holders of the Series B Bonds.

Collateral and Bond Information -

The delinquency, restructuring and non-performing loan data related to
the residential mortgage loans held for investment by the Company at
December 31, 1996 and 1995 follows:

1996 1995
<S> <C> <C>
Residential Mortgage Loans
(by number of loans) -

Delinquency: (a)

Number delinquent 5 5
Total number of loans 63 69
Percentage 7.94% 7.25%
Restructurings None (b) None (b)
Non-performing (c) (c)

</TABLE>

(a) Based on loans one or more months past due including loans in
foreclosure.

(b) Does not include assumed loans.

(c) Included in delinquency statistics; substantially all residential
mortgage loans are insured against mortgagor defaults down to
approximately 72% of the original loan-to-value ratio on the date of
origination of the loans by private mortgage insurance companies.

Set forth below are the mortgage loan and real estate owned balances
together with delinquency statistics (each by the outstanding aggregate
principal balance and number of loans or properties) as of December 31, 1996
for each series of Bonds outstanding on that date.

<TABLE>
<CAPTION>
Series Mortgage Real Estate Delinquent
of Loan Owned Loans (1) Bonds Principal Number Principal Number Principal Number
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A $ 979,441 24 $ - - $ 42,180 1
B $1,430,734 39 $ - - $148,539 4

</TABLE>

(1) Aggregate delinquent mortgage loan balances pledged to each
respective series of Bonds as of December 31, 1996 for loans past
due for 30 or more days on that date.

<PAGE> 5

Set forth below are the outstanding Bond principal balances along with
the remaining blanket mortgage insurance coverage and cash reserve funds as
of December 31, 1996.

Series of Bond Principal Blanket Mortgage Cash Reserve
Bonds Balance Insurance Coverage Funds
<S> <C> <C> <C> <C>
A $1,228,730 None $248,285
B $2,167,500 None $207,587

</TABLE>

For additional information, see "Notes 2, 4 and 7 of Notes to
Financial Statements."

Item 2. Properties

None.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

<PAGE> 6

PART II

Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters

Not applicable.

Item 6. Selected Financial Data

SUMMARY OF SELECTED FINANCIAL DATA
FOR THE FIVE YEARS ENDED DECEMBER 31, 1996

(Dollars in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES $ 310 $ 371 $ 474 $ 560 $ 698

OPERATING INCOME (LOSS) $1,378 $ (303) $ (165) $ (196) $ (148)

INCOME TAXES $ - $ - $ - $ - $ -
NET INCOME (LOSS) $1,378 $ (303) $ (165) $ (196) $ (148)

NET INCOME (LOSS) PER COMMON SHARE $1,378 $ (303) $ (165) $ (196) $ (148)

DIVIDENDS PER COMMON SHARE $ - $ - $ - $ - $ -

TOTAL ASSETS $2,956 $1,746 $2,725 $3,257 $4,242

TOTAL LONG-TERM DEBT $3,396 $3,562 $4,228 $4,588 $5,335

</TABLE>

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations

Interest revenues and expenses decreased during 1996 compared to 1995
and 1995 compared to 1994 due, primarily, to a reduction in the outstanding
principal balances of mortgage loans and

long-term debt. The reductions in the outstanding principal balances of the
mortgage loans and long-term debt are due to principal repayments of
mortgage loans and liquidation of real estate owned resulting in a
corresponding retirement of the related long-term debt.

During the first quarter of 1997, the Company sold substantially all of
its mortgage loans and paid off a significant portion of its long-term debt
and plans to cease operations in 1997. At December 31, 1996, the Company
recovered substantially all of its provision for losses on loans and real
estate as a result of the sale of these mortgage loans at an above par
purchase price to an unaffiliated investor.

<PAGE> 7

Liquidity

At December 31, 1996, the Company had outstanding approximately
$3,396,000 of Bonds issued pursuant to the Indenture under two series of
publicly held debt. On May 28, 1992, the Trustee for the Bonds notified the
Company that an Event of Default had occurred and declared the outstanding
principal balance of the Bonds issued under the Indenture to be immediately
due and payable.

The Company does not have, nor does it expect to have, any significant
assets other than the mortgage loans, reserve funds and primary mortgage
insurance policies pledged as collateral for each of the remaining series of
Bonds. Accordingly, the Company's ability to pay the principal and interest
on the Bonds when due depends on the ongoing cash flows and any liquidation
proceeds generated by the pledged loans and the funds available from the
cash reserve funds and coverage under the primary mortgage insurance
policies.

Thus far, the Company has made timely payments due to the bondholders
under the terms of the Indenture. However, the Company believes that the
exhaustion of the blanket mortgage insurance coverage for the Bonds issued
by the Company, the anticipated withdrawal by the Trustee to pay for its
trust administration services and for the expenses and costs of the Events
of Default, a continuation of the high costs and losses associated with
foreclosures on pledged loans and the application by the Company of certain
proceeds from insurance claims, principal prepayments and foreclosures to
payment of interest on the Bonds rather than to redemptions or prepayments
of principal on the Bonds will in the future cause a deficiency in cash
flows available for the payments due on the related Bonds and the eventual
depletion of the cash reserve funds. In addition, the Bonds mature within 4
years in 2000 and there is a significant shortfall in the principal balance
and weighted average interest rate earned on the pledged loans compared to
the corresponding principal balance and interest rates paid on the Bonds at
December 31, 1996. Such events will cause the Company at some future date to
be unable to meet its debt service requirements under the Indenture and
holders of Bonds would receive less than the principal amounts due on
their Bonds.

The Trustee disclosed in Special Reports to the bondholders that prior
to granting its consent to this proposed sale, the Trustee requested its
mortgage banking affiliate, experienced in the sale of residential mortgage
loans, to review the process by which the Company obtained the bids to
determine if it was likely to have resulted in receipt of bids fairly
reflecting the market for such loans and assess the fairness of the bid. The
Trustee also stated this affiliate concluded that the bid solicitation
process employed by the Company was appropriate and that the accepted bid
was fair. Accordingly, the Trustee exercised its rights under Section 6.04
of the Indenture and consented to the sale.

On February 7, 1997, the Company sold without recourse all of its
mortgage loans to this investor except for one loan pledged to secure the
Series B Bonds which is in the process of foreclosure. During February and
March, 1997, the Trustee used the proceeds from this sale together with
payments collected on these loans prior to the sale and funds from the
respective cash reserve funds to pay the Series A Bonds in full and to make
a principal prepayment of $1,642,200 on the Series B Bonds. At March 31,
1997, the outstanding principal balance of the Series B Bonds was $525,300.

The Company does not have, nor expect to have, any assets available to
make further payments on the Series B Bonds other than the one remaining
pledged mortgage loan in the process of foreclosure with an outstanding
principal balance of $36,100 (and with an estimated net realizable value of
$14,000). The Trustee expects, and the Company agrees, that the proceeds
from the liquidation of this loan will not be sufficient to repay the
remaining principal of the Series B Bonds in full. The Trustee also informed
the Series B bondholders that, due to such insufficiency, there will be no
further payments of interest on the Series B Bonds. Therefore, at March 31,
1997, the outstanding bond principal balance of $525,300 and interest
accruing on the Series B Bonds is substantially not recoverable and is
expected to result in a loss to the holders of the Series B Bonds.

In addition, the Company does not have the funds to repay the payable
of $1,584,000 to U.S. Home Mortgage Corporation.

For additional information, see "Notes 2, 4 and 7 of Notes to Financial
Statements."

<PAGE> 8

Item 8. Financial Statements and Supplementary Data

C.M. CORP.

INDEX TO FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants - omitted*

Balance Sheets - December 31, 1996 and 1995

Statements of Operations - For the Years Ended December 31, 1996, 1995,
and 1994

Statements of Stockholder's Equity - For the Years Ended December 31, 1996,
1995, and 1994

Statements of Cash Flows - For the Years Ended December 31, 1996, 1995, and
1994

Notes to Financial Statements

All schedules of C.M. Corp. are omitted as not applicable or not required,
or the required information is included in the Financial Statements.

* The Company does not have the cash funds to pay for the costs and
expenses of an audit of its financial statements by independent
certified accountants and, accordingly, the accompanying statements are
unaudited.

<PAGE> 9

C.M. CORP.
BALANCE SHEETS

DECEMBER 31, 1996 AND 1995
(Unaudited)*

(Dollars in Thousands)

<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS

RESTRICTED CASH $ 544 $ 521

ACCRUED INTEREST RECEIVABLE 24 29

INVESTMENT IN RESIDENTIAL MORTGAGE LOANS, net 2,388 1,196

$ 2,956 $ 1,746

LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:

Payable to U.S. Home Mortgage Corporation $ 1,584 $ 1,364
Accrued interest and other liabilities 46 268
Long-term debt, in default 3,396 3,562

Total liabilities 5,026 5,194

STOCKHOLDER'S EQUITY:

Common stock, $1 par value, 1,000 shares authorized and
outstanding 1 1
Capital in excess of par value 1,718 1,718
Retained deficit (3,789) (5,167)

Total stockholder's equity (2,070) (3,448)

$ 2,956 $ 1,746

</TABLE>

The accompanying notes are an integral part of these balance sheets.

* The Company does not have the cash funds to pay for the costs and
expenses of an audit of its financial statements by independent certified
accountants and, accordingly, the accompanying
statements are unaudited.

<PAGE> 10

C.M. CORP.
STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

(Unaudited)

(Dollars in Thousands)

<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
REVENUES:

Interest $ 310 $ 371 $ 474

EXPENSES:

Interest 422 480 535
Provision (recovery) of losses on loans
and real estate owned (1,515) 166 -
Other 25 28 104

(1,068) 674 639

NET INCOME (LOSS) $ 1,378 $ (303) $ (165)

</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 11

C.M. CORP.
STATEMENTS OF STOCKHOLDER'S EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

(Unaudited)

(Dollars in Thousands, Except Par Value)

<TABLE>
<CAPTION>
Common Capital in
Stock Excess of Retained
$1 Par Par Value Deficit
<S> <C> <C> <C>
BALANCE, December 31, 1993 $ 1 $ 1,718 $ (4,699)

Net loss for the year - - (165)

BALANCE, December 31, 1994 1 1,718 (4,864)

Net loss for the year - - (303)

BALANCE, December 31, 1995 1 1,718 (5,167)

Net income for the year - - 1,378

BALANCE, December 31, 1996 $ 1 $ 1,718 $ (3,789)

</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 12

C.M. CORP.
STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

(Unaudited)

<TABLE>
<CAPTION>
(Dollars in Thousands)
1996 1995 1994
<S> <C> <C> <C>
Cash Flows From Operating Activities:

Net income (loss) $ 1,378 $ (303) $ (165)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities -
Provision (recovery) of losses on loans and
real estate owned (1,515) 166 -
Amortization of discounts on investments - (6) (38)
Changes in assets and liabilities -
Decrease (increase) in receivables and
real estate owned (2) 104 (140)
Decrease in accrued interest and other
liabilities (2) (10) (7)
Net cash used by operating activities (141) (49) (350)

Cash Flows From Investing Activities:

Proceeds from investments in residential
mortgage loans 330 693 609
Decrease (increase) in restricted cash (23) 22 101
Net cash used by investing activities 307 715 710

Cash Flows From Financing Activities:

Repayment of long-term debt (166) (666) (360)
Net cash used by financing activities (166) (666) (360)

Net Change In Cash - - -
Cash At Beginning Of Year - - -

Cash At End Of Year $ - $ - $ -

Supplemental Disclosure:

Interest Paid $ 425 $ 490 $ 541

</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 13

C.M. CORP.
NOTES TO FINANCIAL STATEMENTS

(Dollars in Thousands)
(Unaudited)

(1) SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations and Basis of Presentation -

C.M. Corp., a Delaware corporation (the "Company"), is a wholly-owned
subsidiary of U.S. Home Mortgage Corporation ("Mortgage"), which in turn is
a wholly-owned subsidiary of U.S. Home Corporation ("U.S. Home"). The
Company was organized to facilitate the financing of residential mortgage
loans on single-family residences built and sold by U.S. Home through the
purchase of loans and the issuance and sale of mortgage-backed bonds. The
Company has not engaged in activities other than activities with respect to
the outstanding bonds since 1982 and does not intend to engage in the
purchase of loans or issuance and sale of additional mortgage-backed bonds
or any other business activities.

The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles
applicable to a going concern, which contemplate, among other things,
realization of assets and payment of liabilities in the normal course of
business. However, subsequent to December 31, 1996, the Company sold
substantially all of its mortgage loans and paid off a significant portion
of its long-term debt and plans to cease operations in 1997 (see Notes 2, 4
and 7).

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of any contingent assets and liabilities at the
date of the consolidated financial statements and revenues and expenses
during the reporting period. Management's estimates and assumptions are
reflective of, among other things, prevailing market conditions, current
operating strategies and the availability of capital which are all subject
to change. Changes to the aforementioned or other conditions could, in turn,
cause changes in such estimates and assumptions and, as a result, actual
results could differ for the original estimates.

The Company does not have the cash funds to pay for the costs and
expenses of an audit of its financial statements by independent certified
accountants and, accordingly, the accompanying statements are unaudited.

Financial Instruments -

All of the assets of the Company are pledged under an Indenture with the
Trustee (see Note 4) as collateral for the outstanding mortgage-backed bonds
issued by the Company. The Trustee has declared the outstanding principal
balance of all the remaining bonds to be immediately due and payable. The
payment of the principal and interest due on the bonds depends on the
ongoing cash flows and the liquidation proceeds generated from the sale of
the pledged assets together with the remaining amounts in the cash reserve
funds (see Notes 2 and 7). The disposition and liquidation of the pledged
assets to pay the principal and interest on the bonds is at the discretion
and under the control of the Trustee. The Company has been informed there is
no active secondary market for these bonds.

It is not practical to estimate the fair value of the Company's
long-term debt since the outstanding mortgage-backed bonds issued by the
Company are in default and there is no active secondary market for these
bonds. In addition, the Company does not have any assets to fund the payable
to U.S. Home Mortgage Corporation.

Income Recognition -

Discounts applicable to investment in residential mortgage loans were
deferred and amortized to income using the effective interest rate method
over the estimated average life of the loans.

<PAGE> 14

(2) INVESTMENT IN RESIDENTIAL MORTGAGE LOANS:

At December 31, 1996, the investment in residential mortgage loans has
interest rates ranging from 9.875% to 12.875% per annum (weighted average
interest rate of approximately 10.86%) and maturities through August 1,
2010. All mortgage loans purchased by the Company are held for long-term
investment as collateral for long-term debt and are included in the
accompanying balance sheets at amortized cost net of valuation reserves.

On February 7, 1997, the Company sold substantially all of its remaining
mortgage loans (outstanding principal balance of $2,366 on the date of
purchase) at an above par purchase price to an unaffiliated investor (see
Note 7).

(3) VALUATION RESERVES:

The Company invested in a significant number of conventional residential
mortgage loans with high loan-to-value ratios that are located primarily in
energy-related areas which in the mid 1980's experienced a sharp decline in
real estate values and high foreclosure rates. In 1987, the costs and losses
associated with the repossession, maintenance and resale of foreclosed
properties increased due to depressed resale values in these areas which, in
turn, accelerated claims against available blanket mortgage insurance
coverage. During 1987, the Company projected that, based on its accelerated
claim experience, it would exhaust the blanket mortgage insurance coverage
for the conventional mortgage loan pools securing the mortgage-backed bonds
issued by the Company and such coverage was exhausted during 1988. As a
result of the exhaustion of the blanket mortgage insurance coverage for the
mortgage pools, losses have been and may be incurred by the Company that
previously were reimbursed by the mortgage insurer.

The Company established reserves for losses on loans and real estate
owned which reflected an estimate of the losses that would have been
incurred in connection with its investment loans and foreclosed properties.
These reserves were based on management's best estimate of amounts that
would have been realized from the mortgage loans in the event of foreclosure
including any proceeds reimbursed under the primary mortgage insurance
policies using current and historical information. At December 31, 1996, the
Company made a non-cash adjustment to its valuation reserves to reflect the
subsequent sale of substantially all of the mortgage loans without recourse
at an above par purchase price to an unaffiliated investor (see Note 2).

The following summarizes valuation reserves for the years ended December
31, 1996, 1995 and 1994.

Real Estate
Investments Owned

Balance at December 31, 1993 $1,588 $ 226
Write-offs - (105)
Reclassification (44) 44
Balance at December 31, 1994 $1,544 $ 165
Provision for losses 36 130
Write-offs (14) (317)
Reclassification (22) 22
Balance at December 31, 1995 $1,544 $ -
Recovery of provision for losses (1,492) (23)
Write-offs (8) 1
Reclassification (22) 22
Balance at December 31, 1996 $ 22 $ -

<PAGE> 15

(4) LONG-TERM DEBT:

In accordance with the terms of the indenture, dated as of July 15,
1980, between the Company and The First National Bank of Chicago, as amended
and supplemented (the "Indenture"), the Company issued, in 1980 and 1981,
conventional mortgage-backed bonds having original principal balances of
$100,000 ("Bonds") of which $3,396 in principal amount is outstanding at
December 31, 1996. At December 31, 1996, the two remaining series of Bonds
have interest rates of 11.75% and 12.25% per annum and maturities on the
last day of July and August, 2000.

As a result of the sale on February 28, 1997 of substantially all of the
mortgage loans pledged to the Bonds, the Trustee paid principal on the Bonds
in the amount of $2,871 during the first quarter of 1997 (see Note 7).

Under the terms of the Indenture, the Company agreed to provide the
Trustee with the periodic reports filed with the Securities and Exchange
Commission ("SEC") and to provide an annual statement to the bondholders.
The Company does not have, nor does it expect to have, the cash funds to pay
for the costs and expenses of (a) the annual audit of its financial
statements required to be included in the annual report filed with the SEC
or (b) the annual statement to be provided to the bondholders. Accordingly,
the accompanying financial statements and those included in the Company's
annual reports filed with the SEC since 1991 are unaudited and the Company
did not and no longer intends to provide annual statements to the
bondholders which results in non-compliance with a covenant under the
Indenture, permitting the Trustee or holders of 25% of the Bonds to
accelerate their maturity.

On May 28, 1992, the Trustee notified the Company that an Event of
Default (as defined in the Indenture) and a default had occurred under
Section 6.01(4) and Section 6.01(2), respectively, of the Indenture. The
Trustee also declared the outstanding principal balance of all of the
remaining Bonds issued under the Indenture to be immediately due and
payable. Accordingly, pursuant to Section 12.02(a) of the Indenture, the
Company will no longer redeem any of the Bonds.

As part of the Trustee's annual report to bondholders, dated July 14,
1992, the Trustee notified the bondholders of the notices to the Company on
May 28, 1992 relating to the Event of Default and default under the
Indenture and acceleration of all amounts due on the remaining Bonds. In
addition, the Trustee enclosed a special report, dated July 2, 1993 ("July
Report") with its 1993 annual report to the bondholders summarizing, among
other things, the remedies available under the Indenture and the actions
taken and proposed to be taken by the Trustee relating to the Events of
Default. The Trustee informed the bondholders in the July Report that it had
retained AM&G Financial Services, Inc. (now known as First Security Capital
Markets and hereinafter referred to as "FSCM") in the last half of 1992 to
review and analyze the collateral securing the Bonds. The July Report
concludes that (a) the proceeds from the liquidation of the collateral would
not be sufficient to pay either series of bonds in full and (b) the
projected future cash flows from the collateral will also result in a
shortfall in repayment of principal for both series of bonds.

Subsequently, the Trustee mailed another special report, dated December
3, 1993 ("December Report"), to the bondholders to update the July Report
and advise the bondholders of the course of action that has been elected by
the Trustee. As part of the December Report, FSCM analyzed the collateral,
including the reserve funds, using more current information as of August 30,
1993 to determine the economic value to the bondholders of immediately
liquidating the collateral and distributing the proceeds from the
liquidation to the bondholders, compared to the value of holding the
collateral intact over the remaining life of the Bonds and using the income
stream generated from the collateral to pay the Bonds.

<PAGE> 16
Based on this analysis and after considering the additional costs and
risks to maintain the trust estate intact, the Trustee also stated in the
December Report that ". . . the Trustee has determined not to hold the Trust
Estate, but rather to liquidate the Trust Estate and distribute the
proceeds to the Bondholders and the Indenture will be terminated."

The Trustee informed the bondholders in the Trustee's 1994 annual report
to bondholders, dated July 15, 1994, that FSCM subsequently obtained
appraised values and/or brokers' estimated values for all the properties
securing the mortgage loans. Based on those values, the Trustee stated that,
due to the depreciation in the value of the properties to a greater extent
than was assumed previously, such depreciation in value is likely to have a
significant affect on the bondholders' ultimate recovery of their investment
in the Bonds.

The Trustee issued a special report, dated October 7, 1994, of the final
findings of FSCM in which the Trustee stated their intent to hold the
collateral for the present and review periodically this decision with FSCM.
As part of the Trustee's annual reports to bondholders for 1996 (dated July
15, 1996) and 1995 (dated July 15, 1995), the Trustee stated in both reports
it was not aware of any material change in the assumptions or market
conditions used in their decision in October 1994 to hold the collateral for
the present.

The Trustee requested reimbursement from the Company for costs of legal
counsel and FSCM's collateral evaluation services relating to the Events of
Default and for trust administration services of the Trustee. The Company
does not have, nor does it expect to have, the cash funds to reimburse the
Trustee for these costs. The Trustee may, in certain instances, apply moneys
from the reserve funds or from the sale of the pledged collateral to the
payment of expenses incurred and advances made by the Trustee pursuant to
Section 7.07 of the Indenture. As of December 31, 1996, the Trustee withdrew
on a cumulative basis $107 from the reserve fund for the Series A Bonds and
the same amount of $107 from the reserve fund for the Series B Bonds for
these costs.

Thus far, the Company has made timely payments due to the bondholders
under the terms of the Indenture. However, the Company believes that the
exhaustion of the blanket mortgage insurance coverage for the Bonds issued
by the Company, the anticipated withdrawal by the Trustee for expenses and
advances for its trust administration services and for the expenses and
costs of the Events of Default, a continuation of the high costs and losses
associated with foreclosures on pledged loans and the application by the
Company of certain proceeds from insurance claims, principal prepayments and
foreclosures to payment of interest on the Bonds rather than to redemptions
or prepayments of principal on the Bonds will in the future cause a
deficiency in cash flows available for the payments due on the related Bonds
and the eventual depletion of the cash reserve funds. In addition, the Bonds
mature within the next 4 years in 2000 and there is a significant shortfall
in the principal balance and weighted average interest rate earned on the
pledged loans compared to the corresponding principal balance and interest
rates paid on the Bonds at December 31, 1996. Such events will cause the
Company at some future date to be unable to meet its debt service
requirements under the Indenture and holders of Bonds would receive less
than the principal amounts due on their Bonds.

At the end of 1996, substantially all of the remaining mortgage loans
were current and had good recent payment histories. In order to minimize the
eventual losses to the bondholders, and based on the highest bid the Company
obtained from an investor to purchase these loans at an above par purchase
price, the Trustee agreed with the Company that it was in the best interest
of the bondholders to sell the loans and distribute the liquidated
collateral to them.

Mortgage, as servicer, is not obligated to advance delinquent payments
due on the pledged mortgage loans unless it reasonably believes that such
advances will ultimately be recoverable from mortgage insurance proceeds. On
March 27, 1991, Mortgage, as servicer, advised the Company that it will not
advance delinquent mortgage loan payments due to the uncertainty of the
recoverability of such advances. As a result, the Trustee withdrew a portion
of the reserve funds on March 28, 1991 and March 30, 1992 to make the
required interest payments on the Series B Bonds and on August 28, 1996 to
make such payments on the Series A Bonds. In addition to the withdrawals
from the reserve funds by the Trustee for bond administration costs and
expenses, the anticipated cash flow deficiencies to meet future debt service
requirements will also result in further withdrawals from each of the
reserve funds for both series of bonds until these funds are eventually
exhausted.

<PAGE> 17
The Company has two cash reserve funds separately securing each of the
two remaining Bond series. At December 31, 1996, the balance of each of the
cash reserve funds securing the Series A and Series B Bonds was $248 and
$208, respectively. However, the cash reserve funds for the Series A Bonds
were substantially depleted and such funds for the Series B Bonds were fully
depleted from the principal payments paid on these Bonds during the first
quarter of 1997.

(5) INCOME TAXES:

The Company is included in the consolidated federal income tax return
filed by U.S. Home. The Company records its income tax provisions on a
separate company basis in accordance with an allocation agreement with U.S.
Home. Due to the previous years' losses and future uncertainties of the
Company, no current or deferred income taxes have been provided in the
financial statements.

(6) TRANSACTIONS WITH AFFILIATED COMPANIES:

Mortgage acts as servicing agent for the mortgage loans owned by the
Company. Mortgage is entitled to a monthly servicing fee on each pledged
loan at an agreed upon minimum rate. Mortgage also furnishes the Company
with bookkeeping, accounting and administrative services, including services
of the officers and employees of Mortgage without charge to the Company.
<PAGE> 18
(7) SUBSEQUENT EVENT:

At the end of 1996, the Company obtained bids from unaffiliated
investors/brokers to purchase the remaining loans pledged to secure the
Bonds since most of these loans were current and had good recent payment
histories. The Company requested the consent of the Trustee to sell the
loans to the investor with the highest bid of 102.75% offering to purchase
all of the loans which were not in foreclosure.

As part of the Special Reports the Trustee sent to the Series A
bondholders (dated February 28, 1997) and to the Series B bondholders (dated
March 28, 1997), the Trustee stated in those reports that prior to granting
their consent to this proposed sale, the Trustee requested its mortgage
banking affiliate, experienced in the sale of residential mortgage loans, to
review the process by which the Company obtained the bids to determine if it
was likely to have resulted in receipt of bids fairly reflecting the market
for such loans and assess the fairness of the bid. The Trustee also stated
in these reports that this affiliate concluded that the bid solicitation
process employed by the Company was appropriate and that the accepted bid
was fair. Accordingly, the Trustee exercised its rights under Section 6.04
of the Indenture and consented to the sale.

On February 7, 1997, the Company sold without recourse all of its
mortgage loans to this investor except for one loan pledged to secure the
Series B Bonds which is in the process of foreclosure. During February and
March, 1997, the Trustee used the proceeds from this sale together with
payments collected on these loans prior to the sale and funds from the
respective cash reserve funds to pay the Series A Bonds in full and to make
a principal prepayment of $1,642 on the Series B Bonds. At March 31, 1997,
the outstanding principal balance of the Series B Bonds was $525.

The Company does not have, nor expect to have, any assets available to
make further payments on the Series B Bonds other than the one remaining
pledged mortgage loan in the process of foreclosure with an outstanding
principal balance of $36 and estimated net realizable value of $14. The
Trustee stated in the Special Report (dated March 28, 1997) sent to the
Series B bondholders that the Trustee expects, and the Company agrees, the
proceeds from the liquidation of this loan will not be sufficient to repay
the remaining principal of the Series B Bonds in full. The Trustee further
stated in this report that, due to such insufficiency, there will be no
further payments of interest on the Series B Bonds. Therefore, at March 31,
1997, the outstanding bond principal balance of $525 and interest accruing
on the Series B Bonds is substantially not recoverable and is expected to
result in a loss to the holders of the Series B Bonds.
<PAGE> 19
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

See note 1 to the financial statements.

PART III

Item 10. Directors and Executive Officers of the Registrant

The Company's Board of Directors and executive officers during 1996 and
their respective ages, length of service as a director and positions are set
forth below:

<TABLE>
<CAPTION>
Served as
Director
Name Age Since Position and Office

<S> <C> <C> <C>
James R. Petty 48 1992 Director and President

Ronald C. McCabe 48 1992 Director, Senior Vice President and
Secretary

Virginia S. Casagrande 46 1996 Director, Vice President, Controller
and Assistant Secretary

</TABLE>

No family relationship exists among any of the directors or executive
officers of the Company.

On November 18, 1996, Ms. Casagrande was elected a member of the Board
of Directors to replace Kevin W. Kennedy, who resigned his employment with
the Company and from the Board as of that date.

The term of each of the foregoing directors expires at the next annual
meeting of the stockholder of the Company. Each of the foregoing executive
officers has been elected to serve in the office indicated until the first
meeting of the Board of Directors following the next annual meeting of the
stockholder of the Company or until his or her successor is elected and
qualified.

Mr. Petty has served as President of the Company since September 1980
and has been President of Mortgage since that date. He also served as
Director of the Company from September 1980 until April 1991. Mr.
Petty has also been a President of Operations of U.S. Home since March 1985.

Mr. McCabe has been a Senior Vice President of the Company since April
1991 and, prior thereto, was Senior Vice President and Chief Accounting
Officer since November 1984. He has also served as Secretary of the Company
since April 1992 and a Director from October 1987 until April 1991. Mr.
McCabe has also been Senior Vice President, Chief Accounting Officer, Chief
Financial Officer and Secretary of Mortgage since April 1992 and, prior
thereto, was Senior Vice President and Chief Accounting Officer since
November 1984.

Ms. Casagrande has been a Vice President, Controller and Assistant
Secretary of the Company since April 1993. She has also served as a Vice
President, Controller and Assistant Secretary of Mortgage since August 1992
and, prior thereto, was an Accounting Manager with Mortgage since October
1991.

Item 11. Executive Compensation

The Company does not pay or accrue any fees, salaries or other forms of
compensation to its directors or officers for their services. The directors
and officers receive compensation from Mortgage for services performed for
affiliated entities which may include services performed for the Company.
However, the Company believes that any compensation attributable to services
rendered for the Company is immaterial.

Item 12. Security Ownership of Certain Beneficial Owners and Management

As of March 31, 1997, Mortgage owned all of the issued and outstanding
stock of the Company.

James R. Petty, President of the Company, beneficially owns 32,913
shares of common stock of U.S. Home Corporation, including 20,000 options to
acquire shares of common stock of which 12,001 are fully exercisable, and
11,119 shares issued pursuant to a restricted stock plan subject to
forfeited and vesting provisions, all of which constitutes less than 1% of
such outstanding shares of U.S. Home Corporation.

Virginia S. Casagrande, Vice President, Controller of the Company,
beneficially owns 70 shares of common stock of U.S. Home Corporation which
constitutes less than 1% of such outstanding shares.

The directors and executive officers of the Company as a group
beneficially own 32,983 shares of common stock of U.S. Home Corporation,
which constitutes less than 1% of such shares.

No other Director or executive officer of the Company owns any shares
of stock issued by U.S. Home Corporation.

Item 13. Certain Relationships and Related Transactions

At December 31, 1996, the remaining payable to Mortgage of $1,584
consists, primarily, of funds advanced to the Company to redeem certain
series of mortgage-backed bonds. The Company does not have the funds to
repay this payable to Mortgage.
<PAGE> 20

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)1. and 2. The following financial statements are filed as part of this
report. See Index to Financial Statements - Item 8.

(a)3. List of Exhibits

<TABLE>
<S> <C>
3.1 Certificate of Incorporation of Registrant. Exhibit 3.1 to Registrant's Registration
Statement on Form S-ll, registration No. 2-67676, is incorporated by reference.

3.2 By-Laws of Registrant. Exhibit 3.2 to Registrant's Registration Statement on
Form S-ll, registration No. 2-67676 is incorporated by reference.

4.1 Indenture, dated as of July 15, 1980, between U.S. Home Finance Corporation,
as Issuer, and The First National Bank of Chicago, as Trustee. Exhibit 4.1 to
Registrant's Registration Statement on Form S-11, registration No. 2-67676, is
incorporated by reference.

4.2 First Supplemental Indenture, dated as of July l5, 1980, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.2 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.3 Second Supplemental Indenture, dated as of August l5, 1980, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.3 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.4 Third Supplemental Indenture, dated as of October l, 1980, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.4 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.5 Fourth Supplemental Indenture, dated as of November l5, 1980, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.5 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.6 Fifth Supplemental Indenture, dated as of December l5, 1980, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.6 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

</TABLE>

<PAGE> 21

<TABLE>
<S> <C>
4.7 Sixth Supplemental Indenture, dated as of January l5, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.7 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.8 Seventh Supplemental Indenture, dated as of March 9, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.8 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.9 Eighth Supplemental Indenture, dated as of March l5, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.9 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.10 Ninth Supplemental Indenture, dated as of April 1, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.10 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.11 Tenth Supplemental Indenture, dated as of May l5, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.11 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.12 Eleventh Supplemental Indenture, dated as of June 15, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.12 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.13 Twelfth Supplemental Indenture, dated as of July l5, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.13 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.14 Thirteenth Supplemental Indenture, dated as of July 30, 1981, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.2 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

4.15 Indenture, dated as of June l5, 1981, between U.S. Home Finance Corporation,
as Issuer, and The First National Bank of Chicago, as Trustee. Exhibit 4.14 to
Registrant's Registration Statement on Form S-ll, registration No. 2-73132, is
incorporated by reference.

4.16 First Supplemental Indenture, dated as of August 1, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.15 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.17 Second Supplemental Indenture, dated as of September l, 1981, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.16 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.18 Third Supplemental Indenture, dated as of October 1, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.17 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.19 Fourth Supplemental Indenture, dated as of October 31, 1981, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.18 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

</TABLE>

<PAGE> 22

<TABLE>
<S> <C>
4.20 Fifth Supplemental Indenture, dated as of November l, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.19 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.21 Sixth Supplemental Indenture, dated as of December 1, 1981, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.20 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.22 Seventh Supplemental Indenture, dated as of December 21, 1981, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.21 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.23 Eighth Supplemental Indenture, dated as of January 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.22 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.24 Ninth Supplemental Indenture, dated as of February 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.23 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.25 Tenth Supplemental Indenture, dated as of March 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.24 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.26 Eleventh Supplemental Indenture, dated as of May 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.25 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.

4.27 Twelfth Supplemental Indenture, dated as of June 15, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.27 to Registrant's Registration Statement on Form S-ll,
registration No. 2-78099, is incorporated by reference.

4.28 Thirteenth Supplemental Indenture, dated as of August 15, 1982, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago,
as Trustee. Exhibit 4.28 to Registrant's Registration Statement on Form S-ll,
registration No. 2-78099, is incorporated by reference.

4.29 Fourteenth Supplemental Indenture, dated as of September 15, 1982, between
U.S. Home Finance Corporation, as Issuer, and The First National Bank of
Chicago, as Trustee. Exhibit 4.29 to Registrant's Registration Statement on Form
S-ll, registration No. 2-78099, is incorporated by reference.

</TABLE>

<PAGE> 23

<TABLE>
<S> <C>
10.1 Underwriting Agreement, dated July 23, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.1 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.2 Underwriting Agreement, dated September 5, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.2 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.3 Underwriting Agreement, dated October 15, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.3 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.4 Underwriting Agreement, dated December 17, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.4 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.5 Underwriting Agreement, dated January 14, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.5 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.6 Underwriting Agreement, dated February 25, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.6 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.7 Underwriting Agreement, dated March 18, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.7 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.8 Underwriting Agreement, dated April 10, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.8 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.9 Underwriting Agreement, dated May 20, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.9 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

</TABLE>

<PAGE> 24

<TABLE>
<S> <C>
10.10 Underwriting Agreement, dated June 15, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.10 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.11 Underwriting Agreement, dated July 16, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.11 to Registrant's Registration Statement on
Form S-11, registration No. 2-67676, is incorporated by reference.

10.12 Underwriting Agreement, dated August 21, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 1.12 to Registrant's Registration Statement on
Form S-11, registration No. 2-73132, is incorporated by reference.

10.13 Underwriting Agreement, dated October 1, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.13 to Registrant's Form 10-K for the year
ended December 31, 1981, is incorporated by reference.

10.14 Underwriting Agreement, dated October 21, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.14 to Registrant's Form 10-K for the year
ended December 31, 1981, is incorporated by reference.

10.15 Underwriting Agreement, dated November 19, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.15 to Registrant's Form 10-K for the year
ended December 31, 1981, is incorporated by reference.

10.16 Underwriting Agreement, dated December 14, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.16 to Registrant's Form 10-K for the year
ended December 31, 1981, is incorporated by reference.

10.17 Underwriting Agreement, dated January 21, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.17 to Registrant's Form 10-K for the year
ended December 31, 1981, is incorporated by reference.

10.18 Underwriting Agreement, dated February 26, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.18 to Registrant's Form 10-K for the year
ended December 31, 1981, is incorporated by reference.

10.19 Underwriting Agreement, dated March 17, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.19 to Registrant's Form 10-K for the year
ended December 31, 1981, is incorporated by reference.

10.20 Underwriting Agreement, dated June 4, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.20 to Registrant's Form 10-K for the year
ended December 31, 1982, is incorporated by reference.

</TABLE>

<PAGE> 25

<TABLE>
<S> <C>
10.21 Underwriting Agreement, dated September 1, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.21 to Registrant's Form 10-K for the year
ended December 31, 1982, is incorporated by reference.

10.22 Underwriting Agreement, dated October 13, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond,
James & Associates, Inc. Exhibit 10.22 to Registrant's Form 10-K for the year
ended December 31, 1982, is incorporated by reference.

10.23 Servicing Agreement, dated as of July 15, 1980, among U.S. Home Finance
Corporation, U.S. Home Mortgage Corporation and U.S. Home Corporation.
Exhibit 12.1 to Registrant's Registration Statement on Form S-11, registration
No. 2-67676, is incorporated by reference.

10.24 Amendment, dated March 15, 1981, to Servicing Agreement, dated as of July 15,
1980. Exhibit 10.1 to Registrant's Registration Statement on Form S-11,
registration No. 2-67676, is incorporated by reference.

10.25 Servicing Agreement, dated as of June 15, 1981, among U.S. Home Finance
Corporation, U.S. Home Mortgage Corporation and U.S. Home Corporation.
Exhibit 10.5 to Registrant's Registration Statement on Form S-11, registration
No. 2-73132, is incorporated by reference.

10.26 Amendment, dated as of November 2, 1981, to Servicing Agreement dated as of
June 15, 1981 among U.S. Home Finance Corporation, U.S. Home Mortgage
Corporation and U.S. Home Corporation. Exhibit 10.6 to Registrant's
Registration Statement on Form S-11, registration No. 2-73132, is incorporated
by reference.

10.27 Amendment, dated as of June 15, 1982, to Servicing Agreement dated as of June
15, 1981 among U.S. Home Finance Corporation, U.S. Home Mortgage
Corporation and U.S. Home Corporation. Exhibit 10.47 to Registrant's
Registration Statement on Form S-11, registration No. 2-78099, is incorporated
by reference.

10.28 Credit Agreement, dated November 21, 1980, among The First National Bank of
Chicago, U.S. Home Corporation, U.S. Home Finance Corporation and U.S.
Home Acceptance Corporation. Exhibit 10.10 to Registrant's Form 10-K for the year
ended December 31, 1980, is incorporated by reference.

</TABLE>

<PAGE> 26

<TABLE>
<S> <C>
10.29 Amendment, dated March 26, 1981, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation.
Exhibit B to Registrant's Form 10-Q for the quarter ended March 31, 1981, is
incorporated by reference.

10.30 Amendment, dated April 1, 1981, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation.
Exhibit 20 to Registrant's Form 10-Q for the quarter ended June 30, 1981, is
incorporated by reference.

10.31 Amendment, dated July 1, 1981, to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 20.1 to Registrant's Form 10-Q for the quarter ended
September 30, 1981, is incorporated by reference.

10.32 Amendment, dated August 1, 1981, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 20.2 to Registrant's Form 10-Q for the quarter ended
September 30, 1981, is incorporated by reference.

10.33 Amendment, dated September 1, 1981, to Credit Loan Agreement, dated
November 21, 1980, among The First National Bank of Chicago, U.S. Home
Mortgage Corporation, U.S. Home Finance Corporation and U.S. Home
Acceptance Corporation. Exhibit 20.3 to Registrant's Form 10-Q for the quarter
ended September 30, 1981, is incorporated by reference.

10.34 Amendment, dated October 1, 1981, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 20.4 to Registrant's Form 10-Q for the quarter ended
September 30, 1981, is incorporated by reference.

10.35 Amendment, dated October 1, 1981, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 20.5 to Registrant's Form 10-Q for the quarter ended
September 30, 1981, is incorporated by reference.

10.36 Amendment, dated November 1, 1981, to Credit Loan Agreement, dated
November 21, 1980, among The First National Bank of Chicago, U.S. Home
Mortgage Corporation, U.S. Home Finance Corporation and U.S. Home
Acceptance Corporation. Exhibit 20.6 to Registrant's Form 10-Q for the quarter
ended September 30, 1981, is incorporated by reference.

10.37 Amendment, dated November 20, 1981, to Credit Loan Agreement, dated
November 21, 1980, among The First National Bank of Chicago, U.S. Home
Mortgage Corporation, U.S. Home Finance Corporation and U.S. Home
Acceptance Corporation. Exhibit 10.38 to Registrant's Form 10-K for year ended
December 31, 1981, is incorporated by reference.

10.38 Amendment, dated December 1, 1981, to Credit Loan Agreement, dated
November 21, 1980, among The First National Bank of Chicago, U.S. Home
Mortgage Corporation, U.S. Home Finance Corporation and U.S. Home
Acceptance Corporation. Exhibit 10.33 to Registrant's Form 10-K for year ended
December 31, 1981, is incorporated by reference.

10.39 Amendment, dated January 1, 1982, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 10.34 to Registrant's Form 10-K for year ended December
31, 1981, is incorporated by reference.

10.40 Amendment, dated February 1, 1982, to Credit Loan Agreement, dated
November 21, 1980, among The First National Bank of Chicago, U.S. Home
Mortgage Corporation, U.S. Home Finance Corporation and U.S. Home
Acceptance Corporation. Exhibit 10.35 to Registrant's Form 10-K for year ended
December 31, 1981, is incorporated by reference.

10.41 Amendment, dated March 1, 1982, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 10.36 to Registrant's Form 10-K for year ended December
31, 1981, is incorporated by reference.

10.42 Amendment, dated April 1, 1982, to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 20.1 to Registrant's Form 10-Q for quarter ended March
31, 1982, is incorporated by reference.

10.43 Amendment, dated June 1, 1982, to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 20.1 to Registrant's Form 10-Q for quarter ended June 30,
1982, is incorporated by reference.

10.44 Credit Loan Agreement, dated as of June 30, 1982, among The First National
Bank of Chicago, U.S. Home Mortgage Corporation, U.S. Home Finance
Corporation and U.S. Home Acceptance Corporation. Exhibit 20.2 to
Registrant's Form 10-Q for quarter ended June 30, 1982, is incorporated by
reference.

10.45 Commitment, dated August 6, 1981, to purchase mortgage loans between U.S.
Home Finance Corporation and U.S. Home Corporation. Exhibit 10.37 to
Registrant's Form 10-K for the year ended December 31, 1981, is incorporated
by reference.

</TABLE>

<PAGE> 27

<TABLE>
<S> <C>
10.46 Secured Line of Credit, dated as of January 14, 1983, among The First National
Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance
Corporation. Exhibit 10.46 to Registrant's Form 10-K for the year ended
December 31, 1982, is incorporated by reference.

10.47 Typical form of commitment to purchase mortgage loans, beginning in 1982,
between U.S. Home Finance Corporation and U.S. Home Corporation. Exhibit
10.47 to Registrant's Form 10-K for the year ended December 31, 1982, is
incorporated by reference.

10.48 Extension of Secured Line of Credit, dated as of March 28, 1983, among The
First National Bank of Chicago, U.S. Home Mortgage Corporation and U.S.
Home Finance Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the
quarter ended March 31, 1983, is incorporated by reference.

10.49 Agreement dated March 25, 1983, among Citibank, N.A., U.S. Home Finance
Corporation and USHAC, Inc. Exhibit 10.2 to Registrant's Form 10-Q for the
quarter ended March 31, 1983, is incorporated by reference.

10.50 Extension of Secured Line of Credit, dated June 14, 1983, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home
Finance Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the quarter
ended June 30, 1983, is incorporated by reference.

10.51 Credit Agreement, dated as of May 31, 1983, among The First National Bank of
Chicago, U.S. Home Mortgage Corporation, U.S. Home Finance Corporation,
USH II Corporation and U.S. Home Acceptance Corporation. Exhibit 10.2 to
Registrant's Form 10-Q for the quarter ended June 30, 1983, is incorporated by
reference.

10.52 Secured Line of Credit, dated as of December 1, 1983, among The First National
Bank of Chicago, U.S. Home Mortgage Corporation, U.S. Home Finance
Corporation and U.S. Home Acceptance Corporation. Exhibit 10.52 to
Registrant's Form 10-K for the year ended December 31, 1983, is incorporated
by reference.

10.53 Extension of Secured Line of Credit, dated January 16, 1983, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home
Finance Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the quarter
ended March 31, 1984, is incorporated by reference.

10.54 Secured Line of Credit, dated as of July 12, 1984, among The First National
Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance
Corporation. Exhibit 10.54 to Registrant's Form 10-K for the year ended
December 31, 1985, is incorporated by reference.

10.55 Mortgage Warehouse Agreement, dated as of August 31, 1984, among Citicorp
Real Estate, Inc. and U.S. Home Mortgage Corporation. Exhibit 10.55 to
Registrant's Form 10-K for the year ended December 31, 1985, is incorporated
by reference.

10.56 Amendment to Secured Line of Credit, dated August 9, 1985, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home
Finance Corporation. Exhibit 10.56 to Registrant's Form 10-K for the year ended
December 31, 1985, is incorporated by reference.

</TABLE>

<PAGE> 28

<TABLE>
<S> <C>
10.57 Amendment to Mortgage Warehouse Agreement, dated as of July 30, 1985,
among Citicorp Real Estate, Inc. and U.S. Home Mortgage Corporation. Exhibit
10.57 to Registrant's Form 10-K for the year ended December 31, 1985, is
incorporated by reference.

10.58 Amendment to Secured Line of Credit, dated May 23, 1986, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home
Finance Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the quarter
ended June 30, 1986, is incorporated by reference.

10.59 Amendment to Secured Line of Credit, dated July 24, 1986, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home
Finance Corporation. Exhibit 10.2 to Registrant's Form 10-Q for the quarter
ended June 30, 1986, is incorporated by reference.

99 Pages 6 through 15 to Prospectus, dated July 23, 1980 (Registration No. 2-67676).

</TABLE>

(b) No report on Form 8-K was filed by the Company during the three months
ended December 31, 1996.

<PAGE> 29

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Dated: April 14, 1997 C.M. Corp.

By: /s/ James R. Petty
-----------------------------
James R. Petty
President (principal executive officer)

By: /s/ Ronald C. McCabe
-----------------------------
Ronald C. McCabe
Senior Vice President, Chief Accounting
Officer and Chief Financial Officer
(principal accounting officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James R. Petty Director and President April 14, 1997
(James R. Petty) (principal executive officer)

/s/ Ronald C. McCabe Director and Senior Vice April 14, 1997
(Ronald C. McCabe) President (principal accounting
officer)

/s/ Virginia S. Casagrande Director, Vice President, April 14, 1997
(Virginia S. Casagrande) Controller and Assistant Secretary

</TABLE>

<PAGE> 30

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(d) OF THE ACT BY REGISTRANT WHICH HAVE NOT REGISTERED

SECURITIES PURSUANT TO SECTION 12 OF THE ACT:

No annual report to security holders covering the registrant's last fiscal
year or proxy statement, form of proxy or other proxy soliciting material sent
to more than 10 of the registrant's security holders with respect to any annual
or other meeting of security holders has been sent to any of the registrant's
security holders.

<PAGE> 31

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <S> <C>
3.1 Certificate of Incorporation of Registrant. Exhibit 3.1 to Registrant's Registration
Statement on Form S-ll, registration No. 2-67676, is incorporated by reference.*
3.2 By-Laws of Registrant. Exhibit 3.2 to Registrant's Registration Statement on Form
S-ll, registration No. 2-67676 is incorporated by reference.*
4.1 Indenture, dated as of July 15, 1980, between U.S. Home Finance Corporation, as
Issuer, and The First National Bank of Chicago, as Trustee. Exhibit 4.1 to
Registrant's Registration Statement on Form S-ll, registration No. 2-67676, is
incorporated by reference.*
4.2 First Supplemental Indenture, dated as of July 15, 1980, between U.S. Home Finance
Corporation, as Issuer, and The First National Bank of Chicago, as Trustee. Exhibit
4.2 to Registrant's Registration Statement on Form S-ll, registration No. 2-67676, is
incorporated by reference.*
4.3 Second Supplemental Indenture, dated as of August 15, 1980, between U.S. Home
Finance Corporation as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.3 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*
4.4 Third Supplemental Indenture, dated as of October 1, 1980, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.4 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*
4.5 Fourth Supplemental Indenture, dated as of November 15, 1980, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.5 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 32

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
4.6 Fifth Supplemental Indenture, dated as of December 15, 1980, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.6 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

4.7 Sixth Supplemental Indenture, dated as of January 15, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.7 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

4.8 Seventh Supplemental Indenture, dated as of March 9, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.8 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

4.9 Eighth Supplemental Indenture, dated as of March 15, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.9 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

4.10 Ninth Supplemental Indenture, dated as of April 1, 1981, between U.S. Home Finance
Corporation, as Issuer, and The First National Bank of Chicago, as Trustee. Exhibit
4.10 to Registrant's Registration Statement on Form S-ll, registration No. 2-67676, is
incorporated by reference.*

4.11 Tenth Supplemental Indenture, dated as of May 15, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.11 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 33

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
4.12 Eleventh Supplemental Indenture, dated as of June 15, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.12 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

4.13 Twelfth Supplemental Indenture, dated as of July 15, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.13 to Registrant's Registration Statement on Form S-ll, registration No.
2-67676, is incorporated by reference.*

4.14 Thirteenth Supplemental Indenture, dated as of July 30, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.2 to Registrant's Form 10-Q for the quarter ended September 30, 1981, is
incorporated herein by reference.*

4.15 Indenture, dated as of June 15, 1981, between U.S. Home Finance Corporation, as
Issuer, and The First National Bank of Chicago, as Trustee. Exhibit 4.14 to
Registrant's Registration Statement on Form S-ll, registration No. 2-73132, is
incorporated by reference.*

4.16 First Supplemental Indenture, dated as of August 1, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.15 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.17 Second Supplemental Indenture, dated as of September 1, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.16 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 34

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
4.18 Third Supplemental Indenture, dated as of October 1, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.17 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.19 Fourth Supplemental Indenture, dated as of October 31, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.18 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.20 Fifth Supplemental Indenture, dated as of November 1, 1981 between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.19 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.21 Sixth Supplemental Indenture, dated as of December 1, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.20 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.22 Seventh Supplemental Indenture, dated as of December 21, 1981, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.21 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.23 Eighth Supplemental Indenture, dated as of January 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.22 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 35

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
4.24 Ninth Supplemental Indenture, dated as of February 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.23 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.25 Tenth Supplemental Indenture, dated as of March 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.24 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.26 Eleventh Supplemental Indenture, dated as of May 1, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.25 to Registrant's Registration Statement on Form S-ll, registration No.
2-73132, is incorporated by reference.*

4.27 Twelfth Supplemental Indenture, dated as of June 15, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.27 to Registrant's Registration Statement on Form S-ll, registration No.
2-78099, is incorporated by reference.*

4.28 Thirteenth Supplemental Indenture, dated as of August 15, 1982, between U.S. Home
Finance Corporation, as Issuer, and The First National Bank of Chicago, as Trustee.
Exhibit 4.28 to Registrant's Registration Statement on Form S-ll, registration No.
2-78099, is incorporated by reference.*

4.29 Fourteenth Supplemental Indenture, dated as of September 15, 1982, between U.S.
Home Finance Corporation, as Issuer, and The First National Bank of Chicago, as
Trustee. Exhibit 4.29 to Registrant's Registration Statement on Form S-ll, registration
No. 2-78099, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 36

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.1 Underwriting Agreement, dated July 23, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.1 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.2 Underwriting Agreement, dated September 5, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.2 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.3 Underwriting Agreement, dated October 15, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.3 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.4 Underwriting Agreement, dated December 17, 1980, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.4 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.5 Underwriting Agreement, dated January 14, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.5 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.

10.6 Underwriting Agreement, dated February 25, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.6 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 37
INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.7 Underwriting Agreement, dated March 18, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.7 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.8 Underwriting Agreement, dated April 10, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.8 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.9 Underwriting Agreement, dated May 20, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.9 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.10 Underwriting Agreement, dated June 15, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.10 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.11 Underwriting Agreement, dated July 16, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.11 to Registrant's Registration Statement on Form S-ll,
registration No. 2-67676, is incorporated by reference.*

10.12 Underwriting Agreement, dated August 21, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 1.12 to Registrant's Registration Statement on Form S-ll,
registration No. 2-73132, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 38
INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.13 Underwriting Agreement, dated October 1, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.13 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.14 Underwriting Agreement, dated October 21, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.14 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.15 Underwriting Agreement, dated November 19, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.15 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.16 Underwriting Agreement, dated December 14, 1981, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.16 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.17 Underwriting Agreement, dated January 21, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.17 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.18 Underwriting Agreement, dated February 26, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.18 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 39

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.19 Underwriting Agreement, dated March 17, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.19 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.20 Underwriting Agreement, dated June 4, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.20 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.21 Underwriting Agreement, dated September 1, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. Exhibit 10.21 to Registrant's Form 10-K, for the year ended
December 31, 1981 is incorporated by reference.*

10.22 Underwriting Agreement, dated October 13, 1982, among U.S. Home Finance
Corporation, Edward D. Jones & Co., J.C. Bradford & Co., and Raymond, James &
Associates, Inc. and I. M. Simon & Co. Exhibit 10.22 to Registrant's Form 10-K,
for the year ended December 31, 1981 is incorporated by reference.*

10.23 Servicing Agreement, dated July 15, 1981, among U.S. Home Finance Corporation,
U.S. Home Mortgage Corporation and U.S. Home Corporation. Exhibit 12.1 to
Registrant's Registration Statement on Form S-ll, registration No. 2-67676 is
incorporated by reference.*

10.24 Amendment, dated March 15, 1981 to Servicing Agreement, dated as of July 15,
1980. Exhibit 10.1 to Registrant's Registration Statement on Form S-ll, registration
No. 2-67676, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 40

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.25 Servicing Agreement, dated June 15, 1981, among U.S. Home Finance Corporation,
U.S. Home Mortgage Corporation and U.S. Home Corporation. Exhibit 10.5 to
Registrant's Registration Statement on Form S-ll, registration No. 2-73132 is
incorporated by reference.*

10.26 Amendment, dated as of November 2, 1981, to Servicing Agreement dated as of June
15, 1981 among U.S. Home Finance Corporation, U.S. Home Mortgage Corporation
and U.S. Home Corporation. Exhibit 10.6 to Registrant's Registration Statement on
Form S-ll, registration No. 2-73132, is incorporated by reference.*

10.27 Amendment, dated as of June 15, 1982, to Servicing Agreement dated as of June 15,
1981 among U.S. Home Finance Corporation, U.S. Home Mortgage Corporation and
U.S. Home Corporation. Exhibit 10.47 to Registrant's Registration Statement on
Form S-ll, registration No. 2-78099, is incorporated by reference.*

10.28 Credit Agreement, dated November 21, 1980, among The First National Bank of
Chicago, U.S. Home Corporation, U.S. Home Finance Corporation and U.S. Home
Acceptance Corporation. Exhibit 10.10 to Registrant's Form 10-K, for the year ended
December 31, 1980 is incorporated by reference.*

10.29 Amendment, dated March 26, 1981 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Corporation, U.S.
Home Finance Corporation and U.S. Home Acceptance Corporation. Amendment to
Registrant's Form 10-Q for quarter ended March 31, 1981, is incorporated by
reference.*

10.30 Amendment, dated April 1, 1981 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Corporation, U.S.
Home Finance Corporation and U.S. Home Acceptance Corporation. Amendment to
Registrant's Form 10-Q for quarter ended June 30, 1981, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 41

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.31 Amendment, dated July 1, 1981 to Credit Loan Agreement, dated November 21, 1980,
among The First National Bank of Chicago, U.S. Home Mortgage Corporation, U.S.
Home Finance Corporation and U.S. Home Acceptance Corporation. Amendment to
Registrant's Form 10-Q for quarter ended September 30, 1981, is incorporated by
reference.*

10.32 Amendment, dated August 1, 1981 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation.
Amendment to Registrant's Form 10-Q for quarter ended September 30, 1981, is
incorporated by reference.*

10.33 Amendment, dated September 1, 1981 to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Amendment to Registrant's Form 10-Q for quarter ended September 30,
1981, is incorporated by reference.*

10.34 Amendment, dated October 1, 1981 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation.
Amendment to Registrant's Form 10-Q for quarter ended September 30, 1981, is
incorporated by reference.*

10.35 Amendment, dated October 1, 1981 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation.
Amendment to Registrant's Form 10-Q for quarter ended September 30, 1981, is
incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 42
INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.36 Amendment, dated November 1, 1981 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation.
Amendment to Registrant's Form 10-Q for quarter ended September 30, 1981, is
incorporated by reference.*

10.37 Amendment, dated November 20, 1981 to Credit Loan Agreement, dated November
21, 1980, among The First National Bank of Chicago, U.S. Home Mortgage
Corporation, U.S. Home Finance Corporation and U.S. Home Acceptance
Corporation. Exhibit 10.38 to Registrant's Form 10-K for the year ended December
31, 1981, is incorporated by reference.*

10.38 Amendment, dated December 1, 1981 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation. Exhibit
10.33 to Registrant's Form 10-K for the year ended December 31, 1981, is
incorporated by reference.*

10.39 Amendment, dated January 1, 1982 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation. Exhibit
10.34 to Registrant's Form 10-K for the year ended December 31, 1981, is
incorporated by reference.*

10.40 Amendment, dated February 1, 1982 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation. Exhibit
10.35 to Registrant's Form 10-K for the year ended December 31, 1981, is
incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 43

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.41 Amendment, dated March 1, 1982 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation. Exhibit
10.36 to Registrant's Form 10-K for the year ended December 31, 1981, is
incorporated by reference.*

10.42 Amendment, dated April 1, 1982 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation. Exhibit
20.1 to Registrant's Form 10-Q for quarter ended March 31, 1982, is incorporated by
reference.*

10.43 Amendment, dated June 1, 1982 to Credit Loan Agreement, dated November 21,
1980, among The First National Bank of Chicago, U.S. Home Mortgage Corporation,
U.S. Home Finance Corporation and U.S. Home Acceptance Corporation. Exhibit
20.1 to Registrant's Form 10-Q for quarter ended June 30, 1982, is incorporated by
reference.*

10.44 Credit Loan Agreement, dated as of June 30, 1982, among The First National Bank
of Chicago, U.S. Home Mortgage Corporation, U.S. Home Finance Corporation and
U.S. Home Acceptance Corporation. Exhibit 20.2 to Registrant's Form 10-Q for
quarter ended June 30, 1982, is incorporated by reference.*

10.45 Commitment, dated August 6, 1981, to purchase mortgage loans between U.S. Home
Finance Corporation and U.S. Home Corporation. Exhibit 10.37 to Registrant's Form
10-K for the year ended December 31, 1981, is incorporated by reference.*

10.46 Secured Line of Credit, dated as of January 14, 1983 among The First National Bank
of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance Corporation.
Exhibit 10.46 to Registrant's Form 10-K for the year ended December 31, 1982, is
incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 44

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.47 Typical form of commitment to purchse mortgage loans, beginning in 1982, between
U.S. Home Finance Corporation and U.S. Home Corporation. Exhibit 10.47 to
Registrant's Form 10-K for the year ended December 31, 1982, is incorporated by
reference.*

10.48 Extension of Secured Line of Credit, dated as of March 28, 1983, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation, and U.S. Home
Finance Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the quarter ended
March 31, 1983, is incorporated by reference.*

10.49 Agreement, dated March 25, 1983, among Citibank, N.A., U.S. Home Finance
Corporation and USHAC, Inc. Exhibit 10.2 to Registrant's Form 10-Q for the quarter
ended March 31, 1983, is incorporated by reference.*

10.50 Extension of Secured Line of Credit, dated June 14, 1983, among The First National
Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance
Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the quarter ended June 30,
1983, is incorporated by reference.*

10.51 Credit Agreement, dated as of May 31, 1983, among The First National Bank of
Chicago, U.S. Home Mortgage Corporation, U.S. Home Finance Corporation, USH
II Corporation and U.S. Home Acceptance Corporation. Exhibit 10.2 to Registrant's
Form 10-Q for the quarter ended June 30, 1983, is incorporated by reference.*

10.52 Secured Line of Credit, dated as of December 1, 1983, among The First National Bank
of Chicago, U.S. Home Mortgage Corporation, U.S. Home Finance Corporation and
U.S. Home Acceptance Corporation. Exhibit 10.52 to Registrant's Form 10-K for
the year ended December 31, 1983, is incorporated by reference.*

10.53 Extension of Secured Line of Credit, dated January 16, 1984, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance
Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the quarter ended March 31,
1984, is incorporated by reference.*

*Incorporated by Reference

</TABLE>

<PAGE> 45

INDEX TO EXHIBITS

Continued

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
<S> <C> <C>
10.54 Secured Line of Credit, dated as of July 12, 1984, among The First National Bank of
Chicago, U.S. Home Mortgage Corporation, and U.S. Home Finance Corporation.
Exhibit 10.54 to Registrant's Form 10-K for the year ended December 31, 1985, is
incorporated by reference.*
10.55 Mortgage Warehouse Agreement, dated as of August 31, 1984, among Citicorp Real
Estate, Inc. and U.S. Home Mortgage Corporation. Exhibit 10.55 to Registrant's
Form 10-K for the year ended December 31, 1985, is incorporated by reference.*
10.56 Amendment to Secured Line of Credit, dated as of August 9, 1985, among The First
National Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance
Corporation. Exhibit 10.56 to Registrant's Form 10-K for the year ended December
31, 1985, is incorporated by reference.*
10.57 Amendment to the Mortgage Warehouse Agreement, dated as of July 30, 1985, among
Citicorp Real Estate, Inc. and U.S. Home Mortgage Corporation. Exhibit 10.57 to
Registrant's Form 10-K for the year ended December 31, 1985, is incorporated by
reference.*
10.58 Amendment to Secured Line of Credit, dated May 23, 1986, among The First National
Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance
Corporation. Exhibit 10.1 to Registrant's Form 10-Q for the quarter ended June 30,
1986, is incorporated by reference.*
10.59 Amendment to Secured Line of Credit, dated July 24, 1986, among The First National
Bank of Chicago, U.S. Home Mortgage Corporation and U.S. Home Finance
Corporation. Exhibit 10.2 to Registrant's Form 10-Q for the quarter ended June 30,
1986, is incorporated by reference.*
99 Pages 6 through 15 to Prospectus, dated July 23, 1980 (Registration No. 2-67676). 51-60

*Incorporated by Reference

</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND FOR THE TWELVE MONTHS THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 544
<SECURITIES> 0
<RECEIVABLES> 2,412
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,956
<CURRENT-LIABILITIES> 1,630
<BONDS> 3,396
1
0
<COMMON> 0
<OTHER-SE> (2,071)
<TOTAL-LIABILITY-AND-EQUITY> 2,956
<SALES> 0
<TOTAL-REVENUES> 310
<CGS> 0
<TOTAL-COSTS> 25
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (1,515)
<INTEREST-EXPENSE> 422
<INCOME-PRETAX> 1,378
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,378
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,378
<EPS-PRIMARY> 1,378
<EPS-DILUTED> 1,378

</TABLE>

<PAGE> 1

EXHIBIT 99

DESCRIPTION OF THE BONDS

General

The Bonds will be issued pursuant to an indenture (the "Indenture") dated
as of July 15, 1980 between the Issuer and the Trustee, as supplemented by
one or more supplemental indentures. Copies of the Indenture have been, and
copies of each supplemental indenture will be, filed as exhibits to the
registration statement of which this Prospectus forms a part. The following
summaries describe certain provisions common to each series of Bonds. The
summaries do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, the provisions of the Indenture and the
supplemental indenture thereto for each particular series and the supplement
to this Prospectus to be prepared with respect to such series.

The Bonds are limited to $100,000,000 aggregate principal amount and are
issuable in series. The Bonds will be issued in fully registered form only in
initial denominations of $1,000 or any integral multiple thereof. (Indenture,
Sections 3.01 and 3.02) The Bonds of each series will be secured by a
separate Security Package, which will not serve as security for any other
series of Bonds. (see "The Security Package").

Payments of the principal of and interest on, and optional redemptions of,
the Bonds are to be made at the principal corporate trust office of the
Trustee. However, the Issuer intends to make payments of interest and
prepayments of principal by checks mailed to the Bondholders. Optional
redemptions will be made at the principal corporate trust office of the
Trustee. (Indenture, Sections 3.07, 11.02 and 12.01)

The Bonds may be transferred or exchanged without the payment of any
service charge, other than any tax or governmental charge payable in
connection therewith. (Indenture, Section 3.05)

Payments of Interest

The Bonds of a series will bear interest at a rate specified in the
supplement to this Prospectus for that series. Interest will be payable
quarterly. Interest for a quarter will be payable on the 28th day following
such quarter, commencing with the 28th day following the quarter in which the
series was issued, to the persons in whose names the Bonds are registered in
the Bond Register at the close of business on the 20th day following such
quarter. (Indenture, Section 3.07)

Redemption at Option of Bondholders

Unless the Bonds of a series have been declared due and payable prior to
maturity by reason of an event of default, holders of such Bonds have the
right to present them for redemption prior to maturity. After a series of
Bonds has been outstanding for 12 months, on the 28th day of each month (a
"Redemption Date") the Issuer will redeem Bonds of that series that have been
presented for redemption in the order of priority described below and subject
to the limitations that (i) the Issuer will not in any three-month period
ending on a quarterly interest payment date redeem more than $10,000 original
principal amount of Bonds of a series from each Bondholder(0) and (ii)
redemptions will be made only to the extent funds are available in the
Redemption Date occurs. The Redemption Fund for a series will consist of
principal prepayments, proceeds from certain insurance policies and
foreclosure proceedings applied to principal and minor amounts of principal
amortization with respect to the Pledged Loans securing that series. (see
"The Security Package The Pledged Loans - Valuation of Pledged Loans").
Subject to these limitations, on each Redemption Date and with respect to
each series, Bonds presented by the personal representative,

- For this purpose, a Bond held by tenants by the entirety, joint
tenants or tenants in common is considered to be held by a single holder.

[6]
<PAGE> 2

surviving joint tenant or tenant by the entirety of a deceased holder will be
redeemed in the order of their receipt by the Trustee; thereafter Bonds
presented by others will be redeemed in the order of their receipt by the
Trustee. Bonds presented on behalf of a deceased holder may be redeemed
before they have been outstanding for one year.

On each Redemption Date that is also a quarterly interest payment date,
the Issuer will redeem Bonds submitted on behalf of deceased holders in
excess of the $10,000 limitation, but only if and to the extent of available
funds in the Redemption Fund for the series (determined as of the tenth day
of the month in which that Redemption Date occurs) after all other
redemptions through the current month have been made. These additional
redemptions will be made in the order that the Bonds were received by the
Trustee.

The redemption price for Bonds is 100% of the unpaid principal amount
thereof, plus accrued interest through the applicable Redemption Date.
Redemptions of less than a Bond with an original principal amount of $1,000
will not be made.

Bonds may be presented for redemption by delivery to the Trustee of: (i)
the Bonds to be redeemed, (ii) a written request for redemption in form
satisfactory to the Trustee and signed by the holder or duly authorized
representative (with appropriate evidence of authority) and (iii) in the case
of a request on behalf of a deceased holder, appropriate evidence of death
and authority and any requisite tax waivers. Bonds presented for redemption
after the 10th day, and on or before the 28th day, of a month, whether on
behalf of a deceased holder or otherwise, will be treated as if they had been
presented after the close of business on the 28th day of such month. All
Bonds presented for redemption will be held by the Trustee until the Issuer
is able to redeem them, unless withdrawn by written request actually received
by the Trustee on or before the 10th day of the month in which they would
otherwise have been redeemed. Bonds presented for redemption will continue to
bear interest until redeemed. The Trustee may establish such procedures as it
may deem fair and equitable in order to determine the order of receipt of
Bonds received by it on a single day and any such determination shall be
conclusive. (Indenture, Sections 12.02, 12.03 and 12.04)

There is no assurance that the Redemption Fund will be sufficient to
redeem all Bonds presented and a holder of Bonds may not be able to have his
Bonds redeemed prior to maturity. During periods of rising interest rates,
greater numbers of holders may be expected to present their Bonds for
redemption in order to take advantage of the higher interest rates,
obtainable elsewhere and there may be a concurrent reduction in the rate of
prepayments of the Pledged Loans.

Prepayments of Principal

Commencing after a series of Bonds has been outstanding for 12 months,
prepayments of principal will be made quarterly on the 28th day following
each quarter to the persons in whose names the Bonds are registered in the
Bond Register on the 20th day following such quarter to the extent that funds
in the Redemption Fund for that series (determined as of the tenth day of the
month in which the prepayment is made) are not used for redemptions of Bonds
at the option of Bondholders. However, prepayments of principal will only be
made in integral multiples of $5 per Bond of $1,000 denomination and no
prepayment will be made until the amount available for prepayment is at least
$15 per Bond of $1,000 denomination. No notation of prepayments will be made
on the Bonds. Each prepayment of principal will be accompanied by a statement
as to the principal amount remaining after giving effect to such prepayment.
(Indenture, Section 12.01)

[7]

<PAGE> 3

Redemption at Option of Issuer

The Issuer may redeem all, but not less than all, of the Bonds of any
series if the aggregate outstanding principal balance of such Bonds is
reduced to 20% or less of their original aggregate principal amount.
(Indenture, Section 12.06) (see "The Security Package - Prepaid Life
Considerations").

Modification of Indenture

With the consent of the holders of not less than a majority in principal
amount of the outstanding Bonds or of the outstanding Bonds of a series, the
Trustee and the Issuer may execute a supplemental indenture to add provisions
to, or change in any manner or eliminate any provisions of, the Indenture
with respect to all of the Bonds or that series or modify in any manner the
rights of the holder of each outstanding Bond affected, no such supplemental
indenture shall, among other things, (a) change the maturity of any principal
of or interest on any Bond, or reduce the principal amount thereof or the
rate of interest thereon, (b) reduce the percentage of Bondholders whose
consent is required for the authorization of any supplemental indenture or
for any waiver of compliance with certain provisions of the Indenture or
certain defaults thereunder or their consequences or (c) modify any of the
provisions of the Indenture with respect to supplemental indentures with the
consent of Bondholders, except to increase the percentage of Bondholders
whose consent is required for any such action or to provide that other
provisions of the Indenture cannot be modified or waived without the consent
of the holders of each outstanding Bond affected thereby. (Indenture, Section
10.02)

Events of Default

An Event of Default is defined in the Indenture as being: default for 30
days in the payment of principal of, or interest on, the Bonds; default in
the performance of any other covenant in the Indenture and the continuance of
such default for a period of 60 days after notice to the Issuer by the
Trustee or to the Issuer and the Trustee by the holders of at least 25% of
the Bonds then outstanding; or certain events of bankruptcy, insolvency,
receivership or reorganization of the Issuer. In case an Event of Default
should occur and be continuing, the Trustee or the holders of at least 25% in
principal amount of the Bonds then outstanding may declare the principal of
the Bonds to be due and payable. Such declaration may under certain
circumstances be rescinded by the holders of a majority in principal amount
of the Bonds then outstanding. (Indenture, Sections 6.01 and 6.02)

If, following an Event of Default, the Bonds have been declared to be due
and payable, the Trustee may refrain from liquidating the Security Package
for a series if such Security Package is continuing to provide sufficient
funds for the payment of principal of, and interest on, the Bonds of such
series as they would have come due if there had not been such a declaration.
The Trustee may also liquidate the Security Package for a series by
distributing participations in such Security Package to the holders of Bonds
of such series. (Indenture, Section 6.05)

Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the
Trustee shall be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any of the Bondholders,
unless such Bondholders shall have offered to the Trustee reasonable security
or indemnity. (Indenture, Section 7.03) Subject to such provisions for
indemnification and certain limitations contained in the Indenture, the
holders of a majority in principal amount of the outstanding Bonds may, in
certain cases, waive any default except a default in payment of principal or
interest on the Bonds. (Indenture, Sections 6.14 and 6.15)

Statement as to Compliance

The Issuer will be required to file annually with the Trustee a written
statement as to fulfillment of its obligations under the Indenture.
(Indenture, Section 11.09)

[8]

<PAGE> 4

Reports to Bondholders

The Issuer intends to publish and send to each Bondholder annual reports
containing audited financial statements. For each series, the Issuer will
include with the annual report sent to Bondholders a statement setting forth
the following information (Indenture, Section 8.04):

(i) the amount of principal paid on the Bonds of such series during the
preceding calendar year; (ii) the remaining aggregate principal amount of
Bonds of such series outstanding on the last day of the preceding
calendar year;

(iii) the aggregate principal balance of the Pledged Loans securing such
series on the last day of the preceding calendar year after giving effect to
payments due on such date;

(iv) the number and aggregate principal balances on the last day of the
preceding calendar year of Pledged Loans delinquent (a) one month and (b) two
or more months;

(v) the book value of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure;

(vi) the remaining balance on the last day of the preceding calendar year
of any reserve fund securing such series; and

(vii) the amount of remaining coverage under the Blanket Insurance Policy
for such series as of the close of business on the last day of the preceding
calendar year, expressed as a percentage of the amount reported pursuant to
(iii) above.

Satisfaction and Discharge of the Indenture

The Indenture will be discharged upon the cancellation of all of the Bonds
or, with certain limitations, upon deposit with the Trustee of funds
sufficient for the payment or redemption thereof.

(Indenture, Section 5.01)

No Listing of Bonds

The Issuer does not intend to apply for the listing of the Bonds on any
exchange.

The Trustee

The First National Bank of Chicago, Corporate Trust Division, 126 South
State Street, Eighth Floor, Chicago, Illinois 60670, will be the Trustee for
the Bonds. The First National Bank of Chicago performs other services for the
Issuer and its affiliates, including making loans to U.S. Home, the Servicer
and the Issuer, some of which were used to finance the Pledged Loans prior to
issuance of the Bonds.

THE SECURITY PACKAGE

General

Each series of Bonds will be secured by assignment to the Trustee of a
Security Package consisting of (i) Pledged Loans having an aggregate
discounted value equal to 103% of the initial principal amount of the Bonds
of such series, (ii) a cash Reserve Fund in the amount of 3% of the initial
principal amount of the Bonds of such series. (iii) all payments due under
certain Insurance Policies, (iv) the Issuer's rights under the Servicing
Agreement with the Servicer, and (v) to the extent applicable, the Debt
Service Reserve Fund and pledged savings accounts referred to below. The
Security Package of each series of Bonds will serve as collateral only for
that series of Bonds.

The Pledged Loans

The Pledged Loans will consist of conventional (i.e., not government
guaranteed) first mortgage loans(0) on single-family residences constructed
by US Home and serviced by the Servicer, having initial loan-to-value

- See footnote on page 13

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ratios of up to 97%, maturities of up to 30 years and amortization schedules
of up to 50 years (an amortization schedule in excess of 30 years requires
payment of a principal balance at maturity if the loan is not prepaid). The
initial loan-to-value ratio of a Pledged Loan will be determined by dividing
the original principal the original principal amount of the Pledged Loan
(after deducting any savings account pledged by the borrower) by the lesser
of (a) the price at which the home was sold (without deducting discounts to
U.S. Home employees) and (b) the appraised value of the home at the time of
closing such loan. (Indenture, Section 1.01) The assignment of the Pledged
Loans to the Trustee by the Issuer will be without recourse.

It is contemplated that the assignments to the Trustee of the Pledged
Loans securing each series will not be recorded until after that series is
issued; as a result, it might be possible for the Issuer to discharge Pledged
Loans or transfer them to bona fide purchasers for value during that period.
However, in most cases the Issuer would not be able to deliver the original
documents evidencing the Pledged Loans, which are to be held by the Trustee
unless released to the Servicer in connection with its servicing activities.
If the assignments of any Pledged Loans are not recorded within 120 days
after issuance of the series that such Pledged Loans secure, U.S. Home or the
Servicer must purchase or replace such Pledged Loans as described below under
"Criteria for Pledged Loans."

Valuation of Pledged Loans

Each Pledged Loan bearing interest at a rate that exceeds the interest
rate on the applicable series of Bonds by at least an increment (which will
not be less than 0.375% per annum) specified in the supplement to this
Prospectus for that series will be valued at its unpaid principal amount.
Each Pledged Loan bearing interest at a lesser rate will be valued at an
amount that would produce a yield equal to such increment over the interest
rate on the applicable series of Bonds, based on the assumption that such
Pledged Loan will not be prepaid prior to maturity (the value of a Pledged
Loan determined as provided in this paragraph is its "Discounted Value").
(Indenture, Section 1.01) However, the experience of the Federal Housing
Administration ("FHA") relating to insured single-family mortgage loan
suggests that many of the Pledged Loans will be prepaid prior to maturity,
which in the case of discounted Pledged Loans, would result in a higher
yield. (see "The Security Package - Prepaid Life Considerations").

Pledged Loans that have been discounted will be amortized on the basis of
the yield assumption described in the preceding paragraph. Thus, some or all
payments of principal on the Pledged Loans will not be taken into account in
determining the Redemption Fund and may be applied to the payment of interest
on the Bonds. (see "Description of the Bonds - Prepayments of Principal" and
"Description of the Bonds Redemption at Option of Bondholders").

Criteria for Pledged Loans

No Pledged Loan may have an original principal amount exceeding $125,000.
The mean of the original principal amounts of each Pledged Loan for a series
of Bonds may not exceed $75,000, and no more than 35% of the Pledged Loans
for any series of Bonds may have an original principal amount in excess of
$85,000. (Indenture, Section 4.02 (1) (a) )

Pledged Loans with an original principal amount of $75,000 or less that
are secured by owner occupied homes may have initial loan-to-value ratios of
up to 97%. The initial loan-to-value ratio of Pledged Loans with an original
principal amount in excess of $75,000 or Pledged Loans secured by non-owner
occupied homes may not exceed 90%. Pledged Loans with an original principal
amount in excess of $93,750 must have initial loan-to-value ratios of 80% or
less. (Indenture, Section 4.02 (1) (b) ) (see "Special Considerations -
Foreclosures and Casualties").

Not more than 33% of the aggregate unpaid principal amount of the Pledged
Loans for any series of Bonds may consist of mortgages on low-rise (not more
than three living stories) condominium units and attached townhouses. The
remainder of Pledged Loans will consist of mortgages on single-family
detached homes. (Indenture, Section 4.02 (1) (c) )

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The mortgaged properties will consist of homes constructed and sold by
U.S. Home in the states of Arizona, California, Colorado, Florida, Illinois,
Louisiana, Maryland, Minnesota, Mississippi, Nevada, New Jersey, New Mexico,
Oklahoma, Texas, Utah and Virginia and other states in which U.S. Home may
sell homes. Not more than 50% of the Discounted Value of the Pledged Loans
for each series of Bonds will be secured by homes located in any state other
than Texas, in which homes securing 75% of such Discounted Value may be
located. In addition, not more than 25% of the Discounted Value of the
Pledged Loans for any series of Bonds will be secured by homes located in
anyone subdivision of U.S. Home. (Indenture, Sections 4.02 (1) (d) and 4.02
(i) (e))

Certain of the Pledged Loans (including all of the Pledged Loans with
amortization schedules over 30 years) will bear interest at a constant rate
during the first 20 years following their origination and, at the end of the
20 year period, will bear interest at an increased or decreased rate based on
a formula taking into account then prevailing interest rates. However, the
Discounted Value of a Pledged Loan will be determined on the basis of the
rate of interest charged during the first 20-year period.

In the event of a breach of any of representations and warranties that
U.S. Home and the Servicer will be making with respect to each Pledged Loan
or if a Pledged Loan is found to have been obtained on the basis of
fraudulent information (i.e., regarding the credit and/or employment history
of the mortgagor, the occupancy of the home or any other evidence of
systematic fraud) or if any document relating to a Pledged Loan is found to
be defective in any material respect and the Servicer cannot cure such
defect within 90 days, or if the assignment of a Pledged Loan to the Trustee
is not recorded within 120 days after the issuance of the series of Bonds
that it secures, the Trustee may require U.S. Home or the Servicer to
purchase such Pledged Loan from the Issuer at its then Discounted Value. The
Issuer, in turn, will either replace such Pledged Loan with a new eligible
Pledged Loan with the same Discounted Value or place the proceeds of such
sale in the Redemption Fund. The Trustee may not, however, require U.S. Home
or the Servicer to make such a purchase after the series of Bonds that such
Pledged Loan secures has been outstanding for more than one year, nor does
the Trustee or any Bondholder have any other remedy in any such event.
(Indenture, Sections 4.02 and 4.03; Servicing Agreement, Section 6.02)

The Pledged Loans may include mortgage loans in which a percentage of the
down payment will be applied directly to the purchase price of the home and
the remainder placed in a savings account pledged to the lender. Principal
and interest from the pledged savings account will be used to supplement the
borrower's monthly mortgage payment at a predetermined rate. The savings
accounts pledged by all such borrowers will be assigned to the Trustee along
with the related Pledged Loan and will be held by the Trustee as additional
security for the related Pledged Loan.

In determining a borrower's eligibility for a Pledged Loan only the net
payments (i.e., after deduction of the amounts from any pledged account used
to supplement the payment) to be made by the borrower during the first year
of the loan are used in calculating whether the borrower meets lending
guidelines with respect to the proportion of the borrower's income used for
mortgage payments. (see "U.S. Home Mortgage Corporation - The Servicer").

Debt Service Reserve Fund

Some Pledged Loans may provide for a lower rate of interest during the
first five years of their term, or may provide for only payments of interest
during the first five years of their term, or may provide for payments that
increase during the first five years of the term and which, until the sixth
year, are not sufficient to pay the full interest accruing on the loan. The
Issuer will deposit with the Trustee in cash a Debt Service Reserve Fund in
an amount equal to the aggregate excess, if any, of (a) the interest to
accrue on each such Pledged Loan (on the basis of the yield assumption used
in determining Discounted Value) over (b) the payments of principal and
interest called for by such Pledged Loan. The amount deposited in a Debt
Service Reserve Fund will be taken into account in determining the Discounted
Value of a Pledged Loan. The Trustee shall withdraw from the Debt Service
Reserve Fund, or draw on the letter of

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<PAGE> 7

credit that may be established in lieu thereof, and apply to the payment of
interest on the Bonds the amount of such excess. As a result of the
borrower's obligation to ultimately pay the accrued interest on certain
Pledged Loans together with interest on such interest (which obligation will
not be covered by either a Primary or Blanket Insurance Policy), there may be
substantially no amortization of principal of these Pledged Loans available
for redemption's of or principal prepayments on the Bonds.

The Reserve Fund

The Issuer will deposit with the Trustee in cash a Reserve Fund equal to
3% of the initial principal amount of that series of Bonds.

The Reserve Fund may be applied by the Trustee to pay the Bondholders any
shortfall in the payments of principal of, and interest on, the Bonds to the
extent not paid by the Issuer, advanced by the Servicer, or paid from the
Debt Service Reserve Fund, or the proceeds of a Primary or a Blanket
Insurance Policy. (See "Special Considerations").

The Reserve Fund for a series of Bonds need not be invested (and may
therefore serve as compensating balances for the Issuer and its affiliates)
and the Issuer may make withdrawals from the Reserve Fund for a series,
unless (i) such Reserve Fund is or would be reduced below 3% of the initial
principal amount of the Bonds of that series or (ii) as a result of an
uninsured loss on foreclosure, (A) the then aggregate Discounted Value of
Pledged Loans is reduced to less that 103% of the then outstanding principal
amount of the Bonds of that series and (B) the sum of such aggregate
Discounted Value, and the amount of the Reserve Fund for such series is less
than the sum of (x) 3% of the initial principal amount of the Bonds of that
series and (y) 103% of the then outstanding principal amount of the Bonds of
that series. The Reserve Fund may be invested by the Trustee, as directed by
the Issuer, only in short-term obligations of the United States or any agency
thereof, obligations of Federal National Mortgage Association ("FNMA"),
commercial paper (rated in the highest rating category by Standard & Poor's
Corporation or Moody's Investors' Service, Inc.), demand deposits, time
deposits, interest or noninterest-bearing certificates of deposit of the
Trustee or any other bank in the United States with capital and unimpaired
surplus of at lease $30,000,000 and repurchase obligations collateralized by
any of the foregoing.

Mortgage Insurance

The forms of Primary Policy and Blanket Insurance Policy have been filed
as exhibits to the registration statement of which this Prospectus forms a
part. The following descriptions do not purport to be complete, and are
qualified in their entirety by reference to such forms of policies.

Primary

Each Pledged Loan with a loan-to-value ratio exceeding 80%* at its date of
closing will be insured down to approximately a 72% loan-to-value ratio by
MGIC under a Primary Policy and such insurance will be maintained in force by
the Service (see "the Servicing Agreement"), until such time as the
outstanding principal balance of the Pledged Loan is reduced to 80% or less
of the original price of, or the then current appraised value of, the
mortgaged home, whichever is greater. The purchaser of the home is required
to pay the annual premiums on this insurance.

Blanket

The Blanket Insurance Policy for the Pledged Loans in the Security
Package for each series of Bonds insures against loss by reason of the
default in payments on any Pledged Loan included therein, with a cumulative
loss limitation equal to 10% of the aggregate principal balance of the
Pledged Loans for that series on the date such series is issued (excluding
the aggregate principal balance of the sub-subordinated loans that represent
the excess over a loan with a long-to-value ratio of 95%). Each Blanket
Insurance

* See Footnote on page 13.

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<PAGE> 8

Policy will be issued by MGIC. The Issuer and the Trustee will be the named
insured under the Insurance Policy and the Issuer will use its best efforts
to maintain such policy in effect. The Blanket Insurance Policy does not
cover all types of losses, and claims thereunder may be made only respecting
defaulted Pledged Loans and only upon satisfaction of certain conditions
precedent described below.

The Blanket Insurance Policy will cover losses to the insured by reason of
payment defaults on Pledged Loans which are not otherwise paid from the
proceeds of any applicable Primary Policy of up to 100% of the principal
balance of each Pledged Loan with an original loan-to-value ratio up to 95%*
outstanding at any time, plus accrued interest (at the rate provided by such
Pledged Loan) through the date of settlement of a claim and all advances,
i.e., advances made by the insured to protect its security, such as unpaid
real estate taxes, hazard insurance premiums necessarily incurred, and other
expenses incurred in preserving the property, plus costs of foreclosure,
including reasonable attorney's fees. The maximum cumulative liability of
MGIC under each Blanket Insurance Policy will be an amount equal to 10% of
the initial aggregate principal balance of the Pledged Loans of the series
(excluding the aggregate principal balance of the subordinated loans that
represent the excess over a loan with a loan-to-value of 95%). Until the
maximum cumulative liability of MGIC is exhausted through loss payments paid
by MGIC, accrued and unpaid interest and all advances on any Pledged Loan in
default will be covered by the Blanket Insurance policy.

The Servicer will present claims to MGIC on behalf of the Insurer and the
Trustee, and will be required to use its best efforts to take all actions
necessary to permit recovery under the Blanket Insurance Policy.

The Blanket Insurance Policy provides that no claim may be validly
presented thereunder unless (a) hazard insurance on the property securing the
defaulted Pledged Loan has been kept in force and other reimbursable
protection and preservation expenses have been paid and (b) if there has been
physical loss or damage to the mortgaged property, it has been restored to
its condition (reasonable wear and tear excepted) at the date insured.
Assuming the satisfaction of these conditions, MGIC is required to either (a)
pay the difference (if any) between the proceeds received from an approved
sale of the property and the principal balance of the defaulted Pledged Loan
plus accrued and unpaid interest (at the rate provided by such Pledged Loan)
to the date of sale and all advances or (b) purchase the property securing the
defaulted Pledged Loan at a price equal to the principal balance thereof plus
accrued and unpaid interest (at the rate provided by such Pledged Loan) to the
date of purchase and all advances.

Since the Blanket Insurance Policy will require that the property subject
to defaulted Pledged Loan be restored to its original condition (reasonable
wear and tear excepted) prior to claiming against MGIC, such policy on the
Pledged Loans will not provide coverage against certain uninsured hazard
losses. The hazard policies covering the Pledged Loans typically exclude form
coverage physical damage resulting from a number of causes and, even when the
damage is covered, may result in recoveries which are significantly less than
full replacement cost of such losses. (see "The Security Package -- Hazard
Insurance").

MGIC

MGIC, which is the insurer under the Primary Policies and the Blanket
Insurance Policy, is engaged in the business of insuring mortgage loans on
residential properties against default in payment

* In order to qualify for the Blanket Insurance Policy, Pledged Loans with
an original loan-to-value ratio in excess of 95% will be divided into two
loans, which will either be secured by a first and a second mortgage on the
home, or by one mortgage on the home for both loans; a senior loan with a
loan-to-value ratio of 95%, which will be covered under the Primary and
Blanket Insurance Policy, and a subordinated loan for the excess, which will
not be covered under either Insurance Policy. With respect to each series of
Bonds, the aggregate Discounted Value of the Pledged Loans that are not
subordinated loans will be at least equal to the principal amount of the
Bonds.

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<PAGE> 9

by the Mortgagor. Insurance is offered to approved mortgage by the mortgagor.
Insurance is offered to approved mortgage lending institutions in all states.
Based on information published by MGIC, at December 31, 1979, MGIC was the
largest private mortgage insurer in the United States and had total assets of
approximately $654.5 million, capital and surplus aggregating approximately
$159.0 million and statutory contingency reserves of approximately $338.2
million, resulting in total policy policyholders' reserves of approximately
$497.2 million, and reported insurance in force covering over $40 billion of
residential mortgages.

Hazard Insurance

The Servicer will use its best efforts to cause the mortgagor to maintain
for each Pledged Loan a hazard insurance policy providing for no less than
the coverage of the applicable state standard form of fire insurance policy
with extended coverage. Such insurance coverage will be in an amount not less
than the maximum insurable value of the home and other improvements securing
such Pledged Loans or the principal balance owing on such Pledged Loan,
whichever is less. The standard forms of mortgages and deeds of trust used by
the Servicer provide that payments must be applied to escrowed items,
including insurance premiums, prior to application to principal or interest.
All amounts collected by the Servicer under any hazard policy (except for
amounts to be applied to the restoration or repair of property subject to the
related mortgage or released to the mortgagor in accordance with the
Servicer's normal servicing procedures) will be treated in the same manner as
any other prepayment on a Pledged Loan (and will therefore be available for
redemption of the Bonds). (see "Description of the Bonds -- Redemption at
Option of Bondholders")

In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements on the property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions particularized in
each policy. Although the policies relating to the Pledged Loans are
underwritten by different insurers and therefore do not contain identical
terms and conditions, the basic terms thereof are determined by state law,
and most such policies typically do not cover any physical damage resulting
from certain risks, including war, riot, governmental action, floods and
other water-related causes, earth movements (including earthquakes,
landslides and mud flows), nuclear reactions, wet or dry rot, vermin,
rodents, insects or domestic animals, theft and, in certain cases, vandalism.
There the property securing a Pledged Loan is located in a designated flood
area, the Servicer requires that the mortgagor obtain flood insurance in
those areas where floor insurance has been made available under the National
Flood Insurance Act of 1968, as amended.

The hazard insurance policies covering properties securing the Pledged
Loans typically contain a clause which in effect required the insured at all
times to carry insurance of a specific percentage (generally 80% to 90%) of
the full replacement value of the improvements on the property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, such clause provides that the insurer's
liability in the event of partial loss shall not exceed the lesser of (a) the
replacement cost of the improvements less physical depreciation or (b) such
proportion of the loss as the amount of insurance carried bears to the
specified percentage of the full replacement cost of such improvements. Since
the amount of hazard insurance the borrowers are required to maintain on the
improvements securing the Pledged Loans declines as the principal balances
owing thereon decrease, and since residential properties have historically
appreciated in value over time, in the event of partial loss hazard insurance
proceeds may be insufficient to restore fully the damaged property.

Any losses incurred by the Issuer due to uninsured risks (i.e.,
earthquakes, landslides and mud flows) or insufficient hazard insurance
proceeds may reduce the collateral in a Security Package.

Prepaid Life Considerations

The Pledged Loans will have maturities of up to 30 years from their dates
of closing, with amortization schedules of up to 50 years. However, mortgages
such as those included in the Pledged

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Loans are frequently prepaid; the proceeds of any such prepayment will be used
to redeem or prepay the Bonds, thereby reducing their average life. Factors
such as general economic conditions, prevailing interest rates and mortgagor
mobility affect the prepayment experiences with respect to mortgage loans.

Experience of the FHA relating to insured single-family mortgage loans at
various interest rates with original maturities of 26 to 30 years, all of
which permit assumption by the new buyer if the home is sold, indicates that
while some of such mortgage loans will, on the average, produce a yield
equivalent to that of a single loan which amortizes according to the
prescribed 30-year amortization schedule and then totally prepays in the 12th
year. This 12-year prepayment assumption is the mortgage industry norm for
quoting yields and is used in most generally accepted yield tables. Assuming
that all of the Pledged Loans for a particular series of Bonds were
originated concurrently and that the weighted average interest rate of such
Pledged Loans was 123/4% per annum, the aggregate remaining principal
balances of such Pledged Loans 12 years after origination would be: (a)
approximately 91.8% of the original aggregate principal balances if no
prepayments are made; (b) approximately 49.1% if the actual prepayment
experience parallels the FHA's national prepayment experience which
accelerated rate would produce an average loan life of approximately seven
years. If the interest rate on the Pledged Loans were higher than 12 3/4% per
annum, the remaining principal balances based on each of these assumptions
would be higher.

Industry experience with 30-year conventional single-family loans
indicates that prepayments with respect to such loans more nearly approximate
twice the rate experience by the FHA. However, lower rates of prepayment may
be experienced because of the combined effects of high prevailing mortgage
rates, seasonal factors, general economic factors, and judicial decisions
limiting the ability of institutional lenders to accelerate a mortgage loan
upon conveyance of mortgaged property. In additional, all of the Pledged
Loans permit assumption by the new buyer if the home is sold, subject to
satisfaction of the Servicer's credit requirements and adjustment of the
interest rate to prevailing levels where permitted by law. There is thus no
assurance that prepayment of the Pledged Loans for a particular series of
Bonds will conform to industry or FHA prepayment experience. The variation of
cash flows because of changes in the prepayment patterns may result in some
loss of collateral in certain situations. (see "Special Considerations --
Interest Rate Fluctuations").

U.S. HOME MORTGAGE CORPORATION -- THE SERVICER

The Servicer does not insure or guarantee the Bonds or the Pledged Loans
and it obligation with respect to payment on the Bonds is limited to the
advance of delinquent payments on individual Pledged Loans to the extent that
such advances will, in the judgment of the Servicer, be reimbursable under
the Insurance Policies. (see "The Security Package -- Insurance"). The
Servicer, a wholly owned mortgage banking subsidiary of U.S. Home, is a
`FNMA/Government National Mortgage Association ("GNMA")/Federal Home Loan
Mortgage Corporation ("FHLMC") approved seller-servicer based in Clearwater,
Florida currently servicing for U.S. Home, other investors and its own
account approximately 8,000 mortgage loans totaling over $280 million. The
Servicer operated through FHA approved branch offices in Houston, Tucson,
Phoenix, Las Vegas, Denver and Clearwater where it originated loans. The
Servicer originated approximately $138,000,000 in mortgage loans during 1979,
primarily covering U.S. Home products. The Servicer's consolidated
stockholder's equity as at December 31, 1979 was $5,364,497.

Prospective residential mortgage loans underwritten and serviced by the
Servicer are subject to an underwriting process and review by the Servicer in
order to assess the prospective homeowner's ability to repay and the adequacy
of home as collateral. In additional, all Pledged Loans must conform to the
requirements of MGIC, the insurer under the Primary and Blanket Insurance
Policies, which will review and insure each Pledged loan. All Pledged Loans
will be approved by MGIC prior to the issuance of the Bonds that they secure.

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