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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One): [ ] Form 10-K [ ] Form 20-F [ ] Form 11-K
[X] Form 10-Q [ ] Form N-SAR
For Period Ended: March 31, 1998
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[ ] Transition Report on Form 10-K and Form 10-KSB
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q and Form 10-QSB
[ ] Transition Report on Form N-SAR
For the Transition Period Ended: ____________________________
Read Attached Instruction sheet Before Preparing Form. Please Print or Type
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I - REGISTRANT INFORMATION
HOMECAPITAL INVESTMENT CORPORATION
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Full Name of Registrant
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Former Name if Applicable
6836 AUSTIN CENTER BLVD., SUITE 280
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Address of Principal Executive Office (Street and Number)
AUSTIN, TEXAS 78731
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City, State and Zip Code
PART II - RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
| (a) The reasons described in reasonable detail in Part III of this form
| could not be eliminated without unreasonable effort or expense;
| (b) The subject annual report, semi-annual report, transition report on
| Form 10-K, Form 10-KSB, Form 20-F, 11-K or Form N-SAR, or portion
| thereof, will be filed on or before the fifteenth calendar day
| following the prescribed due date; or the subject quarterly
[x] | report of transition report on Form 10-Q, 10-QSB or portion thereof
| will be filed on or before the fifth calendar day following
| the prescribed due date; and
| (c) The accountant's statement or other exhibit required by Rule
| 12b-25(c) has been attached if applicable.
PART III - NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 10-KSB, 11-K, 20-F,
10-Q, 10-QSB, N-SAR or the transition report or portion thereof could not be
filed within the prescribed time period. (Attach Extra Sheets if Needed.)
On March 24, 1998, the Federal National Mortgage Association ("Fannie Mae")
abruptly and unexpectedly terminated the Mortgage Selling and Servicing Contract
with the Registrant's operating subsidiary, HomeOwners Mortgage & Equity, Inc.
("Home"). On April 6, 1998, the employment was terminated of the President and
three (3) Executive Vice Presidents of Registrant and Home, including the chief
financial officer and principal accounting officer of Registrant and Home. On
May 4, 1998, Home filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code. The remaining executive and accounting personnel
of Registrant and Home have not been able to complete the financial statements
and related financial data or otherwise provide a reasonable estimate of the
impact of these events within the prescribed time for filing the Quarterly
Report on Form 10-QSB of the Registrant.
PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification.
J. Rolfe Johnson (713) 621-2880
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) or
the Securities Exchange Act of 1934 or Section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that
the registrant was required to file such report(s) been filed? If the
answer is no, identify report(s). [x] Yes [ ] No
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(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected by
the earnings statements to be included in the subject report or portion
thereof? [x] Yes [ ] No
See Exhibit A attached.
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
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HomeCapital Investment Corporation
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(Name of Registrant as Specified in Charter)
Has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date May 15, 1998 By /s/ Rebecca F. Blanchard
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Rebecca F. Blanchard, Treasurer and
Principal Accounting Officer
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HOMECAPITAL INVESTMENT CORPORATION
EXHIBIT A
TO
FORM 12b-25
Explanatory Comments regarding material changes in operating results:
The Company expects to incur a pre-tax loss for the three months ended
March 31, 1998, in excess of $21,000,000, and a net loss for the period in
excess of $18,000,000 or approximately $2.17 per share, diluted. For the same
period ended March 31, 1997, the Company reported net income of $1,544,693 or
$.15 per share, diluted.
The primary reason for the anticipated operating loss relates to the
following nonrecurring events:
On March 24, 1998, Fannie Mae terminated the Mortgage Selling and
Servicing Contract for FHA Title loans with Home. Additionally, Fannie Mae
terminated its short-term warehouse facilities and its securities repurchase
facilities with Home related to financing of Title I loans and mortgage-backed
securities. Home began selling substantially all of its Title I loan production
to Fannie Mae in June 1996. As part of the contract termination, the right to
service the portfolio of Title I loans and mortgage-backed securities and
receive the excess interest flow from these assets serviced was terminated by
Fannie Mae, and Fannie Mae assumed control over the servicing and the related
cash flow.
The carrying value of this asset, which is included in the balance sheet
caption, Interest-Only Strip Receivable, had a balance of approximately
$12,356,000 at February 28, 1998, the month-end immediately preceding the date
of termination of the Fannie Mae relationship. At March 31, 1998, the Company
had determined that the asset had been permanently impaired and has charged the
write-off of the asset against operations for the three and six month periods
ended March 31, 1998.
In conjunction with the Fannie Mae contract termination, the Company was
also notified that Fannie Mae was requesting the repurchase by Home of certain
multifamily loans previously sold to Fannie Mae that Fannie Mae now considers to
be ineligible under the contract.
Since substantially all of the Title I loan production of Home was sold
to Fannie Mae on a whole loan basis or swapped with Fannie Mae for
mortgage-backed securities, and the whole loans and mortgage-backed securities
were financed by Fannie Mae, the actions taken by Fannie Mae have had a
materially adverse effect upon the Company.
The actions by Fannie Mae have resulted in the following effects upon
the Company:
. Caused the substantial suspension of business;
. Caused the write-off of a material portion of Interest-only strip
receivables in the amount of $13,857,307; and
. Caused an event of default under the various financing agreements
with the Company's lending institution.
In summary, the going concern value of Home and the Company has been
materially impaired, and it is unlikely that the Company will be able to
continue operations. Home is, therefore, seeking reorganization under Chapter 11
of the Bankruptcy Code.
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The specific charges to operations related to the period ended March 31, 1998,
are estimated as follows:
1. Write-off of Interest-only strip receivables,
classified as available for sale securities $11,981,819
2. Reversal of allowance for available for sale
securities, previously classified in
Stockholders' Equity 1,875,488
3. Unrealized loss on Interest-only strip
receivables - Trading Securities 3,707,095
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Total Charges $17,564,402
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