GUARANTEED MORTGAGE CORP III, 10-K405, 1995-03-21

GUARANTEED MORTGAGE CORP III
10-K405, 1995-03-21
ASSET-BACKED SECURITIES

Previous: NORTHERN EMPIRE BANCSHARES, POS AM, 1995-03-21

Next: HABERSHAM BANCORP, DEF 14A, 1995-03-21

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

FORM 10-K
(Mark one) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended DECEMBER 31, 1994
-----------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-12811
--------------------------------------------------------------
GUARANTEED MORTGAGE CORPORATION III
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)

MICHIGAN 31-1054754
-------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)

6061 SOUTH WILLOW DRIVE, SUITE 301, GREENWOOD VILLAGE, COLORADO 80111
--------------------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code - (303) 740-3370
--------------
Securities registered pursuant to Section 12(b) of the Act:
NONE
----
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $1.00 PER SHARE
---------------------------------------
(Title of Class)

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 the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes XX No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (paragraph 229.405 of this chapter) 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. /X/
-----
Aggregate market value of voting stock held by nonaffiliates of the registrant
as of March 1, 1995: $-0-

Number of shares of common stock outstanding as of March 1, 1995: 1,000.

Registrant meets the conditions set forth in General Instruction J(1)(a) and
(b) of Form 10-K and is therefore filing this Annual Report on Form 10-K with
the reduced disclosure format.
<PAGE> 2

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

PART I

ITEM 1. BUSINESS

Organization

Guaranteed Mortgage Corporation III (the "Company") was incorporated
under the laws of the State of Michigan on October 18, 1982, as a wholly-owned
limited purpose financing subsidiary of Pulte Financial Companies, Inc.
("PFCI"), a wholly-owned subsidiary of Pulte Corporation, a publicly-owned
holding company listed on the New York Stock Exchange.

Issuance of Collateralized Mortgage Bonds

The Company was organized to facilitate the financing of long-term
mortgage loans on single-family residential homes, including homes built by
Pulte Home Corporation ("PHC"), through the issuance and sale of bonds secured
by mortgage-backed securities ("Certificates") or by funding agreements with
various limited-purpose financing companies ("Funding Companies") and the notes
issued thereunder that are secured by Certificates ("Funding Notes"), or by a
combination thereof. Such Certificates consist of Guaranteed Mortgage
Pass-Through Certificates ("FNMA Certificates"), issued and guaranteed as to
the full and timely payment of principal and interest by the Federal National
Mortgage Association, Fully Modified Pass-Through mortgage-backed certificates
("GNMA Certificates"), guaranteed as to the full and timely payment of
principal and interest by the Government National Mortgage Association,
Mortgage Participation Certificates ("FHLMC Certificates"), issued and
guaranteed as to the full and timely payment of interest and as to the ultimate
payment of principal by the Federal Home Loan Mortgage Corporation, or a
combination of such Certificates. To accomplish its purpose, the Company
issued collateralized mortgage bonds in series and used the net proceeds of
such sales to purchase Certificates backed by mortgage loans, some of which
were originated by ICM Mortgage Corporation, a wholly-owned subsidiary of PHC,
and are secured by homes, some of which were built by PHC. Alternatively, the
Company remitted a portion of the net proceeds of such sales of collateralized
mortgage bonds in series to a Funding Company that, in turn, pledged to the
Company certain Funding Notes, which, together with certain other collateral,
serve as security for the obligations of that Funding Company to the Company.

The Company, although incorporated in October, 1982 and capitalized in
August, 1984, did not commence operations until it issued its first series of
bonds on October 24, 1984. Prior to 1994, the Company issued fifteen series of
bonds, all of which were offered and sold to the public pursuant to a
registration statement filed with the Securities and Exchange Commission. The
bonds had an aggregate original principal amount of $1,208,697,000, with stated
annual interest rates ranging from 7.0% to 12.5%. The Company did not issue
any additional series of bonds in 1994. At December 31, 1994, the Company had
$189,715,500 in aggregate principal amount of bonds outstanding, with stated
annual interest rates ranging from 8.50% to 9.00%. This aggregate principal
amount includes $21,860,006 in outstanding aggregate principal amount of the
Company's Series H Bonds, secured by Funding Notes, and $53,024,658 in
outstanding aggregate principal amount of the Company's Series L and Series M
Bonds, all of which are non-recourse obligations and do not represent a
liability of the Company.

Each series of the Company's bonds is secured by a separate collateral
package consisting, in part, of the Certificates purchased in connection with
the issuance of a bond series, or Funding Notes or a combination thereof,
additional pledged GNMA certificates and cash. The collateral package for a
series is pledged to NBD Bank, N.A., as trustee on behalf of the holders of the
bonds of such series. Funds held by the trustee with respect to the bonds are
restricted so as to assure the payment of principal and interest on the bonds
to the extent of such funds.

2
<PAGE> 3

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

Under the Company's articles of incorporation and the terms of the
indenture governing the issuance of the Company's collateralized mortgage
bonds, the Company may only issue collateralized mortgage bonds rated in the
highest category by Standard & Poor's Corporation.

ITEM 2. PROPERTIES

The Company has no material physical properties. Its primary asset is
ownership of the various Certificates, and the mortgage loans underlying such
Certificates, pledged to NBD Bank, N.A., as trustee, to secure the Company's
collateralized mortgage bonds.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS

Information in response to this item is omitted pursuant to General
Instruction J(2).

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

The Company is a wholly-owned subsidiary of PFCI. (See "Business -
Organization" in Item 1 of this Report.) Thus, there is no market for its
common stock.

ITEM 6. SELECTED FINANCIAL DATA

Information in response to this item is omitted pursuant to General
Instruction J(2).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The Company's mortgage-backed securities (Certificates) or finance
companies' notes secured by Certificates (Funding Notes) are used as collateral
for associated bonds payable. Mortgage-backed securities were acquired from
affiliates. Any difference between the acquisition price and the principal
balance of the securities at their date of acquisition (mortgage
discounts/premiums) was amortized into operations as an adjustment of mortgage
yield.

The Company's pretax income (loss) before extraordinary item was
$(7,204,441) for 1994 as compared to pretax income (loss) before extraordinary
item of $(794,434) and $4,905,355 for 1993 and 1992, respectively. Earnings
decreased during 1994 as compared to 1993 primarily due to increased
amortization of mortgage discounts, bond discounts and bond issue costs as a
result of GMC III changing its accounting

3
<PAGE> 4

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

estimate of amortization speeds in December, 1994 due to greater than expected
prepayment experience.

Earnings decreased during 1993 from 1992 primarily due to reduced net
interest carry as a result of volume declines resulting from accelerated
mortgage prepayments related to heavy refinancing activity in 1993.

Pretax extraordinary losses from the bond extinguishments during 1993
and 1992 were $2,028,327 and $1,872,795, respectively. These losses resulted
from the write-off of unamortized bond discounts and issue costs. There was no
similar activity in 1994.

Financial Condition

The Company will have no additional capital or liquidity requirements,
assuming the mortgage-backed securities continue to pay principal and interest
in accordance with their terms.

4
<PAGE> 5

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
Page
<S> <C>
Index to Financial Statements

Balance Sheets at December 31, 1994 and 1993 6

Statements of Operations for the years ended
December 31, 1994, 1993 and 1992 7

Statements of Shareholder's Equity for the years
ended December 31, 1994, 1993 and 1992 8

Statements of Cash Flows for the years
ended December 31, 1994, 1993 and 1992 9

Notes to Financial Statements 10

Report of Ernst & Young LLP, Independent Auditors 12

</TABLE>

5
<PAGE> 6

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

BALANCE SHEETS
DECEMBER 31, 1994 AND 1993

ASSETS

Cash . . . . . . . . . . . . . . . . . . . . . $ 450 $ 1,003

Funds held by trustee . . . . . . . . . . . . . 2,275,383 7,621,454

Mortgage-backed securities . . . . . . . . . . 114,015,107 154,532,645

Accrued interest receivable . . . . . . . . . . 869,788 1,160,553

Bond issue costs . . . . . . . . . . . . . . . 759,108
------------- ------------
$ 117,160,728 $164,074,763
============= ============

LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:

Bonds payable . . . . . . . . . . . . . . . $ 114,830,836 $153,750,523

Accrued liabilities, primarily interest . . 1,727,987 2,354,417

Due affiliates . . . . . . . . . . . . . . . 86,479 249,956
-------------- -----------
Total liabilities . . . . . . . . . . . 116,645,302 156,354,896
-------------- -----------

Shareholder's equity:

Common stock, $1 par value; 50,000 shares
authorized; 1,000 shares issued and
outstanding . . . . . . . . . . . . . . . 1,000 1,000

Additional paid-in capital . . . . . . . . . 19,000 19,000

Retained earnings . . . . . . . . . . . . . 495,426 7,699,867
-------------- ------------
Total shareholder's equity . . . . . . 515,426 7,719,867
-------------- ------------
$ 117,160,728 $164,074,763
============== ============
</TABLE>

See accompanying notes.

6
<PAGE> 7

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
1994 1993 1992
--------------- --------------- ----------------
<S> <C> <C> <C>
Revenues:

Interest, including amortization of net
mortgage discounts/premiums . . . . . . . . . . . . $ 9,324,263 $18,468,205 $33,379,651
Gain on sale of mortgage-backed securities . . . . . 4,357,636
Fee income . . . . . . . . . . . . . . . . . . . . . 33,303 45,917 65,098
----------- ----------- -----------
9,357,566 18,514,122 37,802,385
----------- ----------- -----------

Expenses:

Interest, including amortization of bond
discounts and issue costs . . . . . . . . . . . . 16,464,805 19,139,112 32,560,898
General and administrative . . . . . . . . . . . . 97,202 169,444 336,132
----------- ----------- -----------
16,562,007 19,308,556 32,897,030
----------- ----------- -----------

Income (loss) before income tax benefit and
extraordinary item . . . . . . . . . . . . . . . (7,204,441) (794,434) 4,905,355

Income tax benefit . . . . . . . . . . . . . . . . (2,809,732) (309,829)
----------- ----------- -----------

Income (loss) before extraordinary item . . . . . . . (4,394,709) (484,605) 4,905,355

Extraordinary loss from early extinguishment of
debt, net of tax benefit . . . . . . . . . . . . . (1,237,279) (1,872,795)
----------- ----------- -----------
Net income (loss) . . . . . . . . . . . . . . . . . . $(4,394,709) $(1,721,884) $ 3,032,560
=========== =========== ===========
</TABLE>

See accompanying notes.

<PAGE> 8

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>

Balance January 1, 1992 . . . . . . . . . 1,000 19,000 7,824,568 7,844,568

Dividends . . . . . . . . . . . . . . . . (334,500) (334,500)

Net income . . . . . . . . . . . . . . . 3,032,560 3,032,560
-------- --------- ----------- -----------

Balance December 31, 1992 . . . . . . . . 1,000 19,000 10,522,628 10,542,628

Dividends . . . . . . . . . . . . . . . . (1,100,877) (1,100,877)

Net loss . . . . . . . . . . . . . . . . (1,721,884) (1,721,884)
-------- ---------- ----------- -----------

Balance December 31, 1993 . . . . . . . . 1,000 19,000 7,699,867 7,719,867

Dividends . . . . . . . . . . . . . . . . (2,809,732) (2,809,732)

Net loss . . . . . . . . . . . . . . . . (4,394,709) (4,394,709)
---------- ---------- ----------- -----------
Balance December 31, 1994 . . . . . . . . $ 1,000 $ 19,000 $ 495,426 $ 515,426
========== =========== =========== ===========
</TABLE>

See accompanying notes.

8
<PAGE> 9

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------------ ------------------ ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . $ (4,394,709) $ (1,721,884) $ 3,032,560
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Amortization of net mortgage
premiums/discounts . . . . . . . . . . . . . . 2,164,399 469,946 (84,046)
Amortization of bond discounts
and issue costs . . . . . . . . . . . . . . . 5,038,874 690,354 930,341
Gain on sale of mortgage-backed securities . . . (4,357,636)
Loss from early extinguishment of debt . . . . . 2,028,327 1,872,795
Provision for income tax benefit . . . . . . . . (2,809,732) (1,100,877)
Operating changes in cash due to:
Decrease in accrued interest receivable . . . . 290,765 1,134,501 829,839
Increase in accrued liabilities . . . . . . . . 3,628,078 1,804,631 2,137,350
------------- ---------- -----------

Net cash provided by operating activities 3,917,675 3,304,998 4,361,203
------------- ----------- -----------
Cash flows from investing activities:
Principal amortization and prepayments
of mortgage-backed securities . . . . . . . . . . 38,353,138 68,328,709 68,680,770
Transfer of mortgage-backed securities
to holding company . . . . . . . . . . . . . . . . 75,304,263
Sale of mortgage-backed securities . . . . . . . . 41,324,074
Decrease (increase) in funds held by trustee . . . 5,346,071 1,308,530 (1,303,646)
------------- ------------ ------------

Net cash provided by investing activities 43,699,209 144,941,502 108,701,198
------------- ------------ ------------
Cash flows from financing activities:
Bond principal payments . . . . . . . . . . . . . . (47,453,960) (148,339,714) (107,195,396)
Increase (decrease) in due affiliates . . . . . . . (163,477) 93,281 (5,532,009)
Dividends to parent . . . . . . . . . . . . . . . . (334,500)
------------- ------------ ------------

Net cash used in financing activities . . (47,617,437) (148,246,433) (113,061,905)
------------- ------------ ------------
Net increase (decrease) in cash . . . . . . . . . . . (553) 67 496

Cash at beginning of year . . . . . . . . . . . . . . 1,003 936 440
------------- ------------ -------------

Cash at end of year . . . . . . . . . . . . . . . . . $ 450 $ 1,003 $ 936
============= ============ =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the year for interest . . . . . . . $ 7,797,852 $ 16,644,127 $ 29,493,207
============= ============ =============

</TABLE>

See accompanying notes.

9
<PAGE> 10

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION, RELATED PARTY TRANSACTIONS AND SIGNIFICANT ACCOUNTING
POLICIES

BASIS OF PRESENTATION

Guaranteed Mortgage Corporation III (GMC III) is a wholly-owned financing
subsidiary of Pulte Financial Companies, Inc. (PFCI), which is a wholly-owned
financing subsidiary of Pulte Corporation.

GMC III acquired mortgage-backed securities from affiliates and entered into
funding agreements with various limited purpose financing companies (funding
companies), the notes (funding notes) issued thereunder being secured by
mortgage-backed securities. GMC III then issued bonds collateralized by such
securities or funding notes. The mortgage-backed securities are guaranteed by
the Government National Mortgage Association, the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation.

RELATED PARTY TRANSACTIONS

Transactions and arrangements between GMC III and PFCI, Pulte Corporation,
and/or Pulte Home Corporation (PHC), an indirect wholly-owned subsidiary of
Pulte Corporation, are summarized as follows:

- GMC III has periodic interest-free cash and non-cash advances from certain
affiliates, the net payable balances of which were $86,479 and $249,956 at
December 31, 1994 and 1993, respectively. Average month-end balances due
these affiliates were $171,485 and $4,784,151 during the years ended December
31, 1994 and 1993, respectively. Advances payable by GMC III to affiliates
relate principally to the acquisition of mortgage-backed securities.

- GMC III's taxable income is included in the consolidated tax returns of
Pulte Corporation. Pursuant to PFCI's tax sharing agreement with Pulte
Corporation, no federal income taxes were provided in 1992, because the
consolidated group did not incur federal income tax expense. Effective
January 1, 1993, GMC III implemented the new method of accounting for income
taxes (FAS No. 109) that requires income taxes to be provided by subsidiaries
based on their own results of operations. In 1994 and 1993, GMC III provided
for income taxes on a stand alone basis at statutory rates. The related
income tax benefit was settled by a dividend to the parent corporation and
did not represent a cash transaction.

- Certain of GMC III's corporate officers are also officers of PFCI, Pulte
Corporation, PHC, ICM, and/or other affiliates of GMC III.

- PFCI incurs certain administrative expenses on behalf of GMC III, for which
GMC III reimburses PFCI.

- During the years ended December 31, 1994, 1993 and 1992, GMC III paid
$33,303, $45,917 and $71,233, respectively, to PFCI for management fees
related to the issuance and administration of non-recourse bonds (see Note
3).

- During the years ended December 31, 1994, 1993 and 1992, GMC III paid
dividends to PFCI of $2,809,732, $1,100,877 and $334,500, respectively.
Dividends during 1994 and 1993 related entirely to income tax benefits that
did not represent cash transactions.

SIGNIFICANT ACCOUNTING POLICIES

- Mortgage-backed securities are classified as held-to-maturity based upon
the Company's positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost and are adjusted for
amortization of premiums and accretion of discounts over the estimated life
of the security. Such amortization, along with interest and dividends are
included in interest income.

- Unamortized net mortgage discounts/premiums, bond discounts and issue costs
had been amortized using the interest method over the estimated lives of the
mortgage-backed securities and bonds, respectively. The rates previously
used to amortize these into operations were based on management's estimates
of the remaining lives of the mortgage-backed securities and bonds. These
estimates had been periodically reviewed and adjusted, as necessary.

- In December 1994, due to higher than anticipated collateral prepayment
experience, GMC III changed its accounting estimate of required amortization
and expensed all remaining mortgage discounts, bond discounts and issue costs
amounting to $5,812,061. Unamortized net mortgage premiums were $2,164,399 at
December 31, 1993.

10
<PAGE> 11

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

NOTES TO FINANCIAL STATEMENTS, CONTINUED

2. MORTGAGE-BACKED SECURITIES

At December 31, 1994, mortgage-backed securities (GNMA certificates) had an
estimated fair market value of $115,620,712 which included gross unrealized
gains of $1,605,605 on securities with an amortized cost of $114,015,107. At
December 31, 1993, these securities had an estimated fair market value of
$163,612,379, which included gross unrealized gains of $9,079,734 on securities
with an amortized cost of $154,532,645. Actual maturities of these
mortgage-backed securities may differ from contractual maturities because the
issuers of the securities may have the right to prepay obligations without
penalties.

During the year ended December 31, 1993, GMC III extinguished $79,295,473 of
its long-term debt prior to scheduled maturity. Due to this redemption, GMC
III transferred the related outstanding collateral of $77,044,581 and the
unamortized discount of $1,740,318 associated with this collateral, to its
affiliate, Pulte Financial Holding Company.

3. BONDS PAYABLE

Bonds payable at December 31, 1994 and 1993 consisted of two bond issues with
stated interest rates ranging from 8.50% to 9.00%. Weighted average stated
interest rates were 8.88% and 8.82% at December 31, 1994 and 1993,
respectively. Both of the bond issues have classes of bonds with serial
maturities. Each series of the bonds is secured by separate pools of
mortgage-backed securities. Timing of bond retirements is dependent upon
payments received on mortgage loans. The bonds are further collateralized by
additional pledged GNMA certificates in the aggregate amount of $1,060,400.

Bonds payable are stated net of unamortized bond discounts of $4,279,765 at
December 31, 1993 ($0 at December 31, 1994).

The estimated fair market values of the outstanding bonds payable at December
31, 1994 and 1993 were $115,084,000 and $162,725,000, respectively. This was
estimated using December secondary market activity for comparable securities.
Secondary market activity for these specific securities is limited.

Under provisions of the bond indenture, funds held by trustee are restricted
so as to assure the payment of principal and interest on the bonds to the
extent of such funds.

As of December 31, 1994, $74,884,664 was outstanding for three series of
non-recourse bonds issued by GMC III in the initial aggregate principal amount
of $527,300,000, which are secured by funding notes or mortgage-backed
securities in which GMC III has nominal or no ownership interest. In
accordance with generally accepted accounting principles, these series of bonds
are not treated as borrowings and, accordingly, such bonds and related
collateral are not included on the balance sheet.

4. EXTRAORDINARY ITEM

During the year ended December 31, 1993, GMC III extinguished $79,295,473 of
its long-term debt prior to scheduled maturity, resulting in an extraordinary
pretax loss of $2,028,327 due to the write-off of unamortized bond discounts
and issue costs.

During the year ended December 31, 1992, GMC III extinguished or notified the
trustee of its intent to extinguish $51,370,603 of its long-term debt prior to
scheduled maturity, resulting in an extraordinary loss of $1,872,795 due to the
write-off of unamortized bond discounts and issue costs. The funds for these
extinguishments were obtained from the sale of the mortgage-backed securities
which collateralized the bonds.

11
<PAGE> 12

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

REPORT OF ERNST & YOUNG LLP

INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS AND SHAREHOLDER
GUARANTEED MORTGAGE CORPORATION III

We have audited the accompanying balance sheets of Guaranteed Mortgage
Corporation III as of December 31, 1994 and 1993, and the related statements of
income, shareholder's equity and cash flows for each of the three years in the
period ended December 31, 1994. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

As more fully described in Note 1, Guaranteed Mortgage Corporation III is a
wholly-owned financing subsidiary of Pulte Financial Companies, Inc., which in
turn is a wholly-owned financing subsidiary of Pulte Corporation. Guaranteed
Mortgage Corporation III has certain transactions with affiliates.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Guaranteed Mortgage
Corporation III at December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

As discussed in Note 1 of the Notes to the Financial Statements, Guaranteed
Mortgage III changed its method of accounting for income taxes in 1993.

ERNST & YOUNG LLP
Detroit, Michigan
January 31, 1995

12
<PAGE> 13

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

This item is not applicable.

PART III

Information in response to this part is omitted pursuant to General
Instruction J(2).

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K

The following documents are filed as a part of this Annual Report on
Form 10-K:

(a) (1) Financial Statements

GUARANTEED MORTGAGE CORPORATION III
Balance Sheets at December 31, 1994 and 1993
Statements of Operations for the years ended
December 31, 1994, 1993 and 1992
Statements of Shareholder's Equity for the
years ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for the
years ended December 31, 1994, 1993 and 1992
Notes to Financial Statements
Report of Ernst & Young LLP, Independent
Auditors

(a) (2) Financial Statement Schedules

GUARANTEED MORTGAGE CORPORATION III

IV - Indebtedness of and to Related Parties - Not
Current

All other schedules have been omitted since the
required information is not present, is not present
in amounts sufficient to require submission of the
schedule or because the required information is
included in the financial statements or notes
thereto.

(a) (3) Exhibits

<TABLE>
<S> <C>
3.1 Articles of Incorporation and By-Laws of Guaranteed Mortgage Corporation III, previously filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form S-3 (Registration No. 2-93045), are
hereby incorporated by reference.
</TABLE>

13
<PAGE> 14

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
3.2 Amendment to Articles of Incorporation, previously filed as Exhibit 3 to the Registrant's Current
Report on Form 8-K, dated as of September 20, 1984, is hereby incorporated by reference.

4.1 Indenture between Guaranteed Mortgage Corporation III and National Bank of Detroit, as trustee, dated
as of October 1, 1984, previously filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K,
dated as of September 20, 1984, is hereby incorporated by reference.

4.2 Series B Supplement to Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of November 1, 1986, previously filed as Exhibit 4 to the Registrant's
Current Report on Form 8-K, dated as of November 28, 1986, is hereby incorporated by reference.

4.3 Series C Supplement to Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of January 1, 1987, previously filed as Exhibit 4 to the Registrant's
Current Report on Form 8-K, dated as of January 27, 1987, is hereby incorporated by reference.

4.4 Series D Supplement to Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of April 1, 1987, previously filed as Exhibit 4 to the Registrant's
Current Report on Form 8-K, dated as of April 29, 1987, is hereby incorporated by reference.

4.5 Series E Supplement to Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of June 1, 1987, previously filed as Exhibit 4 to the Registrant's
Current Report on Form 8-K, dated as of June 26, 1987, is hereby incorporated by reference.

4.6 Series G Supplement to Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of September 1, 1987, previously filed as Exhibit 4 to the Registrant's
Current Report on Form 8-K, dated as of September 29, 1987, is hereby incorporated by reference.

4.7 Series F Supplement to Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of October 1, 1987, previously filed as Exhibit 4 to the Registrant's
Current Report on Form 8-K, dated as of October 29, 1987, is hereby incorporated by reference.

4.8 Series H Supplement to Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of November 1, 1987, previously filed as Exhibit 4 to the Registrant's
Current Report on Form 8-K, dated as of November 24, 1987, is hereby incorporated by reference.

</TABLE>

14
<PAGE> 15

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
4.9 Series I Supplement to Indenture between Guaranteed Mortgage Corporation III and National
Bank of Detroit, as trustee, dated as of November 1, 1987, previously filed as Exhibit 4
to the Registrant's Current Report on Form 8-K, dated as of November 25, 1987, is hereby
incorporated by reference.

4.10 Series J Supplement to Indenture between Guaranteed Mortgage Corporation III and National
Bank of Detroit, as Trustee, dated as of January 1, 1988, previously filed as Exhibit 4 to
the Registrant's Current Report on Form 8-K, dated as of January 28, 1988, is hereby
incorporated by reference.

4.11 Series K Supplement to Indenture between Guaranteed Mortgage Corporation III and National
Bank of Detroit, as Trustee, dated as of February 1, 1988, previously filed as Exhibit 4
to the Registrant's Current Report on Form 8-K, dated as of February 26, 1988, is hereby
incorporated by reference.

4.12 Series L Supplement to Indenture between Guaranteed Mortgage Corporation III and National
Bank of Detroit, as Trustee, dated as of March 1, 1988, previously filed as Exhibit 4 to
the Registrant's Current Report on Form 8-K, dated as of March 30, 1988, is hereby
incorporated by reference.

4.13 Series M Supplement to Indenture between Guaranteed Mortgage Corporation III and National
Bank of Detroit, as Trustee, dated as of March 1, 1988, previously filed as Exhibit 4.1 to
the Registrant's Current Report on Form 8-K, dated as of March 30, 1988, is hereby
incorporated by reference.

4.14 Series N Supplement to Indenture between Guaranteed Mortgage Corporation III and National
Bank of Detroit, as Trustee, dated as of May 1, 1988, previously filed as Exhibit 4 to the
Registrant's Current Report on Form 8-K, dated as of May 26, 1988, is hereby incorporated
by reference.

4.15 First Amendment to Series L Supplement to Indenture between Guaranteed Mortgage
Corporation III and National Bank of Detroit, as Trustee, dated as of June 1, 1988,
previously filed as Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of
June 15, 1988, is hereby incorporated by reference.

4.16 First Amendment to Series M Supplement to Indenture between Guaranteed Mortgage
Corporation III and National Bank of Detroit, as Trustee, dated as of June 1, 1988,
previously filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K, dated as
of June 15, 1988, is hereby incorporated by reference.

4.17 Series O Supplement to Indenture between Guaranteed Mortgage Corporation III and National
Bank of Detroit, as Trustee, dated as of July 1, 1988,

</TABLE>

15
<PAGE> 16

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
previously filed as Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of
July 22, 1988, is hereby incorporated by reference.

9.1 Pledge Agreement between Pulte Financial Companies, Inc., and First National Bank of
Minneapolis, as pledgee, previously filed as Exhibit 4 to the Registrant's Current Report
on Form 8-K, dated as of September 20, 1984, is hereby incorporated by reference.

10.1 Underwriting Agreement Standard Provisions incorporated by reference into the Underwriting
Agreements filed as Exhibits 10.2 and 10.4, previously filed as Exhibit 1.1 to the
Registrant's Current Report on Form 8-K dated as of September 20, 1984, is hereby
incorporated by reference.

10.2 Underwriting Agreement between Guaranteed Mortgage Corporation III and Pulte Home
Corporation, on the one hand, and The First Boston Corporation, on the other, dated
October 2, 1986, previously filed as Exhibit 1 to the Registrant's Current Report on
Form 8-K, dated as of November 28, 1986, is hereby incorporated by reference.

10.3 Terms Agreement between Guaranteed Mortgage Corporation III and Pulte Home Corporation, on
the one hand, and The First Boston Corporation, on the other, dated October 2, 1986,
previously filed as Exhibit 1.1 to the Registrant's Current Report on Form 8-K, dated as
of November 28, 1986, is hereby incorporated by reference.

10.4 Underwriting Agreement between Guaranteed Mortgage Corporation III and Pulte Home
Corporation, on the one hand, and The First Boston Corporation, on the other, dated
December 9, 1986, previously filed as Exhibit 1 to the Registrant's Current Report on Form
8-K, dated as of January 27, 1987, is hereby incorporated by reference.

10.5 Terms Agreement between Guaranteed Mortgage Corporation III and Pulte Home
Corporation, on the one hand, and The First Boston Corporation, on the other, dated December
9, 1986, previously filed as Exhibit 1.1 to the Registrant's Current Report on Form 8-K,
dated as of January 27, 1987, is hereby incorporated by reference.

10.6 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Robert W. Baird & Co. Incorporated and Morgan Keegan & Company, Inc., on the other,
dated April 6, 1987, previously filed as Exhibit 1 to the Registrant's Current Report on Form
8-K, dated as of April 29, 1987, is hereby incorporated by reference.

10.7 Underwriting Agreement Basic Provisions, incorporated by reference into the Underwriting
Agreement filed as Exhibit 10.6, previously filed as Exhibit 1.1 to the Registrant's
Current Report

</TABLE>

16
<PAGE> 17

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
on Form 8-K, dated as of April 29, 1987, is hereby incorporated by reference.

10.8 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Shearson Lehman Brothers Inc. and Blunt Ellis & Loewi Incorporated, on the other,
dated June 11, 1987, previously filed as Exhibit 1 to the Registrant's Current Report on Form
8-K, dated as of June 26, 1987, is hereby incorporated by reference.

10.9 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreement filed as Exhibit 10.8, previously filed as Exhibit 1.1 to the
Registrant's Current Report on Form 8-K, dated as of June 26, 1987, is hereby incorporated by
reference.

10.10 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Robert W. Baird & Co. Incorporated, A.G. Edwards & Sons, Inc., J.J.B. Hilliard,
W.L. Lyons, Inc. and Morgan Keegan & Company, Inc., on the other, dated August 24, 1987,
previously filed as Exhibit 1 to the Registrant's Current Report on Form 8-K, dated as of
September 29, 1987, is hereby incorporated by reference.

10.11 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreements filed as Exhibit 10.10, 10.12 and 10.15, previously filed as Exhibit
1.1 to the Registrant's Current Report on Form 8-K, dated as of September 29, 1987, is hereby
incorporated by reference.

10.12 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Robert W. Baird & Co. Incorporated, Blunt Ellis & Loewi Incorporated, Boettcher &
Company, Inc. and J.C. Bradford & Co., on the other, dated September 22, 1987, previously
filed as Exhibit 1 to the Registrant's Current Report on Form 8-K, dated as of October 29,
1987, is hereby incorporated by reference.

10.13 Underwriting Agreement between Guaranteed Mortgage Corporation III and Dean
Witter Reynolds Inc., dated November 3, 1987, previously filed as Exhibit 1 to the
Registrant's Current Report on Form 8-K, dated as of November 24, 1987, is hereby
incorporated by reference.

10.14 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreement filed as Exhibit 10.13, previously filed as Exhibit 1.1 to the
Registrant's Current Report on Form 8-K, dated as of November 24, 1987, is hereby
incorporated by reference.

10.15 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Robert W. Baird & Co. Incorporated, Blunt Ellis & Loewi

</TABLE>

17
<PAGE> 18

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
Incorporated, Boettcher & Company, Inc., J.C. Bradford & Co. and Stifel,
Nicolas and Company Incorporated, on the other, dated October 29, 1987, previously filed as
Exhibit 1 to the Registrant's Current Report on Form 8-K, dated as of November 25, 1987, is
hereby incorporated by reference.

10.16 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Blunt Ellis & Loewi Incorporated, Robert W. Baird & Co. Incorporated and J.C.
Bradford & Co, on the other, dated January 11, 1988, previously filed as Exhibit 1 to the
Registrant's Current Report on Form 8-K, dated as of January 28, 1988, is hereby incorporated
by reference.

10.17 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreements filed as Exhibits 10.16, 10.18, 10.23 and 10.24, previously filed as
Exhibit 1.1 to the Registrant's Current Report on Form 8-K, dated as of January 28, 1988, is
hereby incorporated by reference.

10.18 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Blunt Ellis & Loewi Incorporated, Robert W. Baird & Co. Incorporated, Boettcher &
Co., Inc. and Piper, Jaffray & Hopwood Incorporated, on the other, dated January 20, 1988,
previously filed as Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of
February 26, 1988, is hereby incorporated by reference.

10.19 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
other hand, and Dean Witter Reynolds Inc., on behalf of itself and the other underwriters
listed on Schedule A to the Underwriting Agreement, on the other, dated January 28, 1988,
previously filed as Exhibit 1 to the Registrant's Current Report on Form 8-K, dated as of
March 30, 1988, is hereby incorporated by reference.

10.20 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreement filed as Exhibit 10.19, previously filed as Exhibit 1.1 to the
Registrant's Current Report on Form 8-K, dated as of March 30, 1988, is hereby incorporated
by reference.

10.21 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
other hand, and Shearson Lehman Hutton Inc., on behalf of itself and the other underwriters
listed on Schedule I to the Underwriting Agreement, on the other, dated February 5, 1988,
previously filed as Exhibit 1.2 to the Registrant's Current Report on Form 8-K, dated as of
March 30, 1988, is hereby incorporated by reference.

</TABLE>

18
<PAGE> 19

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
10.22 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreement filed as Exhibit 10.21, previously filed as Exhibit 1.3 to the
Registrants' Current Report on Form 8-K, dated as of March 30, 1988, is hereby incorporated
by reference.

10.23 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Blunt Ellis & Loewi Incorporated, A.G. Edwards & Sons, Inc. and J.C. Bradford &
Co., on the other, dated April 28, 1988, previously filed as Exhibit 1 to the Registrant's
Current Report on Form 8-K, dated as of May 26, 1988, is hereby incorporated by reference.

10.24 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the one
hand, and Blunt Ellis & Loewi Incorporated and J.C. Bradford & Co., on the other, dated June
15, 1988, previously filed as Exhibit 1 to the Registrant's Current Report on Form 8-K, dated
as of July 22, 1988, is hereby incorporated by reference.

23.1 Consent of Ernst & Young LLP.

27 Financial Data Schedule.
</TABLE>

(b) Reports on Form 8-K

No reports on Form 8-K have been filed during the last quarter of the
fiscal year covered by this Report.

19
<PAGE> 20

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

SCHEDULE IV - INDEBTEDNESS OF AND TO
RELATED PARTIES - NOT CURRENT
($000's omitted)

<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1994 1993 1992
------------- -------------- --------------
<S> <C> <C> <C>

Advances from affiliates:

Balance at beginning of year $ 250 $ 157 $ 5,689
Additions 1,021 80,965 1,571
Reductions (1,185) (80,872) (7,103)
------- -------- --------

Balance at end of year $ 86 $ 250 $ 157
======= ======== =========
</TABLE>

20
<PAGE> 21

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

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, on March 21, 1995.

GUARANTEED MORTGAGE CORPORATION III

By /s/JAMES A. WEISSENBORN
--------------------------------
James A. Weissenborn, President

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 and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date
---- ----- -----
<S> <C> <C>

/s/JAMES A. WEISSENBORN President March 21, 1995
- ----------------------- (Principal Executive Officer)
James A. Weissenborn and Director

/s/BRUCE E. ROBINSON Vice President-Finance March 21, 1995
- ----------------------- and Treasurer
Bruce E. Robinson (Principal Financial Officer)
and Director

/s/ANNA M. CECE Assistant Secretary March 21, 1995
- ----------------------- and Controller
Anna M. Cece (Principal Accounting Officer)

</TABLE>

21
<PAGE> 22

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

INDEX TO EXHIBITS
------------------
<TABLE>
<S> <C>
3.1 Articles of Incorporation and By-Laws of Guaranteed Mortgage Corporation III,
previously filed as Exhibit 3.1 to the Registrant's Registration Statement on Form S-3
(Registration No. 2-93045), are hereby incorporated by reference.

3.2 Amendment to Articles of Incorporation, previously filed as Exhibit 3 to the
Registrant's Current Report on Form 8-K, dated as of September 20, 1984, is hereby
incorporated by reference.

4.1 Indenture between Guaranteed Mortgage Corporation III and National Bank of
Detroit, as trustee, dated as of October 1, 1984, previously filed as Exhibit 4.1 to the
Registrant's Current Report on Form 8-K, dated as of September 20, 1984, is hereby
incorporated by reference.

4.2 Series B Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as trustee, dated as of November 1, 1986, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of November 28, 1986, is
hereby incorporated by reference.

4.3 Series C Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as trustee, dated as of January 1, 1987, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of January 27, 1987, is
hereby incorporated by reference.

4.4 Series D Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as trustee, dated as of April 1, 1987, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of April 29, 1987, is
hereby incorporated by reference.

4.5 Series E Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as trustee, dated as of June 1, 1987, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of June 26, 1987, is
hereby incorporated by reference.

4.6 Series G Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as trustee, dated as of September 1, 1987, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of September 29, 1987, is
hereby incorporated by reference.

</TABLE>

22
<PAGE> 23

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
Current Report on Form 8-K, dated as of October 29, 1987, is hereby incorporated by
reference.

4.8 Series H Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as trustee, dated as of November 1, 1987, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of November 24, 1987, is
hereby incorporated by reference.

4.9 Series I Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as trustee, dated as of November 1, 1987, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of November 25, 1987, is
hereby incorporated by reference.

4.10 Series J Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as Trustee, dated as of January 1, 1988, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, edited as of January 1, 1988, is
hereby incorporated by reference.

4.11 Series K Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as Trustee, dated as of February 1, 1988, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of February 26, 1988, is
hereby incorporated by reference.

4.12 Series L Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as Trustee, dated as of March 1, 1988, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of March 30, 1988, is
hereby incorporated by reference.

4.13 Series M Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as Trustee, dated as of March 1, 1988, previously filed as
Exhibit 4.1 to the Registrant's Current Report on Form 8-K, dated as of March 30, 1988, is
hereby incorporated by reference.

4.14 Series N Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as Trustee, dated as of May 1, 1988, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of May 26, 1988, is hereby
incorporated by reference.

4.15 First Amendment to Series L Supplement to Indenture between Guaranteed
Mortgage Corporation III and National Bank of Detroit, as Trustee, dated as of June 1, 1988,
previously filed as Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of
June 15, 1988, is hereby incorporated by reference.

</TABLE>
23
<PAGE> 24

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
4.16 First Amendment to Series M Supplement to Indenture between Guaranteed
Mortgage Corporation III and National Bank of Detroit, as Trustee, dated as of June 1, 1988,
previously filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K, dated as of
June 15, 1988, is hereby incorporated by reference.

4.17 Series O Supplement to Indenture between Guaranteed Mortgage Corporation III
and National Bank of Detroit, as Trustee, dated as of July 1, 1988, previously filed as
Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of July 22, 1988, is
hereby incorporated by reference.

9.1 Pledge Agreement between Pulte Financial Companies, Inc., and First National
Bank of Minneapolis, as pledgee, previously filed as Exhibit 4 to the Registrant's Current
Report on Form 8-K, dated as of September 20, 1984, is hereby incorporated by reference.

10.1 Underwriting Agreement Standard Provisions incorporated by reference into the
Underwriting Agreements filed as Exhibit 10.2 and 10.4, previously filed as Exhibit 1.1 to
the Registrant's Current Report on Form 8-K dated as of September 20, 1984, is hereby
incorporated by reference.

10.2 Underwriting Agreement between Guaranteed Mortgage Corporation III and Pulte
Home Corporation, on the one hand, and The First Boston Corporation, on the other, dated
October 2, 1986, previously filed as Exhibit 1 to the Registrant's Current Report on Form
8-K, dated as of November 28, 1986, is hereby incorporated by reference.

10.3 Terms Agreement between Guaranteed Mortgage Corporation III and Pulte Home
Corporation, on the one hand, and The First Boston Corporation, on the other, dated October
2, 1986, previously filed as Exhibit 1.1 to the Registrant's Current Report on Form 8-K,
dated as of November 28, 1986, is hereby incorporated by reference.

10.4 Underwriting Agreement between Guaranteed Mortgage Corporation III and Pulte
Home Corporation, on the one hand, and The First Boston Corporation, on the other, dated
December 9, 1986, previously filed as Exhibit 1 to the Registrant's Current Report on Form
8-K, dated as of January 27, 1987, is hereby incorporated by reference.

</TABLE>

24
<PAGE> 25

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
10.6 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Robert W. Baird & Co. Incorporated and Morgan Keegan & Company, Inc., on the
other, dated April 6, 1987, previously filed as Exhibit 1 to the Registrant's Current Report
on Form 8-K, dated as of April 29, 1987, is hereby incorporated by reference.

10.7 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreement filed as Exhibit 10.6, previously filed as Exhibit 1.1 to the
Registrant's Current Report on Form 8-K, dated as of April 29, 1987, is hereby incorporated
by reference.

10.8 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Shearson Lehman Brothers Inc. and Blunt Ellis & Loewi Incorporated, on the
other, dated June 11, 1987, previously filed as Exhibit 1 to the Registrant's Current Report
on Form 8-K, dated as of June 26, 1987, is hereby incorporated by reference.

10.10 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Robert W. Baird & Co. Incorporated, A.G. Edwards & Sons, Inc., J.J.B. Hilliard,
W.L. Lyons, Inc. and Morgan Keegan & Company, Inc., on the other, dated August 24, 1987,
previously filed as Exhibit 1 to the Registrant's Current Report on Form 8-K, dated as of
September 29, 1987, is hereby incorporated by reference.

10.12 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Robert W. Baird & Co. Incorporated, Blunt Ellis & Loewi Incorporated, Boettcher
& Company, Inc. and J.C. Bradford & Co., on the other, dated September 22, 1987, previously
filed as Exhibit 1 to the Registrant's Current Report on Form 8-K, dated as of October 29,
1987, is hereby incorporated by reference.

10.13 Underwriting Agreement between Guaranteed Mortgage Corporation III and Dean
Witter Reynolds Inc., dated November 3, 1987, previously filed as Exhibit 1 to the
Registrant's Current Report on

</TABLE>

25
<PAGE> 26

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

<TABLE>
<S> <C>
Form 8-K, dated as of November 24, 1987, is hereby incorporated by reference.

10.15 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Robert W. Baird & Co. Incorporated, Blunt Ellis & Loewi Incorporated, Boettcher
& Company, Inc., J.C. Bradford & Co. and Stifel, Nicolas and Company Incorporated, on the
other, dated October 29, 1987, previously filed as Exhibit 1 to the Registrant's Current
Report on Form 8-K, dated as of November 25, 1987, is hereby incorporated by reference.

10.16 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Blunt Ellis & Loewi Incorporated, Robert W. Baird & Co. Incorporated and J.C.
Bradford & Co, or the other, dated January 11, 1988, previously filed as Exhibit 1 to the
Registrant's Current Report on Form 8-K, dated as of January 28, 1988, is hereby incorporated
by reference.

10.17 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreements filed as Exhibits 10.16 and 10.18, previously filed as Exhibit 1.1 to
the Registrant's Current Report or Form 8-K, dated as of January 28, 1988, is hereby
incorporated by reference.

10.18 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Blunt Ellis & Loewi Incorporated, Robert W. Baird & Co. Incorporated, Boettcher
& Co., Inc. and Piper, Jaffray & Hopwood Incorporated, on the other, dated January 20, 1988,
previously filed as Exhibit 4 to the Registrant's Current Report on Form 8-K, dated as of
February 26, 1988, is hereby incorporated by reference.

</TABLE>

26
<PAGE> 27

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

10.22 Underwriting Agreement Basic Provisions, incorporated by reference into the
Underwriting Agreement filed as Exhibit 10.21, previously filed as Exhibit 1.3 to the
Registrant's Current Report on Form 8-K, dated as of March 30, 1988, is hereby incorporated
by reference.

10.23 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Blunt Ellis & Loewi Incorporated, A.G. Edwards & Sons, Inc. and J.C. Bradford &
Co., on the other, dated April 28, 1988, previously filed as Exhibit 1 to the Registrant's
Current Report on Form 8-K, dated as of May 26, 1988, is hereby incorporated by reference.

10.24 Underwriting Agreement between Guaranteed Mortgage Corporation III, on the
one hand, and Blunt Ellis & Loewi Incorporated and J.C. Bradford & Co., on the other, dated
June 15, 1988, previously filed as Exhibit 1 to the Registrant's Current Report on Form 8-K,
dated as of July 22, 1988, is hereby incorporated by reference.

23.1 Consent of Ernst & Young LLP.

27 Financial Data Schedule.

</TABLE>

<PAGE> 1

Year Ended
FORM 10-K GUARANTEED MORTGAGE CORPORATION III 12/31/94

Guaranteed Mortgage Corporation III

Exhibit 23.1 - Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 33-18864) of Guaranteed Mortgage Corporation III and in the
related Prospectus of our report dated January 31, 1995, with respect to the
financial statements and schedule of Guaranteed Mortgage III included in this
Annual Report (Form 10-K) for the year ended December 31, 1994.

ERNST & YOUNG LLP

Detroit, Michigan
March 20, 1995

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,275,833
<SECURITIES> 114,015,107
<RECEIVABLES> 869,788
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 117,160,728
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 117,160,728
<CURRENT-LIABILITIES> 1,814,466
<BONDS> 114,830,836
<COMMON> 1,000
0
0
<OTHER-SE> 514,426
<TOTAL-LIABILITY-AND-EQUITY> 117,160,728
<SALES> 0
<TOTAL-REVENUES> 9,357,566
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 97,202
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,464,805
<INCOME-PRETAX> (7,204,441)
<INCOME-TAX> (2,809,732)
<INCOME-CONTINUING> (4,394,709)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,394,709)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>