CRIIMI MAE INC, DEF 14A, 1996-03-25

CRIIMI MAE INC
DEF 14A, 1996-03-25
ASSET-BACKED SECURITIES

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

CRIIMI MAE INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>

CRIIMI MAE INC.
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852

March 25, 1996
Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
CRIIMI MAE Inc. to be held on Tuesday, May 7, 1996. The formal Notice of the
meeting and a Proxy Statement describing the purposes of the meeting are
enclosed. Please give them your prompt and careful attention.

Please read the Proxy Statement and complete, sign and return your proxy
in the enclosed envelope promptly. No postage is necessary if mailed in the
United States.

Thank you for your cooperation and prompt reply.

Sincerely,

WILLIAM B. DOCKSER
CHAIRMAN OF THE BOARD

<PAGE>

CRIIMI MAE INC.
_____________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_____________

The Annual Meeting of Shareholders of CRIIMI MAE Inc. (the
"Corporation") will be held on May 7, 1996, at 10:00 a.m. at the Hyatt
Regency Bethesda, One Bethesda Metro Center, Bethesda, Maryland for the
following purposes:

1. To elect two Class I directors as set forth in the accompanying Proxy
Statement to hold office until their successors are elected and
qualified;

2. To consider and vote upon a proposal to approve the CRIIMI MAE Inc.
1996 Non-Employee Director Stock Plan authorizing:

(i) annual grants to the Corporation's unaffiliated directors of
common stock and options to purchase common stock; and

(ii) the Corporation's unaffiliated directors to elect to receive
all or a portion of their annual cash retainer in the form of
additional common stock and/or options to purchase common stock.

3. To transact such other business as may properly come before the
meeting.

The Board of Directors has fixed the close of business on March 18, 1996
as the record date for shares entitled to vote at the meeting.

A Proxy Statement, proxy and the Corporation's Annual Report to
Shareholders (including audited financial statements) for the fiscal year
ended December 31, 1995 are enclosed with this Notice.

You are requested, if you cannot be present at the meeting, to complete,
sign and return the proxy in the enclosed business reply envelope promptly.

BY ORDER OF THE BOARD OF DIRECTORS

H. WILLIAM WILLOUGHBY
SECRETARY

March 25, 1996

IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES ARE REPRESENTED
AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH
TO DO SO EVEN THOUGH YOU HAVE PREVIOUSLY SENT IN YOUR PROXY.

<PAGE>

CRIIMI MAE INC.
11200 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
_________________

PROXY STATEMENT
_________________

This Proxy Statement is furnished by the Board of Directors (the
"Board") in connection with its solicitation of proxies for use at the Annual
Meeting of Shareholders on May 7, 1996, and at any and all adjournments
thereof (the "Meeting"). Mailing of this Proxy Statement will commence on or
about March 25, 1996. The Corporation's Annual Report to Shareholders
(including audited financial statements) for the fiscal year ended December
31, 1995 and a form of proxy for use at the Meeting are enclosed.

If the proxy is properly executed and returned, the shares it represents
will be voted at the Meeting in accordance with the instructions noted
thereon. If no direction is indicated, such shares will be voted: (1) FOR the
nominated directors; (2) FOR the approval of the CRIIMI MAE Inc. 1996
Non-Employee Director Stock Plan (the "Director Stock Plan"); and (3) for or
against such other matters as may properly come before the Meeting in the
discretion of the proxy holders. The Corporation's management knows of no
matter to be brought before the Meeting which is not referred to in the
Notice of Meeting and this Proxy Statement. If, however, any other matter
comes before the Meeting, the proxy will be voted in accordance with the
judgment of the person or persons voting such proxy, unless the proxy
contains instructions to the contrary. Any shareholder executing a proxy has
the power to revoke it at any time before it is voted by submitting a duly
executed proxy bearing a later date, or by attending the Meeting and orally
withdrawing the proxy.

The voting securities of the Corporation consist of shares of common
stock, $.01 par value per share ("Common Shares"), of which 30,407,024 Common
Shares were issued and outstanding at the close of business on the record
date for the Meeting, March 18, 1996. Shareholders of record at the close of
business on March 18, 1996 will be entitled to vote at the Meeting. Each
Common Share is entitled to one vote. Shareholders do not have cumulative
voting rights. The election of directors and the approval of the Director
Stock Plan, as well as any other matters or proposals that come before the
Meeting, will be determined by the affirmative vote of at least a majority of
the Common Shares represented at the Meeting in person or by proxy, and
entitled to vote. The holder of each outstanding Common Share is entitled to
vote for as many nominees as there are directors to be elected. An
abstention or broker non-vote on any such matter will not change the number
of votes cast for or against the matter.

ELECTION OF DIRECTORS

Members of the Board serve staggered three-year terms. Two Class I
directors are to be elected at the Meeting, each to serve until the 1999
Annual Meeting of Shareholders or until their successors have been duly
elected and qualified. Unless authority to vote for one or both of the
nominees is withheld, it is intended that Common Shares represented by
proxies in the form accompanying this Proxy Statement will be voted for the
election of the nominees listed below, each of whom is currently a Class I
director of the Corporation. In case any such nominee becomes unable or
unwilling to stand for election as a director for any reason not currently
known or contemplated, the Common Shares represented by such proxies will be
voted by the proxy holders for such other person as may be designated by the
Board.

<PAGE>

PERSONS NOMINATED FOR ELECTION AS DIRECTORS

CLASS I DIRECTORS

NAME PRINCIPAL OCCUPATION AGE
---- -------------------- ---
<S> <C> <C>

H. William Willoughby Director and Secretary of the Corporation 49
and of CRI Liquidating REIT, Inc., an
approximately 57%-owned subsidiary of the
Corporation ("Liquidating REIT") since 1989;
President of the Corporation and of
Liquidating REIT since 1990; Director
and shareholder of C.R.I., Inc. ("CRI")
since 1974; Secretary of CRI from 1974
to 1990 and President of CRI since 1990.

NAME PRINCIPAL OCCUPATION AGE
---- -------------------- ---
<S> <C> <C>

Garrett G. Carlson, Sr.* Director of the Corporation and of 59
Liquidating REIT since 1989; Chairman of
the Board of SCA Realty Holdings, Inc.
since 1985; President of Can-American
Realty Corp. and Canadian Financial
Corp. since 1979 and 1974, respectively;
Vice Chairman of Shelter Development
Corporation Ltd. since 1983 and
President of Garrett Real Estate
Development since 1982.

</TABLE>

The remainder of the Board constitutes the Class II and Class III
directors, none of whom will stand for election at the Meeting, as their
terms will expire in 1997 and 1998, respectively.

DIRECTORS CONTINUING IN OFFICE

CLASS II DIRECTORS

YEAR TERM
NAME PRINCIPAL OCCUPATION AGE EXPIRES
---- -------------------- --- ---------
<S> <C> <C> <C>

Robert F. Tardio* Director of the Corporation and of 66 1997
Liquidating REIT since 1989; Chairman
of the Tardio Corporation from 1986 to
1995; Chairman of the Board and Chief
Executive Officer of Sovran
Bank/Maryland from April 1986 to June
1986; Chairman of the Board and Chief
Executive Officer of Suburban Bancorp
and Suburban Bank, Bethesda, MD, from
1979 to 1986; Independent Financial
Consultant from 1986 to present;
Director of Washington Mutual Investors
Fund (Advisory Board), AW Industries and
Chairman of the Metropolitan Washington
Airports Authority.

<CAPTION>
YEAR TERM
NAME PRINCIPAL OCCUPATION AGE EXPIRES
---- -------------------- --- ---------
<S> <C> <C> <C>

Larry H. Dale* Director of the Corporation and of 50 1997
Liquidating REIT since January 1996;
Senior Adviser, Housing Investment Fund,
Federal National Mortgage Association
("Fannie Mae"); Executive Director of
Fannie Mae's National Housing Impact
Division from 1993 to 1995; Senior Vice
President-marketing and mortgage-backed
securities and Senior Vice President-
multifamily finance and housing initiatives
for Fannie Mae from 1987 to 1993; Vice
President with Newman and Associates
from 1984 to 1987; President of Mid City
Financial Corporation from 1981 to 1983;
employed by the U.S. Department of Housing
and Urban Development from 1971 to 1981,
serving as a deputy to the Assistant Secretary
for Housing/FHA Commissioner from 1979 to 1981.

</TABLE>

_______________________
*Unaffiliated Director

<PAGE>

CLASS III DIRECTORS

YEAR TERM
NAME PRINCIPAL OCCUPATION AGE EXPIRES
---- -------------------- --- ---------
<S> <C> <C> <C>

William B. Dockser Chairman of the Board of the Corporation 59 1998
and of Liquidating REIT since 1989;
Chairman of the Board and shareholder of
CRI since 1974.

G. Richard Dunnells* Director of the Corporation and of 58 1998
Liquidating REIT since 1991; Partner in
the Washington, D.C. office and Director
of the law firm of Holland & Knight
since January 1994; Chairman of the
Washington, D.C. law firm of Dunnells &
Duvall from 1989 to 1993; Senior Partner
of such law firm from 1973 to 1993;
Special Assistant to the Under-Secretary
and Deputy Assistant Secretary for
Housing and Urban Renewal and Deputy
Assistant Secretary for Housing
Management with the U.S. Department of
Housing and Urban Development from 1969
to 1973; President's Commission on
Housing from 1981 to 1982.

</TABLE>

______________________
*Unaffiliated Director

During 1995, the Board met twice in person, six times by conference
telephone and action was taken by unanimous written consent on seven
occasions. All then serving members of the Board attended 80% of the total
number of meetings of the Board and Board committees on which they served.
Pursuant to the Corporation's Bylaws, a majority of the Board shall at all
times consist of directors who are not officers or employees of the
Corporation and do not perform any services for the Corporation other than as
a director ("Unaffiliated Directors").

The Board has an Audit Committee currently comprised of Messrs. Carlson,
Dunnells and Tardio, each of whom is an Unaffiliated Director. The functions
performed by the Audit Committee are to: recommend independent auditors to
the Corporation; review the scope of the audit, audit fees, the audit report
and the management letter with the Corporation's independent auditors; review
the financial statements of the Corporation; review and approve non-audit
services provided by the independent auditors; and consult with the
independent auditors and management with regard to the adequacy of internal
controls. The Audit Committee met twice in 1995.

The Board has a Stock Option Committee currently comprised of Messrs.
Carlson, Dunnells and Tardio. The Stock Option Committee was formed to
administer the CRIIMI MAE Stock Option Plan For Key Employees (the "Employee
Stock Option Plan"). The Stock Option Committee must consist of at least
three members of the Board, appointed from time to time (and removable) by
the Board. The Stock Option Committee did not meet in 1995.

The Board does not currently have a standing compensation or nominating
committee.

A Special Committee of the Board, comprised of Messrs. Carlson, Dunnells
and Tardio, was appointed to consider whether, and on what basis, the
Corporation should become self-administered and self-managed, including a
proposed merger in which a newly formed subsidiary of the Corporation would
succeed to substantially all of the mortgage advisory, servicing and related
businesses of CRI and its affiliates, including the activities previously
performed on the Corporation's behalf by its former adviser, an affiliate of
CRI, and related transactions. The Special Committee met 10 times in 1995.
For a description of the transaction, see "Certain Transactions" below.

EXECUTIVE OFFICERS. In addition to Messrs. Dockser and Willoughby,
whose business experience is set forth in the above table, Jay R. Cohen, 55,
has served as Executive Vice President of the Corporation and of Liquidating
REIT since 1989, and as Treasurer of the Corporation and of Liquidating REIT
since 1990. Mr. Cohen was Senior Vice President--Mortgages of CRI from 1983
to June 1995 and President of CRICO Mortgage Company, Inc., an affiliate of
CRI, from 1985 to June 1995, at which time it merged into CRIIMI MAE
Management, Inc., a wholly

<PAGE>

owned subsidiary of the Corporation, in connection with the transaction
described below under "Certain Transactions." Frederick J. Burchill, 47, has
served as Executive Vice President of the Corporation since 1991 and of
Liquidating REIT since 1995. Mr. Burchill served as Senior Vice President of
CRI from 1990 to June 1995. Cynthia O. Azzara, 36, has served as Chief
Financial Officer of the Corporation and of Liquidating REIT since 1994 and
as Senior Vice President of the Corporation and of Liquidating REIT since
1995. Ms. Azzara served in the Accounting and Finance Departments of CRI from
1985 to June 1995. Deborah A. Linn, 40, has served as General Counsel of the
Corporation and of Liquidating REIT since 1995. Ms. Linn served in the
Office of General Counsel of CRI from 1988 until June 1995, serving as
General Counsel from 1992 until June 1995. Executive officers of the
Corporation are elected annually by the Board and serve at the Board's
discretion.

BENEFICIAL OWNERSHIP OF COMMON SHARES

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding the
beneficial ownership of more than 5% of the Corporation's Common Shares as of
March 1, 1996. Such information is based upon filings received by the
Corporation under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and other information available to the Corporation.

COMMON SHARES PERCENTAGE OF OUTSTANDING
NAME BENEFICIALLY OWNED COMMON SHARES BENEFICIALLY OWNED
---- ------------------ --------------------------------
<S> <C> <C>

William B. Dockser 1,561,099(a)(b) 5.1

</TABLE>

___________________

(a) Includes 2,767 Common Shares owned by CRI, of which Messrs. Dockser and
Willoughby are the sole shareholders.

(b) Includes 104,343 Common Shares held by Mr. Dockser's wife, 125,000 Common
Shares held by the William B. Dockser '59 Charitable Lead Annuity Trust
and 140,000 Common Shares held by the Dockser Family Foundation.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of Common Shares as of March 1, 1996 by each director and by all
officers and directors of the Corporation as a group. Unless otherwise
indicated, the voting and investment powers for the Common Shares listed are
held solely by the named holder.

COMMON SHARES PERCENTAGE OF OUTSTANDING
NAME BENEFICIALLY OWNED COMMON SHARES BENEFICIALLY OWNED
---- ------------------ ---------------------------------
<S> <C> <C>

William B. Dockser 1,561,099 (a)(b) 5.1
H. William Willoughby 1,415,100 (a)(c) 4.7
Garrett G. Carlson, Sr. 9,300 (d) *
Larry H. Dale 1,000 *
G. Richard Dunnells 5,333 *
Robert F. Tardio 349 *
All Directors and
Executive Officers
as a Group (10 persons) 3,144,330 (a)(b)(c)(d) 10.3

</TABLE>
______________
* Less than 1%.

<PAGE>

(a) Includes 2,767 Common Shares owned by CRI, of which Messrs. Dockser and
Willoughby are the sole shareholders.

(d) Includes 1,000 Common Shares held by Mr. Carlson's wife and 7,300 Common
Shares held by two partnerships in which Mr. Carlson is the sole general
partner.

Except as otherwise noted, based solely on its review of Forms 3 and 4
and amendments thereto furnished to the Corporation, and written
representations from certain reporting persons that no Forms 5 were required
for those persons, the Corporation believes that all directors, officers and
beneficial owners of more than 10% of the Common Shares have filed on a
timely basis Forms 3, 4 and 5 as required in the fiscal year ended December
31, 1995. Ms. Linn, an executive officer of the Corporation, did file a
delinquent Form 4 solely to report an automatic purchase of Common Shares for
her account pursuant to the Corporation's Dividend Reinvestment Plan.

DIRECTORS' REMUNERATION

Directors of the Corporation who are also employees received no
additional compensation for their services as directors in 1995. Each
Unaffiliated Director receives an aggregate fee of $12,000 per year for
services as a director plus a fee of $750 (for telephonic meetings) and
$1,500 (for in-person meetings) for each meeting in which such director
participates, including committee meetings held on days when the Board is not
meeting. In addition, the Corporation reimburses directors and officers
(including those employed by the Corporation as executive officers) for
travel and other expenses incurred in connection with their duties as
directors or officers of the Corporation. Each of Messrs. Carlson, Dunnells
and Tardio were paid $12,000 by the Corporation for their services as
Unaffiliated Directors during the year ended December 31, 1995, plus
traveling expenses, $1,500 per day for meetings attended, including committee
meetings held on days when the Board was not meeting, and $750 per telephonic
meeting in which they participated. See "Election of Directors" above and
"Proposal to Approve the CRIIMI MAE Inc. 1996 Non-Employee Director Stock
Plan" below.

EXECUTIVE COMPENSATION

Prior to the merger in June 1995, described in "Certain Transactions"
below (the "Merger"), the Corporation engaged the services of CRI Insured
Mortgage Associates Adviser Limited Partnership, an adviser affiliated with
CRI (the "Adviser"), to manage the day-to-day affairs of the Corporation, and
therefore did not pay any compensation or grant any stock options to its
executive officers. However, upon consummation of the Merger on June 30,
1995 (the "Closing Date"), the Corporation became a self-administered real
estate investment trust. In connection with the Merger, the Corporation and
its executive officers entered into certain executive compensation
arrangements and other transactions as discussed below. See "Employment and
Noncompetition Agreements" and "Certain Transactions."

SUMMARY COMPENSATION TABLE

The following table sets forth the cash and non-cash compensation awarded
to the Chairman of the Board and each of the other five most highly
compensated executive officers of the Corporation whose income exceeded
$100,000 during the fiscal year ended December 31, 1995. None of the
Corporation's executive officers received cash or non-cash compensation prior
to the Merger which occurred on June 30, 1995.

<PAGE>

SUMMARY COMPENSATION TABLE

Long Term Compensation
Awards
Restricted Securities
Annual Compensation Stock Underlying All Other
Salary(1) Bonus(1) Awards Options Compensation

Name and Principal Position Year $ $ $ # $
- --------------------------- ---- ------- --------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
William B. Dockser 1995 $62,500 -0- -0- 1,500,000 $130,297(2)
Chairman of the Board

H. William Willoughby 1995 $62,500 -0- -0- 1,500,000 $130,297(2)
President and Secretary

Jay R. Cohen 1995 $87,500 $70,000 $316,292(3) 65,000 -0-
Executive Vice President
and Treasurer

Frederick J. Burchill 1995 $87,500 $75,000 $316,292(3) 65,000 -0-
Executive Vice President

Cynthia O. Azzara 1995 $63,333 $25,000 $118,613(4) 25,000 -0-
Senior Vice President and
Chief Financial Officer

Deborah A. Linn 1995 $64,167 $25,000 $118,613(4) 25,000 -0-
General Counsel

</TABLE>

___________________
(1) The amounts reported as annual salary and compensation bonus for each
individual in the Summary Compensation Table relate to the period from the
Closing Date of the Merger (June 30, 1995) through December 31, 1995.
Prior to the Merger, none of the executive officers received cash or any
other form of compensation from CRIIMI MAE.

(2) These amounts represent deferred compensation which CRIIMI MAE has agreed
to pay for services performed in connection with the Merger. As discussed
in "-Report of the Board on Executive Compensation" and "Certain
Transactions--Merger" below, these amounts were paid solely from principal
and interest received by CRIIMI MAE from CRI in connection with a
receivable acquired by CRIIMI MAE in the Merger.

(3) The 40,164 restricted Common Shares had a value of $336,374 at December 31,
1995. A total of 110,452 restricted Common Shares were awarded in 1995.
The shares will vest in three equal installments on the first three
anniversaries of the Closing Date of the Merger (June 30, 1995). Dividends
are paid on the restricted stock.

(4) The 15,062 restricted Common Shares had a value of $126,144 at December
31, 1995. A total of 110,452 restricted Common Shares were awarded in
1995. The shares will vest in three equal installments on the first three
anniversaries of the Closing Date of the merger (June 30, 1995). Dividends
are paid on the restricted stock.

OPTION GRANTS IN FISCAL YEAR 1995

The following table sets forth the options granted to the Corporation's
Chairman and each of the five other most highly compensated executive
officers with respect to the fiscal year ended December 31, 1995:

<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

Common Shares Options Granted
Underlying to Employees Exercise Price Expiration Grant Date
Name Options Granted in Fiscal Year ($/share) Date Present Value (3)
- ---- --------------- --------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>

William B. Dockser 1,000,000(1) 31.0% $ 9.77 June 30, 2003 $550,000
500,000(1) 15.5% 12.27 June 30, 2003 150,000
H. William Willoughby 1,000,000(1) 31.0% 9.77 June 30, 2003 550,000
500,000(1) 15.5% 12.27 June 30, 2003 150,000
Jay R. Cohen 65,000(2) 2.0% 9.77 June 30, 2003 35,750
Frederick J. Burchill 65,000(2) 2.0% 9.77 June 30, 2003 35,750
Deborah A. Linn 25,000(2) 0.8% 9.77 June 30, 2003 13,750
Cynthia O. Azzara 25,000(2) 0.8% 9.77 June 30, 2003 13,750

</TABLE>

(1) These options were granted on June 30, 1995, the Closing Date of the
Merger, and will vest in equal installments on the first five anniversaries
of the date of grant.

(2) These options were granted on June 30, 1995, the Closing Date of the
Merger, and will vest in equal installments on the first three
anniversaries of the date of grant.

(3) These values are based on American valuation using the Cox-Ross-Rubinstein
option pricing model, of June 30, 1995, the grant date, using the
following principal assumptions: expected stock price volatility 23.5%,
risk free rate of return 8.12%, dividend yield 11% and options exercised
upon vesting over three or five years, as applicable. No adjustments have
been made for forfeitures or nontransferability. The actual value, if any,
that the executive officer will realize from these options will depend
solely on the increase in the stock price over the option price when the
options are exercised.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995 AND FY-END 1995 OPTION VALUES

<TABLE>
<CAPTION>
Value of unexercised
Number of unexercised in-the-money options
Shares acquired Value Realized options at FY-end (#) at FY-end ($)
Name on exercise (#) ($) exercisable/unexercisable exercisable/unexercisable
- ---- --------------- --------------- -------------------------- -------------------------
<S> <C> <C> <C> <C>

William B. Dockser -0- -0- 0/1,500,000 (1)
H. William Willoughby -0- -0- 0/1,500,000 (1)
Jay R. Cohen -0- -0- 0/65,000 (1)
Frederick J. Burchill -0- -0- 0/65,000 (1)
Deborah A. Linn -0- -0- 0/25,000 (1)
Cynthia O. Azzara -0- -0- 0/25,000 (1)

</TABLE>

(1) The closing price on December 29, 1995, the last 1995 trading day for the
Corporation's Common Shares, was $8.38 per Common Share. The exercise
price of each of the options identified in this table is greater than such
year end price.

EMPLOYMENT AND NONCOMPETITION AGREEMENTS

In connection with the Merger, the Corporation, through its wholly owned
operating subsidiary CRIIMI MAE Management, Inc. (the "Management
Corporation"), entered into employment and noncompetition agreements with
each of Messrs. Dockser and Willoughby. Messrs. Dockser's and Willoughby's
employment agreements each provide for minimum annual compensation of
$125,000 and a term expiring on June 30, 2000. The agreements require each
of Messrs. Dockser and Willoughby to devote a substantial portion of such
officer's time to the affairs of the Corporation and its affiliated entities,
except that each of them may devote time to other existing business
activities; provided that the time devoted to such other existing business
activities does not interfere with the performance of his duties to the
Corporation and its affiliated entities. The agreements define the phrase
"substantial portion" to mean all of the time required to perform the
services necessary and appropriate for the conduct of the businesses of the
Corporation and its affiliated entities. The agreements also include
provisions which prohibit Messrs. Dockser and Willoughby from competing with
the Corporation or the Corporation's affiliates for at least six years from
the Closing Date, subject to certain limited exceptions.

<PAGE>

The Management Corporation also entered into employment agreements with
each of the other executive officers of the Corporation in connection with
the Merger, namely Jay R. Cohen, Frederick J. Burchill, Deborah A. Linn and
Cynthia O. Azzara (the "Other Executive Officers"). The Other Executive
Officers' agreements have three-year terms and provide for minimum annual
salaries of $175,000, $175,000, $130,000 and $130,000, respectively. The
agreements also provide for certain minimum bonuses to be paid to each of the
Other Executive Officers. The actual bonuses paid for 1995 were $70,000,
$75,000, $25,000 and $25,000, respectively. Each of the agreements with the
Other Executive Officers includes provisions prohibiting the Other Executive
Officers from competing with the Corporation or the Corporation's affiliated
entities while employed by the Management Corporation.

STOCK OPTIONS

In connection with the Merger, each of Messrs. Dockser and Willoughby
received options to purchase (1) 1,000,000 Common Shares at an exercise price
of $9.77 (i.e., $1.50 per share more than the aggregate average of the high
and low sales prices of Common Shares on the New York Stock Exchange during
the ten trading days preceding the Closing Date (the "Trading Price"), and
(2) 500,000 Common Shares at an exercise price of $12.27 (i.e., $4.00 per
share more than the Trading Price). Such options vest in equal installments
on the first five anniversaries of the Closing Date and expire on the eighth
anniversary of the Closing Date. If either of Messrs. Dockser and Willoughby
voluntarily terminates his employment with the Management Corporation or is
terminated for cause, in general (1) all vested options must be exercised
within 180 days following such termination or such options will expire, and
(2) all unvested options will expire immediately. Upon death, any unvested
options will vest immediately.

Also in connection with the Merger, Messrs. Cohen and Burchill each
received options to purchase 65,000 Common Shares and Ms. Linn and Ms. Azzara
each received options to purchase 25,000 Common Shares. Nine other employees
of the Corporation received options to purchase a total of 50,000 Common
Shares. All such stock options have an exercise price of $9.77 (i.e., $1.50
per share more than the Trading Price), vest in equal installments on the
first three anniversaries of the Closing Date and expire on the eighth
anniversary of the Closing Date. Each of the foregoing options, except those
issued to Messrs. Dockser and Willoughby, were issued pursuant to the
Employee Stock Option Plan which was adopted by the Board in June 1995, as
further amended in July 1995 and approved by the shareholders in September
1995.

EMPLOYEE STOCK OPTION PLAN

The purposes of the Employee Stock Option Plan are to enhance the
long-term profitability and shareholder value of the Corporation by offering
incentives and rewards to those officers and employees of the Corporation and
its subsidiaries who are key to the Corporation's growth and success, and to
encourage them to remain in the service of the Corporation and its
subsidiaries and to acquire and maintain stock ownership in the Corporation.

The Employee Stock Option Plan provides for grants of stock options to
purchase up to 500,000 Common Shares at any time prior to June 30, 2000. As
of March 1, 1996, options to purchase a total of 230,000 Common Shares have
been issued under the Employee Stock Option Plan. Options granted under the
Employee Stock Option Plan are "nonqualified stock options" or "incentive
stock options." The exercise price for options granted under the Employee
Stock Option Plan may not be less than the fair market value of the Common
Shares on the date of grant.

Any executive officer or other key employee of the Corporation or any
subsidiary of the Corporation will be eligible to be granted options. The
Stock Option Committee is authorized to select from among eligible employees
the individuals to whom options are to be granted and to determine the number
of Common Shares to be subject to the options, whether such options are to be
incentive stock options or nonqualified stock options, and the terms and
conditions of the options, consistent with the Employee Stock Option Plan.

The Employee Stock Option Plan is administered by the Stock Option
Committee consisting of at least three members of the Board, appointed from
time to time (and removable) by the Board. Currently, the Stock Option

<PAGE>

Committee comprises Messrs. Carlson, Dunnells and Tardio, each of whom is an
Unaffiliated Director. Except as permitted by Rule 16b-3(c)(2) under the
Exchange Act, options may not be granted under the Employee Stock Option Plan
to any member of the Stock Option Committee during the term of his or her
membership on the Stock Option Committee.

COMPARISON OF CUMULATIVE SHAREHOLDER RETURNS

Below is a chart comparing the cumulative total shareholder return on
Common Shares with the cumulative total shareholder return of (1) a broad
equity market index and (ii) a published industry index or peer group. Such
chart compares the cumulative total shareholder return of the Common Shares
with the cumulative total shareholder return of the companies on (i) the S&P
500 index provided by Standard & Poor's Corporation and (ii) the NAREIT
Mortgage Index provided by the National Association of Real Estate Investment
Trusts. The chart assumes an initial investment of $100 on December 31,
1990, and the reinvestment of all dividends paid thereafter with respect to
such $100 investment, in each of (i) the Common Shares, (ii) the stocks
comprising the S&P 500 Index and (iii) the stocks comprising the NAREIT
Mortgage Index.

PERFORMANCE GRAPH

12/31/1990 12/31/1991 12/31/1992 12/31/1993 12/31/1994 12/31/1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>

CRIIMI MAE
Annual Equivalent 46.33% 27.77% 22.64% -30.17% 39.56%
Indexed $100 146.33 186.97 229.29 160.12 223.45

S&P 500
Annual Equivalent 30.55% 7.67% 9.99% 1.31% 37.43%
Indexed $100 130.55 140.56 154.60 156.63 215.25

NAREIT Mortgage Index*
Annual Equivalent 31.83% 1.92% 14.55% -24.30% 63.41%
Indexed $100 131.83 134.36 153.91 116.51 190.39

</TABLE>
___________________
* The NAREIT Mortgage Index includes all real estate investment trusts
("REITs") listed on the New York Stock Exchange, the American Stock Exchange
or the NASDAQ National Market System which hold at least 75% of their
invested assets in mortgages, including participating mortgages and interests
in mortgage pools. During 1995, 24 REITs were included in the NAREIT
Mortgage Index. The Corporation will provide to any shareholder upon request
the names of the companies whose stocks comprise the NAREIT Mortgage Index.

<PAGE>

REPORT OF THE BOARD ON EXECUTIVE COMPENSATION

THIS REPORT IS NOT DEEMED TO BE "SOLICITING MATERIAL" OR TO BE "FILED"
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR SUBJECT TO THE
SEC'S PROXY RULES OR TO THE LIABILITIES OF SECTION 18 OF THE EXCHANGE ACT,
AND THE REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY
PRIOR OR SUBSEQUENT FILING BY THE CORPORATION UNDER THE SECURITIES ACT OF
1933 OR THE EXCHANGE ACT.

The Corporation's executive compensation program is intended to attract,
retain and reward experienced, highly motivated executive officers who are
capable of effectively leading and continuing the growth of the Corporation.
The Corporation does not have a standing compensation committee, therefore,
compensation decisions are made by the Board. The Board administers the
executive compensation program with an objective of utilizing a combination
of cash and equity-based compensation to provide motivational incentives for
executives that align the executives' goals and interests with those of the
Corporation's shareholders.

In support of these goals, the Corporation's executive compensation
program is designed to reward performance that contributes to the
Corporation's short-term and long-term success. Accordingly, the Corporation
attempts to provide both short-term and long-term incentive compensation that
varies based on the Corporation's performance and the individual's
performance. To accomplish these goals, the Corporation's executive
compensation program is structured with three primary components: base
salary, annual bonus and long-term incentives (i.e., stock options and/or
stock awards).

Prior to the Merger in June 1995 (as described below in "Certain
Transactions"), none of the executive officers received cash or any other
form of compensation from CRIIMI MAE, as the Corporation's day-to-day affairs
were managed by an outside adviser. In connection with the Merger, the
Corporation entered into employment agreements with each of its executive
officers. The employment agreements govern the salary, stock grants and
option grants to the executives. The Special Committee, which represented
the interests of the Corporation in the Merger, took the above-referenced
compensation policies and goals into consideration when negotiating the
employment agreements with the executive officers on behalf of the
Corporation. See "-Employment and Noncompetition Agreements".

Except as described in the following paragraph with respect to Messrs.
Dockser and Willoughby, the employment agreements provide for base salary
levels which are determined according to each individual executive's position
in the Corporation. The employment agreements also provide for financial
awards in the form of bonuses. While the Board generally has the authority
to determine bonuses, certain minimum bonus awards are required by the
employment agreements. The Corporation also granted options to purchase
Common Shares to each of the executive officers, pursuant to the employment
agreements, which vest over a three-to-five-year period. The executive
officers may be eligible for additional grants of options pursuant to the
CRIIMI MAE Inc. Employee Stock Option Plan, which provides for grants of
options to purchase up to 500,000 Common Shares (of which options to purchase
230,000 Common Shares have already been granted). See "-Employee Stock Option
Plan" above.

The Corporation's senior executive officers, Messrs. Dockser and
Willoughby, each received a base salary of $62,500 for the period from June
30, 1995 (the Closing Date of the Merger) through December 31, 1995. While
the salary and compensation awards of Messrs. Dockser and Willoughby are
determined substantially in conformity with the policies described above for
all other executive officers of the Corporation, they receive a base salary
that is significantly less than senior executives of many comparable
companies. This reduced level of base salary paid to Messrs. Dockser and
Willoughby is due in part to the concern raised by the members of the Special
Committee that the Corporation's senior officers should be closely linked to
the performance of the Corporation. Accordingly, a majority of the
compensation paid to Messrs. Dockser and Willoughby is in the form of options
to purchase Common Shares which vest over a five year period and which have
exercise prices above the market price on the date of grant.

Additionally, in connection with the Merger, the Corporation entered into
a deferred compensation arrangement with Messrs. Dockser and Willoughby in
the aggregate amount of $5,002,183 pursuant to which the Corporation agreed
to pay each of Messrs. Dockser and Willoughby for services performed in
connection with structuring the Merger. Pursuant to the Merger, the
Management Corporation acquired a note in the principal

<PAGE>

amount of $5,002,183 payable, with interest, by CRI (the "CRI Receivable").
The Management Corporation concurrently entered into a deferred compensation
arrangement with each of Messrs. Dockser and Willoughby for services rendered
in connection with the Merger pursuant to which the Management Corporation
has agreed to pay, to the extent received with respect to the CRI Receivable,
approximately $2,500,000 to each of Messrs. Dockser and Willoughby as
deferred compensation. The Management Corporation's obligation to pay the
deferred compensation is generally limited to the creation of an irrevocable
grantor trust for the benefit of Messrs. Dockser and Willoughby, and to the
transfer to such trust of the CRI Receivable, both of which were effected
upon the consummation of the Merger. The deferred compensation is paid only
to the extent CRI makes principal payments on the CRI Receivable. Interest
payments received by the Management Corporation on the CRI Receivable will be
paid to each of Messrs. Dockser and Willoughby as additional compensation so
long as Messrs. Dockser and Willoughby continue to be employed by the
Management Corporation.

The SEC requires that this report comment upon the Corporation's policy
with respect to Section 162(m) of the Internal Revenue Code of 1986, as
amended (the"Code"), which limits the deductibility on the Corporation tax
return of compensation over $1 million to any of the named executive officers
of the Corporation unless, in general, the compensation is paid pursuant to a
plan which is performance related, non-discretionary and has been approved by
the Corporation's shareholders. The deductibility limitation outlined by
Section 162(m) of the Code is not currently a consideration for the
Corporation because none of its executives earned sufficient compensation
income in 1995 nor are any Corporation executives anticipated to have
sufficient compensation in the near future to be subject to Section 162(m).

SUBMITTED BY THE BOARD

William B. Dockser H. William Willoughby
Garrett G. Carlson, Sr. G. Richard Dunnells
Larry H. Dale Robert F. Tardio

BOARD INTERLOCKS AND INSIDER PARTICIPATION

The Board includes two persons, Messrs. Dockser and Willoughby, who serve
as Chairman of the Board and President, respectively, of the Corporation. In
connection with the Merger, Messrs. Dockser and Willoughby each executed
employment agreements with the Corporation. See "-Employment and
Noncompetition Agreements".

In addition, in the Merger, the Corporation acquired companies affiliated
with CRI for consideration of approximately $32.9 million. Messrs. Dockser
and Willoughby own all of CRI's capital stock and are directors and executive
officers of CRI. Messrs. Dockser and Willoughby each received 1,325,419
Common Shares and options to purchase 1,000,000 Common Shares at an exercise
price of $9.77 per share and options to purchase an additional 500,000 Common
Shares at an exercise price of $12.27 per share. The options vest in equal
installments on the first five anniversaries of the Closing Date of the
Merger. The Corporation also assumed approximately $9.1 million in debt owed
by CRI and affiliates and guaranteed by Messrs. Dockser and Willoughby. See
"-Stock Options" and "Certain Transactions".

Another CRI-affiliated entity serves as the Adviser for Liquidating REIT,
of which the Corporation owns approximately 57% of the Common Stock. The
Adviser receives an annual and certain incentive fees for managing CRI
Liquidating portfolio of mortgages. In 1995, those fees were $416,007. See
"Certain Transactions".

Through June of 1995, the Adviser also advised the Corporation. As a
result of the Merger, the Corporation's Advisory Agreement was cancelled. In
1995, fees in the amount of $1,706,206 were paid by the Corporation for the
period prior to the Merger. See "Certain Transactions".

The Corporation has an Administrative Services Agreement with CRI
pursuant to which the Corporation pays CRI for certain services provided to
the Corporation. The amount paid in the second half of 1995 was $372,658.
The Corporation also subleases office space from CRI at a total annual rent
of approximately $450,000. See "Certain Transactions".

<PAGE>

CERTAIN TRANSACTIONS

MERGER

On June 21, 1995, the Corporation's shareholders approved the Merger,
pursuant to which the Corporation acquired the mortgage investment,
servicing, origination and advisory businesses conducted by CRI and its
affiliates, including the advisory services previously performed on the
Corporation's behalf by the Adviser. Prior to the Merger, the Corporation's
portfolio management and day-to-day operations were conducted primarily by
the Adviser.

To effect the Merger, the Corporation formed certain affiliated entities
to hold the assets being acquired, including: the Management Corporation,
CRIIMI MAE Services Limited Partnership (the "Services Partnership"), and
CRIIMI MAE Services, Inc. (the "Services Corporation"). The Management
Corporation, a wholly owned subsidiary of the Corporation, serves as its
primary operating subsidiary, employing the work force and owning the
physical assets transferred by CRI and its affiliates in the Merger. The
Services Partnership and the Services Corporation were formed by the
Corporation in order to avoid certain negative Real Estate Investment Trust
income tax consequences. The Services Partnership holds those contracts,
agreements and other arrangements which relate to services provided to third
parties and to affiliates of CRI which were transferred in the Merger. The
Management Corporation is the sole general partner of the Services
Partnership, with a 32% interest, as of December 31, 1995, and the Services
Corporation is the sole limited partner of the Services Partnership, with a
68% interest as of December 31, 1995. The Services Corporation was formed
primarily to own the limited partnership interest in the Services
Partnership. Executive officers of the Corporation own all of the voting
common stock, which is entitled to 5% of the dividends paid, and the
Corporation owns all of the non-voting common stock, which is entitled to 95%
of the dividends paid, in the Services Corporation. No dividends will be
paid by the Services Corporation until its $6.6 million obligation to the
Management Corporation, including interest thereon, is fully 14 repaid.

In connection with the Merger, Messrs. Dockser and Willoughby, the sole
shareholders of CRI and its affiliates, as well as certain executive officers
of the Corporation received the following: (i) Messrs. Dockser and
Willoughby each received 1,325,419 Common Shares, (ii) Messrs. Cohen and
Burchill each received 40,164 Common Shares, (iii) Ms. Linn and Ms. Azzara
each received 15,062 Common Shares, (iv) Messrs. Dockser and Willoughby each
received unvested options to purchase 1,500,000 Common Shares, (v) Messrs.
Burchill and Cohen each received unvested options to purchase 65,000 Common
Shares, (vi) Ms. Linn and Ms. Azzara each received unvested options to
purchase 25,000 Common Shares, (vii) each of the foregoing executive officers
entered into employment agreements ranging from three to five years in
duration, and (viii) Messrs. Dockser, Willoughby, Burchill, Cohen and Ms.
Linn and Ms. Azzara purchased, pursuant to a stock issuance agreement,
respectively 25%, 25%, 14.6%, 14.6%, 10.4%, and 10.4% of the voting common
stock of the Services Corporation. Each of the foregoing options, except
those issued to Messrs. Dockser and Willoughby, were issued pursuant to the
Employee Stock Option Plan which was adopted by the Board in June 1995, as
further amended in July 1995 and approved by the shareholders in September
1995. See "Executive Compensation."

The aggregate number of Common Shares and other benefits issued or
conferred in connection with the Merger was determined by negotiation between
the Corporation and Messrs. Dockser and Willoughby. Because of the
affiliation between the Corporation and CRI and its affiliates, negotiations
on behalf of the Corporation were conducted by the Special Committee. The
consideration paid by the Corporation pursuant to the Merger was determined
by the Special Committee. To assist in the Merger negotiations, the Special
Committee engaged the services of an independent financial advisor, and took
into account the views of the financial advisor to the Corporation. The
Special Committee considered alternatives to the proposed Merger and
concluded that the Merger better served the interests of the Corporation and
the public shareholders than any of the alternatives considered. In
evaluating the Merger, the Special Committee and the Board gave careful
consideration to, among other things, the opinion of its independent
financial advisor to the effect that the Merger was fair to the Corporation
and the public shareholders, from a financial point of view. After
considering all the factors that the Special Committee deemed relevant, the
Special Committee unanimously recommended the Merger to the Board.

Pursuant to the Merger, the Management Corporation acquired a note in the
principal amount of $5,002,183 payable by CRI (the "CRI Receivable"). Under
the CRI Receivable, interest is payable at the Signet Bank prime

<PAGE>

rate plus 2% per annum and level payments of principal and interest are
payable quarterly until maturity in 2005. The Management Corporation
concurrently entered into a deferred compensation arrangement with each of
Messrs. Dockser and Willoughby for services rendered in connection with the
Merger pursuant to which the Management Corporation has agreed to pay, to the
extent received with respect to the CRI Receivable, approximately $2,500,000
to each of Messrs. Dockser and Willoughby as deferred compensation. The
Management Corporation's obligation to pay the deferred compensation is
generally limited to the creation of an irrevocable grantor trust for the
benefit of Messrs. Dockser and Willoughby, and to the transfer to such trust
of the CRI Receivable, both of which were effected upon the consummation of
the Merger. The deferred compensation is paid only to the extent CRI makes
principal payments on the CRI Receivable. Interest payments received by the
Management Corporation on the CRI Receivable will be paid to each of Messrs.
Dockser and Willoughby as additional compensation so long as Messrs. Dockser
and Willoughby continue to be employed by the Management Corporation.

Pursuant to the Merger, the Management Corporation became liable for
indebtedness of CRI and certain of its affiliates totaling $9,100,000. The
$9,100,000 of indebtedness consisted of two borrowings: (i) a working capital
loan with an outstanding balance of $4,097,817, the proceeds of which had
been used over a period of several years prior to the Merger for financing
various working capital and investment needs of CRI's businesses, including
its mortgage businesses; and (ii) a loan to an affiliate of CRI with an
outstanding balance of $5,002,183, the proceeds of which had been used
principally to retire subordinated debt of CRI in 1993. Both loans were
guaranteed by CRICO Mortgage Company, Inc. and certain other CRI affiliates.
In connection with the Merger, Messrs. Dockser and Willoughby and CRI and its
affiliated entities were released from their obligations with respect to the
$9,100,000 of debt.

CERTAIN OTHER RELATIONSHIPS AND TRANSACTIONS

Prior to the Merger, the Corporation had engaged the services of the
Adviser pursuant to an agreement (the "Advisory Agreement") under which the
Adviser was obligated to provide administrative services for the Corporation,
evaluate and negotiate voluntary dispositions of mortgage investments,
conduct the Corporation's day-to-day affairs, and analyze, evaluate and
structure mortgage investments. CRI is the general partner of the Adviser,
and Messrs. Dockser and Willoughby own a majority of the limited partnership
interests in the Adviser. Messrs. Dockser and Willoughby are all of the
shareholders and directors of CRI and Messrs. Dockser and Willoughby are
executive officers of CRI. Prior to the Merger, Messrs. Cohen and Burchill
and Ms. Azzara and Ms. Linn were executive officers of CRI.

Under the Advisory Agreement, the Adviser was entitled to receive
mortgage selection fees and annual fees (including master servicing fees)
based on amounts invested by the Corporation in mortgage investments and
incentive fees based on the achievement of certain performance goals. The
Adviser and its affiliates were also entitled to reimbursement for certain
expenses incurred in connection with the operation and administration of the
Corporation. As a result of the Merger, the Advisory Agreement was
terminated. Pursuant to the Advisory Agreement prior to its termination as
of June 30, 1995, CRIIMI MAE paid the Adviser in 1995 (i) mortgage selection
fees of $212,909, (ii) annual fees (including master servicing fees) of
$1,493,297, (iii) no incentive fees, and (iv) expense reimbursements of
$1,302,074.

Liquidating REIT is party to a similar agreement with the Adviser (the
"Liquidating REIT Advisory Agreement"). Pursuant to the Liquidating REIT
Advisory Agreement, in 1995, Liquidating REIT paid the Adviser (i) annual
fees of $416,007, (ii) no incentive fees, and (iii) expense reimbursements of
$125,482 for expenses incurred prior to the Merger. The Adviser will
continue to perform advisory services under the Liquidating REIT Advisory
Agreement following the Merger.

Pursuant to a reimbursement agreement (the "Liquidating REIT
Reimbursement Agreement") entered into between the Adviser and the Management
Corporation in connection with the Merger, the employees of the Management
Corporation perform certain functions on behalf of the Adviser under the
Liquidating REIT Advisory Agreement. Neither the Management Corporation nor
the Corporation, which owns approximately 57% of Liquidating REIT, will
receive advisory fees under the Liquidating REIT Advisory Agreement.
However, commencing July 1, 1995, the Management Corporation is reimbursed,
at cost, for its employees' time and expenses pursuant to the Liquidating
REIT Reimbursement Agreement. For the period July 1, 1995 through December
31,

<PAGE>

1995, Liquidating REIT reimbursed the Management Corporation $122,938 for
services provided on its behalf in connection with the Liquidating REIT
Reimbursement Agreement.

Following the Merger, the Corporation continues to maintain its
headquarters office at the CRI Building in Rockville, Maryland. The
Corporation subleases approximately 22,400 square feet of office space leased
by CRI at a total annual rent of approximately $450,000. During the six
months ended December 31, 1995, CRIIMI MAE incurred rent charges of
approximately $141,000. All increases in lease occupancy charges, including
inflation adjustments and expense reimbursements, are passed through on a per
square foot basis. This amount reflects prevailing market rates. The term
of this sublease will run concurrently with CRI's lease, which expires on
October 31, 1997.

Pursuant to an administrative services agreement with CRI which was
entered into in connection with the Merger (the "CRI Administrative Services
Agreement"), CRI is obligated to provide the Corporation and its subsidiaries
with certain administrative and office facility services and other services,
at cost, with respect to certain aspects of the Corporation's business. The
Corporation intends to use the services provided under the CRI Administrative
Services Agreement to the extent such services are not performed by the
Corporation or provided by another service provider. The CRI Administrative
Services Agreement is terminable on 30 days' notice at any time by the
Corporation. The Corporation and its subsidiaries paid charges under the CRI
Administrative Services Agreement of $372,658 for the six months ended
December 31, 1995.

PROPOSAL TO APPROVE THE CRIIMI MAE INC. 1996 NON-EMPLOYEE DIRECTOR STOCK PLAN

The Board adopted the CRIIMI MAE Inc. 1996 Non-Employee Director Stock
Plan (the "Director Stock Plan") on January 25, 1996, subject to approval by
the shareholders at the Meeting.

The Board believes that the ownership of Common Shares by directors
supports the maximization of long-term stockholder value by aligning the
interests of directors with those of shareholders. The Director Stock Plan
is designed to facilitate the ownership of Common Shares by directors by
providing for the annual grant of both Common Shares and options to purchase
Common Shares to Unaffiliated Directors, and by permitting such directors to
elect to receive all or a portion of their annual retainer in additional
Common Shares, options to purchase Common Shares, or a combination thereof.

SUMMARY OF THE DIRECTOR STOCK PLAN

A summary of the Director Stock Plan is set forth below. The summary is
qualified in its entirety by reference to the full text of the Director Stock
Plan, which is attached to this Proxy Statement as Appendix A.

The purpose of the Director Stock Plan is to promote the long-term growth
of CRIIMI MAE by enhancing CRIIMI MAE's ability to attract and retain highly
qualified and capable Unaffiliated Directors with diverse backgrounds and
experience and by increasing the proprietary interest of Unaffiliated
Directors in CRIIMI MAE. Only Unaffiliated Directors of CRIIMI MAE are
eligible to participate in the Director Stock Plan. Currently, CRIIMI MAE
has four Unaffiliated Directors.

Under the Director Stock Plan, each Unaffiliated Director will receive an
annual grant of 500 Common Shares and an option to purchase an additional 500
Common Shares, and may, in addition, elect to receive Common Shares, or
options to purchase Common Shares, or a combination of both, in lieu of all
or a portion of his or her annual retainer. Effective January 1, 1996,
non-employee directors will receive an annual retainer of $12,000, which is
the same amount paid in 1995. A maximum of 500,000 Common Shares will be
available for the award of shares and the grant of stock options under the
Director Stock Plan, subject to adjustment in the event of stock splits,
stock dividends or changes in corporate structure affecting Common Shares.
To the extent a stock option granted under the Director Stock Plan expires or
terminates unexercised, the Common Shares allocable to the unexercised
portion of such option will be available for awards under the Director Stock
Plan. In addition, to the extent that Common Shares are delivered (actually
or by attestation) to pay all or a portion of an option exercise price, such
shares will become available for awards under the Director Stock Plan.

<PAGE>

If the Director Stock Plan is approved by shareholders, each Unaffiliated
Director will be granted 500 Common Shares and an option to purchase an
additional 500 Common Shares on May 7, 1996 (the date of the Meeting), and,
thereafter, on the first business day of January in each year while the
Director Stock Plan is in effect. If an Unaffiliated Director begins service
on a date other than the first business day of January in any year, the
number of shares subject to the option shall be prorated. Each Unaffiliated
Director may also elect to receive a portion of his or her annual retainer in
Common Shares or options to purchase Common Shares. The number of Common
Shares granted will be based upon the fair market value per Common Share (as
defined in the Director Stock Plan) on the date of grant in the year of such
election, and will be determined by dividing such fair market value into the
amount of the annual retainer that the director elected to receive in Common
Shares. The number of Common Shares issuable upon the exercise of the stock
options granted will be determined by dividing the amount of the annual
retainer that the director elected to receive in stock options by twenty-five
percent (25%) of such fair market value per Common Share.

The exercise price per Common Share of all stock options granted under
the Director Stock Plan will be 100% of the fair market value per Common
Share on the grant date, defined as the closing sales price per Common Share
reported on the New York Stock Exchange Composite Transactions Tape. Options
granted under the Director Stock Plan vest immediately and are immediately
exercisable upon grant. However, any Common Shares issued upon the exercise
of stock options will be subject to restrictions on transfer for a period of
six months from the date of grant of the stock option. Options granted under
the Director Stock Plan may be exercised until the tenth anniversary of the
date of grant. Options may be exercised either by the payment of cash in the
amount of the aggregate exercise price or by surrendering (or attesting to
ownership of) Common Shares owned by the participant for at least six months
prior to the date the option is exercised, or a combination of both, having a
combined value equal to the aggregate exercise price of the Common Shares
subject to the option or portion of the option being exercised. Any option
or portion thereof that is not exercised on or before the tenth anniversary
of the date of grant shall expire.

Options granted under the Director Stock Plan will not be transferable by
the participant other than by court order, will or the laws of descent and
distribution, unless such transferability is both (i) permitted under all
applicable federal and state securities laws, including Rule 16b-3 under the
Exchange Act and (ii) approved by the Board, in its sole discretion. Options
granted under the Director Stock Plan will be exercisable during the
participant's lifetime only by the participant or the participant's guardian,
legal representative or similar person.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The grant of an option under the Director Stock Plan will not result in
income for the participant or in a deduction for CRIIMI MAE. The exercise of
an option will generally result in compensation income for the participant
and a deduction for CRIIMI MAE, in each case measured by the difference
between the exercise price and the fair market value of the shares at the
time of exercise. However, in certain circumstances, the exercise of options
within six months from the date of grant will not result in compensation
income for the participant (or a deduction for CRIIMI MAE) until the
expiration of such six month period.

The receipt of Common Shares under the Director Stock Plan will generally
result in compensation income for the participant and a deduction for CRIIMI
MAE, based on the fair market value of the shares on the date awarded.

ADMINISTRATION OF THE DIRECTOR STOCK PLAN

The Director Stock Plan will be administered by the Board. The Board may
amend or terminate the Director Stock Plan at any time, but the terms of any
option granted under the Director Stock Plan may not be adversely modified
without the participant's consent. In addition, the Board may not amend the
Director Stock Plan more than once every six months to change the number of
shares subject to an option, the exercise price of an option, the grant date
of an option, or the termination provisions relating to an option, other than
to comply with changes in the Code, the Employee Retirement Income Security
Act of 1974, as amended, or the rules and regulations promulgated thereunder.

<PAGE>

ADDITIONAL INFORMATION

The closing price of CRIIMI MAE's Common Shares, as reported on the New
York Stock Exchange Composite Transactions Tape on March 15, 1996, was $10.25.

The affirmative vote of a majority of the votes cast on this proposal
will constitute approval of the Director Stock Plan.

THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE CRIIMI MAE Inc. 1996
NON-EMPLOYEE DIRECTOR STOCK PLAN.

INDEPENDENT PUBLIC ACCOUNTANTS

The Corporation's financial statements for the fiscal year ended December
31, 1995 were audited by Arthur Andersen LLP. The directors have selected
Arthur Andersen LLP as the Corporation's auditors to examine the financial
statements of the Corporation for 1996. A representative of Arthur Andersen
LLP will be present at the Meeting. This representative will have an
opportunity to make a statement, and will be available to respond to
questions by shareholders.

OTHER MATTERS

The Board knows of no other business which will be presented at the
Meeting. If other matters properly come before the Meeting, the persons named
as proxy holders will vote on them in accordance with their best judgment.

The cost of this solicitation of proxies will be borne by the
Corporation. In addition to the use of the mails, some of the officers or
agents of the Corporation and/or regular employees of the Management
Corporation may solicit proxies by telephone and telegraph. The Corporation
will request brokerage houses and other custodians, nominees and fiduciaries
to forward soliciting material to the beneficial owners of Common Shares held
of record by such persons and may verify the accuracy of marked proxies by
contacting record and beneficial owners of the Common Shares. The Corporation
will reimburse such persons for their reasonable expenses incurred in
forwarding such soliciting materials.

1997 ANNUAL MEETING

Shareholders may present proposals to be considered for inclusion in the
Proxy Statement for the 1997 Annual Meeting of Shareholders provided such
proposals are received by the Corporation no later than December 1, 1996.

H. WILLIAM WILLOUGHBY
SECRETARY

March 25, 1996

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APPENDIX A
CRIIMI MAE INC.
1996 NON-EMPLOYEE DIRECTOR STOCK PLAN

ARTICLE I - PURPOSE OF THE PLAN

The purpose of the CRIIMI MAE Inc. 1996 Non-employee Director Stock Plan
is to promote the long-term growth of CRIIMI MAE Inc. (hereinafter sometimes
referred to as the "Corporation") by increasing the proprietary interest of
Non-Employee Directors in the Corporation and to attract and retain highly
qualified and capable Non-Employee Directors.

NONE OF THE OPTIONS GRANTED PURSUANT TO THIS PLAN MEET THE REQUIREMENTS
OF SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR ANY
SUCCESSOR LAW, CONCERNING "INCENTIVE STOCK OPTIONS."

ARTICLE II - DEFINITIONS

Unless the context clearly indicates otherwise, the following terms
shall have the following meanings:

2.1 "ANNUAL GRANT DATE" means the first business day of January.

2.2 "ANNUAL RETAINER" means the annual cash retainer fee payable by the
Corporation to a Non-Employee Director for services as a director of the
Corporation, as such amount may be changed from time to time.

2.3 "AWARD" means an award granted to a Non-Employee Director under the
Plan in the form of Options or Shares, or any combination thereof.

2.4 "BOARD" means the Board of Directors of the Corporation.

2.5 "CORPORATION" means CRIIMI MAE Inc.

2.6 "DELAYED GRANT DATE" shall have the meaning set forth in Section 9.1
hereof.

2.7 "EFFECTIVE DATE" shall have the meaning set forth in Article XII
hereof.

2.8 "FAIR MARKET VALUE" means, with respect to any date, the closing
sales price per Share on the New York Stock Exchange Composite Transactions
Tape on such date, provided that if there shall be no sale of Shares reported
on such date, the Fair Market Value of a Share on such date shall be deemed
to be equal to the closing sales price per Share on such Composite Tape for
the last preceding date on which sales of Shares were reported.

2.9 "OPTION" means an option to purchase Shares awarded under Article
VIII or IX hereof.

2.10 "OPTION GRANT DATE" means the date upon which an Option is granted
to a Non-Employee Director, which date may fall either on the Annual Grant
Date or the Delayed Grant Date, or, with respect to non-elective Options
granted in 1996, the Effective Date.

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2.11 "OPTIONEE" means a Non-Employee Director of the Corporation to whom
an Option has been granted or, in the event of such Non-Employee Director's
death prior to the expiration of an Option, such Non-Employee Director's
executor, administrator, beneficiary or similar person, or, in the event of a
transfer permitted by Article VII hereof, such permitted transferee.

2.12 "NON-EMPLOYEE DIRECTOR" means a director of the Corporation who is
not an employee of the Corporation or any subsidiary of the Corporation.

2.13 "PLAN" means the CRIIMI MAE Inc. 1996 Non-Employee Director Stock
Plan, as amended and restated from time to time.

2.14 "STOCK AWARD DATE" means the date on which Shares are awarded to a
Non-Employee Director, which date may fall either on the Annual Grant Date or
the Delayed Grant Date, or, with respect to non-elective Shares granted in
1996, the Effective Date.

2.15 "SHARES" means shares of the Common Stock, par value $.01 per
share, of the Corporation.

2.16 "STOCK OPTION AGREEMENT" means a written agreement between a
Non-Employee Director and the Corporation evidencing an Option.

ARTICLE III - ADMINISTRATION OF THE PLAN

3.1 ADMINISTRATOR OF THE PLAN. The Plan shall be administered by the
Board.

3.2 AUTHORITY OF BOARD. The Board shall have full power and authority
to: (i) interpret and construe the Plan and adopt such rules and regulations
as it shall deem necessary and advisable to implement and administer the Plan
and (ii) designate persons other than members of the Board to carry out its
responsibilities, subject to such limitations, restrictions and conditions as
it may prescribe, such determinations to be made in accordance with the
Board's best business judgment as to the best interests of the Corporation
and its stockholders and in accordance with the purposes of the Plan. The
Board may delegate administrative duties under the Plan to one or more agents
as it shall deem necessary or advisable.

3.3 DETERMINATIONS OF BOARD. A majority of the Board shall constitute a
quorum at any meeting of the Board, and all determinations of the Board shall
be made by a majority of its members. Any determination of the Board under
the Plan may be made without notice or a meeting of the Board by a written
consent signed by all members of the Board.

3.4 EFFECT OF BOARD DETERMINATIONS. No member of the Board or the Board
shall be personally liable for any action or determination made in good faith
with respect to the Plan or any Award or to any settlement of any dispute
between a Non-Employee Director and the Corporation. Any decision or action
taken by the Board with respect to an Award or the administration or
interpretation of the Plan shall be conclusive and binding upon all persons.

ARTICLE IV - AWARDS UNDER THE PLAN

Awards in the form of Options and Shares shall be granted to
Non-Employee Directors in accordance with Article VIII. Awards in the form
of Options or Shares, or a combination thereof,

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may be granted to Non-Employee Directors in accordance with Article IX. Each
Option granted under the Plan shall be evidenced by a Stock Option Agreement.

ARTICLE V - ELIGIBILITY

Non-Employee Directors of the Corporation shall be eligible to
participate in the Plan in accordance with Articles VIII and IX.

ARTICLE VI - SHARES SUBJECT TO THE PLAN

Subject to adjustment as provided in Article XI, the aggregate number of
Shares which may be issued upon the award of Shares and the exercise of
Options shall not exceed [500,000] Shares. To the extent that Shares subject
to an outstanding Option are not issued or delivered by reason of the
expiration, termination, cancellation or forfeiture of such Option or by
reason of the delivery of Shares (either actually or by attestation) to pay
all or a portion of the exercise price of such Option, then such Shares shall
again be available under the Plan.

ARTICLE VII - NON-TRANSFERABILITY OF OPTIONS AND SHARES

7.1 NON-TRANSFERABILITY OF OPTIONS. All Options granted under the Plan
shall not be transferable by a Non-Employee Director during his or her
lifetime and may not be assigned, exchanged, pledged, transferred or
otherwise encumbered or disposed of except by court order, will or by the
laws of descent and distribution. Notwithstanding the foregoing, in the
event Options may be transferable without failing to comply with Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
then each Option shall be transferable to the extent set forth in the related
Stock Option Agreement, as determined by the Board (provided that all Options
granted under Article VIII with the same Option Grant Date shall have
identical provisions relating to the transferability of such Options). In
the event that any Option is thereafter transferred as permitted by the
preceding sentence, the permitted transferee thereof shall be deemed the
Optionee hereunder. Options shall be exercisable during the Optionee's
lifetime only by the Optionee or by the Optionee's guardian, legal
representative or similar person.

7.2 SECURITIES LAW RESTRICTIONS. No Options or Shares granted under the
Plan, including Shares issued upon the exercise of Options granted under the
Plan, may be assigned, exchanged, pledged, transferred or otherwise
encumbered or disposed of by a Non-Employee Director, except to the extent
permitted by all applicable federal and state securities laws, including,
without limitation, Rule 16b-3 under the Exchange Act.

ARTICLE VIII - NON-ELECTIVE OPTIONS AND SHARES

Each Non-Employee Director shall be granted a combination of Options and
Shares, subject to the following terms and conditions:

8.1 TIME OF GRANT AND AMOUNT OF OPTIONS. On the Effective Date and,
thereafter, on the Annual Grant Date in each year (or, if later, on the date
on which a person is first elected or begins to serve as a Non-Employee
Director), each person who is a Non-Employee Director shall be granted (i)
500 Shares and (ii) Options to purchase 500 Shares (which numbers shall be
pro-rated if such Non-Employee Director was first elected or began to serve
as a Non-Employee Director after the Annual Grant Date in such year).

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8.2 PURCHASE PRICE. The purchase price per Share under each Option
granted pursuant to this Article shall be 100% of the Fair Market Value per
Share on the Option Grant Date.

8.3 EXERCISE OF OPTIONS. Each Option shall be fully exercisable on the
Option Grant Date. In no event shall the period of time over which the
Option may be exercised exceed ten years from the Option Grant Date. An
Option, or portion thereof, may be exercised in whole or in part only with
respect to whole Shares.

Shares shall be issued to the Optionee pursuant to the exercise of an
Option only upon receipt by the Corporation from the Optionee of payment in
full either in cash or by surrendering (or attesting to the ownership of)
Shares together with proof acceptable to the Board that such Shares have been
owned by the Optionee for at least six months prior to the date of exercise
of the Option, or a combination of cash and Shares, in an amount or having a
combined value equal to the aggregate purchase price for the Shares subject
to the Option or portion thereof being exercised. The Shares issued to an
Optionee for the portion of any Option exercised by attesting to the
ownership of Shares shall not exceed the number of Shares issuable as a
result of such exercise (determined as though payment in full therefor were
being made in cash) less the number of Shares for which attestation of
ownership is submitted. The value of owned Shares submitted (directly or by
attestation) in full or partial payment for the Shares purchased upon
exercise of an Option shall be equal to the aggregate Fair Market Value of
such owned Shares on the day immediately preceding the date of the exercise
of such Option.

ARTICLE IX - ELECTIVE OPTIONS AND SHARES

Each Non-Employee Director shall be granted elective Options or Shares,
or a combination thereof, subject to the following terms and conditions:

9.1 TIME OF GRANT. On the Annual Grant Date in each year, Options or
Shares, or a combination thereof, shall be granted to each Non-Employee
Director who, at least six months prior thereto, files with the Board or its
designee a written election to receive Options or Shares, or a combination
thereof, in lieu of all or a portion of such Non-Employee Director's Annual
Retainer payable for services performed as a director during the year
commencing on such Annual Grant Date. In the event a Non-Employee Director
does not file a written election in accordance with the preceding sentence by
reason of becoming a Non-Employee Director after the date which is six months
prior to the Annual Grant Date in any year, Options or Shares, or a
combination thereof, shall be granted to such Non-Employee Director on the
first day (the "Delayed Grant Date") which is six months after the date such
Non-Employee Director files with the Board or its designee a written election
to receive Options or Shares, or a combination thereof, in lieu of all or a
portion of such Non-Employee Director's Annual Retainer; PROVIDED, HOWEVER,
that such election may apply only to the portion of such Non-Employee
Director's Annual Retainer determined by multiplying such Non-Employee
Director's Annual Retainer by a fraction, the numerator of which is the
number of days from and including the Delayed Grant Date to and including the
last day of the period for which such Annual Retainer would otherwise be
payable, and the denominator of which is 365 or 366, as the case may be. An
election pursuant to the first sentence of this Section 9.1 may be revoked or
changed only on or prior to the date which is six months prior to the
following Annual Grant Date. An election pursuant to the second sentence of
this Section 9.1 shall be irrevocable.

9.2 NUMBER AND TERMS OF OPTIONS. The number of Shares subject to an
Option granted pursuant to this Article shall be the number of whole Shares
equal to (i) the product of four (4) times the portion of the Annual Retainer
which the Non-Employee Director has elected pursuant to Section

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9.1 shall be payable in Options, divided by (ii) the Fair Market Value per
Share on the Option Grant Date. Any fraction of a Share shall be disregarded
and the remaining amount of such Annual Retainer shall be paid in cash. The
purchase price per Share under each Option granted pursuant to this Article
shall be 100% of the Fair Market Value per Share on the Option Grant Date.
Each Option granted pursuant to this Article shall be exercisable in
accordance with Section 8.3.

9.3 NUMBER OF SHARES. The Number of Shares granted pursuant to this
Article shall be the number of whole Shares equal to (i) the portion of the
Annual Retainer which the Non-Employee Director has elected pursuant to
Section 9.1 shall be payable in Shares, divided by (ii) the Fair Market Value
per Share on the Stock Award Date. Any fraction of a Share shall be
disregarded and the remaining amount of such Annual Retainer shall be paid in
cash. Upon an Award of Shares to a Non-Employee Director, the stock
certificate representing such Shares shall be issued and transferred to the
Non-Employee Director, whereupon the Non-Employee Director shall become a
stockholder of the Corporation with respect to such Shares and shall be
entitled to vote the Shares.

ARTICLE X - AMENDMENT AND TERMINATION

The Board may amend the Plan from time to time or terminate the Plan at
any time; PROVIDED, HOWEVER, that no action authorized by this Article shall
adversely change the terms and conditions of an outstanding Option without
the Optionee's consent and, subject to Article XI, the number of Shares
subject to an Option granted under the Plan, the purchase price therefor, the
date of grant of any such Option and the termination provisions relating to
such Option, shall not be amended more than once every six months, other than
to comply with changes in the Internal Revenue Code of 1986, as amended, or
any successor law, or the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, or the rules and regulations thereunder.

ARTICLE XI - ADJUSTMENT PROVISIONS

11.1 If the Corporation shall at any time change the number of issued
Shares without new consideration to the Corporation (such as by stock
dividend, stock split, recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate structure affecting the
Shares) or make a distribution of cash or property which has a substantial
impact on the value of issued Shares: (i) the total number of Shares
reserved for issuance under the Plan shall be appropriately adjusted; (ii)
the number of Shares to be issued annually pursuant to Section 8.1 shall be
appropriately adjusted; and (iii) the number of Shares covered by each
outstanding Option and the purchase price per Share under each outstanding
Option and the number of Shares underlying Options to be issued annually
pursuant to Section 8.1 shall be adjusted so that the aggregate consideration
payable to the Corporation and the value of each such Option shall not be
changed.

11.2 Notwithstanding any other provision of the Plan, and without
affecting the number of Shares reserved or available hereunder, the Board
shall authorize the issuance, continuation or assumption of outstanding
Options or provide for other equitable adjustments after changes in the
Shares resulting from any merger, consolidation, sale of assets, acquisition
of property or stock, recapitalization, reorganization or similar occurrence
in which the Corporation is the continuing or surviving corporation, upon
such terms and conditions as it may deem necessary to preserve Optionees'
rights under the Plan.

11.3 In the case of any sale of assets, merger, consolidation or
combination of the Corporation with or into another corporation other than a
transaction in which the Corporation is the continuing or surviving
corporation and which does not result in the outstanding Shares being

<PAGE>

converted into or exchanged for different securities, cash or other property,
or any combination thereof (an "Acquisition"), any Optionee who holds an
outstanding Option shall have the right (subject to the provisions of the
Plan and any limitation applicable to the Option) thereafter and during the
term of the Option, to receive upon exercise thereof, the Acquisition
Consideration (as defined below) receivable upon the Acquisition by a holder
of the number of Shares which would have been obtained upon exercise of the
Option or portion thereof, as the case may be, immediately prior to the
Acquisition. The term "Acquisition Consideration" shall mean the kind and
amount of shares of the surviving or new corporation, cash, securities,
evidence of indebtedness, other property or any combination thereof
receivable in respect of one Share of the Corporation upon consummation of an
Acquisition.

ARTICLE XII - EFFECTIVE DATE

The Plan shall be submitted to the stockholders of the Corporation for
approval and, if approved by the affirmative votes of the holders of a
majority of the securities of the Corporation present, or represented, and
entitled to vote at the 1996 annual meeting of stockholders (the "1996
Meeting"), shall become effective as of the date of the 1996 Meeting (the
"Effective Date"). If stockholder approval is not obtained at the 1996
Meeting, the Plan shall be nullified.