UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended March 31, 2000
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission file number 33-83524
MERIT SECURITIES CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1736551
(State or other jurisdiction of incorporation(I.R.S.Employer Identification No.)
10900 Nuckols Road, 3rd Floor, Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
(804) 217-5800
(Registrant's telephone number, including area code)
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 ninety days. |X| Yes |_| No
As of April 30, 2000, the latest practicable date, there were 1,000 shares
of Merit Securities Corporation common stock outstanding.
The registrant meets the conditions set forth in General Instructions H
(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the
reduced disclosure format.
MERIT SECURITIES CORPORATION
FORM 10-Q
INDEX
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Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at March 31, 2000 and
December 31, 1999 3
Statements of Operations for the three months
ended March 31, 2000 and 1999 4
Statement of Shareholder's Equity for the three months
ended March 31, 2000 5
Statements of Cash Flows for the three months ended
March 31, 2000 and 1999 6
Notes to Unaudited Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 15
</TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MERIT SECURITIES CORPORATION
Balance Sheets
(amounts in thousands except share data)
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March 31, December 31,
2000 1999
----------------- -----------------
ASSETS:
Collateral for collateralized bonds $ 2,710,595 $ 2,839,324
Prepaid shelf registration fees 94 94
Cash 10 10
================= =================
$ 2,710,699 $ 2,839,428
================= =================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Non-recourse debt - collateralized bonds $ 2,543,132 $ 2,661,069
Due to affiliates, net - 42,344
----------------- -----------------
2,543,132 2,703,413
----------------- -----------------
SHAREHOLDER'S EQUITY:
Common stock, no par value,
10,000 shares authorized, 1,000 shares issued and 10 10
outstanding
Additional paid-in capital 160,556 125,997
Accumulated other comprehensive loss (19,423) (14,749)
Retained earnings 26,424 24,757
--------------
----------------- ---
167,567 136,015
================= =================
$ 2,710,699 $ 2,839,428
================= =================
<FN>
See notes to unaudited financial statements.
</FN>
</TABLE>
MERIT SECURITIES CORPORATION
Statements of Operations
(amounts in thousands except share data)
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Three Months Ended
March 31,
----------------------------
2000 1999
------------ -------------
Interest income:
Collateral for collateralized bonds $ 53,672 $ 52,315
------------- --------------
Interest and related expense:
Interest expense on collateralized bonds 46,169 47,034
Other collateralized bond expense 380 506
------------- --------------
46,549 47,540
------------- --------------
Net interest margin before provision for losses 7,123 4,775
Provision for losses (4,985) (1,962)
------------- --------------
Net interest margin 2,138 2,813
Gain on sale of securities - 397
Interest on due to affiliates, net (471) (168)
------------- --------------
Income before extraordinary item 1,667 3,042
Extraordinary gain - extinguishment of debt - 27,842
------------- --------------
Net income $ 1,667 30,884
============= ==============
<FN>
See notes to unaudited financial statements.
</FN>
</TABLE>
MERIT SECURITIES CORPORATION
Statement of Shareholder's Equity
(amounts in thousands except share data)
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Accumulated other
Additional comprehensive loss
Common stock paid-in Retained
capital earnings Total
------------- --------------------------------- --------------- ----------------
Balance at December 31, 1999 $ 10 $ 125,997 $ (14,749) $ 24,757 $ 136,015
Comprehensive income:
Net income - - - 1,667 1,667
Change in net unrealized loss on
investments available-for-sale - - (4,674) - (4,674)
------------ -------------- ------------------- -------------- ----------------
Total comprehensive income - - (4,674) 1,667 (3,007)
Capital contribution - 34,559 - - 34,559
------------ -------------- ------------------- -------------- ----------------
Balance at March 31, 2000 $ 10 $ 160,556 $ (19,423) $ 26,424 $ 167,567
============ ============== =================== ============== ================
<FN>
See notes to unaudited financial statements.
</FN>
</TABLE>
MERIT SECURITIES CORPORATION
Statements of Cash Flows
(amounts in thousands)
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Three Months Ended
March 31,
2000 1999
------------------- -------------------
Operating activities:
Net income $ 1,667 $ 30,884
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of securities - (397)
Provision for losses 4,985 1,962
Extraordinary gain - extinguishment of debt - (27,842)
Amortization, net 2,685 5,099
Net change in prepaid shelf registration fees - 93
Other 222 (226)
------------------- -------------------
Net cash provided by operating activities 9,559 9,573
------------------- -------------------
Investing activities:
Collateral for collateralized bonds:
Purchase of loans subsequently securitized - (321,645)
Principal payments on collateral 117,188 387,198
Proceeds from sale of collateralized bonds - 5,250
Net decrease in accrued interest receivable and
funds held by trustee 45 2,136
-------------------
-------------------
Net cash provided by investing activities 117,233 72,939
------------------- -------------------
Financing activities:
Collateralized bonds:
Proceeds from issuance of collateralized bonds - 309,456
Principal payments on collateralized bonds (118,932) (383,928)
Decrease in accrued interest payable (75) (699)
Decrease in due to affiliates (42,344) (10,596)
Proceeds from capital contributions 34,559 3,255
------------------- -------------------
Net cash used for financing activities (126,792) (82,512)
------------------- -------------------
Cash at beginning of period 10 10
---------------- ----------------
---- ----
Cash at end of period $ 10 $ 10
=================== ===================
Supplemental disclosure of cash flow information:
Cash paid for interest $ 45,272 $ 48,011
=================== ===================
Collateral for collateralized bonds subsequently securitized $ - $ 1,121,584
=================== ===================
<FN>
See notes to unaudited financial statements.
</FN>
</TABLE>
MERIT SECURITIES CORPORATION
Notes to Unaudited Financial Statements
March 31, 2000
(amounts in thousands except share data)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. The financial statements include the accounts of
Merit Securities Corporation (the "Company"). The Company is a wholly-owned,
limited-purpose finance subsidiary of Issuer Holding Corporation ("IHC"). IHC
was formed on September 4, 1996 to acquire all of the outstanding stock of the
Company and certain other affiliates of Dynex Capital, Inc. ("Dynex"). IHC is a
wholly-owned subsidiary of Dynex. The Company was organized to facilitate the
securitization of loans through the issuance and sale of collateralized bonds
(the "Bonds").
In the opinion of management, all material adjustments, consisting of
normal recurring adjustments, considered necessary for a fair presentation of
the financial statements have been included. The Balance Sheet at March 31,
2000, the Statements of Operations for the three months ended March 31, 2000 and
1999, the Statement of Shareholder's Equity for the three months ended March 31,
2000, the Statements of Cash Flows for the three months ended March 31, 2000 and
1999, and the related notes to financial statements are unaudited. Operating
results for the three months ended March 31, 2000 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2000. For
further information, refer to the audited financial statements and footnotes
included in the Company's Form 10-K for the year ended December 31, 1999.
Certain amounts for 1999 have been reclassified to conform to the
presentation for 2000.
NOTE 2--COLLATERAL FOR COLLATERALIZED BONDS
Pursuant to the requirements of Statement of Financial Accounting Standards
No. 115, Accounting for Certain Investments in Debt and Equity Securities, the
Company has classified collateral for collateralized bonds as
available-for-sale. The following table summarizes the Company's amortized cost
basis and fair value of collateral for collateralized bonds at March 31, 2000
and December 31, 1999, and the related average effective interest rates
(calculated for the month ended March 31, 2000 and December 31, 1999, and
excluding unrealized gains and losses):
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- -------------------------------------------------------------------------------------------------------------------
March 31, 2000 December 31, 1999
- -------------------------------------------------------------------------------------------------------------------
Effective Effective
Fair Value Interest Rate Fair Value Interest Rate
- -------------------------------------------------------------------------------------------------------------------
Collateral for collateralized bonds:
Amortized cost $ 2,742,033 7.6% $ 2,865,903 7.5%
Allowance for losses (12,015) (11,830)
- -------------------------------------------------------------------------------------------------------------------
Amortized cost, net 2,730,018 2,854,073
Gross unrealized gains 15,489 17,124
Gross unrealized losses (34,912) (31,873)
- -------------------------------------------------------------------------------------------------------------------
$ 2,710,595 $ 2,839,324
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Collateral for collateralized bonds consists of debt securities backed
primarily by adjustable-rate and fixed-rate mortgage loans secured by first
liens on single family residential housing, manufactured housing installment
loans secured by either a UCC filing or a motor vehicle title and property tax
receivables. All collateral for collateralized bonds is pledged to secure
repayment of the related collateralized bonds. All principal and interest (less
servicing-related fees) on the collateral is remitted to a trustee and is
available for payment on the collateralized bonds. The Company's exposure to
loss on collateral for collateralized bonds is generally limited to the amount
of collateral pledged in excess of the related collateralized bonds issued, as
the collateralized bonds issued are non-recourse to the Company. The collateral
for collateralized bonds can be sold by the Company, but only subject to the
lien of the collateralized bond indenture.
The Company did not securitize any collateral during the three months ended
March 31, 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company was organized to facilitate the securitization of loans through
the issuance and sale of collateralized bonds (the "Bonds"). The Bonds will be
secured primarily by: (i) mortgage loans secured by first or second liens on
residential property, (ii) Federal National Mortgage Association Mortgage-Backed
Certificates, (iii) Federal Home Loan Mortgage Corporation Mortgage-Backed
Certificates, (iv) Government National Mortgage Association Mortgage-Backed
Certificates, (v) other mortgage pass-through certificates or
mortgage-collateralized obligations, (vi) property tax receivables and (vii)
consumer installment loans (collectively, the "Collateral"). In the future, the
Company may also securitize other types of loans.
After payment of the expenses of an offering and certain administrative
expenses, the net proceeds from an offering of Bonds will be used to purchase
Collateral from IHC or various third parties. IHC can be expected to use the
proceeds to reduce indebtedness incurred to obtain such loans or to acquire
additional Collateral. After the issuance of a series of Bonds, the Company may
sell the Collateral securing that series of Bonds, subject to the lien of the
Bonds.
FINANCIAL CONDITION
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- -------------------------------------------------- ------------------ --- --------------------
March 31, December 31,
(amounts in thousands except per share data) 2000 1999
- -------------------------------------------------- ------------------ --- --------------------
Collateral for collateralized bonds $ 2,710,595 $ 2,839,324
Non-recourse debt - collateralized bonds 2,543,132 2,661,069
Shareholder's equity 167,567 136,015
Collateralized bond series outstanding 4 4
- -------------------------------------------------- ------------------ --- -------------------
</TABLE>
Collateral for collateralized bonds As of both March 31, 2000 and December
31, 1999, the Company had 4 series of collateralized bonds outstanding. The
collateral for collateralized bonds decreased to $2.7 billion at March 31, 2000
compared to $2.8 billion at December 31, 1999. This decrease of $0.1 billion is
primarily the result of $117.2 million in paydowns on the collateral.
Non-recourse debt - collateralized bonds Collateralized bonds decreased to
$2.5 billion at March 31, 2000 from $2.7 billion at December 31, 1999 as a
result of $118.9 million in paydowns during the three months ended March 31,
2000.
Shareholder's Equity Shareholder's equity increased to $167.6 million at
March 31, 2000 from $136.0 million at December 31, 1999. This increase was
primarily the result of a $34.6 million capital contribution from IHC during the
three months ended March 31, 2000 and $1.7 million of net income earned during
the three months ended March 31, 2000. These increases in shareholder's equity
were partially offset by a $4.7 million increase in the net unrealized loss on
investments available-for-sale from a $14.7 million net unrealized loss on
investments available-for-sale at December 31, 1999 to a $19.4 million net
unrealized loss on investments available-for-sale at March 31, 2000.
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
-----------------------------------
(amounts in thousands) 2000 1999
- --------------------------------------------------------------------------------
Interest income $ 53,672 $ 52,315
Interest expense on collateralized bonds 46,169 47,034
Provision for losses 4,985 1,962
Net interest margin 2,138 2,813
Gain on sale of securities - 397
Extraordinary gain - extinguishment of debt - 27,842
Net income 1,667 30,884
- --------------------------------------------------------------------------------
Interest income on the collateral for collateralized bonds increased
slightly to $53.7 million for the three months ended March 31, 2000 from $52.3
million for the same period in 1999. This increase was primarily a result of
lower premium amortization caused by lower prepayments during the three months
ended March 31, 2000 than during the same period in 1999, which was partially
offset by a decline in average collateral for collateralized bonds.
Interest expense on collateralized bonds decreased to $46.2 million for the
three months ended March 31, 2000 from $47.0 million for the three months ended
March 31, 2000. This slight decrease was primarily due to the decline in average
collateralized bonds due to prepayments on the related collateral for
collateralized bonds, partially offset by an increase in average yields on the
collateralized bonds.
Provision for losses increased to $5.0 million for the three months ended
March 31, 2000 from $2.0 million for the same period in 1999. This increase was
primarily a result of increasing the reserve for probable losses on various loan
pools pledged as collateral for collateralized bonds where the Company has
retained credit risk.
Net interest margin for the three months ended March 31, 2000 decreased to
$2.1 million from $2.8 million for the three months ended March 31, 1999. The
decrease was primarily the result of additional provisions for losses. This
decrease was partially offset by lower premium amortization caused by lower
prepayments during the three months ended March 31, 2000 than during the same
period in 1999.
Gain on sale of securities of $0.4 million during the three months ended
March 31, 1999 is the result of the recognition of the remaining gain on the
sale of the Merit 11B A-1 class, which had a principal balance of $4.9 million.
The Company also incurred an extraordinary gain of $27.8 million related to
the recognition of unamortized premiums net of unamortized issuance costs on six
series of collateralized bonds, which were collapsed during the three months
ended March 31, 1999. The collateral securing these collateralized bonds was
re-securitized in the Company's $1.4 billion securitization in March 1999.
Credit Exposures With collateralized bond structures, the Company retains
credit risk relative to the amount of overcollateralization required in
conjunction with the bond insurance. Losses are generally first applied to the
overcollateralized amount, with any losses in excess of that amount borne by the
bond insurer or the holders of the collateralized bonds. The Company only incurs
credit losses to the extent that losses are incurred in the repossession,
foreclosure and sale of the underlying collateral. Such losses generally equal
the excess of the principal amount outstanding, less any proceeds from mortgage
or hazard insurance, over the liquidation value of the collateral. To compensate
the Company for retaining this loss exposure, the Company generally receives an
excess yield on the collateralized securities relative to the yield on the
collateralized bonds. At March 31, 2000, the Company retained $182.7 million in
aggregate principal amount of overcollateralization compared to $187.1 million
at December 31, 1999. The Company had reserves, or otherwise had provided
coverage through third-party reimbursement guarantees on $49.5 million and $49.3
million of this potential credit loss exposure at March 31, 2000 and December
31, 1999, respectively. At March 31, 2000 and December 31, 1999, $29.7 million
and $30.3 million, respectively, of this reserve amount is in the form of a loss
reimbursement guarantee from a third-party rated A by Standards & Poors Ratings
Services, Inc.
Other Matters At March 31, 2000, the Company had securities of
approximately $308.6 million remaining for issuance under a registration
statement filed with the Securities and Exchange Commission. The Company
anticipates issuing additional Bonds in the future.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk generally represents the risk of loss that may result from the
potential change in the value of a financial instrument due to fluctuations in
interest and foreign exchange rates and in equity and commodity prices. Market
risk is inherent to both derivative and non-derivative financial instruments,
and accordingly, the scope of the Company's market risk management extends
beyond derivatives to include all market risk sensitive financial instruments.
As a financial services company, net interest income comprises the primary
component of the Company's earnings. As a result, the Company is subject to risk
resulting from interest rate fluctuations to the extent that there is a gap
between the amount of the Company's interest-earning assets and the amount of
interest-bearing liabilities that are prepaid, mature or reprice within
specified periods.
Dynex, as the Company's parent, continuously monitors the aggregate cash
flow, projected net yield and market value of the collateral for collateralized
bonds under various interest rate and prepayment assumptions. Dynex has a
Portfolio Executive Committee ("PEC"), which includes executive management
representatives, and monitors and manages the interest rate sensitivity and
repricing characteristics of the balance sheet components consistent with
maintaining acceptable levels of change in both the net portfolio value and net
interest income. Dynex's exposure to interest rate risk is reviewed on a monthly
basis by the PEC and quarterly by the Board of Directors.
Dynex utilizes a monthly static cash flow and yield projection under
interest rate scenarios detailed below. While Dynex may use this tool, there can
be no assurance Dynex will accomplish the goal of adequately managing the risk
profile of the investment portfolio.
Dynex measures the sensitivity of its net interest income to changes in
interest rates. Changes in interest rates are defined as instantaneous,
parallel, and sustained interest rate movements in 100 basis point increments.
Dynex estimates its interest income for the next twelve months assuming no
changes in interest rates from those at period end. Once the base case has been
estimated, cash flows are projected for each of the defined interest rate
scenarios. Those scenario results are then compared against the base case to
determine the estimated change to net interest income.
The following table summarizes the Company's net interest margin
sensitivity analysis as of March 31, 2000. This analysis represents management's
estimate of the percentage change in net interest margin given a parallel shift
in interest rates. The "Base" case represents the interest rate environment as
it existed as of March 31, 2000. The analysis is heavily dependent upon the
assumptions used in the model. The effect of changes in future interest rates on
the mix of assets and liabilities may cause actual results to differ from the
modeled results. In addition, certain financial instruments provide a degree of
"optionality." The model considers the effects of these embedded options when
projecting cash flows and earnings. The most significant option affecting the
Company's portfolio is the borrowers' option to prepay the loans. The model uses
a dynamic prepayment model that applies a Constant Prepayment Rate ranging from
5.5% to 70.1% based on the projected incentive to refinance for each loan type
in any given period. While Dynex's model considers these factors, the extent to
which borrowers utilize the ability to exercise their option may cause actual
results to significantly differ from the analysis. Furthermore, its projected
results assume no additions or subtractions to the Company's portfolio, and no
change to the Company's liability structure. Historically, the Company has made
significant changes to its assets and liabilities, and is likely to do so in the
future.
---------------------- ----------------------
Basis Point % Change in Net
Increase (Decrease) Interest Margin from
in Interest Rates Base Case
---------------------- ----------------------
+200 (33.56 %)
+100 (17.12%)
Base -
-100 13.50 %
-200 15.53 %
---------------------- ------------------ ---
Approximately $1.4 billion of the Company's collateral for collateralized
bonds as of March 31, 2000 is comprised of loans or securities that have coupon
rates which adjust over time (subject to certain periodic and lifetime
limitations) in conjunction with changes in short-term interest rates.
Approximately 66% and 25% of the ARM loans underlying the Company's collateral
for collateralized bonds are indexed to and reset based upon the level of
six-month LIBOR and one-year CMT, respectively.
Generally, during a period of rising short-term interest rates, the
Company's net interest spread earned on its collateralized bonds will decrease.
The decrease of the net interest spread results from (i) the lag in resets of
the ARM loans underlying the collateral for collateralized bonds relative to the
rate resets on the collateralized bonds and (ii) rate resets on the ARM loans
which are generally limited to 1% every six months or 2% every twelve months and
subject to lifetime caps, while the associated borrowings have no such
limitation. As short-term interest rates stabilize and the ARM loans reset, the
net interest margin may be restored to its former level as the yields on the ARM
loans adjust to market conditions. Conversely, net interest margin may increase
following a fall in short-term interest rates. This increase may be temporary as
the yields on the ARM loans adjust to the new market conditions after a lag
period. In each case, however, the Company expects that the increase or decrease
in the net interest spread due to changes in the short-term interest rates to be
temporary. The net interest spread may also be increased or decreased by the
proceeds or costs of interest rate swap and cap agreements.
As part of its asset/liability management process, the Company has entered
into interest rate cap and swap agreements. These interest rate agreements are
used by the Company to help mitigate the risk related to the collateral for
collateralized bonds for fluctuations in interest rates that would ultimately
impact net interest income. To help protect the Company's net interest income in
a rising interest rate environment, the Company has purchased interest rate caps
with a notional amount of $351 million, which help reduce the Company's exposure
to interest rate risk rising above the lifetime interest rate caps on ARM loans
underlying the collateral for collateralized bonds. These interest rate caps
provide the Company with additional cash flow should the related index increase
above the contracted rates. The contracted rates on these interest rate caps are
based on one-month LIBOR, six-month LIBOR or one-year CMT.
The interest rate cap agreements represent protection for the earnings and
cash flow of the net collateral for collateralized bonds in adverse markets. To
date, market conditions have not been adverse such that the caps have been
utilized.
The remaining portion of the Company's collateral for collateralized bonds
as of March 31, 2000, approximately $1.2 billion, is comprised of loans that
have coupon rates that are either fixed or do not reset within the next 15
months. The Company has generally limited its interest rate risk on such
collateral primarily through the issuance of fixed-rate collateralized bonds.
Overall, the Company's interest rate risk is primarily related to the rate of
change in short-term interest rates, not the level of short-term interest rates.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
3.1 Articles of Incorporation of the Registrant (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
3.2 Bylaws of the Registrant (Incorporated herein by reference to the
Exhibits to Registrant's Registration Statement No. 33-83524 on Form S-3 filed
August 31, 1994).
3.3 Amended and Restated Articles of Incorporation of the Registrant,
effective April 19, 1995 (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed April 21, 1995).
4.1 Indenture between Registrant and Trustee, dated as of August 1, 1994
(Incorporated herein by reference to the Exhibits to Registrant's Registration
Statement No. 33-83524 on Form S-3 filed August 31, 1994).
4.2 Form of Supplement Indenture between Registrant and Trustee
(Incorporated herein by reference to the Exhibits to Registrant's Registration
Statement No. 33-83524 on Form S-3 filed August 31, 1994).
Copy of the Indenture, dated as of November 1, 1994, by and between the
Registrant and Texas Commerce Bank National Association, as Trustee
(Incorporated herein by reference to Exhibit to the Registrant's Current Report
on Form 8-K, filed December 19, 1994).
Copy of the Series 4 Indenture Supplement, dated as of June 1, 1995, by and
between the Registrant and Texas Commerce Bank National Association, as Trustee
(including schedules and exhibits) (Incorporated herein by reference to Exhibit
to the Registrant's Current Report on Form 8-K, filed July 10, 1995).
4.5 Copy of the Series 10 Indenture Supplement, dated as of December 1,
1997, by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (related schedules and exhibits available upon request
of the Trustee). (Incorporated herein by reference to Exhibit of Registrant's
Current Report on Form 8-K, filed January 6, 1998).
4.6 Copy of the Series 11 Indenture Supplement, dated as of March 1, 1998,
by and between the Registrant and Texas Commerce Bank National Association, as
Trustee (related schedules and exhibits available upon request of the Trustee).
(Incorporated herein by reference to Exhibit of Registrant's Current Report on
Form 8-K, filed June 12, 1998).
4.7 Copy of the Series 12 Indenture Supplement, dated as of March 1, 1999,
by and between the Registrant and Texas Commerce Bank National Association, as
Trustee (related schedules and exhibits available upon request of the Trustee).
(Incorporated herein by reference to Exhibit of Registrant's Current Report on
Form 8-K, filed April 12, 1999).
4.8 Copy of the Series 13 Indenture Supplement, dated as of August 1, 1999,
by and between the Registrant and Texas Commerce Bank National Association, as
Trustee (related schedules and exhibits available upon request of the Trustee).
(Incorporated herein by reference to Exhibit of Registrant's Current Report on
Form 8-K, filed September 13, 1999).
99.1 Standard Provisions to Servicing Agreement (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.2 Form of Servicing Agreement (Incorporated herein by reference to the
Exhibits to Registrant's Registration Statement No. 33-83524 on Form S-3 filed
August 31, 1994).
99.3 Standard Terms to Master Servicing Agreement (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.4 Form of Master Servicing Agreement (Incorporated herein by reference
to the Exhibits to Registrant's Registration Statement No. 33-83524 on Form S-3
filed August 31, 1994).
99.5 Form of Prospectus Supplement of Bonds secured by adjustable-rate
mortgage loans (Incorporated herein by reference to Exhibits to Registrant's
Pre-Effective Amendment No. 4 to Registration Statement No. 33-83524 on Form S-3
filed December 5, 1994).
99.6 Form of Financial Guaranty Assurance Policy (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.7 Form of GEMICO Mortgage Pool Insurance Policy (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.8 Form of PMI Mortgage Insurance Co. Pool Insurance Policy (Incorporated
herein by reference to the Exhibits to Registrant's Registration Statement No.
33-83524 on Form S-3 filed August 31, 1994).
99.9 Form of Prospectus Supplement of Bonds secured by fixed-rate mortgage
loans (Incorporated herein by reference to Exhibits to Registrant's
Pre-Effective Amendment No. 4 to Registration Statement No. 33-83524 on Form S-3
filed December 5, 1994).
99.10 Copy of the Saxon Mortgage Funding Corporation Servicing Guide for
Credit Sensitive Loans, February 1, 1995 Edition (Incorporated herein by
reference to Exhibit to the Registrant's Current Report on Form 8-K, filed March
8, 1995).
99.11 Copy of Financial Guaranty Insurance Policy No. 50364-N issued by
Financial Guaranty Assurance Inc., dated April 7, 1995, with respect to the
Series 3 Bonds (Incorporated herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed April 21, 1995).
99.12 Copy of Financial Guaranty Insurance Policy No. 50382-N issued by
Financial Guaranty Assurance Inc., dated June 29, 1995, with respect to the
Series 4 Bonds (Incorporated herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed July 10, 1995).
99.13 Copy of the Standard Terms to Master Servicing Agreement, June 1,
1995 Edition (Incorporated herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed July 10, 1995).
99.14 Copy of Financial Guaranty Insurance Policy No. 19804 issued by MBIA
Insurance Corporation (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed November 15, 1995).
Copy of Financial Guaranty Insurance Policy No. 20596 issued by MBIA
Insurance Corporation (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed March 21, 1996).
99.16 Copy of Financial Guaranty Insurance Policy No. 21296 issued by MBIA
Insurance Corporation (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed June 19, 1996).
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements 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.
MERIT SECURITIES CORPORATION
By: /s/ William H. West, Jr.
William H. West, Jr.
Executive Vice President
(Principal Executive Officer)
/s/ Stephen J. Benedetti
Stephen J. Benedetti
Treasurer
(Principal Financial & Accounting Officer)
Dated: May 15, 2000
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