UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
 of 1934

For the fiscal year ended December 31, 1998

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
 Exchange Act of 1934

For the transition period from                     to                     

Commission file number  0-13520                                           

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)

          Massachusetts                                     04-2828131
  (State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                        Identification No.)
                                                                 
                 100 Second Avenue, Needham, Massachusetts     02494
                 (Address of principal executive offices)    (Zip Code)

Registrant's telephone number, including area code  (781) 444-5251        

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

Securities  registered  pursuant to Section  12(g) of the Act:  Units of Limited
Partnership Interest

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


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

Aggregate market value of voting stock held by non-affiliates of the registrant:
Not applicable

                    Documents incorporated by reference: None

                        Exhibits Index on Pages: 128-141

                                  Page 1 of 143


                                     PART I

Item 1.  Business

        The  Registrant,  Liberty  Housing  Partners  Limited  Partnership  (the
"Partnership"),  is a limited partnership  organized under the provisions of the
Massachusetts  Uniform Limited Partnership Act on March 20, 1984. Until December
27,  1995,  the general  partners in the  Partnership  consisted of Liberty Real
Estate  Corporation,  the managing general partner (the "Former Managing General
Partner"),  LHP Associates  Limited  Partnership,  the associate general partner
(the "Former  Associate General Partner") and, together with the Former Managing
General  Partner,  (the "Former  General  Partners").  On December 27, 1995, the
Former General Partners withdrew from the Partnership and TNG Properties,  Inc.,
a Massachusetts  corporation (the "Managing General  Partner"),  was admitted to
the Partnership as a substitute  general partner with an interest  equivalent to
the aggregate interests of the Former General Partners.

        The units of Limited  Partnership  Interest  ("Units")  were offered and
sold commencing July 13, 1984, pursuant to a Registration Statement on Form S-11
under the  Securities  Act of 1933.  The  offering  and sale of 21,616 units was
completed on July 12, 1985.  During 1995, the Partnership  recorded as cancelled
and no longer outstanding 40 units which were formally abandoned by the holders.
During 1998 an additional 10 units were abandoned.

        The  Partnership  will  terminate on December 31,  2020,  unless  sooner
dissolved or  terminated  as provided in Section 11 of the Amended  Agreement of
Limited  Partnership  dated  as of July  13,  1984,  as  amended  to  date  (the
"Partnership Agreement").

        The Partnership has no employees.  Under the Partnership Agreement,  the
Managing  General  Partner  is  solely  responsible  for  the  operation  of the
Partnership and its properties.

        The Partnership is engaged in only one industry segment, the business of
investing in, operating,  owning, leasing and improving interests in real estate
through ownership of interests in other limited partnerships (the "Local Limited
Partnerships")  which own and operate  government-assisted,  multi-family rental
housing complexes.  As described in Item 2, the Partnership owns interests in 13
Local   Limited   Partnerships,    each   of   which   owns   and   operates   a
government-assisted,  garden-style,  residential  multi-family  housing complex.
Each complex  consists of  one-to-three-story  buildings of wood frame and brick
construction  located on  landscaped  lots.  The  apartments  within each of the
complexes  contain fully  equipped  kitchens and some of the  complexes  include
swimming pools.

        The Partnership paid for two of the 13 limited partnership  interests in
cash upon acquisition.  The Partnership paid for 11 of such limited  partnership
interests by delivery of cash,  short-term promissory notes (which have all been
paid in full) and non-recourse  promissory notes which bear interest at the rate
of 9% per annum  ("Purchase  Money  Notes").  Each  Purchase  Money Note permits
interest to accrue to the extent cash  distributions to the Partnership from the
applicable Local Limited  Partnership are insufficient to enable the Partnership
to pay the Purchase Money Note on a current  basis.  The Purchase Money Notes do
not require payment of any portion of the principal amount of the notes prior to
maturity  (except  that the  Purchase  Money  Notes  require  immediate  payment
following a default (as defined therein) by the Partnership thereunder).

                                       2

Item 1. Business, continued

As a result of these  interest  accrual and payment  provisions,  each  Purchase
Money Note will require a substantial  balloon payment at maturity.  The payment
of each Purchase Money Note is secured by a pledge of the Partnership's interest
in the Local Limited  Partnership to which the note relates.  The Purchase Money
Notes had  original  terms of 15 to 17 years and mature at varying  dates during
1999, 2000 and 2001. Additional  information concerning the Purchase Money Notes
is set forth below under  "Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations." One of the two Local Limited  Partnerships
in which the  Partnership  acquired its interest for cash issued  purchase money
notes in connection  with the purchase of its housing  complex.  Such notes have
terms which are  substantially  identical to those of the Purchase  Money Notes,
and are  secured  by a  pledge  by all of the  partners  in such  Local  Limited
Partnership   (including  the  Partnership)  of  their  respective   partnership
interests therein. See the table under Item 2 (Properties) below.

        The Partnership does not intend to make any additional investments.  The
Partnership's business is not seasonal.

        In  connection  with the  Partnership's  investment in the Local Limited
Partnerships,  Liberty  LGP  Limited  Partnership,  an  affiliate  of the Former
General Partners ("Liberty LGP") acquired  co-general  partnership  interests or
special limited partnership interests in each of the Local Limited Partnerships.
In some cases,  such  interests  entitle  Liberty  LGP to approve or  disapprove
certain actions proposed to be taken by the unaffiliated general partners of the
Local Limited Partnership (the "Local General Partners").  In all cases, Liberty
LGP, acting alone, is authorized to cause each Local Limited Partnership to sell
and/or  refinance  the  project  owned by such  Local  Limited  Partnership.  On
December 27, 1995, TNG  Properties,  Inc.  acquired a 19.8% limited  partnership
interest in Liberty LGP. Liberty Housing Corporation held an 80.2% interest as a
general  partner in Liberty LGP.  Michael A.  Stoller,  President and CEO of the
Managing  General  Partner  acquired  all of the  outstanding  stock of  Liberty
Housing Corporation from the Former Managing General Partner.

        The  Partnership's  investments  are and will  continue to be subject to
various risks, including the following:

(1) The risk  that  Partnership  funds  will not be  sufficient  to  enable  the
Partnership  to  pay  its  debts  and  obligations.   Among  the   Partnership's
liabilities  are the Purchase  Money Notes.  Such notes do not require  payments
during  their term,  except to the extent of cash  distributions  from the Local
Limited Partnerships, but will require substantial balloon payments at maturity.
The Partnership  does not expect to have funds sufficient to repay such notes at
maturity. See Item 7.

(2) Risk of  recapture  of  previously  claimed  tax  losses  as a result of the
Partnership's inability to pay at maturity the Purchase Money Notes. As a result
of such recapture,  the investors in the  Partnership  would have taxable income
from the  Partnership,  and the associated  income tax  liability,  without cash
distributions  from the  Partnership  with  which to  satisfy  such  income  tax
liability.

(3) The risks  associated  with an  investment in a  partnership,  including tax
risks as a result of  possible  adjustments  by the IRS to  federal  income  tax
returns filed by the Partnership and its Partners, and other tax risks.

                                       3

Item 1. Business, continued

(4) Risks that the federal  government  will cease or reduce  funding of housing
subsidies,  including  subsidies  under the Section 8 and Section 236  programs,
both of  which  provide  substantial  operating  revenues  to many of the  Local
Limited Partnerships.

(5)  Possible  restrictions  imposed by Federal,  state or local  agencies  that
provide  government  assistance to the  projects,  which may limit the amount of
costs  which may be passed on to  tenants in the form of rent  increases,  limit
future direct government assistance to Local Limited  Partnerships,  or restrict
the  Partnership's  ability to sell or refinance its Local  Limited  Partnership
interests.

(6) The  risk  that  properties  owned by Local  Limited  Partnerships  will not
generate income sufficient to meet their operating  expenses and debt service or
to fund adequate reserves for capital expenditures.

(7)  Continuing  quality of on-site  management  of the local  properties.  Such
on-site management is subject to direct control by the Local General Partners of
the Local Limited Partnerships and not by the Partnership.

(8) Possible  adverse changes in general  economic  conditions and adverse local
conditions,  such as competitive  over-building,  a decrease in  employment,  or
adverse changes in real estate selling laws,  which may reduce the  desirability
of real estate in a particular area.

(9) Circumstances  over which the Local Limited  Partnerships may have little or
no control, such as fires, earthquakes, and floods.

(10) The risk that properties owned by Local Limited Partnerships will be unable
to replace the revenue  received under federal housing  assistance  contracts or
extend the current contract at the same terms upon their termination.


The  Partnership  has  engaged the  General  Partner of Linden  Park  Associates
Limited   Partnership   to  assist  with  the  workout  or  liquidation  of  the
Partnership's Purchase Money Note ("PMN") debt and the Local Limited Partnership
interest  which serves as  collateral  for the PMN. The terms of the  engagement
provide for the payment of certain fees and expenses.  It is  contemplated  that
these fees and expenses  will be paid from the  principal  and interest from the
Linden Park Associates Limited Partnership notes held by the Partnership. If the
workout or liquidation  of the entire  portfolio is  successfully  completed the
Partnership's  entire interest in these notes will have been exhausted.  Through
February 28, 1999 expenses aggregating $7,560 have been paid out of the interest
earnings on these notes.

        Management presently expects that the indebtedness of the Fiddlers Creek
and Linden  Park  Partnerships  will be  refinanced.  In  connection  with these
refinancings,  it is  anticipated  that the  management  of the  Fiddlers  Creek
project will use $494,950 of the proceeds and the  management of the Linden Park
project  will  use  $396,000  of the  proceeds,  respectively,  to  acquire  the
Partnership's  interest  in  those  projects.  The  acquisitions  would  include
assumption of the Partnership's obligations for the related Purchase Money Notes
("PMN").  Management presently expects these transactions to close in the second
quarter of 1999,  although no assurance may be given that the transactions  will
ultimately be consummated.

                                       4


Item 1. Business, continued

        Management is currently in negotiation  with the general  partner of the
Glendale Manor, Surry Manor,  Oxford Homes,  Williamston Homes and Fuquay Varina
partnerships  regarding the extension of the PMN's relating to the Partnership's
investments  in  these  five  projects.  Management  has  proposed  a five  year
extension of the PMN's relating to the Osuna  Apartments  project to the holders
of these notes. No assurance may be given that the  Partnership  will be able to
secure extensions of the terms of any of these PMN's.

Item 2. Properties

        The Partnership owns limited  partnership  interests in 13 Local Limited
Partnerships,  each of which  owns  the fee  interest  in a  government-assisted
residential  multi-family  rental-housing complex. The following table reflects:
(1) the name of each of the Local Limited Partnerships and the percentage of the
total   interests  in  the  Local  Limited   Partnership   represented   by  the
Partnership's  interest;  (2) the date on which the Partnership acquired each of
such  interests;  (3) the  consideration  paid  for  each  interest,  (including
purchase money notes);  (4) the original  principal amount, the aggregate amount
of the principal and accrued and unpaid interest  outstanding as of December 31,
1998,  and the  maturity  date of the  Purchase  Money  Notes  relating  to each
interest; (5) the Partnership's share of the mortgage indebtedness of each Local
Limited Partnership;  (6) the size and the location of the housing project owned
by each Local Limited  Partnership;  and (7) the government  program pursuant to
which the complex  receives  assistance  and the number of housing  units in the
project receiving such assistance.

        More detailed  information  related to the properties owned by the Local
Limited   Partnerships,   including   their   respective   amounts  of  mortgage
indebtedness   is  included  in  Schedule  III,  Real  Estate  and   Accumulated
Depreciation  and included in Item 8. It is unlikely that  operating  cash flows
from the Local Limited Partnerships will generate any distributions to investors
in the  Partnership,  because in nearly all cases,  the  Partnership's  share of
operating cash flows from the properties owned by the Local Limited Partnerships
must be applied to  repayment of accrued  interest and  principal on the related
Purchase Money Notes.

                                       5




                                                         Item 2. Properties

                                                        Purchase Money Notes
                                                 ----------------------------------
                                                               Unpaid
                                                              Principal                     At Acquisition
                                      Total                      and                    -----------------------   
    Name/Percentage      Interest    Acquisi-     Original     Interest                  LHPLP         Total      
  Ownership of Local    Acquisiton    tion       Principal      as of       Maturity    Share of      Invested    
  Limited Partnership      Date       Cost       Amount(A)     12/31/98       Date      Local Debt    Assets (C)  
- ----------------------- ----------   --------    ---------    ---------     --------    ----------    ----------  
98% interests are owned
in the following Local
Limited Partnerships(B):
                                                                                         
1 Glendale Manor         8/31/84     $810,000     $450,000      $609,482    8/29/2000     $929,000    $1,739,000
  Apartments                                                                                                    
                                                                                                                      
                                                                                                                
2 Surry Manor, Ltd.      8/31/84      740,000      360,000       698,512     7/9/2001    1,006,000     1,746,000
                                                                                                                
                                                                                                                      
                                                                                                                
3 Oxford Homes           9/28/84    1,004,000      644,000       883,452    9/28/1999      653,000     1,657,000
  for the Elderly, Ltd.                                                                                         
                                                                                                                    
                                                                                                                
4 Williamston            9/28/84    1,064,000      664,000       783,167    9/28/1999      649,000     1,713,000
  Homes for the                                                                                                 
  Elderly, Ltd.                                                                                                       
                                                                                                                       
5 Fuquay-Varina          9/28/84    1,118,000      707,000       737,549    9/28/1999      822,000     1,940,000
  Homes for the                                                                                                    
  Elderly, Ltd.                                                                                                                 
                                                                                                                
6 Fiddlers Creek         9/28/84    2,876,000    1,750,000     3,072,656    9/28/1999    2,396,000     5,272,000
  Apartments                                                                                                    
                                                                                                                
                                                                                                      
7 Austintown            10/30/84    3,081,000    1,600,000     3,479,213   10/30/1999    3,635,000     6,716,000
  Associates                                                                                                    
                                                                                                                
                                                                                                      
8 Osuna Apartments      11/30/84    2,042,000    1,300,000     2,819,435   11/27/1999    1,527,000     3,569,000
  Company                                                                                                           
                                                                                                                     
                                                                                                      
9 Linden Park           12/06/84    2,997,000    1,800,000     2,419,434   12/11/1999    3,359,000     6,356,000     
  Associates                                                                                 
  Limited Partnership                                                                        
                                                                                                               
                                    Description of Apartment Complex   
    Name/Percentage         -----------------------------------------------   
  Ownership of Local                        Geographic       Government    
  Limited Partnership        Size           Location      Assistance (D)  
- -----------------------      -----         ----------     --------------  
98% interests are owned
in the following Local
Limited Partnerships(B):
                                                                    
1 Glendale Manor            50 Units      Clinton, SC    221(d)(4)                       
  Apartments                30,310 SF                    100% Section 8 (E)                      
                            5.5 Acres                                  
                                                                                   
2 Surry Manor, Ltd.         44 Units      Dobson, NC     221(d)(4)                       
                            27,253 SF                    100% Section 8 (E)                          
                            5.0 Acres                                  
                                                                                   
3 Oxford Homes              50 Units      Oxford, NC     221(d)(4)                       
  for the Elderly, Ltd.     26,672 SF                    100% Section 8 (E)                           
                            4.5 Acres                                
                                                                                   
4 Williamston               50 Units      Williamstown,  221(d)(4)                       
  Homes for the             26,496 SF          NC        100% Section 8 (E)                         
  Elderly, Ltd.             7 Acres                                   
                                                                                   
5 Fuquay-Varina             60 Units      Fuqyay-Varina, 221(d)(4)                       
  Homes for the             35,056 SF         NC         100% Section 8 (E)                   
  Elderly, Ltd.             6 Acres                                  

6 Fiddlers Creek            160 Units     Winston-Salem, 221(d)(4)                      
  Apartments                126,900 SF     NC                                      
                            15 Acres                                               
                                                                                   
7 Austintown                200 Units     Austintown,    236 HUD                     
  Associates                189,200 SF       OH          100% Section 8  (E)
                            20 Acres                                               
                                                                                   
8 Osuna Apartments          110 Units     Albuquerque,   236 HUD                    
  Company                   97,400 SF       NM           Section 8, (E) 
                            7.3 Acres                    22 Units                   
                                                                                   
9 Linden Park               198 Units     Triangle,      221(d)(4)                  
  Associates                164,327 SF      VA           VA Housing                 
  Limited Partnership       10 Acres                     Development                                                         
                                                         Authority Interest                     
                                                         Subsidy

                                                             (Continued)

                                                                 6


Item 2. Properties, continued

                                                        Purchase Money Notes
                                                 ----------------------------------
                                                               Unpaid
                                                              Principal                     At Acquisition
                                      Total                      and                    -----------------------   
    Name/Percentage      Interest    Acquisi-     Original     Interest                  LHPLP         Total      
  Ownership of Local    Acquisiton    tion       Principal      as of       Maturity    Share of      Invested    
  Limited Partnership      Date       Cost       Amount(A)     12/31/98       Date      Local Debt    Assets (C)  
- ----------------------- ----------   --------    ---------    ---------     --------    ----------    ----------  
94% interests are owned 
in the following Local 
Limited Partnerships(B):
                                                                                         

10 Pine Forest          10/29/84      736,000      350,000       765,340   10/30/1999    1,190,000     1,926,000  
   Apartments, Ltd.                                                                                               
                                                                                                                  

11 Brierwood, Ltd.      10/29/84      563,000      270,000       598,962   10/30/1999      838,000     1,401,000  
                                                                                                                  
                                                                                                                  

12 Meadowwood, Ltd.     10/29/84    1,001,000      610,000     1,370,985   10/30/1999    1,004,000     2,005,000  
                                                                                                                  
                                                                                                                  

13 Brierwood II, Ltd.   01/25/85      101,000                                              351,000       452,000  
                                                                                                                  
                                                                                                                  


                                  -----------  -----------   -----------               -----------   -----------  
   Total Acquisitions             $18,133,000  $10,505,000   $18,238,187               $18,359,000   $36,492,000  
                                  ===========  ===========   ===========               ===========   ===========  



                                    Description of Apartment Complex   
    Name/Percentage         -----------------------------------------------   
  Ownership of Local                        Geographic      Government    
  Limited Partnership        Size           Location      Assistance (D)  
- -----------------------      -----         ----------     --------------  
94% interests are owned 
in the following Local 
Limited Partnerships(B):
                                                                    
10 Pine Forest              64 Units      Cairo, GA      515 RHS             
   Apartments, Ltd.         53,344 SF                    521 RHS            
                            6 Acres                      29 Units           
                                                                             
11 Brierwood, Ltd.          56 Units      Bainbridge,    515 RHS             
                            42,840 SF         GA         521 RHS            
                            6 Acres                      33 Units           
                                                                             
12 Meadowwood, Ltd.         80 Units      Tifton,GA      515 RHS             
                            67,416 SF                                       
                            6.8 Acres                                       
                                                                             
13 Brierwood II, Ltd.       18 Units      Bainbridge,    515 RHS             
                            12,402 SF         GA                           
                            1.4 Acres                                      
                                                                                       
  Total Acquisitions       1,140 units     
                                             
                                                              (Continued)

                                                                  7

<FN>
                                                   Item 2. Properties, continued

(A)   Purchase Money Notes bear interest at 9% per annum (See Note 6 to Financial  Statements).  Notes issued in conjuction with the
      acquisition of Linden Park were issued by the Local Limited Partnership; all other notes were issued by the Partnership.  Each
      note requires no principal payments prior to maturity.  Each note requires payment of interest prior to maturity solely to the
      extent of cash distributions from the Local Limited  Partnership to which the note relates. To the extent interest is not paid
      currently,  it accrues and is payable at  maturity.  Accordingly,  each note will  require a  substantial  balloon  payment at
      maturity.

      The total of principal  and accrued and unpaid  interest  outstanding  at December 31, 1998 on the Purchase  Money Notes is as
      follows:

                                    Principal         Interest          Total
                                   -----------      -----------      -----------
      Obligation of:
        The Partnership            $ 8,705,000      $ 7,113,753      $15,818,753
        Linden Park                  1,800,000          619,434        2,419,434
                                   -----------      -----------      -----------
                                   $10,505,000      $ 7,733,187      $18,238,187
                                   ===========      ===========      ===========

(B)   Where the  Partnership  has acquired a 98% interest as investor  partner,  the Local General Partner has retained a 1% general
      partner interest and Liberty LGP has acquired a 1% general partner interest. Where the Partnership has acquired a 94% interest
      as investor  partner,  the Local General Partner has retained a 5% general partner  interest and Liberty LGP has acquired a 1%
      Special Limited Partner interest.

(C)   The amount of any partnership management fee, as defined in the Partnership Agreement, which may be accrued and unpaid for any
      year is limited to a specified percentage of Invested Assets, as defined in the Partnership Agreement.

 (D)  Government Assistance:
      221(d)(4):   Mortgage is insured by HUD
      Section 8:   Rental Assistance from HUD for low income or elderly housing
      515 RHS:     Mortgage financing  and interest  subsidies from RHS pursuant to Section 515 of the Housing Act of 1949 
      521 RHS:     Rental assistance from RHS pursuant to Section 521 of the Housing  Act of  1949  
      236 HUD:     Mortgage insurance and interest subsidies from HUD

 (E) Section 8 rental assistance contracts expire as follows:
     Glendale Manor Apartments                             05/2000
     Surry Manor, Ltd.                                     07/2000
     Oxford Homes for the Elderly, Ltd.                    06/1999
     Williamston Homes for the Elderly, Ltd.               09/1999
     Fuquay-Varina Homes for the Elderly, Ltd.             05/1999
     Austintown Associates                                 05/1999, 10/1999
     Osuna Apartments Company                              08/1999

</FN>


                                                                 8


Item 3.  Legal Proceedings

        There are no material pending legal proceedings to which the Partnership
is a party or, to the knowledge of the Managing General Partner, of which any of
the properties owned by the Local Limited Partnerships is the subject.

        Osuna   Apartment   Company   ("Osuna"),   one  of  the  Local   Limited
Partnerships,  is party to a wrongful  death  action  brought by the estate of a
former tenant in the Second  Judicial  District of the State of New Mexico.  The
suit  arises  out of  the  murder  of the  tenant  by the  son of a  maintenance
contractor  periodically  engaged by Osuna. No specific amount has been claimed.
Osuna is vigorously contesting the allegations of its liability. The Partnership
presently  expects  that if Osuna  were  found to have  some  liability  in this
action,  substantially  all of the amount would be covered by Osuna's  liability
insurance.

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

        None

                                     PART II

Item 5. Market for the  Partnership's  Securities  and Related  Security  Holder
Matters

        (a)  Market Information

        The  Partnership's  outstanding  securities  consist of units of limited
partnership interest ("Units").  There is no public market for the Units, and it
is not anticipated that such a public market will develop. Transfer of the Units
is subject to compliance with state and federal  securities laws, and in various
states is subject to  compliance  with the minimum  investment  and  suitability
standards imposed by the Partnership and applicable "blue sky" laws.

        (b)  Holders.

        As of March 4,  1999,  there  were 997  holders  of record of the 21,566
Units outstanding.

        (c)  Dividends.

        The  Partnership   Agreement   requires  that  Distributable  Cash  from
Operations (as defined in the  Partnership  Agreement) be distributed 99% to the
Limited Partners and 1% to the General  Partners,  to the extent then available,
within 120 days after completion of the Partnership's fiscal year.

        The Partnership  Agreement provides that Cash from Sales or Refinancings
(as defined in the Partnership Agreement),  if any, received by the Partnership,
will be  distributed  (i) first,  until the Limited  Partners  have  received an
amount equal to their total invested capital, 100% to the Limited Partners,  and
(ii) the balance,  85% to the Limited Partners and 15% to the General  Partners;
provided  however that if the amount of Cash from Sales or Refinancings  exceeds
the amount of profits for tax purposes  arising  from such sale or  refinancing,
the amount of such excess is  distributed  to those  Partners,  if any, who have
positive  balances in their capital accounts  following any  distributions  made
pursuant  to  clause  (i) in  connection  with  such  sale  or  refinancing,  in
proportion  to and to the  extent of such  positive  balances,  and prior to any
distributions pursuant to clause (ii).

                                       9

Item 6.  Selected Financial Data

        The following table sets forth-selected  financial information regarding
the Partnership's  financial  position and operating  results.  This information
should be read in  conjunction  with  Management's  Discussion  and  Analysis of
Financial  Condition and Results of Operations and the Financial  Statements and
Notes thereto,  which are included in Items 7 and 8 of this Report.  Amounts are
expressed in thousands with the exception of per Unit calculations.


                                     For the Years Ended December 31,  
                                     --------------------------------
                              1998           1997             1996           1995            1994
                              ----           ----             ----           ----            ----
                                                                          

Interest income           $     36        $     46        $     61        $     32        $     36 
Net loss                    (2,556)         (2,218)         (1,962)         (1,564)         (1,527)
                                                                                          
Net loss per Unit          (117.31)        (101.75)         (90.02)         (71.77)         (69.92)
                                                                                          
Total assets at                                                                           
  December 31                2,254           2,229           2,587           2,964           3,174
                                                                                          
Long-term debt                                                                            
  (including                                                                              
  current portion,                                                                        
  net of discount)                                                                        
  at December 31            14,137          11,544           9,684           8,152           6,864
                                                                                          
Distributable Cash                                                                        
  From Operations                                                                         
  per Unit(a)                 --              --              --              --              --
                                                                                          
Units used in computing                                                                   
  per unit calculations                                                                   
  above (b)                 21,568          21,576          21,576          21,576          21,616
<FN>    
(a)      Distributable  cash  is  calculated   pursuant  to  the  terms  of  the
         Partnership Agreement. See Note 11 to the Financial Statements.

(b)      During  1995,  the  Partnership  recorded  as  cancelled  and no longer
         outstanding  40 units which were  formally  abandoned  by the  holders.
         During 1998 an additional 10 units were abandoned.
</FN>

                                       10

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

Liquidity and Capital Resources

The Partnership.

        The  Partnership  is liable for the amount of the  purchase  money notes
delivered  to purchase  its  interests  in the Local  Limited  Partnerships  (as
hereinafter described),  and for the Partnership's day-to-day administrative and
operating expenses.

        The Partnership acquired its interests in two Local Limited Partnerships
for cash.  The  Partnership  acquired  its  interests  in the other eleven Local
Limited  Partnerships by delivery of cash,  short-term  promissory notes (all of
which have been paid in full) and  purchase  money  promissory  notes which bear
interest at the rate of 9% per annum (the "Purchase  Money Notes").  The payment
of each Purchase Money Note is secured by a pledge of the Partnership's interest
in the Local Limited  Partnership  to which the note  relates.  Recourse on each
Purchase Money Note is limited to the pledged  partnership  interest.  Each note
had an initial term of 15 to 17 years,  and the  Purchase  Money Notes mature at
varying dates between  September 1999 and July 2001.  None of the Purchase Money
Notes  is  cross-defaulted  to the  others,  nor are the  Purchase  Money  Notes
cross-collateralized in any manner.

        The terms of each Purchase  Money Note permit  interest to accrue to the
extent cash  distributions  to the Partnership from the applicable Local Limited
Partnership are insufficient to enable the Partnership to pay the Purchase Money
Note on a current basis.  Generally,  the amount of such cash distributions have
not been  sufficient in any year to pay the full amount of interest  accrued for
that year on the Purchase  Money Notes.  The Purchase Money Notes do not require
payment of any  portion of the  principal  amount of the note prior to  maturity
(except that the Purchase  Money Notes  require  immediate  payment  following a
default (as defined therein) by the Partnership thereunder).  Accordingly,  each
Purchase Money Note will require a substantial balloon payment at maturity.  The
aggregate outstanding principal amount of and accrued and unpaid interest on the
Purchase Money Note obligations of the Partnership,  as of December 31, 1998, as
set  forth  in  the  table  included  in  Item 2  above,  was  $15,818,753.  The
outstanding  obligations  are expected to increase  annually  until  maturity as
interest  continues  to accrue under the Purchase  Money  Notes.  The  aggregate
outstanding  principal  amount  of the  Purchase  Money  Notes  reported  on the
Partnership's  Balance  Sheet  ($14,136,743  at December 31,  1998),  reflects a
discount using an imputed interest rate of approximately  21%, which was applied
to the face amount of the notes on the respective  investment purchase dates and
which is used to  calculate  an  annual  interest  accrued  in  accordance  with
generally  accepted  accounting   principles  that  will  equate  to  the  legal
obligation (as presented in Item 2 and discussed  above) expected at maturity of
the notes.

        Linden  Park  Limited   Partnership,   one  of  the  two  Local  Limited
Partnerships in which the  Partnership  acquired its interest for cash ("LPLP"),
issued  purchase  money  notes in  connection  with the  purchase of its housing
complex.  The terms of such notes are  substantially  identical  to those of the
Partnership's  Purchase Money Notes,  requiring no payment of principal prior to
maturity  and  permitting  interest  to accrue  prior to  maturity to the extent
LPLP's cash flow is insufficient to pay such interest.

                                       11

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

Liquidity and Capital Resources, continued

         The   Partnership   acquired  its  interest  in  LPLP  for  cash,   and
accordingly,  no Purchase  Money Notes were  delivered in connection  therewith.
However, LPLP delivered purchase money notes in the original principal amount of
$1,800,000 in connection with LPLP's  acquisition of the housing project,  which
it owns (the "LPLP  Notes").  The LPLP  Notes are  secured by a pledge of LPLP's
cash  flow,  and by a pledge  by each of the  partners  in LPLP  (including  the
Partnership)  of its respective  interest in LPLP. The LPLP Notes were issued on
December  6,  1984,  bear  interest  at the rate of 9% per annum  and  mature on
December 11, 1999.  The LPLP Notes permit  interest to accrue to the extent that
cash flow of LPLP is not  sufficient to enable LPLP to pay interest on a current
basis.  The LPLP Notes do not require  payment of any  portion of the  principal
amount  thereof  prior to maturity  (except  that such notes  require  immediate
payment  following  a default (as defined  therein)  by LPLP  thereunder).  As a
result of such  interest  accrual  and payment  provisions,  the LPLP Notes will
require  substantial  balloon payments at maturity.  As of December 31, 1998 the
unpaid  principal  amount of and accrued  and unpaid  interest on the LPLP Notes
equaled  $2,419,434.  In order for LPLP to pay at maturity the LPLP Notes,  LPLP
would most  likely be  required to sell or  refinance  its housing  project in a
transaction  generating  proceeds  sufficient  to repay the notes.  As discussed
below, LPLP is in the process of refinancing the property.

        In order to pay at maturity the Purchase Money Notes with respect to any
particular  Local  Limited  Partnership,  the  Partnership  will most  likely be
required to (a) sell its interest in the Local Limited  Partnership  for a price
equal to or greater than the amounts due under the  associated  notes (b) obtain
financing  in an  amount  sufficient  to repay  the notes or (c) cause the Local
Limited  Partnership  to sell or refinance its housing  project in a transaction
sufficient  to repay  indebtedness  encumbering  the  project and  generate  net
proceeds to the  Partnership  sufficient to enable the  Partnership to repay the
notes.  Alternatively,  the Partnership  could seek extension or modification of
the payment terms of the Purchase Money Notes.

        The Partnership  continues to explore options for resolving the Purchase
Money  Notes.  In  connection  with these  efforts the  Partnership  engaged the
General Partner of Linden Park Associates Limited Partnership to assist with the
workout or liquidation of the  Partnership's PMN portfolio and the Local Limited
Partnership  interest  which serves as collateral  for the PMN. The terms of the
engagement  provide  for  the  payment  of  certain  fees  and  expenses.  It is
contemplated  that these fees and expenses  will be paid from the  principal and
interest from the Linden Park Associates  Limited  Partnership notes held by the
Partnership.   If  the  workout  or  liquidation  of  the  entire  portfolio  is
successfully  completed the  Partnership's  entire  interest in these notes will
have been exhausted.

        In addition, the Partnership has granted the Linden Park General Partner
an option to  acquire  the  Partnership's  interest  in Linden  Park  Associates
Limited Partnership,  over the next three and one-half years at a purchase price
of $400,000 for the next  eighteen  months and  increasing by $100,000 each year
thereafter.

        Management presently expects that the indebtedness of the Fiddlers Creek
and Linden  Park  Partnerships  will be  refinanced.  In  connection  with these
refinancings,  it is  anticipated  that the  management  of the  Fiddlers  Creek
project will use $494,950 of the proceeds and the  management of the Linden Park
project  will  use  $396,000  of the  proceeds,  respectively,  to  acquire  the
Partnership's interest in those projects.

                                       12

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

Liquidity and Capital Resources, continued

The acquisitions would include  assumption of the Partnership's  obligations for
the related  Purchase Money Notes ("PMN").  Management  presently  expects these
transactions  to close in the second quarter of 1999,  although no assurance may
be given that the transactions will ultimately be consummated.

        Management is currently in negotiation  with the general  partner of the
Glendale Manor, Surry Manor,  Oxford Homes,  Williamston Homes and Fuquay Varina
partnerships  regarding the extension of the PMN's relating to the Partnership's
investments  in  these  five  projects.  Management  has  proposed  a five  year
extension of the PMN's relating to the Osuna  Apartments  project to the holders
of these notes.

        There  can  be no  assurance  that  the  Partnership  will  be  able  to
successfully consummate any of such types of transactions.  If Partnership funds
are  insufficient  to pay when due the Purchase Money Notes,  the holders of the
Purchase  Money  Notes  will have the right to  foreclose  on the  Partnership's
respective  interests  in the  Local  Limited  Partnerships.  The  sale or other
disposition   by  the   Partnership  of  its  interests  in  the  Local  Limited
Partnerships,  including in  connection  with such a  foreclosure,  is likely to
result in recapture of previously  claimed tax losses to the Partnership and may
have other  adverse  tax  consequences  to the  Partnership  and to the  Limited
Partners.  Such recapture may cause some or all of the Limited  Partners to have
taxable  income  from  the  Partnership  without  cash  distributions  from  the
Partnership with which to satisfy the tax liability resulting therefrom.

        The only sources of  Partnership  funds are (i)  distributions  from the
Local Limited Partnerships (substantially all of which are presently required to
be applied to payment of interest  accruing on the Purchase  Money Notes),  (ii)
payments  to the  Partnership  of amounts  due under  certain  promissory  notes
acquired  by the  Partnership  from one of the Local  Limited  Partnerships  (as
hereinafter described) and (iii) Partnership reserves. As described above, it is
contemplated  that the principal  and interest of the note  identified in clause
(ii) will be utilized to fund the payment of certain fees and expenses  incurred
in connection with the workout or liquidation of the partnership's portfolio. At
December 31, 1998, the  Partnership's  had reserves of $42,284 (in cash and cash
equivalents),  compared  with $65,685 at December 31, 1997.  Such  reserves have
partially  funded the Partnership  administrative  expenses,  including  expense
reimbursement to the Managing General  Partner.  The Partnership  incurs certain
administrative costs, including the partnership Management Fee, which are earned
by or reimbursed to the Managing  General  Partner.  As discussed  more fully in
Note 6 to the  financial  statements,  such  administrative  costs were $98,136,
$107,007 and $98,240 in 1998,  1997 and 1996,  respectively.  The  Partnership's
cash balances have decreased  each year from December 31, 1996 through  December
31, 1998. If the trend  continues,  the Partnership may not have sufficient cash
available for operating expenses during 1999.

         During  1998,  1997 and  1996,  distributable  cash flow from the Local
Limited Partnerships  (LLP's) to which the Partnership  delivered purchase money
notes was  distributed  to the  partnership,  as  follows:  1998:  Seven LLP's -
$186,617;  1997: Seven LLP's - $369,947;  and 1996:  Seven LLP's - $288,577.  By
April 30, 1998, 1997, and 1996, the Partnership used such cash  distributions to
pay a portion of the accrued and unpaid  interest on the related  Purchase Money
Notes.

        In 1989, the  Partnership  purchased  long-term  purchase money notes of
Linden  Park  Associates   Limited   Partnership,   one  of  the  Local  Limited
Partnerships ("Linden Park"). Such notes represent obligations of Linden Park to
former  partners  whose  partnership  interests were purchased for resale to the
Partnership (in connection with the Partnership's  acquisition of an interest in
Linden  Park).

                                       13

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

Liquidity and Capital Resources, continued

The Partnership  purchased such notes, which had an outstanding principal amount
of  $173,803  plus  accrued and unpaid  interest  of $49,692,  as of the date of
acquisition,  for  $58,000.  The notes  mature on December  11,  1999,  and bear
interest  at 9% per annum,  payable  only to the extent of  available  cash from
Linden Park's  operations.  During 1998,  the  Partnership  received  $18,634 of
interest  payments on such notes leaving accrued unpaid interest of $70,297.  As
of December  31, 1998,  the  outstanding  balance of  principal  and accrued and
unpaid  interest  receivable on these notes  amounted to $244,100,  prior to the
unamortized discount of $84,797.

The Local Limited Partnerships.

          The  liquidity  of  the  Local  Limited   Partnerships  in  which  the
Partnership  has invested is dependent  on the ability of the  respective  Local
Limited  Partnerships,  which own and operate government  assisted  multi-family
rental housing  complexes,  to generate cash flow  sufficient to fund operations
and debt service and to maintain  working  capital  reserves.  Each of the Local
Limited  Partnerships is regulated by government  agencies which require monthly
funding  of  certain  operating  and  capital  improvements  reserves  and which
regulate  the amount of cash to be  distributed  to owners.  Each Local  Limited
Partnership's  source  of funds is  rental  income  received  from  tenants  and
government subsidies.  Certain of the Local Limited Partnership's receive rental
income pursuant to Section 8 rental assistance  contracts which expire beginning
in 1999 and continuing through 2000. Under the Multifamily  Assisted Housing and
Reform  and  Affordability  Act  (MAHRAA)  of  1997,   Congress  set  forth  the
legislation for a permanent  "mark-to-market" program and provided for permanent
authority  for the renewal of Section 8 Contracts.  On September  11, 1998,  HUD
issued an interim rule to provide  clarification  of the  implementation  of the
mark-to-market program. Owners with Section 8 contracts expiring after September
30, 1998 are subject to the  provisions of MAHRAA.  As such,  each Local Limited
Partnership  may  choose to either  opt out of the  Section 8  program,  request
mortgage restructuring and renewal of the Section 8 contract, or request renewal
of the Section 8 contract without mortgage restructuring. Each option contains a
specific  set of rules and  procedures  that must be followed in order to comply
with the  requirements  of MAHRAA.  Management  is reviewing  the status of each
Local  Limited  Partnership  with the local General  Partner to determine  which
option under the MAHRAA should be exercised by the Local Limited Partnership.

        Each  of  the  Local   Limited   Partnerships   has  incurred   mortgage
indebtedness  as  reflected  in  Item  8 in  Schedule  III  -  Real  Estate  and
Accumulated Depreciation.  The mortgage loans provide for equal monthly payments
of principal and interest in amounts,  which will reduce the principal amount of
the loans to zero at  maturity.  Each of the  maturity  dates of the  respective
mortgages  is  substantially  beyond  the due date of the  Purchase  Money  Note
obligations.  Upon a sale of a  property  by a  Local  Limited  Partnership  the
mortgage  indebtedness  of such property must be satisfied prior to distribution
of any funds to the partners in the Local Limited Partnership.

Partnership Operations

        The Partnership is engaged solely in the business of owning interests in
the Local Limited  Partnerships rather than the direct ownership of real estate.
The  Partnership's  interest  income  reflects  interest  earned on reserves and
interest net of discount  amortization on the long-term notes receivable.  Total
interest income decreased to $36,347 in 1998 from $45,607 in 1997.

                                       14

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

Partnership Operations, continued

This decrease was  attributable to the lower reserve balance  maintained  during
the year and a decrease in interest  payments  received  on the  long-term  note
receivable ($18,634 in 1998 versus $23,803 in 1997). Interest income was $61,407
in 1996. In 1996,  interest  payments  received on the long-term note receivable
were $35,410.

        The Partnership's  interest expense increased to $2,672,560 in 1998 from
$2,214,122 in 1997 and $1,904,536 in 1996.  Such increases are  attributable  to
the accrual of interest under the Purchase  Money Notes.  Refer to Note 7 to the
Financial Statements.

         General and administrative expenses of the Partnership were $143,677 in
1998, $145,864 in 1997 and $143,556 in 1996.

        Average  occupancy  levels at the  projects  owned by the Local  Limited
Partnerships  ranged from 89% to 100% in 1998,  and 88% to 100% in 1997, and 94%
to 100% in 1996.

The  Partnership's  equity in income  from the Local  Limited  Partnerships  was
$224,229 in 1998, $96,766 in 1997, and $24,678 in 1996. The $107,503 increase in
income  recognized in 1998 compared to 1997, is attributable  to: an increase of
$127,463 in net income from the combined  statements  of operations of all Local
Limited  Partnerships,  and an  increase  in cash  distributions  recognized  as
investment  income of $28,000.  The  Partnership  did not record losses totaling
approximately  $163,658 from Six Local Limited  Partnerships because its related
investment  accounts had already been reduced to zero. The recognition of income
in 1997 is  primarily  attributable  to the fact  that the  partnership  did not
record   losses   totaling   approximately   $172,000  for  five  Local  Limited
Partnerships and recognized  investment income of $23,065 of cash  distributions
received from  Glendale  Manor as it would have reduced its  investment  balance
below zero. In 1996, the  Partnership did not record  approximately  $125,000 of
net losses for four Local Limited  Partnerships but was able to apply $55,714 of
loss  carry-forward  against  the current  year net income of one Local  Limited
Partnership.  The  Partnership  is not  obligated  to  make  additional  capital
contributions  to fund the deficit in its  capital  accounts in any of the Local
Limited Partnerships.

        Because of the above discussed factors, net loss increased to $2,555,661
in 1998 from $2,217,613 and $1,962,007 in 1997 and 1996, respectively.

        The  operations  of the  Partnership  and of each of the  Local  Limited
Partnerships  are subject to numerous risks,  including  material tax risks. The
rents  of the  Properties,  many  of  which  receive  rental  subsidy  payments,
including  payments  under  Section 8 of Title II of the Housing  and  Community
Development Act of 1974 ("Section 8"), are subject to specific laws, regulations
and agreements with federal and state agencies. The subsidy agreements expire at
various times from May 1999 through July 2000.  The United States  Department of
Housing  and Urban  Development  ("HUD")  has issued  notices,  which  relate to
project based Section 8 contracts. HUD's current program provides in general for
restructuring  rents  and/or  mortgages  where  rents may be  adjusted to market
levels and  mortgage  terms may be  adjusted  based on the  reduction  in rents,
although  there may be instances  in which only rents,  but not  mortgages,  are
restructured.

The  Partnership   cannot  reasonably   predict   legislative   initiatives  and
governmental  budget  negotiations,  the  outcome  of which  could  result  in a
reduction  in funds  available  for the various  federal and state  administered
housing programs including the Section 8 program.

                                       15

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

Partnership Operations, continued

Such changes could  adversely  affect the future net  operating  income and debt
structure of certain  Local  Partnerships  currently  receiving  such subsidy or
similar subsidies. See Item 1 above.

Recent Accounting Pronouncements

        The Partnership has adopted SFAS No. 128,  "Earnings per Share" and SFAS
No. 129,  "Disclosure  of  Information  about Capital  Structure."  SFAS No. 128
provides  accounting  and  reporting  standards  for the amount of earnings  per
share.  SFAS No.  129  requires  the  disclosure,  in  summary  form  within the
financial  statements,  of the  pertinent  rights and  privileges of the various
securities outstanding. The implementation of these standards has not materially
affected the Registrant's financial statements.

        In June 1997,  the Financial  Accounting  Standards  Board (FASB) issued
SFAS No. 130, "Reporting  Comprehensive  Income" and SFAS No. 131,  "Disclosures
about Segments of an Enterprise and Related  Information." In February 1998, the
FASB issued SFAS No.  132,  "Employers'  Disclosures  about  Pensions  and Other
Postretirement   Benefits."  In  June  1998,  The  FASB  issued  SFAS  No.  133,
"Accounting for Derivative  Instruments and Hedging  Activities." The Registrant
does not have any  items of  other  comprehensive  income,  does not have  other
segments of its business on which to report, does not have any pensions or other
postretirement   benefits,   and  does  not  have  any  derivatives  or  hedging
activities. Consequently, these pronouncements are expected to have no effect on
the financial statements.

Impact of the Year 2000 Issue

        The Year 2000 issue may affect the Partnership's  operations as a result
of issues  arising from systems and  services  utilized by the Managing  General
Partner or by various Local Limited  Partnerships.  The Managing General Partner
has inventoried  its systems and equipment that may require  correction for Year
2000  issues.  Management  has  received  certifications  from  their  principal
software provider that all of the core components of the primary software system
critical to the  Partnership's  operation are Year 2000 compliant.  In addition,
the primary network system, it's operating system and certain personal computers
attached  to that  system  have  been  upgraded  and are  deemed to be Year 2000
compliant.

        The auditors for each Local Limited  Partnership  have reviewed the Year
2000  status of such  partnerships.  Based on the  information  reported  to the
Partnership  by such  auditors,  management  expects that the  critical  systems
utilized by the Local  Limited  Partnerships  will be timely  rendered Year 2000
compliant at little cost to the Local Limited Partnerships.

        The Partnership does not expect that any failure of the Managing General
Partnership's systems on which it depends to be Year 2000 compliant would have a
material adverse effect on the Partnership.  However,  the failure of systems on
which a Local  Limited  Partnership  depends  could  result in adverse  effects,
including  the failure to properly  account for and process  income and expenses
and the  failure to  properly  operate  the  property.  The  Partnership  cannot
presently  predict whether such effects would have a material and adverse effect
on the Local Limited Partnerships, and as a result, the Partnership.

Item 7A.  Qualitative and Quantitative Disclosure About Market Risk:  

        This  item is not  applicable  as this  registrant  is a small  business
issuer within the meaning of Rule 12b-2.

                                       16

Item 8.  Financial Statements and Supplementary Data

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                                      INDEX


                                                                         Page

Financial Statements:

        Balance Sheets, December 31, 1998 and 1997                       18-19

        Statements of Operations for the Years
          Ended December 31, 1998, 1997 and 1996                            20

        Statements of Changes in Partners' Deficit
          for the Years Ended December 31, 1998, 1997 and 1996              21

        Statements of Cash Flows for the Years Ended
          December 31, 1998, 1997 and 1996                                  22

        Notes to Financial Statements                                    23-35

Independent Auditors' Report                                                36

Separate Financial Statements, including
  Reports of Independent Accountants, for
  Significant Subsidiaries:

        Fiddlers Creek  Apartments                                       37-62
        Osuna Apartments Company                                         63-89
        Linden Park Assoicates                                          90-120

Financial Statement Schedules:

        Independent Auditors' Report                                       121

        Schedule III - Real Estate and Accumulated Depreciation            122



All schedules  other than those  indicated in the index have been omitted as the
required  information  is  inapplicable  or the  information is presented in the
financial statements or related notes.

                                       17



                          LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                             (A Massachusetts Limited Partnership)

                                         BALANCE SHEETS


                                                                          December 31, 
                                                                ----------------------------  
                                                                     1998            1997
                                                                     ----            ----
                                                                         
Assets

Current assets:

    Cash and cash equivalents                                   $     42,284    $     65,685
    Notes and accrued interest receivable, current maturities        159,303            --
                                                                ------------    ------------

        Total current assets                                         201,587          65,685

Long-term notes and accrued interest
    Receivable, net of current maturities                               --           143,485

Investments in local limited
    partnerships                                                   2,052,426       2,019,775
                                                                ------------    ------------

Total Assets                                                    $  2,254,013    $  2,228,945
                                                                ============    ============






                                          (continued)


                                              18



                          LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                             (A Massachusetts Limited Partnership)

                                   BALANCE SHEETS (continued)


                                                                          December 31, 
                                                                ----------------------------  
                                                                     1998            1997
                                                                     ----            ----
                                                                         
Liabilities and Partners' Deficit

Current liabilities:
    Purchase Money Notes, current maturities                    $ 13,151,250    $       --
    Accounts payable to affiliates                                   173,271          75,271
    Accounts payable                                                   2,659           1,410
    Accrued expense                                                   16,500          16,000
    Accrued interest payable                                         263,558         370,165
                                                                ------------    ------------

        Total current liabilities                                 13,607,238         462,846

Purchase money notes, net of current maturities                      985,493      11,544,195
                                                                ------------    ------------

        Total liabilities                                         14,592,731      12,007,041
                                                                ------------    ------------

Contingencies                                                           --              --

Partners' deficit:
    General partners:
        Capital contributions                                          4,202           4,202
        Capital distributions                                            (72)            (22)
        Accumulated losses                                          (224,106)       (198,550)
                                                                ------------    ------------
                                                                    (219,976)       (194,370)
                                                                ------------    ------------

    Limited partners (21,566 Units in 1998 
      and 21,576 units in 1997):
        Capital contributions (net of
          offering costs of $1,134,440)                            9,649,520       9,649,520
        Capital distributions                                         (7,122)         (2,211)
        Accumulated losses                                       (21,761,140)    (19,231,035)
                                                                ------------    ------------
                                                                 (12,118,742)     (9,583,726)
                                                                ------------    ------------

        Total partners' deficit                                  (12,338,718)     (9,778,096)
                                                                ------------    ------------

        Total liabilities and partners' deficit                 $  2,254,013    $  2,228,945
                                                                ============    ============



<FN>
           The accompanying notes are an integral part of these financial statements.
</FN>

                                              19


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                            STATEMENTS OF OPERATIONS


                                      For the Years Ended December 31,  
                                 -----------------------------------------
                                     1998           1997           1996
                                     ----           ----           ----

Interest income                  $    36,347    $    45,607    $    61,407

Expenses:

  Interest expense                 2,672,560      2,214,122      1,904,536

  General and administrative
    expense                          143,677        145,864        143,556
                                 -----------    -----------    -----------

    Total expenses                 2,816,237      2,359,986      2,048,092
                                 -----------    -----------    -----------

Loss before equity in income
  of local limited partnership
  investments                     (2,779,890)    (2,314,379)    (1,986,685)

Equity in income of local
  limited partnership
  investments                        224,229         96,766         24,678
                                 -----------    -----------    -----------

Net loss                         $(2,555,661)   $(2,217,613)   $(1,962,007)
                                 ===========    ===========    ===========

Basic Net Loss per Limited
   Partnership Unit              $   (117.31)   $   (101.75)   $    (90.02)
                                 ===========    ===========    ===========

Units used in computing Basic
    Net Loss per Limited
    Partnership Unit                  21,568         21,576         21,576
                                 ===========    ===========    ===========




   The accompanying notes are an integral part of these financial statements.


                                       20



                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                   STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
              For the years ended December 31, 1998, 1997 and 1996


                               General          Limited
                               Partner         Partners         Total
                               -------         --------         -----

Partners' deficit
  at December 31, 1995      $   (152,551)   $ (5,443,692)   $ (5,596,243)


Net loss                         (19,620)     (1,942,387)     (1,962,007)
                            ------------    ------------    ------------

Partners' deficit
  at December 31, 1996      $   (172,171)   $ (7,386,079)   $ (7,558,250)


Net loss                         (22,177)     (2,195,436)     (2,217,613)

Capital Distributions                (22)         (2,211)         (2,233)
                            ------------    ------------    ------------

Partners' deficit
    at December 31, 1997    $   (194,370)   $ (9,583,726)   $ (9,778,096)

Net loss                         (25,556)     (2,530,105)     (2,555,661)

Capital Distributions                (50)         (4,911)         (4,961)
                            ------------    ------------    ------------

Partners' deficit
At December 31, 1998        $   (219,976)   $(12,118,742)   $(12,338,718)
                            ============    ============    ============




   The accompanying notes are an integral part of these financial statements.


                                       21





                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                            STATEMENTS OF CASH FLOWS

                                                                                     For the Years Ended December 31
                                                                      -------------------------------------------------------
                                                                            1998                1997                1996
                                                                            ----                ----                ----
                                                                                                       
Cash flows from operating activities:
    Cash distributions from local limited partnerships                 $   191,578          $   372,180          $   288,577 
    Interest payments on purchase money notes                             (186,617)            (369,947)            (290,554)
    Cash paid for general and administration expenses                      (43,930)            (128,051)            (173,106)
    Interest received                                                       20,529               29,821               45,667
                                                                       -----------          -----------          -----------
        Net cash used in operating activities                              (18,440)             (95,997)            (129,416)
                                                                       -----------          -----------          -----------
                                                                                                                
Cash flows from financing activity:                                                                             
    Capital distributions                                                   (4,961)              (2,233)                --
                                                                       -----------          -----------          -----------
        Net cash used in financing activity                                 (4,961)              (2,233)                --
                                                                       -----------          -----------          -----------
                                                                                                                
Net decrease in cash and cash equivalents                                  (23,401)             (98,230)            (129,416)
                                                                                                                
Cash and cash equivalents at:                                                                                   
    Beginning of period                                                     65,685              163,915              293,331
                                                                       -----------          -----------          -----------
    End of period                                                      $    42,284          $    65,685          $   163,915
                                                                       ===========          ===========          ===========
                                                                                                                
Reconciliation of net loss to net cash used in operating activities:                                            
                                                                                                                
Net loss                                                               $(2,555,661)         $(2,217,613)         $(1,962,007)
Adjustments to reconcile net loss to net                                                                        
    cash used in operating activities:                                                                          
        Share of income of local limited                                                                        
          partnership investments                                         (224,229)             (96,766)             (24,678)
        Cash distributions from local limited                                                                   
          partnerships                                                     191,578              372,180              288,577
        Interest expense added to purchase money                                                                
          notes, net of discount amortization                            2,592,548            1,859,914            1,532,710
        Interest income added to                                                                                
          notes receivable, net of discount                                                                     
          amortization, and interest received                              (15,818)             (15,817)             (15,818)
        Decrease in other current assets                                      --                     31                   77
        (Decrease) increase in:                                                                                 
          Accrued interest payable                                        (106,607)             (15,736)              81,273
          Accounts payable to affiliates                                    98,000               17,000              (30,500)
          Accounts payable                                                   1,249                  410                1,000
          Accrued expenses                                                     500                  400                  (50)
                                                                       -----------          -----------          -----------
                                                                                                                
        Net cash used in operating activities                              (18,440)         $   (95,997)         $  (129,416)
                                                                       ===========          ===========          ===========
                                                                                                          

<FN>
                            The accompanying notes are an integral part of these financial statements.
</FN>


                                                                22


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

1.      Organization of Partnership

        Liberty Housing Partners Limited  Partnership  (the  "Partnership")  was
formed under the Massachusetts Uniform Limited Partnership Act on March 20, 1984
for the primary purpose of investing in other limited partnerships which own and
operate government  assisted  multi-family  rental housing complexes (the "Local
Limited Partnerships").

        The General  Partners of the Partnership  through December 27, 1995 were
Liberty Real Estate  Corporation,  which served as the Managing General Partner,
and LHP Associates  Limited  Partnership,  which served as the Associate General
Partner.  On  December  27,  1995,  Liberty  Real  Estate  Corporation  and  LHP
Associates  Limited  Partnership  withdrew from the Partnership and assigned and
transferred all of their  interests in the Partnership to the Successor  General
Partner, TNG Properties Inc., which was admitted to the Partnership as Successor
General Partner. TNG Properties Inc. serves as the Managing General Partner.

        The Partnership  Agreement  authorized the sale of up to 30,010 units of
Limited  Partnership  Interest ("Units") of which 21,616 were subscribed for and
sold as of the  completion of the offering on July 12, 1985.  During fiscal 1995
and 1998, the Partnership recorded as cancelled and no longer outstanding 40 and
10 units,  respectively,  which were  formally  abandoned by the holders of such
units.

        Pursuant to terms of the  Partnership  Agreement,  Profits or Losses for
Tax Purposes (other than from sales or refinancings) and Distributable Cash From
Operations,  both as defined in the Partnership Agreement,  are allocated 99% to
the Limited Partners and 1% to the General  Partners.  Different  allocations of
profits  or losses  and cash  distributions  resulting  from  other  events  are
specified in the Partnership Agreement.

2.      Significant Accounting Policies

        The  Partnership   records  are  maintained  on  the  accrual  basis  of
accounting.

        Investments  in Local  Limited  Partnerships  are  accounted  for by the
equity method  whereby costs to acquire the  investments,  including  cash paid,
notes  issued and other costs of  acquisition,  are  capitalized  as part of the
investment account.  The Partnership's  equity in the earnings or losses of each
of the Local Limited Partnerships is reflected as an addition to or reduction of
the respective  investment  account.  The Partnership does not recognize losses,
which reduce its investment account below zero.

        Cash equivalents at December 31, 1998 and December 31, 1997,  consist of
money market fund  investments  with no stated  maturity,  valued at cost, which
approximates market value.

        Discounts on purchase  money notes are  amortized  over the terms of the
related notes using the effective interest method. Discounts on notes receivable
are amortized over the term of the notes using the effective interest method.

        No  provision  or benefit  for income  taxes has been  included in these
financial  statements  since  taxable  income or loss pass  through  to,  and is
reportable by the partners individually.

                                       23

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

2.      Significant Accounting Policies, continued

        The  preparation  of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

        Net loss per Limited  Partnership  Unit is based on the weighted average
number  of  Units  outstanding  in the  applicable  year.  Refer  to  Note 1 for
information regarding profit and loss sharing ratios.

        The Partnership has adopted SFAS No. 128,  "Earnings per Share" and SFAS
No. 129,  "Disclosure  of  Information  about Capital  Structure."  SFAS No. 128
provides  accounting  and  reporting  standards  for the amount of earnings  per
share.  SFAS No.  129  requires  the  disclosure,  in  summary  form  within the
financial  statements,  of the  pertinent  rights and  privileges of the various
securities outstanding. The implementation of these standards has not materially
affected the Registrant's financial statements.

        In June 1997,  the Financial  Accounting  Standards  Board (FASB) issued
SFAS No. 130, "Reporting  Comprehensive  Income" and SFAS No. 131,  "Disclosures
about Segments of an Enterprise and Related  Information." In February 1998, the
FASB issued SFAS No.  132,  "Employers'  Disclosures  about  Pensions  and Other
Postretirement   Benefits."  In  June  1998,  The  FASB  issued  SFAS  No.  133,
"Accounting for Derivative  Instruments and Hedging  Activities." The Registrant
does not have any  items of  other  comprehensive  income,  does not have  other
segments of its business on which to report, does not have any pensions or other
postretirement   benefits,   and  does  not  have  any  derivatives  or  hedging
activities. Consequently, these pronouncements are expected to have no effect on
the financial statements.

3.      Contingencies

        The  Partnership's  cash balances have decreased each year from December
31, 1996 through December 31, 1998. If the trend continues,  the Partnership may
not have sufficient cash available for operating expenses during 1999.

         In addition, the Purchase Money Notes (PMN) have maturity dates ranging
from  September 1999 through July 2001. In order to pay at maturity the Purchase
Money  Notes with  respect to any  particular  Local  Limited  Partnership,  the
Partnership  will most likely be required to (a) sell its  interest in the Local
Limited  Partnership  for a price equal to or greater than the amounts due under
the associated notes (b) obtain financing

                                       24

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

3.      Contingencies, continued

in an amount  sufficient  to repay  the  notes or (c)  cause  the Local  Limited
Partnership to sell or refinance its housing project in a transaction sufficient
to repay  indebtedness  encumbering the project and generate net proceeds to the
Partnership   sufficient  to  enable  the   Partnership   to  repay  the  notes.
Alternatively,  the  Partnership  could seek  extension or  modification  of the
payment terms of the Purchase Money Notes.

        The Partnership  continues to explore options for resolving the Purchase
Money  Notes.  In  connection  with these  efforts the  Partnership  engaged the
General Partner of Linden Park Associates Limited Partnership to assist with the
workout or liquidation of the  Partnership's PMN portfolio and the Local Limited
Partnership  interest  which serves as collateral  for the PMN. The terms of the
engagement  provide  for  the  payment  of  certain  fees  and  expenses.  It is
contemplated  that these fees and expenses  will be paid from the  principal and
interest from the Linden Park Associates  Limited  Partnership notes held by the
Partnership.   If  the  workout  or  liquidation  of  the  entire  portfolio  is
successfully  completed the  Partnership's  entire  interest in these notes will
have been exhausted.

        In addition, the Partnership has granted the Linden Park General Partner
an option to  acquire  the  Partnership's  interest  in Linden  Park  Associates
Limited Partnership,  over the next three and one-half years at a purchase price
of $400,000 for the next  eighteen  months and  increasing by $100,000 each year
thereafter.

        There  can  be no  assurance  that  the  Partnership  will  be  able  to
successfully consummate any of such types of transactions.  If Partnership funds
are  insufficient  to pay when due the Purchase Money Notes,  the holders of the
Purchase  Money  Notes  will have the right to  foreclose  on the  Partnership's
respective  interests  in the  Local  Limited  Partnerships.  The  sale or other
disposition   by  the   Partnership  of  its  interests  in  the  Local  Limited
Partnerships,  including in  connection  with such a  foreclosure,  is likely to
result in recapture of previously  claimed tax losses to the Partnership and may
have other  adverse  tax  consequences  to the  Partnership  and to the  Limited
Partners.  Such recapture may cause some or all of the Limited  Partners to have
taxable  income  from  the  Partnership  without  cash  distributions  from  the
Partnership with which to satisfy the tax liability resulting therefrom.

        The  rents of the  Properties,  many of  which  receive  rental  subsidy
payments,  including  payments  under  Section 8 of Title II of the  Housing and
Community  Development  Act of 1974 ("Section 8"), are subject to specific laws,
regulations  and  agreements  with  federal  and  state  agencies.  The  subsidy
agreements  expire at various  times from May 1999 through July 2000.  Under the
Multifamily  Assisted Housing and Reform and Affordability Act (MAHRAA) of 1997,
Congress set forth the legislation for a permanent  "mark-to-market" program and
provided for  permanent  authority  for the renewal of Section 8  Contracts.  On
September  11, 1998 HUD issued an interim rule to provide  clarification  of the
implementation of the  mark-to-market  program.  Owners with Section 8 contracts
expiring after September 30, 1998 are subject to the provisions of MAHRAA.

                                       25

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

3.      Contingencies, continued

As such,  each  Local  Limited  Partnership  may choose to either opt out of the
Section 8 program,  request mortgage  restructuring and renewal of the Section 8
contract,  or  request  renewal  of the  Section  8  contract  without  mortgage
restructuring.  Each option contains a specific set of rules and procedures that
must be followed in order to comply with the requirements of MAHRAA.

        The Partnership  cannot reasonably predict  legislative  initiatives and
governmental  budget  negotiations,  the  outcome  of which  could  result  in a
reduction  in funds  available  for the various  federal and state  administered
housing programs  including the Section 8 program.  Such changes could adversely
affect the future net  operating  income  and debt  structure  of certain  Local
Limited Partnerships currently receiving such subsidy or similar subsidies.

        Management of the Partnership is presently implementing plans to address
these matters.  Management has decided that the Partnership may defer payment of
the  management  fee, and defer  payment of the  reimbursements  for general and
administrative  costs.  Management is reviewing the status of each Local Limited
Partnership  with the local General  Partner to determine which option under the
MAHRAA should be exercised by the Local Limited Partnership.

4.      Investments in Local Limited Partnerships

        The Partnership acquired Local Limited Partnership interests in thirteen
Local  Limited   Partnerships   which  own  and  operate   government   assisted
multi-family  housing  complexes.  The Partnership,  as Investor Limited Partner
pursuant to Local Limited  Partnership  Agreements,  acquired  interests ranging
from 94% to 98% in the profit or losses from operations and cash from operations
of each of the Local Limited Partnerships.

        Twelve  Local   Limited   Partnership   interests   were  acquired  from
withdrawing  partners  of  existing  Local  Limited  Partnerships  and one Local
Limited  Partnership  interest  was acquired  from a newly formed Local  Limited
Partnership.  In conjunction with the acquisition of eleven of the Local Limited
Partnership  interests  from  withdrawing   partners,   the  Partnership  issued
long-term purchase money notes in the aggregate  principal amount of $8,705,000,
before  discount,   to  such  withdrawing  partners.  In  conjunction  with  the
acquisition of one of the Local Limited Partnership interests, the Local Limited
Partnership  issued  purchase money notes to withdrawing  partners  amounting to
$1,800,000  with the same  terms  as the  purchase  money  notes  issued  by the
Partnership  in  connection  with its  acquisition  of  interests in other Local
Limited Partnerships. All of the Purchase Money Notes bear simple interest at 9%
per  annum.  Interest  is  payable  annually  but  only  to the  extent  of cash
distributed from the respective Local Limited  Partnerships.  Both principal and
unpaid  interest are due at maturity.  Recourse on such purchase  money notes is
limited to the  Partnership's  respective  Local Limited  Partnership  interests
which are pledged as security on the notes.  See Note 7 for further  information
on Purchase Money Notes.

                                       26


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS


4.  Investments in Local Limited Partnerships, continued

        The following is a summary of  cumulative  activity for  investments  in
Local Limited Partnerships since their dates of acquisition:


                                                                Years Ended December 31,
                                                                ------------------------
                                                                  1998            1997
                                                                  ----            ----
                                                                              
Total acquisition cost to the Partnership                     $ 9,356,379    $ 9,356,379

Additional capital contributed by the Partnership                  11,425         11,425

Partnership's share of losses of Local Limited Partnerships    (3,571,307)    (3,744,473)

Cash distributions received from Local Limited Partnerships    (3,818,231)    (3,626,621)

Cash distributions received from Local Limited
    Partnerships recognized as Investment Income              $    74,160    $    23,065
                                                              -----------    -----------
Investments in Local Limited Partnerships                     $ 2,052,426    $ 2,019,775
                                                              ===========    ===========


        Summarized financial  information from the combined financial statements
of all Local Limited Partnerships is as follows:

                            Summarized Balance Sheets
                            -------------------------
                                                       December 31,
                                                       ------------
                                                  1998            1997
                                                  ----            ----
Assets:

  Investment property, net
        of accumulated depreciation           $ 16,092,927    $ 16,526,177
  Current assets                                 2,253,903       2,376,801
  Other assets                                     281,271         294,284
                                              ------------    ------------
    Total assets                              $ 18,628,101    $ 19,197,262
                                              ============    ============

Liabilities and Partners' Equity (Deficit):

  Current liabilities                         $  1,665,916    $  1,671,568
  Long-term debt, net of discounts              16,441,103      16,839,912
                                              ------------    ------------
    Total liabilities                           18,107,019      18,511,480

  Partnership's equity(deficit)                    717,476         878,863
  Other partners' equity(deficit)                 (196,394)       (193,081)
                                              ------------    ------------
    Total liabilities and
      partners' equity(deficit)               $ 18,628,101    $ 19,197,262
                                              ============    ============

                                       27


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

4.  Investments in Local Limited Partnerships, continued


                                        Summarized Statements of Operations
                                        -----------------------------------

                                                       For the Years Ended December 31,
                                                       --------------------------------
                                               1998                 1997                  1996
                                               ----                 ----                  ----
                                                                                      
Rental and other income                    $ 5,482,888          $ 5,358,709           $ 5,199,572  
Expenses:                                                                            
Operating expenses                           3,442,496            3,424,047             3,298,651
  Interest expense                           1,019,581            1,041,432               954,170
  Depreciation and amortization              1,011,101              993,415               991,323
                                           -----------          -----------           -----------
    Total expenses                           5,473,178            5,458,894             5,244,144
                                           -----------          -----------           -----------
                                                                                     
Net income (loss)                          $     9,710          $  (100,185)          $   (44,572)
                                           ===========          ===========           ===========
                                                                                     
Partnership's share of net income (loss)   $     9,506          $   (97,997)          $   (45,752)
                                           ===========          ===========           ===========
Other partners' share                                                                
  of net income (loss)                     $       204          $    (2,188)          $     1,180
                                           ===========          ===========           ===========
                                                                  
        The difference between the Partnership's share of income (loss) in Local
Limited Partnership investments in the Partnership's Statement of Operations for
the years  ended  December  31, 1998  through  1996 and the share of loss in the
above  Summarized   Statements  of  Operations  consists  of  the  Partnership's
unrecorded share of losses and cash distributions  recorded as investment income
as follows:


                                                              1998             1997             1996
                                                              ----             ----             ----
                                                                                    
Share of income in Local Limited Partnership Investments
 in the Partnership's Statement of Operations              $ 224,229        $  96,766         $  24,678
                                                                                            
Partnership's share of income in the                                                        
 above summarized Statements of Operations                     9,506          (97,997)          (44,572)
                                                           ---------        ---------         ---------
        Difference                                         $ 214,723        $ 194,763         $  69,250
                                                           =========        =========         =========
                                                                                            
Unrecorded Losses:                                                                          
  Linden Park (Prior year loss                                                              
    carry forward applied against 1996 net income)         $  19,199        $  46,355         $ (55,714)
  Brierwood, Ltd.                                             46,313           35,037            36,982
  Brierwood II, Ltd.                                          18,802           11,530            20,189
  Pine Forest Apartments, Ltd.                                41,658           66,954            39,870
  Surry Manor                                                   --             11,822            28,145
  Glendale Manor                                               7,778             --                --
  Meadowwood, Ltd.                                            29,908             --                --
  Other                                                         --               --                (222)
                                                           ---------        ---------         ---------
        Subtotal Unrecorded Losses                           163,658          171,698            69,250
Cash distributions recorded as investment income:                                           
   Glendale Manor                                             37,497           23,065              --
   Surry Manor                                                13,568             --                --
                                                           ---------        ---------         ---------
Total                                                      $ 214,723        $ 194,763         $  69,250
                                                           =========        =========         =========
                                                                                       

                                                   28

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

4.  Investments in Local Limited Partnerships, continued

        The Partnership's  investment in Local Limited Partnerships  reported in
its Balance Sheets at December 31, 1998 and 1997 are $1,334,950 and  $1,140,912,
respectively,  greater than the Partnership's  equity reported in the Summarized
Balance Sheets above.  This is related to the share of unrecorded  losses of the
seven Local Limited  Partnerships and cash distributions  received from Glendale
Manor and Surry Manor which were recorded as investment  income.  The investment
of these seven Local Limited Partnerships has been reduced to zero.

        The Partnership  recorded its share of losses in Linden Park,  Brierwood
Ltd.,  Brierwood II, Ltd., Pine Forest Apartments,  Ltd., Surry Manor,  Glendale
Manor and  Meadowwood,  Ltd.  until its related  investment was reduced to zero.
Subsequent  to that  point,  any cash  distributions  received  from these seven
partnerships  will be recognized as investment income rather than as a reduction
in Investment in Local Limited Partnerships on the Partnership's  Balance Sheet.
In 1998,  $37,497 of cash  distributions  from  Glendale  Manor and $13,568 from
Surry Manor were  recognized as  investment  income as it would have reduced its
investment  balance  below  zero.  The  Partnership  is not  obligated  to  make
additional capital  contributions to fund the deficit in its capital accounts in
these Local Limited Partnerships.

        Certain Local Limited  Partnerships  have made payments on behalf of the
Partnership for non-resident  state  withholding  taxes in accordance with state
income tax regulations. These amounts totaling $4,961 in 1998 and $2,233 in 1997
have been treated as  distributions  from the Local Limited  Partnerships  and a
distribution to the partners of Liberty Housing Partners Limited Partnership.

5.      Notes and Accrued Interest Receivable

        During 1989, the Partnership purchased long-term purchase money notes of
Linden Park Associates  Limited  Partnership  ("Linden  Park"),  a Local Limited
Partnership.  The notes represent  obligations of Linden Park to former partners
whose  partnership  interests  were  purchased for resale to the  Partnership in
connection with the Partnership's acquisition of an interest in Linden Park. The
Partnership  purchased  such notes,  which carried a face value of $173,803 plus
accrued  and unpaid  interest  of  $49,692,  for  $58,000.  The notes  mature on
December 11, 1999 and bear interest at 9% per annum payable only from  available
cash from operations of Linden Park. During the year ended December 31, 1998 the
Partnership  received  $18,634 of interest on such notes.  Any interest  that is
unpaid prior to maturity is due at  maturity.  As of December 31, 1998 and 1997,
the  outstanding  balance of principal and accrued  interest net of  unamortized
discount is $159,303 and $143,485, respectively.

                                       29


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

                        NOTES TO THE FINANCIAL STATEMENTS

6.      Transactions with Affiliates

        During the years ended December 31, 1998,  1997 and 1996 the Partnership
recognized  general and  administrative  expenses  owed to the Managing  General
Partner, as follows:

                                      1998           1997           1996
                                      ----           ----           ----
Reimbursement of Partnership
  administration expenses           $48,136        $57,707        $48,240
Partnership management fees          50,000         50,000         50,000
                                                            
        As of  December  31,  1998 and  1997,  accounts  payable  to  affiliates
totaling  $173,271  and  $75,271   respectively,   represent  amounts  owed  for
reimbursements  of Partnership  administration  expenses of $68,000 and $20,000,
respectively,   and  partnership   management  fees  of  $105,271  and  $55,271,
respectively.  Management has determined to defer further payment of the amounts
accruing  for  Partnership  management  fees and  reimbursement  of  Partnership
administrative expenses in order to conserve cash and cash equivalents available
to fund the Partnership's operations. See note 3.

                                       30

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

                        NOTES TO THE FINANCIAL STATEMENTS

7.      Purchase Money Notes

        Purchase money notes consist of the following at December 31:


                                                                  1998                1997
                                                                  ----                ----
                                                                          
Purchase Money  Notes, due July 9, 2001,  
bearing interest  at 9% per annum,
collateralized by the Partnership's 
Local Limited Partnership interest
in Surry Manor, Ltd.:
       Original principal balance                            $   360,000         $   360,000
       Accrued and unpaid interest                               338,512             306,106
                                                           
Purchase Money Notes, due August 29,                       
2000, bearing  interest at 9% per annum,                   
collateralized by the Partnership's                        
Local Limited Partnership interest in                      
Glendale Manor Apartments:                                 
       Original principal balance                                450,000             450,000
       Accrued and unpaid interest                               159,482             137,984
                                                           
Purchase Money Notes, due September 28, 
1999, bearing interest at 9% per annum,
collateralized by the Partnership's 
Local Limited Partnership interest in 
Oxford Homes for the Elderly, Ltd.:
       Original principal balance                                643,600             643,600
       Accrued and unpaid interest                               239,852             215,485

Purchase Money Notes, due September 28, 
1999,  bearing interest at 9% per annum,
collateralized by the Partnership's 
Local Limited Partnership interest in
Williamston Homes for the Elderly, Ltd.:
       Original principal balance                                664,100             664,100
       Accrued and unpaid interest                               119,067              81,486


                                       31


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

                        NOTES TO THE FINANCIAL STATEMENTS


7.     Purchase Money Notes (Continued)
                                                                  1998                1997
                                                                  ----                ----
                                                                          
Purchase Money Notes, due September 28, 
1999,  bearing interest at 9% per annum,
collateralized by the Partnership's  
Local Limited  Partnership interest  in
Fuquay-Varina Homes for the Elderly, Ltd.:
       Original principal balance                            $   707,300         $   707,300
       Accrued and unpaid interest                                30,249              50,080

Purchase Money Notes, due September 28, 
1999, bearing interest at 9% per annum,
collateralized by the Partnership's Local 
Limited Partnership interest in
Fiddlers Creek Apartments:
       Original principal balance                              1,750,000           1,750,000
       Accrued and unpaid interest                             1,322,656           1,066,909

Purchase Money Notes, due 
October 30, 1999, bearing interest at 
9% per annum, collateralized by the  
Partnership's Local Limited Partnership
interest in Meadowwood, Ltd.:
       Original principal balance                                610,000             610,000
       Accrued and unpaid interest                               760,985             706,085

Purchase Money Notes, due 
October 30, 1999, bearing interest at 
9% per annum, collateralized by the  
Partnership's Local Limited Partnership  
interest  in Brierwood, Ltd.:
       Original principal balance                                270,000             270,000
       Accrued and unpaid interest                               328,962             304,662

Purchase Money Notes, due 
October 30, 1999, bearing interest at 
9% per annum, collateralized by the 
Partnership's Local Limited Partnership  
interest in Pine Forest Apartments, Ltd.:
       Original principal balance                                350,000             350,000
       Accrued and unpaid interest                               415,340             383,840


                                       32


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

                        NOTES TO THE FINANCIAL STATEMENTS


7.     Purchase Money Notes (Continued)
                                                                  1998                1997
                                                                  ----                ----
                                                                          
Purchase Money Notes, due 
October 30, 1999, bearing interest at 
9% per annum, collateralized by the  
Partnership's Local Limited Partnership  
interest in Austintown Associates:
       Original principal balance                            $ 1,600,000         $ 1,600,000
       Accrued and unpaid interest                             1,879,213           1,746,140

Purchase Money Notes, due 
November 27, 1999, bearing interest at 
9% per annum, collateralized by the 
Partnership's Local Limited Partnership  
interest in Osuna Apartments Company:
       Original principal balance                              1,300,000           1,300,000
       Accrued and unpaid interest                             1,519,435           1,411,536
                                                             -----------         -----------

  Total principal and accrued and unpaid
    interest at 9% at December 31                             15,818,753          15,115,313

Aggregate discount on the above purchase
money notes plus accrued interest (based
upon average imputed interest rates of 21%)                   (1,682,010)         (3,571,118)
                                                             -----------         -----------

Purchase money note liability                                 14,136,743          11,544,195 
                                                                                                   

Less: Current maturities, net of aggregate discount          (13,151,250)                (--)
                                                             -----------         -----------

Long-term purchase money note liability                      $   985,493        $ 11,544,195
                                                             ===========        ============


       The  purchase  money notes were  originally  discounted  using an imputed
interest  rate of  approximately  19% and assuming a certain  level of cash flow
from   distributions   from   the   underlying   Local   Limited    Partnerships
("distributions").  Since 1990, on an annual basis, the Partnership has reviewed
the estimated  annual level of  distributions  expected to be received  based on
historical and re-forecasted  future  distributions and adjusted accordingly the
future effective annual interest expense.  The effective annual interest rate as
of December 31, 1998 is approximately 21%.

                                       33

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

7        Purchase Money Notes (Continued)

       All of the  purchase  money  notes and  accrued  interest  thereon may be
repaid without penalty prior to maturity.  However,  it is not anticipated  that
any principal payments will be made prior to maturity.

       The  portion of  interest,  which is expected  to be paid  currently,  is
classified  as a current  liability  and the portion of  interest,  which is not
expected to be paid until  maturity has been  reflected  as  interest,  added to
purchase money note debt.

8.     Reconciliation of Loss in Financial Statements to Loss for Federal
       Income Tax Purposes

       A reconciliation of the loss reported in the Statements of Operations for
the years ended  December  31,  1998,  1997 and 1996,  to the loss  reported for
Federal income tax purposes is as follows:

                                      1998            1997          1996
                                      ----            ----          ----
Net loss per Statements of
  Operations                      $(2,555,661)   $(2,217,613)   $(1,962,007)

Less: Excess of tax equity over
    book equity in loss of
    Local Limited
    Partnership                      (700,821)      (669,980)      (746,209)

Add:  Additional book basis
        interest                    1,707,207      1,292,826      1,033,449

      Expenses not deducted
      pursuant to I.R.C 
      Section 267                      98,000         17,000        (30,500)
                                  -----------    -----------    -----------
Loss for Federal income
  tax purposes                    $(1,451,275)   $(1,577,767)   $(1,705,267)
                                  ===========    ===========    ===========

                                       34

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

9.     Disclosure About Fair Value of Financial Instruments

Notes Receivable
       Management does not believe it is practical to estimate the fair value of
the notes  receivable  because notes with similar terms and  provisions  are not
available to the partnership.

Purchase Money Notes Payable
       Management  does not believe it is practical to determine  the fair value
of the  Purchase  Money  Notes  payable  because  notes with  similar  terms and
provisions are not currently available to the partnership.

10.  Concentration of Credit Risk

       The Partnership  maintains its cash and cash equivalents in one financial
institution.   The  balances  are  insured  by  the  Federal  Deposit  Insurance
Corporation up to $100,000 by this bank.

11.  Statement of Distributable Cash from Operations (Unaudited)

       Distributable  Cash From Operations for the year ended December 31, 1998,
as defined in Section 17 of the Partnership Agreement, is as follows:

Interest income per Statement of Operations                           $  36,347

Less:  Interest income added to long-term notes
      receivable, net of discount amortization                          (15,818)

Plus:  1998 cash distributions to be received from
      Local Limited Partnerships, net of non-resident
      state withholding taxes                                           255,290

Less:  1998 interest payments on purchase money
      notes to be paid out of 1998 cash
      distributions from Local Limited Partnerships                    (255,290)

       General and administrative expenses per
         Statement of Operations                                       (143,677)
                                                                      ---------

Cash from Operations, as defined                                       (123,148)
                                                                      ---------
Distributable Cash from Operations, as defined                        $       0
                                                                      =========
                                       35

                           Reznick Fedder & Silverman
            Certified Public Accountants - A Professional Corporation
       745 Atlantic Avenue - Suite 800 - Boston, Massachusetts 02111-2735
                   Phone (617) 423-5855 - Fax (617) 423-6651


                          INDEPENDENT AUDITORS' REPORT


To the Partners
Liberty Housing Partners Limited Partnership

       We have  audited  the  accompanying  balance  sheets of  Liberty  Housing
Partners  Limited  Partnership  (a  Massachusetts  Limited  Partnership)  as  of
December 31, 1998 and 1997, and the related statements of operations, changes in
partners'  deficit,  and cash  flows for each of the three  years in the  period
ended December 31, 1998. These financial  statements are the  responsibility  of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial  statements based on our audits.  We did not audit the financial
statements of certain  operating  partnerships in which Liberty Housing Partners
Limited  Partnership owns a limited  partnership  interest.  Investments in such
partnerships  comprise  47% and 43% of the assets as of  December  31,  1998 and
1997,  respectively,  and losses from such  partnerships  comprise 0%, 1.5%, and
6.6% of the  partnership  loss for each of the three  years in the period  ended
December  31,  1998,  of  Liberty  Housing  Partners  Limited  Partnership.  The
financial statements of these partnerships were audited by other auditors, whose
reports have been  furnished  to us, and our  opinion,  insofar as it relates to
information  relating to these  partnerships,  is based solely on the reports of
the other auditors.

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

       In our opinion, based on our audits and the reports of the other auditors
referred to above, the financial statements referred to above present fairly, in
all  material  respects,  the  financial  position of Liberty  Housing  Partners
Limited  Partners  as of  December  31,  1998 and 1997  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1998, in conformity with generally accepted accounting principles.


                                                /s/ REZNICK FEDDER & SILVERMAN

Boston, Massachusetts                           REZNICK FEDDER & SILVERMAN
March 10, 1999


                                       36



                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)

                          INDEPENDENT AUDITORS' REPORTS
                              FINANCIAL STATEMENTS
                                       AND
                            SUPPLEMENTAL INFORMATION

                                DECEMBER 31, 1998




                                                                               1

                                       37














                                                            C O N T E N T S




                                                                                                                       Page 


                                                                                                                   
Certificate of Partners                                                                                                   3

Management Agent's Certification                                                                                          4

Independent Auditors' Report                                                                                              5

Auditor Information                                                                                                       6

Financial Statements:

    Balance sheet                                                                                                         7
    Statement of partners' equity                                                                                         8
    Statement of profit and loss                                                                                       9-10
    Statement of cash flows                                                                                           11-12
    Summary of accounting policies                                                                                       13
    Notes to financial statements                                                                                     14-16

Supplemental Information                                                                                              17-19

Independent Auditors' Report on Internal Control (Combined Report Applicable to
    the Financial Statements and HUD-Assisted Programs)                                                               20-21

Independent Auditors' Report on Compliance Based on an Audit of
    Financial Statements Performed in Accordance with Government Auditing Standards                                      22

Independent Auditors' Report on Compliance with Specific
    Requirements Applicable to Major HUD Programs                                                                        23

Independent Auditors' Report on Compliance with Specific
    Requirements Applicable to Fair Housing and Non-Discrimination                                                       24

Schedule of Findings and Questioned Costs                                                                                25

Auditors' Comments on Audit Resolution Matters Relating to
    the HUD Programs                                                                                                     26


                                                                               2
                                       38







                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                                December 31, 1998




                             CERTIFICATE OF PARTNERS



                  We  hereby  certify  that we have  examined  the  accompanying
financial statements of Fiddlers Creek Apartments,  Ltd. and, to the best of our
knowledge and belief, the same are complete and accurate.


                            GENERAL PARTNERS




                            /s/ Billy P. Shadrick                        2/9/99
                            ---------------------------------------------------
                            Billy P. Shadrick                              Date




                            Liberty LGP Limited Partnership


                            ---------------------------------------------------
                            Michael Stoller                                Date


                            Partnership Employer
                            Identification Number:  56-1449286

                                                                               3
                                       39







                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                                December 31, 1998




                        MANAGEMENT AGENT'S CERTIFICATION



                  I  hereby  certify  that  I  have  examined  the  accompanying
financial statements and supplemental  information of Fiddlers Creek Apartments,
Ltd.  and, to the best of my  knowledge  and belief,  the same are  complete and
accurate.




                                    /s/ Billy P. Shadrick
                                    ------------------------------------------
                                    Billy P. Shadrick
                                    President, Housing Management, Inc.




                                    2/9/99
                                    ------------------------------------------
                                    Date


                                                                               4
                                       40





Sharrard, McGee & Co., P.A.
Certified Public Accountants - Consultants
1321 Long Street - Post Office Box 5869 - High Point, North Carolina 27262



                          Independent Auditors' Report

                                                                January 18, 1999


To the Partners
Fiddlers Creek Apartments, Ltd.


                  We have  audited the  accompanying  balance  sheet of Fiddlers
Creek Apartments,  Ltd., HUD Project No.  053-35163-PM (a North Carolina limited
partnership)  as of December 31, 1998, and the related  statements of profit and
loss,  partners' equity, and cash flows for the year then ended. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

                  In our opinion,  the  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of Fiddlers
Creek  Apartments,  Ltd.  as of  December  31,  1998,  and  the  results  of its
operations, changes in partners' capital, and cash flows for the year then ended
in conformity with generally accepted accounting principles.

                  In  accordance  with  Government  Auditing  Standards  and the
Consolidated  Audit  Guide  for  Audits  of HUD  Programs  issued  by  the  U.S.
Department of Housing and Urban Development,  we have also issued a report dated
January  18, 1999 on our  consideration  of Fiddlers  Creek  Apartments,  Ltd.'s
internal control and reports dated January 18, 1999, on its compliance with laws
and  regulations,  specific  requirements  applicable  to major HUD programs and
specific requirements applicable to Fair Housing and Non-Discrimination.

                  Our audit was  conducted for the purpose of forming an opinion
on  the  basic  financial   statements   taken  as  a  whole.  The  accompanying
supplementary  information  shown on pages 17 - 19 is presented  for purposes of
additional analysis and is not a required part of the basic financial statements
of the  Partnership.  Such  information  has  been  subjected  to  the  auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  is fairly stated, in all material  respects,  in relation to the basic
financial statements taken as a whole.


                                                /s/ Sharrard, McGee & Co., P.A.

                                                                               5
                                       41















                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                                December 31, 1998




                               AUDITOR INFORMATION


                                                                January 18, 1999



                  The Audit Partner on this  engagement  was Carroll L. Royster,
1321  Long  Street,   P.O.  Box  5869,   High  Point,   North  Carolina   27262,
(336)884-0410.

                  Sharrard,  McGee & Co., P.A.'s federal employer identification
number is 56-1146197.

                                              /s/ Sharrard, McGee & Co., P.A.

                                                                               6


                                       42






                                                    FIDDLERS CREEK APARTMENTS, LTD.
                                                     HUD PROJECT NO. 053-35163-PM
                                                        (A Limited Partnership)
                                                             BALANCE SHEET
                                                           December 31, 1998
                                                    ===============================

                                                                ASSETS

                                                                                                           
CURRENT ASSETS:
    1120        Cash - operations                                                      $            121 815
    1130        Tenant accounts receivable                                                              943
    1200        Miscellaneous prepaid expenses                                                       21 352      $           144 110
                                                                                       --------------------
DEPOSITS HELD IN TRUST - FUNDED:
    1191        Tenant deposits held in trust                                                                                 40 692
FUNDED RESERVES:
    1310        Escrow deposits                                                                       9 377
    1320        Replacement reserves                                                                 70 152                   79 529
                                                                                       --------------------
FIXED ASSETS - AT COST (Note 3):
    1410        Land                                                                                389 973
    1420        Buildings                                                                         3 282 391
    1440        Building equipment - portable                                                       117 278
    1460        Furnishings                                                                          50 953
    1465        Office furniture and equipment                                                        2 321
    1470        Maintenance equipment                                                                 7 066
    1490        Miscellaneous fixed assets                                                            8 463
                                                                                       --------------------
                                                                                                  3 858 445
    1495        Less accumulated depreciation                                                     1 602 562                2 255 883
                                                                                       --------------------
OTHER ASSETS:
    1520        Intangible assets                                                                                             90 188
                                                                                                                 -------------------

                                                                                                                 $         2 610 402
                                                                                                                 ===================


                                                   LIABILITIES AND PARTNERS' EQUITY

                                                                                                           
CURRENT LIABILITIES:
    2109        Accounts payable - 30 days                                             $             10 240
    2113        Accounts payable - entity (Note 4)                                                   15 000
    2121        Accrued payroll taxes payable                                                           701
    2123        Accrued management fee payable (Note 4)                                               5 034
    2131        Accrued interest payable - first mortgage                                            13 716
    2170        Mortgage payable - first mortgage (short-term)
                   (Note 3)                                                                          47 311      $            92 002
                                                                                       --------------------
DEPOSIT AND PREPAID REVENUE:
    2191        Tenant deposits held in trust (contra)                                               37 061
    2210        Prepaid revenue                                                                      10 104                   47 165
                                                                                       --------------------
LONG-TERM LIABILITIES:
    2320        Mortgage payable - first mortgage (Note 3)                                        2 057 342
                Less current maturities                                                              47 311                2 010 031
                                                                                       --------------------
PARTNERS' EQUITY                                                                                                             461 204
                                                                                                                 -------------------

                                                                                                                 $         2 610 402
                                                                                                                 ===================

<FN>
                                                See accompanying summary of accounting
                                              policies and notes to financial statements.
</FN>

                                                                               7
                                       43






                                                    FIDDLERS CREEK APARTMENTS, LTD.
                                                     HUD PROJECT NO. 053-35163-PM
                                                        (A Limited Partnership)
                                                     STATEMENT OF PARTNERS' EQUITY
                                                 For the Year Ended December 31, 1998
                                                 ====================================





                                                                                              Associate
                                                                  Investor Limited             General               Local General
                                          Total (100%)              Partner (98%)            Partner (1%)              Partner (1%) 
                                    --------------------      --------------------     --------------------     --------------------

                                                                                                    
Balance at beginning
    of year                         $           330 810       $           351 894      $           (10 542)     $           (10 542)

Net income for the year                         134 879                   132 181                    1 349                    1 349

Withdrawals by partners                          (4 485)                   (2 658)                    (102)                  (1 725)
                                    -------------------       -------------------      -------------------      -------------------

Balance at end of year              $           461 204       $           481 417      $            (9 295)     $           (10 918)
                                    ===================       ===================      ===================      ===================


<FN>
                                                See accompanying summary of accounting
                                              policies and notes to financial statements.
</FN>

                                                                               8
                                                                 44




Statement of Profit and Loss    U.S. Department of Housing and Urban Development
                                Office of Housing
                                Federal Housing Commissioner
        
Public  Reporting  Burden for this collection of information is estimated to average 1.0 hours per response,  including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the
collection of  information.  Send comments  regarding this burden  estimate or any other aspect of this  collection of  information,
including suggestions for reducing this burden, to the Reports Management Officer,  Paperwork Reduction Project (2602-0062).  Office
of Information  Technology,  U.S.  Department of Housing and Urban Development,  Washington,  D.C.  20410-3600.  This agency may not
collect this  information,  and you are not required to complete this form, unless it displays a currently valid OMB control number.
Do not send this form to the above address.

For Month/Period                            Project         Project Name:        
Beginning:        Ending:                   Number:         
January 1, 1998   December 31, 1998        053-35163-PM    FIDDLERS CREEK APARTMENTS, LTD.
                                                                               
          Part I                          Description of Account                Acct. No.      Amount*
                                                                                                
Rental Income 5100         Rent Revenue - Gross Potential                         5120    $   748,202
                           Tenant Assistant Payments                              5121    $           
                           Stores and Commercial                                  5140    $
                           Garage and Parking Spaces                              5170    $
                           Flexible Subsidy Income                                5180    $
                           Miscellaneous (specify)                                5190    $
                           Total Rent Revenues Potential at 100% Occupancy                                   $748,202
Vacancies 5200             Apartments                                             5220    $   (14,089)
                           Stores and  Commercial                                 5240    
                           Concessions                                            5250    
                           Garage and Parking Spaces                              5270   
                           Miscellaneous (specify)                                5290                 
                           Total Vacancies                                                                    (14,089)
                           Net Rental Revenue Rent Revenue Less Vacancies                                    $743,113
                           Elderly and Congregate Service Income - 5300
                           Total Service Income (Schedule Attached)               5300                       $
Financial Revenue 5400     Financial Revenue - Project Operations                 5410    $     4,922
                           Revenue from Investments - Residual Receipts           5430    $     
                           Revenue from Investments - Replacement Reserve         5440    $     2,237
                           Revenue from Investments - Miscellaneous               5490    $
                           Total Financial Revenue                                                           $  7,159
Other Revenue 5900         Laundry and Vending Revenue                            5910    $     4,062
                           Tenant Charges                                         5920    $    12,931
                           Expiration of Gift Donor Restrictions                  5960    $
                           Gifts                                                  5970    $
                           Miscellaneous Revenue (specify)                        5990    $
                           Total Other Revenue                                                               $ 16,993
                           Total Revenue                                                                     $758,265
Administrative Expenses    Conventions and Meetings                               6203    $
6200/6300                  Management Consultants                                 6204    $
                           Advertising and Marketing                              6210    $     6,718
                           Apartment Resale Expense (Coops)                       6235    $
                           Other Renting Expense                                  6250    $     1,976
                           Office Salaries                                        6310    $     8,608
                           Office Expenses                                        6311    $     6,898
                           Office or Model Apartment Rent                         6312    $    
                           Management Fee                                         6320    $    42,260
                           Manager or Superintendent Salaries                     6330    $    25,001
                           Administrative Rent Free Unit                          6331    $     1,963
                           Legal Expenses - (Project)                             6340    $        44
                           Auditing Expenses                                      6350    $     4,700
                           Bookkeeping Fees/Accounting Services                   6351    $     5,760
                           Bad Debts                                              6370    $       380
                           Miscellaneous Administrative Expenses (specify)        6390    $
                           Total Administrative Expenses                                                     $104,308
Utilities Expense 6400     Fuel Oil/Coal                                          6420    $
                           Electricity                                            6450    $    12,789
                           Water                                                  6451    $     5,262
                           Gas                                                    6452    $          
                           Sewer                                                  6453    $          
                           Total Operating and Maintenance Expense                                           $ 18,051


*All amounts must be rounded to the nearest                Page 1 of 2                              unofficial form HUD-92410 (7/91)
dollar: $.50 and over, round up--$.49 and                                                                        ref Handbook 4370.2
below, round down.           

                         See accompanying summary of accounting policies and notes to financial statements.

                                                                               9
                                                                 45


   053-35163-PM                       FIDDLERS CREEK APARTMENTS, LTD.

                                                                                                
Operating and              Payroll                                                6510    $    30,328
Maintenance Expenses       Supplies                                               6515    $    23,357
6500                       Contracts                                              6520    $    45,997
                           Operating and Maintenance Rent Free Unit               6521    $     6,780
                           Garbage and Trash Removal                              6525    $     2,995
                           Security Payroll/Contract                              6530    $
                           Security Rent Free Unit                                6531    $
                           Heating/Cooling Repairs and Maintenance                6546    $     3,266
                           Snow Removal                                           6548    $       190
                           Vehicle and Maintenance Equipment Operation
                             and Repairs                                          6570    $       331
                           Miscellaneous Operating and Maintenance Expenses       6590    $
                           Total Operating and Maintenance Expenses                                          $113,244
Taxes and Insurance 6700   Real Estate Taxes                                      6710    $    48,372
                           Payroll Taxes (Project's Share)                        6711    $     4,823
                           Property and Liability Insurance (Hazard)              6720    $    19,627
                           Fidelity Bond Insurance                                6721    $       268
                           Workmen's Compensation                                 6722    $     1,697
                           Health Insurance and Other Employee Benefits           6723    $     2,034
                           Miscellaneous Taxes, Licenses, Permits and Insurance   6790    $
                           Total Taxes and Insurance                                                         $ 76,821
Financial Expenses 6800    Interest on Mortgage Payable                           6820    $   166,212
                           Interest on Notes Payable (Long-Term)                  6830    $
                           Interest on Notes Payable (Short-Term)                 6840    $
                           Mortgage Insurance Premium/Service Charge              6850    $    10,387
                           Miscellaneous Financial Expenses                       6890    $          
                           Total Financial Expenses                                                          $176,559
Elderly & Congregate       Total Service Expenses-Schedule Attached               6900                       $
Service Expenses 6900      Total Cost of Operations Before Depreciation                                      $489,023
                           Profit (Loss) before Depreciation                                                 $269,242
                           Depreciation (Total) - 6600 (specify)                  6600                       $119,363
                           Operating Profit or (Loss)                                                        $149,879 
Corporate or Mortgagor     Officer's Salaries                                     7110    $
Entity Expenses 7100       Legal Expense                                          7120    $
                           Federal, State and Other Income Taxes                  7130    $
                           Interest Income                                        7140    $
                           Interest on Notes Payable                              7141    $
                           Interest on Mortgage Payable                           7142    $
                           Other Expenses      PARTNERSHIP ADMIN FEE              7190    $    15,000
                           Total Corporate Expenses                                                          $ 15,000
                           Profit or Loss (Net Income or Loss)                                               $134,879 

Warning: HUD will prosecute false claims and statements.  Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001,
1010, 1012; 31 U.S.C.  3729, 3802)  
Miscellaneous or other Income and Expense  Sub-account  Groups. If miscellaneous or other income and/or expense  subaccounts  (5190,
5290,  5490,  5990,  6390,  6590,  6729,  6890, and 7190) exceed the Account  Groupings by 10% or more,  attach a separate  schedule
describing or explaining the miscellaneous income or expenses.

Part II
                                                                                                         
1.       Total mortgage principal payments required during the audit year (12 monthly payments). 
         This applies to all direct loans and HUD-held and fully insured  mortgages.  Any HUD
         approved  second  mortgages  should be included in these figures.                                   $ 43,685
2.       Total of 12 monthly deposits into the Replacement Reserve account, as required by the 
         Regulatory Agreement even if payments may be temporarily suspended or reduced.                      $ 27,216
3.       Replacement Reserves, or Residual Receipts and Releases which are included as expense 
         items on this Profit and Loss statement                                                             $      0
4.       Project Improvement Reserve releases under the Flexible Subsidy Program that
         are included as expense items on this Profit and Loss Statement.                                    $      0


                                                           Page 2 of 2                              unofficial form HUD-92410 (7/91)

<FN>
                         See accompanying summary of accounting policies and notes to financial statements.
</FN>

                                                                              10

                                                                 46






                                                    FIDDLERS CREEK APARTMENTS, LTD.
                                                     HUD PROJECT NO. 053-35163-PM
                                                        (A Limited Partnership)
                                                        STATEMENT OF CASH FLOWS
                                                 For the Year Ended December 31, 1998
                                                 ====================================




Cash flows from operating activities:
                                                                                                           
    Rental receipts                                                                                             $           742 020
    Interest receipts                                                                                                         7 159
    Other receipts                                                                                                           16 993
                                                                                                                -------------------

                                                                                                                            766 172
    Administrative                                                                     $           (23 092)
    Management fees                                                                                (56 569)
    Accounting fees                                                                                 (5 760)
    Operating and maintenance                                                                      (74 060)
    Real estate taxes                                                                              (47 671)
    Tenant security deposits                                                                         2 411
    Salaries and wages                                                                             (63 523)
    Miscellaneous taxes                                                                             (4 823)
    Insurance                                                                                      (43 228)
    Utilities                                                                                      (18 052)
    Interest on mortgage note                                                                     (166 504)
    Mortgage insurance                                                                             (10 352)                (511 223)
                                                                                       -------------------      -------------------

                 Net cash provided by operating activities                                                                  254 949

Cash flows from investing activities:
    Purchase of property and equipment                                                            (390 554)
    Replacement reserves - deposits                                                                (29 353)
    Replacement reserves - withdrawals                                                             108 296
    Escrow deposits                                                                                  5 844
                                                                                       -------------------

                 Net cash used in investing activities                                                                     (305 767)

Cash flows from financing activities:
    Partnership administrative fee                                                                 (15 000)
    Mortgage principal payments                                                                    (43 685)
    Withdrawals by partners                                                                         (4 485)
                                                                                       -------------------

                 Net cash used in financing activities                                                                      (63 170)
                                                                                                                -------------------

Net increase in cash                                                                                                       (113 988)

Cash at beginning of year                                                                                                   235 803
                                                                                                                -------------------

Cash at end of year                                                                                             $           121 815
                                                                                                                ===================



                                                See accompanying summary of accounting
                                              policies and notes to financial statements.

                                                                              11
                                                                 47




                                                    FIDDLERS CREEK APARTMENTS, LTD.
                                                     HUD PROJECT NO. 053-35163-PM
                                                        (A Limited Partnership)
                                                        STATEMENT OF CASH FLOWS
                                                 For the Year Ended December 31, 1998
                                                              (Continued)
                                                 ====================================



Reconciliation of net income to net cash provided by operating activities:

                                                                                                          
    Net income                                                                                                  $           134 879
                                                                                                                -------------------

    Nonoperating expense included in determining
       net income                                                                                                            15 000

    Adjustments  to  reconcile  net  income to net cash  provided  by  operating
       activities:
           Depreciation                                                                $           114 260
           Amortization                                                                              5 103                  119 363
                                                                                       -------------------

    Decrease (increase) in assets:
           Accounts receivable                                                                      (2 197)
           Tenant security deposits                                                                  2 677
           Prepaid expenses                                                                        (19 567)                 (19 087)
                                                                                       -------------------

    Increase (decrease) in liabilities:
           Accounts payable                                                                         (5 454)
           Accrued interest                                                                           (291)
           Accrued taxes                                                                               700
           Tenant security deposits                                                                   (265)
           Prepaid rents                                                                            10 104                    4 794
                                                                                       -------------------      -------------------

    Total adjustments                                                                                                       120 070
                                                                                                                -------------------

    Net cash provided by operating activities                                                                   $           254 949
                                                                                                                ===================



<FN>
                                                See accompanying summary of accounting
                                              policies and notes to financial statements.
</FN>

                                                                              12
                                                                 48




                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                         SUMMARY OF ACCOUNTING POLICIES
                         ==============================


MANAGEMENT ESTIMATES

                  The  presentation  of financial  statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.



CASH EQUIVALENTS

                  For  purposes  of the  Statement  of Cash  Flows,  the Company
considers all  investments  purchased with a maturity of three months or less to
be cash equivalents.



BASIS OF REPORTING

                  This  report  does  not give  effect  to any  assets  that the
partners may have outside their interests in the Partnership nor to any personal
obligations, including income taxes, of the partners.



PROPERTY, EQUIPMENT AND DEPRECIATION

                  Property and  equipment  are stated at cost.  Depreciation  is
computed over the estimated useful lives using the straight-line method.



INCOME TAXES

                  No  provision  for  income  taxes has been  included  in these
financial  statements  since the tax gains and  losses  pass  through to and are
reportable  by the  partners on their  respective  income tax  returns.  Taxable
income  or loss  reported  by the  partners  will  differ  from  income  or loss
reflected in the financial  statements,  due to the  different  bases in certain
assets (primarily fixed assets) for financial reporting and income tax purposes.



AMORTIZATION

                  Loan costs are  amortized  by using the  straight-line  method
over the life of the mortgage loan.

                                                                              13
                                       49




                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                          =============================


NOTE 1 - ORGANIZATION

                  The  Partnership  was  organized as a North  Carolina  limited
partnership  on April  21,  1975 to  construct,  own,  and  operate  a  160-unit
apartment  project located in Winston-Salem,  North Carolina,  known as Fiddlers
Creek  Apartments,  under  Section  221(d)(4) of the  National  Housing Act. The
Regulatory  Agreement limits distributions of net operating receipts to "surplus
cash" available at the end of semi-annual periods.

                 On  September  30,  1984,  pursuant to an Amended and  Restated
Certificate of Limited  Partnership dated as of that date,  partners'  ownership
interests  amounting to 99% of the existing partners' interests were transferred
by the  original  partners to two new  partners.  As a result of the transfer of
ownership interests, the Partnership,  as of September 30, 1984, retained one of
the original general partners as a local general partner, admitted a new general
partner as  associate  general  partner,  and admitted a sole  investor  limited
partner.

                 After the  aforementioned  transfer,  the Amended and  Restated
Certificate  of Limited  Partnership  provides  that  profits  and  losses  from
operations  be allocated 1% to the local  general  partner,  1% to the associate
general partner, and 98% to the investor limited partner. In the case of certain
events which are specified in the Partnership  Agreement (for example, a sale or
refinancing  of the  property),  the  allocation  may  be  different  than  that
described above for profits and losses from operations.



NOTE 2 - CONCENTRATION OF CREDIT RISK

                 The  Partnership's  policy is to maintain its cash  balances in
reputable  financial  institutions  insured  by the  Federal  Deposit  Insurance
Corporation  which provides  $100,000 of insurance  coverage on each  customer's
cash  balances.  At times  during  the year,  the  Partnership's  cash  balances
exceeded  $100,000.  Management  believes this policy will not cause any adverse
effect on the  Partnership.  At December 31, 1998, the amount exceeding the FDIC
limit was $60,943.



NOTE 3 - MORTGAGE PAYABLE

                 The  mortgage,  originally  in the  amount  of  $2,519,100,  is
payable in monthly installments of $17,516,  including interest at 8% per annum.
The final  payment  is due in  February  2018.  The loan is  secured by land and
buildings  and is insured by the  Federal  Housing  Administration.  Neither the
Partnership nor any of the partners assume liability in the event of default.



                 The maturities of this debt are as follows:
                                                                                    
                          1999                                                         $             47 311
                          2000                                                                       51 238
                          2001                                                                       55 491
                          2002                                                                       60 096
                          2003                                                                       65 084
                          2004 and after                                                          1 778 122
                                                                                       --------------------
                                                                                       $          2 057 342
                                                                                       ====================


                                                                              14
                                       50





                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)
                          =============================




NOTE 4 - RELATED PARTY TRANSACTIONS

A - Management of Project:

                  The Partnership contracted with Housing Management, Inc. (HMI)
to manage the  project.  The local  general  partner  is an officer of HMI.  The
contract  calls for a management fee of 7.5% of gross revenue  collections  plus
accounting  fees of $3.00 per housing unit per month.  Management and accounting
fees are analyzed as follows:



                                                                                        Charged to
                                                                  Unpaid at             Operations               Unpaid at
                                                                 January 1,               During               December 31,
                                                                     1998                  1998                     1998     
                                                                 ------------           ------------           --------------

                                                                                                                
                  Management fees                                $     17 860           $   42 260             $     4 554
                  Accounting fees                                       1 680                5 760                     480
                                                                 ------------           ----------             -----------  

                                                                 $     19 540           $   48 020             $     5 034
                                                                 ============           ==========             ===========



B - Partnership Administrative Fee:

                  For  its  services  in  overseeing   the   operations  of  the
Partnership,  the Partnership has agreed to pay its associate  general partner a
fee of $15,000 per annum.  The  Partnership  administrative  fee is payable from
"surplus cash" as defined by HUD regulations.




NOTE 5 - DISTRIBUTION

                  The Partnership  customarily  makes a cash distribution of the
maximum amount permitted by its Regulatory Agreement and other such restrictions
under which it  operates.  In keeping  with this  custom,  $19,485,  including a
Partnership  administrative fee of $15,000, was distributed in the first quarter
of 1998,  and  $153,037  of  available  surplus  cash was not  distributed,  but
retained for capital  improvements,  and it is anticipated  that $90,685 will be
distributed in the first quarter of 1999.



NOTE 6 - FAIR VALUES OF FINANCIAL INSTRUMENTS

                 Statement   of   Financial   Accounting   Standards   No.  107,
"Disclosure  About Fair Value of  Financial  Instruments"  (SFAS 107),  requires
disclosure of fair value information about financial instruments, whether or not
recognized on the balance  sheet,  for which it is  practicable to estimate that
value. Such instruments include cash and cash equivalents and long-term debt.



                                                                              15
                                       51




                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)
                          =============================



NOTE 6 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

                 Cash and Cash Equivalents:

                 The  carrying  amount   approximates  fair  value  due  to  the
short-term nature of these instruments.

                 Long-Term Debt:

                 The fair value of long-term  debt is based on current  rates at
which the company could borrow funds with similar remaining maturities.


                 The  carrying  amounts  and  estimated  fair values of Fiddlers
Creek  Apartments,  Ltd.'s financial  instruments as of December 31, 1998 are as
follows:

                                                      Carrying       Fair Value
                                                   -------------   -------------
    Financial assets:                           
        Cash and cash equivalents                  $     162 507   $     162 507
                                                   =============   =============
                                                
    Financial liabilities:                      
        Long-term debt                             $   2 057 342   $   2 057 342
                                                   =============   =============
                                                
                                   


                                                                              16
                                       52




                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                             (A Limited Partnership)
                            SUPPLEMENTAL INFORMATION
                      For the Year Ended December 31, 1998
                      ====================================

REPLACEMENT RESERVES

                 In accordance with the provisions of the Regulatory  Agreement,
restricted  cash is held by the mortgagee to be used for replacement of property
with the approval of HUD as follows:



                                                                                                          
                 Balance at beginning of year                                                                   $           149 095

                  Monthly deposits:
                  12 @ $2,268.00                                                                                             27 216

                  Interest                                                                                                    2 237
                  Withdrawals:

                             Approval                     Purpose of
  Authorized By                Date                       Withdrawal       

  HUD                        04/16/98             Repave parking lot                   $           (81 222)
  HUD                        04/16/98             Repave parking lot                               (27 074)
  WMF/Huntooh
  Daise Associates           Various              Investment service charge                           (100)                (108 396)
                                                                                       -------------------      -------------------

                  Balance at end of year confirmed by mortgagee                                                 $            70 152
                                                                                                                ===================

<FN>
                  The  mortgagee  charged  a  fee  of  $100  for  investing  the
replacement reserves fund.
</FN>




                                                                              17
                                                                 53







                                                       FIDDLERS CREEK APARTMENTS, LTD.
                                                        HUD PROJECT NO. 053-35163-PM
                                                           (A Limited Partnership)
                                                          SUPPLEMENTAL INFORMATION
                                                    For the Year Ended December 31, 1998
                                                                 (Continued)
                                                    ====================================
CHANGES IN FIXED ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------
                                            Cost                                            Accumulated Depreciation
                    -----------------------------------------------------     ------------------------------------------------------
                      Balance                                   Balance        Balance                                     Balance
                     January 1,                                 December      January 1,      Current                      December
                       1998        Additions     Deletions      31, 1998         1998        Provisions     Deletions      31, 1998
                    ----------     ---------     ---------     ----------     ----------     ----------     ---------     ----------
                                                                                                     
      ASSETS

Land                $  275 147                                 $  275 147

Land improvements        6 530     $ 108 296                      114 826     $    1 599     $    2 624                   $    4 223

Buildings            3 017 603       264 788                    3 282 391      1 332 254        106 627                    1 438 881

Building equipment -
  portable             108 774        15 168     $   6 664        117 278         95 725          3 941     $   6 664         93 002

Office furniture
 and equipment           2 321                                      2 321          1 922            185                        2 107

Computer equipment         786         2 302                        3 088            235            720                          955
 
Furnishings             50 953                                     50 953         50 953                                      50 953

Maintenance
 equipment               7 066                                      7 066          7 031             35                        7 066

Miscellaneous
  fixed assets           5 375                                      5 375          5 247            128                        5 375
                    ----------     ---------     ---------     ----------     ----------     ----------     ---------     ----------
                    $3 474 555     $ 390 554     $   6 664     $3 858 445     $1 494 966     $  114 260     $   6 664     $1 602 562
                    ==========     =========     =========     ==========     ==========     ==========     =========     ==========
<FN>
NOTE:
        Additions to fixed assets were:       Dispositions of fixed assets were:
              Item             Cost                 Item               Cost   
        -----------------   ----------         ---------------      ----------
        1 Computer          $   1 154           2 Ranges             $    504
        1 Software              1 148          23 Refrigerators         6 160
       23 Refrigerators        10 974                                --------
        2 Ranges                  654                                $  6 664
       14 Dishwashers           3 540                                ========
       Parking Lot Pavement   108 296
       Vinyl Siding           264 788
                            ---------
                            $ 390 554
                            =========
</FN>

                                                                              18
                                                                 54




Computation of Surplus Cash,                              U.S. Department of Housing 
Distributions and Residual                                and Urban Development       
Receipts                                                  Office of Housing
                                                          Federal Housing Commissioner


Project Name                                 Fiscal Period Ended:       Project Number                                     
FIDDLERS CREEK APARTMENTS, LTD.              December 31, 1998          053-35163-PM

Part A - Compute Surplus Cash
                                                                                                     
Cash
       1.  Cash (Accounts 1110, 1120, 1191, 1192)                             $162,507

       2.  Tenant subsidiary vouchers due for period covered                          
             by financial statement                                           $        

       3.  Other (describe)                                                   $        

           (a) Total Cash (Add Lines 1, 2, and 3)                                                          $162,507

Current Obligations
       4.  Accrued mortgage interest payable                                  $ 13,716

       5.  Delinquent mortgage principal payments                             $

       6.  Delinquent deposits to reserve for replacements                    $

       7.  Accounts payable (due within 30 days)                              $ 10,240

       8.  Loans and notes payable (due within 30 days)                       $      

       9.  Deficient Tax Insurance or MIP Escrow Deposits                     $

       10. Accrued expenses (not escrowed)                                    $    701

       11. Prepaid Rents (Account 2210)                                       $ 10,104

       12. Tenant security deposits liability (Account 2191)                  $ 37,061

       13. Other (Describe)                                                   $

           (b) Less Total Current Obligations (Add Lines 4 through 13)                                     $ 71,822

           (c) Surplus Cash (Deficiency)(Line (a) minus Line (b))                                          $ 90,685


PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS
                                                                                                     
       1.  Surplus Cash                                                                                    $ 90,685

Limited Dividend Projects

       2a. Annual Distribution Earned During Fiscal Period                                
             Covered by the Statement                                         $

       2b. Distribution Accrued and Unpaid as of the                     
             End of the Prior Fiscal Period                                   $

       2c. Distributions Paid During Fiscal Period Covered by Statement       $

       3.  Amount to be Carried on Balance Sheet as Distribution Earned   
           but Unpaid (Line 2a plus 2b minus 2c)                              $

       4.  Amount Available for distribution during next Fiscal Period                                     $

       5.  Deposit Due Residual Receipts (Must be deposited with Mortgagee
           within 60 days after Fiscal Period ends)                                                        $

                                   Prepared By
Loan Technician                                          Date


                                   Reviewed By
Loan Servicer                                            Date



                              Page 1 of 2                  form HUD-93486 (8/95)


                                                                              19

                                                                 55



Sharrard, McGee & Co., P.A.
Certified Public Accountants - Consultants
1321 Long Street - Post Office Box 5869 - High Point, North Carolina 27262



                Independent Auditors' Report on Internal Control
                       (Combined Report Applicable to the
                 Financial Statements and HUD-Assisted Programs)

                                                                January 18, 1999

To the Partners
Fiddlers Creek Apartments, Ltd.

                  We have audited the  financial  statements  of Fiddlers  Creek
Apartments,  Ltd.,  HUD  Project  No.  053-35163-PM  (a North  Carolina  limited
partnership),  as of and for the year ended  December 31, 1998,  and have issued
our report  thereon dated January 18, 1999. We have also audited  Fiddlers Creek
Apartments, Ltd.'s compliance with requirements applicable to major HUD-assisted
programs and have issued our reports thereon dated January 18, 1999.

                 We conducted our audit in accordance  with  generally  accepted
auditing standards,  Government  Auditing  Standards,  issued by the Comptroller
General of the United States, and the Consolidated Audit Guide for Audits of HUD
Programs  (the  "Guide"),  issued by the U.S.  Department  of Housing  and Urban
Development,  Office of the  Inspector  General.  Those  standards and the Guide
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial  statements  are free of material  misstatement  and about
whether  Fiddlers Creek  Apartments,  Ltd.  complied with laws and  regulations,
noncompliance with which would be material to a major HUD-assisted program.

                  The   management  of  Fiddlers  Creek   Apartments,   Ltd.  is
responsible for establishing  and maintaining  internal  control.  In fulfilling
this  responsibility,  estimates  and  judgments by  management  are required to
assess the expected  benefits and related costs of controls.  The  objectives of
internal control are to provide  management with  reasonable,  but not absolute,
assurance  that assets are  safeguarded  against loss from  unauthorized  use or
disposition,  that  transactions  are executed in accordance  with  management's
authorization  and  recorded  properly to permit the  preparation  of  financial
statements in accordance with generally accepted accounting principles, and that
HUD-assisted  programs  are  managed  in  compliance  with  applicable  laws and
regulations.  Because of inherent  limitations in any internal control,  errors,
irregularities or instances of noncompliance  may nevertheless  occur and not be
detected.  Also,  projection  of any  evaluation  of internal  control to future
periods is subject to the risk that procedures may become inadequate  because of
changes in  conditions  or that  effectiveness  of the design and  operation  of
controls may deteriorate.

                  In  planning  and  performing   our  audit,   we  obtained  an
understanding of the design of relevant controls and determined whether they had
been placed in operation, and we assessed control risk in order to determine our
auditing procedures for the purpose of expressing our opinions on Fiddlers Creek
Apartments,  Ltd.'s  financial  statements and on its  compliance  with specific
requirements  applicable  to its major HUD-assisted  programs and to report on
internal  control  in  accordance  with the  provisions  of the Guide and not to
provide any assurance on internal control.


                                                                              20
                                       56




(Continued)


                  We performed  tests of controls,  as required by the Guide, to
evaluate  the  effectiveness  of the design and  operation  of controls  that we
considered  relevant to  preventing  or detecting  material  noncompliance  with
specific  requirements  applicable to Fiddlers  Creek  Apartments,  Ltd.'s major
HUD-assisted programs. Our procedures were less in scope than would be necessary
to render an opinion on internal control. Accordingly, we do not express such an
opinion.

                  Our  consideration  of internal  control would not necessarily
disclose all matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public Accountants.
A material  weakness is a condition  in which the design or  operation of one or
more of the internal  control  components  does not reduce to a  relatively  low
level the risk that errors or  irregularities  in amounts that would be material
in relation to the  financial  statements  or that  noncompliance  with laws and
regulations  that would be material to a HUD-assisted  program may occur and not
be  detected  within a timely  period  by  employees  in the  normal  course  of
performing  their assigned  functions.  We noted no matters  involving  internal
control and its operation that we consider to be material  weaknesses as defined
above.

                  This report is  intended  for the  information  and use of the
partners, management, and the Department of Housing and Urban Development and is
not intended to be and should not be used by anyone  other than these  specified
parties.








                                                /s/ Sharrard, McGee & Co., P.A.






                                                                              21
                                       57





Sharrard, McGee & Co., P.A.
Certified Public Accountants - Consultants
1321 Long Street - Post Office Box 5869 - High Point, North Carolina 27262





    Independent Auditors' Report on Compliance Based on an Audit of Financial
      Statements Performed in Accordance with Government Auditing Standards



                                                                January 18, 1999


To the Partners
Fiddlers Creek Apartments, Ltd.

                  We have audited the  financial  statements  of Fiddlers  Creek
Apartments,  Ltd.,  HUD  Project  No.  053-35163-PM  (a North  Carolina  limited
partnership),  as of and for the year ended  December 31, 1998,  and have issued
our report thereon dated January 18, 1999.

                  We conducted our audit in accordance  with generally  accepted
auditing standards and Government Auditing Standards,  issued by the Comptroller
General of the United States.  Those standards  require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement.

                  Compliance  with  laws,  regulations,   contracts  and  grants
applicable to Fiddlers Creek Apartments,  Ltd. is the responsibility of Fiddlers
Creek Apartments,  Ltd.'s management.  As part of obtaining reasonable assurance
about whether the financial  statements  are free of material  misstatement,  we
performed  tests of Fiddlers Creek  Apartments,  Ltd.'s  compliance with certain
provisions of laws,  regulations,  and contracts.  However, the objective of our
audit of the  financial  statements  was not to  provide  an  opinion on overall
compliance with such provisions. Accordingly, we do not express such an opinion.

                  The  results  of  our  tests   disclosed   no   instances   of
noncompliance that are required to be reported herein under Government  Auditing
Standards.

                  This report is  intended  for the  information  and use of the
partners, management, and the Department of Housing and Urban Development and is
not intended to be and should not be used by anyone  other than these  specified
parties.


                                                /s/ Sharrard, McGee & Co., P.A.

                                                                              22
                                       58



Sharrard, McGee & Co., P.A.
Certified Public Accountants - Consultants
1321 Long Street - Post Office Box 5869 - High Point, North Carolina 27262




            Independent Auditors' Report on Compliance with Specific
                 Requirements Applicable to Major HUD Programs



                                                                January 18, 1999


To the Partners
Fiddlers Creek Apartments, Ltd.

                  We have audited the  financial  statements  of Fiddlers  Creek
Apartments,  Ltd.,  HUD  Project  No.  053-35163-PM  (a North  Carolina  limited
partnership),  as of and for the year ended  December 31, 1998,  and have issued
our report thereon dated January 18, 1999.

                  We  have  also  audited  Fiddlers  Creek  Apartments,   Ltd.'s
compliance with specific program requirements governing Management,  Maintenance
and Replacement Reserve;  Federal Financial Reports;  Application,  Eligibility,
and Reexamination of Tenants; Security Deposits;  Mortgage Status; Cash Receipts
and Disbursements;  and Management  Functions that are applicable to each of its
major  HUD-assisted  programs,  for  the  year  ended  December  31,  1998.  The
management of Fiddlers Creek Apartments, Ltd. is responsible for compliance with
those  requirements.  Our  responsibility is to express an opinion on compliance
with those requirements based on our audit.

                  We conducted our audit of compliance  with those  requirements
in accordance with generally accepted auditing  standards,  Government  Auditing
Standards,  issued by the  Comptroller  General  of the United  States,  and the
Consolidated  Audit Guide for Audits of HUD Programs (the "Guide") issued by the
U.S.  Department of Housing and Urban Development,  Office of Inspector General.
Those  standards  and the Guide  require  that we plan and  perform the audit to
obtain  reasonable  assurance  about  whether  material  noncompliance  with the
requirements referred to above occurred. An audit includes examining,  on a test
basis,  evidence about Fiddlers Creek  Apartments,  Ltd.'s compliance with those
requirements.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

                  In our opinion,  Fiddlers Creek Apartments,  Ltd. complied, in
all material respects, with the requirements described above that are applicable
to each of its major HUD-assisted programs for the year ended December 31, 1998.

                  This report is  intended  for the  information  and use of the
partners, management, and the Department of Housing and Urban Development and is
not intended to be and should not be used by anyone  other than these  specified
parties.



                                                /s/ Sharrard, McGee & Co., P.A.


                                                                              23
                                       59


Sharrard, McGee & Co., P.A.
Certified Public Accountants - Consultants
1321 Long Street - Post Office Box 5869 - High Point, North Carolina 27262





            Independent Auditors' Report on Compliance with Specific
         Requirements Applicable to Fair Housing and Non-Discrimination



                                                                January 18, 1999



To the Partners
Fiddlers Creek Apartments, Ltd.

                  We have audited the  financial  statements  of Fiddlers  Creek
Apartments,  Ltd.,  HUD  Project  No.  053-35163-PM  (a North  Carolina  limited
partnership),  as of and for the year ended  December 31, 1998,  and have issued
our report thereon dated January 18, 1999.

                  We have applied  procedures to test Fiddlers Creek Apartments,
Ltd.'s  compliance  with the Fair  Housing and  Non-Discrimination  requirements
applicable to its HUD-assisted programs, for the year ended December 31, 1998.

                  Our  procedures  were  limited  to the  applicable  compliance
requirements  described  by the  Consolidated  Audit  Guide  for  Audits  of HUD
Programs  (the  "Guide")  issued by the U.S.  Department  of  Housing  and Urban
Development, Office of Inspector General. Our procedures were substantially less
in scope than an audit,  the  objective of which would be the  expression  of an
opinion on Fiddlers Creek  Apartments,  Ltd.'s  compliance with the Fair Housing
and  Non-Discrimination  requirements.  Accordingly,  we do not express  such an
opinion.

                  The  results  of  our  tests   disclosed   no   instances   of
noncompliance that are required to be reported herein under the Guide.

                  This report is  intended  for the  information  and use of the
partners, management, and the Department of Housing and Urban Development and is
not intended to be and should not be used by anyone  other than these  specified
parties.


                                                /s/ Sharrard, McGee & Co., P.A.

                                                                              24
                                       60




                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                    SCHEDULE OF FINDINGS AND QUESTIONED COSTS
                      For the Year Ended December 31, 1998
                    =========================================





                                      NONE

                                                                              25







                                       61



                         FIDDLERS CREEK APARTMENTS, LTD.
                          HUD PROJECT NO. 053-35163-PM
                 AUDITORS' COMMENTS ON AUDIT RESOLUTION MATTERS
                          RELATING TO THE HUD PROGRAMS
                      For the Year Ended December 31, 1998
                 ==============================================



                  We performed a review of findings,  if any,  from previous HUD
required annual audits, HUD-OIG audits, or HUD management reviews and determined
that no significant findings remained uncorrected at the time of our review.


                                                                              26






                                       62




                            OSUNA APARTMENTS COMPANY
                          HUD Project No. 116-44052-LDP
                             (A Limited Partnership)

                              Financial Statements
                                       and
                            Supplementary Information
                      For the Year Ended December 31, 1998






                                       63




                            OSUNA APARTMENTS COMPANY
                          HUD Project No. 116-44052-LDP
                             (A Limited Partnership)


                                Table of Contents

                                                                                                    
Independent Auditors' Report

Financial Statements:

  Balance Sheet                                                                                           Exhibit A

  Statement of Profit and Loss                                                                            Exhibit B

  Statement of Changes in Partners' Equity                                                                Exhibit C

  Statement of Cash Flows                                                                                 Exhibit D

  Notes to Financial Statements

Supplementary Information:

  Supplemental Data Required by HUD                                                                    Schedule   1

Independent Auditors' Report on Compliance with Specific
   Requirements Applicable to Major HUD Programs                                                       Schedule   2

Independent Auditors' Report on Compliance with Specific
   Requirements Applicable to Nonmajor HUD Program Transactions                                        Schedule   3

Independent Auditors' Report on Internal Control                                                       Schedule   4

Independent Auditors' Report on Compliance with Specific
  Requirements Applicable to Fair Housing and Non-Discrimination                                       Schedule   5

Schedule of Findings and Questioned Costs                                                              Schedule   6

Auditors' Comments on Audit Resolution Matters Relating to
   HUD Programs                                                                                        Schedule   7

Corrective Action Plan                                                                                 Schedule   8

Partners' Certification                                                                                Schedule   9

Management Agent's Certification                                                                       Schedule  10


                                                                 64



                     Kirkpatrick, Klein & Mathis, P.L.L.C.
                          CERTIFIED PUBLIC ACCOUNTANTS
                              Mike G. Kirkpatrick
                                 James M. Klein
                                 John C. Mathis


                          INDEPENDENT AUDITORS' REPORT

To the Partners of
Osuna Apartments Company

We have audited the accompanying  balance sheet of Osuna  Apartments  Company (a
limited partnership),  HUD Project No.  116-44052-LDP,  as of December 31, 1998,
and the related  statements of profit and loss,  changes in partners' equity and
cash  flows  for  the  year  then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Osuna Apartments  Company (a
limited partnership), HUD Project No. 116-44052-LDP as of December 31, 1998, and
the  results  of its  operations  and its cash  flows for the year then ended in
conformity with generally accepted accounting principles.

In accordance  with Government  Auditing  Standards and the  Consolidated  Audit
Guide for Audits of HUD Programs  issued by the U.S.  Department  of Housing and
Urban  Development,  we have also issued a report dated February 5, 1999, on our
consideration of Osuna Apartments  Company's internal control, and reports dated
February 5, 1999, on its  compliance  with specific  requirements  applicable to
major  HUD  programs,  specific  requirements  applicable  to  Affirmative  Fair
Housing,   and  specific   requirements   applicable  to  nonmajor  HUD  program
transactions.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  required by HUD included in Schedule 1 provides additional analysis
which  is  not a  required  part  of  the  basic  financial  statements  of  the
Partnership. The information in such schedule has been subjected to the auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.

/s/ Kirkpatrick, Klein & Mathis, P.L.L.C.

February 5, 1999

4901 LBJ Freeway-Suite 120-Dallas, Texas 75244-(972) 386-0800-Fax (972) 404-9308

                                       65



                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)
                                                                                     Exhibit A
                                  Balance Sheet
                                December 31, 1998

                            Assets
                                                                                  
Current assets:
    1120 Cash - operations (Note 1)                                              $   33,415
    1130 Accounts receivable - tenants                                                  404
    1135 Accounts receivable - HUD                                                      279
    1200 Prepaid expenses                                                             7,621
                                                                                 -----------

            Total current assets                                                     41,719

Deposits held in trust - funded:                                                  
    1191 Tenant security deposits (contra) (Schedules 1 and 2)                       10,800


Restricted deposits and funded reserves:
    1310 Mortgage escrow deposits                                $   29,052
    1320 Reserve for replacements                                 
          (Note 2 and Schedule 1)                                   162,441
    1330 Reserve for exterior painting (Schedule 1)                  39,960
    1340 Reserve for residual receipts                            
          (Note 2 and Schedule 1)                                   284,328         515,781
                                                                 -----------

Fixed assets (at cost) (Notes 1 and 3) (Schedule 1):
    1410 Land                                                       255,230
    1420 Buildings                                                1,854,035
    1440 Building equipment - portable                                7,487
    1460 Furnishings                                                149,273
    1465 Office furniture                                            10,064
                                                                 -----------
                                                                  2,276,089
    1495 Less accumulated depreciation                            1,029,692       1,246,397
                                                                 -----------

Other asset:
    1520 Unamortized deferred expenses (Note 1)                                      17,560
                                                                                 -----------

                                                                                 $1,832,257
                                                                                 ===========


                        Liabilities and Partners' Equity

                                                                                  
          Current liabilities:
              2110 Accounts payable - trade                      $   15,620
              2113 Accounts payable - other (Note 4)                  2,500
              2115 Accounts payable - HUD                             2,992
              2121 Accrued payroll taxes                                943
              2131 Accrued interest payable                             478
              2150 Accrued property taxes                             8,450
              2210 Prepaid rent                                         474
              2170 Current maturities of long-term debt (Note 3)     39,966
                                                                 -----------

                            Total current liabilities                71,423


          Deposit liabilities:                              
              2191 Tenant security deposits (contra)                 10,800

          Long-term debt (Note 3):
              2320 Mortgage payable, 7 percent, less
                  current maturities of $39,966                   1,171,648

          Contingency (Note 8)

          3130 Partners' equity (Notes 1 and 5)                     578,386
                                                                 -----------

                                                                 $1,832,257
                                                                 ===========

                                       66




Statement of Profit and Loss    U.S. Department of Housing and Urban Development                                           EXHIBIT B
                                Office of Housing
                                Federal Housing Commissioner
        
Public  reporting  burden for this collection of information is estimated to average 1.0 hours per response,  including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the
collection of  information.  Send comments  regarding this burden  estimate or any other aspect of this  collection of  information,
including suggestions for reducing this burden, to the Reports Management Officer,  Paperwork Reduction Project (2502-0062).  Office
of Information  Technology,  U.S.  Department of Housing and Urban Development,  Washington,  D.C.  20410-3600.  This agency may not
collect this  information,  and you are not required to complete this form, unless it displays a currently valid OMG control number.
Do not send this form to the above address.

For Month/Period  Ending:                  Project         Project Name:        
Beginning:                                 Number:         
1/98              12/98                    116-44052-LDP   Osuna Apartments
                                                                               
          Part I                          Description of Account                Acct. No.      Amount*
                                                                                                 
Rental Income 5,100        Rent Revenue - Gross Potential                         5120        391,205
                           Tenant Assistant Payments                              5121         38,683 
                           Stores and Commercial                                  5140     
                           Garage and Parking Spaces                              5170     
                           Flexible Subsidy Revenue                               5180     
                           Misc. Rent Revenue                                     5190     
                           Excess Rent                                            5191     
                           Rent Revenue - Insurance                               5192     
                           Special Claims Revenue                                 5193     
                           Retained Excess Income                                 5194     
                           Total Rent Revenue                                                                 429,888
Vacancies 5,200            Apartments                                             5220          3,561 
                           Stores and  Commercial                                 5240    
                           Rental Concessions                                     5250    
                           Garage and Parking Spaces                              5270   
                           Miscellaneous                                          5290                 
                           Total Vacancies                                                                      3,561 
                           Net Rental Revenue (Rent Less Vacancies)                                           426,327
                           Nursing Home/Assisted Living/Board          
                           Care/Other Elderly Care/Coop/& Other                   5300
Financial Revenue 5,400    Financial Revenue - Project Operations                 5410          1,874
                           Revenue from Investments - Residual Receipts           5430          8,435
                           Revenue from Investments - Replacement Resv.           5440          5,112
                           Revenue from Investments - Misc.                       5490     
                           Total Financial Revenue                                                             15,421
Other Revenue 5,900        Laundry and Vending Revenue                            5910          4,973
                           Tenant Charges                                         5920          2,436
                           Miscellaneous Revenue                                  5990     
                           Total Other Revenue                                                                  7,409
                           Total Revenue                                                                      449,157
Administrative Expenses    Conventions and Meetings                               6203    
6200/6300                  Management Consultants                                 6204    
                           Advertising and Marketing                              6210             87
                           Other Renting Expense                                  6250             18
                           Office Salaries                                        6310          6,760
                           Office Expenses                                        6311          8,224
                           Office or Model Apartment Rent                         6312         
                           Management Fee                                         6320         40,042
                           Manager or Superintendent Salaries                     6330         17,880
                           Administrative Rent Free Unit                          6331          3,966
                           Legal Expenses - Project                               6340             66
                           Audit Expense                                          6350          5,710
                           Bookkeeping Fees/Accounting Services                   6351          5,280
                           Bad Debts                                              6370   
                           Misc. Administrative Expenses                          6390   
                           Total Administrative Expenses                                                       88,033


    The accompanying notes are an integral part of the finanical statements


                                     1 of 2

                                                                 67



OSUNA APARTMENTS                                                                                                           EXHIBIT B

                                                                                                  
Utilities Expense 6,400    Fuel Oil/Coal                                          6420     
                           Electricity                                            6450         47,393
                           Water                                                  6451         18,542
                           Gas                                                    6452         22,790
                           Sewer                                                  6453          7,128     
                           Total Utilities Expense                                                             95,853
Operating and              Payroll                                                6510         18,492 
Maintenance Expenses       Supplies                                               6515         19,830
6,500                      Contracts                                              6520         55,322
                           Operating and Maintenance Rent Free Unit               6521          4,656
                           Garbage and Trash Removal                              6525          7,820
                           Security Payroll/Contract                              6530     
                           Security Rent Free Unit                                6531     
                           Heating/Cooling Repairs and Maintenance                6546          4,345
                           Snow Removal                                           6548               
                           Vehicle and Maintenance Equipment O & R                6570            362
                           Miscellaneous Operating and Maintenance                6590     
                           Total Operating and Maintenance Expenses                                           110,827
Taxes and Insurance 6,700  Real Estate Taxes                                      6710         24,805
                           Payroll Taxes (Project Share)                          6711          4,188
                           Property & Liability Insurance (Hazard)                6720         10,045
                           Fidelity Bond Insurance                                6721            533
                           Workmen's Compensation                                 6722          1,264
                           Health Insurance and Other Employee Benefits           6723          1,615
                           Miscellaneous Taxes, Licenses, Permits and Ins.        6790             40
                           Total Taxes and Insurance                                                           42,490
Financial Expenses 6,800   Interest on Mortgage Payable                           6820          6,826
                           Interest on Notes Payable Long Term                    6830     
                           Interest on Notes Payable Short Term                   6840     
                           Mortgage Insurance Premium/Service Charge              6850          6,244
                           Miscellaneous Financial Expenses                       6890          1,275
                           Total Financial Expenses                                                            14,345
Elderly & Congregate       Nursing Homes/Assisted Living/Board                                                  
Service Expenses 6,900     & Care/Other Elderly Care Expenses                     6900                              -
                           Total Cost of Operations before Depreciation                                       351,548
                           Profit (Loss) Before Depreciation                                                   97,609
                           Depreciation Expense                                   6600         65,344                
                           Amortization Expense                                   6610          1,054          66,398
                           Operating Profit or (Loss)                                                          31,211 
Mortgagor Entity           Officers Salaries                                      7110     
Expenses 7,100             Legal Expense                                          7120     
                           Federal, State and Other Income Taxes                  7130     
                           Interest Income                                        7140     
                           Interest on Notes Payable                              7141     
                           Interest on Mortgage Payable                           7142     
                           Other Expens  Note 4                                   7190          2,500
                           Net Entity Expenses                                                                  2,500
                           Profit or Loss (Net Income or Loss)                    3250                         28,711 

Warning: HUD will prosecute false claims and statements.  Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001,
1010, 1012; 31 U.S.C.  3729, 3802)
Miscellaneous or other Income and Expense  Sub-account  Groups. If miscellaneous or other income and/or expense  subaccounts  (5190,
5290,  5490,  5990,  6390,  6590,  6729,  6890, and 7190) exceed the Account  Groupings by 10% or more,  attach a separate  schedule
describing or explaining the miscellaneous income or expenses.

Part II
                                                                                                       
1.       Total principal payments required under the mortgage, even if payments under a
         Workout Agreement are less or more than those required under the mortgage.                       $ 32,272
2.       Replacement Reserve deposits required by the Regulatory Agreement or
         Amendments thereto, even if payments may be temporarily suspended or waived.                     $  6,068     
3.       Replacement or Painting Reserve releases which are included as expense items on
         this Profit and Loss statement                                                                      None       
4.       Project Improvement Reserve Releases under the Flexible Subsidy Program that
         are included as expense items on this Profit and Loss Statement.                                     NA  

<FN>
Form provided by The Sovereign Management Corporation.

                         The accompanying notes are an integral part of the finanical statements.
</FN>
                                     2 of 2

                                                                 68





                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)
                                                                                                      Exhibit C
                    Statement of Changes in Partners' Equity
                      For the Year Ended December 31, 1998


                                                             Associate            Local
                                                              General            General            Limited
                                            Total             Partner            Partner            Partner
                                         -------------      -------------     --------------     --------------

                                                                                               
Balance, January 1, 1998              $       558,987    $         3,404   $          3,494   $        552,089

Distributions to partners                      (9,312)               (93)              (118)            (9,101)

Net income (loss) for the year                 28,711                745                745             27,221
                                         -------------      -------------     --------------     --------------

Balance, December 31, 1998            $       578,386    $         4,056   $          4,121   $        570,209
                                         =============      =============     ==============     ==============



<FN>
The accompanying notes are an integral part of the financial statements.
</FN>


                                                                 69




                                                                       Exhibit D
                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                             Statement of Cash Flows
                      For the Year Ended December 31, 1998


Cash flows from operating activities:
                                                                                    
    Rental receipts                                                 $         418,657  
    Interest receipts                                                             789  
    Other receipts                                                              7,409     $         426,855
                                                                       ---------------


    Administrative expenses                                                    23,160  
    Management fees                                                            40,042  
    Utilities                                                                  88,966  
    Salaries and wages                                                         43,132  
    Maintenance expenses                                                       87,679  
    Real estate taxes and escrow deposits                                      49,272  
    Taxes - other                                                               3,789  
    Insurance                                                                  13,271  
    Mortgage interest                                                           7,026  
    Mortgage insurance premium                                                  6,016               362,353
                                                                       ---------------       ---------------

        Net cash provided by operating activities                                                    64,502

Cash flows from investing activities:
    Deposit to residual receipts                                              (22,593) 
    Deposits to reserve for replacements                                       (6,068) 
    Deposits to reserve for exterior painting                                  (3,600) 
                                                                       ---------------

        Net cash used in investing activities                                                       (32,261)

Cash flows from financing activities:
    Mortgage principal payments                                               (37,272) 
    Distribution to partners                                                   (9,312) 
                                                                       ---------------

        Net cash used in financing activities                                                       (46,584)
                                                                                             ---------------

Decrease in cash                                                                                    (14,343)

Cash, beginning of year                                                                              47,758
                                                                                             ---------------

Cash, end of year                                                                         $          33,415
                                                                                             ===============





The accompanying notes are an integral part of the financial statements.


                                                                 70



                                                                                                  Exhibit D
                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                       Statement of Cash Flows (Continued)
                      For the Year Ended December 31, 1998



                                                                                     
Cash flows from operating activities:
    Net income                                                                             $         28,711
    Adjustments to reconcile net income to net cash
        provided by operating activities:
            Depreciation and amortization                               $         66,398    
            Decrease in accounts receivable - tenants                                829    
            Increase in accounts receivable - HUD                                   (158)    
            Decrease in prepaid expenses                                             414    
            Increase in mortgage escrow account                                  (11,543)    
            Increase in accounts payable - trade                                   6,887    
            Decrease in accounts payable - HUD                                      (155)    
            Decrease in accrued interest payable                                    (200)    
            Increase in prepaid rent                                                 436    
            Decrease in accrued property taxes                                   (12,924)    
            Increase in accrued payroll taxes                                        439    
            Interest earned on reserve accounts                                  (14,632)            35,791
                                                                           --------------     --------------

                Net cash provided by operating activities                                  $         64,502
                                                                                              ==============




Supplemental disclosures of cash flow information:
    Cash paid during the year for interest                                                 $          7,026
                                                                                              ==============

Interest earned on reserve accounts and
   maintained in the respective reserve accounts                                           $         14,632
                                                                                              ==============






<FN>
The accompanying notes are an integral part of the financial statements.
</FN>


                                                                 71



                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                          Notes to Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies

The Partnership was organized as a limited  partnership on February 25, 1974, to
acquire an interest in real property  located in Albuquerque,  New Mexico and to
construct and operate thereon an apartment  complex of 110 units,  under Section
236 of the National  Housing Act.  Such projects are regulated by HUD as to rent
charges and operating methods.  Lower rental charges to tenants are recovered by
the  Partnership  through rent  subsidies  provided by HUD. The project's  major
program is its insured loan under  Section 236. The project's  nonmajor  program
results from its participation in the Section 8 housing assistance program.

During the year ended December 31, 1998, rental revenue from HUD totaled $38,683
representing  nine percent of total revenue.  The rent subsidy contract with HUD
expires August 31, 1999.

The  Certificate  of Limited  Partnership  provides that profits and losses from
operations  be allocated 1% to the local  general  partner,  1% to the associate
general partner and 98% to the investor limited partner. However, the allocation
of  deductions  in  respect  to  depreciation  on  property  contributed  to the
Partnership is to be allocated  according to the basis contributed by respective
partners.  In the case of  certain  other  events  which  are  specified  in the
Partnership  Agreement (for example,  a sale or refinancing of the property) the
allocation may be different than as described  above for profits and losses from
operations.

The partnership does business under the assumed name of "Osuna Apartments ".

The regulatory  agreement limits annual  distributions of net operating receipts
to "surplus cash"  available at the end of the year.  The maximum  distributable
amount for the year ended  December  31,  1998 was $11,812  and  "surplus  cash"
amounted to $13,187. Undistributed amounts are cumulative and may be distributed
in subsequent  years if future  operations  provide  "surplus cash" in excess of
current  requirements.  The cumulative amount distributable at December 31, 1998
was $11,812.

The  following  significant  accounting  policies  have  been  followed  in  the
preparation of the financial statements:

Basis of accounting

The Partnership's  policy is to prepare its financial statements on the basis of
accounting   practices  prescribed  by  the  Department  of  Housing  and  Urban
Development.  Assets and  liabilities  are  classified  as current  based on the
instructions  provided  in  the  Consolidated  Audit  Guide  for  Audits  of HUD
Programs.  For purposes of the  statement  of cash flows,  cash does not include
tenant security deposits or restricted deposits.


                                       72


                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                          Notes to Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies (Continued)

Depreciation

Depreciation is provided using the accelerated  and  straight-line  methods over
the estimated useful lives of the assets which range from five to 40 years.

Deferred expenses

Unamortized  deferred  expenses  consist of fees for  obtaining  the HUD insured
mortgage  loan which are being  amortized on the  straight-line  method over the
life of the mortgage loan.

Income taxes

No income tax  provision has been  included in the  financial  statements  since
income or loss of the  partnership  is required to be reported by the respective
partners on their income tax returns.

Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect certain  reported  amounts and  disclosures.  Actual results could differ
from those estimates.

Rental revenue

Gross rental revenue  earned  (accounts 5120 and 5121) was based on the approved
rental rate  structure  (revenue  and  non-revenue  units) of the  project.  Two
non-revenue  apartments (a 1BR and a 2BR) were occupied by the resident  manager
and maintenance person during the year.

Concentration of credit risk

The  Partnership  maintains its cash in various  insured bank accounts which, at
times, may exceed Federally insured limits.  The partnership has not experienced
any losses in such  accounts and  believes it is not exposed to any  significant
risk on cash. Management is aware of the limitation and attempts to minimize any
risk.

                                       73


                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                          Notes to Financial Statements


Note 2 - Replacement Reserves and Residual Receipts

Replacement  reserve funds are held in cash  ($11,697) and U.S.  Treasury  bills
($150,744) due April 1999. Residual receipts are held in cash ($12,416) and U.S.
Treasury  bills  ($271,911)  due April 1999. The Treasury bills bear interest at
approximately  5.26% per annum. The amounts reported  approximate fair value and
are based on quoted market prices.


Note 3 - Long-term Debt

The seven  percent  mortgage  note  payable  is insured by HUD and is payable in
monthly installments of $10,293 (before any interest supplement) through August,
2015.  A portion  of the  interest  is paid by HUD under  its 236  Program.  The
apartment project is pledged as collateral for the note.

Current  maturities of long-term  debt over the next five years ending  December
31, are as follows:
              1999                                      $39,966
              2000                                      $42,856
              2001                                      $45,954
              2002                                      $49,275
              2003                                      $52,838
It is  impractical  to  estimate,  with any  precision,  the  fair  value of the
outstanding debt without incurring excessive cost.


Note 4- Related Party Transactions

During  1998,  the  general   partners   earned  $2,500  in  local   partnership
administrative  fees. This amount is reflected as an accrued expense at December
31, 1998.  These fees are treated as a portion of the limited  dividend  payable
and can only be paid as part of the allowable distribution from surplus cash.

                                       74

                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                          Notes to Financial Statements


Note 5 - Restricted Equity

Under the terms of the Regulatory Agreement,  the Partnership is required to set
aside  specified  amounts  for the  replacement  of property  and other  project
expenditures as approved by HUD. Restricted funds, which approximate $446,000 at
December 31, 1998, are held in separate accounts and generally are not available
for operating purposes without HUD's prior written approval.


Note 6 - Rent Increases

Under the regulatory  agreement,  the partnership may not increase rents charged
to tenants without HUD approval.


Note 7 - Management Fees

Management  fees of $40,042  were earned under a HUD  approved  9.4%  management
contract.  Management  fees are  based on  collections  of  rentals,  commercial
(laundry and vending),  late and NSF fees and forfeited  security  deposits.  In
addition,  accounting fees of four dollars per unit per month ($5,280) were paid
to the management company.


Note 8 - Contingency

The Partnership has been named in a lawsuit  stemming from the alleged  wrongful
death of a tenant.  The Partnership's  insurance carrier has retained counsel to
represent the  Partnership in this action.  The  allegations  are denied and are
being vigorously contested.  However, the ultimate outcome of this litigation is
unknown at the present  time.  Accordingly,  no provision  for any liability (if
any) that might result has been made in the accompanying financial statements.


Note 9 - Current Vulnerability Due to Certain Concentrations

The Partnership's sole asset is Osuna Apartments.  The Partnership's  operations
are  concentrated  in the  mutifamily  real  estate  market.  In  addition,  the
Partnership  receives  rental  subsidies  from  HUD and  operates  in a  heavily
regulated  environment.  The  operations of the  Partnership  are subject to the
administrative  directives,  rules and  regulations of federal,  state and local
regulatory  agencies,  including,  but not limited to, HUD. Such  administrative
directives, rules and regulations are subject to change by an act of congress or
an  administrative  change  mandated by HUD.  Such changes may occur with little
notice  or  inadequate  funding  to pay  for the  related  cost,  including  the
additional administrative burden, to comply with a change.

                                       75


                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)
                                                                      Schedule 1
                   Supporting Data Required by HUD (Continued)


Reserve for Replacements

In accordance with the provisions of the regulatory  agreement,  restricted cash
and securities are held by GMAC  Commercial  Mortgage at December 31, 1998 to be
used for replacement of property with the approval of HUD as follows:

    Balance, January 1, 1998                                  $151,260
    Monthly deposits ($506 x 12)                                 6,068
    Interest earned                                              5,113 
                                                              --------

    Balance, December 31, 1998                                $162,441 
                                                              ========

Reserve for Residual Receipts

In accordance with the provisions of the regulatory agreement, residual receipts
cash and securities are held by GMAC Commercial Mortgage.  Use of these funds is
contingent  upon HUD's prior written  approval.  The following is an analysis of
1998 transactions.

    Balance, January 1, 1998                                  $253,300
    Interest earned                                              8,435
    1997 residual receipts transferred                          22,593 
                                                              --------

    Balance, December 31, 1998                                $284,328 
                                                              ========

Reserve for Exterior Painting

Restricted cash is held by a bank to be used for exterior painting as follows:

    Balance, January 1, 1998                                  $35,276
    Deposits for 1998 ($300 x 12)                               3,600
    Interest earned                                             1,084
                                                              -------

    Balance, December 31, 1998                                $39,960
                                                              =======







This supporting data is presented for purposes of additional analysis and is not
a required part of the basic financial statements.

                                       76


                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)
                                                                      Schedule 1
                   Supporting Data Required by HUD (Continued)



Miscellaneous Information

The lead auditor of the  engagement  was James M. Klein, a member in the firm of
Kirkpatrick,  Klein & Mathis,  P.L.L.C. (EIN:  75-2785999),  located at 4901 LBJ
Freeway, Suite 120, Dallas, Texas 75244.







This supporting data is presented for purposes of additional analysis and is not
a required part of the basic financial statements.


                                       77




                                                      OSUNA APARTMENTS COMPANY
                                                       (A Limited Partnership)
                                                                                                                          Schedule 1
                                             Supporting Data Required By HUD (Continued)
                                                          December 31, 1998



Changes in the Apartment Project


                                      Assets                                      Accumulated Depreciation                  Net
                   -----------------------------------------------     ----------------------------------------------     Carrying
                    Balance                               Balance,      Balance,                             Balance,      Amount
                    Jan. 1,                               Dec. 31,      Jan. 1,                              Dec. 31,     Dec. 31,
                      1998     Additions   Deductions      1998          1998      Provision   Deduction       1998          1998
                   ----------  ---------   ----------    ---------     ---------   ---------   ---------   ----------    ----------

                                                                                                    
Land              $  255,230   $      -    $      -    $  255,230     $       -    $      -    $      -   $        -    $  255,230

Buildings          1,854,035          -           -     1,854,035       804,897      61,849           -      866,746       987,289

Building equipment
    portable           7,487          -           -         7,487         4,735       1,070           -        5,805         1,682

Furnishings          149,273          -           -       149,273       149,273           -           -      149,273             -

Office furniture      10,064          -           -        10,064         5,443       2,425           -        7,868         2,196
                   ----------  --------    --------    ----------     ---------    --------    --------   ----------    ----------

    Totals        $2,276,089   $      -    $      -    $2,276,089     $ 964,348    $ 65,344    $      -   $1,029,692    $1,246,397
                  ==========   ========    ========    ==========     =========    ========    ========   ==========    ==========







<FN>
This supporting data is presented for purposes of additional analysis and is not
a required part of the financial statements.
</FN>

                                                                 78



                                         U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
                                              HOUSING - FEDERAL HOUSING COMMISSIONER
                                      OFFICE OF MULTIFAMILY HOUSING MANAGEMENT AND OCCUPANCY

                                          COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND                                  SCHEDULE 1
                                                         RESIDUAL RECEIPTS

PROJECT NAME                                 FISCAL PERIOD ENDED:       PROJECT NUMBER                                     
OSUNA APARTMENTS                             12/31/98                   116-44052-LDP

                                                   PART A - COMPUTE SURPLUS CASH
                                                                                                        
       1.  Cash (Accounts 1110, 1120, 1191, 1192)                              $44,215

       2.  Tenant subsidiary vouchers due for period covered                          
             by financial statement                                            $   279

       3.  Other (describe)                                                    $

                                      (a) Total Cash (Add Lines 1, 2, and 3)                                  $44,494

       4.  Accrued mortgage interest payable                                   $   478

       5.  Delinquent mortgage principal payments                              $     

       6.  Delinquent deposits to reserve for replacements                     $     

       7.  Accounts payable (due within 30 days)                               $15,620

       8.  Loans and notes payable                                                    
           (due within 30 days)                                                $      

       9.  Deficient Tax Insurance or MIP Escrow Deposits                      $

       10. Accrued expenses (not escrowed) Payroll Taxes                       $   943

       11. Prepaid Rents (Account 2210)                                        $   474

       12. Tenant security deposits liability (Account 2191)                   $10,800

       13. Other (Describe)  Excess Income                                     $ 2,992

                                               (b) Less Total Current Obligations (Add Lines 4 through 13)    $31,307

                                               (c) Surplus Cash (Deficiency) (Line (a) minus Line (b))        $13,187

                        PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS
                                                                                                        
  1.   Surplus Cash                                                                                           $13,187

  Limited Dividend Projects

       2a. Distribution Earned During Fiscal Period                                
             Covered by the Statement                                          $11,812

       2b. Distribution Accrued and Unpaid as of the                     
             End of the Prior Fiscal Period                                    $11,812

       2c. Distributions Paid During Fiscal Period Covered by Statement        $11,812

       3. Distributions Earned but Unpaid as of the End of                   
          the Fiscal Period Under Review (Line 2a + 2b - 2c)                   $11,812

  4.   Amount Available for Distribution During Next Fiscal Period                                            $11,812

  5.   Deposit Due Residual Receipts                                                           
       (Must be deposited with Mortgagee within 60 days after Fiscal Period ends)                             $ 1,375

    PREPARED BY                                       REVIEWED BY

 LOAN TECHNICIAN                                    LOAN SERVICER

 DATE                                               DATE

                        See Reverse for instructions)                  HUD-93486

<FN>
This supporting data is presented for additional analysis and is not a required part of the basic financial statements.
</FN>

                                                                 79


                                                                      Schedule 2


                         INDEPENDENT AUDITORS' REPORT ON
                            COMPLIANCE WITH SPECIFIC
                  REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS


To the Partners of
Osuna Apartments Company

We have audited the financial  statements of Osuna Apartments Company (a limited
partnership),  Project No. 116-44052-LDP,  as of and for the year ended December
31, 1998, and have issued our report thereon dated February 5, 1999.

We have also audited Osuna  Apartments  Company's  compliance  with the specific
program requirements  governing federal financial reports,  mortgage status, the
replacement  reserve,  the residual  receipts,  tenant security  deposits,  cash
receipts and disbursements,  distributions to owners, tenant application, tenant
eligibility,   tenant  recertification,   and  management  functions,  that  are
applicable  to its major  HUD-assisted  program for the year ended  December 31,
1998. The management of the Partnership is responsible for compliance with those
requirements.  Our  responsibility  is to express an opinion on compliance  with
those requirements based on our audit.

We conducted our audit of compliance with those  requirements in accordance with
generally accepted auditing standards,  Government Auditing Standards, issued by
the Comptroller  General of the United States and the  Consolidated  Audit Guide
for  Audits of HUD  Programs  (the  "Guide")  issued by the U.S.  Department  of
Housing and Urban Development,  Office of Inspector General. Those standards and
the Guide  require  that we plan and  perform  the  audit to  obtain  reasonable
assurance about whether material noncompliance with the requirements referred to
above occurred. An audit includes examining, on a test basis, evidence about the
Partnership's  compliance  with those  requirements.  We believe  that our audit
provides a reasonable basis for our opinion.

In our opinion,  Osuna Apartments  Company complied,  in all material  respects,
with  the  requirements  described  above  that  are  applicable  to  its  major
HUD-assisted program for the year ended December 31, 1998.

This report is intended solely for the information and use of management and the
Department of Housing and Urban Development and is not intended to be and should
not be used by anyone other than these specified parties.


/s/ Kirkpatrick, Klein & Mathis, P.L.L.C.

Dallas, Texas
February 5, 1999

                                       80




                                                                      Schedule 3



                          INDEPENDENT AUDITORS' REPORT
                           ON COMPLIANCE WITH SPECIFIC
                           REQUIREMENTS APPLICABLE TO
                        NONMAJOR HUD PROGRAM TRANSACTIONS

To the Partners of
Osuna Apartments Company

We have audited the financial  statements of Osuna Apartments Company (a limited
partnership),  HUD  Project  No.  116-44052-LDP  as of and  for the  year  ended
December 31, 1998, and have issued our report thereon dated February 5, 1999.

In  connection  with  our  audit  of the  1998  financial  statements  of  Osuna
Apartments  Company and with our  consideration  of the  Partnership's  internal
control used to administer HUD programs,  as required by the Consolidated  Audit
Guide for Audits of HUD Programs (the "Guide"), issued by the U.S. Department of
Housing and Urban Development,  Office of Inspector General, we selected certain
transactions  applicable to certain nonmajor  HUD-assisted programs for the year
ended  December  31,  1998.  As required  by the Guide,  we  performed  auditing
procedures to test compliance with the  requirements  governing fair housing and
non-discrimination,  management,  maintenance,  the replacement reserve, federal
financial   reports,    tenant   application,    tenant   eligibility,    tenant
recertification,  and tenant  security  deposits  that are  applicable  to those
transactions. Our procedures were substantially less in scope than an audit, the
objective  of  which  is the  expression  of an  opinion  on  the  Partnership's
compliance  with those  requirements.  Accordingly,  we do not  express  such an
opinion.

The  results of our tests  disclosed  no  instances  of  noncompliance  that are
required to be reported herein under the Guide.

This report is intended solely for the information and use of management and the
Department  of Housing and Urban  Development  and is not intended to be used by
anyone other than these specified parties.


/s Kirkpatrick, Klein & Mathis, P.L.L.C.

Dallas, Texas
February 5, 1999



                                       81




                                                                      Schedule 4



                          INDEPENDENT AUDITORS' REPORT
                               ON INTERNAL CONTROL

To the Partners of
Osuna Apartments Company


We have audited the financial  statements of Osuna Apartments Company (a limited
partnership),  HUD  Project  No.  116-44052-LDP  as of and  for the  year  ended
December 31, 1998, and have issued our report thereon dated February 5, 1999. We
have also audited the Partnership's  compliance with requirements  applicable to
its major HUD-assisted program and have issued our report thereon dated February
5, 1999.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards,  Government Auditing Standards,  issued by the Comptroller General of
the United States,  and the Consolidated  Audit Guide for Audits of HUD Programs
(the "Guide"),  issued by the U.S.  Department of Housing and Urban Development,
Office of the Inspector  General.  Those standards and the Guide require that we
plan and perform the audits to obtain  reasonable  assurance  about  whether the
financial  statements  are free of material  misstatement  and about whether the
Partnership  complied with laws and regulations,  noncompliance with which would
be material to a major HUD-assisted program.

The management of Osuna  Apartments  Company is responsible for establishing and
maintaining internal control. In fulfilling this  responsibility,  estimates and
judgments by management are required to assess the expected benefits and related
costs of controls.  The objectives of internal control are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded against
loss from  unauthorized  use or disposition,  that  transactions are executed in
accordance with  management  authorization  and recorded  properly to permit the
preparation  of financial  statements  in  accordance  with  generally  accepted
accounting principles,  and that HUD-assisted programs are managed in compliance
with applicable  laws and  regulations.  Because of inherent  limitations in any
internal  control,  errors,  irregularities  or instances of  noncompliance  may
nevertheless  occur and not be detected.  Also,  projection of any evaluation of
internal  control to future  periods is subject to the risk that  procedures may
become inadequate  because of changes in conditions or that the effectiveness of
the design and operation of controls may deteriorate.

In planning  and  performing  our audits,  we obtained an  understanding  of the
design of  relevant  controls  and  determined  whether  they had been placed in
operation,  and we assessed  control  risk in order to  determine  our  auditing
procedures  for the  purpose of  expressing  our  opinions  on Osuna  Apartments
Company's financial statements and on its compliance with specific  requirements
applicable to its major  HUD-assisted  program and to report on internal control
in accordance  with the provisions of the Guide and not to provide any assurance
on internal control.


                                       82



We  performed  tests of  controls,  as  required by the Guide,  to evaluate  the
effectiveness  of the  design  and  operation  of  controls  that we  considered
relevant  to  preventing  or  detecting  material  noncompliance  with  specific
requirements  applicable to the Partnership's  major HUD-assisted  program.  Our
procedures  were less in scope than would be  necessary  to render an opinion on
internal control. Accordingly, we do not express such an opinion.

Our consideration of internal control would not necessarily disclose all matters
in  internal   control  that  might  be  material   weaknesses  under  standards
established  by the  American  Institute  of  Certified  Public  Accountants.  A
material weakness is a condition in which the design or operation of one or more
of the internal control components does not reduce to a relatively low level the
risk that errors or irregularities in amounts that would be material in relation
to the financial  statements being audited or that  noncompliance  with laws and
regulations  that would be material to a HUD-assisted  program may occur and not
be  detected  within a timely  period  by  employees  in the  normal  course  of
performing  their assigned  functions.  We noted no matters  involving  internal
control and its operation that we consider to be material  weaknesses as defined
above.

This report is intended solely for the information and use of management and the
Department of Housing and Urban Development and is not intended to be and should
not be used by anyone other than these specified parties.


/s/ Kirkpatrick, Klein & Mathis, P.L.L.C.

Dallas, Texas
February 5, 1999



                                       83




                                                                      Schedule 5





                          INDEPENDENT AUDITORS' REPORT
                    ON COMPLIANCE WITH SPECIFIC REQUIREMENTS
                APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION

To the Partners of
Osuna Apartments Company

We have audited the financial  statements of Osuna Apartments  Company as of and
for the year ended  December 31, 1998,  and have issued our report thereon dated
February 5, 1999.

We have also applied  procedures to test Osuna Apartments  Company's  compliance
with the Fair  Housing and  Non-Discrimination  requirements  applicable  to its
HUD-assisted programs for the year ended December 31, 1998.

Our procedures were limited to the applicable  compliance  requirement described
by the Consolidated  Audit Guide for Audits of HUD Programs (the "Guide") issued
by the U.S.  Department  of Housing and Urban  Development,  Office of Inspector
General.  Our procedures  were  substantially  less in scope than an audit,  the
objective of which is the expression of an opinion on Osuna Apartments Company's
compliance   with  the  Fair   Housing  and   Non-Discrimination   requirements.
Accordingly, we do not express such an opinion.

The  results of our tests  disclosed  no  instances  of  noncompliance  that are
required to be reported herein under the Guide.

This report is intended solely for the information and use of management and the
Department of Housing and Urban Development and is not intended to be and should
not be used by anyone other than these specified parties.


/s/ Kirkpatrick, Klein & Mathis, P.L.L.C.

Dallas, Texas
February 5, 1999




                                       84




                                                                      Schedule 6

                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                    Schedule of Findings and Questioned Costs
                                December 31, 1998



There were no findings,  including  material  questioned costs, noted during the
audit.




                                       85




                                                                      Schedule 7


                              AUDITORS' COMMENTS ON
                            AUDIT RESOLUTION MATTERS
                            RELATING TO HUD PROGRAMS 


To the Partners of
Osuna Apartments Company

We have audited the financial  statements of Osuna Apartments Company (a limited
partnership) as of and for the year ended December 31, 1998, and have issued our
report thereon dated February 5, 1999.

During the 1997 audit, no material  matters  involving  internal control and its
operation or compliance with specific  requirements  applicable to its major HUD
program were noted.  Accordingly corrective action was not required during 1998.
Further,  based on the auditor's discussions with management,  there were no HUD
OIG audits,  physical inspections,  program reviews or management reviews during
1998.  In February  1998 the  mortgagee  conducted a physical  inspection of the
property and indicated the overall condition of the property was satisfactory.




/s/ Kirkpatrick, Klein & Mathis, P.L.L.C.

Dallas, Texas
February 5, 1999

                                       86




                                                                      Schedule 8

                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                             Corrective Action Plan
                                December 31, 1998



Section I - Internal Control Review

There were no findings or recommendations which require comment.


Section II - Compliance Review

There were no instances of noncompliance with laws and regulations which require
comment.  Further,  as noted in Schedule 7, the physical  inspection  was deemed
satisfactory and required no response.




NOTE:    As a result of the  above,  there is no need for a  separate  mortgagor
         letter proposing a corrective action plan.


                                       87




                                                                      Schedule 9

                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                             Partners' Certification



We hereby certify that we have examined the  accompanying  financial  statements
and supplemental  data of Osuna  Apartments  Company for the year ended December
31, 1998,  and, to the best of our knowledge  and belief,  the same are complete
and accurate.





                                            By: /s/ Michael A. Stoller

        
                                            TNG Properties Inc.
DATE                                        GENERAL PARTNER  (Printed Name)



                                            By: /s/ Samuel R. Campbell


3/10/99                                     Personal Economics Development Corp.
DATE                                        GENERAL PARTNER  (Printed Name)







                                                       Employer Identification
                                                       No. 74-2347236





                                       88




                                                                     Schedule 10
                            OSUNA APARTMENTS COMPANY
                             (A Limited Partnership)

                        Management Agent's Certification



I hereby certify that I have examined the accompanying  financial statements and
supplemental  data of Osuna  Apartments  Company for the year ended December 31,
1998,  and, to the best of my  knowledge  and belief,  the same are complete and
accurate.









                                           The Sovereign Management Corporation

3/10/99
DATE                                       MANAGING AGENT


                                           BY: /s/ Joyce Brow

                                               Joyce Brow
                                           (Printed Name)

                                           TITLE:   Director of Management

                                           EMPLOYER IDENTIFICATION NO.

                                                  74-1705931



                                       89












                             LINDEN PARK ASSOCIATES

                               LIMITED PARTNERSHIP

                          FHA PROJECT NO.: 000-35090-PM

                                DECEMBER 31, 1998













                                       90




                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                             CERTIFICATE OF PARTNERS
                          FHA PROJECT NO.: 000-35090-PM
                                DECEMBER 31, 1998



                             CERTIFICATE OF PARTNERS


         We hereby  certify  that we have  examined the  accompanying  financial
statements and supplemental data of Linden Park Associates  Limited  Partnership
and, to the best of our knowledge and belief, the same is complete and accurate.




                                GENERAL PARTNERS
                            
                            
                            
                                ---------------------------------------------
                                Signature                                Date
                            
                            
                                ---------------------------------------------
                                Print Name
                            
                            
                            
                                ---------------------------------------------
                                Signature                                Date
                            
                            
                                ---------------------------------------------
                                Print Name
                            
                            
                            
                                Partnership Employer
                                Identification Number
                                52-1377632
                          

                                       91




                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                          FHA PROJECT NO.: 000-35090-PM
                         MANAGING AGENT'S CERTIFICATION
                                DECEMBER 31, 1998




                          CERTIFICATE OF MANAGING AGENT



         We hereby  certify  that we have  examined the  accompanying  financial
statements and supplemental data of Linden Park Associates Limited  Partnership,
and, to the best of our knowledge and belief, the same is complete and accurate.




                                Beltway Management, Inc.
                                CORPORATE OFFICER



                                ---------------------------------------------
                                Signature                                Date


                                ---------------------------------------------
                                Print Name



                                Corporate Employer
                                Identification Number
                                52-1006619



                                       92


Grubman & Associates
of Maryland, P.C. - Certified Public Accountants
101 Chestnut Street, Suite 120
Gaithersburg, MD 20877
(301) 948-3464
Facsimile (301) 762-7350


                   REPORT ON AUDITED FINANCIAL STATEMENTS AND
                            SUPPLEMENTARY INFORMATION

                          Independent Auditor's Report


To the Partners
Linden Park Associates Limited Partnership
Triangle, Virginia

We have audited the accompanying balance sheet of Linden Park Associates Limited
Partnership as of December 31, 1998, and the related statements of income,  cash
flows and analysis of partners' equity for the year then ended.  These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Linden Park Associates Limited
Partnership  as of December 31, 1998,  and the results of its operations and its
cash  flows  for the year  then  ended in  conformity  with  generally  accepted
accounting principles.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 21, 1999 on our  consideration  of Linden Park Associates  Limited
Partnership's  internal control structure and a report dated January 21, 1999 on
its compliance with laws and regulations.

                                       93




The  accompanying   supplementary  information  is  presented  for  purposes  of
additional  analysis  and  is  not  a  required  part  of  the  basic  financial
statements.  Such  information  has been  subjected to the  auditing  procedures
applied in the audit of the basic financial  statements and, in our opinion,  is
fairly stated in all material  respects in relation to the financial  statements
taken as a whole.



/s/ Grubman & Associates of Maryland, P.C.

Grubman & Associates of Maryland, P.C.
Gaithersburg, Maryland
January 21, 1999


Employer Identification No.: 52-1885118
Engagement Principal: Stewart A. Grubman


                                       94




                         LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                                FHA PROJECT NO.: 000-35090-PM
                                        BALANCE SHEET
                                      DECEMBER 31, 1998


                                           ASSETS

                                                                          

Current Assets
  1120  Cash in Bank                                        $97,763
  1121  Cash in Bank - Owners                                   890
  1130  Tenant Accounts Receivable                           12,695
  1140  Accounts Receivable - Other                           2,890
  1153  Due from General Partners                                15               $114,253
                                                        -----------

Deposits Held in Trust - Funded
  1191  Tenants Security Deposits (Contra)                                          68,762

Prepaid Expenses
  1240  Property Insurance                                    2,203
  1250  Mortgage Insurance Premium                              955
  1251  Insurance - Other                                       241                  3,399
                                                        -----------

Restricted Deposits and Funded Reserves
  1310  Mortgage Escrow Deposits                             27,601
  1320  Replacement Reserve                                  88,886                116,487
                                                        -----------

Fixed Assets
  1410  Land                                                456,828
  1420  Buildings                                         5,657,969
  1450  Building Equipment - Portable                       359,506
  1451  Furniture & Fixtures                                 23,264
  1452  Improvements                                        108,483
                                                        -----------

    Total Fixed Assets                                    6,606,050

    Less:  Accumulated Depreciation                      (2,615,129)             3,990,921
                                                        -----------           ------------

  TOTAL ASSETS                                                                  $4,293,822
                                                                              ============






See Accompanying Notes to Financial Statements.



                                                 -2-

                                             95


                             LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                                    FHA PROJECT NO.: 000-35090-PM
                                            BALANCE SHEET
                                          DECEMBER 31, 1998


LIABILITIES AND PARTNERS' EQUITY


                                                                           
Current Liabilities
  2110  Accounts Payable                                    $20,083
  2120  Accrued Wages Payable                                 6,924
  2130  Accrued Interest Payable                              3,579
  2135  Accrued Interest - Sellers Note                     619,434
  2150  Payroll Taxes Payable                                   737
  2155  Management Fee Payable                                9,498
  2320  Mortgage Payable - Current Portion                  105,914               $766,169
                                                       ------------
                                                   
Deposits and Prepayment Liabilities             
  2191  Tenants Security Deposits (Contra)                   38,830
  2210  Rent Deferred Credits                                   725                 39,555
                                                       ------------
                                              
Long Term Liabilities                      
  2310  Notes Payable - Sellers                           1,800,000
  2320  Mortgage Payable                                  2,147,248
                                                       ------------
                                                          3,947,248
    Less:  Current Portion                                 (105,914)             3,841,334
                                                       ------------
                                            
Partners' Equity                         
  3130  Partners' Equity (Deficit)                                                (353,236)
                                                                               -----------


    TOTAL LIABILITIES AND PARTNERS' EQUITY                                      $4,293,822
                                                                               ===========

<FN>
See Accompanying Notes to Financial Statements.
</FN>


                                                -3-

                                             96



Statement of                                     U.S. Department of Housing
Profit and Loss                                  and Urban Development
                                                 Office of Housing
                                                 Federal Housing Commissioner
                                      OMB Approval No. 2502-0052 (Exp. 8/31/92)

Public  Reporting  Burden for this  collection  of  information  is estimated to
average 1.0 hours per response,  including the time for reviewing  instructions,
searching existing data sources,  gathering and maintaining the data needed, and
completing and reviewing the collection of information.  Send comments regarding
this burden  estimate or any other  aspect of this  collection  of  information,
including  suggestions  for  reducing  this  burden,  to the Reports  Management
Officer. Office of Information Policies and Systems, U. S. Department of Housing
and  Urban  Development,  Washington,  D. C.  20410-3600  and to the  Office  of
Management and Budget, Paperwork Reduction Project (2502-0052).  Washington,  D.
C. 20503. Do not send this completed form to either of these addresses.

For Month/Period                                 Project Number                     Project Name
Beginning      1/1/98   Ending  12/31/98         000-35090-PM                       Linden Park

Part I                            Description of Account                   Acct.No.     Amount*
                                                                                              
                  Apartments or Member Carrying Charges (Coops)              5120      $    1,313,529     
                  Tenant Assistance Payments                                 5121      $       29,089     
Rental            Furniture and Equipment                                    5130      $                  
Income            Stores and Commercial                                      5140      $                  
5100              Garage and Parking Spaces                                  5170      $                  
                  Flexible Subsidy Income                                    5180      $                  
                  Miscellaneous (specify)                                    5190      $                  
                  Total Rent Revenue             Potential at 100% Occupancy                               $   1,342,618
                  Apartments                                                 5220       (      76,617)   
                  Furniture and Equipment                                    5230       (            )   
Vacancies         Stores and Commercial                                      5240       (            )   
5200              Garage and Parking Spaces                                  5270       (            )   
                  Miscellaneous (specify)                                    5290       (            )   
                  Total Vacancies                                                                           (     76,617)
                  Net Rental Revenue             Rent Revenue Less Vacancies                               $   1,266,001
                  Elderly and Congregate Services Income -- 5300                                          
                  Total Service Income           (Schedule Attached)         5300      $                   $           0           
                  Interest Income-Project Operations                         5410      $       3,373
Financial         Income from Investments-Residual Receipts                  5430      $
Revenue           Income from Investments-Replacement Reserve                5440      $       2,929
5400              Income from Investments-Miscellaneous                      5490      $
                  Total Financial Revenue                                                                  $       6,302
                  Laundry and Vending                                        5910      $      35,893
                  NSF and Late Charges                                       5920      $       7,368
Other             Damages and Cleaning Fees                                  5930      $
Revenue           Forfeited Tenant Security Deposits                         5940      $          99
5900              Other Revenue (specify)                                    5990      $         673
                  Total Other Revenue                                                                      $      44,033  
                  Total Revenue                                                                            $   1,316,336
                  Advertising                                                6210      $      48,894
                  Other Renting Expense                                      6250      $       5,734
                  Office Salaries                                            6310      $      30,996
                  Office Supplies                                            6311      $      13,025
                  Office or Model Apartment Rent                             6312      $
Administrative    Management Fee                                             6320      $     108,967
Expenses          Manager or Superintendent Salaries                         6330      $      34,060
6200/6300         Manager or Superintendent Rent Free Unit                   6331      $      15,112
                  Legal Expenses (Project)                                   6340      $       5,761
                  Auditing Expenses (Project)                                6350      $       7,500
                  Bookkeeping Fees/Accounting Services                       6351      $       9,504
                  Telephone and Answering Service                            6360      $      10,105
                  Bad Debts                                                  6370      $      22,609
                  Miscellaneous Administrative Expenses (specify)            6390      $       2,104
                  Total Administrative Expenses                                                            $     314,371
                  Fuel Oil/Coal                                              6420      $
Utilities         Electricity                                                6450      $      20,106
Expenses          Water                                                      6451      $      29,153
6400              Gas                                                        6452      $      68,447
                  Sewer                                                      6453      $      38,440
                  Total Utilities Expense                                                                  $     156,146


* All amounts must be rounded to the nearest dollar; $.50 and               Page 1 of 2           Form HUD-92410 (     ) 
  over, round up - $.49 and below, round down.                                                    Ref. HB 4370.2         
    
See Accompanying Notes to Financial Statements.                     
                                                                 -4-

                                                                 97

                                                                                              
                  Janitor and Cleaning Payroll                               6510      $      23,991
                  Janitor and Cleaning Supplies                              6515      $       1,589
                  Janitor and Cleaning Contract                              6517      $      17,549
                  Exterminating Payroll/Contract                             6519      $       4,578
                  Exterminating Supplies                                     6520      $         300
                  Garbage & Trash Removal                                    6525      $      54,404
                  Security Payroll/Contract                                  6530      $       1,470
                  Grounds Payroll                                            6535      $      21,093
Operating and     Grounds Supplies                                           6536      $       4,552
Maintenance       Grounds Contract                                           6537      $      26,784
Expenses          Repairs Payroll                                            6540      $      62,180
6500              Repairs Material                                           6541      $
                  Repairs Contract                                           6542      $      20,689
                  Elevator Maintenance/Contract                              6545      $       3,560
                  Heating/Cooling Repairs and Maintenance                    6546      $         348
                  Swimming Pool Maintenance/Contract                         6547      $      19,292
                  Snow Removal                                               6548      $
                  Decorating Payroll/Contract                                6560      $      22,373
                  Decorating Supplies                                        6561      $
                  Other                                                      6570      $
                  Miscellaneous Operating and Maintenance Expenses           6590      $       3,802
                  Total Operating and Maintenance Expenses                                                 $     288,554  
                  Real Estate Taxes                                          6710      $      53,173
                  Payroll Taxes (FICA)                                       6711      $      16,422
                  Miscellaneous Taxes, Licenses and Permits                  6719      $         140
Taxes             Property and Liability Insurance (Hazard)                  6720      $      13,239
and               Fidelity Bond Insurance                                    6721      $         715
Insurance         Workmen's Compensation                                     6722      $       4,188
6700              Health Insurance and Other Employee Benefits               6723      $      18,068
                  Other Insurance (specify)                                  6729      $
                  Total Taxes and Insurance                                                                $     105,945
                  Interest on Bonds Payable                                  6810      $
                  Interest on Mortgage Payable                               6820      $      43,900
Financial         Interest on Notes Payable (Long-Term)                      6830      $
Expenses          Interest on Notes Payable (Short-Term)                     6840      $
6800              Mortgage Insurance Premium/Service Charge                  6850      $      11,501
                  Miscellaneous Financial Expenses                           6890      $       1,404
                  Total Financial Expenses                                                                  $     56,805
Elderly &         Total Service Expenses--Schedule Attached                  6900                           $          0  
Congregate        Total Cost of Operations Before Depreciation                                              $    921,821  
Service           Profit (Loss) Before Depreciation                                                         $    394,515  
Expenses          Depreciation (Total)--6600 (specify)                       6600                           $    242,126
6900              Operating Profit or (Loss)                                                                $    152,389
                  Officer Salaries                                           7110      $
Corporate or      Legal Expenses (Entity)                                    7120      $
Mortgagor         Taxes (Federal-State-Entity)                               7130-32   $
Entity            Other Expenses (Entity)                                    7190      $     171,980
Expenses          Total Corporate Expenses                                                                  $    171,980
7100              Net Profit or (Loss)                                                                      $    (19,591)

Warning:  HUD will prosecute false claims and statements.  Conviction may result
in criminal and/or civil penalties.  (18 U.S.C. 1001, 1010,1012; 31 U.S.C. 3729,
3802)
Miscellaneous or other Income and Expense  Sub-account  Groups. If miscellaneous
or other income and/or expense sub-accounts (5190, 5290, 5490, 5990, 6390, 6590,
6729,  6890,  and 7190) exceed the Account  Groupings  by 10% or more,  attach a
separate schedule describing or explaining the miscellaneous income or expense.

Part II
                                                                                                        
1.   Total  principal  payments  required under the mortgage,  even if payments under a Workout
     Agreement are less or more than those required under the mortgage.                                     $   103,811
2.   Replacement  Reserve deposits required by the Regulatory  Agreement or Amendments thereto,            
     even if payments may be temporarily suspended or waived.                                               $    62,400 
3.   Replacement  or Painting  Reserve  releases  which are  included as expense  items on this            
     Profit and Loss statement.                                                                             $         0
4.   Project  Improvement Reserve Releases under the Flexible Subsidy Program that are included            
     as expense items on this Profit and Loss Statement.                                                    $         0
<FN>
                                                             Page 2 of 2                                    Form HUD-92410
See Accompanying Notes to Financial Statements.  
</FN>
                                                           
                                                                 -5-

                                                                 98



                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                         STATEMENT OF PARTNERS' EQUITY
                      FOR THE YEAR ENDED DECEMBER 31, 1998


                                        General        Limited          Total
                                       Partners        Partners
                                      ------------------------------------------

Partners' (Deficit) -
January 1, 1998                       ($ 30,578)      ($303,067)      ($333,645)

Add:  Net Income for the
       Year                                (392)        (19,199)        (19,591)
                                      ------------------------------------------

Partners' (Deficit) -
December 31, 1998                     ($ 30,970)      ($322,266)      ($353,236)
                                      ==========================================









See Accompanying Notes to Financial Statements.

                                      -6-



                                       99

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                      STATEMENT OF CASH FLOWS - OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998


OPERATING ACTIVITIES:
  Revenues
   Rent Income                                      $ 1,248,492
   Financial Income                                       6,302
   Laundry Income                                        35,893
   Other Tenant Charges                                   8,140      $ 1,298,827
                                                    -----------
  Expenses
   Administrative Expenses                              127,474
   Utilities Expenses                                   156,929
   Management Fees                                      109,596
   Operating & Maintenance Expenses                     173,141
   Payrolls                                             188,189
   Taxes - Real Estate                                   53,173
   Taxes - Other                                         16,487
   Interest on Mortgages                                 44,073
   Interest - Other                                       1,204
   Insurance                                             36,202
   Mortgage Insurance Premiums                           11,460
   Miscellaneous                                            200         918,128
                                                    -----------      ----------

   TOTAL PROVIDED BY OPERATIONS                                      $  380,699
                                                                     ----------

INVESTING ACTIVITIES:
   Net Change in Tax and Insurance Escrow                                 4,595
   Net Change in Replacement Reserve                                      7,755
   Increase in Funded Security Deposits                                  (2,284)
   Decrease in Tenants Security Deposits                                 (5,688)
   Purchase of Assets                                                   (64,587)
                                                                     ----------

   TOTAL USED BY INVESTING ACTIVITIES                                   (60,209)
                                                                     ----------

FINANCIAL ACTIVITIES:
   Surplus Cash Distributions                                          (198,598)
   Amortization of Mortgage                                            (103,811)
                                                                     ----------

   TOTAL USED FOR FINANCIAL ACTIVITIES                                 (302,409)
                                                                     ----------

   INCREASE (DECREASE) IN CASH BALANCE                                   18,081

Cash at Beginning of Year                                                79,682
                                                                     ----------

Cash at End of Year                                                  $   97,763
                                                                     ==========


See Accompanying Notes to Financial Statements.

                                      -7-



                                      100

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                   RECONCILIATION OF CASH FLOWS - OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998


Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities:


Net Income (Loss)                                                      $152,389
Adjustments to Reconcile Net Income (Loss)
    to Net Cash Provided by
    Operating Activities:
  Depreciation                                                          242,126
  Decrease (Increase) in:
    Accounts Receivable - Tenants                                        (2,979)
    Accounts Receivable - Section 8                                         (40)
    Prepaid Property Insurance                                                8
    Prepaid Mortgage Insurance                                               41
  Increase (Decrease) in:
    Accounts Payable - Trade                                            (11,428)
    Accounts Payable - Management Agent                                    (629)
    Accrued Interest Payable                                               (173)
    Accrued Wages                                                           687
    Rents Received in Advance                                               622
    Accrued Payroll Taxes                                                    75
                                                                       --------

Net Cash Provided (Used) by
Operating Activities                                                   $380,699
                                                                       ========




See Accompanying Notes to Financial Statements.

                                      -8-


                                      101

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                          FHA PROJECT NO.: 000-35090-PM
                      STATEMENT OF CASH FLOWS - PARTNERSHIP
                      FOR THE YEAR ENDED DECEMBER 31, 1998


OPERATING ACTIVITIES:

  Revenues
    Financial Income                                                   $     20

  Expenses
    Partnership Administration Fee                    $  10,000
    Interest on Sellers Notes                           188,598         198,598
                                                      ---------        --------

    TOTAL USED BY OPERATIONS                                           (198,578)
                                                                       --------

FINANCIAL ACTIVITIES:

  Surplus Cash Distributions                                            198,598
                                                                       --------

  INCREASE (DECREASE) IN CASH BALANCE                                        20

Cash at Beginning of Year                                                   870
                                                                       --------

Cash at End of Year                                                    $    890
                                                                       ========




See Accompanying Notes to Financial Statements.

                                      -9-




                                      102

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                     STATEMENT OF CASH FLOWS - PARTNERSHIP
                      FOR THE YEAR ENDED DECEMBER 31, 1998


Reconciliation of Net Income (Loss) to Net Cash Provided by Operating
Activities:


Net Income (Loss)                                                     ($171,980)
Adjustments to Reconcile Net Income (Loss)
      to Net Cash Provided (Used) by
      Operating Activities:
  Increase (Decrease) in:
   Accrued Interest - Sellers Notes                                     (26,598)
                                                                      ---------


  Net Cash Provided (Used) by
  Operating Activities                                                ($198,578)
                                                                      =========





See Accompanying Notes to Financial Statements.

                                      -10-





                                      103

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                          FHA PROJECT NO.: 000-35090-PM
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


1.       Summary of Significant Accounting Policies:

         a)       Organization:

                  The Virginia limited  partnership was organized on December 6,
                  1984 to own, maintain and operate a 198 unit apartment complex
                  (the project) located in Dumfries,  Virginia. The operation of
                  the  project  is  governed  under  Section  221 (d) (4) of the
                  National  Housing  Act  by a  regulatory  agreement  with  the
                  Federal Housing Administration. Such projects are regulated by
                  HUD as to operating  methods.  By amendment to the  regulatory
                  agreement  project rent charges were  decontrolled by HUD. The
                  Virginia  Housing  Development  Authority  (VHDA) controls the
                  rent charges pursuant to their regulatory agreement.

                  The Amended and Restated  Certificate  of Limited  Partnership
                  provides that profits and losses from  operations be allocated
                  1% to the Local General Partner,  1% to the Associate  General
                  Partner and 98% to the Investor Limited Partner.  However,  1)
                  the  allocation of deductions  in respect of  depreciation  on
                  property  contributed  to the  partnership  is to be allocated
                  according to the basis contributed by respective partners, and
                  2) deductions in respect of the  operating  deficit  guarantee
                  fee are to be allocated 1% to the  Associate  General  Partner
                  and  99% to the  Investor  Limited  Partner.  In the  case  of
                  certain  other events which are  specified in the  Partnership
                  Agreement (for example, a sale or refinancing of the property)
                  the allocation  may be different  than as described  above for
                  profits and losses from operations.

         b)       Depreciation:

                  Depreciation  is provided for in amounts  sufficient to relate
                  the  cost of  depreciable  assets  to  operations  over  their
                  estimated  service lives,  principally using the straight line
                  method  over 30 years  for  buildings,  5 years  for  portable
                  building equipment and 7 years for office equipment.

         c)       Income Taxes:

                  No provision  for income taxes has been made in the  financial
                  statements since these taxes are the personal responsibilities
                  of the partners.

         d)       Use of Estimates:

                  The  preparation  of financial  statements in conformity  with
                  generally accepted  accounting  principles requires management
                  to make estimates and assumptions that affect certain reported
                  amounts and  disclosures.  Accordingly,  actual  results could
                  differ from those estimates.


                                      -11-



                                      104


Notes to Financial Statements                                            Page 2


2.       Mortgage Payable:

         The 2% FHA insured mortgage, collateralized by property and building of
         the partnership,  to the Virginia Housing Development Authority and the
         Loyola Federal Savings & Loan requiring monthly payments as follows:

         Principal         Tax and Insurance     Replacement
         and Interest      Escrow                Reserve         Total
         ------------      ------                -------         -----
         $12,324           $6,687                $5,200          $24,211
         =======           ======                ======          =======

         The balance as of December 31, 1998 is:

                  Virginia Housing Development
                  Authority                                   $2,014,134
                  Loyola Federal Savings & Loan                  133,114
                                                              ----------
                                                              $2,147,248

         Amortization for the next five years is as follows:

                                1999                       $105,914
                                2000                       $108,044
                                2001                       $110,216
                                2002                       $112,450
                                2003                       $114,719
                 2004 and Thereafter                     $1,595,905


         The fair  value  of the  mortgage  payable  is  estimated  based on the
         current rates  offered for debt of the same  remaining  maturities.  At
         December 31, 1998, the fair value of the mortgage payable  approximates
         the amounts recorded in the financial statements.


3.       Related Party Transactions:

         The project is managed by Beltway  Management,  Inc., an affiliate of a
         general partner, pursuant to the management agreement approved by HUD.

         The  partnership  pays  a  8.6%  management  fee  based  on  the  gross
         collections  of the  project.  The  management  fee for the year  ended
         December 31, 1998 charged to operations was $108,967.

                                      -12-



                                      105

Notes to Financial Statements                                             Page 3


4.       Allowable Distribution:

         Although  this  project is "profit  motivated"  as defined by HUD,  the
         Virginia  Housing  Development  Authority  had  previously  limited the
         dividends.  During the calendar year, the Virginia Housing  Development
         Authority lifted this limitation.

         The  partnership  agreement  requires that cash flow from operations be
         distributed:  1) first $10,000 to  partnership  administrative  fee, 2)
         balance to the accrued  interest  payable on the sellers purchase money
         promissory notes.


5.       Notes Payable - Sellers:

         The purchase money promissory notes of $1,800,000 due December 11, 1999
         bearing  interest  at 9% per  annum  collateralized  by the  pledge  of
         limited and general partnership interests.

         All of the  purchase  money notes and accrued  interest  thereon may be
         paid without penalty prior to maturity.  However, it is not anticipated
         that  any  principal  payments  will  be made  prior  to  maturity  and
         therefore the principal balances are classified as long term.





                                      -13-



                                      106




                            SUPPLEMENTAL INFORMATION














                                      -14-







                                      107


                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                         FORM 92410 - SUPPORT SCHEDULE
                      FOR THE YEAR ENDED DECEMBER 31, 1998


Mortgage Entity Expense

  Interest Income - Partnership                                            ($20)
  Partnership Administration Fee                                         10,000
  Interest on Sellers Note                                              162,000
                                                                      ---------
                                                                      $ 171,980
                                                                      =========




                                      -15-





                                      108


                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                            SUPPLEMENTAL INFORMATION
                      FOR THE YEAR ENDED DECEMBER 31, 1998


Delinquent Tenants Accounts Receivable:

                                                    Number of     Amount Past
                                                     Tenants          Due

Delinquent 30 Days                                      24         $ 8,007
Delinquent 30-60 Days                                   11           1,966
Delinquent over 90 Days                                 16           2,722
                                                                   -------
                                                                   $12,695
                                                                   =======

Accounts Receivable (Other than from Regular Tenants):

Name of              Original Date         Terms        Original     Balance
Borrower                                                Amount       Due
- --------------------------------------------------------------------------------
                                                   
Coinmach             December 1998                       $2,850           $2,850
Laundry Income                                         ========        =========
                                      
                                                    
HUD - Section 8                                             $40              $40
                                                       ========        =========
                                              

Mortgage Escrow Deposits:

         Estimated amount required for
         future payment of:
                 City, State and County Taxes            $4,431
                 Property Insurance                      11,020
                 Mortgage Insurance                      10,505          $25,956
                                                      ---------

         Total Confirmed by Mortgagee                                     27,601
                                                                       ---------

         Amount Funded in Excess                                          $1,645
                                                                       =========


Tenant Security Deposits:

Tenant Security  deposits are held in a separate bank account in the name of the
project.


Compensation of Partners from Operations:

None




                                      -16-




                                      109

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                      SUPPLEMENTAL INFORMATION - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 1998



Reserve for Replacements:

In accordance with the provisions of the regulatory  agreement,  restricted cash
is held by Source One Mortgage  Services to be used for  replacement of property
with approval of HUD as follows:


Balance, January 1, 1998                                 $ 96,641

Monthly Deposits - $5,200 x 12 months                      62,400

Interest Earned                                             2,928

Disbursements - Approved Releases                         (71,861)

Disbursement - Interest (monthly)                          (1,222)
                                                         --------

Balance, December 31, 1998,
  confirmed by mortgagee                                 $ 88,886
                                                         ========



Accrued Taxes:
Federal Unemployment                Accrued Wages                         $ 54
FICA - Employers' Share             Accrued Wages                          515
Virginia Unemployment               Accrued Wages                          168
                                                                   -----------
                                                                          $737
                                                                   ===========


Identity of Interest Firms:

The project is managed by Beltway  Management,  Inc.,  an affiliate of a general
partner,  pursuant to a  management  agreement  submitted to the  Department  of
Housing and Urban Development.



Accounts Payable (Other than Trade Creditors):

None


                                      -17-





                                      110

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                      SUPPLEMENTAL INFORMATION - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 1998



Listing of Identity of Interest  Companies and  Activities  doing  Business with
Owner/Agent:


     Company Name                       Type of Service             Amount
                                                                   Received

Beltway Management, Inc.           Management of Property           $108,967

Beltway Management, Inc.           Computer Fee                     $9,504



Unauthorized Distributions from Operations:

None





                                      -18-






                                      111

                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                         FHA PROJECT NO.: 000-35090-PM
                      SUPPLEMENTAL INFORMATION - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 1998


Schedule of Funds in Financial Institution as of December 31, 1998:

A.  Funds held by Mortgagor, Regular Operating Accounts:              

    1)  NationsBank (checking)                                        $  2,834
    2)  NationsBank (checking)                                          60,837
    3)  Allegiance Bank (savings)                                       29,547
    4)  Susquehanna Bank (savings)                                       4,545
                                                                     ---------
    Operating Accounts, Total                                         $ 97,763
                                                                     ---------


B.  Funds held by Mortgagor in Trust, Tenant Security Deposits:

    1)  Allegiance Bank (checking)                                      68,762
                                                                     ---------
                                                                        68,762
                                                                     ---------


C.  Funds held by Mortgagee, in Trust

    1)  Tax & Insurance Escrow                                          27,601
    2)  Replacement Reserve                                             88,886
                                                                     ---------
    Funds held by Mortgagee, Total                                     116,487
                                                                     ---------


    TOTAL FUNDS IN FINANCIAL INSTITUTION                              $283,012
                                                                     =========




                                      -19-





                                      112



Computation of Surplus Cash,                  U.S. Department of Housing
Distributions and Residual                    and Urban Development
Receipts                                      Office of Housing
                                              Federal Housing Commissioner

Project Name                                  Fiscal Period Ended                        Project Number
Linden Park                                      12/31/98                                000-35090-PM
                                                                                                               

Part A - Compute Surplus Cash
Cash
  1.  Cash (Accounts 1110, 1120, 1191, 1192)                                                $  166,525        
  2.  Tenant subsidy vouchers due for period covered by financial statement                 $                 
  3.  Replacement Reserve Release                                                           $                 
       (a)  Total Cash (Add Lines 1, 2, and 3)                                                                        $  166,525
Current Obligations                                                                                                  
  4.  Accrued mortgage interest payable                                                     $    3,579               
  5.  Delinquent mortgage principal payments                                                $                        
  6.  Delinquent deposits to reserve for replacements                                       $                        
  7.  Accounts payable (due within 30 days)                                                 $   20,083               
  8.  Loans and notes payable (due within 30 days)                                          $                        
  9.  Deficient Tax Insurance or MIP Escrow Deposits                                        $                        
 10.  Accrued expenses (not escrowed)                                                       $   17,159               
 11.  Prepaid Rents (Account 2210)                                                          $      725               
 12.  Tenant security deposits liability (Account 2191)                                     $   38,830               
 13.  Other (Describe)                                                                      $                        
       (b)  Less Total Current Obligations (Add lines 4 through 13)                                                   $   80,376
       (c)  Surplus Cash (Deficiency) (Line (a) minus Line (b))                                                       $   86,149
Part B - Compute Distributions to Owners and Required Deposit to Residual Receipts                                   
  1.  Surplus Cash                                                                                                    $   86,149
Limited Dividend Projects                                                                                            
 2a.  Annual Distribution Earned During Fiscal Period Covered by Statement                  $                 
 2b.  Distribution Accrued and Unpaid as of the End of the Prior Fiscal Period              $
 2c.  Distributions Paid During Fiscal Period Covered by Statement                          $
  3.  Amount to be Carried on Balance Sheet as Distribution Earned but Unpaid               
       (Line 2a plus 2b minus 2c)                                                           $        0
  4.  Amount Available for Distribution During Next Fiscal Period                                                     $   86,149
  5.  Deposit Due Residual Receipts (Must be deposited with Mortgagee within 60 days after
       Fiscal Period ends)                                                                                            $        0
<FN>
Prepared By                                                                              Reviewed By
Loan Technician                    Date                                                  Loan Servicer       Date

                                                            Page 1 of 1                                      form HUD-93486 (8/95)
</FN>


                                                                -20-




                                                                113



                                             LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                                                   FHA PROJECT NO.: 000-35090-PM
                                                  CHANGES IN FIXED ASSET ACCOUNTS
                                                FOR THE YEAR ENDED DECEMBER 31, 1998



                                    ASSETS                                             ACCUMULATED DEPRECIATION
                 ----------------------------------------------    -----------------------------------------------------------------
                     Balance                          Balance        Balance          Current           Balance           Net Book
                    01/01/98       Additions         12/31/98       01/01/98         Provision          12/31/98            Value
                 ----------------------------------------------    -----------------------------------------------------------------

                                                                                                           
Land              $  456,828      $     --        $  456,828       $     --         $     --          $     --           $  456,828 
                                                                                                                        
Buildings          5,657,969            --         5,657,969        2,054,276          216,406         2,270,682          3,387,287
                                                                                                                        
Building                                                                                                                
Equipment            359,506            --           359,506          294,987           23,009           317,996             41,510
                                                                                                                        
Furniture &                                                                                                             
Equipment             23,264            --            23,264           23,008              171            23,179                 85
                                                                                                                        
Improvements          43,896          64,587         108,483              732            2,540             3,272            105,211
                 ----------------------------------------------    -----------------------------------------------------------------
                                                                                                                        
                  $6,541,463      $   64,587      $6,606,050       $2,373,003       $  242,126        $2,615,129         $3,990,921
                 ==============================================    =================================================================




                                                                -21-







                                                                114

              INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL
                  STRUCTURE (COMBINED REPORT APPLICABLE TO THE
                 FINANCIAL STATEMENTS AND HUD-ASSISTED PROGRAMS)

                          Independent Auditor's Report


To the Partners
Linden Park Associates Limited Partnership
Triangle, Virginia

We have  audited the  financial  statements  of Linden Park  Associates  Limited
Partnership  as of and for the year ended December 31, 1998, and have issued our
report  thereon  dated  January  21,  1999.  We have also  audited  Linden  Park
Associates  Limited  Partnership's  compliance with  requirements  applicable to
major HUD-assisted programs and have issued our report thereon dated January 21,
1999.

We conducted our audits in accordance with generally accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United States and the Consolidated  Audit Guide for Audits of HUD Programs ("the
Guide"), issued by the U.S. Department of Housing and Urban Development,  Office
of Inspector General in July 1993. Those standards and the Guide require that we
plan and perform the audits to obtain  reasonable  assurance  about  whether the
financial statements are free of material  misstatement and about whether Linden
Park  Associates  Limited  Partnership   complied  with  laws  and  regulations,
noncompliance with which would be material to a major HUD-assisted program.

The management of Linden Park Associates Limited  Partnership is responsible for
establishing and maintaining an internal control  structure.  In fulfilling this
responsibility,  estimates and  judgements by management  are required to assess
the  expected  benefits  and related  costs of the  internal  control  structure
policies and procedures.  The objectives of an internal control structure are to
provide management with reasonable, but not absolute,  assurance that assets are
safeguarded   against  loss  from  unauthorized  use  or  disposition  and  that
transactions  are executed in accordance  with  management's  authorization  and
recorded  properly  to  permit  the  preparation  of  financial   statements  in
accordance with generally accepted  accounting  principles and that HUD-assisted
programs are managed in compliance with applicable laws and regulations. Because
of  inherent   limitations   in  any   internal   control   structure,   errors,
irregularities or instances of noncompliance  may nevertheless  occur and not be
detected.  Also, projection of any evaluation of the structure to future periods
is subject to the risk that procedures may become inadequate  because of changes
in conditions or that the  effectiveness of the design and operation of policies
and procedures may deteriorate.

In planning  and  performing  our audits,  we obtained an  understanding  of the
design of relevant  internal  control  structure  policies  and  procedures  and
determined  whether they had been placed in operation,  and we assessed  control
risk in order to determine our auditing procedures for the purpose of expressing
our  opinions on the  financial  statements  of Linden Park  Associates  Limited
Partnership and on its compliance with specific  requirements  applicable to its
major  HUD-assisted  programs and to report on the internal control structure in
accordance  with the provisions of the Guide and not to provide any assurance on
the internal control structure.

                                      -22-






                                      115


We  performed  tests of  controls,  as  required by the Guide,  to evaluate  the
effectiveness of the design and operation of internal control structure policies
and procedures that we considered  relevant to preventing or detecting  material
noncompliance  with specific  requirements  applicable to Linden Park Associates
Limited Partnership's major HUD-assisted  programs.  Our procedures were less in
scope than would be  necessary  to render an  opinion on such  internal  control
structure  policies  and  procedures.  Accordingly,  we do not  express  such an
opinion.

This report is intended for the information of the audit committee,  management,
and the Department of Housing and Urban Development.  However,  this report is a
matter of public record and its distribution is not limited.



/s/ Grubman & Associates of Maryland, P.C.

Grubman & Associates of Maryland, P.C.
Gaithersburg, Maryland
January 21, 1999













                                      -23-








                                      116




            INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
                  REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS

                          Independent Auditor's Report


To the Partners
Linden Park Associates Limited Partnership
Triangle, Virginia

We have  audited the  financial  statements  of Linden Park  Associates  Limited
Partnership  as of and for the year ended  December 31, 1998 and have issued our
report thereon dated January 21, 1999.

We have also audited Linden Park  Associates  Limited  Partnership's  compliance
with the specific  requirements  governing federal financial  reports,  mortgage
status,  the  replacement  reserve,  the  residual  receipts,   tenant  security
deposits,  cash  receipts and  disbursements,  distributions  to owners,  tenant
application,   tenant  eligibility,   tenant  recertification,   and  management
functions,  that are applicable to each of its major  HUD-assisted  programs for
the year ended December 31, 1998.

We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing  Standards,  issued by the Comptroller General of the United
States,  and the  Consolidated  Audit  Guide for  Audits of HUD  Programs  ("the
Guide") issued by the U.S.  Department of Housing and Urban Development,  Office
of Inspector General in July 1993. Those standards and the Guide require that we
plan and perform the audit to obtain reasonable assurance about whether material
noncompliance  with  the  requirements  referred  to  above  occurred.  An audit
includes  examining,  on a test basis,  evidence  about  Linden Park  Associates
Limited  Partnership's  compliance with those requirements.  We believe that our
audit provides a reasonable basis for our opinion.

In our  opinion,  Linden Park  Associates  Limited  Partnership  complied in all
material respects,  with the requirements described above that are applicable to
each of its major HUD-assisted programs for the year ended December 31, 1998.

This report is intended for the information of the audit committee,  management,
and the Department of Housing and Urban Development.  However,  this report is a
matter of public record and its distribution is not limited.


/s/ Grubman & Associates of Maryland, P.C.

Grubman & Associates of Maryland, P.C.
Gaithersburg, Maryland
January 21, 1999



                                      -24-






                                      117


            INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
               REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING

                          Independent Auditor's Report



To the Partners
Linden Park Associates Limited Partnership
Triangle, Virginia

We have  audited  the  financial  statements  of Linden  and for the year  ended
December 31, 1998, and have issued our report thereon dated January 21, 1999.

We  have  also  applied  procedures  to  test  Linden  Park  Associates  Limited
Partnership's   compliance  with  the  Affirmative  Fair  Housing   requirements
applicable to its HUD assisted programs, for the year ended December 31, 1998.

Our procedures were limited to the applicable  compliance  requirement described
in the Consolidated  Audit Guide for Audits of HUD Programs ("the Guide") issued
by the U.S.  Department  of Housing and Urban  Development,  Office of Inspector
General in July 1993.  Our  procedure  was  substantially  less in scope than an
audit,  the  objective of which is the  expression  of an opinion on Linden Park
Associates  Limited  Partnership's  compliance with the Affirmative Fair Housing
requirements. Accordingly, we do not express such an opinion.

The  results of our tests  disclosed  no  instances  of  noncompliance  that are
required to be reported herein under the Guide.

This report is intended for the information of the audit committee,  management,
and the Department of Housing and Urban Development.  However,  this report is a
matter of public record and its distribution is not limited.



/s/ Grubman & Associates of Maryland, P.C.

Grubman & Associates of Maryland, P.C.
Gaithersburg, Maryland
January 21, 1999



                                      -25-




                                      118


                   INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
                      WITH LAWS AND REGULATIONS APPLICABLE
                           TO THE FINANCIAL STATEMENTS



To the Partners
Linden Park Associates Limited Partnership
Triangle, Virginia

We have  audited the  financial  statements  of Linden Park  Associates  Limited
Partnership  as of and for the year ended December 31, 1998, and have issued our
report thereon dated January 21, 1999.

We conducted our audit in accordance with generally  accepted auditing standards
and Government  Auditing  Standards,  issued by the  Comptroller  General of the
United  States.  Those  standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material misstatement.

Compliance with laws,  regulations,  contracts,  and grants applicable to Linden
Park  Associates  Limited  Partnership  is the  responsibility  of  Linden  Park
Associates Limited  Partnership's  management.  As part of obtaining  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement, we performed tests of Linden Park Associates Limited Partnership's
compliance with certain provisions of laws, regulations,  contracts, and grants.
However,  the  objective  of our audit of the  financial  statements  was not to
provide an opinion on overall compliance with such provisions.  Accordingly,  we
do not express such an opinion.

The  results of our tests  disclosed  no  instances  of  noncompliance  that are
required to be reported herein under Government Auditing Standards.

This report is intended for the information of the audit committee,  management,
and the Department of Housing and Urban Development.  However,  this report is a
matter of public record and its distribution is not limited.


/s/ Grubman & Associates of Maryland, P.C.

Grubman & Associates of Maryland, P.C.
Gaithersburg, Maryland
January 21, 1999




                                      -26-






                                      119



                   LINDEN PARK ASSOCIATES LIMITED PARTNERSHIP
                          FHA PROJECT NO.: 000-35090-PM
                    SCHEDULE OF FINDINGS AND QUESTIONED COSTS
                         COMPLIANCE AND INTERNAL CONTROL
                      FOR THE YEAR ENDED DECEMBER 31, 1998




         Findings/Noncompliance                         Questioned Cost

         None                                                N/A












                                      -27-





                                      120


                           Reznick Fedder & Silverman
            Certified Public Accountants - A Professional Corporation
       745 Atlantic Avenue - Suite 800 - Boston, Massachusetts 02111-2735
                   Phone (617) 423-5855 - Fax (617) 423-6651


                          INDEPENDENT AUDITORS' REPORT




To the Partners
Liberty Housing Partners Limited Partnership



        Our report on the 1998 and 1997 financial  statements of Liberty Housing
Partners  Limited  Partnership  is  included  on page 34 of this Form  10-K.  In
connection  with our audits of such financial  statements,  we have also audited
the related financial  statement schedule listed in the index on page 15 of this
Form 10-K. In our opinion,  the financial  statement schedule referred to above,
when considered in relation to the basic financial  statements taken as a whole,
presents  fairly,  in all  material  respects,  the  information  required to be
included therein.



                                               /s/ REZNICK FEDDER & SILVERMAN

Boston, Massachusetts                           REZNICK FEDDER & SILVERMAN
March 10, 1998

                                      121



                                            LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                                                (A Massachusetts Limited Partnership)

                           SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY
                                     LOCAL LIMITED PARTNERSHIPS IN WHICH REGISTRANT HAS INVESTED
                                                         At December 31,1998




                                                       Cost at Interest              Net         Gross Amount At Which Carried   
                                                       Acquisition Date          Improvements         At December 31, 1998      
                                                  -------------------------      Capitalized   ---------------------------------- 
                               Number     Total                  Buildings        Subsequent                 Buildings           
                                 Of       Encum-                    And              to                        And                  
Property                       Units     brances      Land     Improvements      Acquisition      Land    Improvements    Total    
- ------------------------------ -----   ----------  ----------  ------------      ------------- ---------- ------------- --------- 
                                                                                                        
Garden Apartment Complexes - Elderly Housing:
- ---------------------------------------------

Surry Manor Apartments,         44      $934,598     $50,239     $1,259,177        60,485      $54,839    $1,315,062    $1,369,901
   Dobson, NC
Glendale Manor Apartments,      50       855,216      53,652      1,187,181        12,640       53,652     1,199,821     1,253,473
   Clinton, SC
Fuquay-Varina Homes,            60       743,122      72,396      1,401,073        24,283       79,276     1,418,476     1,497,752
   Fuquay, NC
Williamston Homes,              50       586,767      60,967      1,096,520        37,586       81,067     1,114,006     1,195,073
   Williamston, NC
Oxford Homes, Oxford, NC        50       590,460      64,360      1,085,939        27,143       67,950     1,109,492     1,177,442

Garden Apartment Complexes - Low and Moderate Income Housing:
- -------------------------------------------------------------

Compass West Apartments,       200     3,110,997     397,105      4,822,593       325,778      469,020     5,076,456     5,545,476
   Austintown, OH           
Meadowwood Apartments,          80       788,895      90,146      1,337,358        39,379       90,146     1,376,737     1,466,883
   Tifton, GA               
Brierwood Apartments,           56       856,358      76,325      1,024,970       (26,931)      76,325       998,039     1,074,364
   Bainbridge, GA           
Pine Forest Apartments,         64     1,229,691      44,588      1,491,921         1,380       44,588     1,493,301     1,537,889
   Cairo, GA                
Osuna Apartments,              110     1,316,060     255,230      1,987,767        33,092      255,230     2,020,859     2,276,089
   Albuquerque, NM          
Linden Park Apartments         198     4,261,517     357,236      4,544,514     1,704,300      456,828     6,149,222     6,606,050
   Triangle, VA             
Brierwood II Apartments         18       369,139      27,288        423,387            --       27,288       423,387       450,675
   Bainbridge, GA         

Garden Apartment Complexes - Other Assisted Housing:
- ----------------------------------------------------

Fiddlers Creek Apartments,     160     2,178,611     275,147      3,156,533       426,765      389,973     3,468,472     3,858,445
   Winston Salem, NC         -----   -----------  ----------    -----------    ----------   ----------   -----------   -----------
Total Local Limited
   Partnership Real Estate   1,140   $17,821,431  $1,824,679    $24,818,933    $2,665,900   $2,146,182   $27,163,330   $29,309,512
                             =====   ===========  ==========    ===========    ==========   ==========   ===========   ===========
                                                                                                                  
                                                                               Life on Which
                                                                               Depreciation 
                                               Accumulated           Date       is Computed
Property                                       Depreciation         Built        (Years)
- ---------------------------------            ----------------      ---------   -------------
                                                                           
Garden Apartment Complexes - Elderly Housing:
- ---------------------------------------------

Surry Manor Apartments,                          $639,645            1981            3-30
   Dobson, NC                                                    
Glendale Manor Apartments,                        594,259            1980            3-30
   Clinton, SC                                                   
Fuquay-Varina Homes,                              701,170            1977            3-30
   Fuquay, NC                                                    
Williamston Homes,                                551,962            1978            3-30
   Williamston, NC                                               
Oxford Homes, Oxford, NC                          547,390            1978            3-30
                                                               
Garden Apartment Complexes - Low and Moderate Income Housing:
- -------------------------------------------------------------

Compass West Apartments,                        2,467,773            1974            7-30
   Austintown, OH                                                 
Meadowwood Apartments,                            799,404            1977           10-25
   Tifton, GA                                                     
Brierwood Apartments,                             554,634            1979           10-25
   Bainbridge, GA                                                 
Pine Forest Apartments,                           864,586            1980           10-25
   Cairo, GA                                                      
Osuna Apartments,                               1,029,692            1975            5-30
   Albuquerque, NM                                               
Linden Park Apartments                          2,615,129            1975            5-30
   Triangle, VA
Brierwood II Apartments                           248,379            1984           10-25
   Bainbridge, GA

Garden Apartment Complexes - Other Assisted Housing:
- ----------------------------------------------------

Fiddlers Creek Apartments,                      1,602,562            1977            5-30
   Winston Salem, NC                          -----------
Total Local Limited
     Partnership Real Estate                  $13,216,585
                                              ===========

The aggregate cost of the above properties for Federal income tax purposes at December 31, 1998 is $36,305,945.

A  reconciliation  of summarized  carrying value of the above  properties for the years ended December 31, 1998,  1997 and 1996 is a
follows:
                                                             1998                  1997                1996
                                                             ----                  ----                ----
                                                                                                  
Balance at beginning of year                              $28,802,902          $28,708,988          $27,292,762
Additions during the period - Improvements subse-
  equent to acquisition, net of dispositions                  506,610               93,914            1,416,226
                                                          -----------          -----------          -----------
Balance at end of year                                    $29,309,512          $28,802,902          $28,708,988
                                                          ===========          ===========          ===========

A reconciliation of summarized accumulated depreciation on the above properties for the years ended December 31, 1998, 1997 and 1996
is as follows:
                                                             1998                  1997                1996
                                                             ----                  ----                ----
                                                                                                    
Balance at beginning of year                             ($12,276,725)        ($11,329,357)        ($10,381,105)
Current provision for depreciation                           (939,860)            (947,368)            (948,252)
                                                          -----------          -----------          -----------
Balance at end of year                                   ($13,216,585)        ($12,276,725)        ($11,329,357)
                                                         ============         ============         ============


                                                                122



Item 9.  Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure

       None

       PART III

Item 10.  Directors and Executive Officers of the Partnership

       (a-b)  Identification of Directors and Executive Officers

       The Partnership  has no directors or officers.  As indicated in Item 1 of
this report, the Managing General Partner of the Partnership, as of December 27,
1995, is TNG Properties Inc., a Massachusetts corporation. Under the Partnership
Agreement,  the Managing General Partner is solely responsible for the operation
of the  Partnership's  properties,  and the  Limited  Partners  have no right to
participate  in the  control  of such  operations.  The  names  and  ages of the
directors and executive officers of the Managing General Partner, TNG Properties
Inc., are as follows as of March 18, 1999:


Name                     Title                                              Age
- ----                     -----                                              ---

Michael A. Stoller       President, Chief Executive Officer and Director    42

Wilma R. Brooks          Vice President, Treasurer and Director             41

Barbara A. Gilman        Vice President and Director of Management          49

Stephen D. Puliafico     Director                                           43

James C. Coughlin        Director                                           34

        The directors of the Managing  General Partner  generally are elected at
the annual meeting of stockholders  of the Managing  General  Partner,  to serve
until the next such annual meeting,  and until their successors are duly elected
and  qualified,  or until their  earlier  death,  resignation  or  removal.  The
executive  officers the Managing  General  Partner  generally are elected at the
annual meeting of directors of the Managing General Partner,  to serve until the
next such  annual  meeting,  and until  their  successors  are duly  elected and
qualified, or until their earlier death, resignation or removal.

        (c)  Identification of certain significant persons.

        None.

        (d)  Family relationship

        Mr. Stoller and Ms. Brooks are husband and wife.

                                      123


Item 10.  Directors and Executive Officers of the Partnership, continued

        (e)  Business experience

        Michael A.  Stoller is  President,  CEO,  and a Director of the Managing
General  Partner and The Newton Group,  LLC. From 1992 to 1994,  Mr. Stoller was
President and Director of MBMC, Inc. of Boston, and the Managing General Partner
of MB Management Company Limited  Partnership,  of Boston, a property management
company.  From 1983 to 1992, Mr.  Stoller was employed by REMAS,  Inc. and was a
Partner and Chief Operating Officer of MB Associates, which companies engaged in
the development and management of government  assisted housing  properties.  Mr.
Stoller holds a B.S. from Babson College and is a Certified Public Accountant.

        Stephen D. Puliafico is Director of the Managing General Partner.  Since
August 1995 Mr. Puliafico has been Executive Vice President of The Newton Group,
LLC. From 1994 to 1995 Mr. Puliafico was a Regional Sales Manager for Staples, a
seller  of  office  supplies.  From 1982 to 1994,  Mr.  Puliafico  was a General
Manager for Lechmere,  a discount  department store chain. Mr. Puliafico holds a
B.S. from Southeastern Massachusetts University.

        James C. Coughlin is a Director of the Managing General  Partner.  Since
September  1997 Mr.  Coughlin  has been Vice  President of  Acquisitions  of The
Newton Group,  LLC. Mr. Coughlin is responsible for corporate  finance,  project
finance, project acquisitions,  site selection and strategic planning. From 1995
to 1997,  Mr.  Coughlin  was a principal  of Peacock  Associates,  a real estate
consulting and financial  advisory firm.  From 1992 to 1995, Mr.  Coughlin was a
real estate finance  specialist for The Berkshire Group.  Mr. Coughlin  received
his B.A. from  Stonehill  College and his M.B.A.  from Suffolk  University.  Mr.
Coughlin  is a licensed  Massachusetts  real estate  broker and a  candidate  at
Boston University's Real Estate Finance Certificate Program.

        Wilma R.  Brooks is Vice  President,  Treasurer  and a  Director  of the
Managing  General  Partner and Vice President and Treasurer of The Newton Group,
LLC. From 1987 to 1993, Ms. Brooks was Chief Financial  Officer and Treasurer of
Congress Group Ventures,  Inc., of Cambridge,  Massachusetts,  a commercial real
estate developer.  Ms. Brooks holds a B.S. from the University of Vermont and is
a Certified Public Accountant.

        Barbara A. Gilman is Vice  President  and Director of  Management of the
Managing  General  Partner.  For the seven years  prior to joining the  Managing
General  Partner  in 1994,  Ms.  Gilman was  Director  of  Management  of Beacon
Management Company, of Boston, Massachusetts, a property management company. Ms.
Gilman holds a B.S. from Stonehill College.

(f-g)  Involvement in certain legal proceedings

        The  Partnership is not aware of any legal  proceedings  during the past
five years which may be material to the  evaluation of the ability and integrity
of any director or executive officer of the Managing General Partner.

                                      124

Compliance with Section 16(a) of the Exchange Act

        Section  16(a)  of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Partnership's officers and directors, and persons who own more than
ten percent of a registered class of the  Partnership's  equity  securities,  to
file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with
the Securities and Exchange Commission.

Item 10.  Directors and Executive Officers of the Partnership, continued

Such officers,  directors and ten-percent  security holders are also required by
applicable  rules to furnish the  Partnership  with copies of all Section  16(a)
reports they file.  Although the Partnership  has no directors or officers,  the
rules promulgated under ss. 16(a) provide that, for purposes of ss. 16, officers
of  the  Managing   General  Partner  are  considered  to  be  officers  of  the
Partnership.  Based solely on its review of the copies of such forms received by
it, or written  representation from certain reporting persons that no Forms 3, 4
or 5 were required for such persons.  The Partnership  believes that, during the
fiscal year ended  December  31, 1998,  its  officers  and ten percent  security
holders complied with all Section 16(a) filing  requirements  applicable to such
individuals.

Item 11.  Executive Compensation

        (a),  (b), (c), (d), and (e): The officers and directors of the Managing
General  Partner are compensated as employees of the Managing  General  Partner,
but receive no compensation  from the Partnership.  The Managing General Partner
and its  affiliates  receive  compensation  and expense  reimbursement  from the
Partnership,  as more  fully  described  in  Note 6 of the  Notes  to  Financial
Statements of the Partnership included in Item 8 of this report.

Item 12.  Security Ownership of Certain Beneficial Owners and 
          Management

        (a) Security ownership of certain beneficial owners and management.

        Because it is organized as a limited  partnership,  the  Partnership has
issued  no  securities  possessing  traditional  voting  rights.   However,  the
Partnership  Agreement  provides that certain  matters require the approval of a
majority in interest of the Limited Partners. Such matters include:

(1)    Amendment of the Limited Partnership Agreement;

(2)    Termination of the Partnership;

(3)    Removal of any General Partner; and

(4)    Sale of substantially all the assets of the Partnership.

                                      125

Item 12.  Security Ownership of Certain Beneficial Owners and 
          Management, continued

       Under the Partnership  Agreement,  the Managing General Partner is solely
responsible for the operation of the Partnership's  properties,  and the Limited
Partners  have no right to  participate  in the control of such  operations.  On
December 27, 1995,  the Former  Managing  General  Partner and Former  Associate
General  Partner  withdrew  from the  Partnership  and TNG  Properties  Inc. was
admitted in their place as Successor General Partner and became Managing General
Partner of the Partnership.

       No  person  or  group is known by the  Managing  General  Partner  to own
beneficially  more than 5% of the  Partnership's  21,566 Units outstanding as of
December 31, 1998.

       (b) Security ownership of management.

       By virtue of its organization as a limited  partnership,  the Partnership
has no officers or  directors.  The Former  Associate  General  Partner owned 10
Units, which have been assigned,  as of January 1, 1997, to the current Managing
General Partner.

       (c) Changes in Control.

       None.

Item 13.  Certain Relationships and Related Transactions

       (a), (b), and (c): The Managing General Partner of the Partnership is TNG
Properties,  Inc.,  a  Massachusetts  corporation.  See Note 6 to the  Financial
Statements  of  the  Partnership  contained  in  Item  8 of  this  report  for a
description of the fees and expense reimbursement paid by the Partnership to the
current or former Managing  General  Partner and its  affiliates.  Directors and
executive  officers of TNG  Properties,  Inc. are  identified in Item 10 of this
report.  During  1998,  the  Partnership  was not  involved  in any  transaction
involving any of these directors or officers of the Corporation or any member of
the immediate family of these individuals,  nor did any of these persons provide
services  to  the  Partnership  for  which  they  received  direct  or  indirect
remuneration.  Similarly,  there  exists no  business  relationship  between the
Partnership  and  any of the  directors  or  officers  of the  Managing  General
Partner,  nor were any of the individuals  indebted to the Partnership.  Liberty
LGP,  formerly an  affiliate  of the  predecessor  general  partners  and now an
affiliate  of the  Managing  General  Partner is  entitled  to  receive  certain
administrative fees from the Local Limited  Partnerships.  At January 1, 1998 an
aggregate  of  $121,679 in accrued  and unpaid  administrative  fees were due to
Liberty  LGP from the Local  Limited  Partnerships.  During  1998,  Liberty  LGP
accrued $68,500 in  administrative  fees due from the Local Limited  Partnership
and  received  payment  aggregating  $65,762.  At December  31, 1998 accrued and
unpaid  administrative fees aggregated $124,417.  Liberty LGP is not entitled to
interest on the accrued and unpaid amount.

                                      126



                                     PART IV

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

(a)  1. Financial Statements

              See Index included in Item 8, on page 15 of this Report.

        2.    Financial Statement Schedules

              See  Index  included  in Item 8 on page  15 of this  Report  for
              schedules applicable to registrant.

        3.    Exhibits

              See (c) below

(b)  Reports on Form 8-K

        None


(c)  Index to Exhibits

        Except as set forth below,  all  Exhibits to Form 10-K,  as set forth in
        Item 601 of Regulation S-K, are not applicable.



                                      127



Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

4.                     Instruments defining the rights of security holders:

4.1                    The Amended and Restated Certificate of Limited            Exhibit 4.1 to the registrants Annual
                       Partnership                                                Report on Form 10-K, for the period
                                                                                  ended December 31, 1995.

4.2                    First Amendment to Second Amended and Restated             Exhibit 4.2 to the registrants Annual
                       Certificate of Limited Partnership                         Report on Form 10-K, for the period
                                                                                  ended December 31, 1995.

*4.39                  Amended Agreement of Limited Partnership                   Exhibit A to the prospectus contained
                                                                                  in Form S-11 Registration Statement
                                                                                  (File 2-90617)

4.4                    Amendment to the Amended Agreement of Limited              Exhibit 4.4 to the registrants Annual
                       Partnership (withdrawal of Liberty Real Estate             Report on Form 10-K, for the period
                       Corporation and Admission of TNG Properties Inc.           ended December 31, 1995.

4.5                    Amendment to the Amended Agreement of Limited              Exhibit 4.5 to the registrants Annual
                       Partnership (withdrawal of LHP Associates Limited          Report on Form
                       Partnership)                                               10-K, for the period ended December 31,
                                                                                  1995.

10.                    Material Contracts and Other Documents

10.4                   Documents Relating to Partnership Interest in Surry
                       Manor, Ltd.

*10.4 (a)              Escrow Agreement dated August 31, 1984 between Billy P.    Exhibit 10.4 (a) Effective to
                       Shadrick, Bobby Ray Badgett, Housing Projects, Inc. and    Post-Amendment No. 1 to Form S-11
                       Liberty Housing Partners Limited Partnership.              Registration Statement (File 2-90617)

*10.4 (b)              Amended and Restated Certificate and Agreement of          Exhibit 10.4 (b) to Post- Effective
                       Limited Partnership of Surry Manor, Ltd.                   Amendment No. 1 to Form S-11
                                                                                  Registration Statement (File 2-90617)

                                                                128


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

 *10.4 (c)             Promissory Notes dated August 31, 1984 from Liberty        Exhibit 10.4 (c) to Post-Effective Amendment No.
                       Housing Partners Limited Partnership to Billy P.           1 to Form S-11 Registration Statement (File
                       Shadrick and from Liberty Housing Partners Limited         2-90617)
                       Partnership to Bobby Joe Davis.

 *10.4 (d)             Purchase Money Notes dated August 31, 1984 from Liberty    Exhibit 10.4 (d) to Post-Effective Amendment No.
                       Housing Partners to Billy P. Shadrick and from Liberty     1 to Form S-11 Registration Statement (File
                       Housing Partners Limited Partnership to Bobby Joe Davis.   2-90617)

 *10.4 (e)             Pledge Agreements dated August 31, 1984 between Billy P.   Exhibit 10.4 (e) to Post-Effective Amendment No.
                       Shadrick and Liberty Housing Partners Limited              1 to Form S-11 Registration Statement (File
                       Partnership and between Bobby Joe Davis and Liberty        2-90617)
                       Housing Partners Limited Partnership.

 *10.4 (f)             Deed of Trust Note dated July 11, 1980 from Surry Manor,   Exhibit 10.4 (f) to Post-Effective Amendment No.
                       Ltd. to Highland Mortgage Company and related Deed of      1 to Form S-11 Registration Statement (File
                       Trust dated July 11, 1980 among Surry Manor,  Ltd., James
                       2-90617) M. Tanner, and Highland Mortgage Company.

 *10.4 (g)             Regulatory Agreement dated July 11, 1980 between Surry     Exhibit 10.4 (g) to Post-Effective Amendment No.
                       Manor, Ltd. and the Secretary of Housing and Urban         1 to Form S-11 Registration Statement (File
                       Development.                                               2-90617)

 *10.4 (h)             Housing Assistance Payments Contract dated April 9, 1981   Exhibit 10.4 (h) to Post-Effective Amendment No.
                       between Surry Manor, Ltd. and the Secretary of Housing     1 to Form S-11 Registration Statement (File
                       and Urban Development.                                     2-90617)

 10.5                  Documents Relating to Partnership Interest in Glendale
                       Manor Apartments

 *10.5 (a)             Escrow Agreement dated August 31, 1984 between Billy P.    Exhibit 10.5 (a) to Post-Effective Amendment No.
                       Shadrick, Bobby Ray Badgett, Housing Projects, Inc. and    1 to Form S-11 Registration Statement (File
                       Liberty Housing Partners Limited Partnership.              2-90617)

 *10.5 (b)             Amended and Restated Certificate and Agreement of          Exhibit 10.5 (b) to Post-Effective Amendment No.
                       Limited Partnership of Glendale Manor Apartments.          1 to Form S-11  Registration Statement (File
                                                                                  2-90617)
                                                                129


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           
*10.5 (c)              Promissory Notes dated August 31, 1984 from Liberty        Exhibit 10.5 (c) to Post-Effective Amendment No.
                       Housing Partners Limited Partnership to Billy P.           1 to Form S-11 Regis-tration Statement (File
                       Shadrick, from Liberty Housing Partners Limited            2-90617)
                       Partnership to Bobby Joe Davis and from Liberty Housing
                       Partners Limited Partnership to Bobby R. Badgett.

*10.5 (d)              Purchase Money Notes dated August 31, 1984 from Liberty    Exhibit 10.5 (d) to Post-Effective Amendment No.
                       Housing Partners Limited Partnership to Billy P.           1 to Form S-11 Registration Statement (File
                       Shadrick and from Liberty Housing Partners Limited         2-90617)
                       Partnership to Bobby Joe Davis.

*10.5 (e)              Pledge Agreements dated August 31, 1984 between Billy P.   Exhibit 10.5 (e) to Post-Effective Amendment No.
                       Shadrick and Liberty Housing Partners Limited              1 to Form S-11 Regis-triton Statement (File
                       Partnership, between Bobby Joe Davis and Liberty Housing   2-90617)
                       Partners Limited Partnership and between Bobby R.
                       Badgett and Liberty Housing Partners Limited Partnership.

*10.5 (f)              Mortgage  Note dated  April 11,  1979 from  Glendale       Exhibit 10.5 (f) to  Post-Effective Amendment No.
                       Manor Apartments to Cincinnati  Mortgage  Corporation and  1 to Form S-11  Registration  Statement (File
                       related Mortgage dated April 11, 1979 between Glendale     2-90617)         
                       Manor Apartments and Cincinnati Mortgage Corporation.

*10.5 (g)              Regulatory Agreement dated April 11, 1979 between          Exhibit 10.5 (g) to Post-Effective Amendment No.
                       Glendale Manor Apartments and the Secretary of Housing     1 to Form S-11 Registration Statement (File
                       and Urban Development.                                     2-90617)

*10.5 (h)              Housing Assistance Payments Contract dated May 30, 1980    Exhibit 10.5 (h) to Post-Effective Amendment No.
                       between Glendale Manor Apartments and the Secretary of     1 to Form S-11 Registration Statement (File
                       Housing and Urban Development                              2-90617)

10.6                   Documents Relating to Partnership Interest in Fiddlers
                       Creek Apartments

*10.6 (a)              Escrow Agreement dated September 28, 1984 between Billy    Exhibit 10.6 (a) To Post-Effective Amendment No.
                       P. Shadrick, Bobby Ray Badgett, J. Thomas Dotson and       1 to Form S-11 Registration Statement (File
                       Liberty Housing Partners Limited Partnership.              2-90617)

                                                                130


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.6 (b)              Amended and Restated Certificate and Agreement of          Exhibit 10.6 (b) to Post-Effective Amendment No.
                       Limited Partnership of Fiddlers Creek Apartments.          1 to Form S-11 Registration Statement (File
                                                                                  2-90617)

*10.6 (c)              Promissory Note form dated September 28, 1984, Purchase    Exhibit 10.6 (c) to Post Effective Amendment No.
                       Money Note form dated September 28, 1984, Pledge           1 to Form S-11 Registration Statement (File
                       Agreement form dated September 28, 1984 and Schedule of    2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge
                       Agreements between Liberty Housing Partners Limited
                       Partnership and the partners of Fiddlers Creek
                       Apartments.

*10.6 (d)              Deed of Trust Note dated September 1, 1975 from Fiddlers   Exhibit 10.6 (d) to Post-Effective Amendment No.
                       Creek Apartments to Guaranty Mortgage Company of           1 to Form S-11 Registration Statement (File
                       Nashville  and related  Deed of Trust dated  September 1,  2-90617)  
                       1975  between  Fiddlers  Creek  Apartments  and
                       Guaranty Mortgage Company of Nashville.

*10.6 (e)              Regulatory Agreement dated September 1, 1975 between       Exhibit 10.6 (e) to Post-Effective Amendment No.
                       Fiddlers Creek Apartments and the Secretary of Housing     1 to Form S-11 Registration Statement (File
                       and Urban Development.                                     2-90617)

10.7                   Documents Relating to Partnership Interest Fuquay-Varina
                       Homes for the Elderly, Ltd.

*10.7 (a)              Escrow Agreement dated September 28, 1984 between Billy    Exhibit 10.7 (a) to Post-Effective Amendment No.
                       P. Shadrick, Bobby Ray Badgett and Liberty Housing         1 to Form S-11 Registration Statement (File
                       Partners Limited  Partnership.                             2-90617)


                                                                131

Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.7 (b)              Amended and Restated Certificate and Agreement of          Exhibit 10.7 (b) to Post-Effective Amendment No.
                       Limited Partnership of Fuquay-Varina Homes for the         1 to Form S-11 Registration Statement (File
                       Elderly, Ltd.                                              2-90617)

*10.7 (c)              Promissory Note form dated September 28, 1984, Purchase    Exhibit 10.7 (c) to Post-Effective Amendment No.
                       Money Note form dated September 28, 1984, Pledge           1 to Form S-11 Registration Statement (File
                       Agreement form dated September 28, 1984 and Schedule of    2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge
                       Agreements between Liberty Housing Partners Limited
                       Partnership and the partners of Fuquay-Varina Apartments.

*10.7 (d)              Deed of Trust Note dated May 23, 1977 from Fuquay-Varina   Exhibit 10.7 (d) to Post-Effective Amendment No.
                       Homes for Elderly, Ltd. to Cincinnati Mortgage             1 to Form S-11 Registration Statement (File
                       Corporation and related Deed of Trust dated May 23, 1977   2-90617)
                       between Fuquay-Varina Homes for the Elderly, Ltd. and
                       Cincinnati Mortgage Corporation.

*10.7 (e)              Regulatory Agreement dated May 23, 1977 between            Exhibit 10.7 (e) to Post-Effective Amendment No.
                       Fuquay-Varina Homes for the Elderly, Ltd. and the          1 to Form S-11 Registration Statement (File
                       Secretary of Housing and Urban Development.                2-90617)

*10.7 (f)              Housing Assistance Payments Contract dated May 3, 1978     Exhibit 10.7 to
                       between Fuquay-Varina Homes for the Elderly, Ltd. and      Post-Effective
                       the Secretary of Housing and Urban Development.            Amendment No. 1 to
                                                                                  Form S-11 Registration (File 2-90617)

10.8                   Documents Relating to Partnership Interest in Oxford
                       Homes for the Elderly, Ltd.

                                                                132


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.8 (a)              Escrow Agreement dated September 28, 1984 between Billy    Exhibit 10.8 (a) to Post-Effective Amendment No.
                       P. Shadrick, Bobby Ray Badgett and Liberty Housing         1 to Form S-11 Registration Statement (File
                       Partners Limited Partnership.                              2-90617)

*10.8 (b)              Amended and Restated Certificate and Agreement of          Exhibit 10.8 (b) to Post-Effective Amendment No.
                       Limited Partnership of Oxford Homes for the Elderly, Ltd.  1 to Form S-11 Registration Statement (File
                                                                                  2-90617)

*10.8 (c)              Promissory Note form dated September 28, 1984, Purchase    Exhibit 10.8 (c) to Post-Effective Amendment No.
                       Money Note form dated September 28, 1984, Pledge           1 to Form S-11 Registration Statement (File
                       Agreement form dated September 28, 1984 and Schedule of    2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge
                       Agreements between Liberty Housing Partners Limited
                       Partnership and the partners of Oxford Homes for the
                       Elderly, Ltd.

*10.8 (d)              Mortgage Note dated May 23, 1977 from Oxford Homes for     Exhibit 10.8 (d) to Post-Effective Amendment No.
                       the Elderly, Ltd. to Cincinnati Mortgage Corporation and   1 to Form S-11 Registration Statement (File
                       related Mortgage dated May 23, 1977 between Oxford Homes   2-90617)
                       for the Elderly, Ltd. and Cincinnati Mortgage
                       Corporation.

*10.8 (e)              Regulatory Agreement dated May 23, 1977 between Oxford     Exhibit 10.8 (e) to Post-Effective Amendment No.
                       Homes for the Elderly, Ltd. and the Secretary of Housing   1 to Form S-11 Registration Statement (File
                       and Urban Development.                                     2-90617)

*10.8 (f)              Housing Assistance Payments Contract dated July 3, 1978    Exhibit 10.8 (f) to Post-Effective Amendment No.
                       between Oxford Homes for the Elderly, Ltd. and the         1 to Form S-11 Registration Statement (File
                       Secretary of Housing and Urban Development.                2-90617)

                                                                133




Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

10.9                   Documents Relating to Partnership Interest in
                       Williamston Homes for the Elderly, Ltd.

*10.9 (a)              Escrow Agreement dated September 28, 1984 between Billy    Exhibit 10.9 (a) to Post-Effective Amendment No.
                       P. Shadrick, Bobby Ray Badgett and Liberty Housing         1 to Form S-11 Registration Statement (File
                       Partners Limited Partnership.                              2-90617)

*10.9 (b)              Amended and Restated Certificate and Agreement of          Exhibit 10.9 (b) to Post-Effective Amendment No.
                       Limited Partnership of Williamston Homes for the           1 to Form S-11 Registration Statement (File
                       Elderly, Ltd.                                              2-90617)

*10.9 (c)              Promissory Note form dated September 28, 1984, Purchase    Exhibit 10.9 (c) to Post-Effective Amendment No.
                       Money Note form dated September 28, 1984, Pledge           1 to Form S-11 Registration Statement (File
                       Agreement form dated September 28, 1984 and Schedule of    2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge
                       Agreements between Liberty Housing Partners Limited
                       Partnership and the partners of Williamston Homes for
                       the Elderly, Ltd.

*10.9 (d)              Deed of Trust Note dated May 24, 1977 from Williamston     Exhibit 10.9 (d) to Post-Effective Amendment No.
                       Homes for the Elderly, Ltd. and Cincinnati Mortgage        1 to Form S-11 Registration Statement (File
                       Corporation and related Deed of Trust between              2-90617)
                       Williamston Homes for the Elderly, Ltd. and Cincinnati
                       Mortgage Corporation.

*10.9 (e)              Regulatory Agreement dated May 24, 1977 between            Exhibit 10.9 (e) to Post-Effective Amendment No.
                       Williamston Homes for the Elderly, Ltd. and the            1 to Form S-11 Registration Statement (File
                       Secretary of Housing and Urban Development.                2-90617)

*10.9 (f)              Housing Assistance Payments Contract dated September 19,   Exhibit 10.9 (f) to Post-Effective Amendment No.
                       1978 between Williamston Homes for the Elderly, Ltd. and   1 to Form S-11 Registration Statement (File
                       the Secretary of Housing and Urban Development.            2-90617)

                                                                134


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               ----------------------------------------------------      -------------------------------
                                                                           

10.10                  Documents Relating to Partnership Interest in
                       Austintown Associates

*10.10 (a)             Escrow Agreement dated October 30, 1984 between James      Exhibit 10.10 (a) to Post-Effective Amendment No.
                       P. Manchi, Robert P. Baker, First March Realty             1 to Form S-11 Registration Statement (File
                       Corporation and Liberty Housing Partners Limited           2-90617)
                       Partnership.                                               
                                                                                  
*10.10 (b)             Amended and Restated Certificate of Formation and          Exhibit 10.10 (b) to Post-Effective Amendment No.
                       Agreement of Limited Partnership of Austintown             1 to Form S-11 Registration Statement (File
                       Associates.                                                2-90617)
                                                                                  
*10.10 (c)             Promissory Note form dated October 30, 1984, Purchase      Exhibit 10.10 (c) to Post-Effective Amendment No.
                       Money Note form dated October 30, 1984, Pledge             1 to Form S-11 Registration Statement (File
                       Agreement form dated October 30, 1984 and Schedule of      2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge          
                       Agreements between Liberty Housing Partners Limited        
                       Partnership and the partners of Austintown Associates.     
                                                                                  
*10.10 (d)             Mortgage Note dated February 22, 1973 from Austintown      Exhibit 10.10 (d) to Post-Effective Amendment No.
                       Associates to Metropolitan Mortgage Corporation of         1 to Form S-11 Registration Statement (File
                       Ohio, Supplementary Mortgage Note dated November, 1975     2-90617)
                       from Austintown Associates to The Cleveland Trust          
                       Company, Supplementary Mortgage Note dated March 24,       
                       1978 from Austintown Associates to Diversified             
                       Financial & Mortgage Services, Inc. and the related        
                       Mortgage dated February 22, 1973 between Austintown        
                       Associates and Metropolitan Mortgage Corporation of        
                       Ohio.                                                      
                                                                135             


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.10 (e)             Regulatory Agreement dated February 22, 1973 between       Exhibit 10.10 (e) to Post-Effective Amendment No.
                       Austintown Associates and the Secretary of Housing and     1 to Form S-11 Registration Statement (File
                       Urban Development.                                         2-90617)
                                                                                  
*10.10 (f)             Housing Assistance Payments Contracts dated December       Exhibit 10.10 (f) to Post-Effective Amendment No.
                       1, 1983 and June 1, 1984 between Austintown Associates     1 to Form S-11 Registration Statement (File
                       and the Secretary of Housing and Urban Development.        2-90617)
                                                                                  
10.11                  Documents Relating to Partnership Interest in              
                       Meadowwood, Ltd.                                           
                                                                                  
*10.11 (a)             Second Amended and Restated Certificate and Agreement      Exhibit 10.11 (a) to Post-Effective Amendment No.
                       of Limited Partnership of Meadowwood, Ltd.                 1 to Form S-11 Registration Statement (File
                                                                                  2-90617)
                                                                                  
*10.11 (b)             Promissory Note form dated October 30, 1984, Purchase      Exhibit 10.11 (b) to Post-Effective Amendment No.
                       Money Note form dated October 30, 1984, Pledge             1 to Form S-11 Registration Statement (File
                       Agreement form dated October 30, 1984 and Schedule of      2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge          
                       Agreements between Liberty Housing Partners Limited        
                       Partnership and the partners of Meadowwood, Ltd.           
                                                                                  
*10.11 (c)             Promissory Notes dated October 3, 1977 and October 25,     Exhibit 10.11 (c) to Post-Effective Amendment No.
                       1978 from Meadowwood, Ltd. to Farmers Home                 1 to Form S-11 Registration Statement (File
                       Administration and related Deed to Secure Debt dated       2-90617)
                       October 25, 1978 between Meadowwood, Ltd. and Farmers      
                       Home Administration.                                       
                                                                                  
*10.11 (d)             Farmers Home Administration Loan Agreement between         Exhibit 10.11 (d) to Post-Effective Amendment No.
                       Meadowwood, Ltd. and Farmers Home Administration.          1 to Form S-11 Registration Statement (File
                                                                                  2-90617)
                                                                136

Exhibit                                                                           Page Number or Filing From Which Incorporated by
Numbers                                        Description                        Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.11 (e)             Interest Credit and Rental Assistance Agreement dated      Exhibit 10.11 (e) to Post-Effective Amendment No.
                       October 1, 1983 between Meadowwood, Ltd. and the           1 to Form S-11 Registration Statement (File
                       Farmers Home Administration.                               2-90617)
                                                                                  
*10.12                 Documents Relating to Partnership Interest in              
                       Brierwood, Ltd.                                            
                                                                                  
*10.12 (a)             Second Amended and Restated Certificate and Agreement      Exhibit 10.12 (a) to Post-Effective Amendment No.
                       of Limited Partnership of Brierwood, Ltd.                  1 to Form S-11 Registration Statement (File
                                                                                  2-90617)
                                                                                  
*10.12 (b)             Promissory Note form dated October 30, 1984, Purchase      Exhibit 10.12 (b) to Post-Effective Amendment No.
                       Money Note form dated October 30, 1984, Pledge             1 to Form S-11 Registration Statement (File
                       Agreement form dated October 30, 1984 and Schedule of      2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge          
                       Agreements between Liberty Housing Partners Limited        
                       Partnership and the partners of Brierwood, Ltd.            
                                                                                  
*10.12 (c)             Promissory Note dated May 4, 1979 from Brierwood, Ltd.     Exhibit 10.12 (c) to Post-Effective Amendment No.
                       to Farmers Home Administration and related Deed to         1 to Form S-11 Registration Statement (File
                       Secure Debt dated May 4, 1979 between Brierwood, Ltd.      2-90617)
                       and Farmers Home Administration.                           
                                                                                  
*10.12 (d)             Farmers Home Administration Loan Agreement dated June      Exhibit 10.12 (d) to Post-Effective Amendment No.
                       15, 1978 between Brierwood, Ltd. and Farmers Home          1 to Form S-11 Registration Statement (File
                       Administration.                                            2-90617)
                                                                                  
*10.12 (e)             Interest Credit and Rental Assistance Agreement dated      Exhibit 10.12 (e) to Post-Effective Amendment No.
                       October 1, 1980 between Brierwood, Ltd. and the            1 to Form S-11 Registration Statement (File
                       Farmers Home Administration.                               2-90617)
                                                                137             


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

10.13                  Documents Relating to Partnership Interest in Pine         
                       Forest Apartments, Ltd.                                    
                                                                                  
*10.13 (a)             Second Amended and Restated Certificate and Agreement      Exhibit 10.13 (a) to Post-Effective Amendment No.
                       of Limited Partnership of Pine Forest Apartments, Ltd.     1 to Form S-11 Registration Statement
                                                                                  (File 2-90617)
                                                                                  
*10.13 (b)             Promissory Note form dated October 30, 1984, Purchase      Exhibit 10.13 (b) to Post-Effective Amendment No.
                       Money Note form dated October 30, 1984, Pledge             1 to Form S-11 Registration Statement (File
                       Agreement form dated October 30, 1984 and Schedule of      2-90617)
                       Promissory Notes, Purchase Money Notes and Pledge          
                       Agreements between Liberty Housing Partners Limited        
                       Partnership and the partners of Pine Forest                
                       Apartments, Ltd.                                           
                                                                                  
*10.13 (c)             Promissory Note dated August 6, 1980 from Pine Forest      Exhibit 10.13 (c) to Post-Effective Amendment No.
                       Apartments, Ltd. to Farmers Home Administration and        1 to Form S-11 Registration Statement (File
                       related Deed to Secure Debt dated August 6, 1980           2-90617)
                       between Pine Forest Apartments, Ltd. and Farmers Home      
                       Administration.                                            
                                                                                  
*10.13 (d)             Farmers Home Administration Loan Agreement dated May       Exhibit 10.13 (d) to Post-Effective Amendment No.
                       10, 1979 between Pine Forest Apartments, Ltd. and          1 to Form S-11 Registration Statement (File
                       Farmers Home Administration.                               2-90617)
                                                                                  
*10.13 (e)             Interest Credit and Rental Assistance Agreement dated      Exhibit 10.13 (e) to Post-Effective Amendment No.
                       June 1, 1982 between Pine Forest Apartments, Ltd. and      1 to Form S-11 Registration Statement (File
                       the Secretary of Housing and Urban Development.            2-90617)
                                                                                  
10.14                  Documents Relating to Partnership Interest in Osuna        
                       Apartments Company                                         
                                                                                
                                                                138


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.14 (a)             Amended and Restated Certificate of Formation and          Exhibit 10.14 (a) to Post-Effective Amendment No.
                       Agreement of Limited Partnership of Osuna Apartments       2 To Form S-11 Registration Statement (File
                       Company.                                                   2-90617)
                                                                                  
*10.14 (b)             Promissory Note form dated November 27, 1984, Purchase     Exhibit 10.14 (b) to Post-Effective Amendment No.
                       Money Note form dated November 27, 1984, Pledge            2 to Form S-11 Registration Statement (File
                       Agreement dated November 27, 1984 between Liberty          2-90617)
                       Housing Partners Limited Partnership, Liberty LGP          
                       Limited Partnership and the Sovereign Corporation, and     
                       Schedule of Promissory Notes and Purchase Money Notes      
                       between Liberty Housing Partners Limited Partnership       
                       and the partners of Osuna Apartments Company.              
                                                                                  
*10.14 (c)             Mortgage Note dated March 5, 1974 from Osuna               Exhibit 10.14 (c) to Post-Effective Amendment No.
                       Apartments Company to Housing America Mortgage Co.,        2 to Form S-11 Registration Statement (File
                       Inc. and related Mortgage dated March 5, 1974 from         2-90617)
                       Osuna Apartments Company to Housing Mortgage Co., Inc.     
                                                                                  
*10.14 (d)             Regulatory Agreement dated March 5, 1974 between Osuna     Exhibit 10.14 (d) to Post Effective Amendment No.
                       Apartments Company and the Secretary of Housing and        2 to Form S-11 Registration Statement (File
                       Urban Development.                                         2-90617)
                                                                                  
*10.14 (e)             Housing Assistance Payments Contracts dated August 7,      Exhibit 10.14 (e) to Post-Effective Amendment No.
                       1984 between Osuna Apartments Company and the              2 to Form S-11 Registration Statement (File
                       Secretary of Housing and Urban Development.                2-90617)
                                                                                  
10.15                  Documents Relating to Partnership Interest in Linden       
                       Park Associates Limited Partnership                        
                                                                                
                                                                139



Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.15 (a)             Certificate and Agreement of Limited Partnership of        Exhibit 10.15 (a) to Post-Effective Amendment No.
                       Linden Park Associates Limited Partnership.                2 to Form S-11 Registration Statement (File
                                                                                  2-90617)
                                                                                  
*10.15 (b)             Promissory Note form dated December 11, 1984, Purchase     Exhibit 10.15 (b) to Post-Effective Amendment No.
                       Money Note form dated December 11, 1984, Pledge            2 to Form S-11 Registration Statement (File
                       Agreement dated December 11, 1984 by and between           2-90617)
                       Liberty LGP Limited Partnership, John L. Wagner,           
                       Liberty Housing Partners Limited Partnership and           
                       Graham Park Venture, and Schedule of Promissory Notes      
                       and Purchase Money Notes between Linden Park               
                       Associates Limited Partnership and Graham Park Venture.    
                                                                                  
*10.15 (c)             Deed of Trust Note and related Deed of Trust both          Exhibit 10.15 (c) to Post-Effective Amendment No.
                       dated December 5, 1972 and Allonge of January 29,          2 to Form S-11 Registration Statement (File
                       1976, Supplemental Deed of Trust both dated December       2-90617)
                       17, 1974 and Allonge of January 29, 1976, and Second       
                       Supplemental Deed of Trust Note and related Second         
                       Supplemental Deed of Trust both dated January 29, 1976     
                       all documents between Graham Park Venture and Loyola       
                       Federal Savings and Loan Association.                      
                                                                                  
*10.15 (d)             Loan Assumption Agreement dated March 23, 1976 between     Exhibit 10.15 (d) to Post-Effective Amendment No.
                       Pennamco, Inc. and Virginia Housing Development            2 to Form S-11 Registration Statement (File
                       Authority.                                                 2-90617)
                                                                                  
*10.15 (e)             Regulatory Agreement dated December 12, 1984 between       Exhibit 10.15 (e) to Post-Effective Amendment No.
                       Linden Park Associates Limited Partnership and the         2 to Form S-11 Registration Statement (File
                       Secretary of Housing and Urban Development.                2-90617)
                                                                                
                                                                140


Exhibit                                Description                                Page Number or Filing from 
Numbers                                                                           which Incorporated by Reference
- --------               -----------------------------------------------------      -------------------------------
                                                                           

*10.15 (f)             Regulatory Agreement dated January 31, 1976 between        Exhibit 10.15 (f) to Post-Effective Amendment No.
                       Graham Park Venture and Virginia Housing Development       2 to Form S-11 Registration Statement (File
                       Authority.                                                 2-90617)
                                                                                  
10.16                  Documents Relating to Partnership Interest Brierwood       
                       II, Ltd.                                                   
                                                                                  
*10.16 (a)             Amended and Restated Certificate and Agreement of          Exhibit 10.16 (a) to Post-Effective Amendment No.
                       Limited Partnership of Brierwood II, Ltd.                  2 to Form S-11 Registration Statement (File
                                                                                  2-90617)
                                                                                  
*10.16 (b)             Promissory Note form dated January 4, 1985, Pledge         Exhibit 10.16 (b) to Post-Effective Amendment No.
                       Agreement form dated January 4, 1985 and Schedule of       2 to Form S-11 Registration Statement (File
                       Promissory Notes and Pledge Agreements between Liberty     2-90617)
                       Housing Partners Limited Partnership and the partners      
                       of Brierwood II, Ltd.                                      
                                                                                  
*10.16 (c)             Promissory Note dated January 4, 1985 from Brierwood       Exhibit 10.16 (c) to Post-Effective Amendment No.
                       II, Ltd. to Farmers Home Administration and related        2 to Form S-11 Registration Statement (File
                       Deed to Secure Debt dated January 4, 1985 between          2-90617)
                       Brierwood II, Ltd. and Farmers Home Administration.        
                                                                                  
*10.16 (d)             Farmers Home Administration Loan Agreement dated June      Exhibit 10.16 (d) to Post-Effective Amendment No.
                       30, 1983 between Brierwood II, Ltd. and Farmers Home       2 to Form S-11 Registration Statement (File
                       Administration.                                            2-90617)
                                                                                  
*10.16 (e)             Interest Credit and Rental Assistance Agreement dated      Exhibit 10.16 (e) to Post-Effective Amendment No.
                       January 4, 1985 between Brierwood II, Ltd. and the         2 to Form S-11 Registration Statement (File
                       Farmers Home Administration.                               2-90617)
                                                                                  
*10.17                 Letter agreement with John Wagner regarding consulting     Exhibit 10.17 to Form 10-Q for the period ended 
                       services in connection with the liquidation or             September 30, 1998
                       workout of the Partnership's portfolio                     
                                                                                


<FN>
*Incorporated by Reference as noted
</FN>

                                                                141




                                   SIGNATURES


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

                                By:    LIBERTY HOUSING PARTNERS LIMITED
                                       PARTNERSHIP
                                       (Registrant)
                                By:    TNG Properties, Inc.,
                                       Managing General Partner



Date: 3-29-99                   By: /s/ Michael A. Stoller 
                                     Michael A. Stoller
                                     President, CEO, and Director of
                                     TNG Properties, Inc.
                                     Managing General Partner

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



Signature                                  Title                         Date
- ---------                                  -----                         ----


                                 Vice President, Treasurer
                                 and Director (principal
                                 financial and accounting officer)
                                 of TNG Properties, Inc. Managing
                                 General Partner
/s/ Wilma R. Brooks                                                      3-29-99
Wilma R. Brooks


                                      142





Signatures, continued

Signature                                  Title                         Date
- ---------                                  -----                         ----


                                 President, CEO and Director of
                                 TNG Properties, Inc. Managing
                                 General Partner
/s/ Michael A. Stoller                                                   3-29-99
Michael A. Stoller


                                 Director of TNG Properties, Inc.
                                 Managing General Partner
/s/ Stephen D. Puliafico                                                 3-29-99
Stephen D. Puliafico




                                 Director of TNG Properties, Inc.
                                 Managing General Partner
_____________________________                                          _______
James C. Coughlin




                                      143