- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

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

DECEMBER 31, 1995 0-18226
For the fiscal year Commission file number
ended

------------------------

NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)

MASSACHUSETTS 13-3487910
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

51 MADISON AVENUE, NEW YORK, NEW YORK 10010
(Address of principal executive (Zip Code)
offices)

Registrant's telephone number, including area code (212) 576-7300

------------------------

Securities Registered Pursuant to Section 12(b) of the Act:

NONE

Securities Registered Pursuant to Section 12(g) of the Act:

UNITS OF DEPOSITARY RECEIPTS REPRESENTING UNITS OF LIMITED PARTNER INTERESTS.

------------------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ 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_

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The Exhibit index begins on page 47.

TABLE OF CONTENTS

PAGE NO.
-------------

PART I.................................................................................................. 3

Item 1. Business...................................................................................... 3

Item 2. Properties.................................................................................... 11

Item 3. Legal Proceedings............................................................................. 11

Item 4. Submission of Matters to a Vote of Security Holders........................................... 12

PART II................................................................................................. 13

Item 5. Market for Registrant's Units and Related Unitholder Matters.................................. 13

Item 6. Selected Financial Data....................................................................... 15

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 15

Item 8. Financial Statements and Supplementary Data................................................... 17

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......... 17

PART III................................................................................................ 18

Item 10. Directors and Executive Officers of the Registrant........................................... 18

Item 11. Executive Compensation....................................................................... 20

Item 12. Security Ownership of Certain Beneficial Owners and Management............................... 20

Item 13. Certain Relationships and Related Transactions............................................... 20

PART IV................................................................................................. 21

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................. 21

Signatures............................................................................................ 25

Appendix A Financial Statements

DEFINITIONS -- All capitalized terms not defined herein shall have the
meanings given to them in the Financial Statements attached hereto as Appendix
A, or if not defined therein, the meanings given to them in the registrant's
Amended and Restated Agreement of Limited Partnership (the "Partnership
Agreement").

PART I

ITEM 1. BUSINESS

The registrant NYLIFE Government Mortgage Plus Limited Partnership (referred
to herein as the "Partnership") is a limited partnership which was formed on
November 21, 1988 pursuant to the provisions of the Massachusetts Uniform
Limited Partnership Act. NYLIFE Realty Inc. (the "General Partner"), an indirect
wholly-owned subsidiary of New York Life Insurance Company ("New York Life"), is
the sole general partner of the Partnership.

Pursuant to a prospectus dated May 26, 1989, as supplemented, the
Partnership offered up to 25,000,000 of its units of depositary receipt (the
"Units") for $10 per Unit. The offering of Units in the Partnership was
terminated on September 30, 1991. The capital contributions received by the
Partnership from its offering of Units totaled $81,684,577 which reflected
purchase volume discounts of $143,319. After the return of $42,312,611 of
capital, the Partnership had 8,168,457.7 Units outstanding with a capital value
of $4.82 per Unit.

In connection with the purchase of such MBSs, and in consideration for
accepting a lower Basic Interest Rate on its MBSs, the Partnership was
authorized to acquire a right to participate in the surplus/operating revenues
and residual value, if any, of the properties subject to the mortgages
underlying the MBSs. Each such participation interest is evidenced by an
additional interest agreement between the Partnership and the grantor of the
mortgage that collateralizes the related MBS. The participation interests are
secured by, among other things, subordinated mortgages on the relevant
underlying properties. These participation interests are not insured by any
governmental agency, and in order to accelerate and enforce payments due under
an additional interest agreement, the Partnership would be required to terminate
the federal mortgage insurance contracts with respect to the related MBS.
Although the participation interests are not insured, and the MBSs are not
participating interests, for ease of reference, the MBSs and the additional
interest agreements under which the participation interests were created may be
collectively referred to herein as "Participating Insured Mortgages" or "PIMs".

The Partnership is also authorized to make loans to the equity investors
("Individual Investors") in the entities that own such properties (the
"Borrowers"). Such loans (the "PGLs") cannot be secured by any mortgage, but may
be secured by the Individual Investors' equity interests in the Borrowers. PGLs
are neither insured nor guaranteed, although the General Partner has guaranteed
a return to the Partnership of funds invested in PGLs. Such funds have been
returned to the Partnership and distributed to its investors. See "Guarantees of
PGLs." In addition to fixed interest, the PGLs may also allow the Partnership to
participate in the appreciation of the underlying properties and such
properties' surplus cash flows. Although the PGLs are not secured by mortgages,
for ease of reference, the PIMs and PGLs are collectively referred to herein as
the "Mortgages."

Since the formation of the Partnership, the Partnership has purchased MBSs
collateralized by federally co-insured mortgages on three separate multi-family
residential properties ("the Properties"). As of December 31, 1995, the
Partnership held three MBSs. One such MBS was recently sold. See "Mortgages
- --the Highlands -- Recent Developments".

In connection with the purchase of each MBS, the Partnership also acquired a
participation interest evidenced by an additional interest agreement secured in
part by a subordinated mortgage. One of these participation interests was
released in connection with the sale of the underlying property in 1995. See
"Mortgages -- The Highlands".

The Partnership has also funded three PGLs with respect to the Properties.
These PGLs provide for fixed interest at rates of 10% to 15% and also provide
for additional Partnership participation of 10% to 15% in the Properties' net
cash flow and appreciation, if any. The General Partner guaranteed a return to
the Partnership, upon liquidation, of funds invested in PGLs, in excess of cash
payments received by the Partnership from all mortgages and loans, if any (other
than cash payments of principal and Basic Interest on MBSs). In 1995, one of the
PGLs was repaid and the General Partner's obligation to guarantee return of
principal invested in PGLs was satisfied. See "Mortgages -- The Highlands" and
"Guarantee of Mortgages".

The future performance of the Partnership depends on certain factors that
cannot be predicted. Such factors include the financial strength of the
Borrowers and the Individual Investors and regulatory actions by HUD and other
governmental agencies. In addition, the Partnership is subject to the risks
associated with real estate investments. These include reliance on the owners'
operating skills and ability to maintain occupancy levels, meet operating
expenses, maintain the property and maintain adequate insurance coverage, as
well as the impact of adverse changes in general economic conditions, adverse
local conditions, changes in governmental regulations, real estate zoning laws,
or tax laws and other circumstances over which the Partnership may have little
or no control.

The Partnership's investments are not subject to significant seasonal
fluctuations, although net income may vary somewhat from quarter to quarter
based upon the participation features of its investments, if any.

The Partnership considers itself to be engaged in only one industry segment,
namely investment in insured mortgages, mortgage backed securities, and related
participation interests and PGLs.

EMPLOYEES

As of December 31, 1995, there was no personnel employed by the Partnership.

During the years ended December 31, 1995 and 1994, certain employees of New
York Life Insurance Company and its affiliates performed accounting, secretarial
and administrative services for the Partnership. A portion of the costs of such
services allocable to the Partnership were reimbursed by the Partnership in
accordance with the Partnership Agreement.

MORTGAGES

A) CROSS CREEK

In 1990, the Partnership acquired a PIM (the "Cross Creek PIM") consisting
of (i) an MBS collateralized by a mortgage loan in the principal amount of up to
$7,230,000 (the "Cross Creek Mortgage") secured by a first mortgage on a 152
unit garden style apartment complex in Greenville, South Carolina known as
Halcyon at Cross Creek ("Cross Creek") and (ii) an uninsured participation
interest secured by a subordinated mortgage on Cross Creek. The borrower under
the Cross Creek Mortgage is Boiling Springs Apartments, Ltd. (the "Cross Creek
Borrower"). In addition, the Partnership made a PGL to the Individual Investors
in the Cross Creek Borrower (the "Individual Cross Creek Borrowers") in the
principal amount of up to $600,000 (the "Cross Creek PGL").

PARTICIPATING INSURED MORTGAGE

To fund the construction of Cross Creek, the Partnership purchased from Love
Funding Corporation ("LFC"), mortgage-backed pass-through construction loan
certificates ("CLCs"), guaranteed as to timely payment of principal and Basic
Interest by GNMA, in the maximum principal amount of $7,230,000.

Following the maturity of the CLCs at the conclusion of the construction
period, and upon final endorsement ("Final Endorsement") of the promissory note
evidencing the Cross Creek Mortgage (the "Cross Creek Mortgage Note") by HUD,
which occurred on January 8, 1992, the Partnership received a mortgage-backed
permanent loan certificate ("PLC"), guaranteed as to the timely payment of
principal and Basic Interest by GNMA. The PLC has a face amount of $7,226,406,
and an issue date of February 1, 1992.

The Cross Creek Mortgage Note bears interest at an annual rate ("Basic
Interest Rate") of 8.50% during the permanent term. One quarter of one percent
(.25%) of the foregoing amount is retained by LFC and GNMA as a servicing and
guarantee fee; accordingly, the Partnership's MBS related to the Cross Creek
Mortgage bears interest at the rate of 8.25% per annum. The Cross Creek Borrower
is required to make equal monthly payments of principal and interest on the
Cross Creek Mortgage Note until its maturity on December 15, 2031.

The Cross Creek Mortgage is coinsured by LFC and HUD under Section 221(d)(4)
of the National Housing Act, which relates to new construction of multi-family
residential properties. The Cross Creek Mortgage Note is non-recourse to the
Cross Creek Borrower, except under limited circumstances, including fraud.

The Cross Creek Mortgage Note may be prepaid upon 30 days written notice
after, but not prior to, the tenth anniversary of the date of initial HUD
endorsement ("Initial Endorsement") of the Cross Creek Mortgage Note, with a
prepayment charge equal to 1% of the outstanding principal amount of the Cross
Creek Mortgage Note. Initial Endorsement of the Cross Creek Mortgage Note
occurred on February 22, 1990. Notwithstanding the foregoing, if HUD determines
that prepayment will avoid a mortgage insurance claim and is in the best
interest of the federal government, the Cross Creek Mortgage Note may be prepaid
at any time without the Partnership's consent and without any prepayment charge.
The Partnership has the option, upon six months written notice, to require
prepayment in full of the Cross Creek Mortgage Note on or after the tenth
anniversary of the date of the Initial Endorsement. No prepayment fee shall be
imposed if the Partnership exercises this option. Enforcement of this option
would require the termination of the coinsurance contract and the surrender of
the PLC.

The Partnership is entitled under the participation portion of the Cross
Creek PIM, in addition to monthly pass-through payments of principal and Basic
Interest to: (i) 50% of any increase in the value of Cross Creek in excess of
its base value (i.e., the outstanding principal amounts of the Cross Creek MBS
and PGL); the increase in value is measured from February 22, 1990 until the
sale of Cross Creek, or until the maturity, refinancing or prepayment of the
Cross Creek Mortgage; and (ii) 50% of Cross Creek's monthly net cash flow
(subject to certain HUD restrictions and reserve requirements) beginning with
the first month after completion of construction. The obligation of the Cross
Creek Borrower to make these participation payments is evidenced by an
additional interest agreement between the Cross Creek Borrower and the
Partnership, which is secured by a subordinated mortgage on Cross Creek, and is
non-recourse to the Cross Creek Borrower, except under limited circumstances,
including fraud. This obligation is further secured by a collateral assignment
by the Individual Cross Creek Borrowers of their interests in the Cross Creek
Borrower.

PARTICIPATING GUARANTEED LOAN

The Partnership has made a PGL of up to $600,000 to the Individual Cross
Creek Borrowers, who are jointly and severally liable for this obligation. The
Cross Creek PGL, which is non-recourse debt, is secured by a collateral
assignment by the Individual Cross Creek Borrowers of their partnership

interests in the Cross Creek Borrower, constituting a second lien thereon. The
promissory note evidencing the Cross Creek PGL provides that the Individual
Cross Creek Borrowers will use the proceeds thereof to satisfy obligations of
the Cross Creek Borrower.

Of the maximum loan proceeds to be available under the Cross Creek PGL,
$400,000 had been advanced as of December 31, 1995. The Partnership's commitment
to advance additional funds under the PGL expired on January 8, 1993. The
unfunded loan commitment of $200,000, which had been included in the
Partnership's working capital reserve, was distributed to the Partnership's
investors on November 15, 1994.

The Cross Creek PGL bears interest at the rate of 10% per annum, payable
semi-annually, and provides that interest may be accrued up to $100,000 to the
extent Surplus Cash Distributions (as defined by HUD) to the Individual Cross
Creek Borrowers are insufficient to fully pay the interest obligation. Any such
accruals will be added to the outstanding principal balance of the PGL and shall
bear interest at the same rate. Accrued interest reached $100,000 on September
25, 1993. Accordingly, accrued interest became due and payable on October 1,
1993. Principal and unpaid interest, if any, shall be due and payable on
February 21, 2005, unless sooner paid.

No prepayments of the principal amount of the Cross Creek PGL will be
permitted prior to the tenth anniversary of the Initial Endorsement of the Cross
Creek Mortgage Note. Thereafter, the PGL may be prepaid in whole, but not in
part, subject to a prepayment fee equal to 1% of the principal amount prepaid.
Also, commencing on the tenth anniversary date, the Partnership will have the
right to call the Cross Creek PGL, in which case no prepayment fee shall be
paid.

The terms of the Cross Creek PGL entitle the Partnership to participations
in addition to Basic Interest equal to: (i) 15% of any increase in the value of
the Individual Cross Creek Borrowers' partnership interest in the Cross Creek
Borrower (determined by reference to the value of Cross Creek) over the base
value of the Individual Cross Creek Borrowers' partnership interest (based on
the outstanding principal amount of the Cross Creek Mortgage and the Cross Creek
PGL), such increase to be determined upon the sale of Cross Creek or upon the
refinancing, prepayment or maturity of the PGL; and (ii) 15% of the Individual
Cross Creek Borrowers' interest in Cross Creek's net cash flow (subject to
certain HUD restrictions and reserve requirements). The aforesaid 15%
participation provided by the Cross Creek PGL is over and above the 50%
participation provided by the Cross Creek PIM. The payment obligation of the
Individual Cross Creek Borrowers with respect to this participation is evidenced
by a supplemental interest agreement, and is non-recourse to the Individual
Cross Creek Borrowers, except under limited circumstances, including fraud.
These obligations are collateralized by a collateral assignment by the
Individual Cross Creek Borrowers of their partnership interests in the Cross
Creek Borrower (constituting a second lien thereon).

PARTICIPATION PAYMENTS

As of December 31, 1995, the Partnership had not received any participating
distributions with respect to either the Cross Creek PIM or the Cross Creek PGL
because HUD regulations generally do not permit the distribution of Surplus Cash
(as defined by HUD) until cash on hand at a particular month end exceeds the
amount of the required reserve. As outlined by HUD, the required reserve
generally includes reserves for obligations due within 30 days, such as accrued
mortgage interest payable; delinquent mortgage principal payments and deposits
to reserve for replacements, if any; accounts payable and accrued expenses due
within 30 days; loans and notes payable due within 30 days; deficient tax
insurance or mortgage insurance premium escrow deposits, if any; prepaid rents;
and tenant security deposits payable.

At December 31, 1995, the Cross Creek Borrower represented that it had cash
on hand of $32,009 while the required reserve was $127,572. Therefore, there was
no Surplus Cash available for distribution under HUD regulations at that time.
Since cash on hand and the required reserve fluctuate monthly based on property
performance, the General Partner cannot determine when participating
distributions will be received by the Partnership, if at all.

PROPERTY DESCRIPTION

Cross Creek is a 152 unit garden style apartment complex situated on 21.66
acres of land in Greenville, South Carolina. Cross Creek consists of 19
two-story buildings of cedar siding and stucco accents with pitched roofs. All
upper floor units have covered wooden balconies and all ground floor units have
patios. Amenities at Cross Creek include two pools, two tennis courts, a
clubhouse with an exercise room, locker rooms, sauna and steam room.

Occupancy at Cross Creek was 94% at December 31, 1995. The average occupancy
rate for Cross Creek's primary submarket ranges between 94 and 97%. No rental
concessions were offered during the year ended December 31, 1995.

B) THE HIGHLANDS

In December 1990, the Partnership acquired a PIM (the "Highlands PIM")
consisting of (i) an MBS collateralized by a mortgage loan in the principal
amount of up to $13,154,200 (the "Highlands Mortgage") secured by a first
mortgage on a 272 unit garden style apartment complex located outside Tampa,
Florida (the "Highlands") and (ii) a participation interest evidenced by an
additional interest agreement and secured by a subordinated mortgage on the
Highlands. The borrower under the Highlands Mortgage was originally Highland
Oaks Associates Limited (the "Original Highlands Borrower"). The Original
Highlands Borrower sold the Highlands in 1995 as discussed in further detail
below. In addition, the Partnership made a PGL to the Individual Investors in
the Original Highlands Borrower (the "Individual Highlands Borrowers") in the
principal amount of up to $1,595,800 (the "Highlands PGL").

PARTICIPATING INSURED MORTGAGE

In 1990, to finance the construction of the Highlands, the Partnership
purchased from Related Mortgage Corporation ("RMC"), CLCs, guaranteed as to
timely payment of principal and Basic Interest by GNMA, in the maximum principal
amount of up to $13,154,200.

Upon the maturity of the CLCs at the conclusion of the construction period
and upon Final Endorsement of the Highlands Mortgage Note, which occurred on May
31, 1992, the Partnership received a PLC guaranteed as to the timely payment of
principal and Basic Interest by GNMA (the "Highlands PLC").

In connection with its purchase of the CLCs, the Partnership acquired a
participation interest in the Highlands pursuant to an additional interest
agreement with the Highlands Borrower. Under the additional interest agreement
the Partnership was entitled to (i) 50% of the net appreciation in the value of
the Highlands from Initial Endorsement until the sale of the Highlands; and (ii)
50% of the Highlands' net cash flow (subject to certain HUD restrictions and
reserve requirements). The obligations of the Original Highlands Borrower under
the additional interest agreement were secured in part by a second mortgage on
the Highlands.

PARTICIPATING GUARANTEED LOAN

Pursuant to the Highlands PGL, the Partnership advanced $1,095,800 to the
Individual Highlands Borrowers. The Highlands PGL was repaid in 1995 as
described below.

SALE OF THE HIGHLANDS

Effective January 31, 1995, the Original Highlands Borrower sold the
Highlands to Richland Properties, Inc. (the "New Highlands Borrower") for
$16,300,000. The sale closed in escrow pending the receipt by the Partnership of
a new GNMA certificate in the principal amount of $13,037,676, bearing interest
at 7.625% per annum (the "Highlands GNMA") in exchange for the Highlands PLC.
The Highlands GNMA certificate was received by the Partnership on February 15,
1995, at which time the sale was completed and the Partnership received the
payments described below, together with the other closing documents. In
addition, a mutual release was delivered, effective January 31, 1995,

pursuant to which all obligations of, and claims against, the Original Highlands
Borrower and its general partners were released by the Partnership and RMC, and
all obligations of, and claims against, the Partnership and RMC were released by
the Original Highlands Borrower and its general partners.

In connection with the sale of the Highlands, the Highlands Mortgage
("Modified Mortgage") and related promissory note ("Modified Note") were
modified to provide for (a) prepayment at any time with a prepayment charge
payable to RMC, equal to 1% of the outstanding principal, and (b) a reduction in
the interest rate from 8.5% to 7.875% per annum, one-quarter of one percent of
which is retained by RMC and GNMA as a servicing and guarantee fee. Accordingly,
the Highlands GNMA bears interest at the rate of 7.625% per annum.

Concurrent with the sale of the Highlands as described above, the
participation interests in the Highlands PIM and the Highlands PGL were cashed
out and retired and principal and accrued interest of the Highlands PGL were
repaid as the Partnership received $2,463,060, which included $1,095,800 of PGL
principal, $210,798 of accrued interest, a prepayment fee of $324,000 and
participation in net cash flow and net appreciation of $832,462. The Partnership
distributed these proceeds to investors on May 15, 1995.

Also on January 31, 1995, the Partnership and the Original Highlands
Borrower (together with its partners) entered into a Special Closing Agreement,
pursuant to which two letters of credit held by the Partnership were each
reduced from $75,000 to $17,500. The two letters of credit were being held as
security for the obligations of the Original Highlands Borrower and its partners
under the Special Closing Agreement, pursuant to which the Original Highlands
Borrower agreed to pay a portion of any additional taxes determined to be due to
the State of Florida in connection with the recording of the original loan
documents. The State of Florida claimed that $136,800 of additional recording
taxes were due. The recording tax dispute was recently settled. See "Recent
Developments" below.

During the year ended December 31, 1995, the Partnership received interest
totaling $999,170.10 related to the Highlands GNMA, which has been distributed
to investors in connection with the Partnership's regular quarterly
distributions in accordance with the Partnership Agreement.

RECENT DEVELOPMENTS

On February 27, 1996, the Partnership sold the Highlands GNMA for cash in
the amount of $13,105,373.01. The Highlands GNMA was sold through Utendahl
Capital Partners, an unaffiliated broker dealer. The sales price represents
principal in the amount of $12,976,812.45, accrued interest in the amount of
$71,462.59 and a premium of $57,097.97. The Partnership was not charged any
separate fees or commissions in connection with the sale. The General Partner's
decision to sell the Highlands GNMA was based in part on what it perceived to be
a favorable market in which the Highlands GNMA could be sold at a premium.

The 1996 sale of the Highlands GNMA, together with the 1995 sale of the
Highlands and the related modification of the Highlands Mortgage, terminated the
Partnership's beneficial interest in the Highlands Mortgage and the Highlands.

The General Partner anticipates distributing the proceeds from the sale of
the Highlands GNMA in connection with the Partnership's regular quarterly
distribution to investors on May 15, 1996.

On March 12, 1996, the Partnership settled the $136,800 recording tax claim
of the State of Florida discussed above through a payment to the State of
Florida made on behalf of the Partnership in the amount of $64,000 ($53,800 of
which was funded by the General Partner and $10,150 of which was funded by the
Original Highlands Borrower). The Partnership recently received the signed
Closing Agreement from the State of Florida settling the claim and the letters
of credit being held under the Special Closing Agreement will be returned to the
Original Highlands Borrower.

C) SIGNATURE PLACE

In 1991, the Partnership acquired a PIM (the "Signature Place PIM")
consisting of (i) MBSs issued by LFC and collateralized by a mortgage loan in
the maximum principal amount of up to

$9,800,000 (the "Signature Place Mortgage") secured by a first mortgage on a
232-unit multi-family residential apartment complex in Hampton, Virginia known
as Signature Place ("Signature Place") and (ii) a participation interest
evidenced by an additional interest agreement secured by a subordinated mortgage
on Signature Place. The borrower under the Signature Place Mortgage is HG
Partners Limited Partnership (the "Signature Place Borrower"). The Partnership
also made a PGL to the Individual Investors in the Signature Place Borrower (the
"Individual Signature Place Borrowers") in the original principal amount of up
to $1,200,000 (the "Signature Place PGL").

PARTICIPATING INSURED MORTGAGE

In 1991, the Partnership purchased MBSs from LFC in the form of CLCs,
guaranteed as to timely payment of principal and Basic Interest by GNMA, in the
maximum principal amount of $9,800,000 to fund the construction of Signature
Place.

Following the maturity of the CLCs at the conclusion of the construction
period and upon Final Endorsement of the promissory note evidencing the
Signature Place Mortgage (the "Signature Place Mortgage Note") by HUD, which
occurred on February 9, 1993, the Partnership received a PLC, guaranteed as to
timely payment of principal and Basic Interest by GNMA (the "Signature Place
PLC"). The Signature Place PLC has a face amount of $9,756,900, and an issue
date of February 1, 1993.

The Signature Place Mortgage Note bears interest at the Basic Interest Rate
of 8.25% during the permanent term. One quarter of one percent (.25%) of the
Basic Interest Rate is retained by LFC and GNMA as a servicing and guarantee
fee; accordingly the Signature Place PLC bears interest at the rate of 8% per
annum. The Signature Place Borrower is required to make equal monthly payments
of principal and interest until maturity of the Signature Place Mortgage Note on
January 15, 2033.

The Signature Place Mortgage is coinsured by LFC and HUD under Section
221(d)(4) of the National Housing Act. The Signature Place Mortgage Note is
non-recourse to the Signature Place Borrower, except under limited
circumstances, including fraud.

The Signature Place Mortgage Note may be prepaid in full upon 45 days
written notice after (but not prior to) the tenth anniversary of Initial
Endorsement, which occurred on May 10, 1991, with a prepayment charge equal to
1% of the principal amount prepaid, plus any additional interest due thereon.
Notwithstanding the foregoing, if HUD determines that prepayment will avoid a
mortgage insurance claim and is in the best interest of the federal government,
the Signature Place Mortgage Note may be prepaid at any time without the
Partnership's consent and without any prepayment charge. The Partnership has the
option, upon six months written notice, to require prepayment in full of the
Signature Place Mortgage Note on or after the tenth anniversary of Initial
Endorsement. No prepayment fee shall be imposed if the Partnership exercises
this option. Enforcement of this option would require the termination of the
coinsurance contract and the surrender of the Signature Place PLC.

The Partnership is entitled under the participation portion of the Signature
Place PIM, in addition to monthly pass-through payments of principal and Basic
Interest, of (i) 50% of the net appreciation in the value of Signature Place
from Initial Endorsement of the Signature Place Mortgage Note until the sale of
Signature Place or the maturity, refinancing or prepayment of the Signature
Place Mortgage; and (ii) 50% of Signature Place's net cash flow (subject to
certain HUD restrictions and reserve requirements) beginning after completion of
construction. The payment obligation of the Signature Place Borrower with
respect to this participation is evidenced by an additional interest agreement,
which is collateralized by a subordinated mortgage on Signature Place and is
non-recourse to the Signature Place Borrower, except under limited
circumstances, including fraud and environmental noncompliance.

PARTICIPATING GUARANTEED LOAN

The Partnership made the Signature Place PGL in the aggregate amount of up
to $1,200,000 to the Individual Signature Place Borrowers, jointly and
severally, in the form of a personal loan

collateralized by the pledge of 100% of their partnership interests in the
Signature Place Borrower. Only $100 had been funded under the Signature Place
PGL as of December 31, 1995. The Partnership's obligation to advance funds under
the Signature Place PGL expired on August 8, 1994. The unfunded loan proceeds of
$1,199,900, which had been included in the Partnership's working capital
reserve, were distributed to the Partnership's Investors on November 15, 1994.

The Signature Place PGL bears interest at the rate of 15% per annum, payable
semi-annually, and provides that interest shall be accrued up to $100,000 to the
extent Surplus Cash is insufficient to fully pay the interest obligation. Any
such accruals will be added to the outstanding principal balance of the PGL and
shall bear interest at the same rate. At such time as accruals of interest
(including semi-annually compounded interest) exceed $100,000 or commencing with
the second anniversary of Final Endorsement (regardless of the balance of such
accruals), whichever occurs first, the Individual Signature Place Borrowers
shall pay interest on the outstanding principal amount semi-annually, whether or
not Surplus Cash is available. Principal and accrued interest, if any, shall be
due and payable on May 8, 2006.

Because less than $250,000 was funded under the Signature Place PGL,
$249,900 (the difference between $250,000 and the total amount funded) is
considered additional equity in the Signature Place Borrower ("Additional
Equity") contributed by the Individual Signature Place Borrowers. To the extent
the Individual Signature Place Borrowers' share of cash flow provides less than
a 10% cumulative annual return on the outstanding balance of Additional Equity
(compounded semi-annually) over the holding period of the investment, the
shortfall shall be paid to the Individual Investors out of the proceeds from the
sale of Signature Place or refinancing of the Signature Place Mortgage. All
participation earned by the Partnership with respect to the Signature Place PGL
shall be calculated after deducting the Borrowers' Additional Equity and
interest and principal paid on the Signature Place PIM and PGL.

No prepayments of the Signature Place PGL will be permitted prior to the
tenth anniversary of Initial Endorsement of the Signature Place Mortgage Note.
Thereafter, the Signature Place PGL may be prepaid in whole, but not in part,
upon 90 days prior written notice to the Partnership subject to a prepayment fee
equal to 1% of the principal amount prepaid. On the tenth anniversary date, the
Partnership will have the right to call the Signature Place PGL by six months
prior written notice to the Individual Signature Place Borrowers, in which case
no prepayment fee shall be paid.

The terms of the Signature Place PGL entitle the Partnership to
participation, in addition to Basic Interest, equal to (i) 10% of any increase
in the value of the partnership interests in the Signature Place Borrower
(determined by reference to the value of Signature Place) over the base value of
the partnership interests (based on the outstanding principal amount of the
Signature Place Mortgage and the Signature Place PGL), such increase to be
determined upon the sale of Signature Place or upon the refinancing, prepayment
or maturity of the PGL; and (ii) 10% of the Individual Investors' interest in
Signature Place's net cash flow (subject to certain HUD restrictions and reserve
requirements). The aforesaid 10% participation in Signature Place provided by
the Signature Place PGL are over and above the 50% participation in the
Signature Place PIM. The payment obligation of the Individual Signature Place
Borrowers with respect to this participation is evidenced by a supplemental
interest agreement, and is non-recourse to the Individual Signature Place
Borrowers, except under limited circumstances, including fraud.

PARTICIPATION PAYMENTS

To date, the Partnership has not received any participating distributions
with respect to either the Signature Place PIM or the Signature Place PGL
because HUD regulations generally do not permit the distribution of Surplus Cash
(as defined by HUD) until cash on hand at a particular month end exceeds the
amount of the required reserve. As outlined by HUD, the required reserve
generally includes reserves for obligations due within 30 days such as accrued
mortgage interest payable; delinquent mortgage principal payments and deposits
to reserve for replacements, if any; accounts

payable and accrued expenses due within 30 days; loans and notes payable due
within 30 days; deficient tax insurance or mortgage insurance premium escrow
deposits, if any; prepaid rents; and tenant security deposits payable.

At December 31, 1995, the Signature Place Borrower represented that it had
cash on hand of $328,840 while the required reserve was approximately $183,659.
The General Partner is currently evaluating the Surplus Cash statement from the
Signature Place Borrower as of December 31, 1995 in order to determine what
amount of participation in Surplus Cash, if any, is due to the Partnership.

PROPERTY DESCRIPTION

Signature Place is a 232 unit apartment complex located in Hampton,
Virginia. The property is located in the Mercury Central section of Hampton, an
area which includes a regional mall and a wide range of retail and other
services, and convenient access from Interstate 64.

Signature Place consists of approximately 191,728 net rentable square feet
of building area in 13 two-and three-story buildings of wood frame construction
with siding and brick veneer exteriors. The complex contains eight floor plans
ranging from a 544 square foot one-bedroom unit to a 1,132 square foot three
bedroom, two-bath unit. Signature Place offers a clubhouse, swimming pool,
Jacuzzi spa, sauna, exercise room and tennis court, nine-foot ceilings, patios
or balconies, walk-in closets and washer/dryer hookups in all units, fireplaces
in 208 units, laundry equipment in 64 units, other amenities, and at least 375
surface parking spaces, including 42 garage spaces.

The overall occupancy rate in the area is approximately 94%. Occupancy at
Signature Place was 95% at December 31, 1995. No rental concessions are being
offered at this time. The economy in this region is impacted by the presence of
the military. The market has been somewhat impacted by base realignments and
closures but the overall outlook is cautiously optimistic, as various base
realignments should mitigate any base reductions in the area. Approximately 50%
of the tenants at Signature Place are employed by the military.

GUARANTEE OF PGLS

The General Partner agreed pursuant to the Partnership Agreement to
guarantee a return to the Partnership, in the aggregate, of the amount of
investments in the PGLs for Cross Creek, the Highlands and Signature Place.
Pursuant to this guarantee, on the date that dissolution and winding up of the
Partnership shall be completed, the General Partner agreed to pay to the
Partnership an amount, if any, by which (i) the funds invested by the
Partnership in all PGLs exceeds (ii) all cash payments received by the
Partnership with respect to all Mortgages, INCLUDING points, Basic Interest,
Additional Interest and repayment of principal, but EXCLUDING Basic Interest and
repayment of principal of MBSs and other insured/guaranteed Mortgages. As a
result of the sale of the Highlands as referred to in "Mortgages -- the
Highlands" above, the Partnership received cash in excess of the amount of funds
invested by the Partnership in all PGLs. Accordingly, the General Partner has no
remaining future obligation with respect to any of the PGLs.

COMPETITION

The real estate business is highly competitive and the Properties underlying
the PIMs have active competition for tenants from similar properties in their
respective vicinities.

ITEM 2. PROPERTIES

The Partnership does have any interest in any physical properties other than
as described in Item 1. BUSINESS above.

ITEM 3. LEGAL PROCEEDINGS

Two class action lawsuits have been filed against certain affiliates of the
General Partner in suits filed in the District Court of Harris County, Texas on
January 11, 1996, styled GRIMSHAWE V. NEW YORK LIFE INSURANCE CO., ET AL. (No.
96-001188) and SHEA V. NEW YORK LIFE INSURANCE CO., ET AL. (No. 96-001189)
alleging misconduct in connection with the original sale of investment units in
various partnerships, including violation of various federal and state laws and
regulations and claims

of continuing fraudulent conduct. The plaintiffs have asked for compensatory
damages for their lost original investment, plus interest, costs (including
attorneys fees), punitive damages, disgorgement of any earnings, compensation
and benefits received by the defendants as a result of the alleged actions and
other unspecified relief to which plaintiffs may be entitled. These suits were
amended and refiled in a consolidated action in the United States District Court
for the Southern District of Florida (the "Court") on March 18, 1996, adding the
General Partner as a defendant and including allegations concerning the
Partnership. The plaintiffs purport to represent a class of all persons (the
"Class") who purchased or otherwise assumed rights and title to interests in
certain limited partnerships, including the Partnership and other programs
created, sponsored, marketed, sold, operated or managed by the defendants (the
"Proprietary Partnerships"). The Partnership is not a defendant in the
litigation.

The defendants expressly deny any wrongdoing alleged in the complaint and
concede no liability or wrongdoing in connection with the sale of the Units or
the structure of the Proprietary Partnerships. Nevertheless, to reduce the
burden of protracted litigation, the defendants have entered into a Stipulation
of Settlement ("Settlement Agreement") with the plaintiffs because in their
opinion such Settlement would (i) provide substantial benefits to the Class in a
manner consistent with New York Life's position that it had previously
determined to wind up most of the Proprietary Partnerships through orderly
liquidation as the continuation of the business no longer serves the intended
objectives of either the owners of interests in such Proprietary Partnerships or
the defendants and to offer investors an enhancement to the liquidating
distribution they would otherwise receive and (ii) provide an opportunity to
wind up the Partnership on a schedule favorable to the Class and resolve the
issues raised by the lawsuit.

In connection with the settlement, the General Partner will solicit consents
for the dissolution of the Partnership.

Under the terms of the Settlement Agreement, any settling Unitholders will
receive a complete return of their original investment, less distributions
received prior to the final settlement date, in exchange for a release of any
and all claims a Unitholder may have against the defendants in connection with
the Proprietary Partnerships, including the Partnership, and all activities
related to the dissolution and liquidation of such partnerships.

Preliminary approval of the Settlement Agreement was given by the Court on
March 19, 1996. The Settlement Agreement is further conditioned upon final
approval by the Court as well as certain other conditions and is subject to
certain rights of termination detailed in the consent solicitation material
being mailed to the Unitholders.

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

None

PART II

ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED UNITHOLDER MATTERS

All limited partner interests in the Partnerships were originally issued to
NYLIFE Depository Corporation (the "Corporate Limited Partner"), an indirect
wholly owned subsidiary of New York Life Insurance Company. The Units represent
the assigned economic rights attributable to the limited partner interests in
the Partnership of the Corporate Limited Partner. Each Unit originally
represented $10 of depositary interest in the Partnership. The Corporate Limited
Partner acts as depositary for and on behalf of the Partnership. Units were
issued in registered form only and can not be issued to nominee holders, except
at the sole discretion of the General Partner.

The Corporate Limited Partner assigned, to the extent permitted by the
Massachusetts Uniform Limited Partnership Act (the "Act"), all of its rights and
interest in the Partnership (except its $2,000 Limited Partner Interest) to
Unitholders upon their purchase of the Units. Currently, the rights and
interests assignable under the Act by the Corporate Limited Partner include the
right to distributions, profits and losses, and liquidating distributions of the
Partnership. As to the voting rights and the right to inspect or copy the
Partnership's books which are not assignable under the Act, Unitholders are
entitled to exercise their rights through the Corporate Limited Partner as if
they were limited partners of the Partnership under the Act, pursuant to the
Subscription Agreement and the Partnership Agreement. Accordingly, the Corporate
Limited Partner is required to exercise its rights and perform its obligations
as may be required by the Act solely in favor of, in the interest of, and at the
direction of the Unitholders pursuant to the Partnership Agreement.

The transfer of Units is subject to certain limitations contained in the
Partnership Agreement.

The Units may not be listed on a national securities exchange or a national
interdealer quotation system, unless the Partnership has obtained an opinion of
Counsel to the Partnership to the effect that tax-exempt Unitholders will not
incur unrelated business income as a result of such listing, an opinion which
cannot be rendered under present tax law. Even if such an opinion can be
rendered, there is no assurance that the Units will be so listed or that a
market for the Units will develop. In any event, transfer of Units is at all
times subject to certain restrictions. Such restrictions include the following:
(i) transfers are subject to suitability standards imposed by securities laws;
(ii) transfers to foreign persons are not permitted unless immediately after the
transfer the transferee holds a minimum of 5,000 Units and Limited Partner
Interests in the aggregate; (iii) transfers of fewer than 200 Units are not
permitted unless the transferor owns fewer than 200 Units and all of such Units
are transferred; (iv) transfers which would result in the assets of the
Partnership being "plan assets" or transactions of the Partnership being
"prohibited transactions" under ERISA or the Internal Revenue Code will not be
permitted; (v) transfers of 50% or more of the Units are not permitted in any
12-month period; and (vi) transfers which would result in the change of the
Partnership's status as a partnership for federal income tax purposes or which
might in certain cases result in the classification of the Partnership as a
publicly traded partnership are not permitted. In addition, the General Partner
has the right to impose other transfer restrictions. However, the General
Partner, in its discretion, may waive all but restriction (v) above in order to
comply with listing requirements of a national securities exchange or national
interdealer quotation system.

The General Partner has the authority, without a vote of Limited Partners or
Unitholders, to delist the Units from public trading markets and to impose
restrictions on transfers of Units or Limited Partner Interests, or to take any
other action should the General Partner deem it advisable or necessary to do so,
in order to preserve, to the extent possible, the tax status of the Partnership
as a pass-through entity for federal income tax purposes, provided such actions
do not adversely affect a majority in interest of the Unitholders and Limited
Partners, and do not cause the Partnership's assets to be deemed to be "plan
assets" under ERISA with respect to Unitholders or Limited Partners which are
Qualified Plans. The General Partner also has the ability, upon a vote of the
Limited

Partners and Unitholders, to restructure the Partnership to enable it to qualify
as a real estate investment trust or, if possible, as a real estate mortgage
investment conduit for federal income tax purposes.

There will be a fee of not more than $10 (not including the normal sales
commissions charged by brokers) for each transfer of Units, a fee of the lesser
of $50 or actual costs for each conversion from a Unitholder to a Limited
Partner, and a fee of the lesser of $50 or actual costs for each assignment of
Limited Partner Interests. However, if conversion from Units to Limited Partner
Interests is required by law, there will be no charge of any fee to Unitholders.
The General Partner, in its sole discretion, may waive the Unit transfer fee in
order to comply with the listing requirements of a securities exchange or
interdealer quotation system, or for other reasons.

Unitholders who wish to exchange their Units for Limited Partner Interests
and become Limited Partners may do so by delivering to the Partnership
applications (which are available upon request from the General Partner) and
making payment of the appropriate fee per transaction. Unitholders exchanging
their Units to become Limited Partners will be admitted to the Partnership
monthly, following the submission of all required documents to the General
Partner. Limited Partner Interests will not be listed on a national securities
exchange or national interdealer quotation system, and it is not anticipated
that a public market will develop for such interests. Accordingly, holders of
Limited Partner Interests are expected to encounter greater difficulty in
selling their Limited Partner Interests, or in pledging their interests, than
Unitholders. Therefore, Limited Partner Interests should only be considered as a
long-term investment. Units which have been exchanged for Limited Partner
Interests will be canceled and will not be reissued. Investors who effect such
an exchange will not be able to re-exchange their Limited Partner Interests for
Units, and will not be able to sell their interests on a national securities
exchange or national interdealer quotation system if such Units are then listed
on such an exchange or qualified for trading on such a quotation system.

The Partnership makes quarterly distributions of Distributable Cash Flow
from operations remaining after payment of the Asset Management Fee within 45
days after the close of each quarter. The General Partner anticipates that the
Partnership will satisfy the investment objectives with regard to the
preservation and return of the capital investment by the Partners and the
realization of capital gains upon the repayment or sale of the Mortgages. There
is, however, no assurance that the Partnership will be successful in meeting its
investment objectives within the specified period, or that such objectives will
be attained at all.

The Partnership's ability to attain its investment objectives will be
subject to various risks. The Partnership's ability to make distributions of
Distributable Cash Flow will be, in part, subject to the performance of its
investments and to the performance of the properties underlying the Mortgages.

The Partnership's ability to generate cash flow through the participation
features of its PIMs and PGLs will be determined both by the operating
performance of the properties underlying such investments, and by factors
affecting real estate investments and interest rate environments in general over
which the Partnership may have little or no control. Such factors include the
demand for real property and economic conditions within the market areas where
the properties subject to such mortgages are located, as well as actions by HUD
and other regulatory authorities.

The offering period for the Partnership's Units terminated on September 30,
1991.

The number of investors holding Units as of December 31, 1995 was 5,912.

Quarterly distributions for the years ended December 31, 1995 and 1994 were
as follows:

1995 1994
--------------------------- -------------------------------
GENERAL GENERAL
PARTNER UNITHOLDERS (1) PARTNER UNITHOLDERS (1)
--------- ---------------- ------------- ----------------

1st Quarter.............................. $ 12,053 $ 590,581 $ 11,904 $ 583,291
2nd Quarter.............................. 12,043 3,053,186(3) 11,782 577,320
3rd Quarter.............................. 11,494 563,207 12,149 595,311
4th Quarter.............................. 11,524 564,678 51,415(2) 2,519,325(2)
--------- ---------------- ------------- ----------------
$ 47,114 $ 4,771,652 $ 87,250 $ 4,275,247
--------- ---------------- ------------- ----------------
--------- ---------------- ------------- ----------------

- ------------------------
(1) During 1995 and 1994, the Partnership had 8,168,457.7 Units outstanding of
which the Corporate Limited Partner owned 200 Units.

(2) The 4th quarter 1994 distribution included a distribution of excess working
capital of $40,174 and $1,968,598 to the General Partner and the
Unitholders, respectively.

(3) The 2nd quarter 1995 distribution included proceeds from the sale of the
Highlands of $2,463,060, all of which was distributed to the Unitholders.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth the selected financial information regarding
the Partnership's financial position and operating results as of and for each of
the five years ended December 31, 1995 (which have been derived from audited
financial statements for those years). 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 Supplementary Data, which
are included in Items 7 and 8 of this report, respectively.

1995 1994 1993 1992 1991
-------------- -------------- -------------- -------------- --------------

Total revenue........................... $ 3,268,459 $ 2,705,003 $ 2,550,740 $ 3,739,883 $ 3,905,073
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Net income.............................. $ 2,953,032 $ 2,246,715 $ 2,142,774 $ 3,299,842 $ 3,638,562
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Total assets at December 31............. $ 32,117,943 $ 34,070,778 $ 36,102,009 $ 36,259,215 $ 75,765,875
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Total distributions for the years ended
December 31:
Distributable Cash Flow............... $ 2,355,706 $ 2,353,724 $ 2,330,574 $ 4,025,196 $ 3,807,228
Return of Capital..................... -- -- -- 42,312,611 --
Excess working capital reserves....... -- 2,008,773 -- -- --
Sales Proceeds........................ 2,463,060 -- -- -- --
-------------- -------------- -------------- -------------- --------------
Total Distributions................. $ 4,818,766 $ 4,362,497 $ 2,330,574 $ 46,337,807 $ 3,807,228
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------

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

LIQUIDITY AND CAPITAL RESOURCES

The Partnership's cash and cash equivalents balance at December 31, 1995 of
$867,686 includes $426,266 of working capital reserves and $441,420 of cash
generated from operations net of accrued interest. The Partnership's working
capital reserves were invested in short-term obligations of the United States
government and other cash equivalents.

The Partnership derives its income primarily from its investments in MBSs,
which are long-term, fixed interest rate GNMA securities, guaranteed as to the
timely payment of principal and interest by GNMA and backed by the full faith
and credit of the United States government. The Partnership's only operating
expenses are general and administrative expenses which include audit and tax
return preparation fees, printing and postage costs for quarterly and annual
reports, quarterly investor distribution processing, investor K-1 processing,
and reimbursement to the General Partner for

reimbursable expenses incurred in accordance with the Partnership Agreement In
addition, the Partnership pays an Asset Management Fee to the General Partner of
.5% annually of the average aggregate amount invested in the Cross Creek
Mortgage and the Signature Place Mortgage. As discussed in Item 1. BUSINESS --
"Mortgages -- the Highlands", in connection with the 1995 sale of the Highlands,
the Partnership is no longer entitled to any participation in net cash flow or
net appreciation of the Highlands. Accordingly, effective January 31, 1995 the
General Partner decided to forego an Asset Management Fee with respect to the
aggregate amount invested in the Highlands Modified Mortgage. After payment of
general and administrative expenses, the Partnership distributes all of its
income plus principal repayments on the MBSs to the Partners on a quarterly
basis.

The PIMs and PGLs related to Cross Creek and Signature Place entitle the
Partnership to participate in the cash flow of the properties above certain
levels and in any appreciation upon sale or refinancing. As a result of the
repayment of the Highlands PGL upon the sale of the Highlands, which is more
fully described in Item 1. above, the Partnership received $2,463,060
representing principal and accrued interest on the Highlands PGL, a prepayment
fee and participations in net cash flow and appreciation. The Partnership
distributed such proceeds to investors on May 15, 1995.

Net cash provided by operating activities for 1995 was $3,514,222. In 1994,
net cash provided by operating activities was $2,286,337. As discussed below,
this increase was the result of proceeds received in conjunction with the sale
of the Highlands as offset by decreased interest income resulting from the
repayment of the PGL and the interest rate reduction on the Modified Mortgage.
Going forward, the Partnership's cash flow is expected to decline due to the
sale of the Highlands GNMA as discussed in Item 1. "BUSINESS -- Mortgages -- the
Highlands." Interest income on MBSs will decrease due to the sale of the
Highlands GNMA. Additionally, interest income on cash and cash equivalents will
decrease as the Partnership will no longer receive funds associated with the
Highlands GNMA which would have been invested in United States Government
obligations before being distributed to investors quarterly.

RESULTS OF OPERATIONS -- 1995

The Partnerships net income for the year ended December 31, 1995 increased
by $706,317 from the prior year primarily as a result of other income recognized
in connection with the sale of the Highlands as discussed in Item 1. BUSINESS --
"Mortgages -- the Highlands", and decreases in general and administrative
expenses and Asset Management Fees as offset by decreases in interest income
earned on cash and cash equivalents and the Mortgages.

Interest income on cash and cash equivalents decreased by $18,980 for the
year ended December 31, 1995 as compared to the prior year primarily due to the
distribution on November 15, 1994 of excess working capital which had previously
been invested in short term obligations of the United States government.

Interest income on Mortgages for the year ended December 31, 1995 decreased
by $573,026 from the prior year due to the repayment of the Highlands PGL and
the interest rate reduction on the Modified Mortgage as resulting from the sale
of the Highlands as discussed in Item 1. BUSINESS -- "Mortgages -- the
Highlands."

Other income for the year ended December 31, 1995 increased by $1,155,462
from the prior year due to the receipt of a prepayment charge of $324,000 and
participations in net appreciation and cash flow of $832,462 received in
connection with the sale of the Highlands as discussed in Item 1. BUSINESS --
"Mortgages -- the Highlands."

General and administrative expenses for the year ended December 31, 1995
decreased by $77,549 from the prior year as all legal fees incurred in
connection with the sale of the Highlands and the mutual release delivered in
connection therewith had been paid or accrued as of December 31, 1994. Partially
offsetting this decrease in legal fees was an increase in tax fees and slight
increases in costs related to quarterly investor distribution processing and
investor K-1 processing.

Asset Management Fees for the year ended December 31, 1995 decreased by
$65,312 from the prior year as the General Partner had decided to forego an
asset management fee with respect to the aggregate amount invested in the
Highlands GNMA as, in accordance with the Amended and Restated Agreement, the
Partnership would no longer be entitled to participations in net cash flow or
net appreciation in value of the Highlands.

RESULTS OF OPERATIONS -- 1994

The Partnership's net income for the year ended December 31, 1994 increased
by $103,941 from the prior year primarily as a result of interest income on the
PGLs. Interest income from PGLs increased by $177,708 over 1993, as semi-annual
interest payments became due and payable on the Cross Creek PGL and the
Highlands PGL during the latter half of 1993. Accordingly, the Partnership
realized 12 months worth of interest income on the Cross Creek PGL and the
Highlands PGL during 1994. In addition, the Partnership's 1994 general and
administrative expenses increased from the prior year as a result of
professional fees associated with the Highlands litigation previously described
in the Partnership's annual report on Form 10-K for the year ended December 31,
1994.

RESULTS OF OPERATIONS -- 1993

The Partnership's net income for the year ended December 31, 1993 decreased
by $1,157,068 from the prior year resulting primarily from a decrease in
interest income on cash and cash equivalents. Cash and cash equivalents includes
unfunded net proceeds which are invested in short-term obligations. Unfunded net
proceeds declined throughout 1992 and the first quarter of 1993 as additional
investments in Mortgages were funded. Additionally, there was a decrease in
interest income on Mortgages resulting from the reduction of the interest rate
on the Signature Place MBS from 10% to 8% upon conversion of the Signature Place
Mortgage to permanent status in March, 1993. The decrease in income for the year
more than offset a 10% decrease in general and administrative expenses.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Appendix A to this report.

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The principal business occupations during the past five years for the
Directors and executive officers of the Partnership's General Partner, NYLIFE
Realty Inc., are set forth below. Messrs. Micucci, Nocera, Boyce, Topp, Calhoun,
Warga, Ziegler and Zuccaro hold similar positions with (i) NYLIFE Equity Inc.,
which is the general partner of three series of publicly offered oil and gas
limited partnerships known as NYLOG I, NYLOG II and NYLOG III, and (ii) (except
for Mr. Calhoun, who is an officer but not a director or manager) NYLIFE
Structured Asset Management Company Ltd. ("NYLIFE and SAMCO"), which has sold
notes in a public offering. In addition, Messrs. Micucci, Nocera, Boyce and Topp
hold similar positions with NYLIFE Depositary Corporation ("Depositary"), which
is the General Partner of NAFCO Auto Funding, L.P., the originator of NAFCO Auto
Trust -- 1, NAFCO Auto Trust -- 2 and NAFCO Auto Trust -- 3 which has sold
certificates of beneficial interest pursuant to public offerings. Mr. Calhoun
and Mr. Zuccaro are officers, but not Directors of Depositary.

In addition, Messrs. Boyce, Topp, Calhoun and Warga are directors of NYLIFE
Securities Inc. ("NYLSEC"), the sales agent for the Partnership in its public
offering of Units, and Messrs. Topp (as President and Chief Executive Officer),
Boyce, Warga, Calhoun, Micucci and Zuccaro are officers of NYLSEC. NYLIFE Realty
Inc., NYLIFE Equity Inc., NYLIFE SAMCO, Depositary and NYLSEC are indirect
wholly-owned subsidiaries of New York Life Insurance Company.

NAME POSITION
- ----------------------- -------------------------------------------------------

Kevin M. Micucci Director, President and Controller
Richard A. Topp Director and Vice President
Jefferson C. Boyce Director
Michael J. Nocera Director
Frank J. Ollari Director and Vice President of Investment
Jay S. Calhoun Director, Vice President and Treasurer
Robert Ziegler Vice President of Administration and Secretary
Thomas J. Warga Vice President and General Auditor
Richard W. Zuccaro Tax Vice President

KEVIN M. MICUCCI, age 36, is a Director, President and Controller of the
General Partner. Prior to February 1996, he was a Vice President and Controller
of the General Partner. Mr. Micucci has been recently promoted to Vice President
of New York Life in the Structured Finance Department, where he had been a
Corporate Vice President since March 1991, an Assistant Vice President from July
1989 and a Director of Financial Reporting from August 1987 to July 1989. He was
a Senior Accountant in the Direct Investments Department of E.F. Hutton &
Company Inc. from 1984 to 1987 and was a Senior Accountant in the Audit
Department of Alexander Grant & Company from 1981 to 1984. Mr. Micucci received
a B.S. degree from St. John's University and is a Certified Public Accountant.

RICHARD A. TOPP, age 50, is a Director and Vice President of the General
Partner. Mr. Topp has resigned from these positions effective March 31, 1996; no
successor has been nominated or elected. Mr. Topp has been a Director and the
President and Chief Executive Officer of NYLIFE Securities Inc. since January
1989 and President and Chief Executive Officer of NYLIFE Distributors Inc. since
November 1993. He was a Vice President of Mutual Life Insurance Company of New
York, a life insurance and financial services company, from 1987 to 1989 and,
prior to such time, was the President of MONY Securities Corp., an
insurance-affiliated broker-dealer, from 1981 to 1987. Mr. Topp received a
B.B.A. degree in Accounting and his M.B.A. in Finance from Pace University.

JEFFERSON C. BOYCE, age 38, is a Director of the General Partner. Mr. Boyce
has been a Senior Vice President of New York Life Insurance Company since
February 1994, where he is in charge of the

Mutual Funds and Structured Finance Departments and of the broker/dealer
operations. Since 1995, Mr. Boyce has been Senior Vice President of the MainStay
Funds and MainStay Institutional Funds Inc. Prior to that position, he was Vice
President in charge of coordinating activities across New York Life's pension,
money management and real estate activities, and was responsible for Magnus
Software, Inc. Previously, he was Vice President responsible for the Pension
Departments investment and underwriting operations. Prior thereto, Mr. Boyce was
a Managing Director of Monitor Capital Advisors. Mr. Boyce received a B.B.S.
degree in Finance from Baruch College.

MICHAEL J. NOCERA, age 50, is a Director of the General Partner and CNP
Realty Investments Inc. He was President of the General Partner from October
1990 to February 1996. Mr. Nocera is currently the President and Chief Executive
Officer of New York Life WorldWide Holding, Inc. Mr. Nocera joined New York Life
as Vice President effective as of October 1, 1990. He was a Senior Vice
President at PaineWebber Properties Inc. from April 1990 to September 1990 and a
Senior Vice President of PaineWebber Incorporated, engaged in investment banking
activities from May 1988 to April 1990. Prior to joining PaineWebber, Mr. Nocera
had been engaged in investment banking activities with Shearson Lehman Hutton
Inc. and predecessor firm, E.F. Hutton & Company Inc., since 1982. From 1973 to
1982, Mr. Nocera was employed by the Securities and Exchange Commission. His
last position was Branch Chief in the Division of Corporation Finance. Mr.
Nocera received a B.A. degree from Boston College and his M.B.A. in Finance from
the American University.

FRANK J. OLLARI, age 49, is a Director and Vice President of Investment of
the General Partner. Mr. Ollari has been a Senior Vice President in the Mortgage
Finance Department of New York Life Insurance Company since October 1989, and
prior thereto was Vice President in that department since November 1985. He was
a Real Estate Vice President from 1982 to 1985 and an Assistant Vice President
from 1980 to 1982. Mr. Ollari received a B.B.A. degree from St. John's
University.

JAY S. CALHOUN, age 40, is a Director, Vice President and Treasurer of the
General Partner and has been Vice President and Treasurer of New York Life since
November 1992. He was named Vice President and Associate Treasurer in March 1992
and, prior to that, served as a Corporate Vice President in the Treasury
Department of New York Life. Mr. Calhoun received a B.A. degree from Princeton
University and an M.S. degree in Business Policy from Columbia University.

ROBERT ZIEGLER, age 41, is a Vice President of Administration and Secretary
of the General Partner. Mr. Ziegler has been recently promoted to Vice President
of New York Life in the Structured Finance Department and prior thereto had been
a Corporate Vice President in the Structured Finance Department since January
1989. He was an Assistant Vice President from July 1987 to December 1988. He was
a Vice President of B&D Equities Inc. and Damson Investor Services Corporation
from 1986 to 1987 and was an Assistant Vice President of Citibank, N.A. from
1981 to 1986. Mr. Ziegler received a B.B.A. degree and his M.B.A. degree from
Baruch College.

THOMAS J. WARGA, age 49, is a Vice President and General Auditor of the
General Partner. Mr. Warga has been a Vice President and General Auditor of New
York Life Insurance Company since March 1989. Prior to his current
responsibilities, he was Associate General Auditor from 1988 to 1989 and
Assistant General Auditor from 1985 to 1988. Mr. Warga received a B.S. degree
from Fairfield University and an M.B.A. degree from Long Island University and
is a Certified Internal Auditor, a Chartered Life Underwriter and a Chartered
Financial Consultant.

RICHARD W. ZUCCARO, age 46, is Tax Vice President of the General Partner.
Mr. Zuccaro has been a Vice President of New York Life since April 1995, and
prior thereto had been a Corporate Vice President since May 1986. Prior to his
current responsibilities, he was an Assistant Vice President of New York Life
Insurance Company from November 1981 to May 1986. Mr. Zuccaro received a B.B.A.
degree in Accounting from the University of Oklahoma.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no directors or executive officers. Certain fees and
reimbursable expenses are paid to the General Partner and its affiliates (See
Footnote 7 of Notes to Financial Statements in Appendix A of this report on Form
10-K).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of December 31, 1995, no person is known to the Registrant to be the
beneficial owner of more than 5% of the Partnership's 8,168,257.7 outstanding
Units. The ownership interests held by management or its affiliates consist of
its General Partner and Corporate Limited Partner interests; no interests are
held by executive officers and directors. In addition, as of December 31, 1995,
the General Partner holds [11,869.86 UNITS].

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Notes to Financial Statements in Appendix A of this Form 10-K.

PART IV

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

(a)1. Financial Statements -- see Index of Financial Statements, on page F-2
of Appendix A to this report.

2. All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have
been omitted since either (1) the information required is disclosed in the
financial statements and the notes thereto; (2) the schedules are not
required under the related instructions; or (3) the schedules are
inapplicable.

3. Exhibits:

NUMBER AND DESCRIPTION UNDER REGULATION S-K

The following reflects all applicable Exhibits required under Item 601 of
Regulation S-K:

(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS INCLUDING INDENTURES:
(4.1) Amended and Restated Agreement of Limited Partnership dated as of May 15, 1989,
incorporated by reference to Exhibit A to the Prospectus included in Amendment No.
2 of Registrant's Registration Statement of Form S-11 dated May 17, 1989 (File No.
0-18226).*
(4.2) Subscription Agreement whereby a subscriber agrees to purchase Units and adopts the
provisions of the Agreement of Limited Partnership, incorporated by reference to
Exhibit C to the Prospectus included in Amendment No. 2 of the Registrant's
Registration Statement on Form S-11 dated May 17, 1989 (File No. 0-18226).*
(4.3) Copy of First Amendment to and Restatement of Certificate of Limited Partnership
filed with the Massachusetts Secretary of State on May 12, 1989, incorporated by
reference to Exhibit 4.4 to Amendment No. 2 of Registrant's Registration Statement
on Form S-11 dated May 17, 1989 (File No. 0-18226).*
(10) MATERIAL CONTRACTS (each of which relates to acquisition of the Cross Creek,
Highlands and Signature Place Mortgages):

(10.7) Assignment of Leases, Rents and Profits by Borrower to LFC, incorporated by
reference to Exhibit 28.7 to Registrant's Report on Form 8-K dated February 21,
1990 (File no. 0-18226).*
(10.8) Subordinated Mortgage, Assignment of Leases and Rents and Security Agreement
between Borrower and Partnership, incorporated by reference to Exhibit 28.8 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
(10.9) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.10) Form of Security Agreement between Partnership and each of Borrower's partners
("Individual Borrowers") relating to Additional Interest Agreement, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.11) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.12) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.13) Form of Security Agreement with Individual Borrowers relating to Promissory Note
and Supplemental Interest Agreement, incorporated by reference to Exhibit 28.13 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*

(10.22) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8-K dated January 30, 1991
(File No. 0-18226).*
(10.23) Form of Pledge of Partnership Interests and Security Agreements between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.10 to Registrant's
Report on Form 8-K dated January 30, 1991 (File No. 0-18226).*
(10.24) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated January 30,
1991 (File No. 0-18226).*
(10.25) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.26) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.13 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.39) Modification of Mortgage Note of H.O. Associates, Ltd. payable to Related Mortgage
Corporation dated as of January 31, 1995, as endorsed by HUD.**
(10.40) Modification of Mortgage dated as of January 31, 1995 between H.O. Associates, Ltd.
and Related Mortgage Corporation.**
(10.41) Modification of Collateral Assignment of Rents and Leases dated January 31, 1995
between H.O. Associates, Ltd. and Related Mortgage Corporation.**
(10.42) Amendment to Regulatory Agreement for Multifamily Housing Projects Coinsured by HUD
dated January 31, 1995 by and between H.O. Associates, Ltd. and Related Mortgage
Corporation (original recorded instrument forwarded to Chemical Bank as Ginnie Mae
Custodian by certified mail).**
(10.43) Modification of Security Agreement dated as of January 31, 1995 between H.O.
Associates, Ltd. and Related Mortgage Corporation.**
(10.44) Amended and Restated Agreement dated January 31, 1995 by and between Richland
Properties, Inc. and NYLIFE Government Mortgage Plus Limited Partnership.**
(10.45) Amended and Restated Subordinated Mortgage and Security Agreement dated January 31,
1995 by Richland Properties, Inc. to NYLIFE Government Mortgage Plus Limited
Partnership.**
(10.46) Release Agreement dated January 31, 1995 by and among NYLIFE Government Mortgage
Plus Limited Partnership, Related Mortgage Corporation, H.O. Associates, Ltd.,
Robert M. Schiffman and Edwin B. Branch.**
(10.47) Agreement Regarding Termination of Contract of Coinsurance dated January 31, 1995
by Richland Properties, Inc. and Related Mortgage Corporation.**
(10.48) Amended and Restated Coinsuring Lender/Holder Agreement dated January 31, 1995 by
and between NYLIFE Government Mortgage Plus Limited Partnership and Related
Mortgage Corporation.**
(10.49) Special Closing Agreement dated January 31, 1995 by and among NYLIFE Government
Mortgage Plus Limited Partnership, H.O. Associates, Ltd., Robert M. Schiffman,
Edwin B. Branch, Markborough Development Company and Foley & Lardner.**

SIGNATURE PLACE:
(10.27) GNMA Purchase Agreement between NYLIFE Government Mortgage Plus Limited Partnership
("Partnership") and Love Funding Corporation ("LFC"), incorporated by reference to
Exhibit 28.1 to Registrant's Report on Form 8-K dated June 14, 1991 (File No.
0-18226).*
(10.28) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(10.29) Deed of Trust Note (as endorsed by HUD), issued by H.G. Partners Limited
Partnership. ("Borrower") to LFC, incorporated by reference to Exhibit 28.3 to
Registrant's Report on Form 8-K dated June 14, 1991 (file No. 0-18226).*
(10.30) Deed of Trust, Assignment of Rents and Security Agreement by Borrower for the
benefit of LFC, incorporated by reference to Exhibit 28.4 to Registrant's Report on
Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.31) Building Loan Agreement between Borrower and LFC, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated June 14, 1991 (File No.
0-18226).*
(10.32) Security Agreement between Borrower and LFC, incorporated by reference to Exhibit
28.6 to Registrant's Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.33) Additional Interest Deed of Trust, Security Agreement and Assignment of Leases,
Rents and Profits between Borrower and Partnership, incorporated by reference to
Exhibit 28.7 to Registrant's Report on Form 8-K dated June 14, 1991 (File no.
0-18226).*
(10.34) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.8 to Registrant's Report on Form 8-K dated June 14, 1991
(File No. 0-18226).*
(10.35) Form of Pledge of Partnership Interests and Security Agreement between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.9 to Registrant's
Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.36) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated June 14, 1991
(File No. 0-18226).*
(10.37) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(10.38) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(27.1) Financial Data Schedule.**

- ------------------------
*Previously filed.
**Filed herewith.

(b)REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the last quarter of the period
covered by this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

NYLIFE Government Mortgage
Plus Limited Partnership

By: NYLIFE Realty Inc.
General Partner

By: /s/ KEVIN M. MICUCCI

--------------------------------
Kevin M. Micucci,
President and Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------- ------------------

President, Controller and Director of
/s/ KEVIN M. MICUCCI NYLIFE Realty Inc. (Principal
------------------------------------------- Executive Officer and Principal
Kevin M. Micucci Accounting and Financial Officer) March 29, 1996

/s/ MICHAEL J. NOCERA Director of NYLIFE Realty Inc.
-------------------------------------------
Michael J. Nocera March 29, 1996

/s/ JEFFERSON C. BOYCE Director of NYLIFE Realty Inc.
-------------------------------------------
Jefferson C. Boyce March 29, 1996

/s/ RICHARD A. TOPP Vice President and Director of NYLIFE
------------------------------------------- Realty Inc.
Richard A. Topp March 29, 1996

/s/ FRANK J. OLLARI Vice President of Investment and
------------------------------------------- Director of NYLIFE Realty Inc.
Frank J. Ollari March 29, 1996

/s/ JAY S. CALHOUN Vice President, Treasurer and
------------------------------------------- Director of NYLIFE Realty Inc.
Jay S. Calhoun March 29, 1996

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

APPENDIX A
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (A) (1) AND (2)
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1995 AND 1994

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

F-1

FORM 10-K -- ITEM 8, ITEM 14, (A) (1) AND (2)

NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP

INDEX TO FINANCIAL STATEMENTS

PAGE
NO.
----

Report of Independent Accountants................................ F-3

Balance Sheets as of December 31, 1995 and 1994.................. F-4

Statements of Income for the Years Ended December 31, 1995, 1994
and 1993........................................................ F-5

Statements of Partners' Capital for the Years Ended December 31,
1995, 1994 and 1993............................................. F-6

Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993................................................... F-7

Notes to Financial Statements.................................... F-8

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted since
either (1) the information required is disclosed in the financial statements and
the notes thereto; (2) the schedules are not required under the related
instructions; or (3) the schedules are inapplicable.

F-2

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners and Unitholders
of NYLIFE Government Mortgage
Plus Limited Partnership:

We have audited the accompanying balance sheets of NYLIFE Government Mortgage
Plus Limited Partnership (a Massachusetts limited partnership, the
"Partnership") as of December 31, 1995 and 1994, and the related statements of
income, partners' capital and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

As further discussed in Note 9, in connection with the settlement of litigation
involving the General Partner of the Partnership, the general partner will
solicit consents of the limited partners for the dissolution of the Partnership.
The financial statements do not include any adjustments that might result should
the Unitholders consent to liquidate the Partnership.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NYLIFE Government Mortgage Plus
Limited Partnership as of December 31, 1995 and 1994 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

Coopers & Lybrand L.L.P.

New York, New York
March 22, 1996

F-3

NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
BALANCE SHEETS

AS OF DECEMBER 31, 1995 AND 1994

ASSETS 1995 1994
------------ ------------

Cash and cash equivalents.............................. $ 867,686 $ 950,967
Interest receivable.................................... 208,392 280,773
Investments in Participating Insured Mortgages......... 29,765,800 29,891,263
Investments in Participating Guaranteed Loans.......... 400,100 1,495,900
Deferred acquisition fees and expenses -- net.......... 875,965 1,451,875
------------ ------------
Total assets....................................... $ 32,117,943 $ 34,070,778
------------ ------------
------------ ------------

LIABILITIES AND PARTNERS' CAPITAL
Due to affiliates...................................... $ 21,729 $ 100,000
Accrued liabilities.................................... 79,423 88,253
------------ ------------
Total liabilities.................................. 101,152 188,253
------------ ------------
Commitments and contingencies
Partners' capital:
Capital contributions net of public offering
expenses............................................ 36,028,557 36,028,557
Accumulated earnings................................. 17,372,364 14,419,332
Cumulative distributions............................. (21,384,130) (16,565,364)
------------ ------------
Total partners' capital............................ 32,016,791 33,882,525
------------ ------------
Total liabilities and partners' capital............ $ 32,117,943 $ 34,070,778
------------ ------------
------------ ------------

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

F-4

NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993

1995 1994 1993
---------- ---------- ----------

INCOME
Interest -- cash and cash equivalents.................. $ 64,991 $ 83,971 $ 79,410
Interest -- Mortgages (net of write-off and
amortization of deferred acquisition costs)........... 2,047,006 2,620,032 2,463,163
Other income........................................... 1,156,462 1,000 8,167
---------- ---------- ----------
Total income....................................... 3,268,459 2,705,003 2,550,740
---------- ---------- ----------
EXPENSES
General and administrative............................. 222,572 300,121 250,000
Asset Management Fees.................................. 92,855 158,167 157,966
---------- ---------- ----------
Total expenses..................................... 315,427 458,288 407,966
---------- ---------- ----------
Net income....................................... $2,953,032 $2,246,715 $2,142,774
---------- ---------- ----------
---------- ---------- ----------
NET INCOME ALLOCATED
General Partner........................................ $ 43,654 $ 44,934 $ 42,856
Corporate Limited Partner.............................. 71 55 51
Unitholders............................................ 2,909,307 2,201,726 2,099,867
---------- ---------- ----------
$2,953,032 $2,246,715 $2,142,774
---------- ---------- ----------
---------- ---------- ----------
Net income per Unit.................................... $ .36 $ .27 $ .26
---------- ---------- ----------
---------- ---------- ----------
Number of Units........................................ 8,168,457.7 8,168,457.7 8,168,457.7
---------- ---------- ----------
---------- ---------- ----------

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

F-5

NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993

CORPORATE TOTAL
LIMITED GENERAL PARTNERS'
UNITHOLDERS PARTNER PARTNER CAPITAL
-------------- ----------- ---------- --------------

Balance at January 1, 1993............................... $ 36,178,886 $ 970 $ 6,251 $ 36,186,107
Net income............................................... 2,099,867 51 42,856 2,142,774
Distributions............................................ (2,283,906) (56) (46,612) (2,330,574)
-------------- ----------- ---------- --------------
Balance at December 31, 1993............................. $ 35,994,847 $ 965 $ 2,495 $ 35,998,307
Net income............................................... 2,201,726 55 44,934 2,246,715
Distributions............................................ (4,275,142) (105) (87,250) (4,362,497)
-------------- ----------- ---------- --------------
Balance at December 31, 1994............................. 33,921,431 915 (39,821) 33,882,525
Net income............................................... 2,909,307 71 43,654 2,953,032
Distributions............................................ (4,771,535) (117) (47,114) (4,818,766)
-------------- ----------- ---------- --------------
Balance at December 31, 1995............................. $ 32,059,203 $ 869 $ (43,281) $ 32,016,791
-------------- ----------- ---------- --------------
-------------- ----------- ---------- --------------

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

F-6

NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993

1995 1994 1993
----------- ----------- -----------

Cash flows from operating activities:
Net income............................................. $ 2,953,032 $ 2,246,715 $ 2,142,774
----------- ----------- -----------
Adjustments to reconcile net income to net cash flows
from operating activities:
Amortization of acquisition costs.................... 575,910 17,948 16,494
Changes in assets and liabilities:
Decrease (increase) in interest receivable......... 72,381 (62,877) 28
(Decrease) increase in due to affiliates........... (78,271) 100,000 --
(Decrease) increase in accrued liabilities......... (8,830) (15,449) 30,594
----------- ----------- -----------
Total adjustments................................ 561,190 39,622 47,116
----------- ----------- -----------
Net cash provided by operating activities........ 3,514,222 2,286,337 2,189,890
----------- ----------- -----------
Cash flows from investing activities:
Repayment of Participating Insured Mortgages......... 125,463 108,069 94,191
Investment in Participating Insured Mortgages........ -- -- (391,900)
Repayment of Participating Guaranteed Loans.......... 1,095,800 -- --
----------- ----------- -----------
Net cash provided by (used in) investing
activities...................................... 1,221,263 108,069 (297,709)
----------- ----------- -----------
Cash flows from financing activities:
Distributions to partners............................ (4,818,766) (4,362,497) (2,330,574)
----------- ----------- -----------
Net cash used in financing activities............ (4,818,766) (4,362,497) (2,330,574)
----------- ----------- -----------
Net decrease in cash and cash equivalents.............. (83,281) (1,968,091) (438,393)
Cash and cash equivalents at beginning of period....... 950,967 2,919,058 3,357,451
----------- ----------- -----------
Cash and cash equivalents at end of period............. $ 867,686 $ 950,967 $ 2,919,058
----------- ----------- -----------
----------- ----------- -----------

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

F-7

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF BUSINESS
NYLIFE Government Mortgage Plus Limited Partnership (the "Partnership") is a
limited partnership which was formed on November 21, 1988 pursuant to the
provisions of the Massachusetts Uniform Limited Partnership Act. The
Partnership's general partner, NYLIFE Realty Inc. (the "General Partner"), an
indirect wholly-owned subsidiary of New York Life Insurance Company ("New York
Life"), was issued all of the general partner interests in exchange for a
capital contribution of $3,000. The Partnership also issued all of the limited
partner interests to NYLIFE Depositary Corporation, an indirect wholly-owned
subsidiary of New York Life (the "Corporate Limited Partner"), in exchange for a
capital contribution of $2,000.

Limited partner interests ("Limited Partner Interests") are defined as the
interests of any partner having an ownership interest representing an initial
capital contribution of $10 together with the obligations of such partner to
comply with all terms and provisions of the Partnership Agreement, but excluding
any claims which the partner may have as a creditor.

A unit is defined as the interest of a unitholder in the Partnership
(hereafter referred to as "Units" and "Unitholders"). Upon the purchase of Units
by Unitholders, the Corporate Limited Partner contributed to the Partnership
cash in the amount of the subscription prices paid by the Unitholders and the
Unitholders received Limited Partner Interests in return. In addition, the
Corporate Limited Partner assigned all of the economic rights attributable to
the Limited Partner Interests to the Unitholders to the extent permitted by
Massachusetts law, and exercised all rights with respect to such Limited Partner
Interests as directed by the Unitholders, pursuant to the Partnership Agreement.

The offering period for the Partnership's Units expired on September 30,
1991.

The Partnership Agreement authorizes the Partnership to acquire guaranteed
or federally insured or coinsured mortgages on multi-family residential
properties or residential care facilities directly or through the purchase of
mortgage-backed securities ("MBSs") guaranteed as to principal and Basic
Interest issued or originated under or in connection with the housing programs
of the department of Housing and Urban Development ("HUD"), or Government
National Mortgage Association ("GNMA"). The Partnership may also acquire
uninsured participation interests secured by subordinated mortgages
("Participation Interests"), which may provide for Partnership participation in
the operating revenues and residual value, if any, of the underlying properties.
In addition, the Partnership may invest in uninsured loans ("Participating
Guaranteed Loans" or "PGLs") with respect to the same properties underlying the
MBSs, which may also provide for such participations. Although the Participation
Interests are not guaranteed or insured by any government agency and the PGLs
are not secured by any real estate mortgage, for ease of reference, the MBSs and
the Participation Interests are collectively referred to herein as the
"Participating Insured Mortgages" or "PIMs" and PIMs and PGLs are collectively
referred to herein as the "Mortgages."

Since its formation, the Partnership has invested in three PIMs consisting
of (i) MBSs collateralized by federally coinsured mortgages on multi-family
residential properties pursuant to the coinsurance programs of Section 221(d)(4)
of the National Housing Act and (ii) participating interests evidenced by
additional interest agreements and secured by subordinated mortgages on those
properties. Each MBS is guaranteed as to principal and Basic Interest by GNMA.
As described in Note 9, one such MBS was sold on February 27, 1996. The Cross
Creek and Signature Place PIMs also provide for the Partnership to participate
in 50% of the underlying property's net cash flow and appreciation, if any. The
Partnership has funded three PGLs with respect to the same properties underlying
the

F-8

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
Partnership's PIMs. The General Partner has guaranteed a return to the
Partnership, upon liquidation, of funds invested in PGLs, if any, in excess of
cash payments received by the Partnership from all mortgages and loans (other
than cash payments of principal and Basic Interest on MBSs). The PIMs and PGLs
are further described in Note 5.

"Basic Interest" is defined as interest which is generally payable monthly,
and is calculated on the unpaid balance of the underlying mortgage loan or PGL
at an annual percentage rate (the "Basic Interest Rate") specified in the
documents establishing such mortgage loan or PGL.

The Partnership terminates on December 31, 2028, unless terminated earlier
by the occurrence of certain events as set forth in the Partnership Agreement.

At January 1, 1992, the Partnership had committed $33,580,000 for investment
in MBSs and Participation Interests related to three properties, known as Cross
Creek, the Highlands and Signature Place. This represented 48.2% of the funds
available for investment by the Partnership. Since it was unable to invest its
remaining available net proceeds, the Partnership returned $42,312,611 of its
capital to investors during 1992. This amount included $37,020,024 of proceeds
which were not committed for Mortgages, as well as $5,292,587 of fees and
expense reimbursements previously paid to the General Partner and its
affiliates, of which $3,596,572 were credited to capital and $1,696,015 reduced
deferred acquisition costs. This distribution represented a $5.18 per unit
return of capital. Accordingly, subsequent to such distribution, the Partnership
has 8,168,457.7 Units with a capital value of $4.82 per unit.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership uses the following accounting policies for financial
reporting purposes:

CASH AND CASH EQUIVALENTS

Highly liquid debt instruments (including short-term obligations of the
United States government) purchased with a maturity of three months or less, are
considered cash equivalents and are stated at cost, which approximates market
value. Included in cash and cash equivalents is a working capital reserve of
$426,266 which may be used to meet the Partnership's operating expenses and
liabilities.

PARTICIPATING INSURED MORTGAGES

In 1995, mortgage-backed permanent loan certificates ("PLCs") are carried at
current market value and are classified as available-for-sale. PLCs were carried
at amortized cost in 1994 and were classified as held to maturity (See Note 5).

PARTICIPATING GUARANTEED LOANS ("PGLS")

In 1995, PGLs are carried at current market value and are classified as
available-for-sale. PGLs were carried at amortized cost and were classified as
held to maturity in 1994 (See Note 5). Although interest accrues on the PGLs,
the Partnership does not recognize such income on its books until it is
realizable.

DEFERRED ACQUISITION FEES AND EXPENSES

Acquisition expenses, which were paid upon the receipt of gross offering
proceeds, were deferred and, upon conversion of the construction loan
certificates ("CLCs") to a PLC, are currently being amortized over the term of
the PLC, using the effective interest method. Amounts paid to the

F-9

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Partnership as origination fees relating to the acquisition of Mortgages were
netted against acquisition costs, and are also currently being amortized over
the term of the PLC using the effective interest method.

INCOME TAXES

No provision for income taxes has been made in the financial statements
because these taxes are the responsibility of the individual partners rather
than the Partnership.

PUBLIC OFFERING EXPENSES

Reimbursement to the General Partner for organization and offering expenses
and amounts paid to NYLIFE Securities Inc. ("NYLIFE Securities"), pursuant to a
sales agent agreement, were charged directly to the capital accounts upon the
admission of Unitholders through September 30, 1991. Organization and offering
expenses included costs of preparing the Partnership for registration, and
thereafter offering and selling Units to the public, and included advertising
expenses and any sales commissions paid to broker-dealers relating to the sale
of the Units. In 1992 a portion of these public offering expenses were returned
to the Partnership (See Note 1).

OTHER

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 dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

3. CAPITAL CONTRIBUTIONS AND ALLOCATION OF NET INCOME TO THE CORPORATE
LIMITED PARTNER AND UNITHOLDERS
As of December 31, 1995, the Partnership had 8,168,457.7 Units outstanding
which originally sold for $81,684,577 and which reflected purchase volume
discounts of $143,319.

4. THE PARTNERSHIP AGREEMENT
In accordance with the Partnership Agreement, Distributable Cash Flow, as
defined below, of the Partnership remaining after payment of the Asset
Management Fee, as defined, is distributed quarterly, 98% to the class comprised
of the Unitholders (which includes the Corporate Limited Partner) and 2% to the
General Partner.

"Distributable Cash Flow" is defined as i) the net cash provided by the
Partnership's normal operations for each fiscal year, or portion thereof,
including, without limitation, Basic Interest, Minimum Additional Interest and
Shared Income Interest from Mortgages, points, interest from interim investments
and from funds held in escrow and amounts released from operating reserve
accounts available for distribution, after the general expenses and current
liabilities of the Partnership for such period (other than the Asset Management
Fee) are paid, less ii) amounts set aside for reserves.

"Asset Management Fee" is defined as an amount paid by the Partnership to
the General Partner on a quarterly basis equal to .5% per annum of the value of
the Total Invested Assets of the Partnership. Under no circumstances may the
aggregate of the Asset Management Fee paid since the organization of the
Partnership and the distributions to the General Partner of Distributable Cash
Flow paid since the organization of the Partnership exceed 10% of the aggregate
Distributable Cash Flow since the organization of the Partnership. The General
Partner may subcontract all or a portion of the services rendered for the Asset
Management Fee.

F-10

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. THE PARTNERSHIP AGREEMENT (CONTINUED)
"Total Invested Assets" is defined as the portion of the net proceeds of the
offering which is invested in Mortgages.

Upon the occurrence of a Capital Transaction, as defined below, the General
Partner will apply the proceeds first to the payment of all debts and
liabilities of the Partnership then due, and then fund any reserves for
contingent liabilities which it deems appropriate. "Capital Transaction" is
defined as a principal repayment or Mortgage prepayment to the extent that it is
classified as a return of capital for federal income tax purposes.

The remaining Net Cash Proceeds if any, as defined below, will be
distributed as follows: FIRST, to the class comprising the Unitholders until
they have received a return of their total Invested Capital; SECOND, to the
General Partner until it has received a return of its total Invested Capital;
THIRD, 99% to the class comprising the Unitholders and 1% to the General Partner
until the class comprising the Unitholders have received any deficiency in their
12% per annum Cumulative Return on Invested Capital through fiscal years ended
prior to the date of the Capital Transaction; and FOURTH, as to any remaining
proceeds, 90% to the class comprised of the Unitholders and 10% to the General
Partner.

"Net Cash Proceeds" is defined as cash received by the Partnership as a
result of a Capital Transaction, less any reinvested amounts, all debts and
liabilities of the Partnership required to be paid as a result of the
Transaction, and any reserves for contingent liabilities, to the extent deemed
reasonable by the General Partner. This is provided that, at the expiration of
such period as the General Partner shall deem advisable, the balance of such
reserves remaining after payment of such contingencies shall be distributed in
the manner provided in this Agreement for Net Cash Proceeds. If the Partnership
takes back a mortgage note in connection with a Capital Transaction, all
payments received with respect to it shall be included in the Net Cash Proceeds
of that Transaction.

"Invested Capital" means, with respect to the General Partner, its capital
contributions (other than capital contributions represented by any Guarantee
Payments, as described in Note 5) and, with respect to the Limited Partners and
Unitholders, $10.00 for each Limited Partner Interest or Unit, in either case
reduced by any amounts received as distributions of Distributable Cash Flow.

The Cumulative Return is defined as a 12% return per annum on the invested
capital of the class made up of the Unitholders calculated from the respective
dates on which the Units are deemed to be outstanding through the most recent
fiscal year completed prior to the Capital Transaction giving rise to the
computation.

Net income or loss from operations for any fiscal year is allocated 98% to
the class comprised of the Unitholders and 2% to the General Partner.

F-11

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENTS IN MORTGAGES
The Partnership's net proceeds of $33,580,000 had been committed for
investment in Mortgages. Of this total amount committed, $1,946,594 had been
included in the Partnership's working capital reserve and subsequently
distributed to its Partners on November 15, 1994 and the following amounts have
been funded as of December 31, 1995 and 1994:

1995 (1) 1994 (1)
-------------- -----------

Halcyon at Cross Creek........................ -PIM $ 7,226,406 $ 7,226,406
-PGL 400,000 400,000
The Highlands................................. -PIM 13,037,676(2) 13,154,200
-PGL -- (2) 1,095,800
Signature Place............................... -PIM 9,756,900 9,756,900
-PGL 100 100
-------------- -----------
$ 30,421,082 $31,633,406
-------------- -----------
-------------- -----------

- ------------------------
(1) As of December 31, 1995 and 1994 cumulative principal repayments on the PIMS
of $371,707 and $246,244 have been received, respectively.

(2) Effective January 31, 1995, as part of the sale of the Highlands, as
described below, the participation feature of the Highlands PIM was
released, a new MBS was issued to the Partnership and the related PGL was
repaid. As described in Note 9, the MBS was subsequently sold in 1996.

MORTGAGE BACKED SECURITIES

Effective January 1, 1994, the Partnership adopted the provisions of
Statement of Financial Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS No. 115"). The Partnership had
considered its PIMs and PGLs to be held-to-maturity as defined by SFAS No. 115
in 1994.

SFAS No. 115 addresses the definition of, accounting for and disclosure of
debt and equity securities. In accordance with the statement, securities are
classified when purchased as either securities held to maturity, securities
available for sale or trading securities.

In November 1995, the Financial Accounting Standards Board ("FASB") issued a
Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities." Concurrent with the initial
adoption of this implementation guidance, but no later than December 31, 1995,
the FASB permitted a one-time opportunity to reassess the appropriateness of the
classification of all securities. Accordingly, on December 31, 1995, the
Partnership reclassified its held-to-maturity investments to available-for-sale,
based on a one-time assessment of the portfolio. The impact of the assessment
was to transfer securities with an amortized cost of approximately $30,200,000
(which approximates market value of $30,700,000) from held-to-maturity to
available-for-sale. Market value has been calculated by management by
discounting future cash flows using interest rates based on treasury bills with
similar maturities.

A) CROSS CREEK

In 1990, the Partnership acquired a PIM (the "Cross Creek PIM") consisting
of (i) a MBS collateralized by a first mortgage loan in the principal amount of
up to $7,230,000 (the "Cross Creek Mortgage") with respect to a 152 unit garden
style apartment complex in Greenville, South Carolina known as Halcyon at Cross
Creek ("Cross Creek") and (ii) a participation interest in Cross Creek evidenced
by an additional interest agreement and secured by a subordinated mortgage on
Cross

F-12

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENTS IN MORTGAGES (CONTINUED)
Creek. The borrower is Boiling Springs Apartments Limited (the "Cross Creek
Borrower"). In addition, the Partnership agreed to make a PGL to the Cross Creek
Borrower's partners ("Individual Cross Creek Borrowers") of up to $600,000.

PARTICIPATING INSURED MORTGAGE

To fund the construction of Cross Creek, the Partnership purchased from Love
Funding Corporation ("LFC") mortgage-backed pass-through construction loan
certificates ("CLCs"), guaranteed as to timely payment of principal and Basic
Interest by GNMA, in the maximum principal amount of $7,230,000.

Upon the maturity of the CLCs at the conclusion of the construction period
and upon final endorsement ("Final Endorsement") of the Cross Creek Mortgage
Note by HUD, which occurred on January 8, 1992, the Partnership received a
mortgage-backed permanent loan certificate ( the "Cross Creek PLC"), guaranteed
as to the timely payment of principal and Basic Interest by GNMA. The Cross
Creek PLC has a face amount of $7,226,406, and an issue date of February 1,
1992.

The Cross Creek Mortgage Note bears interest at a Basic Interest Rate of
8.50% during the permanent term. One quarter of one percent (.25%) of the
foregoing amount is retained by LFC and GNMA as a servicing and guarantee fee;
accordingly, the Cross Creek PLC bears an interest rate of 8.25% per annum. The
Cross Creek Borrower is required to make equal monthly payments of principal and
interest on the Cross Creek Mortgage Note until maturity on December 15, 2031.

The Cross Creek Mortgage is coinsured by LFC and HUD under Section 221(d)(4)
of the National Housing Act for new construction of multi-family residential
properties. The Cross Creek Mortgage Note, which is non-recourse to the Cross
Creek Borrower, except under limited circumstances, including fraud, is
collateralized by a first mortgage on Cross Creek.

The Cross Creek Mortgage Note may be prepaid upon 30 days written notice
after, but not prior to, the tenth anniversary of the date of Initial
Endorsement, with a prepayment charge equal to 1% of the outstanding principal
on the Cross Creek Mortgage. Notwithstanding the foregoing, if HUD determines
that prepayment will avoid a mortgage insurance claim and is in the best
interest of the federal government, the Cross Creek Mortgage Note may be prepaid
at any time without the Partnership's consent and without any prepayment charge.
The Partnership has the option, upon six months written notice, to require
prepayment in full on or after the tenth anniversary of the date of the Initial
Endorsement. No prepayment fee shall be imposed if the Partnership exercises
this option. Enforcement of this option would require the termination of the
coinsurance contract and the surrender of the Cross Creek PLC.

The Partnership is entitled under the Cross Creek PIM to participations, in
addition to monthly pass-through payments of principal and Basic Interest, of:
(i) 50% of any increase in the value of Cross Creek in excess of its base value
(i.e., the outstanding principal amounts of the Cross Creek Mortgage and PGL);
the increase in value is measured from February 22, 1990 until the sale of Cross
Creek, or until the maturity, refinancing or prepayment of the Cross Creek
Mortgage; and (ii) 50% of Cross Creek's monthly net cash flow (subject to
certain HUD restrictions and reserve requirements) beginning with the first
month after completion of construction. The obligation of the Cross Creek
Borrower to pay these participations is evidenced by an additional interest
agreement, which is collateralized by a subordinated mortgage on Cross Creek and
is non-recourse to the Cross Creek Borrower, except under limited circumstances,
including fraud. This obligation is further collateralized by a collateral
assignment by the Individual Cross Creek Borrowers of their interests in the
Cross Creek Borrower.

F-13

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENTS IN MORTGAGES (CONTINUED)
PARTICIPATING GUARANTEED LOAN

The Partnership agreed to make a PGL of up to $600,000 to the Individual
Cross Creek Borrowers who are jointly and severally liable for this obligation.
The PGL, which is non-recourse debt, is collateralized by a collateral
assignment by the Individual Borrowers of their partnership interests in the
Cross Creek Borrower, constituting a second lien thereon. The promissory note
evidencing the PGL provides that the Individual Borrowers will use the proceeds
thereof to satisfy obligations of the Cross Creek Borrower.

Of the maximum loan proceeds to be available under the PGL, $400,000 has
been advanced as of December 31, 1995. In addition, up to $200,000 of the
maximum loan proceeds was to be advanced at the rate of $10.00 for each $1.00 of
net operating income in excess of $750,000 earned by Cross Creek at any time up
to and including one year after Final Endorsement of the Cross Creek Mortgage.
The one year anniversary of Final Endorsement was January 8, 1993 and no
additional amounts were advanced under the PGL. The unfunded loan proceeds of
$200,000, which had been included in the Partnership's working capital reserve,
were distributed to its Partners on November 15, 1994.

The PGL bears interest at the rate of 10% per annum, payable semi-annually,
and provides that interest shall be accrued up to $100,000 to the extent Surplus
Cash distributions (as defined by HUD) to the Individual Borrowers are
insufficient to fully pay the interest obligation. Any such accruals will be
added to the outstanding principal balance of the PGL and shall bear interest at
the same rate. At such time as accruals of interest (including semi-annually
compounded interest) exceed $100,000, the Individual Borrowers shall pay
interest on the outstanding principal amount semi-annually, whether or not
Surplus Cash is available. Accrued interest reached $100,000 on September 25,
1993. Accordingly, accrued interest became due and payable on October 1, 1993.
Semi-annual interest payments of $25,000 will be due and payable on each April 1
and October 1. Principal and unpaid interest, if any, shall be due and payable
on February 21, 2005.

No prepayments of the PGL will be permitted prior to the tenth anniversary
of the Initial Endorsement of the Cross Creek Mortgage. Thereafter, the PGL may
be prepaid in whole, but not in part, subject to a prepayment fee equal to 1% of
the principal amount prepaid. Also, commencing on the tenth anniversary date,
the Partnership will have the right to call the PGL, in which case no prepayment
fee shall be paid.

The terms of the PGL entitle the Partnership to participations in addition
to Basic Interest equal to: (i) 15% of any increase in the value of the
Individual Borrowers' partnership interest in the Cross Creek Borrower
(determined by reference to the value of Cross Creek) over the base value of the
Individual Borrowers' partnership interest (based on the outstanding principal
amount of the Cross Creek Mortgage and the PGL), such increase to be determined
upon the sale of Cross Creek or upon the refinancing, prepayment or maturity of
the PGL; and (ii) 15% of the Individual Borrowers' interest in Cross Creek's net
cash flow (subject to certain HUD restrictions and reserve requirements). The
aforesaid 15% participations in the PGL are over and above the 50%
participations in the Cross Creek Mortgage. The obligation of the Individual
Borrowers to pay these participations is evidenced by a supplemental interest
agreement, and is non-recourse to the Individual Borrowers, except under limited
circumstances, including fraud. These obligations are collateralized by a
collateral assignment by the Individual Borrowers of their partnership interests
in the Cross Creek Borrower (constituting a second lien thereon).

F-14

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENTS IN MORTGAGES (CONTINUED)
B) THE HIGHLANDS

In 1990, the Partnership acquired a PIM consisting of (i) an MBS
collateralized by a mortgage loan in the principal amount of up to $13,154,200
(the "Highlands Mortgage") secured by a first mortgage on a 272 unit garden
style apartment complex located outside Tampa, Florida (the "Highlands") and
(ii) a participation interest in the Highlands evidenced by an additional
interest agreement and secured by a subordinated mortgage on the Highlands. The
original borrower under the Highlands Mortgage was Highland Oaks Associates
Limited (the "Original Highlands Borrower").

PARTICIPATING INSURED MORTGAGE

To fund the construction of the Highlands, the Partnership entered into a
purchase agreement with Related Mortgage Corporation ("RMC"), pursuant to which
it agreed to purchase CLCs, guaranteed as to timely payment of principal and
Basic Interest by GNMA, in the maximum principal amount of up to $13,154,200.

Upon the maturity of the CLCs at the conclusion of the construction period
and upon Final Endorsement of the Highlands Mortgage Note by HUD, which occurred
on May 31, 1992, the Partnership received a PLC guaranteed as to the timely
payment of principal and Basic Interest by GNMA. The PLC had a face amount of
$13,154,200 and an issue date of June 1, 1992.

Effective January 31, 1995, the Original Highlands Borrower sold the
Highlands to Richland Properties, Inc. (the "New Highlands Borrower") for
$16,300,000 in accordance with the terms and conditions of the Purchase and Sale
Agreement dated October 14, 1994. The sale closed in escrow pending the receipt
by the Partnership of a new GNMA certificate in the principal amount of
$13,037,676, and bearing interest at 7.625% per annum. The new GNMA certificate
was received by the Partnership on February 15, 1995, at which time the sale was
completed and the Partnership received the payments described below, together
with the other closing documents. In addition, a mutual release was delivered,
effective January 31, 1995, pursuant to which all obligations of, and claims
against, the Highlands Borrower and its general partners were released by the
Partnership and Related Mortgage Corporation ("RMC"), and all obligations of,
and claims against, the Partnership and RMC were released by the Highlands
Borrower and its general partners.

The Partnership retained its beneficial interest in the Highlands Mortgage
("Modified Mortgage") and related promissory note ("Modified Note"), which were
modified to provide for (a) prepayment at any time with a prepayment charge
payable to RMC, equal to 1% of the outstanding principal, and (b) a reduction in
the interest rate from 8.5% to 7.875% per annum, one-quarter of one percent of
which is retained by RMC and GNMA as a servicing and guarantee fee. Accordingly,
the Partnership earns an interest rate of 7.625% per annum. The New Highlands
Borrower is required pursuant to the Modified Note and Modified Mortgage to make
equal monthly payments of principal and interest until maturity on May 15, 2032.
The Modified Mortgage is coinsured by RMC and HUD under Section 221(d)(4), of
the National Housing Act for new construction of multi-family residential
properties.

The Partnership has the option, upon six months written notice, to require
prepayment in full of the Modified Note on or after January 31, 2005. No
prepayment fee will be imposed if the Partnership exercises this option.
Enforcement of this option would require the termination of the coinsurance
contract and the surrender of the new GNMA certificate.

The Additional Interest Agreement has been amended and restated ("Amended
and Restated Agreement") to provide that the Partnership will no longer be
entitled to any participations in net cash flow or net appreciation in value of
the Highlands.

F-15

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENTS IN MORTGAGES (CONTINUED)
Concurrent with the sale of the Highlands as described above, the Highlands
PGL was repaid as the Partnership received $2,463,060, which included $1,095,800
of principal, $210,798 of accrued interest, a prepayment fee of $324,000 and
participations of $832,462. Such prepayment fee and participation are included
in other income for the year ended December 31, 1995. The Partnership
distributed these proceeds to its partners on May 15, 1995. In addition, the
Supplemental Interest Agreement was terminated, and the Partnership and the New
Highlands Borrower entered into an Amended and Restated Subordinated Mortgage
and Security Agreement to secure the Partnership's call option, as described
above.

As described in Note 9, the Highlands GNMA was sold on February 27, 1996.

Also on January 31, 1995, the Partnership and the Original Highlands
Borrower (together with its partners) entered into a Special Closing Agreement,
pursuant to which two letters of credit held by the Partnership were each
reduced from $75,000 to $17,500. The two letters of credit were being held as
security for the obligations of the Original Highlands Borrower and its partners
under the Special Closing Agreement, pursuant to which the Original Highlands
Borrower agreed to pay a portion of any additional taxes determined to be due in
connection with the recording of the original loan documents to the State of
Florida. In 1996, the recording tax claim was settled with the State of Florida
as described in Note 9.

C) SIGNATURE PLACE

On May 8, 1991, the Partnership agreed to acquired a PIM (the "Signature
Place PIM") consisting of (i) an MBS collateralized by a federally coinsured
mortgage loan in the maximum principal amount of up to $9,800,000 (the
"Signature Place Mortgage") and (ii) a Participation Interest evidenced by an
additional interest agreement and secured by a subordinated mortgage on
Signature Place. The borrower of the Signature Place Mortgage is HG Partners
Limited Partnership (the "Signature Place Borrower"), which used the funds to
finance the construction of a 232-unit multi-family residential apartment
complex in Hampton, Virginia known as Signature Place ("Signature Place"). In
addition, the Partnership agreed to make a PGL to each of the Individual
Borrowers in the aggregate amount of up to $1,200,000.

PARTICIPATING INSURED MORTGAGES

The Partnership entered into a GNMA purchase agreement with LFC, pursuant to
which it agreed to purchase CLCs, guaranteed as to timely payment of principal
and Basic Interest by GNMA, in the maximum principal amount of $9,800,000. The
proceeds of the Signature Place Mortgage were disbursed to the Signature Place
Borrower in stages during the construction of Signature Place.

Upon the maturity of the CLCs at the conclusion of the construction period
and upon Final Endorsement of the Signature Place Mortgage note by HUD, which
occurred on February 9, 1993, the Partnership received a PLC (the "Signature
Place PLC"), guaranteed as to timely payment of principal and Basic Interest by
GNMA. The Signature Place PLC has a face amount of $9,756,900, and an issue date
of February 1, 1993.

The Signature Place Mortgage Note bears interest at a Basic Interest Rate of
8.25% during the permanent term. One quarter of one percent (.25%) of the
foregoing amount is retained by LFC and

F-16

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENTS IN MORTGAGES (CONTINUED)
GNMA as a servicing and guarantee fee; accordingly the Signature Place PLC bears
an interest rate of 8% per annum. The Signature Place Borrower will make equal
monthly payments of principal and interest until maturity on January 15, 2033.

The Signature Place Mortgage is coinsured by LFC and HUD under Section
221(d)(4) of the National Housing Act for new construction of multi-family
residential properties. The Signature Place Mortgage note, which is non-recourse
to the Signature Place Borrower, except under limited circumstances, including
fraud, is secured by a first mortgage on Signature Place.

The Signature Place Mortgage Note may be prepaid in full upon 45 days
written notice after (but not prior to) the tenth anniversary of Initial
Endorsement with a prepayment charge equal to 1% of the principal amount
prepaid, plus any additional interest due thereon. Notwithstanding the
foregoing, if HUD determines that prepayment will avoid a mortgage insurance
claim and is in the best interest of the federal government, the Signature Place
Mortgage Note may be prepaid at any time without the Partnership's consent and
without any prepayment charge. The Partnership has the option, upon six months
written notice, to require prepayment in full of the Signature Place Mortgage
Note on or after the tenth anniversary of Initial Endorsement. No prepayment fee
shall be imposed if the Partnership exercises this option. Enforcement of this
option would require the termination of the coinsurance contract and the
surrender of the Signature Place PLC.

The Partnership is entitled to participations under the Signature Place PIM
in addition to monthly pass-through payments of principal and Basic Interest,
equal to: (i) 50% of the net appreciation in the value of Signature Place from
Initial Endorsement until the sale of Signature Place or the maturity,
refinancing or prepayment of the Signature Place Mortgage; and (ii) 50% of
Signature Place's net cash flow (subject to certain HUD restrictions and reserve
requirements) beginning after completion of construction. The obligation of the
Signature Place Borrower to pay these participations is evidenced by an
additional interest agreement, which is collateralized by a subordinated
mortgage on Signature Place and is non-recourse to the Signature Place Borrower,
except under limited circumstances, including fraud and environmental
noncompliance.

PARTICIPATING GUARANTEED LOAN

The Partnership has also agreed to make a PGL in the aggregate amount of up
to $1,200,000 to the Individual Borrowers, jointly and severally, in the form of
a personal loan collateralized by the pledge of 100% of their partnership
interests in the Signature Place Borrower. Of the maximum loan proceeds to be
available under the PGL, $100 was funded as of December 31, 1995. In addition,
up to $499,900 of the loan proceeds were to be advanced at the rate of $6.25 for
each $1.00 of net operating income in excess of $960,000 per annum, and up to an
additional $700,000 of loan proceeds were to be advanced at the rate of $9.50
for each $1.00 of net operating income in excess of $1,040,000 per annum, earned
by the Signature Place Borrower at any time up to and including eighteen months
after Final Endorsement of the Signature Place Mortgage (the "Earn-Out"). The
Earn-Out period expired on August 8, 1994 and no additional amounts were
advanced under the PGL. The unfunded loan proceeds of $1,199,900, which had been
included in the Partnership's working capital reserve, were distributed to its
Partners on November 15, 1994.

The PGL bears interest at the rate of 15% per annum, payable semi-annually,
and provides that interest shall be accrued up to $100,000 to the extent Surplus
Cash (as defined by HUD) is insufficient to fully pay the interest obligation.
Any such accruals will be added to the outstanding principal balance of the PGL
and shall bear interest at the same rate. At such time as accruals of interest
(including semi-annually compounded interest) exceed $100,000 or commencing with
the second

F-17

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENTS IN MORTGAGES (CONTINUED)
anniversary of Final Endorsement (regardless of the balance of such accruals),
whichever occurs first, the Individual Borrowers shall pay interest on the
outstanding principal amount semi-annually, whether or not Surplus Cash is
available. Principal and accrued interest, if any, shall be due and payable on
May 8, 2006.

Since less than $250,000 was funded under the PGL, $249,900 (the difference
between $250,000 and the total amount funded) shall be considered additional
equity ("Additional Equity") contributed by the Individual Borrowers. To the
extent the Individual Borrowers' share of cash flow provides less than a 10%
cumulative annual return on the outstanding balance of Additional Equity
(compounded semi-annually) over the holding period of the investment, the
shortfall shall be paid out of the proceeds from the sale or refinancing of the
Signature Place Mortgage. All participations earned by the Partnership shall be
calculated after deducting interest and principal paid on the PIM, PGL and the
Additional Equity.

No prepayments of the PGL will be permitted prior to the tenth anniversary
of Initial Endorsement of the Signature Place Mortgage. Thereafter, the PGL may
be prepaid in whole, but not in part, upon 90 days prior written notice to the
Partnership subject to a prepayment fee equal to 1% of the principal amount
prepaid. On the tenth anniversary date, the Partnership will have the right to
call the PGL by six months prior written notice to the Individual Borrowers, in
which case no prepayment fee shall be paid.

The terms of the PGL entitle the Partnership to participations in addition
to Basic Interest equal to: (i) 10% of any increase in the value of the
partnership interests in the Signature Place Borrower (determined by references
to the value of Signature Place) over the base value of the partnership
interests (based on the outstanding principal amount of the Signature Place
Mortgage and the PGL), such increase to be determined upon the sale of Signature
Place or upon the refinancing, prepayment or maturity of the PGL; and (ii) 10%
of the Individual Borrowers' interest in Signature Place's net cash flow
(subject to certain HUD restrictions and reserve requirements). The aforesaid
10% participations in the PGL are over and above the 50% participations in the
Signature Place Mortgage. The obligation of the Individual Borrowers' to pay
these participations is evidenced by a Supplemental Interest Agreement, and is
non-recourse to such partners, except under limited circumstances, including
fraud.

6. THE GUARANTEE OF PGLS (ALL PROPERTIES)
The General Partner has agreed to guarantee a return to the Partnership, in
the aggregate, of all amounts invested in PGLs. Pursuant to the Guarantee, on
the date that dissolution and winding-up of the Partnership shall be completed,
the General Partner agreed to pay to the Partnership an amount, if any, by which
(i) the funds invested by the Partnership in PGLs exceeds (ii) all cash payments
received by the Partnership with respect to all Mortgages, INCLUDING points,
Basic Interest, Additional Interest and repayment of principal, but EXCLUDING
Basic Interest and repayment of principal of MBSs and other insured/guaranteed
Mortgages. As a result of the sale of the Highlands as referred to in
"Mortgages-the Highlands" above, the Partnership received cash in excess of the
amount of funds invested by the Partnership in PGLs. Accordingly, the General
Partner has no remaining future obligation with respect to any of the PGLs.

F-18

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
The following is a summary of the fees earned and reimbursements paid or
payable to the General Partner and its Affiliates for the years ended December
31, 1995, 1994 and 1993, pursuant to the Partnership Agreement:

1995 1994 1993
----------- ----------- -----------

(1) Asset Management Fees....................................... $ 92,855 $ 158,167 $ 157,966
(2) Reimbursement of general and administrative expenses to the
General Partner............................................ 100,000 100,000 125,000
----------- ----------- -----------
$ 192,855 $ 258,167 $ 282,966
----------- ----------- -----------
----------- ----------- -----------

- ------------------------
(1) For services rendered in managing the business of the Partnership, the
Partnership is obligated to pay on a quarterly basis to the General Partner
an Asset Management Fee equal to 0.5% per annum of the value of the Total
Invested Assets of the Partnership.

(2) The Partnership Agreement allows the Partnership to reimburse the General
Partner for certain general and administrative expenses paid in connection
with the management of the Partnership.

8. DEFERRED ACQUISITION FEES
Deferred acquisition fees as of December 31, 1995 and 1994 consisted of:

1995 1994
----------- -------------

Acquisition expenses..................................................... $ 908,701 $ 1,945,006
Loan origination fees.................................................... -- (451,600)
Accumulated amortization................................................. (32,736) (41,531)
----------- -------------
Net deferred acquisition fees............................................ $ 875,965 $ 1,451,875
----------- -------------
----------- -------------

9. SUBSEQUENT EVENTS

A) DISTRIBUTIONS TO PARTNERS

On February 15, 1996, the Partnership distributed $547,798 to the Partners,
which represented the Partnership's Distributable Cash Flow for the three months
ended December 31, 1995. The distribution to other Unitholders, the Corporate
Limited Partner and the General Partner was $536,829, $13 and $10,956,
respectively.

B) THE HIGHLANDS

RECENT DEVELOPMENTS

On February 27, 1996, the Partnership sold the Highlands GNMA for cash in
the amount of $13,105,373.01. The Highlands GNMA was sold through Utendahl
Capital Partners, an unaffiliated broker dealer, pursuant to which the Highlands
Borrower agreed to pay a portion of any additional taxes determined by the State
of Florida to be due in connection with the recording of the original loan
documents. The State of Florida claimed that $136,800 in additional recording
taxes were due. On March 12, 1996, the Partnership settled the recording tax
claim of the State of Florida discussed in Note 5 through a payment made on
behalf of the Partnership in the amount of $64,000 ($53,850 of which was funded
by the General Partner and $10,150 of which was funded by the Original Highlands
Borrower). The Partnership has recently received the signed Closing Agreement
settling the claim from the State of Florida and the letters of credit discussed
in Note 5 will be returned to the Original Highlands Borrower. The sales price
represents principal in the amount of $12,976,812.45, accrued interest in the
amount of $71,462.59 and a premium of $57,097.97. The Partnership was not
charged any separate fees or commissions in connection with the sale. The
General Partner of the Partnership

F-19

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. SUBSEQUENT EVENTS (CONTINUED)
decided to sell the Highlands GNMA to take advantage of what it perceived to be
a favorable market in which the Highlands GNMA could be sold at a premium. The
Partnership intends to distribute such proceeds to its partners on May 15, 1996,
the next scheduled distribution date.

The sale of the Highlands GNMA, together with the 1995 sale of the Highlands
and the related modification of the Highlands Mortgage, terminated the
Partnership's beneficial interest in the Highlands Mortgage and the Highlands.

C) CLASS ACTION LAWSUIT

Two class action lawsuits were filed against certain affiliates of the
General Partner in the District Court of Harris County, Texas on January 11,
1996, styled GRIMSHAWE V. NEW YORK LIFE INSURANCE CO., ET AL. (No. 96-001188)
and SHEA V. NEW YORK LIFE INSURANCE CO., ET AL. (No. 96-001189) alleging
misconduct in connection with the original sale of investment units in various
partnerships, including violation of various federal and state laws and
regulations and claims of continuing fraudulent conduct. The plaintiffs have
asked for compensatory damages for their lost original investment, plus
interest, costs (including attorneys fees), punitive damages, disgorgement of
any earnings, compensation and benefits received by the defendants as a result
of the alleged actions and other unspecified relief to which plaintiffs may be
entitled. These suits were amended and refiled in a consolidated action in the
United States District Court for the Southern District of Florida (the "Court")
on March 18, 1996. In the federal action, the plaintiffs added the General
Partner as a defendant and included allegations concerning the Partnership. The
plaintiffs purport to represent a class of all persons (the "Class") who
purchased or otherwise assumed rights and title to interests in certain limited
partnerships, including the Partnership, and other programs created, sponsored,
marketed, sold, operated or managed by the defendants (the "Proprietary
Partnerships"). The Partnership is not a defendant in the litigation.

The defendants expressly deny any wrongdoing alleged in the complaint and
concede no liability or wrongdoing in connection with the sale of the Units or
the structure of the Proprietary Partnerships. Nevertheless, to reduce the
burden of protracted litigation, the defendants have entered into a Stipulation
of Settlement ("Settlement Agreement") with the plaintiffs because in their
opinion such Settlement would (i) provide substantial benefits to the Class in a
manner consistent with New York Life's position that it had previously
determined to wind up most of the Proprietary Partnerships through orderly
liquidation as the continuation of the business no longer serves the intended
objectives of either the owners of interests in such Proprietary Partnerships or
the defendants and to offer investors an enhancement to the liquidating
distribution they would otherwise receive and (ii) provide an opportunity to
wind up such partnerships on a schedule favorable to the Class and resolve the
issues raised by the lawsuit.

In connection with the proposed settlement (the "Settlement"), the General
Partner will solicit consents of the Unitholders for the dissolution of the
Partnership.

Under the terms of the Settlement Agreement, any settling Unitholders will
receive at least a complete return of their original investment, less
distributions received prior to the final settlement date, in exchange for a
release of any and all claims a Unitholder may have against the defendants in
connection with the Proprietary Partnership, including the Partnership, and all
activities related to the dissolution and liquidation of such partnerships.

F-20

NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. SUBSEQUENT EVENTS (CONTINUED)
Preliminary approval of the Settlement Agreement was given by the Court on
March 19, 1996. The Settlement Agreement is further conditioned upon final
approval by the Court as well as certain other conditions and is subject to
certain rights of termination detailed in the consent solicitation material
being mailed to the Unitholders.

If the necessary consents of Unitholders for dissolution are obtained, the
Partnership will be dissolved even if all necessary approvals for the Settlement
Agreement are not obtained or the Settlement Agreement is otherwise terminated.
In general, upon the dissolution of the Partnership, tax consequences will
accrue to the partners. If the necessary consents of the Unitholders for
dissolution are not obtained, the Partnership will continue to own the Mortgages
and will continue to receive payments thereon.

The financial statements do not include any adjustments that might result
should the Unitholders vote to liquidate the Partnership.

F-21

INDEX TO EXHIBITS

NUMBER AND DESCRIPTION UNDER REGULATION S-K

The following reflects all applicable Exhibits required under Item 601 of
Regulation S-K:

CROSS CREEK:
(10.1) GNMA Securities Sale and Purchase Agreement between NYLIFE Government Mortgage Plus
Limited Partnership ("Partnership") and Love Funding Corporation ("LFC"),
incorporated by reference to Exhibit 28.1 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0- 18226).*
(10.2) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.3) Mortgage note (as endorsed by HUD), issued by Boiling Springs Apartments, Ltd.
("Borrower") to LFC, incorporated by reference to Exhibit 28.3 to Registrant's
Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
(10.4) Mortgage, Assignment of Rents and Security Agreement by Borrower for the Benefit of
LFC, incorporated by reference to Exhibit 28.4 to Registrant's Report on Form 8-K
dated February 21, 1990 (File No. 0- 18226).*
(10.5) Building Loan Agreement between Borrower and LFC, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated February 21, 1990 (File No.
0-18226).*
(10.6) Security Agreement between Borrower and LFC, incorporated by reference to Exhibit
28.6 to Registrant's Report on Form 8-K dated February 21, 1990 (File No.
0-18226).*
(10.7) Assignment of Leases, Rents and Profits by Borrower to LFC, incorporated by
reference to Exhibit 28.7 to Registrant's Report on Form 8- K dated February 21,
1990 (File no. 0-18226).*
(10.8) Subordinated Mortgage, Assignment of Leases and Rents and Security Agreement
between Borrower and Partnership, incorporated by reference to Exhibit 28.8 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
(10.9) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8- K dated February 21,
1990 (File No. 0-18226).*

(10.10) Form of Security Agreement between Partnership and each of Borrower's partners
("Individual Borrowers") relating to Additional Interest Agreement, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0- 18226).*
(10.11) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.12) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.13) Form of Security Agreement with Individual Borrowers relating to Promissory Note
and Supplemental Interest Agreement, incorporated by reference to Exhibit 28.13 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*

THE HIGHLANDS:
(10.14) GNMA Security Purchase Agreement between NYLIFE Government Mortgage Plus Limited
Partnership ("Partnership") and Related Mortgage Corporation ("Related"),
incorporated by reference to Exhibit 28.1 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.15) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.16) Mortgage note (as endorsed by HUD), issued by H.O. Associates, Ltd. ("Borrower") to
Related, incorporated by reference to Exhibit 28.3 to Registrant's Report on Form
8-K dated January 30, 1991 (File No. 0-18226).*
(10.17) Mortgage by Borrower for the benefit of Related, incorporated by reference to
Exhibit 28.4 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.18) Building Loan Agreement between Borrower and Related, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.19) Security Agreement between Borrower and Related, incorporated by reference to
Exhibit 28.6 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.20) Assignment of Rents and Leases by Borrower to Related, incorporated by reference to
Exhibit 28.7 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.21) Subordinated Mortgage between Borrower and Partnership, incorporated by reference
to Exhibit 28.8 to Registrant's Report on Form 8- K dated January 30, 1991 (File No
0-18226).*
(10.22) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8- K dated January 30,
1991 (File No. 0-18226).*
(10.23) Form of Pledge of Partnership Interests and Security Agreements between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.10 to Registrant's
Report on Form 8-K dated January 30, 1991 (File No. 0-18226).*
(10.24) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated January 30,
1991 (File No. 0-18226).*

(10.25) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.26) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.13 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.39) Modification of Mortgage Note of H.O. Associates, Ltd. payable to Related Mortgage
Corporation dated as of January 31, 1995, as endorsed by HUD.**
(10.40) Modification of Mortgage dated as of January 31, 1995 between H.O. Associates, Ltd.
and Related Mortgage Corporation.**
(10.41) Modification of Collateral Assignment of Rents and Leases dated January 31, 1995
between H.O. Associates, Ltd. and Related Mortgage Corporation.**
(10.42) Amendment to Regulatory Agreement for Multifamily Housing Projects Coinsured by HUD
dated January 31, 1995 by and between H.O. Associates, Ltd. and Related Mortgage
Corporation (original recorded instrument forwarded to Chemical Bank as Ginnie Mae
Custodian by certified mail).**
(10.43) Modification of Security Agreement dated as of January 31, 1995 between H.O.
Associates, Ltd. and Related Mortgage Corporation.**
(10.44) Amended and Restated Agreement dated January 31, 1995 by and between Richland
Properties, Inc. and NYLIFE Government Mortgage Plus Limited Partnership.**
(10.45) Amended and Restated Subordinated Mortgage and Security Agreement dated January 31,
1995 by Richland Properties, Inc. to NYLIFE Government Mortgage Plus Limited
Partnership.**
(10.46) Release Agreement dated January 31, 1995 by and among NYLIFE Government Mortgage
Plus Limited Partnership, Related Mortgage Corporation, H.O. Associates, Ltd.,
Robert M. Schiffman and Edwin B. Branch.**
(10.47) Agreement Regarding Termination of Contract of Coinsurance dated January 31, 1995
by Richland Properties, Inc. and Related Mortgage Corporation.**
(10.48) Amended and Restated Coinsuring Lender/Holder Agreement dated January 31, 1995 by
and between NYLIFE Government Mortgage Plus Limited Partnership and Related
Mortgage Corporation.**
(10.49) Special Closing Agreement dated January 31, 1995 by and among NYLIFE Government
Mortgage Plus Limited Partnership, H.O. Associates, Ltd., Robert M. Schiffman,
Edwin B. Branch, Markborough Development Company and Foley & Lardner.**

(10.31) Building Loan Agreement between Borrower and LFC, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated June 14, 1991 (File No.
0-18226).*
(10.32) Security Agreement between Borrower and LFC, incorporated by reference to Exhibit
28.6 to Registrant's Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.33) Additional Interest Deed of Trust, Security Agreement and Assignment of Leases,
Rents and Profits between Borrower and Partnership, incorporated by reference to
Exhibit 28.7 to Registrant's Report on Form 8- K dated June 14, 1991 (File no.
0-18226).*
(10.34) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.8 to Registrant's Report on Form 8- K dated June 14, 1991
(File No. 0-18226).*
(10.35) Form of Pledge of Partnership Interests and Security Agreement between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.9 to Registrant's
Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.36) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated June 14, 1991
(File No. 0-18226).*
(10.37) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(10.38) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(27.1) Financial Data Schedule.**

- ------------------------
*Previously filed.
**Filed herewith.