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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended March 31, 2001
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission file number 33-83524
MERIT SECURITIES CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1736551
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
4551 Cox Road, Suite 300, Glen Allen, 23060
(Address of principal executive offices) (Zip Code)
(804) 217-5800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days. |X| Yes |_| No
As of April 30, 2001, the latest practicable date, there were 1,000 shares of
Merit Securities Corporation common stock outstanding.
The registrant meets the conditions set forth in General Instructions H (1)(a)
and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced
disclosure format.
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MERIT SECURITIES CORPORATION
FORM 10-Q
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at March 31, 2001 (unaudited)
and December 31, 2000 3
Statements of Operations for the three months
ended March 31, 2001 and 2000 Unaudited 4
Statement of Shareholder's Equity for the
three months ended March 31, 2001 Unaudited 5
Statements of Cash Flows for the three
months ended March 31, 2001 and 2000
Unaudited 6
Notes to Unaudited Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 14
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MERIT SECURITIES CORPORATION
Balance Sheets
(amounts in thousands except share data)
(Unaudited)
March 31, December 31,
2001 2000
------------------ ------------------
ASSETS:
Collateral for collateralized bonds $ 2,064,219 $ 2,208,015
Cash - 10
----------------- -----------------
$ 2,064,219 $ 2,208,025
================= =================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Non-recourse debt - collateralized bonds $ 1,999,730 $ 2,143,028
----------------- -----------------
SHAREHOLDER'S EQUITY:
Common stock, no par value,
10,000 shares authorized, 1,000 shares issued and 10 10
outstanding
Additional paid-in capital 141,989 147,240
Accumulated other comprehensive loss (91,680) (94,296)
Retained earnings 14,170 12,043
----------------- -----------------
64,489 64,997
----------------- -----------------
$ 2,064,219 $ 2,208,025
================= =================
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION
Statements of Operations, Unaudited
(amounts in thousands except share data)
Three Months Ended
March 31,
----------------------------
2001 2000
------------ -------------
Interest income:
Collateral for collateralized bonds $ 44,754 $ 53,672
------------- --------------
Interest and related expense:
Interest expense on collateralized bonds 35,877 46,169
Other collateralized bond expense 412 380
------------- --------------
36,289 46,549
------------- --------------
Net interest margin before provision for losses 8,465 7,123
Provision for losses (6,338) (4,985)
------------- --------------
Net interest margin 2,127 2,138
Interest on due to affiliates, net - (471)
------------- --------------
Net income $ 2,127 $ 1,667
============= ==============
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION
Statement of Shareholder's Equity (Unaudited)
Three months ended March 31, 2001
(amounts in thousands except share data)
Accumulated
Additional other
Common paid-in comprehensive Retained
stock capital loss earnings Total
------------- -------------- ------------------- --------------- ----------------
Balance at December 31, 2000 $ 10 $ 147,240 $ (94,296) $ 12,043 $ 64,997
----------------
Comprehensive income:
Net income - - - 2,127 2,127
Change in net unrealized loss on
investments available-for-sale - - 2,616 - 2,616
----------------
Total comprehensive income $ 4,743
----------------
Capital distributions - (5,251) - - (5,251)
------------ -------------- ------------------- -------------- ----------------
Balance at March 31, 2001 $ 10 $ 141,989 $ (91,680) $ 14,170 $ 64,489
============ ============== =================== ============== ================
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION
Statements of Cash Flows, Unaudited
(amounts in thousands)
Three Months Ended
March 31,
-------------------------------------------
2001 2000
------------------- -------------------
Operating activities:
Net income $ 2,127 $ 1,667
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses 6,338 4,985
Amortization, net 2,341 2,685
Other 924 222
------------------- -------------------
Net cash provided by operating activities 11,730 9,559
------------------- -------------------
Investing activities:
Collateral for collateralized bonds:
Principal payments on collateral 138,495 117,188
Net decrease in accrued interest receivable
and funds held by trustee (462) 45
------------------- -------------------
Net cash provided by investing activities 138,033 117,233
------------------- -------------------
Financing activities:
Collateralized bonds:
Principal payments on collateralized bonds (144,305) (118,932)
Decrease in accrued interest payable (217) (75)
Decrease in due to affiliates - (42,344)
Capital (distributions) contributions (5,251) 34,559
------------------- -------------------
Net cash used for financing activities (149,773) (126,792)
------------------- -------------------
Net decrease in cash (10) -
Cash, beginning of period 10 10
-------------------- --------------------
Cash, end of period $ - $ 10
=================== ===================
Supplemental disclosure of cash flow information:
Cash paid for interest $ 168 $ 45,272
=================== ===================
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION Notes to Unaudited Financial Statements March 31,
2001 (amounts in thousands except share data)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. The financial statements include the accounts of
Merit Securities Corporation (the "Company"). The Company is a wholly-owned,
limited-purpose finance subsidiary of Issuer Holding Corporation ("IHC"). IHC
was formed on September 4, 1996 to acquire all of the outstanding stock of the
Company and certain other affiliates of Dynex Capital, Inc. ("Dynex"). IHC is a
wholly-owned subsidiary of Dynex. The Company was organized to facilitate the
securitization of loans through the issuance and sale of collateralized bonds
(the "Bonds").
In the opinion of management, all material adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation of the
financial statements have been included. The Balance Sheet at March 31, 2001,
the Statements of Operations for the three months ended March 31, 2001 and 2000,
the Statement of Shareholder's Equity for the three months ended March 31, 2001,
the Statements of Cash Flows for the three months ended March 31, 2001 and 2000,
and the related notes to financial statements are unaudited. Operating results
for the three months ended March 31, 2001 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2001. For further
information, refer to the audited financial statements and footnotes included in
the Company's Form 10-K for the year ended December 31, 2000.
Certain amounts for 2000 have been reclassified to conform to the presentation
for 2001.
NOTE 2--COLLATERAL FOR COLLATERALIZED BONDS
Pursuant to the requirements of Statement of Financial Accounting Standards No.
115, Accounting for Certain Investments in Debt and Equity Securities, the
Company has classified collateral for collateralized bonds as
available-for-sale. The following table summarizes the Company's amortized cost
basis and fair value of collateral for collateralized bonds at March 31, 2001
and December 31, 2000, and the related average effective interest rates
(calculated for the month ended March 31, 2001 and December 31, 2000, and
excluding unrealized gains and losses):
- -------------------------------------------------------------------------------------------------------------------
March 31, 2001 December 31, 2000
- -------------------------------------------------------------------------------------------------------------------
Effective Effective
Fair Value Interest Rate Fair Value Interest Rate
- -------------------------------------------------------------------------------------------------------------------
Collateral for collateralized bonds:
Amortized cost $ 2,174,349 8.2% $ 2,322,537 8.1%
Allowance for losses (18,450) (20,226)
- -------------------------------------------------------------------------------------------------------------------
Amortized cost, net 2,155,899 2,302,311
Gross unrealized gains 23,234 25,113
Gross unrealized losses (114,914) (119,409)
- -------------------------------------------------------------------------------------------------------------------
$ 2,064,219 $ 2,208,015
- -------------------------------------------------------------------------------------------------------------------
Collateral for collateralized bonds consists of debt securities backed primarily
by adjustable-rate and fixed-rate mortgage loans secured by first liens on
single family residential housing, manufactured housing installment loans
secured by either a UCC filing or a motor vehicle title and property tax
receivables. All collateral for collateralized bonds is pledged to secure
repayment of the related collateralized bonds. All principal and interest (less
servicing-related fees) on the collateral is remitted to a trustee and is
available for payment on the collateralized bonds. The Company's exposure to
loss on collateral for collateralized bonds is generally limited to the amount
of collateral pledged in excess of the related collateralized bonds issued, as
the collateralized bonds issued are non-recourse to the Company. The collateral
for collateralized bonds can be sold by the Company, but only subject to the
lien of the collateralized bond indenture.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Company was organized to facilitate the securitization of loans through
the issuance and sale of collateralized bonds (the "Bonds"). The Bonds will be
secured primarily by: (i) mortgage loans secured by first or second liens on
residential property, (ii) Federal National Mortgage Association Mortgage-Backed
Certificates, (iii) Federal Home Loan Mortgage Corporation Mortgage-Backed
Certificates, (iv) Government National Mortgage Association Mortgage-Backed
Certificates, (v) other mortgage pass-through certificates or
mortgage-collateralized obligations, (vi) property tax receivables and (vii)
consumer installment loans (collectively, the "Collateral"). In the future, the
Company may also securitize other types of loans.
After payment of the expenses of an offering and certain administrative
expenses, the net proceeds from an offering of Bonds will be used to purchase
Collateral from IHC or various third parties. IHC can be expected to use the
proceeds to reduce indebtedness incurred to obtain such loans or to acquire
additional Collateral. After the issuance of a series of Bonds, the Company may
sell the Collateral securing that series of Bonds, subject to the lien of the
Bonds.
FINANCIAL CONDITION
- --------------------------------------------------------------------------------
(amounts in thousands March 31, December 31,
except per share data) 2001 2000
- --------------------------------------------------------------------------------
Collateral for collateralized bonds $ 2,064,219 $ 2,208,015
Non-recourse debt - collateralized bonds 1,999,730 2,143,028
Shareholder's equity 64,489 64,997
Collateralized bond series outstanding 4 4
- --------------------------------------------------------------------------------
Collateral for collateralized bonds
As of both March 31, 2001 and December 31, 2000, the Company had 4 series
of collateralized bonds outstanding. The collateral for collateralized bonds
decreased to $2.06 billion at March 31, 2001 compared to $2.21 billion at
December 31, 2000. This decrease of $0.14 billion is primarily the result of
$138.5 million in paydowns on the collateral.
Non-recourse debt - collateralized bonds
Collateralized bonds decreased to $2.00 billion at March 31, 2001 from
$2.14 billion at December 31, 2000 as a result of $144.3 million in paydowns
during the three months ended March 31, 2001.
Shareholder's Equity
Shareholder's equity decreased to $64.5 million at March 31, 2001 from
$65.0 million at December 31, 2000. This decrease was primarily the result of a
$5.2 million capital distribution to IHC during the three months ended March 31,
2001 offset by net income during the three months of $2.1 million and a decrease
of $2.6 million in the net unrealized loss on investments available-for-sale
during the period.
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
-----------------------------------
(amounts in thousands) 2001 2000
- --------------------------------------------------------------------------------
Interest income $ 44,754 $ 53,672
Interest expense on collateralized bonds 35,877 46,169
Provision for losses 6,338 4,985
Net interest margin 2,127 2,138
Net income 2,127 1,667
- --------------------------------------------------------------------------------
Interest income on the collateral for collateralized bonds decreased
slightly to $44.8 million for the three months ended March 31, 2001 from $53.7
million for the same period in 2000. This decrease was primarily a result of a
decline in collateral for collateralized bonds between the respective periods.
Interest expense on collateralized bonds decreased to $35.9 million for the
three months ended March 31, 2001 from $46.2 million for the three months ended
March 31, 2000. This decrease was due to the decline in collateralized bonds due
to prepayments on the related collateral for collateralized bonds, coupled with
an overall decline in the cost of funds on the collateralized bonds.
Provision for losses increased to $6.3 million for the three months ended
March 31, 2001 from $5.0 million for the same period in 2000. This increase was
primarily a result of increasing the reserve for probable losses on various loan
pools pledged as collateral for collateralized bonds where the Company has
retained credit risk, specifically the Company's investment in manufactured
housing loan pools.
Net interest margin was $2.1 million for both three month periods ended
March 31, 2001 and 2000, respectively. An increase in provision for losses and
the decline in interest earning assets was offset by reduced borrowing costs on
collateralized bonds outstanding.
Credit Exposures
With collateralized bond structures, the Company retains credit risk relative to
the amount of overcollateralization required in conjunction with the bond
insurance. Losses are generally first applied to the overcollateralized amount,
with any losses in excess of that amount borne by the bond insurer or the
holders of the collateralized bonds. The Company only incurs credit losses to
the extent that losses are incurred in the repossession, foreclosure and sale of
the underlying collateral. Such losses generally equal the excess of the
principal amount outstanding, less any proceeds from mortgage or hazard
insurance, over the liquidation value of the collateral. To compensate the
Company for retaining this loss exposure, the Company generally receives an
excess yield on the collateralized loans relative to the yield on the
collateralized bonds. At March 31, 2001, the Company retained $178.5 million in
aggregate principal amount of overcollateralization. The Company had reserves,
or otherwise had provided coverage on $79.4 million at March 31, 2001. At March
31, 2001, $30.3 million of these reserve amounts are in the form of a loss
reimbursement guarantee from an A rated third-party. During the first three
months of 2001, the Company provided for additional reserves of $6.3 million and
incurred credit losses of $8.1 million.
The Company and Dynex are currently engaged in a dispute with the counterparty
to the loss reimbursement guarantees, which aggregated $30.3 million at March
31, 2001. Such guarantees are payable when cumulative loss trigger levels are
reached on certain of the Company's single-family mortgage loan securitizations.
Currently, these trigger levels have been reached on four of the Company's
securities, and the Company has made claims under the reimbursement guarantees
in amounts approximating $1.3 million. The counterparty has denied payment on
these claims, citing various deficiencies in loan underwriting which would
render these loans and corresponding claims ineligible under the reimbursement
agreements. The Company disputes this classification and is pursuing this matter
through court-ordered arbitration.
Other Matters
At March 31, 2001, the Company had securities of approximately $308.6
million remaining for issuance under a registration statement filed with the
Securities and Exchange Commission. The Company anticipates issuing additional
Bonds in the future.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk generally represents the risk of loss that may result from the
potential change in the value of a financial instrument due to fluctuations in
interest and foreign exchange rates and in equity and commodity prices. Market
risk is inherent to both derivative and non-derivative financial instruments,
and accordingly, the scope of the Company's market risk management extends
beyond derivatives to include all market risk sensitive financial instruments.
As a financial services company, net interest income comprises the primary
component of the Company's earnings. As a result, the Company is subject to risk
resulting from interest rate fluctuations to the extent that there is a gap
between the amount of the Company's interest-earning assets and the amount of
interest-bearing liabilities that are prepaid, mature or reprice within
specified periods.
As the Company's parent, Dynex continuously monitors the aggregate cash
flow, projected net yield and market value of the collateral for collateralized
bonds under various interest rate and prepayment assumptions. Dynex utilizes a
monthly static cash flow and yield projection under interest rate scenarios
detailed below. While Dynex may use this tool, there can be no assurance Dynex
will accomplish the goal of adequately managing the risk profile of the
Company's investment portfolio.
Dynex measures the sensitivity of the Company's net interest income to
changes in interest rates. Changes in interest rates are defined as
instantaneous, parallel, and sustained interest rate movements in 100 basis
point increments. Dynex estimates the Company's interest income for the next
twelve months assuming no changes in interest rates from those at period end.
Once the base case has been estimated, cash flows are projected for each of the
defined interest rate scenarios. Those scenario results are then compared
against the base case to determine the estimated change to net interest income.
The following table summarizes the Company's net interest margin sensitivity
analysis as of March 31, 2001. This analysis represents management's estimate of
the percentage change in net interest margin given a parallel shift in interest
rates. The "Base" case represents the interest rate environment as it existed as
of March 31, 2001. The analysis is heavily dependent upon the assumptions used
in the model. The effect of changes in future interest rates, the shape of the
yield curve or the mix of assets and liabilities may cause actual results to
differ from the modeled results. In addition, certain financial instruments
provide a degree of "optionality." The model considers the effects of these
embedded options when projecting cash flows and earnings. The most significant
option affecting the Company's portfolio is the borrowers' option to prepay the
loans. The model applies prepayment rate assumptions representing management's
estimate of prepayment activity on a projected basis for each collateral pool in
the investment portfolio. While the Company's model considers these factors, the
extent to which borrowers utilize the ability to exercise their option may cause
actual results to significantly differ from the analysis. Furthermore, its
projected results assume no additions or subtractions to the Company's
portfolio, and no change to the Company's liability structure. Historically, the
Company has made significant changes to its assets and liabilities, and is
likely to do so in the future.
------------------------ ---------------------
Basis Point % Change in Net
Increase (Decrease) in Interest Margin
Interest Rates from Base Case
------------------------ ---------------------
+200 (13.9)%
+100 (7.0)%
Base -
-100 7.0%
-200 13.7%
------------------------ --------------------
Approximately $1.0 billion of the Company's collateral for collateralized
bonds as of March 31, 2001 is comprised of loans or securities that have coupon
rates which adjust over time (subject to certain periodic and lifetime
limitations) in conjunction with changes in short-term interest rates.
Approximately 66% and 25% of the ARM loans underlying the Company's collateral
for collateralized bonds are indexed to and reset based upon the level of
six-month LIBOR and one-year CMT, respectively.
Generally, during a period of rising short-term interest rates, the
Company's net interest spread earned on its collateralized bonds will decrease.
The decrease of the net interest spread results from (i) the lag in resets of
the ARM loans underlying the collateral for collateralized bonds relative to the
rate resets on the collateralized bonds and (ii) rate resets on the ARM loans
which are generally limited to 1% every six months or 2% every twelve months and
subject to lifetime caps, while the associated borrowings have no such
limitation. As short-term interest rates stabilize and the ARM loans reset, the
net interest margin may be restored to its former level as the yields on the ARM
loans adjust to market conditions. Conversely, net interest margin may increase
following a fall in short-term interest rates. This increase may be temporary as
the yields on the ARM loans adjust to the new market conditions after a lag
period. In each case, however, the Company expects that the increase or decrease
in the net interest spread due to changes in the short-term interest rates to be
temporary. The net interest spread may also be increased or decreased by the
proceeds or costs of interest rate swap and cap agreements, to the extent the
Company has entered into such agreements.
As part of its asset/liability management process, the Company may enter
into interest rate cap and swap agreements. These interest rate agreements are
used by the Company to help mitigate the risk related to the collateral for
collateralized bonds for fluctuations in interest rates that would ultimately
impact net interest income.
The remaining portion of the Company's collateral for collateralized bonds
as of March 31, 2001, approximately $1.1 billion, is comprised of loans that
have coupon rates that are fixed. The Company has limited its interest rate risk
on such collateral primarily through the issuance of fixed-rate collateralized
bonds. Overall, the Company's interest rate risk is primarily related to the
rate of change in short-term interest rates and to the level of short-term
interest rates.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
3.1 Articles of Incorporation of the Registrant (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No.
33-83524 on Form S-3 filed August 31, 1994).
3.2 Bylaws of the Registrant (Incorporated herein by reference to the
Exhibits to Registrant's Registration Statement No. 33-83524 on Form
S-3 filed August 31, 1994).
3.3 Amended and Restated Articles of Incorporation of the Registrant,
effective April 19, 1995 (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed
April 21, 1995).
4.1 Indenture between Registrant and Trustee, dated as of August 1,
1994 (Incorporated herein by reference to the Exhibits to Registrant's
Registration Statement No. 33-83524 on Form S-3 filed August 31,
1994).
4.2 Form of Supplement Indenture between Registrant and Trustee
(Incorporated herein by reference to the Exhibits to Registrant's
Registration Statement No. 33-83524 on Form S-3 filed August 31,
1994).
4.3 Copy of the Indenture, dated as of November 1, 1994, by and between
the Registrant and Texas Commerce Bank National Association, as
Trustee (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed December 19, 1994).
4.4 Copy of the Series 4 Indenture Supplement, dated as of June 1, 1995,
by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (including schedules and exhibits)
(Incorporated herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed July 10, 1995).
4.5 Copy of the Series 10 Indenture Supplement, dated as of December 1,
1997, by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (related schedules and exhibits available
upon request of the Trustee). (Incorporated herein by reference to
Exhibit of Registrant's Current Report on Form 8-K, filed January 6,
1998).
4.6 Copy of the Series 11 Indenture Supplement, dated as of March 1, 1998,
by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (related schedules and exhibits available
upon request of the Trustee). (Incorporated herein by reference to
Exhibit of Registrant's Current Report on Form 8-K, filed June 12,
1998).
4.7 Copy of the Series 12 Indenture Supplement, dated as of March 1, 1999,
by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (related schedules and exhibits available
upon request of the Trustee). (Incorporated herein by reference to
Exhibit of Registrant's Current Report on Form 8-K, filed April 12,
1999).
4.8 Copy of the Series 13 Indenture Supplement, dated as of August 1,
1999, by and between the Registrant and Texas Commerce Bank National
Association, as Trustee (related schedules and exhibits available
upon request of the Trustee). (Incorporated herein by reference to
Exhibit of Registrant's Current Report on Form 8-K, filed
September 13, 1999).
99.1 Standard Provisions to Servicing Agreement (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No.
33-83524 on Form S-3 filed August 31, 1994).
99.2 Form of Servicing Agreement (Incorporated herein by reference to the
Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).
99.3 Standard Terms to Master Servicing Agreement (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No.
33-83524 on Form S-3 filed August 31, 1994).
99.4 Form of Master Servicing Agreement (Incorporated herein by reference
to the Exhibits to Registrant's Registration Statement No. 33-83524
on Form S-3 filed August 31, 1994).
99.5 Form of Prospectus Supplement of Bonds secured by adjustable-rate
mortgage loans (Incorporated herein by reference to Exhibits to
Registrant's Pre-Effective Amendment No. 4 to Registration Statement
No. 33-83524 on Form S-3 filed December 5, 1994).
99.6 Form of Financial Guaranty Assurance Policy (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No.
33-83524 on Form S-3 filed August 31, 1994).
99.7 Form of GEMICO Mortgage Pool Insurance Policy (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No.
33-83524 on Form S-3 filed August 31, 1994).
99.8 Form of PMI Mortgage Insurance Co. Pool Insurance Policy (Incorporated
herein by reference to the Exhibits to Registrant's Registration
Statement No. 33-83524 on Form S-3 filed August 31, 1994).
99.9 Form of Prospectus Supplement of Bonds secured by fixed-rate mortgage
loans (Incorporated herein by reference to Exhibits to
Registrant's Pre-Effective Amendment No. 4 to Registration Statement
No. 33-83524 on Form S-3 filed December 5, 1994).
99.10 Copy of the Saxon Mortgage Funding Corporation Servicing Guide for
Credit Sensitive Loans, February 1, 1995 Edition (Incorporated
herein by reference to Exhibit to the Registrant's Current Report on
Form 8-K, filed March 8, 1995).
99.11 Copy of Financial Guaranty Insurance Policy No. 50364-N issued by
Financial Guaranty Assurance Inc., dated April 7, 1995, with
respect to the Series 3 Bonds (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed
April 21, 1995).
99.12 Copy of Financial Guaranty Insurance Policy No. 50382-N issued by
Financial Guaranty Assurance Inc., dated June 29, 1995, with
respect to the Series 4 Bonds (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed July 10,
1995).
99.13 Copy of the Standard Terms to Master Servicing Agreement, June 1,
1995 Edition (Incorporated herein by reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed July 10, 1995).
99.14 Copy of Financial Guaranty Insurance Policy No. 19804 issued by MBIA
Insurance Corporation (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed
November 15, 1995).
99.15 Copy of Financial Guaranty Insurance Policy No. 20596 issued by MBIA
Insurance Corporation (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed
March 21, 1996).
99.16 Copy of Financial Guaranty Insurance Policy No. 21296 issued by MBIA
Insurance Corporation (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed June 19,
1996).
(b) Reports on Form 8-K
-------------------
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERIT SECURITIES CORPORATION
By: /s/ Thomas H. Potts
----------------------------------
Thomas H. Potts
President
(Principal Executive Officer)
/s/ Stephen J. Benedetti
----------------------------------
Stephen J. Benedetti
Treasurer
(Principal Financial &
Accounting Officer)
Dated: May 15, 2001