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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 June 30, 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, Virginia 23060
(Address of principal executive offices) (Zip Code)
(804) 217-5800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days. |_| Yes |X| No
As of June 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 June 30, 2001(unaudited)
and December 31, 2000 3
Statements of Operations for the three months and six months
ended June 30, 2001 and 2000(unaudited) 4
Statements of Cash Flows for the six months ended
June 30, 2001 and 2000(unaudited) 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MERIT SECURITIES CORPORATION
Balance Sheets
(amounts in thousands except share data)
(Unaudited)
June 30, December 31,
2001 2000
------------------ ------------------
ASSETS:
Collateral for collateralized bonds $ 1,897,553 $ 2,208,015
Cash - 10
----------------- -----------------
$ 1,897,553 $ 2,208,025
================= =================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Non-recourse debt - collateralized bonds $ 1,824,682 $ 2,143,028
----------------- -----------------
SHAREHOLDER'S EQUITY:
Common stock, no par value,
10,000 shares authorized, 1,000 shares issued and outstanding 10 10
Additional paid-in capital 134,883 147,240
Accumulated other comprehensive loss (80,609) (94,296)
Retained earnings 18,587 12,043
----------------- --------------
72,871 64,997
----------------- -----------------
$ 1,897,553 $ 2,208,025
================= =================
<FN>
See notes to unaudited financial statements.
</FN>
MERIT SECURITIES CORPORATION
Statements of Operations, Unaudited
(amounts in thousands except share data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2001 2000 2001 2000
------------ ------------- ------------- ------------
Interest income:
Collateral for collateralized bonds $ 39,973 $ 51,087 $ 84,727 $ 104,759
------------- -------------- -------------- -------------
Interest and related expense:
Interest expense on collateralized bonds 28,752 44,791 64,629 90,960
Other collateralized bond expense 466 424 878 804
------------- -------------- -------------- -------------
29,218 45,215 65,507 91,764
------------- -------------- -------------- -------------
Net interest margin before provision for losses 10,755 5,872 19,220 12,995
Provision for losses (6,338) (5,795) (12,676) (10,780)
------------- -------------- -------------- -------------
Net interest margin 4,417 77 6,544 2,215
Loss on sale of investments - (2,534) - (2,534)
Interest on due to affiliates, net - - - (471)
-------------- ------------- -------------- -------------
Net income (loss) $ 4,417 (2,457) $ 6,544 $ (790)
============= ============== ============== =============
<FN>
See notes to unaudited financial statements.
</FN>
MERIT SECURITIES CORPORATION
Statements of Cash Flows, Unaudited
(amounts in thousands)
Six Months Ended
June 30,
-------------------------------------------
2001 2000
------------------- -------------------
Operating activities:
Net income $ 6,544 $ (790)
Adjustments to reconcile net income to net cash provided by
operating activities:
Loss on the termination of interest rate swaps - 2,440
Provision for losses 12,676 10,780
Amortization, net 5,008 5,304
Other 293 26
------------------- -------------------
Net cash provided by operating activities 24,521 17,760
------------------- -------------------
Investing activities:
Collateral for collateralized bonds:
Principal payments on collateral 307,171 245,245
Net decrease in accrued interest receivable and
funds held by trustee 1,545 1,090
------------------- -------------------
Net cash provided by investing activities 308,716 246,335
------------------- -------------------
Financing activities:
Collateralized bonds:
Proceeds from issuance of collateralized bonds - 657
Principal payments on collateralized bonds (320,301) (251,086)
Decrease in accrued interest payable (589) (111)
Decrease in due to affiliates - (42,344)
Capital (distributions) contributions (12,357) 28,789
------------------- -------------------
Net cash used for financing activities (333,247) (264,095)
------------------- -------------------
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 $ 63,329 $ 86,168
=================== ===================
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION Notes to Unaudited Financial Statements
June 30,2001
(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 June 30, 2001,
the Statements of Operations for the three and six months ended June 30, 2001
and 2000, the Statements of Cash Flows for the six months ended June 30, 2001
and 2000, and the related notes to financial statements are unaudited. Operating
results for the three months ended June 30, 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 June 30, 2001 and
December 31, 2000, and the related average effective interest rates (calculated
for the month ended June 30, 2001 and December 31, 2000, and excluding
unrealized gains and losses):
- -------------------------------------------------------------------------------------------------------------------
June 30, 2001 December 31, 2000
- -------------------------------------------------------------------------------------------------------------------
Effective Effective
Fair Value Interest Rate Fair Value Interest Rate
- -------------------------------------------------------------------------------------------------------------------
Collateral for collateralized bonds:
Amortized cost $ 1,993,710 7.9% $ 2,322,537 8.1%
Allowance for losses (15,548) (20,226)
- -------------------------------------------------------------------------------------------------------------------
Amortized cost, net 1,978,162 2,302,311
Gross unrealized gains 15,548 25,113
Gross unrealized losses (96,157) (119,409)
- -------------------------------------------------------------------------------------------------------------------
$ 1,897,553 $ 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 delinquent
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.
NOTE 3 -- USE OF ESTIMATES
Fair Value. The Company uses estimates in establishing fair value for its
financial instruments. Estimates of fair value for collateral for collateralized
bonds are determined by calculating the present value of the projected net cash
flows of the instruments using appropriate discount rates, prepayment rates and
credit loss assumptions. Discount rates used are those management believes would
be used by willing buyers of these financial instruments at prevailing market
rates. The discount rate used in the determination of fair value of the
collateral for collateralized bonds at both June 30, 2001 and December 31, 2000
was 16%. Variations in market discount rates, prepayments rates and credit loss
assumptions may materially impact the resulting fair values of the Company's
financial instruments. In addition to variations in such assumptions, as
discussed further in Note 4, due to an adverse ruling rendered by the
Commonwealth Court of Pennsylvania on July 5, 2001, the Company's ability to
collect certain amounts of interest, fees and costs incurred on its delinquent
property tax receivables pledged as collateral for collateralized bonds may be
adversely impacted. The Company, based on consultation with counsel, reasonably
believes that the Appellate Court's decision will ultimately be reversed or that
the ultimate outcome of the litigation will not result in a material impact on
the carrying value of the delinquent property tax receivables. Since the fair
value of the Company's financial instruments is based on estimates, actual gains
and losses recognized may differ from those estimates recorded in the
consolidated financial statements.
NOTE 4 -- LITIGATION
GLS Capital, Inc. ("GLS"), an affiliate of the Company, together with the
County of Allegheny, Pennsylvania ("Allegheny County"), were defendants in a
lawsuit in the Commonwealth Court of Pennsylvania (the "Commonwealth Court")
wherein the plaintiffs challenged the right of Allegheny County and GLS to
collect certain interest, costs and expenses related to delinquent property tax
receivables in Allegheny County. This lawsuit was related to the purchase by GLS
of delinquent property tax receivables from Allegheny County in 1997, 1998, and
1999 for approximately $58,300. GLS sold a secured funding note, collateralized
by the delinquent property tax receivables to the Company in connection with the
Company's securitization of such secured funding note. On July 5, 2001, the
Commonwealth Court ruling addressed, among other things, (i) the right of the
Company to charge to the delinquent taxpayer a rate of interest of 12% versus
10% on the collection of its delinquent property tax receivables, (ii) the
charging of attorney's fees to the delinquent taxpayer for the collection of
such tax receivables, and (iii) the charging to the delinquent taxpayer of
certain other fees and costs. The Commonwealth Court remanded for further
consideration to the Court of Common Pleas items (i) and (iii), and ruled that
neither Allegheny County nor GLS had the right to charge attorney's fees to the
delinquent taxpayer related to the collection of such tax receivables, reversing
the Court of Common Pleas decision. GLS and Allegheny County have filed an
Application for Reargument of Appellees with the Commonwealth Court of
Pennsylvania. Allegheny County and GLS are in the process of filing a Petition
for Extraordinary Jurisdiction as well as a Petition for Allowance of Appeal
with the Supreme Court of Pennsylvania, which will seek to reverse the
Commonwealth Court's decision. No damages have been claimed in the action;
however, as discussed in Note 4, the decision may impact the ultimate
recoverability of the delinquent property tax receivables. To date, GLS has
incurred attorneys fees of $2 million, approximately $1 million of which have
been reimbursed to GLS by the taxpayer or through liquidation of the underlying
real property. To the extent not collected from the taxpayer, such $1 million of
attorney's fees would need to be paid to GLS from the cash proceeds of the
securitization trust.
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
- --------------------------------------------------- ------------------ ---- -------------------
June 30, December 31,
(amounts in thousands except per share data) 2001 2000
- --------------------------------------------------- ------------------ ---- -------------------
Collateral for collateralized bonds $ 1,897,553 $ 2,208,015
Non-recourse debt - collateralized bonds 1,824,682 2,143,028
Shareholder's equity 72,871 64,997
Collateralized bond series outstanding 7 7
- --------------------------------------------------- ------------------ ---- -------------------
Collateral for collateralized bonds
As of both June 30, 2001 and December 31, 2000, the Company had 7 series of
collateralized bonds outstanding. The collateral for collateralized bonds
decreased to $1.90 billion at June 30, 2001 compared to $2.21 billion at
December 31, 2000. This decrease of $310.5 million is primarily the result of
$307.2 million in paydowns on the collateral.
Non-recourse debt - collateralized bonds
Collateralized bonds decreased to $1.82 billion at June 30, 2001 from $2.14
billion at December 31, 2000 as a result of $320.3 million in paydowns during
the six months ended June 30, 2001.
Shareholder's Equity
Shareholder's equity increased to $72.9 million at June 30, 2001 from $65.0
million at December 31, 2000. This increase was primarily the result of net
income of $6.5million and a decrease of $13.7 million in net unrealized loss on
investments available-for-sale during the six months ended June 30, 2001
partially offset by a $12.4 million capital distribution to IHC during the
period.
RESULTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- -----------------------------------
(amounts in thousands) 2001 2000 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Interest income $ 39,973 $ 51,087 $ 84,727 $ 104,759
Interest expense on collateralized bonds 28,752 44,791 64,629 90,960
Provision for losses 6,338 5,795 12,676 10,780
Net interest margin 4,417 77 6,544 2,215
Loss on the termination of interest rate swaps - (2,440) - (2,440)
Net income (loss) 4,417 (2,457) 6,544 (790)
- ---------------------------------------------------------------------------------------------------------------------------
Interest income on the collateral for collateralized bonds decreased to
$84.7 million for the six months ended June 30, 2001 from $104.8 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 $64.6 million for the
six months ended June 30, 2001 from $91.0 million for the six months ended June
30, 2000. This decrease resulted from 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 $12.7 million for the six months ended
June 30, 2001 from $10.8 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 increased to $6.5 million from $2.2 million for the six
month periods ended June 30, 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 issuance. Losses are generally first applied to the overcollateralized
amount, or in some instances surplus cash and then 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 June 30, 2001, the Company retained $175.5 million in
aggregate principal amount of overcollateralization. The Company had reserves,
or otherwise had provided coverage on $81.8 million at June 30, 2001. At June
30, 2001, $30.3 million of these reserve amounts are in the form of a loss
reimbursement guarantee. During the first six months of 2001, the Company
provided for additional reserves of $12.7 million and incurred credit losses of
$17.4 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 June 30, 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 $1.7 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 June 30, 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.
Dynex and IHC 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.
Approximately $0.9 billion of the Company's collateral for collateralized
bonds as of June 30, 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 60% and 22% 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 June 30, 2001, approximately $1.0 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.
Dynex measures the sensitivity of the Company's net interest income,
excluding various accounting adjustments including provision for losses and
premium and discount amortization, 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 June 30, 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 June 30, 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. 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 (7.7)%
+100 (3.0)%
Base -
-100 3.2%
-200 9.0%
------------------------ --------------------
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).
4.9 Copy of the Series 14 Indenture Supplement, dated as of November 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 November 12, 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: August 17, 2001