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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, 2002
|_| 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. |X| Yes |_| No
As of May 10, 2002, 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
Condensed Balance Sheets at March 31, 2002 (unaudited)
and December 31, 2001...........................................1
Condensed Statements of Operations for the three
months ended March 31, 2002 and 2001 (unaudited)................2
Condensed Statements of Cash Flows for the
three months ended March 31, 2002 and 2001
(unaudited).....................................................3
Notes to Unaudited Condensed Financial Statements...............4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...................5
Item 3. Quantitative and Qualitative Disclosures about Market Risk......7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................8
Item 5. Other Information...............................................8
Item 6. Exhibits and Reports on Form 8-K................................8
SIGNATURES..............................................................11
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MERIT SECURITIES CORPORATION
Condensed Balance Sheets
(amounts in thousands except share data)
(Unaudited)
March 31, December 31,
2002 2001
------------------ ------------------
ASSETS:
Collateral for collateralized bonds $ 1,445,256 $ 1,595,653
Loans 3,801 4,435
------------------ ------------------
$ 1,449,057 $ 1,600,088
================== ==================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Non-recourse debt - collateralized bonds $ 1,395,545 $ 1,542,924
Due to affiliate 582 -
------------------ -----------------
1,396,127 1,542,924
------------------ -----------------
SHAREHOLDER'S EQUITY:
Common stock, no par value,
10,000 shares authorized, 1,000
shares issued and outstanding 10 10
Additional paid-in capital 81,452 92,774
Accumulated other comprehensive loss (30,205) (35,620)
Retained earnings 1,673 -
------------------ ------------------
52,930 57,164
------------------ ------------------
$ 1,449,057 $ 1,600,088
================== ==================
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION
Condensed Statements of Operations, Unaudited
(amounts in thousands except share data)
Three Months Ended
March 31,
----------------------------
2002 2001
------------- -------------
Interest income:
Collateral for collateralized bonds $ 26,815 $ 44,754
------------- --------------
Interest and related expense:
Interest expense on collateralized bonds 16,869 35,877
Other collateralized bond expense 435 412
------------- --------------
17,304 36,289
------------- --------------
Net interest margin before provision for losses 9,511 8,465
Provision for losses (7,838) (6,338)
------------- --------------
Net interest margin 1,673 2,127
Interest on due to affiliates, net - -
------------- --------------
Net income $ 1,673 $ 2,127
============= ==============
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION
Condensed Statements of Cash Flows, Unaudited
(amounts in thousands)
Three Months Ended
March 31,
-------------------------------------------
2002 2001
------------------- -------------------
Operating activities:
Net income $ 1,673 $ 2,127
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for losses 7,838 6,338
Amortization, net 2,903 2,341
Other 2,463 924
------------------- -------------------
Net cash provided by operating activities 14,877 11,730
------------------- -------------------
Investing activities:
Collateral for collateralized bonds:
Principal payments on collateral 145,578 138,495
Net decrease in accrued interest receivable and (1,260) (462)
funds held by trustee
------------------- -------------------
Net cash provided by investing activities 144,318 138,033
------------------- -------------------
Financing activities:
Collateralized bonds:
Principal payments on collateralized bonds (148,325) (144,305)
Decrease in accrued interest payable (130) (217)
Increase in due to affiliates 582 -
Dividends and capital distributions (11,322) (5,251)
------------------- -------------------
Net cash used for financing activities (159,195) (149,773)
------------------- -------------------
Net decrease in cash - (10)
Cash, beginning of period - 10
------------------- -------------------
Cash, end of period $ - $ -
=================== ===================
Supplemental disclosure of cash flow information:
Cash paid for interest $ 16,256 $ 35,168
=================== ===================
See notes to unaudited financial statements.
MERIT SECURITIES CORPORATION
Notes to Unaudited Condensed Financial Statements
March 31, 2002
(amounts in thousands except share data)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed 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 condensed 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 condensed financial statements have been included. The Condensed Balance
Sheet at March 31, 2002, the Condensed Statements of Operations for the three
months ended March 31, 2002 and 2001, the Condensed Statements of Cash Flows for
the three months ended March 31, 2002 and 2001, and the related notes to
condensed financial statements are unaudited. Operating results for the three
months ended March 31, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2002. 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, 2001.
Certain amounts for 2001 have been reclassified to conform to the presentation
for 2002.
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, 2002
and December 31, 2001, and the related average effective interest rates
(calculated for the month ended March 31, 2002 and December 31, 2001, and
excluding unrealized gains and losses):
- -------------------------------------------------------------------------------------------------------------------
March 31, 2002 December 31, 2001
- -------------------------------------------------------------------------------------------------------------------
Effective Effective
Fair Value Interest Rate Fair Value Interest Rate
- -------------------------------------------------------------------------------------------------------------------
Collateral for collateralized bonds:
Amortized cost $ 1,497,800 7.0% $ 1,652,346 6.9%
Allowance for losses (22,340) (21,073)
- -------------------------------------------------------------------------------------------------------------------
Amortized cost, net 1,475,460 1,631,273
Gross unrealized gains 26,762 26,929
Gross unrealized losses (56,966) (62,549)
- -------------------------------------------------------------------------------------------------------------------
$ 1,445,256 $ 1,595,653
- -------------------------------------------------------------------------------------------------------------------
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, and manufactured housing installment loans
secured by either a UCC filing or a motor vehicle title. 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 March 31, 2002 and December 31, 2001
was 16%. Variations in market discount rates, prepayment rates and credit loss
assumptions may materially impact the resulting fair values of the Company's
financial instruments. 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.
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 and (vi) 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
- --------------------------------------------------- ------------------ ---- -------------------
March 31, December 31,
(amounts in thousands except per share data) 2002 2001
- --------------------------------------------------- ------------------ ---- -------------------
Collateral for collateralized bonds $ 1,445,256 $ 1,595,653
Non-recourse debt - collateralized bonds 1,395,545 1,542,924
Shareholder's equity 52,930 57,164
Collateralized bond series outstanding 4 4
- --------------------------------------------------- ------------------ ---- -------------------
Collateral for collateralized bonds
- -----------------------------------
As of both March 31, 2002 and December 31, 2001, the Company had 4 series of
collateralized bonds outstanding. The collateral for collateralized bonds
decreased to $1.45 billion at March 31, 2002 compared to $1.60 billion at
December 31, 2001. This decrease of $150 million is primarily the result of $146
million in paydowns on the collateral.
Non-recourse debt - collateralized bonds
- ----------------------------------------
Collateralized bonds decreased to $1.40 billion at March 31, 2002 from
$1.54 billion at December 31, 2001 primarily as a result of $148.3 million in
paydowns during the three months ended March 31, 2002.
Shareholder's Equity
- --------------------
Shareholder's equity decreased to $52.9 million at March 31, 2002 from
$57.2 million at December 31, 2001. This decrease was primarily the result of a
$11.3 million capital distribution to IHC during the period, partially offset by
net income of $1.7 million and a decrease of $5.4 million in net unrealized loss
on investments available-for-sale during the three months ended March 31, 2002.
RESULTS OF OPERATIONS
- -----------------------------------------------------------------------------------------
Three Months Ended
March 31,
-----------------------------------
(amounts in thousands) 2002 2001
- -----------------------------------------------------------------------------------------
Interest income $ 26,815 $ 44,754
Interest expense on collateralized bonds 16,869 35,877
Provision for losses 7,838 6,338
Net interest margin 1,673 2,127
Net income 1,673 2,127
- ---------------------------------------------------------------------------------------------
Interest income on the collateral for collateralized bonds decreased to $26.8
million for the three months ended March 31, 2002 from $44.8 million for the
same period in 2001. 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 $16.9 million for the
three months ended March 31, 2002 from $35.9 million for the three months ended
March 31, 2001. 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 $7.8 million for the three months ended March
31, 2002 from $6.3 million for the same period in 2001. The increase for the
three months ended March 31, 2002 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 for the three months ended March 31, 2002 was $1.7 million
compared to $2.1 million for the same period in 2001. This decline in the three
months ended March 31, 2002 was the result of 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 overcollaterialized 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, 2002, the Company retained $142.3 million in aggregate principal amount of
overcollateralization. The Company had reserves, or otherwise had provided
coverage on $53.0 million at March 31, 2002. At March 31, 2002, $30.3 million of
these reserve amounts are in the form of a loss reimbursement guarantee. During
the first three months of 2002, the Company provided for additional reserves of
$7.2 million and incurred credit losses of $6.0 million.
The Company and Dynex have settled a dispute with the counter-party to the
$30.3 million in reimbursement guarantees. Such guarantees are payable when
cumulative loss trigger levels are reached on certain of the Company's
single-family mortgage loan securitizations. The Company was paid $0.75 million
in settlement of $2.4 million in claims which had been carried on the Company's
books at $1.1 million. As part of the settlement certain trigger levels were
reset and the reasons that a loss in the future would be a "non-qualifying" loss
were significantly narrowed. As of March 31, 2002, $122 million of loans were
subject to such reimbursement guarantees.
Other Matters
- -------------
At March 31, 2002, 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 monitor the aggregate cash flow, projected net yield
and market value of the collateral for collateralized bonds under various
interest rate and prepayment assumptions.
Approximately $0.6 billion of the Company's collateral for collateralized bonds
as of March 31, 2002, 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 70% and 17%
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, 2002, approximately $0.9 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 March 31, 2002. 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, 2002. 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 (5.1)%
+100 (2.6)%
Base -
-100 2.6%
-200 5.1%
------------------------ --------------------
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)
By: /s/ Stephen J. Benedetti
---------------------------------------
Stephen J. Benedetti
Executive Vice President,
Chief Financial Officer
(Principal Financial &
Accounting Officer)
Dated: May 15, 2002