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                                                                     EXHIBIT 99

                   DESCRIPTION OF THE BONDS

  General

     The Bonds will be issued pursuant to an indenture (the "Indenture") dated
  as of July 15, 1980 between the Issuer and the Trustee, as supplemented by
  one or more supplemental indentures. Copies of the Indenture have been, and
  copies of each supplemental indenture will be, filed as exhibits to the
  registration statement of which this Prospectus forms a part. The following
  summaries describe certain provisions common to each series of Bonds. The
  summaries do not purport to be complete and are subject to, and are qualified
  in their entirety by reference to, the provisions of the Indenture and the
  supplemental indenture thereto for each particular series and the supplement
  to this Prospectus to be prepared with respect to such series.

     The Bonds are limited to $100,000,000 aggregate principal amount and are
  issuable in series. The Bonds will be issued in fully registered form only in
  initial denominations of $1,000 or any integral multiple thereof. (Indenture,
  Sections 3.01 and 3.02) The Bonds of each series will be secured by a
  separate Security Package, which will not serve as security for any other
  series of Bonds. (see "The Security Package").

     Payments of the principal of and interest on, and optional redemptions of,
  the Bonds are to be made at the principal corporate trust office of the
  Trustee. However, the Issuer intends to make payments of interest and
  prepayments of principal by checks mailed to the Bondholders.  Optional
  redemptions will be made at the principal corporate trust office of the 
  Trustee. (Indenture, Sections 3.07, 11.02 and 12.01)

        The Bonds may be transferred or exchanged without the payment of any
  service charge, other than any tax or governmental charge payable in 
  connection therewith. (Indenture, Section 3.05)

  Payments of Interest

     The Bonds of a series will bear interest at a rate specified in the
  supplement to this Prospectus for that series. Interest will be payable
  quarterly. Interest for a quarter will be payable on the 28th day following
  such quarter, commencing with the 28th day following the quarter in which the
  series was issued, to the persons in whose names the Bonds are registered in
  the Bond Register at the close of business on the 20th day following such
  quarter. (Indenture, Section 3.07)

  Redemption at Option of Bondholders

     Unless the Bonds of a series have been declared due and payable prior to
  maturity by reason of an event of default, holders of such Bonds have the
  right to present them for redemption prior to maturity. After a series of
  Bonds has been outstanding for 12 months, on the 28th day of each month (a
  "Redemption Date") the Issuer will redeem Bonds of that series that have been
  presented for redemption in the order of priority described below and subject
  to the limitations that (i) the Issuer will not in any three-month period
  ending on a quarterly interest payment date redeem more than $10,000 original
  principal amount of Bonds of a series from each Bondholder(0) and (ii)
  redemptions will be made only to the extent funds are available in the
  Redemption Date occurs. The Redemption Fund for a series will consist of
  principal prepayments, proceeds from certain insurance policies and
  foreclosure proceedings applied to principal and minor amounts of principal
  amortization with respect to the Pledged Loans securing that series. (see
  "The Security Package The Pledged Loans - Valuation of Pledged Loans").
  Subject to these limitations, on each Redemption Date and with respect to
  each series, Bonds presented by the personal representative,

     -  For this purpose, a Bond held by tenants by the entirety, joint
  tenants or tenants in common is considered to be held by a single holder.

                               [6]
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  surviving joint tenant or tenant by the entirety of a deceased holder will be
  redeemed in the order of their receipt by the Trustee; thereafter Bonds
  presented by others will be redeemed in the order of their receipt by the
  Trustee. Bonds presented on behalf of a deceased holder may be redeemed
  before they have been outstanding for one year.

     On each Redemption Date that is also a quarterly interest payment date,
  the Issuer will redeem Bonds submitted on behalf of deceased holders in
  excess of the $10,000 limitation, but only if and to the extent of available
  funds in the Redemption Fund for the series (determined as of the tenth day
  of the month in which that Redemption Date occurs) after all other
  redemptions through the current month have been made. These additional
  redemptions will be made in the order that the Bonds were received by the
  Trustee.

     The redemption price for Bonds is 100% of the unpaid principal amount
  thereof, plus accrued interest through the applicable Redemption Date.
  Redemptions of less than a Bond with an original principal amount of $1,000
  will not be made.

     Bonds may be presented for redemption by delivery to the Trustee of: (i)
  the Bonds to be redeemed, (ii) a written request for redemption in form
  satisfactory to the Trustee and signed by the holder or duly authorized
  representative (with appropriate evidence of authority) and (iii) in the case
  of a request on behalf of a deceased holder, appropriate evidence of death
  and authority and any requisite tax waivers. Bonds presented for redemption
  after the 10th day, and on or before the 28th day, of a month, whether on
  behalf of a deceased holder or otherwise, will be treated as if they had been
  presented after the close of business on the 28th day of such month. All
  Bonds presented for redemption will be held by the Trustee until the Issuer
  is able to redeem them, unless withdrawn by written request actually received
  by the Trustee on or before the 10th day of the month in which they would
  otherwise have been redeemed. Bonds presented for redemption will continue to
  bear interest until redeemed. The Trustee may establish such procedures as it
  may deem fair and equitable in order to determine the order of receipt of
  Bonds received by it on a single day and any such determination shall be
  conclusive. (Indenture, Sections 12.02, 12.03 and 12.04)

     There is no assurance that the Redemption Fund will be sufficient to
  redeem all Bonds presented and a holder of Bonds may not be able to have his
  Bonds redeemed prior to maturity. During periods of rising interest rates,
  greater numbers of holders may be expected to present their Bonds for
  redemption in order to take advantage of the higher interest rates, 
  obtainable elsewhere and there may be a concurrent reduction in the rate of 
  prepayments of the Pledged Loans.

  Prepayments of Principal

     Commencing after a series of Bonds has been outstanding for 12 months,
  prepayments of principal will be made quarterly on the 28th day following
  each quarter to the persons in whose names the Bonds are registered in the
  Bond Register on the 20th day following such quarter to the extent that funds
  in the Redemption Fund for that series (determined as of the tenth day of the
  month in which the prepayment is made) are not used for redemptions of Bonds
  at the option of Bondholders. However, prepayments of principal will only be
  made in integral multiples of $5 per Bond of $1,000 denomination and no
  prepayment will be made until the amount available for prepayment is at least
  $15 per Bond of $1,000 denomination. No notation of prepayments will be made
  on the Bonds. Each prepayment of principal will be accompanied by a statement
  as to the principal amount remaining after giving effect to such prepayment.
  (Indenture, Section 12.01)

                             [7]


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Redemption at Option of Issuer

     The Issuer may redeem all, but not less than all, of the Bonds of any
  series if the aggregate outstanding principal balance of such Bonds is
  reduced to 20% or less of their original aggregate principal amount.
  (Indenture, Section 12.06) (see "The Security Package - Prepaid Life
  Considerations").

  Modification of Indenture

     With the consent of the holders of not less than a majority in principal
  amount of the outstanding Bonds or of the outstanding Bonds of a series, the
  Trustee and the Issuer may execute a supplemental indenture to add provisions
  to, or change in any manner or eliminate any provisions of, the Indenture
  with respect to all of the Bonds or that series or modify in any manner the
  rights of the holder of each outstanding Bond affected, no such supplemental
  indenture shall, among other things, (a) change the maturity of any principal
  of or interest on any Bond, or reduce the principal amount thereof or the
  rate of interest thereon, (b) reduce the percentage of Bondholders whose
  consent is required for the authorization of any supplemental indenture or
  for any waiver of compliance with certain provisions of the Indenture or
  certain defaults thereunder or their consequences or (c) modify any of the
  provisions of the Indenture with respect to supplemental indentures with the
  consent of Bondholders, except to increase the percentage of Bondholders
  whose consent is required for any such action or to provide that other
  provisions of the Indenture cannot be modified or waived without the consent
  of the holders of each outstanding Bond affected thereby. (Indenture, Section
  10.02)

  Events of Default

     An Event of Default is defined in the Indenture as being: default for 30
  days in the payment of principal of, or interest on, the Bonds; default in
  the performance of any other covenant in the Indenture and the continuance of
  such default for a period of 60 days after notice to the Issuer by the
  Trustee or to the Issuer and the Trustee by the holders of at least 25% of
  the Bonds then outstanding; or certain events of bankruptcy, insolvency,
  receivership or reorganization of the Issuer. In case an Event of Default
  should occur and be continuing, the Trustee or the holders of at least 25% in
  principal amount of the Bonds then outstanding may declare the principal of
  the Bonds to be due and payable. Such declaration may under certain
  circumstances be rescinded by the holders of a majority in principal amount
  of the Bonds then outstanding. (Indenture, Sections 6.01 and 6.02)

     If, following an Event of Default, the Bonds have been declared to be due
  and payable, the Trustee may refrain from liquidating the Security Package
  for a series if such Security Package is continuing to provide sufficient
  funds for the payment of principal of, and interest on, the Bonds of such
  series as they would have come due if there had not been such a declaration.
  The Trustee may also liquidate the Security Package for a series by
  distributing participations in such Security Package to the holders of Bonds
  of such series. (Indenture, Section 6.05)

     Subject to the provisions of the Indenture relating to the duties of the
  Trustee in case an Event of Default shall occur and be continuing, the
  Trustee shall be under no obligation to exercise any of the rights or powers
  under the Indenture at the request or direction of any of the Bondholders,
  unless such Bondholders shall have offered to the Trustee reasonable security
  or indemnity. (Indenture, Section 7.03) Subject to such provisions for
  indemnification and certain limitations contained in the Indenture, the
  holders of a majority in principal amount of the outstanding Bonds may, in
  certain cases, waive any default except a default in payment of principal or
  interest on the Bonds. (Indenture, Sections 6.14 and 6.15)

  Statement as to Compliance

     The Issuer will be required to file annually with the Trustee a written 
  statement as to fulfillment of its obligations under the Indenture. 
  (Indenture, Section 11.09)

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Reports to Bondholders

     The Issuer intends to publish and send to each Bondholder annual reports
  containing audited financial statements. For each series, the Issuer will
  include with the annual report sent to Bondholders a statement setting forth
  the following information (Indenture, Section 8.04):

     (i) the amount of principal paid on the Bonds of such series during the
     preceding calendar year; (ii) the remaining aggregate principal amount of
     Bonds of such series outstanding on the last day of the preceding 
     calendar year;

     (iii) the aggregate principal balance of the Pledged Loans securing such
  series on the last day of the preceding calendar year after giving effect to
  payments due on such date;

     (iv) the number and aggregate principal balances on the last day of the
  preceding calendar year of Pledged Loans delinquent (a) one month and (b) two
  or more months;

     (v)  the book value of any real estate acquired through foreclosure or 
  grant of a deed in lieu of foreclosure;

     (vi)  the remaining balance on the last day of the preceding calendar year
  of any reserve fund securing such series; and

     (vii) the amount of remaining coverage under the Blanket Insurance Policy
  for such series as of the close of business on the last day of the preceding
  calendar year, expressed as a percentage of the amount reported pursuant to
  (iii) above.

  Satisfaction and Discharge of the Indenture

     The Indenture will be discharged upon the cancellation of all of the Bonds
  or, with certain limitations, upon deposit with the Trustee of funds
  sufficient for the payment or redemption thereof.

  (Indenture, Section 5.01)

  No Listing of Bonds

     The Issuer does not intend to apply for the listing of the Bonds on any
  exchange.

  The Trustee

     The First National Bank of Chicago, Corporate Trust Division, 126 South
  State Street, Eighth Floor, Chicago, Illinois 60670, will be the Trustee for
  the Bonds. The First National Bank of Chicago performs other services for the
  Issuer and its affiliates, including making loans to U.S. Home, the Servicer
  and the Issuer, some of which were used to finance the Pledged Loans prior to
  issuance of the Bonds.

                     THE SECURITY PACKAGE

  General

     Each series of Bonds will be secured by assignment to the Trustee of a
  Security Package consisting of (i) Pledged Loans having an aggregate
  discounted value equal to 103% of the initial principal amount of the Bonds
  of such series, (ii) a cash Reserve Fund in the amount of 3% of the initial
  principal amount of the Bonds of such series. (iii) all payments due under
  certain Insurance Policies, (iv) the Issuer's rights under the Servicing
  Agreement with the Servicer, and (v) to the extent applicable, the Debt
  Service Reserve Fund and pledged savings accounts referred to below. The
  Security Package of each series of Bonds will serve as collateral only for
  that series of Bonds.

  The Pledged Loans

     The Pledged Loans will consist of conventional (i.e., not government
  guaranteed) first mortgage loans(0) on single-family residences constructed
  by US Home and serviced by the Servicer, having initial loan-to-value

     - See footnote on page 13

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  ratios of up to 97%, maturities of up to 30 years and amortization schedules 
  of up to 50 years (an amortization schedule in excess of 30 years requires
  payment of a principal balance at maturity if the loan is not prepaid). The
  initial loan-to-value ratio of a Pledged Loan will be determined by dividing
  the original principal the original principal amount of the Pledged Loan
  (after deducting any savings account pledged by the borrower) by the lesser
  of (a) the price at which the home was sold (without deducting discounts to
  U.S. Home employees) and (b) the appraised value of the home at the time of
  closing such loan. (Indenture, Section 1.01) The assignment of the Pledged 
  Loans to the Trustee by the Issuer will be without recourse.

     It is contemplated that the assignments to the Trustee of the Pledged
  Loans securing each series will not be recorded until after that series is
  issued; as a result, it might be possible for the Issuer to discharge Pledged
  Loans or transfer them to bona fide purchasers for value during that period.
  However, in most cases the Issuer would not be able to deliver the original
  documents evidencing the Pledged Loans, which are to be held by the Trustee
  unless released to the Servicer in connection with its servicing activities.
  If the assignments of any Pledged Loans are not recorded within 120 days
  after issuance of the series that such Pledged Loans secure, U.S. Home or the
  Servicer must purchase or replace such Pledged Loans as described below under
  "Criteria for Pledged Loans."

  Valuation of Pledged Loans

     Each Pledged Loan bearing interest at a rate that exceeds the interest
  rate on the applicable series of Bonds by at least an increment (which will
  not be less than 0.375% per annum) specified in the supplement to this
  Prospectus for that series will be valued at its unpaid principal amount.
  Each Pledged Loan bearing interest at a lesser rate will be valued at an
  amount that would produce a yield equal to such increment over the interest
  rate on the applicable series of Bonds, based on the assumption that such
  Pledged Loan will not be prepaid prior to maturity (the value of a Pledged
  Loan determined as provided in this paragraph is its "Discounted Value").
  (Indenture, Section 1.01) However, the experience of the Federal Housing
  Administration ("FHA") relating to insured single-family mortgage loan
  suggests that many of the Pledged Loans will be prepaid prior to maturity,
  which in the case of discounted Pledged Loans, would result in a higher 
  yield. (see "The Security Package - Prepaid Life Considerations").

     Pledged Loans that have been discounted will be amortized on the basis of
  the yield assumption described in the preceding paragraph. Thus, some or all
  payments of principal on the Pledged Loans will not be taken into account in
  determining the Redemption Fund and may be applied to the payment of interest
  on the Bonds. (see "Description of the Bonds - Prepayments of Principal" and
  "Description of the Bonds Redemption at Option of Bondholders").

  Criteria for Pledged Loans

     No Pledged Loan may have an original principal amount exceeding $125,000.
  The mean of the original principal amounts of each Pledged Loan for a series
  of Bonds may not exceed $75,000, and no more than 35% of the Pledged Loans
  for any series of Bonds may have an original principal amount in excess of
  $85,000. (Indenture, Section 4.02 (1) (a) )

     Pledged Loans with an original principal amount of $75,000 or less that
  are secured by owner occupied homes may have initial loan-to-value ratios of
  up to 97%. The initial loan-to-value ratio of Pledged Loans with an original
  principal amount in excess of $75,000 or Pledged Loans secured by non-owner
  occupied homes may not exceed 90%. Pledged Loans with an original principal
  amount in excess of $93,750 must have initial loan-to-value ratios of 80% or
  less. (Indenture, Section 4.02 (1) (b) ) (see "Special Considerations -
  Foreclosures and Casualties").

     Not more than 33% of the aggregate unpaid principal amount of the Pledged
  Loans for any series of Bonds may consist of mortgages on low-rise (not more
  than three living stories) condominium units and attached townhouses. The
  remainder of Pledged Loans will consist of mortgages on single-family
  detached homes. (Indenture, Section 4.02 (1) (c) )

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     The mortgaged properties will consist of homes constructed and sold by
  U.S. Home in the states of Arizona, California, Colorado, Florida, Illinois,
  Louisiana, Maryland, Minnesota, Mississippi, Nevada, New Jersey, New Mexico,
  Oklahoma, Texas, Utah and Virginia and other states in which U.S. Home may
  sell homes. Not more than 50% of the Discounted Value of the Pledged Loans
  for each series of Bonds will be secured by homes located in any state other
  than Texas, in which homes securing 75% of such Discounted Value may be
  located. In addition, not more than 25% of the Discounted Value of the
  Pledged Loans for any series of Bonds will be secured by homes located in
  anyone subdivision of U.S. Home. (Indenture, Sections 4.02 (1) (d) and 4.02
  (i) (e))

     Certain of the Pledged Loans (including all of the Pledged Loans with
  amortization schedules over 30 years) will bear interest at a constant rate
  during the first 20 years following their origination and, at the end of the
  20 year period, will bear interest at an increased or decreased rate based on
  a formula taking into account then prevailing interest rates. However, the
  Discounted Value of a Pledged Loan will be determined on the basis of the
  rate of interest charged during the first 20-year period.

     In the event of a breach of any of representations and warranties that
  U.S. Home and the Servicer will be making with respect to each Pledged Loan
  or if a Pledged Loan is found to have been obtained on the basis of 
  fraudulent information (i.e., regarding the credit and/or employment history 
  of the mortgagor, the occupancy of the home or any other evidence of 
  systematic fraud) or if any document relating to a Pledged Loan is found to 
  be defective in any material respect and the Servicer cannot cure such 
  defect within 90 days, or if the assignment of a Pledged Loan to the Trustee 
  is not recorded within 120 days after the issuance of the series of Bonds 
  that it secures, the Trustee may require U.S. Home or the Servicer to 
  purchase such Pledged Loan from the Issuer at its then Discounted Value. The 
  Issuer, in turn, will either replace such Pledged Loan with a new eligible 
  Pledged Loan with the same Discounted Value or place the proceeds of such 
  sale in the Redemption Fund. The Trustee may not, however, require U.S. Home 
  or the Servicer to make such a purchase after the series of Bonds that such 
  Pledged Loan secures has been outstanding for more than one year, nor does 
  the Trustee or any Bondholder have any other remedy in any such event. 
  (Indenture, Sections 4.02 and 4.03; Servicing Agreement, Section 6.02)

     The Pledged Loans may include mortgage loans in which a percentage of the
  down payment will be applied directly to the purchase price of the home and
  the remainder placed in a savings account pledged to the lender. Principal
  and interest from the pledged savings account will be used to supplement the
  borrower's monthly mortgage payment at a predetermined rate. The savings
  accounts pledged by all such borrowers will be assigned to the Trustee along
  with the related Pledged Loan and will be held by the Trustee as additional
  security for the related Pledged Loan.

     In determining a borrower's eligibility for a Pledged Loan only the net
  payments (i.e., after deduction of the amounts from any pledged account used
  to supplement the payment) to be made by the borrower during the first year
  of the loan are used in calculating whether the borrower meets lending
  guidelines with respect to the proportion of the borrower's income used for
  mortgage payments. (see "U.S. Home Mortgage Corporation - The Servicer").

  Debt Service Reserve Fund

     Some Pledged Loans may provide for a lower rate of interest during the
  first five years of their term, or may provide for only payments of interest
  during the first five years of their term, or may provide for payments that
  increase during the first five years of the term and which, until the sixth
  year, are not sufficient to pay the full interest accruing on the loan. The
  Issuer will deposit with the Trustee in cash a Debt Service Reserve Fund in
  an amount equal to the aggregate excess, if any, of (a) the interest to
  accrue on each such Pledged Loan (on the basis of the yield assumption used
  in determining Discounted Value) over (b) the payments of principal and
  interest called for by such Pledged Loan. The amount deposited in a Debt
  Service Reserve Fund will be taken into account in determining the Discounted
  Value of a Pledged Loan. The Trustee shall withdraw from the Debt Service
  Reserve Fund, or draw on the letter of

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<PAGE>   7


  credit that may be established in lieu thereof, and apply to the payment of
  interest on the Bonds the amount of such excess. As a result of the
  borrower's obligation to ultimately pay the accrued interest on certain
  Pledged Loans together with interest on such interest (which obligation will
  not be covered by either a Primary or Blanket Insurance Policy), there may be
  substantially no amortization of principal of these Pledged Loans available
  for redemption's of or principal prepayments on the Bonds.

  The Reserve Fund

     The Issuer will deposit with the Trustee in cash a Reserve Fund equal to
  3% of the initial principal amount of that series of Bonds.

     The Reserve Fund may be applied by the Trustee to pay the Bondholders any
  shortfall in the payments of principal of, and interest on, the Bonds to the
  extent not paid by the Issuer, advanced by the Servicer, or paid from the
  Debt Service Reserve Fund, or the proceeds of a Primary or a Blanket
  Insurance Policy. (See "Special Considerations").

     The Reserve Fund for a series of Bonds need not be invested (and may
  therefore serve as compensating balances for the Issuer and its affiliates)
  and the Issuer may make withdrawals from the Reserve Fund for a series,
  unless (i) such Reserve Fund is or would be reduced below 3% of the initial
  principal amount of the Bonds of that series or (ii) as a result of an
  uninsured loss on foreclosure, (A) the then aggregate Discounted Value of
  Pledged Loans is reduced to less that 103% of the then outstanding principal
  amount of the Bonds of that series and (B) the sum of such aggregate
  Discounted Value, and the amount of the Reserve Fund for such series is less
  than the sum of (x) 3% of the initial principal amount of the Bonds of that
  series and (y) 103% of the then outstanding principal amount of the Bonds of
  that series. The Reserve Fund may be invested by the Trustee, as directed by
  the Issuer, only in short-term obligations of the United States or any agency
  thereof, obligations of Federal National Mortgage Association ("FNMA"),
  commercial paper (rated in the highest rating category by Standard & Poor's
  Corporation or Moody's Investors' Service, Inc.), demand deposits, time
  deposits, interest or noninterest-bearing certificates of deposit of the
  Trustee or any other bank in the United States with capital and unimpaired
  surplus of at lease $30,000,000 and repurchase obligations collateralized by
  any of the foregoing.

  Mortgage Insurance

     The forms of Primary Policy and Blanket Insurance Policy have been filed
  as exhibits to the registration statement of which this Prospectus forms a
  part. The following descriptions do not purport to be complete, and are
  qualified in their entirety by reference to such forms of policies.

  Primary

     Each Pledged Loan with a loan-to-value ratio exceeding 80%* at its date of
  closing will be insured down to approximately a 72% loan-to-value ratio by
  MGIC under a Primary Policy and such insurance will be maintained in force by
  the Service (see "the Servicing Agreement"), until such time as the
  outstanding principal balance of the Pledged Loan is reduced to 80% or less
  of the original price of, or the then current appraised value of, the
  mortgaged home, whichever is greater. The purchaser of the home is required
  to pay the annual premiums on this insurance.

  Blanket

     The Blanket Insurance Policy for the Pledged Loans in the Security
  Package for each series of Bonds insures against loss by reason of the
  default in payments on any Pledged Loan included therein, with a cumulative
  loss limitation equal to 10% of the aggregate principal balance of the
  Pledged Loans for that series on the date such series is issued (excluding
  the aggregate principal balance of the sub-subordinated loans that represent
  the excess over a loan with a long-to-value ratio of 95%).  Each Blanket
  Insurance

  * See Footnote on page 13.

                               [12]


<PAGE>   8


  Policy will be issued by MGIC. The Issuer and the Trustee will be the named
  insured under the Insurance Policy and the Issuer will use its best efforts
  to maintain such policy in effect. The Blanket Insurance Policy does not
  cover all types of losses, and claims thereunder may be made only respecting
  defaulted Pledged Loans and only upon satisfaction of certain conditions
  precedent described below.

     The Blanket Insurance Policy will cover losses to the insured by reason of
  payment defaults on Pledged Loans which are not otherwise paid from the
  proceeds of any applicable Primary Policy of up to 100% of the principal
  balance of each Pledged Loan with an original loan-to-value ratio up to 95%*
  outstanding at any time, plus accrued interest (at the rate provided by such
  Pledged Loan) through the date of settlement of a claim and all advances,
  i.e., advances made by the insured to protect its security, such as unpaid
  real estate taxes, hazard insurance premiums necessarily incurred, and other
  expenses incurred in preserving the property, plus costs of foreclosure,
  including reasonable attorney's fees. The maximum cumulative liability of
  MGIC under each Blanket Insurance Policy will be an amount equal to 10% of
  the initial aggregate principal balance of the Pledged Loans of the series
  (excluding the aggregate principal balance of the subordinated loans that
  represent the excess over a loan with a loan-to-value of 95%). Until the
  maximum cumulative liability of MGIC is exhausted through loss payments paid
  by MGIC, accrued and unpaid interest and all advances on any Pledged Loan in
  default will be covered by the Blanket Insurance policy.

     The Servicer will present claims to MGIC on behalf of the Insurer and the
  Trustee, and will be required to use its best efforts to take all actions
  necessary to permit recovery under the Blanket Insurance Policy.

     The Blanket Insurance Policy provides that no claim may be validly
  presented thereunder unless (a) hazard insurance on the property securing the
  defaulted Pledged Loan has been kept in force and other reimbursable
  protection and preservation expenses have been paid and (b) if there has been
  physical loss or damage to the mortgaged property, it has been restored to
  its condition (reasonable wear and tear excepted) at the date insured.
  Assuming the satisfaction of these conditions, MGIC is required to either (a)
  pay the difference (if any) between the proceeds received from an approved
  sale of the property and the principal balance of the defaulted Pledged Loan
  plus accrued and unpaid interest (at the rate provided by such Pledged Loan) 
  to the date of sale and all advances or (b) purchase the property securing the
  defaulted Pledged Loan at a price equal to the principal balance thereof plus
  accrued and unpaid interest (at the rate provided by such Pledged Loan) to the
  date of purchase and all advances.

     Since the Blanket Insurance Policy will require that the property subject
  to defaulted Pledged Loan be restored to its original condition (reasonable
  wear and tear excepted) prior to claiming against MGIC, such policy on the
  Pledged Loans will not provide coverage against certain uninsured hazard
  losses. The hazard policies covering the Pledged Loans typically exclude form
  coverage physical damage resulting from a number of causes and, even when the
  damage is covered, may result in recoveries which are significantly less than
  full replacement cost of such losses. (see "The Security Package -- Hazard
  Insurance").

  MGIC

     MGIC, which is the insurer under the Primary Policies and the Blanket
  Insurance Policy, is engaged in the business of insuring mortgage loans on
  residential properties against default in payment

     * In order to qualify for the Blanket Insurance Policy, Pledged Loans with
  an original loan-to-value ratio in excess of 95% will be divided into two
  loans, which will either be secured by a first and a second mortgage on the
  home, or by one mortgage on the home for both loans; a senior loan with a
  loan-to-value ratio of 95%, which will be covered under the Primary and
  Blanket Insurance Policy, and a subordinated loan for the excess, which will
  not be covered under either Insurance Policy. With respect to each series of
  Bonds, the aggregate Discounted Value of the Pledged Loans that are not
  subordinated loans will be at least equal to the principal amount of the
  Bonds.

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<PAGE>   9


  by the Mortgagor. Insurance is offered to approved mortgage by the mortgagor.
  Insurance is offered to approved mortgage lending institutions in all states.
  Based on information published by MGIC, at December 31, 1979, MGIC was the
  largest private mortgage insurer in the United States and had total assets of
  approximately $654.5 million, capital and surplus aggregating approximately
  $159.0 million and statutory contingency reserves of approximately $338.2
  million, resulting in total policy policyholders' reserves of approximately
  $497.2 million, and reported insurance in force covering over $40 billion of
  residential mortgages.

  Hazard Insurance

     The Servicer will use its best efforts to cause the mortgagor to maintain
  for each Pledged Loan a hazard insurance policy providing for no less than
  the coverage of the applicable state standard form of fire insurance policy
  with extended coverage. Such insurance coverage will be in an amount not less
  than the maximum insurable value of the home and other improvements securing
  such Pledged Loans or the principal balance owing on such Pledged Loan,
  whichever is less. The standard forms of mortgages and deeds of trust used by
  the Servicer provide that payments must be applied to escrowed items,
  including insurance premiums, prior to application to principal or interest.
  All amounts collected by the Servicer under any hazard policy (except for
  amounts to be applied to the restoration or repair of property subject to the
  related mortgage or released to the mortgagor in accordance with the
  Servicer's normal servicing procedures) will be treated in the same manner as
  any other prepayment on a Pledged Loan (and will therefore be available for
  redemption of the Bonds). (see "Description of the Bonds -- Redemption at
  Option of Bondholders")

     In general, the standard form of fire and extended coverage policy covers
  physical damage to or destruction of the improvements on the property by
  fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
  civil commotion, subject to the conditions and exclusions particularized in
  each policy. Although the policies relating to the Pledged Loans are
  underwritten by different insurers and therefore do not contain identical
  terms and conditions, the basic terms thereof are determined by state law,
  and most such policies typically do not cover any physical damage resulting
  from certain risks, including war, riot, governmental action, floods and
  other water-related causes, earth movements (including earthquakes,
  landslides and mud flows), nuclear reactions, wet or dry rot, vermin,
  rodents, insects or domestic animals, theft and, in certain cases, vandalism.
  There the property securing a Pledged Loan is located in a designated flood
  area, the Servicer requires that the mortgagor obtain flood insurance in
  those areas where floor insurance has been made available under the National
  Flood Insurance Act of 1968, as amended.

     The hazard insurance policies covering properties securing the Pledged
  Loans typically contain a clause which in effect required the insured at all
  times to carry insurance of a specific percentage (generally 80% to 90%) of
  the full replacement value of the improvements on the property in order to
  recover the full amount of any partial loss. If the insured's coverage falls
  below this specified percentage, such clause provides that the insurer's
  liability in the event of partial loss shall not exceed the lesser of (a) the
  replacement cost of the improvements less physical depreciation or (b) such
  proportion of the loss as the amount of insurance carried bears to the
  specified percentage of the full replacement cost of such improvements. Since
  the amount of hazard insurance the borrowers are required to maintain on the
  improvements securing the Pledged Loans declines as the principal balances
  owing thereon decrease, and since residential properties have historically
  appreciated in value over time, in the event of partial loss hazard insurance
  proceeds may be insufficient to restore fully the damaged property.

     Any losses incurred by the Issuer due to uninsured risks (i.e.,
  earthquakes, landslides and mud flows) or insufficient hazard insurance
  proceeds may reduce the collateral in a Security Package.

  Prepaid Life Considerations

     The Pledged Loans will have maturities of up to 30 years from their dates
  of closing, with amortization schedules of up to 50 years. However, mortgages
  such as those included in the Pledged

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<PAGE>   10


  Loans are frequently prepaid; the proceeds of any such prepayment will be used
  to redeem or prepay the Bonds, thereby reducing their average life. Factors
  such as general economic conditions, prevailing interest rates and mortgagor
  mobility affect the prepayment experiences with respect to mortgage loans.

     Experience of the FHA relating to insured single-family mortgage loans at
  various interest rates with original maturities of 26 to 30 years, all of
  which permit assumption by the new buyer if the home is sold, indicates that
  while some of such mortgage loans will, on the average, produce a yield
  equivalent to that of a single loan which amortizes according to the
  prescribed 30-year amortization schedule and then totally prepays in the 12th
  year. This 12-year prepayment assumption is the mortgage industry norm for
  quoting yields and is used in most generally accepted yield tables. Assuming
  that all of the Pledged Loans for a particular series of Bonds were
  originated concurrently and that the weighted average interest rate of such
  Pledged Loans was 123/4% per annum, the aggregate remaining principal
  balances of such Pledged Loans 12 years after origination would be: (a)
  approximately 91.8% of the original aggregate principal balances if no
  prepayments are made; (b) approximately 49.1% if the actual prepayment
  experience parallels the FHA's national prepayment experience which
  accelerated rate would produce an average loan life of approximately seven
  years. If the interest rate on the Pledged Loans were higher than 12 3/4% per
  annum, the remaining principal balances based on each of these assumptions
  would be higher.

     Industry experience with 30-year conventional single-family loans
  indicates that prepayments with respect to such loans more nearly approximate
  twice the rate experience by the FHA. However, lower rates of prepayment may
  be experienced because of the combined effects of high prevailing mortgage
  rates, seasonal factors, general economic factors, and judicial decisions
  limiting the ability of institutional lenders to accelerate a mortgage loan
  upon conveyance of mortgaged property. In additional, all of the Pledged
  Loans permit assumption by the new buyer if the home is sold, subject to
  satisfaction of the Servicer's credit requirements and adjustment of the
  interest rate to prevailing levels where permitted by law. There is thus no
  assurance that prepayment of the Pledged Loans for a particular series of
  Bonds will conform to industry or FHA prepayment experience. The variation of
  cash flows because of changes in the prepayment patterns may result in some
  loss of collateral in certain situations. (see "Special Considerations --
  Interest Rate Fluctuations").

        U.S. HOME MORTGAGE CORPORATION -- THE SERVICER

     The Servicer does not insure or guarantee the Bonds or the Pledged Loans
  and it obligation with respect to payment on the Bonds is limited to the
  advance of delinquent payments on individual Pledged Loans to the extent that
  such advances will, in the judgment of the Servicer, be reimbursable under
  the Insurance Policies. (see "The Security Package -- Insurance"). The
  Servicer, a wholly owned mortgage banking subsidiary of U.S. Home, is a
  `FNMA/Government National Mortgage Association ("GNMA")/Federal Home Loan
  Mortgage Corporation ("FHLMC") approved seller-servicer based in Clearwater,
  Florida currently servicing for U.S. Home, other investors and its own
  account approximately 8,000 mortgage loans totaling over $280 million. The
  Servicer operated through FHA approved branch offices in Houston, Tucson,
  Phoenix, Las Vegas, Denver and Clearwater where it originated loans. The
  Servicer originated approximately $138,000,000 in mortgage loans during 1979,
  primarily covering U.S. Home products. The Servicer's consolidated
  stockholder's equity as at December 31, 1979 was $5,364,497.

     Prospective residential mortgage loans underwritten and serviced by the
  Servicer are subject to an underwriting process and review by the Servicer in
  order to assess the prospective homeowner's ability to repay and the adequacy
  of home as collateral. In additional, all Pledged Loans must conform to the
  requirements of MGIC, the insurer under the Primary and Blanket Insurance
  Policies, which will review and insure each Pledged loan. All Pledged Loans
  will be approved by MGIC prior to the issuance of the Bonds that they secure.

                               [15]