<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                   For the Fiscal Year Ended DECEMBER 31, 1998

                             Commission File Number
                                     0-13808

                            HOUSING PROGRAMS LIMITED
                        A CALIFORNIA LIMITED PARTNERSHIP
       (Formerly, Shearson Lehman/Coast Savings Housing Partners, Limited)

                  I.R.S. Employer Identification No. 95-3906167

         9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA 90211

        Registrant's Telephone Number, Including Area Code (310) 278-2191

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

                                      NONE

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

                               Yes [X]   No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]


<PAGE>   2
PART I.

ITEM 1. BUSINESS

Housing Programs Limited (the "Partnership") is a limited partnership which was
formed under the laws of the State of California on May 15, 1984. On September
12, 1984, the Partnership offered 3,000 units consisting of 6,184 Limited
Partnership Interests and warrants to purchase a maximum of 6,184 Additional
Limited Partnership Interests through a public offering.

The general partners of the Partnership are National Partnership Investments
Corp. ("NAPICO"), Housing Programs Corporation II and Coast Housing Investment
Associatioes ("CHIA") (collectively, the "General Partners"). The business of
the Partnership is conducted primarily by its General Partners as Housing
Programs Limited has no employees of its own.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The current members of NAPICO's Board of Directors are
Charles H. Boxenbaum, Bruce E. Nelson, Alan I. Casden and Henry C. Casden. LBI
Group Inc. owns all of the stock of Housing Programs Corporation II. CHIA is a
limited partnership formed under the California Limited Partnership Act and
consists of Messrs. Nicholas G. Ciriello, an unrelated individual, as general
partner and Charles H. Boxenbaum, as limited partner.

The Partnership holds limited partnership interests in 10 local limited
partnerships (referred herein as the "local" or "lower-tier" limited
partnerships) as of December 31, 1998, after selling its interests in 7 local
limited partnerships, in December 1998, to the Operating Partnership. As of
December 31, 1998, an affiliate of NAPICO holds a general partnership interest
in 5 of the local limited partnerships. The remaining local partnerships general
partners are unaffiliated with the Partnership. Each of the local partnerships
owns a low income housing project which is subsidized and/or has a mortgage note
payable to or insured by agencies of the federal or local government.

In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies provided ownership incentives,
including among others, interest subsidies, rent supplements, and mortgage
insurance, with the intent of reducing certain market risks and providing
investors with certain tax benefits, plus limited cash distributions and the
possibility of long-term capital gains. There remains, however, significant
risks associated with the ownership of low income housing projects. The
long-term nature of investments in government assisted housing limits the
ability of the Partnership to vary its portfolio in response to changing
economic, financial and investment conditions; such investments are also subject
to changes in local economic circumstances and housing patterns, as well as
rising operating costs, vacancies, rent collection difficulties, energy
shortages and other factors which have an impact on real estate values. These
projects also require greater management expertise and may have higher operating
expenses than conventional housing projects.

Under recent adopted law and policy, the United States Department of Housing and
Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which was generally the case
under existing HAP Contracts. The payments under the renewed HAP Contracts are
not expected to be in an amount that would provide sufficient cash flow to
permit owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing Administration of
HUD ("FHA") unless such mortgage loans are restructured. In order to address the
reduction in payments under HAP Contracts as a result of this new policy, the
Multi-family Assisted Housing Reform and Affordability Act of 1997 ( "MAHRAA"),
which was adopted in October 1997, provides for the restructuring of mortgage
loans insured by the FHA with respect to properties


<PAGE>   3
subject to the Section 8 program. Under MAHRAA, an FHA-insured mortgage loan can
be restructured into a first mortgage loan which will be amortized on a current
basis and a low interest second mortgage loan payable to FHA which will only be
payable on maturity of the first mortgage loan. This restructuring results in a
reduction in annual debt service payable by the owner of the FHA-insured
mortgage loan and is expected to result in an insurance payment from FHA to the
holder of the FHA-insured loan due to the reduction in the principal amount.
MAHRAA also phases out project-based subsidies on selected properties serving
families not located in rental markets with limited supply, converting such
subsidies to a tenant-based subsidy.

MAHRAA provides that properties begin the restructuring process in federal
fiscal year 1999 (beginning October 1, 1998). On September 11, 1998, HUD issued
interim regulations implementing MAHRAA and final regulations are expected to be
issued in 1999. With respect to the local limited partnerships' expiring HAP
Contracts, it is expected that the HAP payments will be reduced or terminated
pursuant to the terms of MAHRAA.

When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.

The Partnership became the limited partner in the local limited partnerships
pursuant to arm's-length negotiations with the local limited partnerships'
general partners who are often the original project developers. In certain other
cases, the Partnership invested in newly formed local limited partnerships
which, in turn, acquired the projects. As a limited partner, the Partnership's
liability for obligations of the local limited partnership is limited to its
investment. The general partner of the local limited partnership retains
responsibility for maintaining, operating and managing the project. Under
certain circumstances, the Partnership has the right to replace the general
partner of the limited partnerships.

Although each of the partnerships in which the Partnership has invested will
generally own a project which must compete in the market place for tenants,
interest subsidies and rent supplements from governmental agencies make it
possible to offer these dwelling units to eligible "low income" tenants at a
cost significantly below the market rate for comparable conventionally financed
dwelling units in the area.


<PAGE>   4
During 1998, all of the projects in which the Partnership had invested were
substantially rented. The following is a schedule of the status, as of December
31, 1998, of the projects owned by local partnerships in which the Partnership
has invested.

            SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
               IN WHICH HOUSING PROGRAMS LIMITED HAS AN INVESTMENT
                                DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                              Units Authorized
                                                 For Rental
                               No. of         Assistance Under          Units       Percentage of
Name & Location                 Units             Section 8           Occupied       Total Units 
---------------                ------         ----------------        --------      -------------
<S>                            <C>            <C>                     <C>           <C>

Cape LaCroix                    125                   0                 121               97%
  Cape Girardeau, MO

Cloverdale                      100                   0                  96               96%
  Crawfordsville, IN

Cloverleaf                       94                  94                  92               98%
  Indianapolis, IN

Evergreen Apts                  330                 330                 328               99%
  Oshtemo, MI

Jenny Lind Hall                  78                  78                  78              100%
  Springfield, MO

Lancaster Heights               198                   0                 183               92%
  Normal, IL

Midpark Towers                  202                 202                 200               99%
  Dallas, TX

Plaza Village                   228                 114                 218               96%
  Woonsocket, RI

Santa Fe Towers                 252                 251                 245               97%
  Overland Park, KS

Walnut Towers                    78                  77                  70               90%
  Winfield, KS
                             ------               -----               -----

     TOTAL                    1,685               1,146               1,631               97%
                             ======               =====               =====
</TABLE>


<PAGE>   5
ITEM 2. PROPERTIES

Through its investments in local limited partnerships, the Partnership holds
interests in real estate properties.


ITEM 3. LEGAL PROCEEDINGS

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership interests in Real Estate Associates Limited III (an affiliated
partnership in which NAPICO is the managing general partner) and two investors
holding an aggregate of five units of limited partnership interest in Real
Estate Associates Limited VI (another affiliated partnership in which NAPICO is
the managing general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other affiliated entities. The complaint alleges that the defendants
breached their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and made materially false and misleading statements in the consent
solicitation statements sent to the limited partners of such partnerships
relating to approval of the transfer of partnership interests in limited
partnerships, owning certain of the properties, to the Operating Partnership
organized by an affiliate of NAPICO. The plaintiffs seek preliminary and
permanent injunctive relief and other equitable relief, as well as compensatory
and punitive damages. The managing general partner of such NAPICO managed
partnerships and the other defendants believe that the plaintiffs' claims are
without merit and intend to contest the action vigorously.

As of December 31, 1998, NAPICO was a plaintiff or defendant in several
lawsuits. None of these suits are related to the Partnership.


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

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests, held for investment by the Partnership, by the Operating
Partnership, together with certain amendments to the Partnership Agreement and
other disclosures of various conflicts of interest in connection with the
proposed transaction. Prior to the sale of the partnership interests, the
consents of the limited partners to the sale and amendments to the Partnership
Agreement were obtained.


PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY
        HOLDER MATTERS

The Limited Partnership Interests are not traded on a public exchange, and it is
not anticipated that any public market will develop for the purchase and sale of
any Limited Partnership Interest. Limited Partnership Interests may be
transferred only if certain requirements are satisfied. Currently, there are
2,771 registered holders of Limited Partnership Interests in the Partnership.
The Partnership has invested in certain government assisted projects under
programs which in many instances restrict the cash return available to project
owners. The Partnership was not designed to provide cash distributions to
investors in circumstances other than refinancing or dispositions of its
investments in limited partnerships. In March 1999, the Partnership made
distributions of $695,687 to the limited partners and $7,027 to the general
partners, which included using proceeds from the sale of the partnership
interests.


<PAGE>   6
ITEM 6. SELECTED FINANCIAL DATA:


<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                   ----------------------------------------------------------------------------------------
                                       1998               1997               1996               1995               1994
                                   ------------       ------------       ------------       ------------       ------------
<S>                                <C>                <C>                <C>                <C>                <C>          
Loss From Operations               $ (1,510,232)      $ (1,554,011)      $ (1,698,332)      $ (1,727,047)      $ (1,690,366)

Gain on Sale of Limited
   Partnership Interests              5,398,913               --                 --                 --                 --

Distribution From Limited
   Partnerships Recognized
   as Income                            489,499            468,618            387,721            307,474            520,001

Equity in Income (Loss)
   of Limited Partnerships
   and amortization of
   acquisition costs                 (9,591,534)           367,144            142,894             87,795           (210,249)

Extraordinary gain - debt
   forgiveness                     $       --         $  2,149,096       $       --         $       --         $       --
                                   ------------       ------------       ------------       ------------       ------------

Net Income (Loss)                  $ (5,213,354)      $  1,430,847       $ (1,167,717)      $ (1,331,778)      $ (1,380,614)
                                   ============       ============       ============       ============       ============

Net Income (Loss) per Limited
   Partner Interest                $       (422)      $        116       $        (94)      $       (108)      $       (111)
                                   ============       ============       ============       ============       ============



Total assets                       $  1,034,465       $ 14,571,452       $ 15,312,532       $ 15,191,113       $ 15,692,284
                                   ============       ============       ============       ============       ============

Investments in
   Limited Partnerships            $       --         $ 13,409,054       $ 14,364,056       $ 14,470,783       $ 14,533,940
                                   ============       ============       ============       ============       ============


Notes payable                      $  4,600,000       $  8,669,743       $ 10,169,743       $ 10,169,743       $ 10,177,433
                                   ============       ============       ============       ============       ============

Fees and Expenses Due to
   General Partners                $  1,355,519       $  1,562,552       $  1,317,044       $    990,393       $  1,092,620
                                   ============       ============       ============       ============       ============
</TABLE>


<PAGE>   7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS:

LIQUIDITY

The Partnership's primary sources of funds include interest income on money
market accounts and certificates of deposit and distributions from local
partnerships in which the Partnership has invested. It is not expected that any
of the local partnerships in which the Partnership has invested will generate
cash flow sufficient to provide for distributions to the Partnership's limited
partners in any material amount. The Partnership sold its interest in 7 local
limited partnerships on December 30, 1998, which resulted in cash proceeds to
the Partnership of $202,714. In March 1999, the Partnership distributed $695,687
to the limited partners and $7,027 to the general partners.

CAPITAL RESOURCES

The Partnership received $30,920,000 in subscriptions for units of Limited
Partnership Interests (at $5,000 per unit) during the period September 12, 1984,
to June 30, 1986, pursuant to a registration statement filed on Form S-11.

The Partnership made its capital contributions to the local limited partnerships
in stages, over a period of two to five years, with each contribution due on a
specified date, provided that certain conditions regarding construction or
operation of the project were fulfilled. The Partnership has no further capital
commitments to the local limited partnerships.

RESULTS OF OPERATIONS

The Partnership was formed to provide various benefits to its partners as
discussed in Item 1. It is anticipated that the local limited partnerships in
which the Partnership has invested could produce tax losses for as long as 20
years. Tax benefits will decline over time as the advantages of accelerated
depreciation are greatest in the earlier years, as deductions for interest
expense will decrease as mortgage principal is amortized and as the Tax Reform
Act of 1986 limits the deductions available.

At December 31, 1998, the Partnership has investments in 10 limited
partnerships, all of which own housing projects that were substantially all
rented. The Partnership sold its interest in 7 local partnerships in December
1998. The Partnership, as a limited partner, is entitled to 75% to 99% of the
profits and losses of the local limited partnerships. The Partnership accounts
for its investments in the local limited partnerships on the equity method,
thereby adjusting its investment balance by its proportionate share of the
income or loss of the local limited partnerships. Equity in losses of limited
partnerships is recognized in the financial statements until the limited
partnership investment account is reduced to a zero balance. Losses incurred
after the limited partnership investment account is reduced to zero are not
recognized.
Limited partners are not liable for losses beyond their contributed capital.

Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent distributions
received are recognized as income.

The total losses from the 17 local limited partnerships that were allocated to
the Partnership were approximately $606,000, $485,000 and $1,148,000 for the
years ended December 31, 1998, 1997 and 1996, respectively. However, because
losses incurred after the investment account is reduced to a zero balance are
not recognized, the Partnership recognized equity in (loss) income of limited
partnerships of $(9,591,534), $367,144 and $142,894 for the years ended December
31, 1998, 1997 and 1996, respectively. The cumulative amount of the unrecognized
equity in losses of certain limited partnerships was approximately $13,016,000
and $12,507,000 as of December 31, 1998 and 1997, respectively. The loss in 1998
is the result of an impairment of approximately $9,873,000 recognized to the
carrying values of the investments in certain local limited partnerships.


<PAGE>   8
Distributions from the local limited partnerships in which the Partnership did
not have a positive investment balance were approximately $489,000, $469,000 and
$388,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
These amounts were recognized as income on the accompanying statements of
operations, in accordance with the equity method of accounting.

As of December 31, 1998 and 1997, the Partnership has cash and cash equivalents
of $831,751 and $1,162,398, respectively. Substantially all of these amounts are
on deposit with one money market mutual fund, earning interest. This resulted in
the Partnership earning approximately $56,000, $58,000 and $40,000 in interest
income for the years ended December 31, 1998, 1997 and 1996, respectively. The
amount of interest income varies with market rates available on deposits and
with the amount of funds available for investment. Cash equivalents can be
converted to cash to meet obligations of the Partnership as they arise. The
Partnership intends to continue investing available funds in this manner.

A recurring partnership expense is the annual management fee. The fee is payable
to the General Partners of the Partnership and is calculated at .5 percent of
the Partnership's invested assets. The management fee is paid to the General
Partners for their continuing management of partnership affairs. The fee is
payable beginning with the month following the Partnership's initial investment
in a local limited partnership. Management fees were $492,960, $509,806 and
$526,651 for the years ended December 31, 1998, 1997 and 1996, respectively. The
fees have decreased due to the sale of a property owned by a local partnership
in 1997, which reduced the invested assets.

The Partnership is obligated on non-recourse notes payable of $4,600,000 and
$8,669,743 at December 31, 1998 and 1997, respectively, which bear interest at
9.5 percent per annum and mature on December 31,1999. The Partnership was
relieved of notes payable in the amount of $4,069,743 in connection the sale of
the partnership interests to the Operating Partnership. The notes and related
interest are payable from cash flow generated from operations of the related
rental properties as defined in the notes. These obligations are collateralized
by the Partnership's investments in the limited partnerships. Unpaid interest is
due at maturity of the notes. Interest expense totaled $823,624, $917,376 and
$1,027,333 for 1998, 1997 and 1996, respectively. Interest expense has decreased
due to the repayment of two notes totaling $1,500,000 in connection with the
sale of the property in 1997. In addition, pursuant to a Memorandum of
Understanding entered into on August 11, 1995, the Partnership paid $16,207 in
interest on May 1, 1996 to an affiliate of NAPICO that served as the management
company for properties owned by the Partnership. The interest relates to funds
advanced to the Partnership by the master disbursement account maintained by the
management company.

Operating expenses, other than management fees and interest expense, consist of
legal and accounting fees for services rendered to the Partnership and
administrative expenses, which were generally consistent for the three years
presented. Legal and accounting fees were $124,902, $109,225 and $124,958 for
the years ended December 31, 1998, 1997 and 1996, respectively. Included in
legal and accounting fees in 1996, is $15,000 that the Partnership reimbursed
Housing Programs Corporation II for professional fees, which were paid on behalf
of the Partnership in connection with issues raised in the Memorandum of
Understanding. General and administrative expenses were $128,108, $75,592 and
$59,324 for the years ended December 31, 1998, 1997 and 1996, respectively.
Included in general and administrative expenses for the year ended December 31,
1996 are reimbursements to NAPICO for certain expenses, which totaled $9,948. In
addition, included in general and administrative expenses in 1998 and 1997 is
$37,556 and $5,540, respectively, in expenses related to the third party review
of the properties discussed below.

The results of operations of the local limited partnerships were fairly constant
during the years ended December 31, 1998, 1997 and 1996, after adjusting for the
sale of Deep Lake Hermitage Apartments ("Deep Lake") in June 1997 (see below).
Contributing to the relative stability of operations at the local partnerships
is the fact that substantially all of the local partnerships are operating
apartment projects which are subsidized and have mortgage notes payable to or
insured by agencies of the federal or local government.

Total revenue for the 17 local partnerships remained fairly constant, and was
$16,839,000, $17,633,000 and $17,935,000 for the years ended December 31, 1998,
1997 and 1996, respectively.


<PAGE>   9
Total expenses for the 17 local partnerships remained fairly consistent, and
were $17,451,000, $18,123,000 and $19,091,000 for the years ended December 31,
1998, 1997 and 1996, respectively. In addition to expenses decreasing as a
result of the sale of Deep Lake, interest expense decreased in 1997 as a result
of the interest rate being reduced on several properties' notes payable.

The total net loss for the 17 local partnerships for 1998, 1997 and 1996
aggregated $612,000, $490,000 and $1,156,000, respectively. The losses allocated
to the Partnership were $606,000, $485,000 and $1,148,000 for 1998, 1997 and
1996, respectively.

During the year ended December 31, 1997, the lower-tier partnership that owns
Deep Lake consummated the sale of the apartment complex for $4,800,000. There
were two notes payable by the Partnership to sellers of interests in the lower-
tier partnership that owns the Deep Lake property in the aggregate principal
amount of $1,500,000, which were secured by the Partnership's interest in the
local limited partnership. The notes had accrued interest of $1,650,696, for a
total amount due of $3,150,696. The Partnership entered into an agreement with
the note holders, who accepted a reduced payment of $1,001,600 in full
satisfaction of all obligations, in order to enable the sale of property. This
was paid by the lower tier partnership from proceeds of the sale, and
approximated the Partnership's investment balance in Deep Lake. In addition, the
apartment complex had a first mortgage note of approximately $3,500,000 which
was paid off from proceeds of the sale. In 1997, the Partnership recognized an
extraordinary gain of $2,149,096 from the forgiveness of the debt.

Under recent adopted law and policy, the United States Department of Housing and
Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which was generally the case
under existing HAP Contracts. The payments under the renewed HAP Contracts are
not expected to be in an amount that would provide sufficient cash flow to
permit owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing Administration of
HUD ("FHA") unless such mortgage loans are restructured. In order to address the
reduction in payments under HAP Contracts as a result of this new policy, the
Multi-family Assisted Housing Reform and Affordability Act of 1997 ( "MAHRAA"),
which was adopted in October 1997, provides for the restructuring of mortgage
loans insured by the FHA with respect to properties subject to the Section 8
program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a
first mortgage loan which will be amortized on a current basis and a low
interest second mortgage loan payable to FHA which will only be payable on
maturity of the first mortgage loan. This restructuring results in a reduction
in annual debt service payable by the owner of the FHA-insured mortgage loan and
is expected to result in an insurance payment from FHA to the holder of the
FHA-insured loan due to the reduction in the principal amount. MAHRAA also
phases out project-based subsidies on selected properties serving families not
located in rental markets with limited supply, converting such subsidies to a
tenant-based subsidy.

MAHRAA provides that properties begin the restructuring process in federal
fiscal year 1999 (beginning October 1, 1998). On September 11, 1998, HUD issued
interim regulations implementing MAHRAA and final regulations are expected to be
issued in 1999. With respect to the local limited partnerships' expiring HAP
Contracts, it is expected that the HAP payments will be reduced or terminated
pursuant to the terms of MAHRAA.

When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.

As a result of the foregoing, the Partnership in 1997 undertook an extensive
review of disposition, refinancing or re- engineering alternatives for the
properties in which the limited partnerships have invested and are subject to
HUD mortgage and rental subsidy programs. The Partnership has incurred expenses
in connection with this review by various


<PAGE>   10
third party professionals, including accounting, legal, valuation, structural
and engineering costs, which amounted to $37,556 and $5,540 for the years ended
December 31, 1998 and 1997, respectively, and are included in general and
administrative expenses.

On December 30, 1998, the Partnership sold its limited partnership interests in
7 local limited partnerships, with a total carrying value of $3,691,082, to the
Operating Partnership. The sale resulted in proceeds to the Partnership of
$202,714 and a net gain of $5,398,913, after being relieved of notes and
interest payable of $9,172,563 and incurring selling costs of $285,282, most of
which are included in accounts payable at December 31, 1998. In March 1999, the
Partnership made cash distributions of $695,687 to the limited partners and
$7,027 to the general partners, which included using proceeds from the sale of
the partnership interests.

The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity securities.
The purchase was subject to, among other things, (i) the purchase of the general
partner interests in the local limited partnerships by the Operating
Partnership; (iii) the approval of HUD and certain state housing finance
agencies; and (iii) the consent of the limited partners to the sale of the local
limited partnership interests held for investment by the Partnership.

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to the
sale of the partnership interests, the consents of the limited partners to the
sale and amendments to the Partnership Agreement were obtained.

The Partnership, as a Limited Partner in the local partnerships in which it has
invested, is subject to the risks incident to the construction, management, and
ownership of improved real estate. The Partnership investments are also subject
to adverse general economic conditions, and, accordingly, the status of the
national economy, including substantial unemployment, concurrent inflation and
changing legislation, could increase vacancy levels, rental payment defaults,
and operating expenses, which in turn, could substantially increase the risk of
operating losses for the projects.

The Partnership has assessed the potential impact of the Year 2000 computer
systems issue on its operations. The Partnership believes that no significant
actions are required to be taken by the Partnership to address the issue and
that the impact of the Year 2000 computer systems issue will not materially
affect the Partnership's future operating results or financial condition.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

The Financial Statements and Supplementary Data are listed under Item 14.


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

Not Applicable.
<PAGE>   11
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                              FINANCIAL STATEMENTS,
                          FINANCIAL STATEMENT SCHEDULES
                  AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                DECEMBER 31, 1998

<PAGE>   12
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
Housing Programs Limited
(A California limited partnership)

We have audited the accompanying balance sheets of Housing Programs Limited (a
California limited partnership) as of December 31, 1998 and 1997, and the
related statements of operations, partners' deficiency and cash flows for each
of the three years in the period ended December 31, 1998. Our audits also
included the financial statement schedules listed in the index in item 14. These
financial statements and financial statement schedules are the responsibility of
the management of the Partnership. Our responsibility is to express an opinion
on these financial statements and financial statement schedules based on our
audits. We did not audit the financial statements of certain limited
partnerships, the investments in which are reflected in the accompanying
financial statements using the equity method of accounting. The investments in
these limited partnerships represent 0 percent and 26 percent of total assets as
of December 31, 1998 and 1997, respectively, and the equity in income (loss) of
these limited partnerships represent 5 percent, 8 percent and 23 percent of the
total net loss of the Partnership for the years ended December 31, 1998, 1997
and 1996, respectively, and represent a substantial portion of the investee
information in Note 2 and the financial statement schedules. The financial
statements of these limited partnerships are audited by other auditors. Their
reports have been furnished to us and our opinion, insofar as it relates to the
amounts included for these limited partnerships, is based solely on the reports
of the other auditors.

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

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Housing Programs Limited as of December 31, 1998 and
1997, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles. Also, in our opinion, based on our audits and
the reports of other auditors, such financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

The accompanying financial statements have been prepared assuming that the 
Partnership will continue as a going concern. As discussed in Note 3 to the 
financial statements, the Partnership's recurring losses from operations, 
partners' deficiency and notes and related accrued interest payable of 
$10,177,861 as of December 31, 1998 becoming payable on December 31, 1999 raise 
substantial doubt about the Partnership's ability to continue as a going 
concern. Management's plans concerning these matters are also described in 
Note 3. The financial statements do not include any adjustments that might 
result from the outcome of this uncertainty. 


DELOITTE & TOUCHE LLP

Los Angeles, California
April 6, 1999

<PAGE>   13


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
Housing Programs Limited
(A California limited partnership)

We have audited the accompanying balance sheets of Housing Programs Limited (a
California limited partnership) as of December 31, 1997 and 1996, and the
related statements of operations, partners' equity (deficiency) and cash flows
for each of the three years in the period ended December 31, 1997. Our audits
also included the financial statement schedules listed in the index on item 14.
These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
investments in these limited partnerships represent 26 percent and 27 percent of
total assets as of December 31, 1997 and 1996, respectively, and the equity in
income (loss) of these limited partnerships represent 8 percent, 23 percent and
15 percent of the total net loss of the Partnership for the years ended December
31, 1997, 1996 and 1995, respectively, and represent a substantial portion of
the investee information in Note 2 and the financial statement schedules. The
financial statements of these limited partnerships are audited by other
auditors. Their reports have been furnished to us and our opinion, insofar as it
relates to the amounts included for these limited partnerships, is based solely
on the reports of the other auditors.

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

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Housing Programs Limited as of December 31, 1997 and
1996, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles. Also, in our opinion, based on our audits and
the reports of other auditors, such financial statement schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.



DELOITTE & TOUCHE LLP

Los Angeles, California
April 6, 1998


<PAGE>   14


                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]


              INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
                   AND ADDITIONAL FINANCIAL DATA REQUIRED BY
              THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT


To the Partners of
Bannock Arms Second Limited Partnership

We have audited the accompanying balance sheets of BANNOCK ARMS SECOND LIMITED
PARTNERSHIP (a limited partnership), FHA Project No. 124-35019-PM, (the
"Partnership"), as of December 31, 1997 and 1996, and the related statements of
income, changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. 

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bannock Arms Second Limited
Partnership as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the year then ended in conformity with generally
accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements takes as a whole. The accompanying 1997 additional financial data
(shown on pages 13 through 19) are presented for purposes of additional analysis
and are not a required part of the financial statements of the Partnership. Such
information has been subjected to the auditing procedures applied in the audit
of the 1997 basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.


                                                                               2
<PAGE>   15
In accordance with Government Auditing Standards, we have also issued a report
dated February 10, 1998 on our consideration of the Partnership's internal
control and a report dated February 10, 1998 on its compliance with laws and
regulations.


                    /s/ ALTSCHULER, MELVOIN AND GLASSER LLP


Los Angeles, California
February 10, 1996



                                                                               3


<PAGE>   16

                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]


            INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS AND
                     ADDITIONAL FINANCIAL DATA REQUIRED BY
              THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT


To the Partners of
Bannock Arms Second Limited Partnership

We have audited the accompanying balance sheets of BANNOCK ARMS SECOND LIMITED
PARTNERSHIP, FHA Project No. 124-35019-PM, (the "Partnership") as of December
31, 1996 and 1995, and the related statements of income, changes in partners'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits. 

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bannock Arms Second Limited
Partnership as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated February 17, 1997 on our consideration of the Partnership's internal
control structure and a report dated February 17, 1997 on its compliance with
laws and regulations.



                                                                              2.

<PAGE>   17
Our audit was conducted for the purpose of forming an opinion on the financial
statements take as a whole. The accompanying 1996 additional financial data
shown on pages 13 through 20 are presented for purposes of additional analysis
and are not a required part of the financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the 1996
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.


                    /s/ ALTSCHULER, MELVOIN AND GLASSER LLP


Los Angeles, California
February 17, 1997




                                                                              3.
<PAGE>   18

                     [REZNICK FEDDER & SILVERMAN LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Berkeley Gardens Limited Partnership

     We have audited the accompanying balance sheet of Berkeley Gardens Limited
Partnership as of December 31, 1997, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Berkeley Gardens Limited
Partnership as of December 31, 1997, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.

     Our 1997 audit was conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information on
pages 19 through 23 is presented for purposes of additional analysis and is not
a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.



                                      -6-
<PAGE>   19
     In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 28, 1998 on our consideration of Berkeley Gardens Limited Partnership's
internal control and on its compliance with specific requirements applicable to
major and nonmajor HUD programs, fair housing and non-discrimination, and laws
and regulations applicable to the financial statements.


                                        [SIG]


                                        Federal Employer
                                          Identification Number:
                                          52-1088612

Bethesda, Maryland
January 28, 1998

Audit Principal: Craig Birmingham




                                      -7-
<PAGE>   20

                     [REZNICK FEDDER & SILVERMAN LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Berkeley Gardens Limited Partnership

     We have audited the accompanying balance sheet of Berkeley Gardens Limited
Partnership as of December 31, 1996, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Berkeley Gardens Limited
Partnership as of December 31, 1996, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.



                                      -6-
<PAGE>   21
    

     In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 28, 1997 on our consideration of Berkeley Gardens Limited Partnership's
internal control and on its compliance with specific requirements applicable to
major and nonmajor HUD programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.


                                        [SIG]
                                        ----------------------------------------
                                        Federal Employer
                                          Identification Number:
                                          52-1088612

Bethesda, Maryland
January 28, 1997

Audit Principal: Craig Birmingham




                                      -7-
<PAGE>   22

                          [REZNICK FEDDER & SILVERMAN]



                          INDEPENDENT AUDITORS' REPORT

To the Partners
Berkeley Gardens Limited Partnership

     We have audited the accompanying balance sheet of Berkeley Gardens Limited
Partnership as of December 31, 1995, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Berkeley Gardens Limited
Partnership as of December 31, 1995, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.



                                      -6-
<PAGE>   23

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated January 19, 1996 on our consideration of Berkeley Gardens Limited
Partnership internal control structure and on its compliance with specific
requirements applicable to major and nonmajor HUD programs, affirmative fair
housing, and laws and regulations applicable to the financial statements.




                                        /s/ RESNICK FEDDER & SILVERMAN
                                        -----------------------------------


Bethesda, Maryland                      Federal Employer
January 19, 1996                          Identification Number:
                                          52-1088612


Audit Principal: Craig Birmingham





                                      -7-

<PAGE>   24
                     [COOPERS & LYBRAND L.L.P. LETTERHEAD]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Oshtemo Limited Dividend
Housing Association:

We have audited the accompanying balance sheet of Oshtemo Limited Dividend
Housing Association (a Michigan limited partnership), MSHDA Development No. 544,
as of December 31, 1997 and the related statements of profit and loss, partners'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of Oshtemo Limited Dividend
Housing Association, MSHDA Development No. 544, as of December 31, 1997 and the
results of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 1998 on our consideration of Oshtemo Limited Dividend Housing
Association's internal control structure and a report dated January 26, 1998 on
its compliance with laws and regulations.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data included on pages
13 and 14 is presented for purposes of additional analysis and is not a required
part of the basic financial statements of Oshtemo Limited Dividend Housing
Association. This supplementary data is the responsibility of the Partnership's
management. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.

                                       1
<PAGE>   25
We have previously audited and expressed an unqualified opinion on the
financial statements of Oshtemo Limited Dividend Housing Association for the
years 1990 through 1995. In our opinion, the supplemental data included on page
15, relating to the years 1990 through 1997, is fairly stated, in all material
respects, in relation to the basic financial statements from which it has been
derived. The data on page 15 for the years 1983 through 1989 was not audited by
us and, accordingly, we do not express an opinion on such data. That data was
audited by other auditors who have ceased operation and whose report, dated
January 24, 1990, stated that such information was fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.

/s/ COOPERS & LYBRAND L.L.P.

Detroit, Michigan
January 26, 1998


                                       2
<PAGE>   26
                         [COOPERS & LYBRAND LETTERHEAD]

Report of Independent Accountants

To the Partners of
Oshtemo Limited Dividend
Housing Association:

We have audited the accompanying balance sheet of Oshtemo Limited Dividend
Housing Association (a Michigan limited partnership), MSHDA Development No.
544, as of December 31, 1996 and the related statements of profit and loss,
partners' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oshtemo Limited Dividend
Housing Association, as of December 31, 1996 and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 31, 1997 on our consideration of Oshtemo Limited Housing
Association's internal control structure and a report dated January 31, 1997 on
its compliance with laws and regulations.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data included on pages
13 and 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of Oshtemo Limited Dividend
Housing Association. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.

                                       1
<PAGE>   27
We have previously audited and expressed an unqualified opinion on the
financial statements of Oshtemo Limited Dividend Housing Association for the
years 1990 through 1995. In our opinion, the supplemental data included on page
15, relating to the years 1990 through 1996, is fairly stated, in all material
respects, in relation to the basic financial statements from which it has been
derived. The data on page 15 for the years 1983 through 1989 was not audited by
us and, accordingly, we do not express an opinion on such data. That data was
audited by other auditors who have ceased operation and whose report, dated
January 24, 1990, stated that such information was fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.

/s/ COOPERS & LYBRAND L.L.P.

Detroit, Michigan
January 31, 1997

                                       2
 
<PAGE>   28
                         [COOPERS & LYBRAND LETTERHEAD]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Oshtemo Limited Dividend
Housing Association:

We have audited the accompanying balance sheet of Oshtemo Limited Dividend
Housing Association (a Michigan limited partnership), MHSDA Development No.
544, as of December 31, 1995 and the related statements of profit and loss,
partners' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oshtemo Limited Housing
Association, as of December 31, 1995 and the results of its operation and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 25, 1996 on our consideration of Oshtemo Limited Dividend Housing
Association's internal control structure and a report dated January 25, 1996 on
its compliance with laws and regulations.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data included on pages
13 and 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of Oshtemo Limited Dividend
Housing Association. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.

                                       1
<PAGE>   29
We have previously audited and expressed an unqualified opinion on the
financial statements of Oshtemo Limited Dividend Housing Association for the
years 1990 through 1994. In our opinion, the supplemental data included on page
15, relating to the years 1990 through 1995, is fairly stated, in all material
respects, in relation to the basic financial statements from which it has been
derived. The data on page 15 for the years 1983 through 1989 was not audited by
us and, accordingly, we do not express an opinion on such data. That data was
audited by other auditors who have ceased operation and whose report, dated
January 24, 1990, stated that such information was fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.

/s/ COOPERS & LYBRAND L.L.P.

Detroit, Michigan
January 25, 1996

                                       2
<PAGE>   30

                    [REZNICK FEDDER & SILVERMAN LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT

To the Partners
Hyattsville Housing Associates

     We have audited the accompanying balance sheet of Hyattsville Housing
Associates as of December 31, 1997, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Berkeley Gardens Limited
Partnership as of December 31, 1997, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 29 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
that portion marked "unaudited," on which we express no opinion, has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.



                                      -6-
<PAGE>   31

     In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs, we have also issued reports dated
January 4, 1998, on our consideration of Hyattsville Housing Associates'
internal control structure and on its compliance with specific requirements
applicable to CDA programs, fair housing and non-discrimination, and laws and
regulations applicable to the financial statements.




                                        /s/ RESNICK FEDDER & SILVERMAN
                                        -----------------------------------


Baltimore, Maryland                     Federal Employer Identification
January 4, 1998                           Number: 52-1088612


Audit Principal: Richard G. Schaefer




                                      -7-

<PAGE>   32
                     [REZNICK FEDDER & SILVERMAN LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Hyattsville Housing Associates

     We have audited the accompanying balance sheet of Hyattsville Housing
Associates as of December 31, 1996, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hyattsville Housing
Associates as of December 31, 1996, and the results of its operations, changes
in partners' equity and cash flows for the year then ended, in conformity with
generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 30 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
that portion marked "unaudited," on which we express no opinion, has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.



                                      -6-
<PAGE>   33
     In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs, we have also issued reports dated
January 17, 1997, on our consideration of Hyattsville Housing Associates'
internal control structure and on its compliance with specific requirements
applicable to CDA programs, affirmative fair housing, and laws and regulations
applicable to the financial statements.

                                        /s/ REZNICK FEDDER & SILVERMAN


                                        Federal Employer Identification 
                                          Number: 52-1088612

Baltimore, Maryland
January 17, 1997

Audit Principal: Richard G. Schaefer




                                      -7-
<PAGE>   34
                     [REZNICK FEDDER & SILVERMAN LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Hyattsville Housing Associates

     We have audited the accompanying balance sheet of Hyattsville Housing
Associates as of December 31, 1995, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hyattsville Housing
Associates as of December 31, 1995, and the results of its operations, changes
in partners' equity and cash flows for the year then ended, in conformity with
generally accepted accounting principles.



                                      -6-
<PAGE>   35
     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 28 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
that portion marked "unaudited," on which we express no opinion, has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated January 18, 1996, on our consideration of Hyattsville Housing
Associates' internal control structure and on its compliance with specific
requirements applicable to CDA programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.

 
                                       /s/ REZNICK FEDDER & SILVERMAN

                                        Federal Employer 
                                          Identification Number: 
                                          52-1088612

Baltimore, Maryland
January 18, 1996

Audit Principal: Richard G. Schaefer




                                      -7-
<PAGE>   36
                     [REZNICK FEDDER & SILVERMAN LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Locust House Associates

     We have audited the accompanying balance sheet of Locust House Associates
as of December 31, 1997, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Locust House Associates as
of December 31, 1997, and the results of its operations, the changes in
partners' equity and cash flows for the year then ended, in conformity with
generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as whole. The supplemental information on pages 19
through 29 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
that portion marked "unaudited," on which we express no opinion, has been
subjected to the audit procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.



                                      -6-
<PAGE>   37
     In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 3,
1998 on our consideration of Locust House Associates' internal control and on
its compliance with specific requirements applicable to CDA programs,
affirmative fair housing, and laws and regulations applicable to the financial
statements.


                                        /s/ RESNICK FEDDER & SILVERMAN


                                        Federal Employer
                                          Identification Number:
                                          52-1088612

Baltimore, Maryland
January 3, 1998


Audit Principal: Craig Birmingham




                                      -7-
<PAGE>   38
                     [REZNICK FEDDER & SILVERMAN LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Locust House Associates

     We have audited the accompanying balance sheet of Locust House Associates
as of December 31, 1996, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Locust House Associates
as of December 31, 1996, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.

     Our audit was conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information on
pages 19 through 30 is presented for purposes of additional analysis and is not
a required part of the basic financial statements. Such information except for
that portion marked "unaudited," on which we express no opinion, has been
subjected to the audit procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.



                                      -6-
<PAGE>   39
     In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 8,
1997 on our consideration of Locust House Associates' internal control structure
and on its compliance with specific requirements applicable to CDA programs,
affirmative fair housing, and laws and regulations applicable to the financial
statements.


                                        /s/ RESNICK FEDDER & SILVERMAN


                                        Federal Employer
                                          Identification Number:
                                          52-1088612

Baltimore, Maryland
January 8, 1997

Audit Principal: Richard G. Schaefer




                                      -7-
<PAGE>   40
                     [REZNICK FEDDER & SILVERMAN LETTERHEAD]

                          INDEPENDENT AUDITORS' REPORT

To the Partners
Locust House Associates

     We have audited the accompanying balance sheet of Locust House Associates
as of December 31, 1995, and the related statements of profit and loss (on HUD
Form No. 92410), partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Locust House Associates as
of December 31, 1995, and the results of its operations, the changes in
partners' equity and cash flows for the year then ended, in conformity with
generally accepted accounting principles.



                                      -6-
<PAGE>   41
     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 20
through 28 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
that portion marked "unaudited," on which we express no opinion, has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated January 8, 1996, on our consideration of Locust House Associates'
internal control structure and on its compliance with specific requirements
applicable to HUD and CDA programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.

 
                                        /s/ REZNICK FEDDER & SILVERMAN

                                        Federal Employer 
                                          Identification Number: 
                                          52-1088612

Baltimore, Maryland
January 6, 1996

Audit Principal: Richard G. Schaefer




                                      -7-
<PAGE>   42

                          [KPMG PEAT MARWICK LLP LOGO]



                     REPORT ON AUDITED FINANCIAL STATEMENTS
                         AND SUPPLEMENTARY INFORMATION


                          INDEPENDENT AUDITORS' REPORT


The Partners
Plaza Village Group:

     We have audited the accompanying balance sheet of Plaza Village Group (the
"Partnership"), FHA Project No. 016-44076-LDT-SUP as of December 31, 1997, and
the related statements of profit and loss (on HUD Form No. 92410), changes in
partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Partnership as of
December 31, 1997, and the results of its operations, and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedules 1 through 8 is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

     In accordance with Government Auditing Standards, we have also issued
reports dated January 23, 1998 on: our consideration of the Partnership's
internal controls, the Partnership's compliance with specific requirements
applicable to major HUD programs, and the Partnership's compliance with specific
requirements applicable to fair housing and non-discrimination.



                                        /s/ KPMG PEAT MARWICK LLP
                                        -----------------------------------

Providence, Rhode Island 02903-9605
January 23, 1998
<PAGE>   43

                          [KPMG PEAT MARWICK LLP LOGO]



                     REPORT ON AUDITED FINANCIAL STATEMENTS
                         AND SUPPLEMENTARY INFORMATION


                          INDEPENDENT AUDITORS' REPORT


The Partners
Plaza Village Group:

     We have audited the accompanying balance sheet of Plaza Village Group (the
"Partnership"), FHA Project No. 016-44076-LDT-SUP as of December 31, 1996, and
the related statements of profit and loss (on HUD Form No. 92410), changes in
partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Partnership as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

     In accordance with Government Auditing Standards, we have also issued
reports dated January 24, 1997 on: our consideration of the Partnership's
internal control structure, the Partnership's compliance with specific
requirements applicable to major HUD programs, and the Partnership's compliance
with specific requirements applicable to affirmative fair housing.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedules 1 through 7 is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.




                                        /s/ KPMG PEAT MARWICK LLP
                                        -----------------------------------

Providence, Rhode Island 02903-9605
January 24, 1997
<PAGE>   44

                          [KPMG PEAT MARWICK LLP LOGO]



                          INDEPENDENT AUDITORS' REPORT


The Partners
Plaza Village Group
(A Limited Partnership):

     We have audited the accompanying balance sheet of Plaza Village Group (A
Limited Partnership), FHA Project No. 016-44076-LDT-SUP as of December 31, 1995,
and the related statements of profit and loss (on HUD Form No. 92410), changes
in partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Plaza Village Group (A
Limited Partnership) FHA Project No. 016-44076-LDT-SUP December 31, 1995 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information required by
the U.S. Department of Housing and Urban Development ("HUD") included in
Schedules 1 through 7 is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly presented in all material respects in
relation to the basic financial statements taken as a whole.




                                        /s/ KPMG PEAT MARWICK LLP
                                        -----------------------------------

Providence, Rhode Island 02903-9605
January 26, 1996
<PAGE>   45
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 1998 AND 1997

                                     ASSETS

<TABLE>
<CAPTION>
                                                        1998             1997
                                                    ------------     ------------
<S>                                                 <C>              <C>
INVESTMENTS IN LIMITED PARTNERSHIPS
    (Notes 1 and 2)                                 $         --     $ 13,409,054

CASH DUE FROM ESCROW (Note 2)                            202,714               --

CASH AND CASH EQUIVALENTS (Note 1)                       831,751        1,162,398
                                                    ------------     ------------
          TOTAL ASSETS                              $  1,034,465     $ 14,571,452
                                                    ============     ============

                      LIABILITIES AND PARTNERS' DEFICIENCY

LIABILITIES:
     Notes payable (Notes 3 and 7)                  $  4,600,000     $  8,669,743
     Accrued fees and expenses due general
         partners (Note 4)                             1,355,519        1,562,552
     Accrued interest payable (Notes 3 and 7)          5,577,861        9,921,172
     Accounts payable                                    300,309            3,855
                                                    ------------     ------------

                                                      11,833,689       20,157,322
                                                    ------------     ------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 6)

PARTNERS' DEFICIENCY:
     General partners                                   (358,739)        (306,605)
     Limited partners                                (10,440,485)      (5,279,265)
                                                    ------------     ------------
                                                     (10,799,224)      (5,585,870)
                                                    ------------     ------------
           TOTAL LIABILITIES AND PARTNERS'
                DEFICIENCY                          $  1,034,465     $ 14,571,452
                                                    ============     ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   46
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                                       1998             1997             1996
                                                   ------------     ------------     ------------
<S>                                                <C>              <C>              <C>
INTEREST AND OTHER INCOME                          $     59,362     $     57,988     $     39,934
                                                   ------------     ------------     ------------
OPERATING EXPENSES:
     Management fees - general partner (Note 4)         492,960          509,806          526,651
     General and administrative (Note 4)                128,108           75,592           59,324
     Legal and accounting (Note 4)                      124,902          109,225          124,958
     Interest (Notes 3 and 4)                           823,624          917,376        1,027,333
                                                   ------------     ------------     ------------
           Total operating expenses                   1,569,594        1,611,999        1,738,266
                                                   ------------     ------------     ------------
LOSS FROM OPERATIONS                                 (1,510,232)      (1,554,011)      (1,698,332)

GAIN ON SALE OF LIMITED PARTNERSHIP
     INTERESTS (Note 2)                               5,398,913               --               --

DISTRIBUTIONS FROM LIMITED
     PARTNERSHIPS RECOGNIZED
     AS INCOME                                          489,499          468,618          387,721

EQUITY IN INCOME (LOSS) OF LIMITED
     PARTNERSHIPS AND AMORTIZATION
     OF ACQUISITION COSTS (Note 1 and 2)             (9,591,534)         367,144          142,894
                                                   ------------     ------------     ------------
LOSS BEFORE EXTRAORDINARY GAIN                       (5,213,354)        (718,249)      (1,167,717)

EXTRAORDINARY GAIN -
     DEBT FORGIVENESS (Note 3)                               --        2,149,096               --
                                                   ------------     ------------     ------------
NET INCOME (LOSS)                                  $ (5,213,354)    $  1,430,847     $ (1,167,717)
                                                   ============     ============     ============
LOSS BEFORE EXTRAORDINARY GAIN
     PER LIMITED PARTNERSHIP INTEREST              $       (422)    $        (58)    $        (94)
                                                   ============     ============     ============
NET INCOME (LOSS) PER LIMITED
     PARTNERSHIP INTEREST                          $       (422)    $        116     $        (94)
                                                   ============     ============     ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   47
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                       STATEMENTS OF PARTNERS' DEFICIENCY
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                    General           Limited
                                    Partners          Partners            Total
                                  ------------      ------------      ------------
<S>                               <C>               <C>               <C>
DEFICIENCY, January 1, 1996       $   (309,236)     $ (5,539,764)     $ (5,849,000)

    Net loss, 1996                     (11,677)       (1,156,040)       (1,167,717)
                                  ------------      ------------      ------------
DEFICIENCY, December 31, 1996         (320,913)       (6,695,804)       (7,016,717)

    Net income, 1997                    14,308         1,416,539         1,430,847
                                  ------------      ------------      ------------
DEFICIENCY, December 31, 1997         (306,605)       (5,279,265)       (5,585,870)

    Net loss, 1998                     (52,134)       (5,161,220)       (5,213,354)
                                  ------------      ------------      ------------
DEFICIENCY, December 31, 1998     $   (358,739)     $(10,440,485)     $(10,799,224)
                                  ============      ============      ============
</TABLE>

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

<PAGE>   48
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                          1998             1997             1996
                                                                      ------------     ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                   <C>              <C>              <C>
   Net income (loss)                                                  $ (5,213,354)    $  1,430,847     $ (1,167,717)
   Adjustments to reconcile net income (loss) to net
      cash provided by (used in) operating activities:
          Extraordinary gain                                                    --       (2,149,096)              --
          Gain on sale of partnership interests                         (5,398,913)              --               --
          Equity in loss (income) of limited partnerships                9,559,407         (399,271)        (181,384)
          Amortization of acquisition costs                                 32,127           32,127           38,490
          Increase in accrued interest payable                             759,509          760,313          947,012
          Increase (decrease) in accrued fees and
             expenses due general partners                                (207,033)         245,508          326,651
          Increase in accounts payable                                     296,454          (27,050)          15,473
                                                                      ------------     ------------     ------------
                Net cash used in operating activities                     (171,803)        (106,622)         (21,475)
                                                                      ------------     ------------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Costs related to the sale of partnership interests                     (285,282)
   Capital contributions to limited partnerships                          (556,697)        (520,287)        (915,568)
   Distributions from limited partnerships
      recognized as a return of capital                                    683,135        1,842,431        1,165,189
   Decrease in short term investments                                           --               --          125,000
                                                                      ------------     ------------     ------------
               Net cash (used in) provided by investing activities        (158,844)       1,322,144          374,621
                                                                      ------------     ------------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payment of notes payable                                                     --       (1,001,600)              --
                                                                      ------------     ------------     ------------
NET (DECREASE) INCREASE IN CASH
   AND CASH EQUIVALENTS                                                   (330,647)         213,922          353,146

CASH AND CASH EQUIVALENTS,
   beginning of year                                                     1,162,398          948,476          595,330
                                                                      ------------     ------------     ------------
CASH AND CASH EQUIVALENTS,
   end of year                                                        $    831,751     $  1,162,398     $    948,476
                                                                      ============     ============     ============
SUPPLEMENTAL DISCLOSURE OF
   CASH FLOW INFORMATION
     Cash paid during the year for interest                           $     64,113     $    158,665     $     80,321
                                                                      ============     ============     ============
SUPPLEMENTAL SCHEDULE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES
     See Note 2 to financial statements regarding
     notes and interest payable
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   49
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       Organization

       Housing Programs Limited (the "Partnership"), formed under the California
       Uniform Limited Partnership Act, was organized on May 15, 1984. The
       Partnership was formed to invest primarily in other limited partnerships
       which own or lease and operate federal, state or local
       government-assisted housing projects. The general partners of the
       Partnership are National Partnership Investments Corp. (NAPICO), and
       Coast Housing Investment Associates (CHIA), a limited partnership and
       Housing Programs Corporation II. Prior to December 30, 1998, NAPICO was a
       wholly owned subsidiary of Casden Investment Corporation ("CIC"), which
       is wholly owned by Alan I. Casden.

       On December 30, 1998, Casden Properties Operating Partnership, L.P., (the
       "Operating Partnership") a majority owned subsidiary of Casden Properties
       Inc., a real estate investment trust organized by Alan I. Casden,
       purchased a 95.25% economic interest in NAPICO. The limited partner of
       CHIA is an officer of NAPICO.

       The Partnership offered and issued 6,184 units of limited partnership
       interests through a public offering. Each unit was comprised of two
       limited partnership interests and one warrant, which entitled the
       investor two additional limited partnership interests. An additional
       6,184 of interests were issued from the exercise of warrants and the sale
       of interests associated with warrants not exercised. The general partners
       have a 1 percent interest in profits and losses of the Partnership. The
       limited partners have the remaining 99 percent interest in proportion to
       their respective investments.

       The Partnership shall be dissolved only upon the expiration of 50
       complete calendar years (December 31, 2034) from the date of the
       formation of the Partnership or upon the occurrence of various other
       events as described in the terms of the Partnership agreement.

       Upon total or partial liquidation of the Partnership or the disposition
       or partial disposition of a project or project interest and distribution
       of the proceeds, the general partners will be entitled to a liquidation
       fee as stipulated in the Partnership agreement. The limited partners will
       have a priority return equal to their invested capital attributable to
       the project(s) or project interest(s) sold and shall receive from the
       sale of the project(s) or project interest(s) an amount sufficient to pay
       state and federal income taxes, if any, calculated at the maximum rate
       then in effect. The general partners' liquidation fee may accrue but
       shall not be paid until the limited partners have received distributions
       equal to 100 percent of their capital contributions.

       On December 30, 1998, the Partnership sold its limited partnership
       interests in 7 local limited partnerships for net proceeds of $202,714 to
       the Operating Partnership.

       Use of Estimates

       The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make estimates and
       assumptions that affect the reported amounts of assets and liabilities
       and disclosure of contingent assets and liabilities at the date of the
       financial statements and


                                        5
<PAGE>   50
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998


1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

       reported amounts of revenues and expenses during the reporting period.
       Actual results could differ from those estimates.

       Method of Accounting for Investments in Limited Partnerships

       The investments in local limited partnerships are accounted for on the
       equity method. Acquisition, selection and other costs related to the
       acquisition of the projects have been capitalized to the investment
       account and are being amortized on a straight line basis over the
       estimated lives of the underlying assets, which is generally 30 years.

       Net Loss Per Limited Partnership Interest

       Net loss per limited partnership interest was computed by dividing the
       limited partners' share of net loss by the number of limited partnership
       interests outstanding during the year. The number of limited partnership
       interests was 12,368 for all years presented.

       Cash and Cash Equivalents

       Cash and cash equivalents consist of cash and bank certificates of
       deposit with an original maturity of three months or less. The
       Partnership has its cash and cash equivalents on deposit primarily with
       one money market mutual fund. Such cash and cash equivalents are
       uninsured.

       Impairment of Long-Lived Assets

       The Partnership reviews long-lived assets to determine if there has been
       any permanent impairment whenever events or changes in circumstances
       indicate that the carrying amount of the asset may not be recoverable. If
       the sum of the expected future cash flows is less than the carrying
       amount of the assets, the Partnership recognizes an impairment loss.
       During 1998, the partnership recognized an impairment loss of $9,873,020
       related to certain investments in local limited partnerships, which has
       been included in equity in loss of limited partnerships.

2.     INVESTMENTS IN LIMITED PARTNERSHIPS

       The Partnership holds limited partnership interests in 10 limited
       partnerships as of December 31, 1998, after selling its interests in 7
       limited partnerships. The limited partnerships owned as of December 31,
       1998, residential low income rental projects consisting of 1,685
       apartment units. The mortgage loans of these projects are payable to or
       insured by various governmental agencies.

       The Partnership, as a limited partner, is entitled to 99 percent of the
       profits and losses of the limited partnerships.


                                        6
<PAGE>   51
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998


2.     INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

       Equity in losses of limited partnerships is recognized in the financial
       statements until the limited partnership investment account is reduced to
       a zero balance. Losses incurred after the investment account is reduced
       to zero are not recognized. The cumulative amount of unrecognized equity
       in losses of certain limited partnerships was approximately $13,015,000
       and $12,507,000 as of December 31, 1998 and 1997, respectively.

       Distributions from the limited partnerships are recognized as a reduction
       of capital until the investment balance has been reduced to zero or to a
       negative amount equal to further capital contributions required.
       Subsequent distributions are recognized as income.

       The following is a summary of the investments in limited partnerships and
       reconciliation to the limited partnership accounts:

<TABLE>
<CAPTION>
                                                                     1998             1997 
                                                                 ------------     ------------
<S>                                                              <C>              <C>         
       Investment balance, beginning of year                     $ 13,409,054     $ 14,364,056
       Equity in (loss) income of limited partnerships             (9,559,407)         399,271
       Investment in partnership interests sold                    (3,691,082)              --
       Amortization of capitalized acquisition costs and fees         (32,127)         (32,127)
       Capital contributions                                          556,697          520,287
       Distributions recognized as a return of capital               (683,135)      (1,842,433)
                                                                 ------------     ------------
       Investment balance, end of year                           $         --     $ 13,409,054
                                                                 ============     ============
</TABLE>

       The difference between the investment per the accompanying balance sheets
       at December 31, 1998 and 1997, and the equity per the limited
       partnerships' combined financial statements is due primarily to
       cumulative unrecognized equity in losses of certain limited partnerships,
       costs capitalized to the investment account cumulative distributions
       recognized as income and impairment losses.

       Selected financial information from the combined financial statements of
       the limited partnerships at December 31, 1998 and 1997 and for each of
       the three years in the period ended December 31, 1998 is as follows:

                                 Balance Sheets

<TABLE>
<CAPTION>
                                                            1998         1997 
                                                          --------     --------
                                                             (in thousands)
<S>                                                       <C>          <C>     
       Land and buildings, net                            $ 31,923     $ 51,149
                                                          ========     ========
       Total assets                                       $ 45,473     $ 71,789
                                                          ========     ========
       Mortgages payable                                  $ 29,378     $ 52,219
                                                          ========     ========
       Total liabilities                                  $ 52,238     $ 75,642
                                                          ========     ========
       Equity of Housing Programs Limited                 $ (6,462)    $ (3,495)
                                                          ========     ========
       Equity of other partners                           $   (303)    $   (358)
                                                          ========     ========
</TABLE>


                                        7
<PAGE>   52
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998

2.     INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

                            Statements of Operations

<TABLE>
<CAPTION>
                                                   1998         1997         1996 
                                                 --------     --------     --------
                                                           (in thousands)
<S>                                              <C>          <C>          <C>
       Total revenues                            $ 16,839     $ 17,633     $ 17,935
                                                 ========     ========     ========
       Interest expense                          $  3,251     $  3,450     $  3,634
                                                 ========     ========     ========
       Depreciation                              $  3,363     $  3,438     $  3,532
                                                 ========     ========     ========
       Total expenses                            $ 17,451     $ 18,123     $ 19,091
                                                 ========     ========     ========
       Net loss                                  $   (612)    $   (490)    $ (1,156)
                                                 ========     ========     ========
       Net loss allocable to Housing Programs
          Limited                                $   (606)    $   (485)    $ (1,148)
                                                 ========     ========     ========
</TABLE>

       Prior to the sale of certain partnership interests on December 30, 1998,
       an affiliate of NAPICO was the general partner in 10 of the limited
       partnerships included above and another affiliate of NAPICO receives
       property management fees of approximately 5 to 6 percent of revenues from
       4 of these partnerships. The affiliate received property management fees
       of $187,166, $211,938 and $244,827 in 1998, 1997 and 1996, respectively.
       The following sets forth the significant data for these partnerships
       prior to the sale referred to above, reflected in the accompanying
       financial statements using the equity method of accounting:

<TABLE>
<CAPTION>
                                                   1998         1997        1996
                                                 --------     --------     ------
                                                           (in thousands)
<S>                                              <C>          <C>          <C>
       Total assets                              $ 19,655     $ 34,962
                                                 ========     ========
       Total liabilities                         $ 30,911     $ 46,250
                                                 ========     ========
       Deficiency of Housing Programs Limited    $(11,026)    $(11,070)
                                                 ========     ========
       Deficiency of other partners              $   (230)    $   (219)
                                                 ========     ========
       Total revenue                             $  8,383     $  9,119     $9,741
                                                 ========     ========     ======
       Net loss                                  $   (616)    $   (745)    $ (686)
                                                 ========     ========     ======
</TABLE>


                                        8
<PAGE>   53
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998


2.     INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

       Subsequent to the sale of certain partnership interests, NAPICO is the
       general partner in five of the limited partnerships, and another
       affiliate manages one of the limited partnership's property.

       Under recent adopted law and policy, the United States Department of
       Housing and Urban Development ("HUD") has determined not to renew the
       Housing Assistance Payment ("HAP") Contracts on a long term basis on the
       existing terms. In connection with renewals of the HAP Contracts under
       such new law and policy, the amount of rental assistance payments under
       renewed HAP Contracts will be based on market rentals instead of above
       market rentals, which was generally the case under existing HAP
       Contracts. The payments under the renewed HAP Contracts are not expected
       to be in an amount that would provide sufficient cash flow to permit
       owners of properties subject to HAP Contracts to meet the debt service
       requirements of existing loans insured by the Federal Housing
       Administration of HUD ("FHA") unless such mortgage loans are
       restructured. In order to address the reduction in payments under HAP
       Contracts as a result of this new policy, the Multi-family Assisted
       Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was
       adopted in October 1997, provides for the restructuring of mortgage loans
       insured by the FHA with respect to properties subject to the Section 8
       program. Under MAHRAA, an FHA-insured mortgage loan can be restructured
       into a first mortgage loan which will be amortized on a current basis and
       a low interest second mortgage loan payable to FHA which will only be
       payable on maturity of the first mortgage loan. This restructuring
       results in a reduction in annual debt service payable by the owner of the
       FHA-insured mortgage loan and is expected to result in an insurance
       payment from FHA to the holder of the FHA-insured loan due to the
       reduction in the principal amount. MAHRAA also phases out project-based
       subsidies on selected properties serving families not located in rental
       markets with limited supply, converting such subsidies to a tenant-based
       subsidy.

       MAHRAA provides that properties begin the restructuring process in
       federal fiscal year 1999 (beginning October 1, 1998). On September 11,
       1998, HUD issued interim regulations implementing MAHRAA and final
       regulations are expected to be issued in 1999. With respect to the local
       limited partnerships' expiring HAP Contracts, it is expected that the HAP
       payments will be reduced or terminated pursuant to the terms of MAHRAA.

       When the HAP Contracts are subject to renewal, there can be no assurance
       that the local limited partnerships in which the Partnership has an
       investment will be permitted to restructure its mortgage indebtedness
       under MAHRAA. In addition, the economic impact on the Partnership of the
       combination of the reduced payments under the HAP Contracts and the
       restructuring of the existing FHA-insured mortgage loans under MAHRAA is
       uncertain.

       As a result of the foregoing, the Partnership in 1997 undertook an
       extensive review of disposition, refinancing or re-engineering
       alternatives for the properties in which the limited partnerships have
       invested and are subject to HUD mortgage and rental subsidy programs. The
       Partnership has incurred expenses in connection with this review by
       various third party professionals, including accounting, legal,
       valuation, structural and engineering costs, which amounted to $37,556
       and $5,540 for the years ended December 31, 1998 and 1997, respectively,
       and are included in general and administrative expenses.


                                        9
<PAGE>   54
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998


2.     INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

       On December 30, 1998, the Partnership sold its limited partnership
       interests in 7 local limited partnerships, with a total carrying value of
       $3,691,082,to the Operating Partnership. The sale resulted in proceeds to
       the Partnership of $202,714 and a net gain of $5,398,913, after being
       relieved of notes and interest payable of $9,172,563 and incurring
       selling costs of $285,282. The cash proceeds were held in escrow at
       December 31, 1998 and were received subsequent to year end. In March
       1999, the Partnership made cash distributions of $695,687 to the limited
       partners and $7,027 to the general partners, which included using
       proceeds from the sale of the partnership interests.

       The Operating Partnership purchased such limited partner interests for
       cash, which it raised in connection with a private placement of its
       equity securities. The purchase was subject to, among other things, (i)
       the purchase of the general partner interests in the local limited
       partnerships by the Operating Partnership; (ii) the approval of HUD and
       certain state housing finance agencies; and (iii) the consent of the
       limited partners to the sale of the local limited partnership interests
       held for investment by the Partnership.

       In August 1998, a consent solicitation statement was sent to the limited
       partners setting forth the terms and conditions of the purchase of the
       limited partners' interests held for investment by the Partnership,
       together with certain amendments to the Partnership Agreement and other
       disclosures of various conflicts of interest in connection with the
       proposed transaction. Prior to the sale of the partnership interests, the
       consents of the limited partners to the sale and amendments to the
       Partnership Agreement were obtained.

3.     NOTES PAYABLE

       Certain of the Partnership's investments involved purchases of
       partnership interests from partners who subsequently withdrew from the
       operating partnership. As of December 31, 1998, the Partnership is
       obligated for non-recourse notes payable of $4,600,000 to the sellers of
       the partnership interests, bearing interest at 9.5 percent. The
       Partnership was relieved of notes payable in the amount of $4,069,743 in
       connection with the sale of the partnership interests to the Operating
       Partnership. The notes mature in December 1999 or upon sale or
       refinancing of the underlying partnership properties. These obligations
       and the related interest are collateralized by the Partnership's
       investment in the investee limited partnerships and are payable only out
       of cash distributions from the investee partnerships, as defined in the
       notes. Unpaid interest is due at maturity of the notes.

       During the year ended December 31, 1997, the lower-tier partnership that
       owns Deep Lake Hermitage Apartments ("Deep Lake") consummated the sale of
       the apartment complex for $4,800,000. There were two notes payable by the
       Partnership to sellers of interests in the lower-tier partnership that
       owns the Deep Lake property in the aggregate principal amount of
       $1,500,000, which were secured by the Partnership's interest in the local
       limited partnership. The notes had accrued interest of $1,650,696, for a
       total amount due of $3,150,696. The Partnership entered into an agreement
       with the note holders, who accepted a reduced payment of $1,001,600 in
       full satisfaction of all obligations, in order to enable the sale of
       property. This was paid by the lower tier partnership from proceeds of
       the sale, and approximated the Partnership's investment balance in Deep
       Lake. In addition, the apartment complex had a first mortgage


                                       10
<PAGE>   55
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998


3.     NOTES PAYABLE (CONTINUED)

       note of approximately $3,500,000 which was paid off from proceeds of the
       sale. In 1997, the Partnership recognized an extraordinary gain of
       $2,149,096 from the forgiveness of the debt.

       Maturity dates on the notes and related accrued interest payable are as
       follows:

<TABLE>
<CAPTION>
                                                       Accrued
           Years Ending December 31,       Notes       Interest       Total
           -------------------------     ----------   ----------   -----------
<S>                                      <C>          <C>          <C>
                     1999                $4,600,000   $5,577,861   $10,177,861
                                         ==========   ==========   ===========
</TABLE>

       Notes payable and related accrued interest payable aggregating
       $10,177,861 as of December 31, 1998 become payable on December 31, 1999.
       Due to the Partnership's lack of cash and partners' deficiency, there is
       substantial doubt about its ability to make these payments, which would
       result in the possible foreclosure of the investments in the local
       limited partnerships. As a result, there is substantial doubt about the
       Partnerships' ability to continue as a going concern.

4.     FEES AND EXPENSES DUE GENERAL PARTNERS

       Under the terms of the Restated Certificate and Agreement of the Limited
       Partnership, the Partnership is obligated to the general partners for an
       annual asset management fee equal to .5% of the original invested assets
       of the limited partnerships. Invested assets is defined as the costs of
       acquiring project interests including the proportionate amount of the
       mortgage loans related to the Partnership's interest in the capital
       accounts of the respective limited partnerships.

       Included in general and administrative expenses for the year ended
       December 31, 1996 are reimbursements to NAPICO for certain expenses,
       which totaled $9,948.

       As of December 31, 1998, the fees and expenses due the general partners
       exceeded the Partnership's cash. The general partners, during the
       forthcoming year, will not demand payment of amounts due in excess of
       such cash or such that the Partnership would not have sufficient
       operating cash; however, the Partnership will remain liable for all such
       amounts.

       Pursuant to a Memorandum of Understanding entered into on August 11,
       1995, the Partnership paid $16,207 in interest on May 1, 1996 to an
       affiliate of NAPICO, that served as the management company for properties
       owned by the Partnership. The interest relates to funds advanced to the
       Partnership by the master disbursement account maintained by the
       management company. In addition, the Partnership on May 1, 1996
       reimbursed Housing Programs Corporation II $15,000 for professional fees,
       which were paid on behalf of the Partnership in connection with issues
       raised in the Memorandum of Understanding.


                                       11
<PAGE>   56
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998


5.     INCOME TAXES

       No provision has been made for income taxes in the accompanying financial
       statements since such taxes, if any, are the liability of the individual
       partners. The major differences in tax and financial reporting result
       from the use of different bases and depreciation methods for the
       properties held by the limited partnerships. Differences in tax and
       financial reporting also arise as losses are not recognized for financial
       reporting purposes when the investment balance has been reduced to zero
       or to a negative amount equal to further capital contributions required.

6.     CONTINGENCIES

       On August 27, 1998, two investors holding an aggregate of eight units of
       limited partnership interests in Real Estate Associates Limited III (an
       affiliated partnership in which NAPICO is the managing general partner)
       and two investors holding an aggregate of five units of limited
       partnership interest in Real Estate Associates Limited VI (another
       affiliated partnership in which NAPICO is the managing general partner)
       commenced an action in the United States District Court for the Central
       District of California against the Partnership, NAPICO and certain other
       affiliated entities. The complaint alleges that the defendants breached
       their fiduciary duty to the limited partners of certain NAPICO managed
       partnerships and made materially false and misleading statements in the
       consent solicitation statements sent to the limited partners of such
       partnerships relating to approval of the transfer of partnership
       interests in limited partnerships, owning certain of the properties, to
       the Operating Partnership organized by an affiliate of NAPICO. The
       plaintiffs seek preliminary and permanent injunctive relief and other
       equitable relief, as well as compensatory and punitive damages. The
       managing general partner of such NAPICO managed partnerships and the
       other defendants believe that the plaintiffs' claims are without merit
       and intend to contest the action vigorously.

       NAPICO is a plaintiff in various lawsuits and has also been named as a
       defendant in other lawsuits arising from transactions in the ordinary
       course of business. In the opinion of management and NAPICO, the claims
       will not result in any material liability to the Partnership.

       The Partnership has assessed the potential impact of the Year 2000
       computer systems issue on its operations. The Partnership believes that
       no significant actions are required to be taken by the Partnership to
       address the issue and that the impact of the Year 2000 computer systems
       issue will not materially affect the Partnership's future operating
       results or financial condition.

7.     FAIR VALUE OF FINANCIAL INSTRUMENTS

       Statement of Financial Accounting Standards No. 107, "Disclosure about
       Fair Value of Financial Instruments," requires disclosure of fair value
       information about financial instruments, when it is practicable to
       estimate that value. The notes payable are collateralized by the
       Partnership's investments in investee limited partnerships and are
       payable only out of cash distributions from the investee partnerships.
       The operations generated by the investee limited partnerships, which
       account for the Partnership's primary source of revenues, are subject to
       various government rules, regulations and


                                       12
<PAGE>   57
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1998


7.     FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

       restrictions which make it impracticable to estimate the fair value of
       the notes payable and related accrued interest. The carrying amount of
       other assets and liabilities reported on the balance sheets that require
       such disclosure approximates fair value due to their short-term maturity.

8.     FOURTH-QUARTER ADJUSTMENT

       The Partnership's policy is to record its equity in the loss of limited
       partnerships on a quarterly basis using estimated financial information
       furnished by the various local operating general partners. The equity in
       income (loss) of limited partnerships reflected in the accompanying
       financial statements is based primarily upon audited financial statements
       of the investee limited partnerships. The difference, $9,315,534, between
       the estimated nine-month equity in income and the actual 1998
       year-to-date equity in loss has been recorded in the fourth quarter.


                                       13
<PAGE>   58
                                                                        SCHEDULE

                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                      Year Ended December 31, 1998
                                   ------------------------------------------------------------------------------------------------
                                                                     Cash
                                     Balance                         Distri-                                             Balance
                                    January 1,       Capital         butions       Equity in                           December 31,
Limited Partnerships                  1998         Contributions    Received      Income/(Loss)        Sale                1998
--------------------               -----------     -------------   -----------    -------------     -----------        ------------
<S>                                <C>                <C>          <C>            <C>               <C>                <C> 
Bannock Arms                       $   615,775        $            $               $    68,680      $  (684,455)       $         --

Berkeley Gardens                       288,107                                         (90,957)        (197,150)

Cape La Croix                                            2,237         (2,237)

Cloverdale                                              29,843        (29,843)

Cloverleaf                                              95,763        (95,763)

Evergreen Apts.                      9,181,872                        (77,702)      (9,104,170)

Friendship Arms                      2,055,500                        (35,039)         (98,171)      (1,922,290)

Jenny Lind Hall

Lancaster Heights                                       21,858        (21,858)

Locust House*                          979,769                        (16,897)         (78,885)        (883,987)

Midpark Towers                                         236,732       (236,732)

Oxford Towers*                                           3,200                                           (3,200)

Plaza Village                          288,031                                        (288,031)

Round Barn Manor*

Santa Fe Towers                                         87,818        (87,818)

Walnut Towers                                           48,005        (48,005)

Westwood Terrace*                                       31,241        (31,241)
                                   -----------        --------    -----------      -----------      -----------        -------------
                                   $13,409,054        $556,697    $  (683,135)     $(9,591,534)     $(3,691,082)       $          --
                                   ===========        ========    ===========      ===========      ===========        =============
</TABLE>

<PAGE>   59
                                                                        SCHEDULE
                                                                     (CONTINUED)

                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                              Year Ended December 31, 1997
                                   -----------------------------------------------------------------------------
                                                                     Cash
                                     Balance                         Distri-                           Balance
                                    January 1,       Capital         butions       Equity in        December 31,
Limited Partnerships                  1997         Contributions    Received      Income/(Loss)         1997
--------------------               -----------     -------------   -----------    -------------     ------------
<S>                                <C>                <C>          <C>            <C>               <C>
Bannock Arms                       $   638,495        $ 15,234     $  (198,839)    $ 160,885         $  615,775

Berkeley Gardens                       316,528                                       (28,421)           288,107

Cape La Croix                                            6,784          (6,784)

Cloverdale

Cloverleaf                                              22,229         (22,229)

Deep Lake Hermitage                    979,876                        (979,876)

Evergreen Apts.                      8,762,504                         (77,703)       497,071         9,181,872

Friendship Arms                      2,189,065                         (35,184)      (98,381)         2,055,500

Jenny Lind Hall

Lancaster Heights                                       22,079         (21,858)         (221)

Locust House                         1,032,519                         (16,898)      (35,852)           979,769

Midpark Towers                                         247,203        (247,203)

Oxford Towers

Plaza Village                          445,069                         (29,101)     (127,937)           288,031

Round Barn Manor

Santa Fe Towers                                         99,802         (99,802)

Walnut Towers                                           75,714         (75,714)

Westwood Terrace                                        31,242         (31,242)
                                   -----------        --------     -----------     ---------         -----------
                                   $14,364,056        $520,287     $(1,842,433)    $ 367,144         $13,409,054
                                   ===========        ========     ===========     =========         ===========
</TABLE>

<PAGE>   60
                                                                        SCHEDULE
                                                                     (CONTINUED)

                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                                         Year Ended December 31, 1996
                                ------------------------------------------------------------------------------
                                                                  Cash
                                  Balance                         Distri-                            Balance
                                 January 1,      Capital          butions         Equity in        December 31,
Limited Partnerships                1996      Contributions      Received        Income/(Loss)         1996
--------------------            -----------   -------------     -----------      -------------     -----------
<S>                             <C>           <C>               <C>              <C>               <C>
Bannock Arms                    $   553,880      $157,898       $  (193,780)        $ 120,497      $   638,495

Berkeley Gardens                    419,312                                          (102,783)         316,529

Cape La Croix                                       5,957            (5,957)

Cloverdale

Cloverleaf                                          4,394            (4,394)

Deep Lake Hermitage               1,057,356                         (84,178)            6,698          979,876

Evergreen Apts.                   8,384,177                         (77,702)          456,029        8,762,504

Friendship Arms                   2,340,564                         (35,183)         (116,316)       2,189,065

Jenny Lind Hall                                    55,300           (55,300)

Lancaster Heights                                  22,079           (21,858)             (221)

Locust House                      1,137,223                         (16,897)          (87,807)       1,032,519

Midpark Towers                                    446,072          (446,072)

Oxford Towers

Plaza Village                       578,271                                          (133,203)         445,068

Round Barn Manor

Santa Fe Towers                                    96,484           (96,484)

Walnut Towers                                      96,143           (96,143)

Westwood Terrace                                   31,241           (31,241)
                                -----------      --------     -------------         ---------      -----------
                                $14,470,783      $915,568       $(1,165,189)        $ 142,894      $14,364,056
                                ===========      ========     =============         =========      ===========
</TABLE>
<PAGE>   61
                                                                        SCHEDULE
                                                                     (CONTINUED)

                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
                               FOR THE YEARS ENDED
                        DECEMBER 31, 1998, 1997 AND 1996

NOTES: 1. Equity in income (losses of the limited partnerships represents the
          Partnership's allocable share of the net income (loss) from the
          limited partnerships for the year. Equity in losses of the limited
          partnerships will be recognized until the investment balance is
          reduced to zero or below zero to an amount equal to future capital
          contributions to be made by the Partnership.

       2. Cash distributions from the limited partnerships will be treated as a
          return on the investment and will reduce the investment balance until
          such time as the investment is reduced to an amount equal to
          additional contributions. Distributions subsequently received will be
          recognized as income.
<PAGE>   62
                                                                    SCHEDULE III

                            HOUSING PROGRAMS LIMITED
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                 OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
                          IN WHICH HPL HAS INVESTMENTS
                                DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                                         BUILDINGS, FURNISHINGS
                                                                              & EQUIPMENT
                              NUMBER       OUTSTANDING                       AMOUNT CARRIED
                                OF          MORTGAGE                           AT CLOSE OF                           ACCUMULATED
PARTNERSHIP/LOCATION           APTS.          LOAN           LAND                 PERIOD              TOTAL          DEPRECIATION
--------------------          ------       -----------    ----------     ----------------------    ------------      ------------
<S>                           <C>          <C>            <C>            <C>                       <C>               <C>
Jenny Lind Hall                   78         1,364,711       111,000             2,729,647            2,840,647        1,341,393
  Springfield, MO
Lancaster Heights                198         2,068,823       200,000             4,867,513            5,067,513        2,228,270
  Normal, IL
Midpark Towers                   202         4,025,955       532,593             8,729,209            9,261,802        4,387,449
  Dallas, TX
Santa Fe Towers                  252         5,830,616       316,724            11,480,545           11,797,269        5,632,712
  Overland Park, KS
Walnut Towers                     78         1,375,080        85,229             3,056,802            3,142,031        1,493,384
  Winfield, KS
Cape La Croix                    125         1,324,266       169,000             2,484,615            2,653,615        1,250,575
  Cape Girardeau, MO
Cloverdale                       100           959,536       100,000             2,051,596            2,151,596        1,020,192
  Crawfordsville, IN
Cloverleaf                        94           881,766       123,000             1,927,274            2,050,274          967,254
  Indianapolis, IN
Evergreen Apts.                  330         8,317,774       617,369            15,386,376           16,003,745        7,142,733
  Oshtemo, MI
Plaza Village                    228         3,229,486       369,700             7,043,679            7,413,379        4,994,829
  Woonsocket, RI
                               -----       -----------    ----------           -----------         ------------      -----------
                               1,685       $29,378,013    $2,624,615           $59,757,256         $ 62,381,871      $30,458,791
                               =====       ===========    ==========           ===========         ============      ===========
</TABLE>

<PAGE>   63
                                                                    SCHEDULE III
                                                                     (CONTINUED)


                            HOUSING PROGRAMS LIMITED
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                 OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
                          IN WHICH HPL HAS INVESTMENTS
                                DECEMBER 31, 1998

NOTES: 1. Each local limited partnership has developed, owns and operates the
          housing project. Substantially all project costs, including
          construction period interest expense, were capitalized by the local
          limited partnerships.

       2. Depreciation is provided for by various methods over the estimated
          useful lives of the projects. The estimated composite useful lives of
          the buildings are from 25 to 40 years.

       3. Investments in property and equipment - limited partnerships:

<TABLE>
<CAPTION>
                                                     Buildings,
                                                    Furnishings,
                                                        And
                                    Land              Equipment             Total
                                -------------       -------------       -------------
<S>                             <C>                 <C>                 <C>
Balance, January 1, 1996        $   4,284,878          98,128,551         102,413,429

Net additions in 1996                      --             536,527             536,527
                                -------------       -------------       -------------
Balance, December 31, 1996          4,284,878          98,665,078         102,949,956

Net additions in 1997                (360,000)         (5,632,467)         (5,992,467)
                                -------------       -------------       -------------
Balance, December 31, 1997          3,924,878          93,032,611          96,957,489

Net additions in 1998                      --           1,005,225           1,005,225

Sale of Property                   (1,300,263)        (34,280,580)        (35,580,843)
                                -------------       -------------       -------------
Balance, December 31, 1998      $   2,624,615       $  59,757,256       $  62,381,871
                                =============       =============       =============
</TABLE>

<PAGE>   64
                                                                    SCHEDULE III
                                                                     (CONTINUED)


                            HOUSING PROGRAMS LIMITED
              REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
                       HELD BY LOCAL LIMITED PARTNERSHIPS
                          IN WHICH HPL HAS INVESTMENTS
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                    Buildings,
                                                                   Furnishings,
                                                                       And
                                                                    Equipment
                                                                   ------------
<S>                                                                <C>
ACCUMULATED DEPRECIATION:

Balance, January 1, 1996                                           $ 41,753,560

Net additions for 1996                                                3,470,865
                                                                   ------------
Balance, December 31, 1996                                           45,224,425

Net additions for 1997                                                  583,873
                                                                   ------------
Balance, December 31, 1997                                           45,808,298

Net additions for 1998                                                3,281,218

Sale of Property                                                    (18,630,725)
                                                                   ------------
Balance, December 31, 1998                                         $ 30,458,791
                                                                   ============
</TABLE>
<PAGE>   65
PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

HOUSING PROGRAMS LIMITED (the "Partnership") has no directors or executive
officers of its own.

The general partners of the Partnership are National Partnership Investments
Corp. ("NAPICO"), Coast Housing Investments Associates (an affiliate of NAPICO)
and Housing Programs Corporation II. Prior to December 30, 1998, NAPICO was a
wholly owned subsidiary of Casden Investment Corporation ("CIC"), which is
wholly owned by Alan I. Casden. On December 30, 1998, Casden Properties
Operating Partnership, L.P., (the "Operating Partnership") a majority owned
subsidiary of Casden Properties Inc., a real estate investment trust organized
by Alan I. Casden, purchased a 95.25% economic interest in NAPICO. Housing
Programs Corporation II is a wholly-owned subsidiary of LB I Group Inc. The
following biographical information is presented for the directors and executive
officers of NAPICO and officers of Housing Programs Corporation II with
principal responsibility for the Partnership's affairs.

CHARLES H. BOXENBAUM, 69, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.

Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company.

Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
In 1963, he was the winner of the Snyder Award, the highest annual award offered
by the National Association of Real Estate Boards for Best Exchange. He is one
of the founders and a past director of the First Los Angeles Bank, organized in
November 1974. Mr. Boxenbaum was a member of the Board of Directors of the
National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree
from the University of Chicago.

BRUCE E. NELSON, 47, President and a director of NAPICO.

Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments.

From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time Mr. Nelson was engaged in
the private practice of law in Los Angeles. Mr. Nelson received his Bachelor of
Arts degree from the University of Wisconsin and is a graduate of the University
of Colorado School of Law. He is a member of the State Bar of California and is
a licensed real estate broker in California and Texas.

ALAN I. CASDEN, 53, Chairman of Casden Properties Inc. and The Casden Company,
an affiliate of Casden Properties (formerly CoastFed Properties), a director and
member of the audit committee of NAPICO, and chairman of the Executive Committee
of NAPICO.

Mr. Casden is Chairman of the Board, Chief Executive Officer and sole
shareholder of The Casden Company and Casden Investment Corporation. He also
became the Chairman of the Board of Casden Properties Inc. in 1998. Previously,
he was the president and chairman of Mayer Group, Inc., which he joined in 1975.
He is also chairman of Mayer Management, Inc., a real estate management firm.


<PAGE>   66
Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.

Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, and the President's Council of the California
Building Industry Association. He also serves on the advisory board to the
School of Accounting of the University of Southern California. He holds a
Bachelor of Science and a Masters in Business Administration degree from the
University of Southern California.

HENRY C. CASDEN, 55, President, Chief Operating Officer and Secretary of The
Casden Company and a director and secretary of NAPICO.

Mr. Casden has been President and Chief Operating Officer of The Casden Company,
as well as a director of NAPICO since February 1988. He became secretary of both
companies in late 1994. He also became the President of Casden Properties Inc.
in 1998. From 1982 to 1988, Mr. Casden was of counsel and a partner in the Los
Angeles law firm of Troy, Casden & Gould. From 1978 to 1981, he was of counsel
and a partner in the Los Angeles law firm of Loeb & Loeb. From 1972 to 1978, Mr.
Casden was a member of the Beverly Hills law firm of Fink & Casden, Professional
Corporation.

Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School. Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.

PAUL PATIERNO, 42, Chief Financial Officer.

Mr. Patierno joined NAPICO in 1998 and is responsible for its financial affairs,
as well as the limited partnerships sponsored by it. From 1995 until joining
NAPICO in September 1998, Mr. Patierno was a senior manager in the affordable
housing group of Altschuler, Melvoin and Glasser LLP, a national public
accounting firm. From 1990 to 1995, he practiced public accounting with a firm
specializing in real estate syndication. Mr. Patierno received his bachelor of
science degree in accounting from California State University at Northridge, and
is a member of the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants.

PATRICIA W. TOY, 69, Senior Vice President - Communications and Assistant
Secretary.

Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.

MARK L. WALTHER, 38, Executive Vice President, General Counsel and Assistant
Secretary.

Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther
worked in the San Francisco law firm of Browne and Kahn which specialized in
construction litigation. Mr. Walther received his Bachelor of Arts Degree in
Political Science from the University of California, Santa Barbara and is a
graduate of the University of California, Davis, School of Law. He is a member
of the State Bar of Hawaii.


NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection


<PAGE>   67
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and does
not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.


<PAGE>   68
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS:

Housing Programs Limited has no officers, employees, or directors. However,
under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the general partners an annual
management fee. The annual management fee is approximately equal to .5% of the
invested assets, including the Partnership's allocable share of the mortgages
related to real estate properties held by local limited partnerships. The fee is
earned beginning in the month the Partnership makes its initial contribution to
the local partnership. In addition, the Partnership reimburses NAPICO for
certain expenses.

An affiliate of NAPICO is responsible for the on-site property management for
certain properties owned by the limited partnerships in which the Partnership
has invested.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

(a)     Security Ownership of Certain Beneficial Owners

        The general partners own all of the outstanding general partnership
        interests of Housing Programs Limited. No person is known to own
        beneficially in excess of 5% of the outstanding limited partnership
        interests.

(b)     With the exception of the Initial Limited Partner, Bruce Nelson, who is
        an officer of NAPICO, none of the officers or directors of NAPICO own
        directly or beneficially any limited partnership interests in the
        Partnership.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The Partnership is obligated to NAPICO for an annual
management fee equal to .5 percent of the original invested assets of the
limited partnerships. Invested assets is defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage loans
related to the Partnership's interest in the capital accounts of the respective
partnerships. The management fee was $492,960, $509,806 and $526,651 for the
three years ended December 31, 1998, 1997 and 1996, respectively.

The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $9,948 in 1996, and is included in general and administrative
expenses.

Prior to the sale of certain partnership interests on December 30, 1998, an
affiliate of NAPICO was the general partner in 10 of the limited partnerships in
which the Partnership had an investment, and another affiliate received property
management fees of approximately 5 to 6 percent of the revenue from 4 of these
partnerships. The affiliate received property management fees of $187,166,
$211,938 and $244,827 in 1998, 1997 and 1996, respectively.

Pursuant to a Memorandum of Understanding entered into on August 11, 1995, the
Partnership paid $16,207 in interest on May 1, 1996 to an affiliate of NAPICO,
that served as the management company for properties owned by the Partnership.
The interest relates to funds advanced to the Partnership by the master
disbursement account maintained by the management company. In addition, the
Partnership on May 1, 1996 reimbursed Housing Programs Corporation II, a general
partner, $15,000 for professional fees, which were paid on behalf of the
Partnership in connection with issues raised in the Memorandum of Understanding.

On December 30, 1998, the Partnership sold its limited partnership interests in
7 local limited partnerships, with a total carrying value of $3,691,082, to the
Operating Partnership. The sale resulted in proceeds to the Partnership of
$202,714 and a net gain of $5,398,913, after being relieved of notes and
interest payable of $9,172,563 and incurring selling costs


<PAGE>   69
of $285,282. In March 1999, the Partnership made cash distributions of $695,687
to the limited partners and $7,027 to the general partners, which included using
proceeds from the sale of the partnership interests.

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

FINANCIAL STATEMENTS

Reports of Independent Public Accountants.

Balance Sheets as of December 31, 1998 and 1997.

Statements of Operations for the years ended December 31, 1998, 1997 and 1996.

Statements of Partners' Equity (Deficiency) for the years ended December 31,
1998, 1997 and 1996.

Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996.

Notes to Financial Statements.

FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO HOUSING PROGRAMS LIMITED AND LIMITED PARTNERSHIPS IN WHICH HOUSING
PROGRAMS LIMITED HAS INVESTMENTS

Schedule - Investments in Limited Partnerships for the years ended December 31,
1998, 1997 and 1996.

Schedule III - Real Estate and Accumulated Depreciation of Property Held by
Local Limited Partnerships, December 31, 1998.

The remaining schedules are omitted because the required information is included
in the financial statements and notes thereto or they are not applicable or not
required.

EXHIBITS

(3)     Articles of incorporation and bylaws: The registrant is not
        incorporated. The Partnership Agreement was filed with Form S-11
        #2-92352 incorporated herein by reference.

(10)    Material contracts: The registrant is not party to any material
        contracts, other than the Restated Certificate and Agreement of Limited
        Partnership dated May 15, l984, and the nineteen contracts representing
        the partnership's investment in local limited partnerships as previously
        filed at the Securities Exchange Commission, File #2-92352 which is
        hereby incorporated by reference.

REPORTS ON FORM 8-K

No reports on Form 8K were filed during the year ended December 31, 1998.


<PAGE>   70
                                   SIGNATURES


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


HOUSING PROGRAMS LIMITED

By:    NATIONAL PARTNERSHIP INVESTMENTS CORP.
       The General Partner


/s/ CHARLES H. BOXENBAUM
------------------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer


/s/ BRUCE E. NELSON
------------------------------------------
Bruce E. Nelson
Director and President


/s/ ALAN I. CASDEN
------------------------------------------
Alan I. Casden
Director


/s/ HENRY C. CASDEN
------------------------------------------
Henry C. Casden
Director


/s/ PAUL PATIERNO
------------------------------------------
Paul Patierno
Chief Financial Officer