<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, 1997

                             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 6,000 Limited
Partnership Interests and warrants to purchase a maximum of 6,000 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 National Partnership
Investments Associates II ("NPIA") (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.

NAPICO is a wholly owned subsidiary of Casden Investment Corporation ("CIC"),
which is wholly owned by Alan I. Casden. The current members of NAPICO's Board
of Directors are Charles H. Boxenbaum, Bruce E. Nelson, Alan I. Casden, Henry C.
Casden and Brian D. Goldberg. 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 seventeen local limited
partnerships (referred herein as the "local" or "lower-tier" limited
partnerships) as of December 31, 1997. NAPICO holds a general partnership
interest in nine 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, HUD has determined not to renew 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. As a result, existing HAP Contracts that are renewed in
the future on projects insured by the FHA will not provide sufficient cash flow
to permit owners of properties to meet the debt service requirements of these
existing FHA-insured mortgages. 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 (the "MAHRAA"), which was adopted
in October 1997, provides for the restructuring of mortgage loans insured by
the FHA with respect to properties subject to HAP Contracts that have been
renewed under the new policy. The restructured loans will be held by the
current lender or another lender. Under MAHRAA, an FHA-insured mortgage loan
can be restructured to reduce the annual debt service on such loan. There can
be no assurance that the Partnership will be permitted to restructure its
mortgage indebtedness pursuant to the new HUD rules implementing MAHRAA or that
the Partnership would choose to restructure such mortgage indebtedness if it
were eligible to participate in the MAHRAA program. It should be noted that
there are uncertainties as to 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.
Accordingly, the General Partners are unable to predict with certainty their
impact on the Partnership's future cash flow.

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>   3

During 1997, 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, 1997, 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, 1997

<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>
Bannock Arms Apts.               66                  66                  66              100%
  Boise, ID

Berkeley Gardens                132                  26                 128               97%
  Martinsburg, WV

Cape LaCroix                    125                   0                 120               96%
  Cape Girardeau, MO

Cloverdale                      100                   0                  97               97%
  Crawfordsville, IN

Cloverleaf                       94                  94                  93               99%
  Indianapolis, IN

Evergreen Apts                  330                 330                 323               98%
  Oshtemo, MI

Friendship Arms                 151                 150                 151              100%
  Hyattsville, MD

Jenny Lind Hall                  78                  78                  78              100%
  Springfield, MO

Lancaster Heights               198                   0                 184               93%
  Normal, IL

Locust House                     99                  98                  99              100%
  Westminster, MD

Midpark Towers                  202                 202                 200               99%
  Dallas, TX

Oxford House                    156                 152                 156              100%
  Decatur, IL
</TABLE>


<PAGE>   4



            SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
               IN WHICH HOUSING PROGRAMS LIMITED HAS AN INVESTMENT
                                DECEMBER 31, 1997

<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>
Plaza Village                   228                 114                 219               96%
  Woonsocket, RI

Round Barn Manor                156                 156                 156              100%
  Champaign, IL

Santa Fe Towers                 252                 251                 244               97%
  Overland Park, KS

Walnut Towers                    78                  77                  78              100%
  Winfield, KS

Westwood Terrace                 97                  97                  96               99%
                              -----               -----               -----
  Moline, IL

     TOTAL                    2,542               1,909               2,488               98%
                              =====               =====               =====
</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

As of December 31, 1997, 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

Not applicable.


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
2,870 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.



<PAGE>   6
ITEM 6.    SELECTED FINANCIAL DATA:


<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                   ---------------------------------------------------------------------------------------
                                           1997              1996               1995               1994              1993
                                   ------------       ------------       ------------       ------------       ------------

<S>                                <C>                <C>                <C>                <C>                <C>          
Loss From Operations               $ (1,554,011)      $ (1,698,332)      $ (1,727,047)      $ (1,690,366)      $ (1,699,642)

Distribution From Limited
   Partnerships Recognized
   as Income                            468,618            387,721            307,474            520,001            473,210

Equity in Income (Loss)
   of Limited Partnerships
   and amortization of
   acquisition costs                    367,144            142,894             87,795           (210,249)           616,683

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

Net Income (Loss)                  $  1,430,847       $ (1,167,717)      $ (1,331,778)      $ (1,380,614)      $   (609,749)
                                   ============       ============       ============       ============       ============

Net Income (Loss) per Limited
   Partner Interest                $        116       $        (94)      $       (108)      $       (111)      $        (49)
                                   ============       ============       ============       ============       ============



Total assets                       $ 14,571,452       $ 15,312,532       $ 15,191,113       $ 15,692,284       $ 15,858,598
                                   ============       ============       ============       ============       ============

Investments in
   Limited Partnerships            $ 13,409,054       $ 14,364,056       $ 14,470,783       $ 14,533,940       $ 15,184,763
                                   ============       ============       ============       ============       ============


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

Fees and Expenses Due to
   General Partners                $  1,562,552       $  1,317,044       $    990,393       $  1,092,620       $    714,742
                                   ============       ============       ============       ============       ============
</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.

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, 1997, the Partnership has investments in 17 limited
partnerships, all of which own housing projects that were substantially all
rented. 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 $485,000, $1,148,000 and $1,379,000 for the years ended
December 31, 1997, 1996 and 1995, respectively. However, because losses incurred
after the investment account is reduced to a zero balance are not recognized,
the Partnership recognized equity in income of limited partnerships of $367,144,
$142,894 and $87,795 for the years ended December 31, 1997, 1996 and 1995,
respectively. The cumulative amount of the unrecognized equity in losses of
certain limited partnerships was approximately $12,507,000 and $11,603,000 as of
December 31, 1997 and 1996, respectively.

Distributions from the local limited partnerships in which the Partnership did
not have a positive investment balance were $486,618, $387,721 and $307,474 for
the years ended December 31, 1997, 1996 and 1995, respectively. These amounts
were recognized as income on the accompanying statements of operations, in
accordance with the equity method of accounting.




<PAGE>   8

As of December 31, 1997, 1996 and 1995, the Partnership has cash and cash
equivalents of $1,162,398, $948,476 and $595,330, respectively. Substantially
all of these amounts are on deposit with one money market mutual fund, earning
interest. This resulted in the Partnership earning approximately $58,000,
$40,000 and $44,000 in interest income for the years ended December 31, 1997,
1996 and 1995, 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 $509,806, $526,651 and
$547,773 for the years ended December 31, 1997, 1996 and 1995, respectively. The
fees have decreased due to the foreclosure of a property owned by a local
partnership in 1995 and the sale of another property in 1997, which reduced the
invested assets.

The Partnership is obligated on non-recourse notes payable of $8,669,743 and
$10,169,743 at December 31, 1997 and 1996, respectively, which bear interest at
9.5 percent per annum and have principal maturities ranging from December 1999
to December 2001. Effective January 1, 1995, the interest rate for two notes
totalling $1,500,000 changed from 9.5 percent to 12.5 percent per the terms of
the notes, and the note holders accepted a reduced payment of $1,000,000 in full
satisfaction of all obligations in 1997 in connection with the sale of the
related property. 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. 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. Interest
expense totalled $917,376, $1,027,333 and $1,011,127 for 1997, 1996 and 1995,
respectively.

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 $109,225, $124,958 and $125,941 for
the years ended December 31, 1997, 1996 and 1995, 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 $75,592, $59,324 and
$86,350 for the years ended December 31, 1997, 1996 and 1995, respectively.
Included in administrative expenses are reimbursements to NAPICO for certain
expenses, which totalled $0, $9,948 and $29,845 for the years ended December 31,
1997, 1996 and 1995, respectively.

The results of operations of the local limited partnerships were fairly constant
during the years ended December 31, 1997, 1996 and 1995, 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
$17,633,000, $17,935,000 and $17,132,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

Total expenses for the 17 local partnerships remained fairly consistent, and
were $18,123,000, $19,091,000 and $18,525,000 for the years ended December 31,
1997, 1996 and 1995, respectively. In addition to expenses decreasing 
<PAGE>   9

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 1997, 1996 and 1995
aggregated $490,000, $1,156,000 and $1,393,000, respectively. The losses
allocated to the Partnership were $485,000, $1,148,000 and $1,379,000 for 1997,
1996 and 1995, respectively.

The Montecito local partnership had been operating at a deficit, and the General
Partner of the Montecito Local Partnership was unsuccessful in its attempt to
negotiate a mortgage modification with the lender to improve the situation. No
mortgage payments were made subsequent to May 1994 and the mortgage was in
default. On July 18, 1995, the property was foreclosed by the lender. The
Partnership's original investment in the Montecito local partnership represented
approximately 5% of the Partnership's total capital raised. The Partnership's
financial statements reflect no investment in the Montecito Local Partnership at
December 31, 1996 and 1995.

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. The Partnership recognized an
extraordinary gain of $2,149,096 from the forgiveness of the debt.

Under recent adopted law and policy, HUD has determined not to renew 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. As a result, existing HAP Contracts that are renewed in
the future on projects insured by the FHA will not provide sufficient cash flow
to permit owners of properties to meet the debt service requirements of these
existing FHA-insured mortgages. 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 (the "MAHRAA"), which was adopted
in October 1997, provides for the restructuring of mortgage loans insured by
the FHA with respect to properties subject to HAP Contracts that have been
renewed under the new policy. The restructured loans will be held by the
current lender or another lender. Under MAHRAA, an FHA-insured mortgage loan
can be restructured to reduce the annual debt service on such loan. There can
be no assurance that the Partnership will be permitted to restructure its
mortgage indebtedness pursuant to the new HUD rules implementing MAHRAA or that
the Partnership would choose to restructure such mortgage indebtedness if it
were eligible to participate in the MAHRAA program. It should be noted that
there are uncertainties as to 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.
Accordingly, the General Partners are unable to predict with certainty their
impact on the Partnership's future cash flow.

A real estate investment trust organized by an affiliate of NAPICO has advised
the Partnership that it intends to make a proposal to purchase from the
Partnership certain of the real estate assets of the Partnership. 

The REIT proposes to purchase such limited partner interests for cash, which it
plans to raise in connection with a private placement of its equity securities.
The purchase is subject to, among other things (i) consummation of such private
placement by the REIT; (ii) the purchase of the general partner interests in
the local limited partnerships by the REIT; (iii) the approval of HUD and
certain state housing finance agencies; (iv) the consent of the limited
partners to the sale of the local limited partnership interests held for
investment by the Partnership; and (v) the consummation of a minimum number of
purchase transactions with other Casden affiliated partnerships. As of March
31, 1998, the REIT had completed buy-out negotiations with a majority of the
general partners of the local limited partnerships.

A proxy is contemplated to be 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 transaction.

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 and concurrent inflation,
could increase vacancy levels, rental payment defaults, changing legislation 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>   10



                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                              FINANCIAL STATEMENTS,
                          FINANCIAL STATEMENT SCHEDULES
                  AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                DECEMBER 31, 1997





<PAGE>   11


                    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>   12


                [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>   13
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>   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, 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>   15
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>   16

                     [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>   17
     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>   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, 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>   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, 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>   20

                          [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>   21

     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>   22
                     [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>   23
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>   24
                         [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>   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 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>   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), 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>   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 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>   28

                    [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>   29

     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>   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, 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>   31
     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>   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, 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>   33
     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>   34
                     [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>   35
     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>   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, 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>   37
     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>   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, 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>   39
     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>   40

                          [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>   41

                          [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>   42

                          [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>   43
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 1997 AND 1996

                                     ASSETS
<TABLE>
<CAPTION>

                                                             1997               1996
                                                        ------------        ------------
<S>                                                     <C>                 <C>         
INVESTMENTS IN LIMITED PARTNERSHIPS
    (Notes 1 and 2)                                     $ 13,409,054        $ 14,364,056

CASH AND CASH EQUIVALENTS (Note 1)                         1,162,398             948,476
                                                        ------------        ------------

TOTAL ASSETS                                            $ 14,571,452        $ 15,312,532
                                                        ============        ============

                      LIABILITIES AND PARTNERS' DEFICIENCY

LIABILITIES:
Notes payable (Notes 3 and 7)                           $  8,669,743        $ 10,169,743
Accrued fees and expenses due general
partners (Note 4)                                          1,562,552           1,317,044
Accrued interest payable (Notes 3 and 7)                   9,921,172          10,811,557
Accounts payable                                               3,855              30,905
                                                        ------------        ------------

                                                          20,157,322          22,329,249
                                                        ------------        ------------


COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 6)

PARTNERS' DEFICIENCY:
General partners                                            (306,605)           (320,913)
Limited partners                                          (5,279,265)         (6,695,804)
                                                        ------------        ------------

                                                          (5,585,870)         (7,016,717)
                                                        ------------        ------------
TOTAL LIABILITIES AND PARTNERS'
  DEFICIENCY                                            $ 14,571,452        $ 15,312,532
                                                        ============        ============
</TABLE>



   The accompanying notes are an integral part of these financial statements.
<PAGE>   44



                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>

                                                          1997              1996               1995
                                                      -----------        -----------        -----------

<S>                                                   <C>                <C>                <C>    
INTEREST INCOME                                       $    57,988        $    39,934        $    44,144
                                                      -----------        -----------        -----------

OPERATING EXPENSES:
     Management fees - general partner (Note 4)           509,806            526,651            547,773
     General and administrative (Note 4)                   75,592             59,324             86,350
     Legal and accounting (Note 4)                        109,225            124,958            125,941
     Interest (Notes 3 and 4)                             917,376          1,027,333          1,011,127
                                                      -----------        -----------        -----------

         Total operating expenses                       1,611,999          1,738,266          1,771,191
                                                      -----------        -----------        -----------

LOSS FROM OPERATIONS                                   (1,554,011)        (1,698,332)        (1,727,047)

DISTRIBUTIONS FROM LIMITED
     PARTNERSHIPS RECOGNIZED
     AS INCOME                                            468,618            387,721            307,474

EQUITY IN INCOME OF LIMITED
     PARTNERSHIPS AND AMORTIZATION
     OF ACQUISITION COSTS (Note 2)                        367,144            142,894             87,795
                                                      -----------        -----------        -----------

NET LOSS BEFORE EXTRAORDINARY GAIN                       (718,249)        (1,167,717)        (1,331,778)

EXTRAORDINARY GAIN -
     DEBT FORGIVENESS                                   2,149,096                 --                 --
                                                      -----------        -----------        -----------

NET INCOME (LOSS)                                     $ 1,430,847        $(1,167,717)       $(1,331,778)
                                                      ===========        ===========        ===========

NET LOSS BEFORE EXTRAORDINARY GAIN
     PER LIMITED PARTNERSHIP INTEREST                 $       (58)       $       (94)       $      (108)
                                                      ===========        ===========        ===========

NET INCOME (LOSS) PER LIMITED
     PARTNERSHIP INTEREST                             $       116        $       (94)       $      (108)
                                                      ===========        ===========        ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.


<PAGE>   45
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                       STATEMENTS OF PARTNERS' DEFICIENCY
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995



<TABLE>
<CAPTION>

                                      General            Limited
                                      Partners           Partners            Total
                                    -----------        -----------        -----------

<S>                                 <C>                <C>                <C>         
DEFICIENCY, January 1, 1995         $  (295,918)       $(4,221,304)       $(4,517,222)

    Net loss, 1995                      (13,318)        (1,318,460)        (1,331,778)
                                    -----------        -----------        -----------

DEFICIENCY, December 31, 1995          (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)
                                    ===========        ===========        ===========
</TABLE>


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

<PAGE>   46
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>

                                                                1997               1996               1995
                                                            -----------        -----------        -----------
<S>                                                         <C>                <C>                <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                      $ 1,430,847        $(1,167,717)       $(1,331,778)
    Adjustments to reconcile net income (loss) to net
       cash provided by (used in) operating activities:
       Extraordinary gain                                    (2,149,096)                --                 --
       Equity in income of limited partnerships                (399,271)          (181,384)          (126,285)
       Amortization of acquisition costs                         32,127             38,490             38,490
       Increase in accrued interest payable                     760,313            947,012            947,014
       Increase (decrease) in accrued fees and
       expenses due general partners                            245,508            326,651           (102,227)
       (Decrease) increase in accounts payable                  (27,050)            15,473             (6,490)
                                                            -----------        -----------        -----------

       Net cash used in operating activities                   (106,622)           (21,475)          (581,276)
                                                            -----------        -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital contributions to limited partnerships              (520,287)          (915,568)          (671,865)
    Distributions from limited partnerships
       recognized as a return of capital                      1,842,431          1,165,189            822,817
    Decrease in short term investments                               --            125,000            408,409
                                                            -----------        -----------        -----------

       Net cash provided by investing activities              1,322,144            374,621            559,361
                                                            -----------        -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payment of notes payable                                 (1,001,600)                --             (7,690)
                                                            -----------        -----------        -----------

NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                                        213,922            353,146            (29,605)

CASH AND CASH EQUIVALENTS,
    beginning of year                                           948,476            595,330            624,935
                                                            -----------        -----------        -----------

CASH AND CASH EQUIVALENTS,
     end of year                                            $ 1,162,398        $   948,476        $   595,330
                                                            ===========        ===========        ===========

SUPPLEMENTAL DISCLOSURE OF
   CASH FLOW INFORMATION
    Cash paid during the year for interest                  $   158,665        $    80,321        $    64,113
                                                            ===========        ===========        ===========
</TABLE>



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

<PAGE>   47


                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997

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. Casden Investment Corp. owns 100 percent of NAPICO's stock. 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.

     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 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

<PAGE>   48



                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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.

2.   INVESTMENTS IN LIMITED PARTNERSHIPS

     The Partnership now holds limited partnership interests in 17 limited
     partnerships. The partnerships own residential rental projects consisting
     of 2,542 apartment units. The mortgage loans of these projects are 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.

     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 $12,507,000 and
     $11,603,000 as of December 31, 1997 and 1996, 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.


<PAGE>   49
                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

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

                                                                 1997           1996
                                                             -----------    --------

<S>                                                          <C>            <C>        
     Investment balance, beginning of year                   $14,364,056    $14,470,783
     Equity in income of limited partnerships                    399,271        181,384
     Amortization of capitalized acquisition costs and fees      (32,127)       (38,490)
     Capital Contributions                                       520,287        915,568
     Distributions recognized as a return of capital          (1,842,433)    (1,165,189)
                                                            ------------   ------------

     Investment balance, end of year                         $13,409,054    $14,364,056
                                                             ===========    ===========
</TABLE>

     The difference between the investment per the accompanying balance sheets
     at December 31, 1997 and 1996, 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 and cumulative distributions recognized as income.

     Selected financial information from the combined financial statements of
     the limited partnerships at December 31, 1997 and 1996 and for each of the
     three years in the period ended December 31, 1997 is as follows:

                                 Balance Sheets
<TABLE>
<CAPTION>
                                          1997             1996
                                         --------        --------
                                               (in thousands)

<S>                                      <C>             <C>     
Land and buildings, net                  $ 51,149        $ 57,726
                                         ========        ========

Total assets                             $ 71,789        $ 77,431
                                         ========        ========

Mortgages payable                        $ 52,219        $ 56,826
                                         ========        ========

Total liabilities                        $ 75,642        $ 79,446
                                         ========        ========

Equity of Housing Programs Limited       $ (3,495)       $ (1,640)
                                         ========        ========

Deficiency of other partners             $   (358)       $   (375)
                                         ========        ========
</TABLE>



<PAGE>   50



                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997




2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

                            Statements of Operations

<TABLE>
<CAPTION>
                                                1997           1996            1995
                                             --------        --------        --------
                                                          (in thousands)

<S>                                          <C>             <C>             <C>     
Total revenues                               $ 17,633        $ 17,935        $ 17,132
                                             ========        ========        ========

Interest expense                             $  3,450        $  3,634        $  3,706
                                             ========        ========        ========

Depreciation                                 $  3,438        $  3,532        $  3,524
                                             ========        ========        ========

Total expenses                               $ 18,123        $ 19,091        $ 18,525
                                             ========        ========        ========

Net loss                                     $   (490)       $ (1,156)       $ (1,393)
                                             ========        ========        ========

Net loss allocable to Housing Programs
   Limited                                   $   (485)       $ (1,148)       $ (1,379)
                                             ========        ========        ========
</TABLE>

     An affiliate of NAPICO is 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
     $211,938, $244,827 and $234,903 in 1997, 1996 and 1995, respectively. The
     following sets forth the significant data for these partnerships, reflected
     in the accompanying financial statements using the equity method of
     accounting:
<TABLE>
<CAPTION>

                                                    1997        1996         1995
                                             --------        ---------      -------
                                                           (in thousands)

<S>                                          <C>             <C>            <C>
Total assets                                 $ 34,962        $ 40,380
                                             ========        ========

Total liabilities                            $ 46,250        $ 49,766
                                             ========        ========

Deficiency of Housing Programs Limited       $(11,070)       $ (9,151)
                                             ========        ========

Deficiency of other partners                 $   (219)       $   (235)
                                             ========        ========

Total revenue                                $  9,119        $  9,741        $  9,283
                                             ========        ========        ========

Net loss                                     $   (745)       $   (686)       $   (828)
                                             ========        ========        ========
</TABLE>

     The Montecito local partnership had been operating at a deficit, and the
     general partner was unsuccessful in its attempt to negotiate a mortgage
     modification with the lender to improve the situation. No mortgage


<PAGE>   51

                            HOUSING PROGRAMS LIMITED
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

2.   INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

     payments to the lender were made subsequent to May 1994 and the mortgage
     was in default. On July 18, 1995, the property was foreclosed by the
     lender. The Partnership's original investment in the Montecito local
     partnership represents approximately 5% of the Partnership's total capital
     raised. No loss was recognized upon foreclosure, as the Partnership had a
     zero investment balance in Montecito.

     A real estate investment trust organized by an affiliate of NAPICO has
     advised the Partnership that it intends to make a proposal to purchase from
     the Partnership certain of the real estate assets of the Partnership.

     The REIT proposes to purchase such limited partner interests for cash,
     which it plans to raise in connection with a private placement of its
     equity securities. The purchase is subject to, among other things, (i)
     consummation of such private placement by the REIT; (ii) the purchase of
     the general partner interests in the local limited partnerships by the
     REIT; (iii) the approval of HUD and certain state housing finance
     agencies; (iv) the consent of the limited partners to the sale of the
     local limited partnership interests held for investment by the
     Partnership; and (v) the consummation of a minimum number of purchase
     transactions with other Casden affiliated partnerships. As of March 31,
     1998, the REIT had completed buy-out negotiations with a majority of the
     general partners of the local limited partnerships.

     A proxy is contemplated to be 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 transaction.

3.   NOTES PAYABLE

     Certain of the Partnership's investments involved purchases of partnership
     interests from partners who subsequently withdrew from the operating
     partnership. The Partnership is obligated for non-recourse notes payable of
     $8,669,743 to the sellers of the partnership interests, bearing interest at
     9.5 percent. Two notes payable totalling $1,500,000 bore interest at 9.5
     percent through December 31, 1994 and 12.5 percent thereafter, and the note
     holders accepted a reduced payment of $1,000,000 in full satisfaction of
     all obligations in 1997 in connection with the sale of the related
     property. The notes have principal maturity dates ranging from December
     1999 to December 2001 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 note of approximately
     $3,500,000 which was paid off from proceeds of the sale. The Partnership
     recognized an extraordinary gain of $2,149,096 from the forgiveness of the
     debt.

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

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


3.   NOTES PAYABLE (CONTINUED)

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

<TABLE>
<CAPTION>

                                                             
           Years Ending                          Accrued
            December 31,        Notes            Interest            Total
           -------------     -----------       -----------       -----------
<S>                          <C>               <C>               <C>        
               1998          $        --       $        --       $        --
               1999            7,669,743         8,714,054        16,383,797
               2000                   --                --                --
               2001            1,000,000         1,207,118         2,207,118
                             -----------       -----------       -----------

                             $ 8,669,743       $ 9,921,172       $18,590,915
                             ===========       ===========       ===========
</TABLE>

                                      
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.

     As of December 31, 1997, 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.

     The Partnership reimburses NAPICO for certain expenses. The reimbursement
     to NAPICO was $9,948 and $29,845 in 1996 and 1995, respectively, and is
     included in operating expenses.

     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.

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 

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

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


5.   INCOME TAXES (CONTINUED) 

     reporting purposes when the investment balance has been reduced to zero or
     to a negative amount equal to further capital contributions required.

6.   CONTINGENCIES

     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 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, $258,010, between the
     estimated nine-month equity in income and the actual 1997 year-to-date
     equity in loss has been recorded in the fourth quarter.



<PAGE>   54
                                                                        SCHEDULE

                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>

                                                            Year Ended December 31, 1997
                             -----------------------------------------------------------------------------------
                                                                  Cash
                                 Balance                         Distri-                              Balance
                                 January        Capital         butions           Equity in         December 31,
Limited Partnerships             1, 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>   55


                                                                        SCHEDULE
                                                                     (CONTINUED)
<TABLE>
<CAPTION>
                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                                             Year Ended December 31, 1996
                              ------------------------------------------------------------------------------------------------
                                                                          Cash
                               Balance                                    Distri-                                   Balance
                               January             Capital                butions             Equity in             December
Limited Partnerships           1, 1996           Contributions           Received            Income/(Loss)           31, 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>   56


                                                                      SCHEDULE 
                                                                     (CONTINUED)
<TABLE>
<CAPTION>
                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                                             Year Ended December 31, 1995
                              ------------------------------------------------------------------------------------------------
                                                                           Cash
                               Balance                                    Distri-                                    Balance
                              January 1,            Capital               butions              Equity in          December 31,
Limited Partnerships            1995              Contributions          Received             Income/(Loss)           1995
-------------------          -----------          -------------          ---------            -------------       ------------
<S>                          <C>                  <C>                   <C>                   <C>                  <C>
Bannock Arms                 $   490,588             $184,684            $(229,495)             $ 108,103          $   553,880

Berkeley Gardens                 497,349                                                          (78,037)             419,312

Cape La Croix                                           6,405               (6,405)

Cloverdale

Cloverleaf                                              6,517               (6,517)

Deep Lake Hermitage            1,189,101                                                         (131,745)           1,057,356

Evergreen Apts                 7,971,008                                   (77,702)               490,871            8,384,177

Friendship Arms                2,364,500                                   (35,183)                11,247            2,340,564

Jenny Lind Hall                                        45,504              (45,504)

Lancaster Heights                                      24,881              (24,881)                       

Locust House                   1,221,828                                   (16,897)               (67,708)           1,137,223

Midpark Towers                                        184,124             (184,124)

Montecito Apartments                                   23,641                                     (23,641)

Oxford Towers

Plaza Village                    799,566                                                         (221,295)           578,271

Round Barn Manor

Santa Fe Towers                                        95,250              (95,250)
 
Walnut Towers                                          69,618              (69,618)

Westwood Terrace                                       31,241              (31,241)
                             -----------             --------            ----------             ---------          -----------

                             $14,533,940             $671,865            $(822,817)             $  87,795          $14,470,783
                             ===========             ========            ==========             =========          ===========
</TABLE>

<PAGE>   57

                                                                        SCHEDULE
                                                                     (CONTINUED)


                            HOUSING PROGRAMS LIMITED
                       INVESTMENTS IN LIMITED PARTNERSHIPS
                               FOR THE YEARS ENDED
                        DECEMBER 31, 1997, 1996 AND 1995


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>   58

                                                                    SCHEDULE III


                            HOUSING PROGRAMS LIMITED
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                 OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
                         IN WHICH H P L HAS INVESTMENTS
                                DECEMBER 31, 1997

<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>
Bannock Arms                            66      $1,446,194     $   78,000         $ 2,865,472          $2,943,472        $1,289,421
  Boise, ID
Deep Lake Hermitage                    144               0              0                   0                   0                 0 
  Lake Villa, IL                       
Jenny Lind Hall                         78       1,397,894        111,000           2,729,647           2,840,647         1,254,345
  Springfield, MO
Lancaster Heights                      198       2,154,899        200,000           4,785,054           4,985,054         2,048,441
  Normal, IL                           
Midpark Towers                         202       4,108,425        532,593           8,729,209           9,261,802         4,114,933 
  Dallas, TX                           
Oxford House                           156       4,922,784        300,000           4,796,928           5,096,928         2,186,728
  Decatur, IL
Round Barn Manor                       156       5,209,567        200,000           5,213,709           5,413,709         2,258,651
  Champaign, IL
Santa Fe Towers                        252       5,945,987        316,724          11,480,545          11,797,269         5,267,139
  Overland Park, KS
Walnut Towers                           78       1,406,120         85,229           3,056,802           3,142,031         1,395,677
  Winfield, KS
Westwood Terrace                        97       2,924,494        109,200           4,262,787           4,371,987         2,560,115
  Moline, IL
Friendship Arms                        151       3,982,363        262,879           7,966,139           8,229,018         4,200,881
  Hyattsville, MO
Locust House                            99       2,153,134        201,113           4,642,884           4,843,997         2,542,472
  Westminster, MO
Berkeley Gardens                       132       1,465,671        149,071           3,849,967           3,999,038         2,393,325
  Martinsburg, WV
Cape La Croix                          125       1,374,327        169,000           2,484,615           2,653,615         1,171,807
  Cape Girardeau, MO
Cloverdale                             100         999,315        100,000           2,051,596           2,151,596           951,624
  Crawfordsville, IN
Cloverleaf                              94         916,339        123,000           1,927,274           2,050,274           905,390
  Indianapolis, IN
Evergreen Apts.                        330       8,483,030        617,369          15,149,027          15,766,396         6,627,588 
  Oshtemo, MI
Plaza Village                          228       3,328,432        369,700           7,040,956           7,410,656         4,639,761
  Woonsocket, RI
                                    ------      -----------    ----------         -----------         -----------       -----------
                                     2,686      $52,218,975    $3,924,878         $93,032,611         $96,957,489       $45,808,298
                                    ======      ===========    ==========         ===========         ===========       ===========
</TABLE>


<PAGE>   59
                                                                    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, 1997


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, 1995            $   4,284,878           $  97,585,326           $ 101,870,204

Net additions in 1995                          --                 543,225                 543,225
                                    -------------           -------------           -------------

Balance, December 31, 1995              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
                                    =============           =============           =============
</TABLE>

<PAGE>   60

                                                                    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, 1997

<TABLE>
<CAPTION>

                                      Buildings,
                                     Furnishings,
                                         And
                                      Equipment
                                    -----------
ACCUMULATED DEPRECIATION:

<S>                                 <C>        
Balance, January 1, 1995            $38,513,676

Net additions for 1995                3,239,884
                                    -----------

Balance, December 31, 1995           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
                                    ===========
</TABLE>


<PAGE>   61


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. NAPICO is a wholly-owned subsidiary of
Casden Investment Company, an affiliate of The Casden Company. 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, 68, 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, 46, 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, 52, Chairman of 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. Prior to
that, 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.

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.
<PAGE>   62

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, 54, 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. 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.

BOB SCHAFER, 56, Senior Vice President of Finance.

Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible
for the financial reporting function of the Company. Prior to this, he was a
Group and Division Controller at Bergen Brunswig for over eight years,
Controller at a Flintkote subsidiary for over four years, and Assistant
Controller at an electronics subsidiary of General Electric for two years. Mr.
Schafer is a member of the California Society of Certified Public Accountants.
He holds a Bachelor of Science degree in accounting from Woodbury University,
Los Angeles.

PATRICIA W. TOY, 68, 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, 37, 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.

ROCCO F. ANDRIOLA, 39, serves as President and Chief Financial Officer of
Housing Programs Corporation II and Managing Director of Lehman Brothers Inc. in
its Diversified Asset Group. He has held such position with Lehman since October
1996. Since joining Lehman in 1986, Mr. Andriola has been involved in a wide
range of restructuring and asset management activities involving real estate and
other direct investment transactions. From June 1991 through September 1996, Mr.
Andriola held the position of Senior Vice President in Lehman's Diversified
Asset Group. From June 1989 through May 1991, Mr. Andriola held the position of
First Vice President in Lehman's Capital Preservation and Restructuring Group.
From November 1986 through May 1989, Mr. Andriola held the position of Vice
President in the Corporate Transactions Group of Shearson Lehman Brothers,
Office of the General Counsel. From September 1982 through October 1986, Mr.
Andriola was employed by the law firm of Donovan Leisure Newton & Irvine as a
corporate and securities attorney. Mr. Andriola graduated summa cum laude from
Fordham University in 1979 with a 

<PAGE>   63





B.A. degree in Economics and Political Science. Mr. Andriola received a J.D.
degree and an LL.M degree in Corporate Law from New York University School of
Law in 1982 and 1986, respectively.

JOHN H. NG, 47, is a Vice President of Housing Programs Corporation II and Vice
President of Lehman Brothers Inc. He has been employed by Lehman since November
1977. He is an asset manager of the Diversified Asset Group of Lehman and has
held such position since 1985. From 1980 to 1985, Mr. Ng served as Senior
Financial Analyst in the Corporate Planning and Development Department and from
1977 to 1980 he was an analyst in the Controller's Department. Prior to joining
Lehman, he served as a Teaching Assistant in Finance and Economics at the
University of Minnesota. Mr. Ng received an M.B.A. with a concentration in
Corporate Finance from the University of Minnesota in 1977 and a B.A. magna cum
laude in Economics with a specialization in Monetary Economics from Moorhead
State University in 1975.

DOREEN ODELL, 38, Senior Vice President, has worked with the Diversified Asset
Group since June 1988. Ms. Odell graduated Phi Beta Kappa and received a B.A.
in Economics summa cum laude from Wellesley College in 1981. She received a M.S.
in Real Estate Development from the Massachusetts Institute of Technology in
1986. Prior to joining Lehman, Ms. Odell was involved in real estate
development in both the public and private sectors. As a development manager
with N.Y.C. Public Development Corporation, she structured joint ventures with
private developers. She also worked with a private development company, The
Harborside Corporation, evaluating real estate investments and development
projects. From 1981 to 1984, Ms. Odell was a construction loan officer with
Manufacturer's Hanover Trust Company.

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
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>   64



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 $509,806, $526,651 and $547,773 for the
three years ended December 31, 1997, 1996 and 1995, respectively.

The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $0, $9,948 and $29,845 in 1997, 1996 and 1995, respectively, and is
included in operating expenses.

An affiliate of NAPICO is the general partner in 9 of the limited partnerships
in which the Partnership has an investment, and another affiliate receives
property management fees of approximately 5 to 6 percent of the revenue from
five of these partnerships. The affiliate received property management fees of
$211,938, $244,827 and $234,903 in 1997, 1996 and 1995, 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.

A real estate investment trust organized by an affiliate of NAPICO has advised
the Partnership that it intends to make a proposal to purchase from the
Partnership certain of the real estate assets of the Partnership.

The REIT proposes to purchase such limited partner interests for cash, which it
plans to raise in connection with a private placement of its equity securities.
The purchase is subject to, among other things, (i) consummation of such
private placement by the REIT; (ii) the purchase of the general partner
interests in the local limited partnerships by the REIT; (iii) the approval of
HUD and certain state housing finance agencies; (iv) the consent of the limited
partners to the sale of the local limited partnership interests held for
investment by the partnership; and (v) the consummation of a minimum number of
purchase transactions with other Casden affiliated partnerships. As of March
31, 1998, the REIT had completed buy-out negotiations with a majority of the
general partners of the local limited partnerships.

<PAGE>   65



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, 1997 and 1996.

Statements of Operations for the years ended December 31, 1997, 1996 and 1995.

Statements of Partners' Equity (Deficiency) for the years ended December 31,
1997, 1996 and 1995.

Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995.

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,
1997, 1996 and 1995.

Schedule III - Real Estate and Accumulated Depreciation of Property Held by
Local Limited Parnterships, December 31, 1997.

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, 1997.


<PAGE>   66



                                   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/ BOB E. SCHAFER
--------------------------------------
Bob E. Schafer
Senior Vice President of Finance