UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

_X_  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the fiscal year ended December 31, 1997

                                       OR

____ TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                         Commission File Number 0-18491

                           CAPITAL MORTGAGE PLUS L.P.
             (Exact name of registrant as specified in its charter)

            Delaware                                             13-3502020
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

 625 Madison Avenue, New York, New York                             10022
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code: (212) 421-5333

Securities registered pursuant to Section 12(b) of the Act:

     None

Securities registered pursuant to Section 12(g) of the Act:

     Beneficial Assignment Certificates

     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 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. [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

     Registrant's  prospectus dated May 10, 1989, as supplemented  July 7, 1989,
January 8, 1990,  February 9, 1990, May 18, 1990, and October 24, 1990, as filed
with the Commission pursuant to Rules 424(b) and 424(c) of the Securities Act of
1933, but only to the extent expressly incorporated by reference in Parts I, II,
III and IV.

Index to exhibits may be found on page
Page 1 of



<PAGE>

                                     PART I

Item 1. Business.

General

Capital Mortgage Plus L.P. (the "Registrant") is a limited partnership which was
formed under the laws of the State of Delaware on November  23,  1988.  The sole
general  partner  of  the  Registrant  is  CIP  Associates,   Inc.,  a  Delaware
corporation  (the "General  Partner").  The General Partner manages and controls
the affairs of the Registrant.  See Item 10, Directors and Executive Officers of
the Registrant, below.

The  Registrant's  principal  investment  objectives  are to: (i)  preserve  and
protect the Registrant's  capital;  (ii) provide quarterly cash distributions of
adjusted cash from operations;  and (iii) provide additional  distributions from
additional  interest arising from  participations in the annual cash flow of the
developments  and/or  the  sale  or  refinancing  of a  development.  Due to the
depressed  state of the real  estate  market  in recent  years,  there can be no
assurance that all of the objectives can be achieved.

The Registrant has originated  federally  insured and co-insured  first mortgage
construction  and  permanent  loans   ("Mortgages")   to  finance   multi-family
residential  rental  properties   ("Developments")   developed  by  unaffiliated
entities.  All base  interest and initially at least 90% in the aggregate of the
principal  of the  Mortgages  in which the  Registrant  invests  are  insured or
coinsured by the Department of Housing and Urban Development ("HUD") and Related
Mortgage  Corporation ("RMC"), an affliate of the General Partner. The remaining
10% of the Registrant's portfolio is comprised of uninsured non-interest bearing
equity loans made directly to the same  developers as the Mortgages  for,  among
other  purposes,   defrayal  of  certain  specific  cash   requirements  of  the
properties.  The Registrant has made five mortgage loans in the aggregate amount
of  $26,158,190  and five  non-interest  bearing  equity loans in the  aggregate
amount of $3,062,135 in connection with five multi-family projects.

The  Registrant is engaged  solely in the business of investing in Mortgages and
equity loans;  therefore,  presentation of industry  segment  information is not
applicable.

The  following  table  lists the  mortgage  loans  and  equity  loans  which the
Registrant holds as of March 3, 1998:

<TABLE>
<CAPTION>
                                                 Original                    Interest
                                                 Mortgage                    Rate on
                                   Date of         Loan       Equity Loan   Mortgage
Project               Location    Investment    Amount (2)     Amount(10)   Loan(1)(9)   Term(8)
-------               --------    ----------    ----------     ----------   ----------   -------
<S>                   <C>           <C>         <C>            <C>           <C>        <C>     
Mortenson Manor       Ames,                                                   8.43%-
Apartments (3)        Iowa          8/31/90     $ 4,974,090    $  577,885      9.4%     40 years
Windemere             Wichita,                                                9.55%-
Apartments (4)        Kansas        9/28/90       8,110,300       736,550    10.64%     40 years
Fieldcrest            Dothan,                                                 8.75%-
III Apartments (5)    Alabama       8/27/91       3,343,700       383,300    10.11%     40 years
Holly Ridge II        Gresham,
Apartments (6)        Oregon        3/16/93       5,310,100       684,400     9.89%     40 years
Willow Trace          Tuscaloosa,
Apartments (7)        Alabama       6/18/93       4,420,000       680,00     9.657%     35 years
                                                -----------    ----------
                                                $26,158,190    $3,062,135
                                                ===========    ==========
</TABLE>


                                      -2-

<PAGE>

(1) The minimum  interest rate shown above includes  interest  payable under the
first mortgage note plus additional  interest payable pursuant to the terms of a
Limited   Operating   Guaranty   agreement   for   Fieldcrest   III   Apartments
("Fieldcrest")  and the Additional  Interest  Guaranty  agreements for Mortenson
Manor Apartments ("Mortenson"),  Windemere Apartments ("Windemere"), Holly Ridge
II Apartments ("Holly Ridge") and Willow Trace Apartments ("Willow Trace").

(2) The Mortenson and Windemere  mortgage  loans are  co-insured by HUD and RMC.
The Fieldcrest, Holly Ridge and Willow Trace mortgage loans are fully insured by
HUD. As of March 9, 1998, all loan amounts have been disbursed.

(3) Cost  certification on Mortenson  occurred in November 1991 and amortization
of the loan began during  September  1991.  The property was 100% occupied as of
March 1, 1998. The property achieved Final Endorsement during February 1992. The
Registrant  has  received  approximately  $ 205,900 as of December 31, 1997 from
Mortenson  representing  principal payments of the mortgage loan. The operations
of Mortenson have not been able to support the payment of the required interest.
Accordingly,   effective   January  1,  1995  the  Registrant   entered  into  a
modification  agreement  whereby the annual  yield was  modified to a cumulative
yield of 9.4% per annum from the  Permanent  Loan Date and the Default  Rate was
redefined as 8.43% per annum.  The  modification  agreement  also  provided that
pre-1995 accrued interest shall not accrue further interest on and after January
1,  1995,  and  shall  be paid  solely  out of  Capital  Proceeds  prior  to the
calculation of participation  percentages.  Mortenson also agreed to subordinate
the  management  fee to the Default  Rate.  Since the  Guaranteed  Rate Guaranty
Period expired, pursuant to its terms, payment of interest in excess of 8.43% is
contingent upon the amount of the  distributable  cash,  which is dependent upon
the future results of operations, or net proceeds of the capital transactions of
the  mortgagor.  In addition to the interest  rate during the  post-construction
period,  the  Registrant  will be entitled to 30% of cash flow  remaining  after
payment of 9.4% interest and accrued interest,  if any, and certain amounts from
sale  or  refinancing  proceeds.  Default  Interest  payments  of  approximately
$563,000 for the years ended  December  31, 1993 to 1997 have not been  received
and, as a result,  an allowance for  uncollectability  amounted to approximately
$538,000 and $442,000 at December 31, 1997 and 1996, respectively.

(4) Cost  certification  on Windemere  occurred in June 1992 and amortization of
the loan began the same  month.  The  property  was 99%  occupied as of March 1,
1998.  Windemere achieved Final Endorsement during July 1992. The Registrant has
received   approximately  $194,400  as  of  December  31,  1997  from  Windemere
representing  principal  payments of the mortgage loan. The interest rate during
the  Guaranteed  Rate  Guaranty  period was 10.64%.  Since the  Guaranteed  Rate
Guaranty Period expired at the end of August 1993, payment of interest in excess
of 9.55% is  contingent  upon the  amount of the  distributable  cash,  which is
dependent  upon the future  results of  operations,  or net  proceeds of capital
transactions  of the  mortgagor.  A Default  Interest  payment of  approximately
$65,000 for the period July 1997 to December 1997 expected to be received during
the  second  quarter  of 1998.  In  addition  to the  interest  rate  during the
post-construction  period,  the Registrant  will be entitled to 30% of cash flow
remaining  after payment of 10.64%  interest and accrued  interest,  if any, and
certain amounts from sale or refinancing proceeds.

(5) Cost  certification on Fieldcrest  occurred in August 1992. The property was
92% occupied as of March 1, 1998. Final endorsement was achieved during November
1992 and  amortization  of the loan began the same  month.  The  Registrant  has
received   approximately  $63,700  as  of  December  31,  1997  from  Fieldcrest
representing  principal  payments of the mortgage  loan. The mortgage loan has a
term of 40 years and  bears  interest  at a rate  ranging  from  8.75% to 10.11%
during the  post-construction  period of which  8.75% is  insured  by HUD.  As a
result,  any amount of the Default Rate of 8.75% is contingent on the property's
ability  to  produce  cash  flow in excess of this  amount.  A Default  Interest
payment of approximately  $2,300 for the period January 1997 to December 1997 is
expected to be received  during the second  quarter of




                                      -3-

<PAGE>

1998. In addition to the interest rate during the post-construction  period, the
Registrant  will be  entitled to receive  payment of 30% of cash flow  remaining
after  payment of 10.11%  interest  and accrued  interest,  if any,  and certain
amounts from sale or refinancing proceeds.

(6) Cost  certification on Holly Ridge occurred in July 1994 and amortization of
the loan began during  September 1994. The property was 97% occupied as of March
1, 1998. The fully insured 221(d)(4) mortgage loan is for $5,310,100.  An equity
loan of $684,400 was also advanced to the borrower.  The Registrant has received
approximately  $64,900 as of December  31,  1997 from Holly  Ridge  representing
principal  payments of the mortgage  loan.  The  mortgage  loan has a term of 40
years and bears interest at 8.25% to 9.89% during the  post-construction  period
of which 8.25% is insured by HUD. In  addition to the  interest  rate during the
post-construction  period,  the Registrant  will be entitled to 30% of cash flow
remaining  after  payment of 9.89%  interest and accrued  interest,  if any, and
certain amounts from sale or refinancing proceeds. Payments at the rate of 9.89%
are  guaranteed  by the  developer  for three years after  September  1, 1994. A
Guaranteed Interest payment of approximately $51,000 for the period July 1997 to
December 1997 is expected to be received during the second quarter of 1998.

(7) On June 18, 1993,  the  Registrant  closed the investment in Willow Trace, a
152 unit project, located in Tuscaloosa,  Alabama. The property was 98% occupied
as of March 1, 1998.  The 223(f)  mortgage  loan in the amount of  $4,420,000 is
fully  insured by HUD.  The  Registrant  provided  an  additional  $680,000 as a
non-interest  bearing equity loan to the developer.  The Registrant has received
approximately  $112,300 as of December 31, 1997 from Willow  Trace  representing
principal  payments of the mortgage  loan.  The  mortgage  loan has a term of 35
years and bears interest at 8.37% to 9.65% during the permanent  period of which
8.37% is insured by HUD. In addition to the interest  rate during the  permanent
period,  the Registrant is entitled to 30% of cash flow remaining  after payment
of 9.657% interest and accrued  interest,  if any, and certain amounts from sale
or refinancing proceeds. A Default Interest payment of approximately $28,000 for
the period  July 1997 to December  1997 is  expected  to be received  during the
second  quarter  of  1997.  In  addition,  the  Registrant  expects  to  receive
approximately  $15,000  during the second quarter of 1998,  representing  30% of
cash flow after payment of Default Interest.  Payments at the rate of 9.657% are
guaranteed by the developer for three years after June 18, 1993.

(8)  All  loans  have  call  provisions  effective  ten  years  following  final
endorsement  and a grace  period.  The  Registrant,  in  order to  enforce  such
provisions,  would be required to terminate the mortgage insurance contract with
FHA (and/or the coinsurer) not later than the  accelerated  payment date.  Since
the  exercise  of such option  would be at the  Registrant's  discretion,  it is
intended to be exercised only where the Registrant  determines that the value of
the  Development  has  increased by an amount which would  justify  accelerating
payment in full and assuming the risks of foreclosure if the mortgagor failed to
make the accelerated  payment.  The Registrant  presently  expects to dispose of
such loans within 10 to 15 years after acquisition.

(9) Construction has been completed on all properties.

(10) Equity loans are non-interest bearing.



                                      -4-

<PAGE>

Following is the interest  income from  mortgage  loans as a percentage of total
revenues.

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

Mortenson                    16%                  16%                 16%
Windemere                    31                   31                  31
Fieldcrest                   13                   12                  13
Holly Ridge                  21                   21                  20
Willow Trace                 18                   18                  17

Competition

The  Registrant's  business is affected  by  competition  to the extent that the
underlying properties from which it is to derive interest and principal payments
may be subject to competition from neighboring  properties.  In particular,  the
receipt of additional interest and the repayment of the equity loans, neither of
which is insured or guaranteed by government or  quasi-government  agencies,  is
dependent upon the economic performance of the underlying properties which could
be adversely affected by competitive conditions.

Employees

The Registrant does not directly  employ anyone.  All services are performed for
the Registrant by its General  Partner and its  affiliates.  The General Partner
receives  compensation  in connection with such activities as set forth in Items
11 and 13. In  addition,  the  Registrant  reimburses  the  General  Partner and
certain  of  its  affiliates  for  expenses  incurred  in  connection  with  the
performance by their employees of services for the Registrant in accordance with
the Partnership Agreement.

Item 2. Properties.

The Registrant does not own or lease any property.

Item 3. Legal Proceedings.

There are no  material  legal  proceedings  pending  against  or  involving  the
Registrant.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were  submitted to a vote of security  holders during the fiscal year
covered by this report through the solicitation of proxies or otherwise.

                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Security Holder
        Matters.

As of December 31, 1997,  the Registrant  had issued and  outstanding  1,836,660
limited  partnership   interests   ("Limited   Partnership   Interests"),   each
representing a $20 capital  contribution to the Registrant,  for aggregate gross
proceeds of $36,733,200.  All of the issued and outstanding  Limited Partnership
Interests  have been issued to Related FI BUC$  Associates,  Inc. (the "Assignor
Limited Partner"), which has issued Beneficial Assignment Certificates ("BACs").
Each BAC  represents  all of the economic  and  virtually  all of the  ownership
rights  attributable  to a Limited  Partnership  Interest  held by the  Assignor
Limited Partner.  BACs may be converted into Limited Partnership Interests at no
cost to the holder, but Limited  Partnership  Interests are not convertible back
into BACs. There is currently no established  public trading market for BACs and
it is not  anticipated  that BACs will be listed for  trading on any  securities
exchange or included for quotation on the Nasdaq National Market.



                                      -5-

<PAGE>

All of the Registrant's general partnership interests, representing an aggregate
capital contribution of $1,000, are held by the General Partner.

There are no material legal restrictions upon the Registrant's present or future
ability  to  make  distributions  in  accordance  with  the  provisions  of  the
Registrant's Amended and Restated Agreement of Limited Partnership.

Distribution Information

Cash  distributions per BAC made to the limited partners or BACs holders for the
following quarters in 1997, 1996 and 1995 were as follows:

           1st Quarter        2nd Quarter         3rd Quarter        4th Quarter
           -----------        -----------         -----------        -----------
1997         .3452               .3490              .3529               .3529
1996         .3452               .3490              .3529               .3529
1995         .3452               .3490              .3529               .3529

Quarterly  distributions  are made 45 days  following  the close of the calendar
quarter.

A total of $7,713,991 was distributed to the limited partners or BACs holders in
1997,  1996 and 1995.  The  Registrant  utilized  the original  working  capital
reserve,  in the  aggregate  amount of  $477,532,  for  distributions  from 1989
through  1991,  which is  considered  to be a return of capital.  An  additional
working capital reserve of  approximately  $2,800,000 was formed from uninvested
offering  proceeds,  a portion  of which was  applied to pay a part of the 1997,
1996 and 1995  distributions  (which is  considered  to be a return of capital).
Approximately  $706,000,  $897,000 and $669,000 paid to the limited  partners or
BACs  holders  in each of the years  ended  December  31,  1997,  1996 and 1995,
respectively, represented a return of capital on a generally accepted accounting
principles  (GAAP) basis (the return of capital on a GAAP basis is calculated as
BACs holder  distributions  less net income allocated to the limited partners or
BACs holders).  A total of $157,428 was  distributed  to the General  Partner in
1997, 1996 and 1995.

Since contingent interest on some of the mortgage loans is paid semi-annually, a
portion of the 1997 fourth quarter distribution (of which approximately $648,000
and $13,000 was paid to BACs holders and the General Partner,  respectively) has
been funded from cash provided  from earnings  during the period from January 1,
1998 through the distribution date,  February 14, 1998. See Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations,  for a
discussion  of the  effect of fee  deferments  and the  expiration  of the final
Guaranteed Rate Guaranty Period on the distributions.




                                      -6-

<PAGE>

Item 6.  Selected Financial Data.

The  information  set  forth  below  presents  selected  financial  data  of the
Registrant.  Additional  financial  information  is set  forth  in  the  audited
financial statements and footnotes thereto contained in Item 8 hereof.

<TABLE>
<CAPTION>
                                                  Year ended December 31,
                            -------------------------------------------------------------------

OPERATIONS                      1997          1996         1995           1994         1993
                            -----------   -----------   -----------   -----------   -----------
<S>                         <C>           <C>           <C>           <C>           <C>        
Interest income
Mortgage loans              $ 2,471,273   $ 2,423,058   $ 2,448,891   $ 2,477,238   $ 2,161,784
Temporary investments            14,658        39,064        64,534        57,421       211,561
REMIC certificates                    0             0             0             0             0
Other income                      2,252         2,202         1,952         2,002         1,604
                            -----------   -----------   -----------   -----------   -----------

Total revenues                2,488,183     2,464,324     2,515,377     2,536,661     2,374,949

Operating expenses              584,796       598,701       574,172       579,336       536,559

Provision for bad debts          96,079       157,138             0       285,000             0
                            -----------   -----------   -----------   -----------   -----------

Total Expenses                  680,875       755,839       574,172     1,672,325       536,559

Net income                  $ 1,807,308   $ 1,708,485   $ 1,941,205   $ 1,672,325   $ 1,838,390
                            ===========   ===========   ===========   ===========   ===========

Net income per BAC          $      0.96   $      0.91   $      1.04   $      0.89   $      0.98
                            ===========   ===========   ===========   ===========   ===========

                                                         December 31,
                            -------------------------------------------------------------------
FINANCIAL POSITION              1997          1996          1995          1994          1993
                            -----------   -----------   -----------   -----------   -----------

Total assets                $28,597,517   $29,292,812   $30,383,120   $30,973,591   $31,989,902
                            ===========   ===========   ===========   ===========   ===========

CASH DISTRIBUTIONS

Distributions per BAC       $      1.40   $      1.40   $      1.40   $      1.40   $      1.40
                            ===========   ===========   ===========   ===========   ===========
</TABLE>





                                      -7-

<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Capital Resources and Liquidity

Sources of Registrant  funds  included  interest  earned on (1)  investments  in
mortgage loans (see also Item 1, Business) and (2) the working capital reserve.

During  the year ended  December  31,  1997,  cash and cash  equivalents  of the
Registrant  decreased  by  approximately  $350,000.  Cash  provided by operating
activities and  collections  of principal on mortgage  loans were  approximately
$2,130,000  and  $145,000,  respectively,  and  distributions  paid to  partners
approximated $2,624,000. Included in the adjustments to reconcile the net income
to cash flow from operations is amortization of approximately $279,000.

In addition,  the General Partner has allowed the accrual without payment of the
partnership  management  fee through 1992 and for the Quarter ended December 31,
1997  in  aggregate   amounts  equal  to  approximately   $268,000  and  38,000,
respectively.  Since 1992,  substantially  all  partnership  management fees and
expense  reimbursements  have been paid. See Note 4-Related Parties, in Notes to
Financial  Statements,  included in Item 8 below.  In future years, a portion of
the  working  capital  reserve may be used to pay accrued and unpaid fees and/or
distributions in the event that cash generated from operations is not sufficient
to maintain current  distribution  levels and repay such fees.  Distributions in
1997 and prior  years have been  supplemented  by a portion  of working  capital
reserves.

The Registrant  anticipates  that cash generated from operations and invested in
temporary investments will be sufficient to cover anticipated expenses in 1998.

Distributions of  approximately  $2,571,000 made to the limited partners or BACs
holders  for each of the years ended  December  31, 1997 and 1996 were made from
adjusted cash flow from operations and, to a lesser extent, from working capital
reserves,  which is considered to be a return of capital.  Approximately $52,000
was  distributed to the General Partner for each of the years ended December 31,
1997 and 1996.

The  level of  future  distributions  will  depend  on  results  of  operations.
Furthermore,  the expiration of the final  Guaranteed  Rate Guaranty  Periods in
1997 (see Item 1, Business) may have an adverse  affect on future  distributions
if contingent  interest is not realized on the mortgage loans.  Beginning in the
first  quarter  of 1998  the  Partnerships  distribution  policy  will  call for
quarterly distributions which reflect collections of interest payments.

Management is not aware of any trends or events,  commitments  or  uncertainties
that will impact  liquidity  in a material  way.  Management  believes  the only
impact would be from laws that have not yet been adopted.  All base interest and
the principal of the  Registrant's  investments in mortgage loans are insured or
co-insured  by HUD and a private  mortgage  lender (which is an affiliate of the
General Partner). The Registrant's investments in uninsured non-interest bearing
equity loans (which represent  approximately 10% of the Registrant's  portfolio)
are secured by a Registrant  interest in  properties  which are  diversified  by
location so that if one area of the  counrty is  experiencing  downturns  in the
economy,  the remaining  properties may be experiencing  upswings.  However, the
geographic  diversification  of the portfolio may not protect  against a general
downturn in the national economy.




                                      -8-

<PAGE>

Results of Operations

1997 vs. 1996

Results of operations  for the years ended  December 31, 1997 and 1996 consisted
primarily  of  interest  income  of  approximately  $2,471,000  and  $2,423,000,
respectively, earned from investments in mortgage loans.

Interest income from mortgage loans increased approximately $48,000 for the year
ended  December 31, 1997 as compared to 1996  primarily due to the receipt of an
annual yield payment form Fieldcrest in 1997.

Interest  income from  temporary  investments  decreased  approximately  $24,000
primarily due to lower cash and cash equivalents balances.

Total expenses, excluding provision for bad debts, remained fairly constant with
a decrease of  approximately 2% for the year ended December 31, 1997 as compared
to 1996.

A provision for bad debts of approximately  $96,079 and $157,000 was charged for
the year ending  December  31,  1997 and 1996,  respectively,  representing  the
1995-1997 Guaranteed Interest due from Mortenson.

1996 vs. 1995

Results of operations  for the years ended  December 31, 1996 and 1995 consisted
primarily  of  interest  income  of  approximately  $2,423,000  and  $2,449,000,
respectively, earned from investments in mortgage loans.

Interest  income from mortgage loans remained fairly constant for the year ended
December  31,  1996  as  compared  to  1995.   Interest  income  from  temporary
investments  decreased  approximately  $25,000  for  1996  as  compared  to 1995
primarily due to lower cash and cash equivalents balances.

General and  administrative  expenses-related  parties  increased  approximately
$25,000 for the year ended  December 31, 1996 as compared to 1995  primarily due
to higher expense  reimbursements  to the General  Partner in 1996 as well as an
underaccrual of such reimbursements at December 31, 1995.

A provision  for bad debts of  approximately  $157,000  was charged for the year
ending December 31, 1996 representing the 1996 and 1995 Guaranteed  Interest due
from Mortenson.

Recent Financial Accounting Standards

The  Financial  Accounting  Standards  Board has  recently  issued  several  new
accounting  pronouncements.  Statement No. 128, "Earnings per Share" establishes
standards for computing and  presenting  earnings per share.  Statement No. 129,
"Disclosure of Information about Capital  Structure"  establishes  standards for
disclosing  information  about an entity's  capital  structure.  The adoption of
these  standards  in 1997 has not  materially  affected the  Company's  reported
operating results, per share amounts, financial position or cash flows.

In June 1997, SFAS No. 130,  Reporting  Comprehensive  Income, and SFAS No. 131,
Disclosures  about  Segments  of an  Enterprise  and Related  Information,  were
issued.  SFAS  No.  130  establishes  standards  for  reporting  and  displaying
comprehensive  income  and  its  components  in a  financial  statement  that is
displayed   with   the  same   prominence   as   other   financial   statements.
Reclassification  of  financial  statements  for earlier  periods,  provided for
comparative purposes,  is required.  The statement also requires the accumulated
balance of other comprehensive  



                                      -9-

<PAGE>

income to be displayed  separately from retained earnings and additional paid-in
capital in the equity section of the statement of financial position.

SFAS No. 131  establishes  standards for reporting  information  about operating
segments in annual and interim  financial  statements.  Operating  segments  are
defined  as  components  of  an  enterprise   about  which  separate   financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance.  Categories  required to be reported as well as  reconciled  to the
financial  statements are segment profit or loss,  certain  specific revenue and
expense items,  and segment  assets.  SFAS No. 130 and No. 131 are effective for
fiscal years beginning after December 15, 1997.

Both SFAS No. 130 and 131 are disclosure related only and therefore will have no
impact on the Company's financial position or results of operations.

Year 2000 Compliance

As the year  2000  approaches,  an issue  has  emerged  regarding  how  existing
application  software  programs and operating  systems can accommodate this date
value.  Failure to adequately address this issue could have potentially  serious
repercussions.  The  Advisor is in the  process of  working  with the  Company's
service  providers to prepare for the year 2000. Based on information  currently
available,  the Company does not expect that it will incur significant operating
expenses or be required to incur material costs to be year 2000 compliant.






                                      -10-
<PAGE>

Item 8. Financial Statements and Supplementary Data.

                                                                            Page
                                                                            ----
(a)1.   Financial Statements

        Independent Auditors' Report                                         12

        Statements of Financial Condition as of December 31, 1997            
        and 1996                                                             13

        Statements of Income for the years ended December 31, 1997, 1996
        and 1995                                                             14

        Statements of Changes in Partners' Capital (Deficit) 
        for the years ended December 31, 1997, 1996 and 1995                 15

        Statements of Cash Flows for the years ended 
        December 31, 1997, 1996 and 1995                                     16

        Notes to Financial Statements                                        17





                                      -11-

<PAGE>

                          INDEPENDENT AUDITORS' REPORT




To the Partners of
Capital Mortgage Plus L.P.



We have audited the  accompanying  statement  of financial  condition of Capital
Mortgage Plus L.P. (a Delaware limited  partnership) as of December 31, 1997 and
1996  and the  related  statements  of  income,  changes  in  partners'  capital
(deficit)  and cash flows for each of the three years ended  December  31, 1997.
These financial  statements are the responsibility of the General Partners.  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.  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 the
General  Partners,  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 Capital Mortgage Plus L.P. as
of December 31, 1997 and 1996,  and the results of its  operations  and its cash
flows for each of the three years ended  December  31, 1997 in  conformity  with
generally accepted accounting principles.




Boston, Massachusetts                               REZNICK, FEDDER & SILVERMAN
January 29, 1998





                                      -12-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                        STATEMENTS OF FINANCIAL CONDITION

                                     ASSETS

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                    ----------------------------
                                                                         1997           1996
                                                                    ------------    ------------
<S>                                                                 <C>             <C>         
Investments in mortgage loans (Note 3)                              $ 27,085,493    $ 27,485,450
Cash and cash equivalents                                                217,902         567,460
Accrued interest receivable (net of allowance
  of $538,217 and $442,138, respectively)                                443,267         365,663
Loan origination costs (net of accumulated
  amortization of $141,883 and $118,499, respectively)                   850,855         874,239
                                                                    ------------    ------------

Total Assets                                                        $ 28,597,517    $ 29,292,812
                                                                    ============    ============

                        LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
  Accounts payable and other liabilities                            $     46,446    $     27,704
  Due to general partner and affiliates (Note 4)                         400,298         297,828
                                                                    ------------    ------------

Total liabilities                                                        446,744         325,532
                                                                    ------------    ------------

Partners' capital (deficit):
  Limited Partners (1,836,660 BACs issued
   and outstanding) (Note 1)                                          28,256,354      29,056,531
  General Partner                                                       (105,581)        (89,251)
                                                                    ------------    ------------

Total partners' capital                                               28,150,773      28,967,280
                                                                    ------------    ------------

Total Liabilities and Partners' Capital                             $ 28,597,517    $ 29,292,812
                                                                    ============    ============
</TABLE>

See accompanying notes to financial statements.




                                      -13-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                   Years Ended December 31,
                                        ----------------------------------------
                                           1997           1996           1995
                                        ----------     ----------     ----------
<S>                                     <C>            <C>            <C>       
Revenues:

  Interest income:
   Mortgage loans (Note 3)              $2,471,273     $2,423,058     $2,448,891
   Temporary investments                    14,658         39,064         64,534
  Other income                               2,252          2,202          1,952
                                        ----------     ----------     ----------

   Total revenues                        2,488,183      2,464,324      2,515,377
                                        ----------     ----------     ----------

Expenses:

  General and administrative                88,408         81,012         81,659
  General and administrative-
   related parties (Note 4)                216,208        237,509        212,333
  Provision for bad debts                   96,079        157,138              0
  Amortization                             280,180        280,180        280,180
                                        ----------     ----------     ----------

   Total expenses                          680,875        755,839        574,172
                                        ----------     ----------     ----------

   Net income                           $1,807,308     $1,708,485     $1,941,205
                                        ==========     ==========     ==========

Net income per BAC                      $     0.96     $     0.91     $     1.04
                                        ==========     ==========     ==========
</TABLE>





See accompanying notes to financial statements.

                                      -14-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995



<TABLE>
<CAPTION>
                                                                     Limited        General
                                                      Total         Partners        Partner
                                                  ------------    ------------    ------------

<S>                                               <C>             <C>             <C>          
Partners' capital (deficit) - January 1, 1995     $ 30,565,194    $ 30,622,487    $    (57,293)
Net income                                           1,941,205       1,902,381          38,824
Distributions                                       (2,623,789)     (2,571,313)        (52,476)
                                                  ------------    ------------    ------------

Partners' capital (deficit) - December 31, 1995     29,882,610      29,953,555         (70,945)
Net income                                           1,708,485       1,674,315          34,170
Distributions                                       (2,623,815)     (2,571,339)        (52,476)
                                                  ------------    ------------    ------------

Partners' capital (deficit) - December 31, 1996     28,967,280      29,056,531         (89,251)
Net income                                           1,807,308       1,771,162          36,146
Distributions                                       (2,623,815)     (2,571,339)        (52,476)
                                                  ------------    ------------    ------------

Partners' capital (deficit) - December 31, 1997   $ 28,150,773    $ 28,256,354    $   (105,581)
                                                  ============    ============    ============
</TABLE>



See accompanying notes to financial statements.




                                      -15-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                        -----------------------------------------
                                                            1997           1996           1995
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>        
Cash flows from operating activities:
  Net income                                            $ 1,807,308    $ 1,708,485    $ 1,941,205

  Adjustments  to  reconcile  net  income  to net
   cash  provided  by  operating activities:
    Provision for bad debts                                  96,079        157,138              0
    Amortization                                            280,180        280,180        280,180
    Amortization of interest rate buydown                    (1,452)        (1,452)        (1,452)
    Changes in operating assets and liabilities:
      Increase in other assets                             (173,683)      (130,290)       (42,571)
      Increase (decrease) in accounts payable
       and other liabilities                                 18,743         (5,775)         3,479
      Increase (decrease) in due to general partner
       and affiliates                                       102,470       (169,203)        88,634
                                                        -----------    -----------    -----------
   Total adjustments                                        322,337        130,598        328,270
                                                        -----------    -----------    -----------

  Net cash provided by operating activities               2,129,645      1,839,083      2,269,475
                                                        -----------    -----------    -----------

Cash flows from investing activities:
  Investments in loans                                            0              0       (430,578)
  Receipt of principal on mortgage loans                    144,612        133,829        125,302
                                                        -----------    -----------    -----------

  Net cash provided by (used in) investing activities       144,612        133,829       (305,276)
                                                        -----------    -----------    -----------

Cash flows from financing activities:
  Distributions to partners                              (2,623,815)    (2,623,815)    (2,623,789)
                                                        -----------    -----------    -----------

Net decrease in cash and cash equivalents                  (349,558)      (650,903)      (659,590)

Cash and cash equivalents at beginning of year              567,460      1,218,363      1,877,953
                                                        -----------    -----------    -----------

Cash and cash equivalents at end of year                $   217,902    $   567,460    $ 1,218,363
                                                        ===========    ===========    ===========
</TABLE>


See accompanying notes to financial statements.




                                      -16-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 AND 1995

NOTE 1 - General

Capital Mortgage Plus L.P., a Delaware limited  partnership (the  "Partnership")
commenced  a public  offering  (the  "Offering")  on May 10,  1989 of  5,000,000
($100,000,000)   Beneficial   Assignment   Certificates   ("BACs")  representing
assignments of limited partnership  interests.  The BACs represent an assignment
of all of the economic and virtually all of the ownership rights attributable to
the limited  partnership  interests  in the  Partnership.  The BACs holders have
virtually the same rights and, for all practical purposes,  are limited partners
of the Partnership.

Pursuant to the Offering, the Partnership received $36,733,200 of gross proceeds
from the BACs  holders  representing  1,836,660  BACs.  The  final  close of the
Offering  occurred  on  May  23,  1991  and  no  further  issuance  of  BACs  is
anticipated.

The  Partnership  was  organized  on November 23, 1988 and will  continue  until
December  31,  2041  unless  terminated  sooner  under  the  provisions  of  its
Partnership Agreement.

The general  partner of the  Partnership  is CIP  Associates,  Inc.,  a Delaware
corporation (the "General  Partner").  Related FI BUC$  Associates,  Inc. is the
Assignor Limited Partner of the Partnership. CIP Associates, Inc. and Related FI
BUC$ Associates, Inc. are under substantially common ownership.

The  Partnership  was  formed  to  invest  in  insured  or  guaranteed  mortgage
investments.  The  Partnership has invested in first mortgage  construction  and
permanent  loans  ("Mortgages")  to  finance   multifamily   residential  rental
properties ("Developments") developed by unaffiliated entities. After an initial
period,  a  substantial  portion of the  Mortgages  is  expected  to provide for
additional  interest based on the annual cash flow from the Developments and the
proceeds of  prepayments,  sales or other  dispositions.  All base  interest and
initially at least 90% of the principal of the Mortgages is insured or coinsured
by the  Department  of  Housing  and  Urban  Development  ("HUD")  and a private
mortgage lender (which is an affiliate of the General Partner).  The Partnership
has also  invested in uninsured  equity  loans made  directly to  developers  of
developments on which the Partnership holds a first mortgage.

Net income and  distributions of the Partnership are allocated 2% to the General
Partner  and 98% to the  limited  partners,  until  the  limited  partners  have
received an 11% per annum non-cumulative non-compounded return on their adjusted
contributions  as defined  in the  Amended  and  Restated  Agreement  of Limited
Partnership.  Thereafter,  net income and distributions will be allocated 90% to
the limited partners and 10% to the General Partner.

The distributions per BAC were $1.40 for 1997, 1996 and 1995. The 1997, 1996 and
1995  distributions  were made from adjusted cash flow from  operations and to a
lesser  extent  were  supplemented  from  working  capital  reserves,  which was
considered to be a return of capital.  The General Partner has waived or allowed
the accrual without payment of certain fees. See Note 4-Related Parties.


NOTE 2 - Accounting Policies

a)  Basis of Accounting

The books and records of the  Partnership are maintained on the accrual basis of
accounting in accordance with generally accepted accounting principles ("GAAP").



                                      -17-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 AND 1995

The  preparation  of financial  statements in conformity  with GAAP requires the
General  Partner to make  estimates  and  assumptions  that affect the  reported
amounts of assets and  liabilities  and the disclosure of contingent  assets and
liabilities  at the date of the  financial  statements  as well as the  reported
amounts of revenues and expenses  during the reporting  period.  Actual  results
could differ from those estimates.

Costs incurred to organize the  Partnership,  including but not limited to legal
and accounting,  were considered  deferred  organization costs. These costs were
capitalized and were amortized over a 60 month period.

Acquisition  expenses  incurred for the  investment of mortgage  loans have been
capitalized  and are  included  in  loan  origination  costs,  which  are  being
amortized  over the average  expected  lives of the  respective  mortgages  when
acquired.

The equity loans are considered to be premiums paid to obtain the mortgage loans
and are  being  amortized  over the  average  expected  lives of the  respective
mortgages.

Interest  rate  buydowns are being  amortized as an  adjustment to the effective
interest rate over the average expected lives of the respective mortgages.

b)  Cash and Cash Equivalents

Cash and cash equivalents  include temporary  investments with original maturity
dates of less than 3 months when  acquired  and are carried at cost plus accrued
interest, which approximates market.

c)  Income Taxes

The  Partnership  is not  required to provide  for, or pay,  any federal  income
taxes.  Income tax attributes  that arise from its operation are passed directly
to the individual  partners.  The  Partnership may be subject to state and local
taxes in jurisdictions in which it operates.

d)  Reclassification

Certain balances have been  reclassified  from the prior years to conform to the
current year's presentation.

e) New Pronouncements


                                      -18-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 AND 1995


The  Financial  Accounting  Standards  Board has  recently  issued  several  new
accounting  pronouncements.  Statement No. 128, "Earnings per Share" establishes
standards for computing and  presenting  earnings per share.  Statement No. 129,
"Disclosure of Information about Capital  Structure"  establishes  standards for
disclosing  information  about an entity's  capital  structure.  The adoption of
these  standards  in 1997 has not  materially  affected the  Company's  reported
operating results, per share amounts, financial position or cash flows.

In June 1997, SFAS No. 130,  Reporting  Comprehensive  Income, and SFAS No. 131,
Disclosures  about  Segments  of an  Enterprise  and Related  Information,  were
issued.  SFAS  No.  130  establishes  standards  for  reporting  and  displaying
comprehensive  income  and  its  components  in a  financial  statement  that is
displayed   with   the  same   prominence   as   other   financial   statements.
Reclassification  of  financial  statements  for earlier  periods,  provided for
comparative purposes,  is required.  The statement also requires the accumulated
balance of other comprehensive  income to be displayed  separately from retained
earnings and additional  paid-in  capital in the equity section of the statement
of financial position.

SFAS No. 131  establishes  standards for reporting  information  about operating
segments in annual and interim  financial  statements.  Operating  segments  are
defined  as  components  of  an  enterprise   about  which  separate   financial
information  is  available  that is evaluated  regularly by the chief  operating
decision  maker  in  deciding  how  to  allocate   resources  and  in  assessing
performance.  Categories  required to be reported as well as  reconciled  to the
financial  statements are segment profit or loss,  certain  specific revenue and
expense items,  and segment  assets.  SFAS No. 130 and No. 131 are effective for
fiscal years beginning after December 15, 1997.

Both SFAS No. 130 and 131 are disclosure related only and therefore will have no
impact on the Company's financial position or results of operations.


                                      -19-

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 and 1995
                                   (Unaudited)

Note 3 - Investments in Loans

The Partnership  has funded five mortgage loans and originated five  noninterest
bearing equity loans in the aggregate amount of $29,220,325.

Information  relating to  investments  in mortgage  loans and equity loans as of
December 31, 1997 and 1996 is as follows:

<TABLE>
<CAPTION>
                                                                                          Amounts Advanced             
                                                         ---------------------------------------------------------------------------

                         No. of
                          Apart   Date of    Final                                        Total        Investments      Investments
Property/                 -ment   Invest-   Maturity     Mortgage                        Amounts       in Loans at      in Loans at
Location                  Units     ment      Date        Loans        Equity Loans      Advanced      12/31/97 (F)     12/31/96 (F)
--------                  -----     ----      ----        -----        ------------      --------      ------------     ------------

<S>                        <C>      <C>       <C>      <C>              <C>             <C>             <C>             <C>        
Mortenson                  104      8/90      8/30     $ 4,974,090      $   577,885     $ 5,551,975     $ 5,009,020     $ 5,095,655
Manor
Apts./
Ames, IA

Windemere                  204      9/90      9/30       8,110,300          736,550       8,846,850       8,222,672       8,325,535
Apts./ 
Wichita, KS

Fieldcrest III             112      8/91      8/31       3,343,700          383,300       3,727,000       3,467,130       3,513,361
Apts./
Dothan, AL

Holly Ridge II             144      3/93      3/33       5,310,100          684,400       5,994,500       5,656,344       5,734,738
Apts./
Gresham, OR

Willow Trace               152      6/93      6/28       4,420,000          680,000       5,100,000       4,730,327       4,816,161
Apts./
Tuscaloosa, AL
                                                       ----------------------------------------------------------------------------

Total                                                  $26,158,190      $ 3,062,135     $29,220,325     $27,085,493     $27,485,450

                                                       ============================================================================ 
</TABLE>

<TABLE>
<CAPTION>
                                              Interest earned by the Partnership during 1997
                       ---------------------------------------------------------------------------------------
                                    Non-contingent                                  Contingent
                       ---------------------------------------     -------------------------------------------
                                                                                   Cash Flow
                                     Default                         Annual         Partici-
                       Construc        Base          Interest         Yield          pation            Total
Property/                tion        Interest        Amount/         Amount/         Amount/         Interest
Location               Rate (A)      Rate (B)        Rate (C)        Rate (D)        Rate (E)         Earned
---------              ------      -----------     -----------     -----------     -----------     -----------
<S>                     <C>        <C>               <C>           <C>             <C>             <C>        
Mortenson               13.00%     $   305,352       $  96,079     $         0     $         0     $   401,431
Manor                                     6.45%           1.98%           0.97%          30.00%
Apts./
Ames, IA

Windemere               13.00%         630,847         128,725               0               0         759,572
Apts./                                    7.95%           1.60%           1.09%          30.00%
Wichita, KS

Fieldcrest III          10.18%         285,277           2,333          45,630           6,690         339,930
Apts./                                    8.68%           0.07%           1.36%          30.00%
Dothan, AL

Holly Ridge II          10.25%         426,982          87,381             N/A          11,704         526,067
Apts./                                   8.125%           1.64%                          25.00%
Gresham, OR

Willow Trace              N/A          358,663          56,395             N/A          29,215         444,273
Apts./                                    8.37%          1.287%                          30.00%
Tuscaloosa, AL
                        --------------------------------------------------------------------------------------

Total                              $ 2,007,121     $   370,913     $    45,630     $    47,609     $ 2,471,273

                        ======================================================================================
</TABLE>

<PAGE>

                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 AND 1995


(A) The  Partnership did not receive any  construction  interest during 1997, as
construction was completed prior to 1997 on all properties.

(B) Base interest on the Mortgages is that amount that is  insured/co-insured by
HUD and is being shown net of service fee.

(C) Default  Interest is the minimum  amount due over the base rate,  and is not
contingent  upon cash flow.  This interest is secured by Partnership  interests.
Fieldcrest's  default  rate was  reduced  during  11/95,  as per the  Additional
Interest documents, to 0.07% over the Base Rate.

(D) Annual  Yield is the amount over the  default  rate and is  contingent  upon
property cash flow.

(E) Cash Flow  Participation  is the percent of cash flow due to the Partnership
after  payment of the Annual Yield and is  contingent  upon  property cash flow.
Fieldcrest,  Willow Trace and Holly Ridge provided  sufficient cash flow in 1996
to pay the Partnership a participation during 1997.

(F) The Investments in Loans amount reflects the unpaid balance of the Mortgages
and the  unamortized  balance of the equity loans in the amounts of  $25,508,832
and   $1,576,661  at  December  31,  1997  and   $25,651,993   and   $1,833,457,
respectively, at December 31, 1996.

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

Investment in loans January 1,                   $ 27,485,450      $ 27,874,623

Additions:
Fieldcrest III discount amortization                    1,452             1,452
                                                 ------------      ------------

                                                        1,452             1,452
                                                 ------------      ------------
Deductions:
Amortization of equity loans                         (256,796)         (256,796)
Collection of principal -Mortenson                    (38,478)          (36,080)
                        -Windemere                    (41,485)          (38,298)
                        -Fieldcrest III               (14,123)          (12,944)
                        -Holly Ridge                  (21,360)          (19,674)
                        -Willow Trace                 (29,167)          (26,833)
                                                 ------------      ------------
                                                     (401,409)         (390,625)

Investment in loans December 31,                 $ 27,085,493      $ 27,485,450
                                                 ============      ============

The Mortenson  Manor and Windemere  Mortgages are  co-insured by HUD and Related
Mortgage   Corporation  ("RMC"),  an  affiliate  of  the  General  Partner.  The
Fieldcrest III, Holly Ridge and Willow Trace Mortgages are insured by HUD.

In  addition to the  interest  rate during the  post-construction  periods,  the
Partnership  will be  entitled  to payment of 30% of cash flow  remaining  after
payment of the permanent loan interest and accrued interest, if any, and certain
amounts from sale or refinancing proceeds.


                                      -21-
<PAGE>


                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 AND 1995


The equity loans are  non-interest  bearing and are secured by the assignment of
the  owner/developers'  interests  in the  projects.  The  equity  loans are not
insured  by HUD or any  other  party  and,  for  financial  statement  reporting
purposes,  are  considered  to be premiums paid to obtain the  Mortgages.  These
premiums are being  amortized over the average  expected lives of the respective
Mortgages.

The Fieldcrest  general  partner paid $17,440 to the  Partnership as an interest
rate buydown during the construction  period. For financial  reporting purposes,
the fee is  treated  as an  adjustment  to the  effective  interest  rate on the
Mortgage.

At December 31, 1997, all of the loans due to the  Partnership are current (when
taking into account the modification  agreement discussed below).  Mortenson has
not paid its default interest of approximately $96,000,  $85,000 and $98,000 for
the years ended December 31, 1997, 1996 and 1995, respectively. During the first
quarter of 1997, the  Partnership  received  default  interest of  approximately
$25,000,  representing  partial payment for 1996. As a result,  an allowance for
uncollectability  relating to the  default  interest  amounted to  approximately
$538,217 and $442,000 at December 31, 1997 and 1996, respectively.

The  operations  of  Mortenson  have not been able to support the payment of the
required  interest.  Accordingly,  effective  January  1,  1995 the  Partnership
entered into a modification agreement whereby the annual yield was modified to a
cumulative  yield of 9.4% per annum from the Permanent Loan Date and the Default
Rate was redefined as 8.43% per annum. The modification  agreement also provided
that pre-1995  accrued interest not accrue further interest on and after January
1,  1995,  and  shall  be paid  solely  out of  Capital  Proceeds  prior  to the
calculation  of  participation  percentages.  Mortenson also agreed to defer the
management  fee payable up to the Default  Rate.  Pursuant to this  modification
agreement,  default  interest  for 1997 and 1996 of  approximately  $96,000  and
$97,000, respectively, has been accrued.

NOTE 4 - Related Parties

The costs  incurred to related  parties for the years ended  December  31, 1997,
1996 and 1995 were as follows:

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

Partnership management fees (a)             $153,065      $153,065      $153,065
Expense reimbursement (b)                     63,143        84,444        59,268
                                            --------      --------      --------

                                            $216,208      $237,509      $212,333
                                            ========      ========      ========

(a) A  Partnership  management  fee for managing the affairs of the  Partnership
equal to .5% per annum of  invested  assets is  payable  out of cash flow to the
General  Partner.  During the years  ended  December  31,  1997,  1996 and 1995,
payments  of  $114,799,  $267,864  and  $65,668  were  made,  respectively.  The
remaining  balance of the 1995 fee of $114,799 was paid during  January 1996. As
of December 31, 1997 and 1996, a balance of $305,822 and $267,556, respectively,
was due to the General Partner for these fees.

(b) The General Partner and its affiliates  perform services for the Partnership
which  include,  but are not limited to:  accounting  and financial  management,
register,   transfer  and  assignment  functions,  asset  management,   investor
communications,  printing services and other administrative



                                      -22-
<PAGE>


services.  The amount of  reimbursement  from the  Partnership is limited by the
provisions of the  Partnership  Agreement.  An affiliate of the General  Partner
performs  assets  monitoring for the  Partnership.  These services  include site
visits and evaluations of the performance of the properties  securing the loans.
During the years ended  December  31, 1997,  1996 and 1995,  payments of $1,062,
$138,849 and $58,032  were made,  respectively,  relating to these costs.  As of
December  31, 1997 and 1996,  the General  Partner and its  affiliates  were due
$94,476 and $30,271, respectively.

RMC is a  co-insurer  on the  Mortenson  and  Windemere  Mortgages  in which the
Partnership has invested.  RMC is entitled to a mortgage insurance premium which
is paid by the mortgagors.

NOTE 5 - Fair Value of Financial Instruments

Financial Accounting Standards Board SFAS No. 107, "Disclosures about Fair Value
of Financial  Instruments"  requires that the estimated  fair value of financial
instruments, as defined by SFAS No. 107, be disclosed. Financial instruments are
defined as cash,  evidence of an  ownership  interest in an entity or a contract
which creates  obligations  and rights to exchange  cash and/or other  financial
instruments.  SFAS  No.  107  also  requires  disclosures  of  the  methods  and
significant   assumptions   used  to  estimate   the  fair  value  of  financial
instruments.

Considerable  judgment is required in interpreting data to develop the estimates
of fair value.  Accordingly,  the estimates presented herein are not necessarily
indicative of the amounts that the Partnership could realize in a current market
exchange.   The  use  of  different   market   assumptions   and/or   estimation
methodologies may have a material effect on the estimated fair value amounts.

The following  methods/assumptions  were used to estimate the fair value of each
class of financial instrument:

Cash and cash equivalents

Fair value is determined  to be the carrying  value because they mature in three
months or less and do not represent unanticipated credit concerns.

Investments in loans

At December  31,  1997,  the  estimated  carrying  value of the  mortgage  loans
approximated  fair value.  The  estimated  fair values at December 31, 1997 were
based on internal valuations of the five properties collateralizing these loans.
Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information and information  about the financial  instrument  which sets
forth the terms of a loan.  This  estimate is  subjective in nature and involves
uncertainties and matters of significant judgment.  Changes in assumptions could
significantly affect estimates. Due to the property-specific nature of the loans
and the lack of a ready market for such  investments,  this fair value  estimate
does not necessarily  represent the amount which the  Partnership  could realize
upon a current sale of its investments.



                                      -23-
<PAGE>


                           CAPITAL MORTGAGE PLUS L.P.
                             (a limited partnership)
                          NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 1997, 1996 AND 1995


NOTE 6 - Subsequent Events

On February  12, 1998,  a  distribution  of $648,164 and $13,228 was paid to BAC
holders  and the General  Partner,  respectively,  representing  the 1997 fourth
quarter distributions.





                                      -24-
<PAGE>


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

None.
                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

The Registrant has no directors or executive officers.  The Registrant's affairs
are  managed and  controlled  by the General  Partner.  The General  Partner was
organized in Delaware in November 1988.  The executive  officers and director of
the General  Partner  have held their  positions  as  indicated  below.  Certain
information  concerning  the  director  and  executive  officers  of the General
Partner is set forth below.

The Registrant,  the General  Partner and its directors and executive  officers,
and any BACs holder holding more than ten percent of the  Registrant's  BACs are
required  to report  their  initial  ownership  of such BACs and any  subsequent
changes in that ownership to the Securities and Exchange  Commission on Forms 3,
4 and 5. The  Registrant  is not aware of any BACs holders who own more than ten
percent  of the  BACs.  Such  executive  officers,  directors  are  required  by
Securities and Exchange  Commission  regulators to furnish the  Registrant  with
copies of all Forms 3, 4 or 5 they file. All of these filing  requirements  were
satisfied  by the  officers  and  directors  of the General  Partner on a timely
basis. In making these disclosures,  the Registrant has relied solely on written
representations  of the General  Partner's  directors and executive  officers or
copies  of the  reports  they  have  filed  with  the  Securities  and  Exchange
Commission during and with respect to its most recent fiscal year.

CIP Associates Inc.

     Name                         Position            Position Held Since
     ----                         --------            -------------------

J. Michael Fried          President and Director           1988

Stephen M. Ross           Director                         1988

Stuart J. Boesky          Senior Vice President            1988

Alan P. Hirmes            Senior Vice President            1988

Richard A. Palermo        Treasurer                        1996

Lynn A. McMahon           Secretary                        1988

J. MICHAEL FRIED,  53, is President and a Director of the General  Partner.  Mr.
Fried is President,  a Director and a principal  shareholder of Related  Capital
Company ("Capital"),  an affiliate of the General Partner, a real estate finance
and acquisition  affiliate of the General Partner.  In that capacity,  he is the
chief  executive  officer of Capital,  and is  responsible  for  initiating  and
directing  all of  Capital's  syndication,  finance,  acquisition  and  investor
reporting  activities.  Mr. Fried practiced  corporate law in New York City with
the law firm of  Proskauer  Rose  Goetz &  Mendelsohn  from 1974 until he joined
Capital in 1979.  Mr.  Fried  graduated  from  Brooklyn  Law School with a Juris
Doctor degree, magna cum laude; from Long Island University Graduate School with
a Master of Science  degree in Psychology;  and from Michigan  State  University
with a Bachelor of Arts degree in History.



                                      -25-
<PAGE>


STEPHEN M. ROSS, 57, is a Director of the General Partner. Mr. Ross is President
of The Related Companies, L.P. He graduated from The University of Michigan with
a Bachelor of Business Administration degree and from Wayne State School of Law.
Mr.  Ross  then  received  a Master  of Law  degree  in  taxation  from New York
University  School of Law. He joined the accounting firm of Coopers & Lybrand in
Detroit as a tax specialist and later moved to New York, where he worked for two
large Wall Street  investment  banking  firms in their real estate and corporate
finance departments.  Mr. Ross formed The Related Companies, Inc. ("Related") in
1972,  to  develop,  manage,  finance and acquire  subsidized  and  conventional
apartment  developments.  To date, Related has developed multi-family properties
totaling in excess of 25,000 units, all of which it manages.

STUART J. BOESKY,  41, is Vice  President  of the General  Partner.  Mr.  Boesky
practiced  real estate and tax law in New York City with the law firm of Shipley
&  Rothstein  from 1984  until  February  1986 when he joined  Capital  where he
presently  serves as Managing  Director.  From 1983 to 1984 Mr. Boesky practiced
law with  the  Boston  law firm of Kaye,  Fialkow  Richard  &  Rothstein  (which
subsequently  merged  with  Strook & Strook & Lavan) and from 1978 to 1980 was a
consultant  specializing  in real estate at the  accounting  firm of Laventhol &
Horwath.  Mr. Boesky graduated from Michigan State University with a Bachelor of
Arts degree and from Wayne State  School of Law with a Juris Doctor  degree.  He
then received a Master of Law degree in Taxation from Boston  University  School
of Law.

ALAN P. HIRMES,  43, is a Vice President of the General Partner.  Mr. Hirmes has
been a Certified  Public  Accountant  in New York since  1978.  Prior to joining
Capital in October  1983,  Mr.  Hirmes was  employed by Weiner & Co.,  certified
public  accountants.  Mr.  Hirmes is also a Managing  Director of  Capital.  Mr.
Hirmes graduated from Hofstra University with a Bachelor of Arts degree.

RICHARD A. PALERMO,  37, is Treasurer of the General  Partner.  Mr.  Palermo has
been a Certified  Public  Accountant  in New York since  1985.  Prior to joining
Related in September  1993,  Mr.  Palermo was employed by Sterling Grace Capital
Management from October 1990 to September 1993, Integrated Resources,  Inc. from
October 1988 to October 1990 and E.F.  Hutton & Company,  Inc. from June 1986 to
October 1988.  From October 1982 to June 1986, Mr. Palermo was employed by Marks
Shron & Company and Mann Judd Landau, certified public accountants.  Mr. Palermo
graduated  from Adelphi  University  with a Bachelor of Business  Administration
degree.

LYNN A. McMAHON,  42, is Secretary of the General  Partner.  Since 1983, she has
served as  Assistant  to the  President  of  Capital.  From 1978 to 1983 she was
employed at Sony Corporation of America in the Government Relations Department.

There are no family  relationships  between the foregoing directors or executive
officers.


                                      -26-
<PAGE>


Item 11.  Executive Compensation.

The  Registrant  has no officers or directors.  The  Registrant  does not pay or
accrue  any fees,  salaries  or other  forms of  compensation  to  directors  or
officers  of the General  Partner  for their  services.  Certain  directors  and
officers of the General  Partner receive  compensation  from the General Partner
and its affiliates for services performed for various affiliated  entities which
may include  services  performed for the Registrant.  Such  compensation  may be
based in part on the performance of the Registrant; however, the General Partner
believes  that any  compensation  attributable  to  services  performed  for the
Registrant  is  immaterial.  See also Note  4-Related  Parties,  in Notes to the
Financial Statements, included in Item 8 above.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

As of March 3, 1998, no person was known by the  Registrant to be the beneficial
owner of more than five  percent of the  Limited  Partnership  Interests  and/or
BACs; and neither the General Partner nor any director or officer of the General
Partner owns any Limited Partnership Interests or BACs.

As of March 3, 1998,  the  directors  and  officers of the General  Partner as a
group own, in the aggregate, 95.2% of the common stock of CIP Associates Inc.

Item 13.  Certain Relationships and Related Transactions.

The  Registrant  has and will  continue to have certain  relationships  with the
General  Partner  and  its  affiliates,  as  discussed  in  Item  11,  Executive
Compensation  and as set  forth  below.  However,  there  have  been  no  direct
financial  transactions between the Registrant and the directors and officers of
the General  Partner.  See Note  4-Related  Parties,  in Notes to the  Financial
Statements, included in Item 8 above.

The General  Partner has allowed the accrual  without payment of the partnership
management  fee  through  1992 in an  aggregate  amount  equal to  approximately
$268,000.  Since 1992, substantially all partnership management fees and expense
reimbursements have been paid. See Note 4-Related Parties, in Notes to Financial
Statements, included in Item 8 above.


                                      -27-
<PAGE>


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

<TABLE>
<CAPTION>
                                                                                    Sequential
                                                                                       Page
                                                                                    ----------
<S>       <C>                                                                       <C>
(a) 1.    Financial Statements

          Independent Auditors' Report                                               12

          Statements of Financial Condition as of December 31, 1997 and 1996         13

          Statements of Income for the years ended  December 31, 1997,  1996 and
          1995                                                                       14

          Statements  of Changes in Partners'  Capital  (Deficit)  for the years
          ended December 31, 1997, 1996 and 1995                                     15

          Statements of Cash Flows for the years ended  December 31, 1997,  1996
          and 1995                                                                   16

          Notes to Financial Statements                                              17

(a) 2.    Financial Statement Schedules

          All  schedules  have been  omitted  because  they are not  required or
          because  the  required  information  is  contained  in  the  financial
          statements or notes hereto.

(a) 3.    Exhibits

(3A)      The   Registrant's   Amended  and   Restated   Agreement   of  Limited
          Partnership,   incorporated   by   reference   to  Exhibit  A  to  the
          Registrant's Prospectus, dated May 10, 1989 (the "Prospectus"),  filed
          pursuant to Rule 424(b)  under the  Securities  Act of 1933,  File No.
          33-26690.

(3B)      The  Registrant's  Certificate  of Limited  Partnership,  as  amended,
          incorporated  by reference  to Exhibits 3B and 3C to the  Registrant's
          Registration Statement on Form S-11, File No. 33-26690,  dated January
          24,  1989 and to Exhibit 3D to  Amendment  No. 1 to such  Registration
          Statement dated April 28, 1989

(3C)      Amendment No. 1, dated July 7, 1989, to the  Registrant's  Amended and
          Restated Agreement of Limited Partnership

(10A)     Mortgage Note,  dated August 31, 1990, with respect to Mortenson Manor
          Apartments  in Ames,  Iowa,  in the  principal  amount  of  $4,974,900
          (incorporated  by  reference  to  Exhibit  10(a)  in the  Registrant's
          Current Report on Form 8-K dated August 31, 1990)

(10B)     Equity Loan Note dated  August 31,  1990,  with  respect to  Mortenson
          Manor  Apartments in Ames,  Iowa, in the principal  amount of $577,885
          (incorporated  by  reference  to  Exhibit  10(b)  in the  Registrant's
          Current Report on Form 8-K dated August 31, 1990)
</TABLE>


                                      -28-
<PAGE>


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
          (continued)

<TABLE>
<CAPTION>
                                                                                    Sequential
                                                                                       Page
                                                                                    ----------
<S>       <C>                                                                       <C>
(10C)     Subordinated  Promissory  Note,  dated August 31, 1990 with respect to
          Mortenson  Manor  Partnership  (incorporated  by  reference to Exhibit
          10(c) in the Registrant's  Current Report on Form 8-K dated August 31,
          1990)

(10D)     Mortgage  Note,  dated  September 27, 1990,  with respect to Windemere
          Apartments in Wichita,  Kansas,  in the principal amount of $8,110,300
          (incorporated by reference to Exhibit 10(a) in the Registrant's Form 8
          Amendment  dated October 30, 1990 to Current  Report on Form 8-K dated
          September 28, 1990)

(10E)     Equity Loan Note,  dated September 27, 1990, with respect to Windemere
          Apartments in Wichita,  Kansas,  in the  principal  amount of $736,500
          (incorporated by reference in Exhibit 10(b) in the Registrant's Form 8
          Amendment  dated October 30, 1990 to Current  Report on Form 8-K dated
          September 28, 1990)

(10F)     Subordinated Promissory Note, dated September 27, 1990 with respect to
          Windemere  Development,  Inc.  (incorporated  by  reference to Exhibit
          10(c) in the  Registrant's  Form 8 Amendment dated October 30, 1990 to
          Current Report on Form 8-K dated September 28, 1990)

(10G)     Mortgage Note,  dated August 23, 1991,  with respect to Fieldcrest III
          Apartments in Dothan,  Alabama,  in the principal amount of $3,450,200
          (incorporated  by  reference  to  Exhibit  10(a)  in the  Registrant's
          Current Report on Form 8-K dated August 27, 1991)

(10H)     Equity Loan Note,  dated August 27, 1991,  with respect to  Fieldcrest
          III Apartments in Dothan, Alabama, in the principal amount of $383,300
          (incorporated  by  reference  to  Exhibit  10(b)  in the  Registrant's
          Current Report on Form 8-K dated August 27, 1991)

(10I)     Subordinated  Promissory  Note,  dated August 27, 1991 with respect to
          Fieldcrest III Apartments  (incorporated by reference to Exhibit 10(c)
          in the Registrant's Current Report on Form 8-K dated August 27, 1991)

(10J)     Mortgage  Note,  dated  March 1, 1993,  with  respect  to Holly  Ridge
          Apartments in Gresham,  Oregon,  in the principal amount of $5,310,000
          (incorporated  by  reference  to  Exhibit  10(a)  in the  Registrant's
          Current Report on Form 8-K dated March 16, 1993)

(10K)     Equity  Loan  dated  March  16,  1993,  with  respect  to Holly  Ridge
          Apartments in Gresham,  Oregon,  in the  principal  amount of $684,000
          (incorporated  by  reference  to  Exhibit  10(b)  in the  Registrant's
          Current Report on Form 8-K dated March 16, 1993)

(10L)     Subordinated  Promissory  Note,  dated March 16, 1993, with respect to
          Holly Ridge Apartments in Gresham,  Oregon  (incorporated by reference
          to Exhibit 10(c) in the Registrant's  Current Report on Form 8-K dated
          March 16, 1993)
</TABLE>


                                      -29-
<PAGE>


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
          (continued)

<TABLE>
<CAPTION>
                                                                                    Sequential
                                                                                       Page
                                                                                    ----------
<S>       <C>                                                                        <C>
(10M)     Mortgage  Note,  dated June 18,  1993,  with  respect to Willow  Trace
          Apartments  in  Tuscaloosa,   Alabama,  in  the  principal  amount  of
          $4,420,000   (incorporated  by  reference  to  Exhibit  (10M)  in  the
          Registrant's Form 10-K for the fiscal year ended December 31, 1993)

(10N)     Equity  Loan  dated  June 18,  1993,  with  respect  to  Willow  Trace
          Apartments in Tuscaloosa, Alabama, in the principal amount of $680,000
          (incorporated by reference to Exhibit (10N) in the  Registrant's  Form
          10-K for the fiscal year ended December 31, 1993)

(10O)     Subordinated  Promissory  Note,  dated June 18, 1993,  with respect to
          Willow  Trace  Apartments  in  Tuscaloosa,  Alabama  (incorporated  by
          reference  to  Exhibit  (10O) in the  Registrant's  Form  10-K for the
          fiscal year ended December 31, 1993)

(10P)     Modification  Agreement,  dated  January  1,  1995,  with  respect  to
          Mortenson Manor Apartments in Ames, Iowa (incorporated by reference to
          Exhibit (10P) in the Registrant's  Form 10-K for the fiscal year ended
          December 31, 1995)

(10Q)     Guaranty  made for the  benefit of the  Registrant,  dated  January 1,
          1995, with respect to the Modification  Agreement  regarding Mortenson
          Manor  Apartments  (incorporated  by reference to Exhibit (10Q) in the
          Registrant's Form 10-K for the fiscal year ended December 31, 1995)

27        Financial Data Schedule (filed herewith)                                   35

99.       Additional Exhibits 

(99A)     The Financial  Statements of Windemere  Development,  Inc., which owns
          and  operates an  apartment  complex  known as  Windemere at Tallgrass
          located in Wichita,  Kansas, as required by Staff Accounting  Bulletin
          No. 71                                                                     36

(b)       Reports on Form 8-K

          No  reports  on Form 8-K were  filed  during  the last  quarter of the
          period covered by this report.




                                      -30-
<PAGE>


                                   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.


                           CAPITAL MORTGAGE PLUS L.P.
                                  (Registrant)



                                            By: CIP ASSOCIATES, INC.
                                                General Partner



Date:                                       By: ________________________________
                                                J. Michael Fried
                                                President and Director
                                                (Principal Executive Officer)






<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:


     Signature                         Title                            Date
     ---------                         -----                            ----



                          President (principal executive officer)
_____________________     and Director of CIP Associates, Inc.
J. Michael Fried          (a General Partner of the Registrant)



                          Senior Vice President (principal
_____________________     financial officer) of CIP Associates, Inc.
Alan P. Hirmes            (a General Partner of the Registrant)



                          Treasurer (principal accounting
_____________________     officer) of CIP Associates, Inc.
Richard A. Palermo        (a General Partner of the Registrant)



_____________________     Director of CIP Associates, Inc.
Stephen M. Ross           (a General Partner of the Registrant)



<PAGE>

                                   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.


                           CAPITAL MORTGAGE PLUS L.P.
                                  (Registrant)



                                            By: CIP ASSOCIATES, INC.
                                                General Partner



Date:  March 30, 1998                       By: /s/ J. Michael Fried
                                                --------------------------------
                                                J. Michael Fried
                                                President and Director
                                                (Principal Executive Officer)



<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:


  Signature                                     Title                              Date
  ---------                                     -----                              ----
<S>                               <C>                                           <C>



/s/ J. Michael Fried              President (principal executive officer)
------------------------          and Director of CIP Associates, Inc.
J. Michael Fried                  (a General Partner of the Registrant)         March 30, 1998



/s/ Alan P. Hirmes                Senior Vice President (principal
------------------------          financial officer) of CIP Associates, Inc.
Alan P. Hirmes                    (a General Partner of the Registrant)         March 30, 1998



/s/ Richard A. Palermo            Treasurer (principal accounting
------------------------          officer) of CIP Associates, Inc.
Richard A. Palermo                (a General Partner of the Registrant)         March 30, 1998



/s/ Stephen M. Ross               Director of CIP Associates, Inc.
------------------------          (a General Partner of the Registrant)         March 30, 1998
Stephen M. Ross
</TABLE>