UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549
                          __________________
                              FORM 10-K/A 1
           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934
                          __________________

For the fiscal year ended December 31, 1999      Commission file number 1-10360

                            CRIIMI MAE INC.
        (Exact name of registrant as specified in its charter)

        Maryland                                     52-1622022
(State or other jurisdiction of                  (I.R.S. Employer
Incorporation or organization)                    Identification No.)

                          11200 Rockville Pike
                       Rockville, Maryland 20852
                             (301) 816-2300
           (Address, including zip code, and telephone number,
     Including area code, of registrant's principal executive offices)

                           __________________

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

                                                  Name of each exchange on
Title of each class                                   which registered
-------------------                             -----------------------------
Common Stock                                     New York Stock Exchange, Inc.
Series B Cumulative Convertible                  New York Stock Exchange, Inc.
  Preferred Stock
Series F Redeemable Cumulative Dividend          New York Stock Exchange, Inc.
  Preferred Stock

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

                                    None
                            __________________

     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 10K or any amendment to this
Form 10K. [ ]

     As of March 15,  2000,  62,353,170  shares of CRIIMI MAE Inc.  common stock
(voting) with a par value of $0.01 were outstanding.  The aggregate market value
(based upon the last reported sale price on the New York Stock Exchange on March
15,  2000) of the  shares of  CRIIMI  MAE Inc.  common  stock  (voting)  held by
non-affiliates was approximately  $61,807,108.  (For purposes of calculating the
previous amount only, all directors and executive officers of the registrant are
assumed to be affiliates.)
                          __________________

                  Documents Incorporated By Reference

                                 None.

<PAGE>2

ITEM 1.  BUSINESS

FORWARD-LOOKING  STATEMENTS.  When used in this Annual Report on Form 10-K,
the words  "believes,"  "anticipates,"  "expects,"  "contemplates"  and  similar
expressions  are  intended to identify  forward-looking  statements.  Statements
looking forward in time are included in this Annual Report on Form 10-K pursuant
to the "safe harbor" provision of the Private  Securities  Litigation Reform Act
of 1995. Such statements are subject to certain risks and  uncertainties,  which
could cause actual results to differ materially,  including,  but not limited to
the risk factors  contained under the headings "Risk Factors" and  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  set
forth  below.  Readers  are  cautioned  not to  place  undue  reliance  on these
forward-looking statements,  which speak only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking  statements to
reflect events or  circumstances  occurring  after the date hereof or to reflect
the occurrence of unanticipated events.

General

     CRIIMI MAE Inc.  (together with its consolidated  subsidiaries,  unless the
context  otherwise  indicates,  "CRIIMI  MAE"  or  the  "Company")  is  a  fully
integrated  commercial mortgage company structured as a  self-administered  real
estate  investment  trust  ("REIT").  Prior to the  filing  by  CRIIMI  MAE Inc.
(unconsolidated) and two of its operating  subsidiaries,  CRIIMI MAE Management,
Inc. ("CM  Management"),  and CRIIMI MAE Holdings II, L.P.  ("Holdings  II" and,
together with CRIIMI MAE and CM  Management,  the  "Debtors"),  for relief under
Chapter 11 of the U.S.  Bankruptcy Code on October 5, 1998 (the "Petition Date")
as described  below,  CRIIMI MAE's  primary  activities  included (i)  acquiring
non-investment grade securities (rated below BBB- or unrated) backed by pools of
commercial  mortgage  loans on  multifamily,  retail and other  commercial  real
estate  ("Subordinated  CMBS"),  (ii)  originating and  underwriting  commercial
mortgage  loans,  (iii)  securitizing  pools of  commercial  mortgage  loans and
resecuritizing  pools of  Subordinated  CMBS,  and (iv)  through  the  Company's
servicing  affiliate,   CRIIMI  MAE  Services  Limited  Partnership   ("CMSLP"),
performing servicing functions with respect to the mortgage loans underlying the
Company's Subordinated CMBS.

     Since  filing for  Chapter 11  protection,  CRIIMI  MAE has  suspended  its
Subordinated  CMBS acquisition,  origination and  securitization  programs.  The
Company  continues  to  hold  a  substantial  portfolio  of  Subordinated  CMBS,
originated loans and mortgage  securities and, through CMSLP, acts as a servicer
for its own as well as third party securitized mortgage loan pools.

     In addition to the two  operating  subsidiaries  which filed for Chapter 11
protection along with the Company,  the Company owns 100% of multiple  financing
and  operating  subsidiaries  as well as  various  interests  in other  entities
(including  CMSLP)  which either own or service  mortgage  and  mortgage-related
assets (the  "Non-Debtor  Affiliates").  See Note 3 of the Notes to Consolidated
Financial Statements. None of the Non-Debtor Affiliates has filed for bankruptcy
protection.

     The Company was incorporated in Delaware in 1989 under the name CRI Insured
Mortgage  Association,  Inc. ("CRI Insured").  In July 1993, CRI Insured changed
its name to CRIIMI  MAE Inc.  and  reincorporated  in  Maryland.  In June  1995,
certain mortgage businesses affiliated with C.R.I., Inc. were merged into CRIIMI
MAE (the "Merger").  The Company is not a government sponsored entity nor in any
way affiliated with the United States government or any United States government
agency.

Chapter 11 Filing

     Prior to the Petition  Date,  CRIIMI MAE financed a substantial  portion of
its Subordinated  CMBS  acquisitions  with short-term,  variable-rate  financing
facilities  secured  by the  Company's  CMBS.  The  agreements  governing  these
financing  arrangements  typically  required the Company to maintain  collateral
with a market  value not less than a  specified  percentage  of the  outstanding
indebtedness  ("loan-to-value  ratio"). The agreements further provided that the
creditors could require the Company to provide cash or additional  collateral if
the market value of the existing collateral fell below this minimum amount.

     As a result of the turmoil in the capital markets commencing in late summer
of 1998, the spreads between CMBS yields and yields on Treasury  securities with
comparable  maturities  began to widen  substantially  and rapidly.  Due to this


<PAGE>3

widening of CMBS  spreads,  the market value of the CMBS  securing the Company's
short-term, variable-rate financing facilities declined. CRIIMI MAE's short-term
secured creditors perceived that the value of the CMBS securing their facilities
with the  Company  had fallen,  creating a value  deficiency  as measured by the
loan-to-value  ratio  described  above and,  consequently,  made demand upon the
Company to provide cash or additional  collateral with sufficient  value to cure
the perceived  value  deficiency.  In August and September of 1998,  the Company
received and met collateral calls from its secured creditors.  At the same time,
CRIIMI MAE was in negotiations with various third parties in an effort to obtain
additional  debt and  equity  financing  that would  provide  the  Company  with
additional liquidity.

     On Friday  afternoon,  October  2, 1998,  the  Company  was in the  closing
negotiations  of a refinancing  with one of its unsecured  creditors  that would
have  provided  the  Company  with  additional  borrowings  when it  received  a
significant  collateral call from Merrill Lynch Mortgage Capital, Inc. ("Merrill
Lynch").  The  basis  for this  collateral  call,  in the  Company's  view,  was
unreasonable. After giving consideration to, among other things, this collateral
call and the Company's  concern that its failure to satisfy this collateral call
would  cause the  Company to be in default  under a  substantial  portion of its
financing arrangements,  the Company reluctantly concluded on Sunday, October 4,
1998 that it was in the best  interests of creditors,  equity  holders and other
parties in interest to seek Chapter 11 protection.

     On October 5, 1998,  the Debtors  filed for relief under  Chapter 11 of the
U.S.  Bankruptcy Code in the United States  Bankruptcy Court for the District of
Maryland,  Southern Division,  in Greenbelt,  Maryland (the "Bankruptcy Court").
These  related  cases are being  jointly  administered  under the caption "In re
CRIIMI MAE Inc., et al.," Ch. 11 Case No. 98-2-3115-DK.

     While in bankruptcy, CRIIMI MAE has streamlined its operations. The Company
has  significantly  reduced  the  number of  employees  in its  origination  and
underwriting operations. In connection with these reductions, the Company closed
its five regional loan origination offices. See "BUSINESS-Employees."

     Although the Company has significantly  reduced its work force, the Company
recognizes  that retention of its executives  and other  remaining  employees is
essential to the efficient  operation of its business and to its  reorganization
efforts.  Accordingly,  the Company has, with Bankruptcy Court approval, adopted
an employee retention plan. See  "BUSINESS-Employee  Retention Plan" and Note 15
of the Notes to Consolidated Financial Statements.

     CRIIMI MAE is working  diligently  toward  emerging  from  bankruptcy  as a
successfully  reorganized  company.  In furtherance of such effort,  the Debtors
filed (i) a Joint Plan of  Reorganization on September 22, 1999, (ii) an Amended
Joint Plan of Reorganization and proposed Joint Disclosure Statement on December
23, 1999, and (iii) a Second Amended Joint Plan of  Reorganization  (the "Plan")
and proposed  Amended  Joint  Disclosure  Statement  (the  "Proposed  Disclosure
Statement")  on March 31,  2000.  The Plan was  filed  with the  support  of the
Official  Committee  of  Equity  Security  Holders  of CRIIMI  MAE (the  "Equity
Committee"),  which is a co-proponent of the Plan.  Subject to the completion of
mutually  acceptable  documentation  evidencing  the  secured  financing  to  be
provided   by  the   unsecured   creditors   (the   "Unsecured   Creditor   Debt
Documentation"),  the Official  Committee  of Unsecured  Creditors of CRIIMI MAE
(the "Unsecured Creditors' Committee") has agreed to support confirmation of the
Debtors' Plan. The Company,  the Equity  Committee and the Unsecured  Creditors'
Committee are now all  proceeding  toward  confirmation  of the Plan.  Under the
Plan, Merrill Lynch and German American Capital Corporation ("GACC"), two of the
Company's largest secured creditors,  would provide a significant portion of the
recapitalization  financing  contemplated by the Plan. The Bankruptcy  Court has
scheduled  a  hearing  for April 25 and 26,  2000 on  approval  of the  Proposed
Disclosure Statement.

     On December 20, 1999, the Unsecured Creditors' Committee filed its own plan
of reorganization  and proposed  disclosure  statement with the Bankruptcy Court
which, in general, provided for the liquidation of the assets of the Debtors. On
January 11, 2000 and February 11, 2000, the Unsecured Creditors' Committee filed
its first and second  amended plans of  reorganization,  respectively,  with the
Bankruptcy  Court  and  amended  proposed  disclosure  statements  with  respect
thereto. However, as a result of successful negotiations between the Debtors and
the  Unsecured  Creditors'  Committee,  the Unsecured  Creditors'  Committee has
agreed to the treatment of unsecured claims under the Debtors' Plan,  subject to
completion of mutually acceptable Unsecured Creditor Debt Documentation, and has


<PAGE>4

asked the Bankruptcy Court to defer  consideration of its second amended plan of
reorganization and second amended proposed disclosure statement.

The Plan of Reorganization

     The Plan  contemplates  the payment in full of all of the allowed claims of
the Debtors primarily through  recapitalization  financing  (including  proceeds
from CMBS  sales)  aggregating  at least  $856  million  (the  "Recapitalization
Financing").  Approximately $275 million of the Recapitalization Financing would
be  provided by Merrill  Lynch and GACC  through a secured  financing  facility,
approximately $155 million would be provided through new secured notes issued to
some of the Company's major unsecured  creditors,  and another $35 million would
be obtained from another existing creditor in the form of an additional  secured
financing facility (collectively,  the "New Debt"). The sale of select CMBS (the
"CMBS Sale"), the proceeds of which are expected to be used to pay down existing
debt, is contemplated to provide the balance of the Recapitalization  Financing.
The Company may seek new equity  capital from one or more investors to partially
fund the Plan, although new equity is not required to fund the Plan.

     In connection with the Plan,  substantially  all cash flows are expected to
be used to satisfy  principal,  interest and fee obligations under the New Debt.
The $275 million  secured  financing would provide for (i) interest at a rate of
one month LIBOR plus 3.25%, (ii) principal prepayment/amortization  obligations,
(iii) extension fees after two years and (iv) maturity on the fourth anniversary
of the effective  date of the Plan. The Plan  contemplates  that the $35 million
secured  financing  would provide for terms  similar to those  referenced in the
preceding sentence;  however, the proposed lender has not agreed to any terms of
the  $35  million  secured  financing  and  there  can be no  assurance  that an
agreement for this  financing  will be obtained or that, if obtained,  the terms
will be as referenced  above.  The approximate  $155 million  secured  financing
would be effected  through the issuance of two series of secured notes under two
separate  indentures.  The  first  series  of  secured  notes,  representing  an
aggregate principal amount of approximately $105 million,  would provide for (i)
interest  at a rate of 11.75% per annum, (ii)  principal prepayment/amortization
obligations, (iii) extension fees after four years and (iv) maturity on the
fifth  anniversary of the  effective  date  of the  Plan.  The  second
series  of  secured  notes, representing an aggregate  principal amount of
approximately $50 million,  would provide for (i) interest at a rate of 13% per
annum with additional  interest at the rate of 7% per annum accreting over the
debt term, (ii) extension fees after four years,  and (iii)  maturity on the
sixth  anniversary  of the effective date of the Plan. The New Debt described
above will be secured by  substantially all of the  assets  of the  Company.
It is  contemplated  that  there  will  be restrictive covenants, including
financial covenants, in connection with the New Debt.

     The Plan also  contemplates  that the holders of the Company's common stock
will retain their stock. Under the Plan, no cash dividends, other than a maximum
of $4.1 million to preferred shareholders, can be paid to existing shareholders.
See  "BUSINESS-Effect of Chapter 11 on REIT Status and Other Tax Matters-Taxable
Income  Distributions"  for  further  discussion.   Subject  to  the  respective
approvals  by the  holders  of the  Company's  Series B  Cumulative  Convertible
Preferred  Stock (the  "Series B Preferred  Stock") and the Series F  Redeemable
Cumulative  Dividend  Preferred Stock (the "Series F Preferred Stock" or "junior
preferred  stock"),  the Plan  contemplates  an  amendment  to their  respective
relative  rights and  preferences  to permit the  payment of accrued  and unpaid
dividends in cash or common stock, at the Company's  election.  The Plan further
contemplates  amendments to the relative  rights and preferences of the Series D
Cumulative Convertible Preferred Stock (the "Series D Preferred Stock"), through
an  exchange  of Series D Preferred  Stock for Series E  Cumulative  Convertible
Preferred Stock (the "Series E Preferred  Stock"),  similar to those  amendments
effected  in  connection  with  the  recent  exchange  of the  former  Series  C
Cumulative  Convertible  Preferred  Stock (the  "Series C Preferred  Stock") for
Series E Preferred  Stock.  See "MARKET FOR THE  REGISTRANT'S  COMMON  STOCK AND
OTHER  RELATED  STOCKHOLDER  MATTERS-Exchange  of Series C  Preferred  Stock for
Series E Preferred Stock" for a discussion of the exchange of Series C Preferred
Stock for Series E Preferred Stock.

     Reference is made to the Plan and Proposed Disclosure Statement, previously
filed with the Securities and Exchange  Commission  (the "SEC") as exhibits to a
Form  8-K,  for a  complete  description  of the  financing  contemplated  to be
obtained  under  the Plan  from the  respective  existing  creditors  including,
without limitation,  payment terms, restrictive covenants and collateral,  and a
complete  description of the treatment of preferred  stockholders.  Although the
Company  has  commitments  for  substantially  all of the New  Debt and has sold
certain of the CMBS  contemplated  to be sold in connection  with the CMBS Sale,
there can be no  assurance  that the Company  will  obtain the  Recapitalization


<PAGE>5

Financing,  that the Plan will be confirmed by the Bankruptcy Court, or that the
Plan, if confirmed,  will be  consummated.  The Plan also  contemplates  certain
amendments to the Company's articles of incorporation,  including an increase in
authorized shares from 120 million to 375 million  (consisting of 300 million of
common shares and 75 million of preferred shares).

Effect of Chapter 11 Filing on REIT Status and Other Tax Matters

     REIT Status

     CRIIMI MAE is required to meet income,  asset,  ownership and  distribution
tests  to  maintain  its  REIT  status.  The  Company  has  satisfied  the  REIT
requirements for all years through,  and including,  1998.  However,  due to the
uncertainty resulting from its Chapter 11 filing, there can be no assurance that
CRIIMI MAE will  retain its REIT  status for 1999 or  subsequent  years.  If the
Company  fails to retain its REIT status for any taxable  year, it will be taxed
as a regular domestic corporation subject to federal and state income tax in the
year of disqualification and for at least the four subsequent years.

     The Company's 1999 Taxable Income

     As a REIT,  CRIIMI MAE is generally  required to distribute at least 95% of
its "REIT taxable  income" to its  shareholders  each tax year.  For purposes of
this  requirement,  REIT taxable income  excludes  certain excess noncash income
such as original issue discount  ("OID").  In determining its federal income tax
liability,  CRIIMI  MAE, as a result of its REIT  status,  is entitled to deduct
from its taxable income dividends paid to its shareholders.  Accordingly, to the
extent the Company  distributes its net income to  shareholders,  it effectively
reduces taxable income, on a dollar-for-dollar basis, and eliminates the "double
taxation" that normally  occurs when a corporation  earns income and distributes
that income to  shareholders  in the form of  dividends.  The Company,  however,
still must pay corporate level tax on any 1999 taxable income not distributed to
shareholders.  Unlike the 95% distribution  requirement,  the calculation of the
Company's  federal  income tax liability  does not exclude excess noncash income
such as OID.  Should  CRIIMI MAE  terminate  or fail to maintain its REIT status
during the year ended  December 31, 1999,  the taxable income for the year ended
December 31, 1999 of approximately  $37.5 million would generate a tax liability
of up to $15.0 million.

     In  determining  the  Company's  taxable  income  for  1999,  distributions
declared by the Company on or before September 15, 2000 and actually paid by the
Company on or before  December 31, 2000 will be considered as dividends paid for
the year ended December 31, 1999. The Company anticipates distributing all, or a
substantial  portion of, its 1999 taxable income in the form of non-cash taxable
dividends.  There can be no assurance that the Company will be able to make such
distributions with respect to its 1999 taxable income.

     1999 Excise Tax Liability

     Apart from the requirement that the Company  distribute at least 95% of its
REIT taxable  income to maintain  REIT status,  CRIIMI MAE is also required each
calendar  year to  distribute  an amount at least equal to the sum of 85% of its
"REIT  ordinary  income"  and 95% of its "REIT  capital  gain  income"  to avoid
incurring a nondeductible  excise tax. Unlike the 95% distribution  requirement,
the 85%  distribution  requirement is not reduced by excess noncash income items
such as OID. In addition,  in  determining  the Company's  excise tax liability,
only dividends actually paid in 1999 will reduce the amount of income subject to
this excise tax. The Company has accrued  $1,105,000  for the excise tax payable
for 1999.  The accrual was  calculated  based on the taxable income for the year
ended December 31, 1999.

     The Company's 1998 Taxable Income

     On September 14, 1999,  the Company  declared a dividend  payable to common
shareholders  of  approximately  1.61  million  shares of a new series of junior
convertible preferred stock with a face value of $10 per share.  See Note 12 of
the Notes to Consolidated  Financial  Statements for further  discussion.  The
purpose of the dividend was to distribute  approximately  $15.7 million in
undistributed  1998 taxable income.  To the extent  that it is  determined such
amount was not distributed, the Company would bear a corporate level income tax
on the undistributed amount.  There can be no assurance that all of the


<PAGE>6

Company's tax liability was eliminated by payment of such junior preferred stock
dividend. The Company paid the junior preferred stock dividend on November 5,
1999. The junior preferred stock dividend was taxable to common  shareholder
recipients.  Junior preferred  shareholders  were  permitted  to  convert  their
shares  of  junior preferred  stock into common  shares  during two  separate
conversion periods. During these conversion periods,  an  aggregate  1,020,241
shares of junior preferred stock were converted into 8,798,009 shares of common
stock.

     Taxable Income Distributions

     The recently  issued  Internal  Revenue  Service  Revenue  Procedure  99-17
provides   securities  and  commodities   traders  with  the  ability  to  elect
mark-to-market  treatment  for 2000 by including  an election  with their timely
filed 1999 federal tax  extension.  The election  applies to all future years as
well, unless revoked with the consent of the Internal Revenue Service.  On March
15,  2000,  the  Company  determined  to  elect  mark-to-market  treatment  as a
securities  trader for 2000 and,  accordingly,  will recognize  gains and losses
prior to the actual disposition of its securities.  Moreover, some if not all of
those gains and  losses,  as well as some if not all gains or losses from actual
dispositions  of  securities,  will be  treated  as  ordinary  in nature and not
capital,  as they would be in the absence of the  election.  Therefore,  any net
operating  losses  generated by the Company's  trading  activity will offset the
Company's ordinary taxable income, and thereby reduce required  distributions to
shareholders by a like amount. See "BUSINESS-Risk  Factors-Risks Associated with
Trader  Election"  for  further  discussion.  If the  Company  does  have a REIT
distribution  requirement (and such  distributions  would be permitted under the
Plan), a substantial portion of the Company's distributions would be in the form
of non-cash taxable dividends.

     Taxable Mortgage Pool Risks

     An entity that constitutes a "taxable  mortgage pool" as defined in the Tax
Code  ("TMP") is treated as a separate  corporate  level  taxpayer  for  federal
income  tax  purposes.  In  general,  for an entity to be  treated  as a TMP (i)
substantially  all of the assets must consist of debt obligations and a majority
of those debt obligations  must consist of mortgages;  (ii) the entity must have
more than one class of debt securities  outstanding with separate maturities and
(iii)  the  payments  on the debt  securities  must bear a  relationship  to the
payments  received from the  mortgages.  The Company  currently  owns all of the
equity interests in three trusts that constitute TMPs (CBO-1,  CBO-2 and CMO-IV,
collectively  the "Trusts").  See  "BUSINESS-Resecuritizations,"  "BUSINESS-Loan
Originations and Securitizations" and Notes 5 and 6 of the Notes to Consolidated
Financial  Statements for descriptions of CBO-1, CBO-2 and CMO-IV. The statutory
provisions and regulations governing the tax treatment of TMPs (the "TMP Rules")
provide an exemption  for TMPs that  constitute  "qualified  REIT  subsidiaries"
(that is,  entities  whose equity  interests  are wholly owned by a REIT).  As a
result of this  exemption  and the fact that the Company  owns all of the equity
interests in each Trust, the Trusts currently are not required to pay a separate
corporate level tax on income they derive from their underlying mortgage assets.

     The Company also owns certain securities  structured as bonds (the "Bonds")
issued by each of the Trusts. Certain of the Bonds owned by the Company serve as
collateral (the "Pledged Bonds") for short-term,  variable-rate  borrowings used
by the Company to finance their initial  purchase.  If the creditors holding the
Pledged Bonds were to seize or sell this  collateral  and the Pledged Bonds were
deemed to constitute equity interests (rather than debt) in the Trusts, then the
Trusts would no longer  qualify for the exemption  under the TMP Rules  provided
for  qualified  REIT  subsidiaries.  The Trusts  would then be required to pay a
corporate  level  federal  income  tax.  As a result,  available  funds from the
underlying  mortgage assets that would  ordinarily be used by the Trusts to make
payments  on  certain  securities  issued by the  Trust  (including  the  equity
interests and the Pledged Bonds) would instead be applied to tax payments. Since
the equity  interests  and Bonds owned by the Company are the most  subordinated
securities and,  therefore,  would absorb payment  shortfalls first, the loss of
the exemption under the TMP rules could have a material  adverse effect on their
value and the payments received thereon.

     In  addition to causing the loss of the  exemption  under the TMP Rules,  a
seizure or sale of the Pledged  Bonds and a  characterization  of them as equity
for tax purposes could also jeopardize the Company's REIT status if the value of
the remaining  ownership interests in any Trust held by the Company (i) exceeded
5% of the total value of the Company's  assets or (ii) constituted more than 10%
of the Trust's  voting  interests.  Although it is possible that the election by
the TMPs to be treated as taxable REIT  subsidiaries  could  prevent the loss of
CRIIMI MAE's REIT status,  there can be no assurance that a valid election could
be made given the timing of a seizure or sale of the Pledged Bonds.


<PAGE>7

The CMBS Market

     Historically,  traditional lenders,  including commercial banks,  insurance
companies  and  savings and loans have been the  primary  holders of  commercial
mortgages.  The real  estate  market of the late 1980s and early  1990s  created
business and  regulatory  pressure to reduce the real estate  assets held on the
books of these institutions. As a result, there has been significant movement of
commercial  real estate debt from  private  institutional  holders to the public
markets.  According to Commercial  Mortgage  Alert,  CMBS  issuances in the U.S.
equaled  approximately  $58.3  billion in 1999,  $77.7  billion  in 1998,  $40.4
billion in 1997 and $28.8 billion in 1996.

     CMBS are  generally  created  by  pooling  commercial  mortgage  loans  and
directing  the cash  flow  from  such  mortgage  loans to  various  tranches  of
securities.   The  tranches   consist  of   investment   grade  (AAA  to  BBB-),
non-investment grade (BB+ to CCC) and unrated securities.  The first step in the
process of creating CMBS is loan  origination.  Loan  origination  occurs when a
financial  institution  lends money to a borrower to  refinance or to purchase a
commercial  real  estate  property,  and secures the loan with a mortgage on the
property  that the borrower  owns or purchases.  Commercial  mortgage  loans are
typically  non-recourse  to  the  borrower.  A pool  of  these  commercial  real
estate-backed  mortgage loans is then  accumulated,  often by a large commercial
bank or other  financial  institution.  One or more rating agencies then analyze
the loans and the underlying real estate to determine their credit quality.  The
mortgage  loans  are  then  deposited  into an  entity  that is not  subject  to
taxation,  often a real estate mortgage  investment conduit ("REMIC") or, in the
case of the Company, a TMP. The investment vehicle then issues securities backed
by the commercial mortgage loans, CMBS.

     The CMBS are divided into  tranches,  which are afforded  certain  priority
rights to the cash flow from the underlying  mortgage loans.  Interest  payments
typically  flow first to the most senior  tranche  until it receives  all of its
accrued interest and then to the junior tranches in order of seniority until all
available  interest is exhausted.  Principal payments typically flow to the most
senior  tranche  until it is  retired.  Tranches  are then  retired  in order of
seniority,  based on available  principal.  Losses,  if any, are generally first
applied  against the principal  balance of the lowest rated or unrated  tranche.
Losses are then applied in reverse order of seniority.  Each tranche is assigned
a credit rating by one or more rating agencies based on the agencies' assessment
of the likelihood of the tranche receiving its stated payment of principal.  The
CMBS are then sold to investors  through  either a public  offering or a private
placement.   The  Company  has  primarily  focused  on  acquiring  or  retaining
non-investment  grade and unrated tranches,  issued by mortgage conduits,  where
the Company believed its market  knowledge and real estate expertise  allowed it
to earn attractive risk-adjusted returns.

     At the time of a  securitization,  one or more  entities  are  appointed as
"servicers" for the pool of mortgage  loans,  and are responsible for performing
servicing duties which include collecting payments (master or direct servicing),
monitoring  performance  (loan  management)  and working out or  foreclosing  on
defaulted  loans  (special  servicing).  Each servicer  receives a fee and other
financial incentives based on the type and extent of servicing duties.

     The CMBS market was adversely affected by the turmoil which occurred in the
capital  markets  commencing in late summer of 1998 that caused spreads  between
CMBS  yields  and  the  yields  on  U.S.  Treasury  securities  with  comparable
maturities to widen,  resulting in a decrease in the value of CMBS. As a result,
the  creation  of new CMBS  and the  trading  of  existing  CMBS  came to a near
standstill.  In late  November  1998,  buying and  trading  activity in the CMBS
market began to recover, increasing liquidity in the CMBS market; however, these
improvements mostly related to investment grade CMBS. New issuances of CMBS also
returned in late November 1998 and continued  throughout  1999 with the issuance
of newly created CMBS totaling  approximately $58.3 billion for 1999. The market
for Subordinated CMBS has, however, been slower to recover. It is difficult,  if
not impossible, to predict when, or if, the CMBS market and, in particular,  the
Subordinated CMBS market, will recover. Even if the market for Subordinated CMBS
recovers,   the  liquidity  of  such  market  has  historically   been  limited.
Additionally, during adverse market conditions, the liquidity of such market has
been  severely  limited.  Therefore,  management's  estimate of the value of the
Company's CMBS could vary significantly from the value that could be realized in
a  transaction  between a willing  buyer  and a willing  seller in other  than a
forced sale or liquidation.


<PAGE>8
Subordinated CMBS Acquisitions

     As of December 31, 1999,  the  Company's  $2.3 billion  portfolio of assets
included $1.2 billion of Subordinated  CMBS  (representing  approximately 51% of
the Company's total consolidated assets).

     The Company did not acquire any Subordinated  CMBS in 1999. In 1998, CRIIMI
MAE acquired  Subordinated CMBS from offerings with a total face amount of $13.5
billion.  These  offerings  comprised  approximately  17.2% of the total  ($58.3
billion face amount  according  to  Commercial  Mortgage  Alert) CMBS market for
1998. For the year ended December 31, 1998,  the Company  acquired  Subordinated
CMBS with an aggregate  face amount of  approximately  $1.2 billion,  making the
Company a leading  purchaser of  Subordinated  CMBS in 1998.  As of December 31,
1999,  approximately  42% of the Company's CMBS (based on fair value) were rated
BB+, BB or BB-, 27% were B+, B, B- or CCC and 10% were  unrated.  The  remaining
approximately  21%  represents  investment  grade  securities  that the  Company
reflects    on   its    balance    sheet   as   a   result   of    CBO-2.    See
"BUSINESS-Resecuritizations" and "BUSINESS-The Portfolio-CMBS."

     The Company generally  acquired  Subordinated CMBS in privately  negotiated
transactions, which allowed it to perform due diligence on a substantial portion
of the mortgage loans underlying the Subordinated CMBS as well as the underlying
real  estate  prior  to  consummating  the  purchase.  In  connection  with  its
Subordinated CMBS acquisitions,  the Company targeted  diversified mortgage loan
pools with a mix of property types,  geographic locations and borrowers.  CRIIMI
MAE financed a substantial  portion of its Subordinated  CMBS  acquisitions with
short-term,  variable-rate  financing  facilities secured by the Company's CMBS.
The  Company's  business  strategy was to  periodically  refinance a substantial
portion of the Subordinated CMBS in its portfolio through a resecuritization  of
such  Subordinated  CMBS primarily to attain a better matching of the maturities
of  its  assets  and   liabilities   through  the   refinancing  of  short-term,
variable-rate,  recourse  financing  with  long-term,  fixed-rate,  non-recourse
financing.  See   "BUSINESS-Resecuritizations,"   "MANAGEMENT'S  DISCUSSION  AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," and Notes 5 and 9 of
the Notes to Consolidated Financial Statements.

     The Company  generally  enters into interest rate protection  agreements to
mitigate the adverse effects of rising short-term interest rates on the interest
payments due on its  variable-rate  financing  facilities.  It is the  Company's
policy to hedge at least 75% of the principal balance of its variable-rate  debt
with interest rate  protection  agreements  that limit the cash flow exposure to
increases  in interest  rates  beyond a certain  level on the amount of interest
expense the Company must pay. As of December 31, 1999,  approximately 94% of the
Company's  variable-rate  debt was  hedged  by  interest  rate  caps,  a form of
interest rate  protection  agreement.  Interest rate caps provide  protection to
CRIIMI  MAE to the  extent  interest  rates,  based  on a  readily  determinable
interest rate index,  increase above the stated interest rate cap, in which case
CRIIMI MAE would receive payments based on the difference  between the index and
the cap. These  payments  would serve to reduce the interest  payments due under
the  variable-rate  financing  facilities.   See  "MANAGEMENT'S  DISCUSSION  AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and Notes 9 and 10 of
the Notes to Consolidated  Financial  Statements for a further discussion of the
Company's  short-term,  variable-rate  secured financing facilities and interest
rate protection agreements. If treasury rates increase and/or spreads widen from
the December 31, 1999 levels, the value of the Company's portfolio of securities
would decrease.

Resecuritizations

     The Company initially funded a substantial portion of its Subordinated CMBS
acquisitions with short-term,  variable-rate  secured financing  facilities.  To
further  mitigate the Company's  exposure to interest  rate risk,  the Company's
business  strategy was to periodically  refinance a significant  portion of this
short-term,   variable-rate  debt  with  fixed-rate,  non-recourse  debt  having
maturities  that matched those of the Company's  mortgage  assets  securing such
debt  ("match-funded").   The  Company  effected  such  refinancing  by  pooling
Subordinated  CMBS,  once a  sufficient  pool  of  Subordinated  CMBS  had  been
accumulated,  and issuing newly  created CMBS backed by the pooled  Subordinated
CMBS. The CMBS issued in such resecuritizations were fixed-rate obligations with
maturities that matched the maturities of the Subordinated  CMBS backing the new
CMBS. These  resecuritizations also increased the amount of borrowings available
to the Company due to the increased collateral value of the new CMBS relative to
the pooled  Subordinated  CMBS. The increase in collateral value was principally
attributable  to  the  seasoning  of  the  underlying  mortgage  loans  and  the
diversification  that  occurred  when such  Subordinated  CMBS were pooled.  The
Company  generally  used the cash proceeds from the  investment  grade CMBS that
were sold in the  resecuritization  to  reduce  the  amount  of its  short-term,
variable-rate secured borrowings. The Company then used the net excess borrowing

<PAGE>9

capacity created by the resecuritization to obtain new short-term, variable-rate
secured borrowings which were used with additional new short-term, variable-rate
secured borrowings  typically provided by the Subordinated CMBS seller and, to a
lesser extent,  cash, to purchase  additional  Subordinated  CMBS.  Although the
Company's  resecuritizations  mitigated the Company's  exposure to interest rate
risk through  match-funding,  the Company's  short-term,  variable-rate  secured
borrowings increased from December 31, 1996 to December 31, 1998, as a result of
the Company's continued acquisitions of Subordinated CMBS during that period.

     In December  1996,  the Company  completed  its first  resecuritization  of
Subordinated  CMBS  ("CBO-1") with a combined face value of  approximately  $449
million  involving  35  individual  securities  collateralized  by  12  mortgage
securitization pools. The Company sold, in a private placement,  securities with
a face amount of $142  million  and  retained  securities  with a face amount of
approximately $307 million.  Through CBO-1, the Company refinanced approximately
$142 million of short-term,  variable-rate,  secured borrowings with fixed-rate,
non-recourse,  match-funded  debt. CBO-1 generated excess borrowing  capacity of
approximately  $22 million  primarily as a result of a higher  overall  weighted
average  credit  rating for the new CMBS,  as compared to the  weighted  average
credit rating on the related CMBS collateral.

     In  May  1998,  the  Company  completed  its  second   resecuritization  of
Subordinated  CMBS  ("CBO-2") with a combined face value of  approximately  $1.8
billion  involving  75  individual  securities  collateralized  by  19  mortgage
securitization  pools and three of the retained securities from CBO-1. In CBO-2,
the Company sold, in a private placement,  securities with a face amount of $468
million  and  retained  securities  with a face  amount  of  approximately  $1.3
billion.  Through CBO-2, the Company  refinanced  approximately  $468 million of
short-term,  variable-rate  secured  borrowings with  fixed-rate,  non-recourse,
match-funded   debt.   CBO-2   generated  net  excess   borrowing   capacity  of
approximately  $160 million  primarily as a result of a higher overall  weighted
average  credit  rating for the new CMBS,  as compared to the  weighted  average
credit  rating on the  related  CMBS  collateral.  See "LEGAL  PROCEEDINGS"  for
information regarding the sale of additional CBO-2 CMBS.

     As of December 31, 1999, the Company's  total debt was  approximately  $2.0
billion,  of  which  approximately  53% was  fixed-rate,  match-funded  debt and
approximately  47% was  short-term,  variable-rate  or fixed-rate  debt that was
recourse to the Company and not  match-funded.  For the year ended  December 31,
1999, the Company's weighted average cost of borrowing  (including  amortization
of discounts  and deferred  financing  fees of  approximately  $8.7 million) was
approximately    7.64%.   See    "BUSINESS-Subordinated    CMBS   Acquisitions,"
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS"  and  Notes  5, 9 and  10 of the  Notes  to  Consolidated  Financial
Statements for further  information  regarding the Company's  resecuritizations,
short-term, variable-rate secured financings, and interest rate caps.

Loan Originations and Securitizations

     Prior  to  the  Petition  Date,  the  Company  originated   mortgage  loans
principally   through  mortgage  loan  conduit  programs  with  major  financial
institutions  for the primary purpose of pooling such loans for  securitization.
The Company viewed a  securitization  as a means of extracting the maximum value
from the mortgage loans  originated.  A portion of the mortgage loans originated
was financed  through the creation  and sale of  investment  grade CMBS to third
parties in connection  with the  securitization.  The Company  received net cash
flow on the CMBS not sold to third  parties  after  payment  of  amounts  due to
secured  creditors who had provided  acquisition  financing.  Additionally,  the
Company  received  origination  and servicing  fees related to the mortgage loan
conduit programs.

     A majority  of the  mortgage  loans  originated  under the  Company's  loan
conduit programs were "No Lock" mortgage loans.  Unlike most commercial mortgage
loans originated for the CMBS market which contain  "lock-out" clauses (that is,
provisions  which prohibit the prepayment of a loan for a specified period after
the loan is  originated  or impose  costly yield  maintenance  provisions),  the
Company's  No Lock loans  allowed  borrowers  the ability to prepay loans at any
time by paying a prepayment penalty.

     Prior to the Petition Date, the Company had originated over $900 million in
aggregate  principal  amount of loans.  In June 1998,  the  Company  securitized
approximately  $496  million of the  commercial  mortgage  loans  originated  or


<PAGE>10

acquired through a mortgage loan conduit program with Citicorp Real Estate, Inc.
("Citibank"), and through CRIIMI MAE CMBS Corp., issued Commercial Mortgage Loan
Trust Certificates, Series 1998-1 ("CMO-IV"). A majority of these mortgage loans
were "No Lock"  loans.  In CMO-IV,  CRIIMI MAE sold $397  million face amount of
fixed-rate,  investment grade CMBS. The Company originally  intended to sell all
of the  investment  grade  tranches of CMO-IV;  however,  two  investment  grade
tranches  were not sold until  1999.  CRIIMI MAE has call  rights on each of the
issued  securities and therefore has not surrendered  control of the bonds, thus
requiring  the  transaction  to be accounted  for as a financing of the mortgage
loans collateralizing the investment grade CMBS sold in the securitization.  See
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS-Liquidity  and Capital  Resources"  and Notes 6 and 9 of the Notes to
Consolidated  Financial  Statements  for additional  information  regarding this
securitization,  including the 1999 sales of the two remaining  investment grade
tranches and certain financial and accounting effects of such sales.

     At the time it filed for bankruptcy, the Company had a second mortgage loan
conduit program with Citicorp Real Estate,  Inc. (the "Citibank  Program") and a
loan conduit  program with  Prudential  Securities  Incorporated  and Prudential
Securities  Credit  Corporation  (collectively,  "Prudential")  (the "Prudential
Program").

     Each Program  provided  that during the  warehouse  period,  the  financial
institution  party would fund and originate in its name all mortgage loans under
the  Program,  and CRIIMI MAE would  deposit a portion of each loan  amount in a
reserve account. In each Program, the financial  institution was responsible for
executing an interest rate hedging strategy.

     The  Citibank  Program  provided for CRIIMI MAE to pay to Citibank the face
value of the loans originated through the Program, which were funded by Citibank
and not  otherwise  securitized,  plus or minus  any  hedging  loss or gain,  on
December 31, 1998. To secure this obligation, CRIIMI MAE was required to deposit
a portion of the principal amount of each originated loan in a reserve account.

     On April 5, 1999,  the Bankruptcy  Court entered a Stipulation  and Consent
Order (the "Order"),  negotiated by the Company and Citibank.  The  negotiations
were in  response  to a letter  Citibank  sent to the Company on October 5, 1998
alleging that the Company was in default under the Citibank  Program and that it
was  terminating the Citibank  Program.  The Order provided that Citibank would,
with CRIIMI  MAE's  cooperation,  sell the loans  originated  under the Citibank
Program  pursuant  to  certain  specified  terms  and  conditions.  All  of  the
commercial  loans  originated  under the Citibank Program were sold in 1999 at a
loss to the  Company.  See  "MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS-Liquidity and Capital Resources" and Notes 6
and 9 of the Notes to Consolidated Financial Statements for a further discussion
of these commercial loan sales and certain  financial and accounting  effects of
such sales.

     Under  the  Prudential  Program,  the  Company  had  an  option  to  pay to
Prudential the face value of the loan plus or minus any hedging loss or gain, at
the earlier of June 30,  1999,  or the date by which a stated  quantity of loans
for securitization had been made. Under the Prudential Program,  the Company was
required to fund a reserve account of approximately $2 million for the sole loan
originated  under this  Program.  Since  CRIIMI MAE was unable to  exercise  its
option under the  Prudential  Program,  the Company  forfeited the amount of the
reserve  account.  CRIIMI  MAE  intends  to sell the loan  originated  under the
Prudential Program.  There can be no assurance that an agreement will be reached
with  Prudential  or, if reached  that such  agreement  would be approved by the
Bankruptcy Court.

Servicing

     CRIIMI MAE conducts its mortgage  loan  servicing  and advisory  operations
through its affiliate,  CMSLP.  At the time of the Chapter 11 filing,  CMSLP was
responsible  for certain  servicing  functions on a mortgage  loan  portfolio of
approximately  $32.0 billion,  as compared to approximately  $16.5 billion as of
December 31, 1997. Prior to the Petition Date, CRIIMI MAE increased its mortgage
loan  servicing  and  advisory  operations  primarily  through its  purchases of
Subordinated  CMBS by acquiring  certain servicing rights for the mortgage loans
collateralizing  the  Subordinated  CMBS, as well as providing  servicing on the
loans originated through the CRIIMI MAE loan origination programs.


<PAGE>11

     CMSLP did not file for protection under Chapter 11. However, because of the
related party nature of its relationship with CRIIMI MAE, CMSLP has been under a
high degree of scrutiny from servicing  rating  agencies.  As a result of CRIIMI
MAE's Chapter 11 filing, CMSLP was also declared in default under certain credit
agreements with First Union National Bank ("First Union"). In order to repay all
such credit agreement obligations and to increase its liquidity,  CMSLP arranged
for ORIX Real Estate Capital Markets,  LLC ("ORIX"),  formerly known as Banc One
Mortgage  Capital  Markets,  LLC,  to  succeed  it as  master  servicer  on  two
commercial  mortgage  pools on October 30, 1998. In addition,  in order to allay
rating agency concerns stemming from CRIIMI MAE's Chapter 11 filing, in November
1998,  CRIIMI  MAE  designated  ORIX as special  servicer  on 33  separate  CMBS
securitizations   totaling   approximately  $29  billion,   subject  to  certain
requirements  contained in the respective servicing  agreements.  As of December
31, 1999, CMSLP continued to perform special  servicing as sub-servicer for ORIX
on all but five of these  securitizations.   As of December 31, 1999, CRIIMI
MAE remained the owner of the lowest rated  tranche of the related  Subordinated
CMBS and, as such,  retains rights pertaining to ownership,  including the right
to replace the special servicer.  CMSLP also lost the right to specially service
the DLJ MAC 95 CF-2  securitization when the majority holder of the lowest rated
tranches replaced CMSLP as special  servicer.  As of December 31, 1999 and 1998,
CMSLP's  remaining  servicing  portfolio was  approximately  $28 billion and $31
billion,  respectively.  As part of CRIIMI MAE's Plan,  certain of the Company's
non-resecuritized  CMBS are  intended to be sold.  As such,  CMSLP will lose its
special  servicing  rights related to these CMBS. In 1999, CMSLP generated gross
revenues of $1.1 million in fees on these CMBS.

     CMSLP's principal servicing activities are described below.

     Special Servicing

     A special  servicer  typically  provides  asset  management  and resolution
services with respect to nonperforming or underperforming loans within a pool of
mortgage loans. When acquiring  Subordinated CMBS, CRIIMI MAE typically required
that it  retain  the right to  appoint  the  special  servicer  for the  related
mortgage pools.  When serving as special  servicer of a CMBS pool, CMSLP has the
authority to deal directly with any borrower that fails to perform under certain
terms of its  mortgage  loan,  including  the failure to make  payments,  and to
manage any loan workouts and foreclosures.  As special servicer, CMSLP earns fee
income on  services  provided in  connection  with any loan  servicing  function
transferred to it from the master servicer.  CRIIMI MAE believes that because it
owns  the  lowest  rated  or  unrated  tranche  (first  loss  position)  of  the
Subordinated  CMBS, CMSLP has an incentive to quickly resolve any loan workouts.
During  the  year  ended  December  31,  1999,   CMSLP   successfully   resolved
approximately  $174.1  million of CMBS loan  workouts.  As of December 31, 1999,
CMSLP was  designated  as the special  servicer (or  sub-special  servicer)  for
approximately  4,978  commercial  mortgage  loans,   representing  an  aggregate
principal amount of approximately  $27 billion.  Such commercial  mortgage loans
represent  substantially  all of the  mortgage  loans  underlying  CRIIMI  MAE's
Subordinated CMBS portfolio.

     As of December  31,  1999,  CMSLP had a special  servicer  rating of "above
average"  from  Fitch IBCA and had been  approved  on a  transactional  basis by
Moody's Investors Service,  Inc. ("Moody's") and Duff & Phelps Credit Rating Co.
However, CMSLP lost an "acceptable" special servicer rating by Standard & Poor's
("S&P") in  October  1998 as a result of the  Chapter  11 filing of CRIIMI  MAE.
Also, as a result of the Chapter 11 filing,  Fitch IBCA placed  CMSLP's  special
servicing rating on "rating watch".

     Master Servicing

     A master servicer typically provides  administrative and reporting services
to the trustee  with respect to a particular  issuance of CMBS.  Mortgage  loans
underlying CMBS generally are serviced by a number of primary  servicers.  Under
most  master  servicing  arrangements,  the  primary  servicers  retain  primary
responsibility for administering the mortgage loans and the master servicer acts
as an intermediary in overseeing the work of the primary  servicers,  monitoring
their  compliance  with the  standards  of the  issuer of the  related  CMBS and
consolidating  the  servicers'   respective   periodic  accounting  reports  for
transmission  to the  trustee.  When  acting as master  servicer of a CMBS pool,
CMSLP has greater control over the mortgage assets  underlying its  Subordinated
CMBS,  including the  authority to  (i)-collect  monthly  principal and interest
payments  (either from a direct  servicer or directly from  borrowers)-on  loans
comprising a CMBS pool and remit such amounts to the pool trustee,  (ii)-oversee
the  performance  of  sub-servicers  and  (iii)-report  to  trustees.  As master
servicer,  CMSLP is usually paid a fee and can earn float income on the deposits
it  holds.  In  addition  to this fee and  float  income,  the  master  servicer


<PAGE>12

typically has more direct and regular  contact with  borrowers  than the special
servicer.  As of December 31, 1999, CMSLP remained master servicer on three CMBS
portfolios  representing  commercial  mortgage loans with an aggregate principal
amount of approximately $2.3-billion.

     As of December 31, 1999, CMSLP had a master servicer rating of "acceptable"
from Fitch  IBCA and had been  approved  on a  transactional  basis by  Moody's.
However,  CMSLP lost an acceptable  master  servicer  rating from S&P in October
1998 as a result of the  Chapter 11 filing of CRIIMI MAE.  Also,  as a result of
the  Chapter 11 filing,  Fitch IBCA placed  CMSLP's  master  servicer  rating on
"rating watch".

     Direct (or Primary) Servicing

     Direct (or primary)  servicers  typically perform certain functions for the
master servicer.  Direct serviced loans are those loans for which CMSLP collects
loan payments  directly from the borrower  (including tax and insurance  escrows
and replacement reserves). The loan payments are remitted to the master servicer
for the loan (which may be the same entity as the direct servicer), usually on a
fixed date each  month.  The direct  servicer  is usually  paid a fee to perform
these  services,  and is eligible to earn float income on the deposits  held. In
addition  to this fee and float  income,  the direct  servicer,  like the master
servicer,  typically has more direct and regular contact with borrowers than the
special servicer.  As of December 31, 1999, CMSLP was designated direct servicer
for  approximately  502 commercial  mortgage  loans,  representing  an aggregate
principal  amount of approximately  $2.4 billion.  This number of loans excludes
loans that are both direct and master  serviced by CMSLP,  which are included in
the master servicing figures above.

     Loan Management

     In certain  cases,  CMSLP acts as loan  manager  and  monitors  the ongoing
performance   of  properties   securing  the  mortgage   loans   underlying  its
Subordinated  CMBS  portfolio  by  continuously  reviewing  the  property  level
operating data and regular site  inspections.  For  approximately  half of these
loans,  CMSLP  performs these duties on a contractual  basis;  for the remaining
loans, as part of its routine asset monitoring  process, it reviews the analysis
performed  by other  servicers.  This  allows  CMSLP  to  identify  and  resolve
potential  issues that could result in losses.  As of December  31, 1999,  CMSLP
served as contractual loan manager for approximately  2,464 commercial  mortgage
loans representing an aggregate principal amount of approximately $12.0 billion.
As of December 31, 1999, CMSLP performed  surveillance on analyses  performed by
other servicers for approximately 2,456 commercial mortgage loans,  representing
an aggregate principal amount of $14.8 billion.

Underwriting Procedures

     CRIIMI MAE believes that its experience in  underwriting  has enabled it to
maintain the overall  quality of assets  underlying  its CMBS  portfolio  and to
properly manage certain of the risks  associated with mortgage loans  underlying
acquired  Subordinated CMBS and loan  originations.  Since the Company generally
acquired  CMBS  through   privately   negotiated   transactions  and  originated
commercial  mortgage loans through its regional offices,  it was able to perform
extensive  due  diligence  on a majority  of the  mortgage  loans as well as the
underlying  real estate prior to consummating  any purchase or origination.  The
Company  underwrote  every loan it originated  and  re-underwrote  a substantial
portion of the loans underlying the Subordinated CMBS it acquired.  Furthermore,
the  Company's  credit  committee,  composed  of members  of senior  management,
reviewed  originated loans and Subordinated CMBS acquisitions.  The Company also
placed underwriting  personnel in its regional  origination offices, not only to
provide a timely  response  to the  originators  but also to  achieve a thorough
understanding of local markets and demographic trends.

     CRIIMI MAE's  underwriting  guidelines were designed to assess the adequacy
of  the  real   property  as  collateral   for  the  loan  and  the   borrower's
creditworthiness. The underwriting process entailed a full independent review of
the operating records,  appraisals,  environmental  studies,  market studies and
architectural  and  engineering  reports,  as well as site visits to  properties
representing  a majority  of the CMBS  portfolio.  The  Company  then tested the
historical  and projected  financial  performance of the properties to determine
their resiliency to a market downturn and applied varying  capitalization  rates
to assess  collateral  value.  To assess the  borrower's  creditworthiness,  the
Company  reviewed the borrower's  financial  statements,  credit  history,  bank
references and managerial  experience.  The Company purchased  Subordinated CMBS


<PAGE>13

when the  loans  it  believed  to be  problematic  (i.e.,  that did not meet its
underwriting  criteria) were excluded from the CMBS pool, and when  satisfactory
arrangements  existed that enabled the Company to closely monitor the underlying
mortgage loans and provided the Company with appropriate workout and foreclosure
rights.

Employees

     As of March 15, 2000, the Company had 44 full-time employees, and CMSLP had
110 full-time  employees.  Prior to the Petition Date on September 30, 1998, the
Company had 170 full-time employees, and CMSLP had 113 full-time employees.

Employee Retention Plan

     Upon  commencement  of the Chapter 11 cases,  the  Company  believed it was
essential  to both the  efficient  operation of the  Company's  business and the
reorganization  effort that the Company  maintain the support,  cooperation  and
morale of its employees.  The Company obtained  Bankruptcy Court approval to pay
certain pre-petition  employee obligations in the nature of wages,  salaries and
other  compensation  and to continue to honor and pay all employee benefit plans
and policies.

     In addition,  to ensure the Company's continued retention of its executives
and other employees and to provide meaningful  incentives for these employees to
work toward the Company's financial recovery and  reorganization,  the Company's
management  and Board of  Directors  developed a  comprehensive  and  integrated
program  to  retain  its   executives   and  other   employees   throughout  the
reorganization.  On December 18, 1998,  the Company  obtained  Bankruptcy  Court
approval to adopt and  implement an employee  retention  program (the  "Employee
Retention Plan") with respect to all employees of the Company other than certain
key  executives.  On February 28, 1999, the Company  received  Bankruptcy  Court
approval  authorizing  it to  extend  the  Employee  Retention  Plan  to the key
executives   initially   excluded,   including   modifying  existing  employment
agreements and entering into new employment agreements with such key executives.
The Employee  Retention  Plan permitted the Company to approve  ordinary  course
employee  salary  increases   beginning  in  March  1999,   subject  to  certain
limitations,  and to grant options to its employees  after the Petition Date, up
to certain  limits.  The Employee  Retention  Plan also  provides for  retention
payments  aggregating up to approximately  $3.5 million,  including  payments to
certain executives.  Retention payments are payable semiannually over a two-year
period. The first retention payment of approximately $909,000 vested on April 5,
1999,  and  was  paid on  April  15,  1999.  The  second  retention  payment  of
approximately  $865,000  vested on October 5, 1999,  and was paid on October 15,
1999. The third retention  payment of approximately  $653,000 vested on April 5,
2000 and will be paid on April  14,  2000.  The  entire  unpaid  portion  of the
retention  payments will become due and payable (i) upon the effective date of a
plan  of  reorganization  of the  Company  and,  with  respect  to  certain  key
executives,  court approval or (ii) upon termination  without cause.  William B.
Dockser,  Chairman  of  the  Board  of  Directors,  and H.  William  Willoughby,
President, are not currently entitled to receive any retention payments. Subject
to the terms of their respective employment  agreements,  certain key executives
will be entitled to  severance  benefits if they resign or their  employment  is
terminated  following a change of control.  The other employees will be entitled
to severance  benefits if they are  terminated  without  cause  subsequent  to a
change of control of the Company and CM Management. In addition, options granted
by the Company after October 5, 1998 will, subject to Bankruptcy Court approval,
become  exercisable  upon a change of control.  For a discussion of the Employee
Retention  Plan as it  relates  to named  key  executives  of the  Company,  see
"EXECUTIVE COMPENSATION-Employment Agreements."

<PAGE>14

The Portfolio

CMBS

     Fair Value.  As of December 31, 1999,  the Company  owned,  for purposes of
generally accepted accounting principles ("GAAP"),  CMBS rated from A to CCC and
unrated  with  a  total  fair  value  amount  of   approximately   $1.2  billion
(representing  approximately 51% of the Company's total consolidated assets) and
an aggregate amortized cost of approximately $1.4 billion.

<TABLE>
<CAPTION>


                                Weighted                                         Range of         Amortized      Amortized
                   Face         Average        Weighted       Fair Value      Discount Rates      Cost as        Cost as
                 Amount as      Pass-Through   Average          as of             Used to         of             of
Security        of 12/31/99        Rate        Life (1)        12/31/99       Calculate Fair       12/31/99       12/31/98
Rating              (in                                           (in            Value (2)        (in            (in
                 millions)                                    millions)                           millions)      millions)
                                                                 (2)
-----------     ------------    -----------    ---------     -------------    ----------------    -----------    -----------
<S>             <C>             <C>            <C>           <C>              <C>                 <C>            <C>

A (3)            $    62.6            7.0%       6 years        $    54.5                9.8%      $ 57.4        $     57.0

BBB (3)              150.6            7.0%      12 years            116.1               10.5%       127.7             126.9

BBB-(3)              115.2            7.0%      12 years             82.6               11.4%        93.5              92.8

BB+                  394.6            7.0%      13 years            255.3         11.4%-13.2%       305.5             317.9

BB                   279.0            6.9%      14 years            192.8         11.8%-13.9%       206.1             259.1

BB-                   89.1            6.8%      14 years             51.2         13.2%-14.9%        58.6              72.6

B+                   128.7            6.7%      16 years             63.7         14.5%-15.9%        82.1              93.0

B                    300.2            6.6%      16 years            141.3         15.5%-17.2%       178.2             208.9

B-                   198.7            6.7%      17 years             84.9         16.0%-19.4%        98.1             106.7

CCC                   92.0            6.8%      19 years             23.2         25.0%-30.0%        32.5              36.0

Unrated (4)          477.4            5.9%      20 years            113.7         26.0%-32.0%       134.4             159.0
               ------------    -----------    -----------     -------------   ---------------    -----------       ----------

Total (5) (6)     $2,288.1            6.7%      15 years         $1,179.3                        $1,374.1 (7)      $1,529.9
               =============   ============   ===========     =============                      ============      ===========

</TABLE>


     (1) Weighted  average life represents the weighted average expected life of
the  Subordinated   CMBS  prior  to  consideration  of  losses,   extensions  or
prepayments.

     (2) The estimated fair values of  Subordinated  CMBS represent the carrying
value of these assets.  Due to the Chapter 11 filing, the Company's lenders were
not willing to provide  fair value  quotes for the  portfolio as of December 31,
1999. As a result, the Company calculated the estimated fair market value of its
Subordinated  CMBS  portfolio  as of  December  31,  1999.  The  Company  used a
discounted cash flow  methodology to estimate the fair value of its Subordinated
CMBS  portfolio.  The cash  flows  for each  bond  were  projected  assuming  no
prepayments and no losses, as is the market convention. The cash flows were then
discounted  using a discount rate that, in the Company's view, was  commensurate
with the market's  perception  of risk and value.  The Company used a variety of
sources to determine  its discount  rate,  including  institutionally  available
research reports and  communications  with dealers and active  Subordinated CMBS
investors  regarding the valuation of comparable  securities.  Since the Company
calculated the estimated fair market value of its Subordinated CMBS portfolio as
of December 31, 1999, it has disclosed in the table the range of discount  rates
by rating category used in determining these fair market values.


<PAGE>15

     (3) In  connection  with CBO-2,  $62.6  million (A rated) and $60.0 million
(BBB rated)  face  amount of  investment  grade  securities  were sold with call
options and $345 million (A rated) face amount were sold  without call  options.
In connection  with CBO-2,  in May 1998,  the Company  initially  retained $90.6
million (BBB rated) and $115.2  million (BBB- rated) face amount of  securities,
both with call  options,  with the  intention to sell the  securities at a later
date.  Such sale  occurred  March 5, 1999.  See "LEGAL  PROCEEDINGS".  Since the
Company  retained  call  options on certain  sold  bonds,  the  Company  did not
surrender  control of those assets  pursuant to the  requirements of FAS 125 and
thus these securities are accounted for as a financing and not a sale. Since the
transaction  is recorded as a partial  financing and a partial sale,  CRIIMI MAE
has retained the securities with call options in its Subordinated CMBS portfolio
reflected on its balance sheet.

     (4) The unrated bond from CBO-1  experienced an approximately  $1.6 million
principal  write down in 1999 due to a loss on the foreclosure of two underlying
loans.  Management  believes that the current loss  estimates  used to recognize
income related to this bond remain adequate to cover losses.

     (5) Refer to Note 8 of the Notes to Consolidated  Financial  Statements for
additional  information  regarding  the total face amount and purchase  price of
Subordinated CMBS for tax purposes.

     (6) Similar to the  Company's  other  sponsored  CMOs,  CMO-IV,  as further
described in "BUSINESS-Loan  Originations and Securitizations" and Note 6 of the
Notes to Consolidated Financial Statements, resulted in the creation of CMBS, of
which the Company sold certain tranches. Since the Company retained call options
on the sold  bonds,  the  Company  did not  surrender  control of the assets for
purposes  of FAS 125 and thus  the  entire  transaction  is  accounted  for as a
financing  and not a  sale.  Since  the  entire  transaction  is  recorded  as a
financing, the Subordinated CMBS are not reflected in the Company's Subordinated
CMBS portfolio. Instead, the underlying mortgage loans contributed to CMO-IV are
reflected in Investment in Originated Loans on the balance sheet

     (7) Amortized cost reflects the $156.9 million  impairment  loss write-down
related  to the CMBS  subject  to the  CMBS  Sale.  See  Note 5 of the  Notes to
Consolidated Financial Statements.

     Type and  Geographic  Location of Loans.  As of December 31, 1999 and 1998,
the mortgage  loans  underlying  the Company's  CMBS  portfolio  were secured by
properties of the types and at the locations identified below:

<TABLE>
<CAPTION>
Property Type                     1999(1)      1998(1)        Geographic Location(2)       1999(1)        1998(1)
--------------------------        -------      -------        ----------------------       -------        -------
<S>                               <C>          <C>            <C>                          <C>            <C>

Multifamily...............          32%          31%          California..............        17%            16%
Retail....................          29%          28%          Texas...................        13%            12%
Office....................          13%          15%          Florida.................         8%             7%
Hotel.....................          14%          13%          New York................         5%             6%
Other.....................          12%          13%          Other(3)................        57%            59%
                                 -------      -------                                      -------        -------
  Total...................         100%         100%            Total.................       100%           100%
                                 ========     ========                                     ========       ========
</TABLE>

(1)      Based on a percentage of the total unpaid principal balance of the
         underlying loans.
(2)      No significant concentration by region.
(3)      No other individual state makes up more than 5% of the total.


<PAGE>16

     CMBS Pools.  The following  table  summarizes  information  relating to the
Company's  CMBS on an aggregate  basis by pool as of December 31, 1999. See also
Note 5 of the Notes to Consolidated Financial Statements.

<TABLE>
<CAPTION>

                                                                       Amortized          Original           December. 31, 1999
                                    Face Amount       Fair Value (2)     Cost        Anticipated Yield       Anticipated Yield
Pool (1)                           (in millions)      (in millions)  (in millions)    to Maturity (3)        to Maturity (3)(4)
------------------------------     -------------    --------------    ------------    -----------------    ---------------------
<S>                                <C>              <C>               <C>             <C>                  <C>

Retained Securities from
   CRIIMI 1996 C1 (CBO-1)              $  111.3          $   42.4        $   45.0             19.5%                20.6%(5)

DLJ Mortgage Acceptance Corp.
   Series 1997 CF2 Tranche
   B-30C (7)                                6.2              17.4            17.4              8.2%                 8.2%

Nomura Asset Securities Corp.
   Series 1998-D6 Tranche B7               46.5              10.8            16.9             12.0%                12.0%

Retained Securities from
   CRIIMI 1998 C1 (CBO-2)               1,427.2             741.0           927.1             10.3%                10.2%(6)

Mortgage Capital Funding, Inc.
   Series 1998-MC1 (7)                    151.8              89.8            89.8              8.9%                 9.0%

Chase Commercial Mortgage
Securities Corp.
   Series 1998-1 (7)                       81.8              44.3            44.3              8.8%                 8.8%

First Union/Lehman Brothers
   Series 1998 C2 (7)                     289.7             141.3           141.3              8.9%                 9.0%

Morgan Stanley Capital I., Inc.
   Series 1998-WF2 (7)                     87.0              47.2            47.2              8.5%                 8.6%(6)

Mortgage Capital Funding, Inc.
   Series 1998-MC2 (7)                     85.8              45.1            45.1              8.7%                 8.8%
                                   -------------    --------------    ------------    -----------------       ------------------
                                       $2,287.3          $1,179.3        $1,374.1              9.7%(1)             10.1%(1)
                                   =============    ==============    ============    =================       ==================
</TABLE>

     (2) CRIIMI MAE, through CMSLP, performs servicing functions on a total CMBS
pool of approximately $28 billion as of December 31, 1999. Of the $28 billion of
mortgage loans,  approximately  $273.3 million are being specially serviced,  of
which  approximately  $167.5 million are being specially serviced due to payment
default  (including  $26.8  million of Real Estate  Owned) and the  remainder is
being specially serviced due to non-financial covenant default. Through December
31,  1999,  CMSLP  has  resolved  and  transferred  out  of  special   servicing
approximately  $439.9 million of the approximately  $713.1 million that has been
transferred into special servicing.  Through December 31, 1999, actual losses on
mortgage  loans  underlying the CMBS  transactions  are lower than the Company's
original loss  estimates.  See  "BUSINESS-Servicing"  and Note 5 of the Notes to
Consolidated  Financial  Statements  for a discussion of the transfer of special
servicing to ORIX.


<PAGE>17

     (3) Fair value has been  calculated  as described  above in footnote (1) to
the table on CMBS Fair Value.

     (4) Represents the anticipated  weighted average unleveraged yield over the
expected  average life of the Company's  Subordinated  CMBS  portfolio as of the
date of acquisition and December 31, 1999,  respectively,  based on management's
estimate of the timing and amount of future credit losses and prepayments.

     (5) Unless  otherwise  noted,  changes in the December 31, 1999 anticipated
yield to maturity from that  originally  anticipated are primarily the result of
changes in prepayment assumptions relating to mortgage collateral.

     (6) The increase in the anticipated yield resulted from the reallocation of
a  portion   of  the  CBO-1   asset   basis  in   conjunction   with  the  CBO-2
resecuritization.  In addition, while it had no impact on the anticipated yield,
the unrated bond from CBO-1 experienced an approximately  $1.6 million principal
write-down in 1999 due to a loss on the foreclosure of two underlying loans.

     (7) On  October 6,  1998,  Morgan  Stanley  and Co.  International  Limited
("Morgan  Stanley") advised CRIIMI MAE that it was exercising  alleged ownership
rights over certain classes of CMBS it held as collateral.  In the first quarter
of 1999,  the Company  agreed to cooperate in selling two classes of  investment
grade CMBS issued by CRIIMI MAE  Commercial  Mortgage  Trust Series 1998-C1 (the
"CBO-2 BBB Bonds") and to suspend litigation with Morgan Stanley with respect to
these CMBS.  On March 5, 1999,  the CBO-2 BBB Bonds with a $205.8  million  face
amount and a coupon rate of 7% were sold in a transaction that was accounted for
as a financing  by the  Company  rather  than a sale.  Of the $159.0  million in
proceeds,  $141.2 million was used to repay amounts due under the agreement with
Morgan Stanley,  and $17.8 million was paid to CRIIMI MAE. CRIIMI MAE and Morgan
Stanley  reached  an  agreement  that  called  for the sale of seven  classes of
subordinated  CMBS and a related unrated bond,  issued by Morgan Stanley Capital
Inc.  Series  1998-WF2 (the "Wells Fargo Bonds").  The agreement was approved by
the Bankruptcy Court on February 24, 2000. On February 29, 2000, the Wells Fargo
Bonds were sold. Of the approximately $45.9 million in net sale proceeds,  $37.5
million was used to pay off all  outstanding  borrowings  owed to Morgan Stanley
and the remaining  proceeds of approximately $8.4 million will be used primarily
to help fund CRIIMI MAE's Plan.

     (8) As discussed  further in Note 5 of the Notes to Consolidated  Financial
Statements,  under the Plan the Company  intends to sell these CMBS pools and as
such,  impairment  was recognized as of December 31, 1999 related to these CMBS.
The impairment resulted in the cost basis being written down to fair value as of
December  31, 1999.  As a result of this new basis,  these bonds have new yields
effective the first quarter of 2000.

Insured Mortgage Securities

     As of December 31, 1999 and 1998, the Company had $394.9 million and $488.1
million  (at  fair  value),  respectively,   invested  in  mortgage  securities,
consisting of GNMA Mortgage-Backed  Securities and FHA-Insured Certificates,  as
well as Freddie Mac participation  certificates that are  collateralized by GNMA
Mortgage-Backed Securities. As of December 31, 1999, approximately 15% of CRIIMI
MAE's investment in mortgage  securities were  FHA-Insured  Certificates and 85%
were GNMA Mortgage-Backed  Securities (including certificates that collateralize
Freddie  Mac  participation  certificates).  See  Notes 3 and 7 of the  Notes to
Consolidated Financial Statements for further discussion.

Investment in Originated Loans

     As of December 31, 1999 and 1998, the Company had $470.2 million and $499.1
million (at amortized cost), respectively, invested in commercial mortgage loans
primarily  originated  through the Company's  mortgage loan conduit programs and
subsequently securitized in CMO-IV. Because the bonds sold in CMO-IV are subject
to certain call options,  under FAS 125, the entire transaction is accounted for
as a financing  instead of a sale and the  mortgage  loans are  reflected on the
Company's balance sheet. See  "BUSINESS-Loan  Originations and  Securitizations"
and Notes 3 and 6 of the Notes to Consolidated  Financial Statements for further
discussion.


<PAGE>18

     As of  December  31,  1999 and 1998,  the  originated  mortgage  loans were
secured by properties of the types and at the locations identified below:

<TABLE>
<CAPTION>

Property Type                     1999(1)      1998(1)        Geographic Location(2)       1999(1)        1998(1)
----------------------------      -------      -------        ----------------------       -------        -------
<S>                               <C>          <C>            <C>                          <C>            <C>

Multifamily.................         37%          38%          Michigan.............          20%            20%
Hotel.......................         26%          26%          Texas................           7%             8%
Retail......................         20%          20%          Illinois.............           7%             7%
Office......................         11%          11%          California...........           6%             6%
Other.......................          6%           5%          Maryland.............           6%             6%
                                  -------      --------
    Total.......................   100%          100%          Connecticut..........           6%             6%
                                                               Florida..............           5%             5%
                                                               Other(3).............          43%            42%
                                                                                          --------        --------
                                                                 Total..............         100%           100%
</TABLE>

(1)      Based on a percentage of the total unpaid principal balance of the
         related loans.
(2)      No significant concentration by region.
(3)      No other state makes up more than 5% of the total.

Equity Investments

     As of December  31, 1999 and 1998,  the  Company  had  approximately  $34.9
million and $42.9 million,  respectively, in investments accounted for under the
equity method of accounting.  Included in equity investments are (a) the general
partnership  interests in American Insured Mortgage Investors,  American Insured
Mortgage   Investors-Series   85,  L.P.,  American  Insured  Mortgage  Investors
L.P.-Series  86  and  American   Insured  Mortgage   Investors   L.P.-Series  88
(collectively the "AIM Funds"), owned by CRIIMI, Inc., a wholly owned subsidiary
of CRIIMI MAE, (b) a 20% limited partnership  interest in the adviser to the AIM
Funds,  50% of  which is  owned  by  CRIIMI  MAE and 50% of which is owned by CM
Management,  (c) CRIIMI  MAE's  interest in CRIIMI MAE  Services  Inc.,  and (d)
CRIIMI  MAE's  interest  in  CMSLP.  See  Note 3 of the  Notes  to  Consolidated
Financial Statements for further discussion.

Risk Factors

     The following risk factors address risks relating  primarily to the Company
and its  operations  during the  pendency of the  bankruptcy.  Because it is not
possible  to predict  the  outcome of the  Chapter 11 filing and there can be no
assurance as to when or if the Company will resume  business  activities that it
has suspended during the bankruptcy,  the following  discussion does not address
risks relating to the resumption of the Company's Subordinated CMBS acquisition,
loan origination or securitization programs.  Reference is made to the Company's
Plan and Proposed Disclosure Statement for risks related to the Recapitalization
Financing and to confirmation  and consummation of the Plan, which are generally
not addressed below.

     Effect of Bankruptcy Filing; Ability to Continue as a Going Concern

     Since filing for bankruptcy, CRIIMI MAE has suspended its Subordinated CMBS
acquisition, origination and securitization operations, but continues to service
mortgage loans through CMSLP.  Accordingly,  the Company's results of operations
during the pendency of the bankruptcy are expected to differ materially from the
Company's performance prior to the bankruptcy. Moreover, depending upon when and
if any of these  activities  are resumed by the Company,  the  Company's  future
performance will differ materially from its present operations.

     The Company's  ability to resume the acquisition of  Subordinated  CMBS, as
well  as  its  loan  origination  and  securitization  programs,  depends  to  a
significant  degree on its ability to obtain additional  capital and emerge from
bankruptcy as a  successfully  reorganized  company.  The  Company's  ability to
access the necessary additional capital will be affected by a number of factors,
many of which are not in the Company's  control.  These include the cost of such
capital,  changes in interest  rates and interest rate  spreads,  changes in the
commercial  mortgage  industry and the commercial  real estate  market,  general
economic  conditions,  perceptions  in the  capital  markets  of  the  Company's
business,  covenants under the Company's  current and future debt securities and


<PAGE>19

credit  facilities,  results of operations,  leverage,  financial  condition and
business prospects.  The Company can give no assurances as to whether or when it
will obtain the  necessary  capital or the terms upon which such  capital can be
obtained.

     On March 31, 2000,  the Debtors  filed their Plan and  Proposed  Disclosure
Statement with the Bankruptcy  Court. The Plan was filed with the support of the
Equity Committee, which is a co-proponent of the Plan. Subject to the completion
of mutually  acceptable  Unsecured  Creditor Debt  Documentation,  the Unsecured
Creditors'  Committee has agreed to support  confirmation  of the Debtors' Plan.
Merrill Lynch and GACC, two of the Company's  largest secured  creditors,  would
provide a significant portion of the Recapitalization  Financing contemplated by
the Plan.  The  Bankruptcy  Court has scheduled a hearing for April 25 and April
26, 2000 on the Proposed Disclosure Statement filed by the Debtors.

     On December 20, 1999, the Unsecured Creditors' Committee filed its own plan
of reorganization  and disclosure  statement,  which generally  provided for the
liquidation  of the assets of the Debtors.  Such plan and  disclosure  statement
were amended on January 11, 2000 and February 11, 2000.  However, as a result of
successful  negotiations  between  the  Debtors  and  the  Unsecured  Creditors'
Committee,  the  Unsecured  Creditors'  Committee has agreed to the treatment of
unsecured  claims under the Debtors'  Plan,  subject to  completion  of mutually
acceptable  Unsecured Creditor Debt Documentation,  and has asked the Bankruptcy
Court to defer  consideration of its second amended plan of  reorganization  and
second amended proposed disclosure statement.

     At this time,  it is not  possible to predict the outcome of the Chapter 11
filing,  in general,  nor its  effects on the  business of the Company or on the
claims and interests of creditors and shareholders.  In addition,  the Company's
independent public accountants have issued a report expressing substantial doubt
about the Company's ability to continue as a going concern.

     Risks Relating to the Necessary Recapitalization Financing

     Consummation  of the Plan is conditioned  upon,  among other  matters,  the
Company  obtaining New Debt and completing  the CMBS Sale.  Although the Company
has  sold  certain  CMBS in  connection  with  the  CMBS  Sale,  is  engaged  in
negotiating  additional  commitments  for the CMBS Sale, and has agreed to terms
with  respect to  substantially  all of the New Debt,  there can be no assurance
that the Company will complete the CMBS Sale or obtain and satisfy all terms and
conditions  of the New  Debt.  See  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF
FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS"  and Note 5 of the  Notes to
Consolidated  Financial  Statements  for a  discussion  of certain  CMBS sold in
February 2000 constituting a portion of the CMBS Sale.

     Risk of Loss of REIT Status and Other Tax Matters

     See  "BUSINESS-Effect  of  Chapter  11 Filing on REIT  Status and Other Tax
Matters" for a discussion.

     Taxable Mortgage Pool Risks

     See  "BUSINESS-Effect  of  Chapter  11 Filing on REIT  Status and Other Tax
Matters" for a discussion.

     Phantom Income May Result in Additional Tax Liability

     The Company's  investment in  Subordinated  CMBS and certain other types of
mortgage related assets may cause it, under certain circumstances,  to recognize
taxable  income in excess  of its  economic  income  ("phantom  income")  and to
experience an offsetting  excess of economic  income over its taxable  income in
later years.  As a result,  stockholders,  from time to time, may be required to
treat  distributions that economically  represent a return of capital as taxable
dividends.  Such  distributions  would be offset in later years by distributions
representing  economic  income  that would be treated as returns of capital  for
federal  income tax purposes.  Accordingly,  if the Company  recognizes  phantom
income,  its stockholders may be required to pay federal income tax with respect
to such income on an accelerated basis (i.e.,  before such income is realized by
the  stockholders in an economic  sense).  Taking into account the time value of
money,  such an  acceleration  of federal  income tax  liabilities  would  cause
stockholders  to receive an  after-tax  rate of return on an  investment  in the
Company that would be less than the  after-tax  rate of return on an  investment
with an  identical  before-tax  rate of  return  that did not  generate  phantom


<PAGE>20

income.  As the  ratio of the  Company's  phantom  income  to its  total  income
increases, the after-tax rate of return received by a taxable stockholder of the
Company will decrease.

     Effect of Rate Compression on Market Price of Stock

     The  Company's  actual  earnings   performance  as  well  as  the  market's
perception of the Company's  ability to achieve  earnings  growth may affect the
market price of the Company's  common stock. In the Company's case, the level of
earnings  (or  losses)  depends  to a  significant  extent  upon the  width  and
direction  of the spread  between  the net yield  received by the Company on its
income earning assets (principally,  the long term, fixed-rate assets comprising
its CMBS  portfolio)  and its  floating  rate cost of  borrowing.  In periods of
narrowing  or  compressing  spreads,  the  resulting  pressure on the  Company's
earnings  may  adversely  affect the market  value of its common  stock.  Spread
compression  can occur in high or low interest rate  environments  and typically
results when net yield on the long term assets adjusts less  frequently than the
current rate on debt used to finance their purchase. For example, if the Company
relies on short term,  floating rate  borrowings to finance the purchase of long
term fixed-rate CMBS assets, the Company may experience rate compression,  and a
resulting  diminution of earnings,  if the interest  rate on the debt  increases
while the coupon and yield  measure for the financed  CMBS remain  constant.  In
such an event,  the market  price of the common stock may decline to reflect the
actual or perceived  decrease in value of the Company  resulting from the spread
compression.  In an effort to  mitigate  this risk,  the  Company as a matter of
policy   generally   hedges  at  least  75%  of  the  principal  amount  of  its
variable-rate debt with interest-rate  protection agreements to protect interest
cash flow against a significant rise in interest rates.

     Substantial Indebtedness; Leverage

     The Company has  substantial  indebtedness.  As of December 31,  1999,  the
Company's  total  consolidated  indebtedness  was $2.0  billion,  of which  $926
million was recourse  debt to the Company  (i.e.  not  match-funded  debt),  and
stockholders'  equity  of $219  million.  This  high  level of debt  limits  the
Company's ability to obtain additional  financing,  reduces income available for
distributions to the extent income from assets purchased with the borrowed funds
fails to cover the cost of the  borrowings,  restricts the Company's  ability to
react  quickly to changes in its business and makes the Company more  vulnerable
to economic downturn.

     Risks of Owning Subordinated CMBS

     As an owner of the most  subordinate  tranches of CMBS, the Company will be
the  first to bear any  loss and the last to have a  priority  right to the cash
flow of the related  mortgage  pool.  For  example,  if the  Company  owns a $10
million subordinated  interest in an issuance of CMBS consisting of $100 million
of mortgage loan  collateral,  a 7% loss on the  underlying  mortgage loans will
result in a 70% loss on the subordinated interest.

     The  Company's  Subordinated  CMBS can  change  in value due to a number of
economic  factors.  These factors include changes in the underlying real estate,
fluctuations in Treasury rates, and supply/demand mismatches which are reflected
in CMBS pricing  spreads.  For  instance,  changes in the credit  quality of the
properties securing the underlying mortgage loans can result in interest payment
shortfalls,  to  the  extent  there  are  mortgage  payment  delinquencies,  and
principal  losses, to the extent that there are payment defaults and the amounts
are not fully recovered.  These losses may result in a permanent  decline in the
value of the CMBS, and the losses may change the Company's  anticipated yield to
maturity  if the losses are in excess of those  previously  estimated.  CMBS are
priced at a spread above the current Treasury security with a maturity that most
closely  matches  the  CMBS'  weighted  average  life.  The value of CMBS can be
affected by changes in Treasury  rates, as well as changes in the spread between
such CMBS and the Treasury security with a comparable maturity. For example, the
spread to Treasury  of a CMBS may have  increased  from 400 basis  points to 500
basis points. If the Treasury security with a comparable maturity had a constant
yield of 5% then, in this example, the yield on the CMBS would have changed from
9% to 10%  and  accordingly,  the  value  of  such  CMBS  would  have  declined.
Generally, increases and decreases in both Treasury rates or spreads will result
in temporary  changes in the value of the  Subordinated  CMBS  assuming that the
Company has the ability and intent to hold its CMBS investments  until maturity.
However,  such  temporary  changes  in the  value of  Subordinated  CMBS  become
permanent  changes  realized  through the income  statement  when the Company no
longer  intends or fails to have the ability to hold such  Subordinated  CMBS to
maturity.  The Company has  historically  been unable to obtain financing at the
time of  acquisition  that  matches the  maturity  of the  related  investments,
resulting  in a  periodic  need to obtain  short-term  financing  secured by the


<PAGE>21

Company's  CMBS.  The  inability  to  refinance  this  short-term  floating-rate
financing with long-term  fixed-rate  financing or a decline in the value of the
collateral securing such short-term floating-rate indebtedness could result in a
situation  where the  Company is  required  to sell CMBS or  provide  additional
collateral,  which could have, and has had, an adverse effect on the Company and
its  financial  position and results of  operations.  The  Company's  ability to
borrow amounts in the future may be impacted by, among other things,  the credit
performance  of the underlying  pools of commercial  mortgage  loans,  and other
factors affecting the Subordinated CMBS that it owns.

     Limited Protection from Hedging Transactions

     To minimize the risk of interest rate  increases on interest  expense as it
relates to its short-term,  variable-rate  debt, the Company follows a policy to
hedge at least  75% of the  principal  amount  of its  variable-rate  debt  with
interest rate protection  agreements in order to provide a ceiling on the amount
of interest expense payable by the Company.  As of December 31, 1999, 94% of the
Company's   outstanding   variable-rate  debt  was  hedged  with  interest  rate
protection  agreements  that partially limit the impact of rising interest rates
above a certain  defined  threshold,  or strike price.  When these interest rate
protection agreements expire, the Company will have increased interest rate risk
unless it is able to enter into replacement interest rate protection agreements.
As of December 31, 1999,  the weighted  average  remaining term for the interest
rate protection  agreements was  approximately  one year with a weighted average
strike price of 6.7%. The highest rate for one-month LIBOR during 1999 was 6.5%.
There can be no  assurance  that the Company  will be able to maintain  interest
rate protection  agreements to meet its hedge policy on satisfactory terms or to
adequately  protect  against  rising  interest  rates on the Company's  debt. In
addition,  the Company does not currently hedge against any interest rate risks,
including  increases in interest rate spreads and  increases in Treasury  rates,
which adversely  affect the value of its CMBS.  Moreover,  hedging involves risk
and typically involves costs,  including  transaction costs. Such costs increase
dramatically  as the period covered by the hedging  increases and during periods
of rising and  volatile  interest  rates.  The Company may  increase its hedging
activity and, thus, increase its hedging costs during such periods when interest
rates are volatile or rising and hedging costs have increased.

     Risk of Foreclosure on Pledged CMBS

     Additionally,  changes  in  interest  rates,  as well as  changes in market
spreads,  may cause the value of the  Company's  CMBS  portfolio to decrease.  A
decrease in the market  value of these  assets may cause  lenders to seek relief
from the automatic  stay  provision of the  Bankruptcy  Code to foreclose on the
collateral or take other action.

     Limited Liquidity of Subordinated CMBS Market

     There is  currently no active  secondary  trading  market for  Subordinated
CMBS.  This limited  liquidity  results in  uncertainty  in the valuation of the
Company's  portfolio of Subordinated  CMBS. In addition,  even if the market for
Subordinated CMBS fully recovers,  the liquidity of such market has historically
been limited; and furthermore, during adverse market conditions the liquidity of
such market has been severely limited, which would impair the amount the Company
could realize if it were required to sell a portion of its Subordinated CMBS.

     Pending Litigation

     The Company is involved in material litigation. See "LEGAL PROCEEDINGS" for
descriptions of such litigation and other legal proceedings.

     Investment Company Act Risk

     Under the  Investment  Company  Act of 1940,  as amended  (the  "Investment
Company Act"), an investment company is required to register with the SEC and is
subject to extensive restrictive and potentially adverse regulation relating to,
among other things, operating methods, management,  capital structure, dividends
and transactions with affiliates.  However,  as described below,  companies that
are primarily engaged in the business of acquiring  mortgages and other liens on
and  interests in real estate  ("Qualifying  Interests")  are excluded  from the
requirements of the Investment Company Act.



<PAGE>22

     To qualify for the  Investment  Company Act  exclusion,  CRIIMI MAE,  among
other things,  must maintain at least 55% of its assets in Qualifying  Interests
(the "55%  Requirement")  and is also required to maintain an additional  25% in
Qualifying  Interests or other real  estate-related  assets  ("Other Real Estate
Interests" and such requirement,  the "25%  Requirement").  According to current
SEC staff  interpretations,  CRIIMI MAE  believes  that its  government  insured
mortgage  securities and originated loans constitute  Qualifying  Interests.  In
accordance with current SEC staff interpretations, the Company believes that all
of its Subordinated CMBS constitute Other Real Estate Interests and that certain
of its Subordinated CMBS also constitute Qualifying Interests. On certain of the
Company's  Subordinated  CMBS,  the Company,  along with other  rights,  has the
unilateral right to direct  foreclosure with respect to the underlying  mortgage
loans. Based on such rights and its economic interest in the underlying mortgage
loans,  the Company  believes  that the  related  Subordinated  CMBS  constitute
Qualifying Interests.  As of December 31, 1999, the Company believes that it was
in compliance with both the 55% Requirement and the 25% Requirement.

     If the SEC or its staff were to take a different  position  with respect to
whether such  Subordinated  CMBS constitute  Qualifying  Interests,  the Company
could,  among other things, be required either (i) to change the manner in which
it conducts its  operations to avoid being required to register as an investment
company or (ii) to register as an investment company, either of which could have
a material adverse effect on the Company. If the Company were required to change
the manner in which it conducts its business, it would likely have to dispose of
a significant portion of its Subordinated CMBS or acquire significant additional
assets  that  are  Qualifying  Interests.  Alternatively,  if the  Company  were
required to register as an  investment  company,  it expects that its  operating
expenses would significantly  increase and that the Company would have to reduce
significantly  its  indebtedness,   which  could  also  require  it  to  sell  a
significant  portion of its  assets.  No  assurances  can be given that any such
dispositions or acquisitions of assets,  or deleveraging,  could be accomplished
on favorable terms.

     Further, if the Company were deemed an unregistered investment company, the
Company  could be subject to  monetary  penalties  and  injunctive  relief.  The
Company  would be unable to  enforce  contracts  with  third  parties  and third
parties could seek to obtain  rescission of transactions  undertaken  during the
period the Company was deemed an unregistered  investment  company. In addition,
as a result of the  Company's  Chapter  11  filing,  the  Company  is limited in
possible actions it may take in response to any need to modify its business plan
in order to register as an  investment  company,  or avoid the need to register.
Certain  dispositions or acquisitions of assets would require  Bankruptcy  Court
approval.  Also, any forced sale of assets that occurs after the bankruptcy stay
is lifted would change the  Company's  asset mix,  potentially  resulting in the
need to register as an investment  company under the  Investment  Company Act or
take further  steps to change the asset mix. Any such results would be likely to
have a material adverse effect on the Company.

     Effect of Economic Recession on Losses and Defaults

     Economic recession may increase the risk of default on commercial  mortgage
loans and  correspondingly  increase the risk of losses on the Subordinated CMBS
backed by such loans.  Economic  recession  may also cause  declining  values of
commercial  real estate  securing  the  outstanding  mortgage  loans,  weakening
collateral  coverage and increasing the  possibility of losses in the event of a
default.  In  addition,  an  economic  recession  may cause  reduced  demand for
commercial mortgage loans.

     Results of Operations Adversely Affected by Factors Beyond Company's
       Control

     The Company's  results of operations  can be adversely  affected by various
factors,  many of which are beyond the control of the  Company,  and will depend
on, among other things,  the level of net interest income  generated by, and the
market value of, the Company's CMBS portfolio. The Company's net interest income
and results of operations  will vary  primarily as a result of  fluctuations  in
interest rates,  CMBS pricing,  and borrowing  costs.  The Company's  results of
operations  also will depend upon the Company's  ability to protect  against the
adverse effects of such  fluctuations  as well as credit risks.  Interest rates,
credit risks, borrowing costs and credit losses depend upon the nature and terms
of the CMBS,  conditions in financial markets,  the fiscal and monetary policies
of the U.S.  government,  international  economic and financial  conditions  and
competition,  none of which can be predicted with any certainty. Because changes
in interest rates may significantly  affect the Company's CMBS and other assets,
the  operating  results of the Company  will  depend,  in large  part,  upon the


<PAGE>23

ability of the Company to manage its interest rate and credit risks  effectively
while  maintaining  its  status as a REIT.  See  "BUSINESS-Risk  Factors-Limited
Protection from Hedging Transactions" for further discussion.

     Borrowing Risks

     A substantial  portion of the Company's  borrowings  is, and is expected to
continue to be, in the form of collateralized  borrowings.  The terms of the New
Debt  contemplated to be provided by Merrill and GACC will be  collateralized by
first-priority  liens and  security  interests  in certain  assets,  and will be
subject to a number of terms,  conditions and  restrictions  including,  without
limitation,  scheduled  principal and interest payments,  accelerated  principal
payments,   restrictions  and  requirements  with  respect  to  the  collection,
management,  use and  application  of funds,  and certain  approval  rights with
respect to Board of Directors.  Certain events,  including,  without limitation,
the  failure to  satisfy  certain  payment  obligations  will  result in further
restrictions  on the ability of the Company to take certain  actions  including,
without limitation,  to pay cash dividends to preferred or common  shareholders.
The  unsecured  creditor  New Debt  will be  collateralized  by first or  second
priority liens or security interests in certain assets or proceeds,  and will be
subject to a number of terms,  conditions and  restrictions  including,  without
limitation,  scheduled  principal and interests  payments,  and restrictions and
requirements with respect to the use of funds.

     A  substantial  portion  of the  Company's  borrowings  are,  and a limited
portion of the Company's  borrowings  in the future,  if CMBS  acquisitions  are
resumed, may be, in the form of collateralized, short-term floating-rate secured
borrowings.  The amount borrowed under such agreements is typically based on the
market value of the CMBS pledged to secure  specific  borrowings.  Under adverse
market  conditions,  the value of pledged CMBS would decline,  and lenders could
initiate  margin  calls (in which case the  Company  could be  required  to post
additional  collateral or to reduce the amount  borrowed to restore the ratio of
the amount of the borrowing to the value of the collateral).  The Company may be
required to sell CMBS to reduce the amount borrowed. If these sales were made at
prices lower than the carrying value of the CMBS,  the Company would  experience
losses.

     A default by the Company under its  collateralized  borrowings could result
in a liquidation of the  collateral.  If the Company is forced to liquidate CMBS
that qualify as qualified  real estate assets (under the REIT  Provisions of the
Internal  Revenue Code) to repay  borrowings,  there can be no assurance that it
will be able to maintain  compliance  with the REIT  Provisions  of the Internal
Revenue Code regarding asset and source of income requirements.

     Shape of the Yield Curve Adversely Affects Income

     The relationship  between  short-term and long-term interest rates is often
referred to as the "yield  curve."  Ordinarily,  short-term  interest  rates are
lower  than  long-term  interest  rates.  If  short-term   interest  rates  rise
disproportionately  relative to long-term  interest  rates (a  flattening of the
yield curve),  the borrowing costs of the Company may increase more rapidly than
the interest  income earned on its assets.  Because  borrowings will likely bear
interest at short-term  rates (such as LIBOR) and CMBS will likely bear interest
at  medium-term  to  long-term  rates  (such  as those  calculated  based on the
Ten-Year  U.S.  Treasury  Rate),  a  flattening  of the yield curve will tend to
decrease the Company's net income,  assuming the Company's  short-term borrowing
rates bear a strong relationship to short-term Treasury rates. Additionally,  to
the extent cash flows from long-term  assets are  reinvested in other  long-term
assets,  the spread between the coupon rates of long-term  assets and short-term
borrowing  rates may decline  and also may tend to  decrease  the net income and
mark-to-market  value of the  Company's  net assets.  It is also  possible  that
short-term  interest rates may adjust relative to long-term  interest rates such
that the level of short-term rates exceeds the level of long-term rates (a yield
curve  inversion).  In this case, as well as in a positively  sloped yield curve
environment,  borrowing  costs could  exceed the interest  income and  operating
losses would be incurred.

     Year 2000

     During the transition from 1999 to 2000, the Company did not experience any
significant  problems or errors in its information  technology ("IT") systems or
date-sensitive  embedded  technology  that controls  certain  systems.  Based on
operations  since January 1, 2000,  the Company does not expect any  significant
impact to its business,  operations,  or financial  condition as a result of the
Year 2000 issue. However, it is possible that the full impact of the date change


<PAGE>24

has not been fully recognized.  The Company is not aware of any significant Year
2000 problems affecting third parties with which the Company interfaces directly
or indirectly.

     Risks Associated with Trader Election

     On March 15, 2000, the Company determined to elect mark-to-market treatment
as a securities  trader for 2000. See  "BUSINESS-Effect  of Chapter 11 Filing on
REIT  Status and Other Tax  Matters-Taxable  Income  Distributions"  for further
discussion. There is no assurance, however, that the Company's election will not
be  challenged on the ground that it is not in fact a trader in  securities,  or
that it is only a trader with respect to some,  but not all, of its  securities.
As such,  there is a risk that the  Company  will be limited  in its  ability to
recognize certain losses if it is not able to mark-to-market its securities.

     The election to be treated as a trader will result in net operating  losses
("NOLs")  that  generally  may be  carried  forward  for 20 years.  The  Company
believes  that it may  experience an  "ownership  change"  within the meaning of
Section  382 of the Code.  Consequently,  its use of NOLs  generated  before the
ownership  change to reduce  taxable  income after the  ownership  change may be
subject to limitation under Section 382. Generally,  the use of NOLs in any year
is  limited  to the value of the  Company's  stock on the date of the  ownership
change  multiplied by the long-term tax exempt rate  (published by the IRS) with
respect to that date.

     For the  year  ended  December  31,  2000,  taxable  income  (loss)  may be
different from the net income (loss) as calculated according to GAAP as a result
of, among other things,  differing  treatment of the unrealized gains and losses
on  securities  transactions  as  well  as  other  timing  differences.  For the
Company's tax purposes,  unrealized gains (losses) will be recognized at the end
of the year and will be  aggregated  with  operating  gains  (losses) to produce
total taxable income (loss) for the year.


<PAGE>25

                                 SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                         CRIIMI MAE INC.

March 24, 2000                           /s/ William B. Dockser


                                             --------------------------
                                             William B. Dockser
                                             Chairman of the Board and
                                             Principal Executive Officer



<PAGE>26

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


March 24, 2000                         /s/ William B. Dockser


                                           ---------------------------
                                           William B. Dockser
                                           Chairman of the Board and
                                           Principal Executive Officer




April 11, 2000                         /s/ H. William Willoughby


                                           -----------------------
                                           H. William Willoughby
                                           Director, President and
                                           Secretary



April 14, 2000                         /s/ Cynthia O. Azzara


                                           -------------------------------
                                           Cynthia O. Azzara
                                           Senior Vice President, Chief
                                           Financial Officer and Principal
                                           Accounting Officer



March 24, 2000                         /s/ Garrett G. Carlson, Sr.


                                           -----------------------
                                           Garrett G. Carlson, Sr.
                                           Director



March 24, 2000                         /s/ G. Richard Dunnells


                                           -------------------
                                           G. Richard Dunnells
                                           Director



March 24, 2000                         /s/ Robert Merrick


                                           --------------
                                           Robert Merrick
                                           Director



March 24, 2000                         /s/ Robert E. Woods


                                           ---------------
                                           Robert E. Woods
                                           Director



<PAGE>27

                              CRIIMI MAE INC.

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       ORGANIZATION

General

     CRIIMI MAE Inc.  (together with its consolidated  subsidiaries,  unless the
context  otherwise  indicates,  "CRIIMI  MAE"  or  the  "Company")  is  a  fully
integrated  commercial mortgage company structured as a  self-administered  real
estate  investment  trust  ("REIT").  Prior to the  filing  by  CRIIMI  MAE Inc.
(unconsolidated) and two of its operating  subsidiaries,  CRIIMI MAE Management,
Inc. ("CM  Management"),  and CRIIMI MAE Holdings II, L.P.  ("Holdings  II" and,
together with CRIIMI MAE and CM  Management,  the  "Debtors"),  for relief under
Chapter 11 of the U.S.  Bankruptcy Code on October 5, 1998 (the "Petition Date")
as described  below,  CRIIMI MAE's  primary  activities  included (i)  acquiring
non-investment grade securities (rated below BBB- or unrated) backed by pools of
commercial  mortgage  loans on  multifamily,  retail and other  commercial  real
estate  ("Subordinated  CMBS"),  (ii)  originating and  underwriting  commercial
mortgage  loans,  (iii)  securitizing  pools of  commercial  mortgage  loans and
resecuritizing  pools of  Subordinated  CMBS,  and (iv)  through  the  Company's
servicing  affiliate,   CRIIMI  MAE  Services  Limited  Partnership   ("CMSLP"),
performing servicing functions with respect to the mortgage loans underlying the
Company's Subordinated CMBS.

     Since  filing for  Chapter 11  protection,  CRIIMI  MAE has  suspended  its
Subordinated  CMBS acquisition,  origination and  securitization  programs.  The
Company  continues  to  hold  a  substantial  portfolio  of  Subordinated  CMBS,
originated loans and mortgage  securities and, through CMSLP, acts as a servicer
for its own as well as third party securitized mortgage loan pools.

     The  Company's  business is subject to a number of risks and  uncertainties
including,  but not  limited  to:  (1) the  effect of the  Chapter 11 filing and
substantial  doubt as to the Company's  ability to continue as a going  concern;
(2)  risks  related  to  the  necessary  Recapitalization  Financing  under  the
Company's Second Amended Joint Plan of Reorganization;  (3) risk of loss of REIT
status;  (4) taxable mortgage pool risk; (5) risk of phantom income resulting in
additional tax liability; (6) the effect of rate compression on the market price
of the Company's stock; (7) substantial  leverage;  (8) inherent risks in owning
Subordinated CMBS; (9) the limited protection provided by hedging  transactions;
(10) risk of foreclosure on CMBS assets;  (11) the limited liquidity of the CMBS
market;  (12) pending  litigation;  (13) risk of being  considered an investment
company;  (14) possible effects of an economic recession on losses and defaults;
(15) borrowing  risks;  (16) the shape of the yield curve could adversely affect
income; and (17) risks associated with the trader election.

     In addition to the two  operating  subsidiaries  which filed for Chapter 11
protection  with the Company,  the Company owns 100% of multiple  financing  and
operating subsidiaries as well as various interests in other entities (including
CMSLP) which either own or service  mortgage  and  mortgage-related  assets (the
"Non-Debtor  Affiliates").  See Note 3. None of the  Non-Debtor  Affiliates  has
filed for bankruptcy protection.

     The Company was incorporated in Delaware in 1989 under the name CRI Insured
Mortgage  Association,  Inc. ("CRI Insured").  In July 1993, CRI Insured changed
its name to CRIIMI  MAE Inc.  and  reincorporated  in  Maryland.  In June  1995,
certain mortgage businesses affiliated with C.R.I., Inc. were merged into CRIIMI
MAE (the "Merger").  The Company is not a government sponsored entity nor in any
way affiliated with the United States government or any United States government
agency.

Chapter 11 Filing

     Prior to the Petition  Date,  CRIIMI MAE financed a substantial  portion of
its Subordinated  CMBS  acquisitions  with short-term,  variable-rate  financing
facilities  secured  by the  Company's  CMBS.  The  agreements  governing  these
financing  arrangements  typically  required the Company to maintain  collateral
with a market  value not less than a  specified  percentage  of the  outstanding
indebtedness  ("loan-to-value  ratio"). The agreements further provided that the


<PAGE>28

creditors could require the Company to provide cash or additional  collateral if
the market value of the existing collateral fell below this minimum amount.

     As a result of the turmoil in the capital markets commencing in late summer
of 1998, the spreads between CMBS yields and yields on Treasury  securities with
comparable  maturities  began to widen  substantially  and rapidly.  Due to this
widening of CMBS  spreads,  the market value of the CMBS  securing the Company's
short-term, variable-rate financing facilities declined. CRIIMI MAE's short-term
secured creditors perceived that the value of the CMBS securing their facilities
with  the  Company  had  fallen  below  the  minimum   value   required  in  the
loan-to-value  ratio  described  above and,  consequently,  made demand upon the
Company to provide cash or additional  collateral with sufficient  value to cure
the perceived  value  deficiency.  In August and September of 1998,  the Company
received and met collateral calls from its secured creditors.  At the same time,
CRIIMI MAE was in negotiations with various third parties in an effort to obtain
additional  debt and  equity  financing  that would  provide  the  Company  with
additional liquidity.

     On Friday  afternoon,  October  2, 1998,  the  Company  was in the  closing
negotiations  of a refinancing  with one of its unsecured  creditors  that would
have  provided  the  Company  with  additional  borrowings  when it  received  a
significant  collateral call from Merrill Lynch Mortgage Capital, Inc. ("Merrill
Lynch").  The  basis  for this  collateral  call,  in the  Company's  view,  was
unreasonable. After giving consideration to, among other things, this collateral
call and the Company's  concern that its failure to satisfy this collateral call
would  cause the  Company to be in default  under a  substantial  portion of its
financing arrangements,  the Company reluctantly concluded on Sunday, October 4,
1998 that it was in the best  interests of creditors,  equity  holders and other
parties in interest to seek Chapter 11 protection.

     On October 5, 1998,  the Debtors  filed for relief under  Chapter 11 of the
U.S.  Bankruptcy Code in the United States  Bankruptcy Court for the District of
Maryland,  Southern Division,  in Greenbelt,  Maryland (the "Bankruptcy Court").
These  related  cases are being  jointly  administered  under the caption "In re
CRIIMI MAE Inc., et al.," Ch. 11 Case No. 98-2-3115-DK.

     While in bankruptcy, CRIIMI MAE has streamlined its operations. The Company
has  significantly  reduced  the  number of  employees  in its  origination  and
underwriting operations. In connection with these reductions, the Company closed
its five regional loan origination offices.

     Although the Company has significantly  reduced its work force, the Company
recognizes  that retention of its executives  and other  remaining  employees is
essential to the efficient  operation of its business and to its  reorganization
efforts.  Accordingly,  the Company has, with Bankruptcy Court approval, adopted
an employee retention plan. See Note 15 for further discussion.

     CRIIMI MAE is working  diligently  toward  emerging  from  bankruptcy  as a
successfully  reorganized  company.  In furtherance of such effort,  the Debtors
filed (i) a Joint Plan of  Reorganization on September 22, 1999, (ii) an Amended
Joint Plan of Reorganization and proposed Joint Disclosure Statement on December
23, 1999, and (iii) a Second Amended Joint Plan of  Reorganization  (the "Plan")
and proposed  Amended  Joint  Disclosure  Statement  (the  "Proposed  Disclosure
Statement")  on March 31,  2000.  The Plan was  filed  with the  support  of the
Official  Committee  of  Equity  Security  Holders  of CRIIMI  MAE (the  "Equity
Committee"),  which is a co-proponent of the Plan.  Subject to the completion of
mutually  acceptable  documentation  evidencing  the  secured  financing  to  be
provided   by  the   unsecured   creditors   (the   "Unsecured   Creditor   Debt
Documentation"),  the Official  Committee  of Unsecured  Creditors of CRIIMI MAE
(the "Unsecured Creditors' Committee") has agreed to support confirmation of the
Debtors' Plan. The Company,  the Equity  Committee and the Unsecured  Creditors'
Committee are now all  proceeding  toward  confirmation  of the Plan.  Under the
Plan, Merrill Lynch and German American Capital Corporation ("GACC"), two of the
Company's largest secured creditors,  would provide a significant portion of the
recapitalization  financing  contemplated by the Plan. The Bankruptcy  Court has
scheduled  a  hearing  for April 25 and 26,  2000 on  approval  of the  Proposed
Disclosure Statement.

     On December 20, 1999, the Unsecured Creditors' Committee filed its own plan
of reorganization  and proposed  disclosure  statement with the Bankruptcy Court
which, in general, provided for the liquidation of the assets of the Debtors. On
January 11, 2000 and February 11, 2000, the Unsecured Creditors' Committee filed
its first and second  amended plans of  reorganization,  respectively,  with the


<PAGE>29

Bankruptcy  Court  and  amended  proposed  disclosure  statements  with  respect
thereto. However, as a result of successful negotiations between the Debtors and
the  Unsecured  Creditors'  Committee,  the Unsecured  Creditors'  Committee has
agreed to the treatment of unsecured claims under the Debtors' Plan,  subject to
completion of mutually acceptable Unsecured Creditor Debt Documentation, and has
asked the Bankruptcy Court to defer  consideration of its second amended plan of
reorganization and second amended proposed disclosure statement.

The Plan of Reorganization

     The Plan  contemplates  the payment in full of all of the allowed claims of
the Debtors primarily through  recapitalization  financing  (including  proceeds
from CMBS  sales)  aggregating  at least  $856  million  (the  "Recapitalization
Financing").  Approximately $275 million of the Recapitalization Financing would
be  provided by Merrill  Lynch and GACC  through a secured  financing  facility,
approximately $155 million would be provided through new secured notes issued to
some of the Company's major unsecured  creditors,  and another $35 million would
be obtained from another existing creditor in the form of an additional  secured
financing facility (collectively,  the "New Debt"). The sale of select CMBS (the
"CMBS Sale"), the proceeds of which are expected to be used to pay down existing
debt, is contemplated to provide the balance of the Recapitalization  Financing.
The Company may seek new equity  capital from one or more investors to partially
fund the Plan, although new equity is not required to fund the Plan.

     In connection with the Plan,  substantially  all cash flows are expected to
be used to satisfy  principal,  interest and fee obligations under the New Debt.
The $275 million  secured  financing would provide for (i) interest at a rate of
one month LIBOR plus 3.25%, (ii) principal prepayment/amortization  obligations,
(iii) extension fees after two years and (iv) maturity on the fourth anniversary
of the effective  date of the Plan. The Plan  contemplates  that the $35 million
secured  financing  would provide for terms  similar to those  referenced in the
preceding sentence;  however, the proposed lender has not agreed to any terms of
the  $35  million  secured  financing  and  there  can be no  assurance  that an
agreement for this  financing  will be obtained or that, if obtained,  the terms
will be as referenced  above.  The approximate  $155 million  secured  financing
would be effected  through the issuance of two series of secured notes under two
separate  indentures.  The  first  series  of  secured  notes,  representing  an
aggregate principal amount of approximately $105 million,  would provide for (i)
interest  at a rate of 11.75% per annum,  (ii) principal prepayment/amortization
obligations,(iii) extension fees after four years and (iv) maturity on the fifth
anniversary of the effective date of the Plan.  The second  series  of  secured
notes, representing an aggregate  principal amount of approximately $50 million,
would provide for (i) interest at a rate of 13% per annum with additional
interest at the rate of 7% per annum accreting over the debt term,(ii) extension
fees after four years, and (iii) maturity on the sixth anniversary of the
effective date of the Plan. The New Debt described above will be secured by
substantially  all of the assets of the Company.  It is contemplated that there
will be  restrictive covenants, including financial covenants, in connection
with the New Debt.

     The Plan also  contemplates  that the holders of the Company's common stock
will retain their stock. Under the Plan, no cash dividends, other than a maximum
of $4.1 million to preferred shareholders, can be paid to existing shareholders.
See  "Effect of Chapter 11 on REIT Status and Other Tax  Matters-Taxable  Income
Distributions" below for further discussion. Subject to the respective approvals
by the holders of the Company's Series B Cumulative  Convertible Preferred Stock
(the "Series B Preferred Stock") and the Series F Redeemable Cumulative Dividend
Preferred Stock (the "Series F Preferred  Stock" or "junior  preferred  stock"),
the Plan  contemplates  an amendment  to their  respective  relative  rights and
preferences  to permit the  payment of accrued and unpaid  dividends  in cash or
common  stock,  at  the  Company's  election.   The  Plan  further  contemplates
amendments  to the relative  rights and  preferences  of the Series D Cumulative
Convertible  Preferred  Stock  (the  "Series D  Preferred  Stock"),  through  an
exchange  of  Series D  Preferred  Stock  for  Series E  Cumulative  Convertible
Preferred Stock (the "Series E Preferred  Stock"),  similar to those  amendments
effected  in  connection  with  the  recent  exchange  of the  former  Series  C
Cumulative  Convertible  Preferred  Stock (the  "Series C Preferred  Stock") for
Series E Preferred  Stock.  See "MARKET FOR THE  REGISTRANT'S  COMMON  STOCK AND
OTHER  RELATED  STOCKHOLDER  MATTERS-Exchange  of Series C  Preferred  Stock for
Series E Preferred Stock" for a discussion of the exchange of Series C Preferred
Stock for Series E Preferred Stock.

     Reference is made to the Plan and Proposed Disclosure Statement, previously
filed with the Securities and Exchange  Commission  (the "SEC") as exhibits to a
Form  8-K,  for a  complete  description  of the  financing  contemplated  to be
obtained  under  the Plan  from the  respective  existing  creditors  including,


<PAGE>30

without limitation,  payment terms, restrictive covenants and collateral,  and a
complete  description of the treatment of preferred  stockholders.  Although the
Company has commitments for substantially all of the New Debt and has certain of
the CMBS  contemplated to be sold in connection with the CMBS Sale, there can be
no assurance that the Company will obtain the Recapitalization  Financing,  that
the Plan  will be  confirmed  by the  Bankruptcy  Court,  or that the  Plan,  if
confirmed, will be consummated. The Plan also contemplates certain amendments to
the  Company's  articles of  incorporation,  including an increase in authorized
shares  from 120  million to 375  million  (consisting  of 300 million of common
shares and 75 million of preferred shares).

Effect of Chapter 11 Filing on REIT Status and Other Tax Matters

     REIT Status

     CRIIMI MAE is required to meet income,  asset,  ownership and  distribution
tests  to  maintain  its  REIT  status.  The  Company  has  satisfied  the  REIT
requirements for all years through,  and including,  1998.  However,  due to the
uncertainty resulting from its Chapter 11 filing, there can be no assurance that
CRIIMI MAE will  retain its REIT  status for 1999 or  subsequent  years.  If the
Company  fails to retain its REIT status for any taxable  year, it will be taxed
as a regular domestic corporation subject to federal and state income tax in the
year of disqualification and for at least the four subsequent years.

     The Company's 1999 Taxable Income

     As a REIT,  CRIIMI MAE is generally  required to distribute at least 95% of
its "REIT taxable  income" to its  shareholders  each tax year.  For purposes of
this  requirement,  REIT taxable income  excludes  certain excess noncash income
such as original issue discount  ("OID").  In determining its federal income tax
liability,  CRIIMI  MAE, as a result of its REIT  status,  is entitled to deduct
from its taxable income dividends paid to its shareholders.  Accordingly, to the
extent the Company  distributes its net income to  shareholders,  it effectively
reduces taxable income, on a dollar-for-dollar basis, and eliminates the "double
taxation" that normally  occurs when a corporation  earns income and distributes
that income to  shareholders  in the form of  dividends.  The Company,  however,
still must pay corporate level tax on any 1999 taxable income not distributed to
shareholders.  Unlike the 95% distribution  requirement,  the calculation of the
Company's  federal  income tax liability  does not exclude excess noncash income
such as OID.  Should  CRIIMI MAE  terminate  or fail to maintain its REIT status
during the year ended  December 31, 1999,  the taxable income for the year ended
December 31, 1999 of approximately  $37.5 million would generate a tax liability
of up to $15.0 million.

     In  determining  the  Company's  taxable  income  for  1999,  distributions
declared by the Company on or before September 15, 2000 and actually paid by the
Company on or before  December 31, 2000 will be considered as dividends paid for
the year ended December 31, 1999. The Company anticipates distributing all, or a
substantial  portion of, its 1999 taxable income in the form of non-cash taxable
dividends.  There can be no assurance that the Company will be able to make such
distributions with respect to its 1999 taxable income.

     1999 Excise Tax Liability

     Apart from the requirement that the Company  distribute at least 95% of its
REIT taxable  income to maintain  REIT status,  CRIIMI MAE is also required each
calendar  year to  distribute  an amount at least equal to the sum of 85% of its
"REIT  ordinary  income"  and 95% of its "REIT  capital  gain  income"  to avoid
incurring a nondeductible  excise tax. Unlike the 95% distribution  requirement,
the 85%  distribution  requirement is not reduced by excess noncash income items
such as OID. In addition,  in  determining  the Company's  excise tax liability,
only dividends actually paid in 1999 will reduce the amount of income subject to
this excise tax. The Company has accrued  $1,105,000  for the excise tax payable
for 1999.  The accrual was  calculated  based on the taxable income for the year
ended December 31, 1999.

     The Company's 1998 Taxable Income

     On September 14, 1999,  the Company  declared a dividend  payable to common
shareholders  of  approximately  1.61  million  shares of a new series of junior
preferred  stock  with a  face  value of  $10  per  share. See  Note 12 for
further discussion.  The purpose of the dividend was to distribute approximately



<PAGE>31

$15.7 million in undistributed 1998 taxable income.  To the  extent  that  it is
determined  that such  amount  was not  distributed,  the  Company  would bear a
corporate  level  income  tax  on  the  undistributed  amount.  There  can be no
assurance  that all of the Company's tax liability will be eliminated by payment
of such junior  preferred stock dividend.  The Company paid the junior preferred
stock  dividend on November 5, 1999.  The junior  preferred  stock  dividend was
taxable to common shareholder recipients.

     Taxable Income Distributions

     The recently  issued  Internal  Revenue  Service  Revenue  Procedure  99-17
provides   securities  and  commodities   traders  with  the  ability  to  elect
mark-to-market  treatment  for 2000 by including  an election  with their timely
filed 1999 federal tax  extension.  The election  applies to all future years as
well, unless revoked with the consent of the Internal Revenue Service.  On March
15,  2000,  the  Company  determined  to  elect  mark-to-market  treatment  as a
securities  trader for 2000 and,  accordingly,  will recognize  gains and losses
prior to the actual disposition of its securities.  Moreover, some if not all of
those gains and  losses,  as well as some if not all gains or losses from actual
dispositions  of  securities,  will be  treated  as  ordinary  in nature and not
capital,  as they would be in the absence of the  election.  Therefore,  any net
operating  losses  generated by the Company's  trading  activity will offset the
Company's ordinary taxable income, and thereby reduce required  distributions to
shareholders by a like amount. See "BUSINESS-Risk  Factors-Risks Associated with
Trader  Election"  for  further  discussion.  If the  Company  does  have a REIT
distribution  requirement (and such  distributions  would be permitted under the
Plan), a substantial portion of the Company's distributions would be in the form
of non-cash taxable dividends.

     Taxable Mortgage Pool Risks

     An entity that constitutes a "taxable  mortgage pool" as defined in the Tax
Code  ("TMP") is treated as a separate  corporate  level  taxpayer  for  federal
income  tax  purposes.  In  general,  for an entity to be  treated  as a TMP (i)
substantially  all of the assets must consist of debt obligations and a majority
of those debt obligations  must consist of mortgages;  (ii) the entity must have
more than one class of debt securities  outstanding with separate maturities and
(iii)  the  payments  on the debt  securities  must bear a  relationship  to the
payments  received from the  mortgages.  The Company  currently  owns all of the
equity interests in three trusts that constitute TMPs (CBO-1,  CBO-2 and CMO-IV,
collectively the "Trusts").  See Notes 5 and 6 for descriptions of CBO-1,  CBO-2
and CMO-IV. The statutory provisions and regulations governing the tax treatment
of TMPs  (the  "TMP  Rules")  provide  an  exemption  for TMPs  that  constitute
"qualified  REIT  subsidiaries"  (that is,  entities whose equity  interests are
wholly  owned by a REIT).  As a result of this  exemption  and the fact that the
Company owns all of the equity interests in each Trust, the Trusts currently are
not  required to pay a separate  corporate  level tax on income they derive from
their underlying mortgage assets.

     The Company also owns certain securities  structured as bonds (the "Bonds")
issued by each of the Trusts. Certain of the Bonds owned by the Company serve as
collateral (the "Pledged Bonds") for short-term,  variable-rate  borrowings used
by the Company to finance their initial  purchase.  If the creditors holding the
Pledged Bonds were to seize or sell this  collateral  and the Pledged Bonds were
deemed to constitute equity interests (rather than debt) in the Trusts, then the
Trusts would no longer  qualify for the exemption  under the TMP Rules  provided
for  qualified  REIT  subsidiaries.  The Trusts  would then be required to pay a
corporate  level  federal  income  tax.  As a result,  available  funds from the
underlying  mortgage assets that would  ordinarily be used by the Trusts to make
payments  on  certain  securities  issued by the  Trust  (including  the  equity
interests and the Pledged Bonds) would instead be applied to tax payments. Since
the equity  interests  and Bonds owned by the Company are the most  subordinated
securities and,  therefore,  would absorb payment  shortfalls first, the loss of
the exemption under the TMP rules could have a material  adverse effect on their
value and the payments received thereon.

     In  addition to causing the loss of the  exemption  under the TMP Rules,  a
seizure or sale of the Pledged  Bonds and a  characterization  of them as equity
for tax purposes could also jeopardize the Company's REIT status if the value of
the remaining  ownership interests in any Trust held by the Company (i) exceeded
5% of the total value of the Company's  assets or (ii) constituted more than 10%
of the Trust's  voting  interests.  Although it is possible that the election by
the TMPs to be treated as taxable REIT  subsidiaries  could  prevent the loss of
CRIIMI MAE's REIT status,  there can be no assurance that a valid election could
be made given the timing of a seizure or sale of the Pledged Bonds.

<PAGE>32


                                SIGNATURE

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this Form 10-K/A 1 to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                       CRIIMI MAE INC.

April 20, 2000                         /s/ William B. Dockser


                                           ---------------------------
                                           William B. Dockser
                                           Chairman of the Board and
                                           Principal Executive Officer