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

                                    FORM 10-Q


(Mark One)


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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007


                                       OR


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

                         Commission File Number 0-23972

                      AMERICAN MORTGAGE ACCEPTANCE COMPANY
             (Exact name of Registrant as specified in its charter)


            MASSACHUSETTS                               13-6972380
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
    incorporation or organization)

 625 MADISON AVENUE, NEW YORK, NEW YORK                   10022
(Address of principal executive offices)                (Zip Code)


Registrant's telephone number, including area code (212) 317-5700


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 whether the registrant is a large  accelerated  filer, an
accelerated  filer or a  non-accelerated  filer (as defined in Rule 12b-2 of the
Exchange Act). Large Accelerated filer [ ] Accelerated filer [X] Non-accelerated
filer [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of July 31,  2007,  there were  8,406,028  outstanding  common  shares of the
registrant's shares of beneficial interest, $0.10 par value.


<PAGE>

                                TABLE OF CONTENTS

                      AMERICAN MORTGAGE ACCEPTANCE COMPANY

                                    FORM 10-Q



                                                                            PAGE
PART I   FINANCIAL INFORMATION
Item 1.    Financial Statements                                               3
Item 2.    Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                       18
Item 3.    Quantitative and Qualitative Disclosures about Market Risk        27
Item 4.    Controls and Procedures                                           27

PART II  OTHER INFORMATION
Item 1.    Legal Proceedings                                                 28
Item 1A.   Risk Factors                                                      28
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds       28
Item 3.    Defaults Upon Senior Securities                                   28
Item 4.    Submission of Matters to a Vote of Security Holders               28
Item 5.    Other Information                                                 28
Item 6.    Exhibits                                                          28

SIGNATURES                                                                   29

                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                    (In thousands, except per share amounts)
<TABLE>
<CAPTION>
                                     ASSETS

                                                                            June 30,     December 31,
                                                                              2007          2006
                                                                          -----------    -----------
                                                                          (Unaudited)
<S>                                                                       <C>            <C>
Cash and cash equivalents                                                 $     6,833    $     7,553
 Restricted cash                                                                2,223         14,951
 Investments
   Mortgage loans receivable, net                                             727,675        545,898
   Available for sale investments, at fair value:
     Debt securities                                                           78,347         82,582
     CMBS                                                                     103,559             --
     CDO securities                                                             9,822             --
     Revenue bonds                                                              4,888          4,967
   Real estate owned - discontinued                                                --         48,692
Accounts receivable                                                             9,733          7,670
Deferred charges and other assets, net                                         13,433          8,671
                                                                          -----------    -----------

Total assets                                                              $   956,513    $   720,984
                                                                          ===========    ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
 CDO notes payable                                                        $   362,000    $   362,000
 Repurchase facilities                                                        403,124        163,576
 Line of credit - related party                                                57,600         15,000
 Preferred shares of subsidiary (subject to mandatory
   repurchase)                                                                 25,000         25,000
 Mortgages payable on real estate owned - discontinued                             --         39,944
 Accounts payable and accrued expenses                                          8,590         13,666
 Due to Advisor and affiliates                                                  1,441          1,670
 Dividends payable                                                              1,891         15,120
                                                                          -----------    -----------

Total liabilities                                                             859,646        635,976
                                                                          -----------    -----------

Commitments and contingencies

Shareholders' equity:
 Shares of beneficial interest; $0.10 par value; 25,000 shares
   authorized; 8,817 issued and 8,402 outstanding in 2007 and
   8,815 issued and 8,400 outstanding in 2006                                     882            881
 Treasury shares of beneficial interest at par; 415 shares in
   2007 and 2006                                                                  (42)           (42)
 Additional paid-in capital                                                   128,048        127,971
 Accumulated deficit                                                          (35,316)       (40,174)
 Accumulated other comprehensive income (loss)                                  3,295         (3,628)
                                                                          -----------    -----------

Total shareholders' equity                                                     96,867         85,008
                                                                          -----------    -----------

Total liabilities and shareholders' equity                                $   956,513    $   720,984
                                                                          ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.
                                       3
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   Condensed Consolidated Statements of Income
                    (In thousands, except per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                  Three Months Ended            Six Months Ended
                                                       June 30,                     June 30,
                                              -------------------------    -------------------------
                                                  2007          2006           2007          2006
                                              -----------   -----------    -----------   -----------
<S>                                           <C>           <C>            <C>           <C>
Revenues:
   Interest income:
     Mortgage loans                           $    12,712   $     3,903    $    22,928   $     6,124
     Debt securities                                1,208         2,996          2,435         6,215
     CMBS                                             862            --            862            --
     Revenue bonds                                    105           141            211           284
     Temporary investments                             89            52            259           135
     CDO securities                                   183            --            190            --
   Participation income                                --            --            699            --
   Other revenues                                     153           157            229           162
                                              -----------   -----------    -----------   -----------
     Total revenues                                15,312         7,249         27,813        12,920
                                              -----------   -----------    -----------   -----------

Expenses:
   Interest                                        10,638         4,227         19,133         6,586
   Interest - distributions to preferred
     shareholders of subsidiary (subject to
     mandatory repurchase)                            554           556          1,123         1,074
   General and administrative                         687           490          1,421           978
   Fees to Advisor                                    773           977          1,612         1,803
   Amortization and other                             201            15            401            30
                                              -----------   -----------    -----------   -----------
     Total expenses                                12,853         6,265         23,690        10,471
                                              -----------   -----------    -----------   -----------

Other income (loss)
   Gain on sale of ARCap                              337            --            337            --
   Change in fair value of derivative
     instruments                                      681         1,879            650         2,023
   Loss on repayment of debt securities                --          (153)            --          (153)
   Equity in earnings of ARCap                         --         2,397             --         3,076
                                              -----------   -----------    -----------   -----------
     Total other income                             1,018         4,123            987         4,946
                                              -----------   -----------    -----------   -----------

   Income from continuing operations                3,477         5,107          5,110         7,395

   Income (loss) from discontinued
     operations, including gain of sale                --           108          3,531           (11)
                                              -----------   -----------    -----------   -----------

   Net income                                 $     3,477   $     5,215    $     8,641   $     7,384
                                              ===========   ===========    ===========   ===========

Per share amounts (basic and diluted):

   Net income from continuing operations      $      0.41   $      0.62    $      0.61   $      0.89

   Net income from discontinued operations             --          0.01           0.42            --
                                              -----------   -----------    -----------   -----------

   Net income                                 $      0.41   $      0.63    $      1.03   $      0.89
                                              ===========   ===========    ===========   ===========

   Dividends per share                        $     0.225   $     0.400    $     0.450   $     0.800
                                              ===========   ===========    ===========   ===========

Weighted average shares outstanding:
   Basic                                            8,403         8,304          8,402         8,304
                                              ===========   ===========    ===========   ===========
   Diluted                                          8,403         8,304          8,402         8,305
                                              ===========   ===========    ===========   ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                   Six Months Ended
                                                                      June 30,
                                                             --------------------------
                                                                 2007           2006
                                                             -----------    -----------
<S>                                                          <C>            <C>
Cash flows from operating activities:
   Net income                                                $     8,641    $     7,384

Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation expense                                            336            900
     Equity in earnings of ARCap                                      --         (3,076)
     Distributions received from ARCap                                --          1,716
     Gain on sale of real state owned                             (3,611)            --
     Net loss on sale or repayment of assets                          --            153
     Change in fair value of derivative instruments                 (681)        (2,023)
     Amortization and accretion                                      197           (144)
     Other non-cash (income) expense                                (512)            89
     Changes in operating assets and liabilities:
       Accounts receivable                                        (2,063)           159
       Other assets                                                   (3)           223
       Due to Advisor and affiliates                                (229)        (1,070)
       Accounts payable and accrued expenses                       3,200            921
                                                             -----------    -----------

Net cash provided by operating activities                          5,275          5,232
                                                             -----------    -----------

Cash flows from investing activities:
  Funding and purchase of mortgage loans                        (238,873)      (153,759)
  Principal repayments of mortgage loans                          57,565          5,450
  Investment in CMBS                                            (106,830)            --
  Investment in CDO securities                                   (10,062)            --
  Principal repayments or sale of debt securities                  2,408         17,945
  Decrease in restricted cash                                     12,728             --
  Proceeds from sale of real estate owned                         11,987             --
  Principal repayment on real estate owned                            35             --
  Principal repayment of revenue bonds                                95             90
                                                             -----------    -----------

Net cash used in investing activities                           (270,947)      (130,274)
                                                             -----------    -----------
</TABLE>

                                    continued
                                       5
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                              Six Months Ended
                                                                  June 30,
                                                         --------------------------
                                                             2007           2006
                                                         -----------    -----------
<S>                                                      <C>            <C>
Cash flows from financing activities:
   Proceeds from repurchase facilities                   $   387,649    $   135,012
   Repayments of repurchase facilities                      (148,101)       (32,216)
   Proceeds from line of credit - related party              171,815         67,542
   Repayments of line of credit - related party             (129,215)       (40,500)
   Repayments of warehouse facility                               --         (4,070)
   Deferred financing costs                                     (186)        (1,604)
   Dividends paid to shareholders                            (17,010)        (6,644)
                                                         -----------    -----------

Net cash provided by financing activities                    264,952        117,520
                                                         -----------    -----------

Net decrease in cash and cash equivalents                       (720)        (7,522)

Cash and cash equivalents at the beginning of the year         7,553         11,214
                                                         -----------    -----------

Cash and cash equivalents at the end of the period       $     6,833    $     3,692
                                                         ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


NOTE 1 - BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of American
Mortgage Acceptance Company and its wholly owned subsidiaries.  All intercompany
accounts  and  transactions  have  been  eliminated  in  consolidation.   Unless
otherwise indicated, we herein refer to American Mortgage Acceptance Company and
its  subsidiaries  as "AMAC",  "we",  "us",  "our",  and "our  Company".  We are
externally  managed by  Centerline/AMAC  Manager Inc. (the "Advisor"),  formerly
known as CharterMac AMI  Associates,  Inc.,  which acts as our Advisor and is an
indirect subsidiary of Centerline Holding Company ("Centerline"), formerly known
as CharterMac,  which owns approximately 2.4% of our common shares of beneficial
interest  at June 30,  2007 (see Notes 13 and 15).  We  operate in one  business
segment.

The condensed  consolidated  financial  statements  have been  prepared  without
audit.  In the  opinion of  management,  the  financial  statements  contain all
adjustments  (consisting  of only normal  recurring  adjustments)  necessary  to
present  fairly our financial  position as of June 30, 2007,  and the results of
our  operations  and our cash  flows for the period  then  ended.  However,  the
operating  results for interim  periods may not be indicative of the results for
the full year.

Certain  information  and  footnote  disclosures  normally  included  in  annual
consolidated   financial  statements  prepared  in  accordance  with  accounting
principles generally accepted in the United States of America ("GAAP") have been
condensed or omitted. It is suggested that these financial  statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 2006.

Our Annual Report on Form 10-K for the year ended December 31, 2006,  contains a
summary of our  significant  accounting  policies.  There have been no  material
changes to these items since December 31, 2006.

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

We have  reclassified  certain prior year amounts to conform to the current year
presentation,  in particular the  reclassification  of operating results for our
real estate owned portfolio to discontinued operations (see Notes 4 and 12).

NEW ACCOUNTING PRONOUNCEMENTS

In September  2006, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement No. 157, FAIR VALUE  MEASUREMENTS,  which  established a framework for
calculating  the fair value of assets and  liabilities  as  required by numerous
other accounting  pronouncements and expands disclosure requirements of the fair
values of certain assets and  liabilities.  The statement is effective as of the
beginning of our 2008 fiscal year. We are currently  evaluating  the impact,  if
any, that the adoption of this statement will have on our consolidated financial
statements.

In February 2007,  the FASB issued  Statement No. 159, THE FAIR VALUE OPTION FOR
FINANCIAL ASSETS AND FINANCIAL  LIABILITIES.  This statement was issued with the
intent to provide an  alternative  measurement  treatment for certain  financial
assets and liabilities.  The alternative  measurement would permit fair value to
be used for both initial and subsequent measurement,  with changes in fair value
recognized in earnings as those changes occur. This "Fair Value Option" would be
available on a contract by contract basis. The effective date for this statement
is the beginning of our 2008 fiscal year. We are currently assessing the impact,
if any, that the adoption would have on our  consolidated  financial  statements
should  we elect to adopt  it.  If we were to do so,  we  would  not  apply  its
provisions until Statement No. 157 (described above) is adopted.

In June 2007, the American Institute of Certified Public  Accountants  ("AICPA")
issued  Statement of Position  ("SOP") 07-1,  CLARIFICATION  OF THE SCOPE OF THE

                                       7
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


AUDIT AND  ACCOUNTING  GUIDE  INVESTMENT  COMPANIES  AND  ACCOUNTING  FOR PARENT
COMPANIES AND EQUITY METHOD  INVESTORS FOR INVESTMENTS IN INVESTMENT  COMPANIES.
This SOP provides guidance for determining whether an entity is within the scope
of the AICPA AUDIT AND  ACCOUNTING  GUIDE  INVESTMENT  COMPANIES  (the "Guide").
Entities  that are  within  the  scope of the Guide are  required,  among  other
things,  to carry their  investments  at fair value,  with changes in fair value
included in earnings.  The  provisions  of this SOP are  effective on January 1,
2008.  We are  currently  evaluating  this new guidance and have not  determined
whether we will be required to apply the  provisions  of the Guide in presenting
our financial statements.

NOTE 2 - MORTGAGE LOANS

We partially or fully funded 19 first  mortgage,  bridge and mezzanine loans and
subordinated notes, totaling approximately $244.9 million through June 30, 2007,
including  two to a related  party (see Note 13).  The loans bear  interest at a
weighted average interest rate of 7.98%.

During  February  2007,  one of our  mortgage  loans was repaid,  resulting in a
one-time  payment  received,   pursuant  to  a  participating  arrangement,   of
approximately  $699,000.  These fees are recorded as participation income in our
condensed consolidated statements of income.

During April 2007,  we purchased an $84.0  million  participation  interest in a
mezzanine loan. Approximately $55.3 million was repaid during the second quarter
of 2007.

At June 30, 2007, approximately $673.5 million of our first mortgage, bridge and
mezzanine  loans and  subordinated  notes  were  partially  or fully  pledged as
collateral under our repurchase facilities.

NOTE 3 -AVAILABLE FOR SALE INVESTMENTS

We carry all of our  Available  for Sale  investments  at their  estimated  fair
values.   We  record  the  change  in  their  fair  values  as  a  component  of
comprehensive  income  within  shareholders'  equity.  If the  fair  value of an
investment  is lower than our cost,  and we  determine  that the decline in fair
value is  other-than-temporary,  we record an impairment charge in our condensed
consolidated statement of income.

At June 30, 2007, we had the following  investments  classified as available for
sale:

     o    Debt Securities
     o    Commercial Mortgage-Backed Securities ("CMBS")
     o    Collateralized Debt Obligation ("CDO") Securities
     o    Revenue Bonds

During March 2007,  we purchased a $10.1 million  investment  in CDO  securities
(class J, K, L, M, N, O and preferred shares),  issued by Nomura CRE CDO 2007-2,
LTD ("Nomura").  These  securities bear interest at a weighted  average interest
rate of 9.00% and mature in May 2042.

During the second  quarter of 2007,  we  purchased  $115.3  million of CMBS,  at
discounts  aggregating  $8.5  million,  for a net cost of  approximately  $106.8
million.  These  securities,  which bear interest at a weighted average interest
rate of 5.93%, mature on dates ranging from June 2022 through April 2049.

CMBS investments we hold were comprised of the following as of June 30, 2007:

                                       8
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                        Unrealized        Percentage of
  (Dollars in thousands)       Face Amount       Accreted Cost       Fair Value           losses            Fair Value
-------------------------    ---------------    ---------------    ---------------    ---------------     ---------------
<S>                          <C>                <C>                <C>                <C>                             <C>
Security rating:
   BBB+                      $         4,750    $         4,776    $         4,740    $           (36)                4.6%
   BBB                                69,556             64,615             62,360             (2,255)               60.2
   BBB-                               40,995             37,470             36,459             (1,011)               35.2
                             ---------------    ---------------    ---------------    ---------------     ---------------
                             $       115,301    $       106,861    $       103,559    $        (3,302)              100.0%
                             ===============    ===============    ===============    ===============     ===============
</TABLE>

Information regarding our available for sale investments is as follows:
<TABLE>
<CAPTION>
(In thousands)
                                  Debt                                    CDO             Revenue
     June 30, 2007             Securities            CMBS             Securities           Bonds               Total
-------------------------    ---------------    ---------------    ---------------    ---------------     ---------------
<S>                          <C>                <C>                <C>                <C>                 <C>
Amortized cost               $        81,027    $       106,861    $        10,062    $         4,753     $       202,703

Unrealized gains                         273                 --                 --                135                 408
Unrealized losses                     (2,953)            (3,302)              (240)                --              (6,495)
                             ---------------    ---------------    ---------------    ---------------     ---------------
Net unrealized (loss) gain            (2,680)            (3,302)              (240)               135              (6,087)
                             ---------------    ---------------    ---------------    ---------------     ---------------

Fair value                   $        78,347    $       103,559    $         9,822    $         4,888     $       196,616
                             ===============    ===============    ===============    ===============     ===============


   December 31, 2006
-------------------------

Amortized cost               $        83,496    $            --    $            --    $         4,846     $        88,342

Unrealized gains                         359                 --                 --                121                 480
Unrealized losses                     (1,273)                --                 --                 --              (1,273)
                             ---------------    ---------------    ---------------    ---------------     ---------------
Net unrealized (loss) gain              (914)                --                 --                121                (793)
                             ---------------    ---------------    ---------------    ---------------     ---------------

Fair value                   $        82,582    $            --    $            --    $         4,967     $        87,549
                             ===============    ===============    ===============    ===============     ===============
</TABLE>

The fair value and gross unrealized losses of our available for sale investments
aggregated by length of time that these  individual debt securities have been in
a continuous  unrealized  loss position at June 30, 2007, and December 31, 2006,
is summarized in the table below:
<TABLE>
<CAPTION>
                                        June 30, 2007                                 December 31, 2006
                        ---------------------------------------------   ---------------------------------------------
                          Less than       12 Months                       Less than       12 Months
(dollars in thousands)    12 Months        or More          Total         12 Months        or More          Total
                        -------------   -------------   -------------   -------------   -------------   -------------
<S>                     <C>             <C>             <C>             <C>             <C>             <C>
Number of securities:
  Debt securities                   2              12              14               3               9              12
  CMBS                              6              --               6              --              --              --
  CDO securities                    1              --               1              --              --              --
                        -------------   -------------   -------------   -------------   -------------   -------------
Total                               9              12              21               3               9              12

Fair value              $     128,497   $      44,959   $     173,456   $      35,799   $      37,579   $      73,378
Gross unrealized
losses                  $       3,888   $       2,607   $       6,495   $         246   $       1,027   $       1,273
</TABLE>

                                       9
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


The unrealized losses shown above are as a result of increases in interest rates
and interest rate spreads subsequent to the acquisition of the investments.  All
of the available for sale  investments are performing  according to their terms.
Furthermore,  we have the  intent  and  ability  to hold  these  investments  to
maturity, or at least until interest rates change such that the fair value is no
longer less than book value. Accordingly,  we have concluded that these declines
in value are temporary.

At June 30, 2007, approximately $187.5 million of our debt securities,  CMBS and
CDO securities were pledged as collateral under our repurchase facilities.

NOTE 4 - REAL ESTATE OWNED

During March 2007, we sold our economic  interest in the Concord portfolio to an
affiliated  party (see Note 13),  resulting in proceeds of  approximately  $12.0
million and a gain of  approximately  $3.6 million.  As a result of the sale, we
have reclassified  property operations for the current period and all comparable
prior periods as discontinued operations (see Note 12).

NOTE 5 - DEFERRED CHARGES AND OTHER ASSETS, NET

Deferred charges and other assets consisted of the following:
<TABLE>
<CAPTION>
                                                       June 30,     December 31,
   (In thousands)                                        2007           2006
                                                     ------------   ------------
   <S>                                               <C>            <C>
   Deferred financing charges, net of accumulated
     amortization  of $552 in 2007 and $151 in 2006  $      7,255   $      7,467
   Interest rate derivatives (see Note 9)                   6,114          1,143
   Other Assets                                                64             61
                                                     ------------   ------------

   Total                                             $     13,433   $      8,671
                                                     ============   ============
</TABLE>

NOTE 6 - REPURCHASE FACILITIES

Our repurchase facilities consisted of financing collateralized by:
<TABLE>
<CAPTION>
                                                       June 30,     December 31,
   (In thousands)                                        2007           2006
                                                     ------------   ------------
   <S>                                               <C>            <C>
   Debt securities                                   $     75,604   $     79,427
   Other investment classes (1)                           327,520         84,149
                                                     ------------   ------------

   Total                                             $    403,124   $    163,576
                                                     ============   ============
</TABLE>

(1) This facility includes mortgage loans, CMBS, bridge notes,  mezzanine loans,
subordinated notes and CDO securities pledged as collateral.

As of June 30, 2007, the debt securities repurchase facilities (with RBC Capital
Markets  Corporation  and UBS Financial  Services  Inc.) had a weighted  average
interest  rate of  5.37%  as  compared  to 5.41% at  December  31,  2006.  These
borrowings  are  subject  to  30-day  settlement  terms.  Our  other  repurchase
facilities  with Citigroup  Global  Markets,  Inc.  ("Citigroup"),  Bear Stearns
International   Limited  ("Bear  Stearns")  and  Liquid  Funding,  LTD  ("Liquid
Funding")  had weighted  average  interest  rates of 6.01% at June 30, 2007,  as
compared to 6.13% at December 31, 2006. Our  repurchase  facility with Citigroup
expires upon the completion of a second planned CDO securitization,  or December
2007, whichever comes first.

                                       10
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


NOTE 7 - LINE OF CREDIT - RELATED PARTY

During April 2007, we amended our revolving  credit  facility with Centerline to
increase  our  borrowing  capacity  from  $50.0  million to $80.0  million.  The
maturity  date of the  facility  was also  extended to June 2008 with a one-year
optional  extension.  In the opinion of our Advisor,  the terms of this facility
are consistent with those of transactions  with  independent  third parties.  At
June 30, 2007,  and December 31, 2006,  we had  approximately  $57.6 million and
$15.0 million,  respectively,  in borrowings outstanding,  bearing interest at a
weighted average interest rate of 8.32% and 8.35%, respectively.

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:
<TABLE>
<CAPTION>
                                                June 30,      December 31,
     (In thousands)                               2007            2006
                                              ------------   ------------
     <S>                                      <C>            <C>
     Accrued interest payable                 $      6,414   $      3,078
     Interest rate derivatives (see Note 9)            496          8,673
     Refundable deposits (1)                           265          1,161
     Other                                           1,415            754
                                              ------------   ------------

                                              $      8,590   $     13,666
                                              ============   ============
</TABLE>

(1) Includes  refundable deposits collected during the due diligence period of a
loan transaction which are payable to other parties.

NOTE 9 - DERIVATIVE INSTRUMENTS

Our derivative  instruments  comprise cash flow hedges of debt and free-standing
derivatives  related to investments.  While we carry  derivative  instruments in
both  categories at their  estimated  fair values on our condensed  consolidated
balance sheet, the changes in those fair values are recorded differently. To the
extent that the cash flow hedges are effectively hedging the associated debt, we
record changes in their fair values as a component of other comprehensive income
within  shareholders'  equity. If a cash flow swap is ineffective,  we include a
portion of the change in its fair value in our condensed  consolidated statement
of income. With respect to the free-standing derivatives,  we always include the
change in their fair value in our condensed consolidated statement of income.

CASH FLOW HEDGES OF DEBT

Our borrowings under  repurchase  facilities,  CDO notes payable,  related party
line of credit and our  preferred  shares of a subsidiary  (subject to mandatory
repurchase) incur interest at variable rates, exposing us to interest rate risk.
We have  established a policy for risk  management  outlining our objectives and
strategies for use of derivative instruments to potentially mitigate such risks.

Effective  March 30, 2007,  we entered into a three-year  interest  rate swap to
reduce our exposure to possible  increases in the variable  interest rate on our
subsidiary's preferred shares (subject to mandatory repurchase).  Under the swap
agreement,  we are  required  to pay  Bear  Stearns  a fixed  rate of 4.97% on a
notional  amount of $25.0 million and will receive a floating rate equivalent to
3-month LIBOR.

As of June 30, 2007, including the above mentioned swap, we had 45 interest rate
swaps with an aggregate notional amount of $618.3 million,  which will expire on
dates ranging from March 2008 through  February 2022 and are  designated as cash
flow  hedges,   with  the  hedged  item  being  the  interest  payments  on  our
variable-rate  repurchase  facilities,  CDO notes payable,  and our subsidiary's
preferred shares (subject to mandatory repurchase).  These swaps are recorded at
fair value,  with changes in fair value recorded in comprehensive  income to the

                                       11
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


extent the hedges are effective in achieving  offsetting cash flows.  Amounts in
accumulated other comprehensive income will be reclassified into earnings in the
same period during which the hedged  forecasted  transaction  affects  earnings.
Since we are  hedging  the  interest  payments on our  variable-rate  debt,  the
forecasted transactions are the interest payments.

At inception and on an ongoing basis,  we assess whether the swaps are effective
in offsetting  changes in the variable cash flows of the hedged item. We measure
ineffectiveness  of our cash flow  hedges on a  quarterly  basis and  record any
ineffectiveness in interest expense on the condensed consolidated  statements of
income. With the exception of one, all of our swaps have been effective,  and we
expect  they will  continue to be  effective  in the  future.  We have  recorded
ineffectiveness  of approximately  $124,000 related to the one ineffective swap.
This swap includes an embedded  financing  component,  which has caused and will
continue to cause some  ineffectiveness,  within the limits  allowed by SFAS No.
133, ACCOUNTING FOR DERIVATIVE  INSTRUMENTS AND HEDGING ACTIVITIES,  to maintain
hedge accounting.

We estimate that approximately  $682,000 of the net unrealized gains included in
accumulated  other  comprehensive  loss  will be  reclassified  as an  offset to
interest expense within the next 12 months.

FREE-STANDING DERIVATIVES RELATED TO INVESTMENTS

We  have  three  interest  rate  swaps  with an  aggregate  notional  amount  of
approximately  $20.1  million,  which expire on dates ranging from February 2017
through  July  2017,  that are  hedging  changes  in the fair  value of  certain
investments. We did not elect to apply hedge accounting to these swaps.

We are required to maintain a minimum balance of collateral with Bank of America
in connection with these interest rate swaps. From time to time, as market rates
fluctuate, we may be called upon to post additional cash collateral with Bank of
America.  These  payments are held as deposits  with Bank of America and will be
used to settle the swap at termination date if market rates fall below the fixed
rates on the swaps. At June 30, 2007, we had approximately  $150,000 of deposits
held by Bank of America.

FINANCIAL STATEMENT IMPACT

Interest rate swaps for which we were in a net  liability  position are recorded
in accounts payable and accrued expenses (see Note 8) and those for which we are
in a net asset  position are recorded in deferred  charges and other assets (see
Note 5). The amounts recorded were as follows:
<TABLE>
<CAPTION>
                                       June 30,      December 31,
       (In thousands)                    2007           2006
                                     ------------   ------------
            <S>                      <C>            <C>
            Net asset position       $      6,114   $      1,143
            Net liability position   $        496   $      8,673
</TABLE>

Net income included the following related to our  free-standing  derivatives and
interest rate hedges:
<TABLE>
<CAPTION>
                           Three Months Ended            Six Months Ended
                                June 30,                      June 30,
                       --------------------------    --------------------------
(In thousands)             2007           2006           2007           2006
                       -----------    -----------    -----------    -----------
    <S>                <C>            <C>            <C>            <C>
    Interest income    $      (583)   $      (127)   $      (838)   $      (202)
    Interest expense             5             61              5             66
    Other income              (681)        (1,879)          (650)        (2,023)
                       -----------    -----------    -----------    -----------

     Net               $    (1,259)   $    (1,945)   $    (1,483)   $    (2,159)
                       ===========    ===========    ===========    ===========
</TABLE>

                                       12
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


NOTE 10 - COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) for the six months ended June 30, 2007 and 2006, was
as follows:
<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                               June 30,
                                                       ------------------------
(In thousands)                                            2007          2006
                                                       ----------    ----------
<S>                                                    <C>           <C>
Net income                                             $    8,641    $    7,384
Net unrealized gain on derivative instruments              12,217           205
Net unrealized holding loss on investments                 (5,294)      (10,293)
Comprehensive income of equity investments                     --           240
                                                       ----------    ----------
Comprehensive income (loss)                                15,564    $   (2,464)
                                                       ==========    ==========
</TABLE>

NOTE 11 - EARNINGS PER SHARE

Diluted net income from continuing  operations per share is calculated using the
weighted  average  number of  shares  outstanding  during  the  period  plus the
additional  dilutive effect of common share equivalents.  The dilutive effect of
outstanding share options is calculated using the treasury stock method.
<TABLE>
<CAPTION>
(In thousands, except per share amounts)

Three Months Ended June 30, 2007:                Income        Shares      Per Share
                                              -----------   -----------   -----------
   <S>                                        <C>                 <C>     <C>
   Basic EPS (from continuing operations)     $     3,477         8,403   $      0.41
   Effect of dilutive securities                       --            --            --
                                              -----------   -----------   -----------
   Diluted EPS (from continuing operations)   $     3,477         8,403   $      0.41
                                              ===========   ===========   ===========

Three Months Ended June 30, 2006:

   Basic EPS (from continuing operations)     $     5,107         8,304   $      0.62
   Effect of dilutive securities                       --            --            --
                                              -----------   -----------   -----------
   Diluted EPS (from continuing operations)   $     5,107         8,304   $      0.62
                                              ===========   ===========   ===========

 Six Months Ended June 30, 2007:

   Basic EPS (from continuing operations)     $     5,110         8,402   $      0.61
   Effect of dilutive securities                       --            --            --
                                              -----------   -----------   -----------
   Diluted EPS (from continuing operations)   $     5,110         8,402   $      0.61
                                              ===========   ===========   ===========

 Six Months Ended June 30, 2006:

   Basic EPS (from continuing operations)     $     7,395         8,304   $      0.89
   Effect of dilutive securities                       --             1            --
                                              -----------   -----------   -----------
   Diluted EPS (from continuing operations)   $     7,395         8,305   $      0.89
                                              ===========   ===========   ===========
</TABLE>

                                       13
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


NOTE 12 - DISCONTINUED OPERATIONS

Income (loss) from discontinued operations included the following related to the
Concord  portfolio  (which we sold from our real estate owned portfolio in March
2007) and the Reserve at Autumn  Creek (which we sold from our real estate owned
portfolio in October 2006):
<TABLE>
<CAPTION>
                                        Three months ended             Six months ended
                                              June 30,                     June 30,
                                    ---------------------------   ---------------------------
                                        2007           2006           2007           2006
                                    ------------   ------------   ------------   ------------
<S>                                 <C>            <C>            <C>            <C>
Revenues                            $         --   $      2,338   $      1,815   $      4,731
                                    ============   ============   ============   ============
Gain on sale of real estate owned   $         --   $         --   $      3,611   $         --
                                    ============   ============   ============   ============
Net income (loss)                   $         --   $        108   $      3,531   $        (11)
                                    ============   ============   ============   ============
</TABLE>

NOTE 13 - RELATED PARTY TRANSACTIONS

Fees to Advisor
---------------
Under our amended  Advisory  Services  Agreement with our Advisor (the "Advisory
Agreement"),  which was amended in March 2007,  we pay certain fees, in addition
to  reimbursements  of certain  administrative  and other costs that our Advisor
incurs on our behalf for its ongoing management and operations of our Company:

Fees/Compensation               Annual Amount

I.  Asset  management fees      Our  Advisor  receives  an  asset management fee
                                equal  to  1.75%  per year for the first  $300.0
                                million  of our  equity  balance  (as defined in
                                the  Advisory  Agreement)  and 1.50% per year of
                                our adjusted equity balance in excess of  $300.0
                                million.

II. Loan origination fees       Our Advisor is entitled to receive, with respect
                                to  each  investment  originated   by  us,   the
                                origination  points, if any,  paid by borrowers.
                                In    connection    with   the   acquisition  of
                                investments  for us, our Advisor may also act as
                                an  advisor to  third parties which  participate
                                with  us  in  such  investments  and may receive
                                origination  points,  if any,  from  such  third
                                parties  or  their  borrowers.  In the event our
                                Advisor  is  not  entitled  to  an   origination
                                fee  from  a  borrower  for  a loan the  Advisor
                                originated  for  investment  by us,  we will pay
                                an  origination fee or a referral fee consistent
                                with industry practice, amount and terms.

III.Annual incentive management Our  Advisor  is  entitled  to receive incentive
    fees                        compensation for each  fiscal  year in an amount
                                equal to the product of:

                                (A)   25% of the dollar amount by which

                                      (1)   Adjusted   Funds   from   Operations
                                            ("AFFO")   before   this   incentive
                                            management  fee per share  (based on
                                            the  weighted   average   number  of
                                            shares    outstanding),    excluding
                                            non-cash  gains or losses due to the
                                            recording of fair value hedges

                                      exceeds

                                      (2)   the weighted average per share value
                                            of (x) $20 and  (y) the  prices  per
                                            share of any secondary  offerings by
                                            the   Company   multiplied   by  the
                                            greater of:

                                       14
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


                                            (a) 9.00%; and

                                            (b) the Ten-Year U.S.  Treasury Rate
                                                plus 2% per annum

                                multiplied by

                                (B)  the  weighted   average  number  of  shares
                                     outstanding during such year.

                                AFFO means net income  (computed  in  accordance
                                with GAAP) including  realized gains (or losses)
                                from debt  restructuring  and sales of  non-real
                                estate    assets,    plus    depreciation    and
                                amortization   on  real   property,   and  after
                                adjustments for unconsolidated  partnerships and
                                joint ventures.

                                A  minimum  of 10% and a  maximum  of 50% of the
                                annual incentive management fee is to be paid in
                                common shares, at the discretion of our Board of
                                Trustees.

IV. Shared services expenses    Our   Advisor  is  reimbursed  by us for (i) the
                                actual costs to the Advisor of goods,  materials
                                and  services  used   for  and  by  us  obtained
                                from   unaffiliated parties,  (ii) the  costs of
                                certain  personnel   employed by the Advisor and
                                directly   involved  in   the  organization  and
                                business   of   our   Company   and  for  legal,
                                accounting,  transfer  agent,  reinvestment  and
                                redemption plan administration, data processing,
                                duplication and investor communications services
                                performed  by  employees  or  officers  of   the
                                Advisor.

Prior to the March 2007 amendment to the Advisory Agreement,  the following fees
were paid to the Advisor differently than they are currently paid.

     o    ASSET  MANAGEMENT FEES - We paid asset  management fees equal to 1.75%
          of our total equity  balance,  adjusted by certain  costs and one-time
          events.
     o    INCENTIVE MANAGEMENT FEES - We paid incentive management fees based on
          a calculation that used an AFFO and specified yield - based threshold.
          Payment of this fee was made in cash only.

Other fees as described above are consistent  with the Advisory  Agreement prior
to the March 2007 amendment.

Other Related Party Transactions
--------------------------------

We pay Centerline  Servicing Inc ("CSI"), an affiliate of Centerline,  a fee for
servicing and special  servicing our mortgage loans and other  investments equal
to the  Advisor's  actual costs of  performing  such  services but not less than
0.08% per year of the  principal  balance of the related  mortgage loan or other
investment.

During 2006, we entered into a  co-investment  agreement  with  Centerline  Real
Estate Special Situations Mortgage Fund LLC ("CRESS"), whereby we and CRESS will
participate  in investment  opportunities  that are originated by affiliates and
which meet the  investment  criteria  of both  companies.  A portion of our 2007
investments  were made pursuant to this agreement and we will continue to pursue
investment opportunities with CRESS throughout 2007.

During April 2007, we amended our loan agreement with Centerline to increase our
borrowing capacity to $80.0 million and extend the maturity date of the facility
to June 2008 (see Note 7).

During  2007,  we  partially  or fully  funded  19 first  mortgage,  bridge  and
mezzanine loans and subordinated notes,  totaling  approximately  $244.9 million
(see Note 2), originated by Centerline  Mortgage Capital Inc. ("CMC"),  formerly
known as CharterMac Mortgage Capital  Corporation,  an affiliate of our Advisor.
CMC received  approximately  $924,000 in loan  origination fees related to these
originations, all of which were paid by the borrowers.

                                       15
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


During  2007,  we funded  two  mezzanine  loans  aggregating  $50.7  million  to
properties  developed by a company  partly owned by the chairman of  Centerline.
Those  transactions  were  approved by the  independent  members of our Board of
Trustees  and,  in the  opinion  of  management,  the  terms of these  mezzanine
transactions  were consistent with those  transactions  with  independent  third
parties.

During March 2007 Centerline  entered into a 10b5-1 Plan whereby it may purchase
up to 9.8% of our common shares of beneficial  interest in open market purchases
based on  pre-determined  parameters.  Through June 30, 2007,  it has  purchased
approximately  199,000 common shares under this plan, amounting to approximately
2.4% of our  outstanding  common  shares at June 30, 2007.  Centerline  has also
purchased 280,000 of our 7.25% Series A Cumulative  Convertible Preferred Shares
("Preferred Shares") that we issued in July 2007 (see Note 15).

During March 2007,  we sold our economic  interest in the Concord  properties to
CRESS (see Note 4).

The  following  summarizes  all costs  paid or  payable  to our  Advisor  or its
affiliates:
<TABLE>
<CAPTION>
                                                          Three months ended            Six months ended
(In thousands)                                                 June 30,                     June 30,
                                                     ---------------------------   ---------------------------
                                                         2007            2006           2007           2006
                                                     ------------   ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>            <C>
Fees to Advisor:
  Shared services expenses                           $        338   $        497   $        793   $        699
  Asset management fees                                       435            480            819            916

  Incentive management fee                                     --             --             --            188(1)
                                                     ------------   ------------   ------------   ------------

Total fees to Advisor                                $        773   $        977   $      1,612   $      1,803
                                                     ============   ============   ============   ============

Other Fees:
  Servicing fees                                     $        145           $ --   $        274         $   --
  Interest paid on related party line of credit(2)            805            745            902            745
                                                     ------------   ------------   ------------   ------------

Total other fees                                     $        950   $        745   $      1,176   $        745
                                                     ============   ============   ============   ============
</TABLE>

(1)  Accrual was based on the  proportion of actual  earnings as compared to our
     estimates of full-year results at June 30, 2006. Later in 2006, when it was
     determined that certain  financial  thresholds  would not be achieved,  the
     accrual was reversed and no incentive fees were paid.
(2)  Represents  interest  predominantly  on the line of credit with  Centerline
     (see Note 7).

NOTE 14 - COMMITMENTS AND CONTINGENCIES

(a)  Guarantees

Prior to 2000,  we entered into a loan  program with Fannie Mae,  under which we
agreed to guarantee a  first-loss  position on certain  loans,  which could have
potentially  resulted  in an  aggregate  exposure of $7.5  million.  In June and
October  of 2000,  we  originated  two loans  totaling  $3.3  million  under the
program.  In September  2003, we transferred and assigned all of our obligations
with  respect to these two loans to CMC, a  subsidiary  of  Centerline,  both of
which  are  affiliates  of the  Advisor.  Pursuant  to the  agreement  with CMC,
Centerline guaranteed CMC's obligations, and we agreed to indemnify both CMC and
Centerline  for any losses  incurred in exchange for retaining all fees which we
were  otherwise  entitled  to receive  from  Fannie Mae under the  program.  The
maximum exposure at June 30, 2007, was $3.1 million,  although we expect that we
will not be called upon to fund these guarantees.

In the first quarter of 2003, we  discontinued  our loan program with Fannie Mae
and will issue no further guarantees pursuant to such program.

                                       16
<PAGE>

              AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                                   (Unaudited)


For these  guarantees,  we monitor the status of the  underlying  properties and
evaluate our exposure under the  guarantees.  To date, we have concluded that no
accrual  for  probable  losses is  required  under  SFAS No. 5,  ACCOUNTING  FOR
CONTINGENCIES.

(b)  Future Funding Commitments

We are committed to additionally fund the following first mortgage and mezzanine
loans at June 30, 2007:
<TABLE>
<CAPTION>
                                                                            (In thousands)
                                                                     MAXIMUM AMOUNT OF COMMITMENT
                                                              ------------------------------------------
                                                                                             LESS THAN
ISSUE DATE    PROJECT                     LOCATION               TOTAL          1 YEAR       1-3 YEARS
----------    ------------------------    ----------------    ------------------------------------------
 <S>          <C>                         <C>                 <C>            <C>            <C>
 Apr-05       Atlantic Hearthstone        Hillsborough, NJ    $        729   $        729   $         --
 Nov-06       12 Atlantic Station Hotel   Atlanta, GA                1,000          1,000             --
 Feb-07       Aberdeen Apartments         Houston, TX                  976            976             --
 Jun-07       122 Greenwich Ave.          New York, NY               6,454          6,454             --
                                                              ------------   ------------   ------------

TOTAL FUTURE FUNDING COMMITMENTS                              $      9,159   $      9,159   $         --
                                                              ============   ============   ============
</TABLE>


NOTE 15 - SUBSEQUENT EVENTS

During July 2007, we issued  680,000  Preferred  Shares at a price of $25.00 per
share. Of this total,  Centerline  purchased  280,000  shares,  which amounts to
41.2% of the total  issuance.  These  shares,  which  pay  annual  dividends  of
$1.8125, can be converted into common shares at an initial rate of 2.2701 common
shares per preferred share.  This offering  generated $16.0 million in proceeds,
net of offering costs, and will be used for investment activity.

In addition to the common  shares owned at June 30, 2007 and the purchase of the
Preferred Shares mentioned  above,  Centerline has made subsequent  purchases of
our common shares,  amounting to an ownership  percentage of over 10%,  assuming
all of the Preferred Shares were converted to common shares.

On July 12, 2007, Daryl J. Carter resigned as President.

                                       17
<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Forward-Looking Statements
--------------------------

Certain   statements  made  in  this  report  may  constitute   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
Such forward-looking  statements include statements regarding the intent, belief
or current  expectations  of us and our management  (which includes our Advisor)
and involve known and unknown risks,  uncertainties  and other factors which may
cause the actual results, performance or achievements to be materially different
from any future  results,  performance or  achievements  expressed or implied by
such  forward-looking  statements.  These factors,  which are outlined in detail
under the heading  "Item 1A. Risk Factors" in our Annual Report on Form 10-K for
the  year  ended  December  31,  2006,  include,  but are not  limited  to,  the
following:

     o    Risks of  investing in  non-investment  grade  commercial  real estate
          investments;

     o    Competition in acquiring desirable investments;

     o    Interest rate fluctuations;

     o    Risks  associated  with  investments in real estate  generally and the
          properties which secure many of our investments;

     o    General economic conditions and economic conditions in the real estate
          markets  specifically,  particularly  as they  affect the value of our
          assets and the credit status of our borrowers;

     o    Dependence  on  our  Advisor  for  all  services   necessary  for  our
          operations;

     o    Conflicts which may arise among us and other entities  affiliated with
          our Advisor that have similar investment policies to ours;

     o    Risks associated with the repurchase  agreements we utilize to finance
          our investments and our ability to raise capital;

     o    Risks  associated  with  the  failure  to  qualify  as a  Real  Estate
          Investment Trust ("REIT"); and

     o    Risks    associated   with   Collateral   Debt   Obligation    ("CDO")
          securitization transactions, which include, but are not limited to:

          o    The inability to acquire eligible investments for a CDO issuance;

          o    Interest rate fluctuations on variable-rate swaps entered into to
               hedge fixed-rate loans;

          o    The inability to find  suitable  replacement  investments  within
               reinvestment periods; and

          o    The negative impact on our cash flow that may result from the use
               of  CDO  financings  with   over-collateralization  and  interest
               coverage requirements.

Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements, which speak only as of the date of this quarterly report.

Factors Affecting Comparability
-------------------------------

During 2007, we sold our economic interest in the Concord  portfolio,  resulting
in a gain of approximately $3.6 million. This amount is recorded in discontinued
operations along with rental income, property operations,  mortgage interest and
depreciation  for the  period up to the sale.  Property  operations  from  prior
comparable   periods  have  been  reclassified  to  conform  to  current  period
presentation.

                                       18
<PAGE>

Investment Activity
-------------------

During the three  months  ended June 30, 2007 and 2006,  we  partially  or fully
funded the following investments, not reflecting any discounts or premiums:
<TABLE>
<CAPTION>
                               Three months ended               Three months ended
(In thousands)                   June 30, 2007                    June 30, 2006
                         -----------------------------    -----------------------------
                                            Weighted                         Weighted
                                            Average                          Average
                            Amount       Interest Rate       Amount       Interest Rate
                         -------------   -------------    -------------   -------------
<S>                      <C>                      <C>     <C>                      <C>
Mortgage loans:
  First mortgage loans   $       8,200            5.89%   $     151,200            6.28%
  Bridge loans                      --              --               --              --
  Mezzanine loans              110,131            8.25            5,500            9.05
  Subordinated notes            23,380            8.47               --              --
CMBS                           115,301            5.93               --              --
CDO securities                      --              --               --              --
                         -------------   -------------    -------------   -------------
Total                    $     257,012            7.15%   $     156,700            6.37%
                         =============   =============    =============   =============
</TABLE>

During the six months ended June 30, 2007 and 2006, we partially or fully funded
the following investments, not reflecting any discounts or premiums:
<TABLE>
<CAPTION>
                                   Six months ended                 Six months ended
   (In thousands)                   June 30, 2007                    June 30, 2006
                            -----------------------------    -----------------------------
                                               Weighted                         Weighted
                                               Average                          Average
                               Amount       Interest Rate       Amount       Interest Rate
                            -------------   -------------    -------------   -------------
   <S>                      <C>                    <C>       <C>                      <C>
   Mortgage loans:
     First mortgage loans   $      42,900            5.75%   $     151,200            6.28%
     Bridge loans                  19,660            6.51               --              --
     Mezzanine loans              155,824            8.73            5,500            9.05
     Subordinated notes            26,490            8.30               --              --
   CMBS                           115,301            5.93               --              --
   CDO securities                  10,083            9.00               --              --
                            -------------   -------------    -------------   -------------
   Total                    $     370,258            7.36%   $     156,700            6.37%
                            =============   =============    =============   =============
   </TABLE>

During the three months ended March 31, 2006, we had no origination activity.

Results of Operations
---------------------

The following is a summary of our operations for the periods ended June 30, 2007
and 2006:
<TABLE>
<CAPTION>
(In thousands)

                       Three months ended June 30,      Six months ended June 30,
                     -----------------------------------------   -------------------
                       2007       2006      Change      2007       2006      Change
                     --------   --------   --------   --------   --------   --------
<S>                  <C>        <C>           <C>     <C>        <C>           <C>
Total revenues       $ 15,312   $  7,249      111.2%  $ 27,813   $ 12,920      115.3%
Total expenses         12,853      6,265      105.2     23,690     10,471      126.2
Total other income      1,018      4,123      (75.3)       987      4,946      (80.0)
Income (loss) from
 discontinued
 operations,
 including gain on
 sale                      --        108     (100.0)     3,531        (11)       N/A
                     --------   --------   --------   --------   --------   --------
Net income           $  3,477   $  5,215      (33.3)% $  8,641   $  7,384       17.0%
                     ========   ========   ========   ========   ========   ========
</TABLE>

                                       19
<PAGE>

The growth in our annual  revenues  during the three and six month periods ended
June 30, 2007, as compared to the same periods in 2006,  resulted primarily from
increases in investment  volume,  as well as  participation  income  received in
connection with a paydown of one of our mortgage loans.

Expenses also increased for these periods due to:

     o    financing costs  (particularly  due to higher debt balances and slight
          increases in interest rates);
     o    amortization costs due to a higher balance of deferred costs resulting
          from our 2006 CDO securitization; and
     o    general and administrative  costs  (particularly  legal costs due to a
          higher  amount of  specially  serviced  assets in our  portfolio,  CDO
          administrative  costs as a result of our 2006 CDO  securitization  and
          loan servicing costs which we no longer pay through  quarterly expense
          reimbursement to our Advisor).

Other income (loss)  decreased  during 2007 primarily as a result of the sale of
our investment in ARCap during 2006 and the resulting  absence of equity income.
The  balance in 2007  relates  to the change in the fair value of  free-standing
derivatives,  as well as an  additional  gain  recognized  from  the sale of our
investment  in ARCap  resulting  from  the  release  of  escrow  funds  upon the
expiration of certain holdback requirements.

Income from discontinued  operations  includes operations from real estate owned
that was sold during 2007 and 2006.  The  increase for the six months ended June
30, 2007, as compared to 2006, is due to the  recognition of a gain on sale of a
portfolio of properties.

REVENUES
<TABLE>
<CAPTION>
                                 Three Months Ended            Change           % of           % of
                           ----------------------------         from            2007           2006
                             June 30,        June 30,           Prior           Total          Total
(In thousands)                 2007            2006            Period         Revenues        Revenues
                           ------------    ------------     ------------    ------------    ------------
<S>                        <C>             <C>                    <C>               <C>             <C>
Interest income:
   Mortgage loans          $     12,712    $      3,903           225.7%            83.0%           53.9%
   Debt securities                1,208           2,996           (59.7)             7.9            41.3
   CMBS                             862              --           100.0              5.6              --
   Revenue bonds                    105             141           (25.5)             0.7             1.9
   Temporary investments             89              52            71.2              0.6             0.7
   CDO securities                   183              --           100.0              1.2              --
Other revenues                      153             157            (2.5)             1.0             2.2
                           ------------    ------------     ------------    ------------    ------------

  Total revenues           $     15,312    $      7,249           111.2%           100.0%          100.0%
                           ============    ============     ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                 Six Months Ended              Change           % of           % of
                           ----------------------------         from            2007           2006
                             June 30,        June 30,           Prior           Total          Total
(In thousands)                 2007            2006            Period         Revenues        Revenues
                           ------------    ------------     ------------    ------------    ------------
<S>                        <C>             <C>                    <C>               <C>             <C>
Interest income:
   Mortgage loans          $     22,928    $      6,124           274.4%            82.4%           47.4%
   Debt securities                2,435           6,215           (60.8)             8.8            48.1
   CMBS                             862              --           100.0              3.1              --
   Revenue bonds                    211             284           (25.7)             0.8             2.2
   Temporary investments            259             135            91.9              0.9             1.0
   CDO securities                   190              --           100.0              0.7              --
Participation income                699              --           100.0              2.5              --
Other revenues                      229             162            41.4              0.8             1.3
                           ------------    ------------     ------------    ------------    ------------

  Total revenues           $     27,813    $     12,920           115.3%           100.0%          100.0%
                           ============    ============     ============    ============    ============
</TABLE>

                                       20
<PAGE>

At June 30, we had the following investments (exclusive of Real Estate Owned and
temporary investments):
<TABLE>
<CAPTION>
(In thousands)
                                               2007                                            2006
                           --------------------------------------------     --------------------------------------------
                                                             Weighted                                         Weighted
                             Carrying          % of           Average         Carrying          % of           Average
                              Amount           Total       Interest Rate       Amount           Total       Interest Rate
                           ------------    ------------    ------------     ------------    ------------    ------------
<S>                        <C>                     <C>             <C>      <C>                     <C>             <C>
Mortgage loans             $    727,675            78.7%           6.28%    $    213,487            51.5%           8.79%
Debt securities                  78,347             8.5            6.49          194,286            46.9            6.17
CMBS                            103,559            11.2            5.93               --              --              --
CDO securities                    9,822             1.1            9.00               --              --              --
Revenue bonds                     4,888             0.5            8.70            6,489             1.6            8.68
                           ------------    ------------    ------------     ------------    ------------    ------------
                           $    924,291           100.0%           6.30%    $    414,262           100.0%           7.54%
                           ============    ============    ============     ============    ============    ============
</TABLE>

Interest income from mortgage loans increased significantly for the 2007 periods
as compared to 2006,  primarily due to the funding of 77 first  mortgage  loans,
bridge notes,  mezzanine loans, and subordinated  notes throughout 2006 and 2007
and the partial  funding of several  existing  mezzanine  loans during 2006. The
decrease in the weighted average interest rates on mortgage loans as of June 30,
2007,  as  compared  to June 30,  2006,  was  primarily  due to the funding of a
greater  amount of higher credit quality  loans,  as opposed to riskier,  higher
coupon loans as we had funded in the past.

Interest  income  from debt  securities  decreased  for the three and six months
ended  June  30,  2007,  primarily  due to the sale of 20 FNMA  certificates  in
November 2006, as well as the payoff of three GNMA certificates during 2006. The
increase in the weighted average interest rate on debt securities during 2007 is
due to the lower yields of the FNMA  certificates sold relative to the yields of
those retained.

Interest  income from CMBS increased for the 2007 periods,  as compared to 2006,
due to the purchase of nine CMBS investments  during the second quarter of 2007.
There were no investments in CMBS in prior periods.

Interest  income from revenue  bonds for the three and six months ended June 30,
2007,  was lower than the  comparable  prior year period,  primarily  due to the
payoff of two revenue bonds during 2006.

Interest income from temporary  investments  increased for the 2007 periods,  as
compared  to  2006,  primarily  due to the  investment  of  excess  cash on hand
resulting from the payoff of several mortgage loans and debt securities, as well
as interest earned on restricted cash balances held with custodians.

Interest income from CDO securities increased for the three and six months ended
June 30, 2007, as compared to 2006,  due to an investment  made during the first
quarter of 2007 purchasing various classes of Nomura CDO securities.  There were
no investments in CDO securities made in prior periods.

Participation  income for the six months  ended June 30, 2007  represents  a one
time payment  received  pursuant to a  participating  arrangement for a mortgage
loan that was  repaid in the first  quarter  of 2007.  There was no such  income
received during 2006 or the second quarter of 2007.

                                       21
<PAGE>

EXPENSES
<TABLE>
<CAPTION>
                                    Three Months Ended           Change            % of           % of
                                ---------------------------       from             2007           2006
                                  June 30,        June 30,        Prior            Total          Total
   (In thousands)                   2007            2006         Period          Revenues        Revenues
                                ------------   ------------   ------------     ------------    ------------
   <S>                          <C>            <C>                 <C>                 <C>             <C>
   Interest                     $     10,638   $      4,227          151.7%            69.5%           58.3%
   Interest-subsidiary
    preferred shares                     554            556           (0.4)             3.6             7.7
   General and administrative            687            490           40.2              4.5             6.8
   Fees to Advisor                       773            977          (20.9)             5.0            13.5
   Amortization and other                201             15        1,240.0              1.3             0.2
                                ------------   ------------   ------------     ------------    ------------

   Total expenses               $     12,853   $      6,265          105.2%            83.9%           86.4%
                                ============   ============   ============     ============    ============
</TABLE>


<TABLE>
<CAPTION>
                                      Six Months Ended           Change            % of           % of
                                ---------------------------       from             2007           2006
                                  June 30,        June 30,        Prior            Total          Total
   (In thousands)                   2007            2006         Period          Revenues        Revenues
                                ------------   ------------   ------------     ------------    ------------
   <S>                          <C>            <C>                 <C>                 <C>             <C>
   Interest                     $     19,133   $      6,586          190.5%            68.8%           51.0%
   Interest-subsidiary
    preferred shares                   1,123          1,074            4.6              4.0             8.3
   General and administrative          1,421            978           45.3              5.1             7.6
   Fees to Advisor                     1,612          1,803          (10.6)             5.8            14.0
   Amortization and other                401             30        1,236.7              1.4             0.2
                                ------------   ------------   ------------     ------------    ------------

   Total expenses               $     23,690   $     10,471          126.2%            85.1%           81.0%
                                ============   ============   ============     ============    ============
</TABLE>

Interest expense  increased for the three and six months ended June 30, 2007, as
compared to 2006,  primarily due to the increased  borrowings  made through 2007
and 2006 to fund origination activity and the slight increase in market interest
rates  during 2006 and 2007.  Excluding  mortgages  on real estate owned (in the
2006 period), we had total debt as follows:
<TABLE>
<CAPTION>
                                                     Three months ended             Six months ended
                                                          June 30,                      June 30,
                                                 --------------------------    --------------------------
(dollars in thousands)                               2007           2006           2007           2006
                                                 -----------    -----------    -----------    -----------
<S>                                              <C>            <C>            <C>            <C>
Average outstanding                              $   814,735    $   339,032    $   726,950    $   286,462
Weighted average interest rate
  (including effect of interest rate swaps)             5.49%          5.64%          5.57%          5.11%
Average notional amount of interest rate swaps   $   607,572    $   148,607    $   582,723    $    91,803
Weighted average rate of interest rate swaps            5.18%          4.96%          5.18%          4.72%
</TABLE>

General and administrative expenses increased for the three and six months ended
June 30, 2007, as compared to 2006,  due to higher legal fees  resulting  from a
larger  amount of  watched  assets as our  portfolio  has grown,  recurring  CDO
administrative costs incurred during the 2007 period as a result of our 2006 CDO
securitization and increased  servicing costs.  During 2006, our servicing costs
were paid through quarterly expense  reimbursements  made to our Advisor.  These
increases were partially offset by decreased  insurance  costs,  decreased stock
option  costs (all of which were fully  amortized  in April 2006) and excise tax
accrual (as no excise taxes are anticipated for 2007).

Fees to Advisor  decreased  for the 2007  periods,  as compared to 2006,  due to
lower shared services costs because servicing costs are now billed separately by
our Advisor's  servicing  affiliate,  as well as by the absence of an accrual of
incentive  management fees in the 2007 period,  as we do not anticipate  current
year earnings to reach incentive fee payment hurdles.

Amortization and other costs increased for the 2007 periods,  as compared to the
same periods in 2006, due to higher deferred  financing costs as a result of our
2006 CDO securitization.

                                       22
<PAGE>

OTHER INCOME

Other income  decreased  for the three and six months  ended June 30,  2007,  as
compared to 2006,  primarily due to the sale of our investment in ARCap in 2006,
which had earned equity income in the 2006 period.

Funds from Operations
---------------------

Funds  from  operations  ("FFO"),  represents  net income or loss  (computed  in
accordance  with  GAAP),  excluding  gains or  losses  from  sales of  property,
excluding  depreciation and amortization  related to real property and including
funds from operations for unconsolidated  joint ventures  calculated on the same
basis.  FFO is calculated in accordance  with the National  Association  of Real
Estate  Investment  Trusts  ("NAREIT")  definition.  FFO does not represent cash
generated  from  operating  activities  in  accordance  with  GAAP  and  is  not
necessarily  indicative of cash available to fund cash needs.  FFO should not be
considered  as an  alternative  to net income as an indicator  of our  operating
performance or as an  alternative  to cash flows as a measure of liquidity.  Our
management considers FFO a supplemental measure of operating  performance,  and,
along with cash flows  from  operating  activities,  financing  activities,  and
investing activities, it provides investors with an indication of our ability to
incur and service debt, make capital expenditures, and fund other cash needs.

The following table reconciles net income to FFO for the three months ended June
30, 2007 and 2006:
<TABLE>
<CAPTION>
(In thousands)
                                                     Three months ended            Six months ended
                                                          June 30,                      June 30,
                                                ---------------------------   ---------------------------
                                                    2007           2006            2007          2006
                                                ------------   ------------   ------------   ------------
<S>                                             <C>            <C>            <C>            <C>
Net income                                      $      3,477   $      5,215   $      8,641   $      7,384

Add back:  Depreciation  of real  property(1)             --            450            336            900
Less: Gain on sale of real property(1)                    --             --         (3,611)            --
                                                ------------   ------------   ------------   ------------

FFO                                                    3,477   $      5,665   $      5,366   $      8,284
                                                ============   ============   ============   ============

Cash flows from:
  Operating activities                          $      3,646   $      3,578   $      5,275   $      5,232
                                                ============   ============   ============   ============
  Investing activities                          $   (186,619)  $   (130,507)  $   (270,947)  $   (130,274)
                                                ============   ============   ============   ============
  Financing activities                          $    175,298   $    129,943   $    264,952   $    117,520
                                                ============   ============   ============   ============

Weighted average shares outstanding:
  Basic                                                8,403          8,304          8,402          8,304
                                                ============   ============   ============   ============
  Diluted                                              8,403          8,304          8,402          8,305
                                                ============   ============   ============   ============
</TABLE>

(1) Related to properties sold during 2007 and 2006 and included in discontinued
operations in our condensed consolidated statements of income.

Since not all companies  calculate  FFO in a similar  fashion,  our  calculation
presented above may not be comparable to similarly  titled measures  reported by
other companies.

Liquidity and Capital Resources
-------------------------------

SOURCES OF FUNDS

We expect that cash  generated  from our  investments,  as well as our borrowing
capacity, will meet our needs for short-term liquidity and will be sufficient to
pay all expenses and distributions to our shareholders in amounts  sufficient to
retain our REIT status in the foreseeable  future. In order to qualify as a REIT
under the Internal  Revenue Code, as amended ("the Code"),  we must, among other
things, distribute at least 90% of our taxable income. We believe that we are in
compliance with the REIT-related provisions of the Code.

                                       23
<PAGE>

As of June 30, 2007, our credit facilities consisted of:

     o    repurchase facilities; and
     o    a related party line of credit.

Repurchase Facilities
---------------------

Under our repurchase agreements we pledge additional assets as collateral to our
repurchase  agreement  counterparties  (i.e.,  lenders) when the estimated  fair
value of the existing pledged collateral under such agreements declines and such
lenders demand additional  collateral (i.e., a margin call). Margin calls result
from a decline in the value of our  investments  collateralizing  our repurchase
agreements,  generally  due to  changes  in the  estimated  fair  value  of such
investments.  This could result from principal reduction of such investments due
to scheduled  amortization  payments or unscheduled principal prepayments on the
mortgages underlying our investments, changes in market interest rates and other
market factors.  To cover a margin call, we may pledge additional  securities or
cash.

Through June 30, 2007, we paid approximately $450,000 due to margin calls on our
repurchase  facility with Liquid Funding.  We believe we have adequate financial
resources to meet our obligations,  including margin calls, as they come due and
to fund  dividends  we declare  as well as to  actively  pursue  our  investment
strategies.  However,  should market interest rates and/or  prepayment speeds on
our investments  suddenly  increase,  margin calls on our repurchase  agreements
could result, causing an adverse change in our liquidity position.

At June 30, 2007, we had the following repurchase facilities in place:

DEBT SECURITIES

As a vehicle to leverage our investments in debt securities,  we have repurchase
agreements  with two  counterparties,  RBC  Capital  Markets  and UBS  Financial
Services. These facilities offer advance rates between 94% and 97% of collateral
value and borrowing  rates  between LIBOR minus 0.03% and LIBOR plus 0.10%.  The
borrowings  are subject to 30-day  settlement  terms.  As of June 30, 2007,  the
amount outstanding under these repurchase  facilities was $75.6 million,  with a
weighted  average  interest rate of 4.62% including the effects of interest rate
hedges in place on these facilities.

OTHER INVESTMENT CLASSES

During  2006,  we  began  financing  our  investment  growth  by  utilizing  CDO
securitizations.  Prior to a securitization,  we finance  investments  through a
repurchase  facility,  which is repaid from the proceeds  received  when the CDO
securitization is complete.

During December 2006, we executed a repurchase  agreement with Citigroup for the
purpose of funding  investment  activity.  Advance rates on the borrowings  from
this facility, ranging from 80% to 90% of collateral value, are determined on an
asset-by-asset basis.  Interest on the borrowings,  which ranges from LIBOR plus
0.40% to LIBOR plus 1.25%, is also determined on an  asset-by-asset  basis.  The
repurchase   facility   expires  upon   completion  of  a  second   planned  CDO
securitization,  or December 2007,  whichever  comes first. At June 30, 2007, we
had approximately  $266.6 million of borrowings  outstanding under this facility
at a weighted average interest rate of 5.31%,  including the effects of interest
rate hedges.

In the event we do not complete the anticipated CDO  securitization,  we believe
that we can extend the existing  facility or  refinance it with another  lending
institution.

During the second quarter of 2007, we executed  repurchase  agreements with Bear
Stearns  and Liquid  Funding  for the  purpose of  providing  financing  for our
investments in CMBS and CDO securities. Advance rates on the borrowings from the
Bear Stearns  facility range from 58-80% of the collateral value and interest on
the  borrowings  ranged from 30-day LIBOR plus 0.55% to 30-day LIBOR plus 0.85%.
The  borrowings  are subject to 30-day  settlement  terms.  Advance rates on the
borrowings from Liquid Funding  facility are at 73% of the collateral  value and
interest on these  borrowings is at 30-day LIBOR plus 0.50%.  The borrowings are
subject to 30-day settlement terms. At June 30, 2007, we had approximately $60.9
million of borrowings  outstanding  under these facilities at a weighted average
interest rate of 5.94%, including the effects of interest rate hedges.

                                       24
<PAGE>

Related Party Line of Credit
----------------------------

We finance our remaining  investing activity primarily through borrowings from a
credit facility we maintain with Centerline,  which was amended in April 2007 to
increase our borrowing  capacity and extend the maturity date of the facility to
June 2008.  This $80.0 million  facility  offers  borrowing  rates of LIBOR plus
3.00%.  As of June 30, 2007,  the amount  outstanding  was $57.6  million with a
weighted  average  interest rate of 8.32%.  We had  approximately  $22.4 million
available to borrow on this line at June 30, 2007.

Other Financing
---------------

As noted above, in 2006, we began  financing our investment  growth by utilizing
CDO  securitizations.  At June 30, 2007, we had outstanding  CDO  securitization
certificates  totaling  $362.0  million  at a  weighted  average  rate of 5.42%,
including the effects of interest rate hedges.

We have capacity to raise  approximately  $170.0 million of additional  funds by
issuing  either  common or  preferred  shares  pursuant to a shelf  registration
statement  filed  with the SEC.  Of this  amount,  we issued  $17.0  million  of
preferred  securities  in July 2007 (see Note 15 to our  condensed  consolidated
financial  statements).  If  market  conditions  warrant,  we may  seek to raise
additional funds for investment through further  offerings,  although the timing
and amount of such offerings cannot be determined at this time.

SUMMARY OF CASH FLOWS

During the six months ended June 30,  2007,  as compared to the six months ended
June  30,  2006,  the net  change  in cash  and cash  equivalents  increased  by
approximately $6.8 million.  Operating cash flows were consistent with the prior
year  period.  While net income  excluding  the gain on sale of our real  estate
owned was lower than in 2006,  this decrease was offset by lower payments to our
Advisor.

An  increase  in net cash used in  investing  activities  (approximately  $140.7
million) was due to investments made in mortgage loans,  CMBS and CDO securities
during  2007 as  compared  to lower  origination  activity  in the 2006  period,
partially  offset by proceeds  received from the sale of real estate owned and a
higher amount of principal repayments made on our mortgage loans.

The increase in net cash provided by financing activities  (approximately $147.4
million) can be attributed to the higher level of investing  activity during the
2007 period,  offset by partial repayments of the repurchase  facilities and our
related party line of credit.

LIQUIDITY REQUIREMENTS AFTER JUNE 30, 2007

During July 2007,  we partially or fully funded  approximately  $25.3 million of
first mortgage loans, mezzanine loans and CMBS. Financing for these acquisitions
was made through our related party line of credit or repurchase facilities.

During July and August 2007,  we paid  approximately  $2.7 million due to margin
calls on our repurchase facility with Liquid Funding.

During August 2007,  dividends of approximately $1.9 million ($0.225 per share),
which were declared in June 2007, will be paid to common shareholders.

OTHER MATTERS

We are not aware of any trends or events,  commitments or  uncertainties,  which
have not otherwise been disclosed that will or are likely to impact liquidity in
a material way.

                                       25
<PAGE>

Dividends
---------

The following table outlines our total dividends and return of capital  amounts,
determined in accordance with GAAP, for the six months ended June 30:
<TABLE>
<CAPTION>
(In thousands)                                      2007                 2006
                                                ------------        ------------
<S>                                             <C>                 <C>
Total dividends                                 $      3,782        $      6,644
                                                ============        ============
</TABLE>

None of the dividends constituted a return of capital.

Commitments, Contingencies and Off-Balance Sheet Arrangements
-------------------------------------------------------------

See Note 14 to our condensed  consolidated financial statements for a summary of
our guarantees and commitments and contingencies.

We  have no  unconsolidated  subsidiaries,  special  purpose  off-balance  sheet
financing entities, or other off-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS

In conducting business, we enter into various contractual  obligations.  Details
of these obligations, including expected settlement periods as of June 30, 2007,
are contained below.
<TABLE>
<CAPTION>
                                                                    Payments Due by Period
                                                                        (In thousands)
                                              -------------------------------------------------------------------
                                                             Less than                                 More than
                                                 Total        1 Year      1 - 3 Years   3 - 5 Years     5 Years
                                              -----------   -----------   -----------   -----------   -----------
<S>                                           <C>           <C>           <C>           <C>           <C>
Debt:
  CDO notes payable (1)(2)                    $   362,000   $        --   $        --   $        --   $   362,000
  Repurchase facilities:
    Debt securities (1)(2)                         75,604        75,604            --            --            --
    Other investment classes(1)(2)(3)             327,520       327,520            --            --            --
  Preferred shares of subsidiary
    (subject to mandatory repurchase)(1)(2)        25,000            --            --            --        25,000
  Line of credit - related party (1)(2)            57,600        57,600            --            --            --
Funding Commitments:
  Future funding loan commitments                   9,159         9,159            --            --            --
                                              -----------   -----------   -----------   -----------   -----------

Total                                         $   856,883   $   469,883   $        --   $        --   $   387,000
                                              ===========   ===========   ===========   ===========   ===========
</TABLE>


(1) The amounts included in each category reflect the current expiration,  reset
    or renewal date of each facility or security certificate. Management has the
    ability and intent to renew,  refinance  or remarket the  borrowings  beyond
    their current due dates.
(2) Includes  principal  amounts  only. At June 30, 2007,  the weighted  average
    interest rate on our debt was 6.06%.
(3) Approximately  $266.6  million  of this  debt  is  related  to a  repurchase
    facility   that  will  be  repaid   upon  the  closing  of  our  second  CDO
    securitization currently anticipated to take place during the second half of
    2007.

Recently Issued Accounting Standards
------------------------------------

See  NEW  ACCOUNTING  PRONOUNCEMENTS  in  Note 1 to the  condensed  consolidated
financial statements.

Inflation
---------

Inflation  did not  have a  material  effect  on our  results  for  the  periods
presented.

                                       26
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk is the exposure to loss resulting from changes in interest rates and
equity prices.  The primary market risk to which we are exposed is interest rate
risk, which is highly sensitive to many factors, including governmental monetary
and  tax   policies,   domestic  and   international   economic  and   political
considerations and other factors beyond our control.

INTEREST RATE RISK

Interest  rate  fluctuations  can  adversely  affect our income in many ways and
present a variety of risks,  including the risk of mismatch between asset yields
and borrowing rates.

Our operating  results  depend in large part on  differences  between the income
from our assets (net of credit losses) and our borrowing costs. Although we have
originated  variable-rate  loans,  most of our assets generate fixed returns and
have terms in excess of five years. We fund the origination and acquisition of a
significant  portion of our assets with borrowings  that have variable  interest
rates that reset relatively rapidly, such as weekly,  monthly, or quarterly.  In
most cases,  the income from assets will  respond  more slowly to interest  rate
fluctuations  than the cost of  borrowings,  creating a mismatch  between  asset
yields  and  borrowing   rates.   Consequently,   changes  in  interest   rates,
particularly  short-term  interest  rates,  may  influence  our net income.  Our
borrowings under our related party line of credit, repurchase facilities and our
subsidiary's  preferred securities subject to mandatory redemption bear interest
at rates that fluctuate with LIBOR.

Various  financial  vehicles  exist which would allow our management to mitigate
the impact of interest  rate  fluctuations  on our cash flows and  earnings.  We
enter into certain  hedging  transactions to protect our positions from interest
rate  fluctuations and other changes in market  conditions.  These  transactions
include  interest  rate swaps and fair  value  hedges.  Interest  rate swaps are
entered  into in order to  hedge  against  increases  in  floating  rates on our
repurchase  facilities.  Fair  value  hedges  are  entered  into for some of our
investments  to hedge our risk that interest  rates may affect the fair value of
these investments, prior to securitization.

Based on the $847.7 million of borrowings outstanding at June 30, 2007, of which
$176.5 million  remains  unhedged,  a 1% change in LIBOR would impact our annual
net  income  and cash  flows by  approximately  $1.8  million.  However,  as the
interest  income  from some of our loans is also based on LIBOR,  a 1% change in
LIBOR  would  impact  our  annual  net  income and cash flows from such loans by
approximately  $1.3  million.  The net  effect  of a 1%  change  in LIBOR  would
therefore result in a change of our annual net income by approximately $421,000.
In addition,  a change in LIBOR could also impede the collections of interest on
our  variable-rate  loans,  as there  might not be  sufficient  cash flow at the
properties  securing such loans to pay the increased  debt service.  Because the
value of our debt securities  fluctuates  with changes in interest  rates,  rate
fluctuations will also affect the market value of our net assets.

If we complete a second CDO transaction,  substantially  all of our debt will be
fixed through interest rate swaps on the CDO debt.

ITEM 4.  CONTROLS AND PROCEDURES.

(a)  EVALUATION  OF  DISCLOSURE  CONTROLS AND  PROCEDURES.  Our Chief  Executive
     Officer and Chief Financial Officer have evaluated the effectiveness of our
     disclosure  controls and  procedures  (as defined in Rule 13a-15(e) or Rule
     15a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
     Act")) as of the end of the period covered by this quarterly report.  Based
     on such  evaluation,  such  officers  have  concluded  that our  disclosure
     controls  and  procedures  as of the  end of the  period  covered  by  this
     quarterly report were effective to ensure that  information  required to be
     disclosed  by us in the reports  that we file or submit  under the Exchange
     Act is recorded, processed, summarized and reported within the time periods
     specified in the SEC rules and forms,  and to ensure that such  information
     is accumulated  and  communicated  to our  management,  including the Chief
     Executive  Officer and Chief Financial  Officer,  as appropriate,  to allow
     timely decisions regarding required disclosure.

(b)  INTERNAL CONTROL OVER FINANCIAL REPORTING.  There have not been any changes
     in our internal control over financial  reporting during the fiscal quarter
     to  which  this  report  relates  that  have  materially  affected,  or are
     reasonably likely to materially affect, our internal control over financial
     reporting.

                                       27
<PAGE>

                           PART II. OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS.

          We are not party to any pending material legal proceedings.

ITEM 1A.  RISK FACTORS.

          There have been  no material  changes to the risk factors as disclosed
          in  our  Annual  Report on Form 10-K for the year ended  December  31,
          2006.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.  None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.  None

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

          The company held its annual meeting of  shareholders on June 12, 2007.
          The  shareholders  elected Jeff T. Blau,  James L. Duggins,  George P.
          Jahn,  Harry Levine,  Scott M. Mannes,  Stanley R. Perla,  and Marc D.
          Schnitzer as trustees  for  one-year  terms which will expire in 2008.
          Common shares of beneficial interest were voted as follows:

               Trustee nominee                   For           Abstain/withheld
              -----------------               ---------        -----------------

              Jeff T. Blau                    6,320,626            1,251,932
              James L. Duggins                7,342,458              230,100
              George P. Jahn                  7,369,139              203,419
              Harry Levine                    7,369,755              202,803
              Scott M. Mannes                 7,362,941              209,617
              Stanley R. Perla                7,372,912              199,646
              Marc D. Schnitzer               7,332,612              239,946

          There were no votes "against" any of the nominees.

          The shareholders were also asked to ratify the appointment of Deloitte
          & Touche  LLP as the  independent  registered  public  accountants  of
          American Mortgage Acceptance Company.  The ratification was identified
          as  proposal  2 in the proxy  statement  for the  annual  meeting  and
          approved by the  shareholders.  Common Shares of beneficial  interests
          were voted on as follows:

              For                                                  7,389,057
              Against                                                139,971
              Abstain                                                 43,530

ITEM 5.   OTHER INFORMATION.  None

ITEM 6.   EXHIBITS.

          31.1 Certification of the Chief Executive  Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.*

          31.2 Certification of the Chief Financial  Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.*

          32.1 Certification  of the  Chief  Executive  Officer  and  the  Chief
               Financial  Officer pursuant to Section 906 of the  Sarbanes-Oxley
               Act of 2002.*

          *    Filed herewith.

                                       28
<PAGE>

                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.



                      AMERICAN MORTGAGE ACCEPTANCE COMPANY
                                  (Registrant)



Date: August 8, 2007          By:     /s/ James L. Duggins
                                      --------------------
                                      James L. Duggins
                                      Chief Executive Officer
                                      (Principal Executive Officer)


Date: August 8, 2007          By:     /s/ Robert L. Levy
                                      ------------------
                                      Robert L. Levy
                                      Chief Financial Officer
                                      (Principal Financial Officer and Principal
                                         Accounting Officer)

                                       29
<PAGE>

                                                                    Exhibit 31.1



   CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE
                          SARBANES-OXLEY ACT OF 2002.

I, James L. Duggins, hereby certify that:

     1.  I have reviewed this quarterly report on Form 10-Q for the period ended
         June 30, 2007, of American Mortgage Acceptance Company;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this  report,  fairly  present in all material
         respects the financial condition,  results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules  13a-15(e)  and  15d-15(e))  and internal
         control  over  financial  reporting  (as defined in Exchange  Act Rules
         13a-15(f) and 15d-15(f)) for the registrant and have:

         a) Designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  that  material  information  relating  to the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

         b) Designed such internal control over financial  reporting,  or caused
         such internal control over financial reporting to be designed under our
         supervision,  to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles;

         c) Evaluated the effectiveness of the registrant's  disclosure controls
         and procedures and presented in this quarterly  report our  conclusions
         about the effectiveness of the disclosure  controls and procedures,  as
         of the  end of  the  period  covered  by  this  report  based  on  such
         evaluation; and

         d)  Disclosed  in this report any change in the  registrant's  internal
         control over financial  reporting that occurred during the registrant's
         most  recent  fiscal  quarter  that  has  materially  affected,  or  is
         reasonably  likely to  materially  affect,  the  registrant's  internal
         control over financial reporting; and

     5.  The registrant's other certifying  officer and I have disclosed,  based
         on our most  recent  evaluation  of  internal  control  over  financial
         reporting,  to the registrant's auditors and the audit committee of the
         registrant's  board of trustees (or persons  performing  the equivalent
         functions):

         a) All significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

         b) Any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal control over financial reporting.


         Date:  August 8, 2007                By:  /s/ James L. Duggins
                                                   --------------------
                                                   James L. Duggins
                                                   Chief Executive Officer
                                                   (Principal Executive Officer)

                                       30
<PAGE>


                                                                    Exhibit 31.2



   CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
                          SARBANES-OXLEY ACT OF 2002.

I, Robert L. Levy, hereby certify that:

     1.  I have reviewed this quarterly report on Form 10-Q for the period ended
         June 30, 2007, of American Mortgage Acceptance Company;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this  report,  fairly  present in all material
         respects the financial condition,  results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules  13a-15(e)  and  15d-15(e))  and internal
         control  over  financial  reporting  (as defined in Exchange  Act Rules
         13a-15(f) and 15d-15(f)) for the registrant and have:

         a) Designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to  ensure  that  material  information  relating  to the
         registrant,  including its consolidated subsidiaries,  is made known to
         us by others within those entities,  particularly  during the period in
         which this report is being prepared;

         b) Designed such internal control over financial  reporting,  or caused
         such internal control over financial reporting to be designed under our
         supervision,  to provide reasonable assurance regarding the reliability
         of financial reporting and the preparation of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles;

         c) Evaluated the effectiveness of the registrant's  disclosure controls
         and procedures and presented in this quarterly  report our  conclusions
         about the effectiveness of the disclosure  controls and procedures,  as
         of the  end of  the  period  covered  by  this  report  based  on  such
         evaluation; and

         d)  Disclosed  in this report any change in the  registrant's  internal
         control over financial  reporting that occurred during the registrant's
         most  recent  fiscal  quarter  that  has  materially  affected,  or  is
         reasonably  likely to  materially  affect,  the  registrant's  internal
         control over financial reporting; and

     5.  The registrant's other certifying  officer and I have disclosed,  based
         on our most  recent  evaluation  of  internal  control  over  financial
         reporting,  to the registrant's auditors and the audit committee of the
         registrant's  board of trustees (or persons  performing  the equivalent
         functions):

         a) All significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the  registrant's  ability to
         record, process, summarize and report financial information; and

         b) Any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal control over financial reporting.


         Date:  August 8, 2007             By:  /s/ Robert L. Levy
                                                ------------------
                                                Robert L. Levy
                                                Chief Financial Officer
                                                (Principal Financial Officer and
                                                 Principal Accounting Officer)

                                       31
<PAGE>

                                                                    Exhibit 32.1



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of American Mortgage  Acceptance Company
(the  "Company")  on Form 10-Q for the period ending June 30, 2007 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),  James
L. Duggins,  as Chief Executive  Officer of the Company,  and Robert L. Levy, as
Chief  Financial  Officer of the Company each hereby  certifies,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that:


       (1) The Report fully complies with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and


       (2) The  information  contained  in the Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.



By:  /s/ James L. Duggins                           By:  /s/ Robert L. Levy
     --------------------                                ------------------
     James L. Duggins                                    Robert L. Levy
     Chief Executive Officer                             Chief Financial Officer
     August 8, 2007                                      August 8, 2007


A signed  original of this  written  statement  required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.