<PAGE>   1
                         SECURITIES EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

 X   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Act of
---  1934 for the quarterly period ended June 30, 1998.

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

                          Commission file No. 333-3954
                                             -----------

                              IMC MORTGAGE COMPANY
               (Exact name of issuer as specified in its Charter)

                          Florida                               59-3350574
                 ---------------------------------------------------------------
                (State or other jurisdiction of             (I.R.S. Employer
              incorporation or organization)              identification number)

                              5901 E. FOWLER AVENUE
                              TAMPA, FLORIDA 33617
                    (Address of Principal Executive Offices)

         Issuer's telephone number, including area code: (813) 984-8801

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing for the past 90 days. Yes  X    No
                                                 ---      ---

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

Title of each Class:                               Outstanding at August 7, 1998
--------------------------------------             -----------------------------
Common Stock, par value $.01 per share             30,835,496



<PAGE>   2


                      IMC MORTGAGE COMPANY AND SUBSIDIARIES

                                      INDEX

PART I.   FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                                               Page
                                                                               ----
<S>       <C>                                                                  <C>   
Item 1.   Financial Statements

          Consolidated Balance Sheets as of
             June 30, 1998 and December 31, 1997                                 1

          Consolidated Statements of Operations
             for the three months and the six months
             ended June 30, 1998 and June 30, 1997                               2

          Consolidated Statements of Cash Flows
             for the six months ended June 30, 1998
             and June 30, 1997                                                   3

          Notes to Consolidated Financial Statements                             4

 Item 2.  Management's Discussion and Analysis of
             Results of Operations and Financial Condition                       8


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                                     25

Item 2.   Changes in Securities                                                 25

Item 3.   Defaults Upon Senior Securities                                       25

Item 4.   Submission of Matters to a Vote of Security Holders                   25

Item 5.   Other Information                                                     25

Item 6.   Exhibits and Reports on Form 8-K                                      26
</TABLE>


<PAGE>   3














                          PART I. FINANCIAL INFORMATION


<PAGE>   4


                      IMC MORTGAGE COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                            June 30,           December 31,
                           ASSETS                                             1998                1997
                                                                           -----------         ------------ 
                                                                           (Unaudited)
<S>                                                                        <C>                 <C>   
Cash and cash equivalents                                                  $    8,690          $   26,750
Securities purchased under agreements to resell                               995,483             772,586
Accrued interest receivable                                                    23,681              29,272
Accounts receivable                                                            27,465              21,349
Mortgage loans held for sale, net                                           1,717,727           1,673,144
Interest-only and residual certificates                                       445,577             223,306
Warehouse financing due from correspondents                                    15,879              25,913
Property, furniture, fixtures and equipment, net                               16,586              14,884
Capitalized mortgage servicing rights                                          51,863              34,954
Goodwill                                                                       91,151              91,963
Other assets                                                                   47,320              31,811
                                                                           ----------          ----------
        Total assets                                                       $3,441,422          $2,945,932
                                                                           ==========          ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:

   Warehouse finance facilities                                            $1,813,870          $1,732,609
   Term debt                                                                  279,390             130,480
   Accrued and other liabilities                                               32,115              31,665
   Accrued interest payable                                                    12,506              10,857
   Securities sold but not yet purchased                                      997,986             775,324
   Deferred tax liability                                                      19,200              10,933
                                                                           ----------          ----------
        Total liabilities                                                   3,155,067           2,691,868
                                                                           ----------          ----------

Commitments and contingencies

Stockholders' equity:
   Preferred stock, par value $.01 per share; 10,000,000
       shares authorized; none issued and outstanding                               0                   0
   Common stock, par value $.01 per share; 50,000,000
       authorized; 30,825,934 and 30,710,790 shares
       issued and outstanding                                                     308                 307
   Additional paid-in capital                                                 194,035             193,178
   Retained earnings                                                           92,012              60,579
                                                                           ----------          ----------
         Total stockholders' equity                                           286,355             254,064
                                                                           ----------          ----------

         Total liabilities and stockholders' equity                        $3,441,422          $2,945,932
                                                                           ==========          ==========

</TABLE>




           See accompanying notes to Consolidated Financial Statements

                                       1
<PAGE>   5


                      IMC MORTGAGE COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                       For the Three Months             For the Six Months
                                                           Ended June 30,                  Ended June 30,
                                                   ----------------------------    ------------------------------

                                                        1998          1997              1998            1997
                                                        ----          ----              ----            ----
<S>                                                <C>             <C>              <C>                <C>       

Revenues:
   Gain on sales of loans                          $     71,159    $     32,232     $   131,139        $   59,951
                                                   ------------    ------------      ----------        ----------  

   Warehouse interest income                             38,985          32,309          80,220            53,018
   Warehouse interest expense                           (32,944)        (23,107)        (66,438)          (37,863)
                                                   ------------    ------------      ----------        ---------- 
     Net warehouse interest income                        6,041           9,202          13,782            15,155
                                                   ------------    ------------      ----------        ----------  

   Servicing fees                                        10,666           3,808          19,677             6,849
   Other                                                  9,436           4,531          16,575             6,239
                                                   ------------    ------------      ----------        ----------  
     Total servicing fees and other                      20,102           8,339          36,252            13,088
                                                   ------------    ------------      ----------        ----------  

     Total revenues                                      97,302          49,773         181,173            88,194
                                                   ------------    ------------      ----------        ----------  

Expenses:
   Compensation and benefits                             33,421          16,258          61,859            28,585
   Selling, general and administrative                   30,870          13,184          55,809            22,776
   Other interest expense                                 5,283           3,119          10,173             4,982
                                                   ------------    ------------      ----------        ----------  
     Total expenses                                      69,574          32,561         127,841            56,343
                                                   ------------    ------------      ----------        ----------

   Income before provision for income taxes              27,728          17,212          53,332            31,851

   Provision for income taxes                            11,400           6,500          21,900            12,200
                                                   ------------    ------------      ----------        ---------- 

     Net income                                    $     16,328    $     10,712      $   31,432        $   19,651
                                                   ============    ============      ==========        ========== 

Net income per common share:
     Basic                                         $       0.53    $       0.41      $     1.02        $     0.82
                                                   ============    ============      ==========        ========== 
     Diluted                                       $       0.47    $       0.36      $     0.90        $     0.70
                                                   ============    ============      ==========        ==========

Weighted average number of shares outstanding:
     Basic                                           30,799,173      26,202,855      30,775,154        24,087,750
     Diluted                                         35,043,008      29,804,982      34,828,065        27,996,771

</TABLE>


           See accompanying notes to Consolidated Financial Statements


                                       2
<PAGE>   6


                      IMC MORTGAGE COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)




<TABLE>
<CAPTION>
                                                                          For the Six Months
                                                                             Ended June 30,
                                                                         -----------------------
                                                                            1998          1997
                                                                          --------      --------
<S>                                                                      <C>            <C>  
Cash flows from operating activities:
  Net income                                                             $  31,432      $  19,651
  Adjustments to reconcile net income to net cash used in
   operating activities:
   Depreciation and amortization                                            11,344          2,909
   Deferred taxes                                                            8,267           (280)
   Capitalized mortgage servicing rights                                   (24,591)       (10,513)
   Net loss on joint venture                                                 1,512            667
   Net change in operating assets and liabilities, net of effects of
    acquisitions of businesses:
     Increase in mortgage loans held for sale                              (44,583)      (614,806)
     (Increase) descrease in securities purchased under agreement
        to resell and securities sold but not yet purchased                   (235)         1,243
     Decrease (increase) in accrued interest receivable                      5,591         (6,837)
     Decrease (increase) in warehousing financing due
      from correspondents                                                   10,034        (13,706)
     Increase in interest-only and residual certificates                  (222,271)      (120,325)
     Increase in other assets                                              (14,741)        (1,589)
     Increase in accounts receivable                                        (6,116)        (6,712)
     Increase in accrued interest payable                                    1,649          3,074
     Increase in accounts payable and accrued liabilities                      528          6,985
                                                                         ---------      ---------
       Net cash used in operating activities                              (242,180)      (740,239)
                                                                         ---------      ---------

Investing activities:
   Investment in joint venture                                              (2,280)          (565)
   Purchase of property, furniture, fixtures, and equipment                 (3,362)        (6,531)
   Acquisitions of businesses                                                  ---        (10,337)
   Other                                                                      (415)           ---
                                                                         ---------      ---------
       Net cash used in investing activities                                (6,057)       (17,433)
                                                                         ---------      ---------

Financing activities:
  Issuance of common stock                                                       6         58,709
  Warehouse finance facilities borrowings, net                              81,261        625,651
  Term debt and notes payable borrowings                                   306,016         99,651
  Term debt and notes payable repayments                                  (157,106)       (19,901)
                                                                         ---------      ---------
       Net cash provided by financing activities                           230,177        764,110
                                                                         ---------      ---------

Net (decrease) increase in cash and cash equivalents                       (18,060)         6,438
Cash and cash equivalents, beginning of period                              26,750         13,289
                                                                         ---------      ---------
Cash and cash equivalents, end of period                                 $   8,690      $  19,727
                                                                         =========      =========

Supplemental disclosure cash flow information:
       Cash paid during the period for interest                          $  74,961      $  41,028
                                                                         =========      =========
       Cash paid during the period for taxes                             $   3,210      $  14,625
                                                                         =========      =========
</TABLE>

           See accompanying notes to Consolidated Financial Statements

                                       3
<PAGE>   7


                      IMC MORTGAGE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)


1.    ORGANIZATION AND BASIS OF PRESENTATION:

      IMC Mortgage Company and its wholly-owned subsidiaries (the "Company")
      purchase and originate mortgage loans made to borrowers who may not
      otherwise qualify for conventional loans for the purpose of
      securitization and sale. The Company typically securitizes these
      mortgages into the form of a Real Estate Mortgage Investment Conduit
      ("REMIC") or an owner trust. A significant portion of the mortgages are
      sold on a servicing retained basis.

      The accompanying consolidated financial statements include the accounts
      of the Company and its wholly owned subsidiaries. All intercompany
      transactions have been eliminated in the accompanying consolidated
      financial statements.

      The accompanying unaudited condensed consolidated financial statements
      have been prepared in accordance with generally accepted accounting
      principles for interim financial information and with the instructions to
      Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
      include all of the information and footnotes required by generally
      accepted accounting principles for complete financial statements. In the
      opinion of management, all adjustments (consisting of normal recurring
      accruals) considered necessary for a fair presentation have been
      included. Operating results for the interim periods are not necessarily
      indicative of financial results for the full year. These unaudited
      condensed consolidated financial statements should be read in conjunction
      with the audited consolidated financial statements and notes thereto
      included in the Company's Annual Report on Form 10-K for the fiscal year
      ended December 31, 1997. The year-end balance sheet data was derived from
      audited financial statements, but does not include all disclosures
      required by generally accepted accounting principles.

      Certain reclassifications have been made to the presentations to
      conform to current period presentations.

 2.   RECENT ACCOUNTING PRONOUNCEMENTS:

      In June 1998, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards No. 133 ("SFAS 133")
      "Accounting for Derivative Instruments and Hedging Activities". SFAS 133
      is effective for all fiscal quarters of all fiscal years beginning after
      June 15, 1999 (January 1, 2000 for the Company). SFAS 133 requires that
      all derivative instruments be recorded on the balance sheet at their fair
      value. Changes in the fair value of derivatives are recorded each period
      in current earnings or other comprehensive income, depending on whether a
      derivative was designated as part of a hedge transaction and, if it is,
      the type of hedge transaction. For fair-value hedge transactions in which
      the Company is hedging changes in an asset's, liability's, or firm
      commitment's fair value, changes in the fair value of the derivative
      instrument will generally be offset in the income statement by changes in
      the hedged item's fair value. The ineffective portion of hedges will be
      recognized in current-period earnings.

                                       4
<PAGE>   8

                      IMC MORTGAGE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)

      SFAS 133 precludes designation of a nonderivative financial instrument as
      a hedge of an asset or liability. The Company currently hedges its
      interest rate risk on loan purchases by selling short United States
      Treasury securities which match the duration of the fixed rate mortgage
      loans held for sale and borrows the securities under agreements to resell.
      The unrealized gain or loss resulting from the change in fair value of
      these instruments is deferred and recognized upon securitization as an
      adjustment to the carrying value of the hedged mortgage loans. SFAS 133
      requires the gain or loss on these nonderivative financial instruments to
      be recognized in earnings in the period of change in fair value without a
      corresponding adjustment of the carrying amount of mortgage loans held for
      sale. Management anticipates that it may change the financial instruments
      used to hedge the Company's interest rate risk on loan purchases to
      include derivative financial instruments which will qualify for hedge
      accounting under the provisions of SFAS 133 and thus more appropriately
      reflect the economics of its hedging and risk management activities in the
      financial statements of the Company.

      The actual effect implementation of SFAS 133 will have on the Company's
      financial condition and results of operations will depend on various
      factors determined at the period of adoption, including the type of
      financial instrument used to hedge the Company's interest rate risk on
      loan purchases, whether such instruments qualify for hedge accounting
      treatment, the effectiveness of the hedging instrument, the amount of
      mortgage loans held for sale which the Company intends to hedge, and the
      level of interest rates. Accordingly, the Company can not determine at the
      present time the impact adoption of SFAS 133 will have on its statement of
      operations or balance sheet.

3.    EARNINGS PER SHARE:

      In February 1997, the Financial Accounting Standards Board issued SFAS
      No. 128 "Earnings per Share" ("SFAS 128"), which became effective for the
      Company for reporting periods ending after December 15, 1997. Under the
      provisions of SFAS 128, basic earnings per share is determined by
      dividing net income, adjusted for preferred stock dividends, by weighted
      average shares outstanding. Diluted earnings per share, as defined by
      SFAS No. 128, is computed assuming all dilutive potential common shares
      were issued. All prior period earnings per share data has been restated
      in accordance with the provisions of SFAS 128.

      Weighted average number of shares outstanding are as follows for the
      three and six months ended June 30, 1998 and 1997:

                                       5
<PAGE>   9
                    IMC MORTGAGE COMPANY AND SUBSIDIARIES
                  NOTES TO CONSOLIDTED FINANCIAL STATEMENTS
          FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                 (UNAUDITED)


<TABLE>
<CAPTION>


                                                                           For the Three Months              For the Six Months
                                                                              Ended June 30,                   Ended June 30,
                                                                       ---------------------------       -------------------------
                                                                          1998             1997             1998           1997
                                                                          ----             ----             ----           ----
       <S>                                                             <C>              <C>              <C>    <C>     <C>         
       Weighted average common shares outstanding...........           30,799,173       26,202,855       30,775,154     24,087,750
       Adjustments for dilutive securities:                        
           Stock warrants...................................            2,160,000        2,296,484        2,160,000      2,497,127
           Stock options....................................            1,154,748        1,272,648        1,006,468      1,385,288
           Contingent shares................................              929,087           32,995          886,443         26,606
                                                                       ----------       ----------       ----------    -----------
       Diluted common shares................................           35,043,008       29,804,982       34,828,065     27,996,771
                                                                       ==========       ==========       ==========    ===========
</TABLE>

4.     WAREHOUSE FINANCE FACILITIES, TERM DEBT AND NOTES PAYABLE:

       The Company has available numerous warehouse lines of credit at June
       30, 1998 totaling approximately $4.03 billion ($3.04 billion at December
       31, 1997) of which at June 30, 1998 approximately $1.81 billion was
       outstanding ($1.73 billion at December 31, 1997). Outstanding borrowings
       under warehouse finance facilities are collateralized by mortgage loans
       held for sale, warehouse financing due from correspondents and servicing
       rights on approximately $250 million of mortgage loans. Upon the sale of
       these loans and repayment of warehouse financing due from correspondents,
       the borrowings under these lines will be repaid.

       The Company also has available term debt and notes payable at June
       30, 1998 totaling approximately $470.6 million ($315.7 million at
       December 31, 1997) of which at June 30, 1998 approximately $279.4 million
       was outstanding ($130.5 million at December 31, 1997).

5.     SUBSEQUENT EVENT:

       On July 14, 1998, Travelers Casualty and Surety Company and Greenwich
       Street Capital Partners II, L.P. (together, the "Purchasers") purchased
       $50 million of the Company's Series A convertible preferred stock. The
       Series A preferred stock is convertible to non-registered common stock at
       $10.44 per share. The Series A preferred stock bears no dividend and is
       redeemable by the Company over a three-year period commencing in ten
       years if not previously converted. As part of the preferred stock
       purchase agreement, the Company shall use its best efforts to cause two
       persons designated by the Purchasers to be elected to the Company's board
       of directors at each annual meeting of stockholders.

       The Purchasers were also granted an option to purchase, within the next
       three years, an additional $30 million of Series B preferred stock at par
       with a conversion price into common stock of $22.50.

                                       6
<PAGE>   10



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

The following information should be read in conjunction with the consolidated
financial statements and notes included in Item 1 of this Quarterly Report, and
the financial statements and the notes thereto and Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997. The following management's discussion and analysis of the Company's
financial condition and results of operations contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of important factors such as reduced demand for
non-conforming loans, competitive forces, prepayment speeds, delinquency and
default rates, rapid fluctuations in interest rates, lower than expected
performance by acquired companies, limitations on available funds, market forces
affecting the price of the Company's shares and other risks identified in the
Company's Securities and Exchange Commission filings. In addition, it should be
noted that past financial and operational performance of the Company is not
necessarily indicative of future financial and operational performance.

GENERAL

IMC is a specialized consumer finance company engaged in purchasing,
originating, servicing and selling home equity loans secured primarily by first
liens on one- to four-family residential properties. The Company focuses on
lending to individuals whose borrowing needs are generally not being served by
traditional financial institutions due to such individuals' impaired credit
profiles and other factors. Loan proceeds typically are used by such individuals
to consolidate debt, to finance home improvements, to pay educational expenses
and for a variety of other uses. By focusing on individuals with impaired credit
profiles and providing prompt responses to their borrowing requests, the Company
has been able to charge higher interest rates for its loan products than
typically are charged by conventional mortgage lenders.

In 1996, the Company acquired Mortgage Central Corp., a non-conforming lender
which did business under the name "Equitystars". In 1997, the Company acquired
eight non-conforming mortgage lenders: Mortgage America, Inc., Equity Mortgage
Co., Inc., CoreWest Banc, American Mortgage Reduction, Inc., National Lending
Center, Inc. ("National Lending Center"), Central Money Mortgage Co., Inc.
("Central Money Mortgage"), Residential Mortgage Corporation, and Alternative
Capital Group, Inc. ("Alternative Capital Group"). These acquisitions were
accounted for using the purchase method of accounting and the results of
operations have been included with the Company's results of operations since the
effective acquisition dates.

                                       7
<PAGE>   11



RESULTS OF OPERATIONS

Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997.

Net income for the three months ended June 30, 1998 was $16.3 million
representing an increase of $5.6 million or 52.4% over net income of $10.7
million for the three months ended June 30, 1997. The increase in net income
resulted principally from an increase in gain on sale of loans of $38.9 million
or 120.8% to $71.2 million for the three months ended June 30, 1998 from $32.2
million for the three months ended June 30, 1997. Offsetting the increase in net
income was a $3.2 million or 34.4% decrease in net warehouse interest income to
$6.0 million for the three months ended June 30, 1998 from $9.2 million for the
three months ended June 30, 1997. Contributing to the increase in net income was
a $6.9 million or 180.1% increase in servicing fees to $10.7 million for the
three months ended June 30, 1998 from $3.8 million for the three months ended
June 30, 1997, and a $4.9 million or 108.3% increase in other revenues to $9.4
million for the three months ended June 30, 1998 from $4.5 million for the three
months ended June 30, 1997.

The increase in income was partially offset by a $17.2 million or 105.6%
increase in compensation and benefits to $33.4 million for the three months
ended June 30, 1998 from $16.3 million for the three months ended June 30, 1997,
of which increase $6.7 million related to the compensation and benefits related
to the acquisitions of National Lending Center, Central Money Mortgage,
Residential Mortgage Corporation and Alternative Capital Group (which occurred
during the six months ended December 31, 1997) and the remainder related
primarily to the growth of the Company. The increase in income was also
partially offset by a $17.7 million or 134.1% increase in selling, general and
administrative expenses to $30.9 million for the three months ended June 30,
1998 from $13.2 million for the three months ended June 30, 1997, of which
increase of $3.0 million related to the acquisitions of National Lending Center,
Central Money Mortgage, Residential Mortgage Corporation and Alternative Capital
Group, which occurred during the six months ended December 31, 1997 and the
remainder related primarily to the growth of the Company. The increase in income
was further offset by a $2.2 million or 69.4% increase in other interest expense
to $5.3 million for the three months ended June 30, 1998, from $3.1 million for
the three months ended June 30, 1997.

Income before taxes was reduced by a provision for income taxes of $11.4 million
for the three months ended June 30, 1998 compared to a provision for income
taxes of $6.5 million for the three months ended June 30, 1997, representing an
effective tax rate of approximately 41%.

REVENUES

The following table sets forth information regarding components of the Company's
revenues for the three months ended June 30, 1998 and 1997:

                                       8
<PAGE>   12


<TABLE>
<CAPTION>

                                                                   For the Three Months
                                                                       Ended June 30,
                                                             -------------------------------
                                                                 1998  (in thousands) 1997
                                                                 ----                 ----
<S>                                                          <C>                  <C> 
Gain on sales of loans                                       $   71,159           $   32,232
                                                             ----------           ----------
Warehouse interest income                                        38,985               32,309
Warehouse interest expense                                      (32,944)             (23,107)
                                                             ----------           ----------
       Net warehouse interest income                              6,041                9,202
                                                             ----------           ----------
 Servicing fees                                                  10,666                3,808
 Other                                                            9,436                4,531
                                                             ----------           ----------
        Total revenues                                       $   97,302           $   49,773
                                                             ==========           ==========
</TABLE>


Gain on Sales of Loans. For the three months ended June 30, 1998, gain on sales
of loans increased to $71.2 million from $32.2 million for the three months
ended June 30, 1997, an increase of 120.8%, reflecting increased loan production
and securitizations for the three months ended June 30, 1998. The total volume
of loans produced increased to approximately $1.9 billion for the three months
ended June 30, 1998 as compared with a total volume of approximately $1.4
billion for the three months ended June 30, 1997. Originations by the Company's
correspondent network increased to approximately $1.3 billion for the three
months ended June 30, 1998 from approximately $1.1 billion for the three months
ended June 30, 1997, while production from the Company's broker network and
direct lending operations increased to approximately $620 million for the three
months ended June 30, 1998 from approximately $290 million for the three months
ended June 30, 1997. Production volume increased during the 1998 period due to:
(i) the Company's expansion program; (ii) the increase of its securitization
activity; (iii) the growth of its loan servicing capability; and (iv) the
acquisitions of National Lending Center, Central Money Mortgage, Residential
Mortgage Corporation and Alternative Capital Group during the last six months of
1997, which accounted for approximately $260 million in residential mortgage
loans originated during the three months ended June 30, 1998. Mortgage loans
sold and delivered to securitization trusts increased by $800.0 million, an
increase of 100.0%, to $1.6 billion for the three months ended June 30, 1998
from $800.0 million for the three months ended June 30, 1997.

For securitizations of mortgage loans, the gain on the sale of loans represents
the present value of the differential (spread) between (i) interest earned on
the portion of the loans sold and (ii) interest paid to investors with related
costs over the expected life of the loans, including expected losses,
foreclosure expenses and a normal servicing fee. The spread is adjusted for
estimated prepayments. The Company utilizes assumed prepayment and loss curves
which the Company believes will approximate the timing of prepayments and losses
over the life of the securitized loans. During the three months ended June 30,
1998, prepayment assumptions used to calculate the gain on sales of securitized
loans reflect the Company's expectation that prepayments on fixed rate loans
will gradually increase from a constant prepayment rate ("CPR") of 4% to 28% in
the first year of the loan and remain at 28% thereafter and expected prepayments
on adjustable rate loans will gradually increase from a CPR of 4% to 35% in the
first year of the loan and remain at 35% thereafter. During the three months
ended June 30, 1997, the maximum CPR used to compute gain on sales of fixed 


                                       9
<PAGE>   13

and adjustable rate securitized loans was 27% and 30%, respectively. The CPR
measures the annualized percentage of mortgage loans which prepay during a given
period. The CPR represents the annual prepayment rate such that, in the absence
of regular amortization, the total prepayment over the year would equal that
percent of the original principal balance of the mortgage loan. 

During the three months ended June 30, 1998, the loss assumption used to
calculate the gain on sales of securitized loans reflects the Company's
expectations that losses from defaults will gradually increase from zero in the
first six months of securitization to 100 basis points after 36 months. During
the three months ended June 30, 1997, the assumed loss rate used to calculate
gain on sales of securitized loans was 50 basis points per year. The loss curve
utilized by the Company during the three months ended June 30, 1998 approximates
a loss rate of approximately 65 basis points per year at inception of the
securitization.

The gain on sales of loans as a percentage of loans sold and securitized
approximated 3.7% for the three months ended June 30, 1998 compared to 3.8% for
the three months ended June 30, 1997. Upfront points and origination fees
related to retail loan production recognized as gain on sale at the time the
loan is sold approximated $2.2 million for the three months ended June 30, 1997
and $8.2 million for the three months ended June 30, 1998.

Net Warehouse Interest Income. Net warehouse interest income decreased to $6.0
million for the three months ended June 30, 1998 from $9.2 million for the three
months ended June 30, 1997, a decrease of 34.4%. The decrease in the three month
period ended June 30, 1998 reflected an increase in the securitization of
adjustable rate mortgage loans and the subsequent delivery of mortgage loans
into securitization trusts. In a fixed rate mortgage loan securitization
transaction, the Company receives the pass-through rate of interest on the loans
conveyed to the securitization trust for the period between the cut-off date
(generally the first day of the month a securitization transaction occurs) and
the closing date of the securitization transaction (typically during the third
or fourth week of the month). The cut-off date represents the date when interest
on the mortgage loans accrues to the securitization trust rather than the
Company. The pass-through rate, which is less than the weighted average interest
rate on the mortgage loans, represents the interest rate to be received by
investors who purchase pass-through certificates in the securitization trust on
the closing date. The Company continues to incur interest expense on its
warehouse financings related to loans conveyed to the trust until the closing
date, at which time the warehouse line is repaid. In an adjustable rate mortgage
loan securitization, the Company receives no interest on mortgage loans conveyed
to the securitization trust for the period between the cut-off date and the
closing date of the securitization. For the three months ended June 30, 1998 and
1997, the Company incurred warehouse interest expense of approximately $2.4
million and $0, respectively, related to the period between the cut-off date and
the closing date of adjustable rate mortgage rate mortgage loan securitizations
for which no corresponding interest income was recognized.

The Company from time to time will elect not to deliver the entire amount of
mortgage loans to a securitization trust at the closing date. The remaining
mortgage loans (the "subsequent loans") are delivered at a later date, usually
within 90 days of the closing date. The Company continues to incur interest on
warehouse financings related to subsequent loans until the loans are delivered
to the

                                       10

<PAGE>   14

securitization trust. However, the Company receives no interest income from the
subsequent loans generally from the first day of the month the subsequent loans
are delivered until the date the subsequent loans are conveyed to the
securitization trust. Subsequent loans delivered into securitization trusts
approximated $270 million and $94 million for the three months ended June 30,
1998 and 1997. The Company incurred approximately $1.3 million and $195,000 of
warehouse interest expense related to these loans for the three months ended
June 30, 1998 and 1997.

The decrease in net warehouse interest income was partially offset by a decrease
in the cost of funds and increased mortgage loan production.

Servicing Fees. Servicing fees increased to $10.7 million for the three months
ended June 30, 1998 from $3.8 million for the three months ended June 30, 1997,
an increase of 180.1%. Servicing fees for the three months ended June 30, 1998
were positively affected by an increase in mortgage loans serviced over the
prior period. The Company increased its servicing portfolio by $5.4 billion or
132.7% to $9.4 billion as of June 30, 1998 from $4.0 billion as of June 30,
1997.

Other. Other revenues, consisting principally of the recognition of the increase
or accretion of the discounted value of interest-only and residual certificates
over time, increased to $9.4 million or 108.3% for the three months ended June
30, 1998 from $4.5 million in three months ended June 30, 1997 as a result of
increased securitization volume and increased investment in interest-only and
residual certificates.

EXPENSES

The following table sets forth information regarding components of the Company's
expenses for the three months ended June 30, 1998 and 1997:


<TABLE>
<CAPTION>
                                                       For the Three Months
                                                           Ended June 30,
                                                 -------------------------------
                                                     1998   (in thousands) 1997
                                                     ----                  ----
<S>                                              <C>                <C> 
Compensation and benefits                        $    33,421        $     16,258
Selling, general and administrative                   30,870              13,184
Other interest expense                                 5,283               3,119
                                                 -----------        ------------
         Total expenses                          $    69,574        $     32,561
                                                 ===========        ============
</TABLE>

Compensation and benefits increased by $17.2 million or 105.6% to $33.4 million
for the three months ended June 30, 1998 from $16.3 million for the three months
ended June 30, 1997, principally due to an increase in the number of employees
related to the Company's increased mortgage loan production, including $6.7
million of compensation and benefits relating to the acquisitions of National
Lending Center, Central Money Mortgage, Residential Mortgage Corporation and
Alternative Capital Group (which occurred during the six months ended December
31, 1997), additions of personnel to service the Company's increased loan
servicing portfolio and a $1.1 million increase in executive and management
incentive compensation from $0.75 million for the three months ended June 30,
1997 to $1.8 million for the three months ended June 30, 1998. It is anticipated
that the Company's


                                       11
<PAGE>   15

compensation and benefits will increase as the Company expands; however, the
amount of executive bonuses is directly related to increases in the Company's
earnings per share.

Selling, general and administrative expenses increased by $17.7 million or
134.1% to $30.9 million for the three months ended June 30, 1998 from $13.2
million for the three months ended June 30, 1997 principally due to an increase
in underwriting, originating and servicing costs as a result of an increase in
the volume of mortgage loan production, including $3.0 million relating to the
acquisitions of National Lending Center, Central Money Mortgage, Residential
Mortgage Corporation and Alternative Capital Group (which occurred during the
six months ended December 31, 1997), an increase in the provision for loan
losses of $6.4 million and an increase in amortization expense related to
capitalized mortgage servicing rights of $3.3 million.

Other interest expense increased by $2.2 million or 69.4% to $5.3 million for
the three months ended June 30, 1998 from $3.1 million for the three months
ended June 30, 1997 principally as a result of increased term debt and notes
payable borrowings.

Income Taxes. The effective income tax rate for the three months ended June 30,
1998 was approximately 41%, which differed from the federal tax rate of 35%
primarily due to state income taxes and the non-deductibility for tax purposes
of amortization expense related to goodwill recognized for certain acquisitions.
The increase in the provision for income taxes of $4.9 million or 75.4% to $11.4
million for the three months ended June 30, 1998 from the provision for income
taxes of $6.5 million for the three months ended June 30, 1997 was proportionate
to the increase in pre-tax income and amortization expense related to goodwill.

Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997.

Net income for the six months ended June 30, 1998 was $31.4 million representing
an increase of $11.8 million or 60.0% over net income of $19.7 million for the
six months ended June 30, 1997. The increase in net income resulted principally
from an increase in gain on sale of loans of $71.2 million or 118.7% to $131.1
million for the six months ended June 30, 1998 from $60.0 million for the six
months ended June 30, 1997. Offsetting the increase in net income was a $1.4
million or 9.1% decrease in net warehouse interest income to $13.8 million for
the six months ended June 30, 1998 from $15.2 million for the six months ended
June 30, 1997. Contributing to the increase in net income was a $12.8 million or
187.3% increase in servicing fees to $19.7 million for the six months ended June
30, 1998 from $6.8 million for the six months ended June 30, 1997, and a $10.3
million or 165.7% increase in other revenues to $16.6 million for the six months
ended June 30, 1998 from $6.2 million for the six months ended June 30, 1997.

The increase in income was partially offset by a $33.3 million or 116.4%
increase in compensation and benefits to $61.9 million for the six months ended
June 30, 1998 from $28.6 million for the six months ended June 30, 1997, of
which increase $12.5 million related to the compensation and benefits related to
the acquisitions of National Lending Center, Central Money Mortgage, Residential
Mortgage Corporation and Alternative Capital Group (which occurred during the
six months ended December 31, 1997) and the remainder related primarily to the
growth of the Company. The increase in income


                                       12
<PAGE>   16

was also partially offset by a $33.0 million or 145.0% increase in selling,
general and administrative expenses to $55.8 million for the six months ended
June 30, 1998 from $22.8 million for the six months ended June 30, 1997, of
which increase of $5.0 million related to the acquisitions of National Lending
Center, Central Money Mortgage, Residential Mortgage Corporation and Alternative
Capital Group, which occurred during the six months ended December 31, 1997 and
the remainder related primarily to the growth of the Company. The increase in
income was further offset by a $5.2 million or 104.2% increase in other interest
expense to $10.2 million for the six months ended June 30, 1998, from $5.0
million for the six months ended June 30, 1997.

Income before taxes was reduced by a provision for income taxes of $21.9 million
for the six months ended June 30, 1998 compared to a provision for income taxes
of $12.2 million for the six months ended June 30, 1997, representing an
effective tax rate of approximately 41%.

REVENUES

The following table sets forth information regarding components of the Company's
revenues for the six months ended June 30, 1998 and 1997:


<TABLE>
<CAPTION>

                                                    For the Six Months
                                                      Ended June 30,
                                              ------------------------------
                                                1998    (in thousands)  1997
                                                ----                    ----
<S>                                           <C>                  <C> 
Gain on sales of loans                        $  131,139           $   59,951
                                              ----------           ----------
Warehouse interest income                         80,220               53,018
Warehouse interest expense                       (66,438)             (37,863)
                                              ----------           ----------
       Net warehouse interest income              13,782               15,155
                                              ----------           ----------
 Servicing fees                                   19,677                6,849
 Other                                            16,575                6,239
                                              ----------           ----------
        Total revenues                        $  181,173           $   88,194
                                              ==========           ==========
</TABLE>

Gain on Sales of Loans. For the six months ended June 30, 1998, gain on sales of
loans increased to $131.1 million from $60.0 million for the six months ended
June 30, 1997, an increase of 118.7%, reflecting increased loan production and
securitizations for the six months ended June 30, 1998. The total volume of
loans produced increased to approximately $3.6 billion for the six months ended
June 30, 1998 as compared with a total volume of approximately $2.2 billion for
the six months ended June 30, 1997. Originations by the Company's correspondent
network increased to approximately $2.5 billion for the six months ended June
30, 1998 from approximately $1.7 billion for the six months ended June 30, 1997,
while production from the Company's broker network and direct lending operations
increased to approximately $1.2 billion for the six months ended June 30, 1998
from approximately $480 million for the six months ended June 30, 1997.
Production volume increased during the 1998 period due to: (i) the Company's
expansion program; (ii) the increase of its securitization activity; (iii) the
growth of its loan servicing capability; and (iv) the acquisitions of National
Lending Center, Central Money Mortgage, Residential Mortgage Corporation and
Alternative Capital Group during the last six months of 1997, which accounted
for approximately $475 million in

                                       13
<PAGE>   17

residential mortgage loans originated during the six months ended June 30, 1998.
Mortgage loans sold and delivered to securitization trusts increased to $3.1
billion for the six months ended June 30, 1998 from $1.53 billion for the six
months ended June 30, 1997.

For securitizations of mortgage loans, the gain on the sale of loans represents
the present value of the differential (spread) between (i) interest earned on
the portion of the loans sold and (ii) interest paid to investors with related
costs over the expected life of the loans, including expected losses,
foreclosure expenses and a normal servicing fee. The spread is adjusted for
estimated prepayments. The Company utilizes assumed prepayment and loss curves
which the Company believes will approximate the timing of prepayments and losses
over the life of the securitized loans. During the six months ended June 30,
1998, prepayment assumptions used to calculate the gain on sales of securitized
loans reflect the Company's expectation that prepayments on fixed rate loans
will gradually increase from a constant prepayment rate ("CPR") of 4% to 28% in
the first year of the loan and remain at 28% thereafter and expected prepayments
on adjustable rate loans will gradually increase from a CPR of 4% to 35% in the
first year of the loan and remain at 35% thereafter. During the six months ended
June 30, 1997, the maximum CPR used to compute gain on sales of fixed and
adjustable rate securitized loans was 27% and 30%, respectively. The CPR
measures the annualized percentage of mortgage loans which prepay during a given
period. The CPR represents the annual prepayment rate such that, in the absence
of regular amortization, the total prepayment over the year would equal that
percent of the original principal balance of the mortgage loan.

During the six months ended June 30, 1998, the loss assumption used to calculate
the gain on sales of securitized loans reflects the Company's expectations that
losses from defaults will gradually increase from zero in the first six months
of securitization to 100 basis points after 36 months. During the six months
ended June 30, 1997, the assumed loss rate used to calculate gain on sales of
securitized loans was 50 basis points per year. The loss curve utilized by the
Company during the six months ended June 30, 1998 approximates a loss rate of 65
basis points per year at inception of the securitization.

The gain on sales as a percentage of loans sold and securitized approximated
3.8% for the six months ended June 30, 1998 compared to 3.7% for the six months
ended June 30, 1997. Upfront points and origination fees related to retail loan
production recognized as gain on sale at the time the loan is sold approximated
$3.2 million for the six months ended June 30, 1997 and $12.1 million for the
six months ended June 30, 1998.

Net Warehouse Interest Income. Net warehouse interest income decreased to $13.8
million for the six months ended June 30, 1998 from $15.2 million for the six
months ended June 30, 1997, a decrease of 9.1%. The decrease in the six month
period ended June 30, 1998 reflected an increase in the securitization of
adjustable rate mortgage loans and subsequent delivery of mortgage loans to
securitization trusts. In a fixed rate mortgage loan securitization transaction,
the Company receives the pass-through rate of interest on the loans conveyed to
the securitization trust for the period between the cut-off date (generally the
first day of the month a securitization transaction occurs) and the closing date
of the securitization transaction (typically during the third or fourth week of
the month). The cut-off date represents the date when interest on the mortgage
loans accrues to the securitization trust rather

                                       14
<PAGE>   18

than the Company. The pass-through rate, which is less than the weighted average
interest rate on the mortgage loans, represents the interest rate to be received
by investors who purchase pass-through certificates in the securitization trust
on the closing date. The Company continues to incur interest expense on its
warehouse financings related to loans conveyed to the trust until the closing
date, at which time the warehouse line is repaid. In an adjustable rate mortgage
loan securitization, the Company receives no interest on mortgage loans conveyed
to the securitization trust for the period between the cut-off date and the
closing date of the securitization. For the six months ended June 30, 1998 and
1997, the Company incurred warehouse interest expense of approximately $5.3
million and $550,000, respectively, related to the period between the cut-off
date and the closing date of adjustable rate mortgage rate mortgage loan
securitizations for which no corresponding interest income was recognized.

The Company from time to time will elect not to deliver the entire amount of
mortgage loans to a securitization trust at the closing date. The remaining
mortgage loans (the "subsequent loans") are delivered at a later date, usually
within 60 days of the closing date. The Company continues to incur interest on
warehouse financings related to subsequent loans until the loans are delivered
to the securitization trust. However, the Company receives no interest income
from the subsequent loans generally from the first day of the month the
subsequent loans are delivered until the date the subsequent loans are conveyed
to the securitization trust. Subsequent loans delivered into securitization
trusts approximated $270 million and $94 million for the six months ended June
30, 1998 and 1997. The Company incurred approximately $1.3 million and $195,000
of warehouse interest expense related to these loans for the six months ended
June 30, 1998 and 1997.

The decrease in net warehouse interest income was partially offset by a decrease
in the cost of funds and increased mortgage loan production.

Servicing Fees. Servicing fees increased to $19.7 million for the six months
ended June 30, 1998 from $6.8 million for the six months ended June 30, 1997, an
increase of 187.3%. Servicing fees for the six months ended June 30, 1998 were
positively affected by an increase in mortgage loans serviced over the prior
period. The Company increased its servicing portfolio by $5.4 billion or 135.0%
to $9.4 billion as of June 30, 1998 from $4.0 billion as of June 30, 1997.

Other. Other revenues, consisting principally of the recognition of the increase
or accretion of the discounted value of interest-only and residual certificates
over time, increased to $16.6 million or 165.7% for the six months ended June
30, 1998 from $6.2 million in six months ended June 30, 1997 as a result of
increased securitization volume and increased investment in interest-only and
residual certificates.

EXPENSES

The following table sets forth information regarding components of the Company's
expenses for the six months ended June 30, 1998 and 1997:


                                       15
<PAGE>   19


<TABLE>
<CAPTION>
                                                      For the Six Months
                                                         Ended June 30,
                                              -------------------------------
                                                  1998   (in thousands) 1997
                                                  ----                  ----
<S>                                           <C>                <C>   
Compensation and benefits                     $    61,859        $     28,585
Selling, general and administrative                55,809              22,776
Other interest expense                             10,173               4,982
                                              -----------        ------------
         Total expenses                       $   127,841        $     56,343
                                              ===========        ============
</TABLE>

Compensation and benefits increased by $33.3 million or 116.4% to $61.9 million
for the six months ended June 30, 1998 from $28.6 million for the six months
ended June 30, 1997, principally due to an increase in the number of employees
related to the Company's increased mortgage loan production, including $12.5
million of compensation and benefits relating to the acquisitions of National
Lending Center, Central Money Mortgage, Residential Mortgage Corporation and
Alternative Capital Group (which occurred during the six months ended December
31, 1997), additions of personnel to service the Company's increased loan
servicing portfolio and a $1.2 million increase in executive and management
incentive compensation from $2.0 million for the six months ended June 30, 1997
to $3.2 million for the six months ended June 30, 1998. It is anticipated that
the Company's compensation and benefits will increase as the Company expands;
however, the amount of executive bonuses is directly related to increases in the
Company's earnings per share.

Selling, general and administrative expenses increased by $33.0 million or
145.0% to $55.8 million for the six months ended June 30, 1998 from $22.8
million for the six months ended June 30, 1997 principally due to an increase in
underwriting, originating and servicing costs as a result of an increase in the
volume of mortgage loan production, including $5.0 million relating to the
acquisitions of National Lending Center, Central Money Mortgage, Residential
Mortgage Corporation and Alternative Capital Group (which occurred during the
six months ended December 31, 1997), an increase in the provision for loan
losses of $15.8 million and an increase in amortization expense related to
capitalized mortgage servicing rights of $4.8 million.

Other interest expense increased by $5.2 million or 104.2% to $10.2 million for
the six months ended June 30, 1998 from $5.0 million for the six months ended
June 30, 1997 principally as a result of increased term debt and notes payable
borrowings.

Income Taxes. The effective income tax rate for the six months ended June 30,
1998 was approximately 41%, which differed from the federal tax rate of 35%
primarily due to state income taxes and the non-deductibility for tax purposes
of amortization expense related to goodwill recognized for certain acquisitions.
The increase in the provision for income taxes of $9.7 million or 79.5% to $21.9
million for the six months ended June 30, 1998 from the provision for income
taxes of $12.2 million for the six months ended June 30, 1997 was proportionate
to the increase in pre-tax income and amortization expense related to goodwill.

FINANCIAL CONDITION

June 30, 1998 Compared to December 31, 1997

                                       16
<PAGE>   20

The Company hedges, in part, its interest rate exposure on fixed-rate mortgage
loans held for sale through the use of securities sold but not yet purchased and
securities purchased under agreements to resell. Securities purchased under
agreements to resell increased $222.9 million or 28.9% from $772.6 million at
December 31, 1997 to $995.5 million at June 30, 1998 and securities sold but not
yet purchased increased $222.7 million or 28.7% from $775.3 million at December
31, 1997 to $998.0 million at June 30, 1998 due primarily to an increase in
fixed-rate mortgage loans held for sale at June 30, 1998 as compared to December
31, 1997.

Mortgage loans held for sale at June 30, 1998 were $1.72 billion, representing
an increase of $44.6 million or 2.7% over mortgage loans held for sale of $1.67
billion at December 31, 1997. This increase was a result of the Company's
strategy to increase its financial flexibility by maintaining a sufficient
balance of mortgage loans held for sale. Included in mortgages held for sale at
June 30, 1998 and December 31, 1997 were $81.3 million and $53.9 million,
respectively, of mortgage loans which were not eligible for securitization due
to delinquency and other factors (loans under review). The amount by which cost
exceeds market value on loans under review is accounted for as a valuation
allowance. Changes in the valuation allowance are included in the determination
of net income in the period of change. The valuation allowance at June 30, 1998
and December 31, 1997 was $17.9 million and $11.5 million, respectively.

Interest-only and residual certificates at June 30, 1998 were $445.6 million,
representing an increase of $222.3 million or 99.5% over interest-only and
residual certificates of $223.3 million at December 31, 1997 and capitalized
mortgage servicing rights increased $16.9 million or 48.4% from $35.0 million at
December 31, 1997 to $51.9 million at June 30, 1998. The increases in
interest-only and residual certificates and capitalized mortgage servicing
rights resulted primarily from the delivery of $3.1 billion in mortgage loans
into four securitizations totaling $3.3 billion during the six months ended June
30, 1998.

Borrowings under warehouse financing facilities at June 30, 1998 were $1.8
billion, representing an increase of $81.3 million or 4.7% over warehouse
financing facilities of $1.7 billion at December 31, 1997. This increase was a
result of increased mortgage loans held for sale.

Term debt and notes payable at June 30, 1998 was $279.4 million, representing an
increase of $148.9 million or 114.1% over term debt and notes payable of $130.5
million at December 31, 1997. This increase was primarily a result of financing
the increase in interest-only and residual certificates and an increase of $19.0
million in outstanding borrowings under the Company's working capital line of
credit. At June 30, 1998, the Company's working capital line of credit had an
outstanding balance of $19.0 million.

Stockholders' equity as of June 30, 1998 was $286.4 million, representing an
increase of $32.3 million over stockholders' equity of $254.1 million at
December 31, 1997. This increase was a result of net income for the six months
ended June 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

                                       17
<PAGE>   21

The Company uses its cash flow from the sale of loans through securitizations,
whole loan sales, loan origination fees, processing fees, net interest income,
servicing fees and borrowings under its warehouse facilities and term debt to
meet its working capital needs. The Company's cash requirements include the
funding of loan purchases and originations, payment of interest costs, funding
of over-collateralization requirements for securitizations, operating expenses,
income taxes, acquisitions when acquired for cash and capital expenditures.

The Company has an ongoing need for substantial amounts of capital. Adequate
credit facilities and other sources of funding are essential to the continuation
of the Company's ability to purchase and originate loans. As a result of
increased loan purchases and originations and its growing securitization
program, the Company has operated, and expects to continue to operate, on a
negative cash flow basis. During the six months ended June 30, 1998, the Company
used cash flows in operating activities of $242.2 million, a decrease of $498.0
million, or 67.3%, over cash flows used in operating activities of $740.2
million during the six months ended June 30, 1997. During the six months ended
June 30, 1998, the Company received cash flows from financing activities of
$230.2 million, a decrease of $533.9 million or 69.9% over cash flows received
from financing activities of $764.1 million during the six months ended June 30,
1997. The cash flows used in operating activities related primarily to
securitization activities and the funding of mortgage loan purchases or
originations and cash flows received from financing activities related primarily
to the funding of the mortgage loan purchases or originations.

The increasing amount of loans sold through securitizations has resulted in an
increase in the amount of gain on sales recognized by the Company. Significant
cash outflows are incurred upon the closing of a securitization transaction;
however, the Company does not receive a significant portion of the cash
representing the gain until later periods when the related loans are repaid or
otherwise collected. The Company borrows funds on a short-term basis to support
the accumulation of loans prior to sale. These short-term borrowings are made
under warehouse lines of credit with various lenders.

At June 30, 1998, the Company had a $1.25 billion uncommitted warehouse and
residual financing facility with Paine Webber Real Estate Securities, Inc. This
warehouse facility bears interest at rates ranging from LIBOR plus 0.65% to
LIBOR plus .90%. Approximately $871.4 million was outstanding under this
warehouse facility as of June 30, 1998.

At June 30, 1998, the Company also had a $1.0 billion uncommitted warehouse
facility with Bear Stearns Home Equity Trust 1996-1. This facility bears
interest at LIBOR plus 0.75%. Approximately $516.2 million was outstanding under
this facility at June 30, 1998.

In March 1998, the Company entered into a $1.0 billion committed warehouse and
residual financing facility with German American Capital Corporation, a
subsidiary of Deutsche Bank North American Holding Corp. The facility provides
for $1.0 billion in committed warehousing for mortgage loans held for sale
including a $100.0 million credit facility to be collateralized by interest-only
and residual certificates. Approximately $199.7 million was outstanding under
this warehouse and residual financing facility at June 30, 1998.


                                       18
<PAGE>   22

Additionally, at June 30, 1998, the Company had approximately $910 million
available under numerous other warehouse lines of credit. As of June 30, 1998,
approximately $226.5 million was outstanding under these lines of credit.
Interest rates ranged from LIBOR plus 0.65% to LIBOR plus 1.50% as of June 30,
1998, and all borrowings mature within one year.

                                       19
<PAGE>   23



Outstanding borrowings on the Company's warehouse financing facilities are
collateralized by mortgage loans held for sale, warehouse financing due from
correspondents and servicing rights on approximately $250 million of mortgage
loans. Upon the sale of these loans and the repayment of warehouse financing due
from correspondents, the borrowings under these lines will be repaid.

At June 30, 1998, the Company had borrowed $125.2 million under its residual
financing credit facility with Paine Webber Real Estate Securities, Inc.
Outstanding borrowings bear interest at LIBOR plus 2.0% and are collateralized
by the Company's interest in certain interest-only and residual certificates.

Bear, Stearns & Co. Inc. and its affiliates, Bear, Stearns Mortgage Capital
Corporation and Bear, Stearns International Limited, provide the Company with a
residual financing credit facility which is collateralized by certain
interest-only and residual certificates owned by the Company. At June 30, 1998,
$107.1 million was outstanding under this credit facility, which bears interest
at 1.75% per annum in excess of LIBOR.

At June 30, 1998, the Company had borrowed $3.6 million under an agreement which
matures August 1998, bears interest at 2.0% per annum in excess of LIBOR and is
collateralized by certain interest-only and residual certificates.

The Company also has available a $7 million credit facility which matures July
31, 1999 and bears interest at 10% per annum from an affiliate of a stockholder.
At June 30, 1998, $6.8 million was outstanding under this credit facility.

The Bank of Boston provides the Company a revolving credit facility which
provides for borrowings up to $50 million subject to the following terms: (i) to
finance interest-only and residual certificates, to be repaid according to a
repayment schedule calculated by Bank of Boston with a maximum amortization
period after October 1998 of three years; or (ii) for acquisitions or bridge
financing. The Bank of Boston, with participation from another financial
institution, also provides the company with a $45 million working capital
facility. At June 30, 1998, $19.0 million was outstanding under this credit
facility. The Company's $50 million revolving credit facility and $45 million
working capital facility bear interest at (i) the Bank of Boston "base rate",
(ii) LIBOR plus 2.50%, or (iii) the Federal Funds rate plus 2.50% and mature in
October 1998. The Company has commenced discussions with the Bank of Boston to
extend the maturity date and increase the total facility capacity to $100
million. There can be no assurance that the existing facilities will be extended
or increased or that the Company will be able to arrange or replace these
facilities on similar terms and conditions, if at all. To the extent that the
Company is not successful in extending, increasing or replacing these
facilities, the Company would have to curtail operations or attempt to increase
the volume of whole loan sales to sustain operations. There can be no assurance
the Company would be successful in increasing whole loan sales to the level
required to sustain operations.

The Company's warehouse lines and term debt contain various affirmative and
negative covenants customary for credit arrangements of their type and which the
Company believes will not have a material effect on its operations, growth and
financial flexibility. The credit facility with Bank of

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<PAGE>   24

Boston also contains certain financial covenants requiring the maintenance of
certain debt-to-equity or debt-to-net worth ratios, as well as establishing
limits on the ability of the Company to incur unsecured indebtedness. The
Company does not believe that the existing financial covenants will restrict its
operations within the next 12 months. Management believes the Company is in
compliance with all such covenants under these agreements.

The Company's current warehouse lines generally are subject to one-year terms.
Certain warehouse lines have automatic renewal features subject to the absence
of defaults and permit the lender to terminate the facility on notice to the
Company. There can be no assurance either that the Company's current creditors
will renew their facilities as they expire or that the Company will be able to
obtain additional credit lines.

On July 14, 1998, Travelers Casualty and Surety Company and Greenwich Street
Capital Partners II, L.P. (together, the "Purchasers") purchased $50 million of
the Company's Series A convertible preferred stock. The Series A preferred stock
is convertible to non-registered common stock at $10.44 per share. The Series A
preferred stock bears no dividend and is redeemable by the Company over a
three-year period commencing in ten years if not previously converted. As part
of the preferred stock purchase agreement, the Company shall use its best
efforts to cause two persons designated by the Purchasers to be elected to the
Company's board of directors. The Purchasers were also granted an option to
purchase, within the next three years, an additional $30 million of Series B
preferred stock at par with a conversion price into common stock of $22.50.

The Company's business requires continual access to short- and long-term sources
of capital. The Company believes that its current warehouse and other facilities
and internally generated funds will be sufficient (assuming renewal or
replacement of existing warehouse and term debt facilities as they mature, some
of which mature in August 1998 and October 1998, as described above) to fund its
liquidity requirements, including the implementation of its business strategy
through the second quarter of 1999. However, the Company has substantial capital
requirements and it anticipates that it may need to arrange for additional
external cash resources through the sale or securitization of interest-only and
residual certificates, increased credit facilities and the sale or placement of
debt, preferred stock or equity securities. There can be no assurance that
existing credit facilities can be increased, extended or refinanced, that the
Company will be able to arrange for the sale or securitization of interest-only
and residual certificates in the future on terms the Company would consider
favorable, that debt, preferred stock or equity sources will be available to the
Company at any given time or on terms the Company would consider favorable or
that funds generated from operations will be sufficient to repay its existing
debt obligations or meet its operating and capital requirements. To the extent
that the Company is not successful in increasing, maintaining or replacing
existing credit facilities, in selling or securitizing interest-only and
residual certificates or in the placement of debt, preferred stock or equity
securities, the Company would not be able to hold a large volume of loans
pending securitization and therefore would have to curtail its loan production
activities or attempt to increase the volume of whole loan sales to sustain
operations. There can be no assurance the Company would be successful in
increasing whole loans sales to the level required to sustain operations.

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<PAGE>   25


CERTAIN ACCOUNTING CONSIDERATIONS

The Company sells loans through securitizations and retains a residual interest
in the loans and, on occasion, also retains an interest-only certificate. The
interest-only and residual certificates are recorded at fair value and changes
in fair value are recorded in the results of operations in the period of the
change in value. The Company determines fair value based on a discounted cash
flow analysis. The cash flows are estimated as the excess of the weighted
average coupon on each pool of mortgage loans sold over the sum of the
pass-through interest rate plus a normal servicing fee, a trustee fee, and
insurance fee when applicable and an estimate of annual future credit losses
related to the mortgage loans securitized over the life of the mortgage loans.

These cash flows are projected over the life of the mortgage loans using
prepayment, default, and interest rate assumptions that market participants
would use for similar financial instruments subject to prepayment, credit and
interest rate risk. In projecting cash flows, the Company uses available
information such as externally prepared reports on prepayment rates, interest
rates, collateral value, economic forecasts and historical default and
prepayment rates of the portfolio under review.

If actual prepayment speed or credit losses of a loan portfolio materially and
adversely vary from the Company's original assumptions over time, the Company
would be required to adjust the value of the interest-only and residual
certificates, and such adjustment could have a material adverse effect on the
Company's financial condition and results of operations. Higher than assumed
rates of loan prepayments or credit losses over a period of time would require
the Company to write down the value of the interest-only and residual
certificates, adversely affecting earnings. There can be no assurance that the
Company's assumptions as to prepayment speeds and credit losses will prove to be
accurate. To the Company's knowledge, there is a limited market for the sale of
interest-only and residual classes of certificates and there can be no assurance
that these assets can be sold for the value reflected on the balance sheet.

RISK MANAGEMENT

The Company purchases and originates mortgage loans and then sells them
primarily through securitizations. At the time of securitization and the
delivery of the loans, the Company recognizes gain on sale based on a number of
factors including the difference, or "spread", between the interest rate on the
loans and the interest rate paid to investors (which typically is priced based
on the Treasury security with a maturity corresponding to the anticipated life
of the loans). If interest rates rise between the time the Company originates or
purchases the loans and the time the loans are priced at securitization, the
spread narrows, resulting in a loss in value of the loans. To protect against
such losses, the Company hedges a portion of the value of the loans through the
short sale of Treasury securities. Prior to hedging, the Company performs an
analysis of its loans taking into account, among other things, interest rates
and maturities to determine the amount, type, duration and proportion of each
Treasury security to sell short so that the risk to the value of the loans is
effectively hedged. The Company executes the sale of the Treasury securities
with large, reputable securities firms and uses the proceeds received to acquire
Treasury securities under repurchase agreements. These securities are designated
as hedges in the Company's records and are closed out when the loans are sold.

                                       22
<PAGE>   26

If the value of the hedges decreases, offsetting an increase in the value of the
loans, the Company, upon settlement with its counterparty, will pay the hedge
loss in cash and realize the corresponding increase in the value of the loans as
part of its interest-only and residual certificates. Conversely, if the value of
the hedges increases, offsetting a decrease in the value of the loans, the
Company, upon settlement with its counterparty, will receive the hedge gain in
cash and realize the corresponding decrease in the value of the loans through a
reduction in the value of the corresponding interest-only and residual
certificates.

The Company believes that its hedging activities using Treasury securities are
substantially similar in purpose, scope and execution to customary hedging
activities using Treasury securities engaged in by many of its competitors.

INFLATION

Inflation historically has had no material effect on the Company's results of
operations. Inflation affects the Company most in the area of loan originations
and can have an effect on interest rates. Interest rates normally increase
during periods of high inflation and decrease during periods of low inflation.

Profitability may be directly affected by the level and fluctuation in interest
rates which affect the Company's ability to earn a spread between interest
received on its loans and the costs of its borrowings. The profitability of the
Company is likely to be adversely affected during any period of unexpected or
rapid changes in interest rates. A substantial and sustained increase in
interest rates could adversely affect the ability of the Company to purchase and
originate loans and affect the mix of first and second mortgage loan products.
Generally, first mortgage production increases relative to second mortgage
production in response to low interest rates and second mortgage production
increases relative to first mortgage production during periods of high interest
rates. A significant decline in interest rates could decrease the size of the
Company's loan servicing portfolio by increasing the level of loan prepayments.
Additionally, to the extent servicing rights and interest-only and residual
certificates have been capitalized on the books of the Company, higher than
anticipated rates of loan prepayments or losses could require the Company to
write down the value of such servicing rights and interest-only and residual
certificates which could have a material adverse effect on the Company's results
of operations and financial condition. Conversely, lower than anticipated rates
of loan prepayments or lower losses could allow the Company to increase the
value of interest-only and residual certificates which could have a favorable
effect on the Company's results of operations and financial condition.
Fluctuating interest rates also may affect the net interest income earned by the
Company from the difference between the yield to the Company on loans held
pending sales and the interest paid by the Company for funds borrowed under the
Company's warehouse facilities. In addition, inverse or flattened interest yield
curves could have an adverse impact on the profitability of the Company because
the loans pooled and sold by the Company have long-term rates, while the senior
interests in the related securitization trusts are priced on the basis of
intermediate term rates.

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RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133 ("SFAS 133") "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). SFAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative was designated as part of a hedge
transaction and, if it is, the type of hedge transaction. For fair-value hedge
transactions in which the Company is hedging changes in an asset's, liability's,
or firm commitment's fair value, changes in the fair value of the derivative
instrument will generally be offset in the income statement by changes in the
hedged item's fair value. The ineffective portion of hedges will be recognized
in current-period earnings.

SFAS 133 precludes designation of a nonderivative financial instrument as a
hedge of an asset or liability. The Company currently hedges its interest rate
risk on loan purchases by selling short United States Treasury securities which
match the duration of the fixed rate mortgage loans held for sale and borrows
the securities under agreements to resell. The unrealized gain or loss resulting
from the change in fair value of these instruments is deferred and recognized
upon securitization as an adjustment to the carrying value of the hedged
mortgage loans. SFAS 133 requires the gain or loss on these nonderivative
financial instruments to be recognized in earnings in the period of change in
fair value without a corresponding adjustment of the carrying amount of mortgage
loans held for sale. Management anticipates that it may change the financial
instruments used to hedge the Company's interest rate risk on loan purchases to
include derivative financial instruments which will qualify for hedge accounting
under the provisions of SFAS 133 and thus more appropriately reflect the
economics of its hedging and risk management activities in the financial
statements of the Company.

The actual effect implementation of SFAS 133 will have on the Company's
financial condition and results of operations will depend on various factors
determined at the period of adoption, including the type of financial instrument
used to hedge the Company's interest rate risk on loan purchases, whether such
instruments qualify for hedge accounting treatment, the effectiveness of the
hedging instrument, the amount of mortgage loans held for sale which the Company
intends to hedge, and the level of interest rates. Accordingly, the Company can
not determine at the present time the impact adoption of SFAS 133 will have on
its statement of operation or balance sheet.

YEAR 2000

The Company utilizes a number of software systems to originate, securitize and
service its various loan products. The Company has and will continue to make
certain investments in its software systems and applications to ensure the
Company is Year 2000 compliant. The financial impact of becoming year 2000
compliant has not been completely evaluated, but is not expected to be material
to the Company, to its financial position or results of operations in a given
year.

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<PAGE>   28















                           PART II. OTHER INFORMATION








<PAGE>   29


PART II.      OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is party to various legal proceedings arising out of the
         ordinary course of its business. Management believes that none of these
         actions, individually or in the aggregate, will have a material adverse
         effect on the results of operations or financial condition of the
         Company.

Item 2.  Changes in Securities - None

Item 3.  Defaults Upon Senior Securities - None

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

         The annual meeting of stockholders was held on June 5, 1998.

                  Election of Directors - Joseph P. Goryeb was reelected to the
         Board for a term of three years. There were 21,896,605 votes cast in
         favor of the resolution and 551,607 votes cast against the resolution.
         Mr. Mark W. Lorimer was elected to the Board for a term of three years.
         There were 21,896,605 votes cast in favor of the resolution and 551,607
         votes cast against the resolution.

                  Approval of a Resolution to Adopt the IMC Mortgage Company
         Employee Stock Purchase Plan - The IMC Mortgage Company Employee Stock
         Purchase Plan was approved. There were 22,116,407 votes cast in favor
         of the resolution to approve the adoption of the plan, 321,872 votes
         cast against the resolution and 9,933 votes abstained.

                  Ratification of the Appointment of Coopers & Lybrand L.L.P. as
         Independent Accountants for the Company for the fiscal year ending
         December 31, 1998 - The appointment of Coopers & Lybrand L.L.P. as
         independent accountants for the Company for the fiscal year ending
         December 31, 1998 was ratified. There were 22,431,537 votes cast in
         favor of the ratification, 11,850 votes cast against the ratification
         and 4,825 votes abstained.

Item 5.  Other Information - None

                                       25
<PAGE>   30



Item 6.  Exhibits and Reports on Form 8-K

           A.   Exhibits

                  3.1      Articles of Incorporation of the Registrant, as
                           amended

                  10.53    First Amendment and Restatement of Contingency Fee
                           Compensation Arrangement between the Registrant and
                           Mitchell W. Legler

                  10.54    Second Amendment to Employment Agreement dated August
                           1, 1996 between the Registrant and Stuart D. Marvin

                  10.55    Preferred Stock Purchase and Option Agreement

                  27       Financial Data Schedule (for SEC use only)

           B.   Reports on Form 8-K
                None






                                       26

<PAGE>   31

SIGNATURES

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



Date:    August 13, 1998   IMC MORTGAGE COMPANY



         By: /s/ Thomas G. Middleton


         Thomas G. Middleton, President, Chief Operating Officer, Assistant
         Secretary and Director











         By: /s/ Stuart D. Marvin


         Stuart D. Marvin, Chief Financial Officer


                                       27