<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

                For the Quarterly Period Ended SEPTEMBER 30, 1998

                         Commission File Number 0-13808

                            HOUSING PROGRAMS LIMITED
                       (A California Limited Partnership)

                  I.R.S. Employer Identification No. 95-3906167

                         9090 WILSHIRE BLVD., SUITE 201
                           BEVERLY HILLS, CALIF. 90211

                         Registrant's Telephone Number,
                       Including Area Code (310) 278-2191

Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                                Yes [X]   No [ ]



<PAGE>   2


                            HOUSING PROGRAMS LIMITED

                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               INDEX TO FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998


<TABLE>
<S>                                                                                                <C>

PART I.  FINANCIAL INFORMATION

                  Item 1.  Financial Statements

                          Balance Sheets, September 30, 1998 and December 31, 1997 .................1

                          Statements of Operations,
                                   Nine and Three Months Ended September 30, 1998 and 1997..........2

                          Statement of Partners' Deficiency,
                                   Nine Months Ended September 30, 1998 ............................3

                          Statements of Cash Flow,
                                   Nine Months Ended September 30, 1998 and 1997....................4

                          Notes to Financial Statements ............................................5

                  Item 2.  Management's Discussion and Analysis of Financial

                                    Condition and Results of Operation.............................11

PART II.  OTHER INFORMATION

                  Item 1.  Legal Proceedings.......................................................14

                  Item 6.  Exhibits and Reports on Form 8-K........................................14

                  Signatures       ................................................................15

</TABLE>

<PAGE>   3


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS
                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

                                     ASSETS

<TABLE>
<CAPTION>
                                                              1998
                                                           (Unaudited)           1997
                                                           ------------      ------------
<S>                                                        <C>               <C>         

INVESTMENTS IN LIMITED PARTNERSHIPS
         (Notes 1 and 2)                                   $ 13,555,416      $ 13,409,054

CASH AND CASH EQUIVALENTS (Note 1)                            1,379,882         1,162,398

     OTHER ASSETS                                                67,499                --
                                                           ------------      ------------

     TOTAL ASSETS                                          $ 15,002,797      $ 14,571,452
                                                           ============      ============



                  LIABILITIES AND PARTNERS' DEFICIENCY

LIABILITIES:

  Notes payable (Notes 3 and 6)                            $  8,669,743      $  8,669,743
  Accrued fees and expenses due general
    partners (Note 4)                                         1,879,908         1,562,552
  Accrued interest payable (Notes 3 and 6)                   10,474,777         9,921,172
  Accounts payable                                               52,802             3,855
                                                           ------------      ------------

                                                             21,077,230        20,157,322
                                                           ------------      ------------


COMMITMENTS AND CONTINGENCIES
  (Notes 2, 4 and 5)

PARTNERS' DEFICIENCY:
 General partners                                              (311,490)         (306,605)
 Limited partners                                            (5,762,943)       (5,279,265)
                                                           ------------      ------------

                                                             (6,074,433)       (5,585,870)
                                                           ------------      ------------
TOTAL LIABILITIES AND PARTNERS'
       DEFICIENCY                                          $ 15,002,797      $ 14,571,452
                                                           ============      ============

</TABLE>


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

                                        1


<PAGE>   4


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
             NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Nine months     Three months     Nine months      Three months
                                                       ended           ended            ended            ended
                                                  Sept. 30, 1998   Sept. 30, 1998   Sept. 30, 1997    Sept. 30, 1997
                                                  --------------   --------------   --------------    --------------
<S>                                               <C>              <C>              <C>               <C>        
INTEREST INCOME                                     $    44,066      $    14,401      $    41,582      $    16,586
                                                    -----------      -----------      -----------      -----------

OPERATING EXPENSES:

     Management fees - general partner (Note 4)         369,720          123,240          382,354          119,029
     General and administrative (Note 4)                102,463           63,461           56,771           24,639
     Legal and accounting (Note 4)                      113,935           36,630           96,058           21,434
     Interest (Notes 3 and 4)                           617,718          205,906          711,469          205,906
                                                    -----------      -----------      -----------      -----------

            Total operating expenses                  1,203,836          429,237        1,246,652          371,008
                                                    -----------      -----------      -----------      -----------

LOSS FROM OPERATIONS                                 (1,159,770)        (414,836)      (1,205,070)        (354,422)

DISTRIBUTIONS FROM LIMITED
     PARTNERSHIPS RECOGNIZED
     AS INCOME                                          395,207           16,322          439,020               --

EQUITY IN INCOME OF LIMITED
     PARTNERSHIPS AND AMORTIZATION
     OF ACQUISITION COSTS (Note 2)                      276,000           92,000          109,134           36,378
                                                    -----------      -----------      -----------      -----------

NET LOSS BEFORE EXTRAORDINARY GAIN                     (488,563)        (306,514)        (656,916)        (318,044)

EXTRAORDINARY GAIN -
     DEBT FORGIVENESS (NOTE 3)                               --               --        2,149,096               --
                                                    -----------      -----------      -----------      -----------

NET INCOME (LOSS) AFTER EXTRAORDINARY GAIN          $  (488,563)     $  (306,514)     $ 1,492,180      $  (318,044)
                                                    ===========      ===========      ===========      ===========

NET LOSS PER LIMITED PARTNERSHIP INTEREST
      INTEREST BEFORE EXTRAORDINARY GAIN            $       (40)     $       (25)     $       (53)     $       (26)
                                                    ===========      ===========      ===========      ===========

NET INCOME (LOSS) PER LIMITED PARTNERSHIP
      INTEREST AFTER EXTRAORDINARY GAIN             $       (40)     $       (25)     $       121      $       (26)
                                                    ===========      ===========      ===========      ===========

</TABLE>


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

                                        2


<PAGE>   5


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                       STATEMENTS OF PARTNERS' DEFICIENCY
                      NINE MONTHS ENDED SEPTEMBER 30, 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                         General          Limited
                                         Partners         Partners          Total
                                       -----------      -----------      -----------
<S>                                    <C>              <C>              <C>         

PARTNERSHIP INTERESTS                                        12,368
                                                        ===========


DEFICIENCY,
      January 1, 1998                  $  (306,605)     $(5,279,265)     $(5,585,870)

      Net loss for the nine months
      ended September 30, 1998              (4,886)        (483,677)        (488,563)
                                       -----------      -----------      -----------

DEFICIENCY,
      September 30, 1998               $  (311,490)     $(5,762,943)     $(6,074,433)
                                       ===========      ===========      ===========

</TABLE>



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

                                        3


<PAGE>   6

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        1998             1997
                                                                     -----------      -----------
<S>                                                                  <C>              <C>        

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net (loss) income                                              $  (488,563)     $ 1,492,180
      Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
      Equity in income of limited partnerships
        and amortization of acquisition costs                           (276,000)        (109,134)
      Extraordinary gain - Debt forgiveness                                   --       (1,500,000)
      Increase in other assets                                           (67,499)         (64,299)
      Increase in accrued interest payable                               553,605       (1,078,700)
      Increase in accrued fees and expenses due general partners         317,356          232,357
      Increase (decrease) in accounts payable                             48,947          (10,679)
                                                                     -----------      -----------

      Net cash provided by (used in) operating activities                 87,846       (1,038,275)
                                                                     -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Distributions from limited partnerships
      recognized as a return of capital                                  129,638        1,287,681
                                                                     -----------      -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                217,484          249,406

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                         1,162,398          948,476
                                                                     -----------      -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                             $ 1,379,882      $ 1,197,882
                                                                     ===========      ===========

</TABLE>


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

                                        4


<PAGE>   7


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       GENERAL

       The information contained in the following notes to the financial
       statements is condensed from that which would appear in the annual
       audited financial statements; accordingly, the financial statements
       included herein should be reviewed in conjunction with the financial
       statements and related notes thereto contained in the Housing Programs
       Limited (the "Partnership") annual report for the year ended December 31,
       1997. National Partnership Investments Corp. ("NAPICO") is a general
       partner for the Partnership. Accounting measurements at interim dates
       inherently involve greater reliance on estimates than at year end. The
       results of operations for the interim period presented are not
       necessarily indicative of the results for the entire year.

       In the opinion of NAPICO, the accompanying unaudited financial statements
       contain all adjustments (consisting primarily of normal recurring
       accruals) necessary to present fairly the financial position of the
       Partnership at September 30, 1998 and the results of operations for the
       nine and three months then ended and changes in cash flows for the nine
       months then ended.

       ORGANIZATION

       The Partnership is a limited partnership which was formed under the laws
       of the State of California on May 15, 1984. On September 12, 1984, the
       Partnership offered 3,000 units consisting of 6,000 limited partnership
       interests and warrants to purchase a maximum of 6,000 additional limited
       partnership interests through a public offering .

       The general partners of the Partnership are NAPICO, Housing Programs
       Corporation II and Coast Housing Investment Associates ("CHIA"). LBI
       Group Inc. owns 100 percent of the stock of Housing Programs Corporation
       II. NAPICO is a wholly owned subsidiary of Casden Investment Corporation,
       which is wholly owned by Alan I. Casden. CHIA is a limited partnership
       formed under the California Limited Partnership Act and consists of
       Messrs. Nicholas G. Ciriello, an unrelated individual, as general partner
       and Charles H. Boxenbaum, as limited partner.

       USE OF ESTIMATES

       The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make estimates and
       assumptions that affect the reported amounts of assets and liabilities
       and disclosure of contingent assets and liabilities at the date of the
       financial statements and reported amounts of revenues and expenses during
       the reporting period.  Actual results could differ from those estimates.



                                       5
<PAGE>   8

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               SEPTEMBER 30, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

       METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS

       The investments in local limited partnerships are accounted for on the
       equity method. Acquisition, selection fees and other costs related to the
       acquisition of the projects have been capitalized to the investment
       account and amortized on a straight line basis over the estimated lives
       of the underlying assets.

       NET LOSS PER LIMITED PARTNERSHIP INTEREST

       Net income (loss) per limited partnership interest was computed by
       dividing the limited partners' share of net income (loss) by the number
       of limited partnership interests outstanding during the year. The number
       of limited partnership interests was 12,368 for all years presented.

       CASH AND CASH EQUIVALENTS

       Cash and cash equivalents consist of cash and bank certificates of
       deposit with an original maturity of three months or less. The
       Partnership has its cash and cash equivalents on deposit primarily with
       one money market mutual fund. Such cash and cash equivalents are
       uninsured.

       INCOME TAXES

       No provision has been made for income taxes in the accompanying financial
       statements since such taxes, if any, are the liability of the individual
       partners.

       IMPAIRMENT OF LONG-LIVED ASSETS

       The Partnership reviews long-lived assets to determine if there has been
       any permanent impairment whenever events or changes in circumstances
       indicate that the carrying amount of the asset may not be recoverable. If
       the sum of the expected future cash flows is less than the carrying
       amount of the assets, the Partnership recognizes an impairment loss.

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS

       The Partnership currently holds limited partnership interests in 17
       limited partnerships. The 17 lower-tier limited partnerships own
       residential rental projects consisting of a total of 2,542 apartment
       units. The mortgage loans encumbering these projects are insured by
       United States Department of Housing and Urban Development ("HUD") or
       state governmental agencies.



                                       6
<PAGE>   9

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                               SEPTEMBER 30, 1998

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

       The Partnership, as a limited partner, is entitled to 99 percent of the
income and losses of the lower-tier limited partnerships.

       Equity in losses of limited partnerships is recognized in the financial
       statements until the limited partnership investment account is reduced to
       a zero balance. Losses incurred after the investment account is reduced
       to zero are not recognized.

       Distributions from the limited partnerships are recognized as a reduction
       of capital until the investment balance has been reduced to zero or a
       negative amount equal to future capital contributions required.
       Subsequent distributions are recognized as income.

       The following is a summary of the Partnership's investment in lower-tier
       limited partnerships for the nine and three months ended September 30,
       1998:

<TABLE>
<S>                                                                        <C>        
                    Balance, beginning of period                           $13,409,054
                    Amortization of acquisition costs                          (24,000)
                    Equity in income of limited partnerships                   300,000
                    Distribution recognized as return of capital              (129,638)
                                                                           -----------
                    Balance, end of period                                 $13,555,416
                                                                           ===========
</TABLE>

       The difference between the investment per the accompanying balance sheets
       at September 30, 1998 and December 31, 1997, and the deficiency per the
       unaudited combined estimated statements of operations is due primarily to
       cumulative unrecognized equity in losses of certain limited partnerships,
       costs capitalized to the investment account and cumulative distributions
       recognized as income.

       The following are unaudited combined estimated statements of operations
       for the nine and three months ended September 30, 1998 and 1997 for the
       limited partnerships in which the Partnership has investments:


<TABLE>
<CAPTION>
                           Nine months     Three months       Nine months       Three months
                              ended           ended               ended           ended
                         Sept. 30, 1998    Sept. 30, 1998    Sept. 30, 1997    Sept. 30, 1997
                         --------------    --------------    --------------    --------------
<S>                      <C>               <C>               <C>               <C>         
INCOME
   Rental and Other       $ 13,224,000      $  4,408,000      $ 13,452,000      $  4,484,000
                          ------------      ------------      ------------      ------------

EXPENSES
   Depreciation              2,580,000           860,000         2,649,000           883,000
   Interest                  2,586,000           862,000         2,730,000           910,000
   Operating                 8,427,000         2,809,000         8,946,000         2,982,000
                          ------------      ------------      ------------      ------------

       Total expenses       13,593,000         4,531,000        14,325,000         4,775,000
                          ------------      ------------      ------------      ------------

NET LOSS                  $   (369,000)     $   (123,000)     $   (873,000)     $   (291,000)
                          ============      ============      ============      ============

</TABLE>

                                       7
<PAGE>   10

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1998

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

        Under recently adopted law and policy, HUD has determined not to renew
        HAP contracts on their existing terms. In connection with renewals of
        the housing assistance payments contracts ("HAP Contracts") under such
        new law and policy, the amount of rental assistance payments under
        renewed HAP Contracts will be based on market rentals instead of above
        market rentals, which was generally the case under existing HAP
        Contracts. As a result, existing HAP Contracts that are renewed in the
        future on projects insured by the Federal Housing Administrative of HUD
        ("FHA") will not provide sufficient cash flow to permit owners of
        properties to meet the debt service requirements of these existing
        FHA-insured mortgages. In order to address the reduction in payments
        under HAP Contracts as a result of this new policy, the Multi-family
        Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA"), which
        was adopted in October 1997, provides for the restructuring of mortgage
        loans insured by the FHA with respect to properties subject to HAP
        Contracts that have been renewed under the new policy. The restructured
        loans will be held by the current lender or another lender. Under
        MAHRAA, an FHA-insured mortgage loan can be restructured to reduce the
        annual debt service on such loan. There can be no assurance that the
        Partnership will be permitted to restructure its mortgage indebtedness
        pursuant to the new HUD rules implementing MAHRAA or that the
        Partnership would choose to restructure such mortgage indebtedness if it
        were eligible to participate in the MAHRAA program. It should be noted
        that there are uncertainties as to the economic impact on the
        Partnership of the combination of the reduced payments under the HAP
        Contracts and the restructuring of the existing FHA-insured mortgage
        loans under MAHRAA. Accordingly, the General Partners are unable to
        predict with certainty their impact on the Partnership's future cash
        flow.

        A real estate investment trust ("REIT") organized by affiliates of
        NAPICO has advised the Partnership that it intends to make a proposal to
        purchase from the Partnership certain of the limited partnership
        interests held for investment by the Partnership.

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

        A consent solicitation statement has been sent to the limited partners
        setting forth the terms and conditions of the purchase of the limited
        partners' interests held for investment by the Partnership, together
        with certain amendments to the Partnership Agreement and other
        disclosures of various conflicts of interest in connection with the
        proposed transaction. As of November 2, 1998, the consents of the
        limited partners to the sale of the partnership interests and amendments
        to the Partnership Agreement have been obtained. In addition, the REIT
        has completed buy-out negotiations with a majority of the general
        partners of the local limited partnerships and has obtained approval
        from HUD.


                                       8
<PAGE>   11

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1998

NOTE 3 - NOTES PAYABLE

        Certain of the Partnership's investments involved purchases of
        partnership interests from partners who subsequently withdrew from the
        operating partnership. The Partnership is obligated for non-recourse
        notes payable of $8,669,743 to the sellers of the partnership interests,
        bearing interest at 9.5 percent per annum to the various sellers of the
        partnership interests. The notes have principal maturity dates ranging
        from December 31, 1999 to December 2001 or upon sale or refinancing of
        the underlying partnership properties. These obligations and the related
        interest are collateralized by the Partnership's investment in the
        investee limited partnerships and are payable only out of cash
        distributions from the investee partnerships, as defined in the notes.
        Unpaid interest is due at maturity of the notes.

        During 1997, the lower-tier partnership that owns Deep Lake Hermitage
        Apartments ("Deep Lake") consummated the sale of the apartment complex
        for $4,800,000. There were two notes payable by the Partnership to
        sellers of interests in the lower-tier partnership that owns the Deep
        Lake property in the aggregate principal amount of $1,500,000, which
        were secured by the Partnership's interest in the local limited
        partnership. The notes had accrued interest of $1,650,696, for a total
        amount due of $3,150,696. The Partnership entered into an agreement with
        the note holders, who accepted a reduced payment of $1,001,600 in full
        satisfaction of all obligations, in order to enable the sale of
        property. This was paid by the lower tier partnership from proceeds of
        the sale, and approximated the Partnership's investment balance in Deep
        Lake. In addition, the apartment complex had a first mortgage note of
        approximately $3,500,000 which was paid off from proceeds of the sale.
        In 1997, the Partnership recognized an extraordinary gain of $2,149,096
        from the forgiveness of the debt.

NOTE 4 - FEES AND EXPENSES DUE TO GENERAL PARTNERS

        Under the terms of the Restated Certificate and Agreement of the Limited
        Partnership, the Partnership is obligated to the general partners for an
        annual management fee equal to 0.5 percent of the original invested
        assets of the limited partnerships. Invested assets is defined as the
        costs of acquiring project interests including the proportionate amount
        of the mortgage loans related to the Partnership's interests in the
        capital accounts of the respective limited partnerships.

        As of September 30, 1998, the fees and expenses due the general partners
        exceeded the Partnership's cash. The general partners, during the
        forthcoming year, will not demand payment of amounts due in excess of
        such cash or such that the Partnership would not have sufficient
        operating cash; however, the Partnership will remain liable for all such
        amounts.

NOTE 5 - CONTINGENCIES

        NAPICO is a plaintiff in various lawsuits and has also been named as
        defendant in other lawsuits arising from transactions in the ordinary
        course of business. In the opinion of NAPICO, the claims will not result
        in any material liability to the Partnership.



                                       9
<PAGE>   12

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1998

NOTE 5 - CONTINGENCIES (CONTINUED)

        The Partnership has assessed the potential impact of the Year 2000
        computer systems issue on its operations. The Partnership believes that
        no significant actions are required to be taken by the Partnership to
        address the issue and that the impact of the Year 2000 computer systems
        issue will not materially affect the Partnership's future operating
        results or financial condition.

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

        Statement of Financial Accounting Standards No. 107, "Disclosure about
        Fair Value of Financial Instruments," requires disclosure of fair value
        information about financial instruments, when it is practicable to
        estimate that value. The notes payable are collateralized by the
        Partnership's investments in investee limited partnerships and are
        payable only out of cash distributions from the investee partnerships.
        The cash flow generated by operations of the investee limited
        partnerships, which account for the Partnership's primary source of
        revenues, are subject to various government rules, regulations and
        restrictions which make it impracticable to estimate the fair value of
        the notes payable and related accrued interest. The carrying amount of
        other assets and liabilities reported on the balance sheets that require
        such disclosure approximates fair value due to their short-term
        maturity.



                                       10
<PAGE>   13


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1998


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

         LIQUIDITY AND CAPITAL RESOURCES

        The Partnership's primary sources of funds include interest income on
        money market accounts and certificates of deposit and distributions from
        limited partnerships in which the Partnership has invested. It is not
        expected that any of the local limited partnerships in which the
        Partnership has invested will generate cash flow sufficient to provide
        for distributions to the Partnership's limited partners in any material
        amount.

         RESULTS OF OPERATIONS

        Partnership revenues consist primarily of interest income earned on
        certificates of deposit and other temporary investment of funds. The
        Partnership also receives distributions from the lower-tier limited
        partnerships in which it has invested.

        Distributions received from limited partnerships are recognized as
        return of capital until the investment balance has been reduced to zero
        or to a negative amount equal to future capital contributions required.
        Subsequent distributions received are recognized as income.

        Except for certificates of deposit and money market funds, the
        Partnership's investments consist entirely of interests in other limited
        partnerships owning government assisted housing projects. Available cash
        is invested to provide interest income as reflected in the statements of
        operations. These funds can be converted to cash to meet obligations as
        they arise. The Partnership intends to continue investing available
        funds in this manner.

        A recurring partnership expense is the annual management fee. The fee is
        payable to the General Partners of the Partnership and is calculated at
        .5 percent of the Partnership's invested assets. The management fee is
        paid to the General Partners for their continuing management of
        partnership affairs. The fee is payable beginning with the month
        following the Partnership's initial investment in a local limited
        partnership. Management fees were $369,720 and $382,354 for the nine
        months ended September 30, 1998 and 1997, respectively. The fees have
        decreased due to the sale of a property owned by a local partnership in
        1997, which reduced the invested assets.

        The Partnership is obligated on non-recourse notes payable of $8,669,743
        at September 30, 1998 and December 31, 1997, which bear interest at 9.5
        percent per annum and have principal maturities ranging from December
        1999 to December 2001. The notes and related interest are payable from
        cash flow generated from operations of the related rental properties as
        defined in the notes. These obligations are collateralized by the
        Partnership's investments in the limited partnerships. Unpaid interest
        is due at maturity of the notes.



                                       11
<PAGE>   14

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1998

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

         RESULTS OF OPERATION (CONTINUED)

        Operating expenses, other than management fees and interest expense,
        consist of legal and accounting fees for services rendered to the
        Partnership and administrative expenses, which were generally consistent
        for periods presented. Legal and accounting fees were $113,935 and
        $96,058 for the nine months ended September 30, 1998 and 1997,
        respectively. General and administrative expenses were $102,463 and
        $56,771 for the periods ended September 30, 1998 and 1997, respectively.

        The Partnership accounts for its investments in the local limited
        partnerships on the equity method, thereby adjusting its investment
        balance by its proportionate share of the income or loss of the local
        limited partnerships. Losses incurred after the limited partnership
        investment account is reduced to zero are not recognized.

        During the year ended December 31, 1997, the lower-tier partnership that
        owns Deep Lake consummated the sale of the apartment complex for
        $4,800,000. There were two notes payable by the Partnership to sellers
        of interests in the lower-tier partnership that owns the Deep Lake
        property in the aggregate principal amount of $1,500,000, which were
        secured by the Partnership's interest in the local limited partnership.
        The notes had accrued interest of $1,650,696, for a total amount due of
        $3,150,696. The Partnership entered into an agreement with the note
        holders, who accepted a reduced payment of $1,001,600 in full
        satisfaction of all obligations, in order to enable the sale of
        property. This was paid by the lower tier partnership from proceeds of
        the sale, and approximated the Partnership's investment balance in Deep
        Lake. In addition, the apartment complex had a first mortgage note of
        approximately $3,500,000 which was paid off from proceeds of the sale.
        The Partnership recognized an extraordinary gain of $2,149,096 from the
        forgiveness of the debt in the second quarter of 1997.

        Under recently adopted law and policy, HUD has determined not to renew
        HAP contracts on their existing terms. In connection with renewals of
        the housing assistance payments contracts ("HAP Contracts") under such
        new law and policy, the amount of rental assistance payments under
        renewed HAP Contracts will be based on market rentals instead of above
        market rentals, which was generally the case under existing HAP
        Contracts. As a result, existing HAP Contracts that are renewed in the
        future on projects insured by the Federal Housing Administrative of HUD
        ("FHA") will not provide sufficient cash flow to permit owners of
        properties to meet the debt service requirements of these existing
        FHA-insured mortgages. In order to address the reduction in payments
        under HAP Contracts as a result of this new policy, the Multi-family
        Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA"), which
        was adopted in October 1997, provides for the restructuring of mortgage
        loans insured by the FHA with respect to properties subject to HAP
        Contracts that have been renewed under the new policy. The restructured
        loans will be held by the current lender or another lender. Under
        MAHRAA, an FHA-insured mortgage loan can be restructured to reduce the
        annual debt service on such loan. There can be no assurance that the
        Partnership will be permitted to restructure its mortgage indebtedness
        pursuant to the new HUD rules implementing



                                       12
<PAGE>   15

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1998


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

         RESULTS OF OPERATION (CONTINUED)

        MAHRAA or that the Partnership would choose to restructure such mortgage
        indebtedness if it were eligible to participate in the MAHRAA program.
        It should be noted that there are uncertainties as to the economic
        impact on the Partnership of the combination of the reduced payments
        under the HAP Contracts and the restructuring of the existing
        FHA-insured mortgage loans under MAHRAA. Accordingly, the General
        Partners are unable to predict with certainty their impact on the
        Partnership's future cash flow.

        A real estate investment trust ("REIT") organized by affiliates of
        NAPICO has advised the Partnership that it intends to make a proposal to
        purchase from the Partnership certain of the limited partnership
        interests held for investment by the Partnership.

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

        A consent solicitation statement has been sent to the limited partners
        setting forth the terms and conditions of the purchase of the limited
        partners' interests held for investment by the Partnership, together
        with certain amendments to the Partnership Agreement and other
        disclosures of various conflicts of interest in connection with the
        proposed transaction. As of November 2, 1998, the consents of the
        limited partners to the sale of the partnership interests and amendments
        to the Partnership Agreement have been obtained. In addition, the REIT
        has completed buy-out negotiations with a majority of the general
        partners of the local limited partnerships and has obtained approval
        from HUD.



                                       13
<PAGE>   16

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1998

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

        NAPICO was a plaintiff or defendant in several lawsuits. None of these
        suits are related to the Partnership. In the opinion of NAPICO, the
        claims will not result in any material liability to the Partnership.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        A report 8-K relating to an unsolicited offer to buy units of limited
        partnership interests (the "Units"), as discussed below, was filed with
        the Securities and Exchange Commission during the quarter ended
        September 30, 1998.

        On July 10, 1998, Bond Purchase, L.L.C. (the "Buyer") made an
        unsolicited tender offer to buy a certain number of units in the
        Partnership for a price of $100 per Unit. The Buyer did not contact the
        Corporate General Partner prior to commencing its tender offer. By
        letter dated July 20, 1998, the Corporate General Partner advised
        limited partners that it had determined not to take a position with
        respect to the tender offer but cautioned limited partners to consider
        certain items before determining whether to tender their Units to the
        Buyer. A copy of the letter from the Buyer is attached as an Exhibit to
        this form 10-Q.




                                       14
<PAGE>   17

                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1998


                                   SIGNATURES

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

                                   HOUSING PROGRAMS LIMITED
                                   (a California limited partnership)

                                   By:    National Partnership Investments Corp.
                                          General Partner

                                          /s/ PAUL PATIERNO
                                          --------------------------------------
                                          Paul Patierno
                                          Chief Financial Officer

                                   Date:
                                          --------------------------------------

                                          /s/ CHARLES BOXENBAUM
                                          --------------------------------------
                                          Charles Boxenbaum
                                          Chief Executive Officer


                                   Date:
                                          --------------------------------------



                                       15

<PAGE>   18
                                                                       EXHIBIT 1

BOND PURCHASE, L.L.C.
P.O. Box 26730
Kansas City, MO 64196

July 10, 1998

To the Holders of Limited Partnership Interests in Housing Programs, Ltd.

RE:  OFFER TO PURCHASE LIMITED PARTNERSHIP INTERESTS FOR $100.00

Dear Investor:

     We are offering you an opportunity to sell your limited partnership 
interests (the "Units") in Housing Programs, Ltd. (the "Partnership") for cash 
in the amount of $100.00 per Unit (which amount will be reduced by any cash 
distributions declared by the Partnership after the date of this letter). Our 
offer provides you with an opportunity to sell your Units now without the 
costly transfer fees and commission costs (typically up to 10%) usually paid by 
the seller in secondary market sales. ALL TRANSFER COSTS AND FEES WILL BE PAID 
BY BOND PURCHASE, L.L.C.

     We believe that it is appropriate for investors to have financial choices. 
Our offer gives you, the investor, the ability to make a decision about your 
continued involvement with the Partnership. You may no longer wish to continue 
with your investment in the Partnership for a number of reasons, including:

     *  NO FURTHER IRS FILING

     *  The partnership does not pay any cash distributions.

     *  If you sell units, 1998 will be the final year for which you receive a
        K-1 tax form from the partnership.

     *  You may be able to realize a tax loss that would reduce your taxes for
        1998.

     *  The Partnership was closed twelve years ago in 1986. Your money has been
        tied up for this long period with minimal return.

     *  More immediate use for the cash tied up in your investment in the Units.
<PAGE>   19

o    The absence of a formal trading market for the Units and their resulting 
     relative illiquidity.

o    General disenchantment with real estate investments, particularly 
     long-term investments in limited partnerships;

     Our offer is limited to 300 of the 6,184 outstanding Units. If we were to
acquire more than this amount, the administrative costs of our offer would
become burdensome. If more than  300 units are offered to us, we will prorate
our purchases ratably to all sellers.

     We will accept for purchase properly documented Units on a "first-received,
first-buy" basis. You will be paid promptly following confirmation of a valid,
properly executed Agreement of Transfer and other required transfer documents.
We will pay for all Partnership transfer fees and costs. All tenders of Units
will be irrevocable and may not be rescinded or withdrawn.

     We are real estate investors who are not affiliated with the Partnership or
the General Partners. The General Partners of the Partnership have not analyzed,
approved, endorsed or made any recommendation as to acceptance of the offer.
The purchase offer has been determined solely at the discretion of Bond
Purchase, L.L.C. and does not necessarily represent the true market value of
each unit. We are seeking to acquire Units for investment purposes only and not
with a view to their resale.

     An Agreement of Transfer is enclosed which you can use to accept our offer.
Please execute page 3 of this document, as well as the Power of Attorney. Obtain
all other required signatures and return the documentation in the enclosed
envelop. Please note that all signatures must be medallion guaranteed. The
transfer cannot be processed without signatures that are medallion guaranteed
and failure to obtain them will result in needless delays. In addition, place
your Unit Certificate in the enclosed envelope. We encourage you to act
immediately if you are interested in accepting our offer as only 300 Units will
be purchased.

     OUR OFFER WILL EXPIRE AT 5:00 PM ON AUGUST 31, 1998, UNLESS EXTENDED.

     Please call Kim Pham at (816) 421-4670 if you have any questions.

Sincerely,


Bond Purchase, L.L.C.