<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 MARCH 31, 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 MARCH 31, 1998



<TABLE>

PART I.  FINANCIAL INFORMATION

<S>                                                                                       <C>
            Item 1.  Financial Statements

                  Balance Sheets, March 31, 1998 and December 31, 1997 .....................1

                  Statements of Operations,
                        Three Months Ended March 31, 1998 and 1997..........................2

                  Statement of Partners' Deficiency,
                        Three Months Ended March 31, 1998 ..................................3

                  Statements of Cash Flow,
                        Three Months Ended March 31, 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

                      MARCH 31, 1998 AND DECEMBER 31, 1997

                                     ASSETS
<TABLE>
<CAPTION>
                                                             1998                 1997
                                                          (Unaudited)          (Audited)
                                                         ------------         ------------

<S>                                                     <C>                  <C>         
INVESTMENTS IN LIMITED PARTNERSHIPS
    (Notes 1 and 2)                                      $ 13,501,054         $ 13,409,054

CASH AND CASH EQUIVALENTS (Note 1)                          1,508,840            1,162,398
                                                         ------------         ------------

TOTAL ASSETS                                             $ 15,009,894         $ 14,571,452
                                                         ============         ============



             LIABILITIES AND PARTNERS' DEFICIENCY

LIABILITIES:
Notes payable (Notes 3)                                  $  8,669,743         $  8,669,743
Accrued fees and expenses due general
  partners (Note 4)                                         1,635,793            1,562,552
Accrued interest payable (Notes 3)                         10,127,078            9,921,172
Accounts payable                                              336,932                3,855
                                                         ------------         ------------
                                                           20,769,546           20,157,322
                                                         ------------         ------------


COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 5)

PARTNERS' DEFICIENCY:
General partners                                             (308,343)            (306,605)
Limited partners                                           (5,451,309)          (5,279,265)
                                                         ------------         ------------
                                                           (5,759,652)          (5,585,870)
                                                         ------------         ------------
TOTAL LIABILITIES AND PARTNERS'
  DEFICIENCY                                             $ 15,009,894         $ 14,571,452
                                                         ============         ============
</TABLE>





   The accompanying notes are an integral part of these financial statements.
<PAGE>   4


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                         1998               1997
                                                       ---------         ---------

<S>                                                    <C>               <C>      
INTEREST INCOME                                        $  15,350         $  12,038
                                                       ---------         ---------

OPERATING EXPENSES:
     Management fees - general partner (Note 4)          123,240           131,663
     General and administrative (Note 4)                  18,192            14,214
     Legal and accounting (Note 4)                        51,362            44,483
     Interest (Notes 3 and 4)                            205,906           252,781
                                                       ---------         ---------

         Total operating expenses                        398,700           443,141
                                                       ---------         ---------

LOSS FROM OPERATIONS                                    (383,350)         (431,103)

DISTRIBUTIONS FROM LIMITED
     PARTNERSHIPS RECOGNIZED
     AS INCOME                                           117,568           133,856

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

NET LOSS                                               $(173,782)        $(260,869)
                                                       =========         =========

NET LOSS PER LIMITED PARTNERSHIP INTEREST              $     (14)        $     (21)
                                                       =========         =========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
<PAGE>   5
                       STATEMENTS OF PARTNERS' DEFICIENCY
                        THREE MONTHS ENDED MARCH 31, 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 three months
          ended March 31, 1998                      (1,738)           (172,044)           (173,782)
                                               -----------         -----------         -----------

      DEFICIENCY, March 31, 1998               $  (308,343)        $(5,451,309)        $(5,759,652)
                                               ===========         ===========         ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
<PAGE>   6
                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                         1998               1997
                                                                      -----------         -----------
<S>                                                                   <C>                <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net  loss                                                      $  (173,782)        $  (260,869)
    Adjustments to reconcile net loss to net
    cash provided by operating activities:
    Equity in income of limited partnerships                             (100,000)            (46,000)
    Amortization of acquisition costs                                       8,000               9,622
    Increase in accrued interest payable                                  205,906             252,781
    Increase in accrued fees and expenses due general partners             73,241              81,665
    Increase (decrease) in accounts payable                               333,077              (4,490)
                                                                      -----------         -----------

    Net cash provided by operating activities                             346,442              32,709
                                                                      -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Distributions from limited partnerships
    recognized as a return of capital                                          --              29,101
                                                                      -----------         -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                 346,442              61,810

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

CASH AND CASH EQUIVALENTS, END OF PERIOD                              $ 1,508,840         $ 1,014,286
                                                                      ===========         ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   7



                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                 MARCH 31, 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 March 31, 1998 and the results of operations and changes
       in cash flows for the three 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)

                                 MARCH 31, 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)

                                 MARCH 31, 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 three months ended March 31, 1998: 

<TABLE>

              <S>                                               <C>        
              Balance, beginning of period                       $13,409,054
              Amortization of acquisition costs                       (8,000)
              Equity in income of limited partnerships               100,000
                                                                 -----------

              Balance, end of period                             $13,501,054
                                                                 ===========
</TABLE>

      The following are unaudited combined estimated statements of operations
      for the three months ended March 31, 1998 and 1997 for the limited
      partnerships in which the Partnership has investments:

<TABLE>
<CAPTION>

                                  Three months        Three months
                                      ended               ended
                                 March 31, 1998      March 31, 1997
                                   -----------         -----------
      <S>                          <C>                 <C>        
      INCOME
         Rental and Other          $ 4,408,000         $ 4,484,000
                                   -----------         -----------

      EXPENSES
         Depreciation                  860,000             883,000
         Interest                      862,000             910,000
         Operating                   2,809,000           2,982,000
                                   -----------         -----------

             Total expenses          4,531,000           4,775,000
                                   -----------         -----------

      NET LOSS                     $  (123,000)        $  (291,000)
                                   ===========         ===========
</TABLE>



                                        7


<PAGE>   10


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 1998


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

       Under recent adopted law and policy, HUD has determined not to renew HAP
       contracts on a long term basis on the 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 an affiliate 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 partner 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 partner 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. As of March 31,
       1998, the REIT had completed buy-out negotiations with a majority of the
       general partners of the local limited partnerships it proposes to
       purchase.

       A proxy is contemplated to be 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 transaction.



                                        8


<PAGE>   11


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 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 March 31, 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)

                                 MARCH 31, 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)

                                 MARCH 31, 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 $123,240 and $131,663 for the three
       months ended March 31, 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 March 31, 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. Effective January 1, 1995, the interest rate for
       two notes totalling $1,500,000 changed from 9.5 percent to 12.5 percent
       per the terms of the notes, and the note holders accepted a reduced
       payment of $1,000,000 in full satisfaction of all obligations in 1997 in
       connection with the sale of the related property. 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)

                                 MARCH 31, 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 $51,362 and $44,483
       for the three months ended March 31, 1998 and 1997, respectively. General
       and administrative expenses were $18,192 and $14,214 for the periods
       ended March 31, 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 recent adopted law and policy, HUD has determined not to renew HAP
       contracts on a long term basis on the 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



                                       12


<PAGE>   15


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 1998


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

       RESULTS OF OPERATION (CONTINUED)

       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 an affiliate 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 partner 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 partner 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. As of March 31,
       1998, the REIT had completed buy-out negotiations with a majority of the
       general partners of the local limited partnerships it proposes to
       purchase.

       A proxy is contemplated to be 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 transaction.



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<PAGE>   16


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 1998


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of March 31, 1998, 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) No reports on Form 8-K were filed during the quarter ended March 31,
           1998.




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<PAGE>   17


                            HOUSING PROGRAMS LIMITED
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 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/ BRUCE NELSON
                                        --------------------------------------
                                        Bruce Nelson
                                        President


                                    Date: May 18, 1998
                                          --------------


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


                                    Date: May 18, 1998
                                          --------------



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