SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q



(Mark One)


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


                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005


                                       OR


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



                         Commission File Number 1-13237


                                   CHARTERMAC
         (Exact name of Registrant as specified in its Trust Agreement)


           Delaware                                              13-3949418
(State or other jurisdiction of                             (I.R.S. Employer
  incorporation or organization)                             Identification No.)

 625 Madison Avenue, New York, New York                            10022
(Address of principal executive offices)                         (Zip Code)


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


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No


Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes  X  No
                                               -----  -----


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

As of  October  31,  2005,  51,625,863  shares  of the  Registrant's  shares  of
beneficial interest were outstanding.



<PAGE>



                                TABLE OF CONTENTS

                                   CHARTERMAC

                                    FORM 10-Q

<TABLE>
<CAPTION>

                                                                                                      PAGE
<S>             <C>           <C>                                                                       <C>
PART I
                Item 1.       Financial Statements                                                       3
                Item 2.       Management's Discussion and Analysis of Financial Condition and
                                  Results of Operations                                                 22
                Item 3.       Quantitative and Qualitative Disclosures about Market Risks               37
                Item 4.       Controls and Procedures                                                   38

PART II
                Item 1.       Legal Proceedings                                                         39
                Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds               39
                Item 3.       Defaults Upon Senior Securities                                           39
                Item 4.       Submission of Matters to a Vote of Security Holders                       39
                Item 5.       Other Information                                                         39
                Item 6.       Exhibits                                                                  40

SIGNATURES                                                                                              41

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       2
<PAGE>



ITEM 1. FINANCIAL STATEMENTS

                           CHARTERMAC AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                 September 30,     December 31,
                                                                                     2005              2004
                                                                                 -------------    -------------

                                     ASSETS
<S>                                                                               <C>              <C>
Mortgage revenue bonds - at fair value                                            $ 2,074,786      $ 2,100,720
Other investments                                                                     174,841          187,506
Cash and cash equivalents - including restricted cash of $35,107 and $25,879          140,947           97,166
Deferred costs - net of amortization of $16,436 and $11,566                            21,219           28,559
Goodwill and intangible assets, net                                                   474,887          416,282
Other assets                                                                          140,804           46,392
Loan to affiliate                                                                        --              4,600
Investments held by consolidated partnerships                                       2,851,625        2,527,455
Other assets of consolidated partnerships                                             564,552          328,559
                                                                                  -----------      -----------

Total assets                                                                      $ 6,443,661      $ 5,737,239
                                                                                  ===========      ===========

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Financing arrangements                                                          $ 1,228,394      $ 1,068,428
  Preferred shares of subsidiary (subject to mandatory repurchase)                    273,500          273,500
  Notes payable                                                                       173,372          174,454
  Accounts payable, accrued expenses and other liabilities                            180,279          154,104
  Notes payable and other liabilities of consolidated partnerships                  1,487,394        1,307,093
                                                                                  -----------      -----------

Total liabilities                                                                   3,342,939        2,977,579
                                                                                  -----------      -----------

Minority interests in consolidated subsidiaries                                       270,888          271,419
                                                                                  -----------      -----------
Preferred shares of subsidiary (not subject to mandatory repurchase)                  104,000          104,000
                                                                                  -----------      -----------
Partners' interests in consolidated partnerships                                    1,725,319        1,501,519
                                                                                  -----------      -----------

Commitments and contingencies

Shareholders' equity:
  Beneficial owners' equity:
     4.4% Convertible CRA preferred shares; no par value (2,160 shares issued
        and outstanding in 2005 and none issued and outstanding in 2004)              104,726               --
     Convertible CRA shares; no par value (6,552 shares issued and
      outstanding in 2005 and 2004)                                                   106,481          108,745
     Special preferred voting shares; no par value (14,960 shares issued
      and outstanding in 2005 and 15,172 shares issued and outstanding in
                                                                         2004)            150              152
     Common shares; no par value (100,000 shares authorized; 51,842 shares
      issued and 51,601 outstanding in 2005 and 51,363 shares issued and
      51,229 outstanding in 2004)                                                     762,421          773,165
  Restricted shares granted                                                            (5,389)          (7,922)
  Treasury shares of beneficial interest - common, at cost (241 shares in
   2005 and 134 shares in 2004)                                                        (5,449)          (2,970)
  Accumulated other comprehensive income                                               37,575           11,552
                                                                                  -----------      -----------
Total shareholders' equity                                                          1,000,515          882,722
                                                                                  -----------      -----------

Total liabilities and shareholders' equity                                        $ 6,443,661      $ 5,737,239
                                                                                  ===========      ===========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                Three Months Ended             Nine Months Ended
                                                                                   September 30,                 September 30,
                                                                             ------------------------      ------------------------
                                                                                2005           2004           2005           2004
                                                                             ---------      ---------      ---------      ---------
<S>                                                                          <C>            <C>            <C>            <C>
Revenues:
  Mortgage revenue bond interest income                                      $  36,482      $  33,027      $ 110,221      $  97,365
  Other interest income                                                          4,856          3,599         12,425          5,528
  Fee income                                                                    24,369         16,529         58,952         46,445
  Other revenues                                                                 5,985          2,463         15,504          6,809
  Revenues of consolidated partnerships                                          7,349          3,766         19,403          6,556
                                                                             ---------      ---------      ---------      ---------
     Total revenues                                                             79,041         59,384        216,505        162,703
                                                                             ---------      ---------      ---------      ---------

Expenses:
  Interest expense                                                              14,758          8,297         40,598         22,424
  Interest expense of consolidated partnerships                                  6,342          6,569         19,364         13,258
  Interest expense - distributions to preferred shareholders of subsidiary       4,724          4,724         14,173         14,173
  General and administrative                                                    29,348         26,253         88,168         71,236
  Depreciation and amortization                                                 16,302          7,864         33,467         22,553
  Loss on impairment of assets                                                     803            610          1,902            610
  Other expenses of consolidated partnerships                                   14,435         10,917         40,062         19,398
                                                                             ---------      ---------      ---------      ---------
     Total expenses                                                             86,712         65,234        237,734        163,652
                                                                             ---------      ---------      ---------      ---------

Loss before other income                                                        (7,671)        (5,850)       (21,229)          (949)

Equity and other income                                                            612            611          2,062          1,731
Gain on sale of loans and repayment of mortgage revenue bonds                    3,962            566         10,886          5,863
Loss on investments held by consolidated partnerships                          (65,353)       (46,434)      (181,915)       (95,111)
                                                                             ---------      ---------      ---------      ---------

Loss before allocations and income taxes                                       (68,450)       (51,107)      (190,196)       (88,466)

Income allocated to preferred shareholders of subsidiary                        (1,557)        (1,556)        (4,669)        (2,386)
Minority interests in consolidated subsidiaries, net of tax                     (7,626)        (7,432)       (21,572)       (20,252)
Loss allocated to partners of consolidated partnerships                         91,295         70,174        255,628        141,992
                                                                             ---------      ---------      ---------      ---------

Income before income taxes                                                      13,662         10,079         39,191         30,888
Income tax benefit                                                               5,016          4,832         13,716         14,644
                                                                             ---------      ---------      ---------      ---------

Net income                                                                   $  18,678      $  14,911      $  52,907      $  45,532
                                                                             =========      =========      =========      =========

Allocation of net income to:
  4.4% Convertible CRA preferred shareholders                                $     832      $      --      $     832      $      --
  Common shareholders                                                           15,832         13,098         46,185         39,268
  Convertible CRA shareholders                                                   2,014          1,813          5,890          6,264
                                                                             ---------      ---------      =========      ---------
     Total                                                                   $  18,678      $  14,911      $  52,907      $  45,532
                                                                             =========      =========      =========      =========

Net income per share:
  Basic                                                                      $    0.31      $    0.26      $    0.90      $    0.85
                                                                             =========      =========      =========      =========
  Diluted                                                                    $    0.31      $    0.26      $    0.89      $    0.84
                                                                             =========      =========      =========      =========

Weighted average shares outstanding:
  Basic                                                                         58,059         57,708         57,927         53,794
                                                                             =========      =========      =========      =========
  Diluted                                                                       61,040         58,112         59,135         54,220
                                                                             =========      =========      =========      =========

Dividends declared per share                                                 $    0.41      $    0.41      $    1.23      $    1.16
                                                                             =========      =========      =========      =========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                       Nine months Ended
                                                                         September 30,
                                                                   ------------------------
                                                                      2005           2004
                                                                   ---------      ---------
<S>                                                                <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                      $  52,907      $  45,532
   Adjustments to reconcile net income to net cash provided by
    operating activities:
   Gain on repayment of mortgage revenue bonds                        (1,930)          (217)
   Loss on impairment of assets                                        1,902            610
   Depreciation and amortization                                      33,467         22,553
   Income allocated to preferred shareholders of subsidiary            4,669          2,386
   Income allocated to minority interests in consolidated
    subsidiaries                                                      21,572         20,252
   Non-cash compensation expense                                       5,419         10,610
   Other non-cash expense                                              3,344          2,102
   Deferred taxes                                                    (12,312)       (16,670)
   Changes in operating assets and liabilities:
    Mortgage servicing rights                                         (9,719)        (5,642)
    Mortgage loans receivable                                        (45,794)         6,333
    Loan to affiliate                                                  4,600        (15,361)
    Deferred income                                                   11,548         28,000
    Other assets                                                     (35,599)       (20,428)
    Accounts payable, accrued expenses and other liabilities             956             85
                                                                   ---------      ---------
Net cash provided by operating activities                             35,030         80,145
                                                                   ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Mortgage loans repaid                                               2,996             --
   Repayments of  mortgage revenue bonds and notes                    84,210         36,245
   Mortgage revenue bond acquisitions and fundings                  (225,159)      (239,888)
   Acquisitions, net of cash acquired                                   (290)          (919)
   Loans to Capri Capital                                             (8,011)       (84,000)
   Advances to partnerships                                          (97,181)      (133,078)
   Collection of advances to partnerships                            104,742        103,471
   Deferred investment acquisition costs                              (1,312)        (2,584)
   Decrease (increase) in cash and cash equivalents -
    restricted                                                        (8,552)           964
   Other investing activities                                        (10,625)        18,660
                                                                   ---------      ---------

Net cash used in investing activities                               (159,182)      (301,129)
                                                                   ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions to shareholders                                     (71,747)       (59,997)
   Distributions to preferred shareholders of subsidiary              (4,739)          (830)
   Distributions to Special Common Unit and Special Membership
    Unit holders                                                     (25,894)       (19,869)
   Proceeds from financing arrangements                              315,310        147,085
   Repayments of financing arrangements                             (155,360)       (73,429)
   Increase in notes payable                                          (1,082)        23,388
   Issuance of common shares                                             (93)       110,802
   Issuance of preferred subsidiary shares                                --        104,000
   Issuance of preferred shares                                      108,000             --
   Proceeds from stock options exercised                                 248            309
   Retirement of special preferred voting shares                          (2)           (10)
   Treasury stock purchases                                           (2,479)        (1,328)
   Deferred financing costs                                           (3,457)        (9,697)
                                                                   ---------      ---------

Net cash provided by financing activities                            158,705        220,424
                                                                   ---------      ---------

Net increase (decrease) in cash and cash equivalents                  34,553           (560)
                                                                   ---------      ---------

Cash and cash equivalents at the beginning of the year                71,287         58,257
                                                                   ---------      ---------

Cash and cash equivalents at the end of the period                 $ 105,840      $  57,697
                                                                   =========      =========

</TABLE>

                                   (continued)

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                         Nine months Ended
                                                                                           September 30,
                                                                                   -----------------------------
                                                                                      2005              2004
                                                                                   -----------       -----------
<S>                                                                                <C>               <C>
SUPPLEMENTAL INFORMATION:

Acquisition activity:
--------------------

   Conversion of note receivable                                                   $    70,000
   Issuance of subsidiary equity                                                         7,500
   Decrease in minority interest                                                        (4,200)
   Increase in mortgage servicing rights                                               (40,974)
   Increase in cash and cash equivalents - restricted                                     (676)
   Increase in other investments                                                        (7,787)
   Increase in goodwill                                                                (31,641)
   Increase in intangible assets                                                        (3,213)
   Increase in other assets                                                             (6,239)
   Increase in accounts payable, accrued expenses and other liabilities                  5,549
   Increase in deferred income                                                          11,391
                                                                                   -----------

Net cash paid for acquisitions                                                     $      (290)
                                                                                   ===========

Supplemental disclosure of non-cash activities relating to adoption of FIN 46R:

    Decrease in mortgage revenue bonds                                                               $    34,281
    Increase in investments held by consolidated partnerships                                         (2,394,398)
    Increase in other assets of consolidated partnerships                                               (287,410)
    Increase in notes payable and other liabilities of consolidated partnerships                       1,228,065
    Increase in partners' interests of consolidated partnerships                                       1,419,462
                                                                                                     -----------
                                                                                                     $        --
                                                                                                     ===========

Restricted share grants                                                            $     1,209       $        59
                                                                                   ===========       ===========
Conversion of SCUs to common shares                                                $     3,271       $    17,789
                                                                                   ===========       ===========
Issuance of SMUs in exchange for investment                                        $    11,576
                                                                                   ===========

</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



NOTE 1 - BASIS OF PRESENTATION

The  condensed   consolidated  financial  statements  include  the  accounts  of
CharterMac,  its wholly owned and majority owned  subsidiary  statutory  trusts,
other  non-trust  subsidiary  companies it controls  and  entities  consolidated
pursuant to the adoption of FASB  Interpretation  No. 46(R) ("FIN  46(R)").  All
intercompany  accounts and transactions  have been eliminated in  consolidation.
Unless  otherwise  indicated,  "the Company",  "we" and "us", as used throughout
this document, refers to CharterMac and its consolidated  subsidiaries.  For the
entities identified throughout this document as "consolidated partnerships", the
financial information included is as of and for the periods ended June 30, 2005,
the latest practical date available. As we began consolidating such partnerships
upon our adoption of FIN 46(R) as of March 31, 2004,  the operating  results for
the  first  nine  months  of 2004  only  include  those  of  these  consolidated
partnerships for a six-month period.

The accompanying  interim financial statements have been prepared without audit.
In the opinion of management,  the financial  statements contain all adjustments
(consisting of only normal  recurring  adjustments)  necessary to present fairly
the  financial  statements  of the interim  periods.  However,  given the highly
seasonal nature of our business,  the operating  results for the interim periods
may not be indicative of the results for the full year.

Certain  information and footnote  disclosures  normally  included in the annual
consolidated   financial  statements  prepared  in  accordance  with  accounting
principles generally accepted in the United States of America ("GAAP") have been
condensed  or  omitted.  It  is  suggested  that  these  condensed  consolidated
financial  statements be read in  conjunction  with the  consolidated  financial
statements  and  notes  thereto  included  in our Form  10-K for the year  ended
December 31, 2004.

Our annual report on Form 10-K for the year ended December 31, 2004,  contains a
summary of our  significant  accounting  policies.  There have been no  material
changes to these  items since  December  31,  2004,  nor have there been any new
accounting  pronouncements pending adoption that would have a significant impact
on our condensed consolidated financial statements.

We are responsible for the unaudited condensed consolidated financial statements
included in this document.  Our condensed  consolidated financial statements are
prepared  on the  accrual  basis of  accounting  in  accordance  with GAAP.  The
preparation of financial  statements in conformity with GAAP requires us to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the  financial  statements  as well as the  reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Certain  amounts from prior years have been  reclassified to conform to the 2005
presentation,  including the  reclassification  of deferred charges and deferred
revenue  accounts  associated with our mortgage  revenue bond portfolio that are
now incorporated  within the calculation of unrealized gain on investments.  The
reclassification  for  December  31,  2004,  reduced  deferred  charges by $27.9
million,  reduced deferred  revenues by $10.6 million,  and reduced  accumulated
other comprehensive income by $17.3 million (see Note 13).

NOTE 2 - ACQUISITIONS

In the first  quarter of 2005,  we purchased  the  remaining  13% of  CharterMac
Mortgage Capital  Corporation  ("CMC") that we had not previously owned and made
the final payments under the terms of the original purchase agreement. The total
purchase  price of these two items was $7.9  million,  $7.5  million of which we
paid in cash. This transaction resulted in $3.6 million of additional goodwill.

Effective  March 1, 2005, we purchased 100% of the ownership  interests of Capri
Capital  Limited  Partnership  ("CCLP").  The initial  purchase  price was $70.0
million plus $1.8 million of acquisition costs. Subsequently, the sellers earned
$15.0 million of additional consideration based on the 2004 financial results of
CCLP's mortgage  banking  business.  The initial purchase price of $70.0 million
was  paid  via  conversion  into  equity  of an  existing  loan to CCLP  and its
affiliates  (collectively "Capri") (see Note 4). Of the additional $15.0 million
contingent  consideration,  we issued  subsidiary  equity  units for half of the
amount (see Note 9), and paid all but  approximately  $1.7  million  (subject to
contractual  hold backs) of the balance in cash.  Operations of CCLP were merged
into those of CMC.

The  acquisition of CCLP was accounted for as a purchase and,  accordingly,  the
results of  operations  are  included in the  condensed  consolidated  financial
statements from the  acquisition  date. We allocated our cost of the acquisition
on the basis of the estimated fair values of the assets acquired and liabilities
assumed.  The excess of the purchase price over the net of the amounts  assigned
to the assets  acquired and  liabilities  assumed was  recognized as goodwill of
approximately $28.9 million. Certain allocations are preliminary as of September
30, 2005, and may be refined as we gather further information.


                                       7
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



Pro forma financial  results for CCLP are not presented,  as the acquisition was
not material to our assets, revenues or net income.

NOTE 3 - MORTGAGE REVENUE BONDS

The following table summarizes our mortgage revenue bond portfolio:

<TABLE>
<CAPTION>

                                                September 30,       December 31,
             (In thousands)                         2005                2004
------------------------------------------      -------------       -----------
<S>                                              <C>                <C>
Unamortized cost basis                           $ 2,247,966        $ 2,116,213
Gross unrealized gains                                56,583             41,643
Gross unrealized losses                              (18,589)           (22,849)
                                                 -----------        -----------
Subtotal/fair value                                2,285,960          2,135,007
  Less: eliminations (1)                            (211,174)           (34,287)
                                                 -----------        -----------
Total fair value per balance sheet               $ 2,074,786        $ 2,100,720
                                                 ===========        ===========

</TABLE>

(1)  These bonds are either  recorded as  liabilities  on the balance  sheets of
     certain  consolidated  partnerships  or are recorded as liabilities of real
     estate owned and are therefore eliminated in consolidation.

The fair  value  and gross  unrealized  losses of our  mortgage  revenue  bonds,
aggregated  by length of time that  individual  bonds have been in a  continuous
unrealized  loss  position,  at September  30, 2005,  is summarized in the table
below:

<TABLE>
<CAPTION>

                           Less than       12 Months
(Dollars in thousands)     12 Months        or More          Total
-----------------------   -----------     -----------      ----------
<S>                        <C>              <C>             <C>
Number of bonds                  58              76             134
Fair value                 $326,893         573,768         900,661
Gross unrealized loss      $  7,253          11,336          18,589

</TABLE>

The unrealized  losses related to these mortgage revenue bonds are due primarily
to changes in interest  rates,  in that we calculate  present  values based upon
future  cash flows from the bonds and  discount  these cash flows at the current
rate on our  recent  bond  issuances;  as  rates  rise,  the  fair  value of our
portfolio  decreases.  We have the  intent and  ability  to hold these  bonds to
recovery  and  have  therefore  concluded  that  these  declines  in  value  are
temporary.

The following  summarizes the maturity dates of our mortgage  revenue bonds, all
of which have fixed interest rates:

<TABLE>
<CAPTION>

                                                                           Weighted
                                           Outstanding                      Average
         (In thousands)                    Bond Amount     Fair Value    Interest Rate
----------------------------------         -----------     ----------    -------------
<S>                                        <C>             <C>                <C>
Due in less than one year                  $   13,611      $   12,031         8.52%
Due between one and five years                 19,602          19,443         6.20
Due after five years                        2,215,288       2,254,486         6.64
                                           ----------      ----------         ----
Total / Weighted Average                    2,248,501       2,285,960         6.65%
                                                                              ====
   Less: eliminations (1)                    (223,125)       (211,174)
                                           ----------      ----------
Total                                      $2,025,376      $2,074,786
                                           ==========      ==========

</TABLE>

(1)   These bonds are either  recorded as  liabilities  on the balance sheets of
      certain  consolidated  partnerships or are recorded as liabilities of real
      estate owned and are therefore eliminated in consolidation.


                                       8
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



The following table summarizes our acquisition  activity and additional fundings
to  previously  acquired  mortgage  revenue  bonds  for the  nine  months  ended
September 30, 2005.

<TABLE>
<CAPTION>

                                                            Weighted         Weighted
                                                             Average          Average
                                           Outstanding    Construction       Permanent
         (In thousands)                    Bond Amount    Interest Rate    Interest Rate
----------------------------------         -----------    -------------    -------------
<S>                                        <C>                <C>              <C>
 Construction/rehabilitation properties    $  213,608         5.68%            6.42%
 Additional funding of existing bonds      $   11,551         5.42%            6.61%

</TABLE>

During the nine months ended September 30, 2005,  eleven mortgage  revenue bonds
were repaid  generating net proceeds of approximately  $65.5 million.  The bonds
had an aggregate net book value of approximately  $63.6 million,  resulting in a
gain of approximately $1.9 million.

At September 30, 2005, $2.2 billion of mortgage  revenue bonds were  securitized
or pledged as collateral for our borrowing facilities.  Fourteen of these bonds,
with  a  fair  value  of  approximately   $177.5  million,   are  eliminated  in
consolidation as noted in the tables above.

In May 2005,  an affiliate of ours  foreclosed  upon the  properties  underlying
three of our mortgage  revenue  bonds which had an aggregate  carrying  value of
$34.5 million as of September  30, 2005.  We have obtained  valuations as of the
foreclosure date indicating that the fair values of the properties are in excess
of our carrying amounts. As a result, management has concluded that there was no
impairment  related  to  these  foreclosures.  We  are  actively  marketing  the
properties  for sale and, as such,  the properties are classified as Real Estate
Owned - Held for Sale within Other Assets on the condensed  consolidated balance
sheet.

In the third  quarter of 2005,  we agreed in  principle to revise the terms of a
mortgage  revenue  bond.  In connection  with this  agreement,  we recognized an
impairment of the asset and recorded a charge of $803,000.

See also Note 12 regarding  the status of other  mortgage  revenue  bonds in our
portfolio  for  which  we have  assumed  the  general  partner  interest  in the
associated  property-level  partnership and the impairment charge related to one
of those bonds.

NOTE 4 - OTHER INVESTMENTS

Investments other than mortgage revenue bonds consisted of:

<TABLE>
<CAPTION>

                                                         September 30,   December 31,
                (In thousands)                               2005            2004
--------------------------------------------------       ------------    -----------
<S>                                                        <C>            <C>
Investment in equity interests in LIHTC properties         $ 32,331       $ 40,132
Investment in properties under development                    3,397          3,157
Investment in ARCap                                          19,054         19,054
Capri loans and preferred stock                              26,092         84,000
Mortgage loans receivable                                    73,274         27,480
Other investments                                            20,693         13,683
                                                           --------       --------
   Total other investments                                 $174,841       $187,506
                                                           ========       ========

</TABLE>

In July 2004, our subsidiary provided an interim loan of $84.0 million ("Interim
Loan") to Capri,  which bore interest at a rate of 11.5% per year and matured on
January 15, 2005.  In the first  quarter of 2005,  we extended and converted the
loan,  adding $6.0  million to the loan  amount.  Upon  conversion,  we held two
participating  loans,  one of which allowed us to  participate in the cash flows
of, and in turn was  convertible  into a 100%  ownership  interest in, CCLP. The
other allows us to participate  in the cash flows of, and is convertible  into a
49%  ownership  interest  in, Capri  Capital  Advisors  ("CCA"),  a pension fund
advisory business.  In the first quarter of 2005, we converted the CCLP loan and
acquired the business as an addition to our Mortgage  Banking  segment (see Note
2).  Management  currently  expects  to  convert  the CCA  loan  into an  equity
ownership prior to the end of the loan term, no later than August 2006.


                                       9
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



In August 2005, in connection  with an acquisition  CCA  consummated,  we issued
approximately  $4.1  million of  subsidiary  equity (see Note 9) and  received a
preferred  interest in CCA. In addition,  we have  advanced  approximately  $2.0
million to CCA through  September 30, 2005, in connection with this acquisition.
The preferred interest and advances earn a 10.0% rate of return.

"Other investments" includes $5.0 million invested in a fund sponsored by CCA.

NOTE 5 - GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets consisted of the following:

<TABLE>
<CAPTION>

                                                    September 30,      December 31,
        (In thousands)                                  2005              2004
------------------------------                      ------------       -----------
<S>                                                   <C>               <C>
Goodwill                                              $237,378          $206,397
Mortgage servicing rights, net                          69,413            32,366
Other intangible assets, net                           168,096           177,519
                                                      --------          --------

Total                                                 $474,887          $416,282
                                                      ========          ========

</TABLE>

A. GOODWILL

The following table provides information regarding goodwill by segment:

<TABLE>
<CAPTION>

                                            Fund         Mortgage
       (In thousands)                    Management      Banking        Total
-----------------------------            ----------     ---------     ---------
<S>                                      <C>            <C>           <C>
Balance at December 31, 2004             $ 200,153      $   6,244     $ 206,397
Additions (see Note 2)                        --           32,486        32,486
Reductions                                  (1,505)          --          (1,505)
                                         ---------      ---------     ---------
Balance at September 30, 2005            $ 198,648      $  38,730     $ 237,378
                                         =========      =========     =========

</TABLE>

The reduction in Fund  Management  goodwill  pertained to the conversion of SCUs
(see Note 9), the deferred tax impact of which served to  effectively  lower the
purchase price of Related Capital Company LLC ("RCC").

The increase in Mortgage Banking goodwill relates to the acquisition of CCLP and
the purchase of the remainder of CMC (see Note 2).


                                       10
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



B. OTHER INTANGIBLE ASSETS

The components of other identified intangible assets are as follows:

<TABLE>
<CAPTION>

                                         Estimated
                                           Useful
                                            Life              Gross                  Accumulated
              (In thousands)             (in Years)      Carrying Amount             Amortization                     Net
----------------------------------------- --------- -------------------------  -------------------------  -------------------------
                                                    September 30, December 31, September 30, December 31, September 30, December 31,
                                                        2005         2004          2005         2004          2005         2004
                                                    ------------  -----------  ------------  -----------  ------------  -----------
<S>                                         <C>       <C>           <C>          <C>           <C>           <C>          <C>
Amortized identified intangible assets:
  Trademarks and trade names                21.0      $ 25,100      $ 25,100     $  2,234      $  1,338      $ 22,866     $ 23,762
  Partnership service contracts              9.4        47,300        47,300        9,453         5,661        37,847       41,639
  Transactional relationships               16.7       103,000       103,000       15,757         9,436        87,243       93,564
  General partner interests                  9.0         5,100         5,100        1,059           634         4,041        4,466
  Joint venture developer relationships      5.0         4,800         4,800        1,795         1,075         3,005        3,725
  Mortgage banking broker relationships      5.0         1,080            --          126            --           954           --
  Other identified intangibles               9.3         4,427         4,427        3,060         2,703         1,367        1,724
                                            ----      --------      --------     --------      --------      --------     --------
Subtotal/weighted average life              14.7       190,807       189,727       33,484        20,847       157,323      168,880
                                            ====

Unamortized identified
  intangible assets:
  Mortgage banking licenses and approvals               10,773         8,639           --            --        10,773        8,639
                                                      --------      --------     --------      --------      --------     --------

Total identified intangible assets                    $201,580      $198,366     $ 33,484      $ 20,847      $168,096     $177,519
                                                      ========      ========     ========      ========      ========     ========

                                                                                   2005          2004
                                                                                 --------      --------
Amortization expense recorded
  for the nine months ended September 30,                                        $ 12,637      $ 12,511
                                                                                 ========      ========

</TABLE>

The amortization of "other identified  intangibles"  (approximately $477,000 per
year) is included as a reduction  to mortgage  revenue bond  interest  income as
they pertain to the acquisition of such bond investments.

NOTE 6 - FINANCING ARRANGEMENTS AND NOTES PAYABLE

In March 2005, we terminated our $100.0 million  fixed-rate  securitization  and
remarketed the borrowings under the Merrill Lynch P-FLOATs/RITESSM program.

Our $75.0 million  secured  revolving  tax-exempt bond warehouse line expired on
March 31, 2005. There were no outstanding borrowings when it expired.

Our RCC warehouse line was extended until October 2006. The terms of the renewed
line are  similar to  previous  terms  except that the rate was reduced to LIBOR
plus 1.70% from LIBOR plus 2.00%.

Our $91.0 million Capri  acquisition  line was extended  pending its replacement
with a new facility from the same lender.

NOTE 7 - DERIVATIVE INSTRUMENTS

As of September 30, 2005, we had interest rate swaps with an aggregate  notional
amount  of  $589.3  million,  which are  designated  as cash flow  hedges on the
variable interest payments on our floating rate securitizations. These swaps are
recorded at fair market  value,  with changes in fair market  value  recorded in
accumulated other comprehensive income to the extent the hedges are effective in
achieving offsetting cash flows.

We entered into our first swap with a notional  amount of $50.0 million in 2001.
We entered into several  additional swap agreements  during 2003 and 2004, which
had  inception  dates of  January  2005 and  notional  amounts  totaling  $450.0
million.  We also entered into seven swaps with  aggregate  notional  amounts of
approximately  $89.3 million during 2004 and 2005, which went into effect in the
same periods.  During the period between the dates we entered into the swaps and
the effective dates, we measured their effectiveness using the hypothetical swap
method.  There was no ineffectiveness in the hedging  relationship of any of our
swaps during the nine months ended September 30, 2005.


                                       11
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



We expect  all of the swaps will be highly  effective  in  achieving  offsetting
changes in cash flows throughout their terms.

At September  30,  2005,  those  interest  rate swaps for which we were in a net
liability position were recorded in accounts payable, accrued expenses and other
liabilities in the amount of $5.6 million. Those swaps for which we are in a net
asset  position  are  recorded  in other  assets in the amount of $4.6  million.
Interest  expense includes  approximately  $2.0 million and $4.9 million for the
three and nine months ended September 30, 2005, respectively,  and approximately
$356,000  and $1.4  million for the three and nine months  ended  September  30,
2004, respectively, for amounts paid or payable under the swap agreements.

We estimate that  approximately $2.3 million of the net unrealized loss included
in accumulated  other  comprehensive  income will reduce interest expense within
the next twelve months.

NOTE 8 - ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

Accounts  payable,  accrued  expenses  and other  liabilities  consisted  of the
following:

<TABLE>
<CAPTION>

                                              September 30,       December 31,
         (In thousands)                           2005                2004
---------------------------------             ------------        ------------
<S>                                             <C>                 <C>
Deferred income                                 $ 69,309            $ 48,157
Distributions payable                             39,771              38,859
Deferred taxes                                    14,463              29,898
Other                                             56,736              37,190
                                                --------            --------

Total                                           $180,279            $154,104
                                                ========            ========

</TABLE>

NOTE 9 - MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES

Minority interests in consolidated subsidiaries consisted of the following:

<TABLE>
<CAPTION>

                                              September 30,       December 31,
         (In thousands)                           2005                2004
---------------------------------             ------------       -------------
<S>                                             <C>                 <C>
Convertible Special Common Units
   ("SCUs") of a subsidiary                     $259,362            $267,025
Convertible Special Membership
   Units ("SMUs") of a subsidiary                 11,526                  --
CMC                                                   --               4,394
                                                --------            --------

Total                                           $270,888            $271,419
                                                ========            ========

</TABLE>

Income allocated to minority interests was as follows:

<TABLE>
<CAPTION>

                                   Three Months                 Nine months
                                      Ended                        Ended
                                   September 30,               September 30,
                              ----------------------      ----------------------
(in thousands)                  2005          2004          2005          2004
                              --------      --------      --------      --------
<S>                           <C>           <C>           <C>           <C>
Convertible SCUs              $  7,467      $  7,577      $ 21,358      $ 20,032
Convertible SMUs                   159            --           214            --
CMC                                 --          (145)           --           220
                              --------      --------      --------      --------

Total                         $  7,626      $  7,432      $ 21,572      $ 20,252
                              ========      ========      ========      ========

</TABLE>

A majority  of the  convertible  SMUs were  issued in  connection  with the CCLP
acquisition  and the  minority  interest in CMC was  purchased  during the first
quarter of 2005 (See Note 2).  Additional  SMUs were issued in connection with a
preferred investment in CCA (see Note 4).


                                       12
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



In the first nine months of 2005,  the  holders of  approximately  252,000  SCUs
converted the units to an equivalent  number of common  shares,  and the related
special preferred voting shares were redeemed at par.

NOTE 10 - SHAREHOLDERS' EQUITY

In July 2005,  we issued  approximately  2.2 million 4.4%  Cumulative  Perpetual
Convertible  Community  Reinvestment Act Preferred Shares ("4.4% Convertible CRA
Preferred  Shares") for gross proceeds of $108.0  million.  Net of  underwriters
fees and  expenses,  our net proceeds were  approximately  $104.7  million.  The
shares  carry a  cumulative  preferred  4.4% return  based upon the  liquidation
amount  of $50 per  share  and have no stated  maturity.  Beginning  July  2008,
holders of the shares may convert  them into  approximately  3.9 million  common
shares,  and we may also  redeem the shares at our  option.  The shares are also
subject to remarketing  provisions  beginning in July 2015. These shares have no
voting rights. Meridian Investments acted as placement agent for this offering.

NOTE 11 - RELATED PARTY TRANSACTIONS

General and administrative expense includes shared services fees paid or payable
to The Related Companies,  L.P. ("TRCLP"), a company controlled by our chairman.
These fees  totaled  $122,000  and  $392,000 for the three and nine months ended
September  30,  2005,  respectively,  and $1.2  million and $3.1 million for the
three and nine months ended September 30, 2004, respectively.

In  addition,  a  subsidiary  of  TRCLP  earned  fees  for  performing  property
management  services for various  properties  held in investment  funds which we
manage.  These  fees,  which are  included  in other  expenses  of  consolidated
partnerships,  totaled approximately $839,000 and $2.2 million for the three and
nine months ended September 30, 2005,  respectively,  and approximately $604,000
and $1.2  million  for the three  and nine  months  ended  September  30,  2004,
respectively.

We collect asset management, incentive management and expense reimbursement fees
from American  Mortgage  Acceptance  Company ("AMAC"),  an affiliated,  publicly
traded  real  estate  investment  trust that we manage.  These  fees,  which are
included in fund sponsorship income, totaled approximately $2.0 million and $3.5
million for the three and nine months ended  September  30, 2005,  respectively,
and approximately  $611,000 and $1.8 million for the three and nine months ended
September 30, 2004, respectively.

In June 2004,  we entered  into an  unsecured  revolving  credit  facility  (the
"Revolving  Facility")  with AMAC to  provide  it up to $20.0  million,  bearing
interest  at  LIBOR  plus  3.0%,  which  is to be used by AMAC to  purchase  new
investments.  The  Revolving  Facility  expires in June 2006.  In the opinion of
management,  the  terms  of this  facility  are  consistent  with  those of loan
transactions  with  independent  third parties.  As of September 30, 2005, there
were no outstanding advances to AMAC under this facility. Interest income earned
from  this  facility  for  the  nine  months  ended   September  30,  2005,  was
approximately  $73,000,  all of which was recorded in the first  quarter of 2005
and  for the  three  and  nine  months  ended  September  31,  2004,  there  was
approximately $26,000 in income earned.

NOTE 12 - PRS / CRG

PRS Companies  ("PRS") and Capitol  Realty Group ("CRG") are sponsors of certain
Low-Income Housing Tax Credit ("LIHTC")  partnerships for which we hold mortgage
revenue  bonds  and/or to which  investment  funds we sponsor  have  contributed
equity. Information with respect to these partnerships is set forth in the table
below. A construction company affiliate of PRS also served as general contractor
for those partnerships.

After PRS approached us to discuss  financial  difficulties in its  construction
company,  we conducted a thorough review regarding its financial  condition (and
that of its  guarantors) and determined  that the PRS  construction  company was
experiencing significant financial difficulties, so that the transfer of control
of the PRS and CRG general partnership  interests to entities affiliated with us
- and the orderly termination of unfulfilled construction contracts - was in our
best  interest.  We could then  install  new  general  contractors  to  complete
construction and capable property  managers to complete  leasing.  We determined
that, if we did not obtain control of the  partnerships,  a bankruptcy filing by
or against PRS would be adverse to our  interests as it would  likely  result in
the reduction or cessation of bond payments, could possibly endanger our various
tax  credit  equity  investments,  and would  result  in delays in  construction
completion, the financial impact of which could not be quantified.

In April 2005, affiliates of ours acquired by assignment the general partnership
interests owned by PRS in seven of the "PRS Partnerships" indicated in the table
below.  We  sought  control  of the  PRS  Partnerships  because  PRS'  financial
difficulties  caused  construction  finance  shortfalls  that created  liquidity
problems for those partnerships. As a result, settlement agreements were entered
into  by  and  amongst  the  PRS  Partnerships,  the  PRS  project  owners,  the
guarantors,  various  affiliates  of ours and  other  third  parties  (the  "PRS


                                       13
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



Settlements"). The PRS Settlements provide for, among other things:

o    the termination of the PRS construction contracts;
o    the settlement of construction claims and release of liens;
o    the termination of management agreements for the PRS projects;
o    the assignment of the development agreements to our affiliates;
o    the  assignment  of the interest in the general  partner of each of the PRS
     Partnerships to our affiliates;
o    the termination of PRS' obligations under the payment and performance bonds
     for each project;  and
o    mutual releases by and amongst the PRS Settlement parties.

The PRS Settlement  Agreements are, in essence, a complete cessation of business
between us and PRS.

Also in April, affiliates of ours acquired by assignment the general partnership
interests owned by CRG in five of the "CRG Partnerships"  indicated in the table
below.  We  sought  control  of  the  CRG  Partnerships   because  PRS  was  the
construction  general  contractor  for  those  partnerships  and PRS'  financial
difficulties caused construction  finance shortfalls that have created liquidity
problems for those  partnerships.  We entered into settlement  agreements by and
amongst the CRG Partnerships,  the CRG project owners,  the guarantors,  various
affiliates  of ours and other third  parties  (the "CRG  Settlements").  The CRG
Settlement Agreements provide for, among other things:

o    the termination of the PRS construction contracts;
o    the  assignment of each of the CRG project's  development  agreements to an
     affiliate of CRG subject to reassignment to CRG as discussed below;
o    a $5.0 million non-revolving line of credit from us to be used to stabilize
     the CRG  Partnerships  which is  collateralized  by  contractual  rights to
     development  fees to CRG and its  affiliates  to  receive  fees  and  other
     consideration.  This  includes  interim  loans to  satisfy  amounts  due to
     subcontractors,  material  suppliers and other vendors providing  materials
     and/or  services on the CRG projects  through  September  30, 2005,  we had
     advanced $2.2 million on this line of credit;
o    reaffirmation of various guarantee agreements;
o    the assignment of the interests in the CRG Partnerships to our affiliates;
o    an  operating  agreement,  whereby an affiliate of CRG will operate the CRG
     projects  subject to our discretion;  and
o    various releases by and amongst the CRG Settlement  parties,  excluding any
     reaffirmation of guaranty  agreements and any other exclusions set forth in
     the CRG Settlement Agreements.

The  CRG  Settlement  Agreements  also  provide  that  the  general  partnership
interests  will be returned to CRG if they provide us with a letter of credit to
secure advances made and/or such advances are paid in full by a date certain.

Additionally,  there were two other projects, for which PRS was the construction
company--O'Fallon and Peine Lakes (the "GCG Partnerships").  With respect to the
O'Fallon  project,  in August 2005 the Gundaker  Commercial  Group,  Inc and its
affiliates  ("GCG")  and our  affiliates  negotiated  a letter of  intent  which
provides for:

o    additional mortgage debt financing by an affiliate of ours;
o    the  assignment  of a portion of our  affiliates  interest in the  O'Fallon
     Partnership to an affiliate of GCG;
o    the execution of a new construction contract; and
o    amendments to several fee agreements.

With  respect  to the  Peine  Lakes  project,  it  continues  to move  along its
construction phase and is now approximately 90% complete. GCG has agreed to fund
approximately  $1.0  million  into  the  Peine  Partnership  to aid in any  cost
overruns  and any  amounts due and owing as a result of the action of PRS on the
project.

In addition  to the PRS  Partnerships,  CRG  Partnerships  and CGC  Partnerships
described  above, we own bonds that finance other  partnerships in which PRS was
the  general  partner  or in which CRG is the  general  partner  and PRS was the
construction  general contractor.  These partnerships are also summarized in the
table below.  On those deals in which our funds are not the equity  sponsor,  we
will  look  to  the  respective  equity  investor  to  take  control,   complete
construction and stabilize the partnerships.  Absent a satisfactory  resolution,
we may  exercise our  available  remedies to protect our  investments.  In those
situations, there is substantial equity in the form of LIHTCs in addition to the
real estate, both of which are our collateral.

There can be no assurance  that a bankruptcy by or against PRS or its affiliates
may not give rise to additional claims concerning these partnerships.


                                       14
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



Our potential exposure falls into three categories as follows:

o    CASH REQUIRED TO BRING THE PROPERTIES TO BREAK-EVEN OPERATION - Our current
     estimate of the maximum amount of cash that we may need to provide to bring
     the  properties  to  break-even  operation,  taking into account  delays in
     construction,  is approximately $10.0 million.  This estimate is based upon
     our initial  analyses and  information  provided by the developer,  and may
     increase due to unforeseen construction delays and other factors, while the
     amount may be reduced by additional  contributions  by investors (which may
     generate   additional  tax  credits),   reserves  at  the  property  level,
     syndication  of state tax credits or other factors.  Through  September 30,
     2005, we had advanced $5.4 million to the partnerships. These advances, and
     additional loans, will be assessed  periodically for collectibility and the
     impact on the potential  impairment  of existing  mortgage  revenue  bonds.
     Given existing  loan-to-value  ratios and the variability of the likelihood
     of funding, we can not yet determine the ultimate amount of any such loans.
     At present, we do not anticipate that any such loans would require a charge
     to expense.

o    POTENTIAL IMPACT ON MORTGAGE REVENUE BONDS - Our current estimate, based on
     available  information,  is that  expected  cash flows from the  underlying
     properties are sufficient to provide debt service.  As a result,  we do not
     believe  that  there  is  other-than-temporary  impairment  of  any  of the
     affected bonds, except as noted below.

o    POTENTIAL COST TO PROVIDE  SPECIFIED  YIELDS - As noted in the table below,
     11 of the  partnerships  in question  are part of equity funds for which we
     are  obligated to provide  specified  yields.  As  construction  delays are
     likely  to  reduce  the  expected  yields  of  the  properties  themselves,
     performance of the funds is likely to be impacted as well. The obligations,
     however, provide for expected yields on pools of properties,  some of which
     are performing above expected levels and the funds themselves often provide
     for adjustors  that may mitigate the negative  impact that would arise from
     the   construction   delays  over  the  guarantee  period  covered  by  the
     agreements. Our current estimate given these factors, and assuming that the
     property  level   partnerships   meet  their   obligations  under  existing
     partnership  agreements,  is that no  exposure  under these  agreements  is
     probable at this time.

As a result of our analysis of the affected  properties,  we determined that the
development  of one property in the early stages of  construction  should not be
continued.  We plan to exercise our right to  foreclosure as holder of the first
mortgage  and will be able to recover  much of the funds  advanced  through  the
mortgage  revenue bond as well as take ownership of the underlying  land.  Based
upon the funds  available  to recover and the  estimated  value of the land,  we
recognized a write-down of  approximately  $1.1 million in the second quarter of
2005. This property was included in a credit enhanced RCC sponsored fund, and we
exercised a right of  substitution  to remove it from that fund and  replaced it
with other properties.

We have  consolidated  the  partnerships  for which we have  assumed the general
partnership  interests (except for the GCG  Partnerships,  which do not give our
affiliates  operational  control of the partnerships)  effective April 2005.


                                       15
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



The partnerships in question are summarized as follows:

<TABLE>
<CAPTION>

                                                                                                            (In thousands)
                                                                                                                    Fair Value of
                                    CharterMac                                                                        Mortgage
                                    Holds  or        RCC                                                 Loan         Revenue
                                    Will Hold     Sponsored    Included in                    Third     Amounts        Bonds
                                     Mortgage      Fund is        Credit         RCC         Parties   Upon Full    Oustanding at
                                     Revenue       Equity        Enhanced      Holds GP      Provided     Draw      September 30,
                        Number         Bond        Partner        Funds        Interest       Equity      Down          2005
                       --------     ----------    ----------   ------------    --------      --------  ----------   -------------
<S>                       <C>           <C>           <C>           <C>           <C>           <C>     <C>           <C>
PRS
  PARTNERSHIPS
Construction               3             3             2             2             2             1      $ 30,700      $ 23,007
Lease-Up                   8             7             4             2             4             4        91,400        89,144
Rehab                      2             2             1             1             1             1        30,400        30,251
Stabilized                 2             2            --            --            --             2        18,835        18,822
                       ----------------------------------------------------------------------------------------------------------
Subtotal PRS
  Deals                   15            14             7             5             7             8       171,335       161,224
                       ----------------------------------------------------------------------------------------------------------

CRG
  PARTNERSHIPS
Construction               2             2             2            --             2            --        17,680            --
Lease-Up                   3             3             3             2            --            --         8,300         7,897
Rehab                      3             3             3             3             3            --        71,650        69,496
Stabilized                --            --            --            --            --            --            --            --
                       ----------------------------------------------------------------------------------------------------------
Subtotal CRG
  Deals                    8             8             8             5             5            --        97,630        77,393
                       ----------------------------------------------------------------------------------------------------------

GCG
  PARTNERSHIPS
Construction               2             2             2             1            --            --        27,770        15,010
Lease-Up                  --            --            --            --            --            --            --            --
Rehab                     --            --            --            --            --            --            --            --
Stabilized                --            --            --            --            --            --            --            --
                       ----------------------------------------------------------------------------------------------------------
Subtotal GCG
  Deals                    2             2             2             1            --            --        27,770        15,010
                       ----------------------------------------------------------------------------------------------------------

Total                     25            24            17            11            12             8      $296,735      $253,627
                       ==========================================================================================================

</TABLE>

NOTE 13 - COMPREHENSIVE INCOME

Comprehensive  income for the nine months ended September 30, 2005 and 2004, was
as follows:

<TABLE>
<CAPTION>

                                                                          Nine months Ended
                                                                             September 30,
                                                                       ----------------------
                         (In thousands)                                  2005          2004
------------------------------------------------------------------     --------      --------
<S>                                                                    <C>           <C>
Net income                                                             $ 52,907      $ 45,532
Net unrealized gain (loss) on interest rate derivatives                   2,296        (4,113)
Net unrealized gain on marketable securities                                 29          --
Net unrealized gain (loss) on mortgage revenue bonds:
   Unrealized gain(loss) during the period                               25,629       (15,714)
   Reclassification adjustment for net gain included in net income       (1,930)         (217)
                                                                       --------      --------
Comprehensive income                                                   $ 78,931      $ 25,488
                                                                       ========      ========

</TABLE>


                                       16
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



NOTE 14 - EARNINGS PER SHARE

For basic EPS, the number of shares includes  common and  Convertible  Community
Reinvestment Act Preferred Shares ("Convertible CRA Shares"), as the Convertible
CRA  Shares  have the same  economic  benefits  as  common  shares,  and  income
represents  net income less  dividends  for the 4.4%  Convertible  CRA Preferred
Shares.

Diluted  EPS  is  calculated   using  the  weighted  average  number  of  shares
outstanding  during the period  plus the  additional  dilutive  effect of common
share equivalents. The dilutive effect of outstanding share options and unvested
share grants is calculated using the treasury stock method.  The dilutive effect
of 4.4% Convertible CRA Preferred Shares and our subsidiaries'  SCUs and SMUs is
calculated using the "if-converted  method". The SCUs and SMUs are antidilutive,
because while the shares are  convertible on a one-to-one  basis,  the dividends
paid are greater than the dividends paid per common share.

<TABLE>
<CAPTION>

                                         Three Months Ended September 30, 2005    Nine months Ended September 30, 2005
                                         -------------------------------------    ------------------------------------
(In thousands, except per share amounts)   Income       Shares      Per Share       Income       Shares     Per Share
----------------------------------------  --------      ------      ---------      --------      ------     ---------
<S>                                       <C>           <C>          <C>           <C>           <C>         <C>
Basic EPS                                 $17,846       58,059       $   0.31      $52,075       57,927      $   0.90
                                                                     ========                                ========
  Assumed conversion of 4.4%                  832        2,674                         832          901
   Convertible CRA Preferred Shares
Effect of other dilutive securities            --          307                          --          307
                                          -------       ------                     -------       ------
Diluted EPS                               $18,678       61,040       $   0.31      $52,907       59,135      $   0.89
                                          =======       ======       ========      =======       ======      ========

</TABLE>
<TABLE>
<CAPTION>

                                         Three Months Ended September 30, 2005    Nine months Ended September 30, 2005
                                         -------------------------------------    ------------------------------------
                                           Income       Shares      Per Share       Income       Shares     Per Share
                                          --------      ------      ---------      --------      ------     ---------
<S>                                       <C>           <C>          <C>           <C>           <C>         <C>
Basic EPS                                 $14,911       57,708       $   0.26      $45,532       53,794      $   0.85
                                                                     ========                                ========
Effect of other dilutive securities            --          404                          --          426
                                          -------       ------                     -------       ------
Diluted EPS                               $14,911       58,112       $   0.26      $45,532       54,220      $   0.84
                                          =======       ======       ========      =======       ======      ========

</TABLE>

NOTE 15 - BUSINESS SEGMENTS

We operate in four business segments:

1.   Portfolio Investing,  which includes  subsidiaries that invest in primarily
     tax-exempt  first  mortgage  revenue bonds issued by various state or local
     governments,  agencies or  authorities  and other  investments  designed to
     produce federally tax-exempt income. The mortgage revenue bonds are used to
     finance the new construction,  substantial rehabilitation,  acquisition, or
     refinancing of affordable multifamily housing throughout the United States.

2.   Fund Management, which includes:

o    Subsidiaries   that  sponsor  real  estate  equity  investment  funds  that
     primarily  invest in LIHTC  properties.  In  exchange  for  sponsoring  and
     managing  these  funds,  we receive fee income for  providing  acquisition,
     asset management, underwriting, origination and other services;
o    A subsidiary  which  provides  advisory  services to AMAC,  an  affiliated,
     publicly traded real estate investment trust; and
o    Subsidiaries that participate in credit enhancement transactions, including
     providing  credit  enhancement  for mortgage loans and providing  specified
     returns to investors in LIHTC equity funds, in exchange for fees.

3.   Mortgage  Banking,  which includes  subsidiaries that originate and service
     primarily multifamily mortgage loans on behalf of third parties, primarily:

o    Fannie Mae;
o    the Federal Home Loan Mortgage Corporation ("Freddie Mac");
o    the Federal Housing Administration ("FHA"); and
o    insurance companies and conduits.

     In exchange for these  origination  and  servicing  activities,  we receive
     origination and servicing fees.

4.   Consolidated  Partnerships,  primarily  the LIHTC  equity  funds we sponsor
     through  the  Fund  Management  segment's  subsidiaries  and  which  we are
     required to  consolidate  in  accordance  with FIN 46(R),  as well as other
     partnerships we control but in which we have virtually no equity interest.


                                       17
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



Segment results include all direct and contractual revenues and expenses of each
segment and  allocations of indirect  expenses based on specific  methodologies.
These reportable  segments are strategic  business units that primarily generate
revenue  streams  that  are  distinctly  different  and  are  generally  managed
separately.

In prior periods we had eliminated intersegment transactions from the results of
the  segment  earning  profits  from such  transactions.  We have  adjusted  our
presentation  to reflect the full  operations of each segment to better  reflect
the true operations of each business.  We have reclassified prior years' segment
results accordingly.

The following table provides more information regarding our segments:

<TABLE>
<CAPTION>

                                                       Three Months Ended             Nine months Ended
                                                          September 30,                 September 30,
                                                    ------------------------      ------------------------
                  (In thousands)                       2005           2004           2005           2004
                                                    ---------      ---------      ---------      ---------
<S>                                                 <C>            <C>            <C>            <C>
REVENUES
   Portfolio Investing                              $  43,509      $  36,558      $ 126,007      $ 103,324
   Fund Management                                     32,080         25,729         83,104         63,573
   Mortgage Banking (1)                                13,424          4,979         30,856         15,515
   Consolidated Partnerships (2)                        7,349          3,765         19,403          6,555
   Elimination of intersegment transactions           (17,321)       (11,647)       (42,865)       (26,264)
                                                    ---------      ---------      ---------      ---------
Consolidated                                        $  79,041      $  59,384      $ 216,505      $ 162,703
                                                    =========      =========      =========      =========

NET INCOME BEFORE ALLOCATIONS TO EQUITY HOLDERS
   Portfolio Investing                              $  22,740      $  25,745      $  73,278      $  73,688
   Fund Management                                      5,972            120          5,284         (5,704)
   Mortgage Banking (1)                                  (731)        (1,203)         2,975          2,236
   Consolidated Partnerships (2)                           (8)            --             (8)            --
   Elimination of intersegment transactions              (404)          (871)        (1,924)        (2,521)
                                                    ---------      ---------      ---------      ---------
Consolidated                                           27,569         23,791         79,605         67,699

   Income allocated to minority interests              (7,626)        (7,432)       (21,572)       (20,252)
   Income allocated to preferred shareholders          (6,281)        (6,280)       (18,842)       (16,559)
   Income tax benefit                                   5,016          4,832         13,716         14,644
                                                    ---------      ---------      ---------      ---------
Consolidated net income                             $  18,678      $  14,911      $  52,907      $  45,532
                                                    =========      =========      =========      =========

DEPRECIATION AND AMORTIZATION
   Portfolio Investing                              $   2,941      $     841      $   5,094      $   2,592
   Fund Management                                      4,694          4,616         13,906         13,855
   Mortgage Banking (1)                                 8,667          2,407         14,467          6,106
   Consolidated Partnerships (2)                           --             --             --             --
   Elimination of intersegment transactions                --             --             --             --
                                                    ---------      ---------      ---------      ---------

Consolidated                                        $  16,302      $   7,864      $  33,467      $  22,553
                                                    =========      =========      =========      =========

</TABLE>
<TABLE>
<CAPTION>

                                                                            September 30,      December 31,
                                                                                2005               2004
                                                                            ------------       ------------
<S>                                                                          <C>               <C>
IDENTIFIABLE ASSETS AT END OF PERIOD
   Portfolio Investing                                                       $ 5,219,732       $ 4,808,449
   Fund Management                                                               799,339           767,339
   Mortgage Banking (1)                                                          238,040            90,851
   Consolidated Partnerships (2)                                               3,416,177         2,856,014
   Elimination of intersegment balances                                       (3,229,627)       (2,785,414)
                                                                             -----------       -----------
Consolidated                                                                 $ 6,443,661       $ 5,737,239
                                                                             ===========       ===========

</TABLE>

(1) Includes CCLP beginning March 1, 2005.
(2) Consolidated  beginning March 31, 2004.


                                       18
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



NOTE 16 - COMMITMENTS AND CONTINGENCIES

FORWARD TRANSACTIONS

At September 30, 2005, our Mortgage Banking subsidiaries had forward commitments
of approximately $271.0 million for mortgages to be funded in 2005 and later. As
each lending  commitment has an associated sale  commitment,  the fair values of
these  commitments  offset  each other and,  as a result,  we record no asset or
liability.  In addition,  those  subsidiaries  had commitments to sell mortgages
totaling $197.9 million.  Approximately  $73.3 million of this amount was funded
as of September 30, 2005, and is included in Other Investments as Mortgage Loans
Receivable. The balance of approximately $124.6 million is to be funded later in
2005, with the exception of two construction  loans of $9.4 million,  which will
be funded in 2006.

We have  entered  into  transactions  to  purchase  mortgage  revenue  bonds  at
predetermined  prices  and  interest  rates,  but  only if  construction  of the
property is completed.  These forward commitments create derivative  instruments
under  SFAS No.  133,  which  have been  designated  as a cash flow hedge of the
anticipated  funding of the  mortgage  revenue  bonds and are  recorded  at fair
value,  with changes in fair value recorded in other  accumulated  comprehensive
income until the mortgage  revenue bonds are funded.  The total potential amount
we could be required to fund is $165.2 million.

Additionally,  we have certain  other bonds that we fund on an as needed  basis.
The remaining balance to be funded on these drawdown bonds is approximately $2.8
million at September 30, 2005.

MORTGAGE BANKING LOSS SHARING AGREEMENT

Under a master loss sharing agreement with Fannie Mae, we assume  responsibility
for a portion  of any loss that may  result  from  borrower  defaults,  based on
Fannie Mae loss sharing  formulas.  At September 30, 2005, all of our loans sold
to Fannie Mae consisted of Level I loans,  meaning,  in most cases,  that we are
responsible  for the first 5% of the unpaid  principal  balance and a portion of
any  additional  losses to a maximum of 20% of the original  principal  balance;
Fannie  Mae  bears  any  remaining  loss.  Pursuant  to this  agreement,  we are
responsible for funding 100% of mortgagor  delinquency  (principal and interest)
and  servicing  (taxes,  insurance and  foreclosure  costs)  advances  until the
amounts  advanced  exceed  5% of the  unpaid  principal  balance  at the date of
default. Thereafter, we may request interim loss sharing adjustments which allow
us to fund 25% of such advances until final settlement under the agreement.

Our maximum  exposure at September  30, 2005,  pursuant to this  agreement,  was
approximately $941.5 million  (representing what we would owe in accordance with
the loss sharing percentages described above if every loan defaulted),  although
this amount is not  indicative of our actual  potential  losses.  We maintain an
allowance for loan losses for loans  originated under the Fannie Mae DUS product
line at a level  that,  in  management's  judgment,  is  adequate to provide for
estimated  losses.  At September 30, 2005, that reserve was  approximately  $9.7
million,  which we believe  represents our actual potential losses at that time.
At the current time, unlike loans originated for the Fannie Mae DUS program,  we
do not share the risk of loss for loans we originate  for Freddie Mac or FHA. We
have, however, been approved to participate in a new Freddie Mae program,  which
also involves risk sharing.

Our Mortgage Banking subsidiaries maintained, as of September 30, 2005, treasury
notes of approximately $13.5 million and a money market account of approximately
$2.2  million,  which  is  included  in cash  and  cash  equivalents,  including
restricted  cash, in the condensed  consolidated  balance sheet,  to satisfy the
Fannie Mae collateral requirements of $13.0 million.

MORTGAGE POOL CREDIT INTERMEDIATION

In December 2001, we completed a credit intermediation  transaction with Merrill
Lynch Capital Services, Inc. ("MLCS"). Pursuant to the terms of the transaction,
we assumed  MLCS's first loss position on a pool of tax-exempt  weekly  variable
rate  multifamily  mortgage  loans.  TRCLP  has  provided  us with an  indemnity
covering  50% of any losses  that we incur as part of this  transaction.  As the
loans  mature or prepay,  the first loss  exposure  and the fees we receive  are
reduced.  The latest maturity date on any loan in the portfolio  occurs in 2009.
The remainder of the real estate exposure after the first loss position has been
assumed by Fannie Mae and Freddie Mac. In connection  with the  transaction,  we
have posted  collateral,  initially  in an amount equal to 50% of the first loss
amount,  which may be reduced to 40% if certain post closing conditions are met.
Our maximum  exposure  under the terms of the  transaction  as of September  30,
2005, is approximately $12.9 million.

We  performed  due  diligence  on  each  property  in  the  pool,  including  an
examination  of  loan-to-value  and debt service  coverage both on a current and
"stressed"  basis. We analyzed the portfolio on a "stressed" basis by increasing
capitalization  rates and assuming an increase in the low floater bond rate.  As
of September 30, 2005, the credit enhanced  properties are performing  according
to their  contractual  obligations  and we do not  anticipate  any  losses to be
incurred on this  guarantee.  Should our  analysis of risk of loss change in the


                                       19
<PAGE>



                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



future, a provision for probable loss might be required  pursuant to SFAS No. 5,
ACCOUNTING FOR CONTINGENCIES.

YIELD TRANSACTIONS

We have entered into several  agreements  with either IXIS  Financial  Products,
Inc. ("IXIS") or Merrill Lynch (each a "Primary Obligor") to provide agreed-upon
rates of  return  for  pools of  multifamily  properties  each  owned by a local
partnership  which  in  turn,  is  majority-owned  by a  fund  sponsored  by our
subsidiary,  Related  Capital  Company LLC ("RCC").  In return,  we have or will
receive fees,  generally at the start of each obligation period.  There are nine
agreements  to provide  the  specified  returns  through  the  construction  and
lease-up phases of the properties and there are nine other agreements to provide
the  specified  returns from the  completion  of the  construction  and lease-up
phases through the operating phase of the properties.

Total potential exposure pursuant to these transactions is approximately  $646.2
million,  assuming the funds achieve no return whatsoever.  We have analyzed the
expected operations of the underlying properties and believe there is no risk of
loss at this time as we have never yet been called upon to make  payments  under
the  guarantees.  Should our  analysis of risk of loss  change in the future,  a
provision for possible losses might be required pursuant to SFAS No. 5. The fair
value of these obligations, representing the deferral of the fee income over the
obligation  periods,  was $21.4 million as of September 30, 2005. This amount is
included in deferred income on our condensed  consolidated  balance sheet. Refer
to Note 12 regarding potential exposure under existing obligations.

Some of the property-level  partnerships have financed their properties with the
proceeds of our mortgage  revenue bonds. In these cases, the Primary Obligor has
required that those mortgage revenue bonds be deposited into a trust pursuant to
which the  mortgage  revenue  bonds were  divided  into senior and  subordinated
interests  with   approximately   50%  of  each  mortgage   revenue  bond  being
subordinated.  We have  financed  the  senior  trust  interest  and a portion of
certain of the subordinate  trust interests  using credit  enhancement  from the
Primary Obligor as part of the Merrill Lynch  P-FLOATs/RITESSM  program.  We use
the  remaining  subordinate  trust  interests as collateral in the Merrill Lynch
P-FLOATs/RITESSM program. In connection with these transactions,  we have posted
$64.4 million as collateral with a Primary Obligor in the form of either cash or
mortgage revenue bonds.

OTHER

We have entered into several transactions pursuant to the terms of which we will
provide credit support to construction lenders for project completion and Fannie
Mae conversion.  In some instances,  we have also agreed to acquire subordinated
bonds to the extent the construction  period bonds do not fully convert. We also
provide payment, operating deficit, recapture and replacement reserve guarantees
as business requirements for developers to obtain construction financing.

Our maximum aggregate  exposure relating to these  transactions is approximately
$153.0 million.

To date,  we have had minimal  exposure to losses under these  transactions  and
anticipate no material  liquidity  requirements in satisfaction of any guarantee
issued.

OTHER CONTINGENCIES

We are subject to routine litigation and administrative  proceedings  arising in
the ordinary  course of business.  Management does not believe that such matters
will have a  material  adverse  impact on our  financial  position,  results  of
operations or cash flows.

NOTE 17 - SUBSEQUENT EVENTS

During  October  2005,  Hurricane  Wilma  struck the state of  Florida.  We have
identified 12 properties in our equity sponsorship portfolio that sustained what
is expected to be major damage.  We hold mortgage  revenue bonds on three of the
properties, and the bonds had a carrying value of approximately $23.1 million as
of  September  30,  2004.  None of these  properties  are in funds  for which we
provide a specified rate of return.

In addition,  we  identified 40 other  properties  that did or may have suffered
minor damage (although we have not been able to access 12 of those  properties).
Eleven of the 40 are properties for which we hold a mortgage revenue bond.

In our  mortgage  banking  risk-sharing  portfolio,  there  are nine  properties
identified  as affected,  six of which are estimated to have damage in excess of
$25,000.


                                       20
<PAGE>


                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                   (UNAUDITED)



As with  the  storms  that  occurred  during  the  third  quarter  of 2005  (see
Management's  Discussion and Analysis - IMPACT OF HURRICANES  DURING THE QUARTER
ENDED SEPTEMBER 30, 2005),  we are unable to assess the potential  impact on the
Company at this time.

On November 8, 2005, we announced  that Stuart J. Boesky will step down from his
position  as our  Chief  Executive  Officer  and as a  member  of our  Board  of
Trustees,  effective  November 15, 2005. The Board of Trustees has appointed our
Chairman,  Stephen M. Ross, as interim Chief Executive Officer,  and has begun a
search  for a new CEO.  The Board  will  consider  both  internal  and  external
candidates.  In connection with Mr. Boesky's departure,  our President,  Marc D.
Schnitzer,  and Alan P. Hirmes,  our Chief Financial Officer and Chief Operating
Officer, will assume certain of his duties.

Pursuant to a definitive  separation and consulting  agreement,  Mr. Boesky will
serve  as a  consultant  to the  Company  for a  period  of one  year,  and  his
consulting  contract may be  terminated  by either  party.  The  separation  and
consulting agreement also contains non-compete provisions.

We will  pay Mr.  Boesky  approximately  $2.8  million  in  connection  with the
separation and consulting agreement as follows: we will pay $1.5 million in cash
and issue common  shares worth $0.8 million  during the fourth  quarter of 2005,
with the balance paid in cash during the first quarter of 2006.  The full amount
will be recorded as an expense in the fourth quarter of 2005.

Pursuant to the terms of Mr. Boesky's  separation and consulting  agreement,  we
will  also pay him  approximately  $64,000  in the  fourth  quarter  of 2004 and
approximately $175,000 in 2006 for the consulting services.  These expenses will
be recorded as incurred.

In  addition,  we will  accelerate  the vesting on  restricted  shares and share
options we had previously granted to Mr. Boesky,  resulting in a non-cash charge
of $0.4 million during the fourth quarter of 2005, and the lockup agreement with
respect to his SCUs will terminate upon his departure.


                                       21
<PAGE>



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

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

Certain   statements  made  in  this  report  may  constitute   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
These  forward-looking  statements  are not  historical  facts,  but  rather our
beliefs and expectations and are based on our current  expectations,  estimates,
projections,  beliefs and assumptions about our Company and industry. Words such
as  "anticipates,"   "expects,"   "intends,"   "plans,"   "believes,"   "seeks,"
"estimates"  and similar  expressions  are intended to identify  forward-looking
statements.  These  statements are not guarantees of future  performance and are
subject to risks,  uncertainties and other factors, some of which are beyond our
control,  are  difficult  to predict  and could cause  actual  results to differ
materially from those expressed or forecasted in the forward-looking statements.
Some of these risks include, among other things:

o    adverse changes in the real estate markets  including,  among other things,
     competition with other companies;
o    interest rate fluctuations;
o    general economic and business  conditions,  which will, among other things,
     affect the availability and credit worthiness of prospective tenants, lease
     rents and the terms and  availability of financing for properties  financed
     by mortgage revenue bonds owned by us;
o    risk of real estate development and acquisition;
o    environment/safety requirements;
o    changes in applicable laws and regulations;
o    our  tax  treatment,  the tax  treatment  of our  subsidiaries  and the tax
     treatment of our investments; and
o    risk of  default  associated  with the  mortgage  revenue  bonds  and other
     securities held by us or our subsidiaries.

These  risks  are  more  fully  described  in our Form  10-K for the year  ended
December  31,  2004.  We  caution  you not to  place  undue  reliance  on  these
forward-looking  statements,  which reflect our view only as of the date of this
report.

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

Primarily due to our adoption of FIN 46(R) as of March 31, 2004, we  consolidate
more than 110  partnerships  (predominantly  investment funds we sponsor) in our
financial statements.  The operating results for the three and nine months ended
September 30, 2005, include those of these entities,  as well as the elimination
of  transactions  between the entities and our  subsidiaries.  In 2004, only the
operating  results for the three  months ended  September 30 include  comparable
operations as we adopted this accounting standard as of March 31 of that year.

In addition,  we acquired CCLP in March 2005. Operating results in our portfolio
investing  segment prior to the  acquisition  date include  interest income on a
loan made in July 2004. Following the acquisition, operating results of CCLP are
included in our Mortgage Banking segment.

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

Three Months Ended September 30, 2005
-------------------------------------

The  following  is a  summary  of our  operations  for the  three  months  ended
September 30, 2005 and 2004:

<TABLE>
<CAPTION>

                                                 % of                        % of       % of
       (In thousands)             2005         Revenues       2004         Revenues    Change
---------------------------     --------       --------     --------       --------   --------
<S>                             <C>             <C>         <C>             <C>         <C>
Revenues                        $ 79,041        100.0%      $ 59,384        100.0%      33.1%
Income before income taxes      $ 13,662         17.3%      $ 10,079         17.0%      35.5%
Net income                      $ 18,678         23.6%      $ 14,911         25.1%      25.3%

</TABLE>

Compared  to 2004,  the  third  quarter  of 2005  benefited  from the  continued
expansion of all of our businesses  and the  acquisition of CCLP in the Mortgage
Banking segment. In addition, revenues in 2005 include $7.3 million generated by
consolidated  partnerships  compared  to $3.8  million in 2004.  Offsetting  the
revenue  gains is the  elimination  of revenues  earned by our  subsidiaries  in
transactions  with  partnerships we have  consolidated  beginning April 1, 2004.
Although the amounts are eliminated in consolidation,  the net losses recognized
by those  partnerships  in connection  with these  transactions  are absorbed by
their  equity  partners;  as  such,  the  elimination  in  consolidation  has an
insignificant impact on our net income.

The revenue  gains and the  relatively  smaller  increase in expenses  led to an
increase in income before income taxes and an increase in net income.


                                       22
<PAGE>



REVENUES

Our revenues were as follows:

<TABLE>
<CAPTION>

                                        For the Three Months Ended September 30,
                                        ----------------------------------------
           (In thousands)                   2005           2004       % Change
--------------------------------------    --------       --------     --------
<S>                                       <C>            <C>           <C>
Mortgage revenue bond interest income     $ 36,482       $ 33,027       10.5%

Other interest income                        4,856          3,599       34.9

Fee income:
   Mortgage banking                          7,711          3,321      132.2
   Fund sponsorship                         14,472         10,493       37.9
   Credit enhancement                        2,186          2,715      (19.5)
                                          --------       --------      -----
Total fee income                            24,369         16,529       47.4

Other revenues:
   Construction service fee                  1,185            454      161.0
   Service fees                              1,012            536       88.8
   Prepayment penalties                      2,515            474      430.6
   Other                                     1,273            999       27.4
                                          --------       --------      -----
Total other revenues                         5,985          2,463      143.0

Revenues of consolidated partnerships        7,349          3,766       95.1
                                          --------       --------      -----

   Total revenues                         $ 79,041       $ 59,384       33.1%
                                          ========       ========      =====

</TABLE>

The  increase  in mortgage  revenue  bond  interest  income  stems from  ongoing
investment activity in the Portfolio Investing segment. Fee income variances are
detailed in the  discussions  of results for the Fund  Management  and  Mortgage
Banking segments. Results of Consolidated Partnerships are also discussed below.
See RESULTS BY SEGMENT.

Other  interest  income  includes  income from temporary  investments,  interest
earned on Mortgage  Banking escrow  balances and interest earned on our loans to
Capri  (see Note 4 to the  condensed  consolidated  financial  statements).  The
increase from the 2004 period relates to:

o    the rapid expansion of the Mortgage Banking business due to the acquisition
     of CCLP and the increase in origination  volume; and
o    higher cash balances  coupled with  increasing  market  interest  rates for
     temporary investments.

Offsetting  these  increases  is a decrease  in  interest on loans to Capri as a
large  portion of the balance was  converted to an equity  interest in the first
quarter of 2005 (see Note 2 to the condensed consolidated financial statements).

The increase in prepayment  penalties is principally  due to higher  refinancing
volume in the Mortgage Banking business while the increase in "other" relates to
higher administrative fees in the Fund Management segment.

In the third quarter of 2005,  the following  amounts were  eliminated,  as they
represented  transactions  between  consolidated   partnerships  and  our  other
component businesses:

<TABLE>
<CAPTION>

                                        For the Three Months Ended September 30,
                                        ----------------------------------------
          (In thousands)                    2005          2004       % Change
-------------------------------------     --------      --------     --------
<S>                                       <C>           <C>           <C>
Mortgage revenue bond interest income     $ 1,136       $   447       154.1%
Fund sponsorship fees                      10,318         8,594        20.1
Other revenues                              1,067           979         9.0
                                          -------       -------       -----

Total                                     $12,521       $10,020        25.0%
                                          =======       =======       =====

</TABLE>


                                       23
<PAGE>



EXPENSES

<TABLE>
<CAPTION>

Our expenses were as follows:
                                                     For the Three Months Ended September 30
                                                     ---------------------------------------
                (In thousands)                           2005         2004        % Change
-------------------------------------------------      --------     --------      --------
<S>                                                    <C>          <C>             <C>
Interest expense                                       $14,758      $ 8,297         77.9%
Interest expense - preferred shares of subsidiary        4,724        4,724           --

Salaries and benefits                                   17,105       13,474         26.9
General and administrative                              12,243       12,779         (4.2)
                                                       -------      -------        -----
   Subtotal                                             29,348       26,253         11.8
                                                       -------      -------        -----

Depreciation and amortization                           16,302        7,864        107.3
Loss on impairment of assets                               803          610         31.6
                                                       -------      -------        -----

   Subtotal                                             65,935       47,748         38.1

Interest expense of consolidated partnerships            6,342        6,569         (3.5)
Other expenses of consolidated partnerships             14,435       10,917         32.2
                                                       -------      -------        -----

Total expenses                                         $86,712      $65,234         32.9%
                                                       =======      =======        =====

</TABLE>

The  increase in interest  expense  reflects  the higher  amount of debt to fund
continuing   mortgage   revenue   bond  and  LIHTC   investments   and  mortgage
originations.  In addition,  our average borrowing rate increased as a result of
increases  in Bond Market  Association  Municipal  Swap Index  ("BMA") and LIBOR
rates in 2004 and 2005, as well as the impact of interest rate swap transactions
that went into effect in 2005. The incremental  impact of the swap  transactions
has decreased from prior  quarters,  however,  as the swapped rates received for
certain of the contracts now exceed the rates paid.  Our average  borrowing rate
increased to 3.6% in the 2005 quarter as compared to 2.7% in the 2004 period.

The  increases  in salaries and  benefits  expense  relates to the growth of our
component  businesses as well as the acquisition of CCLP in the first quarter of
2005, which doubled the size of our Mortgage Banking business.

General and  administrative  expenses in many  categories  increased  due to the
expansion of our  businesses  and the  acquisition  of CCLP,  particularly  with
regard  to  increased  occupancy  needs and  professional  fees.  Despite  these
increases, total expenses declined for the quarter as compared to last year as a
result  of  lower  organization  expenses  related  to the  lower  level of fund
sponsorship  activity  and the  recovery  of a large  amount of costs from prior
periods.  While we  recognize  the  billing of these  costs in the period a fund
closes as revenue,  we record  estimates of the expenses that offset the revenue
amounts. To the extent that such estimated costs are not ultimately incurred, we
reverse the reserves accordingly.

Depreciation and amortization expenses were higher in the 2005 period, primarily
due to higher  amortization  of mortgage  servicing  rights  following  the CCLP
acquisition.   In  addition,   we  recognized   amortization  of  CCLP  acquired
intangibles  retroactively  to the acquisition  date upon the final valuation of
those assets in the third quarter of 2005.

The asset impairment  charge pertains to an agreement in principle we reached to
restructure the terms of a mortgage  revenue bond, as was the charge in the 2004
period.

Interest expense of consolidated  partnerships  declined from the 2004 level due
to the  repayment of fund debt upon  collection of equity  subscriptions.  Other
expenses of these  partnerships  increased due to the increase in the population
of consolidated entities due to additional fund sponsorship activity.  Virtually
all of the  expenses  of the  consolidated  partnerships  are  absorbed by their
equity partners.


                                       24
<PAGE>



<TABLE>
<CAPTION>

OTHER ITEMS
                                                       For the Three Months Ended September 30,
                                                      --------------------------------------------
                (In thousands)                            2005           2004       % Change
--------------------------------------------------      --------       --------     --------
<S>                                                     <C>            <C>            <C>
Equity and other income                                 $    612       $    611         0.2 %

Gain on sale of loans                                   $  2,935       $    572       413.1 %
Gain (loss) on repayment of mortgage revenue bonds         1,027             (6)         --
                                                        --------       --------     -------
Gain on repayment of mortgage revenue bonds and         $  3,962       $    566       600.0 %
   sale of loans

Income allocated to preferred shareholders of
   subsidiary                                           $ (1,557)      $ (1,556)        0.1 %

Income allocated to SCUs                                $ (7,467)      $ (7,577)       (1.5)%
Income allocated to SMUs                                    (159)          --            --
Income allocated to CMC                                     --              145          --
                                                        --------       --------     -------
  Total income allocated to minority interests          $ (7,626)      $ (7,432)        2.6 %

Loss allocated to partners of consolidated
   partnerships                                         $ 91,295       $ 70,174        30.1 %

</TABLE>

Gains  related to  mortgage  revenue  bonds and loans  fluctuate  in relation to
relative  activity  levels  in the  Portfolio  Investing  and  Mortgage  Banking
businesses. See RESULTS BY SEGMENT below.

Equity  and  other  income  includes  dividends  from  our  investment  in ARCap
Investors, LLC, in both years, property operations of real estate owned in 2005,
offset in 2005 by losses  from tax  advantaged  investment  vehicles  similar to
those we sponsor.

The income allocated to preferred shareholders of a subsidiary relates to shares
we issued in 2004 that differ from previously issued shares in that they are not
subject to mandatory redemption; as such, the distributions are classified as an
expense outside of operating earnings.

The  income  allocation  to  SCUs  and  SMUs  of  subsidiaries   represents  the
proportionate  share of after-tax  income  attributable to holders of subsidiary
equity  as if they were all  converted  to  common  shares.  There was no income
allocated to SMUs in 2004, as the units were first issued in May 2005.

The loss  allocation to partners of  consolidated  partnerships  represents  the
operating losses of the partnerships, of which we have absorbed an insignificant
portion (approximately $8,000).

Results by Segment

PORTFOLIO INVESTING

The table below shows  selected  information  regarding our Portfolio  Investing
activities:

<TABLE>
<CAPTION>

                                                           For the Three Months Ended September 30,
                                                           ----------------------------------------
                   (In thousands)                             2005           2004        % Change
-----------------------------------------------------      ----------     ----------    -----------
<S>                                                        <C>            <C>              <C>
Mortgage revenue bond acquisitions and fundings            $   58,378     $   89,980       (35.1)%
 Weighted average permanent interest rate of bonds
  acquired                                                       6.26%          6.53%
 Mortgage revenue bonds repaid                             $   46,118     $      392          --
 Average portfolio balance (fair value)                    $2,247,522     $1,956,338        14.9 %
 Weighted average yield of portfolio                             6.49%          6.75%

 Average BMA rate                                                2.40%          1.21%

 Mortgage revenue bond interest income (1)                 $   37,801     $   33,474        12.9 %
 Other interest income (1)                                      4,578          2,395        91.1
 Prepayment penalties (1)                                         317             --          --
 Other revenues (1)                                               813            689        18.0
                                                           ----------     ----------       -----
                                                           $   43,509     $   36,558        19.0 %
                                                           ==========     ==========       =====

 Interest expense and securitizations fees (1)             $   14,758     $    8,297        77.9 %
 Gain (loss) on repayments of mortgage revenue bonds       $    1,027     $       (6)         --

</TABLE>

 (1) Prior to intersegment eliminations.


                                       25
<PAGE>



The increase in mortgage  revenue bond  interest  income is primarily due to the
increased  investment base resulting from new bonds funded during later quarters
of 2004 and during 2005,  although the volume of  investment  and the decline in
the interest rate of bonds acquired  reflects the challenging  market conditions
experienced  since  2004,  such as  increased  competition  and  some  potential
investments not meeting our underwriting standards.

While the decline in interest  rates has gradually  lowered the average yield of
our portfolio, from a profit perspective,  the low interest rate environment has
been favorable for us. Although  increasing lately, the BMA rate, the short-term
tax-exempt  index,  continues to be low,  and our weighted  average cost of debt
associated with these  investments,  taking our hedging into effect continues to
allow us to recognize  healthy  spreads  between our cost of  borrowing  and the
interest rates earned.

Other interest income  increased due to a higher level of  intercompany  funding
(which income is eliminated in consolidation) offset by a decline in income from
loans to Capri  following  the  conversion  of a large  portion of our loan into
equity.

FUND MANAGEMENT

The  table  below  shows  selected  information  regarding  our Fund  Management
activities:

<TABLE>
<CAPTION>

                                        For the Three Months Ended September 30,
                                        ----------------------------------------
         (In thousands)                   2005            2004       % Change
-----------------------------------     --------        --------     ---------
<S>                                     <C>             <C>            <C>
Equity raised                           $275,534        $355,648       (22.5)%
Equity invested by investment funds     $321,050        $258,908        24.0 %

Fund sponsorship fees (1)               $ 25,498        $ 20,220        26.1 %
Credit enhancement fees (1)                2,185           2,715       (19.5)
Other revenues (1)                         4,397           2,794        57.4
                                        --------        --------        ----
  Total                                 $ 32,080        $ 25,729        24.7 %
                                        ========        ========        ====

</TABLE>

(1) Prior to intersegment eliminations.

Our  Fund  Management  activities  generate  origination  and  acquisition  fees
associated with sponsoring  tax-credit equity investment funds and for assisting
the funds in acquiring assets, which we recognize when the equity is invested by
the investment  fund. We also receive asset  management fees for the services we
perform  for the funds  once they are  operating,  which we  recognize  over the
service periods.  As many of our revenues are recognized over time following the
sponsorship of a new fund, many of the 2005 increases relate to the funds closed
throughout 2004 and the first nine months of 2005.

We earn  Organization  and Offering  ("O&O") service and partnership  management
fees based upon the level of equity we raise for tax-credit  equity funds.  Fees
earned for O&O services decreased  approximately  24.3% to $2.3 million compared
to $3.0  million in the 2004  quarter  primarily  due to the  decrease in equity
raised and a decrease  in the fee rate  realized.  Fees  earned for  partnership
management services are amortized over a five-year period.  These fees increased
approximately 147.2% to $1.1 million compared to $441,000 for the same period in
2004.  This  increase  is  primarily  the  result of ongoing  revenues  for fund
sponsorships completed after the third quarter of 2004.

We earn property acquisition fees and acquisition  allowance fees based upon the
level of fund equity invested.  Fees earned for property  acquisition and equity
origination   services  associated  with  tax  credit  equity  fund  sponsorship
increased to  approximately  $13.0 million in 2005,  representing an approximate
19.9%  increase  compared to the prior year results.  The increase is due to the
increase in equity invested in 2005 as compared to 2004.

Also  during  2005,  RCC  acted as  advisor  for  $96.8  million  of  investment
originations  by CharterMac  entities and others,  compared to $133.7 million of
such  originations  for the three months ended  September 30, 2004. We recognize
acquisition  fees  in  this  segment  for  such  services,   which  amounted  to
approximately $641,000,  declining from the fees recognized for the three months
ended  September  30, 2004 by  approximately  42.1%.  The decrease  exceeded the
change in investment originations due to a decrease in the rate of fees realized
in 2005 as compared to 2004.

Partnership  and asset  management  fees increased to $8.5 million for the three
months ended September 30, 2005,  representing an increase of approximately  76%
over the  2004  quarter,  attributable  to the  higher  level  of  assets  under
management,  an increase in the incentive  management  fee received from AMAC of
$1.2  million and the  improvement  of the cash  position of certain  investment
funds allowing us to collect management fees in 2005 which we did not previously
recognize until collectibility was determined.

The decrease in credit  enhancement fees relates to the timing and relative size
of the  credit  enhancement  transactions.  Fees  for  the  three  months  ended
September 30, 2004 included  recognition of fees for several large  transactions
for which the credit enhancement period ended prior to the current year quarter.
Both periods, however, include fees for smaller transactions, the fees for which


                                       26
<PAGE>



are recognized over periods of up to 20 years.

Other  revenues  in this  segment  consist  largely of service  fees  charged to
entities managed by these subsidiaries (including consolidated partnerships) and
fluctuate with the growth of the number of those entities and their cash flows.

MORTGAGE BANKING

The table  below shows  selected  information  regarding  our  Mortgage  Banking
activities:

<TABLE>
<CAPTION>

                                        For the Three Months Ended September 30,
                                        ----------------------------------------
        (In thousands)                      2005           2004        % Change
--------------------------------         ----------     ----------     ---------
<S>                                      <C>            <C>              <C>
Originations                             $  382,158     $  113,243       237.5%
Mortgage portfolio at September 30       $9,217,640     $4,181,130       120.5%

Mortgage servicing fees                  $    5,188     $    2,444       112.3%
Mortgage origination fees                     2,523            878       187.4
Interest income                               3,205            967       231.4
Prepayment penalties                          2,198            474       363.7
Other revenues                                  310            216        43.5
                                         ----------     ----------       -----
                                         $   13,424     $    4,979       169.6%
                                         ==========     ==========       =====

Gain on sale of mortgages                $    2,935     $      571       414.0%

</TABLE>

The increase in the servicing  portfolio  and servicing  fees is a result of the
CCLP  acquisition.  Adjusting for the impact of the  acquisition,  servicing fee
income in 2005 declined approximately 6% as compared to the same period in 2004.
The decline was caused by a higher level of payoffs and amortization as compared
to service-retained  originations that led to a decrease in the comparable-basis
servicing portfolio.

The higher volume of originations  in 2005 resulted from a significant  increase
in  Fannie  Mae  originations,  due to the CCLP  acquisition  (whereby  CCLP has
traditionally  conducted  a large  portion of its  business  through  Fannie Mae
originations)  and a pricing  change that  allowed us to garner  greater  market
share.  Conduit  originations  also  increased  sharply as we continue to pursue
business that does not warrant agency execution.  The current year also includes
a  significantly  higher  level of  assumption  lending  for  which  we  receive
assumption fees rather than origination fees.

Originations for the three months ended September 30 are broken down as follows:

<TABLE>
<CAPTION>

  (In thousands)               2005        % of total     2004        % of total
-------------------          --------      ----------   --------      ----------
<S>                          <C>              <C>       <C>              <C>
Fannie Mae                   $131,486         34.4%     $ 36,456         32.2%
Freddie Mac                    66,075         17.3        44,375         39.2
Conduit  and other            152,100         39.8        24,115         21.3
Assumptions                    32,497          8.5         8,297          7.3
                             --------        -----      --------        -----

Total                        $382,158        100.0%     $113,243        100.0%
                             ========        =====      ========        =====

</TABLE>

Interest  income  relates  primarily  to that  earned  on escrow  balances.  The
increase in 2005 was due to higher origination volume and increased market rates
earned.  The  increase  in  prepayment  penalties  relates to a higher  level of
refinancing  activity in the current year. Both categories also increased due to
the CCLP acquisition.

Gain on sale of mortgages  pertains primarily to sales of mortgages for which we
retain servicing rights.  The increase in 2005 as compared to 2004 is due to the
increased origination volume.

CONSOLIDATED PARTNERSHIPS

The results of consolidated  partnerships  reflected in our financial statements
are for entities we are  considered to control  according to the  definitions of
FIN 46(R),  and other  partnerships  we control,  but in which we have no equity
interest or, in the case of 18 partnerships,  an insignificant  equity interest.
Our Fund Management segment earns fees from many of the entities,  however,  and
our Portfolio  Investing  business earns interest on mortgage  revenue bonds for
which these  partnerships are the obligors.  The  consolidated  partnerships are
primarily tax credit equity  investment  funds we sponsor and manage,  while the
others are  property  level  partnerships  for which we have assumed the role of
general partner.

The increased  revenue amounts in 2005 are due to the origination of seven funds


                                       27
<PAGE>



and the  assumption  of the  general  partner  interests  in 18  property  level
partnerships in the past year.

As third party investors hold virtually all of the equity partnership  interests
in these  entities,  we allocate  all results of  operations  to those  partners
except for  approximately  $8,000,  representing  our  nominal  ownership.  As a
result, the consolidation of these  partnerships has an insignificant  impact on
our net income.

Nine months Ended September 30, 2005

The following is a summary of our operations for the nine months ended September
30, 2005 and 2004:

<TABLE>
<CAPTION>

                                               % of                      % of
      (In thousands)             2005        Revenues      2004        Revenues    % Change
--------------------------     --------      --------    --------      --------    --------
<S>                            <C>            <C>        <C>            <C>         <C>
Revenues                       $216,505       100.0%     $162,703       100.0%      33.1%
Income before income taxes     $ 39,191        18.1%     $ 30,888        19.0%      26.9%
Net income                     $ 52,907        24.4%     $ 45,532        28.0%      16.2%

</TABLE>

Compared to 2004,  the first nine months of 2005  benefited  from the  continued
expansion  of our  component  businesses  and  the  acquisition  of  CCLP in the
Mortgage  Banking segment.  In addition,  revenues in 2005 include $19.4 million
generated  by  consolidated  partnerships  as compared to $6.6  million in 2004,
which included only six months of results for those partnerships. Offsetting the
revenue  gains is the  elimination  of revenues  earned by our  subsidiaries  in
transactions  with the  consolidated  partnerships.  Although  the  amounts  are
eliminated in consolidation,  the net losses recognized by those partnerships in
connection with these  transactions are absorbed almost entirely by their equity
partners;  as such, the elimination in consolidation has an insignificant impact
on our net income.

The revenue  gains and the  relatively  smaller  increase in expenses  led to an
increase in income before income taxes and an increase in net income.

REVENUES

<TABLE>
<CAPTION>

Our revenues were as follows:
                                         For the Nine months Ended September 30,
                                         ---------------------------------------
           (In thousands)                   2005          2004       % Change
--------------------------------------    --------      --------     ---------
<S>                                       <C>           <C>            <C>
Mortgage revenue bond interest income     $110,221      $ 97,365        13.2%

Other interest income                       12,425         5,528       124.8

Fee income:
   Mortgage banking                         19,203        11,124        72.6
   Fund sponsorship                         32,503        27,780        17.0
   Credit enhancement                        7,246         7,541        (3.9)
                                          --------      --------       -----
Total fee income                            58,952        46,445        26.9

Other revenues:
   Construction service fees                 3,017           861       250.4
   Service fees                              3,742         1,950        91.9
   Prepayment penalties                      4,314         1,441       199.4
   Other                                     4,431         2,557        73.3
                                          --------      --------       -----
Total other revenues                        15,504         6,809       127.7

Revenues of consolidated partnerships       19,403         6,556       196.0
                                          --------      --------       -----

   Total revenues                         $216,505      $162,703        33.1%
                                          ========      ========       =====

</TABLE>

The  increase  in mortgage  revenue  bond  interest  income  stems from  ongoing
investment activity in the Portfolio Investing segment. Fee income variances are
detailed in the  discussions  of results for the Fund  Management  and  Mortgage
Banking segments. Results of Consolidated Partnerships are also discussed below.
See RESULTS BY SEGMENT.

Other  interest  income  includes  income from temporary  investments,  interest
earned on Mortgage  Banking escrow  balances and interest earned on our loans to
Capri  (see Note 4 to the  condensed  consolidated  financial  statements).  The
increase from the 2004 period relates to:

o    the rapid expansion of the Mortgage Banking business due to the acquisition
     of CCLP and the increase in origination volume; and


                                       28
<PAGE>



o    higher cash balances  coupled with  increasing  market  interest  rates for
     temporary investments.

Offsetting  these  increases  is a decrease  in  interest on loans to Capri as a
large  portion of the balance was  converted to an equity  interest in the first
quarter of 2005 (see Note 2 to the condensed consolidated financial statements).

The increase in  construction  service  fees  relates to the relative  volume of
deals supported in each period.

The increase in prepayment  penalties is principally  due to higher  refinancing
volume in the Mortgage Banking business while the increase in "other" relates to
higher administrative fees in the Fund Management segment.

In the first nine months of each year, the following amounts were eliminated, as
they represented  transactions between  consolidated  partnerships and our other
component businesses:

<TABLE>
<CAPTION>

                                         For the Nine months Ended September 30,
                                         ---------------------------------------
           (In thousands)                    2005        2004       % Change
-------------------------------------      --------    --------     --------
<S>                                         <C>         <C>           <C>
Mortgage revenue bond interest income       $ 2,915     $   694       320.0%
Fund sponsorship fees                        28,935      18,155        59.4
Other revenues                                1,847       1,932        (4.4)
                                            -------     -------       -----

Total                                       $33,697     $20,781        62.2%
                                            =======     =======       =====

</TABLE>
<TABLE>
<CAPTION>

EXPENSES

Our expenses were as follows:
                                                     For the Nine months Ended September 30
                                                     --------------------------------------
                (In thousands)                          2005          2004       % Change
-------------------------------------------------     --------      --------     --------
<S>                                                   <C>           <C>            <C>
Interest expense                                      $ 40,598      $ 22,424        81.0%
Interest expense - preferred shares of subsidiary       14,173        14,173          --

Salaries and benefits                                   50,714        40,406        25.5
General and administrative                              37,454        30,830        21.5
                                                      --------      --------       -----
   Subtotal                                             88,168        71,236        23.8

Depreciation and amortization                           33,467        22,553        48.4
Loss on impairment of assets                             1,902           610       211.8
                                                      --------      --------       -----

   Subtotal                                            178,308       130,996        36.1

Interest expense of consolidated partnerships           19,364        13,258        46.1
Other expenses of consolidated partnerships             40,062        19,398       106.5
                                                      --------      --------       -----

Total expenses                                        $237,734      $163,652        45.3%
                                                      ========      ========       =====

</TABLE>

The  increase in interest  expense  reflects  the higher  amount of debt to fund
continuing   mortgage   revenue  bond  and   short-term   investments  in  LIHTC
partnerships and mortgage originations.  In addition, our average borrowing rate
increased as a result of  increases in BMA and LIBOR rates in 2004 and 2005,  as
well as the impact of new interest rate swap  transactions that went into effect
in the first quarter of 2005. The  incremental  impact of the swap  transactions
has  decreased  during the course of the 2005  period,  however,  as the swapped
rates  received  for certain of the  contracts  now exceed the rates  paid.  Our
average  borrowing  rate  increased  to 3.5% in the  first  nine  months of 2005
quarter as compared to 2.5% in the 2004 period.

The  increases  in salaries and  benefits  expense  relates to the growth of our
component  businesses as well as the acquisition of CCLP in the first quarter of
2005, which doubled the size of our Mortgage Banking business.

The increase in general and administrative expenses is also due to the expansion
of our  businesses  and the  acquisition  of CCLP,  particularly  with regard to
increased  occupancy  needs and  professional  fees.  Partially  offsetting this
increase was a decline in  organization  expenses  related to the lower level of
fund sponsorship  activity as compared to the prior year period and the recovery
of a large  amount of costs from prior  periods  as noted in the  discussion  of
results for the third quarter.

Depreciation and amortization expenses were higher in the 2005 period, primarily
due to higher  amortization  of mortgage  servicing  rights  following  the CCLP
acquisition.   In  addition,   we  recognized   amortization  of  CCLP  acquired
intangibles  retroactively  to the acquisition  date upon the final valuation of
those assets in the third quarter of 2005.


                                       29
<PAGE>



The  asset  impairment  charge in 2005  relates  in large  part to  management's
decision  to  discontinue  construction  of a property  in  connection  with the
financial  difficulties of the property  developer (see Note 12 to the condensed
consolidated  financial  statements).  The  balance  of the 2005  amount and the
entire charge in the prior year period  pertained to the  restructuring of terms
for mortgage revenue bond and mezzanine loan investments.

We did not record the expenses of the consolidated  partnerships  prior to April
1, 2004. The increase in the expenses generated by these entities is a result of
the non-comparable  consolidation  periods as well as the increase in the number
of  such  partnerships  consolidated.  Virtually  all  of  the  expenses  of the
consolidated partnerships are absorbed by their equity partners.

<TABLE>
<CAPTION>

OTHER ITEMS
                                                   For the Nine months Ended September 30,
                                                   ---------------------------------------
              (In thousands)                         2005            2004        % Change
-------------------------------------------        ---------      ---------     ----------
<S>                                                <C>            <C>             <C>
Equity and other income                            $   2,062      $   1,731        19.1%

Gain on sale of loans                              $   8,956      $   5,647        58.6%
Gain on repayment of mortgage revenue bonds            1,930            216       793.5
                                                   ---------      ---------      ------
Gain on repayment of mortgage revenue
   bonds and sale of loans                         $  10,886      $   5,863        85.7%

Income allocated to preferred shareholders
   of subsidiary                                   $  (4,669)     $  (2,386)       95.7%

Income allocated to SCUs                           $ (21,358)     $ (20,032)        6.6%
Income allocated to SMUs                                (214)            --          --
Income allocated to CMC                                   --           (220)         --
                                                   ---------      ---------      ------
  Total income allocated to minority interests     $ (21,572)     $ (20,252)        6.5%

Loss allocated to partners of
   consolidated partnerships                       $ 255,628      $ 141,992        80.0%

</TABLE>

Gains and losses  related  to  mortgage  revenue  bonds and loans  fluctuate  in
relation to relative  activity  levels in the  Portfolio  Investing and Mortgage
Banking businesses. See RESULTS BY SEGMENT below.

Equity  and  other  income  includes  dividends  from  our  investment  in ARCap
Investors, LLC, in both years, property operations of real estate owned in 2005,
offset in 2005 by losses  from tax  advantaged  investment  vehicles  similar to
those we sponsor.

Income  allocated to preferred  shareholders of subsidiary  relates to shares we
issued in 2004 that differ from  previously  issued  shares in that they are not
subject to mandatory redemption; as such, the distributions are classified as an
expense  outside of  operating  earnings.  Total  income  allocated to preferred
shareholders for the nine months ended September 30, 2005, including the portion
classified as interest  expense,  increased as compared to the nine months ended
September 30, 2004, due to the additional  preferred offering consummated in May
2004.

The  income  allocation  to  SCUs  and  SMUs  of  subsidiaries   represents  the
proportionate  share of after-tax  income  attributable to holders of subsidiary
equity  as if they were all  converted  to  common  shares.  There was no income
allocated to SMUs in 2004 as the units were first issued in May 2005.

The loss  allocation to partners of  consolidated  partnerships  represents  the
operating losses of the partnerships, of which we have absorbed an insignificant
portion (approximately $8,000).


                                       30
<PAGE>



Results by Segment
------------------

PORTFOLIO INVESTING

The table below shows  selected  information  regarding our Portfolio  Investing
activities:

<TABLE>
<CAPTION>

                                                      For the Nine months Ended September 30,
                                                    ------------------------------------------
              (In thousands)                           2005            2004         % Change
-----------------------------------------------     ----------      -----------    -----------
<S>                                                 <C>             <C>              <C>
Mortgage revenue bond acquisitions and fundings     $  225,159      $  239,948        (6.2)%
Weighted average permanent interest rate
 of bonds acquired                                        6.43%           6.55%
Mortgage revenue bonds repaid                       $   65,499      $   26,870       143.8 %
Average portfolio balance (fair value)              $2,197,421      $1,911,257        15.0 %
Weighted average yield of portfolio                       6.69%           6.79%

Average BMA rate                                          2.30%           1.10%

Mortgage revenue bond interest income (1)           $  113,708      $   98,059        16.0 %
Other interest income (1)                                8,801           4,108       114.2
Prepayment penalties (1)                                   441              31          --
Other revenues (1)                                       3,057           1,126       171.5
                                                    ----------      ----------     -------
                                                    $  126,007      $  103,324        22.0 %
                                                    ==========      ==========     =======

Interest expense and securitizations
 fees (1)                                           $   40,598      $   22,394        81.3 %
Gain on repayments of mortgage revenue
 bonds                                              $    1,930      $      217       789.4 %

</TABLE>

 (1) Prior to intersegment eliminations.

The increase in mortgage  revenue bond  interest  income is primarily due to the
increased  investment base resulting from new bonds funded during later quarters
of 2004 and during 2005,  although the volume of  investment  and the decline in
the interest rate of bonds acquired  reflects the challenging  market conditions
experienced  since  2004,  such as  increased  competition  and  some  potential
investments not meeting our underwriting standards.

While the decline in interest  rates has gradually  lowered the average yield of
our portfolio, from a profit perspective,  the low interest rate environment has
been favorable for us. Although  increasing lately, the BMA rate, the short-term
tax-exempt  index,  continues to be low,  and our weighted  average cost of debt
associated with these investments,  taking our hedging into effect, continues to
allow us to recognize  healthy  spreads  between our cost of  borrowing  and the
interest rates earned.

Other interest income  increased due to a higher level of  intercompany  funding
(which income is eliminated in consolidation) offset by a decline in income from
loans to Capri  following  the  conversion  of a large  portion of our loan into
equity.

FUND MANAGEMENT

The  table  below  shows  selected  information  regarding  our Fund  Management
activities:

<TABLE>
<CAPTION>

                                         For the Nine months Ended September 30,
                                         ---------------------------------------
         (In thousands)                      2005          2004      % Change
-----------------------------------        --------      --------    ---------
<S>                                        <C>           <C>           <C>
Equity raised                              $711,918      $754,481      (5.6)%
Equity invested by investment funds        $752,049      $632,749      18.9 %

Fund sponsorship fees (1)                  $ 64,052      $ 48,894      31.0 %
Credit enhancement fees (1)                   7,246         7,541      (3.9)
Other revenues (1)                           11,806         7,138      65.4
                                           --------      --------      ----
  Total                                    $ 83,104      $ 63,573      30.7 %
                                           ========      ========      ====

</TABLE>

(1) Prior to intersegment eliminations.

Our  Fund  Management  activities  generate  origination  and  acquisition  fees
associated with sponsoring tax credit equity  investment funds and for assisting
the funds in acquiring assets, which we recognize when the equity is invested by
the investment  fund. We also receive asset  management fees for the services we


                                       31
<PAGE>



perform  for the funds  once they are  operating,  which we  recognize  over the
service periods.  As many of our revenues are recognized over time following the
sponsorship of a new fund, many of the 2005 increases relate to the funds closed
throughout 2004 and the first nine months of 2005.

We earn O&O  service  and  partnership  management  fees based upon the level of
equity we raise for  tax-credit  equity  funds.  Fees  earned  for O&O  services
decreased  approximately  5.1% to $6.1  million  compared to $6.4 million in the
2004 period primarily due to the decrease in equity raised, offset by a marginal
increase  in the fee rate  realized.  Fees  earned  for  partnership  management
services  are  amortized   over  a  five-year   period.   These  fees  increased
approximately  225% to $2.9 million  compared to $891,000 for the same period in
2004.  This  increase  is  primarily  the  result of ongoing  revenues  for fund
sponsorships completed in 2004 and 2005.

We earn property acquisition fees and acquisition  allowance fees based upon the
level of fund equity invested.  Fees earned for property  acquisition and equity
origination   services  associated  with  tax  credit  equity  fund  sponsorship
increased to  approximately  $31.6 million in 2005,  representing an approximate
16.1% increase compared to the prior year results. The increase in fees is lower
than the increase of equity  invested from 2005 to 2004 because of a decrease in
the fee rate  realized.  The lower fee rate  stemmed  from changes in the mix of
funds originated in the current year period.

Also  during  2005,  RCC acted as  advisor  for  $310.2  million  of  investment
originations  by CharterMac  entities and others,  compared to $354.5 million of
such  originations  for the nine months ended  September  30, 2004. We recognize
acquisition   fees  in  this  segment  for  such   services,   which   decreased
approximately  9.4% to $2.6  million  as  compared  to $2.9  million in the 2004
period. The decrease was less than the change in investment  originations due to
an increase in the rate of fees realized in 2005 as compared to 2004.

Partnership  and asset  management  fees increased to $19.7 million for the nine
months ended September 30, 2005,  representing an increase of approximately  71%
over  the  2004  period,  attributable  to the  higher  level  of  assets  under
management,  an increase in the incentive  management  fee received from AMAC of
$1.2  million and the  improvement  of the cash  position of certain  investment
funds allowing us to collect management fees in 2005 which we did not previously
recognize until collectibility was determined.

The increase in credit  enhancement fees for the nine months ended September 30,
2005,  as compared to the 2004 period is due to  additional  credit  enhancement
transactions  completed over the course of 2004 and 2005, the fees for which are
recognized over periods of up to 20 years.

Other  revenues  in this  segment  consist  largely of service  fees  charged to
entities managed by these subsidiaries (including consolidated partnerships) and
fluctuate with the growth of the number of those entities and their cash flows.

MORTGAGE BANKING

The table  below shows  selected  information  regarding  our  Mortgage  Banking
activities:

<TABLE>
<CAPTION>

                                         For the Nine months Ended September 30,
                                         ---------------------------------------
        (In thousands)                       2005           2004      % Change
--------------------------------          ----------     ----------   ---------
<S>                                       <C>            <C>            <C>
Originations                              $1,164,150     $  664,292      75.2%
Mortgage portfolio at September 30        $9,217,640     $4,181,130     120.5%

Mortgage servicing fees                   $   13,890     $    7,165      93.9%
Mortgage origination fees                      5,313          3,960      34.2
Interest income                                6,511          2,441     166.7
Prepayment penalties                           3,873          1,410     174.7
Other revenues                                 1,269            539     135.4
                                          ----------     ----------     -----
                                          $   30,856     $   15,515      98.9%
                                          ==========     ==========     =====

Gain on sale of mortgages                 $    8,956     $    5,646      58.6%

</TABLE>

The increase in the servicing  portfolio  and servicing  fees is a result of the
CCLP  acquisition.  Adjusting for the impact of the  acquisition,  servicing fee
income in 2005 declined approximately 3% as compared to the first nine months of
2004.  The decline was caused by a higher level of payoffs and  amortization  as
compared  to  service-retained  originations  that  led  to a  decrease  in  the
comparable-basis servicing portfolio.

The higher volume of originations  in 2005 resulted from a significant  increase
in  Fannie  Mae  originations,  due to the CCLP  acquisition  (whereby  CCLP has
traditionally  conducted  a large  portion of its  business  through  Fannie Mae
originations)  and a pricing  change that  allowed us to garner  greater  market
share.  Conduit  originations  also  increased  sharply as we continue to pursue
business that does not warrant agency execution.  These increases were partially
offset by a sharp decline in Freddie Mac business, as the 2004 period reflects a
large  single-borrower pool transaction,  with no comparable  transaction in the


                                       32
<PAGE>



current year period. The current year also includes a significantly higher level
of  assumption  lending  for  which  we  receive  assumption  fees  rather  than
origination fees.

Originations for the nine months ended September 30 are broken down as follows:

<TABLE>
<CAPTION>

 (In thousands)             2005         % of total      2004         % of total
----------------         ----------      ----------   ----------      ----------
<S>                      <C>               <C>        <C>               <C>
Fannie Mae               $  596,976         51.3%     $  235,731         35.5%
Freddie Mac                  99,980          8.6         282,006         42.4
FHA                           6,372          0.5          27,714          4.2
Conduit - Bank              291,485         25.0          78,588         11.8
Assumptions                 169,338         14.6          40,253          6.1
                         ----------        -----      ----------        -----

Total                    $1,164,151        100.0%     $  664,292        100.0%
                         ==========        =====      ==========        =====

</TABLE>

Interest  income  relates  primarily  to that  earned  on escrow  balances.  The
increase in 2005 was due to higher origination volume and increased market rates
earned.  The  increase  in  prepayment  penalties  relates to a higher  level of
refinancing  activity in the current year. Both categories also increased due to
the CCLP acquisition.

Gain on sale of mortgages  pertains primarily to sales of mortgages for which we
retain servicing rights.  The increase in 2005 as compared to 2004 is due to the
increased origination volume.

CONSOLIDATED PARTNERSHIPS

The results of consolidated  partnerships  reflected in our financial statements
are for entities we are  considered to control  according to the  definitions of
FIN 46(R),  and other  partnerships  we control,  but in which we have no equity
interest or, in the case of 18 partnerships,  an insignificant  equity interest.
Our Fund Management segment earns fees from many of the entities,  however,  and
our Portfolio  Investing  business earns interest on mortgage  revenue bonds for
which these  partnerships are the obligors.  The  consolidated  partnerships are
primarily tax credit equity  investment  funds we sponsor and manage,  while the
others are  property  level  partnerships  for which we have assumed the role of
general partner.

The results we  reported  in 2005  reflect  nine  months of  operations  for the
partnerships  we  consolidate  while the nine months ended  September  30, 2004,
includes only six months of results,  as we  consolidated  these  entities as of
March 31, 2004. The increased amounts in 2005 are also due to the origination of
seven funds and the assumption of the general  partner  interests in 18 property
level  partnerships  in  the  past  year,  all  of  which  are  included  in the
population.

As third party investors hold virtually all of the equity partnership  interests
in these  entities,  we allocate  all results of  operations  to those  partners
except for  approximately  $8,000,  representing  our  nominal  ownership.  As a
result, the consolidation of these  partnerships has an insignificant  impact on
our net income.

IMPACT OF HURRICANES DURING THE QUARTER ENDED SEPTEMBER 30, 2005

During the third quarter of 2005, two hurricanes struck the Gulf Coast region of
the United States. All of our businesses are involved in properties in the areas
affected by the storms.

Due  to  limited  access  to  certain  affected  properties,   as  well  as  the
complications  and  bureaucracy  involved  in  the  determination  of  insurance
coverage,  we are still  evaluating  the  extent of our  financial  exposure  on
several properties.  Based upon the information available to date, our financial
exposure is expected to be immaterial. However, it will take some time to assess
the full  ramifications of the hurricanes.  Other than insurance  considerations
(discussed below), examples of situations that are too early to assess include:

o    the effects of the likely increase in repair and construction costs;
o    whether  the  increase  in  physical  occupancy  in our  properties  in the
     southwest and southeast will be permanent in nature;
o    any changes that the government  agencies propose for some of the financing
     programs  that we  offer  (i.e.  whether  the IRS will  make  any  proposed
     temporary  changes to the tax code for the LIHTC  program) which if enacted
     could make additional capital available to the affected properties; and
o    what resources the local general partner will bring to bear.

We have identified 46 affected  properties located in Texas, South Florida,  the
Florida Panhandle, Alabama, Louisiana and Mississippi for which we have mortgage
revenue  bond  investments  and/or  one or more  funds  we have  sponsored  have
provided equity, as detailed in the table below. Currently we do not expect that
there will be financial  exposure related to these properties as we believe that
the  properties  have adequate  insurance  coverage,  but in virtually all cases
determinations are ongoing as to:


                                       33
<PAGE>



o    how the insurance  companies  involved will address  damage with respect to
     that caused by wind versus that caused by flooding;
o    the  level  of   deductibles,   which  is   dependent   upon  the  category
     determinations;
o    whether  outside  parties (such as state agencies) will mediate in disputes
     regarding insurance; and
o    the financial resources of the insurers.

The affected properties are summarized below:

<TABLE>
<CAPTION>

                                                                               (In thousands)
                                  CharterMac                                 Loan      Fair Value of
                                   Holds or        RCC                     Amounts        Mortgage
                                  Will Hold     Sponsored                    Upon      revenue bonds
                                   Mortgage      Fund is      Included in    Full      Oustanding at
                                   revenue       Equity       Guaranteed     Draw      September 30,
                      Number         bond        Partner        Funds        Down          2005
                      ------      ----------    ---------     -----------  --------    -------------
<S>                     <C>           <C>           <C>           <C>      <C>           <C>
MINOR DAMAGE
Construction             2             2             2            --       $15,930       $   700
Lease-Up                 6             6             6             3        60,655        40,970
Stabilized              17             2            17             1        17,577        18,578
                      ------------------------------------------------------------------------------
Subtotal                25            10            25             4        94,162        60,248
                      ------------------------------------------------------------------------------

MAJOR DAMAGE
Construction             5            --             5             1            --            --
Lease-Up                 1            --             1            --            --            --
Stabilized               6            --             6            --            --            --
                      ------------------------------------------------------------------------------
Subtotal                12            --            12             1            --            --
                      ------------------------------------------------------------------------------
Total                   37            10            37             5       $94,162       $60,248
                      ==============================================================================

</TABLE>

MORTGAGE BANKING:  Our mortgage banking subsidiary,  identified seven properties
in its loan servicing  portfolio  that were in the paths of the storms.  Five of
the seven properties  involve a risk sharing  commitment by the Company.  One of
the five  experienced  minor damage,  and four  properties  are believed to have
experienced major damage.  Due to limited access granted by local authorities we
are in the process of completing our inspections.  The remaining two properties,
do not involve a risk sharing  commitment by the Company.  In all cases,  we are
unaware of any situation where the casualty  insurance  coverage is not expected
to cover the mortgage  exposure and thus, while we continue to manage that risk,
cannot  identify  a  circumstance  where we think  there is a  likelihood  of an
economic  loss in which the  Company  would have to  participate  under its risk
sharing obligations.

Due to the  uncertainties  noted above, we are currently  unable to estimate the
extent of our direct  financial  exposure,  if any.  With  respect  to  exposure
regarding specified rates of return obligations,  as storm damage may reduce the
expected yields of the properties themselves, performance of the funds is likely
to be impacted as well. The obligations, however, provide for expected yields on
pools of properties,  some of which are performing above expected levels and the
funds  themselves  often  provide for  adjustors  that may mitigate the negative
impact that would arise from the  construction  delays over the guarantee period
covered by the agreements.

Income Taxes
------------

A large majority of our pre-tax  income is derived from our Portfolio  Investing
businesses,  which are structured as partnership  entities; as such, income from
those  investments  is not  subject to income  taxes.  The Fund  Management  and
Mortgage  Banking  businesses are conducted in  corporations  and are subject to
income taxes.

We provide for income taxes for these corporate  subsidiaries in accordance with
SFAS No. 109,  ACCOUNTING  FOR INCOME TAXES ("SFAS No. 109") which  requires the
recognition of deferred tax assets and  liabilities  for the expected future tax
consequences of temporary  differences  between the financial statement carrying
amounts and the tax bases of assets and liabilities.

The tax benefit disclosed  relates to the book losses of the taxable  businesses
and  the  tax  deductible  distributions  on  their  subsidiary  equity.  As the
proportion  of our  pre-tax  income  contributed  by the  businesses  generating
taxable  income and losses  changes,  the resulting tax benefit or provision may
appear incongruous with our consolidated income before income taxes.

The  effective  tax  rate on a  consolidated  basis  for the nine  months  ended
September 30, 2005 and 2004 was (35.0)% and (47.4)%, respectively. The effective
rate for our  corporate  subsidiaries  that were  subject to taxes was 57.4% and
53.7% for the nine months ended September 30, 2005 and 2004, respectively.


                                       34
<PAGE>



Inflation
---------

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

Subsequent Event
----------------

Refer to Note 17 of the condensed consolidated financial statements with respect
to costs associated with the resignation of our Chief Executive Officer.

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

We fund our short-term  business needs  (including  investments)  primarily with
cash provided by  operations,  securitization  of  investments  and revolving or
warehouse  credit  facilities.  Our primary sources of capital to meet long-term
liquidity needs  (including  acquisitions)  are debt and various types of equity
offerings,  including equity of our subsidiaries.  We believe that our financing
capacity and cash flow from current  operations are adequate to meet our current
and projected liquidity requirements. Nonetheless, as business needs warrant, we
may issue other types of debt or equity in the future.

Debt and Securitizations
------------------------

Short-term liquidity provided by operations comes primarily from interest income
from  mortgage  revenue  bonds and  promissory  notes in  excess of the  related
financing costs,  mortgage  origination and servicing fees, and fund sponsorship
fees. We typically  generate  funds for investment  purposes from  corresponding
financing activities.

We have the following debt and  securitization  facilities to provide short-term
and long-term liquidity:

o    $100.0 million, with a temporary additional $50.0 million available through
     December  2005,  used  for  mortgage  banking  needs,  which  is  renewable
     annually;
o    $90.0  million,  used to acquire  equity  interests  in property  ownership
     entities prior to the inclusion of these equity  interests into investments
     funds, which matures in October 2006;
o    $91.0 million,  used to provide the interim loan to Capri,  the maturity of
     which has been extended  pending its  replacement  with a new facility from
     the same lender;
o    $40.0 million,  established in connection with the CMC  acquisition,  which
     expires in December 2006;
o    $650.0 million in MBIA credit enhancement  through 2011, under which we can
     complete up to $425.0 million of floating-rate  securitizations  and $225.0
     million of auction-rate securitizations; and
o    Securitization  through the  Merrill  Lynch  P-FLOATs/RITESSM  program of a
     specified  percentage  of the fair  value of  mortgage  revenue  bonds  not
     otherwise securitized or credit enhanced by either Merrill Lynch or IXIS.
o    Securitization  through the Goldman  Sachs  Tic/Toc  program of a specified
     percentage  of the fair  value of  mortgage  revenue  bonds  not  otherwise
     securitized or credit  enhanced by Goldman Sachs,  which matures in October
     2028.

As of September  30, 2005,  we had  approximately  $342.4  million  available to
borrow under these debt and  securitization  facilities without exceeding limits
imposed by debt covenants and our trust agreement.

Equity
------

We have the ability to issue $100.0 million of equity  securities  pursuant to a
registration statement we have filed with the SEC. We currently have no plans to
issue any such securities.

Liquidity Requirements after September 30, 2005
-----------------------------------------------

During November 2005, equity distributions will be paid as follows:

(In thousands)
Common/CRA shareholders                  $24,700
SCU/SMU holders                            8,700
4.4% CRA Preferred shareholders              800
Equity Issuer Preferred shareholders       6,300
                                          ------

Total                                    $40,500
                                          ======

Other
-----

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


                                       35
<PAGE>



Summary of Cash Flows
---------------------

The net increase in cash and cash equivalents  during 2005 exceeded the increase
in 2004 despite  decreased  operating  inflows due to a lower level of investing
activity in 2005 as compared to 2004.

Despite  increased net income (including net income exclusive of non-cash income
and  expense  items),  operating  cash flows were lower in the 2005  period by a
margin of $45.1 million.  This decrease resulted from a higher level of mortgage
loan fundings and the timing of subsequent sales of the loans. Additionally, the
timing of  receipts  and  payments in  operating  asset and  liability  accounts
contributed to this decrease.

Investing  outflows were lower in 2005 as compared to 2004 by a margin of $141.9
million. The decrease was due to:

o    a lower level of mortgage revenue bond  acquisitions  coupled with a higher
     level of repayments;
o    a net decrease in advances to  partnerships as compared to a net investment
     outflow in 2004;
o    the  acquisition  of CCLP in 2005,  the cash  portion  of which was  mostly
     funded via a loan in 2004 which converted to an equity interest in 2005.

These  factors were offset in part by higher  restricted  cash  requirements  in
connection  with our  growing  mortgage  banking  business.  Additionally,  2004
inflows  included the recapture of cash collateral  balances related to our bond
securitization programs with no similar occurrence in the current year.

Financing  inflows in the 2005 period were lower than in 2004 by $61.7  million.
The primary reason for the higher inflows in 2004 was the issuance of common and
preferred  shares  in the  first  half of the  year,  with  only half as much in
comparable  offerings in the current  year.  The higher level of  securitization
activity  in 2005 was due in part to the  remarketing  of  borrowings  under the
fixed  rate   securitization   that  terminated  in  the  current  year  period.
Additionally,  financing  outflows  increased due to distributions on the higher
level of equity outstanding.

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

Note 16 to the condensed consolidated financial statements contains a summary of
the Company's guarantees and off-balance sheet arrangements.

The  following  table  reflects our maximum  exposure and carrying  amount as of
September 30, 2005, for guarantees we and our subsidiaries have entered into:

<TABLE>
<CAPTION>

                                                       Maximum         Carrying
             (In thousands)                            Exposure         Amount
--------------------------------------------          -----------     ----------
<S>                                                   <C>             <C>
Payment guarantees (1)                                $   45,471      $       --
Completion guarantees (1)                                 37,773              --
Operating deficit guarantees (1)                           1,629              --
Recapture guarantees (1)                                  66,366              --
Replacement reserve (1)                                    1,792              --
Mortgage pool credit enhancement (2)                      12,887              --
LIHTC guarantees (2)                                     646,176          21,427
Mortgage banking loss sharing agreement (3)              941,480           9,681
                                                      ----------      ----------

                                                      $1,753,574      $   31,108
                                                      ==========      ==========

</TABLE>

(1) These guarantees generally relate to business requirements for developers to
obtain  construction  financing.  As part of our role as co-developer of certain
properties,  we issue these  guarantees in order to secure  properties as assets
for the funds we manage.  To date, we have had minimal  exposure to losses under
these   guarantees  and  anticipate  no  material   liquidity   requirements  in
satisfaction of any guarantee issued.

(2) We see these credit  enhancement  deals as  opportunities to expand our Fund
Management  business by offering broad capital solutions to customers.  To date,
we have had minimal  exposure to losses under these  transactions and anticipate
no material  liquidity  requirements in  satisfaction of any credit  enhancement
provided. The carrying values disclosed above relate to the fees we earn for the
transactions,  which we recognize as the fair value of the credit enhancement in
accordance with FIN 45.

(3) The loss  sharing  agreement  with  Fannie  Mae is a normal  part of the DUS
lender  program  and  affords  a  higher  level of fees  than we earn for  other
comparable  funding sources.  The carrying value disclosed above is our estimate
of potential  exposure under the guarantees,  although any funding  requirements
for such exposure is based on the  contractual  requirements  of the  underlying
loans we sell to Fannie  Mae,  which  vary as to amount  and  duration,  up to a
maximum of 30 years.

The maximum  exposure  amount is not indicative of our expected losses under the
guarantees.


                                       36
<PAGE>



CONTRACTUAL OBLIGATIONS

The following  table provides our  commitments as of September 30, 2005, to make
future payments under our debt agreements and other contractual obligations:

<TABLE>
<CAPTION>

                                                                    Payments due by period
                                            ----------------------------------------------------------------------
                                                           Less than                                    More than
             (In thousands)                    Total         1 year        1-3 years     3-5 years       5 years
-----------------------------------------   ----------     ----------     ----------    -----------     ----------
<S>                                         <C>            <C>            <C>            <C>            <C>
Notes payable (1)                           $  173,372     $  156,333     $    5,452     $   11,587     $       --
Notes payable of consolidated
   partnerships (2)                            556,425         85,697        209,020         35,800        225,908
Operating lease obligations, net of
subleases                                       71,999          6,550         13,374         12,870         39,205
Unfunded loan commitments                      167,970        151,140         16,830             --             --
Financing arrangements (1)                   1,228,394      1,228,394             --             --             --
Preferred shares of subsidiary (subject
  to mandatory repurchase)                     273,500             --             --             --        273,500
                                            ----------     ----------     ----------     ----------     ----------

   Total                                    $2,471,660     $1,628,114     $  244,676     $   60,257     $  538,613
                                            ==========     ==========     ==========     ==========     ==========

</TABLE>

(1)  The amounts reflect the current  expiration,  reset or renewal date of each
     facility or security certificate.  Management has the ability and intent to
     renew, refinance or remarket the borrowings beyond their current due dates.

(2)  Of the notes  payable  of  consolidated  partnerships,  $438.3  million  is
     guaranteed  by  certain  equity  partners  of  the  investment  funds.  Per
     partnership  agreements,  the equity partners are also obligated to pay the
     principal  and  interest  on the  notes.  The  remaining  balance of $118.1
     million  is   collateralized   with  the   underlying   properties  of  the
     consolidated  operating  partnerships.  All of this debt is non-recourse to
     us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We invest in certain financial instruments, primarily mortgage revenue bonds and
other bond related investments that are subject to various forms of market risk,
including  interest  rate risk.  We seek to prudently  and actively  manage such
risks to earn  sufficient  compensation to justify the undertaking of such risks
and to  maintain  capital  levels  which  are  commensurate  with  the  risks we
undertake.

The  assumptions  related to the  following  discussion  of market risk  involve
judgments   involving  future  economic  market  conditions,   future  corporate
decisions and other interrelating  factors, many of which are beyond our control
and all of which are difficult or impossible to predict with accuracy.  Although
we believe that the assumptions  underlying the forward-looking  information are
reasonable, any of the assumptions could be inaccurate and, therefore, there can
be no assurance that the forward-looking  information included herein will prove
to be accurate. Due to the significant uncertainties inherent in forward-looking
information,  the  inclusion of such  information  should not be regarded as our
representation that our objectives and plans would be achieved.

INTEREST RATE RISK
------------------

The nature of our  investments  and the  instruments  used to raise  capital for
their acquisition expose us to income and expense volatility due to fluctuations
in market  interest rates.  Market  interest rates are highly  sensitive to many
factors,  including governmental  policies,  domestic and international economic
and political  considerations and other factors beyond our control. Our exposure
to interest rates is twofold:

o    the potential increase in interest expense on our variable-rate debt; and
o    the impact of changes in interest rates on the value of our assets.

IMPACT ON EARNINGS

Our  investments  in mortgage  revenue  bonds  generally  bear interest at fixed
rates, or pay interest according to the cash flows of the underlying properties,
which do not fluctuate with changes in market interest rates.

In contrast,  payments required under our floating-rate  securitization programs
vary based on market  interest  rates based on the BMA and are re-set  weekly or
every  35  days.  In  addition,  we  have  floating-rate  debt  related  to  our
acquisition financing and our warehouse  facilities.  Other long-term sources of
capital,  such as the preferred shares of our Equity Issuer subsidiary,  carry a
fixed dividend rate and, as such, are not impacted by changes in market interest
rates.


                                       37
<PAGE>



Excluding $589.3 million of debt hedged via interest rate swap  agreements,  the
full  amount of our  liabilities  labeled as  Financing  Arrangements  and Notes
Payable  are  variable  rate  debts.  We  estimate  that an  increase of 1.0% in
interest  rates  would  decrease  our annual net  income by  approximately  $8.6
million.

We manage this risk through the use of interest  rate swaps,  interest rate caps
and forward  bond  origination  commitments,  as  described  in the notes to our
financial  statements.  In  addition,  we manage our  exposure by  striving  for
diversification  in our businesses to include those not  susceptible to interest
rate changes and by managing our leverage.

IMPACT ON VALUATION OF ASSETS

Changes in market  interest  rates would also impact the estimated fair value of
our  portfolio of mortgage  revenue  bonds.  We estimate the fair value for each
mortgage  revenue bond as the present value of its expected cash flows,  using a
discount  rate for  comparable  tax-exempt  investments.  Therefore,  as  market
interest rates for tax-exempt  investments increase, the estimated fair value of
our mortgage  revenue bonds will  generally  decline,  and a decline in interest
rates would be expected to result in an increase in their estimated fair values.
For  example,  we  estimate,  using the same  methodology  used to estimate  the
portfolio  fair market value under SFAS 115,  that a 1% increase in market rates
for  tax-exempt  investments  would  decrease  the  estimated  fair value of our
portfolio  of mortgage  revenue  bonds from its  September  30,  2005,  value of
approximately  $2.2  billion  to  approximately  $2.1  billion.  A 1% decline in
interest rates would increase the value of the September 30, 2005,  portfolio to
approximately $2.4 billion.  Changes in the estimated fair value of the mortgage
revenue  bonds do not  impact  our  reported  net  income,  earnings  per share,
distributions or cash flows, but are reported as components of other accumulated
comprehensive  income and affect reported  shareholders'  equity, and may affect
our  borrowing  capability  to  the  extent  that  collateral  requirements  are
sometimes based on our asset values.

ITEM 4. CONTROLS AND PROCEDURES

(a)  EVALUATION OF DISCLOSURE  CONTROLS AND  PROCEDURES.  The Company  maintains
     disclosure  controls  and  procedures  that are  designed  to  ensure  that
     information  required to be disclosed in the reports that the Company files
     or submits under the  Securities  and Exchange Act is recorded,  processed,
     summarized,  and reported  within the time  periods  specified in the SEC's
     rules and forms,  and that such information is accumulated and communicated
     to the  Company's  management,  including its Chief  Executive  Officer and
     Chief  Financial  Officer,  as  appropriate,   to  allow  timely  decisions
     regarding required disclosures.

     As of the end of the period covered by this Quarterly  Report on Form 10-Q,
     the Company  carried out an evaluation,  under the supervision and with the
     participation  of the Company's  management,  including the Chief Executive
     Officer and Chief Financial Officer, of the effectiveness of the design and
     operation  of  our  disclosure  controls  and  procedures  pursuant  to the
     Securities and Exchange Act Rule 13a-15.  Based upon this  evaluation as of
     September 30, 2005, the Chief Executive Officer and Chief Financial Officer
     have  concluded that the Company's  disclosure  controls and procedures are
     effective  to ensure  that  information  required  to be  disclosed  by the
     Company in the reports that the Company files or submits under the Exchange
     Act is  recorded,  processed,  summarized  and  reported,  within  the time
     periods  specified  in the SEC rules  and  forms,  and to ensure  that such
     information is accumulated and  communicated  to the Company's  management,
     including  the Chief  Executive  Officer and Chief  Financial  Officer,  as
     appropriate, to allow timely decisions regarding required disclosure.

(b)  INTERNAL  CONTROL  OVER  FINANCIAL  REPORTING.  To  remediate  the material
     weaknesses in internal controls identified during the Company's  evaluation
     pursuant  to Section 404 of the  Sarbanes-Oxley  Act of 2002 as of the year
     ended December 31, 2004, during the first nine months of 2005, we have:

     (i)  hired a director of taxation, a newly created position;
     (ii) taken  steps to  remediate  the errors in our tax  accounting  through
          increased  use of  third-party  tax  service  providers  for the  more
          complex areas of our tax accounting and increased  formality and rigor
          of controls and procedures over accounting for income taxes;
     (iii)strengthened  our due diligence  procedures  in reviewing  acquisition
          candidates  to  ensure  that  any  required   recharacterizations  are
          identified on a timely basis; and
     (iv) strengthened our analytical  procedures with regard to the preparation
          and review of all consolidation eliminations.


                                       38
<PAGE>



                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         We are subject to routine  litigation  and  administrative  proceedings
         arising in the ordinary course of business. Management does not believe
         that such matters will have a material  adverse impact on our financial
         position, results of operations or cash flows.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         In July 2005,  we issued  approximately  2.2  million  4.4%  Cumulative
         Perpetual  Convertible  Community  Reinvestment  Act  Preferred  Shares
         ("4.4%  Convertible CRA Preferred  Shares") for $108.0 million.  Net of
         underwriters  fees and expenses,  our net proceeds  were  approximately
         $104.6  million.  The shares carry a cumulative  preferred  4.4% return
         based upon the  liquidation  amount of $50 per share and have no stated
         maturity.  Beginning July 2008,  holders of the shares may convert them
         into  approximately  3.9 million common shares,  and we may also redeem
         the shares at our option.  The shares are also  subject to  remarketing
         provisions  beginning in July 2015. These shares have no voting rights.
         Meridian Investments acted as placement agent for this offering.

         Securities purchased by us
         --------------------------

         The following table presents  information related to our repurchases of
         our  equity  securities  during  the  third  quarter  of 2005 and other
         information related to our repurchase program:

<TABLE>
<CAPTION>

                         Purchases of Equity Securities

                                  (a)             (b)              (c)                     (d)

                                                               Total number
                                                                 of shares
                                 Total                       purchased as part       Maximum number
                               number of        Average         of publicly       of shares that may yet
                                shares        price paid      announced plans     be purchased under the
          Period             purchased (1)     per share        or programs          plans or programs
    --------------------     -------------    -----------    -----------------    ----------------------
<S>                              <C>            <C>                  <C>                <C>
    July 1-31, 2005              24,299         $21.96               --
    August 1-31, 2005                --             --               --
    September 1-30, 2005             --             --               --
                               --------         ------          -------

    Total                        24,299         $21.96               --                 1,266,974
                               ========         ======          =======                ==========

</TABLE>

         (1) These  repurchases were in payment of tax  withholding  obligations
         incurred by holders of newly vested restricted  shares and were outside
         of our share repurchase program.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None

ITEM 5.  OTHER INFORMATION

         On  November 8, 2005,  CharterMac  announced that Stuart J. Boesky will
         step down  from his position as CharterMac's  Chief  Executive  Officer
         and as a  member of its Board of Trustees, effective November 15, 2005.
         The Board of  Trustees has appointed CharterMac's Chairman,  Stephen M.
         Ross, as  interim Chief Executive Officer, and has begun a search for a
         new  Chief Executive Officer. The Board will consider both internal and
         external  candidates.  In  connection  with   Mr.  Boesky's  departure,
         CharterMac's  President,  Marc D.  Schnitzer,  and  its Chief Financial
         Officer, Alan P. Hirmes, will assume certain of his duties.

         Pursuant to  the  Agreement,  Mr.  Boesky will serve as a consultant to
         CharterMac and  its  subsidiaries  (collectively,  the "Company") for a
         period of one  year, and his  consulting  contract may be terminated by
         either  party.  The  Company  will pay Mr.  Boesky  approximately  $2.8
         million in  connection  with the  Agreement;  the Company will pay $1.5
         million in cash  and issue  common  shares  worth  $800,000  during the
         fourth quarter  of 2005, with the balance paid in cash during the first


                                       39
<PAGE>



                           PART II. OTHER INFORMATION

         quarter of 2006.  Pursuant to  the terms of the Agreement,  the Company
         also will pay  Mr. Boesky  approximately  $64,000 in the fourth quarter
         of 2004 and approximately $175,000 in 2006 for consulting services.

         In addition,  CharterMac  will  accelerate  the vesting  on  restricted
         shares and  share  options it had  previously  granted to Mr. Boesky as
         well as  the common shares granted under the Agreement,  and the lockup
         agreement  with  respect to his special common units of a subsidiary of
         CharterMac,  which are  exchangeable for common shares of CharterMac on
         a one for one basis, will terminate upon his departure.

         Pursuant to  the  Agreement,  Mr.  Boesky and the Company have mutually
         released claims each  may have against the other, if any. The Agreement
         also contains  non-compete provisions and provides that Mr. Boesky will
         not solicit  Company  employees  or clients for specified time periods.
         Mr.  Boesky  also  has  agreed  to a  standstill  with  respect  to the
         acquisition  of  securities  of American  Mortgage  Acceptance  Company
         ("AMAC") or  other  specified  actions with respect to AMAC.  AMAC is a
         Massachusetts  real  estate  investment  trust  which is managed by an
         affiliate of CharterMac.

ITEM 6.  EXHIBITS

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

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

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


               *  Filed herewith


                                       40
<PAGE>



                                   SIGNATURES



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



                                   CHARTERMAC
                                  (Registrant)



Date:  November 9, 2005        By: /s/ Stuart J. Boesky
                                   --------------------
                                   Stuart J. Boesky
                                   Managing Trustee and Chief Executive Officer



Date:  November 9, 2005        By: /s/ Alan P. Hirmes
                                   ------------------
                                   Alan P. Hirmes
                                   Managing Trustee, Chief Financial Officer and
                                   Chief Operating Officer


<PAGE>



                                                                    Exhibit 31.1



                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002



I, Stuart J. Boesky, hereby certify that:

     1.  I have  reviewed  this  quarterly  report on Form  10-Q for the  period
         ending September 30, 2005 of CharterMac;

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

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

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

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

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

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

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

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

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

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


         Date:  November 9, 2005                    By:  /s/Stuart J. Boesky
                                                         -------------------
                                                         Stuart J. Boesky
                                                         Chief Executive Officer


<PAGE>



                                                                    Exhibit 31.2



                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002



I, Alan P. Hirmes, hereby certify that:

     1.  I have  reviewed  this  quarterly  report on Form  10-Q for the  period
         ending September 30, 2005 of CharterMac;

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

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

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

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

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

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

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

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

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

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


         Date:  November 9, 2005                    By:  /s/ Alan P. Hirmes
                                                         ------------------
                                                         Alan P. Hirmes
                                                         Chief Financial Officer


<PAGE>



                                                                    Exhibit 32.1



        CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
            (UNITED STATES CODE, TITLE 18, CHAPTER 63, SECTION 1350)
                  ACCOMPANYING QUARTERLY REPORT ON FORM 10-Q OF
               CHARTERMAC FOR THE QUARTER ENDED SEPTEMBER 30, 2005


In  connection  with the  Quarterly  Report on Form 10-Q of  CharterMac  for the
quarterly  period ending  September 30, 2005, as filed with the  Securities  and
Exchange  Commission  on the date hereof (the  "Report"),  Stuart J. Boesky,  as
Chief Executive  Officer of our Company,  and Alan P. Hirmes, as Chief Financial
Officer of our Company,  each hereby  certifies,  pursuant to 18 U.S.C.  Section
1350, that:


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


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



By:  /s/ Stuart J. Boesky                           By:  /s/ Alan P. Hirmes
     --------------------                                ------------------
     Stuart J. Boesky                                    Alan P. Hirmes
     Chief Executive Officer                             Chief Financial Officer
     November 9, 2005                                    November 9, 2005