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, 2003


                                       OR


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


                         Commission File Number 1-13237


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                  ---------------------------------------------
         (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) 421-5333


         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 Exchange Act Rule 12b-2).  Yes X   No ____



<PAGE>


                               PART I - FINANCIAL

Item 1.  Financial Statements

                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)


<TABLE>
<CAPTION>

                                                                        ================= =================
                                                                         September 30,     December 31,
                                                                                  2003             2002
                                                                        ----------------- -----------------
                                                                          (Unaudited)
<S>                                                                           <C>                <C>

ASSETS
Revenue bonds-at fair value                                                   $1,712,897         $1,579,590
Other investments                                                                 39,908             44,096
Mortgage servicing rights                                                         32,803             35,595
Cash and cash equivalents                                                         83,115             13,699
Cash and cash equivalents-restricted                                              84,005             46,785
Interest receivable - net                                                         10,019              9,020
Promissory notes and mortgages receivable                                         17,636             53,278
Deferred costs - net of amortization of $11,495 and $8,451                        55,125             48,693
Goodwill                                                                           5,560              4,793
Other intangible assets - net of amortization of
   $2,107 and $1,750                                                              10,959             11,316
Other assets                                                                       6,388              6,003
                                                                              ----------         ----------

Total assets                                                                  $2,058,415         $1,852,868
                                                                               =========          =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Financing arrangements                                                    $   863,621        $   671,659
   Preferred shares of subsidiary (subject to mandatory
      repurchase)                                                                273,500                 --
   Notes payable                                                                  83,695             68,556
   Interest rate hedges                                                            3,453              5,504
   Accounts payable, accrued expenses and other liabilities                       14,041             32,378
   Deferred income                                                                14,067              8,998
   Due to Manager and affiliates                                                   3,965              4,126
   Deferred tax liability                                                          6,567             10,790
   Distributions payable                                                          20,936             19,020
                                                                              ----------         ----------

Total liabilities                                                              1,283,845            821,031
                                                                               ---------         ----------

Preferred shares of subsidiary (subject to mandatory
   repurchase)                                                                        --            273,500
                                                                              ----------         ----------

Minority interest in consolidated subsidiary                                       5,788              4,822
                                                                              ----------         ----------

Commitments and contingencies

Shareholders' equity:
   Beneficial owners' equity - convertible CRA share-
      holders (6,074,767 and 3,835,002 shares, issued and
      outstanding in 2003 and 2002, respectively)                                112,412             58,174
   Beneficial owner's equity-manager                                               1,130              1,126
   Beneficial owners' equity-other common shareholders
      (100,000,000 shares authorized; 42,089,694 shares issued
      and 42,081,294 outstanding and 41,168,618
      shares issued and 41,160,218 outstanding in
      2003 and 2002, respectively)                                               608,539            604,496
   Treasury shares of beneficial interest (8,400 shares)                            (103)              (103)
   Accumulated other comprehensive income                                         46,804             89,822
                                                                              ----------         ----------
Total shareholders' equity                                                       768,782            753,515
                                                                              ----------         ----------

Total liabilities and shareholders' equity                                    $2,058,415         $1,852,868
                                                                               =========          =========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       2
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 (Dollars in thousands except per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                    =============================     ============================
                                                        Three Months Ended                 Nine Months Ended
                                                           September 30,                     September 30,
                                                    -----------------------------     ----------------------------
                                                        2003           2002               2003           2002
                                                    -------------- --------------     -------------- -------------
<S>                                                  <C>            <C>                 <C>           <C>

Revenues:
   Interest income:
     Revenue bonds                                   $   30,353     $   22,819          $   83,528    $   67,764
     Other interest income                                  686          1,141               2,342         4,189
     Promissory notes                                        82            166                 363           489
   Mortgage banking fees                                    898            594               3,072         3,644
   Mortgage servicing fees                                2,273          2,050               6,639         5,912
   Other income                                           1,556          1,314               5,033         2,949
                                                      ---------      ---------           ---------     ---------
   Total revenues                                        35,848         28,084             100,977        84,947
                                                      ---------      ---------           ---------     ---------

Expenses:
   Interest expense                                       4,889          3,850              13,592        11,634
   Interest expense - distributions to
     preferred shareholders of subsidiary                 4,724             --              14,173            --
   Recurring fees - securitizations                       1,039            811               3,021         2,289
   Bond servicing                                         1,123            875               3,185         2,519
   General and administrative                             6,550          4,166              17,477        14,939
   Depreciation and amortization                          2,242          2,024               6,844         6,024
   Loss on impairment of revenue bonds                    1,758            532               1,758           532
                                                      ---------      ---------           ---------     ---------

      Total expenses                                     22,325         12,258              60,050        37,937
                                                      ---------      ---------           ---------     ---------

Income before gain on repayment of revenue
   bonds, sale of loans and equity in earnings
   of ARCap                                              13,523         15,826              40,927        47,010

Equity in earnings of ARCap                                 555            555               1,665         1,664

Gain on sales of loans                                      444          1,465               2,994         7,871

Gain on repayment of revenue bonds                          557             --               2,797         3,979
                                                      ---------      ---------           ---------     ---------

Income before allocation to preferred
   shareholders of subsidiary and minority
   interest                                              15,079         17,846              48,383        60,524

   Income allocated to preferred shareholders
   of subsidiary                                             --         (4,724)                 --       (12,541)

   (Income) loss allocated to minority interest             147           (124)                186          (377)
                                                      ---------      ---------           ---------     ---------

Income before benefit (provision) for income
   taxes                                                 15,226         12,998              48,569        47,606

   Benefit (provision) for income taxes                     689            656               3,453          (983)
                                                      ---------      ---------           ---------     ---------

Net income                                           $   15,915     $   13,654          $   52,022    $   46,623
                                                      =========      =========           =========     =========

Allocation of net income to:
   Special distribution to Manager                   $    1,583     $    1,294          $    4,453    $    3,622
                                                      =========      =========           =========     =========
   Manager                                           $        2     $      124          $        5    $      430
                                                      =========      =========           =========     =========
   Common shareholders                               $   12,727     $   11,327          $   43,132    $   40,266
   Convertible CRA shareholders                           1,603            909               4,432         2,305
                                                      ---------      ---------           ---------     ---------
      Total for shareholders                         $   14,330     $   12,236          $   47,564    $   42,571
                                                      =========      =========           =========     =========

Net income per share
   Basic                                             $     0.31     $     0.28          $     1.05    $     1.01
                                                      ---------      ---------           ---------     ---------
   Diluted                                           $     0.31     $     0.28          $     1.04    $     1.01
                                                      ---------      ---------           ---------     ---------

Weighted average shares
outstanding:

   Basic                                             46,331,385     44,209,982          45,484,538    42,030,318
                                                     ==========     ==========          ==========    ==========
   Diluted                                           46,366,342     44,282,733          45,517,942    42,099,407
                                                     ==========     ==========          ==========    ==========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>


                 CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                             Beneficial
                                           Owners' Equity Beneficial   Beneficial     Treasury                Accumulated
                                           - Convertible   Owner's   Owners' Equity- Shares of                   Other
                                                CRA        Equity -   Other Common   Beneficial Comprehensive Comprehensive
                                            Shareholders   Manager    Shareholders    Interest     Income     Income (Loss) Total
                                            ------------   -------    ------------    --------     ------     ------------  -----

<S>                                           <C>        <C>          <C>             <C>        <C>          <C>         <C>

Balance at January 1, 2003                    $  58,174   $  1,126     $604,496        $(103)                  $  89,822   $753,515
Comprehensive income:
 Net income                                       4,432      4,458       43,132                   $  52,022                  52,022
                                                                                                   --------
 Other comprehensive gain (loss):
     Net unrealized gain on interest rate
        derivatives                                                                                   2,073
     Net unrealized loss on revenue bonds:
     Unrealized holding loss arising during
        the period                                                                                  (42,294)
     Less: Reclassification adjustment for
        net loss included in net income                                                              (2,797)
                                                                                                   --------
 Total other comprehensive loss:                                                                    (43,018)     (43,018)   (43,018)
                                                                                                   --------
 Total comprehensive income                                                                       $   9,004
                                                                                                   ========
Issuance of Convertible CRA Shares               53,783                                                                      53,783
Options exercised                                                         2,456                                               2,456
Distributions                                    (3,977)    (4,454)     (41,545)                                            (49,976)
                                              ---------   --------     --------         ----                    --------    -------

Balance at September 30, 2003                  $112,412   $  1,130     $608,539        $(103)                  $  46,804   $768,782
                                                =======    =======      =======         ====                    ========    =======
</TABLE>


                                       4
<PAGE>


                 CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                ==================================
                                                                                       Nine Months Ended
                                                                                         September 30,
                                                                                ----------------------------------
                                                                                     2003              2002
                                                                                ----------------------------------
<S>                                                                                  <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                      $   52,022       $   46,623
   Adjustments to reconcile net income to net cash
      provided by operating activities:
   Gain on repayment of revenue bonds                                                  (2,797)          (3,979)
   Loss on impairment of revenue bonds                                                  1,758              532
   Other amortization                                                                   2,062              815
   Amortization of other intangible assets                                                357              357
   Amortization of bond selection costs                                                 1,587            1,354
   Amortization of mortgage servicing rights                                            4,688            4,944
   Distributions to preferred shareholders of subsidiary                               14,173               --
   Income allocated to preferred shareholders
      of subsidiary                                                                        --           12,541
   Equity in earnings of ARCap, in excess of
      distributions received                                                               --             (104)
   Increase in mortgage servicing rights                                               (1,897)          (7,498)
   Increase in provision for loss under FNMA DUS
      product line                                                                         --              596
   Income (loss) allocated to minority interest                                          (186)             377
   Issuance of shares of subsidiary - compensation expense                              1,152              498
   Decrease in mortgages receivable                                                    28,439               --
   Changes in operating assets and liabilities:
      Interest receivable                                                              (1,042)          (1,191)
      Other assets                                                                      3,257              (64)
      Deferred income                                                                   5,099            4,809
      Accounts payable, accrued expenses and
         other liabilities                                                            (18,339)           1,774
      Deferred tax liability                                                           (4,223)             143
      Due to Manager and affiliates                                                      (340)             156
      Fair value of interest rate cap                                                      22             (100)
                                                                                    ---------        ---------
Net cash provided by operating activities                                              85,792           62,583
                                                                                    ---------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from repayments of revenue bonds                                           72,276           86,130
   Periodic principal payments of revenue bonds                                        12,793            4,179
   Proceeds from repayment of note                                                         --            6,600
   Purchase/advances to revenue bonds                                                (265,796)        (279,018)
   Other investments                                                                    4,188           (5,263)
   Increase in deferred bond selection costs                                           (6,928)          (6,629)
   Increase in promissory notes                                                            --           (3,409)
   Increase in cash and cash equivalents - restricted                                 (37,219)         (41,726)
   Decrease in notes receivable                                                            --           10,562
   Goodwill                                                                              (767)          (2,983)
   Loans made to properties                                                            (1,879)              --
   Principal payments received from loans
      made to properties                                                                9,082            1,939
                                                                                     --------         --------
Net cash used in investing activities                                                (214,250)        (229,618)
                                                                                     --------         --------
</TABLE>


                                   Continued
                                       5
<PAGE>


                 CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                ==================================
                                                                                       Nine Months Ended
                                                                                         September 30,
                                                                                     2003              2002
                                                                                ----------------------------------
<S>                                                                               <C>               <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
    Distributions paid to the Manager and Common
      shareholders                                                                   (44,232)          (39,319)
   Distributions paid to preferred shareholders
      of subsidiary                                                                  (14,173)          (11,510)
   Distributions paid to Convertible CRA
      shareholders                                                                    (3,617)           (1,732)
   Proceeds from financing arrangements                                              192,699            54,500
   Principal repayments of financing arrangements                                       (737)          (67,282)
   Increase (decrease) in notes payable                                               15,139           (10,562)
   Increase in deferred costs relating to the
      Private Label Tender Option Program                                               (554)             (636)
   Options exercised and stock compensation                                            2,426                --
   Issuance of Convertible CRA Shares                                                 53,783                --
   Issuance of common shares                                                              --            92,353
   Retirement of Convertible CRA Shares                                                   --            22,938
   Issuance of preferred stock of subsidiary                                              --            55,000
   Increase in deferred costs relating to the
      preferred shares offering                                                           --            (2,068)
   Increase in other deferred costs                                                   (2,860)           (2,002)
                                                                                  ----------        ----------
Net cash provided by financing activities                                            197,874            89,680
                                                                                    --------         ---------

Net increase (decrease) in cash and cash equivalents                                  69,416           (77,355)
Cash and cash equivalents at the
   beginning of the period                                                            13,699           105,364
                                                                                   ---------          --------
Cash and cash equivalents at the
   end of the period                                                              $   83,115        $   28,009
                                                                                   =========         =========

SUPPLEMENTAL INFORMATION:
   Interest paid                                                                  $   28,600        $   21,757
                                                                                   =========         =========
   Taxes paid                                                                     $      135        $      582
                                                                                   =========         =========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       6
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


NOTE 1 - General

Charter Municipal  Mortgage  Acceptance Company  ("CharterMac"),  along with its
consolidated  subsidiaries  (the  "Company"),  is  a  Delaware  statutory  trust
principally engaged in the acquisition and ownership (directly or indirectly) of
tax-exempt  multifamily  housing  revenue  bonds  ("Revenue  Bonds")  and  other
investments  that produce  tax-exempt  income,  issued by various state or local
governments,  agencies, or authorities. The Company is also engaged in providing
credit  enhancements  and certain other  guarantees,  and  originates  loans for
multifamily  housing  through its  subsidiary PW Funding Inc.  ("PWF").  Revenue
Bonds  are  primarily  secured  by  participating  and  non-participating  first
mortgage loans on underlying properties ("Underlying Properties"). In some cases
the Company also acquires  smaller taxable loans in conjunction with acquiring a
Revenue Bond.

The Company is governed by a board of trustees  comprised  of three  independent
managing  trustees and five managing  trustees who are  affiliated  with Related
Capital  Company  ("Related"),  a  nationwide,   fully  integrated  real  estate
financial  services  firm.  CharterMac,   through  CharterMac  Corporation  ("CM
Corp."),  a  wholly-owned  subsidiary,  has engaged  Related  Charter L.P.  (the
"Manager"),   an  affiliate  of  Related,  to  manage  its  day-to-day  affairs.
CharterMac  has  also  directly  engaged  the  Manager  to  provide   additional
management services.

On December 18, 2002, the Company  announced it had entered into an agreement to
acquire  100%  of  the  ownership  interests  in  and  substantially  all of the
businesses  operated by Related (other than specific  excluded  interests  which
will be retained by the principals of Related).  The acquisition will enable the
Company to terminate its outside  management  agreement  with the Manager and to
become  an  internally-managed  company.  The  annual  meeting  to  vote  on the
acquisition  of  Related,   originally  scheduled  for  October  29,  2003,  was
rescheduled to November 17, 2003, due to the low number of votes received.

The  consolidated  financial  statements  include the accounts of CharterMac and
five subsidiary statutory trusts which it controls: CM Holding Trust, CharterMac
Equity Issuer Trust,  CharterMac  Origination  Trust I, CharterMac Owner Trust I
and Tax-Exempt  Multifamily Housing Trust and one wholly-owned  corporation,  CM
Corp. CM Corp. owns approximately 85% of the economics of and has voting control
over PWF, which is also included in the consolidated  financial statements.  All
intercompany  accounts and transactions  have been eliminated in  consolidation.
Unless  otherwise  indicated,  the  "Company",  as hereinafter  used,  refers to
Charter Municipal Mortgage Acceptance Company and its consolidated subsidiaries.

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, 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  annual
financial statements prepared in accordance with accounting principles generally
accepted  in the  United  States of  America  ("GAAP")  have been  condensed  or
omitted.  It is  suggested  that these  financial  statements  should be read in
conjunction  with the financial  statements  and notes  thereto  included in the
Company's Form 10-K for the year ended December 31, 2002.

The  consolidated  financial  statements  of the Company are prepared  using the
accrual method of accounting in conformity with GAAP, which requires the Manager
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.  Significant  estimates  in  the  financial  statements  include  the
valuation of the Company's  investments  in Revenue  Bonds,  mortgage  servicing
rights ("MSRs") and interest rate derivatives.


                                       7
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


Certain  amounts in the 2002  financial  statements  have been  reclassified  to
conform to the 2003 presentation.

Significant Accounting Policies
-------------------------------

Investment in Revenue Bonds

The Company accounts for its investments in Revenue Bonds as  available-for-sale
debt  securities  under the  provisions  of Statement  of  Financial  Accounting
Standards  No.  115,  "Accounting  for  Certain  Investments  in Debt and Equity
Securities"  ("SFAS 115") due to a provision in most of its Revenue  Bonds under
which the Company has a right to require  redemption  of the Revenue Bonds prior
to  their  maturity,  although  it can and may  elect  to hold  them up to their
maturity dates unless otherwise modified. As such, SFAS 115 requires the Company
to classify these investments as "available-for-sale." Accordingly,  investments
in Revenue Bonds are carried at their  estimated  fair values,  with  unrealized
gains and losses reported in other  comprehensive  income.  Unrealized  gains or
losses  do  not  affect  the  cash  flow  generated  from  property  operations,
distributions to shareholders,  the  characterization  of the tax-exempt  income
stream or the financial obligations under the Revenue Bonds.

If, in the judgment of the Manager,  it is determined  probable that the Company
will not receive  all  contractual  payments  required,  when they are due,  the
Revenue Bond is deemed  impaired and is written down to its then  estimated fair
value, with the amount of the write-down accounted for as a realized loss.

Because  Revenue Bonds have a limited market,  the Company  estimates fair value
for each bond as the present  value of its expected  cash flows using a discount
rate  for  comparable  tax-exempt  investments.   This  process  is  based  upon
projections of future economic events affecting the real estate  collateralizing
the bonds,  such as property  occupancy  rates,  rental  rates,  operating  cost
inflation,  market  capitalization  rates  and an  appropriate  market  rate  of
interest,  all of  which  are  based on good  faith  estimates  and  assumptions
developed by the Manager.  Changes in market  conditions and  circumstances  may
occur which would cause these  estimates and  assumptions to change;  therefore,
actual results may vary from the estimates and the variance may be material.

For certain  Revenue  Bonds,  management  believes  that  certain  factors  have
impacted the near-term  fair value.  In these  instances,  the Revenue Bonds are
valued  at  either  the  outstanding  face  amount  of the bond or  management's
estimate of the fair value, whichever is lower.

Other Investments

Other investments include the following items:

   Investment  in ARCap - The  Company's  preferred  equity  investment in ARCap
   Investors,  L.L.C. ("ARCap") is accounted for using the equity method because
   the  Company  has the  ability to  exercise  significant  influence,  but not
   control, over ARCap's operating and financial policies.

   Guaranteed Investment Contracts - The Company,  through PWF, is participating
   in the Federal  National  Mortgage  Association  ("Fannie  Mae")  "Guaranteed
   Investment  Agreement Rate Lock Loan Financing"  program for properties which
   are in the construction  phase.  Under this program,  Fannie Mae commits to a
   fixed  interest  rate  on a  permanent  loan,  which  will be  closed  at the
   completion of the construction  phase of the property.  The rate lock forward
   commitment  provided by Fannie Mae exists for a maximum period of twenty-four
   months. Fannie Mae loans the Company the amount of the future permanent loan,
   which is required to be deposited in a guaranteed  investment contract during
   the construction  phase. In exchange for such loan, the Company issues Fannie
   Mae a  promissory  note  whose  interest  is paid  from the  interest  on the
   guaranteed  investment  contract  and  the  negative  arbitrage  paid  by the
   borrower.  The  interest  rate on the note is  equivalent  to the fixed  rate
   committed to on the permanent loan. At the close of the  construction  phase,
   the Company unwinds the guaranteed  investment  contract to repay the note to
   Fannie Mae. The Company  originates the permanent loan to the borrower at the
   rate


                                       8
<PAGE>


   locked  amount,  which is  subsequently  purchased from the Company by Fannie
   Mae.  The  Company  has  commitments  from  Fannie Mae under this  program of
   approximately $5.2 million as of September 30, 2003.

   Temporary  Investments  -  Temporary  investments  may  consist  of  puttable
   floating option tax-exempt receipts,  short-term senior securities which bear
   interest  at a  floating  rate  that is reset  weekly  and  other  short-term
   investments  that generate  tax-exempt  and taxable  interest  income.  These
   investments are recorded at cost, which is equal to market value.

Cash and Cash Equivalents

Cash and cash  equivalents  includes cash in banks and investments in short-term
instruments with an original  maturity of three months or less.  Certain amounts
of cash and cash  equivalents are restricted and serve as additional  collateral
for borrowings within our existing securitization programs.

Mortgage Banking Activities

PWF is an approved seller/servicer of multifamily mortgage loans for Fannie Mae,
Federal  Home Loan  Mortgage  Corporation  ("Freddie  Mac")  and the  Government
National  Mortgage  Association  ("Ginnie Mae"). For Fannie Mae, PWF is approved
under the Delegated  Underwriting and Servicing ("DUS") program. Under DUS, upon
obtaining a commitment from Fannie Mae with regard to a particular loan,  Fannie
Mae commits to acquire the mortgage loan based upon PWF's  underwriting  and PWF
agrees  to bear a  portion  of the risk of  potential  losses  in the event of a
default.  Fannie Mae  commitments  may be made to acquire the mortgage  loan for
cash or in exchange for a mortgage-backed  security backed by the mortgage loan.
As a Program Plus lender for Freddie Mac, Freddie Mac agrees to acquire for cash
from PWF loans  for  which PWF has  issued  commitments.  Ginnie  Mae  agrees to
exchange FHA-insured mortgages originated by PWF for Ginnie Mae securities.

Mortgage loans  originated for Fannie Mae,  Freddie Mac or Ginnie Mae are closed
in the name of PWF which  uses  corporate  cash  obtained  by  borrowing  from a
warehouse  lender to fund the loans.  Approximately  a week to a month following
closing of a loan, loan  documentation and an assignment are delivered to Fannie
Mae,  Freddie Mac,  Ginnie Mae, or a document  custodian on its behalf,  and the
cash  purchase  price or  mortgage-backed  security is delivered to PWF. Cash is
used to repay warehouse loans and  mortgage-backed  securities are sold pursuant
to prior  agreements for cash which is used to repay warehouse  loans.  PWF also
underwrites and originates  multifamily  and commercial  mortgages for insurance
companies and banks.

PWF  receives a fee ranging from 50bps to 100bps for its  origination  services,
included in mortgage  banking  fees in the  Consolidated  Statements  of Income.
Neither the Company nor PWF retains any interest in any of the  mortgage  loans,
except for MSRs and certain liabilities under the loss-sharing  arrangement with
Fannie Mae.

Mortgage Servicing Rights

The  Company  recognizes  as assets  the rights to  service  mortgage  loans for
others,  whether the MSRs are  acquired  through a separate  purchase or through
loan  origination,  by allocating  total costs incurred between the loan and the
MSRs  retained  based on their  relative  fair value.  MSRs are being carried at
their  adjusted cost basis.  MSRs are  amortized in proportion  to, and over the
period of, estimated net servicing income.

The Company has two areas of loss  exposure  related to its lending  activities.
First,  while a loan is  recorded  on the  balance  sheet,  there is exposure to
potential loss if a loan becomes impaired and defaults.  Second, the Company has
exposure  to loss due to its  retention  of a portion of credit  risk within its
servicing contract under the Fannie Mae DUS program.


                                       9
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


When a loan is owned by PWF and recorded on the balance  sheet,  PWF  identifies
loans that are impaired and  evaluates the allowance for loss on a specific loan
basis for losses believed to currently exist in the recorded loan portfolio.  An
impaired loan is defined, as noted within accounting guidance,  when contractual
payments are not made. PWF's primary tool for determining which loans are likely
to currently  have a loss  associated  with them is to evaluate the debt service
coverage ratio based on PWF's  historical  experience of similar  properties and
the  frequency of such losses.  Loans that are impaired and specific  loans that
are not impaired but have debt service coverage ratios below a certain threshold
as having a high likelihood of future foreclosure and currently have an existing
loss,  are  evaluated.  The estimate of currently  existing  loss,  includes the
estimated severity of the loss which would include any advances made or existing
property loss. Property maintenance costs (when foreclosure occurs) are expensed
when incurred and not included in the loss estimate.  However, as most loans are
sold very quickly after origination, there typically is not a significant amount
of loan loss allowance recorded.

The Company has  exposure  to loss due to its  retention  of a portion of credit
risk within PWF's servicing contract under the Fannie Mae DUS program. For loans
which  have been sold as  commercial  mortgage-backed  securities  for which PWF
retains the  servicing  under Fannie  Mae's DUS program,  PWF's share of loss is
associated  with the servicing  contract and  determined in accordance  with the
loss  sharing   provisions   under  the  program.   Prior  to  the  issuance  of
Interpretation No. 45, "Guarantors'  Accounting and Disclosure  Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"),
because  the loss  sharing  on these  serviced  loans  was  associated  with the
servicing  contract,  they  are  valued  within  the  servicing  right  and  the
anticipated cash flows that are associated with such servicing  activities.  The
Com-pany has determined  that these  potential  losses are guarantees  under the
definition  of FIN 45 and  therefore,  will record an asset and a  corresponding
liability  based on the Company's  estimate of the portion of the servicing cash
flows  deemed to represent  compensation  to the Company for its  guarantee  for
loans  originated  on/or after January 1, 2003. On an ongoing basis, the Company
will account for the asset by offsetting cash received for the guarantee against
the asset  and  crediting  interest  income  for the  change in asset due to the
passage  of time.  The  portion of the  liability  representing  an accrual  for
probable losses under SFAS No. 5, "Accounting for Contingencies"  ("FAS 5") will
be adjusted as loss estimates  change;  the portion  representing  the Company's
willingness to stand by as guarantor will be amortized over the expected life of
the guarantee.

The components of the change in MSRs are as follows:

     Servicing Assets                                      (Dollars in millions)
     ---------------------------------------------------  ----------------------

     Balance at December 31, 2002                                   $35.5
     MSR's capitalized during the nine
        months ended September 30, 2003                               4.3
     Amortization                                                    (4.6)
     Increase in reserves                                            (2.4)
                                                                   -------
     Balance at September 30, 2003                                  $32.8
                                                                     ====

     Reserve for Loan Loss Reserves of
     Servicing Assets
     ---------------------------------------------------

     Balance at December 31, 2002                                  $  4.3
     Additions                                                        2.4
                                                                    -----
     Balance at September 30, 2003                                 $  6.7
                                                                    =====

The estimated fair values of the MSRs were $37.8 million and $36.7  million,  at
September 30, 2003 and December 31, 2002, respectively.


                                       10
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


The significant assumptions used by the third party valuation firm in estimating
the fair value of the servicing assets at September 30, 2003 were as follows:


<TABLE>
<CAPTION>

                                                    Fannie Mae              FHA             Freddie Mac
                                                   ---------------      --------------     ---------------
<S>                                                   <C>                <C>                 <C>
Weighted average discount rate                         17.07%              16.86%             16.99%
Weighted average pre-pay speed                         12.12%              10.58%             15.09%
Weighted average lockout period                       56 months          31 months           73 months
Cost to service loans                                  $2,493              $1,365             $1,942
Acquisition cost (per loan)                            $1,500              $  471             $1,480
</TABLE>

Revenue Recognition

The Company  derives its revenues from a variety of investments  and guarantees,
summarized as follows:

     Interest  Income from Revenue Bonds - Interest  income is recognized at the
     stated  rate as it accrues  and when  collectibility  of future  amounts is
     reasonably  assured.  Participating  interest is recognized  when received.
     Interest  income  from  Revenue  Bonds  with  modified  terms or where  the
     collectibility  of future  amounts is  uncertain is  recognized  based upon
     expected cash receipts.  Certain construction Revenue Bonds carry different
     interest rates during the construction and permanent  financing periods. In
     these cases, the Company calculates the effective yield on the Revenue Bond
     and uses that rate to recognize interest income over the life of the bond.

     Interest Income from Promissory  Notes and Mortgages  Receivable - Interest
     on mortgage  loans and notes  receivable is recognized on the accrual basis
     as it becomes due.  Deferred loan origination  costs and fees are amortized
     over the life of the applicable  loan as an adjustment to interest  income,
     using the interest  method.  Interest  which was accrued is reversed out of
     income if deemed to be uncollectible.

     Other Interest Income - Interest income from temporary investments, such as
     cash in banks and  short-term  instruments,  is  recognized  on the accrual
     basis as it becomes due.

     Equity in Earnings of ARCap - The Company's equity in the earnings of ARCap
     is accrued at the preferred  dividend  rate of 12% on the preferred  shares
     held by the  Company,  unless  ARCap does not have  earnings and cash flows
     adequate to meet this dividend requirement.

     Construction  Service Fees - The Company  receives  fees, in advance,  from
     borrowers for servicing Revenue Bonds during the construction period. These
     fees are deferred  and  amortized  into other  income over the  anticipated
     construction period.

     Credit  Enhancement  and  Guarantee  Fees - The Company  receives  fees for
     providing  credit  enhancement  and  for  backing  up  primary  guarantors'
     obligations  to  guarantee  agreed  upon  internal  rates of  return to the
     investors  in  programs  sponsored  by  Related  (see Note 5).  The  credit
     enhancement  fees are received  monthly and recognized in other income when
     received. The guarantee fees are deferred and recognized in other income on
     a prorata basis over the guarantee periods.

     Mortgage Banking Fees - PWF fees earned for arranging  financings under the
     Fannie Mae DUS product line on behalf of Freddie Mac,  insurance  companies
     and  banks or  other  lenders  are  recorded  at the  point  the  financing
     commitment  is  accepted  by the  mortgagor  and the  interest  rate of the
     mortgage loan is fixed.


                                       11
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


     Mortgage  Servicing Fees - PWF receives fees for servicing the loans it has
     originated or purchased. This income is recognized on an accrual basis over
     the estimated life of the loans being serviced.

Deferred Costs

Fees paid to the Manager (see Note 5) for its activities  performed to originate
Revenue Bonds, including their evaluation and selection, negotiation of mortgage
loan terms,  coordination of property  developers and government  agencies,  and
other direct  expenditures  of acquiring  or  investing  in Revenue  Bonds,  are
capitalized  and  amortized as a reduction to interest  income over the terms of
the Revenue Bonds.  Direct costs relating to unsuccessful  acquisitions  and all
indirect costs relating to the Revenue Bonds are charged to operations.

Costs  incurred in  connection  with the  Company's  Private Label Tender Option
Program  ("TOP"),  such as legal,  accounting,  documentation  and other  direct
costs,  have been  capitalized and are being  amortized using the  straight-line
method over 10 years,  which approximates the average remaining term to maturity
of the Revenue Bonds in this program.

Costs incurred in connection with the issuance of cumulative preferred shares of
the Equity Issuer Trust subsidiary, such as legal, accounting, documentation and
other direct costs,  have been  capitalized  and are being  amortized  using the
straight  line method over the period to the  mandatory  repurchase  date of the
shares,  approximately 50 years.  Costs incurred in connection with the issuance
of  Convertible  Community  Reinvestment  Act  ("CRA")  Shares,  such as  legal,
accounting,  documentation and other direct costs, have been accounted for as an
offset to beneficial owners' equity of such shares.

Financial Risk Management and Derivatives

The Company has entered into two interest  rate swaps,  an interest rate cap and
several forward commitments,  all of which are accounted for under the Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments and Hedging  Activities"  ("SFAS 133"), as amended and  interpreted.
The Company  designated  the two interest  rate swaps as cash flow hedges on the
variable interest payments in the floating rate financing (described in Note 8).
Accordingly,  the  interest  rate swaps are  recorded at their  respective  fair
market value each accounting period, with changes in market value being recorded
in other  comprehensive  income  to the  extent  the  hedges  are  effective  in
achieving  offsetting cash flows.  These hedges have been highly  effective,  so
there has been no ineffectiveness  included in earnings.  The interest rate cap,
although  designed to mitigate the Company's  exposure to rising interest rates,
was not designated as a hedging derivative; therefore, any change in fair market
value flows through the Consolidated  Statements of Income, where it is included
in interest  income.  The  forward  commitments  (see Note 7) create  derivative
instruments  under SFAS 133,  which have been  designated as cash flow hedges of
the  anticipated  funding of the  Revenue  Bonds,  and will be  recorded at fair
value, with changes in fair value recorded in other  comprehensive  income until
the Revenue Bonds are funded.

Fair Value of Financial Instruments

As described above, the Company's investments in Revenue Bonds, its MSRs and its
liability  under the interest  rate  derivatives  are carried at estimated  fair
values.  The  Company  has  determined  that  the fair  value  of its  remaining
financial  instruments,  including  its  temporary  investments,  cash  and cash
equivalents,   promissory  notes  receivable,   mortgage  notes  receivable  and
borrowings  approximate their carrying values at September 30, 2003 and December
31, 2002.

Income Taxes

Effective  July 1, 2001,  the Company  began  operation  of a new  wholly-owned,
taxable  subsidiary -- CM Corp.,  which on December 31, 2001,  purchased PWF. CM
Corp.  will  conduct  most  of  the  Company's   taxable   business,   including
fee-generating activities in which the Company may engage and provide management
services to  CharterMac  and its other  subsidiaries.  The Company


                                       12
<PAGE>


provides for income taxes in accordance  with Statement of Financial  Accounting
Standards No. 109,  "Accounting for Income Taxes" ("FAS 109").  FAS 109 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 basis of assets and liabilities.


                                       13
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


New Pronouncements
------------------

In April 2002, the FASB issued SFAS No. 145  "Rescission of FASB  Statements No.
4, 44 and 64,  Amendment of FASB  Statement No. 13 and  Technical  Corrections".
SFAS No. 145,  among other  things,  rescinds SFAS No. 4,  "Reporting  Gains and
Losses from Extinguishment of Debt", and accordingly,  the reporting of gains or
losses from the early  extinguishments of debt as extraordinary  items will only
be required if they meet the specific  criteria of extraordinary  items included
in  Accounting  Principles  Board  Opinion  No. 30,  "Reporting  the  Results of
Operations".  The  revision of SFAS No. 4 became  effective  January  2003.  The
implementation  of SFAS No. 145 did not have a material  impact on the Company's
consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit  or  Disposal  Activities".   SFAS  No.  146  replaces  current  accounting
literature  and  requires  the  recognition  of costs  associated  with  exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment to an exit or disposal plan. SFAS No. 146 became effective January 1,
2003. The  implementation  of SFAS No. 146 did not have a material impact on the
Company's consolidated financial statements.

In November 2002,  the FASB issued FIN 45. FIN 45 elaborates on the  disclosures
to be made by a guarantor  in its  financial  statements  about its  obligations
under certain  guarantees that it has issued. It also clarifies that a guarantor
is required to recognize,  at the inception of a guarantee,  a liability for the
fair  value  of  the  obligation  undertaken  in  issuing  the  guarantee.  This
Interpretation does not prescribe a specific approach for subsequently measuring
the guarantor's recognized liability over the term of the related guarantee. The
initial  recognition  and  initial  measurement  provisions  of this  FIN 45 are
applicable  on a  prospective  basis to  guarantees  issued  or  modified  after
December 31, 2002. The Company entered into one credit  enhancement  transaction
and two yield guarantee transactions prior to December 31, 2002. The fee for the
credit enhancement transaction is received monthly and recognized as income when
due. The fees for the yield guarantee  transactions,  received in advance,  were
deferred and amortized over the guarantee  periods.  During the third quarter of
2003,  the Company  entered into its second  yield  guarantee  transaction.  The
Company believes the fee received for this guarantee approximates the fair value
of the  obligation  undertaken  in  issuing  the  guarantee  and has  recorded a
liability included in deferred income equal to the fair value of the obligation.

In  December  2002,  the FASB issued SFAS No. 148  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure," an amendment of FASB statement No. 123.
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation" to
provide  alternative  methods of transition  for a voluntary  change to the fair
value based method of accounting for stock-based employer compensation.  Because
the  Company  accounts  for its  share  options  using  the fair  value  method,
implementation  of this  statement  did  not  have an  impact  on the  Company's
consolidated  financial  statements.  The Company has adopted the  provisions of
SFAS  No.  123 for its  share  options  issued  to  non-employees.  Accordingly,
compensation  cost is accrued based on the  estimated  fair value of the options
issued, and amortized over the vesting period. Because vesting of the options is
contingent  upon the  recipient  continuing  to provide  services to the Company
until the vesting date, the Company estimates the fair value of the non-employee
options at each period-end up to the vesting date, and adjusts  expensed amounts
accordingly.  The  fair  value  of each  option  grant is  estimated  using  the
Black-Scholes option-pricing model.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  ("FIN 46").  FIN 46 clarifies the  application of
existing accounting pronouncements to certain entities in which equity investors
do not have the  characteristics  of a controlling  financial interest or do not
have sufficient equity at risk for the entity to finance its activities  without
additional  subordinated  financial support from other parties. The provision of
FIN 46 will be  immediately  effective  for all  variable  interests in variable
interest entities created after January 31, 2003, and the Company is required to
apply its  provisions to any existing  variable  interests in variable  interest
entities  beginning  December  31,  2003.  The Company  does not believe that it
currently has any variable  interests in variable  interest  entities  requiring
consolidation,   however,  the  Company  is  evaluating  whether  such  variable
interests may exist should the proposed acquisition of Related be completed.


                                       14
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging  Activities."  SFAS 149 amends and clarifies
the  accounting  for  derivative   instruments,   including  certain  derivative
instruments  embedded in other contracts,  and for hedging activities under SFAS
133.  SFAS 149 is generally  effective  for  contracts  entered into or modified
after June 30,  2003 and for  hedging  relationships  designated  after June 30,
2003.  The adoption of SFAS No. 149 on July 1, 2003, as required,  had no impact
on the Company's consolidated financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with Characteristics of Both Liabilities and Equity." This statement
requires that certain  financial  instruments that have the  characteristics  of
debt and equity be classified as debt.  SFAS No. 150 was effective for financial
instruments  entered into or modified  after May 31,  2003,  and  otherwise  was
effective at the beginning of the first interim period  beginning after June 15,
2003.  Pursuant  to SFAS No. 150,  on July 1, 2003 the  Company  classified  the
$273.5 million  previously  shown in the  "mezzanine"  (between  liabilities and
equity) in the  consolidated  balance sheets as "preferred  shares of subsidiary
subject to mandatory  redemption" into the liability section,  and the dividends
paid on such shares  (approximately $4.7 million and $14.1 million for the three
and nine month periods ended September 30, 2003) has been classified as interest
expense;  dividends related to prior periods continue to be classified as income
allocated to preferred shareholders of subsidiary.

NOTE 2 - Revenue Bonds

Total interest income from Revenue Bonds, including  participating interest, was
approximately  $83,528,000 and $67,764,000,  for the nine months ended September
30, 2003 and 2002,  which  represents an average annual yield of 7.14% and 7.48%
based on weighted  average  face  amounts of  approximately  $1,559,869,000  and
$1,208,528,000, respectively.

The  amortized  cost  basis  of the  Company's  portfolio  of  Revenue  Bonds at
September 30, 2003 and December 31, 2002 was $1,662,600,968 and  $1,484,202,610,
respectively.  The net  unrealized  gain  on  Revenue  Bonds  in the  amount  of
$50,296,031 at September 30, 2003 consisted of gross unrealized gains and losses
of $58,888,083 and $8,592,052,  respectively. The net unrealized gain on Revenue
Bonds of $95,387,390 at December 31, 2002  consisted of gross  unrealized  gains
and losses of $100,964,090 and $5,576,700, respectively.

The following is a table summarizing the maturity dates of the Company's Revenue
Bonds.

<TABLE>
<CAPTION>

                                                Outstanding                            Weighted Average
          (Dollars in thousands)                Bond Amount         Fair Value          Interest Rate
-----------------------------------------------------------------------------------------------------------
<S>                                              <C>                 <C>                      <C>
Due in less than one year                    $        3,174      $        2,982               9.22%
Due between one and five years                       30,994              30,086               6.81%
Due after five years                              1,640,859           1,679,829               7.02%
-----------------------------------------------------------------------------------------------------------
                 Total                           $1,675,027          $1,712,897               7.02%
-----------------------------------------------------------------------------------------------------------
</TABLE>

All of the Company's Revenue Bonds have fixed interest rates.


                                       15
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


2003 Transactions
-----------------

The following table summarizes the Company's  acquisition  activity for the nine
months ended September 30, 2003.

<TABLE>
<CAPTION>

                                                                          Weighted        Weighted
                                                           Aggregate       Average         Average      Number of
                                                           Purchase     Construction      Permanent      Revenue
(Dollars in thousands)                   Face Amount         Price      Interest Rate   Interest Rate     Bonds
-------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                <C>           <C>             <C>            <C>
Non-participating Revenue Bonds
Construction/rehabilitation
   properties                              $265,796           $271,512      5.98%           6.37%          33
</TABLE>

During the nine months ended September 30, 2003 the Company advanced  additional
funds of  approximately  $11,320,000  to Revenue  Bonds  which  were  previously
acquired.

During the nine months ended September 30, 2003, nine Revenue Bonds were repaid.
The Company received net proceeds of approximately $72.3 million.  The bonds had
a net carrying  value of  approximately  $69.5  million,  resulting in a gain of
approximately $2.8 million.

The  original  developer  of  Waterford  Place  Phase II, is in the  process  of
divesting its assets and unwinding its business,  which triggered defaults under
the  Company's  guarantees  with the  developer.  Additionally,  the Company has
determined there has been a softening of this market.  The equity  investor,  an
affiliate of the Manager,  has agreed to release and transfer its ownership to a
nominee of the Company,  who will  foreclose  on the  underlying  property.  The
Company has determined this bond is impaired, has stopped accruing interest, and
wrote  down the bond to its  estimated  fair  value of  approximately  $900,000,
taking a loss on impairment  of  approximately  $1.8 million  during the quarter
ended September 30, 2003. The Company  determined the fair value of the property
as  equal  to  the  appraised  value  of the  land  plus  the  cost  of  certain
improvements made to date, discounted for the softening in the market.

During the second quarter of 2001,  the borrowers of Lexington  Trails failed to
make the regular interest payments. As a result, the Company determined the bond
was  impaired,  has stopped  accruing  interest,  and wrote down the bond to its
estimated fair value of approximately $5.5 million and took a loss on impairment
of $400,000.  During the fourth quarter of 2001, the Company caused the trustee,
for the benefit of the Company, to foreclose on the underlying property.  During
the fourth quarter of 2002, the Company began marketing the underlying  property
for sale,  and the Company wrote this bond down to its  estimated  fair value of
$4.5 million resulting in a recorded loss of $932,000.  The Company continues to
actively pursue the disposition of this property.

NOTE 3 - Deferred Costs

The components of deferred costs are as follows:

<TABLE>
<CAPTION>

                                                                                 (Dollars in thousands)
                                                                             September 30,           December 31,
                                                                                 2003                   2002
                                                                           ---------------       ------------------
<S>                           <C>                                            <C>                    <C>

Deferred bond selection costs (1)                                            $  40,871              $  34,810
Deferred financing costs                                                         8,584                  8,030
Deferred costs relating to the issuance of preferred
   shares of subsidiary                                                         10,445                 10,445
Deferred costs relating to acquisition of Related                                3,945                  2,483
Other deferred costs                                                             2,775                  1,376
                                                                               -------              ---------
                                                                                66,620                 57,144

Less: Accumulated amortization                                                 (11,495)                (8,451)
                                                                              --------              ---------
</TABLE>


                                       16
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


<TABLE>
<CAPTION>


<S>                                                                          <C>                    <C>
                                                                             $  55,125              $  48,693
                                                                              ========               ========
</TABLE>


                                       17
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


(1) This primarily represents the 2% bond selection fee paid to the Manager (see
Note 5).

NOTE 4 - Goodwill and Intangible Assets

The Company  adopted  SFAS 141 on July 1, 2001 and SFAS 142, on January 1, 2002.
The Company has determined that the amounts  previously  capitalized as goodwill
relating to the initial  formation  of the Company and to the merger of American
Tax  Exempt  Bond  Trust,  meet  the  criteria  in SFAS 141 for  recognition  as
intangible  assets apart from  goodwill,  and  accordingly  will  continue to be
amortized over their remaining useful lives, subject to impairment testing.

During the quarter ended June 30, 2002, PWF engaged a third party valuation firm
to evaluate PWF's  licenses with Fannie Mae,  Freddie Mac, FHA, GNMA and various
private  investors.  As a result of this process  approximately $8.6 million has
been reclassified from goodwill to intangible assets, representing the estimated
market value of PWF's licenses. These licenses have an indefinite life and, as a
result, are not being amortized.

During 2002 and the nine months ended September 30, 2003, the Company,  pursuant
to the original acquisition agreement,  paid approximately $3.0 and $.7 million,
respectively,  in "true-up" payments  representing  payments due to the original
PWF  stockholders  which was recorded as additional  goodwill  during the fourth
quarter of 2002 and the first nine months of 2003.  These true-up  payments were
based on i) the increase in the value of MSRs due to certain loans closing,  ii)
positive  changes  between  PWF's  audited  balance  sheet used for the  initial
purchase price and the audited balance sheet at December 31, 2001, iii) payments
of certain  servicing  fees,  and iv) forward  conversions  of loans  previously
committed.  The acquisition  agreement stipulates additional true-up payments to
be made  periodically  for a period of up to three  years  from the  acquisition
date.

The  following  table  provides  further  information  regarding  the  Company's
intangible assets:


<TABLE>
<CAPTION>

                                                                (Dollars in thousands)
                                                   Other Identifiable         PWF
                                                   Intangible Assets        Licenses             Total
                                                ----------------------------------------------------------
<S>                                                       <C>                 <C>                <C>

Balance at December 31, 2002                              $  4,427            $  8,639           $ 13,066
Accumulated amortization                                    (1,750)                  -             (1,750)
                                                           -------             -------            -------
Net balance at December 31, 2002                             2,677               8,639             11,316
Amortization expense                                           357                   -                357
                                                           -------             -------            -------
Balance at September 30, 2003                              $ 2,320            $  8,639           $ 10,959
                                                            ======             =======            =======
Amortization expense for the nine months
   ended September 30, 2003                                $   357             $     -           $    357
                                                           =======              ======            =======
Estimated amortization expense per year for
   next five years                                         $   477             $     -           $    477
                                                           =======              ======            =======
</TABLE>

The amortization is included as a reduction to Revenue Bond interest income.

The amount  indicated  as goodwill in the  accompanying  consolidated  financial
statements as of September 30, 2003 is related to the  acquisition,  on December
31, 2001 of PWF. This amount represents  goodwill under SFAS 142, and therefore,
is not being  amortized.  In accordance  with SFAS 142, the Company  tested this
goodwill for impairment  during the fourth quarter of 2002 and determined  there
was no impairment.  The Company will perform the required annual impairment test
in the fourth quarter of 2003.


                                       18
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


NOTE 5 - Related Party Transactions

The Manager is entitled to  subcontract  its  obligations  under the  Management
Agreements to an affiliate.  In accordance  with the foregoing,  the Manager has
assigned its rights and obligations to Related.

Pursuant to the terms of the Management  Agreements,  the Manager is entitled to
receive the fees and other compensation set forth below:

Fees/Compensation*                      Amount
------------------                      ------
Bond Selection  Fee                     2.00% of the face  amount of each  asset
                                        invested in or acquired by CharterMac or
                                        its subsidiaries.
Special Distributions/Investment        0.375%  per annum of the total  invested
Management Fee                          assets    of     CharterMac    or    its
                                        subsidiaries.
Loan Servicing Fee                      0.25% per annum based on the outstanding
                                        face  amount of revenue  bonds and other
                                        investments  owned by  CharterMac or its
                                        subsidiaries.
Operating Expense Reimbursement         For  direct  expenses  incurred  by  the
                                        Manager  in  an  amount  not  to  exceed
                                        $1,027,206   per   annum   (subject   to
                                        increase    based   on    increases   in
                                        CharterMac's   and   its   subsidiaries'
                                        assets  and to  annual  increases  based
                                        upon  increases  in the  Consumer  Price
                                        Index).
Incentive Share Options                 The  Manager  may  receive   options  to
                                        acquire    additional    Common   Shares
                                        pursuant  to the Share  Option Plan only
                                        if  CharterMac's  distributions  in  any
                                        year exceed $0.9517 per Common Share and
                                        the Compensation  Committee of the Board
                                        of  Trustees  determines  to grant  such
                                        options.
Liquidation Fee                         1.50% of the  gross  sales  price of the
                                        assets sold by  CharterMac in connection
                                        with a liquidation of CharterMac  assets
                                        supervised by the Manager.

* The Manager is also  permitted to earn  miscellaneous  compensation  which may
include,  without  limitation,  construction  fees,  escrow  interest,  property
management fees, leasing  commissions and insurance  brokerage fees. The payment
of any such  compensation is generally  limited to the competitive  rate for the
services  being  performed.  A bond  placement  fee of 1.0% to 1.5% of the  face
amount of each asset  invested in or acquired by CharterMac or its  subsidiaries
is  payable  to the  Manager  by the  borrower,  and  not by  CharterMac  or its
subsidiaries.

The  term of each of the  management  agreements  is one  year.  The  management
agreements  may be renewed,  subject to  evaluation  of the  performance  of the
Manager by CharterMac's Board of Trustees. Both agreements may be terminated (i)
without  cause by the Manager;  or (ii) for cause by a majority of  CharterMac's
Board of  Trustees,  in each case  without  penalty  and each upon 60 days prior
written notice to the  non-terminating  party.  The management  agreements which
were due to expire on  September  30,  2003 were  renewed for the earlier of the
date the acquisition of Related is completed or December 31, 2003.



                                       19
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


The costs,  expenses and the special  distributions  incurred to the Manager and
its affiliates  for the three and nine months ended  September 30, 2003 and 2002
were as follows:

<TABLE>
<CAPTION>

                                                            Three Months Ended             Nine Months Ended
                                                              September 30,                  September 30,
                                                        -------------------------      ------------------------
                                                          (Dollars in thousands)         (Dollars in thousands)
                                                        -------------------------      ------------------------
                                                           2003            2002           2003           2002
                                                        ---------     -----------      ---------      ---------
<S>                                                      <C>            <C>             <C>            <C>
Bond selection fees                                      $  2,670       $  1,681        $  5,274       $  5,662
Special distribution/Investment
   management fee                                           1,690          1,336           4,712          3,747
Bond servicing                                              1,123            875           3,185          2,519
Expense reimbursement                                         269            200             748            547
                                                         --------       --------        --------       --------
                                                         $  5,752       $  4,092         $13,919        $12,475
                                                          =======        =======          ======         ======
</TABLE>

Certain  of the  Revenue  Bonds held by the  Company  are  supported  by various
guarantees including,  but not limited to, construction and operating guarantees
from affiliates of the Manager.

On  September  24,  2003,  the  Company  completed  its second  yield  guarantee
transaction,  agreeing to back up a primary guarantor's  obligation to guarantee
an  agreed-upon  internal  rate of return  ("IRR")  to the  investor  in Related
Capital Guaranteed  Corporate Partners II, L.P. - Series B ("RCGCP - Series B").
RCGCP - Series B is a fund  sponsored  by Related,  which is an affiliate of the
Manager.

During the quarter  ended  September 30, 2002,  the Company  agreed to back up a
primary  guarantor's  obligation  to guarantee an  agreed-upon  internal rate of
return to the investor in Related Capital Guaranteed Corporate Partners II, L.P.
("RCGCP").  RCGCP is a fund  sponsored by Related,  which is an affiliate of the
Manager. The Company is the beneficiary of a guarantee against losses associated
with  construction  and operating  stabilization  for each of the  properties in
RCGCP,  which is capped at $15 million.  The  guarantee has been provided by The
Related  Companies,  L.P.  ("TRCLP"),  an affiliate  of Related.  TRCLP has also
agreed, if needed, after construction completion and property stabilization,  to
fund up to the first  $2.5  million  of  operating  deficits  of the  underlying
properties or any amounts required to pay the guaranteed IRR to the investor. If
the Company's  acquisition of Related is completed,  then this guarantee will no
longer be in force.

In connection with the  refinancing of River Run, the general  partners of which
are  affiliates  of the Manager,  the Company  entered  into an agreement  which
allows  the  Revenue  Bond to be put to the  Company  should  the  owner  of the
underlying  property  default on the bond.  The Company,  in turn,  entered into
agreements which allow the Company to put the bond to the general partners.  The
Company's  put  right  is  secured  by  collateral  assignments  of the  general
partners'  partnership  interests  in the  limited  partnership  which  owns the
underlying property.

The Company has entered into a credit enhancement transaction with Merrill Lynch
Capital  Services  ("MLCS").  TRCLP has  provided  the Company with an indemnity
covering 50% of any losses incurred by the Company.

Effective  April 1, 2003,  PWF took on the day-to-day  responsibility  of a $598
million portfolio of loans subserviced by CreditRe Mortgage  Servicing  Company,
L.L.C. ("CMC"), an affiliate of The Related Companies L.P.

NOTE 6 - Earnings Per Share

Net income per share is computed in accordance with SFAS No. 128,  "Earnings Per
Share".  Basic income per share is  calculated by dividing  income  allocated to
Common and Convertible CRA Shareholders ("Shareholders") by the weighted average
number of Common and Convertible CRA Shares  outstanding  during the period. The
Convertible CRA Shares are included in the calculation of shares  outstanding as
they share the same economic benefits as Common Shares, including payment of the
same  dividends  per  share  as  Common  Shares.  Diluted  income  per  share is


                                       20
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


calculated  using the weighted average number of shares  outstanding  during the
period plus the  additional  dilutive  effect of common share  equivalents.  The
dilutive  effect of outstanding  share options is calculated  using the treasury
stock method.

Pursuant to the Company's Trust Agreement and the Management Agreements with the
Manager, the Manager is entitled,  in its capacity as the general partner of the
Company,  to a special  distribution  equal to .375% per annum of the  Company's
total  invested  assets  (which  equals the face amount of the Revenue Bonds and
other investments),  payable quarterly. Income is allocated first to the Manager
in an amount equal to the special  distribution.  The net  remaining  profits or
losses, after a special allocation of .01% to the Manager, are then allocated to
shareholders in accordance with their percentage interests.

During the quarter ended  September 30, 2002,  the Company issued 40,000 options
at a strike price of $17.56. These options vest equally, in thirds, in September
2003,  2004 and 2005 and  expire  in 10  years.  The  dilutive  effect  of these
outstanding share options is calculated using the treasury stock method.

During the nine months ended September 30, 2003,  137,943 of the Company's stock
options were exercised.


                                       21
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                   (Dollars in thousands)                         (Dollars in thousands)
                                            Three Months Ended September 30, 2003           Nine Months Ended September 30, 2003
                                        -------------------------------------------      -------------------------------------------
                                            Income         Shares        Per Share          Income         Shares       Per Share
                                           Numerator     Denominator       Amount          Numerator     Denominator      Amount
                                        ---------------  -----------     ----------      ------------    -----------    ----------
<S>                                      <C>             <C>              <C>              <C>            <C>            <C>

Net income allocable to share-
   holders (Basic EPS)                   $       14,330  46,331,385       $    .31         $   47,564     45,484,538     $   1.05
                                                                           =======                                        =======
   Effect of dilutive securities
      125,566 share options                          --      34,957                                --        33,404
                                          -------------  ----------                         ---------     ---------
   Diluted net income allocable to
      shareholders (Diluted EPS)         $       14,330  46,366,342       $    .31         $   47,564     45,517,942     $   1.04
                                          =============  ==========        =======          =========     ==========      =======

<CAPTION>
                                                   (Dollars in thousands)                         (Dollars in thousands)
                                            Three Months Ended September 30, 2003           Nine Months Ended September 30, 2003
                                        -------------------------------------------      -------------------------------------------
                                            Income         Shares        Per Share          Income         Shares       Per Share
                                           Numerator     Denominator       Amount          Numerator     Denominator      Amount
                                        ---------------  -----------     ----------      ------------    -----------    ----------
<S>                                      <C>             <C>              <C>              <C>            <C>            <C>

Net income allocable to share-
   holders (Basic EPS)                   $       12,236  44,209,982       $    .28         $   42,571     42,030,318     $   1.01
                                                                           =======                                        =======
   Effect of dilutive securities
     223,509 stock options                           --      72,751                                --        69,089
                                          -------------  ----------                         ---------     ---------
Diluted net income allocable to
   shareholders (Diluted EPS)            $       12,236  44,282,733       $    .28         $   42,571     42,099,407     $   1.01
                                         ==============  ==========        =======          =========    ===========      =======
</TABLE>



*  Includes Common and Convertible CRA Shares.


                                       22
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


NOTE 7 - Commitments and Contingencies

Litigation

On October 24, 2003, the New York Supreme Court for Nassau County issued a final
judgment approving the stipulation of compromise and settlement of the class and
derivative  action  entitled  Dulitz v.  Hirmes,  which had  challenged  certain
aspects of the Company's  acquisition of Related.  Pursuant to that  settlement,
certain  terms of the  acquisition  will be modified,  as fully  detailed in the
Company's proxy statement that was previously  mailed to shareholders  and filed
with the  Commission on September 5, 2003,  together with the Notice of Pendency
of Class and Derivative Action.

Although the defendants in the action denied all wrongdoing and believe they had
meritorious defenses, the settlement eliminates the cloud of litigation over the
acquisition  in  connection  with  Dulitz  and  provides  the  Company  and  its
shareholders with certain benefits  described in the proxy statement and Notice.
The Court also  approved an award  pursuant to the  settlement  of $400,000  for
attorney's  fees  and  expenses  payable  by  the  Company  to  the  plaintiff's
attorneys.

The  Company is subject to routine  litigation  and  administrative  proceedings
arising in the  ordinary  course of business.  Management  does not believe that
such matters will have a materially  adverse  impact on the Company's  financial
position, results of operations or cash flows.

Mortgage Banking Activities

Through PWF, the Company originates and services  multifamily mortgage loans for
Fannie Mae,  Freddie Mac and FHA. PWF's mortgage  lending business is subject to
various governmental and quasi-governmental  regulation.  PWF, collectively,  is
licensed or approved to service  and/or  originate  and sell loans under  Fannie
Mae,  Freddie Mac, Ginnie Mae and FHA programs.  FHA and Ginnie Mae are agencies
of the Federal government and Fannie Mae and Freddie Mac are federally-chartered
investor-owned corporations.  These agencies require PWF and its subsidiaries to
meet  minimum  net worth and  capital  requirements  and to  comply  with  other
requirements. Mortgage loans made under these programs are also required to meet
the requirements of these programs. In addition, under Fannie Mae's DUS program,
PWF has the  authority to originate  loans  without a prior review by Fannie Mae
and is required to share in the losses on loans originated under this program.

The DUS program is Fannie Mae's principal loan program. Under the Fannie Mae DUS
Product Line, the Company,  through PWF,  originates,  underwrites  and services
mortgage loans on multifamily residential properties and sells the project loans
directly to Fannie Mae. The Company assumes  responsibility for a portion of any
loss that may  result  from  borrower  defaults,  based on the  Fannie  Mae loss
sharing  formulas,  Levels  I, II or III.  At  September  30,  2003,  all of the
Company's  loans  consisted  of Level I loans.  For such  loans,  the Company is
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.
Level II and Level III loans carry a higher loss sharing percentage.  Fannie Mae
bears any remaining loss.

Under the terms of the Master Loss Sharing  Agreement between Fannie Mae and the
Company,  the Company is 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,  for Level I loans,  the  Company may request
interim  loss  sharing  adjustments  which allow the Company to fund 25% of such
advances  until final  settlement  under the Master Loss Sharing  Agreement.  No
interim loss sharing adjustments are available for Level II and Level III loans.

The Company  maintains an accrued  liability for probable losses under FAS 5 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, 2003,  that  liability was  approximately  $6.7  million,  which the Company
believes represents its probable liability at this time. Unlike loans originated


                                       23
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


for  Fannie  Mae,  The  Company  does not  share  the risk of loss for loans PWF
originates for Freddie Mac or FHA.

In connection  with the PWF warehouse  line,  both  CharterMac and CM Corp. have
entered  into  guarantees  for the  benefit of Fleet  National  Bank  ("Fleet"),
guaranteeing  the total advances drawn under the line, up to the maximum of $100
million,  together with interest,  fees,  costs,  and charges related to the PWF
warehouse line.

PWF maintains,  as of September 30, 2003,  treasury notes of approximately  $5.6
million and a money market account of approximately $209,000,  which is included
in restricted cash and securities in the consolidated  balance sheet, to satisfy
the Fannie Mae collateral requirements of $5.7 million.

Due to the  nature of PWF's  mortgage  banking  activities,  PWF is  subject  to
supervision by certain regulatory  agencies.  Among other things, these agencies
require PWF to meet certain minimum net worth requirements,  as defined. PWF met
these requirements for all agencies, as applicable, as of September 30, 2003.

At September 30, 2003, PWF had commitments of approximately $18.5 million to six
borrowers.

Credit Enhancement Transaction

In December 2001, the Company  completed a credit  enhancement  transaction with
Merrill Lynch Capital Services,  Inc. ("MLCS"),  as described above. Pursuant to
the terms of the transaction,  CM Corp.  assumed MLCS's $46.9 million first loss
position on a $351.9 million pool of tax-exempt weekly variable rate multifamily
mortgage  loans.  The Related  Companies,  L.P.  has  provided CM Corp.  with an
indemnity  covering 50% of any losses that are  incurred by CM Corp.  as part of
this transaction. As the loans mature or prepay, the first loss exposure and the
fees paid to CM Corp. will both be reduced. The latest maturity date on any loan
in the portfolio occurs in 2009. The remainder of the real estate exposure after
the $46.9 million first loss position has been assumed by Fannie Mae and Freddie
Mac.  In  connection  with  the  transaction,   CharterMac  has  guaranteed  the
obligations of CM Corp.,  and has met its obligation to post  collateral,  in an
amount equal to 40% of the first loss amount.  The  Company's  maximum  exposure
under the terms of this transaction is approximately $23.5 million.

CM Corp.  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.  CM Corp.  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, 2003,  the credit  enhanced  pool of  properties  are
performing  according to their contractual  obligations and the Company does not
anticipate  any losses to be  incurred  on its  guaranty.  Should the  Company's
analysis of risk of loss change in the future,  a provision  for  probable  loss
might be required; such provision could be material.

Fees related to the credit enhancement transaction for the three and nine months
ended September 30, 2003, included in other income, were approximately  $250,673
and $874,482, respectively. Income is recognized monthly as the monthly fees are
received.

Yield Guarantee Transactions

On September  24, 2003,  the Company  entered into two  agreements  with Merrill
Lynch (the "Primary Guarantor") to guarantee an agreed-upon IRR for a pool of 14
multifamily  properties  each  owned by a local  partnership  which in turn,  is
majority-owned  by RCGCP - Series B for  which  the  Company  will  receive  two
guarantee fees totaling approximately $5.9 million.

The  transaction  was  structured  as two  separate  guarantees,  one  primarily
guaranteeing  the IRR through the lease-up phase of the properties and the other
guaranteeing the IRR through the operating phase of the properties.  The fee for
the first guarantee,  in the amount of approximately  $3.6 million,  was paid in
September 2003 at closing.  The fee for the second guarantee will be paid in two
installments.  The  first  installment,  in the  amount  of  approximately  $1.7
million, will be paid in


                                       24
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


July 2004, and the final installment,  in the amount of approximately  $562,000,
will be paid in  January  2005.  These  fees will be  recognized  in income on a
straight  line  basis over the period of the  respective  guarantees.  The total
potential liability to the Company pursuant to these guarantees is approximately
$74 million.  The Company has analyzed the expected operations of the underlying
properties  and  believes  there  is no risk of loss at this  time.  Should  the
Company's  analysis  of risk of loss  change  in the  future,  a  provision  for
possible losses might be required; such provision could be material.

Of the 14 local partnerships,  13 financed their properties with the proceeds of
Revenue Bonds  acquired by an affiliate of  CharterMac.  In connection  with the
transaction,  the  Primary  Guarantor  required  that  those  Revenue  Bonds  be
deposited  into a trust  pursuant to which the Revenue  Bonds were  divided into
senior  and  subordinated   interests  with  50%  of  each  Revenue  Bond  being
subordinated.  The Company has financed the senior trust interest as part of the
Merrill Lynch  P-FloatsSM/RitesSM  program.  The subordinate trust interests are
being used as collateral in other of the Company's financing programs.

In connection with the transaction,  the Company posted $14.5 million of Revenue
Bonds as  collateral  to the  Primary  Guarantor  in the form of either  cash or
Revenue Bonds.

On July 18, 2002,  the Company  entered into two  agreements  with Merrill Lynch
(the  "Primary  Guarantor")  to  guarantee an  agreed-upon  IRR for a pool of 11
multifamily  properties  each  owned by a local  partnership  which in turn,  is
majority-owned by RCGCP.

The total  potential  liability to the Company  pursuant to these  guarantees is
approximately $44 million.  The Company has analyzed the expected  operations of
the  underlying  properties  and believes there is no risk of loss at this time.
Should the Company's  analysis of risk of loss change in the future, a provision
for probable losses might be required; such provision could be material.

In connection with the transaction,  the Company posted $18.2 million of Revenue
Bonds as  collateral  to the  Primary  Guarantor,  which will be reduced to $1.4
million  over a  period  of up to 20  years  as  the  properties  reach  certain
operating benchmarks. In addition, the Company agreed to subordinate 25% of each
of the bonds it acquired that are secured by the  properties  and to not use the
subordinated  portion  of such  bonds  as  collateral  in  connection  with  any
borrowings.

To mitigate risk, the Company is the  beneficiary of a guarantee  against losses
associated  with  construction  and  operating  stabilization  for  each  of the
properties  in RCGCP,  which is capped at $15 million.  The  guarantee  has been
provided by TRCLP.  If the Company's  acquisition of Related is completed,  then
this guarantee will no longer be in force. As of December 31, 2002,  TRCLP had a
GAAP  net  worth  of   approximately   $175.0  million  with  liquid  assets  of
approximately  $70.1  million.  In  addition,  the  developers  of  each  of the
properties  have also been required to give recourse  completion,  stabilization
and  operating  deficit  guarantees.  TRCLP has also  agreed,  if needed,  after
construction completion and property stabilization, to fund up to the first $2.5
million of  operating  deficits  of the  underlying  properties  or any  amounts
required to pay the guaranteed IRR to the investor.

The structure of the  guaranteed  transaction  that closed on July 18, 2002, was
reorganized  on September 24, 2003, to conform to the structure of the Company's
second  guaranteed  transaction,  which  simultaneously  closed on September 24,
2003. The new structure  requires the Company to subordinate  50% of each of the
Revenue  Bonds it acquired that are secured by the  properties  involved in that
transaction. The Senior and the Junior Certificates are available to the Company
to be used as collateral in the Company's  securitization  programs.  Before the
restructuring,  the  Company  only  subordinated  25% of the Revenue  Bonds.  In
connection  with this  transaction,  the Company was able to lower the  required
collateral posted to the Primary Guarantor from $18.2 million to $11.0 million.


                                       25
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


Revenue Bond Forward Transactions

During July 2003, the Company  entered into a transaction to purchase two series
of Revenue  Bonds related to a property  named Middle Creek Village  Apartments.
Pursuant to the terms of the transaction,  a third party,  unrelated lender will
advance funds to the developer, as needed, at a floating rate. At the earlier of
stabilization  or  conversion to permanent  financing,  as long as completion is
achieved,  the  Company  is  obligated  to acquire  Series A Revenue  Bonds at a
predetermined  price and interest rate. The Company is only obligated to buy the
Series B Revenue  Bonds if, at the date the Series A bonds are  stabilized,  the
property's cash flow is sufficient to provide debt service coverage of 1.15x for
both the Series A and B bonds.  The two forward  commitments  create  derivative
instruments  under SFAS No. 133, which have been designated as a cash flow hedge
of the anticipated funding of the Revenue Bonds, and are recorded at fair value,
with  changes in fair value  recorded in other  comprehensive  income  until the
Revenue  Bonds  are  funded.  The  Series  A  Revenue  Bond  is  expected  to be
approximately  $15.8  million  and the Series B Revenue  Bond is  expected to be
$350,000,  which combined represents the Company's maximum purchase  commitment.
At  September  30, 2003,  the fair value of these  forward  transactions  is not
significant.

During December 2002, the Company entered into two  transactions  related to two
properties,  Coventry Place and Canyon  Springs.  Pursuant to the terms of these
transactions, the Company will provide credit support to the construction lender
for project  completion  and Fannie Mae permanent  loan  conversion  and acquire
subordinated  bonds to the extent  the  construction  period  bonds do not fully
convert.  Up until the point of  completion,  the  Company  will  reimburse  the
construction  lender for any draw on its construction letter of credit up to 40%
of the stated amount of the letter of credit. Following completion, up until the
project loan converts to permanent  loan status,  the Company  will,  should the
need  arise,  reimburse  the full  amount of the letter of credit.  The  Company
closely monitors these two properties,  and believes there is no need currently,
to provide for any potential loss. Should the Company's analysis of risk of loss
change in the future,  a provision  for loss might be required;  such  provision
could be material.  The  developer  has also issued  several  guarantees  to the
construction  lender,  each of which would be called  upon before the  Company's
guarantees,  and each of which  would be  assigned  to the  Company  should  its
guarantees be called.  Once the  construction  loans convert to permanent loans,
the Company is obligated to acquire  subordinated  loans for the amount by which
each  construction  loan exceeds the  corresponding  permanent loan, if any. The
subordinated  bonds will bear interest at 10%. Under Fannie Mae guidelines,  the
size of the  subordinated  bonds will be limited to a 1.0x debt service coverage
based on 75% of the cash flow after the senior debt.

The Company's maximum exposure, related to these two transactions, is 40% of the
stated amount of the letter of credit of approximately $27 million.

Also, during December 2002, the Company entered into two transactions related to
properties  known as Auburn Glenn and  Cottonwood.  Pursuant to the terms of the
transactions,  a  third  party,  unrelated  lender  will  advance  funds  to the
developers,  as needed,  at a floating rate. At the completion of  construction,
the  Company  is  obligated  to  acquire  the  permanent   Revenue  Bonds  at  a
predetermined  price and  interest  rate.  The two  forward  commitments  create
derivative  instruments under SFAS No. 133, which have been designated as a cash
flow hedge of the anticipated  funding of the Revenue Bonds, and are recorded at
fair value,  with changes in fair value recorded in other  comprehensive  income
until the Revenue  Bonds are funded.  The Revenue Bonds are expected to be $18.8
million  for Auburn  Glenn and $12.4  million  for  Cottonwood,  which  combined
represents the Company's maximum purchase commitment. At September 30, 2003, the
fair value of these forward transactions is not significant.

NOTE 8 - Financial Risk Management and Derivatives

The Company's  Revenue  Bonds  generally  bear fixed rates of interest,  but the
P-FLOATS and TOP financing  programs  incur  interest  expense at variable rates
re-set  weekly.  The Company is also  exposed to interest  rate risks due to its
borrowings under a $75 million warehouse  facility with Fleet  Securities,  Inc.
and Wachovia Securities,  Inc. (the "Facility") (see Note 11). Various financial


                                       26
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


vehicles exist which allow the Company's  management to hedge against the impact
of interest rate fluctuations on the Company's cash flows and earnings.

The  Company  has entered  into two  interest  rate swaps in order to reduce the
Company's  exposure to increases in the  floating  interest  rate on its TOP and
P-FLOATS  programs.  Under such  interest rate swap  agreements,  the Company is
required to pay MLCS (the  "Counterparty")  a fixed rate on a notional amount of
debt.  In  return,  the  Counterparty  will  pay the  Company  a  floating  rate
equivalent  to The BMA  Municipal  Swap  Index,  an index of  weekly  tax-exempt
variable rate issues on which the Company's variable rate financing programs are
based.  On January 5, 2001, the Company  entered into a five-year  interest rate
swap that fixes the BMA index to 3.98% on a notional  amount of $50 million.  On
February 5, 2001, the Company entered into a three-year  interest rate swap that
fixes the BMA index to 3.64% on an additional notional amount of $100 million.

The  average BMA rates for the nine months  ended  September  30, 2003 and 2002,
were 1.02% and 1.35%,  respectively.  Net swap payments received by the Company,
if any, will be taxable income to the Company and, accordingly, to shareholders.
A  possible  risk of such  swap  agreements  is the  possible  inability  of the
Counterparty to meet the terms of the contracts with the Company; however, there
is no current indication of such an inability.

At  September  30,  2003,  these two  interest  rate  swaps were  recorded  as a
liability  with a combined  fair market  value of  approximately  $3.5  million,
included in interest rate hedges on the  Consolidated  Balance Sheets.  Interest
paid or payable under the terms of the swaps, of  approximately  $3,066,000,  is
included in interest expense.

During  January  2002,  the Company  entered into an interest rate cap agreement
with Fleet Bank, with a cap of 8% on a notional amount of $30 million.  Although
this  transaction  is  designed  to mitigate  the  Company's  exposure to rising
interest  rates,  the Company has not  designated  this  interest  rate cap as a
hedging  derivative.  At September 30, 2003, this interest rate cap was recorded
as an asset with a fair market value of $39,443 included in interest rate hedges
in the Consolidated Balance Sheets.  Because the Company has not designated this
derivative  as a hedge,  the  change in fair  market  value  flows  through  the
Consolidated  Statements of Income,  where it is included in interest income, in
the amount of ($21,611) for the nine months ended September 30, 2003.

NOTE 9 - Dividends and Restricted Assets

CharterMac may not receive any distributions from its subsidiary, Equity Issuer,
until Equity Issuer has either paid all accrued but unpaid distributions related
to its  preferred  shares,  or in the  case of the next  following  distribution
payment date, set aside funds sufficient for payment. The distributions  related
to the  preferred  shares are payable only from Equity  Issuer's  quarterly  net
income,  defined as the  tax-exempt  income (net of expenses) for the particular
calendar  quarter.  Equity Issuer is required,  under the terms of its preferred
share  issuance,  to  meet  certain  leverage  ratios  calculated  as its  total
obligations divided by the gross fair value of investments. This could limit the
ability of Equity Issuer to  distribute  cash or Revenue Bonds to the Company or
to make loans or advances to the Company.

Equity  Issuer and its  subsidiaries  hold Revenue  Bonds which at September 30,
2003, had an aggregate carrying amount of approximately $1.46 billion that serve
as  collateral  for  securitized  borrowings  or  are  securitized.   The  total
securitized  borrowings at September 30, 2003 were  approximately  $864 million.
Equity  Issuer's  net  assets at  September  30,  2003 were  approximately  $559
million.

NOTE 10 - Business Segments

As a result  of the  December  2001  acquisition  of PWF,  the  Company  has two
reportable business segments: an investing segment and an operating segment.

The investing  segment consists of subsidiaries  holding  investments in Revenue
Bonds producing


                                       27
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


primarily tax-exempt interest income.


                                       28
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


The  operating  segment  generates  taxable  interest  and fee  income.  Taxable
interest  income is generated  through the ownership of taxable  bonds,  certain
taxable  loans  and  other   investments.   Taxable  fee  income  includes  loan
origination  and loan  servicing  fees  (through  PWF) on  portfolios  for third
parties,  fees earned and  associated  with the  acquisition  or  origination of
Revenue Bonds, and fees for credit enhancement and guaranty services.

Segment results include all direct and contractual revenues and expenses of each
segment and  allocations of indirect  expenses based on specific  methodologies.
The reportable  segments are strategic  business  units that primarily  generate
revenue  streams  that  are  distinctly  different  and  are  generally  managed
separately.  Segment  reporting is applicable  beginning with the acquisition of
PWF on December 31,  2001;  prior to December  31,  2001,  all of the  Company's
operations were attributable to the investing  segment.  Of the total assets for
the Company at September  30, 2003 and December  31, 2002,  approximately  $1.98
billion and $1.73  billion,  respectively,  are  attributable  to the  investing
segment  and  approximately  $77  million and $124  million,  respectively,  are
attributable to the operating segment.


                                       29
<PAGE>


      The  following  tables  provide more  information  regarding the Company's
segments:

<TABLE>
<CAPTION>
                                                         (Dollars in thousands)                     (Dollars in thousands)
                                                  Three Months Ended September 30, 2003      Three Months Ended September 30, 2002
                                            --------------------------------------------- ------------------------------------------

                                              Investing     Operating        Total          Investing     Operating       Total
                                              ---------     ---------        -----          ---------     ---------       -----
<S>                                            <C>           <C>            <C>             <C>           <C>             <C>

Revenues                                       $31,755       $ 4,093        $35,848         $24,204       $ 3,880         $28,084
Interest Revenue                                30,586           535         31,121          23,174           952          24,126
Interest Expense                                 9,468           145          9,613           8,225         1,128           9,353
Depreciation and Amortization
   expense                                         626         1,616          2,242             479         1,545           2,024
Equity in the income of investees
   accounted for under the equity
   method                                          555          --              555             555          --               555
Income tax or benefit                              345           344            689             214           442             656
Net income (loss)                               16,870          (955)        15,915          13,036           618          13,654

<CAPTION>
                                                         (Dollars in thousands)                     (Dollars in thousands)
                                                Nine Months Ended September 30, 2003         Nine Months Ended September 30, 2002
                                            --------------------------------------------- ------------------------------------------

                                              Investing     Operating        Total          Investing     Operating       Total
                                              ---------     ---------        -----          ---------     ---------       -----
<S>                                            <C>         <C>            <C>              <C>           <C>            <C>

Revenues                                       $88,280     $  12,697      $ 100,977        $   71,707    $  13,240      $  84,947
Interest Revenue                                84,372         1,861         86,233            69,573        2,869         72,442
Interest Expense                                27,159           606         27,765            23,047        1,128         24,175
Depreciation and Amortization
   expense                                       2,040         4,804          6,844               974        5,050          6,024
Equity in the income of investees
  accounted for under the equity
  method                                         1,665            --          1,665             1,664            -          1,664
Income tax (provision) or benefit                2,588           865          3,453               214       (1,197)          (983)
Net income (loss)                               53,191        (1,169)        52,022            44,739        1,884         46,623
</TABLE>


                                       30
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


NOTE 11 - Warehouse Facility

On March 31,  2003,  the Company  entered into a $75 million  secured  revolving
tax-exempt  bond  warehouse  line of credit  with  Fleet  Securities,  Inc.  and
Wachovia  Securities,  Inc.  (the  "Facility").  The  Facility  has a  built  in
accordion  feature  allowing up to a $25 million  increase for a total  Facility
size of $100 million and a term of two years,  plus a one year  extension at the
Company's  option.  The Facility bears interest at either 31, 60, 90, or 180-day
reserve  adjusted LIBOR plus 1.5%, or prime plus .25%, at the Company's  option.
During the third  quarter of 2003,  Citibank  became the third lender under this
Facility.  The  outstanding  balance of this  Facility at September 30, 2003 was
approximately $45.6 million.

NOTE 12 - PWF Acquisition

As part of the PWF acquisition,  the purchase agreement provided that CharterMac
has the right but not obligation, to purchase the remaining 15% of the economics
of PWF shares within the 37 months following the close of the acquisition,  (the
"Call Option").  The agreement also gives the owners of the remaining PWF shares
the right to put those shares to CharterMac  (the "Put  Option"),  within the 34
months following the close of the acquisition.  The Company  considers these two
options to be a single unit (a forward contract), due to the fact the Put Option
and Call  Option  were  entered  into at the same  time,  have the same  counter
parties,  have the same  risk,  and  could  have been  accomplished  in a single
transaction. The price at which the shares of stock are to be purchased is based
on many factors,  determined  in the future  including  the  performance  of the
underlying  revenues of PWF, the value of PWF's  servicing  portfolio  and other
factors which are not currently determinable. The Company determined the forward
contract should not be recorded until the contract is settled and the associated
shares  transferred to the Company.  During the period of the forward  contract,
the Company will allocate  subsidiary income or loss to the minority interest on
a pro-rata basis, determined by its ownership percentage.

NOTE 13 - Financing Arrangements

In addition to other Company borrowings, on April 1, 2003, the Company closed on
its sale of Tax-Exempt  Multifamily Housing Trust Certificates Series 2003A (the
"Trust").  Pursuant  to the  terms of the  Trust,  the  Company  contributed  19
fixed-rate,  tax-exempt  multifamily  housing and senior  housing  Revenue Bonds
collateralized by 16 different properties totaling  approximately $196.8 million
in aggregate  principal into a trust out of which was sold $100 million in Class
A Certificates  to various  institutional  investors.  A  wholly-owned  indirect
subsidiary of CharterMac retained the subordinated Class B Certificates totaling
approximately $96.8 million. CharterMac has agreed that it will hold the Class B
Certificates until the Trust is terminated. The Class A Certificates will accrue
interest  at the fixed rate of 3.25% per annum for two years.  Distributions  to
the  Class A  Certificate  holders  are  made  on the  15th  day of each  month,
commencing  on May 15,  2003.  The  Class A  Certificates  will  be  subject  to
mandatory  tender for purchase at a price equal to the  outstanding  Certificate
Balance thereof plus accrued  interest  thereon on March 15, 2005. If CharterMac
does not exercise its option to terminate the Trust on March 15, 2005, the Class
A Certificates will be subject to remarketing.  The Class A Certificates will be
subject  to  mandatory  tender  for  purchase  and  cancellation  on  the  Final
Distribution  Date from  proceeds of the  liquidation  of the bonds on March 15,
2007. This financing arrangement is being accounted for as a secured borrowing.

NOTE 14 - Shareholders' Equity

In August 2003, the Company issued  approximately 3.1 million of its Convertible
CRA Shares, at $18.48 per share, raising proceeds net of underwriter's  discount
of  approximately  $54.2  million.  The Company  intends to use the  proceeds to
invest in additional Revenue Bonds and for general corporate purposes, including
reduction of the Company's indebtedness.

In September 2003, the Company, at the shareholders  request,  converted 817,589
of outstanding  Convertible CRA Shares to 776,033 Common Shares.  The conversion
was based on a  conversion  ratio of .9217 for  530,728  Convertible  CRA Shares
which were  purchased  by the  holder,  thereof on May 10, 2000 and a one to one
ratio for the remaining  286,861  Convertible CRA Shares which were


                                       31
<PAGE>


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)


purchased by the holder, thereof on July 15, 2002.

NOTE 15 - Subsequent Events

New Acquisitions
----------------
Subsequent  to September  30, 2003,  CharterMac  has acquired four Revenue Bonds
with a total aggregate face amount of  approximately  $98.9 million,  secured by
2,659  multifamily  units.  The Company has also  advanced  additional  funds to
Revenue  Bonds  which  were  previously  acquired  totaling  approximately  $8.2
million.

Convertible CRA Shares
----------------------
Subsequent  to  the  close  of  the  third  quarter,  CharterMac  completed  two
additional  offerings of its CRA Preferred  Shares to another  twelve  financial
institutions.  During October, CharterMac raised gross proceeds of approximately
$36.0 million through the offering of 1,687,194 CRA Preferred Shares and 238,599
CRA  Preferred  Shares priced at $18.67 and $18.86  respectively.  Year-to-date,
CharterMac  has raised gross proceeds  totaling over $92.5 million  through this
unique security.

Conversion of Convertible CRA Shares to Common Shares
-----------------------------------------------------
On October 10, 2003, the Company  converted  575,705 of outstanding  Convertible
CRA Shares to Common Shares. The conversion was based on a one to one conversion
ratio for the Convertible CRA Shares which were purchased on November 12, 2002.

Sale of Taxable Revenue Bonds
-----------------------------
On October 10, 2003,  the Company sold nine taxable  Revenue Bonds at a price of
99% of par value to American Mortgage  Acceptance Company ("AMAC"),  which is an
affiliate of the Manager,  for approximately $7.6 million.  These Revenue Bonds,
which are each secured by a first mortgage  position on a multifamily  property,
carried a weighted average interest rate of 8.69%. The sale price was determined
by an independent  third party  valuation.  This transaction was approved by the
Company's Board of Trustees.

Auction Rate Securitization
---------------------------
On October 30,  2003,  the Company  entered  into a new form of  securitization,
under which auction rate  certificates  secured by an open pool of Revenue Bonds
were  auctioned  through  UBS  Financial  Services  Inc. to  corporations  as an
alternative to tax-exempt money market funds.

The Company  placed  Revenue Bonds with an aggregate par value of  approximately
$141 million into CharterMac  Auction Rate  Certificate  Trust I,  ("ARCSI").  A
portion  of  these  bonds,   approximately  $79  million,  had  been  previously
securitized  under TOPS in the Nat-1 Series Trust. In order to move the bonds to
ARCSI, the Company redeemed low-floater certificates  aggregating  approximately
$118  million.  On October 30,  2003,  ARCSI issued $100 million of auction rate
certificates.  These certificates have an initial rate of 1% which will be reset
every 35 days through a dutch auction  process.  The Company  intends to account
for this transaction as a secured borrowing.

LIHTC Guarantee
---------------
On October 31, 2003,  the Company  completed its third  transaction to guarantee
tax  benefits to an  investor in a  partnership  designed  to earn  LIHTCs.  The
Company entered into two agreements with Merrill Lynch (the "Primary Guarantor")
to guarantee an agreed-upon  IRR to the investor in Related  Capital  Guaranteed
Corporate  Partners  II,  L.P.  - Series C  ("RCGCP  - Series  C") for which the
Company will receive guarantee fees totaling approximately $3.4 million in three
installments.


                                       32
<PAGE>



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

General
-------

Charter Municipal  Mortgage  Acceptance Company  ("CharterMac"),  along with its
consolidated  subsidiaries  (the  "Company"),  is  a  Delaware  statutory  trust
principally engaged in the acquisition and ownership (directly or indirectly) of
tax-exempt  multifamily  housing  revenue  bonds  ("Revenue  Bonds")  and  other
investments  that produce  tax-exempt  income,  issued by various state or local
governments,  agencies,  or authorities.  Revenue Bonds are primarily secured by
participating   and   non-participating   first  mortgage  loans  on  underlying
properties ("Underlying Properties").

The  Company  believes  that it can earn above  market  rates of interest on its
Revenue  Bond  acquisitions  by focusing  its efforts  primarily  on  affordable
housing.   The  Manager  estimates  that  nearly  30%  of  all  new  multifamily
development contains an affordable component which produces tax credits pursuant
to Section 42 of the Internal Revenue Code. The traditional methods of financing
affordable housing with tax-exempt Revenue Bonds are complex and time consuming,
and involve the participation of many  intermediaries.  Through the Manager, the
process has been streamlined with the "Direct Purchase  Program".  The Company's
Direct Purchase Program removes all  intermediaries  from the financing  process
(except the governmental  issuer of the Revenue Bond) and enables  developers to
deal directly with one source.  Because the Company  purchases its Revenue Bonds
directly  from the  governmental  issuer,  the need for  underwriters  and their
counsel,  rating agencies and costly  documentation is eliminated.  This reduces
the financing  life cycle,  often by several  months,  and also reduces the bond
issuance  costs,  usually by 30% or more. In dealing  directly with the Company,
developers feel more certain about the terms and timing of their financing.  The
Company  believes  the savings in time and up-front  costs and the  certainty of
execution  that the Direct  Purchase  Program  offers to  developers  allows the
Company to receive  above-market  rates of  interest  on the  Company's  Revenue
Bonds.

The Company  believes that it is well  positioned to market its Direct  Purchase
Program as a result of the Manager's  affiliation  with Related  Capital Company
("Related"), a nationwide, fully integrated real estate financial services firm,
because the Manager is able to utilize Related's  resources and relationships in
the  multifamily   affordable  housing  finance  industry  to  source  potential
borrowers  of  Revenue  Bonds.  Related  and  its  predecessor   companies  have
specialized  in  offering  debt and equity  products to  mid-market  multifamily
owners and  developers  for over 30 years.  According to the 2001 National Multi
Housing Council survey, Related is the second largest owner of apartments in the
United States.

The Company,  through its wholly-owned  subsidiary  CharterMac  Corporation ("CM
Corp."),  owns  approximately  87% of the outstanding  capital stock (85% of the
economics)  of PW  Funding,  Inc.  ("PWF"),  a national  mortgage  banking  firm
specializing in multifamily  housing.  CM Corp. expects to acquire the remaining
outstanding  capital  stock of PWF over the next 6 to 18 months.  As a result of
the  acquisition of PWF, the Company has diversified the range of its investment
products and is able to offer  developers fixed and floating rate tax-exempt and
taxable  financing  through  Fannie Mae,  Freddie Mac and FHA for affordable and
market rate  multifamily  properties.  Combining  this with the  Company's  core
business of investing in Revenue Bonds and its  affiliation  with  Related,  the
Company is able to provide  developers  with  financing for all aspects of their
property's capital structure.

On December 18, 2002, the Company  announced it had entered into an agreement to
acquire  100%  of  the  ownership  interests  in  and  substantially  all of the
businesses  operated by Related (other than specific  excluded  interests  which
will be retained by the principals of Related).  The acquisition will enable the
Company to terminate its outside  management  agreement  with the Manager and to
become an internally-managed company.

The potential  acquisition is structured so that the ownership interests held by
the  principals of Related in both Related and the other  entities which control
other aspects of Related's  business will be  contributed  into a  newly-formed,
wholly-owned subsidiary of CM Corp. (the "CharterMac Sub").

The Company  anticipates paying total consideration to the principals of Related
of up to $338 million, as follows:

      o     The Initial  Payment--$210  million  consisting  of $160  million in
            special  common units of the  CharterMac Sub and $50 million in cash
            (with the cash  portion  being  paid only to TRCLP).  These  special
            common  units  will be  issued at  $17.78  per  unit,  which was the


                                       33
<PAGE>


            average  closing  price of the  Company's  common  shares for the 30
            calendar  days prior to the  announcement  of the  acquisition  (the
            "Initial Payment SCUs");

      o     The  Contingent  Payment--up  to $128 million of additional  special
            common  units (the  "Contingent  Payment  SCUs"),  which is based on
            7.73x Related's  adjusted audited  earnings before interest,  taxes,
            depreciation and amortization, as well as certain other adjustments,
            for the year ended December 31, 2002.  The  Contingent  Payment SCUs
            are  expected to be issued at the same price as the Initial  Payment
            SCUs, subject to a 17.5% symmetrical collar.

In  connection  with the  proposed  acquisition,  the  Company  also  intends to
establish a  restricted  share award plan which will permit the Company to grant
restricted  common  shares to the  employees  of  Related.  At the option of the
principals of Related, on or prior to the closing of the acquisition, the amount
of restricted  common shares may be increased to up to $20.2  million,  in which
event the amount of the contingent  payment payable to the principals of Related
will be reduced by the amount by which the value of the restricted common shares
issued exceeds $15 million.

Following the completion of the proposed  acquisition,  the economic interest in
the Company of (i) TRCLP will equal  approximately  17.7% and (ii) the Company's
management  and  the  principals  of  Related  (other  than  TRCLP)  will  equal
approximately 8.7%.

The proposed  acquisition  of Related is still subject to customary  conditions,
including  receipt of the  affirmative  vote of the holders of a majority of the
Company's issued and outstanding common shares.  Holders of the Company's common
shares  of  record  on  August  1,  2003 are  entitled  to vote on the  proposed
acquisition of Related and other matters  described  below at the annual meeting
of shareholders, which was originally scheduled to occur on October 29, 2003 and
adjourned to November  17,  2003.  Definitive  proxy  materials  relating to the
proposed acquisition of Related and other matters to be voted on were filed with
the SEC on September 5, 2003 and mailed to common shareholders  entitled to vote
at the annual meeting on or about September 9, 2003.

In addition to asking the holders of the Company's  common shares to approve the
issuance of securities in connection with the proposed acquisition,  the Company
is also asking for their approval of the following proposals:

            (a) Amending and  restating  the  Company's  trust  agreement to (i)
            reflect the terms of the proposed acquisition,  (ii) accommodate the
            Company's  internalized  management  structure  and expansion of the
            Company's business resulting from the proposed acquisition and (iii)
            bring the  Company's  organizational  structure  in line with  other
            internally-managed, public companies;

            (b) Expanding the Company's  existing incentive share option plan to
            enable the  Company to  continue  to  attract  and retain  qualified
            individuals  to serve as the Company's  officers and trustees and to
            provide incentives to and more closely align the financial interests
            of the Company's management team with the interests of the Company's
            shareholders;

            (c) Electing two trustees to the Company's  board of trustees,  each
            for a term of three years; and

            (d) Amending the Company's trust agreement to clarify that preferred
            shares  already  issued  at  the  date  of  the  acquisition  by the
            Company's  subsidiary,  which contain mandatory  redemption features
            would not be considered  "financing or leverage"  under the terms of
            the  Company's  trust  agreement to clarify any confusion due to the
            reclassification of those amounts due to FAS 150.

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

Interest  income from Revenue  Bonds  increased  approximately  $7.5 million and
$15.8 million for the three and nine months ended September 30, 2003 as compared
to 2002.  This increase was  primarily due to an increase in interest  income of
approximately  $21.8  million from new Revenue  Bonds  acquired  during 2002 and
2003,  partially  off-set by a decrease  in  interest  income due to the sale or
repayment  of Revenue  Bonds of  approximately  $4.6  million  and a decrease in
contingent interest of approximately $1.1 million.


                                       34
<PAGE>


Other income for the three and nine months ended  September 30, 2003,  increased
by  approximately  $242,000 and $2.1 million as compared to 2002.  This increase
was primarily due to the Yield Guarantee Transaction completed in July 2002.

Total revenues for the three and nine months ended September 30, 2003, increased
by  approximately  $7.8 million and $16.0  million  including  the  increases in
interest income from Revenue Bonds noted above,  increases in mortgage servicing
fees and other  income  offset by a decrease of  approximately  $1.8  million in
other  interest  income,  due to decrease in other  investments  and  promissory
notes, and a decrease of approximately  $572,000 in mortgage banking fees due to
lower origination volume.

General and  administrative  expenses  increased  approximately $2.4 million and
$2.5 million for the three and nine months ended  September 30, 2003 as compared
to  2002  primarily  due to  increases  in  legal  expenses,  litigation  costs,
compensation expenses, accounting fees, overhead and travel reimbursements and D
and O insurance.

During the three and nine months ended September 30, 2003, the Company  recorded
a loss on impairment of Revenue Bond of approximately  $1.8 million,  associated
with the write-down of the Waterford Place Revenue Bond.

Amortization  increased  approximately  $218,000  and $820,000 for the three and
nine  months  ended  September  30,  2003  primarily  due  to  the  increase  of
amortization  of PW Funding  acquisition  expense and deferred  finance cost for
LIHTC guarantee deal and PW Funding acquisition and warehouse loans.

Interest  expense  for the  three  and nine  months  ended  September  30,  2003
increased  approximately  $1.0  million  and  $2.0  million,  primarily  due  to
increased secured borrowings and interest payments on the Merrill Lynch two-year
securitization and the Facility.

Interest  expense  -  distributions  to  preferred  shareholders  of  subsidiary
increased  approximately  $1.6 million for the nine months ended  September  30,
2003 when compared to 2002 reclassified amounts of income allocated to preferred
shareholders of subsidiary, due to the preferred offering consummated on June 4,
2002.

During the three and nine months ended September 30, 2003, the Company  recorded
a benefit for income taxes of approximately $689,000 and $3.5 million, primarily
due to a large increase in deferred tax assets  representing the deferred income
associated with the yield guarantee transaction.

During  the  three  and nine  months  ended  September  30,  2003,  the  Company
recognized a net gain on repayments of Revenue Bonds of  approximately  $557,000
and $2.8  million.  For the nine months ended  September  30, 2002,  the Company
recognized a gain of approximately  $4.0 million.  These amounts vary due to the
number and size of Revenue Bonds repaid or sold. Additionally,  during the three
and nine months ended September 30, 2003, the Company  recognized gains on sales
of loans of approximately  $444,000 and $3.0 million versus  approximately  $1.5
million and $7.9 million for 2002, relating to PWF's origination activities.

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

The Company has  primarily  used three sources of capital:  collateralized  debt
securitization,  various types of equity offerings and a Credit Facility to fund
its investments and facilitate growth.

On March 31,  2003,  the Company  entered into a $75 million  secured  revolving
tax-exempt  bond  warehouse  line of credit  with  Fleet  Securities,  Inc.  and
Wachovia  Securities,  Inc.  (the  "Facility").  The  Facility  has a built-  in
accordion  feature  allowing up to a $25 million  increase for a total  Facility
size of $100 million and a term of two years,  plus a one- year extension at the
Company's  option.  The Facility bears interest at either 31, 60, 90, or 180-day
reserve  adjusted LIBOR plus 1.5%, or prime plus .25%, at the Company's  option.
During the third quarter of 2003,  Citibank became the third liquidity  provider
under this Facility.

On April 1,  2003,  the  Company  closed on its sale of  Tax-Exempt  Multifamily
Housing Trust Certificates Series 2003A (the "Trust").  Pursuant to the terms of
the Trust, the Company contributed 19 fixed-rate, tax-exempt multifamily housing
and senior  housing  revenue  bonds  collateralized  by 16 different  properties
totaling approximately $196.8 million in aggregate principal into a trust out of
which was sold $100  million in Class A  Certificates  to various  institutional
investors.  A  wholly-


                                       35
<PAGE>


owned  indirect  subsidiary  of  CharterMac  retained the  subordinated  Class B
Certificates totaling approximately $96.8 million. CharterMac has agreed that it
will hold the Class B Certificates  until the Trust is  terminated.  The Class A
Certificates  will accrue  interest at the fixed rate of 3.25% per annum for two
years.  Distributions to the Class A Certificate holders are expected to be made
on the  15th  day of  each  month,  commencing  on May  15,  2003.  The  Class A
Certificates  will be subject to mandatory  tender for purchase at a price equal
to the outstanding  Certificate Balance thereof plus accrued interest thereon on
March 15, 2005.  If  CharterMac  does not  exercise its option to terminate  the
Trust  on  March  15,  2005,  the  Class  A  Certificates  will  be  subject  to
remarketing.  The Class A Certificates  will be subject to mandatory  tender for
purchase and  cancellation on the Final  Distribution  Date from proceeds of the
liquidation of the bonds on March 15, 2007.

In August 2003, the Company issued  approximately 3.1 million of its Convertible
CRA Shares, at $18.48 per share,  raising proceeds net of underwriters  discount
of  approximately  $54.2  million.  The Company  intends to use the  proceeds to
invest in additional Revenue Bonds and for general corporate purposes, including
reduction of the Company's indebtedness.

During the nine months ended  September 30, 2003,  cash and cash  equivalents of
the Company and its  consolidated  subsidiaries  increased  approximately  $69.4
million. The increase was primarily due to cash provided by operating activities
of  approximately  $85.0  million,  proceeds  from the repayment of nine Revenue
Bonds of  approximately  $75.9 million,  principal  payments on Revenue Bonds of
approximately  $12.8  million,  principal  payments  received from loans made to
properties of approximately $9.1 million,  proceeds from financing  arrangements
of  approximately  $192.7  million,  increase in notes payable of  approximately
$15.1 million and proceeds from  issuance of CRA Shares of  approximately  $53.8
million,  partially  offset by  distribution  payments  of  approximately  $62.0
million, purchases of/advances to Revenue Bonds of approximately $265.8 million,
purchases of other  investments of approximately  $10.2 million,  an increase in
restricted cash of approximately  $37.2 million and an increase in deferred bond
selection costs and other deferred costs of approximately $9.8 million.

In October 2003, distributions declared in September 2003 were paid to Preferred
Shareholders as shown in the table below:

<TABLE>
<CAPTION>

                                                                                                      Liquidation
                                                                                                         Value
Series            Dividend Rate             Distribution per Share          Total Distribution         per share
------            -------------             ----------------------          ------------------         ---------
<S>                 <C>                             <C>                          <C>                   <C>

A                   6.625%                          $33,125                      $1,490,625            $2,000,000
A-1                 7.100%                            8,875                         426,000               500,000
A-2                 6.300%                            7,875                         488,250               500,000
A-3                 6.800%                            8,500                         510,000               500,000
B                   7.600%                            9,500                       1,045,000               500,000
B-1                 6.800%                            8,500                         314,500               500,000
B-2                 7.200%                            9,000                         450,000               500,000
</TABLE>

Also paid, during November 2003, were distributions of approximately $16,213,000
($.35 per share) to holders of common and  convertible  CRA  shares,  which were
declared in September 2003.

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.

Critical Accounting Policies
----------------------------

The Company's  critical  accounting  policies are described in its Form 10-K for
the  year  ended  December  31,  2002  and in  Note 1 of  the  footnotes  of the
accompanying  financial statements.  These critical accounting policies have not
changed during 2003 except for the Company's  accounting  treatment of MSRs (see
Note  1,  Mortgage  Banking  Activities  and  Mortgage  Servicing  Rights  for a
description of the current accounting policies).

Acquisitions
------------

During the period  January 1, 2003  through  September  30,  2003,  the  Company
acquired 29  tax-exempt  Revenue  Bonds and four taxable  Revenue  Bonds with an
aggregate  face amount of  approximately  $254.5  million,  not  including  bond
selection  fees and expenses of  approximately  $5.7  million.  The Company also
advanced  additional  funds to  Revenue  Bonds  which were  previously


                                       36
<PAGE>


acquired totaling approximately $11.3 million.

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.
Such forward-looking  statements include statements regarding the intent, belief
or current  expectations of the Company and its management and involve known and
unknown  risks,  uncertainties  and other  factors  which  may cause the  actual
results,  performance or achievements of the Company to be materially  different
from any future  results,  performance or  achievements  expressed or implied by
such forward-looking  statements.  Such factors include, among other things, the
following:  general  economic and business  conditions,  which will, among other
things,  affect the availability and  creditworthiness  of prospective  tenants,
lease rents and the terms and availability of financing for properties  financed
by Revenue  Bonds  owned by the  Company;  adverse  changes  in the real  estate
markets including,  among other things,  competition with other companies; risks
of  real  estate   development  and   acquisition;   governmental   actions  and
initiatives; and environment/safety  requirements.  Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof.

Inflation
---------

Inflation  did not have a  material  effect  on the  Company's  results  for the
periods presented.

Related Parties
---------------

The Company's  day-to-day  affairs are handled under the terms of the Management
Agreements with the Manager.

The Company has  invested  in, and may in the future  invest in,  Revenue  Bonds
secured by properties  in which either direct or indirect  affiliates of Related
own equity interests in the borrower.  The Company's trust agreement  contains a
limitation,  equal to 15% of total  market  value,  on the  aggregate  amount of
Revenue Bonds the Company may hold where the borrowers  under such Revenue Bonds
are either direct or indirect  affiliates of Related and Related generally has a
controlling economic interest.

In some cases,  Related or its affiliates may own a partnership or joint venture
interest merely to facilitate an equity  financing on behalf of one of Related's
investment  funds.   These  instances  are  not  considered  in  the  above  15%
limitation.  This  type of  transaction  with an  affiliated  borrower  would be
structured as a limited partnership as follows:  the general partner would be an
unaffiliated  third  party with a 1% general  partnership  interest  and the 99%
limited  partner would itself be a limited  partnership in which an affiliate of
Related would own a 1% general partnership  interest and one or more Fortune 500
companies would own a 99% limited partnership interest.

Affiliates of the Manager may provide certain financial guarantees to facilitate
leveraging  by  CharterMac,  for which they could be paid market  rate fees.  In
addition,  affiliates of the Manager may provide certain financial guarantees to
the owner (or  partners of the  owners) of the  underlying  properties  securing
CharterMac's revenue bonds, for which they could be paid market rate fees.

Certain  of the  Revenue  Bonds held by the  Company  are  supported  by various
guarantees including,  but not limited to, construction and operating guarantees
from affiliates of the Manager.

On  September  24,  2003,  the  Company  completed  its second  yield  guarantee
transaction,  agreeing to back up a primary guarantor's  obligation to guarantee
an  agreed-upon  internal  rate of return  ("IRR")  to the  investor  in Related
Capital Guaranteed  Corporate Partners II, L.P. - Series B ("RCGCP - Series B").
RCGCP - Series B is a fund  sponsored  by Related,  which is an affiliate of the
Manager.

During the quarter  ended  September 30, 2002,  the Company  agreed to back up a
primary  guarantor's  obligation  to guarantee an  agreed-upon  internal rate of
return to the investor in Related Capital Guaranteed Corporate Partners II, L.P.
("RCGCP").  RCGCP is a fund  sponsored  by Related,  who is an  affiliate of the
Manager. The Company is the beneficiary of a guarantee against losses associated
with  construction  and operating  stabilization  for each of the  properties in
RCGCP,  which is capped at $15 million.  The  guarantee has been provided by The
Related Companies,  L.P.  ("TRCLP"),  an affiliate of Related.  If the Company's
acquisition  of Related is completed,  then this  guarantee will no longer be in
force.


                                       37
<PAGE>


In connection  with the  refinancing  of River Run, the Company  entered into an
agreement  which  allows the Revenue  Bond to be put to the  Company  should the
owner of the  underlying  property  default on the bond.  The Company,  in turn,
entered into  agreements  which allow the Company to put the bond to the general
partners of the owner who are affiliates of the Manager. The Company's put right
is  secured by  collateral  assignments  of the  general  partners'  partnership
interests in the limited partnership which owns the underlying property.

The Company has entered into a credit enhancement transaction with Merrill Lynch
Capital Services.  TRCLP has provided the Company with an indemnity covering 50%
of any losses incurred by the Company.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The  nature  of the  Company's  investments  and the  instruments  used to raise
capital  for their  acquisition  expose  the  Company to gains and losses due to
fluctuations  in  market  interest  rates.  Market  interest  rates  are  highly
sensitive  to  many  factors,  including  governmental  policies,  domestic  and
international  political  considerations and other factors beyond the control of
the Company.

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 the TOP
program and on the secured  borrowings  under the P-FLOATS program vary based on
market  interest  rates  based on the Bond  Market  Association  ("BMA") and are
re-set weekly.

Various  financial  vehicles  exist  which  would allow  Company  management  to
mitigate the impact of interest rate  fluctuations  on the Company's  cash flows
and earnings.  Beginning in 2001, and upon management's analysis of the interest
rate environment and the costs and risks of such strategies, the Company entered
into two interest rate swaps in order to hedge against increases in the floating
interest  rate on its TOP and P-FLOATS  programs.  Under such interest rate swap
agreements,  the Company is required to pay Merrill Lynch Capital  Services (the
"Counterparty")  a fixed  rate on a  notional  amount of debt.  In  return,  the
Counterparty  will  pay  the  Company  a  floating  rate  equivalent  to the BMA
Municipal  Swap Index,  an index of weekly  tax-exempt  variable  rate issues on
which the Company's  variable rate financing  programs are based.  On January 5,
2001, the Company entered into a five-year interest rate swap that fixes the BMA
index to 3.98% on a notional  amount of $50  million.  On February 5, 2001,  the
Company entered into a three-year interest rate swap that fixes the BMA index to
3.64% on a notional amount of an additional $100 million. This effectively fixes
$50 million and $100 million of the  Company's  secured  borrowings at 3.98% and
3.64%, respectively,  protecting the Company in the event the BMA Municipal Swap
Index rises. For the nine months ended September 30, 2003, the Company's cost to
borrow  funds  through the TOP and  P-FLOATS  programs on an  annualized  basis,
averaged 2.08% and 2.02%, respectively, which does not include the effect of the
Company's hedging activities.

With respect to the portion of the Company's  floating rate  financing  programs
which are not  hedged,  a change in the BMA rate would  result in  increased  or
decreased  payments  under these  financing  programs,  without a  corresponding
change in cash flows from the investments in Revenue Bonds.  For example,  based
on the unhedged  floating rate $614 million  outstanding  under these  financing
programs at September 30, 2003,  the Company  estimates that an increase of 1.0%
in the BMA rate would increase  interest  expense and therefore  decrease annual
net income by  approximately  $6.1  million.  Conversely,  a decrease  in market
interest rates would generally  benefit the Company in the same amount described
above,  as a result  of  decreased  allocations  to the  minority  interest  and
interest  expense without  corresponding  decreases in interest  received on the
Revenue Bonds.

Changes in market  interest  rates would also impact the estimated fair value of
the Company's  portfolio of Revenue Bonds. The Company  estimates the fair value
for each Revenue Bond as the present value of its expected  cash flows,  using a
discount rate for comparable tax-exempt and taxable investments.  Therefore,  as
market  interest  rates for  tax-exempt and taxable  investments  increase,  the
estimated fair value of the Company's 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,  the  Company  projects,  using the same
methodology  used to estimate the  portfolio's  fair market value under FAS 115,
that a 1% increase in market rates for tax-exempt and taxable  investments would
decrease the  estimated  fair value of its  portfolio of Revenue  Bonds from its
September 30, 2003 value of $1,712,897,000 to approximately $1,603,741,780. A 1%
decline in interest  rates would  increase the value of the  September  30, 2003
portfolio to approximately


                                       38
<PAGE>


$1,843,496,857.  Changes in the estimated fair value of the Revenue Bonds do not
impact the Company's reported net income,  earnings per share,  distributions or
cash flows,  but are reported as  components of other  comprehensive  income and
affect reported shareholders' equity.

The  assumptions  related to the  foregoing  discussion  of market risk  involve
judgments   involving  future  economic  market  conditions,   future  corporate
decisions and other interrelating  factors, many of which are beyond the control
of the Company and all of which are  difficult  or  impossible  to predict  with
accuracy.  Although the Company  believes 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 a representation  of the Company that the
objectives and plans of the Company would be achieved.

Item 4.  Controls and Procedures

(a)  Evaluation  of Disclosure  Controls and  Procedures.  The  Company's  Chief
Executive  Officer and Chief Financial  Officer have evaluated the effectiveness
of the Company's  disclosure controls and procedures (as such term is defined in
Rules 13a-15 and 15d-15 under the  Securities  Exchange Act of 1934,  as amended
(the "Exchange Act")) as of the end of the period covered by this report.  Based
on such  evaluation,  such officers have  concluded  that, as of the end of such
period, the Company's disclosure controls and procedures are effective .

(b)  Internal  Control  over  Financial  Reporting.  There  have  not  been  any
significant  changes in the Company's internal control over financial  reporting
during the fiscal  quarter to which this  report  relates  that have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


                                       39
<PAGE>


                           PART II. OTHER INFORMATION


Item 1.     Legal Proceedings

            Shareholders Action - Related
            On October 24, 2003,  the New York Supreme  Court for Nassau  County
            issued a final judgment  approving the stipulation of compromise and
            settlement of the class and  derivative  action  entitled  Dulitz v.
            Hirmes,  which  had  challenged  certain  aspects  of the  Company's
            acquisition of Related.  Pursuant to that settlement,  certain terms
            of the  acquisition  will be  modified,  as  fully  detailed  in the
            Company's proxy statement that was previously mailed to shareholders
            and filed with the  Commission  on September 5, 2003,  together with
            the Notice of Pendency of Class and Derivative Action.

            Although the  defendants  in the action  denied all  wrongdoing  and
            believe they had meritorious defenses, the settlement eliminates the
            cloud of litigation  over the  acquisition in connection with Dulitz
            and provides the Company and its shareholders  with certain benefits
            described in the proxy statement and Notice. The Court also approved
            an award pursuant to the settlement of $400,000 for attorney's  fees
            and expenses payable by the Company to the plaintiff's attorneys.

Item 2.     Changes in Securities and Use of Proceeds - None.

Item 3.     Defaults Upon Senior Securities - None

Item 4.     Submission of Matters to a Vote of Security Holders - None

Item 5.     Other Information - None

Item 6.     Exhibits and Reports on Form 8-K

            Exhibits:

            10.1     Acquisition Loan Agreement,  dated as of December 24, 2001,
                     among Charter Mac Corporation,  as Borrower, Fleet National
                     Bank, as Agent, and the Lenders.

            10.2     Mortgage  Warehousing Credit and Security Agreement,  dated
                     as of December 24, 2001,  among PW Funding Inc.,  Cambridge
                     Healthcare  Funding  Inc. and Larson  Financial  Resources,
                     Inc., as Borrowers,  Fleet National Bank, as Agent, and the
                     Lenders.

            10.3     Amended and Restated Reimbursement  Agreement,  dated as of
                     March 31,  2003,  among  Charter Mac Equity  Issuer  Trust,
                     Fleet  National  Bank, as Agent,  Fleet  National  Bank, as
                     Issuing Bank, and the Participants.

            10.4     Tax-Exempt  Bond Line of  Credit  and  Security  Agreement,
                     dated as of March 26, 2003, among Charter Mac Equity Issuer
                     Trust,  Fleet  National  Bank,   Wachovia  Bank,   National
                     Association, Fleet Securities Inc. and Wachovia Securities,
                     Inc., and the Lenders.

            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 certification pursuant to 18 U.S.C.
                     Section  1350,  as adopted  pursuant  to Section 906 of the
                     Sarbanes-Oxley Act of 2002.

            32.2     Chief Financial Officer certification pursuant to 18 U.S.C.
                     Section  1350,  as adopted  pursuant  to Section 906 of the
                     Sarbanes-Oxley Act of 2002.

            (b) Reports on Form 8-K

                    The following 8-K reports were filed or furnished,  as noted
                    in the applicable  Form 8-K, for the quarter ended September
                    30, 2003.


                                       40
<PAGE>


                    Current report on Form 8-K relating to filing an exhibit for
                    the Notice of Class and  Derivative  Action  and  Settlement
                    dated September 8, 2003.

                    Current  report on Form 8-K  relating to the Company  making
                    available   unaudited   supplemental   data   regarding  its
                    operations for the quarter ended June 30, 2003, dated August
                    15, 2003.

                    Current  report  on Form  8-K  relating  to a press  release
                    issued by the Company  reporting its  financial  results for
                    the second  quarter  ended June 30,  2003,  dated August 12,
                    2003.


                                       41
<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.


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                  (Registrant)




Date:  November 14, 2003         By:  /s/ Stuart J. Boesky
                                      ------------------------------------------
                                      Stuart J. Boesky
                                      Managing Trustee, President and
                                      Chief Executive Officer




Date:  November 14, 2003         By:  /s/ Stuart A. Rothstein
                                      ------------------------------------------
                                      Stuart A. Rothstein
                                      Chief Financial Officer and Chief
                                      Accounting Officer