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, 2004

                                       OR

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


                         Commission File Number 1-13237


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


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


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


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


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

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

As of  October  29,  2004,  57,680,798  shares  of the  Registrant's  shares  of
beneficial interest were outstanding.



<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

                           CHARTERMAC AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                  September 30,   December 31,
                                                                      2004            2003
                                                                  ------------    ------------
                                                                  (Unaudited)
<S>                                                                <C>            <C>
                                     ASSETS

Revenue bonds - at fair value                                      $ 2,024,157    $ 1,871,009
Cash and cash equivalents                                               57,697         58,257
Cash and cash equivalents - restricted                                  25,672         26,636
Other investments                                                      162,966         48,460
Mortgage servicing rights                                               33,031         33,351
Deferred costs - net of amortization of $18,343 and $13,463             59,789         58,408
Goodwill                                                               207,667        214,744
Other intangible assets - net of amortization of $16,674
   and $4,163                                                          181,692        194,203
Loan to affiliate                                                       15,361             --
Other assets                                                            47,959         75,946
Investments in partnerships of consolidated VIEs                     2,394,398             --
Other assets of consolidated VIEs                                      302,682             --
                                                                   -----------    -----------

Total assets                                                       $ 5,513,071    $ 2,581,014
                                                                   ===========    ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
   Financing arrangements                                          $   973,663    $   900,008
   Preferred shares of subsidiary (subject to mandatory
     repurchase)                                                       273,500        273,500
   Notes payable                                                       176,737        153,350
   Accounts payable, accrued expenses and other liabilities             82,073         56,318
   Deferred tax liability                                               39,348         60,370
   Distributions payable                                                38,569         27,612
   Notes payable and other liabilities of consolidated VIEs          1,225,523             --
                                                                   -----------    -----------

Total liabilities                                                    2,809,413      1,471,158
                                                                   -----------    -----------

Minority interests in subsidiaries                                     271,640        292,199
                                                                   -----------    -----------
Preferred shares of subsidiary (not subject to mandatory
   repurchase)                                                         104,000             --
                                                                   -----------    -----------
Partners' interests in consolidated VIEs                             1,419,462             --
                                                                   -----------    -----------

Commitments and contingencies

SHAREHOLDERS' EQUITY:
   Beneficial owners' equity - Convertible CRA Shareholders;
     no par value (6,552 shares issued and outstanding in 2004
     and 8,180 issued and outstanding in 2003)                         158,481        160,618
   Beneficial owners' equity - special preferred voting shares;
     no par value                                                          151            161
   Beneficial owners' equity - other common shareholders;  no
     par value (100,000 shares authorized;  51,211 shares issued
     and 51,129 outstanding in 2004 and 42,726 shares issued
     and 42,704 outstanding in 2003)                                   729,176        622,771
   Restricted shares granted                                           (11,372)       (19,385)
   Treasury shares of beneficial interest - common, at cost
     (82 shares in 2004 and 23 shares in 2003)                          (1,706)          (378)
   Accumulated other comprehensive income                               33,826         53,870
                                                                   -----------    -----------
Total shareholders' equity                                             908,556        817,657
                                                                   -----------    -----------

Total liabilities and shareholders' equity                         $ 5,513,071    $ 2,581,014
                                                                   ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       2
<PAGE>

                           CHARTERMAC AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                     Three Months Ended       Nine Months Ended
                                                        September 30,            September 30,
                                                   ----------------------   ----------------------
                                                     2004         2003         2004        2003
                                                   ----------------------   ----------------------
<S>                                                <C>          <C>         <C>          <C>
Revenues:
   Revenue bond interest income                    $  33,027    $  30,353   $  97,365    $  83,528
  Fee income:
     Mortgage banking                                  3,321        3,171      11,124        9,711
     Fund sponsorship                                 11,363           --      30,300           --
     Credit enhancement                                2,715          995       7,541        2,986
   Other income                                        5,760        1,329      11,891        4,752
   Revenues of consolidated VIEs                       4,460           --       7,250           --
                                                   ---------    ---------   ---------    ---------
       Total revenues                                 60,646       35,848     165,471      100,977
                                                   ---------    ---------   ---------    ---------
Expenses:
   Interest expense                                    8,301        5,928      22,424       16,613
   Interest expense of consolidated VIEs               7,263           --      13,952           --
   Interest expense - distributions to
     preferred shareholders of subsidiary 4,724        4,724       14,173       4,724
   Salaries and benefits                              13,474        3,196      40,406        8,521
   General and administrative                         12,775        4,477      30,830       12,141
   Depreciation and amortization                       7,864        2,242      22,553        6,844
   Loss on impairment of revenue bonds                   610        1,758         610        1,758
   Other expenses of consolidated VIEs                10,917           --      19,398           --
                                                   ---------    ---------   ---------    ---------
       Total expenses                                 65,928       22,325     164,346       50,601
                                                   ---------    ---------   ---------    ---------
Income (loss) before equity in earnings of
   investments, loss on investments held by
   consolidated VIEs, gain on sale of loans and
   gain (loss) on repayment of revenue bonds          (5,282)      13,523       1,125       50,376
Equity in earnings of investments                        611          555       1,731        1,665
Loss on investments held by consolidated
   VIEs                                              (46,434)          --     (95,111)          --
Gain on sale of loans                                    571          444       5,646        2,994
Gain (loss) on repayment of revenue bonds                 (5)         557         217        2,797
                                                   ---------    ---------   ---------    ---------
Income (loss) before allocation of (income)
   loss to preferred shareholders of subsidiary,
   Special Common Units of subsidiary,
   minority interests and partners of
   consolidated VIEs                                 (50,539)      15,079     (86,392)      57,832
(Income) allocated to preferred shareholders of
   subsidiary                                         (1,556)          --      (2,386)      (9,449)
(Income) allocated to Special Common Units of
   subsidiary                                         (6,484)          --     (19,737)          --
(Income) loss allocated to minority interests            145          147        (220)         186
Loss allocated to partners of consolidated VIEs       70,174           --     141,992           --
                                                   ---------    ---------   ---------    ---------
Income before income taxes                            11,740       15,226      33,257       48,569
Income tax benefit                                       534          689      11,600        3,453
                                                   ---------    ---------   ---------    ---------
Net income                                         $  12,274    $  15,915   $  44,857    $  52,022
                                                   =========    =========   =========    =========

Allocation of net income to:
   Special distribution to Manager                       $--    $   1,583         $--    $   4,453
                                                   =========    =========   =========    =========
   Manager                                               $--    $       2         $--    $       5
                                                   =========    =========   =========    =========
   Common shareholders                             $  10,839    $  12,727   $  38,686    $  43,132
   Convertible CRA shareholders                        1,435        1,603       6,171        4,432
                                                   ---------    ---------   ---------    ---------
     Total for shareholders                        $  12,274    $  14,330   $  44,857    $  47,564
                                                   =========    =========   =========    =========

Net income per share:
   Basic                                           $    0.21    $    0.31   $    0.83    $    1.05
                                                   =========    =========   =========    =========
   Diluted                                         $    0.21    $    0.31   $    0.83    $    1.04
                                                   =========    =========   =========    =========

Weighted average shares outstanding:
   Basic                                              57,708       46,331      53,794       45,485
                                                   =========    =========   =========    =========
   Diluted                                            58,112       46,366      54,220       45,518
                                                   =========    =========   =========    =========

Dividends declared per share                      $      .41   $      .35  $     1.16   $     1.00
                                                   =========    =========   =========    =========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>


                           CHARTERMAC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        September 30,
                                                                   ----------------------
                                                                     2004         2003
                                                                   ----------------------
<S>                                                                <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                      $  44,857    $  52,022
   Adjustments to reconcile net income to net cash provided by
     operating activities:
   Gain on repayment of revenue bonds                                   (217)      (2,797)
   Loss on impairment of revenue bonds                                   610        1,758
   Depreciation and amortization                                      24,655        8,694
   Income allocated to preferred shareholders of subsidiary           16,559       14,173
   Income allocated to Special Common Units of subsidiary             19,737           --
   Income (loss) allocated to minority interests                         220         (186)
   Non-cash compensation expense                                      10,779        3,578
   Deferred taxes                                                    (13,025)      (4,223)
   Changes in operating assets and liabilities:
     Mortgage servicing rights                                        (5,642)      (1,897)
     Loans to affiliates                                             (15,361)          --
     Other assets                                                      7,801       35,753
     Accounts payable, accrued expenses and other liabilities         23,212      (18,657)
                                                                   ---------    ---------
Net cash provided by operating activities                          $ 114,185    $  88,218
                                                                   =========    =========

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from revenue bonds and notes                           $  36,244    $  94,151
   Revenue bond acquisitions and fundings                           (239,888)    (265,796)
   Investments in partnerships                                       (30,273)       2,309
   Other investments                                                 (84,000)          --
   Increase in goodwill                                                 (920)        (767)
   Decrease (increase) in cash and cash equivalents - restricted         964      (37,219)
                                                                   ---------    ---------

Net cash used in investing activities                              $(317,873)   $(207,322)
                                                                   =========    =========

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions to shareholders                                   $ (59,996)   $ (47,849)
   Distributions to preferred shareholders of subsidiary             (15,003)     (14,173)
   Distributions to Special Common Unit holders                      (19,868)          --
   Proceeds from financing arrangements                              137,761      192,699
   Repayments of financing arrangements                              (64,105)        (737)
   Increase in notes payable                                          23,155       15,139
   Issuance of common shares                                         105,541           --
   Issuance of preferred shares                                      104,000       53,783
   Retirement of special preferred voting shares                         (10)          --
   Proceeds from stock options exercised                                  --           --
   Treasury stock purchases                                           (1,328)          --
   Deferred financing costs                                           (7,019)     (10,342)
                                                                   ---------    ---------

Net cash provided by financing activities                            203,128      188,520
                                                                   ---------    ---------

Net increase (decrease) in cash and cash equivalents                    (560)      69,416
                                                                   ---------    ---------

Cash and cash equivalents at the beginning of the year                58,257       13,699
                                                                   ---------    ---------

Cash and cash equivalents at the end of the period                 $  57,697    $  83,115
                                                                   ---------    ---------
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>


                           CHARTERMAC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                  Nine Months Ended
                                                                                     September 30,
                                                                                 ----------------------
                                                                                   2004         2003
                                                                                 ----------------------
<S>                                                                              <C>          <C>
SUPPLEMENTAL NON-CASH INFORMATION:
   Supplemental  disclosure of non cash  activities  relating to adoption of
     FIN 46R:
  Decrease  in  revenue  bonds                                                   $    34,281
  Decrease in other assets                                                            17,814
  Increase  in  investments  in
  partnerships of consolidated  VIEs                                              (2,394,398)
  Increase in other assets of consolidated VIEs                                     (302,682)
  Increase in notes payable and other liabilities of consolidated
    VIEs                                                                           1,225,523
  Increase in partners' interests of consolidated VIEs                             1,419,462
                                                                                 -----------
                                                                                 $        --
                                                                                 ===========

Conversion of Special Common Units to Common Shares                              $    17,789
                                                                                 ===========

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The  condensed   consolidated  financial  statements  include  the  accounts  of
CharterMac,  its wholly  owned and  majority  owned  subsidiaries  and  entities
consolidated  pursuant to the adoption of Financial  Accounting  Standards Board
("FASB")  Interpretation  No. 46R (see Note 2). All  intercompany  accounts  and
transactions have been eliminated in consolidation.  Unless otherwise indicated,
"the Company",  as used throughout  this document,  refers to CharterMac 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,  given the highly
seasonal nature of our business,  the operating  results for the interim periods
may not be indicative of the results for the full year.

Certain  information and footnote  disclosures  normally  included in the annual
consolidated   financial  statements  prepared  in  accordance  with  accounting
principles generally accepted in the United States of America ("GAAP") have been
condensed or omitted. It is suggested that these financial statements be read in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included in our Form 10-K for the year ended December 31, 2003.

Our annual  report on Form 10-K for the year ended  December 31, 2003 contains a
summary of our  significant  accounting  policies.  There have been no  material
changes to these  items since  December  31,  2003,  nor have there been any new
accounting  pronouncements pending adoption that would have a significant impact
on our condensed consolidated financial statements.

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

Certain  amounts in the 2003  financial  statements  have been  reclassified  to
conform to the 2004 presentation.

NOTE 2 - VARIABLE INTEREST ENTITIES CONSOLIDATED PURSUANT TO FASB INTERPRETATION
46R

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  ("FIN 46"). In December 2003, the FASB issued FIN
46R, which revised FIN 46, codifying  certain FASB Staff positions and extending
the  implementation   date.  FIN  46R  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.  Effective March
31, 2004, we adopted FIN 46R.

Through our  acquisition of Related  Capital  Company  ("RCC") and in subsequent
fund  originations,  we became the general  partner,  or equivalent,  in over 70
investment  funds in which we have no direct  financial  investment.  Typically,
outside investors acquire all limited partnership interest in an upper-tier,  or
investment  partnership,  or 100% of the membership  interest if structured as a
limited liability  company.  The investment  partnership,  in turn, invests as a
limited partner in one or more lower-tier,  or operating partnerships,  that own
and operate multi-family  housing complexes.  Limited partners in the investment
partnerships  are  most  often  corporations  who are  able to  utilize  the tax
benefits,  which are comprised of operating  losses and  Low-Income  Housing Tax
Credits ("LIHTCs").

Investment and operating partnerships are variable interest entities ("VIEs") as
defined by FIN 46R. We have concluded  that, as the general  partner or managing
member for these types of  investments,  and because the  partners or members do
not have the right to  remove  us as such,  we are the  primary  beneficiary  as
defined by FIN 46R  because we absorb the  majority of the  expected  income and
loss variability, which is disproportionate to any actual ownership interest. We
have  consolidated  the assets and  liabilities of these entities in our balance
sheet and have  recorded  their results of operations in our statement of income
beginning  April 1, 2004.  The  balance  sheets  and  statements  of  operations
consolidated  in  our  condensed  financial  statements  reflect  the  financial
position and results of operation of the VIEs as of and for the six month period
ended as of June 30, 2004, the latest date available.

                                       6
<PAGE>

                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)


NOTE 3 - REVENUE BONDS

The following table summarizes our revenue bond portfolio:
<TABLE>
<CAPTION>

                                      September 30,   December 31,
(In thousands)                             2004           2003
                                      ------------    -----------
<S>                                    <C>            <C>
Unamortized cost basis                 $ 2,017,541    $ 1,814,180
Gross unrealized gains                      59,471         65,394
Gross unrealized losses                    (18,574)        (8,565)
                                       -----------    -----------
Subtotal/fair value                      2,058,438      1,871,009


  Less: eliminations (1)                   (34,281)            --
                                       -----------    -----------
Total fair  value per  balance sheet   $ 2,024,157    $ 1,871,009
                                       ===========    ===========
</TABLE>

The fair value and gross  unrealized  losses of our revenue bonds  aggregated by
length of time that individual  bonds have been in a continuous  unrealized loss
position, at September 30, 2004, is summarized in the table below:
<TABLE>
<CAPTION>

                         Less than    12 Months
(Dollars in thousands)   12 Months     or More        Total
                         ---------    ---------    ---------
<S>                             <C>          <C>          <C>
Number of bonds                 39           33           72
Fair value               $ 354,057    $ 221,527    $ 575,584
Gross unrealized loss    $ (13,759)   $  (4,815)   $ (18,574)
</TABLE>

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

In the third  quarter of 2004,  in light of the  underperformance  of one of our
investments  which will necessitate the temporary  revision of payment terms, we
recognized an impairment loss of approximately $610,000.

The following  summarizes the maturity dates of our revenue bonds,  all of which
have fixed interest rates:
<TABLE>
<CAPTION>
                                                                  Weighted
                                  Outstanding                      Average
(In thousands)                    Bond Amount     Fair Value    Interest Rate
                                  -----------    -----------    -------------
<S>                               <C>            <C>                <C>
Due in less than one year         $        --    $        --              N/A
Due between one and
   five years                          34,840         32,963            7.02%
Due after five years                1,993,075      2,025,475            6.76%
                                  -----------    -----------        ---------

Total / Weighted                    2,027,915      2,058,438            6.76%
                                                                    =========

   Less: eliminations (1)             (31,082)       (34,281)
                                  -----------    -----------
Total per balance sheet           $ 1,996,833    $ 2,024,157
                                  ===========    ===========
</TABLE>

(1) These bonds are recorded as  liabilities  on the balance  sheets of entities
    consolidated  pursuant to FIN 46R (see Note 2) and are therefore  eliminated
    in consolidation.

                                       7
<PAGE>

                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)


The following table summarizes our acquisition  activity and additional fundings
to previously  acquired  revenue  bonds for the nine months ended  September 30,
2004.
<TABLE>
<CAPTION>
                                                            Weighted Average
                                                             Construction           Weighted        Number of
                                             Aggregate       Interest Rate           Average         Revenue
                                Face         Purchase      (excluding points        Permanent         Bonds
                               Amount          Price        paid at closing)       Interest Rate     Acquired
(In thousands)               ----------     ----------    --------------------     ------------     ----------
<S>                          <C>             <C>                 <C>                  <C>              <C>
Construction/rehabilitation  $239,948        $239,948            5.40%                6.55%            29
  properties
</TABLE>

During the nine months ended September 30, 2004, seven revenue bonds were repaid
generating net proceeds of approximately $26.9 million. The bonds had a net book
value of  approximately  $26.7  million,  resulting  in a gain of  approximately
$217,000.

At September 30, 2004,  $1.9 billion of revenue bonds were pledged as collateral
for  our  borrowing  facilities.  Two of  these  bonds,  with a  book  value  of
approximately $14.1 million, are included in the bonds pledged as collateral and
are eliminated in consolidation as noted in the tables above.

NOTE 4 - OTHER INVESTMENTS

Investments other than revenue bonds consisted of:
<TABLE>
<CAPTION>

                                                     September 30,    December 31,
                                                          2004            2003
(In thousands)                                       -------------   -------------
<S>                                                    <C>             <C>
Investment in equity interests in LIHTC properties     $ 53,768        $ 24,644
Investment in properties under development                2,476           1,994
Investment in ARCap                                      19,054           19,054
Capri Capital loan                                       84,000              --
Other investments                                         3,668           2,768
                                                       --------        --------
   Total other investments                             $162,966        $ 48,460
                                                       ========        ========
</TABLE>

In July 2004, CM Investor LLC ("CM Investor"), one of our subsidiaries, provided
an interim loan in the  principal  amount of $84.0 million  ("Interim  Loan") to
Capri Capital Limited  Partnership  ("CCLP"),  which bears interest at a rate of
11.5% per year and matures on January 15, 2005 subject to extension.

We anticipate  that the Interim Loan will be repaid in full and that CM Investor
would then make new loans in the aggregate  principal  amount of $90.0  million,
one of which would give CM Investor the right to acquire  100% of Capri  Capital
Finance (CCLP's mortgage banking affiliate) within six months, and the other one
of which  would give CM Investor  the right to acquire a 49% equity  interest in
Capri Capital  Advisors  ("CCA") (CCLP's pension fund advisory  affiliate) on or
after  August 1, 2005  (provided  that CCA has the right to extend the  exercise
date to a date no later than June 30, 2006).  The  acquisitions are both subject
to certain  approvals,  including,  but not  limited to,  regulatory  and agency
approval for the acquisition of Capri Capital  Finance.  We have signed a letter
of intent  with  respect to the  subsequent  acquisitions;  however,  definitive
agreements  have  yet to be  signed,  and  there  can be no  assurance  that the
subsequent  acquisitions will occur. If CM Investor ultimately completes both of
these acquisitions pursuant to these arrangements, the total purchase price will
be based on the operating performance of the respective businesses.

We funded the Interim Loan through bridge loans from Fleet National Bank,  which
bear interest at rates of LIBOR plus 1.65% and mature in July 2005. The weighted
average interest rate on the loans at September 30, 2004 was 3.42%.

                                       8
<PAGE>

                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)


NOTE 5 - GOODWILL AND INTANGIBLE ASSETS

The components of identifiable intangible assets are as follows:
<TABLE>
<CAPTION>
                                                                         Other            Total
                                          RCC           Mortgage     Identifiable     Identifiable
                                       Intangible       Banking       Intangible       Intangible
(In thousands)                           Assets         Licenses        Assets           Assets          Goodwill
                                       -----------    -----------    -------------    -------------    ------------

<S>                                     <C>            <C>             <C>              <C>              <C>
Balance at December 31, 2003            $ 185,300      $   8,639       $   4,427        $ 198,366        $ 214,744
Accumulated amortization                   (1,936)            --          (2,227)          (4,163)              --
                                        ---------      ---------       ---------        ---------        ---------
Net balance at December 31, 2003          183,364          8,639           2,200          194,203          214,744
Additions                                      --             --              --               --              920
Tax effect of conversion of SCUs to
  common shares                                --             --              --               --           (7,997)
Amortization expense                      (12,154)            --            (357)         (12,511)              --
                                        ---------      ---------       ---------        ---------        ---------
Net balance at September 30, 2004       $ 171,210      $   8,639       $   1,843        $ 181,692        $ 207,667
                                        =========      =========       =========        =========        =========

Estimated amortization expense per
  year for next five years              $  16,206      $      --       $     474        $  16,680        $      --
                                        =========      =========       =========        =========        =========
</TABLE>

The  amortization  of other  identifiable  intangible  assets is  included  as a
reduction to revenue bond interest  income as they pertain to the acquisition of
such bond investments.

NOTE 6 - RELATED PARTY TRANSACTION

Following  are the  expenses  and the special  distributions  paid or payable to
related parties,  which are included in general and administrative  expense. For
periods prior to November 17, 2003, the amounts were paid or payable to RCC. For
periods  after our  acquisition  of RCC, the amounts were paid or payable to The
Related Companies, L.P. ("TRCLP").
<TABLE>
<CAPTION>
                                    Three Months Ended       Nine Months Ended
                                       September 30,            September 30,
                                    -------------------     --------------------

(In thousands)                        2004        2003       2004         2003
                                    -------     -------     -------     -------
<S>                                 <C>         <C>         <C>         <C>
Special distribution/investment
  management fee                    $    --     $ 1,690     $    --     $ 4,712
Bond servicing fees                      --       3,793          --       8,459
Expense reimbursement                    --         269          --         748
Shared services agreement             1,209          --       3,145          --
                                    -------     -------     -------     -------
                                    $ 1,209     $ 5,752     $ 3,145     $13,919
                                    =======     =======     =======     =======
</TABLE>

In  addition,  a  subsidiary  of  TRCLP  earned  fees  for  performing  property
management  services for various  properties  held in investment  funds which we
manage.  These fees, which are included in other expenses of consolidated  VIEs,
totaled  approximately  $760,000  and $1.5 million for the three and nine months
ended September 30, 2004.

A subsidiary of ours collects  asset  management and incentive  management  fees
from   American   Mortgage   Acceptance   Company   ("AMAC"),    an   affiliated
publicly-traded  real estate investment trust. These fees, which are included in
fund  sponsorship  income,  totaled  $419,000 and $1.2 million for the three and
nine months ended September 30, 2004, respectively.

In June 2004,  we entered  into an  unsecured  revolving  credit  facility  (the
"Revolving  Facility")  with AMAC to  provide  it up to $20.0  million,  bearing
interest at LIBOR plus 300 basis  points,  which is to be used to  purchase  new
investments.  The  Revolving  Facility  has a term of one  year  with a one year
optional extension. In the opinion of management, the terms of this facility are
consistent  with those of transactions  with  independent  third parties.  As of
September 30, 2004, we had advanced AMAC approximately $15.4 million.

                                       9
<PAGE>

                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)


NOTE 7 - DERIVATIVE INSTRUMENTS

We have  designated  our interest rate swaps as cash flow hedges on the variable
interest  payments  on our  floating  rate  securitizations.  All but one of the
interest rate swaps begin in 2005.  The one interest rate swap that is currently
in place is recorded  at its fair  market  value each  accounting  period,  with
changes in market value recorded in accumulated  other  comprehensive  income to
the extent the hedge is effective in achieving offsetting cash flows. This hedge
has been  effective to date.  The  effectiveness  of the other swaps is measured
using the  hypothetical  swap method until they go into effect in 2005.  For the
nine months ended  September  30,  2004,  we recorded  approximately  $30,000 of
expense related to an interest rate cap.

NOTE 8 - YIELD GUARANTEE TRANSACTION

In July 2004,  we  completed  a  transaction  to  guarantee  tax  benefits to an
investor in a partnership  designed to generate  Georgia  State LIHTCs.  We have
agreed to  back-up  the  guarantee  of a  primary  guarantor  of an agreed  upon
internal rate of return to the investor in Related Capital Guaranteed  Corporate
Partners II, L.P. - Series F, for which we will receive  guarantee fees totaling
approximately  $3.9  million  in  three  installments,  as well as  acquisition,
partnership management and asset management fees amounting to approximately $5.8
million.  We recorded deferred income of approximately  $6.4 million relating to
this guarantee.

NOTE 9 - COMPREHENSIVE INCOME

Comprehensive  income for the nine months ended September 30, 2004 and 2003, was
as follows:
<TABLE>
<CAPTION>
          (In thousands)                                                 2004          2003
                                                                       --------      --------
<S>                                                                    <C>           <C>
Net income                                                             $ 44,857      $ 52,022
Net unrealized gain (loss) on interest rate derivatives                  (4,113)        2,073
Net unrealized loss on revenue bonds:
   Unrealized loss during the period                                    (15,714)      (42,294)
   Reclassification adjustment for net gain included in net income         (217)       (2,797)
                                                                       --------      --------
Comprehensive income                                                   $ 24,813      $  9,004
                                                                       ========      ========
</TABLE>

NOTE 10 - EARNINGS PER SHARE
<TABLE>
<CAPTION>
                                            Three Months Ended September 30, 2004    Nine Months Ended September 30, 2004
                                            -------------------------------------    ------------------------------------

(In thousands, except per share amounts)     Income        Shares     Per Share       Income      Shares     Per Share
                                            -------------------------------------    ------------------------------------
<S>                                          <C>           <C>        <C>            <C>          <C>        <C>
Basic EPS                                    $ 12,274      57,708     $     0.21     $44,857      53,794     $     0.83
                                                                      ==========                             ==========

Effect of dilutive securities                      --         404                         --         426
                                             --------     -------                    -------     -------
Diluted EPS                                  $ 12,274      58,112     $     0.21     $44,857      54,220     $     0.83
                                             ========     =======     ==========     =======     =======     ==========

<CAPTION>
                                            Three Months Ended September 30, 2003    Nine Months Ended September 30, 2003
                                            -------------------------------------    ------------------------------------

(In thousands, except per share amounts)     Income        Shares     Per Share       Income      Shares     Per Share
                                            -------------------------------------    ------------------------------------
<S>                                          <C>           <C>        <C>            <C>          <C>        <C>
Basic EPS                                    $ 14,330      46,331     $     0.31     $47,564      45,485     $     1.05
                                                                      ==========                             ==========

Effect of dilutive securities                      --          35                         --          33
                                             --------     -------                    -------     -------

Diluted EPS                                  $ 14,330      46,366     $     0.31     $47,564      45,518     $     1.04
                                             ========     =======     ==========     =======     =======     ==========
</TABLE>

The  number  of  shares  includes  common  and  Convertible  CRA  Shares  as the
Convertible CRA Shares have the same economic benefits as common shares.

NOTE 11 - BUSINESS SEGMENTS

We  operate in three  business  segments,  which  include  Portfolio  Investing,
Mortgage Banking, and Fund Management.

o    The  Portfolio  Investing  segment  consists of  subsidiaries  investing in
     primarily  tax-exempt  first mortgage  revenue bonds, the proceeds of which
     are  used to  finance  the new  construction,  substantial  rehabilitation,
     acquisition,  or refinancing of affordable  multifamily  housing throughout
     the United States.

                                       10
<PAGE>

                           CHARTERMAC AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)


o    The Mortgage Banking segment  consists of subsidiaries  which originate and
     service  primarily  multifamily  mortgage loans on behalf of third parties,
     including Fannie Mae, Freddie Mac, the Federal Housing Authority, Insurance
     Companies  and  Conduits.  In exchange for the  origination  and  servicing
     activities, the Company receives origination and servicing fees.

o    The Fund Management segment includes two business lines. The first consists
     of our subsidiaries  that sponsor real estate equity  investment funds that
     primarily  invest in LIHTC  properties.  In  exchange  for  sponsoring  and
     managing  these  investment  funds,  the  Company  receives  fee income for
     providing asset management,  underwriting,  origination and other services.
     In  addition,  these  subsidiaries  also  provide  management  and advisory
     services  to AMAC and other  investors  in  exchange  for fees.  The second
     business  line  consists of our  subsidiaries  that  participate  in credit
     enhancement   transactions,   including  guaranteeing  mortgage  loans  and
     specified  returns to  investors  in LIHTC  equity  funds,  in exchange for
     guarantee  fees.  Since the adoption of FIN 46R,  effective March 31, 2004,
     this segment also includes the results of consolidated VIEs (see Note 2).

In prior periods,  results from credit enhancement transactions were included in
Portfolio  Investing.  We have  reclassified  the results to Fund  Management to
better  reflect the  management of our  businesses  and have restated prior year
results accordingly.

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

The following table provides more information regarding our segments:
<TABLE>
<CAPTION>

(In thousands)                  Three Months Ended September 30, 2004              Three Months Ended September 30, 2003
                          --------------------------------------------------    ---------------------------------------------
                            Portfolio      Mortgage     Fund                    Portfolio   Mortgage     Fund
                            Investing      Banking   Management      Total      Investing   Banking    Management    Total
                          --------------------------------------------------    ---------------------------------------------
<S>                       <C>              <C>       <C>          <C>           <C>          <C>         <C>        <C>
Total revenues            $   36,198       $ 4,978   $   19,470   $   60,646    $   30,760   $ 4,093     $  995     $   35,848
                          ==================================================    ==============================================

Depreciation and
amortization              $      710       $ 2,408   $    4,746   $    7,864    $      338   $ 1,616     $  288     $    2,242
                          ==================================================    ==============================================

Net income (loss)         $   13,729       $  (742)  $     (713)  $   12,274    $   16,163   $  (955)    $  707     $   15,915
                          ==================================================    ==============================================

<CAPTION>

(In thousands)                   Nine Months Ended September 30, 2004                Nine Months Ended September 30, 2003
                          --------------------------------------------------    ---------------------------------------------
                            Portfolio      Mortgage     Fund                    Portfolio   Mortgage     Fund
                            Investing      Banking   Management      Total      Investing   Banking    Management    Total
                          --------------------------------------------------    ---------------------------------------------
<S>                       <C>              <C>       <C>          <C>           <C>          <C>         <C>        <C>
Total revenues            $  101,921       $15,514   $   48,036   $  165,471    $   85,294   $12,697     $2,986     $  100,977
                          ==================================================    ==============================================

Depreciation and
amortization              $    2,042       $ 6,107   $   14,404   $   22,553    $    1,468   $ 4,804     $  572     $    6,844
                          ==================================================    ==============================================

Net income (loss)         $   50,976       $ 1,689   $   (7,808)  $   44,857    $   50,777   $(1,169)    $2,414     $   52,022
                          ==================================================    ==============================================

Total assets as of
September 30              $2,085,716       $78,221   $3,349,134   $5,513,071    $1,979,123   $77,325     $1,967     $2,058,415
                           ==================================================    ==============================================

Assets as of September
  30 of consolidated
  VIEs included in total
  assets (see Note 2)     $  (34,281)(1)   $    --   $2,697,080   $2,662,799
                          ==================================================
</TABLE>

(1) This amount represents  revenue bonds recorded as liabilities on the balance
    sheets of  entities  consolidated  pursuant  to FIN 46R (see Note 2) and are
    therefore eliminated in consolidation.

NOTE 12 - SUBSEQUENT EVENTS

Shelf Registration
------------------
In October  2004, we filed a shelf  registration  with the SEC providing for the
issuance of up to $400.0  million in common  shares,  preferred  shares and debt
securities.  This shelf  registration has not yet been declared effective and we
have no current plans to draw upon it.



                                       11
<PAGE>


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

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

Certain   statements  made  in  this  report  may  constitute   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
These  forward-looking  statements  are not  historical  facts,  but  rather our
beliefs  and  expectations  are based on our  current  expectations,  estimates,
projections,  beliefs and assumptions about our Company and industry. Words such
as  "anticipates,"   "expects,"   "intends,"   "plans,"   "believes,"   "seeks,"
"estimates"  and similar  expressions  are intended to identify  forward-looking
statements.  These  statements are not guarantees of future  performance and are
subject to risks,  uncertainties and other factors, some of which are beyond our
control,  are  difficult  to predict  and could cause  actual  results to differ
materially from those expressed or forecasted in the forward-looking statements.
Some of these risks  include,  among other things:  adverse  changes in the real
estate  markets;  risk of default  associated  with the revenue  bonds and other
securities held by us or our subsidiaries;  interest rate fluctuations;  our tax
treatment,  the tax treatment of our  subsidiaries  and the tax treatment of our
investments;  general and local economic and business conditions; and changes in
applicable laws and  regulations.  We caution you not to place undue reliance on
these  forward-looking  statements,  which  reflect our view only as of the date
hereof.

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

Our operating results for 2004 were impacted  significantly by the November 2003
acquisition of RCC, an affiliated  business that, until the date of acquisition,
had acted as an external  manager for our  Company  and our  subsidiaries.  As a
result of the  acquisition,  we generate  more  taxable  income and have assumed
numerous expenses that had previously been covered by fees paid to RCC. Further,
the  issuance  of a new class of  subsidiary  equity as part of the  acquisition
requires  us to  apportion  certain  earnings  and  identify  them as due to the
holders of that equity.

Additionally, the adoption of several accounting pronouncements has caused us to
reclassify  certain  liability and expense  categories  while not increasing the
actual  amounts to be  recorded,  and has led to a  significant  increase in the
amount of assets and  liabilities  we record due to  consolidation  of  numerous
investment  partnerships  (see Note 2 to the  Condensed  Consolidated  Financial
Statements). This consolidation also results in the recognition of the operating
results of partnerships in which we have no equity interest,  the elimination of
transactions between our businesses and those partnerships and the allocation of
their results to their partners.

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

QUARTER ENDED SEPTEMBER 30, 2004 VS. QUARTER ENDED SEPTEMBER 30, 2003
---------------------------------------------------------------------

The  following  is a  summary  of our  operations  for the  three  months  ended
September 30, 2004 and 2003:
<TABLE>
<CAPTION>

                                        % of                  % of
(In thousands)                 2004    Revenues     2003     Revenues   % Change
                            --------- ---------- ---------- --------- ----------
<S>                          <C>         <C>      <C>         <C>        <C>
Revenues                     $60,646              $35,848                69.2
Income before income taxes    11,740     19.4      15,226     42.5      (22.9)
Net income                    12,274     20.2      15,915     44.4      (22.9)
</TABLE>

Compared  to 2003,  the  third  quarter  of 2004  benefited  from a  substantial
expansion of our core Portfolio Investing  business,  the addition of the equity
fund sponsorship portion of our Fund Management segment and the expansion of the
credit  enhancement  portion of that  segment.  In  addition,  revenues  in 2004
include  $4.5  million  generated  by VIEs that were not  consolidated  in 2003.
Offsetting  the revenue  gains is the  elimination  of $10.0 million of revenues
earned  by our  subsidiaries  in  transactions  with  VIEs we have  consolidated
beginning April 1, 2004.  Although the amounts are eliminated in  consolidation,
the expenses  recognized by the VIEs in connection with these  transactions  are
absorbed  entirely by the  partners of the VIEs;  as such,  the  elimination  in
consolidation has no impact on our net income.

Despite the revenue gains and the benefit of eliminating  fees following the RCC
acquisition,  the additional  costs assumed  following the  acquisition (a large
part of which are  non-cash  amortization  costs and income  allocated  to a new
class of subsidiary equity) led to a decline in net income.



                                       12
<PAGE>



REVENUES

Our revenues were as follows:
<TABLE>
<CAPTION>

                               For the Three Months Ended September 30,
(In thousands)                   2004            2003         % Change
                               -------         -------        --------
<S>                            <C>             <C>                <C>
Revenue bond interest income   $33,027         $30,353            8.8
Fee income
   Mortgage banking              3,321           3,171            4.7
   Fund sponsorship             11,363              --            N/A
   Credit enhancement            2,715             995          172.9
Other income                     5,760           1,329          333.4
Revenues of consolidated VIEs    4,460              --            N/A
                               -------         -------          -----

   Total revenues              $60,646         $35,848           69.2
                               =======         =======          =====
</TABLE>

The increase in revenue bond  interest  income is primarily due to the increased
investment  base  resulting  from new bonds funded during later quarters of 2003
and during 2004. We funded $90.0 million of bonds at an average interest rate of
6.53% in the 2004 period as compared to fundings of $119.8 million at an average
interest rate of 6.62% in the same period in 2003. The weighted average level of
the bond  portfolio in the quarter was $2.2  billion,  an increase of 39.7% over
the same period in 2003.  The average  annual yield for the bond  portfolio  was
6.14% compared to 7.88% in the 2003 period.  Offsetting  these  increases is the
elimination in consolidation of approximately $447,000 of revenue on bonds where
the  debtor  is a VIE  that  is  now  consolidated  in our  condensed  financial
statements.

The increase in mortgage  banking fees resulted from a 7.5% increase in mortgage
servicing fees partially  offset by a slight decrease in origination fees due to
changes in the components of total originations.  Loan originations  amounted to
$113.2  million in the 2004  quarter as compared  to $107.9  million in the same
period last year and the total  serviced  loan  portfolio  reached  $4.2 billion
compared  to $3.9  billion at  September  30,  2003.  Originations  in the third
quarter are broken down as follows:
<TABLE>
<CAPTION>
(In thousands)        2004        % of total       2003        % of total
                   ---------      ----------     ---------     ----------
<S>                <C>               <C>         <C>                <C>
Fannie Mae         $  36,456         32.2        $  49,816          46.2
Freddie Mac           44,375         39.2           21,669          20.0
FHA                      (35)        --                 --            --
Assumptions            8,297          7.3           13,828          12.8
Conduit - Bank        24,150         21.3           22,624          21.0
                   ---------      ----------     ---------     ----------

  Total            $ 113,243        100.0        $ 107,937          100.0
                   =========      ==========     =========     ==========
</TABLE>

The increase in fund  sponsorship  fees  represents the fee income earned by RCC
which was not acquired until the fourth  quarter of 2003. The reported  amounts,
however,  exclude  $8.6  million  of fees  earned  by RCC in  transactions  with
consolidated  VIEs. On a pro forma basis,  comparing the 2004 period  (including
the revenues eliminated in consolidation) to the same pre-acquisition  period in
2003, revenue in the Fund Management  business increased 13% over the prior year
due to steady growth in the level of assets under  management and an increase in
origination  fees  as a  result  of  an  increase  in  equity  raised  for  fund
sponsorships.  The increases were partially  offset by a decrease in acquisition
fees, paid by third-party  borrowers of the underlying  revenue bonds,  and from
other loan origination,  due to a decrease in revenue bond acquisitions.  Equity
raised for fund  sponsorships in the quarter totaled $355.6 million  compared to
$310.3  million  in the third  quarter of 2003.  Revenue  bond  transactions  we
arranged  for our Company and others,  for which we receive fee income,  totaled
$133.7  million in the third  quarter of 2004 compared to  approximately  $137.1
million of revenue bonds acquired in the third quarter of 2003.

The  increase  in credit  enhancement  fees  relates  to  growth  in the  credit
enhancement business. In the third quarter of 2004, we completed one transaction
to guarantee  tax  benefits to  investors,  and  continued to earn fees from two
transactions completed earlier in 2004 and three transactions completed in 2003.



                                       13
<PAGE>



Other income comprises:
<TABLE>
<CAPTION>
                             For the Three Months Ended September 30,
(In thousands)                2004            2003          % Change
                             ------          ------         --------
<S>                          <C>             <C>              <C>
Capri loan interest          $1,993          $   --             N/A
Other interest                1,365             686            99.0
Service fee                     704              --             N/A
Other                         1,698             643           164.1
                             ------          ------         -------

   Total other income        $5,760          $1,329           333.4
                             ======          ======         =======
</TABLE>

The Capri loan interest  relates to the Interim Loan we provided to CCLP in July
2004 (see Note 4).  Service  fee  income  represents  income  for  services  RCC
provides  to  affiliates,  which  became  a part  of  our  operations  with  the
acquisition  of RCC in November  2003. The increase in other income is primarily
due to exit fees received within the Mortgage Banking business.

EXPENSES

Our expenses were as follows:
<TABLE>
<CAPTION>
                                 For the Three Months Ended September 30,
(In thousands)                    2004            2003          % Change
                                 -------         -------        ---------
<S>                              <C>             <C>              <C>
Interest expense                 $ 8,301         $ 5,928           40.0
Interest expense - preferred
   shares of subsidiary            4,724           4,724             --
Salaries and benefits             13,474           3,196          321.6
General and administrative        12,775           4,477          185.3
Depreciation and amortization      7,864           2,242          250.8
Loss on impairment of revenue
   bonds                             610           1,758          (65.3)
Expenses of consolidated VIEs     18,180              --            N/A
                                 -------         -------         -------

Total expenses                   $65,928         $22,325          195.3
                                 =======         =======         =======
</TABLE>

The increase in interest  expense  reflects the higher borrowing levels stemming
from our acquisition of RCC,  additional  investments in revenue bonds, our loan
to fund the interim loan to Capri Capital and LIHTC equity interests inherent in
the Fund Management business, which was not yet part of our Company in the third
quarter of 2003. In addition,  our average  borrowing  rate increased to 3.0% as
compared to 2.4% in the 2003 period.

The  increases  in  salaries  and  benefits,   general  and  administrative  and
depreciation  and  amortization  all relate to the RCC acquisition in the fourth
quarter  of  2003  and  the  resulting   recognition  of  expenses  due  to  the
internalization  of management,  as well as  amortization  of intangible  assets
acquired.  General and administrative expenses in the 2004 quarter also included
$5.6 million of costs relating to fund originations.

We did not record the expenses of consolidated  VIEs prior to April 1, 2004. The
expenses are not  controlled  by us, nor do they  represent any cash or non-cash
charges to be absorbed by us. The expenses of the VIEs are absorbed  entirely by
the partners of the VIEs.

OTHER ITEMS

The income  allocation  to SCUs  represents  the  proportionate  share of income
attributable to holders of the new class of equity issued at the time of the RCC
acquisition  in the fourth  quarter of 2003.  The income  allocated to preferred
shareholders  relates to shares we issued in 2004 that  differ  from  previously
issued shares in that they are not subject to mandatory redemption; as such, the
distributions are classified as expense outside of operating earnings.  The loss
allocation  to  partners  of  VIEs  represents  the  full  operating  losses  of
consolidated VIEs for the current period, none of which we have absorbed.

                                       14
<PAGE>

NINE MONTHS ENDED SEPTEMBER 30, 2004 VS. NINE MONTHS ENDED SEPTEMBER 30, 2003
-----------------------------------------------------------------------------
The following is a summary of our operations for the nine months ended September
30, 2004 and 2003:
<TABLE>
<CAPTION>

                                          % of                 % of
(In thousands)                  2004    Revenues    2003     Revenues  % Change
                             ---------------------------------------------------
<S>                          <C>          <C>     <C>           <C>      <C>
Revenues                     $165,471             $100,977                63.9
Income before income taxes     33,257     20.1      48,569      48.1     (31.5)
Net income                     44,857     27.1      52,022      51.5     (13.8)
</TABLE>

The nine  months of 2004  benefited  from a  substantial  expansion  of our core
Portfolio  Investing  business,  the  addition  of the equity  fund  sponsorship
portion  of our  Fund  Management  segment  and  the  expansion  of  the  credit
enhancement portion of that segment.  In addition,  our mortgage banking segment
posted  substantial growth in the first half of the year, and 2004 includes $7.3
million of revenues generated by VIEs that were not consolidated in 2003.

Offsetting these gains is the elimination of $20.8 million of revenues earned by
our subsidiaries in transactions with VIEs we have consolidated  beginning April
1, 2004.  Although the amounts are  eliminated  in  consolidation,  the expenses
recognized  by the VIEs in  connection  with  these  transactions  are  absorbed
entirely by the partners of the VIEs; as such, the elimination in  consolidation
has no impact on our net income.

Despite the revenue gains and the benefit of eliminating  fees following the RCC
acquisition,  the additional  costs assumed  following the  acquisition (a large
part of which are  non-cash  amortization  costs and income  allocated  to a new
class of subsidiary equity) led to a decline in net income.

REVENUES

Our revenues were as follows:
<TABLE>
<CAPTION>

                                      For the Nine Months Ended September 30,
(In thousands)                         2004            2003          % Change
                                   -------------    ------------    ------------
 <S>                                 <C>              <C>              <C>
Revenue bond interest income        $ 97,365         $ 83,528          16.6
Fee income
   Mortgage banking                   11,124            9,711          14.6
   Fund sponsorship                   30,300               --           N/A
   Credit enhancement                  7,541            2,986         152.5
Other income                          11,891            4,752         150.2
Revenues of consolidated VIEs          7,250               --           N/A
                                   -------------    ------------    ------------

Total revenues                      $165,471         $100,977          63.9
                                   =============    ============    ============
</TABLE>

The increase in revenue bond  interest  income is primarily due to the increased
investment  base  resulting  from new bonds funded during later quarters of 2003
and during 2004. We funded $239.9  million of bonds at an average  interest rate
of 6.55% in the 2004 period as  compared  to  fundings  of $265.8  million at an
average  interest rate of 6.37% in the same period in 2003. The weighted average
level of bond  investments  for the nine  months  of 2004 was $2.1  billion,  an
increase of 33.8% over the same period in 2003. The average annual yield for the
bond portfolio was 6.22% compared to 7.14% in the 2003 period.  Offsetting these
increases is the  elimination  in  consolidation  of  approximately  $694,000 of
revenue  on bonds  where  the  debtor is a VIE that is now  consolidated  in our
condensed financial statements.



                                       15
<PAGE>

The  increase  in  mortgage  banking  fees  resulted  from a 28.9%  increase  in
origination  fees with  solid  increases  in Freddie  Mac and FHA  originations,
mostly in the first six months of 2004.  Opportunistic  pricing on a significant
transaction  in the  second  quarter of 2004 and a change in the  components  of
total originations resulted in a less significant change in the mortgage banking
fees as compared to the growth in loan originations.  Loan originations amounted
to $664.3  million in 2004 as compared to $407.8 million in the same period last
year. Originations for the first nine months are broken down as follows:
<TABLE>
<CAPTION>
(In thousands)        2004        % of total         2003        % of total
                  ------------------------------------------------------------
<S>                <C>               <C>         <C>                <C>
Fannie Mae         $235,731           35.5       $201,194            49.3
Freddie Mac         282,006           42.4         59,254            14.6
FHA                  27,714            4.2             --             --
Assumptions          40,253            6.1         41,728            10.2
Conduit - Bank       78,588           11.8        101,161            24.8
Other                    --             --          4,500             1.1
                  ------------------------------------------------------------

   Total           $664,292          100.0       $407,837           100.0
                  ============================================================
</TABLE>

In addition,  servicing  fees  increased 7.9% over the first nine months of 2003
due to the 7.7% growth in the servicing portfolio.

The increase in fund  sponsorship  fees represents the fee income earned by RCC,
which was not acquired until the fourth  quarter of 2003. The reported  amounts,
however,  exclude  $18.2  million  of fees  earned by RCC in  transactions  with
consolidated  VIEs. On a pro forma basis,  comparing the 2004 period  (including
the revenues eliminated in consolidation) to the same pre-acquisition  period in
2003, revenue in the Fund Management  business increased 16% over the prior year
due to steady growth in the level of assets under  management and an increase in
origination and acquisition fees as a result of an increase in equity raised for
fund  sponsorships.  The  increases  were  partially  offset  by a  decrease  in
acquisition  fees paid by third party borrowers of the underlying  revenue bonds
and from other loan originations. This is due to a decrease of approximately 15%
in the  average  percentage  acquisition  fee  charged,  despite an  increase in
acquired   revenue  bonds  and  loan   originations.   Equity  raised  for  fund
sponsorships  for the first nine months of 2004 totaled $754.5 million  compared
to $563.5  million for the first nine months of 2003.  Debt and debt  securities
acquired,  mostly  revenue  bonds  transactions  we arranged for our Company and
others,  totaled  $354.5  million for the first nine months of 2004  compared to
$304.7  million for the first nine months of 2003.  Of the debt acquired for the
first nine months of 2004, $32.9 million has not been funded as of September 30,
2004.

The  increase  in credit  enhancement  income  relates  to growth in the  credit
enhancement  business.   For  the  nine  months  of  2004,  we  completed  three
transactions to guarantee tax benefits to investors,  and continued to earn fees
from three transactions completed in 2003.

Other income comprises:
<TABLE>
<CAPTION>

                                      For the Nine Months Ended September 30,
(In thousands)                         2004             2003         % Change
                                   -------------    ------------    ------------
<S>                                 <C>             <C>                 <C>
Capri loan interest                 $  1,993        $      --             N/A
Other interest                         3,375            2,342            44.1
Service fee                            4,516               --             N/A
Other                                  2,007            2,410           (16.7)
                                   -------------    ------------    ------------

   Total other income                $11,891         $  4,752           150.2
                                   =============    ============    ============
</TABLE>

The Capri loan interest  relates to the Interim Loan we provided to CCLP in July
2004 (see Note 4).  Service  fee  income  represents  income  for  services  RCC
provides  to  affiliates,  which  became  a part  of  our  operations  with  the
acquisition of RCC in November 2003.

                                       16
<PAGE>

EXPENSES

Our expenses were as follows:
<TABLE>
<CAPTION>

                                       For the Nine Months Ended September 30,
 (In thousands)                        2004            2003          % Change
                                   -------------    ------------    ------------
<S>                                <C>                <C>             <C>
 Interest expense                  $  22,424          $16,613          35.0
 Interest expense - preferred
    shares of subsidiary              14,173            4,724         200.0
 Salaries and benefits                40,406            8,521         374.2
 General and administrative           30,830           12,141         153.9
 Depreciation and amortization        22,553            6,844         229.5
 Loss of impairment of revenue
    bonds                                610            1,758         (65.3)
 Expenses of consolidated VIEs        33,350               --           N/A
                                   -------------    ------------    ------------

 Total expenses                     $164,346          $50,601         224.8
                                   =============    ============    ============
</TABLE>

The increase in interest  expense  reflects the higher borrowing levels stemming
from our acquisition of RCC,  additional  investments in revenue bonds, our loan
to fund the interim loan to Capri Capital and LIHTC equity interests inherent in
the  Fund  Management  business,  which  was not yet part of our  Company  as of
September 30, 2003. In addition, our average borrowing rate increased to 2.6% as
compared to 2.4% in the 2003 period.

The amount  reported  as  interest  expense on  preferred  shares of  subsidiary
represent  dividends on our preferred  shares  subject to mandatory  redemption,
which had been reported as an allocation of income outside of operating earnings
in the first half of 2003.

The  increases  in  salaries  and  benefits,   general  and  administrative  and
depreciation  and  amortization  all relate to the RCC acquisition in the fourth
quarter  of  2003  and  the  resulting   recognition  of  expenses  due  to  the
internalization  of management,  as well as  amortization  of intangible  assets
acquired.  General and administrative  expenses for the nine months of 2004 also
include $10.8 million of costs relating to fund originations.

We did not record the expenses of consolidated  VIEs prior to April 1, 2004. The
expenses are not  controlled  by us, nor do they  represent any cash or non-cash
charges to be absorbed by us. The expenses of the VIEs are absorbed  entirely by
the partners of the VIEs.

OTHER ITEMS

Gains on sales of loans increased  approximately 88.6% for the nine months ended
September  30, 2004 versus the same period in 2003,  due to the higher  level of
mortgage  originations  in 2004.  The income  allocation to SCUs  represents the
proportionate share of income attributable to holders of the new class of equity
issued at the time of the RCC acquisition in the fourth quarter of 2003.

The income  allocated to preferred  shareholders  relates to shares we issued in
2004 that differ from  previously  issued shares in that they are not subject to
mandatory  redemption;  as such,  the  distributions  are  classified as expense
outside  of  operating  earnings.  The  loss  allocation  to  partners  of  VIEs
represents  the full  operating  losses  of  consolidated  VIEs for the  current
period, none of which we have absorbed.

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

We have corporate  subsidiaries that are subject to income taxes. We provide for
income taxes in  accordance  with SFAS No. 109,  "Accounting  for Income  Taxes"
("SFAS  109").  SFAS 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.  Our  effective  tax rate will  vary  from  period to period as the
composition of our earnings changes and due to the normal  transactional  nature
of much of our taxable business.

Liquidity and Capital Resources
-------------------------------
We meet our long term  liquidity  needs using  primarily two sources of capital,
debt and  various  types of equity  offerings.  We  believe  that our  financing
capacity and cash flow from current  operations are adequate to meet our current
and  projected   liquidity   requirements.   We  fund  our  business  (including
investments  and  acquisitions)  primarily  with cash  provided  by  operations,
securitization  of investments and equity offerings by some of our subsidiaries.
Additionally,  we  have  entered  into  bridge  loans  and  revolving  warehouse
facilities:

                                       17
<PAGE>

     o    $100.0 million,  used for mortgage  banking needs,  which is renewable
          annually.

     o    $75.0 million,  used to fund mortgage loans and investments in revenue
          bonds on a short term basis,  which  matures  March 31,  2005,  with a
          built in accordion feature allowing up to a $25.0 million increase and
          a term of two years, and a one year extension at our option.

     o    $85.0 million,  used to acquire equity interests in property ownership
          entities  prior  to the  inclusion  of  these  equity  interests  into
          investments  funds, which matures on October 29, 2005, with a one year
          extension at our option.

     o    $85.0 million,  used to provide the interim loan to CCLP,  which bears
          interest at a rate of LIBOR plus 1.65% and matures in July 2005.

     o    $40.0  million,   established  in  connection   with  the  PW  Funding
          acquisition,  which expires  December 31, 2006 and bears interest at a
          rate of LIBOR plus 2.25%.

As of September  30, 2004,  we had  approximately  $208.3  million  available to
borrow under these debt  facilities  without  exceeding  limits  imposed by debt
covenants and our trust agreement.

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

The net change in cash and cash equivalents during the first nine months of 2004
was lower than the  increase in the  comparable  2003 period,  primarily  due to
increased  investing  outflows.  Operating  cash flows  were  higher in the 2004
period by a margin of $26.0  million,  benefited  by a higher  level of earnings
exclusive of non-cash expenses and the timing of payments in operating liability
accounts.  The increase in investing  outflows resulted from our Interim Loan to
Capri  Capital  and  heightened  activity in advance of fund  sponsorships.  The
higher  level  of  financing  inflows  in the  2004  period  related  to  equity
issuances,  which were used to repay debt and  finance the  increased  investing
activity.

During November 2004,  distributions  of  approximately  $23.7 million ($.41 per
share) will be paid to holders of common and Convertible CRA Shares,  which were
declared in September 2004.

Management  currently  expects to pay  approximately  $6.4 million in the fourth
quarter of 2004 in connection with put and call options,  thereby  acquiring the
13% of PW Funding that we do not currently own.

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.

In October  2004, we filed a shelf  registration  with the SEC providing for the
issuance of up to $400.0  million in common  shares,  preferred  shares and debt
securities.  This shelf  registration has not yet been declared effective and we
have no current plans to draw upon it.

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

The  following  table  reflects our maximum  exposure and carrying  amount as of
September 30, 2004 for guarantees we and our subsidiaries have entered into:
<TABLE>
<CAPTION>
                                       Maximum         Carrying
 (In thousands)                        Exposure         Amount
--------------------------------     ------------    ------------
<S>                                  <C>               <C>
Payment guarantees                   $   4,533         $    --
Completion guarantees                   24,538              --
Operating deficit guarantees               949              --
Recapture guarantees                    53,426              --
Replacement reserve                      1,454              --
CMC credit enhancement                  19,000              --
LIHTC guarantees                       398,562          14,730
                                     ------------    ------------

                                      $502,462         $14,730
                                     ============    ============
</TABLE>

                                       18
<PAGE>

CONTRACTUAL OBLIGATIONS

The following  table  provides our  commitments as of September 30, 2004 to make
future payments under our debt agreements and other contractual obligations.
<TABLE>
<CAPTION>

                                                               Payments due by Period
                                           --------------------------------------------------------------
                                                        Less than                  More than
(In thousands)                                Total       1 year      1-3 years    3-5 years    5 years
                                           ----------   ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>                 <C>
Notes payable                              $  176,737   $  154,926   $    5,452   $   16,359          $--
Notes  payable of  consolidated VIEs (1)      474,914       88,152      271,744       22,486       92,532
Operating lease obligations                     5,028          840        2,710        1,333          145
Unfunded loan commitments                     176,421      119,376       57,045           --           --
Floating rate securitization                  873,663      873,663           --           --           --
Fixed rate securitization                     100,000      100,000           --           --           --
                                           ----------   ----------   ----------   ----------   ----------

   Total                                   $1,806,763   $1,336,957   $  336,951   $   40,178   $   92,677
                                           ==========   ==========   ==========   ==========   ==========
</TABLE>

(1) Of the notes payable of consolidated  VIEs,  $401.9 million is guaranteed by
the limited  partners of the investment  funds.  Per partnership  agreements the
limited  partners are also  obligated to pay the  principal  and interest on the
notes.  The  remaining  balance  of $73.0  million  is  collateralized  with the
underlying properties of the consolidated operating partnerships.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

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

     o    the potential  increase in interest expense on our variablerate debt;
          and
     o    the impact of interest rate on the value of our assets.

IMPACT ON EARNINGS

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

In contrast,  payments required under our floating rate securitization  programs
vary based on market interest rates based on the Bond Market Association ("BMA")
municipal  swap index and are re-set  weekly or every 35 days.  In addition,  we
have floating rate debt related to our  acquisition  financing and our warehouse
facilities. Other long-term sources of capital, such as our Cumulative Preferred
Shares, carry a fixed dividend rate and, as such, are not impacted by changes in
market interest rates.

With the  exception  of $50.0  million of debt hedged via an interest  rate swap
agreement and the $100.0 million fixed rate  securitization,  the full amount of
our liabilities labeled as Financing Arrangements and Notes Payable are variable
rate  debts.  We  estimate  that an  increase  of 1.0% in  interest  rates would
decrease our annual net income by approximately $10.0 million.

We manage this risk through the use of interest  rate swaps,  interest rate caps
and forward  bond  origination  commitments,  as  described  in the notes to our
financial statements.


                                       19
<PAGE>

IMPACT ON VALUATION OF ASSETS

Changes in market  interest  rates would also impact the estimated fair value of
our portfolio of revenue bonds. We estimate the fair value for each revenue bond
as the  present  value of its  expected  cash flows,  using a discount  rate for
comparable  tax-exempt  investments.  Therefore,  as market  interest  rates for
tax-exempt  investments increase,  the estimated fair value of our revenue bonds
will  generally  decline,  and a decline in interest  rates would be expected to
result in an increase in their estimated fair values. For example,  we estimate,
using the same  methodology  used to estimate  the  portfolio  fair market value
under SFAS 115,  that a 1% increase in market rates for  tax-exempt  investments
would  decrease the estimated  fair value of our portfolio of revenue bonds from
its September 30, 2004 value of approximately $2.1 billion to approximately $1.9
billion.  A 1%  decline  in  interest  rates  would  increase  the  value of the
September  30, 2004  portfolio to  approximately  $2.2  billion.  Changes in the
estimated fair value of the revenue bonds do not impact our reported net income,
earnings per share,  distributions or cash flows, but are reported as components
of other  accumulated  comprehensive  income and affect  reported  shareholders'
equity.

ITEM 4. CONTROLS AND PROCEDURES

(a)  EVALUATION  OF  DISCLOSURE  CONTROLS AND  PROCEDURES.  Our Chief  Executive
Officer and Chief  Financial  Officer have  evaluated the  effectiveness  of our
disclosure  controls and procedures (as such term is defined in Rules  13a-15(e)
and  15d-15(e)  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, our disclosure controls and procedures are effective.

(b)  INTERNAL  CONTROL  OVER  FINANCIAL  REPORTING.  There  have  not  been  any
significant  changes in our 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, our internal control over financial
reporting.

                                       20
<PAGE>

                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

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

ITEM 2.  CHANGES IN  SECURITIES, USE OF PROCEEDS AND ISSUER  PURCHASES OF EQUITY
         SECURITIES - 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:

         10.6 Third   Amended and  Restated  Bylaws,  dated  September  15, 2004
              (filed herewith).

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

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

         32.1  Chief Executive Officer and Chief Financial Officer certification
               pursuant  to 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,
               2004.

               Current  report on Form 8-K relating to a press release we issued
               announcing that our  subsidiary,  CM Investor LLC, had provided a
               $72.0 million interim loan to Capri Capital  Limited  Partnership
               and committed to make an additional $12.0 million advance,  dated
               July 19, 2004.

               Current  report on Form 8-K relating to a press release we issued
               reporting our second quarter financial  results,  dated August 5,
               2004.


                                       21
<PAGE>


                                   SIGNATURES



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



                                   CHARTERMAC
                                  (Registrant)



Date:  November 4, 2004       By: /s/ Stuart J. Boesky
                                  --------------------
                                  Stuart J. Boesky
                                  Managing Trustee and Chief Executive Officer



Date:  November 4, 2004       By: /s/ Alan P. Hirmes
                                  ------------------
                                  Alan P. Hirmes
                                  Managing Trustee, Chief Financial Officer and
                                  Chief Operating Officer



<PAGE>

                                                                    Exhibit 10.6



                                   CHARTERMAC

                        THIRD AMENDED AND RESTATED BYLAWS

                                    ARTICLE I

                                     OFFICES

Section 1. PRINCIPAL OFFICE.  The principal office of the Trust shall be located
at such place as the Board of Trustees may designate in its sole discretion.

Section 2. ADDITIONAL  OFFICES.  The Trust may have  additional  offices at such
places as the Board of  Trustees  may from  time to time  determine  in its sole
discretion or the business of the Trust may require.

                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

Section 1. PLACE.  All meetings of  Shareholders  shall be held at the principal
office of the Trust or at such other place within the United  States as shall be
stated in the notice of the meeting.

Section  2.  ANNUAL  MEETING.  An annual  meeting  of the  Shareholders  for the
election of Managing  Trustees  whose terms have expired and the  transaction of
any  business  within the powers of the Trust shall be held on a date and at the
time set by the Board of Trustees during the month of June in each year.

Section  3.  SPECIAL  MEETINGS.  Special  meetings  of the  Shareholders  (or of
Shareholders  holding  Shares of any class or series having a separate  class or
series vote on any matter pursuant to the Trust Agreement or applicable law) may
be  called  by the Board of  Trustees  pursuant  to a  resolution  adopted  by a
majority of the whole Board of Trustees, including a majority of the Independent
Trustees.  Special meetings of Shareholders shall also be called by the Board of
Trustees upon the written  request of the holders of Shares entitled to cast not
less than 10% of all the votes entitled to be cast at such meeting. Such request
shall briefly  state the purpose of such meeting and the matters  proposed to be
acted on at such meeting.

Section 4. NOTICE. Not less than 10 nor more than 90 days before each meeting of
Shareholders,  the Board of Trustees shall give to each Shareholder  entitled to
vote at such  meeting  and to  each  Shareholder  not  entitled  to vote  who is
entitled to notice of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special  meeting or as otherwise  may
be required by any statute, stating briefly the purpose for which the meeting is
called, either by mail or by presenting it to such Shareholder  personally or by
leaving it at the Shareholder's residence or usual place of business. If mailed,
such notice shall be deemed to be given when deposited in the United States mail
addressed to the  Shareholder  at the  Shareholder's  post office  address as it
appears on the records of the Trust, with postage thereon prepaid.

Section 5. SCOPE OF NOTICE.  Any business of the Trust may be  transacted  at an
annual  meeting of  Shareholders  without being  specifically  designated in the
notice,  except such business as is required by any statute to be stated in such
notice.  No business  shall be transacted at a special  meeting of  Shareholders
except as specifically designated in the notice.

Section 6. ORGANIZATION.  At every meeting of Shareholders,  the chairman of the
Board of Trustees, if there is one, shall conduct the meeting or, in the case of
vacancy in office or  absence  of the  chairman  of the Board of  Trustees,  the
following  officers of the Trust: the president and the vice presidents in their
order of rank and seniority, and a Person appointed by the chairman shall act as
secretary.

Section 7. QUORUM. At any meeting of Shareholders,  the presence in person or by
proxy of  Shareholders  entitled to cast a majority of all the votes entitled to
be cast at such meeting  shall  constitute  a quorum;  provided,  however,  this
section shall not affect any requirement under any statute,  the Trust Agreement
or these Bylaws  regarding  the vote  necessary for the adoption of any measure.
If,  however,   such  quorum  shall  not  be  present  at  any  meeting  of  the
Shareholders,  the  Shareholders  entitled to vote at such  meeting,  present in
person or by proxy,  shall have the power to adjourn  the  meeting  from time to
time to a date not more than 120 days after the  original  record  date  without
notice other than  announcement  at the meeting.  At such  adjourned  meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally notified. If the adjournment is for


<PAGE>

more than 120 days,  or if after the  adjournment a new record date is fixed for
the adjourned  meeting,  notice of the adjourned  meeting shall be given to each
Shareholder of record entitled to vote at the meeting.

The  Shareholders  present at a meeting  which has been duly called and convened
may  continue  to  transact  business  until  adjournment,  notwithstanding  the
withdrawal of enough Shareholders to leave less than a quorum.

Section  8.  VOTING.  A  plurality  of all the votes  entitled  to be cast,  and
actually cast, at a meeting of Shareholders duly called and at which a quorum is
present shall be sufficient to elect a Managing Trustee. Each Share may be voted
for as many  individuals  as there are  Managing  Trustees to be elected and for
whose  election the Share is entitled to be voted.  A majority of the votes cast
at a meeting of Shareholders  duly called and at which a quorum is present shall
be  sufficient  to approve any other matter  which may properly  come before the
meeting,  unless a different vote is required by statute, the Trust Agreement or
these Bylaws. Unless otherwise provided in the Trust Agreement, each outstanding
Share,  regardless  of  class,  shall be  entitled  to one  vote on each  matter
submitted to a vote at any meeting of Shareholders.

Section 9. PROXIES.  A Shareholder may cast the votes entitled to be cast by the
Shares owned of record by such Shareholder either in person or by proxy executed
in writing or transmitted by telephone (whether orally or otherwise),  telegram,
cablegram  or means of  electronic  transmission  by the  Shareholder  or by the
Shareholder's  duly authorized  attorney in fact. Such proxy shall be filed with
the Board of Trustees  before or at the time of the  meeting.  No proxy shall be
valid after 11 months from the date of its execution,  unless otherwise provided
in the proxy.  A proxy shall be  irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an  irrevocable  power.  A Shareholder  may revoke any proxy that is not
irrevocable  by  attending  the  meeting  and  voting  in person or by filing an
instrument in writing  revoking the proxy or by delivering a proxy in accordance
with applicable law bearing a later date to the Board of Trustees.

Section 10, VOTING OF SHARES BY CERTAIN HOLDERS.  Shares of the Trust registered
in the name of a corporation, partnership, trust or other Entity, if entitled to
be voted,  may be voted by the president or a vice president,  a general partner
or  trustee  thereof,  as the case may be,  or a proxy  appointed  by any of the
foregoing  individuals,  unless some other Person who has been appointed to vote
such stock  pursuant to a bylaw or a resolution  of the  governing  body of such
corporation,  partnership,  trust or other  Entity or  agreement  governing  the
organization  of such other  Entity  presents a  certified  copy of such  bylaw,
resolution  or  agreement,  in which case such Person may vote such  stock.  Any
director  or other  fiduciary  may  vote  stock  registered  in his name as such
fiduciary, either in person or by proxy.

Shares of the Trust directly or indirectly owned by it shall not be voted at any
meeting and shall not be counted in determining  the total number of outstanding
Shares  entitled to be voted at any given time,  unless they are held by it in a
fiduciary  capacity,  in which  case they may be voted and shall be  counted  in
determining the total number of outstanding Shares at any given time.

The Board of Trustees may adopt by resolution a procedure by which a Shareholder
may  certify in writing to the Trust that any Shares  registered  in the name of
the  Shareholder  are held for the account of a specified  Person other than the
Shareholder.  The resolution  shall set forth the class of Shareholders  who may
make the certification, the purpose for which the certification may be made, the
form  of  certification  and  the  information  to be  contained  in it;  if the
certification  is with respect to a record date or closing of the Share transfer
books,  the time after the record  date or closing of the Share  transfer  books
within  which the  certification  must be received  by the Trust;  and any other
provisions with respect to the procedure  which the Board of Trustees  considers
necessary or desirable.  On receipt of such certification,  the Person specified
in the  certification  shall be regarded  as, for the  purposes set forth in the
certification, the Shareholder of record of the specified Shares in place of the
Shareholder who makes the certification.

Section 11.  INSPECTORS.  At any meeting of  Shareholders,  the  chairman of the
meeting may appoint one or more Persons as  inspectors  for such  meeting.  Such
inspectors  shall  ascertain and report the number of Shares  represented at the
meeting  based upon their  determination  of the validity and effect of proxies,
count all votes, report the results and perform such other acts as are proper to
conduct  the  election  and voting  with  impartiality  and  fairness to all the
Shareholders.

Each report of an inspector  shall be in writing and signed by such inspector or
by a  majority  of them if  there  is more  than one  inspector  acting  at such
meeting. If there is more than one inspector,  the report of a majority shall be
the report of the  inspectors.  The report of the inspector or inspectors on the
number of Shares  represented at the meeting and the results of the voting shall
be prima facie evidence thereof.

Section 12 NOMINATIONS AND SHAREHOLDER BUSINESS.

     (a) ANNUAL MEETINGS OF SHAREHOLDERS.

          (1)  Subject to  paragraph  (c) of this  Section  12,  nominations  of
               Persons for election as a Managing Trustee to the Board
<PAGE>

               of Trustees and the proposal of business to be  considered by the
               Shareholders may be made at an annual meeting of Shareholders (i)
               pursuant  to the  Trust's  notice of  meeting,  (ii) by or at the
               direction  of a majority of the Board of Trustees or (iii) by any
               Shareholder  of the Trust who was a Shareholder of record both at
               the time of giving of notice  provided for in this Section  12(a)
               and at the time of the annual meeting, who is entitled to vote at
               the meeting and who complied with the notice procedures set forth
               in this Section 12(a).

          (2)  For  nominations or other business to be properly  brought before
               an annual meeting of  Shareholders  by a Shareholder  pursuant to
               clause  (iii)  of  paragraph  (a)(1)  of  this  Section  12,  the
               Shareholder  must have given timely notice  thereof in writing to
               the Board of Trustees. To be timely, a Shareholder's notice shall
               be delivered to the Board of Trustees at the principal  executive
               offices  of the Trust not less than 60 days nor more than 90 days
               prior to the first  anniversary  of the  preceding  year's annual
               meeting;  provided,  however,  that in the event that the date of
               the annual meeting is advanced by more than 30 days or delayed by
               more than 60 days from such  anniversary date or if the Trust has
               not previously held an annual meeting,  notice by the Shareholder
               to be timely must be so  delivered  not earlier than the 90th day
               prior to such  annual  meeting  and not  later  than the close of
               business  on the  later  of the 60th  day  prior  to such  annual
               meeting  or the  tenth  day  following  the day on  which  public
               announcement  of the date of such  meeting  is first  made.  Such
               Shareholder's  notice  shall set forth (i) as to each Person whom
               the  Shareholder  proposes to nominate for election or reelection
               as a Managing  Trustee  all  information  relating to such Person
               that is required to be disclosed in  solicitations of proxies for
               election of Managing Trustees,  or is otherwise required, in each
               case pursuant to Regulation 14A under the Securities Exchange Act
               of 1934, as amended (the "EXCHANGE ACT") (including such Person's
               written  consent  to being  named  in the  proxy  statement  as a
               nominee and to serving as a Managing Trustee if elected); (ii) as
               to any other  business  that the  Shareholder  proposes  to bring
               before the meeting,  a brief  description of the business desired
               to be brought before the meeting, the reasons for conducting such
               business  at the  meeting  and  any  material  interest  in  such
               business of such Shareholder and of the beneficial owner, if any,
               on  whose  behalf  the  proposal  is  made;  and  (iii) as to the
               Shareholder  giving the notice and the beneficial  owner, if any,
               on whose behalf the  nomination or proposal is made, (x) the name
               and  address of such  Shareholder,  as they appear on the Trust's
               books,  and of such beneficial owner and (y) the number of Shares
               of each  class of  beneficial  interests  of the Trust  which are
               owned  beneficially  and of record by such  Shareholder  and such
               beneficial owner.  Notwithstanding the foregoing provisions,  the
               Board of Trustees  shall have the right,  pursuant to  Regulation
               14A under the Exchange Act, to reject any Shareholder proposal or
               nomination raised.

          (3)  Notwithstanding  anything  in the second  sentence  of  paragraph
               (a)(2) of this Section 12 to the contrary,  in the event that the
               number  of  Managing  Trustees  to be  elected  to the  Board  of
               Trustees is increased and there is no public  announcement naming
               all of the nominees for Managing  Trustee or specifying  the size
               of the increased  Board of Trustees made by the Trust at least 70
               days  prior to the  first  anniversary  of the  preceding  year's
               annual meeting,  a Shareholder's  notice required by this Section
               12(a) shall also be considered  timely,  but only with respect to
               nominees for any new positions  created by such  increase,  if it
               shall be  delivered  to the Board of  Trustees  at the  principal
               office of the Trust not later than the close of  business  on the
               tenth day following the day on which such public  announcement is
               first made by the Trust.

     (b)  SPECIAL  MEETINGS  OF  SHAREHOLDERS.   Only  such  business  shall  be
          conducted  at a special  meeting  of  Shareholders  as shall have been
          brought before the meeting  pursuant to the Trust's notice of meeting.
          Subject to paragraph  (c) of this Section 12,  nominations  of Persons
          for election to the Board of Trustees may be made at a special meeting
          of  Shareholders  at which  Managing  Trustees  are to be elected  (i)
          pursuant to the Trust's notice of meeting, (ii) by or at the direction
          of the Board of Trustees or (iii)  provided that the Board of Trustees
          has determined that Managing Trustees shall be elected at such special
          meeting,  by any  Shareholder  of the  Trust who is a  Shareholder  of
          record  both at the time of  giving  of  notice  provided  for in this
          Section 12(b) and at the time of the special meeting,  who is entitled
          to vote at the meeting and who complied with the notice procedures set
          forth in this Section 12(b).  Subject to paragraph (c) of this Section
          12, in the event the Trust calls a special meeting of Shareholders for
          the purpose of electing one or more Managing  Trustees to the Board of
          Trustees,  any such  Shareholder  may nominate a Person or Persons (as
          the case may be) for  election to such  position as  specified  in the
          Trust's notice of meeting, if the Shareholder's  notice containing the
          information  required by paragraph  (a)(2) of this Section 12 shall be
          delivered  to the Board of  Trustees  at the  principal  office of the
          Trust not earlier than the 90th day prior to such special  meeting and
          not  later  than the  close of  business  on the later of the 60th day
          prior to such special  meeting or the tenth day  following  the day on
          which  public  announcement  is first made of the date of the  special
          meeting  and of the  nominees  proposed by the Board of Trustees to be
          elected at such meeting.
<PAGE>

     (c)  SPECIAL NOMINATION PROVISIONS.

          (1)  NOMINATION OF THE INDEPENDENT TRUSTEES.  Notwithstanding anything
               herein to the contrary, the Independent Trustees nominated by the
               Board of Trustees shall be nominated by the Nominating  Committee
               of the Board of Trustees,  which  nominations shall be subject to
               the approval of two-thirds of the Board of Trustees. All Managing
               Trustees  shall  have the right to  recommend  to the  Nominating
               Committee for its consideration their choices for the Independent
               Trustee nominees.

          (2)  NOMINATION  OF  THE  NON-INDEPENDENT  TRUSTEES.  Subject  to  the
               provisions of the Trust Agreement (including, without limitation,
               any Certificate of Designation attached thereto), non-Independent
               Trustees nominated by the Board of Trustees shall be nominated by
               the  Nominating  Committee  of  the  Board  of  Trustees,   which
               nominations shall be subject to the approval of a majority of the
               Board of Trustees.  All Managing Trustees shall have the right to
               recommend to the Nominating Committee for its consideration their
               choices for the non-Independent Trustee nominees.

     (d)  GENERAL

          (1)  Only  such  Persons  who are  nominated  in  accordance  with the
               procedures  set forth in this  Section  12 shall be  eligible  to
               serve as  Managing  Trustees  and  only  such  business  shall be
               conducted at a meeting of Shareholders as shall have been brought
               before the meeting in accordance with the procedures set forth in
               this Section 12. The chairman of the meeting shall have the power
               and  duty to  determine  whether  a  nomination  or any  business
               proposed to be brought  before the meeting was made in accordance
               with the  procedures  set forth in this  Section  12 and,  if any
               proposed  nomination or business is not in  compliance  with this
               Section 12, to declare that such defective nomination or proposal
               be disregarded.

          (2)  "Public  announcement"  shall mean  disclosure in a press release
               reported  by the Dow  Jones  News  Service,  Associated  Press or
               comparable  news service or in a document  publicly  filed by the
               Trust with the  Securities  and Exchange  Commission  pursuant to
               Section 13, 14 or 15(d) of the Exchange Act.

          (3)  Notwithstanding  the  foregoing  provisions of this Section 12, a
               Shareholder shall also comply with all applicable requirements of
               state law and of the Exchange  Act and the rules and  regulations
               thereunder  with respect to the matters set forth in this Section
               12.  Nothing  in this  Section  12 shall be deemed to affect  any
               rights of Shareholders  to request  inclusion of proposals or the
               Trust's  right to exclude  such  proposals  in the Trust's  proxy
               statement pursuant to Rule 14a-8 under the Exchange Act.

Section 13.  VOTING BY BALLOT.  Voting on any question or in any election may be
viva voce  unless the  chairman of the  meeting  shall order or any  Shareholder
shall demand that voting be by ballot.

Section 14.  CONDUCT OF MEETINGS.  The Board of Trustees may adopt by resolution
such rules and  regulations  for the  conduct of meeting of  Shareholders  as it
shall deem  appropriate.  Except to the extent  inconsistent with such rules and
regulations as adopted by the Board of Trustees,  the chairman of any meeting of
Shareholders  shall  have the right  and  authority  to  prescribe  such  rules,
regulations  and  procedures and to do all such acts as, in the judgment of such
chairman,  are  appropriate  for the proper conduct of the meeting.  Such rules,
regulations  or  procedures,  whether  adopted  by  the  Board  of  Trustees  or
prescribed by the chairman of the meeting, may include, without limitation,  the
following:

     (a)  The establishment of an agenda or order of business for the meeting;

     (b)  Rules and  procedures  for  maintaining  order at the  meeting and the
          safety of those present;

     (c)  Limitations  on  attendance  at or  participation  in the  meeting  of
          Shareholders of record,  their duly authorized and constituted proxies
          or such other Persons as the chairman of the meeting shall determine;

     (d)  Restrictions  on entry to the  meeting  after  the time  fixed for the
          commencement thereof; and

     (e)  Limitations   on  the  time  allotted  to  questions  or  comments  by
          participants.  Unless  and to the  extent  determined  by the Board of
          Trustees or the  chairman  of the  meeting,  meetings of  Shareholders
          shall  not be  required  to be held in  accordance  with the  rules of
          parliamentary procedure.

Section 15. ACTION BY CONSENT OF SHAREHOLDERS.  Any action required or permitted
to be taken at any annual or special  meeting of the  Shareholders  may be taken
without a meeting,  without  prior  notice and  without a vote,  if a consent or


<PAGE>

consents in writing,  setting forth the action so taken,  shall be signed by the
holders of  outstanding  Shares having not less than the minimum number of votes
that would be  necessary  to authorize or take such action at a meeting at which
all  Shares  entitled  to vote  thereon  were  present  and  voted  and shall be
delivered (by regular  mail) to the Trust by delivery to its principal  place of
business,  or an  agent  of the  Trust  having  custody  of the  book  in  which
proceedings  of minutes of  Shareholders  are  recorded.  The Trust shall make a
public  announcement  of the taking of the action without a meeting by less than
unanimous written consent.

Section 16. RECORD DATE FOR ACTION BY CONSENT OF SHAREHOLDERS. In order that the
Trust may  determine the  Shareholders  entitled to consent to action in writing
without a meeting,  the Trustees may fix a record date,  which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of  Trustees,  and which  date shall not be more than 10 days after
the date upon which the  resolution  fixing  the  record  date is adopted by the
Board of Trustees.  Any  Shareholder of record seeking to have the  Shareholders
authorize  or take  action by consent  shall,  by  written  notice to a Managing
Trustee,  request  the  Board of  Trustees  to fix a record  date.  The Board of
Trustees  shall  promptly,  but in all  events  within 10 days after the date on
which such a request is received,  adopt a resolution fixing the record date. If
no record  date has been  fixed by the Board of  Trustees  within 10 days of the
date on which  such a request  is  received,  the  record  date for  determining
Shareholders entitled to consent to action in writing without a meeting, when no
prior action by the Board of Trustees is required by  applicable  law,  shall be
the first date on which a signed written  consent setting forth the action taken
or proposed to be taken is  delivered  (by hand or by  certified  or  registered
mail, return receipt  requested) to the Trust by delivery to its principal place
of  business,  or to an agent of the Trust  having  custody of the book in which
proceedings of meetings of Shareholders are recorded. If no record date has been
fixed by the Board of  Trustees  and prior  action by the Board of  Trustees  is
required  by  applicable  law,  the  record  date for  determining  Shareholders
entitled to consent to action in writing without a meeting shall be at the close
of  business on the date on which the Board of  Trustees  adopts the  resolution
taking such prior action.

                                   ARTICLE III

                                MANAGING TRUSTEES

Section 1.  GENERAL  POWERS.  The  business  and  affairs of the Trust  shall be
managed under the direction of its Board of Trustees.

Section 2.  LIMITATIONS  ON  POWERS.  The Board of  Trustees  shall not have the
authority to:

     (a)  cause the Trust to acquire Minority Positions which, in the aggregate,
          are in excess of 15% of Total  Market  Value  (measured at the time of
          such investment);

     (b)  cause  the  Trust to  invest in a First  Mortgage  Bond  secured  by a
          Mortgage Loan on any one Underlying  Property if the principal of such
          First Mortgage Bond would exceed, in the aggregate, an amount equal to
          20% of Total Market Value (measured at the time of such investment);

     (c)  cause the Trust to invest in First  Mortgage Bonds secured by Mortgage
          Loans to any one  borrower  if the  principal  of such First  Mortgage
          Bonds would exceed,  in the  aggregate,  an amount greater than 20% of
          Total Market Value (measured at the time of such investment);

     (d)  cause the Trust to invest in First  Mortgage Bonds secured by Mortgage
          Loans on unimproved real property or Tax-Exempt Securities relating to
          unimproved real property in an amount in excess of 10% of Total Market
          Value (measured at the time of such investment);

     (e)  cause  the  Trust to  invest in a First  Mortgage  Bond  secured  by a
          Mortgage Loan on any one Underlying  Property if the aggregate  amount
          of  all  mortgage  loans  outstanding  on  the  Underlying   Property,
          including the principal  amount of the Mortgage Loan,  would exceed an
          amount  equal  to  85% of  the  appraised  fair  market  value  of the
          Underlying Property, as determined by an independent appraiser, unless
          the Board of  Trustees  or the  Manager  determines  that  substantial
          justification  exists  for  investing  in such a First  Mortgage  Bond
          because of other  aspects  of the loans,  such as the net worth of the
          borrower,  the  credit  rating  of the  borrower  based on  historical
          financial  performance,  additional  collateral  (such as a pledge  or
          assignment of other real estate or another real estate mortgage) or an
          assignment  of rents under a lease or where the Trust has  purchased a
          First  Mortgage  Bond at a price that is no more than 85% of the value
          of the Underlying  Property  (notwithstanding  that the face amount of
          the outstanding mortgage loans with respect to the Underlying Property
          exceeds  85% of the  appraised  fair  market  value of the  Underlying
          Property), provided that any loans relating to the Underlying Property
          which are  advanced by third  parties  (and which cause the  aggregate
          amount of all mortgage loans outstanding on the Underlying Property to
          exceed  85% of the  appraised  fair  market  value  of the  Underlying
<PAGE>

          Property)  are  subordinated  to  the  Trust's  investment  and do not
          entitle such third party  lender to any  material  rights upon default
          without the Trust's  consent  until after the Trust's  First  Mortgage
          Bond  and  related  Mortgage  Loan  with  respect  to such  Underlying
          Property have been repaid;

     (f)  do any act in  contravention  of these  Bylaws or which  would make it
          impossible to carry on the ordinary business of the Trust;

     (g)  confess a judgment against the Trust in connection with any threatened
          or pending legal action;

     (h)  possess  any Trust asset or assign the rights of the Trust in specific
          Trust assets for other than a Trust purpose;

     (i)  perform any act (other than an act required by these Bylaws or any act
          taken in good faith reliance upon counsel's  opinion) which would,  at
          the time such act occurred,  subject any  Shareholders to liability in
          any jurisdiction;

     (j)  commingle the Trust funds with those of any other Person;

     (k)  operate the Trust in such a manner as to have the Trust  classified as
          (1) an "investment company" for purposes of the Investment Company Act
          of 1940, as amended,  or (2) other than as a partnership  for purposes
          of the Code; and

     (l)  cause the Trust to invest in real estate contracts of sale,  otherwise
          known as land sale  contracts,  unless such  contracts  of sale are in
          recordable form and are appropriately recorded in the chain of title.

Section 3. NUMBER,  TENURE AND QUALIFICATIONS.  At any regular meeting or at any
special  meeting  called for that  purpose,  two-thirds  of the entire  Board of
Trustees may  establish,  increase or decrease the number of Managing  Trustees,
provided  that the number  thereof  shall never be less than three nor more than
sixteen,  and at least a majority of the Managing Trustees,  by at least (i) one
trustee  while Mr. White is on the Board of Trustees  and,  (ii) two trustees if
Mr. White is not on the Board of Trustees  shall be  Independent  Trustees,  and
further  provided  that the tenure of office of a Managing  Trustee shall not be
affected by any decrease in the number of Managing Trustees.

Section  4.  ANNUAL  AND  REGULAR  MEETINGS.  An annual  meeting of the Board of
Trustees  shall be held  immediately  after and at the same  place as the annual
meeting of Shareholders,  no notice other than this Bylaw being  necessary.  The
Board of Trustees may provide, by resolution,  the time and place, either within
or without the State of  Delaware,  for the  holding of regular  meetings of the
Board of Trustees without other notice than such resolution.

Section 5. SPECIAL  MEETINGS.  Special  meetings of the Board of Trustees may be
called by or at the request of the  chairman of the Board of  Trustees,  or by a
majority  of the  Managing  Trustees  then in  office.  The  Person  or  Persons
authorized to call special  meetings of the Board of Trustees may fix any place,
either  within or without  the State of  Delaware,  as the place for holding any
special meeting of the Board of Trustees called by them.

Section 6. NOTICE.  Notice of any special meeting of the Board of Trustees shall
be delivered personally or by telephone,  email, facsimile transmission,  United
States  mail or courier to each  Managing  Trustee  at his  email,  business  or
residence  address.  Notice  by  personal  delivery,  by  telephone,  email or a
facsimile  transmission  shall be given at least two days prior to the  meeting.
Notice by mail shall be given at least five days prior to the  meeting and shall
be  deemed  to be given  when  deposited  in the  United  States  mail  properly
addressed, with postage thereon prepaid.  Telephone notice shall be deemed to be
given when the Managing  Trustee is personally  given such notice in a telephone
call to which he is a party.  Email and facsimile  transmission  notice shall be
deemed to be given upon  completion  of the  transmission  of the message to the
number  given to the Trust by the  Managing  Trustee  and receipt of a completed
answer-back  indicating  receipt.  Neither the business to be transacted at, nor
the purpose of, any annual,  regular or special meeting of the Board of Trustees
need be stated in the notice,  unless specifically  required by statute or these
Bylaws.

Section 7. QUORUM. A majority of the Managing Trustees shall constitute a quorum
for  transaction  of business at any meeting of the Board of Trustees,  provided
that,  if less than a majority  of such  Managing  Trustees  are present at said
meeting,  a majority of the  Managing  Trustees  present may adjourn the meeting
from time to time without further notice, and provided further that if, pursuant
to the Trust  Agreement or these Bylaws,  the vote of a majority of a particular
group of Managing  Trustees is required for action, a quorum must also include a
majority of such group, but only with respect to a vote on such action.

The  Managing  Trustees  present  at a meeting  which has been duly  called  and
convened may continue to transact  business until  adjournment,  notwithstanding
the withdrawal of enough Managing Trustees to leave less than a quorum.

Section 8. VOTING.  The action of the majority of the Managing  Trustees present
at a meeting  at which a quorum is  present  shall be the action of the Board of
Trustees (including with respect to actions to merge, consolidate or convert the

<PAGE>

Trust),  unless the  concurrence  of a greater  proportion  is required for such
action by the Trust Agreement or applicable law.  Notwithstanding the foregoing,
where any action is required  pursuant to the terms of the Trust Agreement to be
approved by a majority vote of the Independent  Trustees or by a majority of the
Independent  Trustees  (or like  wording),  then the action of a majority of the
total  number  of  Persons  at the time  serving  on the Board of  Trustees  who
constitute Independent Trustees shall be the action of the Board of Trustees.

Section 9. TELEPHONE MEETINGS. Managing Trustees may participate in a meeting by
means of a  conference  telephone  or similar  communications  equipment  if all
Persons  participating  in the  meeting  can hear each  other at the same  time.
Participation in a meeting by these means shall constitute presence in person at
the meeting.

Section  10.  INFORMAL  ACTION BY  MANAGING  TRUSTEES.  Any action  required  or
permitted  to be taken at any  meeting  of the  Board of  Trustees  may be taken
without a meeting,  if a consent  in  writing  to such  action is signed by each
Managing  Trustee  and such  written  consent  is  filed  with  the  minutes  of
proceedings of the Board of Trustees.

Section 11. VACANCIES.

     (a)  GENERAL.  If for any reason any or all the Managing  Trustees cease to
          be  Managing  Trustees,  such  event  shall  not  annul,  dissolve  or
          terminate  the  Trust or  affect  these  Bylaws  or the  powers of the
          remaining  Managing  Trustees  hereunder  (even  if fewer  than  three
          Managing Trustees remain).  Any individual elected as Managing Trustee
          in  accordance  with this  Section 11 shall hold office until the next
          annual meeting of Shareholders at which such Managing  Trustee's class
          is to be elected and until his successor is elected and qualifies.

     (b)  INDEPENDENT  TRUSTEES.  If any  vacancy,  whether or not created by an
          increase  in the number of Managing  Trustees,  must be filled with an
          Independent  Trustee to comply  with the terms of  Section  3.1 of the
          Trust  Agreement,  and there are any remaining  Independent  Trustees,
          replacement  Independent Trustees shall be nominated by the Nominating
          Committee of the Board of Trustees, which nominations shall be subject
          to the  approval  of  two-thirds  of the  Managing  Trustees,  and the
          vacancy  shall be filled by a majority  vote of the Managing  Trustees
          electing a nominated  replacement  Independent  Trustee.  All Managing
          Trustees shall have the right to recommend to the Nominating Committee
          for its  consideration  their choices for the replacement  Independent
          Trustee nominees.  If there is no remaining  Independent  Trustee, any
          such vacancies shall be filled by a majority of the remaining Managing
          Trustees.

     (c)  NON-INDEPENDENT  TRUSTEES.  Subject  to the  provisions  of the  Trust
          Agreement   (including,   without   limitation,   any  Certificate  of
          Designation attached thereto), if any vacancy,  whether or not created
          by an increase in the number of Managing Trustees, must be filled with
          a  non-Independent  Trustee to comply with the terms of Section 3.1 of
          the Trust  Agreement,  replacement  non-Independent  Trustees shall be
          nominated by the Nominating Committee of the Board of Trustees and the
          vacancy shall be filled by a majority  vote of the Managing  Trustees.
          All  Managing  Trustees  shall  have  the  right to  recommend  to the
          Nominating  Committee  for its  consideration  their  choices  for the
          replacement non-Independent Trustee nominee.

Section 12.  COMPENSATION.  Managing  Trustees other than  Independent  Trustees
shall not  receive  any  salary or other  compensation  for  their  services  as
Managing Trustees. By resolution of the Board of Trustees,  Independent Trustees
may  receive  fixed  sums,  Shares in the Trust or other  compensation  per year
and/or per meeting  and/or for any service or activity they performed or engaged
in as Managing  Trustees.  Managing  Trustees may be reimbursed  for expenses of
attendance,  if any, at each annual,  regular or special meeting of the Board of
Trustees  or of any  committee  thereof  and for  their  expenses,  if  any,  in
connection  with any other service or activity  they  performed or engaged in as
Managing  Trustees;  but nothing herein contained shall be construed to preclude
any Managing Trustees from serving the Trust in any other capacity and receiving
compensation therefor.

Section 13. LOSS OF DEPOSITS.  No Trustee shall be liable for any loss which may
occur by reason of the  failure of the bank,  trust  company,  savings  and loan
association,  or other  institution  with  whom  moneys  or  property  have been
deposited.

Section 14. SURETY BONDS.  Unless required by law, no Trustee shall be obligated
to give any bond or surety or other  security for the  performance of any of his
duties.

Section 15. RELIANCE. Each Trustee,  officer (if any), employee and agent of the
Trust shall,  in the performance of his or her duties with respect to the Trust,
be fully  justified  and  protected  with regard to any act or failure to act in
reliance in good faith upon the books of account or other  records of the Trust,
upon an  opinion  of  counsel  or upon  reports  made to the Trust by any of its
officers  (if  any)  or  employees  (if  any)  or by the  adviser,  accountants,
appraisers or other experts or consultants  selected by the Board of Trustees or
officers (if any) of the Trust, regardless of whether such counsel or expert may
also be a Trustee.
<PAGE>

Section 16.  CERTAIN  RIGHTS OF TRUSTEES,  OFFICERS,  EMPLOYEES AND AGENTS.  The
Trustees shall have no  responsibility  to devote their full time to the affairs
of the Trust. Any Trustee or officer (if any), employee (if any) or agent of the
Trust, in his personal capacity or in a capacity as an affiliate,  employee,  or
agent of any other Person, or otherwise,  may have business interests and engage
in business activities similar to or in addition to or in competition with those
of or relating to the Trust.

Section 17. CERTAIN RIGHTS OF THE INDEPENDENT TRUSTEES.

     (a)  CHARTER MAC CORPORATION.  Notwithstanding  any provision herein to the
          contrary,  at any time at which there are any Independent  Trustees in
          office,  the powers and duties conferred and imposed upon the Trust as
          sole shareholder of Charter Mac Corporation in accordance with Article
          13 of the  certificate  of  incorporation  of Charter Mac  Corporation
          relating  to (i) the  taking or  refraining  from  taking of action by
          Charter  Mac  Corporation  with  respect  to  any  consents,  waivers,
          amendments,   approvals,   elections  or  similar   actions  under  or
          pertaining to any of the RCC Acquisition  Documents (as defined below)
          that may  affect the rights or  obligations  of any of APH  Associates
          L.P., DLK Associates L.P., Marc Associates,  L.P.,  Related General II
          L.P. and SJB Associates  L.P., or their Affiliates (as defined in that
          certain  Contribution  Agreement  dated as of December  17,  2002,  as
          amended from time to time (the "CONTRIBUTION  AGREEMENT") by and among
          CharterMac Capital Company,  LLC and the other parties named therein),
          or (ii) any  amendment  to this  Section 17,  shall be  exercised  and
          performed  by  the  Independent  Trustees.   For  such  purposes,  the
          Independent  Trustees shall act by the affirmative  vote of a majority
          of the  persons  who are then  serving as  Independent  Trustees  at a
          meeting at which at least a majority of the  Independent  Trustees are
          present or by unanimous  written consent of the Independent  Trustees.
          The  provisions  of these bylaws and of Delaware  Statutory  Trust Act
          shall govern such action at a meeting or by written  consent as if the
          Independent  Trustees  constituted  the  board  of  trustees.  For the
          purposes of this Section 17, "RCC  ACQUISITION  DOCUMENTS"  shall mean
          collectively  the  Contribution  Agreement and each of the  Collateral
          Agreements (as defined in the Contribution Agreement).

     (b)  TRUSTEE LIABILITY.  The personal liability of the Independent Trustees
          acting  pursuant to Section  17(a) hereof is hereby  eliminated to the
          fullest extent permitted by Delaware  Statutory Trust Act, as the same
          may be amended and supplemented.

                                   ARTICLE IV

                                   COMMITTEES

Section 1. NUMBER, TENURE AND QUALIFICATIONS.  The Board of Trustees may appoint
an Audit Committee,  a Compensation  Committee,  a Nominating  Committee and any
other  committees  determined  to be  necessary  or  advisable  by the  Board of
Trustees.  Such committees  shall be comprised of one or more Managing  Trustees
and may also be comprised of individuals  appointed by the Board of Trustees who
are not trustees of the Trust.  Each of the Audit  Committee,  the  Compensation
Committee  and  the  Nominating   Committee  shall  be  entirely   comprised  of
Independent Trustees or individuals that are not trustees of the Trust who would
otherwise qualify as an Independent Trustee.

Section 2. POWERS.  The Board of Trustees may delegate to  committees  appointed
under  Section 1 of this  Article  any of the  powers of the Board of  Trustees,
except as prohibited by law.

Section 3.  MEETINGS.  Notice of committee  meetings  shall be given in the same
manner as notice for special  meetings of the Board of  Trustees.  A majority of
the members of the committee  shall  constitute a quorum for the  transaction of
business at any meeting of the committee. The act of a majority of the committee
members  present at a meeting shall be the act of such  committee.  The Board of
Trustees may designate a chairman of any committee, and such chairman or any two
members of any  committee  may fix the time and place of its meeting  unless the
Board of Trustees shall otherwise  provide.  In the absence of any member of any
such committee,  the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another Managing Trustee to act in the place of
such absent member. Each committee shall keep minutes of its proceedings.

Section 4. TELEPHONE  MEETINGS.  Members of a committee of the Board of Trustees
may  participate  in a meeting  by means of a  conference  telephone  or similar
communications  equipment if all Persons  participating  in the meeting can hear
each other at the same time.  Participation  in a meeting by these  means  shall
constitute presence in person at the meeting.

Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or permitted to be
taken at any  meeting  of a  committee  of the  Board of  Trustees  may be taken
without a meeting,  if a consent  in  writing  to such  action is signed by each
member of the  committee  and such written  consent is filed with the minutes of
proceedings of such committee.



<PAGE>


Section 6. VACANCIES.  Subject to the provisions  hereof,  the Board of Trustees
shall have the power at any time to change the membership of any  committee,  to
fill all  vacancies,  to  designate  alternate  members to replace any absent or
disqualified member or to dissolve any such committee.

                                    ARTICLE V

                                    OFFICERS

The Trust shall not have any officers.  Notwithstanding the foregoing, the Board
of  Trustees  may from time to time in its sole  discretion  appoint  persons as
"officers"  of the Trust with such titles,  powers and duties as they shall deem
necessary  or  desirable.  Additionally,  the Trust  shall  create an  Operating
Committee  which shall,  subject to the  authority of the Board of Trustees,  be
vested with general  responsibility for the ordinary and usual management of the
business  and affairs of the Trust.  The Board of Trustees may from time to time
in its sole  discretion  appoint and remove members of the Operating  Committee,
who may but are not required to be Managing Trustees or "officers" of the Trust.
The  Operating   Committee  shall  be  initially   comprised  of  the  following
individuals:  Marc D.  Schnitzer,  Denise L. Kiley,  Alan P.  Hirmes,  Stuart J.
Boesky,  Stephen M Ross, Jeff T. Blau, Michael J. Brenner and Stuart Rothstein1.
Each member of the Operating  Committee shall have one vote. In the event of any
significant  disagreements at the Operating Committee level, the matter shall be
referred to the Board of Trustees for resolution.

                                   ARTICLE VI

                      CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 1. CONTRACTS.  Subject to the terms of the Trust Agreement, the Board of
Trustees may authorize an officer (if any),  the Manager or other agent to enter
into any contract or to execute and deliver any instrument in the name of and on
behalf of the Trust and such  authority  may be general or  confined to specific
instances.  Any agreement,  deed, mortgage,  lease or other document executed by
one or more of the Managing  Trustees or by an authorized  Person shall be valid
and binding upon the Trust when authorized or ratified by action of the Board of
Trustees.

Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment
of money,  notes or other  evidences of  indebtedness  issued in the name of the
Trust  shall be signed by such  officer  of the Trust (if any),  the  Manager or
other agent of the Trust in such manner as shall from time to time be determined
by the Board of Trustees.

Section 3.  DEPOSITS.  All funds of the Trust not  otherwise  employed  shall be
deposited  from time to time to the  credit of the  Trust in such  banks,  trust
companies or other depositories as the Board of Trustees may designate.

                                   ARTICLE VII

                          SHARES OF BENEFICIAL INTEREST

Section  1.   CERTIFICATES.   Shares  may,  but  need  not  be,  represented  by
certificates.  Shares not represented by certificates will be held in book-entry
form. Each  Shareholder of Shares not  represented by  certificates  may request
from the Trust,  and upon such request,  shall be entitled to, a certificate  or
certificates  which  shall  represent  and  certify the number of Shares of each
class  or  series  of  beneficial  interest  held  by  him in  the  Trust.  Each
certificate  representing Shares shall be signed by the chairman of the Board of
Trustees,  if any, or any Managing Trustee if no chairman has been elected,  and
may be  sealed  with the seal,  if any,  of the  Trust.  The  signatures  of the
Managing Trustees may be either manual or facsimile.  Certificates are not valid
until manually countersigned and registered by the Trust's transfer agent and/or
registrar. Certificates shall be consecutively numbered; and if the Trust shall,
from time to time,  issue  several  classes or series of shares,  each class may
have its own number series.  A certificate is valid and may be issued whether or
not a Managing  Trustee  who signed it is still a  Managing  Trustee  when it is
issued.  Each certificate  representing  Shares which are restricted as to their
transferability  or voting  powers,  which are  preferred or limited as to their
distributions  or as to their allocable  portion of the assets upon  dissolution
and liquidation or which are redeemable at the option of the Trust, shall have a
statement of such restriction,  limitation,  preference or redemption provision,
or a summary thereof, plainly stated on the certificate. If the Trust intends to
issue certificated  Shares of more than one class, the certificate  representing
such Shares shall contain on the face or back a full statement or summary of the
designations  and any  preferences,  conversion or other rights,  voting powers,
restrictions, limitations as to distributions and other qualifications and terms
and  conditions  of  redemption  of such class of  beneficial  interest  and the
differences in the relative  rights and  preferences  between the Shares of each
series of such class to the extent they have been set and the  authority  of the
Board of Trustees  to set the  relative  rights and  preferences  of  subsequent
series of such class. In lieu of such statement or summary,  the certificate may
state that the Trust will furnish a full  statement of such  information  to any
Shareholder  upon written request and without charge.  If any class or series of
certificated  Shares  is  restricted  by the  Trust as to  transferability,  the
certificate  representing  such Shares  shall  contain a full  statement  of the
restrictions.


1 Mr. Rothstein resigned as an officer of the Trust as of March 31, 2004.

<PAGE>


Section  2.  TRANSFERS.  Upon  the  request  by  a  Shareholder  of  Shares  not
represented by certificates to transfer one or more of such Shares,  accompanied
by proper  evidence of  succession,  assignment  or authority  to transfer,  the
transfer  agent of the Trust  shall  transfer  such Shares to the account of the
Person  entitled  thereto  and  shall  debit  the  account  of the  transferring
Shareholder,  and the transaction shall be recorded upon the Trust's books. Upon
surrender to the Trust or the transfer agent of the Trust of a Share certificate
duly endorsed or  accompanied by proper  evidence of  succession,  assignment or
authority to transfer,  the transfer  agent of the Trust shall credit the Shares
to the account of the Person  entitled  thereto,  in book-entry  form, and shall
cancel the certificate  representing  such Shares,  and the transaction shall be
recorded upon the Trust's books.

The Trust  shall be  entitled to treat the holder of record of any Shares as the
holder in fact thereof  and,  accordingly,  shall not be bound to recognize  any
equitable  or other  claim to or  interest  in such  Share or on the part of any
other  Person,  whether or not it shall have  express or other  notice  thereof,
except as otherwise provided by the laws of the State of Delaware.

Notwithstanding  the  foregoing,  transfers  of Shares  shall be  subject in all
respects to the Trust  Agreement and all of the terms and  conditions  contained
therein,  and to the terms of such Shares determined by the Board of Trustees in
accordance with Section 10.2 of the Trust Agreement.

Section 3. REPLACEMENT  CERTIFICATE.  The Manager or any other Person designated
by the Board of Trustees may direct a new  certificate  to be issued in place of
any certificate previously issued by the Trust alleged to have been lost, stolen
or destroyed upon the making of an affidavit of that fact by the Person claiming
the  certificate  to  be  lost,   stolen  or  destroyed  and  requesting  a  new
certificate.  When authorizing the issuance of a new certificate, the Manager or
such other  Person  designated  by the Board of Trustees  may, in such  Person's
discretion  and as a condition  precedent to the issuance  thereof,  require the
owner of such  lost,  stolen  or  destroyed  certificate  or the  owner's  legal
representative to advertise the same in such manner as the Manager or such other
Person shall require and/or to give bond, with sufficient  surety,  to the Trust
and the Trustees of the Trust to indemnify  them against any loss or claim which
may arise as a result of the issuance of a new certificate.

Section  4.  CLOSING  OF  TRANSFER  BOOKS OR FIXING OF RECORD  DATE.  Subject to
Article II, Section 16, with respect to record dates in connection  with consent
to action without a meeting, the Board of Trustees may set, in advance, a record
date for the  purpose of  determining  Shareholders  entitled to notice of or to
vote at any meeting of  Shareholders  or  determining  Shareholders  entitled to
receive payment of any distribution or the allotment of any other rights,  or in
order to make a determination of Shareholders for any other proper purpose. Such
date,  in any case,  shall not be prior to the close of  business on the day the
record  date is fixed and  shall be not more than 90 days and,  in the case of a
meeting of  Shareholders,  not less than ten days,  before the date on which the
meeting or particular  action  requiring such  determination  of Shareholders of
record is to be held or taken.

In lieu of fixing a record  date,  the Board of Trustees  may  provide  that the
Share  transfer books shall be closed for a stated period but not longer than 20
days.  If the Share  transfer  books are closed for the  purpose of  determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders, such
books shall be closed for at least ten days before the date of such meeting.

If no record date is fixed and the Share  transfer  books are not closed for the
determination  of  Shareholders,  (a) the record date for the  determination  of
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be at the close of  business on the day on which the notice of meeting is mailed
or the 30th day before the meeting, whichever is the closer date to the meeting;
and (b) the  record  date for the  determination  of  Shareholders  entitled  to
receive  payment of a distribution  or an allotment of any other rights shall be
the close of  business  on the day on which  the  resolution  of the  directors,
declaring the distribution or allotment of rights, is adopted.

When a  determination  of  Shareholders  entitled  to  vote  at any  meeting  of
Shareholders has been made as provided in this section, such determination shall
apply to any adjournment  thereof,  except when (i) the  determination  has been
made through the closing of the transfer  books and the stated period of closing
has expired or (ii) the meeting is  adjourned to a date more than 120 days after
the record date fixed for the  original  meeting,  in either of which case a new
record date shall be determined as set forth herein.

Section 5. SHARE LEDGER.  The Trust shall maintain at its principal office or at
the office of its  counsel,  accountants  or  transfer  agent,  an  original  or
duplicate Share ledger  containing the name and address of each  Shareholder and
the number of Shares of each class or series held by such Shareholder.

Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Board of Trustees may issue
fractional  Shares or provide for the  issuance of scrip,  all on such terms and
under such conditions as they may determine. Notwithstanding any other provision
of the Trust  Agreement or these  Bylaws,  the Board of Trustees may issue units
consisting of different  securities of the Trust.  Any such security issued in a
unit shall have the same  characteristics as any identical  securities issued by
the Trust,  except that the Board of Trustees  may provide  that for a specified
period  securities  of the Trust issued in such unit may be  transferred  on the
books of the Trust only in such unit.


<PAGE>



                                  ARTICLE VIII

                                 ACCOUNTING YEAR

The Board of Trustees shall have the power, from time to time, to fix the fiscal
year of the Trust by a duly adopted resolution.

                                   ARTICLE IX

                                  DISTRIBUTIONS

Section  1.  AUTHORIZATION.  Distributions  upon the  Shares of the Trust may be
authorized  and declared by the Board of Trustees,  subject to the provisions of
law and the Trust  Agreement.  Distributions  may be paid in cash,  property  or
Shares of the Trust, subject to the provisions of law and the Trust Agreement.

Section 2. CONTINGENCIES.  Before payment of any distributions, there may be set
aside out of any assets of the Trust  available  for  distributions  such sum or
sums as the Board of Trustees may from time to time, in its absolute discretion,
think proper as a reserve fund for contingencies,  for equalizing distributions,
for repairing or maintaining any property of the Trust or for such other purpose
as the Board of  Trustees  shall  determine  to be in the best  interest  of the
Trust, and the Board of Trustees may, in its sole discretion,  modify or abolish
any such reserve in the manner in which it was created.

                                    ARTICLE X

                                INVESTMENT POLICY

Subject to the provisions of the Trust Agreement, the Board of Trustees may from
time to time adopt,  amend,  revise or  terminate  any policy or  policies  with
respect to  investments  by the Trust as it shall deem  appropriate  in its sole
discretion.

                                   ARTICLE XI

                                      SEAL

Section 1. SEAL.  The Board of Trustees may  authorize the adoption of a seal by
the  Trust.  The seal  shall  contain  the name of the Trust and the year of its
creation  and the words  "Delaware  Statutory  Trust." The Board of Trustees may
authorize one or more duplicate seals and provide for the custody thereof.

Section 2. AFFIXING  SEAL.  Whenever the Trust is permitted or required to affix
its seal to a document,  it shall be sufficient to meet the  requirements of any
law, rule or regulation  relating to a seal to place the word "(SEAL)"  adjacent
to the  signature of the Person  authorized to execute the document on behalf of
the Trust.

                                   ARTICLE XII

                     INDEMNIFICATION AND ADVANCE OF EXPENSES

To the maximum extent  permitted by Delaware law in effect from time to time and
in  addition  to any rights set forth in the Trust  Agreement,  the Trust  shall
indemnify and,  without  requiring a preliminary  determination  of the ultimate
entitlement to  indemnification,  shall pay or reimburse  reasonable expenses in
advance of final  disposition  of a proceeding  to (a) any  individual  who is a
present or former Trustee, Manager, officer (if any), employee (if any) or agent
of the Trust and who is made a party to the  proceeding by reason of his service
in that capacity or (b) any individual  who, while a Trustee,  Manager,  officer
(if any),  employee  (if any) or agent of the Trust  and at the  request  of the
Trust,  serves or has served another  corporation,  partnership,  joint venture,
trust,  employee  benefit plan or any other  enterprise as a director,  officer,
partner or trustee  of such  corporation,  partnership,  joint  venture,  trust,
employee  benefit  plan or  other  enterprise  and  who is  made a party  to the
proceeding by reason of such Person's  service in that capacity.  The Trust may,
with the approval of its Board of Trustees,  provide  such  indemnification  and
advance for expenses to a Person who served a predecessor of the Trust in any of
the  capacities  described  in (a) or (b)  above  and to any  officer  (if any),
employee (if any) or agent of the Trust or a predecessor of the Trust.

Neither the amendment nor repeal of this Article,  nor the adoption or amendment
of any other provision of the Bylaws or Trust Agreement  inconsistent  with this
Article,  shall  apply to or  affect in any  respect  the  applicability  of the
preceding  paragraph  with  respect to any act or failure to act which  occurred
prior to such amendment, repeal, adoption or amendment.

<PAGE>

                                  ARTICLE XIII

                                WAIVER OF NOTICE

Whenever any notice is required to be given  pursuant to the Trust  Agreement or
these Bylaws or pursuant to applicable law, a waiver thereof in writing,  signed
by the Person or Persons  entitled to such notice,  whether  before or after the
time stated  therein,  shall be deemed  equivalent to the giving of such notice.
Neither the business to be  transacted at nor the purpose of any meeting need be
set forth in the waiver of notice,  unless specifically required by statute. The
attendance of any Person at any meeting  shall  constitute a waiver of notice of
such meeting, except where such Person attends a meeting for the express purpose
of objecting to the  transaction  of any business on the ground that the meeting
is not lawfully called or convened.

                                   ARTICLE XIV

                               AMENDMENT OF BYLAWS

The Board of Trustees shall have the exclusive  power to adopt,  alter or repeal
any   provision  of  these  Bylaws  and  to  make  new  Bylaws;   provided  that
notwithstanding  anything herein to the contrary, (i) any amendment,  alteration
or repeal of any  provisions of these Bylaws that require the vote of two-thirds
of the  Board of  Trustees  for the  taking  of any  action,  and any  adoption,
amendment or  alteration  of any other  provisions  of these Bylaws or the Trust
Agreement  inconsistent with such provisions,  shall require the approval of not
less than  two-thirds  of the  members  of the Board of  Trustees,  and (ii) any
amendment,  alteration or repeal of any  provisions of these Bylaws that require
the vote of a majority of the  Independent  Trustees (or a majority  vote of the
Independent Trustees) for the taking of any action, and any adoption,  amendment
or  alteration of any other  provisions  of these Bylaws or the Trust  Agreement
inconsistent with such provisions, shall require the approval of not less than a
majority of the Independent Trustees.

                                   ARTICLE XV

                       REQUESTS FOR LISTS OF SHAREHOLDERS

Section 1. GENERAL.  Any request for access to the lists of Shareholders must be
in writing setting forth with  particularity a proper purpose reasonably related
to the current  status of the Person making the request as a Shareholder  in the
Trust at the time of the  request.  The  request  must  certify  that the Person
making  the  request is doing so solely on such  Person's  own behalf and not on
behalf of or for the benefit of any other Person. If any such request is for the
purpose of communicating with Shareholders, such request shall be accompanied by
a copy of the proposed communication. The Person making the request for the list
of Shareholders  shall reimburse the Trust for all reasonable  costs incurred by
the Trust in responding  to such request.  The Trust shall have no obligation to
maintain  any list of the names or  addresses  of any  Shareholders  who are not
record  owners  of the  Shares,  including,  without  limitation,  non-objecting
beneficial owners of the Shares.

Section 2. TENDER OFFERS. The Trust will not provide the Shareholders  access to
or copies of any of the Trust's  books and records or the lists of  Shareholders
for the purpose of conducting or facilitating any tender offer or other offer or
solicitation  to buy 5% or  less  of the  outstanding  Shares  of the  Trust  (a
"MINI-TENDER OFFER") unless, in addition to compliance with all other applicable
legal  requirements,  the Person making such Mini-Tender Offer agrees in writing
to comply with all of the terms and conditions set forth herein:

     (a)  Such Mini-Tender  Offer shall afford  Shareholders  withdrawal  rights
          during the entire period the Mini-Tender Offer remains open.

     (b)  Such Mini-Tender Offer shall afford Shareholders  proration rights for
          all  Shares  of the  Trust  tendered  during  the  entire  period  the
          Mini-Tender Offer remains open.

     (c)  Such Mini-Tender  Offer shall  truthfully and completely  disclose all
          material facts pertaining to such Mini-Tender Offer, the Trust and the
          market and  prices for the Shares of the Trust that the Person  making
          the Mini-Tender Offer knows or reasonably should know.

     (d)  Such  Mini-Tender  Offer shall fully comply in all  respects  with all
          applicable federal and state laws.

     (e)  At  least  seven  business  days  prior  to  the  commencement  of any
          Mini-Tender Offer, the Persons conducting such Mini-Tender Offer shall
          deliver to the Trust copies of all written  materials  respecting such
          Mini-Tender Offer that the Person making the Mini-Tender Offer intends
          to disseminate to the Shareholders.

<PAGE>

     (f)  The Trust  shall  have the right to  require  any  Person  making  any
          Mini-Tender Offer to deliver to the Trust an opinion rendered by legal
          counsel, in form and substance satisfactory to the Trust, stating that
          such  Mini-Tender  Offer is in full  compliance  in all respects  with
          applicable federal and state laws.

Section 3. MAILING BY THE TRUST IN LIEU OF PROVIDING  SHAREHOLDER  LIST. In lieu
of providing any other form of access to the lists of Shareholders  (and subject
to any such  communication  complying with all  requirements of this instrument,
the Trust  Agreement and  applicable  law), the Trust reserves the right to mail
any such communication  (including,  without  limitation,  copies of all written
materials that a Person making a Mini-Tender Offer intends to disseminate to the
Shareholders)  to  Shareholders  on behalf of the requesting  Shareholder at the
expense of the Shareholder.

                                   ARTICLE XVI

                                   DEFINITIONS

Section 1. CERTAIN DEFINITIONS.  All terms not otherwise defined in these Bylaws
shall have the  meanings  ascribed to them in the Second  Amended  and  Restated
Trust  Agreement  of the  Trust,  as  amended  from  time  to time  (the  "TRUST
AGREEMENT").  As used in  these  Bylaws,  the  following  terms  shall  have the
meanings set forth below:

     "ENTITY"  shall  mean  any  general   partnership,   limited   partnership,
corporation,  joint venture,  trust,  business or statutory  trust,  real estate
investment trust, limited liability company, cooperative or association.

     "EXCHANGE ACT" shall have the meaning  ascribed to such term in Article II,
Section 12(a)(2) hereof.

     "FIRST   MORTGAGE   BONDS"   shall   mean   tax-exempt   participating   or
non-participating  first  mortgage  bonds  issued  by  various  state  or  local
governments or their agencies or authorities.

     "MANAGEMENT  AGREEMENT" shall mean the agreement  between the Trust and the
Manager,  as amended  from time to time,  pursuant to which the Manager  will be
engaged by the Trust to conduct the  business  and affairs of the Trust upon the
terms and conditions therein.

     "MANAGER"  shall mean such Person to which the Board of Trustees  delegates
the authority to conduct the business and affairs of the Trust in all matters as
set forth in the Management Agreement with the Manager.

     "MINI-TENDER OFFER" shall have the meaning ascribed to such term in Article
XV, Section 2 hereof.

     "MINORITY  POSITION"  shall mean a minority  position  of a First  Mortgage
Bond,  which is  subordinated  to the  credit  position  of the  holders  of the
remaining portions of such First Mortgage Bond.

     "MORTGAGE LOAN" shall mean the first mortgage and related  mortgage loan on
an  Underlying  Property  which has been  financed  with the proceeds of a First
Mortgage Bond.

     "PERSON" shall mean an individual or Entity.

     "PUBLIC  ANNOUNCEMENT"  shall  have the  meaning  ascribed  to such term in
Article II, Section 12(d)(2) hereof.

     "TAX-EXEMPT  SECURITIES"  shall mean  securities,  the income from which is
exempt  from  federal  income  taxation,  which are  rated not lower  than A1 by
Moody's Investors Service, Inc. or A+ by Standard & Poor's Ratings Group, or are
unrated but which the Manager determines are of comparable quality.

     "TRUST  AGREEMENT"  shall have the meaning ascribed to such term in Article
XVI, Section 1 hereof.

     "UNDERLYING   PROPERTIES"  shall  mean  the  properties  which  secure  the
obligations  under the Mortgage  Loans,  First Mortgage Bonds and other mortgage
investments.

Notes:  Amended and restated by vote of the Board of Trustees on  September  15,
2004 to reflect  amendments and other updates  approved since adoption of Second
Amended and Restated Bylaws on November 17, 2003.


<PAGE>


                                                                    Exhibit 31.1



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



I, Stuart J. Boesky, hereby certify that:

     1.  I have  reviewed  this  quarterly  report on Form  10-Q for the  period
         ending September 30, 2004 of CharterMac;

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

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

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

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

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

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

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

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

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



         Date:  November 4, 2004                   By:  /s/Stuart J. Boesky
                                                        -------------------
                                                        Stuart J. Boesky
                                                        Chief Executive Officer



<PAGE>

                                                                    Exhibit 31.2



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



I, Alan P. Hirmes, hereby certify that:

     1.  I have  reviewed  this  quarterly  report on Form  10-Q for the  period
         ending September 30, 2004 of CharterMac;

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

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

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

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

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

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

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

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

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



         Date:  November 4, 2004                   By:  /s/ Alan P. Hirmes
                                                        ------------------
                                                        Alan P. Hirmes
                                                        Chief Financial Officer


<PAGE>


                                                                    Exhibit 32.1



        CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
            (UNITED STATES CODE, TITLE 18, CHAPTER 63, SECTION 1350)
                  ACCOMPANYING QUARTERLY REPORT ON FORM 10-Q OF
               CHARTERMAC FOR THE QUARTER ENDED SEPTEMBER 30, 2004


In  connection  with the  Quarterly  Report on Form 10-Q of  CharterMac  for the
quarterly  period ending  September 30, 2004, as filed with the  Securities  and
Exchange  Commission  on the date hereof (the  "Report"),  Stuart J. Boesky,  as
Chief Executive  Officer of our Company,  and Alan P. Hirmes, as Chief Financial
Officer of our Company,  each hereby  certifies,  pursuant to 18 U.S.C.  Section
1350, that:


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


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



By:  /s/ Stuart J. Boesky                           By:  /s/ Alan P. Hirmes
     --------------------                                ------------------
     Stuart J. Boesky                                    Alan P. Hirmes
     Chief Executive Officer                             Chief Financial Officer
     November 4, 2004                                    November 4, 2004