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 JUNE 30, 2005


                                       OR


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



                         Commission File Number 1-13237


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


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

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


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


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

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


As of July 29, 2005,  51,479,883 shares of the Registrant's shares of beneficial
interest were outstanding.



<PAGE>


                                TABLE OF CONTENTS

                                   CHARTERMAC

                                    FORM 10-Q

<TABLE>
<CAPTION>

                                                                                                                PAGE
<S>                  <C>               <C>                                                                       <C>
PART I
                     Item 1.           Financial Statements                                                       3
                     Item 2.           Management's Discussion and Analysis of Financial Condition and
                                           Results of Operations                                                 19
                     Item 3.           Quantitative and Qualitative Disclosures about Market Risks               32
                     Item 4.           Controls and Procedures                                                   32

PART II
                     Item 1.           Legal Proceedings                                                         34
                     Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds               34
                     Item 3.           Defaults Upon Senior Securities                                           34
                     Item 4.           Submission of Matters to a Vote of Security Holders                       34
                     Item 5.           Other Information                                                         34
                     Item 6.           Exhibits                                                                  34

SIGNATURES                                                                                                       35

</TABLE>

     See accompanying notes to condensed consolidated financial statements.



                                       2
<PAGE>




ITEM 1. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>

                                                                                   June 30,        December 31,
                                                                                     2005             2004
                                                                                  -----------      -----------

                                                      ASSETS
<S>                                                                               <C>              <C>
Revenue bonds - at fair value                                                     $ 2,050,194      $ 2,100,720
Mortgage servicing rights, net                                                         75,212           32,366
Cash and cash equivalents - including restricted cash of $34,841 and $25,879          107,497           97,166
Other investments                                                                     147,488          187,506
Deferred costs - net of amortization of $22,070 and $19,635                            53,187           57,260
Goodwill                                                                              241,305          206,397
Other intangible assets - net of amortization of $29,186 and $20,847                  169,179          177,519
Loan to affiliate                                                                          --            4,600
Other assets                                                                           98,241           40,549
Investments in partnerships of consolidated non-equity partnerships                 2,721,001        2,527,455
Other assets of consolidated non-equity partnerships                                  548,072          328,559
                                                                                  -----------      -----------

Total assets                                                                      $ 6,211,376      $ 5,760,097
                                                                                  ===========      ===========

                                       LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Financing arrangements                                                          $ 1,213,541      $ 1,068,428
  Preferred shares of subsidiary (subject to mandatory repurchase)                    273,500          273,500
  Notes payable                                                                       202,890          174,454
  Accounts payable, accrued expenses and other liabilities                             57,970           35,364
  Deferred income                                                                      72,180           55,572
  Deferred tax liability                                                               15,159           29,898
  Distributions payable                                                                38,886           38,859
  Notes payable and other liabilities of consolidated non-equity partnerships       1,354,678        1,307,093
                                                                                  -----------      -----------

Total liabilities                                                                   3,228,804        2,983,168
                                                                                  -----------      -----------

Minority interests in consolidated subsidiaries                                       269,706          271,419
                                                                                  -----------      -----------
Preferred shares of subsidiary (not subject to mandatory repurchase)                  104,000          104,000
                                                                                  -----------      -----------
Partners' interests in consolidated non-equity partnerships                         1,715,286        1,501,519
                                                                                  -----------      -----------

Commitments and contingencies

Shareholders' equity:
  Beneficial owners' equity - Convertible CRA Shareholders; no par value
   (6,552 shares issued and outstanding in 2005 and 2004)                             107,227          108,745
  Beneficial owners' equity - special preferred voting shares; no par value
   (15,086 shares issued and outstanding in 2005 and 15,172 shares issued and
   outstanding in 2004)                                                                   151              152
  Beneficial owners' equity - other common shareholders; no par value
   (100,000 shares authorized; 51,630 shares issued and 51,413 outstanding in
   2005 and 51,363 shares issued and 51,229 outstanding in 2004)                      765,439          773,165
  Restricted shares granted                                                            (6,508)          (7,922)
  Treasury shares of beneficial interest - common, at cost (217 shares in
   2005 and 134 shares in 2004)                                                        (4,916)          (2,970)
  Accumulated other comprehensive income                                               32,187           28,821
                                                                                  -----------      -----------
Total shareholders' equity                                                            893,580          899,991
                                                                                  -----------      -----------

Total liabilities and shareholders' equity                                        $ 6,211,376      $ 5,760,097
                                                                                  ===========      ===========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.



                                       3
<PAGE>



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

<TABLE>
<CAPTION>

                                                                                 Three Months Ended           Six Months Ended
                                                                                      June 30,                    June 30,
                                                                              -----------------------     -----------------------
                                                                                2005           2004          2005          2004
                                                                              ---------     ---------     ---------     ---------
<S>                                                                           <C>           <C>           <C>           <C>
Revenues:
  Revenue bond interest income                                                $  37,283     $  32,487     $  73,739     $  64,338
  Fee income:
   Mortgage banking                                                               7,411         4,687        11,492         7,803
   Fund sponsorship                                                              14,719        10,507        18,030        17,287
   Credit enhancement                                                             2,622         2,929         5,061         4,826
  Other revenues                                                                  9,820         3,606        17,088         6,275
  Revenues of consolidated non-equity partnerships                                7,152         2,790        12,054         2,790
                                                                              ---------     ---------     ---------     ---------
     Total revenues                                                              79,007        57,006       137,464       103,319
                                                                              ---------     ---------     ---------     ---------

Expenses:
  Interest expense                                                               15,029         7,511        25,841        14,097
  Interest expense of consolidated non-equity partnerships                        6,133         6,689        13,022         6,689
  Interest expense - distributions to preferred shareholders of subsidiary        4,725         4,725         9,449         9,449
  Change in fair value of interest rate derivatives                                  --        (3,361)           --            26
  Salaries and benefits                                                          16,956        13,050        33,609        26,932
  General and administrative                                                     15,620        11,256        25,211        17,605
  Depreciation and amortization                                                   9,469         7,796        17,165        14,689
  Loss on impairment of assets                                                    1,098            --         1,098            --
  Other expenses of consolidated non-equity partnerships                         14,333         8,481        25,627         8,481
                                                                              ---------     ---------     ---------     ---------
     Total expenses                                                              83,363        56,147       151,022        97,968
                                                                              ---------     ---------     ---------     ---------

(Loss) income before other income                                                (4,356)          859       (13,558)        5,351

Equity and other income                                                             926           565         1,450         1,120
Loss on investments held by consolidated non-equity partnerships                (66,623)      (48,677)     (116,562)      (48,677)
Gain on sale of loans                                                             4,317         3,330         6,021         5,075
Gain (loss) on repayment of revenue bonds                                           912           (38)          903           222
                                                                              ---------     ---------     ---------     ---------
Loss before allocations and income taxes                                        (64,824)      (43,961)     (121,746)      (36,909)

Income allocated to preferred shareholders of subsidiary                         (1,556)         (830)       (3,112)         (830)
Income allocated to minority interests in consolidated subsidiaries              (7,881)       (9,797)      (13,946)      (12,820)
Loss allocated to partners of consolidated non-equity partnerships               93,370        71,818       164,333        71,818
                                                                              ---------     ---------     ---------     ---------

Income before income taxes                                                       19,109        17,230        25,529        21,259
Income tax benefit                                                                  335         6,973         8,700         9,362
                                                                              ---------     ---------     ---------     ---------

Net income                                                                    $  19,444     $  24,203     $  34,229     $  30,621
                                                                              =========     =========     =========     =========

Allocation of net income to:
  Common shareholders                                                         $  17,243     $  20,721     $  30,353     $  26,170
  Convertible CRA shareholders                                                    2,201         3,482         3,876         4,451
                                                                              ---------     ---------     ---------     ---------
     Total for shareholders                                                   $  19,444     $  24,203     $  34,229     $  30,621
                                                                              =========     =========     =========     =========

Net income per share:
  Basic                                                                       $    0.34     $    0.47     $    0.59     $    0.59
                                                                              =========     =========     =========     =========
  Diluted                                                                     $    0.33     $    0.46     $    0.59     $    0.59
                                                                              =========     =========     =========     =========

Weighted average shares outstanding:
  Basic                                                                          57,890        52,017        57,856        51,805
                                                                              =========     =========     =========     =========
  Diluted                                                                        58,274        52,359        58,271        52,193
                                                                              =========     =========     =========     =========

Dividends declared per share                                                  $    0.41     $    0.38     $    0.82     $    0.75
                                                                              =========     =========     =========     =========

</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>

                                                                     Six Months Ended
                                                                          June 30,
                                                                  -----------------------
                                                                    2005          2004
                                                                  ---------     ---------
<S>                                                               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                     $  34,229     $  30,621
   Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
   Gain on repayment of revenue bonds                                  (903)         (222)
   Loss on impairment of revenue bond                                 1,098            --
   Depreciation and amortization                                     17,165        14,689
   Income allocated to preferred shareholders of subsidiary           3,113           830
   Income allocated to minority interests in consolidated
    subsidiaries                                                     13,946        12,820
   Non-cash compensation expense                                      3,836         8,598
   Other non-cash expense                                             1,448           286
   Deferred taxes                                                    (9,815)       (9,446)
   Changes in operating assets and liabilities:
    Mortgage servicing rights                                        (7,134)       (4,571)
    Mortgage loans receivable                                       (33,539)      (90,879)
    Loan to affiliate                                                 4,600        (3,122)
    Deferred income                                                   5,216        11,219
    Other assets                                                    (12,599)        6,554
    Accounts payable, accrued expenses and other liabilities         10,040        (9,119)
                                                                  ---------     ---------
Net cash provided by (used in) operating activities               $  30,701     $ (31,742)
                                                                  ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from revenue bonds and notes                          $  34,357     $  47,484
   Revenue bond acquisitions and fundings                          (166,781)     (164,208)
   Acquisitions, net of cash acquired                                  (290)         (834)
   Loan to Capri Capital                                             (6,000)           --
   Advances to partnerships                                         (57,377)      (87,011)
   Collection of advances to partnerships                            66,542        72,316
   Deferred investment acquisition costs                               (259)       (1,136)
   Decrease (increase) in cash and cash equivalents -
    restricted                                                       (8,285)        1,054
   Other investing activities                                         4,793          (543)
                                                                  ---------     ---------

Net cash used in investing activities                             $(133,300)    $(132,878)
                                                                  ---------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions to shareholders                                  $ (47,802)    $ (40,567)
   Distributions to preferred shareholders of subsidiary             (3,113)           --
   Distributions to Special Common Unit holders                     (17,303)      (11,787)
   Proceeds from financing arrangements                             260,325       127,569
   Repayments of financing arrangements                            (115,213)      (67,625)
   Increase in notes payable                                         28,435       100,548
   Issuance of common shares                                            771       105,541
   Issuance of preferred shares                                          --       101,920
   Retirement of special preferred voting shares                         (1)          (10)
   Treasury stock purchases                                          (1,946)       (1,328)
   Deferred financing costs                                            (185)           (6)
                                                                  ---------     ---------

Net cash provided by financing activities                           103,968       314,255
                                                                  ---------     ---------

Net increase in cash and cash equivalents                             1,369       149,635
                                                                  ---------     ---------

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

Cash and cash equivalents at the end of the period                $  72,656     $ 207,892
                                                                  ---------     ---------

</TABLE>

                                   (continued)



                                       5
<PAGE>



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

<TABLE>
<CAPTION>

                                                                                        Six Months Ended
                                                                                            June 30,
                                                                                   ---------------------------
                                                                                      2005            2004
                                                                                   -----------     -----------
<S>                                                                                <C>             <C>
SUPPLEMENTAL INFORMATION:

Acquisition activity:

   Conversion of note receivable                                                   $    70,000
   Issuance of subsidiary equity                                                         7,500
   Purchase of minority interest                                                        (4,200)
   Increase in mortgage servicing rights                                               (40,974)
   Increase in cash and cash equivalents - restricted                                     (676)
   Increase in other investments                                                        (7,787)
   Increase in goodwill                                                                (34,854)
   Increase in other assets                                                             (6,239)
   Increase in accounts  payable,  accrued  expenses  and other
   liabilities                                                                           5,549
   Increase in deferred income                                                          11,391
                                                                                   -----------

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

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

    Increase in revenue bonds                                                                      $    31,101
    Increase in investments in partnerships of consolidated
      non-equity partnerships                                                                       (2,301,697)
    Increase in other assets of consolidated non-equity partnerships                                  (249,266)
    Increase in notes payable and other liabilities of consolidated
      non-equity partnerships                                                                        1,119,860
    Increase in partners' interests of consolidated  non-equity
      partnerships                                                                                   1,400,002
                                                                                                   -----------
                                                                                                   $        --
                                                                                                   ===========

Restricted share grants                                                            $     1,209     $        59
                                                                                   ===========     ===========
Conversion of SCUs to common shares                                                $     1,903     $    17,789
                                                                                   ===========     ===========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.



                                       6
<PAGE>



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



NOTE 1 - BASIS OF PRESENTATION

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

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

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

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

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

Certain  amounts from prior years have been  reclassified to conform to the 2005
presentation.

NOTE 2 - ACQUISITIONS

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

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

The  acquisition of CCLP was accounted for as a purchase and,  accordingly,  the
results of  operations  are  included in the  condensed  consolidated  financial
statements from the  acquisition  date. We allocated our cost of the acquisition
on the basis of the estimated fair values of the assets and liabilities assumed.
The excess of the  purchase  price over the net of the  amounts  assigned to the
assets  acquired  and   liabilities   assumed  was  recognized  as  goodwill  of
approximately $32.2 million.  Certain allocations are preliminary as of June 30,
2005,  including the  allocation  to goodwill,  and will be refined as we gather
further  information  on fair value and  determine the fair values of intangible
assets acquired.

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



                                       7
<PAGE>



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



NOTE 3 - REVENUE BONDS

The following table summarizes our revenue bond portfolio:

<TABLE>
<CAPTION>

                                                   June 30,         December 31,
          (In thousands)                             2005               2004
----------------------------------                -----------       ------------
<S>                                               <C>               <C>
Unamortized cost basis                            $ 2,224,140       $ 2,098,944
Gross unrealized gains                                 48,962            50,716
Gross unrealized losses                               (13,857)          (14,653)
                                                  -----------       -----------
Subtotal/fair value                                 2,259,245         2,135,007
  Less: eliminations (1)                             (209,051)          (34,287)
                                                  -----------       -----------
Total fair value per balance sheet                $ 2,050,194       $ 2,100,720
                                                  ===========       ===========

</TABLE>

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

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

<TABLE>
<CAPTION>

                                    Less than        12 Months
(Dollars in thousands)              12 Months         or More           Total
-----------------------             ---------        ----------       ---------
<S>                                        <C>              <C>              <C>
Number of bonds                            44               43               87
Fair value                          $ 438,837        $ 267,588        $ 706,425
Gross unrealized loss               $  (6,848)       $  (7,009)       $ (13,857)

</TABLE>

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

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

<TABLE>
<CAPTION>

                                                                     Weighted
                                 Outstanding                          Average
       (In thousands)            Bond Amount       Fair Value      Interest Rate
---------------------------     -------------     -------------    -------------
<S>                              <C>               <C>                 <C>
Due in less than one year        $    13,622       $    11,800         8.52%
Due between one and five
   years                              20,389            20,254         6.08
Due after five years               2,206,013         2,227,191         6.73
                                 -----------       -----------       ------
Total / Weighted Average           2,240,024         2,259,245         6.74%
                                                                     ======
   Less: eliminations (1)           (223,181)         (209,051)
                                 -----------       -----------
Total                            $ 2,016,843       $ 2,050,194
                                 ===========       ===========

</TABLE>

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



                                       8
<PAGE>



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



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

<TABLE>
<CAPTION>

                                                     Weighted        Weighted
                                                      Average         Average
                                         Face      Construction      Permanent
           (In thousands)               Amount     Interest Rate   Interest Rate
-------------------------------       ----------   -------------   -------------
<S>                                   <C>              <C>             <C>
 Construction/rehabilitation
   properties                         $  155,230       5.49%           6.48%
 Additional funding of existing
   bonds                              $   11,551       5.42%           6.61%

</TABLE>

During the six  months  ended  June 30,  2005,  six  revenue  bonds were  repaid
generating  net  proceeds  of  approximately  $19.4  million.  The  bonds had an
aggregate net book value of approximately $18.5 million,  resulting in a gain of
approximately $903,000.

At June 30, 2005,  $2.1 billion of revenue bonds were  securitized or pledged as
collateral for our borrowing  facilities.  Fourteen of these bonds,  with a fair
value of approximately  $183.4 million, are eliminated in consolidation as noted
in the tables above.

In May 2005,  an affiliate of ours  foreclosed  upon the  properties  underlying
three of our  revenue  bonds  which  had an  aggregate  carrying  value of $33.9
million as of June 30, 2005. We have obtained  valuations as of the  foreclosure
date  indicating  that the fair  values of the  properties  are in excess of our
carrying  amounts.  As a result,  management  has  concluded  that  there was no
impairment  related  to  these  foreclosures.  We  are  actively  marketing  the
properties  for sale and, as such,  the properties are classified as Real Estate
Owned - Held for Sale within Other Assets on the condensed  consolidated balance
sheet.

See also Note 10 regarding  the status of other  revenue  bonds in our portfolio
for  which we have  assumed  the  general  partner  interest  in the  associated
property-level  partnership  and the  impairment  charge  related to one revenue
bond.

NOTE 4 - OTHER INVESTMENTS

Investments other than revenue bonds consisted of:

<TABLE>
<CAPTION>

                                                        June 30,    December 31,
                   (In thousands)                         2005         2004
--------------------------------------------------      --------    -----------
<S>                                                     <C>           <C>
Investment in equity interests in LIHTC properties      $ 30,730      $ 40,132
Investment in properties under development                 3,395         3,157
Investment in ARCap                                       19,054        19,054
Capri loan                                                20,000        84,000
Mortgage loans receivable                                 61,019        27,480
Other investments                                         13,290        13,683
                                                        --------      --------
   Total other investments                              $147,488      $187,506
                                                        ========      ========

</TABLE>

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



                                       9
<PAGE>



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



NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS

A. GOODWILL

The following table provides information regarding goodwill by segment:

<TABLE>
<CAPTION>

                                           Fund          Mortgage
        (In thousands)                   Management      Banking        Total
-----------------------------            ----------     ---------     ----------
<S>                                      <C>            <C>           <C>
Balance at December 31, 2004             $ 200,153      $   6,244     $ 206,397
Additions (see Note 2)                        --           35,700        35,700
Reductions                                    (792)          --            (792)
                                         ---------      ---------     ---------
Balance at June 30, 2005                 $ 199,361      $  41,944     $ 241,305
                                         =========      =========     =========

</TABLE>

The reduction in Fund  Management  goodwill  pertained to the conversion of SCUs
(see Note 8), the deferred tax impact of which served to  effectively  lower the
purchase price of Related Capital Company LLC ("RCC").

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

B. OTHER INTANGIBLE ASSETS

The components of other identified intangible assets are as follows:

<TABLE>
<CAPTION>

                                           Estimated
                                             Useful
                                              Life             Gross                 Accumulated
             (In thousands)                (in Years)     Carrying Amount            Amortization                   Net
---------------------------------------    ----------  ----------------------    ----------------------    ----------------------
                                                       June 30,   December 31,   June 30,   December 31,   June 30,   December 31,
                                                         2005        2004          2005        2004          2005        2004
                                                       --------   -----------    --------   -----------    --------   -----------
<S>                                             <C>    <C>          <C>          <C>          <C>          <C>          <C>
Amortized identified intangible assets:
  Trademarks and trade names                    21.0   $ 25,100     $ 25,100     $  1,935     $  1,338     $ 23,165     $ 23,762
  Partnership service
   contracts                                     9.4     47,300       47,300        8,189        5,661       39,111       41,639
  Transactional relationships                   16.7    103,000      103,000       13,650        9,436       89,350       93,564
  General partner interests                      9.0      5,100        5,100          918          634        4,182        4,466
  Joint venture developer
   relationships                                 5.0      4,800        4,800        1,555        1,075        3,245        3,725
  Other identified intangibles                   9.3      4,427        4,427        2,940        2,703        1,487        1,724
                                             -------   --------     --------     --------     --------     --------     --------
Subtotal/weighted average life                  14.5    189,727      189,727       29,187       20,847      160,540      168,880
                                             =======

Unamortized identified intangible assets:
  Mortgage banking licenses                               8,639        8,639           --           --        8,639        8,639
                                                       --------     --------     --------     --------     --------     --------

Total identified intangible assets                     $198,366     $198,366     $ 29,187     $ 20,847     $169,179     $177,519
                                                       ========     ========     ========     ========     ========     ========

                                                                                   2005         2004
                                                                                 --------     --------
Amortization expense recorded
  for the six months ended June 30,                                              $  8,340     $  8,340
                                                                                 ========     ========

</TABLE>

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

NOTE 6 - FINANCING ARRANGEMENTS AND NOTES PAYABLE

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

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



                                       10
<PAGE>



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



Our $91.0 million Capri acquisition line was extended and will expire on October
31, 2005.

NOTE 7 - DERIVATIVE INSTRUMENTS

As of June 30,  2005,  we had  interest  rate swaps with an  aggregate  notional
amount  of  $561.4  million,  which are  designated  as cash flow  hedges on the
variable interest payments on our floating rate securitizations. These swaps are
recorded at fair market  value,  with changes in fair market  value  recorded in
accumulated other comprehensive income to the extent the hedges are effective in
achieving offsetting cash flows.

We entered into our first swap with a notional  amount of $50.0 million in 2001.
We entered into several  additional swap agreements  during 2003 and 2004, which
had  inception  dates of  January  2005 and  notional  amounts  totaling  $450.0
million.  We also entered  into four swaps with  aggregate  notional  amounts of
approximately  $61.4 million during 2004 and 2005, which went into effect in the
same periods.  During the period between the dates we entered into the swaps and
the effective dates, we measured their effectiveness using the hypothetical swap
method.  During the period  ended  March 31,  2004,  we  recorded  an expense of
approximately  $3.4 million  representing  the ineffective  portion of the swaps
which was completely  reversed  during the second quarter of 2004.  There was no
ineffectiveness  in the hedging  relationship of any of our swaps during the six
months ended June 30, 2005.

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

At June 30, 2005, those interest rate swaps for which we were in a net liability
position  were  recorded  in  accounts  payable,   accrued  expenses  and  other
liabilities in the amount of $8.3 million. Those swaps for which we are in a net
asset  position  are  recorded  in other  assets in the amount of $1.1  million.
Interest  expense includes  approximately  $1.2 million and $2.9 million for the
three and six  months  ended  June 30,  2005,  respectively,  and  approximately
$364,000  and $1.0  million  for the three and six months  ended June 30,  2004,
respectively, for amounts paid or payable under the swap agreements.

We estimate that  approximately  $932,000 of the net unrealized loss included in
accumulated  other  comprehensive  income  will be  reclassified  into  interest
expense within the next twelve months.

NOTE 8 - MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES

Minority interests in consolidated subsidiaries consisted of the following:

<TABLE>
<CAPTION>

                       (in thousands)                           June 30, 2005    December 31, 2004
-------------------------------------------------------------   -------------    -----------------
<S>                                                               <C>                <C>
Convertible Special Common Units ("SCUs") of a subsidiary         $262,220           $267,025
Convertible Special Membership Units ("SMUs") of a subsidiary        7,486                 --
CMC                                                                     --              4,394
                                                                  --------           --------

Total                                                             $269,706           $271,419
                                                                  ========           ========

</TABLE>

Income allocated to minority interests was as follows:

<TABLE>
<CAPTION>

                                    Three Months                 Six Months
                                       Ended                       Ended
                                      June 30,                    June 30,
                               ---------------------       ---------------------
(in thousands)                   2005          2004          2005          2004
                               -------       -------       -------       -------
<S>                            <C>           <C>           <C>           <C>
Convertible SCUs               $ 7,826       $ 9,537       $13,891       $12,455
Convertible SMUs                    55            --            55            --
CMC                                 --           260            --           365
                               -------       -------       -------       -------

Total                          $ 7,881       $ 9,797       $13,946       $12,820
                               =======       =======       =======       =======

</TABLE>

The convertible  SMUs were issued in connection with the CCLP  acquisition.  The
minority  interest in CMC was  purchased  during the first  quarter of 2005 (See
Note 2).



                                       11
<PAGE>



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



In the second quarter of 2005, the holders of 86,000 SCUs converted the units to
an equivalent number of common shares.

NOTE 9 - RELATED PARTY TRANSACTIONS

General and administrative expense includes shared services fees paid or payable
to The Related  Companies,  L.P.  ("TRCLP").  These fees  totaled  $123,000  and
$262,000  for the three and six months ended June 30,  2005,  respectively,  and
$917,000  and $1.9  million  for the three and six months  ended June 30,  2004,
respectively.

In  addition,  a  subsidiary  of  TRCLP  earned  fees  for  performing  property
management  services for various  properties  held in investment  funds which we
manage.  These  fees,  which are  included  in other  expenses  of  consolidated
non-equity partnerships, totaled approximately $822,000 and $1.8 million for the
three and six  months  ended  June 30,  2005,  respectively,  and  approximately
$661,000 for the three and six months ended June 30, 2004.

We collect asset management, incentive management and expense reimbursement 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  approximately  $635,000  and $1.5 million for the
three and six  months  ended  June 30,  2005,  respectively,  and  approximately
$768,000  and $1.3  million  for the three and six months  ended June 30,  2004,
respectively.

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

NOTE 10 - PRS

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

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

In April 2005, affiliates of ours acquired by assignment the general partnership
interests owned by PRS in seven of the "PRS Partnerships" indicated in the table
below.  Also in April,  affiliates of ours  acquired by  assignment  the general
partnership  interests owned by CRG in five of the "CRG Partnerships"  indicated
in the table below.  We sought control of the CRG  Partnerships  because PRS was
the construction  general  contractor for those  partnerships and PRS' financial
difficulties caused construction  finance shortfalls that have created liquidity
problems  for those  partnerships.  We have  agreed in  principle,  among  other
things,  to  provide  a $5.0  million  revolving  line of  credit  to be used to
stabilize  the CRG  Partnerships  which will be  collateralized  by  contractual
rights of CRG and its  affiliates to receive fees and other  consideration.  The
agreement also provides that the general partnership  interests will be returned
to CRG if they provide us with a letter of credit to secure advances made.

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



                                       12
<PAGE>



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



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

Our potential exposure falls into three categories as follows:

o    CASH REQUIRED TO BRING THE PROPERTIES TO BREAK-EVEN OPERATION - Our current
     estimate  of the  maximum  amount of cash that may need to be  provided  to
     bring the properties to break-even operation, taking into account delays in
     construction,  is approximately $10.0 million.  This estimate is based upon
     our initial  analyses and  information  provided by the developer,  and may
     increase due to unforeseen construction delays and other factors, while the
     amount may be reduced by additional  contributions  by investors (which may
     generate   additional  tax  credits),   reserves  at  the  property  level,
     syndication of state tax credits or other  factors.  Through June 30, 2005,
     we had  advanced  $1.6 million to the  partnerships.  These  advances,  and
     additional loans, will be assessed  periodically for collectibility and the
     impact  on the  potential  impairment  of  existing  revenue  bonds.  Given
     existing  loan-to-value  ratios and the  variability  of the  likelihood of
     funding, we can not yet determine the ultimate amount of any such loans. At
     present, we do not anticipate that any such loans would require a charge to
     expense.

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

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

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

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



                                       13
<PAGE>



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



The partnerships in question are summarized as follows:

<TABLE>
<CAPTION>

                                                                                                       (In thousands)
                               CharterMac       RCC                                                  Loan      Fari Value of
                                Holds or     Sponsored     Included                    Third       Amounts        Revenue
                                WillHold      Fund is         in           RCC        Parties     Upon Full        Bonds
                                Revenue       Equity       Guaranteed    Holds GP     Provided       Draw      Oustanding at
                    Number        Bond        Partner        Funds       Interest      Equity        Down      June 30, 2005
                   --------    ----------    ----------    ----------    ---------    --------    ----------   -------------
<S>                   <C>          <C>           <C>           <C>           <C>          <C>     <C>           <C>
PRS
  PARTNERSHIPS
Construction          5            5             4             3             2            1       $  58,470     $   37,454
Lease Up              8            7             4             2             4            4          91,400         88,615
Rehab                 2            2             1             1             1            1          30,400         29,798
Stabilized            2            2            --            --            --            2          18,835         18,816
Subtotal PRS
  Deals              17           16             9             6             7            8         199,105        174,683
                   ---------------------------------------------------------------------------------------------------------

CRG
  PARTNERSHIPS
Construction          2            2             2            --             2           --          17,680             --
Lease Up              3            3             3             2            --           --           8,300          7,792
Rehab                 3            3             3             3             3           --          71,650         68,598
Stabilized           --           --            --            --            --           --              --             --
                   ---------------------------------------------------------------------------------------------------------
Subtotal CRG
  Deals               8            8             8             5             5           --          97,630         76,390
                   ---------------------------------------------------------------------------------------------------------

Total                25           24            17            11            12            8       $ 296,735      $ 251,073
                   =========================================================================================================

</TABLE>

NOTE 11 - COMPREHENSIVE INCOME

Comprehensive  income for the six months  ended June 30,  2005 and 2004,  was as
follows:

<TABLE>
<CAPTION>

                                                                   Six Months Ended
                                                                       June 30,
                                                                ----------------------
                        (In thousands)                            2005          2004
------------------------------------------------------------    --------      --------
<S>                                                             <C>           <C>
Net income                                                      $ 34,229      $ 30,621
Net unrealized gain (loss) on interest rate derivatives             (963)        3,266
Net unrealized gain on marketable securities                          52          --
Net unrealized gain (loss) on revenue bonds:
   Unrealized gain (loss) during the period                        5,180        (8,635)
   Reclassification adjustment for net gain included in net
   income                                                           (903)         (222)
                                                                --------      --------
Comprehensive income                                            $ 37,595      $ 25,030
                                                                ========      ========

</TABLE>

NOTE 12 - EARNINGS PER SHARE

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

<TABLE>
<CAPTION>

                                            Three Months Ended June 30, 2005    Six Months Ended June 30, 2005
                                            --------------------------------   --------------------------------
(In thousands, except per share amounts)    Income       Shares    Per Share   Income      Shares     Per Share
----------------------------------------    -------     -------    ---------   -------     -------    ---------
<S>                                         <C>         <C>         <C>        <C>          <C>        <C>
Basic EPS                                   $19,444      57,890     $  0.34    $34,229      57,856     $  0.59
                                                                    =======                            =======
Effect of dilutive securities                    --         384                     --         415
                                            -------     -------                -------     -------
Diluted EPS                                 $19,444      58,274     $  0.33    $34,229      58,271     $  0.59
                                            =======     =======     =======    =======     =======     =======

</TABLE>



                                       14
<PAGE>



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



<TABLE>
<CAPTION>

                                            Three Months Ended June 30, 2004    Six Months Ended June 30, 2004
                                            --------------------------------   --------------------------------
                                            Income       Shares    Per Share   Income      Shares     Per Share
                                            -------     -------    ---------   -------     -------    ---------
<S>                                         <C>         <C>         <C>        <C>         <C>         <C>
Basic EPS                                   $24,203      52,017     $  0.47    $30,621      51,805     $  0.59
                                                                    =======                            =======
Effect of dilutive securities                    --         342                     --         388
                                            -------     -------                -------     -------
Diluted EPS                                 $24,203      52,359     $  0.46    $30,621      52,193     $  0.59
                                            =======     =======     =======    =======     =======     =======

</TABLE>

The number of shares includes common and Convertible Community  Reinvestment Act
Preferred Shares ("Convertible CRA Shares"),  as the Convertible CRA Shares have
the same economic benefits as common shares.

NOTE 13 - BUSINESS SEGMENTS

We operate in four business segments:

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

2.   Fund Management, which includes:

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

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

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

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

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

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

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



                                       15
<PAGE>



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



The following table provides more information regarding our segments:

<TABLE>
<CAPTION>

                                                     Three Months Ended           Six Months Ended
                                                          June 30,                    June 30,
                                                   -----------------------     -----------------------
             (In thousands)                          2005          2004          2005           2004
                                                   ---------     ---------     ---------     ---------
<S>                                                <C>           <C>           <C>           <C>
REVENUES
   Portfolio Investing                             $  42,300     $  33,223   $    82,498   $    66,766
   Fund Management                                    33,507        26,202        51,024        37,844
   Mortgage Banking (1)                               11,562         6,656        17,432        10,536
   Non-equity Partnerships (2)                         7,152         2,790        12,054         2,790
   Elimination of intersegment transactions          (15,514)      (11,865)      (25,544)      (14,617)
                                                   ---------     ---------   -----------   -----------
Consolidated                                       $  79,007     $  57,006   $   137,464   $   103,319
                                                   =========     =========   ===========   ===========

NET INCOME BEFORE ALLOCATIONS TO EQUITY HOLDERS
   Portfolio Investing                             $  24,204     $  27,561   $    50,538   $    47,943
   Fund Management                                     4,731         2,705          (688)       (5,374)
   Mortgage Banking (1)                                4,804         2,879         3,706         3,439
   Non-equity Partnerships (2)                            --            --            --            --
   Elimination of intersegment transactions             (468)         (563)       (1,520)       (1,650)
                                                   ---------     ---------   -----------   -----------
Consolidated                                          33,271        32,582        52,036        44,358

   Income allocated to minority interests             (7,881)       (9,797)      (13,946)      (12,820)
   Income allocated to preferred shareholders         (6,281)       (5,555)      (12,561)      (10,279)
   Income tax benefit                                    335         6,973         8,700         9,362
                                                   ---------     ---------   -----------   -----------
Consolidated net income                            $  19,444     $  24,203   $    34,229   $    30,621
                                                   =========     =========   ===========   ===========

DEPRECIATION AND AMORTIZATION
   Portfolio Investing                             $   1,192     $     939   $     2,153   $     1,751
   Fund Management                                     4,614         4,607         9,212         9,239
   Mortgage Banking (1)                                3,663         2,250         5,800         3,699
   Non-equity Partnerships (2)                            --            --            --            --
   Elimination of intersegment transactions               --            --            --            --
                                                   ---------     ---------   -----------   -----------
Consolidated                                       $   9,469     $   7,796   $    17,165   $    14,689
                                                   =========     =========   ===========   ===========

IDENTIFIABLE ASSETS AT END OF PERIOD
   Portfolio Investing                                                       $ 4,960,264   $ 4,524,793
   Fund Management                                                               804,765       809,102
   Mortgage Banking (1)                                                          317,841       176,924
   Non-equity Partnerships (2)                                                 3,269,073     2,550,963
   Elimination of intersegment balances                                       (3,140,567)   (2,614,356)
                                                                             -----------   -----------
Consolidated                                                                 $ 6,211,376   $ 5,447,426
                                                                             ===========   ===========

</TABLE>

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



                                       16
<PAGE>



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



NOTE 14 - COMMITMENTS AND CONTINGENCIES

FORWARD TRANSACTIONS

At June 30, 2005, our Mortgage Banking  subsidiaries had forward  commitments of
approximately  $272.2  million for mortgages to be funded in 2005 and later.  As
each lending  commitment has an associated sale  commitment,  the fair values of
each  offset  and,  as a  result,  we  record  no  asset  or  liability  for the
commitments.  In addition,  those subsidiaries had commitments to sell mortgages
totaling $293.8 million.  Approximately  $61.0 million of this amount was funded
as of June 30,  2005 and is  included in Other  Investments  as  Mortgage  Loans
Receivable. The balance of approximately $232.8 million is to be funded later in
2005.

We have entered into  transactions  to purchase  revenue  bonds.  The agreements
require  us,  at  the  earlier  of  stabilization  or  conversion  to  permanent
financing,  to  acquire  Series A and  Series B revenue  bonds at  predetermined
prices and interest  rates.  We are obligated to purchase the revenue bonds only
if construction is completed. We are obligated to buy the Series B revenue bonds
only if, at the date the Series A bonds are stabilized, the property's cash flow
is  sufficient  to provide debt service  coverage of 1.15x for both the Series A
and B bonds.  During the construction  period, a third party lender will advance
funds to the developer, as needed, at a floating rate. These forward commitments
create derivative  instruments under SFAS No. 133, which have been designated as
a cash  flow  hedge of the  anticipated  funding  of the  revenue  bonds and are
recorded at fair value, with changes in fair value recorded in other accumulated
comprehensive  income until the revenue  bonds are funded.  The total  potential
amount we could be required to fund is $174.6 million.

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

MORTGAGE BANKING LOSS SHARING AGREEMENT

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

Our  maximum  exposure  at  June  30,  2005,  pursuant  to this  agreement,  was
approximately  $940.2  million,  although  this amount is not  indicative of our
actual  potential  losses.  We maintain an  allowance  for loan losses for loans
originated  under  the  Fannie  Mae  DUS  product  line  at  a  level  that,  in
management's  judgment, is adequate to provide for estimated losses. At June 30,
2005, that reserve was approximately  $9.6 million,  which we believe represents
our actual  potential  losses at that time.  At the current  time,  unlike loans
originated  for  Fannie  Mae DUS  program,  we do not share the risk of loss for
loans we originate  for Freddie Mac or FHA. We have,  however,  been approved to
participate in a new Freddie Mae program, which also involves risk sharing.

Our Mortgage  Banking  subsidiaries  maintained,  as of June 30, 2005,  treasury
notes of approximately $14.2 million and a money market account of approximately
$1.2 million, which is included in cash and cash  equivalents-restricted  in the
condensed  consolidated  balance  sheet,  to satisfy  the Fannie Mae  collateral
requirements of $14.6 million.

MORTGAGE POOL CREDIT INTERMEDIATION

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

We  performed  due  diligence  on  each  property  in  the  pool,  including  an
examination  of  loan-to-value  and debt service  coverage both on a current and
"stressed"  basis. We analyzed the portfolio on a "stressed" basis by increasing
capitalization  rates and assuming an increase in the low floater bond rate.  As



                                       17
<PAGE>



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



of June 30, 2005, the credit  enhanced  properties  are performing  according to
their contractual obligations and we do not anticipate any losses to be incurred
on this  guaranty.  Should our analysis of risk of loss change in the future,  a
provision for probable loss might be required pursuant to SFAS No. 5, ACCOUNTING
FOR CONTINGENCIES.

YIELD TRANSACTIONS

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

Total potential exposure pursuant to these transactions is approximately  $581.6
million,  assuming there is no return  whatsoever by the funds. We have analyzed
the expected  operations of the  underlying  properties  and believe there is no
risk of loss at this time as we have never yet been called upon to make payments
under the guarantees.  Should our analysis of risk of loss change in the future,
a provision  for possible  losses might be required  pursuant to SFAS No. 5. The
fair value of these  obligations,  representing  the  deferral of the fee income
over the obligation periods,  was $20.0 million as of June 30, 2005. This amount
is included in deferred  income on our  condensed  consolidated  balance  sheet.
Refer to Note 10 regarding potential exposure under existing obligations.

Some of the local  partnerships have financed their properties with the proceeds
of our revenue  bonds.  In these cases,  the Primary  Obligor has required  that
those  revenue  bonds be  deposited  into a trust  pursuant to which the revenue
bonds were divided into senior and subordinated interests with approximately 50%
of each  revenue  bond being  subordinated.  We have  financed  the senior trust
interest  and a portion of  certain of the  subordinate  trust  interests  using
credit  enhancement  from  the  Primary  Obligor  as part of the  Merrill  Lynch
P-FLOATs/RITESSM  program.  We use the remaining  subordinate trust interests as
collateral in the Merrill Lynch  P-FLOATs/RITESSM  program.  In connection  with
these  transactions,  we have posted $64.0 million as collateral  with a Primary
Obligor in the form of either cash or revenue bonds.

OTHER

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

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

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

OTHER CONTINGENCIES

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

NOTE 15 - SUBSEQUENT EVENTS

In July 2005, we issued approximately 2.2 million convertible 4.4% CRA Preferred
shares with a liquidation preference of $50.00 per share, receiving net proceeds
of approximately  $104.6 million, to be used in investments and general business
purposes.  The shares will be convertible into  approximately 3.9 million common
shares beginning July 2008.



                                       18
<PAGE>



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

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

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

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

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

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

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

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

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

Three Months Ended June 30, 2005
--------------------------------

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

<TABLE>
<CAPTION>

                                          % of                     % of
      (In thousands)           2005     Revenues       2004      Revenues    % Change
--------------------------    -------   --------     -------     --------    --------
<S>                           <C>        <C>         <C>          <C>          <C>
Revenues                      $79,007    100.0 %     $57,006      100.0 %      38.6 %
Income before income taxes    $19,109     24.2 %     $17,230       30.2 %      10.9 %
Net income                    $19,444     24.6 %     $24,203       42.5 %     (19.7)%

</TABLE>

Compared  to 2004,  the second  quarter  of 2005  benefited  from the  continued
expansion of all of our businesses  and the  acquisition of CCLP in the Mortgage
Banking segment. In addition, revenues in 2005 include $6.8 million generated by
non-equity partnerships compared to $2.8 million in 2004. Offsetting the revenue
gains is the elimination of revenues earned by our  subsidiaries in transactions
with  non-equity  partnerships  we have  consolidated  beginning  April 1, 2004.
Although the amounts are eliminated in consolidation,  the net losses recognized
by those  partnerships  in  connection  with  these  transactions  are  absorbed
entirely by their equity partners; as such, the elimination in consolidation has
no impact on our net income.

The revenue  gains and the  relatively  smaller  increase in expenses  led to an
increase in income before  taxes,  while a lower tax benefit led to the decrease
in net income.



                                       19
<PAGE>



REVENUES

Our revenues were as follows:

<TABLE>
<CAPTION>

                                               For the Three Months Ended June 30,
                                               ----------------------------------
           (In thousands)                        2005         2004       % Change
-------------------------------------          -------      -------      --------
<S>                                            <C>          <C>             <C>
Revenue bond interest income                   $37,283      $32,487         14.8%

Fee income
   Mortgage banking                              7,411        4,687         58.1
   Fund sponsorship                             14,719       10,507         40.1
   Credit enhancement                            2,622        2,929        (10.5)
                                               -------      -------       ------
Total fee income                                24,752       18,123         36.6

Other revenues
   Capri loan interest                             582           --           --
   Other interest                                2,263        1,344         68.4
   Construction service fee                        963          268        259.3
   Expense reimbursement                         1,388        1,111         24.9
   Other                                         4,624          883        423.7
                                               -------      -------       ------
Total other revenues                             9,820        3,606        172.3

Revenues of consolidated non-equity
   partnerships                                  7,152        2,790        156.3
                                               -------      -------       ------

   Total revenues                              $79,007      $57,006         38.6%
                                               =======      =======       ======

</TABLE>

The Capri loan interest  relates to the loans made in July 2004, a large portion
of which has since been  converted to equity upon the  acquisition  of CCLP (see
note 2 to the  condensed  consolidated  financial  statements).  The increase in
"other" is primarily due to prepayment penalty fees received within the Mortgage
Banking business and administrative fees in the Fund Management segment.

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

<TABLE>
<CAPTION>

                                              For the Three Months Ended June 30,
                                             ------------------------------------
          (In thousands)                       2005          2004        % Change
-----------------------------------          -------       -------       --------
<S>                                          <C>           <C>             <C>
Revenue bond interest income                 $ 1,520       $   247         515.4%
Fund sponsorship fees                         11,645         9,563          21.8
Other revenues                                   268           951         (71.8)
                                             -------       -------        ------

Total                                        $13,433       $10,761          24.8%
                                             =======       =======        ======

</TABLE>

See RESULTS BY SEGMENT below for a detailed description of revenue variances.

EXPENSES

Our expenses were as follows:

<TABLE>
<CAPTION>

                                                          For the Three Months Ended June 30,
                                                          ----------------------------------
                    (In thousands)                          2005        2004       % Change
------------------------------------------------------    --------    --------     --------
<S>                                                       <C>         <C>            <C>
Interest expense                                          $ 15,029    $  7,511       100.1%
Interest expense - preferred shares of subsidiary            4,725       4,725          --
Change in fair value interest rate derivatives                  --      (3,361)         --
Salaries and benefits                                       16,956      13,050        29.9
General and administrative                                  15,620      11,256        38.8
Depreciation and amortization                                9,469       7,796        21.5
Loss on impairment of asset                                  1,098          --          --
                                                          --------    --------     -------
   Subtotal                                                 62,897      40,977        53.5

Interest expense of consolidated non-equity
   partnerships                                              6,133       6,689        (8.3)
Other expenses of consolidated non-equity partnerships      14,333       8,481        69.0
                                                          --------    --------     -------

Total expenses                                            $ 83,363    $ 56,147        48.5%
                                                          ========    ========     =======

</TABLE>



                                       20
<PAGE>



The  increase in interest  expense  reflects  the higher  amount of debt to fund
investments in revenue bonds and LIHTC equity  investments  inherent in the Fund
Management  business  in 2004  and  2005,  and to fund our loan to Capri in July
2004. In addition, our average borrowing rate increased as a result of increases
in Bond Market Association  Municipal Swap Index ("BMA") and LIBOR rates in 2004
and 2005,  as well as the impact of interest  rate swap  transactions  that went
into effect in 2005.  Our average  borrowing  rate increased to 3.9% in the 2005
quarter as compared to 2.4% in the 2004 period.

The change in fair value of  derivatives  in 2004  represents  the reversal of a
charge recorded in the first quarter of 2004 for swap  agreements  determined to
be ineffective,  as measured using the hypothetical swap method.  The swaps were
deemed effective in the second quarter of 2004 and all swaps have been effective
in the current year period.

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

The increase in general and administrative expenses is also due to the expansion
of our  businesses  and the  acquisition  of CCLP,  particularly  with regard to
increased  occupancy  needs and  professional  fees. In addition,  we incurred a
higher  level of  organization  expenses  related to the  higher  level of funds
sponsorship activity as compared to the prior year period.

Depreciation and amortization expenses were higher in the 2005 period, primarily
due to higher  amortization  of mortgage  servicing  rights  following  the CCLP
acquisition.

The asset  impairment  charge  relates to  management's  decision to discontinue
construction of a property in connection with the financial  difficulties of the
property  developer  (see  Note  10  to  the  condensed  consolidated  financial
statements).

Interest expense of consolidated  non-equity partnerships declined from the 2004
level due to the repayment of fund debt upon collection of equity subscriptions.
Other expenses of the non-equity  partnerships  increased due to the increase in
the  population  of  consolidated  entities due to  additional  Fund  Management
activity.  The expenses of the non-equity  partnerships are absorbed entirely by
their equity partners.

OTHER ITEMS

<TABLE>
<CAPTION>

                                               For the Three Months Ended June 30,
                                              ------------------------------------
              (In thousands)                    2005         2004        % Change
-----------------------------------------     --------     --------     ----------
<S>                                           <C>          <C>          <C>
Gain (loss) on repayment of revenue bonds     $    912     $    (38)    (2,500.0)%
Gain on sale of loans                         $  4,317     $  3,330         29.6 %
Equity and other income                       $    926     $    565         63.9 %
Income allocated to preferred
   shareholders of subsidiary                 $ (1,556)    $   (830)        87.5 %

Income allocated to SCUs                      $ (7,826)    $ (9,537)       (17.9)%
Income allocated to SMUs                           (55)          --           --
Income allocated to CMC                             --         (260)          --
                                              --------     --------     --------
  Total income allocated to minority          $ (7,881)    $ (9,797)       (19.6)%
   interests

Loss allocated to partners of
   consolidated non-equity partnerships       $ 93,370     $ 71,818         30.0 %

</TABLE>

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

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

The income  allocated to preferred  shareholders  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.  Total income allocated to preferred shareholders
for the three months ended June 30, 2005,  including  the portion  classified as
interest expense, increased as compared to the three months ended June 30, 2004,
due to the additional preferred offering consummated in May 2004.



                                       21
<PAGE>



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

The loss allocation to partners of non-equity  partnerships  represents the full
operating losses of consolidated non-equity partnerships,  none of which we have
absorbed.

RESULTS BY SEGMENT

PORTFOLIO INVESTING

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

<TABLE>
<CAPTION>

                                                     For the Three Months Ended June 30,
                                                     ----------------------------------
                (In thousands)                          2005                    2004
-------------------------------------------------    -----------            -----------
<S>                                                  <C>                    <C>
Revenue bond acquisitions and fundings               $    55,030            $    73,143
Weighted average permanent interest rate of bonds
 acquired                                                   6.43%                  6.46%
Revenue bonds repaid                                 $    18,922            $     2,842
Average portfolio balance                            $ 2,266,725            $ 1,916,458
Weighted average yield of portfolio                         6.58%                  6.78%

Revenue bond interest income (1)                     $    39,191            $    32,734
Other revenues (1)                                         3,109                    489
                                                     -----------            -----------
                                                     $    42,300            $    33,223
                                                     ===========            ===========

Interest expense and securitizations fees (1)        $    15,029            $     7,511
Gain (loss) on repayments of revenue bonds           $       912            $       (38)

</TABLE>

(1) Prior to intercompany eliminations.

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

While the decline in interest  rates has gradually  lowered the average yield of
our portfolio, from a profit perspective,  the low interest rate environment has
been favorable for us. Although  increasing lately, the BMA rate, the short-term
tax-exempt index,  continues to be low,  averaging 2.64% and 1.13% for the three
months ended June 30, 2005 and 2004, respectively.  Our weighted average cost of
debt associated with these investments was approximately 3.38% and 1.97% for the
same respective periods,  taking into effect our current hedging. We continue to
recognize  healthy  spreads between our cost of borrowing and the interest rates
on our revenue bonds.

Other revenues in this segment are predominantly  interest income on investments
other  than  revenue  bonds  and   intercompany   royalty  fees   eliminated  in
consolidation.  The  increase  for the three  months  ended  June 30,  2005,  as
compared to the three months  ended June 30, 2004,  is due largely to Capri loan
interest (see Note 4 to the condensed consolidated financial statements).

FUND MANAGEMENT

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

<TABLE>
<CAPTION>

                                            For the Three Months Ended June 30,
                                        ------------------------------------------
           (In thousands)                   2005           2004         % Change
--------------------------------------  ------------   ------------   ------------
<S>                                     <C>            <C>                <C>
 Equity raised                          $    421,172   $    370,223       13.8  %
 Equity invested by investment funds    $    307,057   $    296,214        3.7  %

 Fund sponsorship fees (1)              $     27,016   $     20,691       30.6  %
 Credit enhancement fees                       2,622          2,929      (10.5)
 Other revenues (1)                            3,869          2,582       49.8
                                        ------------   ------------  -----------
   Total                                $     33,507   $     26,202       27.9  %
                                        ============   ============  ===========

</TABLE>

(1) Prior to intercompany eliminations.



                                       22
<PAGE>



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

We earn  Organization  and Offering  ("O&O") service and partnership  management
fees based upon the level of equity we raise for tax-credit  equity funds.  Fees
earned for O&O services increased  approximately  16.8% to $3.7 million compared
to $3.2  million in the 2004  quarter  primarily  due to the  increase in equity
raised and an increase  in the fee rate  realized.  Fees earned for  partnership
management services are amortized over a five-year period.  These fees increased
approximately 240% to $972,000 compared to $283,000 for the same period in 2004.
This increase is primarily the result of ongoing revenues for fund  sponsorships
completed after the second quarter of 2004.

We earn property acquisition fees and acquisition  allowance fees based upon the
level of fund equity invested.  Fees earned for property  acquisition and equity
origination   services  associated  with  tax  credit  equity  fund  sponsorship
increased to  approximately  $13.4 million in 2005,  representing an approximate
3.8%  increase  compared to the prior year  results.  The increase is due to the
increase in equity invested in 2005 as compared to 2004.

Also  during  2005,  RCC acted as  advisor  for  $109.6  million  of  investment
originations  by  CharterMac  entities and others,  compared to $98.1 million of
such  originations  for the three  months  ended  June 30,  2004.  We  recognize
acquisition fees in this segment for such services,  which amounted to $815,000,
exceeding  the fees  recognized  for the three  months  ended  June 30,  2004 by
approximately  36%. The increase exceeded the change in investment  originations
due to the increase in the rate of fees realized in 2005 as compared to 2004.

Partnership  and asset  management  fees increased to $6.9 million for the three
months ended June 30, 2005,  representing an increase of approximately  84% over
the 2004 quarter,  attributable  to the higher level of assets under  management
and the improvement of the cash position of certain investment funds allowing us
to collect  management fees in 2005 which we did not previously  recognize until
collectibility was determined.

The decrease in credit  enhancement fees relates to the timing and relative size
of the credit enhancement transactions. Fees for the three months ended June 30,
2004 included  recognition of fees for several large  transactions for which the
credit enhancement period ended prior to the current year quarter. A transaction
of similar  size,  however,  was  executed  during  the second  quarter of 2005,
resulting in a partial period of revenue.  Both periods,  however,  include fees
for smaller  transactions,  the fees for which are recognized over periods of up
to 20 years.

MORTGAGE BANKING

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

<TABLE>
<CAPTION>

                                         For the Three Months Ended June 30,
                                    -------------------------------------------
         (In thousands)                 2005           2004          % Change
----------------------------------  ------------   ------------    ------------
<S>                                 <C>            <C>                 <C>
 Originations                       $    658,532   $    418,061           57.5 %
 Mortgage portfolio at June 30      $  9,355,039   $  4,274,720          118.8 %

 Mortgage servicing fees            $      5,378   $      2,404          123.7 %
 Mortgage origination fees                 2,033          2,283          (11.0)
 Other revenues                            4,151          1,969          110.8
                                    ------------   ------------    ------------
                                    $     11,562   $      6,656           73.7 %
                                    ============   ============    ============

</TABLE>

The increase in the servicing  portfolio  and servicing  fees is a result of the
CCLP acquisition.  Excluding the impact of the acquisition, servicing fee income
in 2005 was approximately the same as the second quarter of 2004.

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



                                       23
<PAGE>



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

<TABLE>
<CAPTION>

(In thousands)       2005       % of total       2004      % of total
--------------     --------     ----------     --------    ----------
<S>                <C>             <C>         <C>            <C>
Fannie Mae         $423,222         64.3 %     $121,264        29.0 %
Freddie Mac          24,640          3.7        229,131        54.8
FHA                   6,372          1.0         27,749         6.6
Conduit - Bank      126,572         19.2         32,934         7.9
Assumptions          77,727         11.8          6,983         1.7
                   --------      -------       --------     -------

Total              $658,533        100.0 %     $418,061       100.0 %
                   ========      =======       ========     =======

</TABLE>

Other revenues in this segment  pertain to interest earned on mortgages prior to
their sale date,  prepayment  penalty fees for early  repayments and fees earned
for loan  assumptions.  The increase in the 2005 period is primarily a result of
the CCLP acquisition.

NON-EQUITY PARTNERSHIPS

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

The increased  revenue  amounts in 2005 are due to the  origination of six funds
and the  assumption  of the  general  partner  interests  in 18  property  level
partnerships  in the past year,  all of which are included in the  population of
non-equity partnerships consolidated.

As third party  investors  hold all the equity  partnership  interests  in these
entities,  we allocate all results of operations to those partners. As a result,
the  consolidation  of these  non-equity  partnerships  has no impact on our net
income.

Six Months Ended June 30, 2005
------------------------------

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

<TABLE>
<CAPTION>

                                             % of                        % of
      (In thousands)             2005      Revenues       2004         Revenues      % Change
--------------------------    ----------  ----------    --------      ----------    ----------
<S>                            <C>          <C>         <C>             <C>           <C>
Revenues                       $137,464     100.0 %     $103,319        100.0 %       33.0 %
Income before income taxes     $ 25,529      18.6 %     $ 21,259         20.6 %       20.1 %
Net income                     $ 34,229      24.9 %     $ 30,621         29.6 %       11.8 %

</TABLE>

Compared to 2004, the first half of 2005 benefited from the continued  expansion
of our component  businesses and the acquisition of CCLP in the Mortgage Banking
segment.  In  addition,  revenues in 2005  include  $12.1  million  generated by
non-equity partnerships as compared to $2.8 million in 2004, which included only
three months of results for those partnerships.  Offsetting the revenue gains is
the elimination of revenues earned by our subsidiaries in transactions  with the
non-equity  partnerships.  Although the amounts are eliminated in consolidation,
the net losses  recognized by the  non-equity  partnerships  in connection  with
these  transactions  are  absorbed  entirely  by their  partners;  as such,  the
elimination in consolidation has no impact on our net income.

The revenue  gains and the  relatively  smaller  increase in expenses  led to an
increase  in income  before  taxes,  while a lower tax  benefit led to a smaller
increase in net income.



                                       24
<PAGE>

REVENUES

Our revenues were as follows:

<TABLE>
<CAPTION>

                                               For the Six Months Ended June 30,
                                              ------------------------------------
           (In thousands)                       2005          2004        % Change
------------------------------------         --------      --------      --------
<S>                                           <C>           <C>              <C>
Revenue bond interest income                  $ 73,739      $ 64,338         14.6%

Fee income
   Mortgage banking                             11,492         7,803         47.3
   Fund sponsorship                             18,030        17,287          4.3
   Credit enhancement                            5,061         4,826          4.9
                                              --------      --------       ------
Total fee income                                34,583        29,916         15.6

Other revenues
   Capri loan interest                           2,363            --           --
   Other interest                                5,206         1,928        170.0
   Construction service fee                      1,832           408        349.0
   Expense reimbursement                         2,730         2,365         15.4
   Other                                         4,957         1,574        214.9
                                              --------      --------       ------
Total other revenues                            17,088         6,275        172.3

Revenues of consolidated non-equity
   partnerships                                 12,054         2,790        332.0
                                              --------      --------       ------

   Total revenues                             $137,464      $103,319         33.0%
                                              ========      ========       ======

</TABLE>

The Capri loan interest  relates to the loans made in July 2004, a large portion
of which has since been  converted to equity upon the  acquisition  of CCLP (see
note 2 to the  condensed  consolidated  financial  statements).  The increase in
"other" is primarily due to prepayment penalty fees received within the Mortgage
Banking business and administrative fees in the Fund Management segment.

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

<TABLE>
<CAPTION>

                                             For the Six Months Ended June 30,
                                           --------------------------------------
        (In thousands)                      2005           2004          % Change
-------------------------------            -------       --------        --------
<S>                                        <C>            <C>              <C>
Revenue bond interest income               $ 1,779        $   247          620.2%
Fund sponsorship fees                       18,617          9,563           94.7
Other revenues                                 780            951          (18.0)
                                           -------        -------         ------

Total                                      $21,176        $10,761           96.8%
                                           =======        =======         ======

</TABLE>

See RESULTS BY SEGMENT below for a detailed description of revenue variances.

EXPENSES

Our expenses were as follows:

<TABLE>
<CAPTION>

                                                       For the Six Months Ended June 30,
                                                      ----------------------------------
                (In thousands)                          2005         2004       % Change
-------------------------------------------------     --------     --------     --------
<S>                                                   <C>          <C>            <C>
Interest expense                                      $ 25,841     $ 14,097        83.3%
Interest expense - preferred shares of subsidiary        9,449        9,449          --
Change in fair value of interest rate derivatives           --           26          --
Salaries and benefits                                   33,609       26,932        24.8
General and administrative                              25,211       17,605        43.2
Depreciation and amortization                           17,165       14,689        16.9
Loss on impairment of asset                              1,098           --          --
                                                      --------     --------      ------
   Subtotal                                            112,373       82,798        35.7

Interest expense of consolidated non-equity
   partnerships                                         13,022        6,689        94.7
Other expenses of consolidated non-equity
   partnerships                                         25,627        8,481       202.2
                                                      --------     --------      ------

Total expenses                                        $151,022     $ 97,968        54.2%
                                                      ========     ========      ======

</TABLE>



                                       25
<PAGE>



The  increase in interest  expense  reflects  the higher  amount of debt to fund
investments in revenue bonds, and LIHTC equity investments  inherent in the Fund
Management  business  in 2004  and  2005,  and to fund our loan to Capri in July
2004. In addition, our average borrowing rate increased as a result of increases
in BMA and LIBOR rates in 2004 and 2005,  as well as the impact of new  interest
rate swap  transactions  that went into effect in the first quarter of 2005. Our
average  borrowing  rate  increased to 3.5% in the first half of 2005 quarter as
compared to 2.3% in the 2004 period.

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

The increase in general and administrative expenses is also due to the expansion
of our  businesses  and the  acquisition  of CCLP,  particularly  with regard to
increased  occupancy  needs and  professional  fees. In addition,  we incurred a
higher  level of  organization  expenses  related to the  higher  level of funds
sponsorship activity as compared to the prior year period.

Depreciation and amortization expenses were higher in the 2005 period, primarily
due to higher  amortization  of mortgage  servicing  rights  following  the CCLP
acquisition.

The asset  impairment  charge  relates to  management's  decision to discontinue
construction of a property in connection with the financial  difficulties of the
property  developer  (see  Note  10  to  the  condensed  consolidated  financial
statements).

We did not record the expenses of the non-equity  partnerships prior to April 1,
2004.  The increase in the expenses  generated by these  entities is a result of
the non-comparable  consolidation  periods as well as the increase in the number
of non-equity  partnerships  consolidated.  These  expenses do not represent any
cash or non-cash  charges to be absorbed by us as they are absorbed  entirely by
their partners.

OTHER ITEMS

<TABLE>
<CAPTION>

                                              For the Six Months Ended June 30,
                                            -------------------------------------
          (In thousands)                      2005           2004        % Change
-----------------------------------         ---------      ---------     --------
<S>                                         <C>            <C>            <C>
Gain on repayment of revenue bonds          $     903      $     222      306.8 %
Gain on sale of loans                       $   6,021      $   5,075       18.6 %
Equity and other income                     $   1,450      $   1,120       29.5 %
Income allocated to preferred
   shareholders of subsidiary               $  (3,112)     $    (830)     274.9 %

Income allocated to SCUs                    $ (13,891)     $ (12,455)       11.5%
Income allocated to SMUs                          (55)            --           --
Income allocated to CMC                            --           (365)          --
                                            ---------      ---------      -------
  Total income allocated to minority        $ (13,946)     $ (12,820)        8.8%
   interests

Loss allocated to partners of
   consolidated non-equity partnerships     $ 164,333      $  71,818       128.8%

</TABLE>

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

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

The income  allocated to preferred  shareholders  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.  Total income allocated to preferred shareholders
for the six months  ended June 30, 2005,  including  the portion  classified  as
interest  expense,  increased as compared to the six months ended June 30, 2004,
due to the additional preferred offering consummated in May 2004.

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

The loss allocation to partners of non-equity  partnerships  represents the full
operating losses of consolidated non-equity partnerships,  none of which we have
absorbed.



                                       26
<PAGE>



Results by Segment

PORTFOLIO INVESTING

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

<TABLE>
<CAPTION>

                                                  For the Six Months Ended June 30,
                                                  --------------------------------
             (In thousands)                          2005                  2004
--------------------------------------------      ----------            ----------
<S>                                               <C>                   <C>
Revenue bond acquisitions and fundings            $  166,781            $  164,208
Weighted average permanent interest rate of
 bonds acquired                                         6.49%                 6.54%
Revenue bonds repaid                              $   19,381            $   26,477
Average portfolio balance                         $2,229,206            $1,879,458
Weighted average yield of portfolio                     6.62%                 6.85%

Revenue bond interest income (1)                  $   75,907            $   64,585
Other revenues (1)                                     6,591                 2,181
                                                  ----------            ----------
                                                  $   82,498            $   66,766
                                                  ==========            ==========

Interest expense and securitizations fees (1)     $   25,841            $   14,097
Gain on repayments of revenue bonds               $      903            $      222

</TABLE>

(1) Prior to intercompany eliminations.

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

While the decline in interest  rates has gradually  lowered the average yield of
our portfolio, from a profit perspective,  the low interest rate environment has
been favorable for us. Although  increasing lately, the BMA rate, the short-term
tax-exempt  index,  continues to be low,  averaging  2.25% and 1.04% for the six
months ended June 30, 2005 and 2004, respectively.  Our weighted average cost of
debt associated with these investments was approximately 3.01% and 1.99% for the
same respective periods,  taking into effect our current hedging. We continue to
recognize  healthy  spreads between our cost of borrowing and the interest rates
on our revenue bonds.

Other revenues in this segment are predominantly  interest income on investments
other  than  revenue  bonds  and   intercompany   royalty  fees   eliminated  in
consolidation.  The increase for the six months ended June 30, 2005, as compared
to the six months  ended June 30,  2004,  is due largely to Capri loan  interest
(see Note 4 to the condensed consolidated financial statements).

FUND MANAGEMENT

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

<TABLE>
<CAPTION>

                                                For the Six Months Ended June 30,
                                               -----------------------------------
           (In thousands)                        2005          2004       % Change
--------------------------------------         --------      --------     --------
<S>                                            <C>           <C>              <C>
Equity raised                                  $436,384      $398,833         9.4%
Equity invested by investment funds            $430,999      $373,841        15.3%

Fund sponsorship fees (1)                      $ 38,554      $ 28,673        34.5%
Credit enhancement fees                           5,061         4,826         4.9
Other revenues (1)                                7,409         4,344        70.6
                                               --------      --------      ------
  Total                                        $ 51,024      $ 37,843        34.8%
                                               ========      ========      ======

</TABLE>

(1) Prior to intercompany eliminations.

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



                                       27
<PAGE>



We earn O&O  service  and  partnership  management  fees based upon the level of
equity we raise for  tax-credit  equity  funds.  Fees  earned  for O&O  services
increased  approximately  11.5% to $3.8 million  compared to $3.4 million in the
2004 period  primarily  due to the increase in equity  raised and an increase in
the fee rate  realized.  Fees earned for  partnership  management  services  are
amortized over a five-year period.  These fees increased  approximately  300% to
$1.8 million  compared to $450,000 for the same period in 2004. This increase is
primarily the result of ongoing revenues for fund sponsorships completed in 2004
and 2005.

We earn property acquisition fees and acquisition  allowance fees based upon the
level of fund equity invested.  Fees earned for property  acquisition and equity
origination   services  associated  with  tax  credit  equity  fund  sponsorship
increased to  approximately  $18.6 million in 2005,  representing an approximate
13.6%  increase  compared  to the prior year  results.  The  increase in fees is
consistent with the increase of equity invested from 2005 to 2004.

Also  during  2005,  RCC acted as  advisor  for  $226.5  million  of  investment
originations  by CharterMac  entities and others,  compared to $220.8 million of
such  originations  for the  six  months  ended  June  30,  2004.  We  recognize
acquisition   fees  in  this  segment  for  such   services,   which   increased
approximately  11% to $1.9  million  as  compared  to $1.8  million  in the 2004
period.  The increase exceeded the change in investment  originations due to the
increase in the rate of fees realized in 2005 as compared to 2004.

Partnership  and asset  management  fees  increased to $11.2 million for the six
months ended June 30, 2005,  representing an increase of approximately  68% over
the 2004 period, attributable to the higher level of assets under management and
the improvement of the cash position of certain  investment funds allowing us to
collect  management  fees in 2005 which we did not  previously  recognize  until
collectibility was determined.

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

MORTGAGE BANKING

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

<TABLE>
<CAPTION>

                                            For the Six Months Ended June 30,
                                         ---------------------------------------
        (In thousands)                      2005            2004        % Change
------------------------------           ----------      ----------     --------
<S>                                      <C>             <C>              <C>
Originations                             $  781,993      $  551,049        41.9 %
Mortgage portfolio at June 30            $9,355,039      $4,274,720       118.8 %

Mortgage servicing fees                  $    8,702      $    4,719        84.4 %
Mortgage origination fees                     2,790           3,084        (9.5)
Other revenues                                5,940           2,733       117.3
                                         ----------      ----------     --------
                                         $   17,432      $   10,536        65.5 %
                                         ==========      ==========     ========

</TABLE>

The increase in the servicing  portfolio  and servicing  fees is a result of the
CCLP acquisition.  Excluding the impact of the acquisition, servicing fee income
in 2005 was approximately the same as the first half of 2004.

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

Originations for the six months ended June 30 are broken down as follows:

<TABLE>
<CAPTION>

(In thousands)       2005       % of total      2004       % of total
--------------     --------     ----------    --------     ----------
<S>                <C>            <C>         <C>            <C>
Fannie Mae         $465,490        59.6%      $199,275        36.2%
Freddie Mac          33,905         4.3        237,631        43.1
FHA                   6,372         0.8         27,749         5.0
Conduit - Bank      139,385        17.8         54,437         9.9
Assumptions         136,841        17.5         31,957         5.8
                   --------      ------       --------      ------

Total              $781,993       100.0%      $551,049       100.0%
                   ========     =======       ========      ======

</TABLE>



                                       28
<PAGE>



Other revenues in this segment  pertain to interest earned on mortgages prior to
their sale date,  prepayment  penalty fees for early  repayments and fees earned
for loan  assumptions.  The increase in the 2005 period is primarily a result of
the CCLP acquisition.

NON-EQUITY PARTNERSHIPS

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

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

As third party  investors  hold all the equity  partnership  interests  in these
entities,  we allocate all results of operations to those partners. As a result,
the  consolidation  of these  non-equity  partnerships  has no impact on our net
income.

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

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

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

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

The effective tax rate on a consolidated basis for the six months ended June 30,
2005 and 2004 was (34.1)% and (44.0)%,  respectively. The effective rate for our
corporate  subsidiaries  that were  subject to taxes was 54.6% and 71.9% for the
six months ended June 30, 2005 and 2004, respectively.

Inflation
---------

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

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

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

DEBT AND SECURITIZATIONS
------------------------

Short-term liquidity provided by operations comes primarily from interest income
from  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.

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

     o    $100.0 million,  used for mortgage  banking needs,  which is renewable
          annually;
     o    $90.0 million,  used to acquire equity interests in property ownership
          entities  prior  to the  inclusion  of  these  equity  interests  into
          investments  funds,  which  matures on October 28, 2005,  with a one -
          year extension at our option;
     o    $91.0  million,  used to  provide  the  interim  loan to Capri,  which
          matures on October 31, 2005;
     o    $40.0  million,  established in connection  with the CMC  acquisition,
          which expires December 31, 2006;



                                       29
<PAGE>



     o    $650.0 million in MBIA credit enhancement through 2011, under which we
          can complete up to $425.0 million of floating rate securitizations and
          $225.0 million of auction rate securitization; and
     o    Securitization through the Merrill Lynch P-FLOATs/RITESSM program of a
          specified  percentage of the fair value of revenue bonds not otherwise
          securitized or credit enhanced by either Merrill Lynch or IXIS.

As of June 30, 2005, we had  approximately  $262.8  million  available to borrow
under these debt and securitization  facilities without exceeding limits imposed
by debt covenants and our trust agreement.

Equity
------

We have the ability to issue $100.0 million of equity  securities  pursuant to a
registration   statement  we  have  filed  with  the   Securities  and  Exchange
Commission. We currently have no plans to issue any such securities.  Subsequent
to the end of the second quarter of 2005,  however,  we issued $108.0 million of
4.40%  Cumulative  Perpetual  Convertible  Community  Reinvestment Act Preferred
Shares that are not subject to SEC registration.

Liquidity Requirements after June 30, 2005
------------------------------------------

During August 2005,  distributions  of  approximately  $23.8 million  ($0.41 per
share)  will  be  paid  to  holders  of  common  and   Convertible  CRA  Shares.
Additionally  $8.7  million  will be paid to SCU and SMU  holders.  All of these
distributions were declared in June 2005.

Other
-----

We have  received  a  tender  offer  to  purchase  all of our  shares  of  ARCap
Investors,  LLC at $32.83. We are currently  evaluating whether or not to accept
this offer. If we choose to accept, we would receive approximately $24.3 million
in proceeds.

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.

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

The net  increase  in cash and cash  equivalents  during 2005 was lower than the
increase in 2004  despite  increased  operating  inflows due to a lower level of
financing activity in 2005 as compared to 2004.

Operating  cash  flows  were  higher  in the 2005  period  by a margin  of $62.4
million.  This increase  resulted  from a higher level of earnings  exclusive of
non-cash  expenses.  Additionally,  the  timing  of  receipts  and  payments  in
operating   asset  and  liability   accounts   contributed   to  this  increase,
particularly with regard to the fundings and sales of mortgage loans.

Investing  outflows  were  approximately  the same in 2005 as  compared  to 2004
despite that  acquisition of CCLP as the majority of the cost of the acquisition
was  funded as a loan in the third  quarter of 2004.  A higher  level of revenue
bond acquisition and funding  activity,  coupled with lower repayment  activity,
was partially  offset by a net decrease in our funds invested in partnerships in
the current year period.

Financing  inflows in the 2005 period were lower than in 2004 by $210.3 million.
The primary reason for the higher inflows in 2004 was the issuance of common and
preferred shares in the first half of the year, with no comparable  offerings in
the current  year  (although  we completed an equity after the end of the second
quarter of 2005). The higher level of securitization activity was due in part to
the  remarketing  of  borrowings  under  the  fixed  rate   securitization  that
terminated in the current year period.

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

Note 15 to the condensed consolidated financial statements contains a summary of
the Company's guarantees and off-balance sheet arrangements.



                                       30
<PAGE>



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

<TABLE>
<CAPTION>

                                                               Maximum            Carrying
               (In thousands)                                  Exposure            Amount
-------------------------------------------                 --------------      -------------
<S>                                                         <C>                 <C>
Payment guarantees (1)                                      $       45,471      $          --
Completion guarantees (1)                                           37,773                 --
Operating deficit guarantees (1)                                     1,629                 --
Recapture guarantees (1)                                            66,366                 --
Replacement reserve (1)                                              1,792                 --
Mortgage pool credit enhancement (2)                                12,887                 --
LIHTC guarantees (2)                                               581,561             20,045
Mortgage banking loss sharing agreement (3)                        940,245              9,553
                                                            --------------      -------------

                                                            $    1,687,724      $      29,598
                                                            ==============      =============

</TABLE>

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

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

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

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

CONTRACTUAL OBLIGATIONS

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

<TABLE>
<CAPTION>

                                                                    Payments due by period
                                           ---------------------------------------------------------------------
                                                           Less than                                  More than
          (In thousands)                      Total         1 year       1-3 years     3-5 year        5 years
----------------------------------------   -----------    -----------    ----------    ---------     -----------
<S>                                        <C>            <C>            <C>           <C>           <C>
Notes payable (1)                          $   202,890    $   185,170    $    5,452    $  12,268     $        --
Notes payable of consolidated non-equity
   partnerships (2)                            520,695        100,834       181,517       34,467         203,877
Operating lease obligations, net of
subleases                                       73,533          6,199        13,531       12,984          40,819
Unfunded loan commitments                      177,370        152,540        24,830           --              --
Financing arrangements (1)                   1,213,541      1,213,541            --           --              --
Preferred shares of subsidiary (subject
  to mandatory repurchase)                     273,500             --            --           --         273,500
                                           -----------    -----------    ----------    ---------     -----------

   Total                                   $ 2,461,529    $ 1,658,284    $  225,330    $  59,719     $   518,196
                                           ===========    ===========    ==========    =========     ===========

</TABLE>

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

(2)  Of the  notes  payable  of  consolidated  non-equity  partnerships,  $402.3
     million is guaranteed by certain equity  partners of the investment  funds.
     Per partnership  agreements,  the equity partners are also obligated to pay
     the  principal and interest on the notes.  The remaining  balance of $118.4
     million  is   collateralized   with  the   underlying   properties  of  the
     consolidated  operating  partnerships.  All of this debt is non-recourse to
     us.



                                       31
<PAGE>



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

Excluding $561.4 million of debt hedged via interest rate swap  agreements,  the
full  amount of our  liabilities  labeled as  Financing  Arrangements  and Notes
Payable  are  variable  rate  debts.  We  estimate  that an  increase of 1.0% in
interest  rates  would  decrease  our annual net  income by  approximately  $8.6
million.

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

IMPACT ON VALUATION OF ASSETS

Changes in market  interest  rates would also impact the estimated fair value of
our portfolio of 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 June 30, 2005,  value of approximately  $2.2 billion to  approximately  $2.1
billion. A 1% decline in interest rates would increase the value of the June 30,
2005,  portfolio to  approximately  $2.3 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, and
may affect our borrowing  capability to the extent that collateral  requirements
are sometimes based on our asset values.

ITEM 4. CONTROLS AND PROCEDURES

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



                                       32
<PAGE>

        Officer and Chief Financial  Officer,  as  appropriate,  to allow timely
        decisions regarding required disclosures.

        As of the end of the  period  covered by this  Quarterly  Report on Form
        10-Q, the Company  carried out an evaluation,  under the supervision and
        with the participation of the Company's management,  including the Chief
        Executive Officer and Chief Financial  Officer,  of the effectiveness of
        the design and  operation  of our  disclosure  controls  and  procedures
        pursuant to the Securities and Exchange Act Rule 13a-15. Based upon this
        evaluation as of June 30, 2005,  the Chief  Executive  Officer and Chief
        Financial Officer have concluded that the Company's  disclosure controls
        and  procedures  are  not  effective  due to the  unremediated  material
        weaknesses in the Company's  internal  control over financial  reporting
        identified  during the Company's  evaluation  pursuant to Section 404 of
        the  Sarbanes-Oxley  Act of 2002 as of the year ended December 31, 2004.
        To remediate these control weaknesses,  the Company performed additional
        analysis and performed other  procedures  (detailed in item 4b below) in
        order  to  prepare  the  unaudited  quarterly   consolidated   financial
        statements in accordance with generally accepted  accounting  principles
        in the United States of America.  Accordingly,  management believes that
        the consolidated  financial statements included in this Quarterly Report
        on Form 10-Q fairly  present,  in all material  respects,  our financial
        condition,  results  of  operations  and  cash  flows  for  the  periods
        presented.

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

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



                                       33
<PAGE>



                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

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

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

         There  were no shares  purchased  or sold during the three months ended
         June 30, 2005.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         We held our annual  meeting of  shareholders  on June 30, 2005. Alan P.
         Hirmes,  Janice  Cook  Roberts,  Marc D.  Schnitzer and Thomas W. White
         were  elected  as  trustees  for  three-year  terms  expiring  in 2008.
         Continuing  to serve their  current  terms are the following  trustees:
         Stuart  J.  Boesky,  Stephen M.  Ross,  Peter T.  Allen,  Jeff T. Blau,
         Robert  A.  Meister,  Jerome Y.  Halperin,  Andrew  L.  Farkas,  Nathan
         Gantcher  and Robert L. Loverd. The four individuals  elected,  and the
         number  of votes cast for and abstaining, with respect to each of them,
         were as follows (no votes were cast "against"):

<TABLE>
<CAPTION>

                                                 For                    Abstain
                                              ----------              ----------
        <S>                                   <C>                     <C>
         Alan P. Hirmes
          Common Shares                       46,161,727              1,966,981
          Restricted Common Shares               259,174                     --
          Special Preferred Voting Shares     13,561,875              1,486,182*

         Janice Cook Roberts
          Common Shares                       47,620,657                507,961
          Restricted Common Shares               259,174                     --
          Special Preferred Voting Shares     13,561,875              1,486,182*

         Marc D. Schnitzer
          Common Shares                       47,720,529                408,090
          Restricted Common Shares               259,174                     --
          Special Preferred Voting Shares     13,561,875              1,486,182*

         Thomas W. White
          Common Shares                       46,086,364              2,042,255
          Restricted Common Shares               259,174                     --
          Special Preferred Voting Shares     13,561,875              1,486,182*

</TABLE>

         * Pursuant  to the stipulation and compromise  settlement  entered into
           as a  result of a lawsuit  commenced prior to our acquisition of RCC,
           certain   individuals  can vote no more  than  90% of  their  special
           preferred voting shares until November 13, 2005.

ITEM 5.  OTHER INFORMATION - None

ITEM 6.  EXHIBITS

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

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

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

         99.1  Amended Audit Committee Charter *

               *  Filed herewith



                                       34
<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:  August 9, 2005          By: /s/ Stuart J. Boesky
                                   --------------------
                                   Stuart J. Boesky
                                   Managing Trustee and Chief Executive Officer



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



<PAGE>



                                                                    Exhibit 31.1



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



I, Stuart J. Boesky, hereby certify that:

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

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

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

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

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

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

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

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

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

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

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


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



<PAGE>



                                                                    Exhibit 31.2



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



I, Alan P. Hirmes, hereby certify that:

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

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

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

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

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

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

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

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

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

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

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


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


<PAGE>



                                                                    Exhibit 32.1



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


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


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


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



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


<PAGE>



                                                                    Exhibit 99.1



             CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF TRUSTEES


I. PURPOSE

The Audit  Committee is established by and amongst the Board of Trustees for the
primary purpose of assisting the board in:

     o    overseeing the integrity of the Company's financial statements,
     o    overseeing  the  Company's   compliance   with  legal  and  regulatory
          requirements,
     o    overseeing the independent auditor's qualifications and independence,
     o    overseeing the performance of the company's independent auditor, and
     o    overseeing the Company's  system of disclosure  controls and system of
          internal controls regarding finance, accounting, legal compliance, and
          ethics that management and the Board have established.

Consistent with this function,  the Audit Committee should encourage  continuous
improvement  of,  and  should  foster  adherence  to,  the  Company's  policies,
procedures and practices at all levels.  The Audit Committee should also provide
an open avenue of communication  among the independent  auditors,  financial and
senior management, and the Board of Trustees.

The Audit  Committee  has the  authority to obtain  advice and  assistance  from
outside legal,  accounting,  or other advisors as deemed  appropriate to perform
its duties and responsibilities.

The Company  shall  provide  appropriate  funding,  as  determined  by the Audit
Committee,  for compensation to the independent auditor and to any advisers that
the audit committee chooses to engage.

The Audit Committee will primarily fulfill its  responsibilities by carrying out
the activities  enumerated in Section III of this Charter.  The Audit  Committee
will report  regularly to the Board of Trustees  regarding  the execution of its
duties and responsibilities.


II. COMPOSITION AND MEETINGS

The Audit  Committee  shall be comprised of three or more trustees as determined
by the Board,  each of whom shall be  independent  trustees  (as  defined by all
applicable rules and  regulations),  and free from any  relationship  (including
disallowed  compensatory  arrangements) that, in the opinion of the Board, would
interfere  with the exercise of his or her  independent  judgment as a member of
the  Committee.  Each trustee  shall be free of any  relationship  that,  in the
opinion of the Board,  would  interfere with his or her  individual  exercise of
independent judgment, and shall meet the director independence  requirements for
serving on the Committee as set forth in the corporate  governance  standards of
the American Stock  Exchange.  All members of the Committee shall have a working
familiarity  with  basic  finance  and  accounting  practices.  The board  shall
determine  whether at least one member of the  Committee  qualifies as an "audit
committee  financial expert" in compliance with the criteria  established by the
SEC and other  relevant  regulations.  The Company  will  disclose,  in periodic
filings as required by the SEC, (i) the name of the "audit  committee  financial
expert" and whether or not he or she is independent,  or (ii) the reason for the
absence of a current "audit committee  financial expert".  Committee members may
enhance  their  familiarity  with finance and  accounting  by  participating  in
educational  programs  conducted  by the Company or an outside  consultant.  The
Board has determined that simultaneous  service on more than one Audit Committee
would  not  impair  the  ability  of any  trustee  to  effectively  serve on the
Company's audit committee.

The  members  of the  Committee  shall be  elected  by the  Board at the  annual
organizational  meeting  of the Board or until  their  successors  shall be duly
elected and qualified.  Unless a Chair is elected by the full Board, the members
of the Committee  may  designate a Chair by majority vote of the full  Committee
membership.

The Committee  shall meet at least four times  annually,  or more  frequently as
circumstances  dictate.  Each regularly scheduled meeting shall conclude with an
executive  session of the Committee  absent  members of  management  and on such
terms and  conditions as the  Committee may elect.  As part of its job to foster
open  communication,  the Committee should meet periodically with management and
the independent  auditors in separate  executive sessions to discuss any matters
that  the  Committee  or  each of  these  groups  believe  should  be  discussed
privately. In addition, the Committee should meet quarterly with the independent
auditors and management to discuss the annual audited  financial  statements and
quarterly  financial  statements,   including  the  Company's  disclosure  under
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations".



<PAGE>



III. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Audit Committee shall:

Documents/Reports/Accounting Information Review

1. Review this Charter  periodically,  at least  annually,  and recommend to the
Board of Trustees any necessary amendments as conditions dictate.

2. Review and discuss with management the Company's annual financial statements,
quarterly financial statements,  and all internal controls reports (or summaries
thereof).  Review other relevant reports or financial  information  submitted by
the  Company to any  governmental  body,  or the  public,  including  management
certifications as required by the  Sarbanes-Oxley Act of 2002 (Sections 302, 404
and 906) and relevant reports rendered by the independent auditors (or summaries
thereof).

3. Recommend to the Board whether the financial statements should be included in
the  Annual  Report on Form  10-K.  Review  with  financial  management  and the
independent  auditors  the 10-Q prior to its filing (or prior to the  release of
earnings).

4.  Review  earnings  press  releases  with  management,   including  review  of
"pro-forma" or "adjusted" non-GAAP information.

5. Discuss with management financial  information and earnings guidance provided
to analysts and rating agencies. Such discussions may be on general terms (i.e.,
discussion  of the  types  of  information  to be  disclosed  and  the  type  of
presentation to be made).

INDEPENDENT AUDITORS

6. Appoint (subject to shareholder ratification, if applicable), compensate, and
oversee  the work  performed  by the  independent  auditor  for the  purpose  of
preparing or issuing an audit report or related work.  Review the performance of
the independent  auditors and remove the independent  auditors if  circumstances
warrant.  The independent  auditors shall report directly to the audit committee
and the audit  committee shall oversee the resolution of  disagreements  between
management  and the  independent  auditors  in the event  that they  arise.  The
committee will review the experience and qualifications of senior members of the
independent   audit  team   annually  and  ensure  that  all  partner   rotation
requirements,  as promulgated by applicable rules and regulations, are executed.
The  committee  will  also  consider   whether  the  auditor's   performance  of
permissible nonaudit services is compatible with the auditor's independence.

7.  Review  with the  independent  auditor  any  problems  or  difficulties  and
management's  response;  review the independent auditor's attestation and report
on management's  internal control report;  and hold timely  discussions with the
independent auditors regarding the following:

     o    all critical accounting policies and practices;
     o    all alternative  treatments of financial  information within generally
          accepted   accounting   principles   that  have  been  discussed  with
          management,  ramifications of the use of such alternative  disclosures
          and  treatments,  and  the  treatment  preferred  by  the  independent
          auditor;
     o    other material written  communications between the independent auditor
          and management  including,  but not limited to, the management  letter
          and schedule of unadjusted differences; and
     o    an  analysis  of  the  auditor's  judgment  as to the  quality  of the
          Company's accounting  principles,  setting forth significant reporting
          issues and judgments  made in connection  with the  preparation of the
          financial statements.

8. At least  annually,  obtain  and review a report by the  independent  auditor
describing:

     o    the firm's internal quality control procedures;
     o    any material issues raised by the most recent internal quality-control
          review,   peer  review,   or  by  any  inquiry  or   investigation  by
          governmental  or professional  authorities,  within the preceding five
          years,  respecting one or more  independent  audits carried out by the
          firm, and any steps taken to deal with any such issues; and
     o    (to assess the auditor's  independence) all relationships  between the
          independent auditor and the Company.

9. Review and preapprove both audit and nonaudit  services to be provided by the
independent auditor (other than with respect to DE MINIMIS exceptions  permitted
by the  Sarbanes-Oxley  Act of 2002).  This duty may be delegated to one or more
designated members of the audit committee with any such preapproval  reported to
the  audit  committee  at its next  regularly  scheduled  meeting.  Approval  of
nonaudit  services shall be disclosed to investors in periodic  reports required
by Section 13(a) of the Securities Exchange Act of 1934.

10. Set clear hiring policies, compliant with governing laws or regulations, for
employees or former employees of the independent auditor.



<PAGE>



FINANCIAL REPORTING PROCESSES AND ACCOUNTING POLICIES

11. In consultation with the independent  auditors,  review the integrity of the
organization's  financial reporting processes (both internal and external),  and
the internal control structure (including disclosure controls).

12. Review with  management  major issues  regarding  accounting  principles and
financial  statement  presentations,  including any  significant  changes in the
Company's selection or application of accounting principles, and major issues as
to the adequacy of the Company's  internal  controls and any special audit steps
adopted in light of material control deficiencies.

13. Review analyses prepared by management (and the independent auditor as noted
in item 7 above)  setting  forth  significant  financial  reporting  issues  and
judgments made in connection with the  preparation of the financial  statements,
including  analyses of the effects of alternative  GAAP methods on the financial
statements.

14. Review with management the effect of regulatory and accounting  initiatives,
as well as  off-balance  sheet  structures,  on the financial  statements of the
Company.

15. Establish and maintain procedures for the receipt,  retention, and treatment
of complaints regarding accounting, internal accounting, or auditing matters.

16. Establish and maintain procedures for the confidential, anonymous submission
by Company employees regarding questionable accounting or auditing matters.

Legal Compliance and Risk Management

17. Review, with the organization's  counsel, any legal matter that could have a
significant impact on the organization's financial statements.

18. Discuss policies with respect to risk assessment and risk  management.  Such
discussions  should include the Company's  major  financial and accounting  risk
exposures and the steps management has undertaken to control them.

Other Responsibilities

19.  Review with the  independent  auditors and  management  the extent to which
changes or improvements in financial or accounting practices, as approved by the
Audit Committee,  have been implemented.  (This review should be conducted at an
appropriate time subsequent to  implementation  of changes or  improvements,  as
decided by the Committee.)

20. Prepare the report that the SEC requires be included in the Company's annual
proxy statement.

21.  Annually,  perform a  self-assessment  relative  to the  Audit  Committee's
purpose, duties and responsibilities outlined herein.

22. Perform any other  activities  consistent  with this Charter,  the Company's
by-laws and  governing  law, as the  Committee  or the Board deems  necessary or
appropriate.

     1.   23. Oversee  compliance with the Company's Code of Conduct and oversee
          and review such code and recommend changes as necessary.