UNITED STATES
                                        SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549

                                                     FORM 10-Q

         |X|      Quarterly Report Pursuant to Section 13 or 15(d) of
                  the Securities Exchange Act of 1934

                                       For the quarter ended March 31, 2000

         |_|      Transition Report Pursuant to Section 13 or 15(d) of
                  the Securities Exchange Act of 1934

                                          Commission file number 33-83524


                           MERIT SECURITIES CORPORATION
              (Exact name of registrant as specified in its charter)

         Virginia                                             54-1736551
(State or other jurisdiction of incorporation(I.R.S.Employer Identification No.)

     10900 Nuckols Road, 3rd Floor, Glen Allen, Virginia        23060
     (Address of principal executive offices)                  (Zip Code)

                              (804) 217-5800
           (Registrant's telephone number, including area code)

     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 ninety days. |X| Yes |_| No

     As of April 30, 2000, the latest  practicable date, there were 1,000 shares
of Merit Securities Corporation common stock outstanding.

     The registrant  meets the  conditions  set forth in General  Instructions H
(1)(a)  and (b) of Form  10-Q and is  therefore  filing  this Form 10-Q with the
reduced disclosure format.


                                           MERIT SECURITIES CORPORATION
                                                     FORM 10-Q
                                                       INDEX
<TABLE>
<CAPTION>
<S>                      <C>                                                         <C>


                                                                                     Page Number
PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements
                      Balance Sheets at March 31, 2000 and
                      December 31, 1999                                                  3

                      Statements of Operations for the three months
                      ended March 31, 2000 and 1999                                      4

                      Statement of Shareholder's Equity for the three months
                      ended March 31, 2000                                               5

                      Statements of Cash Flows for the three months ended
                      March 31, 2000 and 1999                                            6

                      Notes to Unaudited Financial Statements                            7

Item 2.           Management's Discussion and Analysis of
                      Financial Condition and Results of Operations                      8

Item 3.           Quantitative and Qualitative Disclosures about Market Risk             10

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings                                                      12

Item 5.           Other Information                                                      12

Item 6.           Exhibits and Reports on Form 8-K                                       12

SIGNATURES                                                                                15
</TABLE>


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

MERIT SECURITIES CORPORATION
Balance Sheets
(amounts in thousands except share data)
<TABLE>
<CAPTION>
<S>                                                                        <C>                 <C>

                                                                        March 31,            December 31,
                                                                          2000                   1999
                                                                    -----------------      -----------------
ASSETS:
   Collateral for collateralized bonds                               $    2,710,595         $    2,839,324
   Prepaid shelf registration fees                                               94                     94
   Cash                                                                          10                     10
                                                                    =================      =================
                                                                     $    2,710,699         $    2,839,428
                                                                    =================      =================

LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES:
   Non-recourse debt - collateralized bonds                          $    2,543,132         $    2,661,069
   Due to affiliates, net                                                         -                 42,344
                                                                    -----------------      -----------------
                                                                          2,543,132              2,703,413
                                                                    -----------------      -----------------

SHAREHOLDER'S EQUITY:
   Common stock, no par value,
       10,000 shares authorized, 1,000 shares issued and                         10                     10
outstanding
   Additional paid-in capital                                               160,556                125,997
   Accumulated other comprehensive loss                                     (19,423)               (14,749)
   Retained earnings                                                         26,424                 24,757
                                                                                              --------------
                                                                    -----------------      ---
                                                                            167,567                136,015
                                                                    =================      =================
                                                                     $    2,710,699         $    2,839,428
                                                                    =================      =================
<FN>

See notes to unaudited financial statements.
</FN>
</TABLE>




MERIT SECURITIES CORPORATION
Statements of Operations
(amounts in thousands except share data)
<TABLE>
<CAPTION>
<S>                                                         <C>            <C>

                                                              Three Months Ended
                                                                   March 31,
                                                          ----------------------------
                                                             2000            1999
                                                          ------------   -------------

Interest income:
    Collateral for collateralized bonds                  $   53,672     $    52,315
                                                         -------------  --------------

Interest and related expense:
    Interest expense on collateralized bonds                 46,169          47,034
    Other collateralized bond expense                           380             506
                                                         -------------  --------------
                                                             46,549          47,540
                                                         -------------  --------------

Net interest margin before provision for losses               7,123           4,775
Provision for losses                                         (4,985)         (1,962)
                                                         -------------  --------------
Net interest margin                                           2,138           2,813

Gain on sale of securities                                        -             397
Interest on due to affiliates, net                             (471)           (168)
                                                         -------------  --------------
Income before extraordinary item                              1,667           3,042
Extraordinary gain - extinguishment of debt                       -          27,842
                                                         -------------  --------------
Net income                                               $    1,667          30,884
                                                         =============  ==============



<FN>

See notes to unaudited financial statements.
</FN>
</TABLE>

MERIT SECURITIES CORPORATION
Statement of Shareholder's Equity
(amounts in thousands except share data)

<TABLE>
<CAPTION>
<S>                                <C>                 <C>            <C>                 <C>            <C>

                                                                Accumulated other
                                                   Additional   comprehensive loss
                                    Common stock     paid-in                           Retained
                                                     capital                           earnings          Total
                                    ------------- --------------------------------- --------------- ----------------

Balance at December 31, 1999          $    10    $      125,997 $          (14,749)  $      24,757 $       136,015

Comprehensive income:
   Net income                               -                 -                   -          1,667           1,667

   Change in net unrealized loss on
      investments available-for-sale        -                 -             (4,674)              -         (4,674)
                                    ------------ -------------- ------------------- -------------- ----------------
Total comprehensive income                  -                 -             (4,674)          1,667         (3,007)

Capital contribution                        -            34,559                   -              -          34,559
                                    ------------ -------------- ------------------- -------------- ----------------

Balance at March 31, 2000             $    10    $      160,556 $          (19,423)  $      26,424 $       167,567
                                    ============ ============== =================== ============== ================
<FN>

See notes to unaudited financial statements.
</FN>
</TABLE>

MERIT SECURITIES CORPORATION
Statements of Cash Flows
(amounts in thousands)
<TABLE>
<CAPTION>
<S>                                                                   <C>                      <C>
                                                                             Three Months Ended
                                                                                 March 31,
                                                                        2000                    1999
                                                                 -------------------     -------------------

Operating activities:
  Net income                                                     $   1,667               $   30,884
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Gain on sale of securities                                       -                       (397)
    Provision for losses                                             4,985                   1,962
    Extraordinary gain - extinguishment of debt                      -                            (27,842)
    Amortization, net                                                2,685                   5,099
    Net change in prepaid shelf registration fees                    -                       93
    Other                                                            222                     (226)
                                                                 -------------------     -------------------
      Net cash provided by operating activities                      9,559                   9,573
                                                                 -------------------     -------------------

Investing activities:
  Collateral for collateralized bonds:
    Purchase of loans subsequently securitized                       -                       (321,645)
    Principal payments on collateral                                 117,188                 387,198
    Proceeds from sale of collateralized bonds                       -                       5,250
    Net decrease in accrued interest receivable and
      funds held by trustee                                          45                      2,136
                                                                 -------------------
                                                                                         -------------------
      Net cash provided by investing activities                      117,233                 72,939
                                                                 -------------------     -------------------

Financing activities:
  Collateralized bonds:
    Proceeds from issuance of collateralized bonds                              -            309,456
    Principal payments on collateralized bonds                           (118,932)           (383,928)
    Decrease in accrued interest payable                                      (75)           (699)
    Decrease in due to affiliates                                         (42,344)           (10,596)
    Proceeds from capital contributions                                    34,559            3,255
                                                                 -------------------     -------------------
      Net cash used for financing activities                             (126,792)           (82,512)
                                                                 -------------------     -------------------

Cash at beginning of period                                                    10            10
                                                                    ----------------        ----------------
                                                                 ----                    ----

Cash at end of period                                            $             10        $   10
                                                                 ===================     ===================

Supplemental disclosure of cash flow information:
  Cash paid for interest                                         $         45,272        $   48,011
                                                                 ===================     ===================

  Collateral for collateralized bonds subsequently securitized   $              -        $   1,121,584
                                                                 ===================     ===================

<FN>

See notes to unaudited financial statements.
</FN>
</TABLE>


MERIT SECURITIES CORPORATION
Notes to Unaudited Financial Statements
March 31, 2000
(amounts in thousands except share data)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accompanying  consolidated  financial  statements have been prepared in
accordance  with the  instructions  to Form 10-Q and do not  include  all of the
information and notes required by generally accepted  accounting  principles for
complete financial statements.  The financial statements include the accounts of
Merit Securities  Corporation  (the  "Company").  The Company is a wholly-owned,
limited-purpose  finance subsidiary of Issuer Holding Corporation  ("IHC").  IHC
was formed on September 4, 1996 to acquire all of the  outstanding  stock of the
Company and certain other affiliates of Dynex Capital, Inc. ("Dynex").  IHC is a
wholly-owned  subsidiary of Dynex.  The Company was organized to facilitate  the
securitization  of loans through the issuance and sale of  collateralized  bonds
(the "Bonds").

     In the opinion of  management,  all  material  adjustments,  consisting  of
normal recurring  adjustments,  considered  necessary for a fair presentation of
the  financial  statements  have been  included.  The Balance Sheet at March 31,
2000, the Statements of Operations for the three months ended March 31, 2000 and
1999, the Statement of Shareholder's Equity for the three months ended March 31,
2000, the Statements of Cash Flows for the three months ended March 31, 2000 and
1999, and the related notes to financial  statements  are  unaudited.  Operating
results for the three months ended March 31, 2000 are not necessarily indicative
of the results that may be expected for the year ending  December 31, 2000.  For
further  information,  refer to the audited  financial  statements and footnotes
included in the Company's Form 10-K for the year ended December 31, 1999.

     Certain  amounts  for  1999  have  been  reclassified  to  conform  to  the
presentation for 2000.

NOTE 2--COLLATERAL FOR COLLATERALIZED BONDS

     Pursuant to the requirements of Statement of Financial Accounting Standards
No. 115, Accounting for Certain  Investments in Debt and Equity Securities,  the
Company   has    classified    collateral    for    collateralized    bonds   as
available-for-sale.  The following table summarizes the Company's amortized cost
basis and fair value of collateral  for  collateralized  bonds at March 31, 2000
and  December  31,  1999,  and the  related  average  effective  interest  rates
(calculated  for the month ended  March 31,  2000 and  December  31,  1999,  and
excluding unrealized gains and losses):
<TABLE>
<CAPTION>
<S>                                               <C>            <C>                 <C>                 <C>

-------------------------------------------------------------------------------------------------------------------
                                                     March 31, 2000                     December 31, 1999
-------------------------------------------------------------------------------------------------------------------
                                                                 Effective                           Effective
                                              Fair Value       Interest Rate       Fair Value      Interest Rate
-------------------------------------------------------------------------------------------------------------------

Collateral for collateralized bonds:
   Amortized cost                        $      2,742,033           7.6%       $      2,865,903         7.5%
   Allowance for losses                           (12,015)                              (11,830)
-------------------------------------------------------------------------------------------------------------------
      Amortized cost, net                       2,730,018                             2,854,073
   Gross unrealized gains                          15,489                                17,124
   Gross unrealized losses                        (34,912)                              (31,873)
-------------------------------------------------------------------------------------------------------------------
                                         $      2,710,595                      $      2,839,324
-------------------------------------------------------------------------------------------------------------------
</TABLE>

     Collateral  for  collateralized  bonds consists of debt  securities  backed
primarily by  adjustable-rate  and  fixed-rate  mortgage  loans secured by first
liens on single family residential  housing,  manufactured  housing  installment
loans  secured by either a UCC filing or a motor  vehicle title and property tax
receivables.  All  collateral  for  collateralized  bonds is  pledged  to secure
repayment of the related  collateralized bonds. All principal and interest (less
servicing-related  fees) on the  collateral  is  remitted  to a  trustee  and is
available for payment on the  collateralized  bonds.  The Company's  exposure to
loss on collateral for  collateralized  bonds is generally limited to the amount
of collateral pledged in excess of the related  collateralized  bonds issued, as
the collateralized  bonds issued are non-recourse to the Company. The collateral
for  collateralized  bonds can be sold by the  Company,  but only subject to the
lien of the collateralized bond indenture.

     The Company did not securitize any collateral during the three months ended
March 31, 2000.


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

     The Company was organized to facilitate the securitization of loans through
the issuance and sale of collateralized  bonds (the "Bonds").  The Bonds will be
secured  primarily  by: (i) mortgage  loans  secured by first or second liens on
residential property, (ii) Federal National Mortgage Association Mortgage-Backed
Certificates,  (iii)  Federal  Home Loan  Mortgage  Corporation  Mortgage-Backed
Certificates,  (iv) Government  National  Mortgage  Association  Mortgage-Backed
Certificates,     (v)    other    mortgage    pass-through    certificates    or
mortgage-collateralized  obligations,  (vi) property tax  receivables  and (vii)
consumer installment loans (collectively,  the "Collateral"). In the future, the
Company may also securitize other types of loans.

     After  payment of the  expenses of an offering  and certain  administrative
expenses,  the net  proceeds  from an offering of Bonds will be used to purchase
Collateral  from IHC or various  third  parties.  IHC can be expected to use the
proceeds  to reduce  indebtedness  incurred  to obtain  such loans or to acquire
additional Collateral.  After the issuance of a series of Bonds, the Company may
sell the  Collateral  securing that series of Bonds,  subject to the lien of the
Bonds.

                                                FINANCIAL CONDITION
<TABLE>
<CAPTION>
<S>                                                    <C>                      <C>

-------------------------------------------------- ------------------ --- --------------------
                                                       March 31,             December 31,
(amounts in thousands except per share data)             2000                    1999
-------------------------------------------------- ------------------ --- --------------------

Collateral for collateralized bonds                 $   2,710,595           $   2,839,324
Non-recourse debt - collateralized bonds                2,543,132               2,661,069
Shareholder's equity                                      167,567                 136,015

Collateralized bond series outstanding                          4                       4

-------------------------------------------------- ------------------ --- -------------------
</TABLE>

     Collateral for collateralized  bonds As of both March 31, 2000 and December
31, 1999,  the Company had 4 series of  collateralized  bonds  outstanding.  The
collateral for collateralized  bonds decreased to $2.7 billion at March 31, 2000
compared to $2.8 billion at December 31, 1999.  This decrease of $0.1 billion is
primarily the result of $117.2 million in paydowns on the collateral.

     Non-recourse debt - collateralized  bonds Collateralized bonds decreased to
$2.5  billion at March 31,  2000 from $2.7  billion at  December  31,  1999 as a
result of $118.9  million in paydowns  during the three  months  ended March 31,
2000.

     Shareholder's  Equity  Shareholder's  equity increased to $167.6 million at
March 31, 2000 from $136.0  million at December  31,  1999.  This  increase  was
primarily the result of a $34.6 million capital contribution from IHC during the
three months ended March 31, 2000 and $1.7 million of net income  earned  during
the three months ended March 31, 2000. These increases in  shareholder's  equity
were partially  offset by a $4.7 million  increase in the net unrealized loss on
investments  available-for-sale  from a $14.7  million  net  unrealized  loss on
investments  available-for-sale  at  December  31,  1999 to a $19.4  million net
unrealized loss on investments available-for-sale at March 31, 2000.

                                               RESULTS OF OPERATIONS

--------------------------------------------------------------------------------
                                                     Three Months Ended
                                                         March 31,
                                             -----------------------------------
(amounts in thousands)                            2000               1999
--------------------------------------------------------------------------------

Interest income                                $     53,672       $     52,315
Interest expense on collateralized bonds             46,169             47,034
Provision for losses                                  4,985              1,962
Net interest margin                                   2,138              2,813
Gain on sale of securities                                -                397
Extraordinary gain - extinguishment of debt               -             27,842
Net income                                            1,667             30,884

--------------------------------------------------------------------------------

     Interest  income  on the  collateral  for  collateralized  bonds  increased
slightly to $53.7  million for the three  months ended March 31, 2000 from $52.3
million for the same period in 1999.  This  increase  was  primarily a result of
lower premium  amortization  caused by lower prepayments during the three months
ended March 31, 2000 than  during the same period in 1999,  which was  partially
offset by a decline in average collateral for collateralized bonds.

     Interest expense on collateralized bonds decreased to $46.2 million for the
three months ended March 31, 2000 from $47.0  million for the three months ended
March 31, 2000. This slight decrease was primarily due to the decline in average
collateralized   bonds  due  to  prepayments  on  the  related   collateral  for
collateralized  bonds,  partially offset by an increase in average yields on the
collateralized bonds.

     Provision  for losses  increased to $5.0 million for the three months ended
March 31, 2000 from $2.0 million for the same period in 1999.  This increase was
primarily a result of increasing the reserve for probable losses on various loan
pools  pledged as  collateral  for  collateralized  bonds  where the Company has
retained credit risk.

     Net interest  margin for the three months ended March 31, 2000 decreased to
$2.1 million  from $2.8  million for the three months ended March 31, 1999.  The
decrease was  primarily  the result of additional  provisions  for losses.  This
decrease was  partially  offset by lower  premium  amortization  caused by lower
prepayments  during the three  months  ended March 31, 2000 than during the same
period in 1999.

     Gain on sale of  securities  of $0.4 million  during the three months ended
March 31, 1999 is the result of the  recognition  of the  remaining  gain on the
sale of the Merit 11B A-1 class, which had a principal balance of $4.9 million.

     The Company also incurred an extraordinary gain of $27.8 million related to
the recognition of unamortized premiums net of unamortized issuance costs on six
series of  collateralized  bonds,  which were collapsed  during the three months
ended March 31, 1999. The collateral  securing  these  collateralized  bonds was
re-securitized in the Company's $1.4 billion securitization in March 1999.

     Credit Exposures With collateralized  bond structures,  the Company retains
credit  risk  relative  to  the  amount  of  overcollateralization  required  in
conjunction  with the bond insurance.  Losses are generally first applied to the
overcollateralized amount, with any losses in excess of that amount borne by the
bond insurer or the holders of the collateralized bonds. The Company only incurs
credit  losses to the extent  that  losses  are  incurred  in the  repossession,
foreclosure and sale of the underlying  collateral.  Such losses generally equal
the excess of the principal amount outstanding,  less any proceeds from mortgage
or hazard insurance, over the liquidation value of the collateral. To compensate
the Company for retaining this loss exposure,  the Company generally receives an
excess  yield on the  collateralized  securities  relative  to the  yield on the
collateralized  bonds. At March 31, 2000, the Company retained $182.7 million in
aggregate principal amount of  overcollateralization  compared to $187.1 million
at December  31,  1999.  The Company had  reserves,  or  otherwise  had provided
coverage through third-party reimbursement guarantees on $49.5 million and $49.3
million of this  potential  credit loss  exposure at March 31, 2000 and December
31, 1999,  respectively.  At March 31, 2000 and December 31, 1999, $29.7 million
and $30.3 million, respectively, of this reserve amount is in the form of a loss
reimbursement  guarantee from a third-party rated A by Standards & Poors Ratings
Services, Inc.

     Other   Matters  At  March  31,  2000,   the  Company  had   securities  of
approximately  $308.6  million  remaining  for  issuance  under  a  registration
statement  filed  with the  Securities  and  Exchange  Commission.  The  Company
anticipates issuing additional Bonds in the future.


Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk generally  represents the risk of loss that may result from the
potential  change in the value of a financial  instrument due to fluctuations in
interest and foreign exchange rates and in equity and commodity  prices.  Market
risk is inherent to both derivative and  non-derivative  financial  instruments,
and  accordingly,  the scope of the  Company's  market risk  management  extends
beyond derivatives to include all market risk sensitive  financial  instruments.
As a financial  services  company,  net interest  income  comprises  the primary
component of the Company's earnings. As a result, the Company is subject to risk
resulting  from  interest  rate  fluctuations  to the extent that there is a gap
between the amount of the  Company's  interest-earning  assets and the amount of
interest-bearing   liabilities  that  are  prepaid,  mature  or  reprice  within
specified periods.

     Dynex, as the Company's  parent,  continuously  monitors the aggregate cash
flow,  projected net yield and market value of the collateral for collateralized
bonds  under  various  interest  rate and  prepayment  assumptions.  Dynex has a
Portfolio  Executive  Committee  ("PEC"),  which includes  executive  management
representatives,  and  monitors and manages the interest  rate  sensitivity  and
repricing  characteristics  of the  balance  sheet  components  consistent  with
maintaining  acceptable levels of change in both the net portfolio value and net
interest income. Dynex's exposure to interest rate risk is reviewed on a monthly
basis by the PEC and quarterly by the Board of Directors.

     Dynex  utilizes  a monthly  static  cash flow and  yield  projection  under
interest rate scenarios detailed below. While Dynex may use this tool, there can
be no assurance Dynex will  accomplish the goal of adequately  managing the risk
profile of the investment portfolio.

     Dynex  measures the  sensitivity  of its net interest  income to changes in
interest  rates.  Changes  in  interest  rates  are  defined  as  instantaneous,
parallel,  and sustained  interest rate movements in 100 basis point increments.
Dynex  estimates  its  interest  income for the next twelve  months  assuming no
changes in interest  rates from those at period end. Once the base case has been
estimated,  cash  flows are  projected  for each of the  defined  interest  rate
scenarios.  Those  scenario  results are then compared  against the base case to
determine the estimated change to net interest income.

     The  following   table   summarizes  the  Company's  net  interest   margin
sensitivity analysis as of March 31, 2000. This analysis represents management's
estimate of the percentage  change in net interest margin given a parallel shift
in interest rates.  The "Base" case represents the interest rate  environment as
it existed as of March 31,  2000.  The  analysis is heavily  dependent  upon the
assumptions used in the model. The effect of changes in future interest rates on
the mix of assets and  liabilities  may cause actual  results to differ from the
modeled results. In addition,  certain financial instruments provide a degree of
"optionality."  The model  considers the effects of these embedded  options when
projecting cash flows and earnings.  The most  significant  option affecting the
Company's portfolio is the borrowers' option to prepay the loans. The model uses
a dynamic prepayment model that applies a Constant  Prepayment Rate ranging from
5.5% to 70.1% based on the  projected  incentive to refinance for each loan type
in any given period.  While Dynex's model considers these factors, the extent to
which  borrowers  utilize the ability to exercise  their option may cause actual
results to significantly  differ from the analysis.  Furthermore,  its projected
results assume no additions or subtractions to the Company's  portfolio,  and no
change to the Company's liability structure.  Historically, the Company has made
significant changes to its assets and liabilities, and is likely to do so in the
future.

            ---------------------- ----------------------
                 Basis Point          % Change in Net
             Increase (Decrease)   Interest Margin from
              in Interest Rates          Base Case
            ---------------------- ----------------------

                    +200               (33.56 %)
                    +100               (17.12%)

                    Base                   -

                    -100                13.50 %
                    -200                15.53 %
            ---------------------- ------------------ ---

     Approximately  $1.4 billion of the Company's  collateral for collateralized
bonds as of March 31, 2000 is comprised of loans or securities  that have coupon
rates  which  adjust  over  time  (subject  to  certain  periodic  and  lifetime
limitations)  in  conjunction   with  changes  in  short-term   interest  rates.
Approximately  66% and 25% of the ARM loans underlying the Company's  collateral
for  collateralized  bonds  are  indexed  to and reset  based  upon the level of
six-month LIBOR and one-year CMT, respectively.

     Generally,  during  a period  of  rising  short-term  interest  rates,  the
Company's net interest spread earned on its collateralized  bonds will decrease.
The  decrease of the net interest  spread  results from (i) the lag in resets of
the ARM loans underlying the collateral for collateralized bonds relative to the
rate  resets on the  collateralized  bonds and (ii) rate resets on the ARM loans
which are generally limited to 1% every six months or 2% every twelve months and
subject  to  lifetime  caps,  while  the  associated  borrowings  have  no  such
limitation.  As short-term interest rates stabilize and the ARM loans reset, the
net interest margin may be restored to its former level as the yields on the ARM
loans adjust to market conditions.  Conversely, net interest margin may increase
following a fall in short-term interest rates. This increase may be temporary as
the  yields on the ARM loans  adjust to the new  market  conditions  after a lag
period. In each case, however, the Company expects that the increase or decrease
in the net interest spread due to changes in the short-term interest rates to be
temporary.  The net  interest  spread may also be  increased or decreased by the
proceeds or costs of interest rate swap and cap agreements.

     As part of its asset/liability  management process, the Company has entered
into interest rate cap and swap  agreements.  These interest rate agreements are
used by the Company to help  mitigate  the risk  related to the  collateral  for
collateralized  bonds for  fluctuations in interest rates that would  ultimately
impact net interest income. To help protect the Company's net interest income in
a rising interest rate environment, the Company has purchased interest rate caps
with a notional amount of $351 million, which help reduce the Company's exposure
to interest rate risk rising above the lifetime  interest rate caps on ARM loans
underlying  the collateral for  collateralized  bonds.  These interest rate caps
provide the Company with  additional cash flow should the related index increase
above the contracted rates. The contracted rates on these interest rate caps are
based on one-month LIBOR, six-month LIBOR or one-year CMT.

     The interest rate cap agreements  represent protection for the earnings and
cash flow of the net collateral for collateralized  bonds in adverse markets. To
date,  market  conditions  have not been  adverse  such  that the caps have been
utilized.

     The remaining portion of the Company's  collateral for collateralized bonds
as of March 31, 2000,  approximately  $1.2  billion,  is comprised of loans that
have  coupon  rates  that are  either  fixed or do not reset  within the next 15
months.  The  Company  has  generally  limited  its  interest  rate risk on such
collateral  primarily through the issuance of fixed-rate  collateralized  bonds.
Overall,  the Company's  interest rate risk is primarily  related to the rate of
change in short-term interest rates, not the level of short-term interest rates.



PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings:

                  None

Item 5.           Other Information:

                  None

Item 6.           Exhibits and Reports on Form 8-K:

(a)               Exhibits


     3.1 Articles of  Incorporation  of the Registrant  (Incorporated  herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).

     3.2  Bylaws of the  Registrant  (Incorporated  herein by  reference  to the
Exhibits to Registrant's  Registration  Statement No. 33-83524 on Form S-3 filed
August 31, 1994).

     3.3  Amended and  Restated  Articles of  Incorporation  of the  Registrant,
effective  April 19, 1995  (Incorporated  herein by  reference to Exhibit to the
Registrant's Current Report on Form 8-K, filed April 21, 1995).

     4.1 Indenture  between  Registrant and Trustee,  dated as of August 1, 1994
(Incorporated  herein by reference to the Exhibits to Registrant's  Registration
Statement No. 33-83524 on Form S-3 filed August 31, 1994).

     4.2  Form  of  Supplement   Indenture   between   Registrant   and  Trustee
(Incorporated  herein by reference to the Exhibits to Registrant's  Registration
Statement No. 33-83524 on Form S-3 filed August 31, 1994).

     Copy of the  Indenture,  dated as of November  1, 1994,  by and between the
Registrant   and  Texas   Commerce   Bank  National   Association,   as  Trustee
(Incorporated  herein by reference to Exhibit to the Registrant's Current Report
on Form 8-K, filed December 19, 1994).

     Copy of the Series 4 Indenture Supplement, dated as of June 1, 1995, by and
between the Registrant and Texas Commerce Bank National Association,  as Trustee
(including schedules and exhibits)  (Incorporated herein by reference to Exhibit
to the Registrant's Current Report on Form 8-K, filed July 10, 1995).

     4.5 Copy of the Series 10  Indenture  Supplement,  dated as of  December 1,
1997,  by  and  between  the   Registrant   and  Texas  Commerce  Bank  National
Association,  as Trustee (related  schedules and exhibits available upon request
of the Trustee).  (Incorporated  herein by reference to Exhibit of  Registrant's
Current Report on Form 8-K, filed January 6, 1998).

     4.6 Copy of the Series 11 Indenture Supplement,  dated as of March 1, 1998,
by and between the Registrant and Texas Commerce Bank National  Association,  as
Trustee (related  schedules and exhibits available upon request of the Trustee).
(Incorporated  herein by reference to Exhibit of Registrant's  Current Report on
Form 8-K, filed June 12, 1998).

     4.7 Copy of the Series 12 Indenture Supplement,  dated as of March 1, 1999,
by and between the Registrant and Texas Commerce Bank National  Association,  as
Trustee (related  schedules and exhibits available upon request of the Trustee).
(Incorporated  herein by reference to Exhibit of Registrant's  Current Report on
Form 8-K, filed April 12, 1999).

     4.8 Copy of the Series 13 Indenture Supplement, dated as of August 1, 1999,
by and between the Registrant and Texas Commerce Bank National  Association,  as
Trustee (related  schedules and exhibits available upon request of the Trustee).
(Incorporated  herein by reference to Exhibit of Registrant's  Current Report on
Form 8-K, filed September 13, 1999).

     99.1 Standard  Provisions to Servicing  Agreement  (Incorporated  herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).

     99.2 Form of Servicing Agreement  (Incorporated  herein by reference to the
Exhibits to Registrant's  Registration  Statement No. 33-83524 on Form S-3 filed
August 31, 1994).

     99.3 Standard Terms to Master Servicing Agreement  (Incorporated  herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).

     99.4 Form of Master Servicing Agreement  (Incorporated  herein by reference
to the Exhibits to Registrant's  Registration Statement No. 33-83524 on Form S-3
filed August 31, 1994).

     99.5 Form of  Prospectus  Supplement  of Bonds  secured by  adjustable-rate
mortgage  loans  (Incorporated  herein by reference to Exhibits to  Registrant's
Pre-Effective Amendment No. 4 to Registration Statement No. 33-83524 on Form S-3
filed December 5, 1994).

     99.6 Form of Financial  Guaranty Assurance Policy  (Incorporated  herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).

     99.7 Form of GEMICO Mortgage Pool Insurance Policy  (Incorporated herein by
reference to the Exhibits to Registrant's Registration Statement No. 33-83524 on
Form S-3 filed August 31, 1994).

     99.8 Form of PMI Mortgage Insurance Co. Pool Insurance Policy (Incorporated
herein by reference to the Exhibits to Registrant's  Registration  Statement No.
33-83524 on Form S-3 filed August 31, 1994).

     99.9 Form of Prospectus  Supplement of Bonds secured by fixed-rate mortgage
loans   (Incorporated   herein  by   reference   to  Exhibits  to   Registrant's
Pre-Effective Amendment No. 4 to Registration Statement No. 33-83524 on Form S-3
filed December 5, 1994).

     99.10 Copy of the Saxon Mortgage  Funding  Corporation  Servicing Guide for
Credit  Sensitive  Loans,  February  1,  1995  Edition  (Incorporated  herein by
reference to Exhibit to the Registrant's Current Report on Form 8-K, filed March
8, 1995).

     99.11 Copy of Financial  Guaranty  Insurance  Policy No.  50364-N issued by
Financial  Guaranty  Assurance  Inc.,  dated April 7, 1995,  with respect to the
Series 3 Bonds (Incorporated  herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed April 21, 1995).

     99.12 Copy of Financial  Guaranty  Insurance  Policy No.  50382-N issued by
Financial  Guaranty  Assurance  Inc.,  dated June 29, 1995,  with respect to the
Series 4 Bonds (Incorporated  herein by reference to Exhibit to the Registrant's
Current Report on Form 8-K, filed July 10, 1995).

     99.13 Copy of the Standard  Terms to Master  Servicing  Agreement,  June 1,
1995 Edition  (Incorporated  herein by reference to Exhibit to the  Registrant's
Current Report on Form 8-K, filed July 10, 1995).

     99.14 Copy of Financial  Guaranty Insurance Policy No. 19804 issued by MBIA
Insurance  Corporation  (Incorporated  herein by  reference  to  Exhibit  to the
Registrant's Current Report on Form 8-K, filed November 15, 1995).

     Copy of  Financial  Guaranty  Insurance  Policy  No.  20596  issued by MBIA
Insurance  Corporation  (Incorporated  herein by  reference  to  Exhibit  to the
Registrant's Current Report on Form 8-K, filed March 21, 1996).

     99.16 Copy of Financial  Guaranty Insurance Policy No. 21296 issued by MBIA
Insurance  Corporation  (Incorporated  herein by  reference  to  Exhibit  to the
Registrant's Current Report on Form 8-K, filed June 19, 1996).

(b)      Reports on Form 8-K

         None.



                                                           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.

                         MERIT SECURITIES CORPORATION


                         By:  /s/ William H. West, Jr.
                              William H. West, Jr.
                              Executive Vice President
                              (Principal Executive Officer)





                              /s/ Stephen J. Benedetti
                              Stephen J. Benedetti
                              Treasurer
                              (Principal Financial & Accounting Officer)






Dated:  May 15, 2000