================================================================================

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

                                   FORM 10-Q/A

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

                       For the quarter ended June 30, 2003

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


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

                         Commission file number 33-83524

<TABLE>
                                <S>                                                     <C>
                           Virginia                                                 54-1736551
               (State or other jurisdiction of                                   (I.R.S. Employer
                incorporation or organization)                                  Identification No.)

        4551 Cox Road, Suite 300, Glen Allen, Virginia                              23060-6740
           (Address of principal executive offices)                                 (Zip Code)
</TABLE>

                                 (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

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

     Aggregate  market  value of  voting  stock  held by  non-affiliates  of the
registrant  as of June 30,  2003:  None As of July 31,  2003,  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/A with the
reduced disclosure format.

================================================================================
<PAGE>
                          MERIT SECURITIES CORPORATION
                                   FORM 10-Q/A

                                      INDEX


     This  amendment  on  Form  10-Q/A  reflects  restatement  of the  Company's
financial  statements  as  discussed  in  Note 7 to the  condensed  consolidated
financial statements.

     All of the  information  in this Form 10-Q/A is as of August 14, 2003,  the
filing  date of the  original  Form 10-Q,  and has not been  updated  for events
subsequent to that date other than for the matter discussed above.

                                                                            Page

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
         Condensed Consolidated Balance Sheets at
           June 30, 2003 (as restated) and December 31,
           2002 (unaudited)...................................................1

         Condensed Consolidated Statements of Operations and
           Comprehensive (Loss) Income for the three months
           and six months ended June 30, 2003 (as restated)
           and 2002 (unaudited)...............................................2

         Condensed Consolidated Statements of Cash Flows
           for the six months ended June 30, 2003 (as
           restated) and 2002 (unaudited).....................................3

         Notes to Unaudited Condensed Consolidated
           Financial Statements...............................................4

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

Item 3.  Quantitative and Qualitative Disclosures about
           Market Risk.......................................................13

Item 4.  Controls and Procedures.............................................14


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings...................................................15

Item 5.  Other Information...................................................15

Item 6.  Exhibits and Reports on Form 8-K....................................16

SIGNATURE ...................................................................19
<PAGE>


PART I.    FINANCIAL INFORMATION


Item 1.    Financial Statements

MERIT SECURITIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(amounts in thousands except share data)



<TABLE>
<CAPTION>
                                                                        June 30, 2003           December 31, 2002
                                                                     ---------------------    ---------------------
                                                                        (As restated,
                                                                         see Note 7)
   ASSETS:
                  <S>                                                           <C>                      <C>
       Collateral for collateralized bonds:
         Loans, net                                                      $    888,490             $   1,017,446
          Debt securities, available-for-sale                                 289,724                   323,791
        Other loans                                                             4,920                     6,505
        Asset-backed Securities, held-to-maturity                               1,111                     1,644
         Due from affiliates, net                                              28,495                    11,507
                                                                     ---------------------    ---------------------
                                                                         $  1,212,740             $   1,360,893
                                                                     =====================    =====================

   LIABILITIES AND SHAREHOLDER'S EQUITY

   LIABILITIES:
        Non-recourse debt - collateralized bonds                         $  1,149,207             $   1,299,113

   SHAREHOLDER'S EQUITY:
      Common stock, no par value, 10,000 shares authorized,
        1,000 shares issued and outstanding                                        10                        10
      Additional paid-in capital                                               68,674                    68,674
      Accumulated other comprehensive income (loss)                             2,311                      (134)
      Accumulated deficit                                                      (7,462)                   (6,770)
                                                                     ---------------------    ---------------------
                                                                               63,533                    61,780
                                                                     ---------------------    ---------------------
                                                                         $  1,212,740             $   1,360,893
                                                                     =====================    =====================
</TABLE>

See notes to unaudited condensed consolidated financial statements.
<PAGE>


MERIT SECURITIES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
     AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
(amounts in thousands)




<TABLE>
<CAPTION>
                                                    -----------------------------------     -----------------------------------
                                                            Three Months Ended                       Six Months Ended
                                                                 June 30,                                June 30,
                                                    -----------------------------------     -----------------------------------
                                                         2003                2002                2003               2002
                                                    ----------------    ---------------     ---------------    ----------------
                                                     (As restated,                          (As restated,
                                                      see Note 7)                            see Note 7)
                <S>                                      <C>                   <C>                 <C>                 <C>
Interest income:
   Collateral for collateralized bonds                $     20,335        $     27,936        $     42,525       $     54,750
   Other loans                                                  38                  27                  76                 27
   Asset-backed securities, held-to-maturity                    54                   -                 115                  -
                                                    ----------------    ---------------     ---------------    ----------------
                                                            20,427              27,963              42,716             54,777
                                                    ----------------    ---------------     ---------------    ----------------

Interest and related expense:
   Interest expense on collateralized bonds                 12,814              16,485              26,166             33,354
   Other collateralized bond expense                           553                 559                 787                994
                                                    ----------------    ---------------     ---------------    ----------------
                                                            13,367              17,044              26,953             34,348
                                                    ----------------    ---------------     ---------------    ----------------

Net interest margin before provision for loan
   losses                                                    7,060              10,919              15,763             20,429
Provision for loan losses                                  (10,030)             (5,279)            (15,033)           (11,156)
                                                    ----------------    ---------------     ---------------    ----------------
Net interest margin                                         (2,970)              5,640                 730              9,273

Impairment charges                                             (40)             (4,442)             (1,421)            (6,403)
Loss on extinguishment of debt                                   -                (544)                  -               (544)
                                                    ----------------    ---------------     ---------------    ----------------
Net (loss) income                                           (3,010)                654                (691)             2,326
Change in net unrealized gain (loss) during
   period on:
Investments classified as available-for-sale                 1,847              (5,578)              2,445             (2,499)
                                                    ----------------    ---------------     ---------------    ----------------
Comprehensive (loss) income                           $     (1,163)       $     (4,924)       $      1,754       $       (173)
                                                    ================    ===============     ===============    ================
</TABLE>

See notes to unaudited condensed consolidated financial statements.

<PAGE>


MERIT SECURITIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(amounts in thousands)
<TABLE>
<CAPTION>
                                                                   ----------------------     ----------------------
                                                                      Three Months Ended          Six Months Ended
                                                                           June 30,                   June 30,
                                                                   ----------------------     ----------------------
                                                                           2003                       2002
                                                                   ----------------------     ----------------------
                                                                       (As restated,
                                                                        see Note 7)
                   <S>                                                          <C>                      <C>
Operating activities:
    Net (loss) income                                                  $       (691)               $    2,326
    Adjustments to reconcile net (loss) income to net cash
      provided by operating activities:
      Impairment charges                                                      1,421                     6,403
      Provision for loan losses                                              15,033                    11,156
      Amortization, net                                                       2,549                     4,692
      Other                                                                   1,030                    (1,692)
                                                                   ----------------------     ----------------------
        Net cash provided by operating activities                            19,342                    22,885
                                                                   ----------------------     ----------------------

Investing activities:
      Principal payments on collateral                                      149,684                    242,160
      Purchase of loans                                                           -                   (158,933)
      Proceeds from sale of collateralized bonds                                  -                    605,272
                                                                   ----------------------     ----------------------
                                                                   ----------------------     ----------------------
        Net cash provided by investing activities                           149,684                    688,499
                                                                   ----------------------     ----------------------

Financing activities:
      Principal payments on collateralized bonds                           (151,727)                  (687,774)
      Payments (to) from affiliates                                         (17,299)                     2,244
      Dividends and capital distributions                                         -                    (25,854)
                                                                 ----------------------     ----------------------
        Net cash used for financing activities                             (169,026)                  (711,384)
                                                                 ----------------------     ----------------------
Net change in cash                                                                -                          -
Cash, beginning of period                                                         -                          -
                                                                 ----------------------     ----------------------

Cash, end of period                                                    $          -               $          -
                                                                 ======================     ======================


Supplemental disclosure of cash flow information:
    Cash paid for interest                                             $     24,835               $     31,926
                                                                 ======================     ======================
</TABLE>

See notes to unaudited condensed consolidated financial statements.
<PAGE>


MERIT SECURITIES CORPORATION

NOTES TO UNAUDITED Condensed CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(amounts in thousands)


NOTE 1 -- BASIS OF PRESENTATION

     The  accompanying  condensed  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  accounting  principles  generally
accepted in the United States of America,  hereinafter referred to as "generally
accepted accounting principles" for complete financial statements. The financial
statements include the accounts of Merit Securities  Corporation (the "Company")
and its wholly owned subsidiary, Financial Asset Securitization,  Inc. ("FASI"),
which was purchased from Dynex Capital, Inc. ("Dynex"), its parent, on March 31,
2002.  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.  IHC is a wholly owned  subsidiary  of Dynex.  Dynex has elected to be
treated as a real  estate  investment  trust  ("REIT")  for  federal  income tax
purposes under the Internal  Revenue Code of 1986.  Accordingly,  the Company is
not subject to federal  income tax. The Company was organized to facilitate  the
securitization  of loans through the issuance and sale of  collateralized  bonds
(the "Bonds"). All significant inter-company balances and transactions have been
eliminated in the consolidation of the Company.

     In the opinion of  management,  all  material  adjustments,  consisting  of
normal recurring  adjustments,  considered  necessary for a fair presentation of
the  condensed   consolidated  financial  statements  have  been  included.  The
Condensed Consolidated Balance Sheet at June 30, 2003 and December 31, 2002, the
Condensed Consolidated  Statements of Operations and Comprehensive (Loss) Income
for the three months and six months ended June 30, 2003 and 2002,  the Condensed
Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and
2002, and the related notes to condensed  consolidated  financial statements are
unaudited.  Operating  results  for the six months  ended June 30,  2003 are not
necessarily  indicative  of the results that may be expected for the year ending
December  31,  2003.  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, 2002.

     The Company uses  estimates in  establishing  fair value for its  financial
instruments as discussed in Note 4.

     The Company also has credit risk on certain investments in its portfolio as
discussed  in Note 5. An  allowance  for  loan  losses  has been  estimated  and
established  for current  existing losses based on  management's  judgment.  The
allowance for loan losses is evaluated and adjusted  periodically  by management
based on the actual and projected timing and amount of credit losses. Provisions
made to increase the allowance related to credit risk are presented as provision
for  loan  losses  in the  accompanying  condensed  consolidated  statements  of
operations.  The Company's  actual credit losses may differ from those estimates
used to establish the allowance.

     Certain  reclassifications  have been made to the financial  statements for
2002 to conform to the presentation for 2003,  including the reclassification of
the  extraordinary  gain  recorded in the three and six month periods ended June
30, 2002 pursuant to the adoption of SFAS No. 145, "Recission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections".


NOTE 2 -- COLLATERAL FOR COLLATERALIZED BONDS

     Collateral for  collateralized  bonds consists of loans and debt securities
backed  primarily by  adjustable-rate  and fixed-rate  mortgage loans secured by
first  liens on single  family  residential  housing  and  manufactured  housing
installment  loans secured by a Uniform  Commercial Code filing.  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  has  classified  all of its debt  securities  included  within
collateral  for  collateralized  bonds  as  available-for-sale.  As  such,  debt
securities included within collateral for collateralized  bonds at June 30, 2003
and  December  31, 2002 are reported at fair value,  with  unrealized  gains and
losses  excluded from earnings and reported as a component of accumulated  other
comprehensive income (loss). Loans included within collateral for collateralized
bonds are reported at amortized cost.

     The following table  summarizes the types of collateral for  collateralized
bonds as of June 30, 2003 and December 31, 2002:


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                    June 30, 2003                       December 31, 2002
------------------------------------------------------------------------------------------------------------------
       <S>                                                 <C>                                    <C>
   Loans, at amortized cost                         $    914,528                           $  1,038,146
   Allowance for loan losses                             (26,038)                               (20,700)
------------------------------------------------------------------------------------------------------------------
                                                         888,490                              1,017,446
   Debt Securities, at fair value                        289,724                                323,791
------------------------------------------------------------------------------------------------------------------
                                                    $  1,178,214                           $  1,341,237
------------------------------------------------------------------------------------------------------------------
</TABLE>


     The following table  summarizes the amortized cost basis,  gross unrealized
gains and  losses,  and  estimated  fair  value of debt  securities  pledged  as
collateral for collateralized bonds as of June 30, 2003 and December 31, 2002:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                    June 30, 2003                       December 31, 2002
------------------------------------------------------------------------------------------------------------------
          <S>                                                <C>                                    <C>
   Debt securities, at amortized cost               $    287,293                           $    323,728
   Gross unrealized gains                                  2,431                                     63
------------------------------------------------------------------------------------------------------------------
   Estimated fair value                             $    289,724                           $    323,791
---------------------------------------------------------------------------- -------------------------------------
</TABLE>


NOTE 3 -- DUE FROM AFFILIATES, NET

     Due from  affiliates,  net,  include  amounts  loaned by the Company to its
parent, or to affiliates of its parent. Interest is charged on amounts due to or
from  affiliates  at the  Federal  Funds  rate  plus  100  basis  points.  These
inter-company  loans are subject to a maximum  outstanding of $50,000.  Interest
income  was $63 and $67 for the  three  and  six-months  ended  June  30,  2003,
respectively on amounts due from  affiliates.  Interest income was $4 and $4 for
the three and six-months  ended June 30, 2002,  respectively on amounts due from
affiliates.


NOTE 4 -- FAIR VALUE

     Securities classified as available-for-sale are carried in the accompanying
financial  statements  at  estimated  fair  value.  Estimates  of fair value for
securities may be based on market prices provided by certain dealers.  Estimates
of fair value for certain other  securities are  determined by  calculating  the
present value of the projected cash flows of the instruments using  market-based
discount rates,  prepayment rates and credit loss  assumptions.  The estimate of
fair value for  securities  pledged as collateral  for  collateralized  bonds is
determined by  calculating  the present value of the projected cash flows of the
instruments  using prepayment rate assumptions and credit loss assumptions based
on historical experience and estimated future activity, and using discount rates
commensurate  with those the Company  believes  would be used by third  parties.
Such discount rate used in the determination of fair value of securities pledged
as collateral for collateralized bonds was 16% at June 30, 2003 and December 31,
2002.  Prepayment rate assumptions at June 30, 2003, and December 31, 2002, were
generally at a "constant  prepayment  rate," or CPR ranging from 35%-40% in 2003
and 30%-45% in 2002,  for  collateral  for  collateralized  bonds  consisting of
securities  backed by  single-family  mortgage loans, and a CPR equivalent of 8%
for 2003 and 11% for 2002 for collateral for collateralized  bonds consisting of
securities  backed by manufactured  housing loans. CPR assumptions for each year
are  based in part on the  actual  prepayment  rates  experienced  for the prior
six-month  period  and in part on  management's  estimate  of future  prepayment
activity.  The  loss  assumptions  utilized  vary  depending  on the  collateral
pledged.

     Estimates of fair value for other financial instruments are based primarily
on  management's  judgment.  Since  the fair  value of the  Company's  financial
instruments  are based on  estimates,  actual  gains and losses  recognized  may
differ from those  estimates  recorded in the condensed  consolidated  financial
statements.


NOTE 5 -- ALLOWANCE FOR LOAN LOSSES

     The  following  table  summarizes  the activity for the  allowance for loan
losses on loans within  collateral for  collateralized  bonds for the six months
ended June 30, 2003 and June 30, 2002:


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                             2003                                 2002
-------------------------------------------------------------------------------------------------------------------
            <S>                                               <C>                                  <C>
   Beginning balance                                     $  20,700                            $  15,364
   Provision for loan losses                                15,033                               11,156
   Credit losses, net of recoveries                         (9,695)                             (11,139)
------------------------------------------------------------------------------ ------------------------------------
   Ending balance                                        $  26,038                            $  15,381
-------------------------------------------------------------------------------------------------------------------
</TABLE>


     The Company has limited exposure to credit risk retained on loans, which it
has securitized through the issuance of collateralized bonds. The aggregate loss
exposure  is  generally  limited  to the amount of  collateral  in excess of the
related  investment-grade  collateralized  bonds issued (commonly referred to as
"over-collateralization"),  excluding  price  premiums and  discounts  and hedge
gains and losses.  The allowance  for loan losses is included in collateral  for
collateralized bonds in the accompanying condensed consolidated balance sheets.

     The Company continues to experience unfavorable results in its manufactured
housing loan portfolio in terms of elevated delinquencies and loss severity. For
the six months ended June 30, 2003,  the Company  recorded  $15,033 of provision
for loan losses.  Included in this amount is $6,120 in provision for loan losses
recorded in June 2003  specifically for currently  existing credit losses within
outstanding  manufactured housing loans that are current as to payment but which
the Company  has  determined  to be  impaired.  Previously,  the Company had not
considered  current loans to be impaired  under  generally  accepted  accounting
principles and therefore had not provided for these loans.  Continued  worsening
trends  in  both  the  industry  as a  whole  and  the  Company's  portfolio  of
manufactured  housing  loans  prompted the Company to prepare  analysis on these
pools of loans.  The Company has not  originated  any new  manufactured  housing
loans since 1999, and has empirical  data on the historical  performance of this
static pool of loans. The Company analyzed  performance and default activity for
loans that were current at various  points in time over the last 36 months,  and
based on that analysis,  identified  default trends on these loans.  The Company
also considered current market conditions in this analysis, with the expectation
that these market  conditions would continue for the foreseeable  future.  Given
this new  observable  data, the Company now believes the inclusion of amounts in
the  provision  for loan  losses for loans which are current as to payment is an
appropriate  application  of  the  definition  of  impairment  within  generally
accepted accounting principles,  and has accounted for the amount as a change in
accounting estimate and accordingly  recorded the amount as additional provision
for loan losses.

     Within each  collateralized  bond series,  a group of loans are held within
the securitization structure as a credit reserve to provide additional cash flow
to cover losses.  Once the  cumulative  level of losses  surpasses the cash flow
available   from   the   credit   reserve   and   losses   have   depleted   the
over-collateralization,  future  losses are passed to the  holders of the lowest
classes of bonds within the structure.  On one of the securitization  structures
of the Company,  total cumulative  losses have surpassed the cash flow available
from the credit reserve and have completely depleted the over-collateralization.
The  reserves for loan losses on this  securitization  decreased as these losses
began to be borne by the subordinated bondholders.

     The allowance for loan losses on the over-collateralization totaled $26,038
and  $20,700  at June 30,  2003 and  December  31,  2002  respectively,  and are
included in collateral for  collateralized  bonds in the accompanying  condensed
consolidated  balance  sheets.  Over-collateralization  at  June  30,  2003  and
December 31, 2002 totaled $48,505 and $54,915 respectively.


NOTE 6 -- RECENT ACCOUNTING PRONOUNCEMENTS

     In May 2003,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 150,  "Accounting for
Certain  Financial  Instruments  with  Characteristics  of both  Liabilities and
Equity." This statement is effective for financial  instruments  entered into or
modified  after May 31, 2003 and is otherwise  effective at the beginning of the
first  interim  period  beginning  after June 15, 2003,  except for  mandatorily
redeemable financial  instruments of nonpublic entities which are subject to the
provisions  of this  statement  for the  first  fiscal  period  beginning  after
December  15,  2003.  This  statement  amends  SFAS  No.  133,  "Accounting  for
Derivative  Instruments and Hedging  Activities" and SFAS No. 128, "Earnings per
Share",  to establish  standards  outlining how to classify and measure  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that certain financial  instruments that were previously  classified as
equity now be  classified  as a  liability  (or,  in some  circumstances,  as an
asset).  The Company is reviewing the  implications of SFAS No. 150 but does not
believe  that its  adoption  will have a  significant  impact  on its  financial
position, results of operations, or cash flows.

     In January  2003,  the FASB issued FIN No. 46,  "Consolidation  of Variable
Interest   Entities  -  an  interpretation  of  ARB  No.  51,"  which  addresses
consolidation of variable interest entities. FIN No. 46 expands the criteria for
consideration  in  determining  whether a  variable  interest  entity  should be
consolidated by a business entity, and requires existing unconsolidated variable
interest  entities  (which  include,  but are not  limited to,  special  purpose
entities,  or SPEs) to be  consolidated  by their primary  beneficiaries  if the
entities  do  not  effectively  disperse  risks  among  parties  involved.  This
interpretation  applies  immediately to variable interest entities created after
January 31,  2003,  and to  variable  interest  entities in which an  enterprise
obtains an  interest  after that date.  It applies in the first  fiscal  year or
interim period beginning after June 15, 2003, to variable  interest  entities in
which an enterprise  holds a variable  interest that it acquired before February
1,  2003.  The  adoption  of FIN No.  46 did not have a  material  effect on the
Company's results of operations, cash flows or financial position.


NOTE 7 -- RESTATEMENT OF FINANCIAL STATEMENTS

     The  Company has  determined  that it  recorded  allowance  for loan losses
during 2003 in excess of its actual  exposure to credit losses for the excess of
collateral for collateralized bonds pledged over the collateralized bonds issued
on one securitization transaction. Accordingly, the Company's exposure to credit
losses was  limited  under the  securitization  structure,  and such credit loss
exposure had been fully  depleted or reserved  during the first quarter of 2003.
Under the securitization structure, with limited exception, future credit losses
are to be borne by the holders of the  subordinated  bond  classes.  The Company
continued  to record  provisions  for loan  losses in its  financial  statements
during the  second  quarter  2003.  At the  quarter  ended  June 30,  2003,  the
allowance  for  loan  losses  exceeded  the net  investment  in  collateral  for
collateralized  bonds  for  this  particular  securitization  transaction.  As a
result,  the Company has restated  its  financial  statements  for the three and
six-month  period  ended  June 30,  2003 for the excess  allowance  for the loan
losses.

The following tables summarize the significant effects of such restatement:

Condensed Consolidated Balance Sheets Data

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
(amounts in thousands)                                              June 30, 2003                June 30, 2003
---------------------------------------------------------------------------------------   -----------------------
                                                                    (As Previously
                                                                       Reported)                 (As Restated)
-----------------------------------------------------------------------------------------------------------------
       <S>                                                                 <C>                         <C>
Collateral for collateralized bonds - loans                         $     881,228               $     888,490
Total assets                                                            1,205,478                   1,212,740
Accumulated deficit                                                       (14,724)                     (7,462)
Total shareholder's equity                                                 56,271                      63,533
Total liabilities and shareholder's equity                              1,205,478                   1,212,740
-----------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
(amounts in thousands)                 Three Months Ended June 30, 2003           Six Months Ended June 30, 2003
                                     -------------------------------------  -------------------------------------
                                          (As                                       (As
                                       Previously         (As Restated)          Previously         (As Restated)
                                       Reported)                                 Reported)
-----------------------------------------------------------------------------------------------------------------
     <S>                                   <C>                  <C>                  <C>                  <C>
Provision for loan losses             $  (17,292)          $  (10,030)          $  (22,295)          $  (15,033)
Net interest margin                      (10,232)              (2,970)              (6,532)                 730
Net loss                                 (10,272)              (3,010)              (7,953)                (691)
Comprehensive (loss) income               (8,425)              (1,163)              (5,508)                1,754
-----------------------------------------------------------------------------------------------------------------
</TABLE>


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

     As discussed in Note 7, the Company has restated its  financial  statements
for the  three  and six  month  period  ended  June  30,  2003.  The  Management
Discussion and Analysis gives effect to this restatement.

     The Company was organized to facilitate the securitization of loans through
the issuance and sale of  collateralized  bonds (the  "Bonds").  Generally,  the
Bonds issued are, or have been,  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. 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  are used to  purchase
Collateral from Issuer Holding Corp.  ("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>
-------------------------------------------------------------------------------------------------------------------
                                                                      June 30,                  December 31,
(amounts in thousands except series outstanding)                        2003                        2002
-------------------------------------------------------------------------------------------------------------------

       <S>                                                                 <C>                         <C>
Collateral for collateralized bonds                                 $   1,178,214               $   1,341,237
Other loans                                                                 4,920                       6,505
Asset-backed securities, held-to-maturity                                   1,111                       1,644
Non-recourse debt collateralized bonds                                  1,149,207                   1,299,113
Shareholder's equity                                                       63,533                      61,780

Collateralized bond series outstanding                                          4                           4
------------------------------------------------------------------------------------------------------------------
</TABLE>


Collateral for Collateralized Bonds
-----------------------------------

     As of both June 30, 2003 and December 31, 2002, the Company had 4 series of
collateralized  bonds  outstanding.  The  collateral  for  collateralized  bonds
decreased to $1.2 billion at June 30, 2003  compared to $1.3 billion at December
31, 2002.  This  decrease of $163.0  million is  primarily  the result of $149.7
million in paydowns on the  collateral,  $15.0 million of additions to allowance
for loan losses, and $0.6 million of net premium amortization.


Other Loans
-----------

     Other loans decreased to $4.9 million at June 30, 2003 from $6.5 million at
December 31, 2002.  Other loans is composed of single  family loans not included
in the  securitization  completed  in April 2002 and  retained by the Company as
individual  loans.  This decrease  resulted from  pay-downs on the loans of $1.6
million.


Asset-backed Securities
-----------------------

     Asset-backed  securities  decreased  to  $1.1  million  at June  30,  2003,
compared to $1.6 million at December 31, 2002, as a result of principal payments
of $0.7  million  during the year  partially  offset by $0.2 million in discount
amortization and accrued interest.


Non-recourse Debt - Collateralized Bonds
----------------------------------------

     Collateralized  bonds  decreased to $1.1 billion at June 30, 2003 from $1.3
billion at December 31, 2002.  This decrease of $149.9  million is the result of
$151.7  million in paydowns  and a $0.2  million  decrease  in accrued  interest
payable offset by $2.0 million of amortization  of premium and discounts  during
the six months ended June 30, 2003. Included in the $151.7 million paydowns, for
certain securitizations, was surplus cash in the amount of $3.3 million that was
retained  within the  security  structure  and used to repay bonds  outstanding,
instead of being released to the Company,  as provided for in the securitization
indenture.


Shareholder's Equity
--------------------

     Shareholder's equity increased to $63.6 million at June 30, 2003 from $61.8
million at December 31, 2002.  This increase was primarily the result a decrease
of $2.5 million in net unrealized loss on investments  available-for-sale offset
by a net loss of $0.7 million.

                                                         RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
(amounts in thousands)                           Three Months Ended                    Six Months Ended
                                                      June 30,                             June 30,
                                          ----------------------------------  ------------------------------------
                                               2003              2002               2003               2002
----------------------------------------------------------------------------  ------------------------------------

     <S>                                         <C>               <C>               <C>                <C>
Interest income - collateral for            $   20,335        $   27,936        $   42,525         $   54,750
    collateralized bonds
Interest expense - collateralized bonds         12,814            16,485            26,166             33,354
Provision for loan losses                       10,030             5,279            15,033             11,156
Net interest margin                             (2,970)            5,640               730              9,273
Impairment charges                                 (40)           (4,442)           (1,421)            (6,403)
Net (loss) income                               (3,010)              654              (691)             2,326
------------------------------------------------------------------------------------------------------------------
</TABLE>


     Interest  income on the collateral for  collateralized  bonds  decreased to
$20.3 million from $27.9 million for the three-month  period ended June 30, 2003
and 2002,  respectively.  Interest  income on the collateral for  collateralized
bonds  decreased  to $42.5  million for the six months  ended June 30, 2003 from
$54.8 million for the same period in 2002.  This decrease was primarily a result
of the continued impact of prepayments on interest income, as average collateral
for  collateralized  bonds  declined  from $1.5  billion to $1.3 billion for the
six-month  period ended June 30, 2002 and 2003  respectively and $1.6 billion to
$1.2  billion  for the  three-month  period  ending  June  30,  2002  and  2003,
respectively, coupled with the overall decline in interest rates during 2003.

     Interest  expense on  collateralized  bonds decreased to $12.8 million from
$16.5  million  for the  three-month  period  ended  June  30,  2003  and  2002,
respectively.  Interest  expense  on  collateralized  bonds  decreased  to $26.2
million for the six months  ended June 30,  2003 from $33.4  million for the six
months  ended  June  30,  2002.  This  decrease  resulted  from the  decline  in
collateralized  bonds due to prepayments  and paydowns on the related assets and
normal  scheduled  bond  paydowns,  as well as a decrease  in  one-month  London
InterBank  Offered Rate ("LIBOR")  during three and six month periods ended June
30,  2003 and  2002.  The  one-month  LIBOR  rate at June 30,  2003 was 1.12% as
compared to 1.84% at June 30, 2002.

     Provision for loan losses  increased to $10.0 million from $5.3 million for
the three-month period ended June 30, 2003 and 2002, respectively. Provision for
loan losses  increased to $15.0 million for the six-month  period ended June 30,
2003 from $11.2  million for the same period in 2002.  Included in provision for
loan losses is $6.1 million  recorded in June 2003  specifically  for  currently
existing credit losses within  outstanding  manufactured  housing loans that are
current as to payment  but which the  Company  has  determined  to be  impaired.
Previously,  the Company had not  considered  current loans to be impaired under
generally  accepted  accounting  principles  and  therefore had not provided for
these loans.  Continued worsening trends in both the industry as a whole and the
Company's  portfolio  of  manufactured  housing  loans  prompted  the Company to
prepare analysis on these pools of loans. The Company has not originated any new
manufactured  housing loans since 1999, and has empirical data on the historical
performance of this static pool of loans. The Company  analyzed  performance and
default  activity for loans that were current at various points in time over the
last 36 months,  and based on that analysis,  identified default trends on these
loans. The Company also considered  current market  conditions in this analysis,
with the  expectation  that  these  market  conditions  would  continue  for the
foreseeable future. Given this new observable data, the Company now believes the
inclusion  of  amounts in the  provision  for loan  losses  for loans  which are
current  as to  payment  is an  appropriate  application  of the  definition  of
impairment within generally accepted  accounting  principles,  and has accounted
for the amount as a change in accounting  estimate and accordingly  recorded the
amount as additional provision for loan losses.

     Within each  collateralized  bond series,  a group of loans are held within
the  securitization  structure as additional support for potential credit losses
and to  provide  additional  cash flow to cover  such  credit  losses.  Once the
cumulative  level of losses  surpassed the cash flow  available  from the credit
reserve and losses have depleted the  over-collateralization,  future losses are
passed to the holders of the lowest  classes of bonds within the  structure.  On
one of the  securitization  structures of the Company,  total cumulative  losses
have  surpassed the level of the cash flow available from the credit reserve and
have    completely     depleted    the     over-collateralization.     As    the
over-collateralization  has been  depleted,  the  Company's  provision  for loan
losses correspondingly declined.

     Net interest  margin  decreased to $(3.0) million from $5.6 million for the
three-month  periods  ended June 30, 2003 and 2002,  respectively.  Net interest
margin  decreased to $0.7 million  from $9.3 million for the  six-month  periods
ended June 30, 2003 and 2002,  respectively.  These  decreases  were primarily a
result of an increase in provision for loan losses,  as discussed  above,  and a
decline in interest earning assets  partially offset by reduced  borrowing costs
on collateralized bonds outstanding during these periods.

     Impairment  charges  decreased  to $0.04  million from $4.4 million for the
three-month  periods  ended  June 30,  2003 and 2002,  respectively.  Impairment
charges  decreased to $1.4 million from $6.4 million for the  six-month  periods
ended June 30, 2003 and 2002,  respectively.  These  decreases  are  primarily a
result of a  decrease  in  realized  losses on the debt  securities  portion  of
collateral for collateralized  bonds and an  other-than-temporary  impairment in
2002  on  a  group  of  loans  retained  by  the  Company  during  the  SASCO  9
securitization in 2002.

     Net income  decreased to a net loss of $3.0 million from net income of $0.6
million for the three-month periods ended June 30, 2003 and 2002,  respectively.
This  decrease  is  primarily  a result of a net  increase  of $4.7  million  in
provision  for loan  losses  and a $7.6  million  decrease  in  interest  income
partially  offset by a  decrease  of $3.7  million  in  interest  expense  and a
decrease of $4.4 million in impairment  charges during the  respective  periods.
Net income  decreased to a $0.7 million net loss from net income of $2.3 million
for the  six-month  periods  ended June 30,  2003 and 2002,  respectively.  This
decrease is  primarily a result of a net  increase of $3.8  million in provision
for loan losses and a $12.2  million  decrease in interest  income on collateral
for  collateralized  bonds  partially  offset by a decrease  of $7.2  million in
interest  expense  on  collateralized  bonds  and a  $5.0  million  decrease  in
impairment charges during the respective periods, as discussed above.


Credit Exposures
----------------

     With  collateralized  bond  structures,  the  Company  retains  credit risk
relative to the amount of  over-collateralization  required in conjunction  with
the bond issuance. Losses are generally first applied to the over-collateralized
amount,  or, in some  instances,  surplus cash and then the  over-collateralized
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  loans  relative  to  the  yield  on  the
collateralized  bonds.  At June 30, 2003, the Company  retained $48.5 million in
aggregate principal amount of  over-collateralization  compared to $54.9 million
at December  31,  2002.  The Company had  reserves,  or  otherwise  had provided
coverage on $26.0 million at June 30, 2003. During the first six months of 2003,
the Company  provided  for  additional  reserves of $15.0  million and  incurred
credit losses of $9.7 million.

     Other forms of credit enhancement that benefit the Company,  based upon the
performance of the underlying loans, may provide  additional  protection against
losses. These additional protections include loss reimbursement  guarantees with
a remaining balance of $30.2 million and a remaining deductible aggregating $0.8
million on $65.3 million of securitized  single family  mortgage loans which are
subject  to such  reimbursement  agreements  and $208.3  million of  securitized
single  family  mortgage  loans  which are  subject  to  various  mortgage  pool
insurance  policies  whereby losses would need to exceed the remaining stop loss
of at least 61% on such policies before the Company would incur losses.


Recent Accounting Pronouncements
--------------------------------

     In May 2003,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 150,  "Accounting for
Certain  Financial  Instruments  with  Characteristics  of both  Liabilities and
Equity." This statement is effective for financial  instruments  entered into or
modified  after May 31, 2003; and otherwise is effective at the beginning of the
first  interim  period  beginning  after June 15,  2003,  except  for  mandatory
redeemable financial instruments of nonpublic entities, which are subject to the
provisions  of this  Statement  for the  first  fiscal  period  beginning  after
December  15,  2003.  This  Statement  amends  SFAS  No.  133,  "Accounting  for
Derivative  Instruments and Hedging Activities," and SFAS No. 128, "Earnings per
Share," to establish  standards  outlining  how to classify and measure  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that certain financial  instruments that were previously  classified as
equity now be  classified  as a  liability  (or,  in some  circumstances,  as an
asset).  The Company is reviewing the  implications of SFAS No. 150 but does not
believe  that its  adoption  will have a  significant  impact  on its  financial
position, results of operations, or cash flows.

     In January  2003,  the FASB issued FIN No. 46,  "Consolidation  of Variable
Interest   Entities  -  an  interpretation  of  ARB  No.  51,"  which  addresses
consolidation of variable interest entities. FIN No. 46 expands the criteria for
consideration  in  determining  whether a  variable  interest  entity  should be
consolidated by a business entity, and requires existing unconsolidated variable
interest  entities  (which  include,  but are not  limited to,  Special  Purpose
Entities,  or SPEs) to be  consolidated  by their primary  beneficiaries  if the
entities  do  not  effectively  disperse  risks  among  parties  involved.  This
interpretation  applies  immediately to variable interest entities created after
January 31,  2003,  and to  variable  interest  entities in which an  enterprise
obtains an  interest  after that date.  It applies in the first  fiscal  year or
interim period beginning after December 31, 2003, to variable  interest entities
in which  an  enterprise  holds a  variable  interest  that it  acquired  before
February 1, 2003.  The adoption of FIN No. 46 did not have a material  effect on
the Company's results of operations, cash flows or financial position.


Other Matters
-------------

     At June 30,  2003,  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.


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

     The  discussion  and  analysis of the  Company's  financial  condition  and
results of operations  are based in large part upon its  consolidated  financial
statements,  which have been prepared in conformity with  accounting  principles
generally  accepted  in  the  United  States  of  America  ("generally  accepted
accounting  principles").  The preparation of the financial  statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the  financial  statements  and the reported  amounts of revenue and
expenses  during the reported  period.  Actual  results  could differ from those
estimates.

     Critical  accounting  policies are defined as those that are  reflective of
significant  judgements  or  uncertainties,  and which may result in  materially
different results under different assumptions and conditions, or the application
of which may have a material impact on the Company's financial  statements.  The
following are the Company's critical accounting policies.

     Consolidation  of  Subsidiaries.   The  consolidated  financial  statements
include the  accounts of the Company and its  wholly-owned  subsidiaries,  after
significant inter-company transactions have been eliminated.

     Impairments.  The Company evaluates the debt and asset-backed securities in
its investment  portfolio for  other-than-temporary  impairments.  A security is
generally  defined to be  other-than-temporarily  impaired if, for a period of a
maximum of three  consecutive  quarters,  the  carrying  value of such  security
exceeds its estimated fair value and the Company  estimates,  based on projected
future cash flows or other fair value  determinants,  that the fair value is not
likely  to  exceed  the  carrying  value  in  the  foreseeable   future.  If  an
other-than-temporary  impairment  is deemed to exist,  the  Company  records  an
impairment  charge to adjust  the  carrying  value of the  security  down to its
estimated   fair   value.   In   certain   instances,   as  a   result   of  the
other-than-temporary impairment analysis, the recognition or accrual of interest
will be discontinued and the security will be placed on non-accrual status.

     Fair Value.  Securities classified as available-for-sale are carried in the
accompanying  condensed  consolidated  financial  statements  at estimated  fair
value.  Estimates  of fair value for  securities  may be based on market  prices
provided  by  certain  dealers.  Estimates  of  fair  value  for  certain  other
securities are determined by calculating the present value of the projected cash
flows of the instruments using market-based discount rates, prepayment rates and
credit loss  assumptions.  The estimate of fair value for securities  pledged as
collateral for  collateralized  bonds is determined by  calculating  the present
value of the  projected  cash flows of the  instruments  using  prepayment  rate
assumptions  and credit loss  assumptions  based on  historical  experience  and
estimated  future  activity,  and using discount rates  commensurate  with those
believed  would  be  used by  third  parties.  Such  discount  rate  used in the
determination   of  fair  value  of  securities   pledged  as   collateral   for
collateralized bonds was 16% at June 30, 2003 and December 31, 2002.  Prepayment
rate  assumptions  at June 30, 2003 and  December  31, 2002 were  generally at a
"constant  prepayment rate," or CPR, ranging from 35%-40% in 2003 and 30%-45% in
2002, for collateral for collateralized bonds consisting of securities backed by
single-family  mortgage loans, and a CPR equivalent ranging from 8% for 2003 and
11% for 2002 for collateral for  collateralized  bonds  consisting of securities
backed by manufactured housing loans. CPR assumptions for each year are based in
part on the actual  prepayment rates  experienced for the prior six-month period
and in part on management's  estimate of future  prepayment  activity.  The loss
assumptions utilized vary depending on the collateral pledged.

     Estimates of fair value for other financial instruments are based primarily
on  management's  judgment.  Since  the fair  value of the  Company's  financial
instruments  are based on  estimates,  actual  gains and losses  recognized  may
differ from those  estimates  recorded in the condensed  consolidated  financial
statements.

     Allowance for Loan Losses.  The Company has limited exposure to credit risk
retained on loans, which it has securitized through the issuance of non-recourse
securitization  financing.  The aggregate loss exposure is generally  limited to
the amount of collateral in excess of the related investment-grade  non-recourse
securitization     financing     issued     (commonly     referred     to     as
"over-collateralization"),  excluding  price  premiums and  discounts  and hedge
basis  adjustments.  The allowance for loan losses is included in collateral for
collateralized bonds in the accompanying balance sheets.

     An  allowance  for loan  losses  has been  estimated  and  established  for
currently existing probable losses to the extent losses are borne by the Company
under  the  terms  of the  securitization  transaction.  Factors  considered  in
establishing an allowance  include current loan  delinquencies,  historical cure
rates of delinquent  loans,  and historical and anticipated loss severity of the
loans as they are liquidated. The allowance for losses is evaluated and adjusted
periodically by management  based on the actual and estimated  timing and amount
of probable  credit losses,  using the above  factors,  as well as industry loss
experience. Where loans are considered homogeneous, the allowance for losses are
established and evaluated on a pool basis.  Otherwise,  the allowance for losses
is  established  and  evaluated on a  loan-specific  basis.  Provisions  made to
increase the allowance are a current period  expense to  operations.  Generally,
the Company considers manufactured housing loans to be impaired when they are 30
days past due. The Company also  provides an allowance  for  currently  existing
credit losses within outstanding  manufactured housing loans that are current as
to payment but which the Company has  determined to be impaired based on default
trends,  current market conditions and empirical observable  performance data on
the loans.  Single-family  loans are  considered  impaired when they are 60 days
past due. The Company's  actual  credit  losses may differ from those  estimates
used to establish the allowance.


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  margin  comprises  the primary
component of the Company's earnings. Additionally, cash flow from the investment
portfolio  represents the primary component of the Company's incoming cash flow.
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  re-price  within  specified  periods.  The  Company's  strategy  has been to
mitigate  interest  rate risk through the creation of a  diversified  investment
portfolio of high quality assets that, in the aggregate, preserves the Company's
capital  base  while  generating  stable  income  and cash flow in a variety  of
interest rate and prepayment environments.

     The Company and IHC monitor the  aggregate  cash flow,  projected net yield
and market  value of the  collateral  for  collateralized  bonds  under  various
interest rate and prepayment assumptions.  While certain investments may perform
poorly  in  an  increasing  or  decreasing  interest  rate  environment,   other
investments may perform well, and others may not be impacted at all.

     The Company  focuses on the sensitivity of its cash flow, and measures such
sensitivity to changes in interest rates.  Changes in interest rates are defined
as  interest  rate  movements  in 100 basis  point and 200 basis  point  ratable
increments,  both  up  and  down,  over  the  ensuing  twelve  months  from  the
measurement  date. The Company  estimates its net interest  margin cash flow for
the next  twenty-four  months assuming that interest rates over such time period
follow the forward LIBOR curve (based on the 90-day Eurodollar futures contract)
as of June 30,  2003.  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 cash flow.

     The following table  summarizes the Company's net interest margin cash flow
sensitivity analysis as of June 30, 2003. This analysis represents  management's
estimate of the percentage change in net interest margin cash flow given a shift
in interest rates.  The "Base" case represents the interest rate  environment as
it  existed  as of June 30,  2003.  As of June 30,  2003,  one-month  LIBOR  and
six-month  LIBOR  were  1.12%.  The  analysis  is  heavily  dependent  upon  the
assumptions  used in the model.  The effect of changes in future interest rates,
the shape of the  yield  curve or 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 most significant
option affecting the Company's  portfolio is the borrower's option to prepay the
loans. The model applies prepayment rate assumptions  representing  management's
estimate of prepayment activity on a projected basis for each collateral pool in
the investment portfolio. The model applies the same prepayment rate assumptions
for  all  five  cases  indicated  below.  Given  the  current   composition  and
performance  of the  investment  portfolio,  and the  limitation  to  estimating
twenty-four  months of net interest margin cash flows,  variations in prepayment
rate  assumptions are not expected to have a material impact on the net interest
margin cash flows.  Projected results assume no additions or subtractions to the
Company's  portfolio,  and no  change  to  the  Company's  liability  structure.
Historically,  there have been  significant  changes in the Company's assets and
liabilities, and there are likely to be such changes in the future.

---------------------------------------------------------------
            Basis Point               % Change in Net
        Increase (Decrease)           Interest Margin
         in Interest Rates            From Base Case
                +200                      (11.7)%
                +100                      (6.6)%
                Base                         -
                -100                       8.6%
                -200                       10.6%
---------------------------------------------------------------

     Approximately  $426 million of the Company's  collateral for collateralized
bonds as of June 30, 2003, are 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 73% and 14% of these 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.  These ARM assets are financed
with adjustable-rate collateralized bond borrowings.

     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,  to the extent that
the Company has entered into such agreements.

     The remaining portion of the Company's  collateral for collateralized bonds
as of June 30, 2003, approximately $787 million, is comprised of loans that have
coupon rates that are fixed.  The Company has 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  and to the level of  short-term
interest rates.


Item 4.  Controls and Procedures

         (a)  Evaluation of disclosure controls and procedures.
              -------------------------------------------------

              Disclosure  controls and procedures are controls and other
              procedures that are  designed  to  ensure  that  information
              required  to be  disclosed  in the Company's  reports  filed or
              submitted  under  the  Exchange  Act is  recorded, processed,
              summarized  and reported within the time periods specified in the
              SEC's rules and forms.  Disclosure  controls  and  procedures
              include,  without limitation, controls and procedures designed to
              ensure that information required to be disclosed in the  Company's
              reports  filed  under the  Exchange  Act is accumulated and
              communicated to management,  including the Company's management,
              as appropriate, to allow timely decisions regarding required
              disclosures.

              As of the end of the period covered by this report,  the Company
              carried out an evaluation of the  effectiveness  of the design and
              operation  of the  Company's  disclosure  controls and  procedures
              pursuant to Rule 13a-15 under the Exchange Act. This  evaluation
              was carried out under the supervision and with the participation
              of the Company's management.  Based upon that evaluation,  the
              Company's  management  concluded that the Company's disclosure
              controls and procedures are effective, except as described below.

              The Company  identified  an internal  control  deficiency  related
              to the  recording of allowance  for loan losses in excess of loss
              obligations.  Management believes that it has performed the
              appropriate  procedures to ensure that the information  included
              herein for the quarter ended June 30, 2003 is materially  accurate
              in all reasonable  aspects.  This internal control deficiency did
              not impact the consolidated financial statements of the Company's
              parent.

              In conducting  its review of disclosure  controls,  management
              concluded  that  sufficient  disclosure  controls and procedures,
              other than this  deficiency,  did exist to ensure that information
              required  to be  disclosed  in the Company's reports filed or
              submitted under the Exchange Act is recorded, processed,
              summarized and reported within the time periods specified in the
              SEC's rules and forms.

         (b)  Changes in internal controls.
              -----------------------------

              The Company's  management is also  responsible  for  establishing
              and  maintaining  adequate  internal  control over financial
              reporting.  There were no changes in the Company's internal
              control over financial reporting identified in connection  with
              the evaluation of it that occurred during the Company's last
              fiscal quarter that materially effected, or is reasonably likely
              to materially affect internal control over financial reporting.


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).

              4.3  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).

              4.4  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).

              4.5  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).

              4.6  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).

              4.7  Copy of the Series 14 Indenture Supplement,  dated as of
                   November 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 November 12, 1999).

              4.8  Copy of the Structure Asset Securitization Corporation Series
                   2002-9 Indenture Supplement, dated as of April 1, 2002, by
                   and between  Structured Asset  Securitization  Corporation
                   and J. P. Morgan Chase, as Trustee (related schedules
                   and  exhibits  available  upon  request of the  Trustee).
                   (Incorporated  herein by  reference to Exhibit of Structured
                   Asset Securitization Corporation's Current Report on
                   Form 8-K, filed April 25, 2002).

             10.1  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).

             10.2  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).

             10.3  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).

             10.4  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).

             31.1  Certification of Principal Executive Officer pursuant to
                   Section 302 of the Sarbanes-Oxley Act of 2002

             31.2  Certification of Principal Financial Officer pursuant to
                   Section 302 of the Sarbanes-Oxley Act of 2002.

             32.1  Certification of Principal Executive Officer pursuant to
                   Section 906 of the Sarbanes-Oxley Act of 2002.

             32.2  Certification of Chief Financial Officer pursuant to
                   Section 906 of the Sarbanes-Oxley Act of 2002.

             99.1  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).

             99.2  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).

             99.3  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).

             99.4  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).

             99.5  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).

             99.6  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).

             99.7  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).

         (b)  Reports on Form 8-K

              None

                                    SIGNATURE

     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




Dated:  May 18, 2004                     By:  /s/ Stephen J. Benedetti
                                              ----------------------------------
                                              Stephen J. Benedetti
                                              President


     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


<TABLE>
<CAPTION>
             Signature                           Capacity                           Date
             ---------                           --------                           ----


          <S>                                       <C>                              <C>
/s/ Stephen J. Benedetti           Principal Executive Officer/Director         May 18, 2004
-------------------------------
Stephen J. Benedetti


/s/ Kevin J. Sciuk                 Principal Financial Officer/Controller       May 18, 2004
-------------------------------
Kevin J. Sciuk


/s/ J. Thomas O'Brien, Jr.                       Director                       May 18, 2004
-------------------------------
J. Thomas O'Brien, Jr.


/s/ Christopher T. Bennett                       Director                       May 18, 2004
-------------------------------
Christopher T. Bennett
</TABLE>
<PAGE>



                                  EXHIBIT INDEX
                                  -------------

                                                                    Sequentially
Exhibit                                                            Numbered Page


31.1  Certification of Principal Executive Officer pursuant to
        Section 302 of the Sarbanes-Oxley Act of 2002.                  I

31.2  Certification of Principal Financial Officer pursuant to
        Section 302 of the Sarbanes-Oxley Act of 2002.                 II

32.1  Certification of Principal Executive Officer pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002                 III

32.2  Certification of Chief Financial Officer pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002.                 IV
<PAGE>




                                                                    Exhibit 31.1


                                  CERTIFICATION
                          PURSUANT TO 17 CFR 240.13a-14
                                PROMULGATED UNDER
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen J. Benedetti, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q/A of Merit
         Securities Corporation;

     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
         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)) for the
         registrant and we have:

         (a)  designed such disclosure controls and procedures, or caused such
              disclosure controls and procedures to be designed under our
              supervision, to ensure that 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 quarterly report is being prepared;

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

         (c)  disclosed in this report any change in the  registrant's  internal
              control over financial  reporting that occurred during the
              registrant's  most  recent  fiscal  quarter  (the  registrant's
              fourth  fiscal  quarter in the case of an annual report) that has
              materially affected, or is reasonably likely to materially affect,
              the registrant's  internal control of 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
         registrant's board of directors (or persons performing the equivalent
         function):

         (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.




Dated:  May 18, 2004                  By:      /s/ Stephen J. Benedetti
                                             -----------------------------------
                                             Stephen J. Benedetti
                                             Principal Executive Officer
<PAGE>


                                                                    Exhibit 31.2



                                  CERTIFICATION
                          PURSUANT TO 17 CFR 240.13a-14
                                PROMULGATED UNDER
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kevin J. Sciuk, certify that:

     1)  I have reviewed this quarterly report on Form 10-Q/A of Merit
         Securities Corporation;

     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 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)) for the
         registrant and we have:

         (a)  designed  such  disclosure  controls and  procedures,  or caused
              such  disclosure  controls and  procedures to be designed under
              our supervision, to ensure that 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 quarterly report is being prepared;

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

         (c)  disclosed in this report any change in the registrant's  internal
              control over financial  reporting that occurred during the
              registrant's  most recent fiscal  quarter (the  registrant's
              fourth fiscal quarter in the case of an annual report) that has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control of 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
         registrant's board of directors (or persons performing the equivalent
         function):

         (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.




Dated:  May 18, 2004                  By:  /s/ Kevin J. Sciuk
                                           -------------------------------------
                                           Kevin J. Sciuk
                                           Principal Financial Officer
<PAGE>


                                                                    Exhibit 32.1



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection  with the Quarterly  Report of Merit  Securities  Corporation
(the  "Company")  on Form 10-Q/A for the quarter  ended June 30, 2003,  as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I,  Stephen J.  Benedetti,  the  Principal  Executive  Officer  of the  Company,
certify,  pursuant to and for  purposes of 18 U.S.C.  Section  1350,  as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) 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 the Company.



Dated:  May 18, 2004                  By:  /s/ Stephen J. Benedetti
                                           -------------------------------------
                                           Stephen J. Benedetti
                                           Principal Executive Officer

<PAGE>




                                                                   Exhibit  32.2



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection  with the Quarterly  Report of Merit  Securities  Corporation
(the  "Company")  on Form 10-Q/A for the quarter  ended June 30, 2003,  as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, Kevin J. Sciuk,  the  Principal  Financial  Officer of the Company,  certify,
pursuant to and for purposes of 18 U.S.C.  Section 1350, as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
         15(d) 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 the Company.




Dated:  May 18, 2004                  By:      /s/ Kevin J. Sciuk
                                           -------------------------------------
                                           Kevin J. Sciuk
                                           Principal Financial Officer