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

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

                                    FORM 10-Q

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

                    For the quarter ended September 30, 1998

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

                         Commission file number 33-83524


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

          Virginia                                  54-1736551
(State or other jurisdiction             (I.R.S. Employer Identification No.)
     of incorporation)                 
 
10900 Nuckols Road, 3rd Floor, Glen Allen, Virginia              23060
     Address of principal executive offices)                   (Zip Code)

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

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

     As of October  31,  1998,  the latest  practicable  date,  there were 1,000
shares of Merit Securities Corporation common stock outstanding.

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

===============================================================================
<PAGE>

                          MERIT SECURITIES CORPORATION
                                    FORM 10-Q
                                      INDEX

<TABLE>
<CAPTION>
                                                                                     Page Number
PART I.           FINANCIAL INFORMATION
<S>                        <C>                                                          <C>
 
Item 1.           Financial Statements
                      Balance Sheets at September 30, 1998 and
                      December 31, 1997                                                  3

                      Statements of Operations for the three and nine months
                      ended September 30, 1998 and 1997                                  4

                      Statement of Shareholder's Equity for the nine months
                      ended September 30, 1998                                           5

                      Statements of Cash Flows for the nine months ended
                      September 30, 1998 and 1997                                        6

                      Notes to Unaudited Financial Statements                            7

Item 2.           Management's Discussion and Analysis of
                      Financial Condition and Results of Operations                      9

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings                                                      10

Item 5.           Other Information                                                      10

Item 6.           Exhibits and Reports on Form 8-K                                       10

SIGNATURES                                                                               14

</TABLE>

<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements


MERIT SECURITIES CORPORATION
Balance Sheets
(amounts in thousands except share data)

<TABLE>
<CAPTION>


                                                                 September 30,         December 31,
                                                                      1998                  1997
                                                                -----------------     ----------------
<S>                                                                   <C>                   <C>

ASSETS:
   Collateral for collateralized bonds                            $  3,836,438          $  3,835,289
   Prepaid shelf registration fees                                         406                   334
   Cash                                                                     10                    10
                                                                =================     ================
                                                                  $  3,836,854          $  3,835,633
                                                                =================     ================

LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES:
   Non-recourse debt - collateralized bonds                       $  3,634,691          $  3,622,877
   Due to affiliates                                                     8,994                43,789
                                                                -----------------     ----------------
                                                                     3,643,685             3,666,666
                                                                -----------------     ----------------

SHAREHOLDER'S EQUITY:
   Common stock, no par value,
     10,000 shares authorized,
     1,000 shares issued and outstanding                                    10                    10
   Additional paid-in capital                                          190,156               125,952
   Accumulated other comprehensive income                               26,591                64,707
   Accumulated deficit                                                 (23,588)              (21,702)
                                                                -----------------     ----------------
                                                                       193,169               168,967
                                                                =================     ================
                                                                  $  3,836,854          $  3,835,633
                                                                =================     ================
<FN>

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


<PAGE>

MERIT SECURITIES CORPORATION
Statements of Operations
(amounts in thousands except share data)

<TABLE>
<CAPTION>


                                                           Three Months Ended               Nine Months Ended
                                                             September 30,                    September 30,
                                                     ------------------------------    ------------------------------
                                                         1998           1997               1998           1997
                                                     --------------  --------------    -------------- ---------------
<S>                                                       <C>             <C>               <C>             <C> 

Interest Income:
   Collateral for collateralized bonds                 $  71,119       $  51,097         $ 191,187      $  133,260
                                                     --------------  --------------    -------------- ---------------

Interest and related expense:
   Interest expense on collateralized bonds               68,066          49,577           191,051         126,161
   Other collateralized bond expense                         744             777             2,729           2,414
                                                     --------------  --------------    -------------- ---------------
                                                          68,810          50,354           193,780         128,575
                                                     --------------  --------------    -------------- ---------------

Net interest margin before provision for losses            2,309             743            (2,593)          4,685
Provision for losses                                      (1,686)           (600)           (4,550)         (1,800)
                                                     --------------  --------------    -------------- ---------------

Net interest margin                                          623             143            (7,143)          2,885

Net gain on sale of securities and other income            6,122               -             7,247               -
Interest on due to affiliate                                (636)           (780)           (1,990)         (2,074)
                                                     --------------  --------------    -------------- ---------------

Net (loss) income                                      $   6,109       $    (637)        $  (1,886)     $      811
                                                     ==============  ==============    ============== ===============


<FN>

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

<PAGE>

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

<TABLE>
<CAPTION>


                                                                          Accumulated other
                                             Common         Additional      comprehensive      Accumulated
                                              stock      paid-in capital       income            deficit           Total
                                            ------------ --------------- ------------------- --------------- ---------------
<S>                                             <C>            <C>               <C>               <C>              <C>

  Balance at December 31, 1997                 $  10       $   125,952     $     64,707        $  (21,702)     $  168,967

  Comprehensive loss:
  Net loss                                         -                 -                -            (1,886)         (1,886)

  Change in net unrealized gain on
    investments available-for-sale                 -                 -          (38,116)                -         (38,116)
                                            ------------ --------------- ------------------- --------------- ---------------
  Total comprehensive loss                         -                 -          (38,116)           (1,886)        (40,002)

  Contributed capital                              -            64,204                -                 -          64,204

                                            ------------ --------------- ------------------- --------------- ---------------
   Balance at September 30, 1998               $   10       $   190,156     $     26,591        $  (23,588)     $  193,169
                                            ============ =============== =================== =============== ===============


<FN>

See notes to unaudited financial statements.

</FN>
</TABLE>

<PAGE>

MERIT SECURITIES CORPORATION
Statements of Cash Flows
(amounts in thousands)

<TABLE>
<CAPTION>


                                                                             Nine Months Ended
                                                                               September 30,
                                                                        1998                   1997
                                                                 -------------------     ------------------
<S>                                                                     <C>                       <C>

Operating activities:
   Net (loss) income                                               $      (1,886)          $        811
   Adjustments to reconcile net (loss) income to net cash
     provided by operating activities:
          Gain on sale of assets                                          (7,247)                     -
       Provision for losses                                                4,550                  1,800
       Amortization, net                                                  28,525                 14,487
         (Increase) decrease in prepaid shelf registration fees              (72)                   313
       Other                                                                (560)                   699
                                                                 -------------------     ------------------
          Net cash provided by operating activities                        23,310                 18,110
                                                                 -------------------     ------------------

Investing activities:
   Collateral for collateralized bonds:
     Purchase of loans subsequently securitized                       (1,692,780)            (1,027,684)
     Principal payments on collateral                                  1,588,220                619,061
     Proceeds from sale of collateralized bonds                           43,425                      -
     Net increase in accrued interest receivable and funds held
      by trustee                                                           1,219                 (1,629)
                                                                 -------------------     ------------------
       Net cash used for investing activities                            (59,916)              (410,252)
                                                                 -------------------     ------------------

Financing activities:
   Collateralized bonds:
     Proceeds from issuance of collateralized bonds                    1,589,272                989,797
     Principal payments on collateralized bonds                       (1,581,640)              (621,503)
     Increase in accrued interest payable                                   (435)                   237
   (Decrease) increase in due to affiliate                               (34,795)                   968
   Proceeds from capital contributions                                    64,204                 22,643
                                                                 -------------------     ------------------
       Net cash provided by financing activities                          36,606                392,142
                                                                 -------------------     ------------------

Net change in cash                                                             -                      -
Cash at beginning of period                                                   10                     10
                                                                 -------------------     ------------------
Cash at end of period                                              $          10           $         10
                                                                 ===================     ==================

Supplemental disclosure of cash flow information:
   Cash paid for interest                                          $     188,460           $    126,473
                                                                 ===================     ==================

<FN>

See notes to unaudited financial statements.

</FN>
</TABLE>

<PAGE>

MERIT SECURITIES CORPORATION
Notes to Unaudited Financial Statements
September 30, 1998
(amounts in thousands except share data)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

     In the opinion of  management,  all  material  adjustments,  consisting  of
normal recurring  adjustments,  considered  necessary for a fair presentation of
the financial statements have been included.  The Balance Sheet at September 30,
1998, the Statements of Operations for the three and nine months ended September
30, 1998 and 1997,  the  Statement of  Shareholder's  Equity for the nine months
ended September 30, 1998, the Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997,  and the related notes to financial  statements are
unaudited.  Operating  results for the nine months ended  September 30, 1998 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December  31,  1998.  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, 1997.

     Certain  amounts  for  1997  have  been  reclassified  to  conform  to  the
presentation for 1998.

NOTE 2-COLLATERAL FOR COLLATERALIZED BONDS

     In  accordance  with the  provisions  of Statement of Financial  Accounting
Standards  No.  115,  Accounting  for  Certain  Investments  in Debt and  Equity
Securities,  the Company has classified  collateral for collateralized  bonds as
available-for-sale.  The following table summarizes the Company's amortized cost
basis and fair value of  collateral  for  collateralized  bonds at September 30,
1998 and December 31, 1997,  and the related  average  effective  interest rates
(calculated  for the month ended  September 30, 1998 and December 31, 1997,  and
excluding unrealized gains and losses):

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------
                                                 September 30, 1998                 December 31, 1997
---------------------------------------------------------------------------------------------------------------

                                                              Effective                          Effective
                                            Fair Value      Interest Rate      Fair Value      Interest Rate
---------------------------------------------------------------------------------------------------------------
<S>                                            <C>               <C>               <C>               <C>

Collateral for collateralized bonds:
  Amortized cost                           $   3,828,334           7.3%       $   3,795,393           7.2%
  Allowance for losses                           (18,487)                           (24,811)
---------------------------------------------------------------------------------------------------------------
     Amortized cost, net                       3,809,847                          3,770,582
  Gross unrealized gains                          47,503                             77,973
  Gross unrealized losses                        (20,912)                           (13,266)
---------------------------------------------------------------------------------------------------------------
                                           $   3,836,438                      $   3,835,289
---------------------------------------------------------------------------------------------------------------
</TABLE>


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

     During the nine months ended  September 30, 1998,  the Company  securitized
$1.7 billion of  collateral,  through one series of  collateralized  bonds.  The
collateral   securitized   was  primarily   single-family   mortgage  loans  and
manufactured  housing  loans.  Under SFAS No. 125,  if an entity  retains a call
provision on the bonds in excess of a "clean-up" call, usually defined as 10% of
the  initial  principal  amount  of the  bond,  the  entity  is  precluded  from
accounting  for the  securitization  of the  collateral  and the issuance of the
bonds as a sale.  The call  provision is considered  individually  for each bond
issued. On all but one class of bonds issued in this securitzation,  the Company
retained call rights which allow the Company to call the bonds at the earlier of
the time that the  outstanding  principal  reaches 35% of the aggregate  initial
principal  amount of the bonds,  or on May 28, 2000.  For the one class of bonds
with an original principal amount totaling $55,007,  the Company retained only a
clean-up call  provision of 10%. The Company  therefore  treated the issuance of
this class as a sale and recognized a gain of $7,534 in connection with the sale
of that  class of bonds.  The  issuance  of the  remaining  classes of bonds was
considered a secured financing transaction.



<PAGE>

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

     Merit  Securities  Corporation (the "Company") was incorporated in Virginia
on August 19, 1994 as a  wholly-owned,  limited-purpose  finance  subsidiary  of
Dynex  Capital,  Inc.  ("Dynex")  a New York  Stock  Exchange  listed  financial
services company (symbol: DX). On September 4, 1996, Issuer Holding Corporation,
Inc.  ("IHC"),  a  wholly-owned   subsidiary  of  Dynex,  acquired  all  of  the
outstanding stock of the Company and certain other affiliates of Dynex.

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

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

     During the nine months ended September 30, 1998, the Company issued one (1)
series of bonds totaling  approximately $1.6 billion aggregate principal amount.
As of  September  30, 1998,  the Company had eight (8) series of  collateralized
bonds outstanding totaling approximately $3.6 billion,  compared to $3.6 billion
at December 31, 1997, and $2.7 billion at September 30, 1997. Interest income on
the  Collateral  increased  $57.9 million to $191.2  million for the nine months
ended  September 30, 1998  compared to $133.3  million for the nine months ended
September 30, 1997, primarily as a result of the increased amount of outstanding
collateral.  Interest  expense on the Bonds  increased $64.9 million from $126.2
million for the nine months ended  September 30, 1997 to $191.1  million for the
nine months ended  September 30, 1998,  primarily due to the  additional  series
outstanding.

     Net interest  margin for the nine months ended September 30, 1998 decreased
to a negative  $7.1 million from a positive $2.9 million for the same period for
1997.  This  decrease was primarily  the result of higher  premium  amortization
caused by higher  prepayments  during the nine months ended  September  30, 1998
than during the same period in 1997. In addition,  the Company securitized lower
coupon collateral,  principally A+ quality  single-family ARM loans during 1997.
The most  recent  securitization  included  loan  premium  of 0.34% of the total
collateral.

     With  collateralized  bond  structures,  the  Company  retains  credit risk
relative to the amount of overcollateralization required in conjunction with the
bond  insurance.  Losses are generally  first applied to the  overcollateralized
amount,  with any losses in excess of that amount  borne by the bond  insurer or
the holders of the  collateralized  bonds. The Company only incurs credit losses
to the extent that losses are incurred in the repossession, foreclosure and sale
of the  underlying  collateral.  Such losses  generally  equal the excess of the
principal  amount  outstanding,  less  any  proceeds  from  mortgage  or  hazard
insurance,  over the  liquidation  value of the  collateral.  To compensate  the
Company for retaining  this loss  exposure,  the Company  generally  receives an
excess  yield on the  collateralized  securities  relative  to the  yield on the
collateralized bonds. At September 30, 1998, the Company retained $174.5 million
in aggregate  principal amount of  overcollateralization,  and had reserves,  or
otherwise had provided  coverage on $48.8 million of this potential  credit loss
exposure.  $30.3  million  of  this  reserve  amount  is in the  form  of a loss
reimbursement guarantee from an A rated third-party.

     At September 30, 1998,  the Company had  securities of  approximately  $329
million  remaining for issuance  under a registration  statement  filed with the
Securities and Exchange  Commission.  The Company anticipates issuing additional
Bonds in the future.

     The Company  competes in a national market with other private  conduits and
various  financial  services  companies.  Economic  conditions,  interest rates,
regulatory  changes and market  dynamics all influence  the mortgage  securities
market.


<PAGE>

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

     4.5 Copy of the Series 2  Indenture  Supplement,  dated as of  February  1,
1995,  by  and  between  the   Registrant   and  Texas  Commerce  Bank  National
Association,  as Trustee (including schedules and exhibits) (Incorporated herein
by reference to Exhibit to the  Registrant's  Current  Report on Form 8-K, filed
March 8, 1995).

     4.6 Copy of the Series 3 Indenture  Supplement,  dated as of March 1, 1995,
by and between the Registrant and Texas Commerce Bank National  Association,  as
Trustee (including schedules and exhibits)  (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed April 21, 1995).

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

     4.8 Copy of the Series 5 Indenture Supplement, dated as of October 1, 1995,
to Indenture,  dated as of November 1, 1994, by and between the  Registrant  and
Texas Commerce Bank National Association, as Trustee (related exhibits available
upon request to the  Trustee).  (Incorporated  herein by reference to Exhibit to
the Registrant's Current Report on Form 8-K, filed November 15, 1995).

     4.9 Copy of the Series 6 Indenture  Supplement,  dated as of March 1, 1996,
by and between the Registrant and Texas Commerce Bank National  Association,  as
Trustee (including schedules and exhibits)  (Incorporated herein by reference to
Exhibit to the Registrant's Current Report on Form 8-K, filed March 21, 1996).

     4.10 Copy of the Series 7 Indenture Supplement, dated as of May 1, 1996, 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 to Registrant's  Current Report on
Form 8-K, filed June 19, 1996).

     4.11 Copy of the Series 8 Indenture  Supplement,  dated as of  September 1,
1996,  by  and  between  the   Registrant   and  Texas  Commerce  Bank  National
Association,  as Trustee (related  schedules and exhibits available upon request
of the Trustee).  (Incorporates  herein by reference to Exhibit of  Registrant's
Current Report on Form 8-K, filed October 9, 1996).

     4.12 Copy of the Series 9 Indenture  Supplement,  dated as of June 1, 1997,
by and between the Registrant and Texas Commerce Bank National  Association,  as
Trustee (related  schedules and exhibits available upon request of the Trustee).
(Incorporates  herein by reference to Exhibit of Registrant's  Current Report on
Form 8-K, filed July 11, 1997).

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

     4.14 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).
(Incorporates  herein by reference to Exhibit of Registrant's  Current Report on
Form 8-K, filed June 12, 1998).

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

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

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

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

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

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

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

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

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

     99.10 Copy of Financial  Guaranty  Insurance  Policy No.  50331-N issued by
Financial  Security  Assurance Inc., dated December 7, 1994, with respect to the
Series 1 Bonds (Incorporated  herein by reference to the Exhibit to Registrant's
1994 Form 10-K, dated and filed March 31, 1995).

     99.11 Copy of Financial  Guaranty  Insurance  Policy No. 95010074 issued by
Financial Guaranty  Insurance Company,  dated February 23, 1995, with respect to
the  Series  2  Bonds  (Incorporated  herein  by  reference  to  Exhibit  to the
Registrant's Current Report on Form 8-K, filed March 8, 1995).

     99.12 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).

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

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

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

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

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

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


(b)      Reports on Form 8-K

 
     Current  Report on Form 8-K as filed with the  Commission  on  September 3,
1998, relating to the Registrant's Series 6 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on  September 3,
1998, relating to the Registrant's Series 8 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on  September 3,
1998, relating to the Registrant's Series 8 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on September 23,
1998, relating to the Registrant's Series 11 Bonds.


<PAGE>

                                   SIGNATURES



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

                                MERIT SECURITIES CORPORATION


                                By:  /s/ Lynn K. Geurin
                                     Lynn K. Geurin
                                     (Principal Executive Officer)





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


Dated:  November 13, 1998