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

                                     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 June 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 
     of incorporation)                                 Identification No.)
 
10900 Nuckols Road, 3rd Floor, Glen Allen, Virginia            23060
    (Address of principal executive offices)               (Zip Code)

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

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

     As of July 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.

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<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 June 30, 1998 and
              December 31, 1997                                                  3

              Statements of Operations for the three and six months
              ended June 30, 1998 and 1997                                       4

              Statement of Shareholder's Equity for the six months
              ended June 30, 1998                                                5

              Statements of Cash Flows for the six months ended
              June 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                       8

PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings                                                     9

Item 5.    Other Information                                                     9

Item 6.    Exhibits and Reports on Form 8-K                                      9

SIGNATURES 
                                                                     13
</TABLE>

<PAGE>


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements


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


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

ASSETS:
   Collateral for collateralized bonds                            $  4,438,761          $  3,835,289
   Prepaid shelf registration fees                                         111                   334
   Cash                                                                     10                    10
                                                                =================     ================
                                                                  $  4,438,882          $  3,835,633
                                                                =================     ================

LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES:
   Non-recourse debt - collateralized bonds                       $  4,204,634          $  3,622,877
   Due to affiliates                                                    29,403                43,789
   Deferred income                                                       4,359                     -
                                                                -----------------     ----------------
                                                                     4,238,396             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                               40,017                64,707
   Accumulated deficit                                                 (29,697)              (21,702)
                                                                -----------------     ----------------
                                                                
                                                                       200,486               168,967
                                                                =================     ================
                                                                  $  4,438,882          $  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                Six Months Ended
                                                                June 30,                         June 30,
                                                     ------------------------------    ------------------------------
                                                         1998             1997             1998             1997
                                                     --------------  --------------    -------------- ---------------
<S>                                                       <C>             <C>               <C>              <C>

Interest Income:
   Collateral for collateralized bonds                 $  61,923       $  39,614         $ 120,068      $   82,163
                                                     --------------  --------------    -------------- ---------------

Interest and related expense:
   Interest expense on collateralized bonds               61,795          37,610           122,985          76,584
   Other collateralized bond expense                         944             802             1,985           1,637
                                                     --------------  --------------    -------------- ---------------
                                                          62,739          38,412           124,970          78,221
                                                     --------------  --------------    -------------- ---------------

Net interest margin before provision for losses             (816)          1,202            (4,902)          3,942
Provision for losses                                      (1,686)           (600)           (2,864)         (1,200)
                                                                                       -------------- ---------------
                                                     --------------  --------------
Net interest margin                                       (2,502)            602            (7,766)          2,742

Gain on sale of assets                                     1,125               -             1,125               -
Interest on due to affiliate                                (700)           (648)           (1,354)         (1,294)
                                                     --------------  --------------    -------------- ---------------

Net (loss) income                                      $  (2,077)      $     (46)        $  (7,995)     $    1,448
                                                     ==============  ==============    ============== ===============

<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                                         -                 -                -            (7,995)         (7,995)

  Change in net unrealized gain on
    investments available-for-sale                 -                 -          (24,690)                -         (24,690)
                                            ------------ --------------- ------------------- --------------- ---------------
  Total comprehensive loss                         -                 -          (24,690)           (7,995)        (32,685)

  Contributed capital                              -            64,204                -                 -          64,204

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

  Balance at June 30, 1998                    $   10       $   190,156     $     40,017        $  (29,697)     $  200,486
                                            ============ =============== =================== =============== ===============


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

<PAGE>

MERIT SECURITIES CORPORATION
Statements of Cash Flows
(amounts in thousands)
<TABLE>
<CAPTION>

                                                                             Six Months Ended
                                                                                 June 30,
                                                                        1998                   1997
                                                                 -------------------     ------------------
<S>                                                                      <C>                     <C>

Operating activities:
   Net (loss) income                                               $      (7,995)          $      1,448
   Adjustments to reconcile net (loss) income to net cash
     provided by operating activities:
          Gain on sale of assets                                          (1,125)                     -
       Provision for losses                                                2,864                  1,200
       Amortization, net                                                  20,495                  9,038
         Increase in deferred income                                       4,359                      -
         Decrease in prepaid shelf registration fees                         223                    246
       Other                                                                 347                    427
                                                                 -------------------     ------------------
         Net cash provided by operating activities                        19,168                 12,359
                                                                 -------------------     ------------------

Investing activities:
   Collateral for collateralized bonds:
     Purchase of loans subsequently securitized                       (1,711,862)            (1,023,811)
     Principal payments on collateral                                  1,012,653                375,912
     Proceeds from sale of collateralized bonds                           58,675                      -
     Net decrease in accrued interest receivable and funds held
      by trustee                                                          (6,505)                (3,273)
                                                                 -------------------     ------------------
       Net cash used for investing activities                           (647,039)              (651,172)
                                                                 -------------------     ------------------

Financing activities:
   Collateralized bonds:
     Proceeds from issuance of collateralized bonds                    1,589,340                979,212
     Principal payments on collateralized bonds                       (1,011,461)              (377,200)
     Increase in accrued interest payable                                    174                    846
   (Decrease) increase in due to affiliate                               (14,386)                13,312
   Proceeds from capital contributions                                    64,204                 22,643
                                                                 -------------------     ------------------
       Net cash provided by financing activities                         627,871                638,813
                                                                 -------------------     ------------------

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                                          $     120,305           $     76,093
                                                                 ===================     ==================

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


<PAGE>

MERIT SECURITIES CORPORATION
Notes to Unaudited Financial Statements
June 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 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 June 30, 1998,
the  Statements of  Operations  for the three and six months ended June 30, 1998
and 1997,  the Statement of  Shareholder's  Equity for the six months ended June
30, 1998,  the  Statements  of Cash Flows for the six months ended June 30, 1998
and 1997, and the related notes to financial statements are unaudited. Operating
results for the six months ended June 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  with 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 June 30, 1998 and
December 31, 1997, and the related average effective  interest rates (calculated
for the  month  ended  June 30,  1998  and  December  31,  1997,  and  excluding
unrealized gains and losses):

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------
                                                   June 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                           $   4,420,605           7.3%       $   3,795,393           7.2%
  Allowance for losses                           (21,861)                           (24,811)
---------------------------------------------------------------------------------------------------------------
     Amortized cost, net                       4,398,744                          3,770,582
  Gross unrealized gains                          59,559                             77,973
  Gross unrealized losses                        (19,542)                           (13,266)
---------------------------------------------------------------------------------------------------------------
                                           $   4,438,761                      $   3,835,289
---------------------------------------------------------------------------------------------------------------
</TABLE>



<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 six months  ended June 30,  1998,  the  Company  issued one (1)
series of bonds totaling  approximately $1.6 billion aggregate principal amount.
As of June 30, 1998,  the Company had eight (8) series of  collateralized  bonds
outstanding  totaling  approximately  $4.2 billion,  compared to $3.6 billion at
December 31, 1997,  and $2.9  billion at June 30, 1997.  Interest  income on the
Collateral  increased  $37.9 million to $120.1  million for the six months ended
June 30, 1998  compared to $82.2 million for the six months ended June 30, 1997,
primarily  as a  result  of the  increased  amount  of  outstanding  collateral.
Interest expense on the Bonds increased $46.4 million from $76.6 million for the
six months  ended June 30, 1997 to $123.0  million for the six months ended June
30, 1998, primarily due to the additional series outstanding.

     Net interest  margin for the six months ended June 30, 1998  decreased to a
negative $7.8 million from a positive $2.7 million for the same period for 1997.
This decrease was primarily the result of higher premium  amortization caused by
higher  prepayments  during the six months  ended June 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.
The Company expects net interest margin to improve as prepayments decline.

     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 June 30, 1998, the Company  retained $143.7 million in
aggregate  principal  amount  of  overcollateralization,  and had  reserves,  or
otherwise had provided  coverage on $52.2 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 June 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.

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 May 12, 1998,
relating to the Registrant's Series 6 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on May 12, 1998,
relating to the Registrant's Series 7 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on May 12, 1998,
relating to the Registrant's Series 8 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on June 2, 1998,
relating to the Registrant's Series 6 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on June 2, 1998,
relating to the Registrant's Series 7 Bonds.

     Current  Report on Form 8-K as filed with the  Commission  on June 2, 1998,
relating to the Registrant's Series 8 Bonds.

     Current  Report on Form 8-K as filed with the  Commission on June 12, 1998,
relating to the Registrant's Series 11 Bonds.
 
     Current  Report on Form 8-K as filed with the  Commission on June 29, 1998,
relating to the Registrant's Series 6 Bonds.

     Current  Report on Form 8-K as filed with the  Commission on June 29, 1998,
relating to the Registrant's Series 7 Bonds.

     Current  Report on Form 8-K as filed with the  Commission on June 29, 1998,
relating to the Registrant's Series 8 Bonds.

     Current  Report on Form 8-K as filed with the Commission on August 5, 1998,
relating to the Registrant's Series 6 Bonds.

     Current  Report on Form 8-K as filed with the Commission on August 5, 1998,
relating to the Registrant's Series 7 Bonds.

     Current  Report on Form 8-K as filed with the Commission on August 5, 1998,
relating to the Registrant's Series 8 Bonds.



                                       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:  August 14, 1998