SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2002
                                       OR

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

                         Commission File Number 1-13237

                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
         (Exact name of Registrant as specified in its Trust Agreement)

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

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

Registrant's telephone number, including area code (212) 421-5333

Securities registered pursuant to Section 12(b) of the Act:
               Title of each class
      --------------------------------------
      Shares of Beneficial Interest

      Name of each exchange on which registered:
      ------------------------------------------
      American Stock Exchange


Securities registered pursuant to Section 12(g) of the Act:
      None

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

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

     The approximate  aggregate market value of the voting and non-voting common
equity  held by  non-affiliates  of the  Registrant  as of  June  28,  2002  was
$729,517,070,  based on a price of $17.88 per share, the closing sales price for
the Registrant's shares of beneficial interest on the American Stock Exchange on
that date.

     As of March  27,  2003  there  were  41,220,138  outstanding  shares of the
Registrant's shares of beneficial interest.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part IV: Definitive proxy statement for the 2003 Annual Meeting of Shareholders,
to be file pursuant to Regulation 14A.

Index to exhibits may be found on page 90
Page 1 of 106


<PAGE>
                      CAUTIONARY STATEMENT FOR PURPOSES OF
                         THE "SAFE HARBOR" PROVISIONS OF
              THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995


WHEN  USED  IN  THIS  ANNUAL  REPORT  ON  FORM  10-K,   THE  WORDS   "BELIEVES,"
"ANTICIPATES,"  "EXPECTS"  AND  SIMILAR  EXPRESSIONS  ARE  INTENDED  TO IDENTIFY
FORWARD-LOOKING  STATEMENTS.  STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K  PURSUANT TO THE "SAFE HARBOR"  PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN  RISKS AND  UNCERTAINTIES  WHICH  COULD CAUSE  ACTUAL  RESULTS TO DIFFER
MATERIALLY,  INCLUDING,  BUT NOT  LIMITED TO,  THOSE SET FORTH IN  "MANAGEMENT'S
DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF  OPERATIONS."
READERS  ARE  CAUTIONED  NOT TO PLACE UNDUE  RELIANCE  ON THESE  FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.



                                      -2-


<PAGE>



                                     PART I
Item 1.  Business

General

Charter Municipal  Mortgage  Acceptance Company  ("CharterMac"),  along with its
consolidated   subsidiaries  (the  "Company"),  is  a  Delaware  business  trust
principally  engaged in the acquisition and ownership  (directly and indirectly)
of tax-exempt  multi-family  housing revenue bonds  ("Revenue  Bonds") and other
investments  that produce  tax-exempt  income,  issued by various state or local
governments,  agencies,  or authorities.  Revenue Bonds are primarily secured by
participating   and   non-participating   first  mortgage  loans  on  underlying
properties  ("Underlying  Properties").  The Company  believes  that it can earn
above market rates of interest on its Revenue Bond  acquisitions by focusing its
efforts primarily on affordable  housing.  The Company utilizes the services and
advice of two managers,  Charter Mac  Corporation,  the  Company's  wholly-owned
subsidiary and Related  Charter L.P.  (collectively  the "Manager")  which is an
affiliate of Related Capital Company ("Related"),  a nationwide fully integrated
real estate services firm, to operate its day-to-day activities and advise it on
the selection and underwriting of investments. The Manager estimates that nearly
30% of all new multi-family housing development contains an affordable component
which produces tax credits pursuant to Section 42 of the Internal Revenue Code.

In addition, the Company believes it can earn above market rates of interest via
its "Direct Purchase Program".  The traditional methods of financing  affordable
housing  with  tax-exempt  Revenue  Bonds are  complex and time  consuming,  and
involve  the  participation  of  many  intermediaries.  This  process  has  been
streamlined  with the Direct  Purchase  Program.  The Company's  Direct Purchase
Program  removes  all  intermediaries  from the  financing  process  (except the
governmental issuer of the Revenue Bond) and enables developers to deal directly
with one source.  Because the Company  purchases its Revenue Bonds directly from
the governmental  issuer,  the need for  underwriters and their counsel,  rating
agencies and costly documentation is eliminated. This reduces the financing life
cycle,  often by several  months,  and also  reduces  the bond  issuance  costs,
usually by 30% or more. In dealing  directly with the Company,  developers  feel
more certain about the terms and timing of their financing. The Company believes
the savings in time and up-front  costs and the certainty of execution  that the
Direct  Purchase  Program  offers to  developers  allows the  Company to receive
above-market rates of interest on the Company's Revenue Bonds.

The Company  believes that it is well  positioned to market its Direct  Purchase
Program as a result of the  Manager's  affiliation  with  Related,  because  the
Manager  is  able  to  utilize  Related's  resources  and  relationships  in the
multi-family  affordable housing finance industry to source potential  borrowers
of Revenue Bonds.  Related and its  predecessor  companies  have  specialized in
offering  debt  and  equity  products  to  mid-market  multi-family  owners  and
developers for over 30 years.

Corporate Strategy

The Company focuses on providing  shareholders  with a stable  investment by, in
part,  operating at relatively low levels of leverage.  The Company chose not to
operate as a mortgage REIT,  which  typically have leverage  ratios ranging from
3:1 to 10:1. Pursuant to the Company's Trust Agreement, the Company is only able
to incur  leverage or other  financing  up to 50% of its Total  Market Value (as
defined in the Trust Agreement).

Adding  to  the  Company's  overall  stability  is the  fact  the  Revenue  Bond
investments carry fixed interest rates and, generally,  can not be repaid before
ten years, without substantial  repayment penalties.  This significantly reduces
the risk of repayment in markets where interest rates are declining.

The  Company  has sought to keep as much of the  income,  passed  through to the
shareholders,  tax-exempt,  by investing mostly in tax-exempt Revenue Bonds. The
Company has begun to guarantee third party mortgage loans and tax credit yields,
through  Charter  Mac  Corporation  ("CM  Corp."),   its  wholly-owned   taxable
subsidiary.  While  these new lines of  business  will  increase  the  Company's
taxable  revenues,  the Company is able to reduce  taxable  income by  deducting
certain expenses which qualify for income tax purposes.

Proposed Acquisition of Related Capital Company

On January 14, 2002, the Company announced that its Board of Trustees had formed
a special committee to explore  strategic  alternatives for the Company's future
management  structure,  including  internalization  of  management,  and ways to
further diversify the Company's revenue sources.  The special committee consists
of the independent  members of the Board of Trustees,  Peter T. Allen, Arthur P.
Fisch and Charles L. Edson.  On December 18, 2002, the Company  announced it had
entered  into an agreement  to acquire  100% of the  ownership  interests in and
substantially  all of the businesses  operated by Related.  The acquisition will
enable the  Company to  terminate  its  outside  management  agreement  with the
Manager and to become an internally-managed company.

Acquisition Terms

The acquisition  will be structured so that the ownership  interests held by the
Related  principals in both Related and the other  entities  which control other
aspects  of  Related's   business  will  be  contributed  into  a  newly-formed,
wholly-owned  subsidiary  of  CharterMac  (the  "CharterMac  Sub").  The selling
principals of Related include the four executive  managing  partners  (Stuart J.
Boesky,  Alan P. Hirmes, Marc D. Schnitzer and Denise L. Kiley) and an affiliate
of The Related Companies, L.P. ("TRCLP"),  which is majority owned by Stephen M.
Ross (the "Related  Principals").  Messrs.  Boesky, Hirmes and Schnitzer and Ms.
Kiley have managed RCC over the past 15 years.

CharterMac will pay total  consideration to the Related Principals of up to $338
million. The consideration will be paid as follows:

        o      The Initial Payment - $210 million  consisting of $160 million in
               special  common  units of the  CharterMac  Sub  ("SCUs")  and $50
               million  in cash  (with  the cash  position  being  paid  only to
               TRCLP).  The  Initial  Payment  SCUs will be issued at $17.78 per
               unit,  which was the average  closing price of CharterMac  Common
               Shares,  for the 30 calendar days prior to this announcement (the
               "Initial Payment SCUs");

        o      The  Contingent  Payment - Up to $128 million of additional  SCUs
               (the "Contingent  Payment SCUs"),  following the determination of
               Related's  adjusted  audited  earnings  before  interest,  taxes,
               depreciation   and   amortization,   as  well  as  certain  other
               adjustments,  for the year ending  December  31, 2002  ("Adjusted
               Earnings").  The  Contingent  Payment  SCUs  will be issued in an
               amount  equal to 7.73x  RCC 2002  Adjusted  Earnings  minus  $210
               million, subject to a cap of $338 million of total consideration.
               The Contingent Payment SCUs are expected to be issued at the same
               price as the Initial Payment SCUs, subject to a 17.5% symmetrical
               collar.

In connection with the acquisition, CharterMac will establish a restricted share
program and will broadly  issue to employees of Related,  other than the Related
Principals, $15 million of CharterMac Common Shares. Following the completion of
the   acquisition,   TRCLP's   economic   interest  in  CharterMac   will  equal
approximately  19% and management and Related  employees'  economic  interest in
CharterMac will equal approximately 11%.

On February 28, 2003, the Company filed a preliminary proxy regarding this
proposed acquisition.

The Predecessor

CharterMac was formed on October 1, 1997 as the result of the merger (the
"Merger") of three publicly registered limited partnerships: Summit Tax Exempt
Bond Fund, L.P., Summit Tax Exempt L.P. II and Summit Tax Exempt L.P. III (the
"Partnerships"). One of the general partners of the Partnerships was an
affiliate of Related. Pursuant to the Merger, CharterMac issued common shares of
beneficial interest ("Common Shares") to all partners in each of the
Partnerships in exchange for their proportionate interests. The Common Shares
commenced trading on the American Stock Exchange on October 1, 1997 under the
symbol "CHC."


                                      -3-


<PAGE>


Significant Subsidiaries

CharterMac Equity Issuer Trust

In 1999,  CharterMac  created  CharterMac  Equity Issuer Trust,  a  wholly-owned
subsidiary, (collectively, with its subsidiaries, "Equity Issuer") which holds a
substantial  portion of the Company's  Revenue Bonds.  From time to time, Equity
Issuer  may  issue   Series  A  and  Series  B   Cumulative   Preferred   Shares
(cumulatively,  "Preferred  Shares") to institutional  investors.  The Preferred
Shares have a senior claim to the tax-exempt income derived from the investments
owned by Equity  Issuer.  Any income in Equity  Issuer  after the payment of the
cumulative  distributions on its Preferred Shares,  and after the fulfillment of
certain  covenants,  may then be allocated to  CharterMac.  The assets of Equity
Issuer, while included in the consolidated  financial statements of the Company,
are legally owned by Equity Issuer and are not available to any creditors of the
Company outside of Equity Issuer.

CharterMac Corporation

In July  2001,  the  Company  formed CM Corp.  as a  wholly-owned,  consolidated
taxable  subsidiary  to help the  Company  more  efficiently  manage its taxable
business.  CM Corp. allows the Company to better diversify its business lines to
include,  among other things,  mortgage  origination  and servicing on behalf of
third parties and  guaranteeing  mortgage loans for a fee. CM Corp. will conduct
most of the Company's taxable business,  including any fee-generating activities
in which the Company may engage and provide  management  services to  CharterMac
and its other  subsidiaries.  CM Corp.  isolates  a  substantial  portion of the
taxable  income and expenses of the Company.  Unlike  CharterMac,  CM Corp. is a
corporation  which  is  subject  to both  Federal  and  State  income  tax.  Any
distributions  of net income  from CM Corp.  to  CharterMac  are taxable and are
passed through to the shareholders of CharterMac in its dividend.

PW Funding, Inc.

In December 2001, the Company,  through CM Corp. acquired 80% of the outstanding
capital  stock  of  PW  Funding,   Inc.  and  its  subsidiaries   ("PWF"),   for
approximately $34.9 million, of which,  approximately $21.6 million was financed
and $7.6  million  was paid in cash.  Additionally,  the  Company  repaid a $5.7
million loan on behalf of PWF. It is anticipated  that CM Corp. will acquire the
remaining 20% of the issued and  outstanding  capital stock of PWF over the next
12 to 24 months. Under the acquisition  agreement,  the stockholders of PWF were
granted the right to put their remaining 20% stock interest to CM Corp. after an
initial period of 24 to 36 months.  The agreement also grants CM Corp. the right
to call the remaining 20% stock  interest of PWF from PWF's  stockholders  after
the same initial  period of 24 to 36 months.  During the year ended December 31,
2002 and the three  months ended March 31,  2003,  the Company,  pursuant to the
original  acquisition  agreement,  paid  approximately $3.6 million in "true-up"
payments  representing  payments  due to the original  PWF  stockholders.  These
true-up  payments were based on i) the increase in the value of servicing rights
due to certain loans closing,  ii) positive  changes between the audited balance
sheet used for the  initial  purchase  price and the  audited  balance  sheet at
December 31, 2001,  iii)  payments of certain  servicing  fees,  and iv) forward
conversions of loans previously committed.  The acquisition agreement stipulates
additional  true-up payments to be made periodically for a period of up to three
years from the acquisition date.

PWF is a national mortgage-banking firm which specializes in providing financing
and  ancillary  services  to  the  multi-family   housing  industry,   including
construction  and permanent  debt  financing,  mortgage loan servicing and asset
management.  Founded in 1971,  PWF became one of the original  Federal  National
Mortgage Association ("Fannie Mae") Delegated  Underwriter and Servicers ("DUS")
and is a Federal Housing Administration ("FHA") approved mortgagor. In 2000, PWF
joined a select group of Federal Home Loan Mortgage Corporation  ("Freddie Mac")
Program Plus lenders through the acquisition of Larson Financial Resources, Inc.
("Larson").

Since 1988,  PWF has  originated  more than $2.8 billion in Fannie Mae loans and
currently services a $3.2 billion loan portfolio including about $1.8 billion in
Fannie Mae DUS loans, $337.2 million in FHA loans, and $548.3 million in Freddie
Mac loans. PWF and its subsidiaries  provide a full range of financing  services
to the conventional  multi-family market and complements  CharterMac's principal
business in the acquisition of tax-exempt affordable housing Revenue Bonds.

CharterMac is entitled to a cumulative preferential distribution from PWF's cash
available for distribution  equal to 10% of its invested capital.  The remaining
cash  available  for  distribution  will  be  distributed  approximately  80% to
CharterMac and 20% to the other  stockholders.  CharterMac will also be entitled
to an  additional  cumulative  priority  return  equal  to 4.3% of its  invested
capital prior to the purchase payments to PWF's  stockholders on exercise of the
put or call options. The fee income generated by PWF is taxable income, which is
partially offset by tax-deductible expenses incurred by CM Corp.

Governance

The Company is governed by a board of trustees  comprised  of three  independent
managing  trustees and five managing  trustees who are affiliated  with Related.
The Company  utilizes  the  services  and advice  provided  by CM Corp.  and the
Manager to operate its  day-to-day  activities  and advise on the  selection and
underwriting  of  investments.  CM Corp. and the Manager  provide these services
pursuant to management agreements between (i) CM Corp. and/or Related Charter LP
and CharterMac,  and (ii) CM Corp. and each of the Company's  subsidiaries.  The
Manager has  subcontracted  its obligations  under the management  agreements to
Related and uses Related's resources and real estate and investment expertise to
advise the Company and provide it with services with a core group of experienced
staff and executive  management.  These  services  include,  among other things,
acquisition,  accounting,  tax, capital  markets,  asset  monitoring,  portfolio
management, investor relations and public relations services.


                                      -4-


<PAGE>



Business Plan

The Company  focuses its efforts on investing in Revenue  Bonds that are secured
by multi-family affordable housing properties.  Through PWF, the Company focuses
on originating and servicing multi-family mortgage loans on behalf of Government
Sponsored  Enterprises  ("GSEs") and government  agencies such as Fannie Mae and
Freddie Mac and the FHA.  Together,  these components offer a full range of debt
capital  solutions to  developers  of  affordable  and market rate  multi-family
housing.

Investing in Tax-Exempt Revenue Bonds

The Company's primary business is investing in tax-exempt  Revenue Bonds secured
by multi-family affordable housing properties.  The Company has been successful,
using its Direct Purchase  Program,  in achieving above market interest rates on
its investments in Revenue Bonds,  and the Manager believes this continues to be
a viable business model.

In addition to investing in tax-exempt  Revenue  Bonds  secured by  multi-family
properties  producing tax credits,  the Company may acquire  other  multi-family
tax-exempt  bonds  including  those  issued to finance  affordable  multi-family
projects   and   facilities   for  the  elderly   owned  by  Section   501(c)(3)
not-for-profit organizations. A portion of assets of the Company produce a small
amount of taxable income.

Credit Enhancement and Yield Guarantee Transactions

Through CM Corp., the Company has begun  guaranteeing third party mortgage loans
and tax  credit  yields  for a fee.  In 2001,  the  Company  executed  its first
mortgage loan credit enhancement  transaction.  In 2002 the Company entered into
two  transactions  whereby it  guaranteed an agreed upon internal rate of return
(IRR), for a pool of 11 properties owned by Related Capital Guaranteed Corporate
Partners II LP (RCGCP), an investment fund sponsored by Related, an affiliate of
the  Manager.  In such  transactions,  the  Company  will  generally  receive  a
guarantee fee in return for guaranteeing an agreed upon IRR. The Company expects
to be able to selectively grow the value of this new fee business over time.

CMBS Investment

The Company  owns 739,741  preferred  equity  units of ARCap  Investors,  L.L.C.
("ARCap"),  with a face amount of $25 per unit,  representing a 6.73%  ownership
and  voting  interest.  The  preferred  equity  units  are  convertible,  at the
Company's  option,  into ARCap common units. If converted into common units, the
conversion price is equivalent to $25 per unit, subject to certain  adjustments.
Also, if not already  converted,  for a period of sixty days following the fifth
anniversary  of the first  closing  date,  which  will be August  4,  2005,  the
preferred  equity  units  are  convertible,  at  the  Company's  option,  into a
three-year  note bearing  interest at 12% that would be junior to all of ARCap's
then existing indebtedness.  The preferred equity units are also redeemable,  at
the option of ARCap,  up until the fifth  anniversary of the first closing date.
As of  December  31,  2002,  ARCap had  approximately  $823  million  in assets,
including  investments  of  approximately  $799  million of CMBS.  Approximately
one-third of ARCap's CMBS are secured by multi-family properties.

Business Segments

As a result  of the  December  2001  acquisition  of PWF,  the  Company  has two
reportable business segments: an investing segment and an operating segment.

The investing  segment consists of subsidiaries  holding  investments in Revenue
Bonds producing primarily tax-exempt interest income.

The  operating  segment  generates  taxable  interest  and fee  income.  Taxable
interest  income is generated  through the ownership of taxable  bonds,  certain
taxable  loans  and  other   investments.   Taxable  fee  income  includes  loan
origination  and loan  servicing  fees  (through  PWF) on  portfolios  for third
parties,  fees earned and  associated  with the  acquisition  or  origination of
Revenue Bonds, and fees for credit enhancement and the yield guaranty business.

Segment results include all direct and contractual revenues and expenses of each
segment and  allocations of indirect  expenses based on specific  methodologies.
These reportable  segments are strategic  business units that primarily generate
revenue  streams  that  are  distinctly  different  and  are  generally  managed
separately.  Segment  reporting is applicable  beginning with the acquisition of
PWF on December 31,  2001;  prior to December  31,  2001,  all of the  Company's
operations were attributable to the investing segment.


                                      -5-


<PAGE>


The following table provides more information regarding the Company's segments:

                          Year Ended December 31, 2002
                   -------------------------------------------
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                   Investing       Operating        Total
                                                   ---------       ---------        -----

<S>                                                   <C>            <C>              <C>

   Revenues                                    $     98,208      $  18,205      $  116,413
   Interest Revenues                                 94,683          3,409          98,092
   Interest Expense                                  14,558          1,265          15,823
   Depreciation and Amortization Expense              1,131          7,760           8,891
   Equity in the net income of investees
   accounted for by the equity method                 2,219             --           2,219
   Income tax expense (benefit)                        (214)         1,498           1,284
   Total Assets                                   1,729,194        123,674       1,852,868


</TABLE>

Revenue Bonds

The Company accounts for its investments in Revenue Bonds as  available-for-sale
debt  securities  under the  provisions  of Statement  of  Financial  Accounting
Standards  No.  115,  "Accounting  for  Certain  Investments  in Debt and Equity
Securities"  ("SFAS 115").  Accordingly,  the Revenue Bonds are carried at their
estimated  fair  values,  with  unrealized  gains and losses  reported  in other
comprehensive income.

Generally, Revenue Bonds are secured by mortgage loans on Underlying Properties.
The Underlying  Properties are primarily garden apartment  complexes  located in
major  metropolitan  markets  in 25 states and the  District  of  Columbia.  The
following table summarizes the Company's portfolio at December 31, 2002.

<TABLE>

                                               Outstanding      Fair        Stated    Occupancy    Average
                                                Balance at    Value1 at     Interest   Rate at   Rental Rate
 Investments/Asset Type                 Units   12/31/2002    12/31/2002     Rate2    12/31/02   at 12/31/02
--------------------------             -------- ------------ -------------  --------  ---------  -----------
                                                         (Dollars in thousands)
<S>                                     <C>     <C>          <C>             <C>       <C>        <C>

Tax-Exempt First Mortgage Bonds

                    Stabilized:
                  Participating          3,874   $  152,977   $  154,440      6.9%      88.1%     $711
              Non-participating         10,463      414,859      445,723      7.2%      94.1%      684
                                      --------    ---------    ---------
               Total stabilized         14,337      567,836      600,163      7.2%
                      Lease-Up3          4,725      227,147      245,866      7.4%
                   Construction          9,779      512,668      532,669      7.0%
                 Rehabilitation          2,976      142,330      153,489      7.5%
                                      --------   ----------   ----------
      Subtotal/Weighted Average         31,817   $1,449,981   $1,532,187      7.2%

   Tax-Exempt Subordinate Bonds
                     Stabilized            692   $   17,000   $   17,000      9.4%
                                                 ----------   ----------

                  Taxable Bonds
                 First Mortgages             *   $   28,368   $   30,403      8.9%
                                                 ----------   ----------
             Total Revenue Bonds                 $1,495,349   $1,579,590      7.2%
                                                 ----------   ----------
</TABLE>

Notes:

*    Not applicable to avoid duplication with Tax-Exempt First Mortgage Bonds
     which are secured by the Underlying Property
1    The Revenue Bonds are deemed to be available-for-sale debt securities and,
     accordingly, are carried at their estimated fair values.
2    The stated interest rate represents the weighted average coupon rates of
     the Revenue Bonds, based on their face amounts at December 31, 2002.
3    Represents properties that have completed construction/rehabilitation and
     have not achieved occupancy above 90% and/or debt coverage ratios of 1.10:1
     or greater for three consecutive months. This lease-up definition may
     differ from the definition of stabilization in individual Revenue Bond
     documents.

The principal  and interest  payments on each Revenue Bond are payable only from
the cash flows of the Underlying  Properties,  including proceeds from a sale of
an  Underlying  Property or the  refinancing  of the mortgage loan securing such
Revenue Bonds (the  "Mortgage  Loans").  None of the Revenue Bonds  constitute a
general  obligation of any state or local government,  agency or authority.  The
structure  of each  Mortgage  Loan mirrors the  structure  of the  corresponding
Revenue Bond that it secures.  In order to protect the tax-exempt  status of the
Revenue  Bonds,  the owners of the  Underlying  Properties are required to enter
into certain agreements to own, manage and operate the Underlying  Properties in
accordance with requirements of the Internal Revenue Code of 1986, as amended.


                                       -6-
<PAGE>



Revenue Bonds generally are not subject to optional  prepayment during the first
five to ten  years  of the  Company's  ownership  of the  bonds  and  may  carry
prepayment  penalties  thereafter  generally  beginning at 5% of the outstanding
principal  balance,  declining  by 1% per annum.  Certain  Revenue  Bonds may be
purchased at a discount  from their face value.  In selected  circumstances  and
generally only in connection with the  acquisition of tax-exempt  Revenue Bonds,
the Company may  acquire a small  amount of taxable  bonds (i) which the Company
may be required to acquire in order to satisfy state regulations with respect to
the issuance of tax-exempt  bonds and (ii) to fund certain costs associated with
the issuance of Revenue  Bonds,  that under current law cannot be funded by such
Revenue Bonds.

Modified Revenue Bonds

From time to time, the Company, as an alternative to foreclosure in the event of
default,  enters into forbearance agreements and/or permanent modifications with
certain borrowers. The determination as to whether it is in the best interest of
the Company to enter into permanent modifications or forbearance agreements,  to
advance second  mortgages,  or  alternatively,  to pursue its remedies under the
loan documents,  including  foreclosure,  is based upon several  factors.  These
factors  include,  but are not limited to,  Underlying  Property  operations and
performance, owner cooperation and projected costs of foreclosure and litigation
-  irrespective  of  whether  or not the  obligor  has an  affiliation  with the
Manager.  These  modifications  have  generally  encompassed an extension of the
maturity together with a prepayment lock out feature and/or prepayment penalties
together with an extension of the mandatory  redemption feature (5-10 years from
modification).  Stated  interest  rates have also been adjusted  together with a
change  in  the   participating   interest   features.   Base  interest   rates,
participating interest, prepayment lock-outs,  mandatory redemption and maturity
features are arrived at through  negotiations between the Company and the owners
of the  Underlying  Properties  and vary  dependent on the facts of a particular
Revenue Bond, the owner of the Underlying  Property,  the Underlying  Property's
performance  and  requirements  of  bond  counsel  and  local  issuers.   Should
negotiations break down, the Company has the option to pursue its other remedies
including   acceleration  and   foreclosure.   The  Company  may  agree  to  the
modification of other Revenue Bonds to generally  reflect similar terms as those
modified  previously,  where and as appropriate.  Significant  modifications  to
interest  rates and  maturity  dates are subject to final  approval of the local
issuers, bond counsel and indenture trustees.  Since inception,  the Company has
modified Revenue Bonds with an aggregate face amount of only $187 million.

With respect to Revenue Bonds which are subject to forbearance  agreements  with
their respective obligors,  the difference between the stated interest rates and
the rates paid (whether  deferred and payable out of available  future cash flow
or, ultimately,  from sale or refinancing proceeds) is not accrued for financial
statement  purposes.  The accrual of interest at the stated  interest  rate will
resume  once an  Underlying  Property's  ability to pay the stated rate has been
adequately   demonstrated.    Unrecorded   contractual   interest   income   was
approximately  $434,500,  $662,000 and $1.6 million for the years ended December
31,  2002,  2001 and 2000,  respectively.  Payments  under each of the  existing
forbearance agreements are current as of December 31, 2002.

Revenue Bonds with the Obligor as an Affiliate of the Manager

The  obligors  of  Revenue  Bonds  with an  aggregate  original  par  amount  of
approximately  $1.1 billion are  partnerships in which affiliates of the Manager
own  a 1%  general  partner  interest.  In  addition,  the  original  owners  of
Underlying  Properties  and obligors of  approximately  $12.2 million of Revenue
Bonds have been replaced with affiliates of the Manager who have not made equity
investments.  Up to 15% of the Total  Market Value of the Company (as defined in
its Trust  Agreement)  may be invested in Revenue  Bonds  secured by  Underlying
Properties  in which  affiliates  of the Manager  have a  controlling  interest,
equity  interest  or  security  interest.  The 15%  limit is not  applicable  to
properties  to which the  Manager or its  affiliates  have  taken  title for the
benefit of the  Company and only  applies to Revenue  Bonds  acquired  after the
Merger. These affiliate entities could have interests that do not coincide with,
and may be adverse to, the interests of the Company.  Negotiations, if any, with
respect to  modifications  of Revenue Bonds between the Company and obligors who
are affiliates may be affected by these conflicts as the Manager  determines the
appropriate  terms and  conditions of  modifications  or otherwise opts for some
other remedy including foreclosure.

The  original  obligor and owner of the  Underlying  Property of the  Highpointe
Revenue Bond has been replaced with an affiliate of the Manager who has not made
an equity investment. This affiliate has assumed the day-to-day responsibilities
and  obligations  of the  Underlying  Property.  A buyer is being sought for the
Underlying  Property  securing  the  Highpointe  Revenue  Bond.   Highpointe  is
generally  paying as interest an amount equal to the net cash flow  generated by
operations,  which is less than the stated rate of the Revenue Bond. The Company
has no  present  intention  of  declaring  default  on this  Revenue  Bond.  The
aggregate  carrying  value  of  Highpointe  at  December  31,  2002 and 2001 was
approximately $6.2 million and $5.7 million, respectively, and the income earned
from Highpointe for the years ended December 31, 2002 and 2001 was approximately
$322,000 and $315,000, respectively.

Impaired Revenue Bond

During 2002,  the Company took a write down of  approximately  $920,000,  on the
Lexington  Trails Revenue Bond.  This Revenue Bond initially  became impaired in
the second  quarter  of 2001,  at which  time the  Company  took a write down of
$400,000.  Subsequently,  the Company caused the trustee, for the benefit of the
Company,  to  foreclose  on the  underlying  property.  Since  the  date  of the
foreclosure,  the  Company  has  attempted  to find a buyer  for the  underlying
property. Management believes it is likely that in connection with a sale of the
underlying property, the terms of this Revenue Bond may need to be modified. The
Company has  therefore  decided to write down the carrying  value of the bond to
$4.5 million, the fair value of the Underlying Property.



                                       -7-
<PAGE>



Accessing Multiple Forms of Capital

In order for the Company to fund its investments in Revenue Bonds and facilitate
growth,  the Company utilizes  multiple sources of debt and equity capital.  The
Company's  access  to  multiple  sources  of debt and  equity  capital  provides
financial  flexibility and enables the Company to not have to rely on one single
source of capital.  Further, the particular structure of each capital source has
attributes  that may make it more  accommodating  to certain  investors  or more
favorably received in the then current climate of the capital markets.

The Company has  collateralized  debt  securitizations  and equity  offerings to
raise  capital.   The  most  efficient  and  economical  source  of  capital  is
securitization. The Company has two primary securitization programs: the Private
Label  Tender   Option   Program   ("TOP")  and  the   P-FLOATS/RITES   program.
Securitizations  continue  to offer the  lowest  cost of  capital,  albeit  with
certain  covenants and leverage  limits.  Pursuant to its Trust  Agreement,  the
Company  is only  able to incur  leverage  or other  financing  up to 50% of the
Company's Total Market Value; this leverage  restriction is generally consistent
or more conservative than leverage covenants on the Company's  securitized debt.
The  Company's   conservative  capital  structure  therefore  requires  periodic
preferred  and common  equity  offerings to maintain  leverage  within  required
limits.

During  2002,  the  Company's  growth was  financed  by the TOP,  an  additional
offering of common share,  two offerings of  Convertible  CRA Shares,  preferred
share  offerings by a subsidiary,  and  securitization  transactions  as well as
funds  generated  from  operations  in excess of  distributions.  The  Company's
continued  growth is expected to be financed by new issuances of Common  Shares,
the TOP or similar programs,  additional  securitization  transactions and funds
generated from operations in excess of distributions.

Public Offerings and Private Placements

In February 2002, the Company issued approximately 6.3 million Common Shares, at
$15.47  per  share,   raising   proceeds  net  of   underwriting   discounts  of
approximately $92.8 million.  The Company used these proceeds to fund additional
investments in Revenue Bonds.

In July 2002,  the Company  issued  approximately  1.4 million  Convertible  CRA
Shares, at $17.43 per share,  raising proceeds net of underwriting  discounts of
approximately  $23  million.  The  Company  used  these  proceeds  to  invest in
additional Revenue Bonds and for general Company purposes,  including  reduction
of the Company's indebtedness.

In November 2002,  the Company  completed a private  placement of  approximately
576,000  Convertible CRA Shares,  at $17.37 per share,  raising  proceeds net of
underwriting  discounts of  approximately  $9.6 million.  The Company used these
proceeds to invest in additional Revenue Bonds.

Preferred Equity Issuances

One of CharterMac's subsidiaries,  Equity Issuer, has issued preferred shares to
institutional   investors   with  an   aggregate   liquidation   preference   of
approximately  $273.5  million,  issued as  follows:  $90  million in 1999,  $79
million in 2000,  $49.5  million in 2001 and $55 million in 2002.  The Preferred
Shares are not  convertible  into Common Shares of Equity Issuer or the Company.
The preferred  shares have an annual  preferred  dividend  payable  quarterly in
arrears,  but only upon declaration thereof by Equity Issuer's board of trustees
and only to the extent of Equity  Issuer's  tax-exempt  income (net of expenses)
for the particular quarter.  Since inception,  all quarterly  distributions have
been declared at the stated annualized  dividend rate for each respective series
and all  distributions  so declared have been paid.  See Item 5, "Market for the
Company's  Common  Shares and Related  Shareholder  Matters"  for more  detailed
information.

The preferred  shares issued during June 2002,  consisted of 60 6.80% Series A-3
cumulative  preferred  shares  and 50 7.20%  Series B-2  subordinate  cumulative
preferred   shares,   raising   proceeds  net  of   underwriting   discounts  of
approximately  $53.1  million.  Each of these  preferred  shares is  subject  to
mandatory repurchase in 2052 at a liquidation amount of $500,000 per share.

Private Label Tender Option Program

On May 21, 1998,  the Company  closed on its TOP. As of December  31, 1999,  the
maximum  amount of capital that could be raised under the TOP was $400  million.
On  December  7, 2000,  the Company  refined  the  structure  of the TOP for the
primary purpose of segregating Revenue Bonds issued by governmental  entities in
California from the remainder of the Revenue Bonds under the TOP and to increase
the maximum amount of capital available under the program to $500 million.

As of December 31, 2002, the Company has  contributed 83 issues of Revenue Bonds
in the  aggregate  outstanding  bond  amount of  approximately  $704  million to
CharterMac  Origination  Trust  I (the  "Origination  Trust"),  a  wholly-owned,
indirect subsidiary of the Company. The Origination Trust then contributed 56 of
its Revenue Bonds,  with an aggregate  outstanding  bond amount of approximately
$505  million,  to  CharterMac  Owner  Trust  I (the  "Owner  Trust")  which  is
controlled  by the  Company.  The  Owner  Trust  contributes  selected  bonds to
specific  "Series  Trusts"  in  order  to  segregate  Revenue  Bonds  issued  by
governmental  entities selected by state of origin. As of December 31, 2002, six
such Series Trusts had been created:  two  "California  only" series that had 16
issues  of  Revenue   Bonds  in  the  aggregate   outstanding   bond  amount  of
approximately $118 million and four "National"  (non-state specific) series that
had 40 issues of  Revenue  Bonds in the  aggregate  outstanding  bond  amount of
approximately $387 million.

Each Series  Trust  issues two equity  certificates:  (i) a Senior  Certificate,
which has been deposited into another  Delaware  business trust (a  "Certificate
Trust") which issues and sells "Floater Certificates"  representing proportional
interests in the Senior Certificate to



                                       -8-
<PAGE>



new  investors  and (ii) a Residual  Certificate  representing  the remaining
beneficial ownership interest in each Series Trust, which has been issued to the
Origination Trust. At December 31, 2002, the California only and National Series
Trusts had Floater  Certificates with an outstanding  amount of $115 million and
$341.5 million, respectively.

The Revenue Bonds remaining in the Origination Trust (aggregate principal amount
of approximately  $199 million) are additional  collateral for the Owner Trust's
obligations under the Senior Certificate.  In addition, the Owner Trust obtained
a  municipal  bond  insurance  policy  from MBIA to credit  enhance  Certificate
distributions  for the benefit of the holders of the  Floater  Certificates  and
arranged  for a  liquidity  facility,  issued by a  consortium  of  highly-rated
European banks,  with respect to the Floater  Certificates.  The Company owns no
beneficial interest in and does not control the Certificate Trusts.

The effect of the TOP  structure is that a portion of the  interest  received by
the Owner Trust on the Revenue Bonds it holds is distributed  through the Senior
Certificate  to the  holders  of the  Floater  Certificates  with  the  residual
interest  remitted  to the  Origination  Trust  (and thus to the  benefit of the
Company)  via the  Residual  Certificate.  The  effect of the  December  7, 2000
refinement of the TOP structure was to segregate the California-related  Floater
Certificates  as they  generally  will pay  distributions  at lower  rates  than
National  (non-state  specific)  Floater  Certificates and thus the yield on the
Residual Certificates owned by the Origination Trust is increased.

The Company's cost of funds relating to the TOP (calculated as interest  expense
plus  recurring  fees as a  percentage  of the  weighted  average  amount of the
outstanding  Senior  Certificate) was approximately  2.4%, 3.5% and 5.4% for the
years ended December 31, 2002, 2001 and 2000, respectively before the effects of
hedging.

P-FLOATs/RITES

Another source of financing for the Company's  investments is the securitization
of  selected  Revenue  Bonds  through the Merrill  Lynch  Pierce  Fenner & Smith
Incorporated  ("Merrill Lynch") P-FLOATS/RITES  program.  Merrill Lynch deposits
each Revenue Bond into an  individual  special  purpose  trust  together  with a
Credit  Enhancement  Guarantee  ("Guarantee").  Two types of securities are then
issued  by  each  trust,  (1)  Puttable  Floating  Option  Tax-Exempt   Receipts
("P-FLOATS"),  a short-term  senior  security which bears interest at a floating
rate that is reset  weekly  and (2)  Residual  Interest  Tax  Exempt  Securities
("RITES"),  a subordinate  security which receives the residual interest payment
after payment of P-FLOAT interest and ongoing transaction fees. The P-FLOATS are
sold to qualified third party,  tax-exempt investors and the RITES are generally
sold back to the Company.  The Company has the right, with 14 days notice to the
trustee,  to purchase the  outstanding  P-FLOATS and to withdraw the  underlying
Revenue  Bonds from the trust.  When the Revenue  Bonds are  deposited  into the
P-FLOAT Trust,  the Company  receives the proceeds from the sale of the P-FLOATS
less  certain  transaction  costs.  In certain  other cases,  Merrill  Lynch may
directly buy the Revenue  Bonds from local  issuers,  deposit them in the trust,
sell the P-FLOAT security to qualified  investors and then sell the RITES to the
Company.

In order to  facilitate  the  securitization  under the  P-FLOATS  program,  the
Company has pledged certain  additional Revenue Bonds, cash and cash equivalents
and temporary  investments as collateral for the benefit of the credit enhancer,
Merrill  Lynch.  At December 31, 2002,  the total par amount of such  additional
Revenue Bonds,  cash and cash equivalents and temporary  investments  pledged as
collateral was approximately $180 million.

During  the year  2002,  the  Company  transferred  six  Revenue  Bonds  with an
aggregate par amount of approximately $91 million to the P-FLOATS/RITES  program
and received proceeds of approximately $90.7 million.  Additionally, the Company
repurchased eight Revenue Bonds with an aggregate par value of approximately $67
million.

The Company's cost of funds relating to its secured borrowings under the Merrill
Lynch P-FLOATS/RITES  program (calculated as interest expense as a percentage of
the weighted average amount of the secured  borrowings) was approximately  2.4%,
3.7%  and  5.0%,  for  the  years  ended  December  31,  2002,  2001  and  2000,
respectively before the effects of hedging.

Other Debt

In  conjunction  with the  acquisition of PW Funding,  the Company,  through its
subsidiary CM Corp., borrowed  approximately $27.3 million ("the PWF Acquisition
Loan").  CM Corp. may request a resizing of the loan, up to the maximum facility
size of $40 million,  in order to generate  additional funding ("Final Advance")
that may be required in connection with CM Corp.'s acquisitions of the remaining
20% stock  ownership of PWF. The Final Advance would equal the lesser of 100% of
the  cost  of the  remaining  20%  equity  interests  of PWF or an  amount  that
represents  an overall  maximum  advance of 75% of the value of the PWF mortgage
servicing portfolio at the time of the Final Advance.

The PWF Acquisition Loan has a term of five years with an interest rate of LIBOR
plus 2.25%. The loan was interest only for the first twelve months. Beginning in
January  2003 and  through  the  remaining  loan term,  quarterly  straight-line
principal  amortization  on the  Initial  Advance  is paid  based on a  ten-year
amortization period. Additionally, after receiving the Final Advance, additional
quarterly  straight-line  principal  amortization  payments on the Final Advance
will be made based on the  remaining  years of the  amortization  period for the
Initial Advance.

PWF established a $100 million secured, revolving mortgage warehouse facility in
December 2001,  subject to annual renewal during December of each year. CM Corp.
is a guarantor of this warehouse facility.  The interest rate for each warehouse
advance is the federal funds rate plus 125 basis points. The interest rate as of
December  31,  2002  was  2.48%.  At  December  31,  2002,  PWF had  out-



                                       -9-
<PAGE>


standing  borrowings  under the  facility of  approximately  $41.3  million.  At
December  31,  2002,  the Company was in  compliance  with all  covenants of the
facility.

The $100 million  facility  replaced  PWF's $50 million  multi-family  revolving
warehouse facility, which expired on May 31, 2002. At December 31, 2001, the $50
million facility had outstanding borrowings of $29.3 million at an interest rate
of 30-day LIBOR plus 1.00%,  which at December 31,  2001,  was 4.0%.  Borrowings
under the $50 million facility were  collateralized by PWF's ownership interests
in the original mortgage notes. At December 31, 2001, PWF was in compliance with
all covenants of the $50 million  facility.  This facility was repaid during the
first quarter of 2002.

PWF was the guarantor for a $35 million loan and security  agreement for Larson,
which expired on May 31, 2002. The interest rate for the agreement was the lower
of 30 day LIBOR plus 209 basis points or the 30-day  Treasury Bill rate plus 205
basis points.  At December 31, 2001, there were no outstanding  borrowings under
the agreement.

Competition

The Company,  from time to time, may be in competition  with private  investors,
regional  investment banks,  mortgage banking companies,  lending  institutions,
quasi-governmental  agencies  such as Fannie Mae and Freddie  Mac,  trust funds,
mutual funds, domestic and foreign credit enhancers,  bond insurers,  investment
partnerships and other entities with objectives similar to the Company. Although
the  Company  operates  in a  competitive  environment,  competitors  focused on
providing  tax-exempt  financing  on  multifamily  housing  consistent  with the
Company's custom-designed programs are relatively few.

The Company's  business is also affected by  competition  to the extent that the
Underlying Properties from which it derives interest and, ultimately,  principal
payments  may be subject to  competition  relating to rental  rates and relative
levels of amenities from those offered by comparable neighboring properties. See
the  comprehensive  table under the heading  "Revenue Bonds -  Characteristics",
above, for additional competitive information.

In  addition,  through  PWF,  the Company is also in  competition  with 25 other
licensed DUS lenders which originate  multi-family mortgages on behalf of Fannie
Mae. However, PWF through its affiliation with the Company, is better positioned
to offer a full range of financing  programs on both  affordable and market-rate
multi-family  housing.  PWF's  origination  groups are able to cross  market the
Company's  tax-exempt  Revenue Bonds and Related Capital's Low Income Tax Credit
equity with its loan products, thereby offering developers a single, streamlined
execution.

The Manager and/or its affiliates have formed, and may continue to form, various
entities to engage in businesses  that may be competitive  with the Company.  At
this time,  there is no other such  business  that has a  tax-exempt  execution.
However,  the Company's  relationship with the Manager and its affiliates offers
developers   different  products  for  all  their  financing  needs,   including
pre-development  loans,  bridge loans and Low Income  Housing Tax Credit Equity.
These  "Capital  Solutions"  enable  developers  to have a  single,  streamlined
process, which reduces the time and cost of financing.  As a result, the savings
in time and  up-front  costs and the  certainty  of  execution  that the Company
offers developers enables the Company to receive  above-market rates of interest
on our Revenue Bonds.

Employees

CharterMac and each of its  subsidiaries  have entered into separate  management
agreements  with  Related  Charter L.P.  and/or CM Corp.  pursuant to which they
provide each respective entity with investment advice, portfolio management, and
all other services vital to such entity's operations.

Prior to the  acquisition of PWF in December 2001, the Company had no employees.
PWF, which is a subsidiary of CM Corp.,  operates as a stand-alone entity and is
actively self-managed with its own employees.  Thus on a consolidated basis, the
Company had 69  employees as of December 31,  2002.  These  employees  are not a
party to any collective bargaining agreement.

Regulatory Matters

Neither  CharterMac nor its  subsidiaries  are  registered  under the Investment
Company Act of 1940,  as amended (the  "Investment  Company  Act").  The Company
would not be able to conduct its activities as it currently  conducts them if it
was required to register.

CharterMac at all times  intends to conduct its, and those of its  subsidiaries'
activities,  so as not to become regulated as an "investment  company" under the
Investment  Company Act. While  CharterMac is not an "investment  company" under
the Investment  Company Act, if one of CharterMac's  subsidiaries were deemed to
be an "investment company," CharterMac could also be subject to regulation under
the Investment  Company Act. There are a number of exemptions from  registration
under the Investment Company Act that CharterMac  believes applies to it and its
subsidiaries, and which CharterMac believes make it possible for the Company not
to be subject to registration under the Investment Company Act.

Additional    information    about   the   Company   is   also    available   at
www.chartermac.com.

                                      -10-
<PAGE>



Item 2.  Properties

The  Company  leases  office  space as follows  (See Note 15 -  Commitments  and
Contingencies of Item 8. Financial Statements and Supplementary Data):

Mineola,  New York.  In 1997,  PWF entered  into a 10 year, 2 month lease for an
office facility. The lease expires in 2007.

Bernardsville,  New Jersey.  In 1999,  Larson entered into a 5 year lease for an
office facility. The lease expires in 2004.

Dallas,  Texas. In 2000, PWF entered into a 5 year lease for an office facility.
The lease expires in 2005.

The Manager  leases office space located at 625 Madison  Avenue,  New York,  New
York, 10022.

The Company and the Manager  believe  that these  facilities  are  suitable  for
current requirements and contemplated future operations.

Item 3.  Legal Proceedings

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

On or about December 24, 2002, an alleged shareholder of the Company commenced a
stockholder's  derivative  action  ostensibly  on behalf of the  Company  in the
Supreme Court of the State of New York, County of Nassau, against each member of
the Company's Board of Trustees and Related Capital Company ("RCC"). The case is
entitled Dulitz v. Hirmes, et al., Index No. 02-020389, and the Company is named
as a nominal  defendant in the action.  The  plaintiff  alleges that each of the
members of the Board of Trustees and RCC  allegedly  breached  fiduciary  duties
and/or aided and abetted  breaches of  fiduciary  duties owed to the Company and
its  shareholders  in approving the proposed  acquisition of RCC by the Company.
The complaint  alleges,  among other things,  that the purchase price for RCC is
excessive,  the  transaction  has been  pursued  and  structured  solely for the
benefit of the  Trustees  that are  affiliated  with RCC and the  members of the
Special Committee are not independent because they are supposedly  "dominated or
controlled" by the Trustees that are affiliated with RCC. The complaint  further
alleges that  shareholder  ratification of the proposed  transaction  supposedly
will not be effective because the Trustees allegedly will not "disclose the true
nature and purpose of the proposed transaction." The complaint seeks declaratory
and injunctive  relief,  including  enjoining the  consummation  of the proposed
transaction,   and   unspecified   amounts  of  compensatory   damages,   costs,
disbursements  and  attorneys'  fees.  The  individual  defendants  and RCC have
informed the Company that they intend to defend against the claims vigorously.

Item 4.  Submission of Matters to a Vote of Shareholders

None.


                                      -11-


<PAGE>



                                     PART II

Item 5. Market for the Company's Common Shares and Related Shareholder Matters.

As  of  March  27,  2003,  there  were  3,383  registered   shareholders  owning
41,220,138.  Common Shares.  The Company's Common Shares have been listed on the
American Stock  Exchange since October 1, 1997 under the symbol "CHC".  Prior to
October  1,  1997,  there  was no  established  public  trading  market  for the
Company's Common Shares.

The high and low prices for each  quarterly  period of the last two years during
which the Common Shares were traded are as follows:

<TABLE>



                                    2002                       2001
                                    ----                       ----

Quarter Ended                 Low           High          Low          High
-------------                 ---           ----          ---          ----
<S>                         <C>           <C>            <C>         <C>

March 31                    $15.45        $16.79         $13.30      $16.10
June 30                     $15.53        $18.20         $14.21      $15.95
September 30                $14.75        $18.19         $15.00      $15.99
December 31                 $15.01        $18.44         $14.75      $16.48
</TABLE>

The last reported sale price of Common Shares on the American  Stock Exchange on
March 27, 2003 was $17.75

The following  table  provides  information  related to the Company's  Incentive
Share Option Plan as of December 31, 2002:

<TABLE>
<CAPTION>
                                          Equity Compensation Plan Information

                                   (a)                          (b)                     (c)

                                                                                Number of securities
                                                                                remaining available
                            Number of securities         Weighted-average       for future issuance under
                            be issued upon exercise      exercise price of      equity compensation plans
                            of outstanding options,      outstanding options,   (excluding securities
                            warrants and rights          warrants and rights    reflected in column a)
                            -----------------------------------------------------------------------------
<S>                                 <C>                          <C>                   <C>
Equity compensation plans
  approved by security holders      263,509                      $12.47                1,720,918(1)

Equity compensation plans
  Not approved by security
  holders                           --                           --                    --

Total                               263,509                      $12.47                1,720,918(1)

</TABLE>

Notes:
(1) The Incentive  Share Option Plan authorizes the issuance of options equal to
3% of the Common Shares  outstanding  as of December 31, of the preceding  year,
for any year the Company's distribution is in excess of $0.9517 per share, up to
10% of the total Common Shares  outstanding at October 1, 1997 (2,058,748).  The
Company has reached the 10% cap.


                                      -12-
<PAGE>



Common Share Repurchase Plan

On October 9, 1998, the Board of Trustees authorized the implementation of a
Common Share repurchase plan, enabling the Company to repurchase, from time to
time, up to 1,500,000 of its Common Shares. The repurchases, if any, are to be
made in the open market and the timing is dependent on the availability of
Common Shares and other market conditions. As of December 31, 2002, the Company
has acquired 8,400 of its Common Shares for an aggregate purchase price of
$103,359 (including commissions and service charges). Repurchased Common Shares
are accounted for as treasury Common Shares of beneficial interest.

Other

Two of the Company's independent trustees are entitled to receive annual
compensation for serving as trustees in the aggregate amount of $17,500 payable
in cash (maximum of $7,500 per year) and/or Common Shares valued at their fair
market value on the date of issuance.  The third independent trustee is entitled
to receive annual compensation in the aggregate amount of $30,000 payable in
cash (maximum of $20,000 per year) and/or Common Shares.  As of December 31,
2002 and 2001, 1,830 and 2,001 Common Shares, respectively, having an aggregate
value on the date of issuance of $30,000 each year, were issued to the
independent trustees as compensation for services rendered during the years
ended December 31, 2001 and 2000.  The independent trustees also received an
aggregate of 5,535 shares, worth $97,500 at the time of issuance, as payment for
their work on the special committee analyzing the proposed acquisition of
Related.  An additional 1,728 shares, with an aggregate value of $30,000 at
issuance, were issued to the independent trustees in January 2003 as
compensation for their 2002 services.

Distribution Information

Distributions Per Share

The Company's earnings are allocated pro rata among the Common Shares and the
Convertible CRA Shares (collectively, "Shares"), and the Convertible CRA Shares
rank on parity with the Common Shares with respect to rights upon liquidation,
dissolution or winding up of the Company.  Quarterly cash distributions per
Share for the years ended December 31, 2002 and 2001 were as follows:


<TABLE>

                          Shareholders of the Company

Cash Distribution         Date              Per       Total Amount
for Quarter Ended         Paid             Share      Distributed
--------------------- --------------- -------------- ----------------
<S>                   <C>             <C>            <C>

March 31, 2002           5/15/02           $0.31      $13,340,885
June 30, 2002            8/14/02            0.31       13,342,358
September 30, 2002      11/14/02            0.32       14,139,587
December 31, 2002        2/14/03            0.32       14,296,126
                                            ----       ----------
Total for 2002                             $1.26      $55,118,956
                                            ====       ==========

March 31, 2001           5/15/01           $0.275    $  6,954,856
June 30, 2001            8/14/01            0.275       9,064,756
September 30, 2001      11/15/01            0.290       9,575,495
December 31, 2001        2/15/02            0.300      11,012,485
                                            -----      ----------
Total for 2001                             $1.140     $36,607,592
                                            =====      ==========
</TABLE>


In addition to the  distributions set forth in the table above, the Company paid
Related Charter, as Manager a special  distribution (equal to .375% per annum of
the total invested assets of the Company),  which amounted to approximately $4.9
million  and $3.6  million  for the  years  ended  December  31,  2002 and 2001,
respectively.

There are no material legal  restrictions  upon the Company's  present or future
ability to make distributions in accordance with the provisions of the Company's
Amended and Restated Trust Agreement.  Future  distributions paid by the Company
will be at the  discretion of the Trustees  based upon  evaluation of the actual
cash flow of the Company, its financial condition, capital requirements and such
other factors as the Trustees deem relevant.

                                      -13-
<PAGE>



Item 6.  Selected Financial Data

The information set forth below presents selected financial data of the Company.
Additional financial information is set forth in the audited consolidated
financial statements and notes thereto contained in "Item 8. Financial
Statements and Supplementary Data".

<TABLE>

                                                    For the Year Ended December 31, ($000s except for share data)
                                                    -------------------------------------------------------------


OPERATIONS                                     2002           2001           2000            1999                1998
----------                                   --------       --------       --------        ---------            -------
<S>                                          <C>            <C>            <C>             <C>                  <C>

Total revenues                               $116,413       $ 74,625       $ 59,091        $ 40,437            $ 27,940

Operating expenses                            (33,397)        (6,074)        (4,563)         (3,151)             (2,391)
Interest expense and financing costs          (19,004)       (16,132)       (16,488)         (8,768)             (3,523)
Other-than-temporary impairments related
 to investments in Revenue Bonds                 (920)          (400)            --          (1,859)                 --
Equity in earnings of ARCap                     2,219            456             --              --                  --
Gain/(Loss) on repayment of Revenue Bonds
 and sales of loans                            14,568           (912)           645            (463)                 --
                                               ------        -------         ------         -------             -------
Income before allocation to preferred
 shareholders and minority interest            79,879         51,563         38,685          26,196              22,026
Income allocated to preferred shareholders
 of subsidiary                                (17,266)       (12,578)        (8,594)         (3,014)                 --
Income allocated to minority interest            (496)            --             --              --                  --
                                               ------        -------         ------         -------             -------
Income before provision for income taxes       62,117         38,985         30,091          23,182              22,026

Provision for income taxes                     (1,284)            --             --              --                  --
                                               ------        -------         ------         -------             -------
Net income                                   $ 60,833        $38,985        $30,091         $23,182             $22,026
                                              =======        =======        =======         =======             =======
Net income applicable to Shareholders (2)    $ 55,905        $35,010        $27,074         $20,951             $20,343
                                              =======        =======        =======         =======             =======
Net income per Share (2)
 Basic                                       $   1.31       $   1.14       $   1.22        $   1.02            $    .99
                                              =======        =======        =======         =======             =======
 Diluted                                     $   1.31       $   1.14       $   1.22        $   1.02            $    .98
                                              =======        =======        =======         =======             =======

Weighted average Shares outstanding

  Basic                                    42,697,195     30,782,161     22,140,576      20,580,756          20,587,151
                                           ==========     ==========     ==========      ==========          ==========
  Diluted                                  42,768,139     30,837,340     22,152,239      20,580,756          20,740,641
                                           ==========     ==========     ==========      ==========          ==========

FINANCIAL POSITION

Total assets                              $ 1,852,868   $  1,421,059    $   925,236    $   673,791          $   492,586
                                           ==========    ===========     ==========     ===========          ==========
Financing arrangements                    $   671,659   $    541,796    $   385,026    $   257,770          $   150,000
                                           ==========    ===========     ==========     ===========          ==========
Notes payable                             $    68,556   $     56,586    $        --    $         --         $        --
                                           ==========    ===========     ==========     ===========          ==========
Total liabilities                         $   821,031   $    663,659    $   399,222    $    268,239         $   165,092
                                           ==========    ===========     ==========     ===========          ==========
Preferred shares of subsidiary (subject to
 mandatory repurchase)                    $   273,500   $    218,500    $   169,000    $     90,000         $        --
                                           ==========    ===========     ==========     ===========          ==========
Total shareholders' equity/partners'
 capital                                  $   753,515   $    535,248    $   357,014    $    315,552         $   327,494
                                           ==========    ===========     ==========     ===========          ==========

DISTRIBUTIONS

Distributions to Series A preferred
shareholders                              $ 5,962,500    $ 5,962,500    $  5,962,500    $ 3,014,375                 N/A
                                           ==========     ==========     ===========     ==========
Distributions to Series A-1 preferred
 shareholders                             $ 1,704,000    $ 1,704,000    $    762,067            N/A                 N/A
                                           ==========     ==========     ===========
Distributions to Series B preferred
 shareholders                             $ 4,180,000    $ 4,180,000    $  1,869,389            N/A                 N/A
                                           ==========     ==========     ===========
Distributions to Series A-2 preferred
 shareholders                             $ 1,953,000    $   444,850            N/A             N/A                 N/A
                                           ==========     ==========
Distributions to Series B-1 preferred
 shareholders                             $ 1,258,000    $   286,544            N/A             N/A                 N/A
                                           ==========     ==========
Distributions to Series A-3 preferred
 shareholders                             $ 1,173,000            N/A            N/A             N/A                 N/A
                                           ==========
Distributions to Series B-2 preferred
 shareholders                             $ 1,035,000            N/A            N/A             N/A                 N/A
                                           ==========
Distributions to Shareholders (2)         $55,118,956    $36,607,592    $23,973,872     $20,478,112         $19,144,597
                                           ==========     ==========     ==========      ==========          ==========
Distributions per share (1)               $      1.26    $      1.14    $      1.07     $      1.00         $       .93
                                           ==========     ==========     ==========      ==========          ==========

</TABLE>



                                      -14-


<PAGE>



Other Data

(1)  Distributions per share are the same for both Common Shares and Convertible
     CRA Shares.

(2)  Includes common shareholders and Convertible CRA Shareholders.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

Results of Operations

The following is a summary of the Company's  results of operations for the years
ended December 31, 2002,  2001 and 2000. Net income for the years ended December
31, 2002, 2001 and 2000 was approximately $60.8 million, $39.0 million and $30.1
million, respectively.

2002 vs. 2001

For the year ended December 31, 2002 as compared to 2001, total revenues,  total
expenses and net income increased due to the net result of the acquisition of 72
Revenue  Bonds and the  repayment  of 11 Revenue  Bonds and three  notes.  Total
revenues  and expenses and net income also  increased  due to the December  2001
acquisition of PWF, the credit enhancement and yield guarantee transaction.

Interest income from Revenue Bonds increased approximately $21.2 million for the
year ended  December 31, 2002 as compared to 2001.  This  increase was primarily
due to an increase in interest  income of  approximately  $26.6 million from new
Revenue  Bonds  acquired  during 2002 and 2001 and an increase of  approximately
$1.6 million in contingent interest collections, partially off-set by a decrease
in interest income of approximately $3.2 million due to the sale or repayment of
Revenue Bonds.

Total revenues for the year ended  December 31, 2002 increased by  approximately
$41.8  million,  including the  increases in interest  income from Revenue Bonds
noted above,  approximately $18.2 million from PWF, $1.3 million in fees related
to the credit  enhancement  transaction and  approximately  $1.4 million in fees
from the LIHTC yield guarantee.

Interest expense and recurring fees increased approximately $2.9 million for the
year ended  December  31,  2002 as  compared  to 2001,  primarily  due to higher
interest  expense on the  interest  rate swaps and a higher  level of  borrowing
throughout the year.

General and administrative  expenses increased  approximately  $18.2 million for
the year ended  December  31,  2002 as  compared  to 2001  primarily  due to the
addition of PWF's expenses and the growth of the Company.

Income  allocated to minority  interest of  approximately  $496,000 for the year
ended December 31, 2002 represents PWF's third party continued 20% ownership.

Amortization increased  approximately $8 million for the year ended December 31,
2002 as compared to 2001  primarily due to  amortization  of mortgage  servicing
rights at PWF.

Income  allocated to preferred  shareholders  of  subsidiary  for the year ended
December 31, 2002 as compared to 2001 increased  approximately  $4.7 million due
to the preferred offerings consumated on October 9, 2001 and June 4, 2002.

During the year ended  December 31, 2002,  the Company  recognized  net gains on
repayments of Revenue Bonds of approximately $3.9 million, versus a net loss for
2001 of  approximately  $912,000,  due to the number  and size of Revenue  Bonds
repaid or sold. Additionally, during the year end December 31, 2002, the Company
recognized gains on sales of loans of  approximately  $10.7 million due to PWF's
activities.

During the year ended  December 31, 2001,  the Company  wrote down the Lexington
Trails Revenue Bond in the amount of $400,000. The Company has continued to seek
a buyer for the  Lexington  Trails  property  and feels it may be  necessary  to
restructure  the debt on the Underlying  Property,  so felt it prudent to take a
further write down of approximately $920,000.

2001 vs. 2000

For the year ended December 31, 2001 as compared to 2000, total revenues,  total
expenses and net income increased due to the net result of the acquisition of 42
Revenue Bonds and the repayment of three Revenue Bonds.

Interest income from Revenue Bonds increased approximately $15.8 million for the
year ended  December 31, 2001 as compared to 2000.  This  increase was primarily
due to an increase  in interest  income of  approximately  $21.9  million on new
Revenue Bonds acquired during 2001 and 2000,  partially  offset by a decrease in
additional base interest,  contingent interest and a decrease in interest income
due to Revenue Bond repayments.

Total revenues for the year ended  December 31, 2001 increased by  approximately
$16 million,  including  the net increase  from Revenue  Bonds noted above,  the
equity in  earnings  of ARCap of  approximately  $456,000,  an increase in other
income of  approximately  $627,000,  which  included a breakup  fee of  $250,000
related to the Country Lake repayment and a placement fee of $141,000 related



                                       -15-
<PAGE>


to Mayflower,  partially  offset by a decrease in interest income from temporary
investments of  approximately  $1.1 million due to lower cash balances and lower
interest rates.

Total expenses for the year ended December 31, 2001,  increased by approximately
$1.6 million  primarily due to increases in bond  servicing  costs,  general and
administrative  expenses  and  amortization  due  to the  acquisition  of 42 new
Revenue Bonds during the year and a loss on impairment of $400,000 taken against
the Lexington  Trails Revenue Bond,  partially  offset by a decrease in interest
expense due to lower  interest  rates and the  refinement  of the Private  Label
Tender Option Program.  During 2001, Lexington Trails failed to make the regular
interest  payments due of $210,000 for the period from April through  September.
As a result  this  bond was  written  down to the  estimated  fair  value of the
underlying property of approximately $4.5 million.

For the year ended December 31, 2001,  the Company  recognized a net loss on the
repayment of Revenue  Bonds of  approximately  $912,000 as compared to a gain of
approximately $645,000 in 2000.

Income  allocated to preferred  shareholders  of  subsidiary  for the year ended
December  31,  2001,  increased by  approximately  $4.0  million  related to the
preferred offerings executed on July 21, 2000 and October 9, 2001.

As of December 31, 2001, the Company  recorded an unrealized gain on its Revenue
Bonds  of  approximately  $262,000  versus  a net  unrealized  loss  in  2000 of
approximately $22.9 million.  The large fluctuation between the years was due to
declining interest rates and is recorded as part of other  comprehensive  income
in the consolidated statements of changes in shareholders' equity.

Acquisitions and Dispositions of Revenue Bonds

During 2002, the Company  acquired  Revenue Bonds with an aggregate par value of
approximately  $457 million,  not including  bond selection fees and expenses of
approximately $10 million.

<TABLE>


                      Acquisitions for the Year Ended December 31, 2002
                      -------------------------------------------------
                                                                                     Bond
                                                                      Aggregate     Interest
                                      Closing                         Purchase       Rate
        Property/Bond Name              Date    Par Amount            Price (a)    at 12/31/02
        ----------------------------- --------- -----------        -------------- ------------
         <S>                          <C>       <C>                <C>            <C>

         West Oaks                    Feb-02   $10,150,000           $10,376,008        7.500%
         Circle S                     Feb-02     9,300,000             9,511,859        7.500%
         Circle S                     Feb-02     1,925,000             1,963,500        8.750%
         Faircliff                    Mar-02     7,000,000             7,152,289        7.900%
         Johnston Mill               April-02   16,000,000            16,378,889        6.900%
         Johnston Mill               April-02      500,000               510,000        8.000%
         Bryte Gardens               April-02    5,358,800             5,501,960        7.000%
         Meridian                    April-02    8,255,000             8,420,100        7.500%
         Meridian                    April-02      375,000               382,500        8.750%
         Stonebridge                  May-02     5,270,000             5,387,215        7.000%
         Oaks At Brandlewood          May-02    12,725,000            12,979,500        7.000%
         Oaks At Brandlewood          May-02     1,200,000             1,224,000        8.750%
         Lansing Heights              May-02     8,320,500             8,486,910        6.800%
         Lansing Heights              May-02       231,500               236,130        6.800%
         Clearwood Villas             May-02    15,000,000            15,311,843        7.000%
         Clearwood Villas             May-02       125,000               127,500        9.000%
         Viewcrest Villages           May-02     8,723,200             8,897,664        8.000%
         Viewcrest Villages           May-02     2,180,800             2,224,416        8.750%
         Matthew Ridge                May-02    10,968,000            11,187,360        7.150%
         Cobblestone Landing          May-02    11,500,000            11,740,399        6.900%
         Lincoln Park                 May-02     4,900,000             4,998,364        7.750%
         Georgia King                 May-02    16,075,000            16,484,823        8.000%
         Georgia King                 May-02     8,925,000             9,103,500        7.000%
         Colonial Park               June-02     8,200,000             8,364,198        7.500%
         Colonial Park               June-02       375,000               382,500        8.750%
         Willow Creek                June-02     4,130,000             4,223,252        7.000%
         Laguna Pointe               June-02    13,300,000            13,584,323        7.500%
         Lakeside Villas             June-02     6,020,000             6,140,400        7.250%
         Lakeside Villas             June-02     2,600,000             2,652,000        7.000%
         Lakeside Villas             June-02     1,350,000             1,377,000        6.750%
         Inverness Centre             Aug-02     5,950,000             6,091,833        6.835%
         Inverness Centre             Aug-02       750,000               765,000        8.000%
         Pleasant Valley              Aug-02    15,000,000            15,317,330        6.750%
         Pleasant Valley              Aug-02     1,470,000             1,499,400        8.500%
         Briarwood Apts.              Aug-02     2,835,000             2,893,912        6.250%
         Briarwood Apts.              Aug-02       660,000               673,200        6.250%
         Briarwood Apts.              Aug-02       680,000               693,600        6.250%


                                       -16-
<PAGE>



                      Acquisitions for the Year Ended December 31, 2002
                      -------------------------------------------------
                                                                                     Bond
                                                                      Aggregate     Interest
                                      Closing                         Purchase       Rate
        Property/Bond Name              Date    Par Amount            Price (a)    at 12/31/02
        ----------------------------- --------- -----------        -------------- ------------



         Community Arms               Aug-02     6,245,000             6,378,363        7.000%
         Community Arms               Aug-02     1,015,000             1,035,300        7.000%
         Palm Terrace                Sept-02     1,000,000             1,020,000        9.500%
         Clarkridge Villas           Sept-02    14,600,000            14,901,921        7.000%
         Chapel Ridge Of Yukon       Sept-02     7,000,000             7,140,000        7.000%
         Pheasant Ridge              Sept-02     9,000,000             9,195,287        7.400%
         Pheasant Ridge              Sept-02     1,900,000             1,938,000        8.500%
         Emerald Bay                 Sept-02    10,570,000            10,789,678        5.500%
         Emerald Bay                 Sept-02     1,330,000             1,356,600        9.000%
         Magnolia Commons at
          Vicksburg                   Oct-02     8,700,000             8,881,167        6.750%
         Heatherwilde Villas          Oct-02    13,500,000            13,785,942        5.500%
         Heatherwilde Villas          Oct-02     1,500,000             1,530,000        5.500%
         Oak Hill                     Oct-02     8,300,000             8,473,590        6.500%
         Waterford Place II           Oct-02     2,102,000             2,319,413        6.500%
         Hickory Trace                Nov-02    11,920,000            12,158,400        7.000%
         Allapatah Gardens            Nov-02     4,850,000             4,956,774        7.150%
         Green Crest                  Nov-02    12,500,000            12,759,348        7.000%
         Ironwood Crossing            Nov-02    15,000,000            15,300,000        5.500%
         Ironwood Crossing            Nov-02     1,970,000             2,009,400        8.750%
         Park Center                  Nov-02    15,000,000            15,368,750        6.375%
         Grove Apts                   Dec-02     8,270,000             8,441,114        4.000%
         Grove Apts                   Dec-02     3,055,000             3,116,100        4.000%
         Grove Apts                   Dec-02     1,475,000             1,504,500        4.000%
         Kensington Court             Dec-02    10,000,000            10,201,169        6.850%
         Southern Oaks                Dec-02    14,990,000            15,289,800        6.750%
         Creekside Landing            Dec-02     5,000,000             5,100,480        6.800%
         Creekside Landing            Dec-02     1,100,000             1,122,000        8.250%
         Chapel Ridge Of Jackson      Dec-02     5,000,000             5,101,489        6.750%
         Chapel Ridge Of Jackson      Dec-02       900,000               918,000        8.250%
         Rosemont                     Dec-02    14,990,000            15,292,800        6.750%
         Hickory Falls Apartment      Dec-02    12,350,000            12,609,757        5.000%
         Ecumenical Homes             Dec-02     2,793,000             2,858,576        6.875%
         Ecumenical Homes             Dec-02       556,000               567,120        6.875%
         Ecumenical Homes             Dec-02       165,000               168,300        9.000%
         Ecumenical Homes             Dec-02        86,000                87,720        6.875%
                                              ----------------------------------
                                              $457,059,800          $466,921,532
                                              ==================================


</TABLE>

(a)  Includes bond selection fees and other direct costs of acquiring the bond.


                                      -17-

<PAGE>




During 2001,  the Company  acquired 42 Revenue Bonds with an aggregate par value
of approximately $296 million, not including bond selection fees and expenses of
approximately $6.4 million.


<TABLE>

             Acquisitions for the Year Ended December 31, 2001
             -------------------------------------------------
                                                                     Bond
                                                     Aggregate     Interest
                               Closing                Purchase      Rate at
Project Name                     Date    Par Amount   Price (a)    12/31/01
----------------------------- --------- ----------- -----------    ---------
<S>                           <C>       <C>         <C>            <C>

Draper Lane                    Feb-28  $11,000,000  $  11,260,970    10.000%
Sherwood Lake                  Apr-24    4,100,000      4,193,572     8.450%
Magnolia Arbors                Apr-26   12,500,000     12,789,997     7.500%
Magnolia Arbors                Apr-26    1,000,000      1,020,000     8.950%
Bluffview                      May-03   10,700,000     10,947,687     8.600%
Knollwood Villas               May-03   13,750,000     14,068,044     8.600%
Chapel Ridge of Lowell         May-18    5,500,000      5,613,165     5.500%
Belmont Heights Estates       June-06    7,850,000      8,030,136     8.150%
Arbors at Creekside           June-12    8,600,000      8,800,720     8.000%
Midtown Square                June-13    5,600,000      5,732,024     7.400%
Midtown Square                June-13      235,000        239,700     8.950%
Oakwood Manor                 June-26    5,010,000      5,144,488     8.500%
Oakwood Manor                 June-26      440,000        448,800     7.650%
Oakwood Manor                 June-26      765,000        780,300     9.500%
Cobb Park                     July-31    7,500,000      7,669,755     7.900%
Cobb Park                     July-31      285,000        290,700     9.500%
Palm Terrace                   Aug-15    4,460,000      4,564,483     8.400%
Palm Terrace                   Aug-15    1,542,381      1,573,229     9.500%
Lakewood Terrace               Aug-21    7,650,000      7,814,099     7.900%
Blunn Creek                    Aug-28   15,000,000     15,355,213     7.900%
Valley View & Ridgecrest       Oct-12    9,200,000      9,387,268     5.000%
Merchandise Mart               Oct-24   25,000,000     25,505,683     8.000%
Lakeline Apartments            Nov-06   21,000,000     21,442,825     8.100%
Lakeline Apartments            Nov-06      550,000        561,000     9.650%
Rivers Edge                    Nov-20   15,000,000     15,306,040     7.700%
Mecca Vineyards                Nov-29   13,040,000     13,300,800     7.750%
Mecca Vineyards                Nov-29    1,500,000      1,530,000     7.250%
Mecca Vineyards                Nov-29      360,000        367,200     9.000%
Westlake Village               Nov-30    6,425,000      6,553,500     7.200%
Westlake Village               Nov-30      575,000        586,500     8.000%
Silverwood                     Dec-11    3,300,000      3,366,000     8.000%
Silverwood                     Dec-11      525,000        535,500     8.750%
Riverside Meadows              Dec-13   11,500,000     11,732,121     7.500%
Riverside Meadows              Dec-13      200,000        204,000     8.750%
Oak Hollow                     Dec-18    8,625,000      8,797,500     7.900%
Hillside Apartments            Dec-18   12,500,000     12,760,859     7.900%
Hillside Apartments            Dec-18      400,000        408,000     9.250%
White Rock                     Dec-21   20,345,000     20,751,900     7.750%
White Rock                     Dec-21      430,000        438,600     9.500%
West Meadows                   Dec-21   13,000,000     13,262,208     5.000%
Ocean Ridge                    Dec-21    6,675,000      6,808,500     7.750%
Ocean Ridge                    Dec-21    2,325,000      2,371,500     8.750%
                                      ---------------------------
                                      $295,962,381   $302,314,586
                                      ---------------------------

</TABLE>

(a)  Includes bonds selection fees and other direct costs of acquiring the bond.


                                      -18-

<PAGE>


During the period  January 1, 2002 through  December 31,  2002,  eleven  Revenue
Bonds and three notes were sold or repaid as described in the table below.

      Dispositions for the Year Ended December 31, 2002
      -------------------------------------------------
                                                      Realized
                             Par        Amortized      Gains/
Property/Bond Name          Amount        Cost        (Losses)
------------------------ ------------ -------------- -----------
Bonds
-----
  Sunset Downs           $15,000,000  $11,360,289    $  389,711
  Chandler Creek          15,850,000   15,915,839       (65,839)
  Chandler Creek-
    Taxable                  350,000      350,000            --
  Sunset Creek             8,275,000    6,155,801       326,199
  Sunset Village          11,375,000    8,819,548        90,452
  Sunset Terrace          10,350,000    8,014,072        93,928
  River Run                7,200,000    7,238,328       (38,328)
  Park at Landmark         9,500,000    9,619,990       260,010
  Clarendon               17,600,000   14,684,445     2,915,555
  Bristol Village         17,000,000   17,082,110       (82,110)
  Chapel Ridge of
    Lowell                 5,500,000    5,609,166        (4,573)

Notes
-----
  Clarendon Hills          6,600,000    6,600,000            --
  Bristol Village            200,000      200,000            --
  Kingsbury                  550,000      550,000            --
                                                      ---------
                                                     $3,885,005
                                                      =========


During the period January 1, 2001 through December 31, 2001, three Revenue Bonds
and one note were repaid and one RITE was terminated as described in the table
below.

      Dispositions for the Year Ended December 31, 2001
      -------------------------------------------------
                                                       Realized
                            Par          Amortized      Gains/
 Property/Bond Name        Amount          Cost        (Losses)
--------------------- --------------- -------------- -----------
Bonds
-----
Greenway             $12,850,000     $12,744,443     $ 105,557
Rolling Ridge          4,925,000       5,989,416      (867,416)
Country Lake           6,255,000       6,400,979      (145,979)

Note
----
Country Lake           2,540,000       2,540,000             -

RITE
----
Courtyard                  5,000           8,766        (3,766)
                                                      ---------
                                                     $(911,604)
                                                      =========


                                      -19-


<PAGE>



Liquidity and Capital Resources


In order for the Company to fund its investments in Revenue Bonds and facilitate
growth,  the Company uses various  sources of capital  including  two  different
methods of collateralized  debt  securitizations and preferred and common equity
offerings.  Management  is not aware of any  trends or  events,  commitments  or
uncertainties,  which have not otherwise  been disclosed that will or are likely
to impact  liquidity in a material way. The  following  table  summarizes,  on a
gross basis, the Company's  capital raising  activities,  which are described in
more detail below.

<TABLE>


                                Amount of Capital Raised During (in $000's):
---------------------------------------------------------------------------------------------
    Capital Source                 2000 and prior     2001         2002
---------------------------------------------------------------------------------------------
<S>                                <C>              <C>            <C>

    Equity:
    ------

    Preferred
    ---------
    Series A                        $  90,000     $      --    $      --
    Series A-1                         24,000            --           --
    Series A-2                             --        31,000           --
    Series A-3                             --            --       30,000
    Series B                           55,000            --           --
    Series B-1                             --        18,500           --
    Series B-2                             --            --       25,000
    Convertible CRA                    35,596            --       34,000
                                      -------      --------     --------
       Total                         $204,596     $  49,500    $  89,000
                                      -------      --------     --------

    Common
    ------
    May 2001                        $      --     $ 122,683    $      --
    November 2001                          --        55,140           --
    February 2002                          --            --       92,835
                                     --------      --------     --------
       Total                        $      --     $ 177,823    $  92,835
                                     --------      --------     --------

    Securitizations:
    ----------------

    Private Label Tender Option
      Program                       $ 275,000     $  75,000    $ 106,500
    P-Floats/RITES                    110,117        81,770       23,272
                                      -------      --------     --------
       Total                        $ 385,117     $ 156,770    $ 129,772
                                      -------      --------     --------

    Fleet: PW Acquisition           $      --     $  27,261    $      --
    ---------------------            --------      --------    ---------


    PW Warehouse Line               $      --     $  29,325    $  11,969
    -----------------                 -------      --------     --------

    Total of all capital activity   $ 589,713     $ 440,679    $ 323,576
                                     ========      ========     ========

</TABLE>


Securitizations and Debt Financings
-----------------------------------

The  Company  has  two  primary   securitization   programs:  the  TOP  and  the
P-FLOATS/RITES  program.  Securitizations  continue to offer efficient execution
and the lowest  cost of capital,  albeit with  certain  covenants  and  leverage
limits.  Pursuant  to its Trust  Agreement,  the  Company  is only able to incur
leverage or other financing up to 50% of the Company's Total Market Value;  such
terms are generally  consistent or more conservative than leverage  covenants on
the Company' s securitized debt.

Short-term  liquidity  is  provided by interest  income from  Revenue  Bonds and
promissory  notes in excess of the related  financing costs, and interest income
from  cash  and  temporary  investments.   For  the  Company's  PWF  subsidiary,
short-term  liquidity is provided by a $100 million revolving  warehouse line to
fund loans prior to a committed  take-out by Fannie Mae, Freddie Mac, Ginnie Mae
or FHA,  under which PWF is the  originator,  underwriter,  and  servicer  under
established programs with these entities.

The Company  believes  that its  financing  capacity  and cash flow from current
operations   are   adequate  to  meet  its  current  and   projected   liquidity
requirements.  As of December 31,  2002,  the Company has no  off-balance  sheet
debt.


                                      -20-


<PAGE>


(i) Preferred Equity Issuances By Subsidiary

Since June 1999, the Company,  through a subsidiary,  has issued multiple series
of  Cumulative  Preferred  Shares.  Proceeds from these  offerings  were used to
invest in or acquire additional tax-exempt assets for the Company.

<TABLE>

                                                          Liquidation
Preferred     Date of  Mandatory    Mandatory   Number     Preference    Total Face  Dividend
Series       Issuance   Tender     Repurchase  of Shares   per Share       Amount      Rate
------       --------   ------     ----------  ---------   ---------     ----------  --------
<S>          <C>        <C>        <C>         <C>         <C>           <C>         <C>

Series A     06/29/99  06/30/09     06/30/49      45     $2,000,000   $90,000,000     6.625%
Series A-1   07/21/00  06/30/09     06/30/49      48        500,000    24,000,000     7.100%
Series A-2   10/09/01  06/30/09     06/30/49      62        500,000    31,000,000     6.300%
Series A-3   06/04/02  10/31/14     10/31/52      60        500,000    30,000,000     6.800%
Series B     07/21/00  11/30/10     11/30/50     110        500,000    55,000,000     7.600%
Series B-1   10/09/01  11/30/10     11/30/50      37        500,000    18,500,000     6.800%
Series B-2   06/04/02  10/31/14     10/31/52      50        500,000    25,000,000     7.200%

</TABLE>

Each series of  Cumulative  Preferred  Shares has an annual  preferred  dividend
payable quarterly in arrears upon declaration  thereof by the Company's Board of
Trustees,  but only to the extent of  tax-exempt  net income for the  particular
quarter.  All series of  Cumulative  Preferred  Shares are subject to  mandatory
tender by the holders thereof for  remarketing and purchase on their  respective
mandatory  tender dates and each remarketing date thereafter at their respective
liquidation  preference  per  share  plus an amount  equal to all  distributions
accrued but unpaid.

Holders of  Cumulative  Preferred  Shares may elect to retain  their shares upon
remarketing,  with a distribution rate to be determined immediately prior to the
remarketing date by the remarketing  agent. Each holder of Cumulative  Preferred
Shares  will be  required  to tender  its  shares to the  Issuer  for  mandatory
repurchase  on the  mandatory  repurchase  date,  unless the Company  decides to
remarket  the  shares  on  such  date.   Cumulative  Preferred  Shares  are  not
convertible into Common Shares of the Company.

The Series A, A-1, A-2 and A-3 Cumulative Preferred Shares rank, with respect to
payment of distributions and amounts upon liquidation, dissolution or winding-up
of the  Company,  senior to all  classes or series of  Convertible  CRA  Shares,
Series B, B-1 and B-2 Subordinate  Cumulative Preferred Shares and Common Shares
of the of the Company.  The Series B  Subordinate  Cumulative  Preferred  Shares
rank,  with respect to payment of  distributions  and amounts upon  liquidation,
dissolution or winding-up of the Company,  senior to the Company's Common Shares
and the Company's  Convertible  CRA Shares and junior to the Issuer's  Series A,
A-1, A-2 and A-3 Cumulative Preferred Shares.

Since inception,  all quarterly  distributions have been declared at each stated
annualized  dividend rate for each respective  series and all  distributions due
have been paid. In February 2003, preferred shareholder  distributions that were
declared in December  2002,  were paid to the preferred  shareholders  from cash
flow from  operations  for the quarter  ended  December 31, 2002.  The per share
distributions declared and paid for this period were as follows:

                            Dividend per Share   Total Distribution
                            ------------------   ------------------


Series A; 6.625%             $ 33,125               $ 1,490,625
Series A-1; 7.100%           $  8,875               $   426,000
Series A-2; 6.300%           $  7,878               $   488,250
Series A-3; 6.800%           $  8,500               $   510,000
Series B;   7.600%           $  9,500               $ 1,045,000
Series B-1; 6.800%           $  8,500               $ 1,258,000
Series B-2; 7.200%           $  9,000               $   450,000

(ii) Convertible Community Reinvestment Act Preferred Share Offerings

On May 10,  2000,  the Company  completed  an offering  of  approximately  $26.4
million, net of underwriters discount, of Convertible Community Reinvestment Act
Preferred  Shares  ("Convertible  CRA Shares") to three  financial  institutions
(1,946,000  Convertible CRA Shares priced at $14.13 per share).  On December 14,
2000,  the  Company  completed  an  additional  offering of  approximately  $8.7
million,  net of  underwriters  discount,  of  Convertible  CRA  Shares to three
additional  financial  institutions  (644,000  Convertible  CRA Shares priced at
$14.13 per share). On May 24, 2001, the Company bought back 707,636  Convertible
CRA Shares,  issued May 10, 2000, at $12.70 per share for a total purchase price
of approximately $9.0 million.

During July and November 2002, the Company issued  approximately 1.4 million and
576,000 Series A Convertible CRA Shares, respectively. The shares were priced at
$17.43 and $17.37, respectively,  raising proceeds net of underwriters discount,
for the two issuances of approximately $32.5 million.

As of December 31, 2002, the Company had outstanding,  3,835,002 Convertible CRA
Shares,  which are  convertible  at the  holders  option into  3,717,301  Common
Shares.

The  Convertible  CRA Shares enable  financial  institutions  to receive certain
regulatory  benefits  in  connection  with their  investment.  The  Company  has
developed  a  proprietary  method  for  specially  allocating  these  regulatory
benefits to specific  financial  institutions that invest in the Convertible CRA
Shares.  Other  than  the  preferred  allocation  of  regulatory  benefits,  the
preferred investors receive



                                       -21-
<PAGE>


the same  economic  benefits as Common  Shareholders  of the Company,  including
receipt of the same  dividends  per share as those paid to Common  Shareholders.
The Convertible CRA Shares have no voting rights,  except on matters relating to
the terms of the  Convertible CRA Shares or to amendments to the Company's Trust
Agreement which would adversely affect the Convertible CRA Shares. The Company's
earnings are allocated pro rata among the Common Shares and the  Convertible CRA
Shares,  and the  Convertible  CRA Shares rank on parity with the Common  Shares
with  respect  to rights  upon  liquidation,  dissolution  or  winding up of the
Company.

The investors,  at their option,  have the ability to convert their  Convertible
CRA  Shares  into  Common  Shares  at a  predetermined  conversion  price.  Upon
conversion,  the investors will no longer be entitled to a special allocation of
the regulatory benefit. The conversion price is the greater of (i) the Company's
book value per Common Share as set forth in the Company's  most recently  issued
annual  or  quarterly  report  filed  with  the  SEC  prior  to  the  respective
Convertible  CRA  Share  issuance  date or (ii) 110% of the  closing  price of a
Common  Share on the  respective  Convertible  CRA  Share's  pricing  date.  The
conversion  price for each  Convertible  CRA Share  offering is indicated on the
following table:

Issuance Date    Conversion Price       Conversion Ratio
-------------    ----------------       ----------------

May 10, 2000          $15.33                   0.9217
December 14, 2000     $14.60                   0.9678
July 15, 2002           N/A                    1.0000
November 21, 2002       N/A                    1.0000

(iii) Private Label Tender Option Program

On May 21,  1998,  the  Company  closed on its TOP in order to raise  additional
capital to acquire  additional  Revenue  Bonds.  As of December  31,  1999,  the
maximum  amount of capital that could be raised under the TOP was $400  million.
On December 7, 2000,  the Company  refined the structure the TOP for the primary
purpose  of  segregating  Revenue  Bonds  issued  by  governmental  entities  in
California from the remainder of the Revenue Bonds under the TOP and to increase
the maximum amount of capital  available  under the program to $500 million.  In
addition,  the TOP's surety  commitment  was extended for a five-year  term. The
liquidity commitment is a one-year renewable commitment.  The Company expects to
renew or replace such commitments upon expiration of their terms.

Under the TOP  structure,  the Company  contributes  Revenue Bonds to CharterMac
Origination  Trust  I  (the  "Origination  Trust"),  a  wholly  owned,  indirect
subsidiary of the Company.  The Origination  Trust then  contributes  certain of
these  Revenue Bonds to  CharterMac  Owner Trust I (the "Owner  Trust") which is
controlled  by the  Company.  The  Owner  Trust  contributes  selected  bonds to
specific  "Series  Trusts"  in  order  to  segregate  Revenue  Bonds  issued  by
governmental entities selected by state of origin. As of December 31, 2000, four
such Series Trusts were  created:  two  California  only series and two National
(non-state specific) series.

Each Series  Trust,  issues two equity  certificates:  (i) a Senior  Certificate
which has been  deposited  into a  "Certificate  Trust"  which  issues and sells
"Floater  Certificates"   representing  proportional  interests  in  the  Senior
Certificate  to new  investors  and (ii) a Residual  Certificate,  issued to the
Origination Trust which represents the remaining  beneficial  ownership interest
in each Series Trust.

The effect of the TOP  structure is that a portion of the  interest  received on
Revenue Bonds in the Owner Trust is distributed  through the Senior  Certificate
to the holders of the Floater  Certificates with any remaining interest remitted
to the  Origination  Trust  (and thus to the  benefit  of the  Company)  via the
Residual Certificate.  The effect of the December 7, 2000, refinement of the TOP
structure was to segregate the California  related Floater  Certificates as they
generally  will  pay  distributions  at lower  rates  than  National  (non-state
specific) Floater  Certificates and thus the yield on the Residual  Certificates
owned by the Origination Trust is increased.  The Revenue Bonds remaining in the
Origination Trust (aggregate principal amount of approximately $150 million) are
an additional collateral pool for the Owner Trust's obligations under the Senior
Certificate.

The balance of the TOP at December  31, 2002 (the equity in the Owner Trust,
represented  by the Senior  Certificate),  was  $456.5  million.  The  Company's
floating rate cost of funds relating to the TOP (calculated as interest  expense
plus  recurring  fees as a  percentage  of the  weighted  average  amount of the
outstanding  Senior  Certificate) was approximately  2.4%, 3.5% and 5.4% for the
years ended December 31, 2002, 2001 and 2000, respectively.

(iv) P-FLOATs/RITES

Another source for financing the Company's  investments is the securitization of
selected  Revenue  Bonds  through  the  Merrill  Lynch  Pierce  Fenner  &  Smith
Incorporated  ("Merrill Lynch") P-FLOATS/RITES  program.  Merrill Lynch deposits
each Revenue Bond into an  individual  special  purpose  trust  together  with a
credit  enhancement  guarantee.  Two types of securities are then issued by each
trust,  (1)  Puttable  Floating  Option  Tax-Exempt  Receipts  ("P-FLOATS"),   a
short-term senior security which bears interest at a floating rate that is reset
weekly and (2) Residual Interest Tax Exempt Securities ("RITES"),  a subordinate
security which receives the residual  interest  payment after payment of P-FLOAT
interest and ongoing  transaction fees. The P-FLOATS are sold to qualified third
party,  tax-exempt  investors  and the  RITES  are  generally  sold  back to the
Company.

During  the year  2002,  the  Company  transferred  six  Revenue  Bonds  with an
aggregate face amount of approximately $91 million to P-FLOATS/RITES program and
received  proceeds of  approximately  $90.7 million.  Additionally,  the Company
repurchased  eight Revenue Bonds with an aggregate  face value of  approximately
$67 million.



                                       -22-
<PAGE>


The Company's cost of funds relating to its secured borrowings under the Merrill
Lynch P-FLOATS/RITES  program (calculated as interest expense as a percentage of
the weighted average amount of the secured  borrowings) was approximately  2.4%,
3.7% and 5.0%,  annualized,  for the years ended  December 31, 2002 and 2001 and
2000, respectively.

(v) Other Debt

In December 2001, CM Corp.  acquired of 80% the outstanding capital stock of PWF
for  approximately  $34.9  million,  of which  approximately  $21.6  million was
financed and $7.6 million was paid in cash.  Additionally,  the Company borrowed
$5.7 million to pay off loans held by PWF. The acquisition loan commitment ("PWF
Acquisition  Loan") is $40 million,  with an aggregate loan advance of up to $30
million during the first three months, subject to a maximum advance ratio of 80%
of  the  value  of  PWF's  mortgage  servicing  portfolio,   following  the  PWF
acquisition and loan closing.  At the time of closing,  $27.3 million  ("Initial
Advance")  of the  facility  was drawn.  CM Corp.  may request a resizing of the
loan,  up to the  maximum  facility  size of $40  million,  in order to generate
additional  funding  ("Final  Advance")  that may be required the  remaining 20%
stock  ownership of PWF. The Final Advance would equal the lesser of 100% of the
cost of the remaining 20% equity  interests of PWF or an amount that  represents
an overall  maximum  advance of 75% of the value of the PWF  mortgage  servicing
portfolio at the time of the Final Advance.

The PWF Acquisition Loan has a term of five years with an interest rate of LIBOR
plus 2.25%. The loan is interest only for the first twelve months.  Beginning in
January  2003 and  through  the  remaining  loan term,  quarterly  straight-line
principal  amortization  on the  Initial  Advance  is paid  based on a  ten-year
amortization period. Additionally, after receiving the Final Advance, additional
quarterly  straight-line  principal  amortization  payments on the Final Advance
will be made based on the  remaining  years of the  amortization  period for the
Initial Advance.

PWF established a $100 million secured,  revolving mortgage warehouse  facility,
subject to annual renewal  during  December of each year. CM Corp is a guarantor
of this warehouse facility.  The interest rate for each warehouse advance is the
Fed Funds rate plus 1.25%  (2.48% at December 31,  2002).  At December 31, 2002,
the amount outstanding was $41.3 million.  There were no outstanding  borrowings
under the facility at December 31, 2001. At December 31, 2002 the Company was in
compliance with all covenants of the facility.

The $100 million  facility  replaced  PWF's $50 million  multi-family  revolving
warehouse  facility,  which expired on May 31, 2002.  At December 31, 2001,  the
facility  was  temporarily   increased  to  $160  million  and  had  outstanding
borrowings  of $ 29.3  million at an interest  rate of 30-day  LIBOR plus 1.00%,
which resets daily, with a LIBOR floor of 3%. At December 31, 2001, the interest
rate was 4.0%.  Borrowings under the line of credit are  collateralized by PWF's
ownership  interests in the original  mortgage  notes. At December 31, 2001, PWF
was in compliance  with all covenants of the facility.  This facility was repaid
during the first quarter of 2002.

PWF was the guarantor for a $35 million loan and security  agreement for Larson,
which expired on May 31, 2002. The interest rate for the agreement was the lower
of 30 day LIBOR plus 209 basis points or the 30 day Treasury  Bill rate plus 205
basis points.  At December 31, 2001, there were no outstanding  borrowings under
the  agreement.  At December 31, 2001, the Company and Larson were in compliance
with all covenants of the agreement.

Critical Accounting Policies

In  preparing  the  consolidated  financial  statements,   management  has  made
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting periods.  Actual results could differ
from those  estimates.  Set forth below is a summary of the accounting  policies
that  management  believes are critical to the  preparation of the  consolidated
financial  statements.  The summary should be read in conjunction  with the more
complete  discussion of the Company's  accounting policies included in Note 1 to
the consolidated financial statements in this annual report on Form 10-K.

Investment in Revenue Bonds and Promissory Notes Receivable

The Company accounts for its investments in Revenue Bonds as  available-for-sale
debt  securities  under the  provisions of  SFAS 115.

In most cases the Company has a right to require redemption of the Revenue Bonds
prior to their maturity,  although it can and may elect to hold them up to their
maturity dates unless otherwise modified. As such, SFAS 115 requires the Company
to classify these investments as "available-for-sale." Accordingly,  investments
in Revenue Bonds are carried at their  estimated  fair values,  with  unrealized
gains and losses reported in other  comprehensive  income.  Unrealized  gains or
losses  do  not  affect  the  cash  flow  generated  from  property  operations,
distributions to shareholders,  the  characterization  of the tax-exempt  income
stream or the financial obligations under the Revenue Bonds.

The Manager's bond review  committee which meets monthly to review the status of
the Revenue Bond  portfolio.  The committee  maintains a "watch list" of Revenue
Bonds where the  underlying  property may be  experiencing  difficulties.  These
underlying  properties are  identified  taking into account a number of factors,
including but not limited to,  construction cost overruns,  delays in completing
construction, occupancy shortfalls and lower than expected debt service coverage
ratios.  In those instances where an underlying  property has been identified as
possibly  experiencing  problems,  members of the review committee work with the
borrower  to attempt to resolve any  issues.  Actions  taken at this point could
include  recommending a change in the property  management agent or such actions
as  extending  the term of the bond,  making  additional  advances,  or reducing
required payments. If, in


                                       -23-
<PAGE>


the judgment of the Manager, it is determined probable that the Company will not
receive all contractual payments required, when they are due, the bond is deemed
impaired and is written down to its then estimated  fair value,  with the amount
of the write-down accounted for as a realized loss.

For Revenue Bonds and  promissory  notes,  interest  income is recognized at the
stated  rate  as it  accrues  and  when  collectibility  of  future  amounts  is
reasonably assured.  Contingent  interest is recognized when received.  Interest
income from Revenue Bonds with  modified  terms or where the  collectibility  of
future  amounts is uncertain is recognized  based upon  expected cash  receipts.
Certain  construction  Revenue  Bonds  carry a higher  interest  rate during the
construction period, which declines to a lower rate for the balance of the term.
In these cases,  the Company  calculates the effective yield on the Revenue Bond
and uses that rate to recognize interest over the life of the bond.

Mortgage Banking Activities

Fannie Mae Program - The  Company,  through  PWF, is approved by Fannie Mae as a
DUS. Under the Fannie Mae DUS product line, the Company originates,  underwrites
and services mortgage loans on multi-family residential properties and sells the
loans directly to Fannie Mae. The Company assumes  responsibility  for a portion
of any loss that may result from borrower defaults, based on the Fannie Mae loss
sharing  formulas,  Levels I, II, or III. As of December  31,  2002,  all of the
Company's  loans  consisted  of Level I loans.  For such  loans,  the Company is
responsible  for the first 5% of the unpaid  principal  balance and a portion of
any  additional  losses to a maximum of 20% of the original  principal  balance.
Level II and Level III loans carry a higher loss sharing percentage.  Fannie Mae
sustains any remaining loss.

Under the terms of the Master Loss Sharing  Agreement between Fannie Mae and the
Company,  the Company is responsible  for funding 100% of mortgagor  delinquency
(principal and interest) and servicing (taxes,  insurance and foreclosure costs)
advances until the amounts advanced exceed 5% of the unpaid principal balance at
the date of  default.  Thereafter,  for Level I loans,  the  Company may request
interim  loss  sharing  adjustments  which allow the Company to fund 25% of such
advances  until final  settlement  under the Master Loss Sharing  Agreement.  No
interim sharing adjustments are available for Level II and Level III loans.

The Company  maintains an allowance for loan losses for loans  originated  under
the Fannie Mae DUS product line at a level that, in  management's  judgment,  is
adequate to provide for  estimated  losses.  This judgment is based upon various
risk assessments including the value of the collateral, the operating results of
the  properties,  the  borrower's  financial  condition and the  Company's  loss
experience.  The  Company's  bond review  committee  meets monthly to review the
status of PWF's loan portfolio and after review of the risk  assessment  factors
may place a loan on the "watch  list".  Such loans are tracked  more closely and
the  committee  may contact the  borrowers  in an attempt to resolve any issues,
taking steps similar to those discussed above for Revenue Bonds.

FHA Program - The Company, through PWF and its subsidiaries,  is approved by the
U.S.  Department of Housing and Urban  Development  ("HUD")/FHA as nonsupervised
mortgagees.  The  Company,  through  PWF,  is also  approved  by the  Government
National Mortgage Association ("GNMA") as a GNMA seller/servicer. As of December
31, 2002, the Company serviced  approximately  $337.2 million of loans under the
FHA 223(f),  232, and 242 Programs,  of which  approximately  $127.6 million had
GNMA securities outstanding.

Freddie  Mac Program - The  Company,  through  PWF and its  subsidiaries,  is an
approved  Freddie Mac  seller/servicer  of mortgage loans. At December 31, 2002,
the Company had approximately  $548.3 million of such loans in its portfolio.  A
substantial portion of the underlying  properties subject to these mortgages are
located in New Jersey.

Other Programs - The Company's PWF subsidiary also  originates,  underwrites and
services  multi-family  and commercial  mortgages for insurance  companies,  and
banks.  The servicing for these loans is generally  retained by the Company.  At
December 31 2002, the Company had approximately  $179.8 million of such loans in
its portfolio.

Mortgage banking fee revenues earned from arranging  financings under the Fannie
Mae DUS product line,  Freddie Mac, FHA, banking and other programs are recorded
at the point the  financing  commitment  is  accepted by the  mortgagor  and the
interest rate of the mortgage loan  thereafter is fixed.  Revenue from servicing
the loan portfolio is recognized on an accrual basis.

Mortgage Servicing Rights

The  Company  recognizes  as assets  the rights to  service  mortgage  loans for
others, whether the servicing rights are acquired through a separate purchase or
through loan  origination,  by allocating  total costs incurred between the loan
and the servicing  rights retained based on their relative fair value.  Mortgage
servicing rights are being carried at their adjusted cost basis.

SFAS No. 140 also  requires an entity to measure  the  impairment  of  servicing
rights  based on the  difference  between the carrying  amount of the  servicing
rights  and  their  current  fair  value.  Impairment  of  servicing  rights  is
recognized in the Consolidated Statements of Income during the applicable period
through additions to a valuation allowance.  The amount of impairment recognized
is the amount by which the capitalized  mortgage  servicing  rights exceed their
fair value.  Subsequent to the initial measurement of impairment,  the valuation
allowance is adjusted to reflect changes in the measurement of impairment.  Fair
value in excess of the amount  capitalized as mortgage  servicing rights (net of
amortization ), however,  is not  recognized.  For the purpose of evaluating and
measuring  impairment of  capitalized  mortgage  servicing  rights,  the Company
stratify  those  rights based on the  predominant  risk  characteristics  of the
underlying loans.

Financial Risk Management and Derivatives


                                      -24-
<PAGE>


During  2001,  the Company  entered  into two  interest  rate  swaps,  which are
accounted  for under the  Statement of Financial  Accounting  Standards No. 133,
"Accounting for Derivative  Instruments  and Hedging  Standards No. 133". At the
inception,  the Company designated these interest rate swaps as cash flow hedges
on the variable interest  payments in its floating rate financing.  Accordingly,
the interest rate swaps are recorded at their fair market values each accounting
period,  with  changes in market  values being  recorded in other  comprehensive
income to the extent  the hedges are  effective  in  achieving  offsetting  cash
flows.  These  hedges  have  been  highly  effective,   so  these  has  been  no
ineffectiveness  included in earnings.  Net amounts  receivable or payable under
the swap agreements are recorded as adjustments to interest expense.

During  January  2002,  the Company  entered into an interest rate cap agreement
with Fleet Bank, with a cap of 8% on a notional amount of $30 million.  Although
this  transaction  is  designed  to mitigate  the  Company's  exposure to rising
interest  rates,  the Company has not  designated  this  interest  rate cap as a
hedging derivative. At December 31, 2002, this interest rate cap was recorded as
an  asset  with a fair  market  value  of  $61,054  included  in  interest  rate
derivatives  in the  Consolidated  Balance  Sheets.  Because the Company has not
designated  this  derivative  as a hedge,  the change in fair market value flows
through the Consolidated  Statements of Income, where it is included in interest
income.

Income Taxes

Prior to 2001,  the Company had no  provision  or benefit for income  taxes have
since  any  income  or  loss  passes  through  to,  and is  reportable  by,  the
shareholders on their respective income tax returns. Effective July 1, 2001, the
Company began  operation of CM Corp., a new  wholly-owned,  taxable  subsidiary,
which  will  conduct  the  taxable  business  of the  Company,  such  as  credit
enhancement  and other types of  guarantee  transactions.,  and  therefore,  the
Company  has  adopted  Statement  of  Financial  Accounting  Standards  No. 109,
"Accounting  for Income Taxes" ("FAS 109").  FAS 109 requires the recognition of
deferred tax assets and liabilities for the expected future tax  consequences of
temporary  differences  between the financial statement carrying amounts and the
tax basis of assets and  liabilities.  The Company  assesses the likelihood that
any tax benefits may not be completely or partially available and will establish
an appropriate allowance for any such benefits.

Credit Enhancement and Yield Guarantee Transactions

The Company has expanded its lines of business to include credit enhancement and
yield guarantee transactions,  for which the Company receives a fee, either on a
monthly basis over the life of the transaction, or a lump-sum, up-front fee. The
monthly fees are  recognized  as income when they become due. The up-front  fees
are  deferred  and  recognized  on a  straight-line  basis  over the life of the
guarantee.

The Company evaluates the ongoing risk in each credit  enhancement and guarantee
transaction and should the Company determine the risk of loss is probable, would
record a provision for loss. Such provision could be material.

Commitments and Contingencies

PWF.  Through PWF, the Company  originates  and services  multi-family  mortgage
loans for Fannie Mae,  Freddie Mac and FHA. PWF and its  subsidiaries'  mortgage
lending  business  is  subject to various  governmental  and  quasi-governmental
regulation.  PW Funding and/or its subsidiaries,  collectively,  are licensed or
approved to service  and/or  originate and sell loans under Fannie Mae,  Freddie
Mac, Ginnie Mae and FHA programs. FHA and Ginnie Mae are agencies of the Federal
government   and  Fannie  Mae  and   Freddie   Mac  are   federally   chartered,
investor-owned corporations.  These agencies require PWF and its subsidiaries to
meet  minimum  net worth and  capital  requirements  and to  comply  with  other
requirements. Mortgage loans made under these programs are also required to meet
the requirements of these programs. In addition, under Fannie Mae's DUS program,
PWF has the  authority to originate  loans  without a prior review by Fannie Mae
and is required to share in the losses on loans originated under this program.

The Company shares the risk of loss for loans it originates under the Fannie Mae
program,  as described  above. The Company's bond review committee meets monthly
to review the status of the portfolio in an effort to identify loans that may be
experiencing  problems.  Based on these reviews and possible  communication with
borrowers,  the Company  estimates its possible  loses and adjusts its allowance
for loan loss accordingly. The Company feels confident the current allowance for
loan losses, of approximately  $4.3 million at December 31, 2002, is adequate to
provide for any estimated losses.

Unlike loans  originated for Fannie Mae, PWF does not share the risk of loss for
loans it originates for Freddie Mac or FHA.

Credit  Enhancement.  On  December  31,  2001,  the  Company  completed a credit
enhancement  transaction  with Merrill Lynch  Capital  Services,  Inc.  ("MLCS")
pursuant to which CM Corp. initially will receive an annual fee of approximately
$1.2 million in return for assuming  MLCS's $46.9 million first loss position on
a $351.9 million pool of tax-exempt weekly variable rate  multi-family  mortgage
loans  originated  by CreditRe  Mortgage  Capital,  LLC, an  affiliate of Credit
Suisse  First  Boston and The  Related  Companies,  L.P.  (TRCLP).  The  Related
Companies,  L.P.  has provided CM Corp.  with an  indemnity  covering 50% of any
losses that are incurred by CM Corp. as part of this  transaction.  As the loans
mature or prepay,  the first loss  exposure  and the fees paid to CM Corp.  will
both be reduced. The latest maturity date on any loan in the portfolio occurs in
2009.  Fannie Mae and Freddie Mac have assumed the  remainder of the real estate
exposure  after the $46.9 million first loss  position.  In connection  with the
transaction,  CharterMac has guaranteed  the  obligations of CM Corp.,  and as a
security therefore, have posted collateral,  initially in an amount equal to 50%
of the first loss  amount,  which may be reduced to 40% if certain  post closing
conditions are met. The Related Companies, L.P. is an affiliate of Related.



                                       -25-
<PAGE>



CM Corp.  performed  due  diligence on each  property in the pool,  including an
examination  of  loan-to-value  and debt service  coverage both on a current and
"stressed"  basis.  CM Corp.  analyzed the  portfolio  on a "stressed"  basis by
increasing capitalization rates and assuming an increase in the low floater bond
rate.  As of December 31,  2002,  the credit  enhanced  pool of  properties  are
performing  according to their contractual  obligations and the Company does not
anticipate any losses to be incurred on its guaranty.

IRR Guarantee. During July 2002, the Company entered into two agreements with an
unrelated  third party (the  "Primary  Guarantor")  to guarantee an  agreed-upon
internal rate of return ("IRR") for a pool of 11 multi-family  properties  owned
by RCGCP for  which  the  Company  will  receive  two  guarantee  fees  totaling
approximately $5.9 million.

The  transaction  was  structured  as two  separate  guarantees,  one  primarily
guaranteeing  the IRR through the lease-up phase of the properties and the other
guaranteeing the IRR through the operating phase of the properties.  The fee for
the first guarantee,  in the amount of approximately  $3.6 million,  was paid in
July  2002 at  closing.  The fee for the  second  guarantee  will be paid in two
installments.  The  first  installment,  in the  amount  of  approximately  $1.7
million, will be paid in October 2003, and the final installment,  in the amount
of  approximately  $566,000,  will be paid in February 2004.  These fees will be
recognized in income on a straight line basis over the period of the  respective
guarantees.  The total  potential  liability  to the  Company  pursuant to these
guarantees is approximately  $44 million.  The Company has analyzed the expected
operations of the underlying properties and believes there is no risk of loss at
this time. Should the Company's analysis of risk of loss change in the future, a
provision  for  possible  losses  might be  required;  such  provision  could be
material.

In connection with the transaction,  the Company posted $18.2 million of Revenue
Bonds  as  collateral  to the  Primary  Guarantor,  which  will  be  reduced  to
approximately  $1.4  million  over a period of up to 20 years as the  properties
reach  certain  operating  benchmarks.   In  addition,  the  Company  agreed  to
subordinate  25% of each of the  bonds  it  acquired  that  are  secured  by the
properties and to not use the  subordinated  portion of such bonds as collateral
in connection with any borrowings.

To mitigate risk, the Company is the  beneficiary of a guarantee  against losses
associated  with  construction  and  operating  stabilization  for  each  of the
properties  in RCGCP,  which is capped at $15 million.  The  guarantee  has been
provided by TRCLP.  If the Company's  acquisition of Related is completed,  then
this guarantee will no longer be in force. As of December 31, 2001,  TRCLP had a
GAAP  net  worth  of   approximately   $179.3  million  with  liquid  assets  of
approximately  $54.9  million.  In  addition,  the  developers  of  each  of the
properties  have also been required to give recourse  completion,  stabilization
and  operating  deficit  guarantees.  TRCLP has also  agreed,  if needed,  after
construction completion and property stabilization, to fund up to the first $2.5
million of  operating  deficits  of the  underlying  properties  or any  amounts
required to pay the guaranteed IRR to the investor.

Credit Support for Construction Loans. During December 2002, the Company entered
into two  transactions  related  to two  properties,  Coventry  Place and Canyon
Springs.  Pursuant to the terms of these deals,  the Company will provide credit
support to the  construction  lender for project  completion and FMNA conversion
and acquire  subordinated  bonds to the extent the construction  period bonds do
not fully convert.

Up until the point of  completion,  the Company will  guaranty the  construction
lender  reimbursement of any draw on its construction letter of credit up to 40%
of the stated amount of the Letter of Credit. Following completion, up until the
project loan converts to permanent  loan status,  the Company will guarantee the
full  amount of the letter of credit.  The  developer  has also  issued  several
guarantees to the construction lender, each of which would be called upon before
the  Company's  guarantees,  and each of which  would be assigned to the Company
should its guarantees are called.

Once the construction loans convert to permanent loans, the Company is obligated
to acquire  subordinated  loans for the amount by which each  construction  loan
exceeds the  corresponding  permanent loan, if any. The subordinated  bonds will
bear interest at 10%. Under FNMA guidelines,  the size of the subordinated bonds
will be limited to a 1.0x debt  service  coverage  based on 75% of the cash flow
after the senior debt.

Forward  Commitments.  Also,  during December 2002, the Company entered into two
forward commitment transactions related to Auburn Glenn and Cottonwood. Pursuant
to the terms of the transactions,  a third party,  unrelated lender will advance
funds to the  developers,  as needed,  at a floating  rate. At the completion of
construction, the Company is obligated to acquire the permanent Revenue Bonds at
a  predetermined  price and interest rate. The Company has designated  these two
derivatives  as  hedges  against  the  cash  flow  to  be  received  from  these
investments.

Leases.  Minimum annual rentals, under non-cancelable leases for a office space,
are as follows:

                               2003             $  639,000
                               2004                536,000
                               2005                387,000
                               2006                350,000
                               2007                 85,000
                                              ------------
                                                $1,997,000
                                              ============

Leases contain  provisions for  escalation  based on certain  increases in costs
incurred by the lessors.



                                       -26-
<PAGE>




Income Taxes

CharterMac is organized as a Delaware Statutory Trust and, for tax purposes,  is
classified as a  partnership.  Almost all of the Company's  recurring  income is
tax-exempt  and from  time to time  CharterMac  may sell or  securitize  various
assets which may result in capital gains and losses.  This tax structure  allows
CharterMac to have the pass-through income  characteristics as a partnership for
both  taxable  and  tax-exempt  income.  CharterMac  does  not  pay  tax  at the
partnership  level.  Instead,  the  distributive  share of CharterMac's  income,
deductions  and credits  reported to each  shareholder  for  inclusion  on their
respective  income  tax  return.  The  tax-exempt  income  derived  from most of
CharterMac's  Revenue  Bonds  remains  tax-exempt  as it is  passed  through  to
shareholders.  Any cash  dividends  received by  CharterMac  from  subsidiaries,
organized as corporations,  will be recorded as dividend income for tax purposes
(such  subsidiaries,  created in 2001,  distributed  no dividends  during 2001).
Approximately  96%of  CharterMac's  tax basis income for each of the years ended
December  31,  2002,  2001 and 2000,  was  tax-exempt  for  federal  income  tax
purposes.

During 2001,  the Company  restructured  its  operations  into two segments,  an
investing  segment and an  operating  segment.  The  investing  segment  invests
primarily in tax-exempt Revenue Bonds. The operating segment,  which is directly
and wholly owned by  CharterMac,  generates  taxable  investment  and fee income
through direct  investment or through its PWF subsidiary.  The Company  provides
for income taxes in accordance with FAS 109. FAS 109 requires the recognition of
deferred tax assets and liabilities for the expected future tax  consequences of
temporary  differences  between the financial statement carrying amounts and the
tax bases of assets and liabilities.

The Company derives a substantial  portion of its income from ownership of first
mortgage  "Private  Activity  Bonds." The interest from these bonds is generally
tax-exempt from regular Federal income tax. However,  the Tax Reform Act of 1986
classifies the interest earned on Private  Activity Bonds issued after August 7,
1986 as a tax preference item for alternative minimum tax purposes ("AMT").  The
percentage of the Company's  tax-exempt  interest  income subject to AMT for the
years ended December 31, 2002, 2001 and 2000 was approximately  85%, 79% and 88%
respectively. AMT is a mechanism within the Internal Revenue Code to ensure that
all taxpayers pay at least a minimum amount of taxes.  All taxpayers are subject
to the AMT calculation requirements although the vast majority of taxpayers will
not actually pay AMT. As a result of AMT, the percentage of the Company's income
that is exempt from  federal  income tax may be different  for each  shareholder
depending on that shareholder's individual tax situation.

Recently Issued Accounting Standards

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
No. 141, "Business Combinations" (SFAS 141) and Statement No. 142, "Goodwill and
Other Intangible  Assets" (SFAS 142).  These statements  establish new standards
for  accounting  and  reporting for business  combinations  and for goodwill and
intangible assets resulting from business combinations.  SFAS 141 applies to all
business  combinations  initiated  after June 30, 2001. The Company  implemented
SFAS 142 on January 1, 2002.  Implementation  of these statements did not have a
material impact on the Company's consolidated financial statements.

In June 2001,  the FASB issued  SFAS No. 143  "Accounting  for Asset  Retirement
Obligations".  SFAS No. 143  requires  the fair value of a liability or an asset
retirement  obligation  be recorded in the period in which it is incurred.  SFAS
No. 143 became effective until January 1, 2003. The  implementation  of SFAS No.
143 did not have a  material  impact  on the  Company's  consolidated  financial
statements.

In August 2001, the FASB issued SFAS No. 144  "Accounting  for the Impairment or
Disposal of Long-Lived  Assets".  SFAS No. 144  supercedes  existing  accounting
literature dealing with impairment and disposal of long-lived assets,  including
discontinued operations. It addresses financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed of, and
expands current reporting for discontinued  operations to include disposals of a
"component"  of an entity that has been disposed of or is classified as held for
sale. The Company implemented SFAS No. 144 on January 1, 2002. Implementation of
this  statement  did not have a material  impact on the  Company's  consolidated
financial statements.

In April 2002, the FASB issued SFAS No. 145  "Rescission of FASB  Statements No.
4, 44 and 64,  Amendment of FASB  Statement No. 13 and  Technical  Corrections".
SFAS No. 145,  among other  things,  rescinds SFAS No. 4,  "Reporting  Gains and
Losses from Extinguishment of Debt", and accordingly,  the reporting of gains or
losses from the early  extinguishments of debt as extraordinary  items will only
be required if they meet the specific  criteria of extraordinary  items included
in  Accounting  Principles  Board  Opinion  No. 30,  "Reporting  the  Results of
Operations".  The  revision  of  SFAS  No.  4 is  effective  January  2003.  The
implementation  of SFAS No. 145 did not have a material  impact on the Company's
consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit  or  Disposal  Activities".   SFAS  No.  146  replaces  current  accounting
literature  and  requires  the  recognition  of costs  associated  with  exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment  to an exit or disposal  plan.  SFAS No. 146 became  effective  until
January  1,  2003.  The  implementation  of SFAS No. 146 did not have a material
impact on the Company's consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantors' Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others." The Interpretation  elaborates on the disclosures to be
made by a guarantor in its  financial  statements  about its  obligations  under
certain  guarantees  that it has issued.  It also  clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee. This Interpretation
does  not  prescribe  a  specific   approach  for  subsequently   measuring  the
guarantor's  recognized  liability over the term of the related  guarantee.  The
initial  recognition and initial  measurement  provisions of this Interpretation
are  applicable on a prospective  basis to guarantees  issued or modified  after
December  31,  2002.  The  Company  has  entered  into  one  credit  enhancement
transaction  and two  yield  guarantee  transactions.  The  fee  for the  credit
enhancement  transaction is received  monthly and recognized as income when due.
The fee for the first yield  guarantee  transaction  was received in advance was
deferred and is being amortized over the guarantee period.  The Company believes
that the fees received approximate the fair value of the obligations  undertaken
in issuing the guarantees; therefore, the Company's current accounting for these
guarantees will not be affected by this Interpretation.

In  December  2002,  the FASB issued SFAS No. 148  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure," an amendment of FASB statement No. 123.
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation" to
provide  alternative  methods of transition  for a voluntary  change to the fair
value based method of accounting for stock-based employer compensation.  Because
the  Company  currently  accounts  for its stock  options  using the fair  value
method,  implementation  of  this  statement  will  not  have an  impact  on the
Company's  consolidated  financial  statements.  The  Company  has  adopted  the
provisions of SFAS No. 123,  "Accounting for Stock-Based  Compensation"  for its
share options issued to non-employees. Accordingly, compensation cost is accrued
based on the estimated fair value of the options issued,  and amortized over the
vesting period.  Because vesting of the options is contingent upon the recipient
continuing  to provide  services to the  Company  until the  vesting  date,  the
Company estimates the fair value of the non-employee  options at each period-end
up to the vesting date, and adjusts expensed amounts accordingly. The fair value
of each option grant is estimated using the Black-Scholes option-pricing model.

                                       -27-
<PAGE>




In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  ("FIN 46").  This  Interpretation  clarifies  the
application of existing  accounting  pronouncements to certain entities in which
equity  investors do not have the  characteristics  of a  controlling  financial
interest or do not have sufficient  equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
The provision of FIN 46 will be immediately effective for all variable interests
in variable  interest  entities  created after January 31, 2003, and the Company
will need to apply its provisions to any existing variable interests in variable
interest  entities by no later than July 1, 2003.  The Company  believes at this
time,  it has no variable  interests  in variable  interest  entities  requiring
consolidation.

Forward-Looking Statements

Certain   statements  made  in  this  report  may  constitute   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
Such forward-looking  statements include statements regarding the intent, belief
or current  expectations of the Company and its management and involve known and
unknown  risks,  uncertainties  and other  factors  which  may cause the  actual
results,  performance or achievements of the Company to be materially  different
from any future  results,  performance or  achievements  expressed or implied by
such forward-looking  statements.  Such factors include, among other things, the
following:  general  economic and business  conditions,  which will, among other
things,  affect the availability and  creditworthiness  of prospective  tenants,
lease rents and the terms and availability of financing for properties  financed
by Revenue  Bonds  owned by the  Company;  adverse  changes  in the real  estate
markets including,  among other things,  competition with other companies; risks
of  real  estate   development  and   acquisition;   governmental   actions  and
initiatives; and environment/safety  requirements.  Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof.

Inflation

Inflation  did not have a  material  effect  on the  Company's  results  for the
periods presented.

Item 7.  Quantitative and Qualitative Disclosures About Market Risk

The Company invests in certain  financial  instruments,  primarily Revenue Bonds
and other bond related  investments  that are subject to various forms of market
risk,  including real estate risk, interest rate risk, credit and liquidity risk
and  prepayment  risk.  The Company seeks to prudently and actively  manage such
risks to earn  sufficient  compensation to justify the undertaking of such risks
and to maintain capital levels which are commensurate with the risks the Company
undertakes.

Real Estate Risk

The  Company   derives   income  by  investing  in  Revenue   Bonds  secured  by
multi-family,  affordable,  residential  properties.  Investing  in such Revenue
Bonds  collateralized  by such properties  subjects the Company to various types
and  degrees of risk that  could  adversely  affect  the value of the  Company's
assets and the  Company's  ability to generate  revenue.  The  factors  that may
reduce the Company's  revenues,  net income and cash available for distributions
to shareholders include the following:  the property securing a Revenue Bond may
not generate income  sufficient to meet its operating  expenses and debt service
on its related  Revenue Bond;  economic  conditions,  either local,  regional or
national,  may limit the amount of rent that can be charged for rental  units at
the  properties,  and may result in a  reduction  in timely  rent  payments or a
reduction  in  occupancy  levels;  occupancy  and rent levels may be affected by
construction  of  additional  housing  units and  national,  regional  and local
politics,  including current or future rent  stabilization and rent control laws
and  agreements;  federal LIHTC and city,  state and federal  housing subsidy or
similar  programs  which  apply to many of the  properties,  could  impose  rent
limitations  and adversely  affect the ability to increase rents to maintain the
properties in proper  condition  during periods of rapid  inflation or declining
market value of such properties;  and, if a Revenue Bond defaults,  the value of
the property  securing such Revenue Bond (plus, for properties that have availed
themselves of the federal LIHTC,  the value of such credit) may be less than the
face amount of such Revenue Bond.

All of these  conditions and events may increase the possibility that a property
owner may be unable to meet its  obligations  to the Company  under its mortgage
Revenue Bond.  This could affect the Company's net income and cash available for
distribution to  shareholders.  The Company manages these risks through diligent
and comprehensive underwriting,  asset management and ongoing monitoring of loan
performance.

The  Company  may be  adversely  affected  by periods of economic or real estate
downturns that result in declining property  performance or property values. Any
material decline in property values used as collateral for the Company's Revenue
Bonds increases the possibility of a loss in the event of default. Additionally,
some of the Company's income may come from additional interest received from the
participation  of a portion of the cash flow,  sale or  refinancing  proceeds on
Underlying  Properties.  The collection of such additional interest may decrease
in periods of economic slowdown due to lower cash flows or values available from
the properties.  In a few instances,  the Revenue Bonds are  subordinated to the
claims of other senior interest and  uncertainties  may exist as to a borrower's
ability to meet  principal  and  interest  payments.  Because of these  economic
factors,  debt service on the Revenue  Bonds,  and therefore net income and cash
available for  distribution  to  shareholders is dependent on the performance of
the Underlying Properties.



                                       -28-
<PAGE>



Interest Rate Risk

The  nature  of the  Company's  investments  and the  instruments  used to raise
capital  for  their  acquisition  expose  the  Company  to  income  and  expense
volatility due to fluctuations  in market interest rates.  Market interest rates
are highly sensitive to many factors, including governmental policies,  domestic
and international economic and political considerations and other factors beyond
the control of the Company.

The Revenue  Bonds  generally  bear  interest at fixed  rates,  or pay  interest
according to the cash flows of the Underlying Properties, which do not fluctuate
with changes in market interest rates. In contrast,  payments required under the
TOP program and on the secured  borrowings  under the P-FLOAT program vary based
on market interest rates based on the Bond Market Association  ("BMA") index and
are re-set weekly.

The Company, through CM Corp., has floating rate debt related to the acquisition
financing of PWF. PWF has loans receivable and short term borrowings  related to
its  mortgage  origination  operations  which are not expected to subject PWF to
significant  interest rate risk. PWF typically  provides  mortgages to borrowers
(mortgages receivable) by borrowing from third parties (short-term  borrowings).
Since PWF's mortgages  receivable are typically subject to a take-out commitment
by Fannie  Mae,  Freddie  Mac or FHA,  the related  borrowings  to finance  such
mortgages  are  typically  short-term.  The  interest  income  or  expense  that
represents  the  difference  between the interest  charged to borrowers  and the
interest  paid to PWF's lender during the  warehousing  period will be earned by
PWF.

Other  long-term  sources of capital,  such as the Company's  various  series of
Cumulative  Preferred  Shares,  carry a fixed dividend rate and as such, are not
impacted by changes in market interest rates.

A rising  interest  rate  environment  could reduce the demand for  multi-family
tax-exempt  and taxable  financing,  which could limit the Company's  ability to
invest  in  Revenue  Bonds or to  structure  transactions.  Conversely,  falling
interest  rates may  prompt  historical  renters to become  homebuyers,  in turn
potentially reducing the demand for multi-family housing.

An effective  interest rate  management  strategy can be complex and no strategy
can insulate the Company from all potential risks  associated with interest rate
changes.  Various financial  vehicles exist which would allow Company management
to mitigate the impact of interest rate fluctuations on the Company's cash flows
and  earnings.  Beginning  in 2001,  based  upon  management's  analysis  of the
interest  rate  environment  and the  costs and  risks of such  strategies,  the
Company entered into interest rate swaps in order to hedge a portion of the risk
of rising  interest  rates and the impact of such a rise on its TOP and P-Floats
programs.

On January 5, 2001,  the Company  entered  into a five-year  interest  swap that
fixes the BMA index to 3.98% on a notional amount of $50 million. On February 5,
2001,  the Company  entered into a three-year  interest  swap that fixes the BMA
index to 3.64% on a notional amount of an additional $100 million. Interest rate
swap  agreements are subject to risk of early  termination by the Company or the
counterparty,  possibly at times  unfavorable  to the Company and,  depending on
market  conditions at the time,  may result in the  recognition of a significant
gain or loss from changes in the market value of the hedging  instrument.  There
can be no assurance that the Company will be able to acquire hedging instruments
at favorable  prices,  or at all, when the existing  arrangements  expire or are
terminated  which would then fully  expose the Company to interest  rate risk to
the extent of the balance of debt subject to such hedges. In addition,  there is
no assurance that the counterparty to these hedges will have the capacity to pay
or perform under the stated terms of the interest rate swap agreement;  however,
the Company seeks to enter into such  agreements  with  reputable and investment
grade rated counterparties to mitigate this risk.

During  January  2002,  the Company  entered into an interest rate cap agreement
with Fleet Bank, with a cap of 8% on a notional amount of $30 million.  Although
this  transaction  is  designed  to mitigate  the  Company's  exposure to rising
interest  rates,  the Company has not  designated  this  interest  rate cap as a
hedging derivative.

With respect to the portion of the Company's  floating rate  financing  programs
which are not  hedged,  a change in the BMA rate would  result in  increased  or
decreased  payments  under these  financing  programs,  without a  corresponding
change in cash flows from the investments in Revenue Bonds.  For example,  based
on the unhedged  $522 million ($672 million  outstanding  under these  financing
programs  at  December  31,  2002,   less  the  $150  million   notional  amount
subsequently  hedged  and  assuming a perfect  hedge  correlation)  the  Company
estimates  that an increase of 1.0% in the BMA rate would decrease the Company's
annual net income by  approximately  $5.2  million.  Conversely,  a decrease  in
market  interest  rates would  generally  benefit the Company in the same amount
described above, as a result of decreased  allocations to the minority  interest
and interest  expense without  corresponding  decreases in interest  received on
Revenue Bonds.

The Company  adopted  statement of Financial  Accounting  Standards  No. 133, as
amended  and  interpreted,  on January 1, 2001.  Accordingly,  the  Company  has
documented  its  established  policy for risk  management and its objectives and
strategies for the use of derivative  instruments  to potentially  mitigate such
risks.  Currently,  the Company has a strategy to reduce its interest  rate risk
through the use of interest  rate swaps.  At inception,  the Company  designated
these interest rate swaps as cash flow hedges on the variable  interest payments
on its  floating  rate  financing.  Accordingly,  the  interest  rate  swaps are
recorded at their fair market  values each  accounting  period,  with changes in
market values being  recorded in other  comprehensive  income to the extent that
the hedge is effective in achieving offsetting cash flows. The Company assesses,
both at the  inception  of the hedge and on an ongoing  basis,  whether the swap
agreements are highly  effective in offsetting  changes in the cash flows of the
hedged financing. Any ineffectiveness in the hedging relationship is recorded in
earnings.  There was no ineffectiveness in the hedging  relationship during 2001
or 2002, and the Company expects that these hedging relationships will be highly
effective in achieving  offsetting  changes in



                                       -29-
<PAGE>


cash flow throughout  their terms.  Net amounts payable or receivable  under the
swap agreements are recorded as adjustments to interest expense.

At December 31, 2002,  the combined  fair market value of the two interest  rate
swaps  and the  interest  rate cap was a net  liability  of  approximately  $5.5
million,  included in interest rate swaps on the  Consolidated  Balance  Sheets.
Interest paid or payable  under the terms of the swaps,  of  approximately  $3.5
million, is included in interest expense for the year ended December 31, 2002.

At December 31,  2002,  this  interest  rate cap was recorded as an asset with a
fair  market  value of $61,054  included  in interest  rate  derivatives  in the
Consolidated  Balance  Sheets.  Because  the  Company  has not  designated  this
derivative  as a hedge,  the  change in fair  market  value  flows  through  the
Consolidated Statements of Income, where it is included in interest income.

Changes in market  interest  rates would also impact the estimated fair value of
the Company's  portfolio of Revenue Bonds. The Company  estimates the fair value
for each Revenue Bond as the present value of its expected  cash flows,  using a
discount  rate for  comparable  tax-exempt  investments.  Therefore,  as  market
interest rates for tax-exempt  investments increase, the estimated fair value of
the Company's  Revenue Bonds will generally  decline,  and a decline in interest
rates would be expected to result in an increase in their estimated fair values.
For example,  the Company projects,  using the same methodology used to estimate
the  portfolio  fair market  value  under FAS 115,  that a 1% increase in market
rates for tax-exempt  investments would decrease the estimated fair value of its
portfolio of Revenue  Bonds from its  December  31, 2002 value of  approximately
$1,579,590,000 to approximately  $1,403,098,000.  A 1% decline in interest rates
would  increase the value of the December  31, 2002  portfolio to  approximately
$1,816,819,000.  Changes in the estimated fair value of the Revenue Bonds do not
impact the Company's reported net income,  earnings per share,  distributions or
cash flows,  but are reported as  components of other  comprehensive  income and
affect reported shareholders' equity.

Changes in interest rates would also affect both the PWF  acquisition  loan with
Fleet and the PWF warehouse lines. A 1% change in the underlying  interest rates
would affect the Company's annual net income by approximately $686,000 (based on
the outstanding balances at December 31, 2002 of approximately $27.3 million for
the PWF acquisition loan and $41.3 million for the warehouse line).

The  assumptions  related to the  foregoing  discussion  of market risk  involve
judgments   involving  future  economic  market  conditions,   future  corporate
decisions and other interrelating  factors, many of which are beyond the control
of the Company and all of which are  difficult  or  impossible  to predict  with
accuracy.  Although the Company  believes that the  assumptions  underlying  the
forward-looking  information  are reasonable,  any of the  assumptions  could be
inaccurate and,  therefore,  there can be no assurance that the  forward-looking
information  included  herein will prove to be accurate.  Due to the significant
uncertainties  inherent in  forward-looking  information,  the inclusion of such
information  should not be regarded as a representation  of the Company that the
objectives and plans of the Company would be achieved.

Liquidity Risk

The Company's investments generally lack a regular trading market,  particularly
during turbulent market conditions or if any of the Company's tax-exempt Revenue
Bonds  become  taxable  or are in  default.  There  is no  limitation  as to the
percentage of  investments  that may be illiquid and the Company does not expect
to invest a substantial portion of its assets in liquid investments.  There is a
risk involved in investing in illiquid  investments,  particularly  in the event
that the Company  needs  additional  cash. In a situation  requiring  additional
cash,  the  Company  could be forced to  liquidate  some of its  investments  on
unfavorable  terms that could  substantially  impact the Company's balance sheet
and reduce the amount of distributions available and payments made in respect of
the Company's shares.

Risk Associated with Securitization

Through securitizations,  the Company seeks to enhance its overall return on its
investments and to generate proceeds that, along with equity offering  proceeds,
facilitate  the  acquisition  of additional  investments.  In the Company's debt
securitizations, an investment bank and/or credit enhancer provides liquidity to
the  underlying  trust and credit  enhancement  to the bonds,  which enables the
senior interests to be sold to certain  accredited third party investors seeking
investments  rated "AA" or better.  The liquidity  facilities  are generally for
one-year  terms  and are  renewable  annually.  To the  extent  that the  credit
enhancer is downgraded  below "AA",  either an  alternative  credit  enhancement
provider would be substituted to reinstate the desired  investment rating or the
senior  interests  would be marketed to other  accredited  investors.  In either
case,  it is  anticipated  that  the  return  on the  residual  interests  would
decrease,  which would negatively impact the Company's income. If the Company is
unable to renew the  liquidity  or credit  enhancement  facilities,  the Company
would be forced to find alternative liquidity or credit enhancement  facilities,
repurchase  the  underlying  bonds or  liquidate  the  underlying  bonds and its
investment in the residual interests.  If the Company is forced to liquidate its
investment,  the Company  would  recognize  gains or losses on the  liquidation,
which may be  significant  depending  on market  conditions.  As of December 31,
2002,  $672 million of the senior  interests  were subject to annual  "rollover"
renewal for liquidity and credit enhancement, respectively. Of the $672 million,
$456.5 million is credit enhanced by a longer-term facility by MBIA. The Company
continues  to  review   alternatives  that  would  reduce  and  diversify  risks
associated with securitization.



                                       -30-
<PAGE>



Item 8. Financial Statements and Supplementary Data.
                                                                            Page
(a) 1.  Financial Statements                                                ----

        Independent Auditors' Report                                          32

        Consolidated Balance Sheets as of December 31, 2002 and 2001          33

        Consolidated Statements of Incomefor the years
        ended December 31, 2002, 2001 and 2000                                34

        Consolidated Statements of Changes in Shareholders' Equity
        for the years ended December 31, 2002, 2001 and 2000                  35

        Consolidated  Statements of Cash Flows for the years ended
        December 31, 2002, 2001 and 2000                                      37

        Notes to Consolidated Financial Statements                            39



                                      -31-

<PAGE>



                          INDEPENDENT AUDITORS' REPORT


To the Board of Trustees
And Shareholders of
Charter Municipal Mortgage Acceptance Company
New York, New York


We  have  audited  the  accompanying  consolidated  balance  sheets  of  Charter
Municipal  Mortgage  Acceptance  Company and subsidiaries  (the "Company") as of
December 31, 2002 and 2001, and the related  consolidated  statements of income,
changes in  shareholders'  equity and cash flows for each of the three  years in
the period  ended  December  31, 2002.  Our audits also  included the  financial
statement  schedule listed in Item 15(a)2.  These  financial  statements and the
financial statement schedule are the responsibility of the Company's management.
Our  responsibility  is to express an opinion on these financial  statements and
the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,   the  financial  position  of  Charter  Municipal  Mortgage
Acceptance  Company and  subsidiaries  as of December 31, 2002 and 2001, and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2002 in  conformity  with  accounting  principles
generally accepted in the United States of America.  Also, in our opinion,  such
financial  statement  schedule,   when  considered  in  relation  to  the  basic
consolidated  financial  statements taken as a whole,  presents  fairly,  in all
material respects, the information set forth therein.


DELOITTE & TOUCHE LLP
New York, New York

March 7, 2003, except for Note 19, as to which the date is April 1, 2003



                                      -32-

<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

                                                             December 31,
                                                     -------------------------
                                                     2002                 2001
                                                     ----                 ----

                                     ASSETS

Revenue Bonds-at fair value                   $1,579,590             $1,137,715
Investment in ARCap                               19,054                 18,950
Guaranteed investment contracts                   19,642                 18,406
Temporary investments                              5,400                     --
Mortgage servicing rights - net of reserves
  of $4,271 and $1,937                            35,595                 33,708
Cash and cash equivalents                         55,227                105,364
Cash and cash equivalents-restricted               5,257                  4,670
Interest receivable - net                          9,020                  6,458
Promissory notes and mortgages receivable         53,278                 45,022
Deferred costs - net of amortization of
  $8,451 and $6,187                               48,693                 34,666
Goodwill                                           4,793                  9,842
Other intangible assets - net of amortization
  of $1,750 and $1,272                            11,316                  3,154
Other assets                                       6,003                  3,104
                                               ---------              ---------

Total assets                                  $1,852,868             $1,421,059
                                               =========              =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
 Financing arrangements                      $   671,659             $  541,796
 Notes payable                                    68,556                 56,586
 Interest rate derivatives                         5,504                  2,958
 Accounts payable, accrued expenses and
   other liabilities                              12,736                 13,820
 Deferred Income                                   8,998                  2,870
 Due to Manager and Affiliates                     4,126                  2,266
 Due to FNMA                                      19,642                 18,406
 Distributions payable to preferred shareholders
  of subsidiary                                    4,724                  3,693
 Deferred tax liability                           10,790                 10,251
 Distributions payable to convertible CRA
  shareholders                                     1,125                    565
 Distributions payable to common shareholders     13,171                 10,448
                                               ---------              ---------

Total liabilities                                821,031                663,659
                                               ---------              ---------

Preferred shares of subsidiary
  (subject to mandatory repurchase)              273,500                218,500
                                               ---------              ---------

Minority interest in consolidated
  subsidiary                                       4,822                  3,652
                                               ---------              ---------
Commitments and contingencies

Shareholders' equity:
 Beneficial owners' equity -
   Convertible CRA shareholders
   (3,835,002 and 1,882,364 shares,
   issued and outstanding in 2002
   and 2001, respectively)                        58,174                 25,522
 Beneficial owner's equity-manager                 1,126                  1,070
 Beneficial owners' equity-other common
   shareholders (100,000,000 shares
   authorized; 41,168,618 issued and
   41,160,218 outstanding and 34,834,308
   issued and 34,825,908 outstanding in
   2002 and 2001, respectively)                  604,496                511,456
 Treasury shares of beneficial interest
   (8,400 shares)                                   (103)                  (103)
 Accumulated other comprehensive
   income (loss)                                  89,822                 (2,697)
                                              ----------             ----------

Total shareholders' equity                       753,515                535,248
                                              ----------             ----------

Total liabilities and shareholders' equity    $1,852,868             $1,421,059
                                               =========              =========


                 See accompanying notes to consolidated financial statements



                                       -33-
<PAGE>





         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 (Dollars in thousands except per share amounts)


<TABLE>


                                                    Years Ended December 31,
                                         --------------------------------------------
                                           2002              2001            2000
                                         ----------        ----------      ----------
<S>                                        <C>                <C>             <C>

Revenues:
 Interest income:
  Revenue Bonds                        $  92,681        $   71,500       $    55,709
  Temporary investments                    1,293             1,279             2,380
  Promissory notes and mortgages
    receivable                               709             1,184             1,002
 Mortgage banking fees                     5,710                --                --
 Mortgage servicing fees                   7,971                --                --
 Other income                              8,049               662                --
                                        --------         ---------        ----------
  Total revenues                         116,413            74,625            59,091
                                        --------         ---------        ----------

Expenses:
 Interest expense                         15,823            13,641            14,291
 Recurring fees relating to the
  Private Label Tender Option
  Program                                  3,181             2,491             2,198
 Bond servicing                            3,530             2,454             1,817
 General and administrative               20,976             2,755             2,168
 Depreciation and amortization             8,891               865               577
 Loss on impairment of assets                920               400                --
                                        --------         ---------        ----------
  Total expenses                          53,321            22,606            21,051
                                        --------         ---------        ----------

Income before gain (loss) on
 repayment of Revenue Bonds,
 gain on sale of loans
 and equity in earnings of ARCap          63,092            52,019            38,040

Equity in earnings of ARCap                2,219               456                --

Gain on sales of loans                    10,683                --                --

Gain (loss) on repayment of
 Revenue Bonds                             3,885              (912)              645
                                        --------         ---------        ----------

Income before allocation to preferred
 shareholders of subsidiary and
 minority interest                        79,879            51,563            38,685

Income allocated to preferred
 shareholders of subsidiary              (17,266)          (12,578)           (8,594)

Income allocated to minority
 interest                                   (496)               --                --
                                        --------         ---------        ----------

Income before provision for income
 taxes                                    62,117            38,985            30,091

Provision for income taxes                (1,284)               --                --
                                        --------         ---------        ----------

  Net income                           $  60,833        $   38,985       $    30,091
                                        ========         =========        ==========

Allocation of net income to:
 Special distribution to Manager       $   4,872        $    3,621       $     2,743
                                        ========         =========        ==========
 Manager                               $      56        $      354       $       274
                                        ========         =========        ==========

 Common shareholders                   $  52,516        $   32,558       $    25,501
 Convertible CRA Shareholders              3,389             2,452             1,573
                                        --------         ---------        ----------
  Total for shareholders               $  55,905        $   35,010       $    27,074
                                        ========         =========        ==========
Net income per share:
 Basic                                 $    1.31        $     1.14       $      1.22
                                        ========         =========        ==========
 Diluted                               $    1.31        $     1.14       $      1.22
                                        ========         =========        ==========

Weighted average shares
 outstanding:

 Basic                                42,697,195        30,782,161        22,140,576
                                      ==========        ==========        ==========
 Diluted                              42,768,139        30,837,340        22,152,239
                                      ==========        ==========        ==========

</TABLE>


          See accompanying notes to consolidated financial statements


                                       -34-
<PAGE>



         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in thousands)

<TABLE>

                                     Beneficial
                                      Owners'                    Beneficial                                Accumulated
                                      Equity-     Beneficial      Owners'      Treasury                    Other Com-
                                     Convertible   Owner's        Equity-     Shares of                    prehensive
                                      CRA Share-   Equity-        Other       Beneficial    Comprehen-      Income
                                       holders     Manager      Shareholders   Interest     sive Income     (Loss)      Total
                                     ----------   --------      ------------  ----------    ------------   ----------   -----
<S>                                     <C>          <C>             <C>         <C>             <C>          <C>        <C>
Balance at January 1, 2000            $     --    $   442      $    312,800  $    (103)                   $    2,413   $ 315,552

Comprehensive income:
Net income                               1,573      3,017            25,501                $    30,091                    30,091
Other comprehensive loss:
 Net unrealized loss on Revenue
  Bonds
 Net unrealized holding loss arising                                                           (24,635)
  during the period
 Add: Reclassification adjustment for
  losses included in net income
                                                                                                  (645)
                                                                                             ---------
Total other comprehensive loss                                                                 (25,280)      (25,280)    (25,280)
Comprehensive income                                                                         ---------
                                                                                           $     4,811
                                                                                             =========
Issuance of Common Shares                                            29,175         --                                    29,175
Issuance of Convertible CRA Shares      34,193                                                                            34,193
Distributions                           (1,369)    (2,743)          (22,605)        --                                   (26,717)
                                    ----------     ------       -----------   --------                                 ---------

Balance at December 31, 2000            34,397        716           344,871       (103)                      (22,867)    357,014

Comprehensive income:
Net income                               2,452      3,975            32,558                $    38,985                    38,985
Other comprehensive gain (loss):
 Net unrealized loss interest rate
  swaps                                                                                         (2,958)
 Net unrealized loss on Revenue
           Bonds:
 Net unrealized holding loss arising                                                            26,225
  during the period
 Add: Reclassification adjustment for net
  gain included in net income
                                                                                                (3,097)
                                                                                             ---------
Total other comprehensive gain                                                                  20,170        20,170      20,170
                                                                                             ---------

Comprehensive income                                                                       $    59,155
                                                                                             =========
Retirement of convertible CRA shares    (8,986)                                                                           (8,986)
Issuance of Common Shares                                           168,294                                              168,294
Distributions                           (2,341)    (3,621)          (34,267)                                             (40,229)
                                    ----------     ------       -----------                                            ---------

                                                                                                                      (continued)
</TABLE>


                                       -35-
<PAGE>



                                   (continued)




         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                   Beneficial
                                    Owners'                      Beneficial                                Accumulated
                                    Equity-       Beneficial      Owners'      Treasury                    Other Com-
                                   Convertible     Owner's        Equity-     Shares of                    prehensive
                                    CRA Share-     Equity-        Other       Beneficial    Comprehen-      Income
                                     holders       Manager      Shareholders   Interest     sive Income     (Loss)      Total
                                   ---------      --------      ------------  ----------    ------------   ----------   -----
<S>                                <C>            <C>             <C>           <C>           <C>            <C>          <C>


Balance at December 31, 2001            25,522      1,070         511,456        (103)                       (2,697)    535,248

Comprehensive income:
Net income                               3,389      4,928          52,516                  $   60,833                    60,833

Other comprehensive gain [loss]:
 Net unrealized loss on interest rate                                                          (2,607)
  derivatives
 Net unrealized gain on Revenue Bonds:
 Unrealized holding gain arising during                                                        99,011
  the period
Less: Reclassification adjustment for net
 gain included in net income                                                                   (3,885)
                                                                                            ---------
Total other comprehensive gain                                                                 92,519        92,519      92,519
                                                                                            ---------
Comprehensive income                                                                       $  153,352
                                                                                            =========
Issuance of Convertible CRA shares       32,523                                                                          32,523
Issuance of Common Shares                    --        --          92,383                                                92,383
Distributions                            (3,260)   (4,872)        (51,859)                                              (59,991)
                                        -------   -------        --------                                              --------

Balance at December 31, 2002           $ 58,174  $  1,126       $ 604,496    $   (103)                  $    89,822   $ 753,515
                                        =======   =======        ========     =======                     =========    ========

</TABLE>



                 See accompanying notes to consolidated financial statements





                                       -36-
<PAGE>



         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                             (Dollars in thousands)


<TABLE>


                                                     Years Ended December 31,
                                        ----------------------------------------------------
                                            2002                2001                2000
                                        ------------        ------------        ------------
<S>                                     <C>                 <C>                 <C>

Cash flows from operating
 activities:
 Net income                              $  60,833          $     38,985        $     30,091
 Adjustments to reconcile net
 income to net cash provided
 by operating activities:
 (Gain) loss on repayments of
   Revenue Bonds                            (3,885)                  912                (645)
 Loss on impairment of Revenue Bonds           920                   400                  --
 Other amortization                          2,836                   865                 577
 Amortization of other intangible assets       476                   475                 365
 Amortization of bond selection costs        1,782                 2,425                 938
 Amortization of mortgage servicing rights   7,684                    --                  --
 Amortization of interest income             2,617                    --                  --
 Accretion of deferred income and purchase
  accounting adjustment                         18                  (144)                (163)
 Income allocated to preferred
  shareholders of subsidiary                17,266                12,578                8,594
 Equity in earnings of ARCap, in excess
  of distributions received                   (104)                 (456)                  --
 Increase in mortgage servicing rights      (9,571)                   --                   --
 Income allocated to minority interest         496                    --                   --
 Issuance of shares of subsidiary-
  compensation expenses                        674                    --                   --
Changes in operating assets and
 liabilities:
  Interest receivable                       (2,562)               (1,255)              (2,279)
  Other assets                              (2,900)                 (167)                  51
  Due to FNMA                                1,236                    --                   --
  Guaranteed investment contracts           (1,236)                   --                   --
  Deferred Income                            2,008                 1,302                   --
Accounts payable, accrued expenses
 and other liabilities                      (1,053)                1,381                  212
  Deferred tax liability                       539                    --                   --
  Due to Manager and affiliates              1,623                   629                 (705)
  Fair value of interest rate cap              (61)                   --                   --
                                         ---------           -----------         ------------
Net cash provided by operating
  activities                                79,636                57,930               37,036
                                         ---------           -----------         ------------

Cash flows from investing
 activities:
 Proceeds from repayments of
  Revenue Bonds                            108,630                24,227               22,400
 Periodic principal payments
  of Revenue Bonds                           4,986                 1,584                  380
 Proceeds from repayment of notes            7,260                 2,540                   --
 Purchase of Revenue Bonds                (457,060)             (295,962)            (276,011)
 Increase in deferred bond selection
  costs                                    (10,702)               (9,100)              (6,499)
 Investment in preferred shares of ARCap        --               (18,494)              45,541
 Increase in temporary investments          (5,400)                   --                   --
 Additional Purchase Price - PWF            (3,590)                   --                   --
 (Increase) decrease in cash and
  cash equivalents-restricted                 (587)               (4,670)               1,028
 Increase in mortgages receivable          (11,969)                   --                   --
 Increase in promissory notes               (5,409)              (11,122)                (200)
 Principal payments received
  from loans made to properties              1,862                 2,794                  438
 Cash acquired in ATEBT merger                  --                    --                  838
 Acquisition of PWF, net of cash acquired       --               (22,340)                  --
                                         ---------           -----------         ------------
Net cash used in investing activities     (371,979)             (330,543)            (212,085)
                                         ---------           -----------         ------------

</TABLE>
                                   (continued)

                                       -37-
<PAGE>



                                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE
                                        COMPANY AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOW
                                       (Dollars in thousands)


<TABLE>

                                                     Years Ended December 31,
                                        ----------------------------------------------------
                                            2002                2001                2000
                                        ------------        ------------        ------------
<S>                                     <C>                 <C>                 <C>
Cash flows from financing activities:
 Distributions paid to the Manager
  and Common shareholders                  (53,741)           (33,456)             (24,344)
 Distributions paid to preferred
  shareholders of subsidiary               (16,234)           (11,846)              (7,123)
 Distributions paid to Convertible
  CRA shareholders                          (2,700)            (2,334)                (810)

 Repayment of minority interest                 --                 --             (250,000)
 Proceeds from financing arrangements      197,176            253,596              377,349
 Principal repayments of financing
  arrangements                             (67,313)           (96,826)                 (92)
 Increase in notes payable                  11,969             27,262                   --
 Increase in deferred costs relating
  to the Private Label Tender Option
  Program                                     (921)              (873)              (2,301)
 Issuance of Common Shares                  92,353            168,264                   --
 Issuance of Convertible CRA shares         32,523                 --               34,193
 Retirement of Convertible CRA Shares           --             (8,987)                  --
 Issuance of preferred stock of
  subsidiary                                55,000             49,500               79,000
 Increase in deferred costs relating
  to the preferred shares of subsidiary     (2,068)            (1,886)              (2,814)
 Increase in other deferred costs           (3,838)              (553)                (546)
                                         ---------        -----------         ------------
Net cash provided by financing
 activities                                242,206            341,861              202,512
                                         ---------        -----------         ------------

Net (decrease) increase in cash and
 cash equivalents                          (50,137)            69,248               27,463

Cash and cash equivalents at the
 beginning of the year                     105,364             36,116                8,653
                                         ---------        -----------         ------------

Cash and cash equivalents at the
 end of the year                        $   55,227       $    105,364        $      36,116
                                         =========        ===========         ============

Supplemental information:
 Interest paid                          $   12,703       $      4,493        $       4,109
                                         =========        ===========         ============

Reclassification of goodwill
 to other intangible assets:

Decrease in goodwill                    $   (8,639)      $         --        $          --
Increase in other intangible assets          8,639                 --                   --
                                         ---------        -----------         ------------
                                        $       --       $         --        $          --
                                         =========        ===========         ============

</TABLE>








<TABLE>

                                                              Years Ended December 31,
                                                ----------------------------------------------------
                                                    2002                2001                2000
                                                ------------        ------------        ------------
<S>                                                 <C>                 <C>                 <C>
Supplemental disclosure of noncash activities:

Merger and issuance of shares:

 Increase in Revenue Bonds                                                             $  (28,729)
 Increase in interest receivable                                                             (121)
 Increase in accounts payable, accrued
  expenses and other liabilities                                                              356
 Increase in due to affiliates                                                              1,014
 Increase in goodwill, net                                                                 (1,483)
 Issuance of shares of common stock                                                        29,155
 Decrease in deferred costs                                                                   646
                                                                                       ----------
Cash acquired in ATEBT merger                                                          $      838
                                                                                       ==========

Acquisition of PW Funding Inc.

 Increase in guaranteed investment contracts                        $  (18,406)
 Increase in mortgage servicing rights                                 (35,646)
 Increase in promissory notes receivable                               (29,325)
 Increase in other assets                                               (2,500)
 Increase in notes payable                                              29,325
 Increase in due to FNMA                                                18,406
 Increase in accounts payable, accrued
  expenses and other liabilities                                         9,807
 Increase in reserves for possible DUS losses                            1,938
 Increase in minority interest in subsidiary                             3,652
 Increase in deferred tax liability                                     10,251
 Increase in goodwill                                                   (9,842)
                                                                    ----------
Acquisition of PWF, net of cash acquired                            $  (22,340)
                                                                    ==========

</TABLE>

           See accompanying notes to consolidated financial statements



                                       -38-

<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - Organization and Significant Accounting Policies

Charter Municipal  Mortgage  Acceptance Company  ("CharterMac"),  along with its
consolidated   subsidiaries  (the  "Company"),  is  a  Delaware  business  trust
principally engaged in the acquisition and ownership (directly or indirectly) of
tax-exempt  multi-family  housing  revenue  bonds  ("Revenue  Bonds")  and other
investments  that produce  tax-exempt  income,  issued by various state or local
governments,  agencies,  or authorities.  Revenue Bonds are primarily secured by
participating   and   non-participating   first  mortgage  loans  on  underlying
properties  ("Underlying  Properties").  In some cases the Company also acquires
smaller taxable loans in conjunction with acquiring a Revenue Bond.

The  Company  was formed on  October  1, 1997 as the  result of the merger  (the
"Merger") of three publicly registered limited  partnerships,  Summit Tax Exempt
Bond Fund,  L.P.,  Summit Tax Exempt L.P. II and Summit Tax Exempt L.P. III (the
"Partnerships").  One  of  the  general  partners  of  the  Partnerships  was an
affiliate of Related Capital Company ("Related"), a nationwide, fully integrated
real estate financial services firm.  Pursuant to the Merger, the Company issued
shares of beneficial  interest  ("Common Shares") to all partners in each of the
Partnerships in exchange for their proportionate interests.

CharterMac  Corporation  ("CM  Corp."),  a  wholly-owned,  consolidated  taxable
subsidiary of  CharterMac,  allows the Company to better  diversify its business
lines to include  mortgage  origination  and  servicing to third parties and the
guarantee  of  mortgage  loans  for a fee.  CM Corp.  will  conduct  most of the
Company's taxable business, including any fee-generating activities in which the
Company may engage and provide  management  services to CharterMac and its other
subsidiaries.  CM Corp. isolates a substantial portion of the taxable income and
expenses of the Company and is subject to federal income tax. Any  distributions
of net income from CM Corp. to CharterMac  are taxable and are passed through to
the shareholders of CharterMac in its dividend.

In December  2001,  the Company  acquired  80% of the common stock of PW Funding
Inc.  ("PWF") and it is anticipated  that the Company will acquire the remaining
20% of the issued and outstanding  stock of PWF within the next 12 to 24 months.
PWF is a national mortgage banking firm and, with its subsidiaries,  specializes
in  providing  financing  and  ancillary  service  to the  multi-family  housing
industry,  including  construction  and permanent debt  financing  mortgage loan
servicing and asset management.

The Company is governed by a board of trustees  comprised  of three  independent
managing  trustees and five managing  trustees who are affiliated  with Related.
CharterMac, through CM Corp., a wholly-owned subsidiary, has engaged the Manager
to manage its  day-to-day  affairs.  CharterMac  has also  directly  engaged the
Manager to provide additional management services.

On December 18, 2002, the Company  announced it had entered into an agreement to
acquire 100% of the ownership  interests and substantially all of the businesses
operated by Related.  The  acquisition  will enable the Company to terminate its
outside  management  agreement with Manager and to become an internally  managed
company.

Acquisition Terms

The acquisition  will be structured so that the ownership  interests held by the
Related  principals in both Related and the other  entities  which control other
aspects  of  Related's   business  will  be  contributed  into  a  newly-formed,
wholly-owned  subsidiary  of  CharterMac  (the  "CharterMac  Sub").  The selling
principals of Related include the four executive  managing  partners  (Stuart J.
Boesky,  Alan P. Hirmes, Marc D. Schnitzer and Denise L. Kiley) and an affiliate
of The Related Companies, L.P. ("TRCLP"),  which is majority owned by Stephen M.
Ross (the "Related  Principals").  Messrs.  Boesky, Hirmes and Schnitzer and Ms.
Kiley have managed RCC over the past 15 years.

CharterMac will pay total  consideration to the Related Principals of up to $338
million. The consideration will be paid as follows:

        o      The Initial Payment - $210 million  consisting of $160 million in
               special  common  units of the  CharterMac  Sub  ("SCUs")  and $50
               million  in cash  (with  the cash  position  being  paid  only to
               TRCLP).  The  Initial  Payment  SCUs will be issued at $17.78 per
               unit,  which was the average  closing price of CharterMac  Common
               Shares,  for the 30 calendar days prior to this announcement (the
               "Initial Payment SCUs");

        o      The  Contingent  Payment - Up to $128 million of additional  SCUs
               (the "Contingent  Payment SCUs"),  following the determination of
               Related's  adjusted  audited  earnings  before  interest,  taxes,
               depreciation   and   amortization,   as  well  as  certain  other
               adjustments,  for the year ending  December  31, 2002  ("Adjusted
               Earnings").  The  Contingent  Payment  SCUs  will be issued in an
               amount  equal to 7.73x  RCC 2002  Adjusted  Earnings  minus  $210
               million, subject to a cap of $338 million of total consideration.
               The Contingent Payment SCUs are expected to be issued at the same
               price as the Initial Payment SCUs, subject to a 17.5% symmetrical
               collar.

In connection with the acquisition, CharterMac will establish a restricted share
program and will broadly  issue to employees of Related,  other than the Related
Principals, $15 million of CharterMac Common Shares. Following the completion of
the   acquisition,   TRCLP's   economic   interest  in  CharterMac   will  equal
approximately  19% and management and Related  employees'  economic  interest in
CharterMac will equal approximately 11%.

Basis of Presentation

The consolidated financial statements of the Company are prepared on the accrual
basis of accounting in accordance with accounting  principles generally accepted
in  the  United  States  of  America  ("GAAP").  The  preparation  of  financial
statements  in conformity  with GAAP requires the Manager to make  estimates and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements as well as the reported  amounts of revenues and expenses  during the
reporting period. Actual results could differ from those estimates.  Significant
estimates in the  financial  statements  include the  valuation of the Company's
investments in Revenue Bonds and interest rate swap agreements.

The consolidated  financial  statements  include the accounts of the Company and
four majority owned  subsidiary  business  trusts which it controls:  CM Holding
Trust,  CharterMac  Equity  Issuer  Trust,  CharterMac  Origination  Trust I and
CharterMac  Owner  Trust I (see Note 5), and one  wholly-owned  corporation,  CM
Corp. CM Corp, in turn,  owns 80% of PWF and its  subsidiary,  Larsen  Financial
Services,  Inc. All intercompany  accounts and transactions have been eliminated
in  consolidation.  Unless otherwise  indicated,  the "Company",  as hereinafter
used,  refers  to  Charter  Municipal   Mortgage   Acceptance  Company  and  its
consolidated subsidiaries.

Reclassifications

Certain  amounts from prior years have been  reclassified to conform to the 2002
presentation.

Investment in Revenue Bonds and Promissory Notes Receivable

The Company accounts for its investments in Revenue Bonds as  available-for-sale
debt  securities  under the  provisions  of Statement  of  Financial  Accounting
Standards  No.  115,  "Accounting  for  Certain  Investments  in Debt and Equity
Securities"  ("SFAS 115").  Accordingly,  the Revenue Bonds are carried at their
estimated  fair  values,  with  unrealized  gains and losses  reported  in other
comprehensive income.



                                       -39-
<PAGE>

                      CHARTER MUNICIPAL MORTGAGE ACCEPTANCE
                            COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In most  cases,  the Company  has a right to require  redemption  of the Revenue
Bonds prior to their maturity,  although it can and may elect to hold them up to
their maturity dates unless otherwise  modified.  As such, SFAS 115 requires the
Company to classify  these  investments  as  "available-for-sale."  Accordingly,
investments in Revenue Bonds are carried at their  estimated  fair values,  with
unrealized gains and losses reported in other comprehensive  income.  Unrealized
gains or losses do not affect the cash flow generated from property  operations,
distributions to shareholders,  the  characterization  of the tax-exempt  income
stream or the financial obligations under the Revenue Bonds.

If, in the judgment of the manager,  it is determined  probable that the Company
will not receive all contractual payments required,  when they are due, the bond
is deemed  impaired and is written down to its then estimated  fair value,  with
the amount of the write-down accounted for as a realized loss.

Because  Revenue Bonds have a limited market,  the Company  estimates fair value
for each bond as the present  value of its expected  cash flows using a discount
rate  for  comparable  tax-exempt  investments.   This  process  is  based  upon
projections of future economic events affecting the real estate  collateralizing
the bonds,  such as property  occupancy  rates,  rental  rates,  operating  cost
inflation,  market capitalization rates and upon determination of an appropriate
market  rate of  interest,  all of which are based on good faith  estimates  and
assumptions  developed  by  the  Manager.   Changes  in  market  conditions  and
circumstances  may occur which would cause these  estimates and  assumptions  to
change;  therefore,  actual results may vary from the estimates and the variance
may be material.

Occasionally,  the Company has  advanced  funds to owners of certain  Underlying
Properties  in  order to  preserve  the  underlying  asset  due to  difficulties
including  construction  completion,  past due real estate taxes and/or deferred
maintenance.  Such  advances are typically  secured by  promissory  notes and/or
second  mortgages  and are carried at cost less a valuation  allowance as may be
periodically deemed appropriate.

Investment in ARCap

The Company's preferred equity investment in ARCap Investors,  L.L.C.  ("ARCap")
is accounted for using the equity method  because the Company has the ability to
exercise  significant  influence,  but not control,  over ARCap's  operating and
financial policies (see Note 3).

Mortgage Banking Activities

Fannie Mae Program - The Company, through its PWF subsidiary, is approved by the
Federal National Mortgage Association ("Fannie Mae") as a Delegated  Underwriter
and  Servicer  ("DUS").  Under the  Fannie Mae DUS  product  line,  the  Company
originates,  underwrites and services mortgage loans on multi-family residential
properties  and sells the loans  directly  to Fannie Mae.  The  Company  assumes
responsibility for a portion of any loss that may result from borrower defaults,
based on the  Fannie  Mae loss  sharing  formulas,  Levels I, II, or III.  As of
December 31, 2002, all of the Company's  loans  consisted of Level I loans.  For
such loans,  the Company is responsible for the first 5% of the unpaid principal
balance  and a portion  of any  additional  losses  to a  maximum  of 20% of the
original  principal  balance.  Level II and Level III loans  carry a higher loss
sharing percentage. Fannie Mae sustains any remaining loss.

Under the terms of the Master Loss Sharing  Agreement between Fannie Mae and the
Company,  the Company is responsible  for funding 100% of mortgagor  delinquency
(principal and interest) and servicing (taxes,  insurance and foreclosure costs)
advances until the amounts advanced exceed 5% of the unpaid principal balance at
the date of  default.  Thereafter,  for Level I loans,  the  Company may request
interim  loss  sharing  adjustments  which allow the Company to fund 25% of such
advances  until final  settlement  under the Master Loss Sharing  Agreement.  No
interim sharing adjustments are available for Level II and Level III loans.

Since the  inception of the Fannie Mae DUS product line in 1988,  PWF has closed
over $2.8  billion of mortgage  loans.  At December  31,  2002,  the Company had
approximately  $1.8  billion  of  such  loans  in its  servicing  portfolio.  In
addition, as of December 31, 2002, the Company received a commitment from Fannie
Mae on a loan totaling  approximately $4.2 million. A substantial portion of the
underlying properties subject to these mortgages are located in California.  The
Company  also  services  approximately  $95.7  million  under  other  Fannie Mae
non-risk sharing programs.

The Company  maintains on allowance for loan losses for loans  originated  under
the Fannie Mae DUS product line at a level that, in  management's  judgment,  is
adequate to provide for estimated losses.  This reserve was  approximately  $4.3
million and $1.9 million in 2002 and 2001, respectively.  This judgment is based
upon  various  risk  assessments  including  the  value of the  collateral,  the
operating results of the properties,  the borrower's financial condition and the
Company's loss experience.

FHA Program - The Company, through PWF and its subsidiaries,  is approved by the
U.S.  Department  of  Housing  and  Urban  Development  ("HUD")/Federal  Housing
Administration ("FHA") as nonsupervised  mortgagees.  The Company, through a PWF
subsidiary,  is also approved by the Government  National  Mortgage  Association
("GNMA")  as a GNMA  seller/servicer.  As of  December  31,  2002,  the  Company
serviced  approximately  $337.2 million of loans under the FHA 223(f),  232, and
242  Programs,  of  which  approximately  $127.6  million  had  GNMA  securities
outstanding.


                                       -40-
<PAGE>


                      CHARTER MUNICIPAL MORTGAGE ACCEPTANCE
                            COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Freddie  Mac Program - The  Company,  through  PWF and its  subsidiaries,  is an
approved Federal Home Loan Mortgage Corporation  ("Freddie Mac") seller/servicer
of mortgage  loans. At December 31, 2002, the Company had  approximately  $548.3
million of such loans in its portfolio and had received commitments from Freddie
Mac on eleven loans totaling  approximately $61.1 million. A substantial portion
of the  underlying  properties  subject to these  mortgages  are  located in New
Jersey.

Other Programs - The Company's PWF subsidiary also  originates,  underwrites and
services  multi-family  and commercial  mortgages for insurance  companies,  and
banks.  The servicing for these loans is generally  retained by the Company.  At
December 31 2002, the Company had approximately  $179.8 million of such loans in
its portfolio.

Mortgage banking fee revenues earned from arranging  financings under the Fannie
Mae DUS product line Freddie Mac, FHA,  insurance and banking or other  programs
are recorded at the point the financing  commitment is accepted by the mortgagor
and the interest  rate of the mortgage loan  thereafter  is fixed.  Revenue from
servicing the loan portfolio is recognized on an accrual basis.

Guaranteed Investment Contracts

The  Company,  through  PWF,  is  participating  in the Fannie  Mae  "Guaranteed
Investment Agreement Rate Lock Loan Financing" program for four properties which
are currently in the construction phase. Under this program,  Fannie Mae commits
to a fixed  interest  rate on a  permanent  loan,  which  will be  closed at the
completion  of the  construction  phase of the  project.  The rate lock  forward
commitment  provided  by Fannie Mae exists for a maximum  period of  twenty-four
months.  Fannie Mae loans the Company the amount of the future  permanent  loan,
which is required to be deposited in a guaranteed investment contract during the
construction  phase.  In exchange for such loan, the Company issues Fannie Mae a
promissory  note whose interest will be paid from the interest on the guaranteed
investment  contract  and  the  negative  arbitrage  paid by the  borrower.  The
interest rate on the note will be  equivalent to the fixed rate  committed to on
the permanent  loan. At the close of the  construction  phase,  the Company will
unwind the guaranteed  investment  contract to repay the note to Fannie Mae. The
Company will  originate  the  permanent  loan to the borrower at the rate locked
amount, which will be subsequently purchased from the Company by Fannie Mae. The
Company  has  commitments  from Fannie Mae under this  program of  approximately
$19.3 million as of December 31, 2002.

Mortgage Servicing Rights

The  Company  recognizes  as assets  the rights to  service  mortgage  loans for
others, whether the servicing rights are acquired through a separate purchase or
through loan  origination,  by allocating  total costs incurred between the loan
and the servicing  rights retained based on their relative fair value.  Mortgage
servicing rights are being carried at their adjusted cost basis.

SFAS No. 140 also  requires an entity to measure  the  impairment  of  servicing
rights  based on the  difference  between the carrying  amount of the  servicing
rights  and  their  current  fair  value.  Impairment  of  servicing  rights  is
recognized in the Consolidated Statements of Income during the applicable period
through additions to a valuation allowance.  The amount of impairment recognized
is the amount by which the capitalized  mortgage  servicing  rights exceed their
fair value.  Subsequent to the initial measurement of impairment,  the valuation
allowance is adjusted to reflect changes in the measurement of impairment.  Fair
value in excess of the amount  capitalized as mortgage  servicing rights (net of
amortization),  however,  is not  recognized.  For the purpose of evaluating and
measuring  impairment of  capitalized  mortgage  servicing  rights,  the Company
stratifies  those rights based on the predominant  risk  characteristics  of the
underlying loans.

In using this valuation model, the Company incorporated  assumptions that market
participants  would use in estimating future net servicing  income.  The Company
estimates the term of servicing for each loan by assuming that  servicing  would
not end prior to the  yield  maintenance  date,  at which  point the  prepayment
penalty expires. The Company provides an estimated default amount to be deducted
in each year based on the borrower's debt service ratio.  The debt service ratio
is a  measurement  of the  amount of excess  cash  flow a  borrower  has to make
monthly mortgage payments.  Purchased servicing rights are measured initially at
the price  paid,  which  approximates  fair  value.  Mortgage  servicing  rights
("MSR's") are amortized in proportion to, and over the period of,  estimated net
servicing  income.  At December  31,  2002,  the Company  has not  provided  for
impairment on any mortgage servicing rights.

Temporary Investments

Temporary  investments  may  consist  of  puttable  floating  option  tax-exempt
receipts,  short-term  senior  securities which bear interest at a floating rate
that is reset weekly and other short-term  investments that generate  tax-exempt
and taxable  interest  income.  These  investments are recorded at cost which is
generally equal to market value.

Cash and Cash Equivalents

Cash and cash  equivalents  includes cash in banks and investments in short-term
instruments with an original  maturity of three months or less.  Certain amounts
of cash and cash  equivalents are restricted and serve as additional  collateral
for borrowings under securitizations (see Note 5).


                                      -41-
<PAGE>


                      CHARTER MUNICIPAL MORTGAGE ACCEPTANCE
                            COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Revenue Recognition

The Company  derives its revenues from a variety of investments  and guarantees,
summarized as follows:

     o    Interest  Income from Revenue Bonds - Interest income is recognized at
          the  stated  rate as it  accrues  and when  collectibility  of  future
          amounts is reasonably assured.  Contingent interest is recognized when
          received.  Interest  income from Revenue Bonds with modified  terms or
          where the  collectibility of future amounts is uncertain is recognized
          based upon expected cash receipts.  Certain construction Revenue Bonds
          carry a higher  interest rate during the  construction  period,  which
          declines to a lower rate for the balance of the term.  In these cases,
          the Company  calculates  the  effective  yield on the Revenue Bond and
          uses that rate to recognize interest over the life of the bond.

     o    Interest  Income from  Promissory  Notes and  Mortgages  Receivable  -
          Interest on mortgage  loans and notes  receivable is recognized on the
          accrual basis as it becomes due.  Deferred loan origination  costs and
          fees  are  amortized  over  the  life  of the  applicable  loan  as an
          adjustment to interest  income,  using the interest  method.  Interest
          which  was  accrued  is  reversed  out  of  income  if  deemed  to  be
          uncollectible.

     o    Interest  Income on  Temporary  Investments  -  Interest  income  from
          temporary   investments,   such  as  cash  in  banks  and   short-term
          instruments, is recognized on the accrual basis as it becomes due.

     o    Equity in Earnings of ARCap - The Company's  equity in the earnings of
          ARCap Investors,  LLC ("ARCap") is accrued at the Company's  preferred
          dividend  rate of 12%,  unless  ARCap does not have  earnings and cash
          flows adequate to meet this dividend requirement.

     o    Construction  Service Fees - The Company  receives  fees,  in advance,
          from  borrowers  for servicing  Revenue Bonds during the  construction
          period.  These fees are deferred and amortized  into other income over
          the anticipated construction period.

     o    Credit  Enhancement and Guarantee Fees - The Company receives fees for
          providing credit  enhancement and guarantees  guaranteed  yields.  The
          credit  enhancement  fees are received monthly and recognized in other
          income when  received.  The guarantee fees are deferred and recognized
          in other income on a prorata basis over the guarantee period.

     o    Mortgage Banking Fees -PWF fees earned for arranging  financings under
          the  FNMA DUS  product  line as well as  Freddie  Mac,  insurance  and
          banking or other  programs  are  recorded  at the point the  financing
          commitment  is accepted by the  mortgagor and the interest rate of the
          mortgage loan is fixed.

     o    Mortgage Servicing Fees - PWF receives fees for servicing the loans it
          has originated. This income is recognized on an accrual basis.

Deferred Costs

Fees paid to the Manager (see Note 9) for its activities  performed to originate
Revenue Bonds, including their evaluation and selection, negotiation of mortgage
loan terms,  coordination of property  developers and government  agencies,  and
other direct  expenditures  of acquiring  or  investing  in Revenue  Bonds,  are
capitalized  and  amortized as a reduction to interest  income over the terms of
the Revenue Bonds.  Direct costs relating to unsuccessful  acquisitions  and all
indirect costs relating to the Revenue Bonds are charged to operations.

Costs incurred in connection with the Company's TOP (see Note 5), such as legal,
accounting,  documentation and other direct costs, have been capitalized and are
being amortized using the straight-line method over 10 years, which approximates
the average remaining term to maturity of the Revenue Bonds in this program.

Costs incurred in connection with the issuance of cumulative preferred shares of
subsidiary  (see Note 7),  such as legal,  accounting,  documentation  and other
direct costs,  have been  capitalized and are being amortized using the straight
line  method  over the period to the  mandatory  repurchase  date of the shares,
approximately 50 years.

Costs incurred in connection  with the issuance of  Convertible  CRA Shares (see
Note 9), such as legal,  accounting,  documentation and other direct costs, have
been accounted for as an offset to beneficial owners' equity of such shares.

Financial Risk Management and Derivatives

                                       -42-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The Company has entered into two interest  rate swaps,  an interest rate cap and
two  forward  commitments,  all of which  are  accounted  for under the State of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging Activities", as amended and interpreted.  The Company designated the
two interest rate swaps as cash flow hedges on the variable interest payments in
the floating rate financing.  Accordingly,  the interest rate swaps are recorded
at their fair  market  values each  accounting  period,  with  changes in market
values being recorded in other comprehensive income to the extent the hedges are
effective  in  achieving  offsetting  cash flows.  These hedges have been highly
effective,  so there  has been no  ineffectiveness  included  in  earnings.  The
interest  rate cap,  although  designed to mitigate  the  Company's  exposure to
rising interest rates,  was not designated as a hedging  derivative;  therefore,
any change in fair market value flows  through the  Consolidated  Statements  of
Income, where it is included in interest income.

Goodwill and Other Intangible Assets

The Company  adopted  SFAS 141 on July 1, 2001 and SFAS 142, on January 1, 2002.
The Company has determined that the amounts  previously  capitalized as goodwill
relating to the initial formation of the Company and to the merger of ATEBT meet
the  criteria  in SFAS 141 for  recognition  as  intangible  assets  apart  from
goodwill,  and  accordingly  will continue to be amortized over their  remaining
useful lives,  subject to impairment testing.  Therefore,  the implementation of
SFAS 142 did not materially affect the Company's results of operations.

During the quarter ended June 30, 2002, PWF engaged a third party valuation firm
to evaluate PWF's  licenses with Fannie Mae,  Freddie Mac, FHA, GNMA and various
private  investors.  As a result of this process  approximately $8.6 million has
been reclassified from goodwill to intangible assets, representing the estimated
market value of PWF's licenses. These licenses have an indefinite life and, as a
result,  are not being  amortized.  Since CM Corp.  purchased  PWF December 31,
2001, the effect of not amortizing the goodwill, is not material.

The  following  table  provides  further  information  regarding  the  Company's
other intangible assets:

                                    (Dollars in Thousands)

                               Identifiable Other   PWF
                               Intangible Assets   Licenses    Total
                               -----------------   --------    -----

Balance at December 31,
2002                            $4,427              $8,639       $13,066
Accumulated Amortization        (1,750)                  -        (1,750)
                                ------              ------       -------
Net balance at December
31, 2002                        $2,677              $8,639       $11,316
                                ======              ======       =======
Amortization Expense for
the year ended December
31, 2002                        $  477              $    -        $  477
                                ======              ======        ======
Estimated amortization
expense per year for next
five years                      $  477              $    -        $  477
                                ======              ======        ======


The amount  indicated  as goodwill in the  accompanying  consolidated  financial
statements  as of December 31, 2002 is related to the  acquisition,  on December
31, 2001, of PWF. This amount represents goodwill under SFAS 142, and therefore,
is not being  amortized.  In accordance  with SFAS 142, the Company  tested this
goodwill for impairment  during the fourth quarter of 2002 and determined  there
was no impairment.

During 2002, CM Corp. made additional  payments to the original  shareholders of
PWF of  approximately  $3.6 million  ("the  True-Up  payments")  pursuant to the
original  acquisition  agreement.  The  True-Up  payments  were  based on i) the
increase in value of servicing rights due to certain loans closing, ii) positive
changes in the audited  balance  sheets used for the initial  purchase price and
the  audited  balance  sheet at  December  31,  2001,  iii)  payments of certain
servicing fees, and iv) forward conversions of loans previously committed. These
True-Up  payments  were  recorded  as  additional  goodwill  related  to the PWF
acquisition. The acquisition agreement stipulates additional true-up payments to
be made  periodically  for a period of up to three  years  from the  acquisition
date.

Fair Value of Financial Instruments

As described  above,  the Company's  investments in Revenue Bonds,  its mortgage
servicing  rights and its  liability  under the interest  rate  derivatives  are
carried at estimated fair values. The Company has determined that the fair value
of its remaining  financial  instruments,  including its temporary  investments,
cash  and  cash  equivalents,   promissory  notes  receivable,   mortgage  notes
receivable and borrowings approximate their carrying values at December 31, 2002
and 2001.

Income Taxes

Prior to 2001,  no provision or benefits for income taxes have been  included in
these  financial  statements  since the income or loss passes through to, and is
reportable  by,  the  shareholders  on  their  respective  income  tax  returns.
Effective  July 1, 2001,  the Company




                                       -43-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


began operation of a new wholly-owned,  taxable subsidiary -- CM Corp., which on
December 31, 2001, purchased PWF. CM Corp will own the taxable Revenue Bonds and
other  taxable  investments  acquired by the Company.  The Company  provides for
income taxes in accordance with Statement of Financial  Accounting Standards No.
109,  "Accounting  for Income  Taxes" ("FAS 109") (see Note 8). FAS 109 requires
the  recognition of deferred tax assets and  liabilities for the expected future
tax  consequences  of  temporary  differences  between the  financial  statement
carrying  amounts and the tax basis of assets and  liabilities.  At December 31,
2002, the net book basis of the Company's  assets and  liabilities  exceeded the
net tax basis by approximately $56.6 million.

Segment Information

SFAS  No.  131,  "Disclosures  About  Segments  of  an  Enterprise  and  Related
Information",  requires  enterprises to report certain financial and descriptive
information   about   their   reportable   operating   segments,   and   certain
enterprise-wide  disclosures  regarding products and services,  geographic areas
and major customers.

As a result  of the  December  2001  acquisition  of PWF,  the  Company  has two
reportable business segments: an investing segment and an operating segment. The
investing segment consists of subsidiaries  holding investments in Revenue Bonds
producing primarily  tax-exempt interest income. The operating segment generates
taxable interest and fee income,  through the ownership of taxable bonds,  loans
and other investments,  loan servicing and origination fees, and fees for credit
enhancement and guaranty services.

Prior to the year ended  December 31, 2001,  all the Company's  operations  were
attributable to the investing segment. Because the acquisition of PWF took place
on December 31, 2001, there was no impact on the Company's net income,  revenues
or expenses.  Of the total assets for the Company at December 31, 2002 and 2001,
approximately $1.73 billion and $1.32 billion, respectively, are attributable to
the  investing  segment  and  approximately   $124  million  and  $100  million,
respectively, are attributable to the operating segment.

New Pronouncements

In June 2001,  the FASB issued  SFAS No. 143  "Accounting  for Asset  Retirement
Obligations".  SFAS No. 143  requires  the fair value of a liability or an asset
retirement  obligation  be recorded in the period in which it is incurred.  SFAS
No. 143 became effective January 1, 2003. The implementation of SFAS No. 143 did
not have a material impact on the Company's consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144  "Accounting  for the Impairment or
Disposal of Long-Lived  Assets".  SFAS No. 144  supercedes  existing  accounting
literature dealing with impairment and disposal of long-lived assets,  including
discontinued operations. It addresses financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed of, and
expands current reporting for discontinued  operations to include disposals of a
"component"  of an entity that has been disposed of or is classified as held for
sale. The Company implemented SFAS No. 144 on January 1, 2002. Implementation of
this  statement  did not have a material  impact on the  Company's  consolidated
financial statements.

In April 2002, the FASB issued SFAS No. 145  "Rescission of FASB  Statements No.
4, 44 and 64,  Amendment of FASB  Statement No. 13 and  Technical  Corrections".
SFAS No. 145,  among other  things,  rescinds SFAS No. 4,  "Reporting  Gains and
Losses from Extinguishment of Debt", and accordingly,  the reporting of gains or
losses from the early  extinguishments of debt as extraordinary  items will only
be required if they meet the specific  criteria of extraordinary  items included
in  Accounting  Principles  Board  Opinion  No. 30,  "Reporting  the  Results of
Operations".  The  revision  of  SFAS  No.  4 is  effective  January  2003.  The
implementation  of SFAS No. 145 did not have a material  impact on the Company's
consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit  or  Disposal  Activities".   SFAS  No.  146  replaces  current  accounting
literature  and  requires  the  recognition  of costs  associated  with  exit or
disposal  activities  when  they  are  incurred  rather  than  at the  date of a
commitment to an exit or disposal plan. SFAS No. 146 became effective January 1,
2003. The  implementation  of SFAS No. 146 did not have a material impact on the
Company's consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantors' Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others." The Interpretation  elaborates on the disclosures to be
made by a guarantor in its  financial  statements  about its  obligations  under
certain  guarantees  that it has issued.  It also  clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee. This Interpretation
does  not  prescribe  a  specific   approach  for  subsequently   measuring  the
guarantor's  recognized  liability over the term of the related  guarantee.  The
initial  recognition and initial  measurement  provisions of this Interpretation
are  applicable on a prospective  basis to guarantees  issued or modified  after
December  31,  2002.  The  Company  has  entered  into  one  credit  enhancement
transaction  and two  yield  guarantee  transactions.  The  fee  for the  credit
enhancement  transaction is received  monthly and recognized as income when due.
The fee for the first yield  guarantee  transaction  was received in advance was
deferred and is being amortized over the guarantee period.  The Company believes
that the fees received approximate the fair value of the obligations  undertaken
in issuing the guarantees;  therefore, for any such similar transactions entered
into after  December 31, 2002,  the Company will record the fair market value of
the guarantee, when entered into.

In  December  2002,  the FASB issued SFAS No. 148  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure," an amendment of FASB statement No. 123.
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation" to
provide  alternative  methods of transition  for a voluntary  change to the fair
value based method of accounting for stock-based employer compensation.  Because
the  Company  currently  accounts  for its stock  options  using the fair  value
method,  implementation  of  this  statement  will  not  have an  impact  on the
Company's  consolidated  financial  statements.  The  Company  has  adopted  the
provisions of SFAS No. 123,  "Accounting for Stock-Based  Compensation"  for its
share options issued to non-employees. Accordingly, compensation cost is accrued
based on the estimated fair value of the options issued,  and amortized over the
vesting period.  Because vesting of the options is contingent upon the recipient
continuing  to provide  services to the  Company  until the  vesting  date,  the
Company estimates the fair value of the non-employee  options at each period-end
up to the vesting date, and adjusts expensed amounts accordingly. The fair value
of each option grant is estimated using the Black-Scholes option-pricing model.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  ("FIN 46").  This  Interpretation  clarifies  the
application of existing  accounting  pronouncements to certain entities in which
equity  investors do not have the  characteristics  of a  controlling  financial
interest or do not have sufficient  equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
The provision of FIN 46 will be immediately effective for all variable interests
in variable  interest  entities  created after January 31, 2003, and the Company
will need to apply its provisions to any existing variable interests in variable
interest  entities by no later than July 1, 2003.  The Company  believes at this
time,  it has no variable  interests  in variable  interest  entities  requiring
consolidation.


                                       -44-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The Company has adopted an  incentive  share option plan (the  "Incentive  Share
Option  Plan"),  the  purpose of which is to (i)  attract  and retain  qualified
persons as trustees and officers and (ii) to provide  incentive and more closely
align the financial interests of the Manager and its employees and officers with
the  interests of the  shareholders  by providing  the Manager with  substantial
financial interest in the Company's success.  The Compensation  Committee of the
Company's  Board of  Trustees  administers  the  Incentive  Share  Option  Plan.
Pursuant to the Incentive Share Option Plan, if the Company's  distributions per
Common  Share in the  immediately  preceding  calendar  year exceed  $0.9517 per
Common Share, the  Compensation  Committee has the authority to issue options to
purchase, in the aggregate, that number of Common Shares which is equal to three
percent of the shares  (including  Common  Shares and  Convertible  CRA  Shares)
outstanding  as of  December  31 of the  immediately  preceding  calendar  year,
provided  that the  Compensation  Committee  may only issue,  in the  aggregate,
options  to  purchase  a maximum  number of Common  Shares  over the life of the
Incentive  Shares Option Plan equal to 10% of the Common Shares  outstanding  on
October 1, 1997 (2,058,748 Common Shares).

Subject  to  the  limitations  described  in  the  preceding  paragraph,  if the
Compensation Committee does not grant the maximum number of options in any year,
then the excess of the number of  authorized  options over the number of options
granted  in such year will be added to the number of  authorized  options in the
next  succeeding  year  and will be  available  for  grant  by the  Compensation
Committee in such succeeding year.

All options granted by the  Compensation  Committee have an exercise price equal
to or greater than the fair market value of the Common Shares on the date of the
grant.  The maximum option term is ten years from the date of grant.  All Common
Share  options  granted  pursuant to the  Incentive  Share  Option Plan may vest
immediately  upon  issuance  or in  accordance  with  the  determination  of the
Compensation Committee. Since 1999, the Company has made distributions in excess
of $0.9517,  thus allowing the  Compensation  Committee to issue options.  Three
percent of the Common Shares  outstanding as of December 31, 2001, 2000 and 1999
is equal to a maximum  option grant of 1,234,807,  1,044,777 and 680,950  Common
Shares, respectively.  The 10% cap has been reached, therefore 2,058,748 options
are available to be issued.

On May 1, 2000,  options to  purchase  297,830  Common  Shares  were  granted to
officers of the Company and certain  employees  of an  affiliate of the Manager,
none of who are employees of the Company. The exercise price of these options is
$11.5625  per share.  The term of each option is ten years.  The options vest in
equal  installments  on May 1, 2001,  2002 and 2003. The Company has adopted the
provisions of SFAS No. 123,  "Accounting for Stock-Based  Compensation"  for its
share options issued to non-employees. Accordingly, compensation cost is accrued
based on the estimated fair value of the options issued,  and amortized over the
vesting period.  Because vesting of the options is contingent upon the recipient
continuing  to provide  services to the  Company  until the  vesting  date,  the
Company estimates the fair value of the non-employee  options at each period-end
up to the vesting date, and adjusts expensed amounts accordingly. The fair value
of each option grant is estimated using the Black-Scholes  option-pricing model.



                                       -45-
<PAGE>



                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - Revenue Bonds

The following table provides certain information with respect to each of the
Revenue Bonds owned by the Company and its consolidated subsidiaries:





                                      -46-
<PAGE>




                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                 Effective
                                                                         Stated   Date of    Future
                                              Date      Call   Maturity  Interest  Future   Interest
Property           Location           Units  Closed     Date     Date     Rate1     Rate     Rate2
----------------- ---------         -------- -------- -------- --------- --------- -------- --------
<S>                <C>                <C>     <C>      <C>      <C>     <C>         <C>       <C>
Tax-Exempt First Mortgage Bonds
Stabilized
Portfolio
 Autumn Ridge      San Marcos, CA      192   Aug-00    Aug-27   Jul-37   7.650%     --        --
 Barnaby Manor     Washington, DC      124   Nov-99    May-17   May-32   7.375%     --        --
 Carrington Point  Los Banos, CA        80   Sep-98    Oct-17   Sep-40   6.375%     --        --
 Casa Ramon        Orange County,
                   CA                   75   Jul-00    Oct-16   Sep-35   7.500%     --        --
 Cedar Creek       McKinney, TX        250   Dec-86    Oct-10   Oct-20   7.430%     --        --
 Cedar Pointe      Nashville, TN       210   Apr-87    Nov-06   Apr-17   7.000%     --        --
 Cedarbrook        Hanford, CA          70   Apr-98    May-17   May-40   7.125%     --        --
 Chapel Ridge at
  Texarkana        Texarkana, AR       144   Sep-99    Oct-16   Sep-41   7.375%     --        --
 College Park      Naples, FL          210   Jul-98    Jul-25   Jul-40   7.250%     --        --
 Crowne Pointe     Olympia, WA         160   Dec-86             Aug-29   7.250%     --        --
 Cypress Run       Tampa, FL           408   Aug-86    Dec-29   Dec-29   5.500%     --        --
 Del Monte Pines   Fresno, CA          366   May-99    May-17   May-36   6.800%     --        --
 Douglas Pointe    Miami, FL           176   Sep-99    Oct-26   Sep-41   7.000%     --        --
 Fort Chaplin      Washington, DC      549   Dec-99    Jan-16   Jan-36   6.900%     --        --
 Franciscan
  Riviera          Antioch, CA         129   Aug-99    Apr-16   Aug-36   7.125%     --        --
 Garfield Park     Washington, DC       94   Aug-99    Aug-17   Aug-31   7.250%     --        --
 Golf and
  Lakeside Villas  Miami, FL             *   Jun-02    Jun-06   Dec-16   7.000%     --        --
 Golf and
  Lakeside Villas  Tamarac, FL         166   Jun-02    Jun-06   Dec-10   6.750%     --        --
 Golf and
  Lakeside Villas  Miami, FL           224   Jun-02    Jun-06   Dec-25   7.250%     --        --
 Greenbriar        Concord, CA         199   May-99    May-17   May-36   6.875%     --        --
 Gulfstream        Dania, FL            96   Jul-98    Apr-16   Jul-38   7.250%     --        --
 Hamilton Gardens  Hamilton, NJ        174   Mar-99    Mar-17   Mar-35   7.125%     --        --
 Highland Ridge    St. Paul, MN        228   Dec-86    Jun-10   Jun-18   7.250%     --        --
 Highpointe        Harrisburg, PA        *   Nov-00    Jun-06   Jun-06   9.000%     --        --
 Highpointe        Harrisburg, PA      240   Jul-86             Jun-06   8.500%     --        --
 King's Village    Pasadena, CA        313   Jul-00    Dec-16   Dec-36   7.500%     --        --

</TABLE>



<TABLE>


                     Outstanding
                  Principal Amount     Fair
                         at          Value at
Property             12/31/2002      12/31/2002     Notes
-----------------    ----------     ------------  ---------
<S>                 <C>             <C>             <C>
Tax-Exempt First
Stabilized
Portfolio
 Autumn Ridge       $9,286,388      $10,509,000      E,K
 Barnaby Manor       4,472,011        4,900,000      D,J
 Carrington Point    3,330,714        3,169,000      E,K
 Casa Ramon
                     4,675,524        5,240,000      E,K
 Cedar Creek         8,100,000        8,886,000      E,K
 Cedar Pointe        9,500,000        9,818,000      D,J
 Cedarbrook          2,804,561        2,977,000      E,K
 Chapel Ridge at
  Texarkana          5,768,870        6,315,000      E,K
 College Park        9,986,710       10,784,000      E,K
 Crowne Pointe       5,075,000        5,432,000     E,K,Q
 Cypress Run        15,402,428       13,288,000     D,J,P
 Del Monte Pines    10,864,772       11,044,000      E,K
 Douglas Pointe      7,057,726        7,338,000      D,J
 Fort Chaplin       25,423,633       26,254,000      E,K
 Franciscan
  Riviera            6,528,099        6,930,000      D,J
 Garfield Park       3,214,613        3,490,000      D,J
 Golf and
  Lakeside Villas    2,600,000        2,687,000      C,H
 Golf and
  Lakeside Villas    1,350,000        1,347,000      C,H
 Golf and
  Lakeside Villas    6,020,000        6,330,000      C,H
 Greenbriar          9,585,000        9,729,000      E,K
 Gulfstream          3,448,591        3,729,000      E,K
 Hamilton Gardens    6,274,674        6,691,000      D,J
 Highland Ridge     15,000,000       16,056,000     E,K,Q
 Highpointe          3,250,000        4,319,000      B,N
 Highpointe          8,900,000        6,201,000     A,N,O
 King's Village     17,542,043       19,544,000      E,K

</TABLE>


                                       -47-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                 Effective
                                                                         Stated   Date of    Future
                                              Date     Call   Maturity  Interest  Future    Interest
 Property         Location           Units    Closed    Date     Date     Rate1     Rate       Rate2
 ----------------- ---------        -------- -------- -------- --------- --------- -------- ---------
<S>               <C>               <C>       <C>      <C>      <C>     <C>         <C>       <C>


 Lake Park         Turlock, CA         104   Jun-99    Oct-15   Sep-35   7.250%     --        --
 Lakepointe        Atlanta, GA         360   Nov-87    Jul-05   Jun-17   6.000%     --        --
 Lakes             Kansas City, MO     400   Dec-86    Dec-06   Dec-06   4.870%     --        --
 Lakes Edge at
  Walden           Miami, FL           400   Jun-99    Jun-13   May-35   6.900%     --        --
 Lenox  Park       Gainesville, GA     292   Jul-99    Aug-21   Jul-41   6.800%     --        --
 Lewis Place       Gainesville, FL     112   Jun-99    Jun-16   Jun-41   7.000%     --        --
 Lexington Square  Clovis,CA           130   Aug-98    Sep-17   Aug-40   6.375%     --        --
 Lexington Trails  Houston, TX         200   Nov-00    May-07   May-22   9.000%     --        --
 Loveridge         Pittsburg, CA       148   Nov-86    Jun-04   Nov-06   7.500%     --        --
 Mansion           Independence, MO    550   May-86    Jan-11   Apr-25   7.250%   Jan-06    7.500%
 Millpond Village  East Windsor, CT    360   Dec-00        -    Dec-31   7.550%     --        --
 Newport Village   Tacoma, WA          402   Feb-87    Sep-11   Aug-29   7.250%     --        --
 North Glen        Atlanta, GA         284   Sep-86    Jul-05   Jun-17   7.500%     --        --
 Northpointe
  Village          Fresno, CA          406   Aug-98    Sep-17   Aug-40   7.500%     --        --
 Oaks at Hampton   Dallas, TX          250   Apr-00    Mar-27   Mar-40   7.200%     --        --
 Ocean Air         Norfolk, VA         434   Apr-98    Jan-16   Nov-30   7.250%     --        --
 Orchard Hills     Tacoma, WA          176   Dec-86    Sep-11   Aug-29   7.250%     --        --
 Orchard Mill      Atlanta, GA         238   May-89    Jul-05   Jun-17   7.500%     --        --
 Park Centre       Alexandria, VA      326   Nov-02    Apr-11   Apr-34   6.375%     --        --
 Park Sequoia      San Jose, CA         81   Oct-00    Mar-17   Mar-37   7.500%     --        --
 Parks at
  Westmoreland     DeSoto, TX          250   Jul-00    Jul-17   Jul-40   7.200%     --        --
 Pelican Cove      St. Louis, MO       402   Feb-87    Oct-10   Oct-20   7.250%     --        --
 Phoenix           Stockton, CA        186   Apr-98    Nov-16   Oct-29   7.125%     --        --
 Reflections       Casselberry, FL     336   Nov-00    Dec-05   Dec-25   9.000%     --        --
 Running Brook     Miami, FL           186   Sep-00    Jan-27   Dec-42   7.400%     --        --
 Shannon Lake      Atlanta, GA         294   Jun-87    Jul-05   Jun-17   7.000%     --        --
 Sherwood Lake     Tampa, FL           149   Apr-01    Nov-17   Sep-37   7.450%     --        --
 Silvercrest       Clovis,CA           100   Sep-98    Oct-17   Sep-40   7.125%     --        --
 South Congress    Austin, TX          172   May-00    Oct-16   Sep-36   7.500%     --        --
 Standiford        Modesto, CA         250   Sep-99    Apr-16   Aug-36   7.125%     --        --



</TABLE>



<TABLE>


                    Outstanding
                  Principal Amount        Fair
                       at               Value at
 Property           12/31/2002        12/31/2002        Notes
 ---------------   ------------       ------------    ---------
<S>                <C>               <C>               <C>

 Lake Park           3,638,000        3,894,000         E,K
 Lakepointe         15,100,000       13,377,000         C,H
 Lakes              13,650,000       11,797,000        D,J,Q
 Lakes Edge at
  Walden            14,850,000       15,128,000         E,K
 Lenox  Park        12,906,803       13,052,000         C,H
 Lewis Place         3,969,472        3,986,000         C,H
 Lexington Square    3,797,470        3,614,000         D,J
 Lexington Trails    4,500,000        4,500,000         B,R
 Loveridge           8,550,000        9,468,000         D,J
 Mansion            19,450,000       20,820,000         E,K
 Millpond Village   14,169,461       15,940,000         E,K
 Newport Village    13,000,000       13,915,000        E,K,Q
 North Glen         12,400,000       13,731,000         E,K
 Northpointe
  Village           13,116,371       14,643,000         E,K
 Oaks at Hampton     9,535,000       10,136,000         C,H
 Ocean Air          10,000,000       10,704,000         E,K
 Orchard Hills       5,650,000        6,048,000        E,K,Q
 Orchard Mill       10,500,000       11,627,000         E,K
 Park Centre        15,000,000       15,000,000         C,I
 Park Sequoia        6,709,372        7,463,000         E,K
 Parks at
  Westmoreland       9,535,000       11,966,000         C,I
 Pelican Cove       18,000,000       19,268,000         E,K
 Phoenix             3,139,578        3,373,000         E,K
 Reflections        10,700,000       14,218,000        E,K,Q
 Running Brook       8,495,000        9,281,000          C
 Shannon Lake       12,000,000       12,402,000         A,G
 Sherwood Lake       3,993,982        4,510,000         C,H
 Silvercrest         2,250,573        2,389,000         E,K
 South Congress      6,251,374        6,976,000         E,K
 Standiford          9,434,155       10,015,000         E,K

</TABLE>




                                       -48-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>


                                                                                      Effective
                                                                              Stated   Date of    Future
                                                   Date     Call   Maturity  Interest  Future    Interest
 Property         Location             Units      Closed    Date     Date     Rate1     Rate       Rate2
 ---------------- ---------           --------   -------- -------- --------- --------- -------- ----------
<S>               <C>                 <C>        <C>       <C>      <C>     <C>         <C>       <C>

 Stonecreek        Watsonville, CA      120      Apr-98    May-17   Apr-40   7.125%     --        --
 Sycamore Woods    Antioch, CA          186      May-99    May-17   May-36   6.875%     --        --
 Tallwood          Virginia Beach, VA   120      Sep-99    Nov-17   Oct-41   7.250%     --        --
 Thomas Lake       Eagan, MN            216      Sep-86    Jan-10   Dec-27   7.500%     --        --
 Village Green     Merced, CA           128      Aug-00    Jan-17   Jan-37   7.500%     --        --
 Village Green     Merced, CA             *      Aug-00        -    Aug-14   7.500%     --        --
 Walnut Creek      Austin, TX            98      May-00    Oct-16   Sep-36   7.500%     --        --
 Walnut Creek      Austin, TX             *      May-00        -    May-14   7.500%     --        --
 Walnut Park
  Plaza            Philadelphia, PA     224      Apr-00        -    Oct-18   7.500%     --        --
 Williams Run      Dallas, TX           252      Dec-00    Jan-11   Nov-40   7.650%     --        --
 Willow Creek      Ames, IA             138      Feb-87    Jul-08   Jun-22   7.250%     --        --
                                     ------
Subtotal - Revenue Bonds Secured
  by Stabilized Properties           14,337
                                     ------

Lease-Up Portfolio
------------------
 Arbors at
  Creekside        Austin, TX           176      Jun-01    Jun-18   May-41   7.450%     --        --
 Armstrong Farm    Jeffersonville, IN   168      Oct-00    Oct-17   Oct-40   7.500%     --        --
 Bay Colony        League City, TX      248      Aug-00    Jul-17   Jul-42   7.500%     --        --
 Chapel Ridge at
  Claremore        Claremore, OK        104      Oct-00    Oct-17   Oct-42   7.500%     --        --
 Chapel Ridge at
  Little Rock      Little Rock, AR      128      Aug-99    Aug-15   Aug-39   7.125%     --        --
 Columbia  at
  Bells Ferry      Cherokee Co., GA     272      Apr-00    Apr-17   Apr-42   7.400%     --        --
 Falcon Creek      Indianapolis, IN     131      Sep-98    Sep-16   Aug-38   7.250%     --        --
 Forest Hills      Garner, NC           136      Dec-98    Jun-16   Jun-34   7.125%     --        --
 Grace Townhomes   Ennis, TX            112      May-00    Jun-17   Jun-42   7.500%     --        --
 Grandview Forest  Durham, NC            92      Dec-00    Feb-18   Jan-43   8.500%   Feb-03     7.500%
 Greenbridge at
  Buckingham       Richardson, TX       242      Nov-00    Mar-17   Nov-40   7.400%     --        --
 Jubilee
  Courtyards       Florida City,FL       98      Sep-98    Oct-25   Sep-40   7.125%     --        --
 Lake Jackson      Lake Jackson, TX     160      Dec-98    Jan-18   Jan-41   7.000%     --        --


</TABLE>


<TABLE>


                    Outstanding
                  Principal Amount        Fair
                       at               Value at
 Property           12/31/2002        12/31/2002        Notes
 ---------------   ------------       ------------    ---------
<S>                <C>               <C>               <C>

 Stonecreek           8,706,043         9,243,000        E,K
 Sycamore Woods       9,301,229         9,557,000        E,K
 Tallwood             6,170,519         6,642,000        E,K
 Thomas Lake         12,975,000        14,368,000        E,K
 Village Green        3,060,797         3,408,000        E,K
 Village Green          471,404           558,000        E,K
 Walnut Creek         3,214,992         3,588,000        E,K
 Walnut Creek           273,232           372,000        E,K
 Walnut Park
  Plaza               5,160,000         6,063,000        E,K
 Williams Run        12,650,000        13,586,000        C,H
 Willow Creek         6,100,000         6,530,000        E,K
                   ------------       -----------
Subtotal - Revenue
  Bonds Secured
  by Stabilized
  Properties       $567,836,184      $600,163,000
                   ------------      ------------
Lease-Up Portfolio
 Arbors at
  Creekside           8,600,000         9,460,000        D,J
 Armstrong Farm       8,242,806         9,131,000        C,I
 Bay Colony          10,083,089        11,184,000        D,J
 Chapel Ridge at
  Claremore           4,097,280         4,540,000        A,G
 Chapel Ridge at
  Little Rock         5,532,543         5,877,000        E,K
 Columbia  at
  Bells Ferry        12,963,840        14,203,000        E,K
 Falcon Creek         5,644,393         6,467,000      E,K,M
 Forest Hills         5,778,074         6,167,000        D,J
 Grace Townhomes      5,215,067         5,786,000        D,J
 Grandview Forest     5,483,907         6,072,000        D,J
 Greenbridge at
  Buckingham         19,735,000        20,502,000        C,I
 Jubilee
  Courtyards          4,006,332         4,252,000        E,K
 Lake Jackson        10,133,171        10,500,000        E,K

</TABLE>


                                       -49-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                  Effective
                                                                          Stated   Date of    Future
                                               Date     Call   Maturity  Interest  Future    Interest
Property         Location            Units    Closed    Date     Date     Rate1     Rate       Rate2
----------------- ---------         -------- -------- -------- --------- --------- -------- ----------
<S>               <C>               <C>       <C>      <C>      <C>     <C>         <C>       <C>

 Lakemoor          Durham, NC          160   Dec-99   Jan-17   Dec-41   7.250%     --        --
 Lakewood Terrace  Belton, MO          152   Aug-01   Feb-19   Aug-41   7.400%     --        --
 Madalyn Landing   Palm Bay, FL        304   Nov-98   Dec-17   Nov-40   7.000%     --        --
 Magnolia Arbors   Covington, GA       250   Apr-01   May-18   Apr-43   7.500%     --        --
 Marsh Landing     Portsmouth, VA      250   May-98   Jul-17   Jul-30   7.250%     --        --
 Midtown Square    Columbus, GA        144   Jun-01   Jun-21   May-43   7.400%     --        --
 Mountain Ranch    Austin, TX          196   Dec-98   Jan-18   Jan-41   7.125%     --        --
 Newark Commons    New Castle, DE      220   May-00   May-18   May-43   7.300%     --        --
 Princess Anne     Virginia  Beach,
  House            VA                  186   Apr-00   Apr-25   Apr-42   7.500%     --        --
 Red Hill Villas   Round Rock, TX      168   Dec-00   Dec-17   Dec-40   7.400%     --        --
 San Marcos        San Marcos, TX      156   May-00   Mar-17   Mar-42   7.375%     --        --
 Silverwood        Lakewood, WA        107   Dec-01   Nov-18   Nov-38   7.200%     --        --
 Southwest Trails  Austin, TX          160   Aug-00   Jun-17   Jun-42   7.350%     --        --
 Summerlake        Davie, FL           108   Mar-00   Apr-27   Mar-42   7.400%     --        --
 Woods Edge        Charlottesville,     97   Nov-00   Nov-17   Nov-40   7.500%     --        --
                   VA
                                     -----
Subtotal - Revenue Bonds Secured
  by properties in lease-up stage    4,725
                                     -----

Construction Bond Portfolio
---------------------------
 Allapattah
  Gardens          Miami, FL           128   Nov-02   Nov-19   Nov-44   7.150%     --        --
 Belmont Heights
  Estates          Tampa, FL           201   Jun-01   Jun-18   Jun-43   8.150%   Mar-03     7.600%
 Bluffview         Denton, TX          250   May-01   May-18   May-41   7.600%     --        --
 Blunn Creek       Austin, Tx          280   Aug-01   Jul-18   Jul-41   7.300%     --        --
 Chapel Ridge at
  Jackson          Jackson, TN         124   Dec-02   Jan-20   Dec-42   6.750%     --        --
 Chapel Ridge at   Oklahoma City,
  Yukon            OK                  148   Sep-02   Nov-02   Sep-03   7.000%     --        --
 Circle S          Austin, TX          200   Feb-02   Dec-18   Jan-42   7.500%   Apr-03     7.200%
 Clarkridge
  Villas           Dallas, TX          256   Sep-02   Aug-19   Sep-42   7.000%     --        --
 Clearwood Villas  Houston, TX         276   May-02   Apr-19   May-42   7.000%     --        --

</TABLE>




<TABLE>


                      Outstanding
                   Principal Amount       Fair
                         at              Value at
 Property             12/31/2002       12/31/2002       Notes
 ---------------     ------------      ------------    ---------
<S>                   <C>              <C>                <C>

 Lakemoor              8,960,356        9,634,000         C,I
 Lakewood Terrace      7,650,000        8,358,000         E,K
 Madalyn Landing      12,859,503       13,284,000         E,K
 Magnolia Arbors      12,500,000       13,842,000         E,K
 Marsh Landing         5,895,278        6,435,000         E,K
 Midtown Square        5,600,000        6,118,000         A,G
 Mountain Ranch        9,041,675        9,595,000         C,I
 Newark Commons       14,300,000       15,413,000         E,K
 Princess Anne
  House                7,500,000        8,305,000         C,I
 Red Hill Villas       9,900,000       10,816,000         C,I
 San Marcos            7,208,142        7,874,000         D,J
 Silverwood            3,300,000        3,508,000         C,H
 Southwest Trails      6,486,332        7,054,000         D,J
 Summerlake            5,582,422        6,118,000         D,J
 Woods Edge            4,848,121        5,371,000         D,J

                     -----------      -----------
Subtotal - Revenue
  Bonds Secured
  by properties
  in lease-up stage $227,147,331     $245,866,000
                   -------------     ------------

Construction Bond Portfolio
---------------------------
 Allapattah
  Gardens              4,850,000        4,850,000         C,L
 Belmont Heights
  Estates              7,850,000        8,808,000         D,J
 Bluffview            10,700,000       12,006,000         C,I
 Blunn Creek          15,000,000       16,167,000         C,I
 Chapel Ridge at
  Jackson              5,000,000        5,000,000         C,L
 Chapel Ridge at
  Yukon                7,000,000        7,235,000          C
 Circle S              9,300,000        9,886,000        C,H,L
 Clarkridge
  Villas              14,600,000       15,089,000         C,L
 Clearwood Villas     15,000,000       15,503,000        E,K,L

</TABLE>

                                       -50-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                 Effective
                                                                         Stated   Date of    Future
                                               Date     Call   Maturity  Interest  Future    Interest
Property           Location           Units   Closed    Date     Date     Rate1     Rate       Rate2
-----------------  ---------        -------- -------- -------- --------- --------- -------- ----------
<S>                <C>               <C>       <C>      <C>      <C>     <C>         <C>       <C>

 Cobb Park         Ft. Worth, TX       172   Jul-01   Aug-18   Jul-41   7.400%     --        --
 Cobblestone       Acworth, GA         172   May-02   May-19   May-42   6.900%     --        --
 Colonial Park     Margate, FL         160   Jun-02   Jun-19   Jun-44   7.500%  Sept-03     7.000%
 Ecumenical Homes  Dayton, OH           50   Dec-02   Jul-19   Jun-44   6.875%     --        --
 Ecumenical Homes  Dayton, OH            *   Dec-02        -   Mar-07   6.875%     --        --
 Ecumenical Homes  Dayton, OH            *   Dec-02        -   Jun-14   9.000%     --        --
 Ecumenical Homes  Dayton, OH            *   Dec-02        -   Jun-14   6.875%     --        --
 Emerald Bay       Houston, TX         248   Sep-02   Aug-19   Sep-42   5.500%   Feb-04     7.000%
 Green Crest       Houston, TX         192   Nov-02   Nov-19   Nov-42   7.000%     --           --
 Grove             Merced, CA          204   Dec-02   Dec-20   Dec-44   4.000%   Mar-03     7.000%
 Grove             Merced, CA            *   Dec-02        -   Dec-07   4.000%   Mar-03     7.000%
 Grove             Merced, CA            *   Dec-02        -   Jun-16   4.000%   Mar-03     8.750%
 Heatherwilde      Pflugerville, TX    256   Oct-02   Nov-19   Oct-42   5.500%   Mar-04     6.750%
 Heatherwilde      Pflugerville, TX      *   Oct-02   Nov-19   Oct-42   5.500%   Mar-04     7.000%
 Hickory Falls     Villa Rica, GA      220   Dec-02   Jan-20   Dec-45   5.000%   Apr-04     6.500%
 Hickory Trace     Dallas, TX          180   Nov-02   Dec-19   Nov-42   7.000%     --        --
 Hidden Grove      Miami, FL           222   Sep-00   Oct-17   Oct-42   7.400%     --        --
 Hillside          Dallas, TX          236   Dec-01   Nov-18   Dec-41   7.900%   Mar-03     7.000%
 Inverness Centre  Ft. Wayne, IN       192   Aug-02   Mar-20   Aug-42   6.835%     --        --
 Ironwood
  Crossing         Ft. Worth, TX       280   Nov-02   Oct-27   Nov-42   5.500%   Jul-04     7.000%
 Johnston Mill     Columbus, GA        336   Apr-02   Mar-19   Mar-42   6.900%   Apr-04     6.950%
 Kensington Court  Kansas City, MO     192   Dec-02   Jan-20   Dec-42   6.850%     --        --
 Knollwood Villas  Denton, TX          264   May-01   May-18   May-41   7.600%     --        --
 Laguna Pointe     Pompano Beach, FL   188   Jun-02   Dec-19   Jun-44   7.500%   Aug-04     7.000%
 Lakeline          Leander, TX         264   Nov-01   Aug-18   Aug-43   8.100%   Mar-03     7.700%
 Lansing Heights   Lansing, KS         130   May-02   Mar-27   Mar-45   6.800%     --        --
 Lansing Heights   Lansing, KS           *   May-02        -   Dec-10   6.800%     --        --

</TABLE>



<TABLE>


                      Outstanding
                   Principal Amount     Fair
                         at            Value at
 Property             12/31/2002     12/31/2002       Notes
 ---------------     ------------    ------------    ---------
<S>                   <C>            <C>                <C>

 Cobb Park          7,500,000            8,194,000     A,G,L
 Cobblestone       11,500,000           11,716,000     E,K,L
 Colonial Park      8,200,000            8,475,000     E,K,L
 Ecumenical Homes   2,793,000            2,793,000      C,L
 Ecumenical Homes     556,000              556,000      C
 Ecumenical Homes     165,000              165,000      C,L
 Ecumenical Homes      86,000               86,000      C,L
 Emerald Bay       10,570,000           10,924,000      C
 Green Crest       12,500,000           12,500,000      C,L
 Grove              8,270,000            8,270,000      C,L
 Grove              3,055,000            3,055,000      C
 Grove              1,475,000            1,475,000      C
 Heatherwilde      13,500,000           13,500,000      C,H
 Heatherwilde       1,500,000            1,500,000      C,H
 Hickory Falls     12,350,000           12,350,000      C,L
 Hickory Trace     11,920,000           11,920,000      C
 Hidden Grove       8,594,129            9,396,000     C,I,L
 Hillside          12,500,000           12,919,000     A,F,L
 Inverness Centre   5,950,000            6,004,000     D,J,L
 Ironwood
  Crossing         15,000,000           15,000,000      C
 Johnston Mill     16,000,000           16,418,000     C,I,L
 Kensington Court  10,000,000           10,000,000      C,L
 Knollwood Villas  13,750,000           15,429,000      C,I
 Laguna Pointe     13,300,000           13,746,000      C,L
 Lakeline          21,000,000           22,701,000     C,H,L
 Lansing Heights    8,320,500            8,354,000      C
 Lansing Heights      231,500              232,000      C

</TABLE>


                                      -51-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                     Effective
                                                                             Stated   Date of     Future
                                                  Date    Call    Maturity  Interest  Future     Interest
Property             Location           Units    Closed   Date      Date     Rate1     Rate        Rate2
-----------------    ---------         -------- -------- -------- --------- --------- --------  -----------
<S>                  <C>               <C>       <C>      <C>      <C>     <C>         <C>      <C>

 Magnolia Commons     Vicksburg, MS       192   Oct-02   Oct-19   Sep-32   6.750%        --          --
 Matthew Ridge        Houston, TX         240   May-02   Apr-19   May-42   7.150%        --          --
 Meridian             Hollywood, FL       160   Apr-02   May-19   Apr-44   7.500%      Jul-03      7.000%
 Oak Hill             Athens, GA          220   Oct-02   Nov-19   Oct-42   6.500%        --          --
 Oak Hollow           Dallas, TX          150   Dec-01   Nov-18   Dec-41   7.900%      Mar-03      7.000%
 Oaks at
  Brandlewood         Savannah, GA        324   May-02   Jun-19   May-42   7.000%        --          --
 Palm Terrace         Auburn, CA            *   Sep-02        -   Sep-03   9.500%        --          --
 Palm Terrace         Auburn, CA           80   Aug-01   Aug-18   Jan-44   8.400%      Feb-03      7.400%
 Palm Terrace         Auburn, CA            *   Aug-01        -   Apr-03   9.500%        --          --
 Pleasant Valley
  Villas              Austin, TX          280   Aug-02   Aug-19   Sep-42   6.750%        --          --
 River's Edge         Green Island, NY    190   Nov-01   Jun-16   Nov-43   7.700%      Jun-03      7.200%
 Riverside
  Meadows             Austin, TX          248   Dec-01   Nov-20   Dec-41   7.500%      May-03      7.000%
 Rosemont             San Antonio, TX     280   Dec-02   Jan-20   Dec-44   6.750%        --          --
 Southern Oaks        Dallas, TX          256   Dec-02   Jan-20   Dec-44   6.750%        --          --
 Waterford Place
 Waterford Place II   Loveland, CO        164   Oct-02   Aug-27   Aug-45   6.500%        --          --
                      Colorado
 West Meadows         Springs, CO         216   Dec-01   Aug-18   Nov-41   7.250%        --          --
 West Oaks            Houston, TX         168   Feb-02   Dec-18   Jan-42   7.500%      Feb-04      7.150%
 Westlake Village     Jackson, NJ           *   Nov-01        -   Feb-04   8.000%        --          --
 Westlake Village     Jackson, NJ         150   Nov-01   May-19   Nov-41   7.200%        --          --
 White Rock           San Antonio, TX     336   Dec-01   Dec-18   Dec-41   7.750%      May-03      7.550%
 Willow Creek II      North Port, FL      104   Jun-02   Jun-19   Jun-44   7.000%        --          --
                                       ------
Subtotal - Revenue Bonds secured
  by properties in construction         9,779
                                       ------

</TABLE>


<TABLE>


                         Outstanding
                      Principal Amount     Fair
                            at            Value at
 Property                12/31/2002     12/31/2002       Notes
 ---------------        ------------    ------------    ---------
<S>                     <C>            <C>                <C>

 Magnolia Commons        8,700,000        8,700,000          C,L
 Matthew Ridge          10,968,000       11,578,000         E,K,L
 Meridian                8,255,000        8,532,000         E,K,L
 Oak Hill                8,300,000        8,300,000          C,L
 Oak Hollow              8,625,000        8,914,000         A,F,L
 Oaks at
  Brandlewood           12,725,000       13,151,000         D,J,L
 Palm Terrace            1,000,000        1,403,000          C,L
 Palm Terrace            4,460,000        4,873,000         A,F,L
 Palm Terrace            1,542,381        2,163,000         A,F,L
 Pleasant Valley
  Villas                15,000,000       14,949,000         C,H,L
 River's Edge           15,000,000       15,946,000           C
 Riverside
  Meadows               11,500,000       11,885,000          A,F
 Rosemont               14,990,000       14,990,000           C
 Southern Oaks          14,990,000       14,990,000           C
 Waterford Place
 Waterford Place II      2,102,000        2,102,000           C

 West Meadows           13,000,000       13,915,000         A,F,L
 West Oaks              10,150,000       10,715,000         A,F,L
 Westlake Village          575,000          679,000          C,L
 Westlake Village        6,425,000        6,830,000         D,J,L
 White Rock             20,345,000       21,564,000         C,H,L
 Willow Creek II         4,130,000        4,268,000          C,H
                     -------------      -----------
Subtotal - Revenue
 Bonds secured
 by properties
 in construction      $512,668,510     $532,669,000
                     -------------     ------------

</TABLE>

                                       -52-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                   Effective
                                                                           Stated   Date of    Future
                                                 Date     Call   Maturity  Interest  Future    Interest
Property             Location          Units    Closed    Date     Date     Rate1     Rate      Rate2
-----------------    ---------        -------- -------- -------- --------- --------- -------- ---------
<S>                  <C>               <C>       <C>      <C>      <C>     <C>         <C>     <C>

Rehabilitation Bond Portfolio
 Briarwood           Fort Smith, AR         *   Aug-02        -   Jun-13   6.250%     --         --
 Briarwood           Fort Smith, AR         *   Aug-02   Jun-03   May-23   6.250%     --         --
 Briarwood           Fort Smith, AR       128   Aug-02   Jun-19   Feb-39   6.250%     --         --
 Bryte Gardens       W. Sacramento, CA    108   Apr-02   Mar-18   Mar-39   7.000%     --         --
 Community Arms      Pasadena, CA         133   Aug-02        -   Sep-14   7.000%     --         --
 Community Arms      Pasadena, CA           *   Aug-02   Jan-18   Oct-38   7.000%     --         --
 Creekside
  Landing            Memphis, TN          248   Dec-02   Jan-20   Dec-39   6.800%     --         --
 Faircliff Plaza     Washington, DC        80   Mar-02   Mar-19   Mar-39   7.900%   Mar-03      7.200%
 Georgia King        Newark, NJ           422   May-02        -   Aug-38   8.000%   Aug-03      7.000%
 Georgia King        Newark, NJ             *   May-02        -   Oct-25   7.000%     --         --
 Lincoln Park        Newark, NJ            80   May-02        -   May-28   7.750%   Feb-03      7.250%
 Mecca Vineyards     Indio, CA            268   Nov-01   May-18   May-38   7.750%   Feb-03      7.250%
 Mecca Vineyards     Indio, CA              *   Nov-01        -   Jul-14   7.250%     --         --
 Merchandise Mart    St. Louis, MO        213   Oct-01   Oct-19   Sep-41   8.000%   Mar-03      7.500%
 Oakwood Manor       Little Rock, AR      200   Jun-01   Dec-17   Nov-37   7.650%     --         --
 Oakwood Manor       Little Rock, AR        *   Jun-01        -   Nov-11   7.650%     --         --
 Ocean Ridge         Federal Way, WA      192   Dec-01   Nov-18   Nov-38   6.950%     --         --
 Pheasant Ridge      Bellevue, NE         264   Sep-02   Apr-19   Mar-39   7.400%   Sep-03      6.750%
 Stonebridge         Florrisant, MO       100   May-02   Oct-18   Oct-38   7.000%     --         --
 Valley View &
  Summertree         Little Rock, AR      240   Oct-01   Jun-18   Jun-38   8.000%   Apr-03      7.450%
 Valley View &
  Summertree         Little Rock, AR        *   Oct-01        -   Feb-14   7.450%     --         --
 Viewcrest
  Villages           Bremerton, WA        300   May-02   Oct-18   Oct-38   8.000%   Apr-03       7.150%
                                       ------
Subtotal - Revenue Bonds secured
  by properties undergoing
  rehabilitation                        2,976
                                      -------
Subtotal - Tax-Exempt First
  Mortgage Revenue Bonds               31,817
                                      -------

</TABLE>



<TABLE>


                              Outstanding
                           Principal Amount    Fair
                                at           Value at
 Property                    12/31/2002     12/31/2002     Notes
 ---------------           --------------   ------------  ---------
<S>                        <C>               <C>             <C>

Rehabilitation Bond
 Briarwood                       645,635        609,000       C
 Briarwood                       680,000        627,000       C
 Briarwood                     2,835,000      2,616,000       C
 Bryte Gardens                 5,358,800      5,538,000       C,H
 Community Arms                  996,958      1,049,000       C
 Community Arms                6,245,000      6,454,000       C
 Creekside
  Landing                      5,000,000      5,000,000       C
 Faircliff Plaza               7,000,000      7,441,000       C,H
 Georgia King                 16,075,000     18,987,000       C,I
 Georgia King                  8,835,121      9,224,000       C,I
 Lincoln Park                  4,900,000      5,245,000       D,J
 Mecca Vineyards              13,040,000     13,958,000       A,F
 Mecca Vineyards               1,424,193      1,606,000       A,F
 Merchandise Mart             25,000,000     27,683,000      C,I,L
 Oakwood Manor                 5,007,621      5,659,000       C,I
 Oakwood Manor                   440,000        497,000       C,I
 Ocean Ridge                   6,675,000      6,849,000       A,F
 Pheasant Ridge                9,000,000      8,969,000       D,J
 Stonebridge                   5,270,000      5,447,000       D,J
 Valley View &
  Summertree                   8,655,000     10,223,000       A,F
 Valley View &
  Summertree                     523,063        599,000       A,F
 Viewcrest
  Villages                     8,723,200      9,209,000       D,J
                            ------------     ----------
Subtotal - Revenue
  Bonds secured
  by properties
  undergoing
  rehabilitation           $ 142,329,591  $ 153,489,000
                           -------------  -------------
Subtotal -
  Tax-Exempt First        $1,449,981,616 $1,532,187,000
  Mortgage Revenue Bonds  -------------- --------------

</TABLE>


                                       -53-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                               Effective
                                                                       Stated    Date of    Future
                                             Date     Call   Maturity  Interest  Future    Interest
Property          Location         Units    Closed    Date     Date     Rate1     Rate       Rate2
----------------- ---------       -------- -------- -------- --------- --------- -------- -----------
<S>               <C>               <C>       <C>      <C>      <C>     <C>         <C>       <C>


Taxable First Mortgage Bonds
----------------------------
 Chapel Ridge at
  Jackson          Jackson, TN        *     Dec-02   Jan-20   Sep-22   8.250%       --        --
 Circle S          Austin, TX         *     Feb-02        -   Oct-23   8.750%       --        --
 Clearwood Villas  Houston, TX        *     May-02        -   Jan-06   9.000%       --        --
 Cobb Park         Ft. Worth, TX      *     Jul-01        -   Nov-10   9.500%       --        --
 Colonial Park     Margate, FL        *     Jun-02        -   Mar-12   8.750%       --        --
 Creekside
  Landing          Memphis, TN        *     Dec-02   Jan-20   Aug-20   8.250%       --        --
 Emerald Bay       Houston, TX        *     Sep-02   Aug-19   Dec-19   9.000%       --        --
 Greenbriar        Concord, CA        *     May-99        -   May-36   9.000%       --        --
 Greenbridge at
  Buckingham       Richardson, TX     *     Nov-00        -   Feb-07  10.000%       --        --
 Hillside          Dallas, TX         *     Dec-01        -   Oct-09   9.250%       --        --
 Inverness Centre  Ft. Wayne, IN      *     Aug-02   Mar-20   Jan-29   8.000%       --        --
 Ironwood
  Crossing         Ft. Worth, TX      *     Nov-02   Jun-05   May-21   8.750%       --        --
 Johnston Mill     Columbus, GA       *     Apr-02        -   Sep-12   8.000%       --        --
 Lake Park         Turlock Park, CA   *     Jun-99        -   Sep-35   9.000%       --        --
 Lakeline          Leander, TX        *     Dec-01        -   Nov-09   9.650%     Mar-03     9.250%
 Lakes Edge at
  Walden           Miami, FL          *     Jun-99        -   Aug-10  11.000%       --        --
 Magnolia Arbors   Covington, GA      *     Apr-01   May-08   Jul-18   8.950%       --        --
 Mecca Vineyards   Indio, CA          *     Nov-01        -   Apr-07   9.000%       --        --
 Meridian          Hollywood, FL      *     Apr-02        -   Dec-13   8.750%       --        --
 Midtown Square    Columbus, GA       *     Jun-01   Jun-08   Feb-14   8.950%       --        --
 Oaks at
  Brandlewood      Savannah, GA       *     May-02        -   Mar-17   8.750%       --        --
 Oaks at Hampton   Dallas, TX         *     Apr-00        -   May-10   9.000%       --        --
 Oakwood Manor     Little Rock, AR    *     Jun-01        -   Jan-09   9.500%       --        --
 Ocean Ridge       Federal Way, Wa    *     Dec-01        -   Sep-23   8.750%       --        --
 Parks at
  Westmoreland     DeSoto, TX         *     Jul-00        -   Nov-09   9.000%       --        --
 Pheasant Ridge    Bellevue, NE       *     Sep-02   Apr-19   Aug-19   8.500%       --        --

</TABLE>


<TABLE>


                              Outstanding
                           Principal Amount     Fair
                                at            Value at
 Property                    12/31/2002      12/31/2002     Notes
 ---------------           --------------    ------------  ---------
<S>                        <C>               <C>             <C>

Taxable First Mortgage
 Bonds Chapel Ridge
 at Jackson                   900,000          900,000       A,L
 Circle S                   1,925,000        1,982,000       A,L
 Clearwood Villas             125,000          132,000       A,L
 Cobb Park                    285,000          319,000       A,L
 Colonial Park                375,000          386,000       A,L
 Creekside
  Landing                   1,100,000        1,100,000        A
 Emerald Bay                1,330,000        1,409,000        A
 Greenbriar                 1,910,078        2,134,000        A
 Greenbridge at
  Buckingham                  350,000          412,000        A
 Hillside                     400,000          435,000      A,F,L
 Inverness Centre             750,000          706,000       A,L
 Ironwood
  Crossing                  1,970,000        1,970,000        A
 Johnston Mill                500,000          471,000       A,L
 Lake Park                    322,375          397,000        A
 Lakeline                     550,000          599,000       A,L
 Lakes Edge at
  Walden                    1,179,109        1,812,000        A
 Magnolia Arbors            1,000,000        1,053,000        A
 Mecca Vineyards              360,000          381,000       A,F
 Meridian                     375,000          386,000       A,L
 Midtown Square               235,000          248,000       A,L
 Oaks at
  Brandlewood               1,200,000        1,236,000       A,L
 Oaks at Hampton              490,942          556,000        A
 Oakwood Manor                666,583          855,000        A
 Ocean Ridge                2,325,000        2,394,000        A
 Parks at
  Westmoreland                436,175          482,000        A
 Pheasant Ridge             1,900,000        1,900,000       A,L

</TABLE>


                                       -54-
<PAGE>


                CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>


                                                                                   Effective
                                                                           Stated   Date of    Future
                                              Date       Call   Maturity  Interest  Future    Interest
Property          Location           Units    Closed     Date     Date     Rate1     Rate       Rate2
----------------- ---------        --------  --------  -------- --------- --------- -------- ----------
<S>               <C>                <C>      <C>       <C>      <C>      <C>         <C>       <C>

 Pleasant Valley
  Villas           Austin, TX          *      Aug-02     Aug-19   Sep-42   8.500%     --        --
 Princess Anne     Virginia Beach,
  House            VA                  *      Apr-00        -     Jan-06   9.500%     --        --
 Red Hill Villas   Round Rock, TX      *      Dec-00        -     Jul-10   9.500%     --        --
 Riverside
  Meadows          Austin, TX          *      Dec-01        -     May-09   8.750%     --        --
 Silverwood        Lakewood, WA        *      Dec-01        -     Aug-17   8.750%     --        --
 Viewcrest
  Villages         Bremerton, WA       *      May-02     Oct-18   Feb-21   8.750%     --        --
 White Rock        San Antonio, TX     *      Dec-01        -     Aug-08   9.500%     --        --
 Williams Run      Dallas, TX          *      Dec-00        -     Jul-04   9.250%     --        --
                                    ------

Subtotal - Taxable Bonds               -
                                    ------

Total First Mortgage Bonds          31,817
                                    ======


Other Tax-Exempt Subordinate Bonds

 Draper Lane       Silver Spring, MD   406    Feb-01     Mar-06   Mar-40  10.000%      --        --
 Museum Tower      Philadelphia, PA    286    Nov-00        -     Dec-26   8.250%      --        --
                                    ------

Total Subordinate Bonds                692
                                    ------
Total Revenue Bonds
                                    32,509
                                    ======

</TABLE>



<TABLE>

                         Outstanding
                       Principal Amount     Fair
                            at            Value at
 Property                12/31/2002      12/31/2002       Notes
 ---------------      ---------------    ------------    ---------
<S>                        <C>          <C>               <C>

 Pleasant Valley
  Villas                1,470,000            1,470,000     A,L
 Princess Anne
  House                   105,667              140,000      A
 Red Hill Villas          397,001              447,000      A
 Riverside
  Meadows                 200,000              206,000     A,F
 Silverwood               525,000              541,000      A
 Viewcrest
  Villages              2,180,800            2,245,000      A
 White Rock               430,000              481,000     A,L
 Williams Run              99,113              218,000      A
                   --------------       --------------

Subtotal -
 Taxable Bonds     $   28,367,843        $  30,403,000
                   --------------       --------------
Total First
 Mortgage Bonds    $1,478,349,459       $1,562,590,000
                   --------------       --------------

Other Tax-Exempt
 Subordinate Bonds

 Draper Lane           11,000,000           11,000,000     C,I
 Museum Tower           6,000,000            6,000,000     C,H
                    -------------          -----------

Total Subordinate   $  17,000,000       $   17,000,000
 Bonds
Total Revenue
 Bonds             $1,495,349,459       $1,579,590,000
                   ==============       ==============

</TABLE>


                                      -55-

<PAGE>



         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     1    The stated  interest  rate  represents  the coupon rate of the Revenue
          Bond at December 31, 2002.

     2    Represents a future interest rate,  generally after the property is no
          longer in construction or rehabilitation.

     3    The Revenue Bonds are deemed to be available-for-sale  debt securities
          and, accordingly, are carried at their estimated fair values.

A.   Owned by the Company, not including its consolidated subsidiaries.
B.   Owned by CM Holding, a consolidated subsidiary of the Company (See Merger).
C.   Owned by CharterMac  Equity Issuer Trust, a consolidated  subsidiary of the
     Company (see Merger).
D.   Owned by CharterMac  Origination Trust I, a consolidated  subsidiary of the
     Company (see Merger).
E.   Owned by CharterMac Owner Trust I, a consolidated subsidiary of the Company
     (see Merger).
F.   Held by Merrill Lynch as collateral under the LIHTC Guaranty Program.
G.   Held by Merrill Lynch as collateral under the Credit Enhancement Program.
H.   Held by Merrill Lynch as collateral for secured  borrowings  (see Financing
     Arrangements).
I.   Held by Merrill Lynch as  collateral  in connection  with the Merrill Lynch
     P-FLOATS/RITES Program (see Financing Arrangements).
J.   Held as  collateral  in  connection  with the TOP (see Private Label Tender
     Option Program).
K.   Transferred  to CharterMac  Owner Trust I in  connection  with the TOP (see
     Private Label Tender Option Program).
L.   In the event the construction or rehabilitation of the Underlying  Property
     is not  completed  in a timely  manner,  the  Company may "put" the Revenue
     Bonds to the construction  lender at par. The put is secured by a letter of
     credit issued by the construction lender to the Company.
M.   The obligor of this Revenue Bond is a partnership in which an affiliate of
     the Manager is the partner that owns a controlling interest(see Note 10).
N.   The original  owner of the  Underlying  Property and obligor of the Revenue
     Bond has been replaced with an affiliate of the Manager.
O.   The minimum pay rate of the bond is the cash flow of the  property.
P.   The  Revenue  Bond is  currently  awaiting  approval  from the  Issuer  for
     modification. The Company is confident that the modification will occur and
     has  therefore  shown the terms of the  Revenue  Bond as per a  forbearance
     agreement which mirrors the terms of the Revenue Bond modification.
Q.   The Company received participating interest during 2002.
R.   The Company has deemed this Revenue  Bond  impaired and has written it down
     to its estimated fair value of the underlying property (see Bond
     Impairment section herein Note 2)


                                      -56-


<PAGE>



         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             (Dollars in thousands)
<TABLE>


Reconciliation of Revenue Bonds:         2002          2001            2000
                                     -----------    -----------     ----------
<S>                                  <C>            <C>             <C>

Balance at beginning of period      $1,137,715         $845,405          $587,892
 Acquisitions                          457,060          295,962           304,740
 Proceeds from repayments of bonds    (108,630)         (24,227)          (22,400)
 Periodic  principal  repayments of     (4,986)          (1,584)             (379)
   bonds
 Carrying   amount   of   bonds  in
   excess  (less  than) of proceeds      4,273             (681)              719
   from the repayment
 Loss on impairment of assets             (920)            (400)               --
 Net change in fair value of bonds      95,126           23,135           (25,291)
 Accretion  of deferred  income and
   purchase accounting adjustment          (48)             105               124
                                      --------        ---------           -------
Balance at close of period           $1,579,590      $1,137,715          $845,405
                                      =========       ==========          =======
</TABLE>

The  weighted  average  interest  rates  recognized  on the face  amount  of the
portfolio of Revenue Bonds for the years ended December 31, 2002,  2001 and 2000
were  7.32%,  7.40% and 7.74%,  respectively,  based on  weighted  average  face
amounts  of  approximately   $1,266,968,000,   $965,865,000  and   $710,544,000,
respectively.

The amortized cost basis of the Company's portfolio of Revenue Bonds at December
31, 2002 and 2001 was $1,484,202,610 and $1,137,453,098,  respectively.  The net
unrealized  gain on Revenue Bonds in the amount of  $95,387,390  at December 31,
2002  consisted  of gross  unrealized  gains  and  losses  of  $100,964,090  and
$5,576,700, respectively. The net unrealized loss on Revenue Bonds in the amount
of $261,902 at December 31, 2001 consisted of gross  unrealized gains and losses
of $20,202,713 and $19,940,811, respectively.

The principal  and interest  payments on each Revenue Bond are payable only from
the cash flows of the Underlying  Properties,  including proceeds from a sale of
an  Underlying  Property or the  refinancing  of the mortgage loan securing such
Revenue Bonds. None of the Revenue Bonds constitutes a general obligation of any
state or local government,  agency or authority.  The structure of each Mortgage
Loan mirrors the structure of the corresponding Revenue Bond that it secures. In
order to protect the tax-exempt  status of the Revenue Bonds,  the owners of the
Underlying  Properties  are  required to enter into certain  agreements  to own,
manage and operate such Underlying Properties in accordance with requirements of
the Internal Revenue Code of 1986, as amended.

No single  Revenue  Bond  provided  interest  income  that  exceeded  10% of the
Company's  total  revenue for the years ended  December 31, 2002,  2001 or 2000.
Based on the face amount of Revenue  Bonds at December 31,  2002,  approximately
29.6% are located in Texas,  12.5% of the  Underlying  Properties are located in
California,  11.2% are located in Florida,  and 10.5% are located in Georgia. No
other state  comprises  more than 10% of the total face  amount at December  31,
2002.  Based  on the  face  amount  of  Revenue  Bonds  at  December  31,  2001,
approximately 23% of the Underlying  Properties were located in California,  14%
were located in Florida, and 17% were located in Texas. No other state comprised
more than 10% of the total face amount at December 31, 2001.

Revenue  Bonds  generally  bear a fixed base  interest  rate and,  to the extent
permitted by existing  regulations,  may or may not also provide for  contingent
interest and other features. Terms are expected to be five to 35 years, although
the Company may have the right to cause  repayment  prior to maturity  through a
mandatory  redemption  feature  (five  to  seven  years  with up to six  month's
notice).  In some  cases,  the bonds call for  amortization  or  "sinking  fund"
payments,  generally at the completion of  rehabilitation  or  construction,  of
principal  based on  thirty  to  forty  year  level  debt  service  amortization
schedules.

Revenue Bonds are generally not subject to optional  prepayment during the first
5-10  years of the  Company's  ownership  of the bonds and may carry  prepayment
penalties  thereafter  beginning  at 5% of the  outstanding  principal  balance,
declining by 1% per annum.  Certain Revenue Bonds may be purchased at a discount
from their face value.  Up to 15% of the Total  Market  Value of the Company (as
defined in its trust  agreement)  may be  invested in Revenue  Bonds  secured by
Underlying  Properties  in which  affiliates  of the Manager have a  controlling
interest,  equity interest or security interest. The 15% limit is not applicable
to  properties to which the Manager or its  affiliates  have taken title for the
benefit of the  Company and only  applies to Revenue  Bonds  acquired  after the
Merger.  In selected  circumstances  and generally  only in connection  with the
acquisition of tax-exempt  Revenue Bonds, the Company may acquire a small amount
of taxable  bonds (i) which the  Company  may be required to acquire in order to
satisfy state  regulations  with respect to the issuance of tax-exempt bonds and
(ii) to fund certain costs  associated with the issuance of Revenue Bonds,  that
under current law cannot be funded by the Revenue Bond itself.

Certain Revenue Bonds provide for  "participating  interest" which is equal to a
percentage  of net property cash flow of the net sale or  refinancing  proceeds.
Both the stated and participating  interest on the Revenue Bonds are exempt from
federal  income  taxation.  During the years ended  December 31, 2002,  2001 and
2000,  participating  interest was  collected  amounting to  approximately  $3.1
million, $1.5 million and $1.7 million, respectively. Revenue Bonds that contain
provisions for contingent interest are referred to as  "participating";  Revenue
Bonds lacking this provision are "non-participating".

From time to time the Company has advanced funds to owners of certain Underlying
Properties in order to preserve the  underlying  asset  including  completion of
construction  and/or  when  Underlying  Properties  have  experienced  operating
difficulties  including past due real estate taxes and/or deferred  maintenance.
Promissory notes and/or second mortgages  typically secure such ad-



                                      -57-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


vances.  As of  December  31,  2002,  the  face  amount  of  such  advances  was
approximately  $6.2  million,  with rates  ranging from 8% to 13% and a carrying
value of $190,000  (net of purchase  accounting  adjustments).  Included in such
amounts  were  advances to obligors  which are  affiliates  of the Manager at an
aggregate face amount of approximately $5.0 million,  with rates ranging from 8%
to 10%.

2002 Transactions

Revenue Bonds and other investments acquired or made during 2002 are summarized
below:

<TABLE>


                                                                   Weighted      Weighted
                                                       Aggregate    Average      Average
                                           Face        Purchase    Construction  Permanent
                                          Amount        Price        Rate       Interest Rate
                                          ------        ---------  ------------ -------------
<S>                                     <C>           <C>            <C>        <C>


 Non-participating Revenue Bonds
   Construction/rehabilitation
      properties                        $457,059,800    $466,921,529  6.940%       6.981%

 Other Investments
   Bridge and mezzanine loans              4,375,000                    N/A        8.257%

</TABLE>


Revenue Bond and notes repaid during 2002 are summarized below:


                                     Face                     Realized
                                    Amount        Cost         Gains
                                 ------------ ------------- -------------

Participating Revenue Bonds
  Stabilized                     $81,825,000  $82,749,336    $917,326

Non-participating Revenue
  Bonds Stabilized                36,175,000   39,142,679    2,967,679

Notes
  Stabilized                       7,350,000    7,350,000           --

2001 Transactions

Revenue Bonds and other investments acquired or made during 2001 are summarized
below:

<TABLE>

                                                                     Weighted       Weighted
                                                       Aggregate      Average       Average
                                           Face        Purchase      Construction   Permanent
                                          Amount        Price          Rate        Interest Rate
                                          ------       ---------     ------------  -------------
<S>                                     <C>           <C>              <C>            <C>

 Non-participating Revenue Bonds
   Construction/rehabilitation
   properties                           $284,962,381  $291,053,618     7.900%          7.530%

 Subordinated non-participating
   Revenue Bonds                          11,000,000    11,260,970       N/A          10.000%

 Other Investments
   Bridge and mezzanine loans             13,897,017                     N/A           8.782%

</TABLE>



Revenue Bond and notes repaid and RITES terminated during 2001 are summarized
below:


                                     Face                     Realized
                                    Amount        Cost        (Losses)
                                 ------------ ------------- -------------


Participating Revenue Bonds
  Stabilized                     $17,775,000    $18,735,343    $(761,859)

Non-participating Revenue Bonds
  Stabilized                       6,255,000      6,400,979     (145,979)
  Construction/rehabilitation          5,000          8,766       (3,766)
  (RITES)

Notes
  Stabilized                       2,540,000      2,540,000           --




                                       -58-
<PAGE>

         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2001 Bond Modifications


On June 1,  2001,  the  Company  agreed  to a  modification  of the terms of the
Revenue Bond secured by the Loveridge  Apartments  Project.  The stated interest
rate was reduced from 8% to 7.5% and the call date was extended to June 1, 2004.
As of  December  31,  2002,  this bond had a  carrying  value and fair  value of
approximately $6.85 million and $9.47 million, respectively.

Bond Impairment

During the second quarter of 2001,  the borrowers of Lexington  Trails failed to
make regular interest payments. As a result, the Company determined the bond was
impaired,  and wrote down the bond to its estimated fair value of  approximately
$5.5 million and took a loss on impairment of $400,000. During 2002, the Company
took an additional write down of approximately  $920,000 on the Lexington Trails
Revenue Bond.  Subsequently,  the Company caused the trustee, for the benefit of
the  Company,  to foreclose on the  underlying  property.  Since the date of the
foreclosure,  the  Company  has  attempted  to find a buyer  for the  underlying
property. Management believes it is likely that in connection with a sale of the
underlying property, the terms of this Revenue Bond may need to be modified. The
Company has  therefore  decided to write down the carrying  value of the bond to
$4.5 million, the estimated value of the underlying property.

NOTE 3 - Investment in ARCap

On October 18, 2001, the Company,  through CM Corp.,  purchased 739,741 units of
Series A Convertible  Preferred Membership Interests in ARCap Investors,  LLC at
the price of $25.00 per unit, with a preferred return of 12.00%.

ARCap  Investors,  LLC was formed in  January,  1999 by REM/CAP  and Apollo Real
Estate Investors to invest  exclusively in subordinated  CMBS. Since then, ARCap
has changed its focus and has begun to provide portfolio management services for
third parties.

Summarized financial  information for ARCap as of December 31, 2002 and the year
then ended is as follows:

                                          ($'s in millions)
Investment securities - trading               $        799
Other assets                                            24
                                               -----------
Total assets                                  $        823
                                               ===========

Repurchase agreements and long-term debt      $        391
Other liabilities                                      207
Members' equity                                        225
                                               -----------
Total liabilities and equity                  $        823
                                               ===========

Total revenues                                $         79
Total expenses                                          48
                                               -----------
Net income                                    $         31
                                               ===========

NOTE 4 - Deferred Costs

The components of deferred costs are as follows:
                                                    December 31,
                                                    ------------
                                                 2002          2001
                                                 ----          ----


Deferred bond selection costs (1)              $ 34,810    $ 25,356


Deferred financing costs                          8,030       6,788
Deferred costs relating to the issuance
 of preferred shares of subsidiary
 (see Note 7)                                    10,445       8,377
Deferred costs relating to acquisition
 of Related                                       2,483          --
Other deferred costs                              1,376         332
                                                -------    --------
                                                 57,144      40,853
Less:  Accumulated amortization                  (8,451)     (6,187)
                                                -------     -------
                                               $ 48,693    $ 34,666
                                                =======     =======

(1)  This primarily represents the 2% bond selection fee paid to the Manager
(See Note 9).



                                       -59-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 5 - Financing Arrangements

P-FLOATS/RITES Program

To  raise  additional   capital  to  acquire  Revenue  Bonds,  the  Company  has
securitized  certain  Revenue  Bonds  through the Merrill  Lynch Pierce Fenner &
Smith Incorporated ("Merrill Lynch") P-FLOATS/RITES program. Under this program,
the Company  transfers  certain  Revenue Bonds to Merrill  Lynch.  Merrill Lynch
deposits each Revenue Bond into an  individual  special  purpose trust  together
with a credit enhancement guarantee  ("Guarantee").  Two types of securities are
then issued by each trust,  (1) Puttable  Floating  Option  Tax-Exempt  Receipts
("P-FLOATS"),  a short-term  senior  security which bears interest at a floating
rate that is reset  weekly  and (2)  Residual  Interest  Tax  Exempt  Securities
("RITES"),  a subordinate  security which receives the residual interest payment
after payment of P-FLOAT interest and ongoing transaction fees. The P-FLOATS are
sold to third  party  investors  and the  RITES are  generally  sold back to the
Company.  The Company  has the right,  with 14 days  notice to the  trustee,  to
purchase the outstanding P-FLOATS and withdraw the underlying Revenue Bonds from
the trust.  When the Revenue Bonds are  deposited  into the P-FLOAT  Trust,  the
Company  receives  the  proceeds  from the  sale of the  P-FLOATS  less  certain
transaction  costs.  In certain other cases,  Merrill Lynch may directly buy the
Revenue Bonds from local  issuers,  deposit them in the trust,  sell the P-FLOAT
security to investors and then the RITES to the Company.

For financial  reporting  purposes,  due to the  repurchase  right,  the Company
accounts for the net proceeds  received  upon the transfer of its Revenue  Bonds
through the P- P-FLOATS/RITES  program as secured  borrowings and,  accordingly,
continues  to account  for the  Revenue  Bonds as  assets.  When  Merrill  Lynch
purchases  Revenue Bonds directly and sells the RITES to the Company,  the RITES
are   included   in  other   assets   and   accounted   for  at  fair  value  as
available-for-sale debt securities.

In order to  facilitate  the  securitization,  the Company  has pledged  certain
additional Revenue Bonds as collateral for the benefit of the credit enhancer or
liquidity  provider.  At December 31, 2002,  the total  carrying  amount of such
additional  Revenue Bonds,  cash and cash equivalents and temporary  investments
pledged as collateral was approximately $180 million.

During  the year  2002,  the  Company  transferred  six  Revenue  Bonds  with an
aggregate face amount of approximately $91 million to the P-FLOATS/RITES program
and received proceeds of approximately $90.7 million.  Additionally, the Company
repurchased  eight Revenue Bonds with an aggregate  face value of  approximately
$67 million.

The Company's cost of funds relating to its secured borrowings under the Merrill
Lynch P-FLOATS/RITES  program (calculated as interest expense as a percentage of
the weighted average amount of the secured  borrowings) was approximately  2.4%,
3.7% and 5.0%,  annualized,  for the years ended  December 31, 2002 and 2001 and
2000, respectively.

Private Label Tender Option Program

The Company also utilizes its TOP to raise additional capital to acquire Revenue
Bonds.  As of December  31,  1999,  the maximum  amount of capital that could be
raised under the TOP was $400 million.  On December 7, 2000, the Company refined
the structure of the TOP for the primary  purpose of  segregating  Revenue Bonds
issued by governmental  entities in California from the remainder of the Revenue
Bonds under the TOP and to  increase  the  maximum  amount of capital  available
under the program to $500 million.

As of December 31, 2002, the Company has  contributed 83 issues of Revenue Bonds
in the  aggregate  par  amount  of  approximately  $704  million  to  CharterMac
Origination  Trust  I  (the  "Origination  Trust"),  a  wholly  owned,  indirect
subsidiary of the Company.  The  Origination  Trust then  contributed  56 of its
Revenue Bonds,  with an aggregate par amount of approximately  $505 million,  to
CharterMac Owner Trust I (the "Owner Trust") which is controlled by the Company.
The Owner Trust contributes  selected bonds to specific "Series Trusts" in order
to segregate Revenue Bonds issued by governmental  entities selected by state of
origin.  As of December  31, 2002,  four such Series  Trusts were  created:  two
California only series and two National (non-state specific) series.

Each Series  Trust  issues two equity  certificates:  (i) a Senior  Certificate,
which has been deposited into another  Delaware  business trust (a  "Certificate
Trust")  which  issued  and sold  certificates  with a  floating  interest  rate
("Floater  Certificates")  representing  proportional  interests  in the  Senior
Certificate to new investors and (ii) a Residual  Certificate  representing  the
remaining  beneficial  ownership  interest in each Series Trust,  which has been
issued to the  Origination  Trust. At December 31, 2002, the two California only
and two National  Series  Trusts had Floater  Certificates  with an  outstanding
amount of $115 million and $341.5 million, respectively.

The Revenue Bonds remaining in the Origination Trust (aggregate principal amount
of approximately  $199 million) are an additional  collateral pool for the Owner
Trust's obligations under the Senior Certificate.  In addition,  the Owner Trust
obtained  a  municipal  bond  insurance  policy  from  MBIA  to  credit  enhance
Certificate  distributions  for  the  benefit  of the  holders  of  the  Floater
Certificates  and has  also  arranged  for a  liquidity  facility,  issued  by a
consortium  of  highly  rated  European  banks,  with  respect  to  the  Floater
Certificates.  The Company owns no beneficial interest in, and does not control,
the Certificate Trusts.

The effect of the TOP  structure is that a portion of the  interest  received by
the Owner Trust on the Revenue Bonds it holds is distributed  through the Senior
Certificate  to the  holders  of the  Floater  Certificates  with  the  residual
interest  remitted  to the  Origination  Trust  (and thus to the  benefit of the
Company)  via the  Residual  Certificate.  The effect of the  December  7, 2000,
refinement of the TOP structure was to segregate the California  related Floater
Certificates  as they  generally  will pay  distributions  at lower  rates  than
National  (non-state  specific)  Floater  Certificates and thus the yield on the
Residual Certificates owned by the Origination Trust is increased.


                                      -60-

<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For financial  accounting  and  reporting  purposes,  the Owner Trust,  which is
controlled by the Company, is consolidated.  Income earned by the Owner Trust is
allocated  to the  minority  interest  in an amount  equal to the  distributions
through the Senior Certificate to the holders of the Floater Certificates.

The Company's cost of funds  relating to the TOP  (calculated  interest  expense
plus  recurring  fees as a  percentage  of the  weighted  average  amount of the
outstanding  Senior  Certificate) was approximately  2.4%, 3.5% and 5.4% for the
years ended December 31, 2002, 2001 and 2000, respectively.

The following table shows the components of the financing arrangements.

                                             Amount Financed
  Financing Arrangement         December 31, 2002      December 31, 2001
  ---------------------         -----------------      -----------------
      P-FLOATS/RITES              $215,159                 $191,796
      Private Label Tender
        Offer Program              456,500                  350,000
                                   -------                  -------
           Total                  $671,659                 $541,796
                                   =======                  =======

NOTE 6 -- Notes Payable

In  connection  with the  acquisition  of PWF,  the Company  entered into a loan
commitment (the "PWF acquisition  loan"). The PWF Acquisition Loan has a term of
five years with an interest rate of LIBOR plus 2.25%.  The loan is interest only
for the first twelve months. Beginning in January 2003 and through the remaining
loan term, quarterly straight-line principal amortization on the Initial Advance
is paid based on a ten-year amortization period.  Additionally,  after receiving
the Final Advance,  additional quarterly  straight-line  principal  amortization
payments on the Final Advance will be made based on the  remaining  years of the
amortization period for the Initial Advance.

At December 31, 2002, there was approximately  $27.3 million outstanding on this
loan,  included  in notes  payable in the  accompanying  consolidated  financial
statements.

PWF has a $100 million secured,  revolving mortgage warehouse facility,  subject
to annual renewal during  December of each year. CM Corp. is a guarantor of this
warehouse  facility.  The interest  rate for each  warehouse  advance is the Fed
Funds rate plus 1.25%,  which at December  31, 2002 was 2.48%.  At December  31,
2001 there were no outstanding  borrowings  under the facility.  At December 31,
2002, the amount  outstanding was approximately  $41.3 million.  At December 31,
2002 the Company was in compliance with all covenants of the facility.

The $100 million  facility  replaced  PWF's $50 million  multi-family  revolving
warehouse  facility,  which expired on May 31, 2002.  At December 31, 2001,  the
facility  was  temporarily   increased  to  $160  million  and  had  outstanding
borrowings  of $29.3  million at an  interest  rate of 30-day  LIBOR plus 1.00%,
which resets daily, with a LIBOR floor of 3%. At December 31, 2001, the interest
rate was 4.0%.  Borrowings under the line of credit are  collateralized by PWF's
ownership  interests in the original  mortgage  notes.  This facility was repaid
during the first quarter of 2002.

PWF was the guarantor for a $35 million loan and security  agreement for Larson,
which expired on May 31, 2002. The interest rate for the agreement was the lower
of 30 day LIBOR plus 209 basis points or the 30 day Treasury  Bill rate plus 205
basis points.  At December 31, 2001, there were no outstanding  borrowings under
the agreement.


NOTE 7 - Preferred Shares of Subsidiary

Since June 1999,  the Company,  through a  consolidated  subsidiary,  has issued
multiple series of "Cumulative Preferred Shares".


<TABLE>

                                                          Liquidation
Preferred     Date of  Mandatory    Mandatory   Number     Preference   Total Face  Dividend
Series       Issuance   Tender     Repurchase  of Shares    per Share     Amount      Rate
------       --------   ------     ----------  ---------    ---------     ------      ----
<S>          <C>        <C>        <C>         <C>         <C>          <C>          <C>

Series A      6/29/99   6/30/09      6/30/49      45     $2,000,000   $90,000,000     6.625%
Series A-1    7/21/00   6/30/09      6/30/49      48        500,000    24,000,000     7.100%
Series A-2    10/9/01   6/30/09      6/30/49      62        500,000    31,000,000     6.300%
Series A-3     6/4/02  10/31/14     10/31/52      60        500,000    30,000,000     6.800%
Series B      7/21/00  11/30/10     11/30/50     110        500,000    55,000,000     7.600%
Series B-1    10/9/01  11/30/10     11/30/50      37        500,000    18,500,000     6.800%
Series B-2     6/4/02  10/31/14     10/31/52      50        500,000    25,000,000     7.200%

</TABLE>

In  connection  with the offerings of these  Cumulative  Preferred  Shares,  the
Company caused 100% of the ownership of the Origination  Trust to be transferred
to CharterMac Equity Issuer Trust (the "Issuer"),  a Delaware business trust and
an  indirectly-owned  subsidiary  in which the  Company  owns 100% of the common
equity. The Issuer then issues the Cumulative Preferred Shares and, as a result,
the Issuer became the direct and indirect owner of the entire  outstanding issue
of  Revenue  Bonds  held  by the  Origination  Trust  and  Owner  Trust  and its
directly-owned  and  indirectly-owned  subsidiaries  (see  discussion of Private
Label Tender Option


                                      -61-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Program,  above).  In addition to contributing  the ownership of the Origination
Trust,  the Company also  contributed  certain  additional  Revenue Bonds to the
Issuer.

Each series of  Cumulative  Preferred  Shares has an annual  preferred  dividend
payable quarterly in arrears upon declaration  thereof by the Board of Trustees,
but only to the extent of tax-exempt net income for the particular quarter.  All
series of Cumulative  Preferred Company's Shares are subject to mandatory tender
by the  holders  thereof  for  remarketing  and  purchase  on  their  respective
mandatory  tender dates and each remarketing date thereafter at their respective
liquidation  preference  per  share  plus an amount  equal to all  distributions
accrued but unpaid.

Holders of  Cumulative  Preferred  Shares may elect to retain  their shares upon
remarketing,  with a distribution rate to be determined immediately prior to the
remarketing date by the remarketing  agent. Each holder of Cumulative  Preferred
Shares  will be  required  to tender  its  shares to the  Issuer  for  mandatory
repurchase  on the  mandatory  repurchase  date,  unless the Company  decides to
remarket  the  shares  on  such  date.   Cumulative  Preferred  Shares  are  not
convertible into Common Shares of the Company.

The Series A, A-1, A-2 and A-3 Cumulative Preferred Shares rank, with respect to
payment of distributions and amounts upon liquidation, dissolution or winding-up
of the  Company,  senior to all  classes or series of  Convertible  CRA  Shares,
Series B, B-1 and B-2  Cumulative  Preferred  Shares and Common Shares of the of
the Company.  The Series B, B-1 and B-2 Subordinate  Cumulative Preferred Shares
rank,  with respect to payment of  distributions  and amounts upon  liquidation,
dissolution or winding-up of the Company,  senior to the Company's Common Shares
and the Company's  Convertible  CRA Shares and junior to the Issuer's  Series A,
A-1, A-2 and A-3 Cumulative Preferred Shares.

Since issuance of the Cumulative  Preferred Shares, all quarterly  distributions
have been declared at each stated  annualized  dividend rate for each respective
series and all distributions due have been paid.

For financial accounting and reporting purposes, Cumulative Preferred Shares are
classified as "Preferred shares of subsidiary (subject to mandatory repurchase)"
in the accompanying consolidated balance sheets. Net income earned by the Issuer
and its two  subsidiaries  is allocated to the holders of  Cumulative  Preferred
Shares in an amount equal to the distributions to such holders.  Such allocation
of income is  classified  as "Income  allocated  to  preferred  shareholders  of
subsidiary" in the accompanying consolidated statements of income.

NOTE 8 - Income Taxes

The income tax  provision  at December  31,  2002,  consisted  of the  following
components:

                                                               2002
                                                               ----
                    Current:
                     Federal                                $  1,303
                     State and Local                             520
                                                             -------
                    Total current                           $  1,823

                    Deferred                                    (539)
                                                             -------
                    Total provision for income taxes        $  1,284
                                                             =======

Until  December  30,  2001,  PWF elected for both  Federal and state  income tax
purposes  to be  treated  as an S  corporation.  As an S  corporation,  the  net
earnings of PWF were taxed directly to its stockholders rather than PWF.

Deferred  income tax assets and  liabilities  are  computed  based on  temporary
differences  between the financial  statement and income tax bases of assets and
liabilities that existed at December 31, 2002.

The Company's effective tax rate is 45.8%, due to State income taxes, net of the
Federal benefit.

The components of the deferred tax (asset), liability are as follows:

                                                             2002        2001
                                                             ----        ----
                    Allowance for loan loss reserves     $    (752)   $  (1,363)
                    Originated mortgage service rights      12,314       11,614
                    Deferred guarantee fees                 (1,456)          --
                    Deferred construction service fees      (1,477)      (1,302)
                    Other Deferred costs                     2,161        1,165
                    Valuation Allowance                         --          137
                                                          --------     --------
                                                         $  10,790    $  10,251
                                                          ========     ========


NOTE 9 - Convertible Community Reinvestment Act Preferred Share Offerings

On May 10, 2000,  the Company  completed a private  placement  of  approximately
$26.4  million,  net  of  underwriters   discount,   of  Convertible   Community
Reinvestment Act Preferred Shares  ("Convertible CRA Shares") to three financial
institutions  (1,946,000  Convertible CRA Shares priced at $14.13 per share). On
December  14,  2000,  the Company  completed an  additional  $9,100,000  pri-


                                      -62-
<PAGE>

         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


vate placement of approximately $8.7 million, net of underwriters  discount,  of
Convertible  CRA  Shares to three  additional  financial  institutions  (644,000
Convertible CRA Shares priced at $14.13 per share). On May 24, 2001, the Company
bought back 707,636  Convertible CRA Shares,  issued May 10, 2000, at $12.70 per
share for a total purchase price of approximately  $9.0 million.  As of December
31, 2002, the Company had outstanding,  3,835,002  Convertible CRA Shares, which
are convertible at the holders option into 3,717,301 Common Shares.

During July and November 2002, the Company issued  approximately 1.4 million and
576,000 Series A Convertible CRA Shares, respectively. The shares were priced at
$17.43 and $17.37  respectively,  raising net proceeds for the two  issuances of
approximately $32.5 million.  These Series A CRA Shares are convertible on a one
to one basis.  As of December 31, 2002,  there were  3,835,002  Convertible  CRA
Shares  outstanding,  which are convertible at the holders option into 3,717,301
Common Shares.

The  Convertible  CRA Shares enable  financial  institutions  to receive certain
regulatory  benefits  in  connection  with their  investment.  The  Company  has
developed  a  proprietary  method  for  specially  allocating  these  regulatory
benefits to specific  financial  institutions that invest in the Convertible CRA
Shares.  Other  than  the  preferred  allocation  of  regulatory  benefits,  the
preferred investors receive the same economic benefits as Common Shareholders of
the Company,  including receipt of the same dividends per share as those paid to
Common Shareholders. The Convertible CRA Shares have no voting rights, except on
matters  relating to the terms of the Convertible CRA Shares or to amendments to
the Company's Trust  Agreement which would adversely  affect the Convertible CRA
Shares.  The  Company's  earnings are allocated pro rata among the Common Shares
and the  Convertible  CRA Shares,  and the Convertible CRA Shares rank on parity
with the Common Shares with respect to rights upon  liquidation,  dissolution or
winding up of the Company.

The investors,  at their option,  have the ability to convert their  Convertible
CRA  Shares  into  Common  Shares  at a  predetermined  conversion  price.  Upon
conversion,  the investors will no longer be entitled to a special allocation of
the regulatory benefit. The conversion price is the greater of (i) the Company's
book value per Common Share as set forth in the Company's  most recently  issued
annual  or  quarterly  report  filed  with  the  SEC  prior  to  the  respective
Convertible  CRA  Share  issuance  date or (ii) 110% of the  closing  price of a
Common  Share on the  respective  Convertible  CRA  Share's  pricing  date.  The
conversion  price for each  Convertible  CRA Share  offering is indicated on the
following table:

               Issuance Date    Conversion Price       Conversion Ratio
               -------------    ----------------       ----------------

               May 10, 2000          $15.33                  0.9217
               December 14, 2000     $14.60                  0.9678
               July 15, 2002          --                     1.0000
               November 21, 2002      --                     1.0000

NOTE 10 - Related Parties

The Manager is entitled to  subcontract  its  obligations  under the  Management
Agreements to an affiliate.  In accordance  with the foregoing,  the Manager has
assigned its rights and obligations to Related.

Pursuant to the terms of the  Management  Agreement,  the Manager is entitled to
receive the fees and other compensation set forth below:

Fees/Compensation*                  Amount
------------------                  ------
Bond Selection  Fee                 2.00%  of the  face  amount  of  each  asset
                                    invested in or acquired by CharterMac or its
                                    subsidiaries.
Special Distributions/Investment
Management Fee                      0.375%  per  annum  of  the  total  invested
                                    assets of CharterMac or its subsidiaries.
Loan  Servicing Fee                 0.25%  per  annum  based on the  outstanding
                                    face  amount  of  revenue  bonds  and  other
                                    investments   owned  by  CharterMac  or  its
                                    subsidiaries.
Operating Expense Reimbursement     For direct expenses  incurred by the Manager
                                    in an  amount  not to  exceed  $778,622  per
                                    annum   (subject   to   increase   based  on
                                    increases    in    CharterMac's    and   its
                                    subsidiaries' assets and to annual increases
                                    based upon  increases in the Consumer  Price
                                    Index).
Incentive Share Options             The Manager  may receive  options to acquire
                                    additional  Common  Shares  pursuant  to the
                                    Share  Option  Plan  only  if   CharterMac's
                                    distributions in any year exceed $0.9517 per
                                    Common Share and the Compensation  Committee
                                    of the Board of Trustees determines to grant
                                    such options.
Liquidation Fee                     1.50% of the gross sales price of the assets
                                    sold  by  CharterMac  in  connection  with a
                                    liquidation of CharterMac  assets supervised
                                    by the Manager.

* The Manager is also  permitted to earn  miscellaneous  compensation  which may
include,  without  limitation,  construction  fees,  escrow  interest,  property
management fees, leasing  commissions and insurance  brokerage fees. The payment
of any such  compensation is generally  limited to the competitive  rate for the
services  being  performed.  A bond  placement  fee of 1.0% to 1.5% of the  face
amount of each asset  invested in or acquired by CharterMac or its  subsidiaries
is  payable  to the  Manager  by the  borrower,  and  not by  CharterMac  or its
subsidiaries.



                                      -63-
<PAGE>

         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Affiliates of the Manager may provide certain financial guarantees to facilitate
leveraging  by  CharterMac,  for which they could be paid market  rate fees.  In
addition,  affiliates of the Manager may provide certain financial guarantees to
the owner (or  partners of the  owners) of the  underlying  properties  securing
CharterMac's revenue bonds, for which they could be paid market rate fees.

The  terms of each of the  management  agreements  is one year.  The  management
agreements  may be renewed,  subject to  evaluation  of the  performance  of the
Manager by CharterMac's Board of Trustees. Both agreements may be terminated (i)
without  cause by the Manager;  or (ii) for cause by a majority of  CharterMac's
Board of  Trustees,  in each case  without  penalty  and each upon 60 days prior
written notice to the non-terminating party.

The costs,  expenses and the special  distributions  incurred to the Manager and
its  affiliates  for the years ended  December 31,  2002,  2001 and 2000 were as
follows:

                                     Year Ended December 31,
                                 --------------------------------
                               2002         2001          2000
                               ----         ----          ----

Bond selection fees        $ 11,104     $  7,853      $  5,996
Special distribution/
  Investment Management
  fee                         4,872        3,621         2,743
Bond servicing fees           3,792        2,535         1,956
Expense reimbursement           768          556           432
                           --------     --------      --------
                          $  20,536    $  14,565     $  11,127
                           ========     ========      ========

In December 2001, the Company  completed a credit  enhancement  transaction with
Merrill  Lynch  Capital  Services,  Inc.  ("MLCS")  pursuant  to  which CM Corp.
initially will receive an annual fee of approximately $1.2 million in return for
assuming  MLCS's $46.9 million  first loss position on a $351.9  million pool of
tax-exempt  weekly  variable  rate  multi-family  mortgage  loans  originated by
CreditRe Mortgage  Capital,  LLC, an affiliate of Credit Suisse First Boston and
the Related Companies,  L.P. The Related  Companies,  L.P. has provided CM Corp.
with an indemnity  covering  50% of any losses that are incurred by CM Corp.  as
part of this transaction.

As of December 31, 2002,  the obligors of certain  Revenue Bonds (see footnote M
to table in Note 2) are local  partnerships  in which  investment  partnerships,
whose  general  partners  are  affiliates  of  the  Manager,  own a  controlling
partnership  interest.  With  respect  to one of the above  Revenue  Bonds,  the
Company  owns the RITES  (see  Note 5).  These  affiliate  entities  could  have
interests that do not coincide with, and may be adverse to, the interests of the
Company.  Negotiations,  if any, with respect to  modifications of Revenue Bonds
between the Company and  obligors  who are  affiliates  may be affected by these
conflicts as the Manager  determines  the  appropriate  terms and  conditions of
modifications or otherwise opts for some other remedy including foreclosure.

As of December 31, 2002, the owner of the Underlying Property and obligor of the
Highpointe  Revenue  Bond was an  affiliate  of the  Manager who has not made an
equity investment.  This entity has assumed the day-to-day  responsibilities and
obligations of the Underlying  Property.  Buyers are being sought who would make
equity  investments  in the  Underlying  Property  and  assume  the  nonrecourse
obligations for the Revenue Bond or otherwise buy the property and payoff all or
most of the Revenue Bond obligation.

On April 11, 2000, Related entered into an agreement to purchase $500,000 of the
outstanding  face  amount of the  Walnut  Park  bonds,  in  $100,000  increments
annually beginning April 1, 2001.  Related Capital Company has agreed,  pursuant
to an Intercreditor Agreement,  that its right to payment on the purchased bonds
is subordinate to the right to payment on the bonds held by the Company.

On July 18,  2002,  the Company  entered into two  agreements  with an unrelated
third party (the "Primary  Guarantor") to guarantee an agreed-upon internal rate
of return ("IRR") for a pool of 11  multi-family  properties  owned by RCGCP for
which the Company will receive two guarantee  fees totaling  approximately  $5.9
million.

In connection with the transaction,  the Company posted $18.2 million of Revenue
Bonds  as  collateral  to the  Primary  Guarantor,  which  will  be  reduced  to
approximately  $1.4  million  over a period of up to 20 years as the  properties
reach  certain  operating  benchmarks.   In  addition,  the  Company  agreed  to
subordinate  25% of each of the  bonds  it  acquired  that  are  secured  by the
properties and to not use the  subordinated  portion of such bonds as collateral
in connection with any borrowings.

To mitigate risk, the Company is the  beneficiary of a guarantee  against losses
associated  with  construction  and  operating  stabilization  for  each  of the
properties  in RCGCP,  which is capped at $15 million.  The  guarantee  has been
provided by TRCLP.  If the Company's  acquisition of Related is completed,  then
this guarantee will no longer be in force. As of December 31, 2001,  TRCLP had a
GAAP  net  worth  of   approximately   $179.3  million  with  liquid  assets  of
approximately  $54.9  million.  In  addition,  the  developers  of  each  of the
properties  have also been required to give recourse  completion,  stabilization
and  operating  deficit  guarantees.  TRCLP has also  agreed,  if needed,  after
construction completion and property stabilization, to fund up to the first $2.5
million of  operating  deficits  of the  underlying  properties  or any  amounts
required to pay the guaranteed IRR to the investor.


                                      -64-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - ATEBT Merger

On November 2, 1999,  the Company and ATEBT,  whose  manager was an affiliate of
the  Manager  of the  Company,  entered  into an  Agreement  and Plan of  Merger
providing  for the  merger of ATEBT into and with the  Company as the  surviving
trust in the merger (the "ATEBT  Merger").  The ATEBT Merger was approved by the
ATEBT shareholders on September 27, 2000 and consummated on November 14, 2000.

On the ATEBT Merger  consummation  date, ATEBT had total assets of approximately
$29,700,000 and net assets of approximately $28,300,000.  ATEBT had four Revenue
Bonds financing  properties in four states,  with an aggregate  outstanding face
amount of $23,775,000, and with individual interest rates of 9.0%.

Pursuant to the Merger  Agreement,  each share of beneficial  ownership in ATEBT
issued and  outstanding was converted into 1.43112 Common Shares of the Company.
Following the ATEBT Merger,  previous ATEBT  shareholders  own 2,115,722  Common
Shares  (representing  approximately 9.3% of the then outstanding Common Shares)
of the Company.

The  ATEBT  Merger  was  accounted  for as a  purchase,  with  the  value of the
Company's  Common Shares issued,  plus  transaction  costs  allocated to the net
assets acquired, based on their relative fair values. The excess of the purchase
price over the fair value of the net assets acquired,  $1,482,986,  was recorded
as goodwill.  Interest income on the acquired Revenue Bonds is recorded from the
acquisition date.

NOTE 12 - Earnings Per Share, Profit and Loss Allocations and Distributions

Pursuant to the Company's Trust Agreement and the Management  Agreement with the
Manager, the Manager is entitled,  in its capacity as the general partner of the
Company,  to a special  distribution  equal to .375% per annum of the  Company's
total  invested  assets  (which  equals the face amount of the Revenue Bonds and
other   investments),   payable   quarterly.   After   payment  of  the  special
distribution,  distributions  are made to the  shareholders  in accordance  with
their percentage interests.

Income is  allocated  first to the  Manager  in an amount  equal to the  special
distribution. The net remaining profits or losses, after a special allocation of
..1% to the Manager,  are then allocated to shareholders in accordance with their
percentage interests.

Net income per share is computed in accordance  with SFAS No. 128,  Earnings Per
Share.  Basic income per share is  calculated  by dividing  income  allocated to
Common and Convertible  CRA  Shareholders  ("Shareholders")  (See Note 9) by the
weighted average number of Common and Convertible CRA Shares  outstanding during
the period.  The Convertible CRA shareholders are included in the calculation of
shares   outstanding  as  they  share  the  same  economic  benefits  as  Common
Shareholders,  including  receipt  of the same  dividends  per  share as  Common
Shareholders.  Diluted income per share is calculated using the weighted average
number of shares  outstanding  during the period  plus the  additional  dilutive
effect of common stock  equivalents.  The dilutive  effect of outstanding  stock
options is calculated using the treasury stock method.  Because each Convertible
CRA Share is convertible  into one or less than one common share,  the potential
conversion would be antidilutive.



                                      -65-

<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>

                                                     For the Year Ended December 31, 2002
                                                     ------------------------------------
                                                     Income        Shares*      Per Share
                                                    Numerator    Denominator      Amount
                                                    ---------    -----------    --------
<S>                                                 <C>          <C>            <C>
Net income  allocable to  shareholders
 (Basic EPS)                                       $  55,905     42,697,195     $  1.31
                                                                                 ======
Effect  of  Dilutive  securities-223,509
 stock options                                            --         70,944
                                                    --------     ----------
Diluted net income  allocable to  shareholders
 (Diluted EPS)                                     $  55,905     42,768,139     $  1.31
                                                    ========     ==========      ======
</TABLE>

<TABLE>
                                                     For the Year Ended December 31, 2001
                                                     ------------------------------------
                                                     Income        Shares*      Per Share
                                                    Numerator    Denominator      Amount
                                                    ---------    -----------    ---------
<S>                                                 <C>          <C>            <C>
Net income  allocable to  shareholders
 (Basic EPS)                                       $  35,010     30,782,161     $  1.14
                                                                                 ======
Effect  of  Dilutive  securities-228,262
 stock options                                            --         55,179
                                                    --------     ----------
Diluted net income  allocable to  shareholders
 (Diluted EPS)                                     $  35,010     30,837,340     $  1.14
                                                    ========     ==========      ======
</TABLE>

<TABLE>
                                                     For the Year Ended December 31, 2000
                                                     ------------------------------------
                                                     Income        Shares       Per Share
                                                    Numerator    Denominator      Amount
                                                    ---------    -----------    ---------
<S>                                                 <C>          <C>            <C>
Net income  allocable to  shareholders
 (Basic EPS)                                       $  27,074     22,140,596     $  1.22
                                                                                 ======
Effect  of  Dilutive   securities-297,830
 stock options                                            --         11,663
                                                    --------     ----------
Diluted net income allocable to shareholders       $  27,074     22,152,259     $  1.22
 (Diluted EPS)                                      ========     ==========      ======

</TABLE>

*includes Convertible CRA Shares


NOTE 13 - Capital Stock and Share Option Plan

The Company has adopted an  incentive  share option plan (the  "Incentive  Share
Option  Plan"),  the  purpose of which is to (i)  attract  and retain  qualified
persons as trustees and officers and (ii) to provide  incentive and more closely
align the financial interests of the Manager and its employees and officers with
the  interests of the  shareholders  by providing  the Manager with  substantial
financial interest in the Company's success.  The Compensation  Committee of the
Company's  Board of  Trustees  administers  the  Incentive  Share  Option  Plan.
Pursuant to the Incentive Share Option Plan, if the Company's  distributions per
Common  Share in the  immediately  preceding  calendar  year exceed  $0.9517 per
Common Share, the  Compensation  Committee has the authority to issue options to
purchase, in the aggregate, that number of Common Shares which is equal to three
percent of the shares  (including  Common  Shares and  Convertible  CRA  Shares)
outstanding  as of  December  31 of the  immediately  preceding  calendar  year,
provided  that the  Compensation  Committee  may only issue,  in the  aggregate,
options  to  purchase  a maximum  number of Common  Shares  over the life of the
Incentive  Shares Option Plan equal to 10% of the Common Shares  outstanding  on
October 1, 1997 (2,058,748 Common Shares).

Subject  to  the  limitations  described  in  the  preceding  paragraph,  if the
Compensation Committee does not grant the maximum number of options in any year,
then the excess of the number of  authorized  options over the number of options
granted  in such year will be added to the number of  authorized  options in the
next  succeeding  year  and will be  available  for  grant  by the  Compensation
Committee in such succeeding year.

All options granted by the  Compensation  Committee have an exercise price equal
to or greater than the fair market value of the Common Shares on the date of the
grant.  The maximum option term is ten years from the date of grant.  All Common
Share  options  granted  pursuant to the  Incentive  Share  Option Plan may vest
immediately  upon  issuance  or in  accordance  with  the  determination  of the
Compensation Committee. Since 1999, the Company has made distributions in excess
of $0.9517,  thus allowing the  Compensation  Committee to issue options.  Three
percent of the Common Shares  outstanding as of December 31, 2001, 2000 and 1999
is equal to a maximum  option grant of 1,234,807,  1,044,777 and 680,950  Common
Shares, respectively.  The 10% cap has been reached, therefore 2,058,748 options
are available to be issued.

On May 1, 2000,  options to  purchase  297,830  Common  Shares  were  granted to
officers of the Company and certain  employees  of an  affiliate of the Manager,
none of who are employees of the Company. The exercise price of these options is
$11.5625  per share.  The term of each option is ten years.  The options vest in
equal  installments  on May 1, 2001,  2002 and 2003. The Company has adopted the
provisions of SFAS No. 123,  "Accounting for Stock-Based  Compensation"  for its
share options issued to non-employees. Accordingly, compensation cost is accrued
based on the estimated fair value of the options issued,  and amortized over the
vesting period.  Because vesting of the options is contingent upon the recipient
continuing  to provide  services to the  Company  until the  vesting  date,  the
Company estimates the fair value of the non-employee  options at each period-end
up to the vesting date, and adjusts expensed amounts accordingly. The fair value
of each option grant is estimated using the Black-Scholes  option-pricing model.
The options  granted on May 1, 2000 had an estimated  fair value at December 31,
2002,  2001  and 2000 of  $681,038,  $445,752  and


                                      -66-

<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



$268,047,  respectively.  At December 31, 2002,  the fair value,  was calculated
using the Black-Scholes model, used the following assumptions: dividend yield of
7.37%,  estimated  volatility of 20%, swap rate of 3.788% and expected  lives of
7.4 years. On May 1, 2001, one-third, or 99,276, of the options vested, of which
69,568 were exercised.  On May 1, 2002 an additional  99,276 options vested,  of
which 4,753 were exercised,  leaving a balance of 223,509.  The Company recorded
compensation  cost of $379,206,  $168,936  and  $109,952  during the years ended
December 31, 2002, 2001 and 2000, respectively, relating to these option grants.

During the quarter ended  September 30, 2002,  the Company issued 40,000 options
at a strike price of $17.56. These options vest equally, in thirds, in September
2003, 2004 and 2005 and expire in 10 years.  These options were antidilutive for
the three and twelve  months ended  December  31,  2002,  so were not taken into
account in the calculation of diluted shares. At December 31,2002, these options
had a fair value of $33,600 based on the Black-Scholes  pricing model,  using he
following  assumptions:  dividend yield of 7.37%,  estimated  volatility of 20%,
swap  rate of 4.22%  and  expected  lives of 9.7  years.  The  Company  recorded
compensation  cost of $3,222 for the year ended  December 31, 2002,  relating to
these options.

The following table shows the number of options outstanding  granted,  exercised
and exercisable and the exercise price of those options.

<TABLE>


                                                     Year Ended December 31,
                                  --------------------------------------------------------------
                                     2002                  2001                  2000
                               -------------------  -------------------  ---------------------

                                         Weighted             Weighted             Weighted
                                         Average              Average               Average
                                         Exercise             Exercise             Exercise
                               Options    Price     Options    Price     Options     Price
                              ---------- --------- ---------- --------- ---------- ----------
<S>                           <C>        <C>       <C>        <C>       <C>        <C>

Options outstanding at
 beginning of year              228,262  $11.5625    297,830  $11.5625         --   $     --

Options granted during the
 year                            40,000   $ 17.56         --    $   --    297,830   $11.5625

Options exercised during          4,753  $11.5625     69,568  $11.5625              $     --
 the year                     ---------            ---------            ---------

Options outstanding at end      263,509  $11.5625    228,262  $11.5625    297,830   $     --
 of year                      =========            =========            =========

Options exercisable at end      124,231  $11.5625     29,708  $11.5625         --   $     --
 of year

Weighted-average fair value
 of options granted during
 the year                                 $33,600               $  --               $268,047

</TABLE>

The following table summarizes  information  about stock options  outstanding at
December 31, 2002.


<TABLE>
<CAPTION>

                       Options Outstanding                           Options Exercisable
------------------------------------------------------------------ -----------------------------
                      Number      Weighted-Average   Weighted        Number        Weighted
                   Outstanding      Remaining        Average       Exercisable     Average
    Exercise           at         Contractual        Exercise          at          Exercise
     Prices         12/31/02          Life            Price         12/31/02         Price
  -------------- --------------- --------------- --------------- --------------- -------------
  <S>            <C>             <C>             <C>             <C>             <C>
     $11.5625      223,509            7.4           $11.5625       124,231        $11.5625
     $17.56         40,000            9.7           $17.56              --          $   --

</TABLE>


Other

Two of the  Company's  independent  trustees  are  entitled  to  receive  annual
compensation  for serving as trustees in the aggregate amount of $17,500 payable
in cash  (maximum of $7,500 per year) and/or  Common Shares valued at their fair
market value on the date of issuance.  The third independent trustee is entitled
to receive annual  compensation  in the aggregate  amount of $30,000  payable in
cash (maximum of $20,000 per year) and/or Common Shares. As of December 31, 2002
and 2001, 1,830 and 2,001 Common Shares, respectively, having an aggregate value
on the date of issuance  of $30,000  each year,  were issued to the  independent
trustees as compensation  for services  rendered during the years ended December
31, 2001 and 2000. The independent  trustees also received an aggregate of 5,535
shares, worth $97,500 at the time of issuance,  as payment for their work on the
special committee  analyzing the proposed  acquisition of Related. An additional
1,728 shares, with an aggregate value of $30,000 at issuance, were issued to the
independent trustees in January 2003 as compensation for their 2002 services.

Effective  May 3, 2000,  the Company  implemented  a dividend  reinvestment  and
Common Share purchase plan (the "Plan"). Under the Plan, Common Shareholders may
elect to have their distributions from the Company  automatically  reinvested in
additional  Common  Shares at a purchase  price equal to the average of the high
and low market price from the previous  day's trading.  If a Common  Shareholder
participates in the Plan, such shareholder may also purchase  additional  Common
Shares through quarterly voluntary cash payments with a minimum  contribution of
$500.  There are no  commissions  for Common  Shares  purchased  under


                                      -67-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



the Plan.  Participation  in the Plan is voluntary and a Common  Shareholder may
join or withdraw at any time.  The  opportunity  for  participation  in the Plan
began with the distributions paid in August 2000.

The Board of  Trustees  has  authorized  the  implementation  of a Common  Share
repurchase  plan,  enabling the Company to repurchase,  from time to time, up to
1,500,000 of its Common Shares.  The repurchases will be made in the open market
and the  timing is  dependant  on the  availability  of Common  Shares and other
market  conditions.  As of both  December  31,  2002 and 2001,  the  Company had
acquired 8,400 of its Common Shares for an aggregate  purchase price of $103,359
(including  commissions  and service  charges).  Repurchased  Common  Shares are
accounted for as treasury shares of beneficial interest.


                                      -68-


<PAGE>



         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (Dollars in thousands)





NOTE 14 - Selected Quarterly Financial Data (unaudited)

<TABLE>


                                                    (Dollars in thousands)
                                                         (Unaudited)

                                                      2002 Quarter Ended
                                    --------------------------------------------------------
                                      March 31      June 30     September 30     December 31
                                    ------------   ---------   --------------   -------------
<S>                                 <C>            <C>         <C>              <C>

Revenues:
 Interest income:
  Revenue bonds                    $   22,920      $  22,025    $  22,819       $  24,917
  Temporary investments                   220            575          303             195
  Promissory notes                        163            160          166             220
 Mortgage banking fess                  1,656          1,394          594           2,066
 Mortgage servicing fees                1,853          2,009        2,050           2,059
 Other income                           1,991          1,897        2,152           2,009
                                   ----------      ---------     --------        --------
  Total revenues                       28,803         28,060       28,084          31,466
                                   ----------      ---------     --------        --------

Expenses:
 Interest expense                       3,991          3,014        3,850           4,968
 Recurring fees relating
  to the Private Label
  Tender Option Program                   727            751          811             892
 Bond servicing                           766            878          875           1,011
 General and Administrative             5,599          5,953        4,166           5,258
 Depreciation and amortization          2,240          1,760        2,024           2,867
 Loss on impairment of assets              --             --          532             388
                                   ----------      ---------     --------        --------
  Total expenses                       13,323         12,356       12,258          15,384
                                   ----------      ---------     --------        --------

Income before gain (loss) on
 repayment of Revenue Bonds,
 gain on sale of loans and
 equity in earnings of ARCap           15,480         15,704       15,826          16,082

Equity in earnings of ARCap               547            563          555             554
Gain on sale of loans                   3,287          3,119        1,465           2,812
Gain (loss) on repayment of
 Revenue Bonds                          3,757            222           --             (94)
                                   ----------      ---------     --------        --------

Income before allocation to
 preferred shareholders of
 subsidiary and minority interest      23,071         19,608       17,846          19,354

Income allocated to preferred
 shareholders of subsidiary            (3,764)        (4,053)      (4,724)         (4,725)

Income allocated to minority
 interest                                (302)            49         (124)           (119)
                                   ----------      ---------     --------        --------

Income before (provision)
 benefit for income taxes              19,005         15,604       12,998          14,510

(Provision) benefit for
 income taxes                            (181)        (1,457)         656            (302)
                                   ----------      ---------     --------        --------

  Net income                       $   18,824      $  14,147     $ 13,654       $  14,208
                                   ==========      =========     ========        ========

Allocation of net income to:
 Special distribution
 to Manager                        $    1,088      $   1,240     $  1,294       $   1,250
                                   ==========      =========     ========        ========
 Manager                           $       18      $      13     $     12       $      13
                                   ==========      =========     ========        ========
 Common shareholders               $   16,866      $  12,350     $ 11,439       $  11,861
 Convertible CRA
   shareholders                           852            544          909           1,084
                                   ----------      ---------     --------        --------
  Total shareholders               $   17,718      $  12,894     $ 12,348       $  12,945
                                   ==========      =========     ========        ========

Net income per share:
 Basic                             $     0.45      $    0.30     $   0.28       $    0.29
                                   ==========      =========     ========        ========
 Diluted                           $     0.45      $    0.30     $   0.28       $    0.29
                                   ==========      =========     ========        ========

Weighted average shares
 outstanding:
 Basic                             38,781,464     43,035,102   44,209,982      44,676,079
                                   ==========     ==========   ==========      ==========
 Diluted                           38,845,985     43,107,175   44,282,733      44,752,197
                                   ==========     ==========   ==========      ==========

</TABLE>

                                      -69-

<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (Dollars in thousands)


<TABLE>


                                                    (Dollars in thousands)
                                                         (Unaudited)

                                                      2001 Quarter Ended
                                    --------------------------------------------------------
                                      March 31      June 30     September 30     December 31
                                    ------------   ---------   --------------   -------------
<S>                                 <C>            <C>         <C>              <C>

Revenues:
 Interest income:
  Revenue Bonds                     $  16,341      $  16,360    $  18,819       $   19,980
  Temporary investments                   224            391          270              394
  Promissory notes                        257            233          168              526
Other income                               35            507           50               70
                                     --------       --------     --------        ---------
  Total revenues                       16,857         17,491        19,307          20,970
                                     --------       --------     --------        ---------

Expenses:
 Interest expense                       3,414          3,890        3,010            3,327
 Recurring fees relating
  to the Private
  Label Tender Option Program             564            570          623              734
 Bond servicing                           542            595          618              699
 General and Administrative               742            730          523              760
 Depreciation and amortization            199            202          222              242
 Loss on impairment of assets              --            400           --               --
                                     --------       --------     --------        ---------
  Total Expenses                        5,461          6,387        4,996            5,762
                                     --------       --------     --------        ---------

Income before gain (loss) on
 repayment of Revenue Bonds
 and equity in earnings of ARCap       11,396         11,104       14,311           15,208

Equity in earnings of ARCap                --             --           --              456

Gain (loss) on repayment
 of Revenue Bonds                         102             --           --           (1,014)
                                     --------       --------     --------        ---------

Income before allocation to
 preferred shareholders of
 subsidiary                            11,498         11,104       14,311           14,650

Income allocated to preferred
 shareholders of subsidiary            (2,962)        (2,962)      (2,962)          (3,692)
                                     --------       --------     --------        ---------

 Net Income                         $   8,536      $   8,142    $  11,349       $   10,958
                                     ========       ========     ========        =========

Allocation of income to:
 Special distribution
   to manager                         $   828      $     866    $     899       $    1,028
                                     ========       ========     ========        =========
 Manager                            $      77      $      73    $     105       $      100
                                     ========       ========     ========        =========
 Common shareholders                $   6,850      $   6,548    $  10,166       $    8,994
 Convertible CRA shareholders             781            655          180              836
                                     --------       --------     --------        ---------
  Total shareholders                $   7,631      $   7,203    $  10,346       $    9,830
                                     ========       ========     ========        =========

Net income per share:
 Basic                              $    0.30      $    0.24    $    0.31       $     0.28
                                     ========       ========     ========        =========
 Diluted                            $    0.30      $    0.24    $    0.31       $     0.28
                                     ========       ========     ========        =========

Weighted average shares outstanding
 Basic                             25,289,651     29,607,203   32,986,483       35,113,134
                                   ==========     ==========   ==========       ==========
 Diluted                           25,350,314     29,664,418   33,038,075       35,174,365
                                   ==========     ==========   ==========       ==========

</TABLE>


NOTE 15 - Commitments and Contingencies

PW Funding Inc.

Through PWF, the Company originates and services  multifamily mortgage loans for
Fannie Mae,  Freddie Mac and FHA.  PWF and its  subsidiaries'  mortgage  lending
business is subject to various governmental and  quasi-governmental  regulation.
PWF and/or its subsidiaries,  collectively,  are licensed or approved to service
and/or  originate and sell loans under Fannie Mae,  Freddie Mac,  Ginnie Mae and
FHA  programs.  FHA and Ginnie Mae are  agencies of the Federal  government  and
Fannie Mae and Freddie Mac are federally-chartered  investor-owned corporations.
These agencies  require PWF and its  subsidiaries  to meet minimum net worth and
capital requirements and to comply with other requirements.  Mortgage loans made
under  these  programs  are  also  required  to meet the  requirements  of these
programs. In addition,  under Fannie Mae's DUS program, PWF has the authority to
originate loans without a prior review by Fannie Mae and is required to share in
the losses on loans originated under this program.



                                      -70-

<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The DUS program is Fannie Mae's principal loan program. Under the Fannie Mae DUS
Product Line, the Company originates, underwrites and services mortgage loans on
multifamily  residential  properties  and sells the  project  loans  directly to
Fannie Mae. The Company  assumes  responsibility  for a portion of any loss that
may  result  from  borrower  defaults,  based on the  Fannie  Mae  loss  sharing
formulas,  Levels I, II or III. At December 31, 2002, all of the Company's loans
consisted of Level I loans.  For such loans,  the Company is responsible for the
first 5% of the unpaid principal  balance and a portion of any additional losses
to a maximum of 20% of the original  principal  balance.  Level II and Level III
loans carry a higher loss  sharing  percentage.  Fannie Mae bears any  remaining
loss.

Under the terms of the Master Loss Sharing  Agreement between Fannie Mae and the
Company,  the Company is responsible  for funding 100% of mortgagor  delinquency
(principal and interest) and servicing (taxes,  insurance and foreclosure costs)
advances until the amounts advanced exceed 5% of the unpaid principal balance at
the date of  default.  Thereafter,  for Level I loans,  the  Company may request
interim  loss  sharing  adjustments  which allow the Company to fund 25% of such
advances  until final  settlement  under the Master Loss Sharing  Agreement.  No
interim loss sharing adjustments are available for Level II and Level III loans.

The Company  maintains an allowance for loan losses for loans  originated  under
the Fannie Mae DUS product line at a level that, in  management's  judgment,  is
adequate to provide for estimated losses. At December 31, 2002, that reserve was
approximately  $4.2 million,  which the Company believes  represents its maximum
liability  at this time.  Unlike loans  originated  for Fannie Mae, PWF does not
share the risk of loss for loans it originates for Freddie Mac or FHA.

Credit Enhancement Transaction

In December 2001, the Company  completed a credit  enhancement  transaction with
Merrill Lynch Capital Services,  Inc ("MLCS"),  as described above.  Pursuant to
the terms of the transaction,  CM Corp.  assumes MLCS's $46.9 million first loss
position on a $351.9 million pool of tax-exempt weekly variable rate multifamily
mortgage  loans.  The Related  Companies,  L.P.  has  provided CM Corp.  with an
indemnity  covering 50% of any losses that are  incurred by CM Corp.  as part of
this transaction. As the loans mature or prepay, the first loss exposure and the
fees paid to CM Corp. will both be reduced. The latest maturity date on any loan
in the portfolio occurs in 2009. The remainder of the real estate exposure after
the $46.9 million first loss position has been assumed by Fannie Mae and Freddie
Mac.  In  connection  with  the  transaction,   CharterMac  has  guaranteed  the
obligations  of CM Corp.,  and as security  therefore,  have posted  collateral,
initially  in an amount  equal to 50% of the  first  loss  amount,  which may be
reduced to 40% if certain post closing conditions are met. The Company's maximum
exposure under the terms of this transaction is approximately $23.5 million.

CM Corp.  performed  due  diligence on each  property in the pool,  including an
examination  of  loan-to-value  and debt service  coverage both on a current and
"stressed"  basis.  CM Corp.  analyzed the  portfolio  on a "stressed"  basis by
increasing capitalization rates and assuming an increase in the low floater bond
rate.  As of December 31,  2002,  the credit  enhanced  pool of  properties  are
performing  according to their contractual  obligations and the Company does not
anticipate  any losses to be  incurred  on its  guaranty.  Should the  Company's
analysis of risk of loss change in the future,  a provision  for  probable  loss
might be required; such provision could be material.

Fees related to the credit  enhancement  transaction for the year ended December
31, 2002,  included in other income,  were approximately  $1,251,000.  Income is
recognized monthly as the fees are received.

LIHTC Guarantee Transaction

On July 18, 2002,  the Company  entered into two  agreements  with Merrill Lynch
(the "Primary  Guarantor") to guarantee an  agreed-upon  internal rate of return
("IRR") for a pool of 11 multi-family properties owned by RCGCP.

The total  potential  liability to the Company  pursuant to these  guarantees is
approximately $44 million.  The Company has analyzed the expected  operations of
the  underlying  properties  and believes there is no risk of loss at this time.
Should the Company's  analysis of risk of loss change in the future, a provision
for probable losses might be required; such provision could be material.

In connection with the transaction,  the Company posted $18.2 million of Revenue
Bonds as  collateral  to the  Primary  Guarantor,  which will be reduced to $1.4
million  over a  period  of up to 20  years  as  the  properties  reach  certain
operating benchmarks. In addition, the Company agreed to subordinate 25% of each
of the bonds it acquired that are secured by the  properties  and to not use the
subordinated  portion  of such  bonds  as  collateral  in  connection  with  any
borrowings.

To mitigate risk, the Company is the  beneficiary of a guarantee  against losses
associated  with  construction  and  operating  stabilization  for  each  of the
properties  in RCGCP,  which is capped at $15 million.  The  guarantee  has been
provided by TRCLP.  If the Company's  acquisition of Related is completed,  then
this guarantee will no longer be in force. As of December 31, 2001,  TRCLP had a
GAAP  net  worth  of   approximately   $179.3  million  with  liquid  assets  of
approximately  $54.9  million.  In  addition,  the  developers  of  each  of the
properties  have also been required to give recourse  completion,  stabilization
and  operating  deficit  guarantees.  TRCLP has also  agreed,  if needed,  after
construction completion and property stabilization, to fund up to the first $2.5
million of  operating  deficits  of the  underlying  properties  or any  amounts
required to pay the guaranteed IRR to the investor.


                                      -71-


<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Non-Cancelable Leases

Minimum  annual  rentals  under  non-cancelable  leases for office  space are as
follows:

                          2003             $   639,000
                          2004                 536,000
                          2005                 387,000
                          2006                 350,000
                          2007                  85,000
                                            ----------
                                           $ 1,997,000
                                            ==========

Other

During December 2002, the Company entered into two  transactions  related to two
properties,  Coventry Place and Canyon  Springs.  Pursuant to the terms of these
deals,  the Company will provide credit support to the  construction  lender for
project  completion and FMNA  conversion and acquire  subordinated  bonds to the
extent the construction period bonds do not fully convert.

Up until the point of  completion,  the Company will  guaranty the  construction
lender  reimbursement of any draw on its construction letter of credit up to 40%
of the stated amount of the Letter of Credit. Following completion, up until the
project loan converts to permanent  loan status,  the Company will guarantee the
full amount of the letter of credit.

The developer has also issued  several  guarantees to the  construction  lender,
each of which would be called upon before the Company's guarantees,  and each of
which would be assigned to the Company should its guarantees are called.

Once the construction loans convert to permanent loans, the Company is obligated
to acquire  subordinated  loans for the amount by which each  construction  loan
exceeds the  corresponding  permanent loan, if any. The subordinated  bonds will
bear interest at 10%. Under FNMA guidelines,  the size of the subordinated bonds
will be limited to a 1.0x debt  service  coverage  based on 75% of the cash flow
after the senior debt.

The Company's maximum exposure, related to these two transactions, is 40% of the
stated amount of the Letter of Credit of approximately $27 million.

Also, during December 2002, the Company entered into two transactions related to
properties  known as Auburn Glenn and  Cottonwood.  Pursuant to the terms of the
transactions,  a  third  party,  unrelated  lender  will  advance  funds  to the
developers,  as needed,  at a floating rate. At the completion of  construction,
the  Company  is  obligated  to  acquire  the  permanent   Revenue  Bonds  at  a
predetermined  price and interest  rate.  These  commitments  create  derivative
instruments  under SFAS No. 133, which has been  designated as a cash flow hedge
of the  anticipated  funding of the Revenue Bonds,  and will be recorded at fair
value, with changes in fair value recorded in other  comprehensive  income until
the Revenue Bonds are funded. The Revenue Bonds are expected to be $18.8 million
for Auburn Glenn and $12.4 million for Cottonwood, which together represents the
Company's maximum liability.

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

In connection  with the PWF warehouse  line,  both the  CharterMac and CM Corp.,
have entered into  guarantees for the benefit of Fleet,  guaranteeing  the total
advances drawn under the line, up to the maximum of $100 million,  together with
interest, fees, costs, and charges related to the PWF warehouse line.

The Company maintains,  as of December 31, 2002, treasury notes of approximately
$3.0 million and a money market account of approximately $2.2 million,  which is
included in restricted cash and securities in the consolidated balance sheet, to
satisfy the Fannie Mae collateral requirements of $5.2 million.

Due to the nature of the Companies' mortgage banking activities,  the Company is
subject to supervision by certain regulatory agencies. Among other things, these
agencies require the Company to meet certain minimum net worth requirements,  as
defined. The Company met these requirements for all agencies, as applicable,  as
of December 31, 2002.

NOTE 16 - Acquisition of PW Funding, Inc.

On December 31, 2001, CM Corp.  acquired 80% of the outstanding capital stock of
PWF, for approximately $34.9 million, of which,  approximately $21.6 million was
financed and $7.6 million was paid in cash.  Additionally,  the Company repaid a
$5.7 million loan on behalf of PWF. It is anticipated that CM Corp. will acquire
the  remaining 20% of the issued and  outstanding  capital stock of PWF over the
next 12 to 24 months. Under the agreement,  the stockholders of PWF were granted
the right to put their remaining 20% stock interest to CM Corp. after an initial
period of 24 to 36 months.  The agreement also grants CM Corp. the right to call
the remaining 20% stock interest of PWF from PWF's  stockholders  after the same
initial period of 24 to 36 months.

CharterMac is entitled to a cumulative preferential distribution from PWF's cash
available for distribution  equal to 10% of its invested capital.  The remaining
cash  available  for  distribution  will  be  distributed  approximately  80% to
CharterMac and 20% to the other  stockholders.  CharterMac will also be entitled
to an  additional  cumulative  priority  return  equal  to 4.3% of its  invested
capital prior to the purchase payments to PWF's  stockholders on exercise of the
put or call  options.  The fee income  generated by PWF will be taxable  income.
However, CM Corp. incurs tax-deductible  expenses which will be used to offset a
portion of this taxable income.

The  acquisition  of  PWF  was  accounted  for  using  the  purchase  method  of
accounting,  with  approximately $7.9 million of the purchase price allocated to
mortgage service rights, based on their estimated fair value.

During 2002 and the first quarter of 2003, CM Corp. made additional  payments to
the original  shareholders  of PWF of  approximately  $3.6 million ("the True-Up
payments") pursuant to the original acquisition agreement.  The True-Up payments
were based on i) the increase in value of servicing  rights due to certain loans
closing, ii) positive changes in the audited balance sheets used for the initial
purchase price and the audited balance sheet at December 31, 2001, iii) payments
of certain servicing fees, and iv) forward


                                      -72-
<PAGE>

         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


conversions of loans previously committed. The acquisition agreement stipulates
additional true-up payments to be made periodically for a period of up to three
years from the acquisition date.

NOTE 17 - Financial Risk Management and Derivatives

The Company's  Revenue  Bonds  generally  bear fixed rates of interest,  but the
P-FLOATS and TOP financing  programs  incur  interest  expense at variable rates
re-set  weekly,  so the  Company is  exposed to  interest  rate  risks.  Various
financial  vehicles exist which allow the Company's  management to hedge against
the  impact of  interest  rate  fluctuations  on the  Company's  cash  flows and
earnings.

The  Company  has entered  into two  interest  rate swaps in order to reduce the
Company's  exposure to increases in the  floating  interest  rate on its TOP and
P-FLOATS  programs.  Under such  interest rate swap  agreements,  the Company is
required to pay MLCS (the  "Counterparty")  a fixed rate on a notional amount of
debt.  In  return,  the  Counterparty  will  pay the  Company  a  floating  rate
equivalent  to The BMA  Municipal  Swap  Index,  an index of  weekly  tax-exempt
variable rate issues on which the Company's variable rate financing programs are
based.  On January 5, 2001, the Company  entered into a five-year  interest rate
swap that fixes the BMA index to 3.98% on a notional  amount of $50 million.  On
February 5, 2001, the Company entered into a three-year  interest rate swap that
fixes the BMA index to 3.64% on an additional notional amount of $100 million.

The average BMA rates for 2002 and 2001, were 1.38% and 2.61%, respectively. Net
swap payments  received by the Company,  if any,  will be taxable  income to the
Company  and,  accordingly,  to  shareholders.  A  possible  risk of  such  swap
agreements is the possible  inability of the  Counterparty  to meet the terms of
the contracts with the Company;  however, there is no current indication of such
an inability.

The Company  adopted  SFAS No. 133,  as amended and  interpreted,  on January 1,
2001.  Accordingly,  the Company has documented its established  policy for risk
management  and  its  objectives  and  strategies  for  the  use  of  derivative
instruments  to  potentially  mitigate  such risks.  The Company  evaluates  its
interest rate risk on an ongoing  basis to determine  whether or not it would be
advantageous to engage in any further hedging  transactions.  At inception,  the
Company designated these interest rate swaps as cash flow hedges on the variable
interest payments on its floating rate financing. Accordingly, the interest rate
swaps are  recorded at their fair market  values each  accounting  period,  with
changes in market  values being  recorded in other  comprehensive  income to the
extent that the hedge is  effective  in  achieving  offsetting  cash flows.  The
Company  assesses,  both at the  inception of the hedge and on an ongoing  basis
whether the swap  agreements are highly  effective in offsetting  changes in the
cash  flows  of  the  hedged  financing.  Any  ineffectiveness  in  the  hedging
relationship  is  recorded  in  earnings.  There was no  ineffectiveness  in the
hedging  relationship  during 2001 or 2002,  and the Company  expects that these
hedging  relationships will be highly effective in achieving  offsetting changes
in cash flow throughout their terms. Net amounts payable or receivable under the
swap agreements are recorded as adjustments to interest expense.

At December 31, 2002, these two interest rate swaps were recorded as a liability
with a combined fair market value of  approximately  $5.6  million,  included in
interest rate derivatives on the consolidated  balance sheets.  Interest paid or
payable under the terms of the swaps, of approximately $3.5 million, is included
in interest expense.

The Company estimates that approximately $3.3 million of the net derivative loss
included  in  accumulated  other  comprehensive  income will be  reclassed  into
interest expense within the next twelve months.

During  January  2002,  the Company  entered into an interest rate cap agreement
with Fleet Bank, with a cap of 8% on a notional amount of $30 million.  Although
this  transaction  is  designed  to mitigate  the  Company's  exposure to rising
interest  rates,  the Company has not  designated  this  interest  rate cap as a
hedging derivative. As of December 31, 2002, this interest rate cap was recorded
as an asset  with a fair  market  value of $61,054  included  in  interest  rate
derivatives  in the  consolidated  balance  sheets.  Because the Company has not
designated  this  derivative  as a hedge,  the change in fair market value flows
through the Consolidated  Statements of Income, where it is included in interest
income, in the amount of $61,054 for the year ended December 31, 2002.

NOTE 18 - Business Segments

As a result  of the  December  2001  acquisition  of PWF,  the  Company  has two
reportable business segments: an investing segment and an operating segment.

The investing  segment consists of subsidiaries  holding  investments in Revenue
Bonds producing primarily tax-exempt interest income.

The  operating  segment  generates  taxable  interest  and fee  income.  Taxable
interest  income is generated  through the ownership of taxable  bonds,  certain
taxable  loans  and  other   investments.   Taxable  fee  income  includes  loan
origination  and loan  servicing  fees  (through  PWF) on  portfolios  for third
parties,  fees earned and  associated  with the  acquisition  or  origination of
Revenue Bonds, and fees for credit enhancement and guaranty services.

Segment results include all direct and contractual revenues and expenses of each
segment and  allocations of indirect  expenses based on specific  methodologies.
The reportable  segments are strategic  business  units that primarily  generate
revenue  streams  that  are  distinctly  different  and  are  generally  managed
separately.  Segment  reporting is applicable  beginning with the acquisition of
PWF on December 31,  2001;  prior to December  31,  2001,  all of the  Company's
operations were attributable to the investing  segment.  Because the acquisition
of PWF took place on December 31, 2001, there was no impact on the Company's net
income,  revenues or  ex-


                                      -73-
<PAGE>


         CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


penses.  Of the total  assets for the  Company at  December  31,  2002 and 2001,
approximately $1.73 billion and $1.32 billion, respectively, are attributable to
the  investing  segment  and  approximately   $124  million  and  $100  million,
respectively, are attributable to the operating segment.

The following table provides more information  regarding the Company's  segments
for the year ended December 31, 2002:

                                                (Dollars in Thousands)

                                       Investing       Operating       Total
                                       ---------       ---------       -----


        Revenues                     $   98,208      $  18,205     $   116,413
        Interest Revenues                94,683          3,409          98,092
        Interest Expense                 14,558          1,265          15,823
        Depreciation and
         Amortization Expense             1,131          7,760           8,891
        Equity in the net
         income of investees
         accounted for by the
         equity method                    2,219            --            2,219
        Income tax expense or
         benefit                           (214)         1,498           1,284
        Total Assets                  1,729,194        123,674       1,852,868

NOTE 19 - Subsequent Event

On February 28, 2003, the Company filed a preliminary proxy statement  regarding
the  proposed  purchase of Related  Capital  Company.  The  acquisition  will be
structured so that the  ownership  interests  held by the Related  principals in
both Related and the other  entities  which  control  other aspects of Related's
business will be contributed  into a  newly-formed,  wholly-owned  subsidiary of
CharterMac (the "CharterMac Sub"). The selling principals of Related include the
four executive  managing  partners  (Stuart J. Boesky,  Alan P. Hirmes,  Marc D.
Schnitzer and Denise L. Kiley) and an affiliate of The Related  Companies,  L.P.
("TRCLP"),   which  is  majority   owned  by  Stephen  M.  Ross  (the   "Related
Principals").  Messrs.  Boesky,  Hirmes and Schnitzer and Ms. Kiley have managed
RCC over the past 15 years.

CharterMac will pay total  consideration to the Related Principals of up to $338
million. The consideration will be paid as follows:

        o      The Initial Payment - $210 million  consisting of $160 million in
               special  common  units of the  CharterMac  Sub  ("SCUs")  and $50
               million  in cash  (with  the cash  position  being  paid  only to
               TRCLP).  The  Initial  Payment  SCUs will be issued at $17.78 per
               unit,  which was the average  closing price of CharterMac  Common
               Shares,  for the 30 calendar days prior to this announcement (the
               "Initial Payment SCUs");

        o      The  Contingent  Payment - Up to $128 million of additional  SCUs
               (the "Contingent  Payment SCUs"),  following the determination of
               Related's  adjusted  audited  earnings  before  interest,  taxes,
               depreciation   and   amortization,   as  well  as  certain  other
               adjustments,  for the year ending  December  31, 2002  ("Adjusted
               Earnings").  The  Contingent  Payment  SCUs  will be issued in an
               amount  equal to 7.73x  RCC 2002  Adjusted  Earnings  minus  $210
               million, subject to a cap of $338 million of total consideration.
               The Contingent Payment SCUs are expected to be issued at the same
               price as the Initial Payment SCUs, subject to a 17.5% symmetrical
               collar.

In connection with the acquisition, CharterMac will establish a restricted share
program and will broadly  issue to employees of Related,  other than the Related
Principals, $15 million of CharterMac Common Shares. Following the completion of
the   acquisition,   TRCLP's   economic   interest  in  CharterMac   will  equal
approximately  19% and management and Related  employees'  economic  interest in
CharterMac will equal approximately 11%.

On March 31, 2003, the Company entered into a $75 million secured revolving tax-
exempt bond  warehouse line of credit with Fleet  Securities,  Inc. and Wachovia
Securities,  Inc. (the "Facility").  The Facility has built in accordion feature
allowing up to a $25 million  increase for a total of $100 million and a term of
two years, plus a one year extension at the Company's option. The Facility bears
interest at either 31, 60, 90, or 180-day reserve  adjusted LIBOR, or prime plus
..25%.

On April 1, 2003,  the  Company  closed on its sale of  Tax-Exempt  Multi-Family
Housing Trust Certificates Series 2003A (the "Trust").  Pursuant to the terms of
the Trust, the Company contributed 19 fixed-rate, tax-exempt multifamily housing
and senior  housing  revenue  bonds  collateralized  by 16 different  properties
totaling  approximately $197 million in aggregate  principal into a trust out of
which was sold $100  million in Class A  Certificates  to various  institutional
investors.  A  wholly-owned  indirect  subsidiary  of  CharterMac  retained  the
subordinated Class B Certificates totaling approximately $97 million. CharterMac
has  agreed  that it will  hold the  Class B  Certificates  until  the  trust is
terminated.  The Class A Certificates  will accrue interest at the fixed rate of
3.25% per annum for two years.  Distributions to the Class A Certificate holders
are  expected  to be made on the 15th day of each month,  commencing  on May 15,
2003. The Class A Certificates  will be subject to mandatory tender for purchase
at a price equal to the  outstanding  Certificate  Balance  thereof plus accrued
interest  thereon on March 15, 2005. If CharterMac  does not exercise its option
to  terminate  the Trust on March 15,  2005,  the Class A  Certificates  will be
subject to  remarketing.  The Class A Certificates  will be subject to mandatory
tender  for  purchase  and  cancellation  on the  Final  Distribution  Date from
proceeds of the liquidation of the bonds on March 15, 2007.


                                      -74-

<PAGE>


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

None.

                                    PART III

Item 10.  Directors and Executive Officers of the Company.

Trustees and Officers

During 2002, the Board of Trustees held 23 meetings,  the compensation committee
held one  meeting  and the audit  committee  held  five  meetings.  The  average
attendance in the aggregate of the total number of Board and committee  meetings
was 80%.

The Trustees and Executive Officers of CharterMac are as follows:

<TABLE>


                                                             Year First Became
Name                       Age      Offices Held              Officer/Trustee   Term Expires
----                       ---      ------------             -----------------  ------------
<S>                       <C>            <C>                 <C>                <C>

Stephen M. Ross            62     Managing Trustee,
                                  Chairman of the Board            1999             2003

Peter T. Allen             57     Managing Trustee                 1997             2004

Charles L. Edson           68     Managing Trustee                 2001             2005

Arthur P. Fisch            61     Managing Trustee                 1997             2005

Stuart J. Boesky           45     Managing Trustee,
                                  President, and Chief
                                  Executive Officer                1997             2003

Alan P. Hirmes             48     Managing Trustee,
                                  Executive Vice
                                  President,
                                  Secretary                        1997             2005

Michael J. Brenner         57     Managing Trustee                 2000             2004 1

Thomas W. White            65     Managing Trustee                 2000             2005 1

Stuart A. Rothstein        37     Chief Financial Officer          2002              --
                                  and Chief Accounting
                                  Officer

</TABLE>


1 In the event  that the  proposed  acquisition  of Related  Capital  Company is
consummated,  Messrs.  Brenner  and White will resign from the Board of Trustees
and five additional independent trustees will be named.


                                      -75-


<PAGE>


STEPHEN M. ROSS is  Chairman of the board of  trustees  of  CharterMac  and is a
Member of the sole general partner of Related Charter.  Mr. Ross is the founder,
Chairman,  CEO  and  Managing  General  Partner  of The  Related  Companies,  LP
("TRCLP").  Mr. Ross began his career working for the accounting firm of Coopers
& Lybrand  in Detroit as a tax  attorney.  Later,  he moved to New York where he
worked for two large Wall Street  investment  banking firms in their real estate
and  corporate  finance  departments  before  founding  TRCLP in 1972.  Mr. Ross
graduated from the University of Michigan School of Business Administration with
a Bachelor  of Science  degree and from Wayne  State  School of Law with a Juris
Doctor degree. He then received a Master of Law degree in Taxation from New York
University School of Law. Mr. Ross endowed the Stephen M. Ross Professor of Real
Estate at the University of Michigan. Mr. Ross is also on the board of directors
of Insignia Financial Group, Inc.

PETER T. ALLEN is a managing trustee (independent  trustee) of CharterMac and is
President  of Peter Allen &  Associates,  Inc.,  a real estate  development  and
management  firm,  in which  capacity he has been  responsible  for the leasing,
refinancing and development of major commercial  properties.  Mr. Allen has also
been an Adjunct  Professor of the Graduate  School of Business at the University
of  Michigan  since  1981.  Mr.  Allen  received  a Bachelor  of Arts  Degree in
history/economics  from  DePauw  University  and a Masters  Degree  in  Business
Administration  with Distinction from the University of Michigan.  Mr. Allen has
been an  Independent  trustee  since  1997  and is a  member  of the  Audit  and
Compensation  Committees.  Mr.  Allen also  serves on the board of  trustees  of
American Mortgage Acceptance Company ("AMAC"), a company that is also advised by
an affiliate of Related Capital Company ("Related").

CHARLES L. EDSON is a managing trustee (independent trustee) of CharterMac.  Mr.
Edson, as senior counsel of the law firm Nixon Peabody LLP, is no longer engaged
in the  practice  of law.  From 1968 to 2002 his  practice  included  service as
counsel to several  governmental,  trade and public interest entities and groups
on housing and legislative  matters.  He still serves as the  Co-Editor-in-Chief
for the  Housing  and  Development  Reporter,  a news  and  information  service
published  by The West  Group.  Mr.  Edson  is an  Adjunct  Professor  of Law at
Georgetown  University  Law  Center  where he  teaches  a seminar  on  federally
assisted housing  programs.  During his career,  he has served as the Transition
Director  for the  Department  of Housing  and Urban  Development  on  President
Carter's  transition staff and has also held the position of Chief in the Public
Housing Section at the Office of General  Counselor at the Department of Housing
and Urban  Development.  Mr. Edson received a Bachelor of Arts, magna cum laude,
from Harvard College and a Juris Doctor degree from Harvard Law School.

ARTHUR P. FISCH is a managing trustee (independent trustee) of CharterMac and is
an attorney in private practice specializing in real property and securities law
since  October  1987,  with  Arthur P.  Fisch,  P.C.  and Fisch & Kaufman.  From
1975-1987,  Mr.  Fisch was employed by E.F.  Hutton & Company,  serving as First
Vice President in the Direct Investment  Department from 1981-1987 and associate
general counsel from 1975-1980 in the legal department. As First Vice President,
he was  responsible  for the  syndication  and  acquisition of residential  real
estate.  Mr. Fisch  received a B.B.A.  from Bernard  Baruch  College of the City
University of New York and a Juris Doctor  degree from New York Law School.  Mr.
Fisch is admitted to practice  law in New York and  Pennsylvania.  Mr. Fisch has
been an  Independent  trustee  since  1997  and is a  member  of the  Audit  and
Compensation Committees. Mr. Fisch also serves on the board of trustees of AMAC.

STUART J. BOESKY is a managing trustee, President and Chief Executive Officer of
CharterMac,  and  President,  Chief  Executive  Officer and a Member of the sole
general partner of Related  Charter.  Mr. Boesky is also Chairman of PW Funding,
Inc.  Mr.  Boesky is a Senior  Managing  Director and one of the  principals  of
Related,  the financial  services affiliate of TRCLP, where his primary areas of
responsibility  are the creation,  design,  and implementation of Related's debt
and equity finance  programs and management of all debt product  origination and
loan servicing.  Mr. Boesky  practiced real estate and tax law with the law firm
of Shipley & Rothstein from 1984-1986,  when he joined Related.  From 1983-1984,
he practiced law with the Boston office of Kaye, Fialkow, Richman and Rothstein.
Previously,  Mr. Boesky was a consultant at the  accounting  firm of Laventhol &
Horwath.  Mr. Boesky  graduated with high honors from Michigan State  University
with a Bachelor of Arts  degree and from Wayne State  School of Law with a Juris
Doctor degree.  He then received a Master of Laws degree in Taxation from Boston
University  School of Law.  Mr.  Boesky is  Chairman of the Board of Trustees of
AMAC. Mr. Boesky is a regular speaker at industry conferences and on television.
Mr.  Boesky  is  also a  member  of  the  board  of  directors  of the  National
Association of Affordable Housing Lenders. Biographical information with respect
to Mr. Boesky is listed in the "Trustees and Officers" section above.


ALAN P. HIRMES is a managing  trustee,  the  Executive  Vice  President  and the
Secretary of CharterMac, and is a Senior Vice President and a Member of the sole
general partner of Related Charter.  Mr. Hirmes is also a principal and a Senior
Managing  Director  of  Related,  where he is  responsible  for  overseeing  the
finance,  accounting  and investor  services  departments  and the joint venture
development  program.  Mr. Hirmes has been a Certified Public  Accountant in New
York since  1978.  Prior to joining  Related in  October  1983,  Mr.  Hirmes was
employed by Weiner & Co.,  certified  public  accountants.  Mr. Hirmes graduated
from Hofstra  University with a Bachelor of Arts degree.  Mr. Hirmes also serves
on the board of trustees of AMAC.

MICHAEL J. BRENNER is a managing  trustee,  and is the Executive  Vice President
and Chief  Financial  Officer  of TRCLP.  Prior to  joining  TRCLP in 1996,  Mr.
Brenner was a partner with Coopers & Lybrand,  having served as managing partner
of its Industry  Programs and Client  Satisfaction  initiatives  from 1993-1996,
managing  partner of the Detroit group of offices from 1986-1993 and Chairman of
its National Real Estate  Industry Group from 1984-1986.  Mr. Brenner  graduated
summa cum laude  from the  University  of  Detroit  with a  Bachelors  degree in
Business  Administration  and from the  University of Michigan with a Masters of
Business Administration, with distinction.

THOMAS W. WHITE is a  managing  trustee.  Mr.  White  retired  as a Senior  Vice
President of Fannie Mae in the multi-family activities department,  where he was
responsible for the development  and  implementation  of policies and procedures
for all Fannie Mae multi-family  programs,  including the delegated underwriting
and servicing program, prior approval program and negotiated swap and negotiated
cash purchases  product lines. He was also  responsible for asset  management of
multi-family loans in portfolio or Mortgage-Backed  Securities. Mr. White joined
Fannie Mae in November 1987 as director of multi-family product management. He

                                      -76-

<PAGE>

was elected Vice President for multi-family  asset  acquisition in November 1998
and assumed his  position of Senior Vice  President in November  1990.  Prior to
joining Fannie Mae, he served as an investment banker with Bear Stearns, Inc. He
also was the executive vice  president of the National  Council of State Housing
Agencies;   chief  underwriter  for  the  Michigan  State  Housing   Development
Authority;  and served as a state  legislator in the state of Michigan.  In July
2001, CM Corp. hired Mr. White as a consultant.

STUART A. ROTHSTEIN is an Executive Vice President and Chief  Financial  Officer
of CharterMac and is an Executive Vice President and Chief Financial  Officer of
the general  partner of Related  Charter.  Prior to joining Related in September
2002, Mr.  Rothstein was Chief Financial  Officer at Spieker  Properties,  a San
Francisco-based  office real estate investment trust (REIT) with over $7 billion
in real estate assets and $850 million in revenues.  At Spieker Properties,  Mr.
Rothstein was  responsible  for developing and  implementing  all aspects of the
company's corporate financial strategy, including executing over $4.0 billion in
capital raising transactions,  which included public and private debt and equity
offerings and structured  transactions.  Mr.  Rothstein's  past  experience also
includes a position as manager with Price  Waterhouse.  Mr. Rothstein  graduated
from  Pennsylvania  State  University  with a  Bachelor  of  Science  degree  in
Accounting  and received his Masters in Business  Administration  from  Stanford
Graduate School of Business.  Mr. Rothstein is a Certified Public  Accountant in
the State of New York.

Committees of the Board of Trustees

The Board of Trustees has standing Audit and Compensation Committees.  The Audit
Committee's  duties  include the review and oversight of all  transactions  with
affiliates  of  CharterMac,   the  periodic  review  of  CharterMac's  financial
statements  and  meetings  with  CharterMac's  independent  auditors.  The Audit
Committee is comprised of Messrs.  Allen,  Fisch and Edson and had five meetings
during  CharterMac's  fiscal year ended December 31, 2002.  The Audit  Committee
must have at least three members, all of whom must be Independent Trustees.

The Compensation Committee's duties include the determination of compensation,
if any, of CharterMac's executive officers and of the Manager and the
administration of CharterMac's Incentive Share Option Plan (the "Share Option
Plan"). The Compensation Committee is comprised of Messrs. Allen and Fisch and
they held one meeting during CharterMac's fiscal year ended December 31, 2002.
The Compensation Committee must have at least two members, each of whom must be
Independent Trustees.


                                      -77-

<PAGE>


Related Charter, LP

The directors and  executive  officers of Related  Charter LLC, the sole general
partner of Related  Charter,  are set forth  below.  These  officers of the sole
general  partner of Related  Charter may also provide  services to CharterMac on
behalf of Related Charter.  The executive  officers of Related Charter,  LLC are
the exact same as the executive officers of CM Corp.

                                                              Year First Became
Name                        Age           Offices Held         Officer/Member
----                        ---           ------------         --------------
Stuart J. Boesky            45     Member, President, and           1997
                                   Chief Executive Officer

Alan P. Hirmes              48     Member,                          1997
                                   Executive Vice
                                   President,
                                   Secretary

Stephen M. Ross             62     Member,                          1999
                                   Chairman of the Board

Stuart A. Rothstein         37     Executive Vice President         2002
                                   and Chief Financial
                                   Officer

Denise L. Kiley             43     Senior Vice President            1997

Marc D. Schnitzer           42     Senior Vice President            1997

James D. Spound             42     Executive Vice President         1998

Steven B. Wendel            40     Senior Vice President            1999

John Sorel                  42     Senior Vice President            1999

Gary Parkinson              53     Controller                       2000

Teresa Wicelinski           37     Secretary                        1998

Biographical  information  with  respect to  Messrs.  Boesky,  Hirmes,  Ross and
Rothstein is set forth above.


DENISE L.  KILEY is a Senior  Vice  President  of the sole  general  partner  of
Related Charter and a Managing Director and principal of RCC and Director of its
Asset Management Division. Ms. Kiley is responsible for overseeing due diligence
and asset management of multi-family  residential properties invested in Related
sponsored corporate,  public and private equity and debt funds. Prior to joining
Related in 1990, Ms. Kiley was a First Vice  President  with  Resources  Funding
Corporation  where  she was  responsible  for  acquiring,  financing,  and asset
managing multi-family  residential  properties.  Previously,  she was an auditor
with Price Waterhouse. Ms. Kiley is a member of the National Association of Home
Builders and the National Housing and Rehabilitation Association. She received a
Bachelor of Science  Degree in accounting  from the Carroll School of Management
at Boston College.

MARC D.  SCHNITZER is a Senior Vice  President  of the sole  general  partner of
Related Charter and a Managing Director and principal of Related.  Mr. Schnitzer
directs Related's tax credit group, which has invested in excess of $4.5 billion
in affordable  housing tax credit  properties since 1987, and is responsible for
structuring and marketing  Related's  institutional  tax credit  offerings.  Mr.


                                      -78-

<PAGE>


Schnitzer  is a  frequent  speaker  at  industry  conferences  sponsored  by the
National   Council  of  State  Housing   Agencies,   the  National  Housing  and
Rehabilitation Association and the National Association of Homebuilders. He is a
member of the  Executive  Committee  of the Board of  Directors  of the National
Multi-Housing Council and a Vice President and member of the Executive Committee
of the Affordable Housing Tax Credit Coalition.  Mr. Schnitzer joined Related in
1988 after  receiving  his  Masters of Business  Administration  degree from The
Wharton School of the University of Pennsylvania in 1987. From 1983 to 1986, Mr.
Schnitzer   was  a  Financial   Analyst  with  First  Boston   Corporation,   an
international  investment  bank.  Mr.  Schnitzer  received a Bachelor of Science
degree in business  administration,  summa cum laude, from the Boston University
School of Management in 1983.

JAMES D. SPOUND is an Executive  Vice  President of the sole general  partner of
Related Charter with primary  responsibility for revenue bond  acquisitions.  He
joined Related from First Union Capital Markets,  in February 1998, where he was
a Vice President  specializing in affordable housing finance. From 1992 to 1996,
Mr. Spound served as an investment  banker in the Housing Finance  Department at
Merrill Lynch & Co., where he was a Vice President at the time of his departure.
Previously,  Mr.  Spound was also a Senior  Consultant  at Kenneth  Leventhal  &
Company where he focused on debt restructurings in the real estate industry.  In
addition,  he served for three  years as a Project  Manager  at New York  City's
Economic  Development  Corporation where he was responsible for underwriting and
administering  incentive loans to support the City's economic development goals.
Mr.  Spound  received a Bachelor  of Arts  degree  from Brown  University  and a
Masters of Science in Management from the Sloan School at MIT.

STEVEN B. WENDEL is a Senior Vice President of Related Charter and a Senior Vice
President of Related,  focusing on taxable  mortgage  financing for multi-family
properties.  Prior to joining  Related in June,  1999, Mr. Wendel was a Managing
Director  of the  commercial  loan  origination  and  securitization  program at
ContiFinancial  Corporation,  which  originated  approximately  $2.6  billion of
commercial  loans.  From  1989-1992,  Mr.  Wendel was a senior  associate of the
structured  finance/MBA rotational program at Coopers & Lybrand. From 1987-1989,
he was a consultant at Martin E. Segal  Company,  and from  1984-1987,  he was a
pricing analyst at Metropolitan Life Insurance Company.  Mr. Wendel received his
Bachelor  of Arts in  economics  from the  University  of  Pennsylvania  and his
Masters  in  Business   Administration   from  the  Stern   School  of  Business
Administration at New York University.

GARY PARKINSON is the Controller of the sole general partner of Related Charter.
Mr.  Parkinson  has been a Certified  Public  Accountant in New York since 1987.
Prior to joining  Related in  September  2000,  Mr.  Parkinson  was  employed by
American Real Estate Partners, L.P. from July 1991 to September 2000, Integrated
Resources,  Inc. from August 1988 to July 1991 and Ernst & Young from  September
1984 to August 1988. Mr. Parkinson  graduated from  Northeastern  University and
The Johnson Graduate School of Business at Cornell University.

TERESA  WICELINSKI  is the  Secretary  of the sole  general  partner  of Related
Charter.  Ms. Wicelinski joined Related in June 1992, and prior to that date was
employed  by  Friedman,  Alprin  &  Green,  certified  public  accountants.  Ms.
Wicelinski  graduated  from Pace  University  with a Bachelor  of Arts Degree in
Accounting.

PW Funding, Inc.

On December 24, 2001, CM Corp.  acquired  approximately  80% of the  outstanding
capital stock of PW Funding,  Inc. ("PWF"), a mortgage banking firm specializing
in multi-family housing.

PW Funding has its own management team, the executive  officers of
which are listed below:

<TABLE>

                                                                 Year First Became
Name                         Age   Office Held                    Officer/Trustee
----                         ---   -----------                   -----------------
<S>                          <C>   <C>                           <C>

Stuart J. Boesky             45    Chairman                             2001

Raymond J. Reisert, Jr.      61    Chief Executive Officer              1991

William T. Hyman             45    Executive Vice President             1991

Larry N. Volk                55    Executive Vice President &           1993
                                   Secretary

Katherine B. Schnur          40    Executive Vice President             2001

Peter J. Reisert             32    Senior Vice President                1997

Lawrence Cohen               45    Controller                           2002

Biographical  information  with respect to Mr. Boesky is listed in the "Trustees
and Officer's" section above
</TABLE>


                                      -79-

<PAGE>


RAYMOND J. REISERT,  JR. is the Chief Executive  Officer of PWF, a member of the
Board of Directors  and serves on the PWF Loan  Committee.  He is also  actively
involved in the company's  strategic  and  financial  planning and PWF's working
relationships with Fannie Mae and Freddie Mac. Mr. Reisert started PWF as an FHA
Lender and directed  its entry into the Fannie Mae  Delegated  Underwriting  and
Servicing  Product Line ("DUS") as one of the original  lenders in that program.
During his tenure, PWF acquired Larson Financial Resources,  a major Freddie Mac
Program  Plus and  Insurance  Company  Correspondent.  Prior to joining PWF, Mr.
Reisert was a Managing  Director in PaineWebber's  Municipal  Securities  Group.
Prior to joining  PaineWebber,  Mr.  Reisert was Vice  President  of Finance and
Treasurer of United Health Services. Mr. Reisert started his career at Coopers &
Lybrand in the Consulting Division where he specialized in economic  feasibility
and financial  planning  studies.  Mr. Reisert  received a Bachelors in Business
Administration  from Iona College and a Masters in Business  Administration from
New York University.  Mr. Reisert is a member of the Executive Board of American
Seniors Housing Association,  the National Multi-family Housing Council, The DUS
Lenders'  Advisory  Council  and the  Mortgage  Bankers  Association  of America
("MBAA").  Mr. Reisert also serves on the MBAA's  Commercial  Board of Governors
and is the current chair of the Multi-family Steering Committee.  Mr. Reisert is
the father of Peter Reisert.

WILLIAM T. HYMAN was named Executive Vice President of Underwriting and National
Origination at PWF in 2001. Mr. Hyman has been with PWF since 1989 and was PWF's
Chief  Underwriter from 1993 until he was named Chief Operating Officer in 2000.
During  his  tenure as Chief  Underwriter,  Mr.  Hyman was  responsible  for the
approval of mortgage  loans  totaling in excess of $800  million.  Mr. Hyman was
also responsible for the management of the Firm's  multi-family  loan processing
and underwriting activities. In 1993, he was appointed Chief Underwriter for the
Fannie Mae  Delegated  Underwriting  and Servicing  Program.  In addition to his
Fannie Mae responsibilities,  Mr. Hyman developed the underwriting standards and
procedures for the Firm's Conduit Program. Prior to joining PWF, Mr. Hyman was a
Vice President with L.F. Rothschild & Co.'s corporate finance department.  Prior
to that,  Mr.  Hyman was with  PaineWebber  Incorporated  as an associate in the
municipal  finance  healthcare  group. Mr. Hyman holds a Bachelor of Arts degree
with a major in  architecture  from  Yale  University  and a  Masters  degree in
business  administration  from  Washington  University in St.  Louis.  Mr. Hyman
served on the Fannie  Mae DUS  Business  Model Task Force in 2000 and  currently
serves on the DUS Advisory Council Subcommittee for Product Development.

LARRY N.  VOLK is  Executive  Vice  President,  General  Counsel  and  Corporate
Secretary  of PWF and  Assistant  to the  President.  Mr. Volk has been with PWF
since early 1993 and served in his current  capacity  since early 2001. Mr. Volk
has been actively  engaged in commercial  mortgage  finance since 1981. Mr. Volk
served on both the  business  side and as general  counsel  for various New York
State  agencies  during the 1980's.  Prior to joining  PWF, Mr. Volk spent three
years in  Washington,  D.C.  serving  the U.S.  Department  of Housing and Urban
Development in the office of the Assistant Secretary for Housing-Federal Housing
Commissioner.  He was also a founding partner of a  Washington-based  investment
banking firm, and then Policy and Program Director for the trade  association of
state housing finance  agencies.  Mr. Volk is a graduate of Clarkson  College of
Technology,  was  valedictorian of his class at Albany Law School,  and holds an
MBA from Rensselaer Polytechnic Institute.

KATHERINE B. SCHNUR is Executive  Vice  President of operations  for PWF. She is
responsible for servicing, closing, personnel and administrative and information
management  functions  for PWF and its  subsidiaries.  Ms.  Schnur  joined LFR's
servicing  department in June 1988. In January 1992,  Ms. Schnur was promoted to
the position of Vice President, Loan Administration.  In 1994, Ms. Schnur became
the Vice  President,  Loan Closing and  Underwriting  and was promoted to Senior
Vice  President in August,  1995. In January 1997,  Ms. Schnur helped create the
Specialty  Finance  Department.  In April 2001, Ms. Schnur was promoted to Chief
Operating  Officer.  Prior to joining  LFR,  she was a manager in the  Corporate
Sales  Division  with  Blue  Cross/Blue  Shield  of New  Jersey  where  she  had
responsibility  for computer  software and managing the sales support staff. Ms.
Schnur  has been an  active  member  of both  the New  Jersey  Mortgage  Bankers
Association and the Mortgage Bankers Association of America,  and has chaired or
vice-chaired a number of committees. She was chosen to participate in the MBA of
America's  inaugural  class of Future Leaders in 1997. She is past president and
Board  member of Children on the Green in  Morristown,  NJ. Ms.  Schnur  holds a
Bachelor of Arts in Psychology and Economics from Lafayette College.

PETER J.  REISERT is Senior  Vice  President  of Capital  Markets,  New  Product
Development,  and  Corporate  Marketing  and  Advertising  of PWF.  Mr.  Reisert
coordinates  PWF's  new  product   development  with  CharterMac,   The  Related
Companies,  Fannie Mae and Freddie  Mac. He also runs PWF's  pricing and trading
desk where he is responsible for the trading of securities  including  mortgages
(Fannie Mae DUS/MBS, FHA Whole Loans and Ginnie Mae securities),  discount notes
and US Treasuries. During his tenure, Mr. Reisert formalized trading and pricing
procedures and developed  relationships with numerous  institutional  investors.
Mr. Reisert is a current member of the PWF loan committee. Mr. Reisert served on
PWF's  Board of  Directors  prior to its sale to  CharterMac  in 2001.  Prior to
joining PWF, Mr. Reisert was employed by Arbor National Mortgage where he worked
on the mortgage-trading desk in a variety of roles. He earned a Bachelor of Arts
degree from Providence  College and a Masters degree in business  administration
from Hofstra  University.  In 2002, Mr. Reisert was chosen to participate in the
Mortgage Banker's  Association of America's Future Leader's  leadership program.
Mr. Reisert is the son of Raymond Reisert.

LAWRENCE  COHEN is Senior Vice President and Controller of PWF. Mr. Cohen joined
PWF in May 2000.  As  Controller,  Mr. Cohen is  responsible  for  directing the
accounting  and  financial  management  activities,   including  preparation  of
financial  statements  and the  business  plan.  Mr.  Cohen is  responsible  for
negotiating  credit  lines and letters of credit for  financings  under the FHA,
Fannie Mae, Freddie Mac, Ginnie Mae and Conduit loan programs. Mr. Cohen manages
PWF's working  capital  position and the investment of PWF's own, as well as its
clients',  funds.  Prior to joining PWF, Mr. Cohen held key financial  positions
with Value Line Inc.,  Kaplan  Educational  Centers and Primedia  Inc. Mr. Cohen
received a Bachelor of Arts in Accounting from Queens College.


                                      -80-

<PAGE>


Management Agreements

CM Corp. and Related Charter provide CharterMac  services pursuant to management
agreements  between (i) CM Corp.  and  CharterMac  and (ii) Related  Charter and
CharterMac.  Collectively,  CM Corp. and Related  Charter are referred to as the
"Manager".  Pursuant to these  agreements,  the Manager is  obligated to use its
best  efforts to seek out and  present to  CharterMac,  whether  through its own
efforts or those of third  parties  retained by it,  suitable  and a  sufficient
number of investment  opportunities  which are  consistent  with the  investment
policies and  objectives  of  CharterMac  and  consistent  with such  investment
programs as the Board of Trustees may adopt from time to time in conformity with
CharterMac's Trust Agreement.

Although  the Board of Trustees  has  continuing  exclusive  authority  over the
management  of  CharterMac,  the conduct of its affairs and the  management  and
disposition  of  CharterMac's  assets,  the  Board  of  Trustees  has  initially
delegated to the Manager,  subject to the supervision and review of the Board of
Trustees and consistent  with the provisions of the Trust  Agreement,  the power
and duty to: (i) manage the day-to-day  operations of CharterMac;  (ii) acquire,
retain or sell  CharterMac's  assets;  (iii)  seek out,  present  and  recommend
investment  opportunities  consistent with CharterMac's  investment policies and
objectives,  and  negotiate  on behalf of  CharterMac  with respect to potential
investments  or the  dispositions  thereof;  (iv)  when  appropriate,  cause  an
affiliate  to serve as the  mortgagee  of record  for  mortgage  investments  of
CharterMac  and in  that  capacity  hold  escrow  on  behalf  of  mortgagors  in
connection  with the  servicing of  mortgages;  (v) obtain for  CharterMac  such
services  as  may  be  required  in  acquiring  and  disposing  of  investments,
disbursing  and  collecting  the  funds of  CharterMac,  paying  the  debts  and
fulfilling the obligations of CharterMac, and handling, prosecuting and settling
any  claims  of  CharterMac,   including  foreclosing  and  otherwise  enforcing
mortgages and other liens securing investments;  (vi) obtain for CharterMac such
services as may be required  for property  management,  mortgage  brokerage  and
servicing,  and  other  activities  relating  to  the  investment  portfolio  of
CharterMac;  (vii)  evaluate,  structure and negotiate  prepayments  or sales of
CharterMac's  mortgage  investments  and  mortgage  securities;  (viii)  monitor
operations  and  expenses  of  CharterMac;  and (ix)  from  time to time,  or as
requested  by the  Board of  Trustees,  make  reports  to  CharterMac  as to its
performance of the foregoing services.

The  terms  of  each  of the  management  agreements  is one  year.  Both of the
management  agreements may be renewed,  subject to evaluation of the performance
of the  Manager  by  CharterMac's  Board of  Trustees.  Both  agreements  may be
terminated (i) without cause by the Manager;  or (ii) for cause by a majority of
CharterMac's  Board of Trustees,  in each case without  penalty and each upon 60
days prior written notice to the non-terminating party.

The Manager is entitled to  subcontract  its  obligations  under the  Management
Agreements to an affiliate.  In accordance  with the foregoing,  the Manager has
assigned its rights and obligations to Related Capital.

Pursuant to the terms of the  Management  Agreement,  the Manager is entitled to
receive the fees and other compensation set forth below:

Fees/Compensation*                  Amount
------------------                  ------

Bond Selection Fee                  2.00%  of the  face  amount  of  each  asset
                                    invested in or acquired by CharterMac or its
                                    subsidiaries.
Special Distributions/Investment    0.375%  per  annum  of  the  total  invested
Management Fee                      assets of  CharterMac  or its  subsidiaries.
                                    Loan  Servicing Fee 0.25% per annum based on
                                    the outstanding face amount of revenue bonds
                                    and other investments owned by CharterMac or
                                    its subsidiaries.
Operating Expense Reimbursement     For direct expenses  incurred by the Manager
                                    in an  amount  not to  exceed  $778,622  per
                                    annum   (subject   to   increase   based  on
                                    increases    in    CharterMac's    and   its
                                    subsidiaries' assets and to annual increases
                                    based upon  increases in the Consumer  Price
                                    Index).
Incentive Share Options             The Manager  may receive  options to acquire
                                    additional  Common  Shares  pursuant  to the
                                    Share  Option  Plan  only  if   CharterMac's
                                    distributions in any year exceed $0.9517 per
                                    Common Share and the Compensation  Committee
                                    of the Board of Trustees determines to grant
                                    such options.
Liquidation Fee                     1.50% of the gross sales price of the assets
                                    sold  by  CharterMac  in  connection  with a
                                    liquidation of CharterMac  assets supervised
                                    by the Manager.

* The Manager is also  permitted to earn  miscellaneous  compensation  which may
include,  without  limitation,  construction  fees,  escrow  interest,  property
management fees, leasing  commissions and insurance  brokerage fees. The payment
of any such  compensation is generally  limited to the competitive  rate for the
services  being  performed.  A bond  placement  fee of 1.0% to 1.5% of the  face
amount of each asset  invested in or acquired by CharterMac or its  subsidiaries
is  payable  to the  Manager  by the  borrower,  and  not by  CharterMac  or its
subsidiaries.

Affiliates of the Manager may provide certain financial guarantees to facilitate
leveraging  by  CharterMac,  for which they could be paid market  rate fees.  In
addition,  affiliates of the Manager may provide certain financial guarantees to
the owner (or  partners of the  owners) of the  underlying  properties  securing
CharterMac's revenue bonds, for which they could be paid market rate fees.


                                      -81-

<PAGE>


The  Manager may engage in other  business  activities  related to real  estate,
mortgage investments or other investments whether similar or dissimilar to those
made by  CharterMac,  or act as  manager  to any other  person or entity  having
investment policies whether similar or dissimilar to those of CharterMac. Before
the  Manager,  the  officers  and  directors  of the  Manager  and  all  persons
controlled by the Manager and its officers and  directors may take  advantage of
an opportunity for their own account or present or recommend it to others,  they
are obligated to present such  investment  opportunity to CharterMac if (i) such
opportunity  is of a  character  which could be taken by  CharterMac,  (ii) such
opportunity is compatible with CharterMac's  investment  objectives and policies
and (iii)  CharterMac  has the  financial  resources  to take  advantage of such
opportunity.

The Trust  Agreement  and  Management  Agreement  provide that  CharterMac  will
indemnify the Manager and its affiliates under certain circumstances.

Related  Charter  has  been  designated  the "Tax  Matters  Partner"  to  manage
administrative  tax proceedings  conducted at CharterMac's level by the IRS with
respect to  company  matters.  Related  Charter  will also serve as the  general
partner of CharterMac for tax purposes.

Item 11.  Executive Compensation

Trustees and Management

CharterMac has three  executive  officers and eight Trustees  (three of whom are
Independent  Trustees).  CharterMac does not pay or accrue any fees, salaries or
other forms of  compensation  to its officers  other than  options  which may be
received under the Share Option Plan.  Independent Trustees receive compensation
for serving as Independent Trustees. Mr. Edson receives compensation at the rate
of $30,000 per year, payable $20,000 in cash (or, at Mr. Edson's option,  Common
Shares) and Common  Shares  having an aggregate  value of $10,000,  based on the
fair  market  value  at  the  date  of  issuance,  in  addition  to  an  expense
reimbursement for attending meetings of the Board of Trustees. Messrs. Allen and
Fisch  receive  compensation  at the rate of $17,500 per year payable  $7,500 in
cash (or, at Messrs. Allen's or Fisch's option, Common Shares) and Common Shares
having an aggregate value of $10,000, based on the fair market value at the date
of issuance,  in addition to an expense  reimbursement for attending meetings of
the Board of Trustees.  In  addition,  Messrs.  Fisch,  Allen and Edson each are
receiving  compensation  for  serving on the special  committee  of the Board of
Trustees in connection with the proposed  acquisition of a Related. For the year
ended  December  31,  2002,  Mr.  Fisch,  who served as  Chairman of the special
committee,  received in total $75,000,  of which $37,500 was in cash and $37,500
was in Common Shares. Messrs. Allen and Edson each received in total $60,000, of
which  $30,000  was in cash and  $30,000 was in Common  Shares.  CharterMac  has
agreed to pay the  members of the special  committee  the same  compensation  in
2003, prorated from the period January 1, 2003 until the proposed acquisition is
consummated.

The  Manager,  at its  expense,  provides  all  personnel  necessary  to conduct
CharterMac's  regular  business.  The Manager receives various fees for advisory
and other services performed under the Management Agreement. An affiliate of the
Manager pays all salaries,  bonuses and other  compensation  (other than options
which may be received under the Share Option Plan) to the officers of CharterMac
and the general partner of the Manager. Certain members and officers of the sole
general  partner of the  Manager  and certain  officers  of  CharterMac  receive
compensation  from the Manager and its  affiliates  for services  performed  for
various   affiliated   entities,   which  may  include  services  performed  for
CharterMac.  Such  compensation  may be  based  in  part on the  performance  of
CharterMac;  however, the Manager believes that any compensation attributable to
services performed for CharterMac is immaterial.

Share Option Plan

The Share Option Plan was adopted to attract and retain qualified individuals to
serve as trustees,  officers and/or employees of CharterMac,  its  subsidiaries,
the Manager and any  successor  manager,  as well as to harmonize  the financial
interests of such individuals  with the interests of the Company's  shareholders
generally (i.e., by providing them with substantial  financial  interests in the
Company's success).  The Compensation  Committee,  which is comprised of Messrs.
Allen and Fisch, administers the Share Option Plan. Pursuant to the Share Option
Plan,  if  CharterMac's  distributions  per  Common  Share  in  the  immediately
preceding  calendar  year exceed  $0.9517  per Common  Share,  the  Compensation
Committee has the authority to issue options to purchase, in the aggregate, that
number of Common  Shares  which is equal to three  percent of the Common  Shares
outstanding as of December 31 of the immediately  preceding calendar year (or in
the  initial  year,  as of  October 1,  1997),  provided  that the  Compensation
Committee may only issue, in the aggregate, options to purchase a maximum number
of Common  Shares  over the life of the Share  Option  Plan  equal to  2,058,683
Common Shares (i.e., 10% of the Common Shares outstanding on October 1, 1997.)

Subject  to  the  limitations  described  in  the  preceding  paragraph,  if the
Compensation Committee does not grant the maximum number of options in any year,
then the excess of the number of  authorized  options over the number of options
granted  in such year will be added to the number of  authorized  options in the
next  succeeding  year  and will be  available  for  grant  by the  Compensation
Committee in such succeeding year.

All options  granted by the  Compensation  Committee will have an exercise price
equal to or greater than the fair market value of the Common  Shares on the date
of the grant.  The maximum option term is ten years from the date of grant.  All
Common  Share  options  granted  pursuant  to the  Share  Option  Plan  may vest
immediately  upon  issuance  or in  accordance  with  the  determination  of the
Compensation Committee. No options were granted for the years ended December 31,
1997 or December 31, 1998.  In 1999,  CharterMac  distributed  $0.995 per Common
Share.  On May 1, 2000 the  compensation  committee  issued  297,830  options to
employees of affiliates of the Manager.


                                      -82-


<PAGE>


In 2000, 2001 and 2002, CharterMac distributed $1.07, $1.14 and $1.26 per share,
respectively,  thus enabling the  Compensation  Committee to issue options under
the  Share  Option  Plan for  each of those  years.  In 2002,  the  compensation
committee issued 40,000 options to Mr. Rothstein. The following table sets forth
information  concerning the grant of share options to Mr.  Rothstein  during the
last fiscal year:


<TABLE>

                                      Percentage
                                         of
                                        total
                                       options
                                       granted                              Potential realized
                                         to                                  value at assumed
                                      employees      Per                     annual rates of
                                         in         Share                   stock appreciation
                           Options     fiscal      exercise  Expiration     at the end of 10
Name            Title      Granted 1    year        price       Date            years 2
----            -----      -------   ----------   --------   ----------     ------------------
<S>             <C>        <C>       <C>          <C>        <C>             <C>

                                                                              5%         10%
                                                                            ------     -------
Stuart A.       Chief      40,000       100%       $17.56     9/18/12     $429,356   $1,099,732
Rothstein      Financial
               Officer

</TABLE>

1    Options   become   exercisable   one-third  on  each  of  the  first  three
     anniversaries  of the date of grant.
2    Assumed  annual rates of share price  appreciation,  as  determined  by the
     rules of the  Commission,  for  illustrative  purposes  only.  Actual share
     prices  will vary from  time to time  based  upon  market  factors  and the
     Company's financial performance.  No assurance can be given that such rates
     will be achieved.

Report of the Compensation Committee

The  Compensation  Committee is comprised of two Independent  Trustees  (Messrs.
Allen and Fisch).  The role of the  Compensation  Committee is to administer the
policies  governing  the Share  Option  Plan.  Because  CharterMac  does not pay
salaries and bonuses to the officers of CharterMac or the general partner of the
Manager,  the  Compensation  Committee  does not  determine  executives'  salary
levels.  Subject to the restrictions  contained in the Share Option Plan, option
compensation is intended to be set at a level  competitive with the amounts paid
to the  management  of  similarly  sized  companies in similar  industries.  The
Committee also  evaluates the  performance of management  when  determining  the
number of options to be issued.

CharterMac's  grants of share options are structured to link the compensation of
the  officers of  CharterMac  and the  officers  of the  general  partner of the
Manager  (and  its  affiliates)  with  CharterMac's  performance.   Through  the
establishment  of the Share Option Plan,  CharterMac  has aligned the  financial
interests of its executives (and the executives of the Manager) with the results
of CharterMac's performance, which is intended to enhance shareholder value. The
Compensation  Committee may only grant options if certain performance levels are
met and is limited in the number of options  which may be granted each year (See
"Share Option Plan"  above).  The amount of options which may be granted will be
set at levels that the  Compensation  Committee  believes to be consistent  with
others  in  CharterMac's  industry,   with  such  compensation  contingent  upon
CharterMac's level of annual and long-term performance.

Section 162 (m) was added to the  Internal  Revenue  Code as part of the Omnibus
Budget  Reconciliation  Act of 1993.  Section 162 (m) limits the  deduction  for
compensation  paid  to the  Chief  Executive  Officer  and the  other  executive
officers to the extent  that  compensation  of a  particular  executive  exceeds
$1,000,000  (less the amount of any "excess  parachute  payments"  as defined in
Section 280G of the Code) in any one year.  However,  under Section 162(m),  the
deduction  limit  does not  apply to  certain  "performance-based"  compensation
established by an independent  compensation  committee which conforms to certain
restrictive  conditions  stated  under the Code and related  regulations.  It is
CharterMac's goal to have compensation paid to its five most highly  compensated
officers qualify as performance based compensation deductible for federal income
tax purposes under Section 162 (m). Given the fact that CharterMac is externally
managed and the only  compensation  that currently may be paid to its executives
are options  pursuant to the Share Option Plan,  it is unlikely that Section 162
(m) will present any concerns.


                                      -83-



<PAGE>



                             COMPENSATION COMMITTEE


                                 Peter T. Allen
                                 Arthur P. Fisch


                                 AUDIT COMMITTEE

Audit Committee Charter

On June 14, 2000, the Board of Trustees  adopted the following  Audit  Committee
Charter.  The Audit Committee Charter will be reviewed,  updated and approved by
the Board of Trustees each year:

Role and Independence

The audit  committee,  of the Board of  Trustees of Charter  Municipal  Mortgage
Acceptance  Company  (the  "Company"),  assists  the  Board  in  fulfilling  its
responsibility  for  oversight of the quality and  integrity of the  accounting,
auditing  and  reporting  practices  of the  Company  and other  such  duties as
directed by the Board.  The  membership of the Company's  audit  committee  (the
"Committee")  shall  consist  of at  least  three  Trustees  who  are  generally
knowledgeable in financial and auditing  matters,  including at least one member
with accounting or related financial management expertise.  Each member shall be
free of any relationship that, in the opinion of the Board, would interfere with
his or her  individual  exercise  of  independent  judgment,  and shall meet the
director independence  requirements for serving on the Committee as set forth in
the corporate governance standards of the American Stock Exchange. The Committee
is expected to maintain free and open communication (including private executive
sessions at least  annually)  with the  independent  accountants,  the  internal
auditors,  if any,  and the  management  of the  Company.  In  discharging  this
oversight  role, the Committee is empowered to investigate any matter brought to
its attention,  with full power to retain  outside  counsel or other experts for
this purpose.

The Board of Trustees shall appoint one member of the Committee as  chairperson.
He or she  shall be  responsible  for  leadership  of the  Committee,  including
preparing the agenda, presiding over the meetings,  making Committee assignments
and  reporting  to the Board of Trustees.  The  chairperson  will also  maintain
regular liaison with the CEO, CFO, and the lead independent audit partner.

Responsibilities

The Committee's primary responsibilities include:


Recommending to the Board the independent  accountant to be selected or retained
to audit the  financial  statements of the Company.  In so doing,  the Committee
will  request  from  the  auditor  a  written   affirmation,   consistent   with
Independence   Standards   Board  Standard  1,  that  the  auditor  is  in  fact
independent,  discuss  with the  auditor any  relationships  that may impact the
auditor's  independence,  and  recommend  to the board any actions  necessary to
oversee the auditor's independence.

Overseeing the independent  auditor  relationship by discussing with the auditor
the  nature  and rigor of the  audit  process,  receiving  and  reviewing  audit
reports,  and providing the auditor full access to the Committee (and the Board)
to report on any and all appropriate matters.

Reviewing the audited  financial  statements and discussing them with management
and the independent  auditor.  These discussions shall include  consideration of
the quality of the Company's  accounting  principles as applied in its financial
reporting,  including  review of  estimates,  reserves and  accruals,  review of
judgmental areas,  review of audit adjustments  whether or not recorded and such
other inquiries as may be appropriate.  Based on the review, the Committee shall
make its  recommendation  to the  Board  as to the  inclusion  of the  Company's
audited financial statements in the Company's annual report on Form 10-K.

Reviewing with  management and the independent  auditor the quarterly  financial
information  prior to the  Company's  filing of Form  10-Q.  This  review may be
performed by the Committee or its chairperson.

Discussing  with  management,  the internal  auditors,  if any, and the external
auditors the quality and adequacy of the Company's internal controls.

Discussing with management the status of pending  litigation,  taxation  matters
and  other  areas  of  oversight  to the  legal  and  compliance  area as may be
appropriate.

Reporting  Committee  activities to the full Board and issuing annually a report
to  be  included  in  the  proxy  statement  (including   appropriate  oversight
conclusions) for submission to the shareholders.

The  Committee's  job is one of  oversight.  Management is  responsible  for the
preparation of the Company's financial  statements and the independent  auditors
are responsible for auditing those financial  statements.  The Committee and the
Board recognize that management (including the internal audit staff, if any) and
the  independent  auditors  have  more  resources  and time,  and more  detailed
knowledge and information regarding the Company's accounting, auditing, internal
control and financial reporting  practices


                                      -84-

<PAGE>


than the Committee does;  accordingly  the  Committee's  oversight role does not
provide any expert or special  assurances  as to the  financial  statements  and
other  financial  information  provided by the Company to its  shareholders  and
others.

Audit Committee Report

The Audit Committee of  CharterMac's  Board of Trustees has issued the following
report with respect to the audited  financial  statements of the Company for the
fiscal year ended December 31, 2002:

o    The Audit Committee has reviewed and discussed with CharterMac's management
     the Company's fiscal 2002 audited financial statements;

o    The Audit Committee has discussed with Deloitte & Touche LLP  (CharterMac's
     independent  auditors) the matters required to be discussed by Statement on
     Auditing Standards No. 61 as amended by SAS No. 90;

o    The Audit  Committee has received the written  disclosures  and letter from
     the independent auditors required by Independence  Standards Board Standard
     No. 1 (which related to the auditors' independence from the Company and its
     related  entities) and has discussed with the auditors  their  independence
     from CharterMac;

Based on the review and  discussions  referred to in the three items above,  the
Audit Committee  recommended to the Board of Trustees that the audited financial
statements be included in CharterMac's Annual Report on Form 10-K for the fiscal
year ended December 31, 2002.

Submitted by the Audit Committee of CharterMac's Board of Trustees:

                                    Charles L. Edson -- Chairman
                                    Peter T. Allen
                                    Arthur P. Fisch


                                      -85-


<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management

As of  March 31, 2003,  no person was known by  CharterMac  to be the
beneficial owner of more than 5% of the outstanding Common Shares of CharterMac.

As of March 31, 2003,  the members of the sole  general  partner of the
Manager  own, in the  aggregate,  100% of the voting  stock of the sole  general
partner of the Manager.

As of March 31, 2003,  Trustees and senior  officers of CharterMac  and
members  and senior  officers  of the sole  general  partner of the  Manager own
directly or beneficially Common Shares of CharterMac as follows:
<TABLE>
<CAPTION>

                                                          Amount and Nature of       Percent of
Name                          Title                       Beneficial Ownership          Class11
----                          -----                   ---------------------------    -----------
<S>                 <C>                               <C>                                <C>
Stephen M. Ross     Chairman of the  Board of         255,487 Common Shares  1 2 3         *
                    CharterMac and Member of
                    Related Charter
Alan P. Hirmes      Managing Trustee,                  65,459 Common Shares  1 3 4         *
                    Executive VP and
                    Secretary, of CharterMac
                    and Member and Senior VP
                    of Related Charter
Stuart J. Boesky    Managing Trustee,                  73,415 Common Shares  1 3 5         *
                    President and CEO of
                    CharterMac and  Member,
                    President and CEO of
                    Related Charter
Peter T. Allen      Managing Trustee  of                5,332 Common Shares                *
                    CharterMac
Arthur P. Fisch     Managing Trustee  of                5,758 Common Shares                *
                    CharterMac
Thomas W. White     Managing Trustee  of                  972 Common Shares                *
                    CharterMac
Charles L. Edson    Managing Trustee  of                2,584 Common Shares                *
                    CharterMac
Michael J. Brenner  Managing Trustee of                20,787 Common Shares  6             *
                    CharterMac
Stuart A.           CFO & CAO of CharterMac                 0 Common Shares                *
Rothstein           and SVP & CFO of Related
                    Charter

James D. Spound     Executive VP of Related            41,576 Common Shares  7             *
                    Charter
Marc D. Schnitzer   Senior VP of  Related              20,855 Common Shares  4             *
                    Charter
Denise L. Kiley     Senior VP of Related               20,855 Common Shares  4             *
                    Charter
John J. Sorel       Senior VP of Related                3,373 Common Shares  8             *
                    Charter
Steven B. Wendel    Senior VP of Related                1,000 Common Shares *9             *
                    Charter
All Senior  Officers and Trustees of CharterMac       475,117 Common Shares  1 3 10    1.05%
and Related Charter as a group (14 persons)

</TABLE>

*Less than 1% of the outstanding Common Shares.


------------------
1    11 of these Common Shares are owned by Related Charter, of which a majority
     is owned by Messrs. Ross, Hirmes, and Boesky.
2    Includes  9,033 options to purchase  Common  Shares (which are  exercisable
     within 60 days)
3    21,157 of these Common Shares are owned by Related AMI Associates, Inc., of
     which a majority is owned by Messrs. Ross, Hirmes and Boesky .
4    Includes  7,226 options to purchase  Common  Shares (which are  exercisable
     within 60 days)
5    Includes  14,188 options to purchase  Common Shares (which are  exercisable
     within 60 days)
6    Includes  20,787 options to purchase  Common Shares (which are  exercisable
     within 60 days)
7    Includes  41,576 options to purchase  Common Shares (which are  exercisable
     within 60 days)
8    Includes  3,373 options to purchase  Common  Shares (which are  exercisable
     within 60 days)
9    Includes  1,000 options to purchase  Common  Shares (which are  exercisable
     within 60 days)
10   Includes  111,635  options to purchase Common Shares (which are exercisable
     within 60 days)
11   Based on the Common Shares outstanding as of December 31, 2002 (41,160,218)
     plus the Common Shares  issuable upon the  conversion of (i) all options to
     purchase Common Shares which are  exercisable  within 60 days (111,635) and
     (ii) all CRA Preferred Shares (3,835,002).



                                      -86-

<PAGE>


Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended,  requires
CharterMac's  officers  and  trustees,  and  persons  who own more than 10% of a
registered class of CharterMac's equity securities, to file reports of ownership
and changes in  ownership  with the  Securities  and  Exchange  Commission  (the
"Commission").  These persons are required by  regulation  of the  Commission to
furnish CharterMac with copies of all Section 16(a) forms they file.

CharterMac  believes  that  during the  fiscal  year ended  December  31,  2002,
CharterMac's officers,  trustees and greater than 10% beneficial owners complied
with all applicable Section 16(a) filing  requirements.  There were not any Form
5's filed with the SEC for the year ended December 31, 2002.

Item 13.  Certain Relationships and Related Transactions

General

CharterMac  has  invested  in, and may in the future  invest in,  Revenue  Bonds
secured by properties  in which either direct or indirect  affiliates of Related
Capital own equity  interests in the borrower.  The Trust  Agreement  contains a
limitation,  equal to 15% of  CharterMac's  total market value, on the aggregate
amount of  Revenue  Bonds  CharterMac  may hold where the  borrowers  under such
Revenue  Bonds are either  direct or indirect  affiliates of Related and Related
generally has a controlling  economic  interest  ("15%  Affiliates").  The Trust
Agreement  also  requires  that  CharterMac  obtain a fairness  opinion  from an
independent  adviser before  investing  under any  circumstance in Revenue Bonds
involving 15% Affiliates.  For purposes of the foregoing limitations, a borrower
in which Related  Capital or its  affiliates  own a partnership or joint venture
interest  merely to  facilitate  an equity  financing  on behalf of one of RCC's
investment  funds is not deemed a 15%  Affiliate  under the Trust  Agreement  by
virtue of such  relationship  ("Non-15%  Affiliate"  and,  together with the 15%
Affiliates, the "RCC Affiliates"). A typical Non-15% Affiliate borrower would be
structured as a limited partnership as follows:  the general partner would be an
unaffiliated  third  party with a 1% general  partnership  interest  and the 99%
limited  partner would itself be a limited  partnership in which an affiliate of
Related would own a 1% general partnership  interest and one or more Fortune 500
companies would own a 99% limited partnership interest.

Every transaction  entered into between CharterMac and an RCC Affiliate raises a
potentially  ongoing inherent  conflict of interest.  In addition to the initial
determination  to invest in Revenue Bonds secured by properties  owned by an RCC
Affiliate,  such  conflicts  of interest  with  respect to these  Revenue  Bonds
include, among others, decisions regarding (i) whether to waive defaults of such
RCC Affiliate,  (ii) whether to foreclose on a loan, and (iii) whether to permit
additional  financing on a property securing a CharterMac  investment other than
financing provided by CharterMac.  Although not required by the Trust Agreement,
the Board of Trustees has adopted a policy to address certain of such conflicts,
requiring  the approval of a majority of the  independent  trustees in the event
that CharterMac is required to take any of the following actions with respect to
a Revenue  Bond  secured by a property in which an RCC  Affiliate of the Manager
owns an equity interest: (i) modification of any material rights and obligations
respecting the RCC Affiliate,  (ii) CharterMac's waiver of material rights under
the affiliated  loan  documents,  (iii) the  advancement of a material amount of
additional funds to an affiliate borrower and (iv) forbearing to exercise any of
CharterMac's  rights or collect any  material  costs due to us from an affiliate
borrower.

Indemnification  Rights with respect to Credit  Enhancement  and Yield Guarantee
Transactions

On December 31, 2001, CharterMac completed a credit enhancement transaction with
Merrill  Lynch  Capital  Services,  Inc.  ("MLCS")  pursuant  to  which CM Corp.
initially will receive an annual fee of approximately $1.2 million in return for
assuming  MLCS's $46.9 million  first loss position on a $351.9  million pool of
tax-exempt  weekly  variable  rate  multi-family  mortgage  loans  originated by
CreditRe Mortgage  Capital,  LLC, an affiliate of Credit Suisse First Boston and
TRCLP.  TRCLP has provided CM Corp. with an indemnity covering 50% of any losses
that are incurred by CM Corp. as part of this  transaction.  As the loans mature
or prepay,  the first loss  exposure and the fees paid to CM Corp.  will both be
reduced.  The latest maturity date on any loan in the portfolio  occurs in 2009.
Fannie  Mae and  Freddie  Mac have  assumed  the  remainder  of the real  estate
exposure  after the $46.9 million first loss  position.  In connection  with the
transaction,  CharterMac has guaranteed  the  obligations of CM Corp.,  and as a
security therefore,  has posted collateral,  initially in an amount equal to 50%
of the first loss  amount,  which may be reduced to 40% if certain  post closing
conditions are met. TRCLP is an affiliate of Related Capital.

CM Corp.  performed  due  diligence on each  property in the pool,  including an
examination  of  loan-to-value  and debt service  coverage both on a current and
"stressed"  basis.  CM Corp.  analyzed the  portfolio  on a "stressed"  basis by
increasing capitalization rates and assuming an increase in the low floater bond
rate.  As of December 31,  2001,  the credit  enhanced  pool of  properties  are
performing  according to their contractual  obligations and the Company does not
anticipate any losses to be incurred on its guaranty.

On July 18, 2002, CM Corp.  entered into two agreements  with Merrill Lynch (the
"Primary Guarantor") to guarantee an agreed-upon internal rate of return ("IRR")
for a pool of 11  multi-family  properties  owned by RCGCP for which the Company
will receive two guarantee fees totaling approximately $5.9 million.

The  transaction  was  structured  as two  separate  guarantees,  one  primarily
guaranteeing  the IRR through the lease-up phase of the properties and the other
guaranteeing the IRR through the operating phase of the properties.  The fee for
the first guarantee,  in the amount of approximately  $3.6 million,  was paid in
July  2002 at  closing.  The fee for the  second  guarantee  will be paid in two
installments.  The  first  installment,  in the  amount  of  approximately  $1.7
million, will be paid in October 2003, and the final installment,  in the amount
of approximately $566,000, will be paid in February 2004. The 11 properties were
financed,  in part,  with $125.3 million of tax-exempt  and taxable debt,  $70.3
million of which are revenue  bonds that have been  acquired by the Company.


                                      -87-

<PAGE>


In connection with the transaction,  the Company posted $18.2 million of Revenue
Bonds  as  collateral  to the  Primary  Guarantor,  which  will  be  reduced  to
approximately  $1.4  million  over a period of up to 20 years as the  properties
reach  certain  operating  benchmarks.   In  addition,  the  Company  agreed  to
subordinate  25% of each of the  bonds  it  acquired  that  are  secured  by the
properties and to not use the  subordinated  portion of such bonds as collateral
in connection with any borrowings.

To mitigate risk, the Company is the  beneficiary of a guarantee  against losses
associated  with  construction  and  operating  stabilization  for  each  of the
properties  in RCGCP,  which is capped at $15 million.  The  guarantee  has been
provided by TRCLP.  If the Company's  acquisition of Related is completed,  then
this guarantee will no longer be in force. As of December 31, 2001,  TRCLP had a
GAAP  net  worth  of   approximately   $179.3  million  with  liquid  assets  of
approximately  $54.9  million.  In  addition,  the  developers  of  each  of the
properties  have also been required to give recourse  completion,  stabilization
and  operating  deficit  guarantees.  TRCLP has also  agreed,  if needed,  after
construction completion and property stabilization, to fund up to the first $2.5
million of  operating  deficits  of the  underlying  properties  or any  amounts
required to pay the guaranteed IRR to the investor.

Proposed Acquisition of Related

In December 2002,  CharterMac announced that it had entered into an agreement to
acquire  100% of the  ownership  interests of RCC and  substantially  all of the
businesses  operated  by  Related,  one of  the  nation's  leading  full-service
financial  services  providers  for  the  multi-family  housing  industry.   The
acquisition will enable CharterMac to terminate its outside management agreement
with Related Charter, an affiliate of Related,  and to become a self-advised and
self-managed company.

The  acquisition,  together with other related  proposals to amend  CharterMac's
trust  agreement and its share option plan in connection  with the  acquisition,
are subject to approval by CharterMac's  common  shareholders,  as well as other
customary closing conditions. The complete terms of the proposed acquisition and
the opinion from Dresdner  Kleinwort  Wasserstein will be set forth in the proxy
statement to be mailed to shareholders following any required regulatory review.
The  transaction  will be voted  upon by  CharterMac  shareholders  at a special
shareholder meeting.

On February 28, 2003,  the Company  filed a  preliminary  proxy  regarding  this
proposed acquisition of Related.


                                      -88-


<PAGE>


Share Performance Graph

The following share performance graph compares  CharterMac's  performance to the
S&P 500 and the Russell 2000 stock  index.  CharterMac  is currently  one of the
companies  included in the Russell 2000 stock index,  an index that measures the
performance of small market capitalization  companies.  The graph assumes a $100
investment on December 31, 1997. All stock price  performance  figures  includes
the reinvestment of dividends.


                               [GRAPHIC OMMITED]




Cumulative Total Return

<TABLE>

                       12/97    12/98      12/99      12/00       12/01     12/02
                       -----    -----      -----      -----       -----     -----
<S>                    <C>      <C>        <C>        <C>         <C>       <C>

CHARTERMAC               100    $102.08   $107.16     $133.01     $173.10   $199.10
S&P 500                  100     128.58    155.64      141.46      124.65     97.10
RUSSELL 2000             100      97.45    118.17      114.60      117.45     93.39

</TABLE>


                                      -89-


<PAGE>



Item 14.   Controls and Procedures

(a)  Evaluation  of Disclosure  Controls and  Procedures.  The  Company's  Chief
     Executive   Officer  and  Chief   Financial   Officer  have  evaluated  the
     effectiveness of the Company's  disclosure controls and procedures (as such
     term is defined in Rules  13a-14(c)  under the  Securities  Exchange Act of
     1934, as amended (the "Exchange Act")) as of a date within 90 days prior to
     the filing date of this annual  report (the  "Evaluation  Date").  Based on
     such  evaluation,  such officers have concluded  that, as of the Evaluation
     Date,  the Company's  disclosure  controls and  procedures are effective in
     alerting  them on a timely  basis to material  information  relating to the
     Company (including its consolidated  subsidiaries)  required to be included
     in the Company's reports filed or submitted under the Exchange Act.

(b)  Changes in Internal  Controls.  Since the Evaluation  Date,  there have not
     been any significant changes in the Company's internal controls or in other
     factors that could significantly affect such controls.




                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.

<TABLE>

                                                                                     Sequential
                                                                                        Page
                                                                                     ----------
<S>                                                                                  <C>

(a)1.  Financial Statements

       Independent Auditors' Report                                                          32

       Consolidated Balance Sheets as of December 31, 2002 and 2001                          33

       Consolidated  Statements of Income for the years ended December 31, 2002,
       2001 and 2000                                                                         34

       Consolidated  Statements of Changes in Shareholders' Equity for the years
       ended December 31, 2002, 2001 and 2000                                                35

       Consolidated  Statements  of Cash Flows for the years ended  December 31,
       2002, 2001 and 2000                                                                   37

       Notes to Consolidated Financial Statements                                            39

(a)2.  Financial Statement Schedules

       Schedule I - Condensed Financial Information of Registrant                            98

       All other  schedules have been omitted because they are not applicable or
       the required  information is included in the financial statements and the
       notes thereto.

(a)3.  Exhibits

3.1(a) Certificate of Business  Trust dated as of August 12, 1996  (incorporated
       by reference to the Company's Registration Statement on Form 10, File No.
       001-13237)

3.1(b) Certificate  of Amendment of  Certificate  of Business  Trust dated as of
       April 30, 1997  (incorporated by reference to the Company's  Registration
       Statement on Form 10, File No. 001-13237)
</TABLE>


                                      -90-

<PAGE>



Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
                                  (continued)

<TABLE>

                                                                                     Sequential
                                                                                        Page
                                                                                     ----------

<S>    <C>
3.1(c) Trust Agreement dated as of August 12, 1996 (incorporated by reference to
       the Company's Registration Statement on Form 10, File No. 001-13237)

3.1(d) Amendment  No.  1  to  Trust   Agreement  dated  as  of  April  30,  1997
       (incorporated  by reference to the  Company's  Registration  Statement on
       Form 10, File No. 001-13237)

3.1(e) Amended and  Restated  Trust  Agreement  dated as of  September  30, 1997
       (incorporated  by reference to the Company's  Current Report on Form 8-K,
       filed with the Commission on March 19, 1998)

3.2    Amended and Restated Bylaws  (incorporated  by reference to the Company's
       Annual Report on Form 10-K, filed with the Commission on March 30, 2000)

4.1    Specimen Copy of Share  Certificate for shares of beneficial  interest of
       the Company  (incorporated by reference to the Company's  Amendment No. 1
       on Form 10/A to the Company's Registration Statement on Form 10, File No.
       001-13237)

10(a)  Management Agreement dated as of October 1, 1997, between the Company and
       Related Charter L.P. (incorporated by reference to the Company's Current
       Report on Form 8-K, filed with the Commission on March 19, 1998)

10(b)  Agreement  and Plan of Merger  dated as of October 1, 1997,  by and among
       the Company, Summit Tax Exempt Bond Fund, L.P., Summit Tax Exempt L.P. II
       and  Summit  Tax  Exempt  L.P.  III  (incorporated  by  reference  to the
       Company's  Current Report on Form 8-K, filed with the Commission on March
       19, 1998)

10(c)  Incentive Share Option Plan  (incorporated  by reference to the Company's
       Current Report on Form 8-K, filed with the Commission on March 19, 1998)

10(d)  Contribution  Agreement  between  CharterMac and  CharterMac  Origination
       Trust  ("Origination  Trust") dated as of May 21, 1998  (incorporated  by
       reference to Exhibit 10 (aaaw) in the Company's  June 30, 1998  Quarterly
       Report on Form 10-Q)

10(e)  Contribution  Agreement  between  Origination  Trust and CharterMac Owner
       Trust ("Owner Trust") dated as of May 21, 1998 (incorporated by reference
       to Exhibit 10 (aaax) in the Company's June 30, 1998  Quarterly  Report on
       Form 10-Q)

10(f)  Insurance  Agreement among MBIA,  CharterMac,  Origination  Trust,  Owner
       Trust,   CharterMac  Floater  Certificate  Trust  ("Floater   Certificate
       Trust"),  First Tennessee Bank National  Association ("First Tennessee"),
       Related  Charter LP, and  Bayerische  Landesbank  Girozentrale,  New York
       Branch ("Bayerische") dated as of May 21, 1998 (incorporated by reference
       to Exhibit 10 (aaay) in the Company's June 30, 1998  Quarterly  Report on
       Form 10-Q)

</TABLE>


                                      -91-

<PAGE>


Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
                                  (continued)

<TABLE>

                                                                                     Sequential
                                                                                        Page
                                                                                     ----------
<S>    <C>                                                                              <C>
10(g)  Liquidity  Agreement among Owner Trust,  Floater Certificate Trust, First
       Tennessee,  MBIA and Bayerische dated as of May 21, 1998 (incorporated by
       reference to Exhibit 10 (aaaz) in the Company's  June 30, 1998  Quarterly
       Report on Form 10-Q)

10(h)  Liquidity Pledge and Security  Agreement among Origination  Trust,  Owner
       Trust,  Floater  Certificate  Trust, MBIA, First Tennessee and Bayerische
       dated as of May 21, 1998 (incorporated by reference to Exhibit 10 (aaaaa)
       in the Company's June 30, 1998 Quarterly Report on Form 10-Q)

10(i)  Fee Agreement among Wilmington Trust Company,  Floater  Certificate Trust
       and  CharterMac  dated as of May 21, 1998  (incorporated  by reference to
       Exhibit 10 (aaaab) in the  Company's  June 30, 1998  Quarterly  Report on
       Form 10-Q)

10(j)  Certificate Placement Agreement  (incorporated by reference to Exhibit 10
       (aaaac) in the Company's June 30, 1998 Quarterly Report on Form 10-Q)

10(k)  Remarketing Agreement (incorporated by reference to Exhibit 10 (aaaad) in
       the Company's June 30, 1998 Quarterly Report on Form 10-Q)

10(l)  CharterMac  Equity  Issuer  Trust,  6 5/8% Series A Cumulative  Preferred
       Shares,  Purchase  Agreement,   dated  June  14,  1999  (incorporated  by
       reference to Exhibit 10 (aaaaz) in the Company's  June 30, 1999 Quarterly
       Report on Form 10-Q)

10(m)  Agreement  and Plan of  Merger by and among  Charter  Municipal  Mortgage
       Acceptance  Company,  CM Holding Trust and American Tax Exempt Bond Trust
       dated as of November 2, 1999  (incorporated  by reference to Exhibit 99.2
       in the Company's Current Report on Form 8-K dated November 2, 1999)

10(n)  Contribution  Agreement  dated as of December 17, 2002  (incorporated  by
       reference to the Company's  Preliminary  Proxy  Statement on Schedule 14A
       filed on February 2, 2003)

12     Ratio of  earnings to fixed  charges and  preferred  share  dividends  of
       subsidiary                                                                       103

21     Subsidiaries of the Company (filed herewith)                                     104

99.1   Amended and  Restated  Trust  Agreement  by and among J.  Michael  Fried,
       Stuart  J.  Boesky,  Alan P.  Hirmes,  Robert  W.  Grier  and  Andrew  T.
       Panaccione as Managing Trustees,  Charter Municipal  Mortgage  Acceptance
       Company and Wilmington  Trust Company,  as Registered  Trustee dated June
       22, 1999 relating to  CharterMac  Equity  Issuer Trust  (incorporated  by
       reference to Exhibit 99 in the Company's June 30, 1999  Quarterly  Report
       on Form 10-Q)

99.2   Agreement dated as of April 15, 1999 between Charter  Municipal  Mortgage
       Acceptance  Company and Melvyn I. Weiss,  Esq. and Lawrence A.  Sucharow,
       Esq.,  as Class  Counsel  co-chairmen (incor-
</TABLE>


                                      -92-

<PAGE>



<TABLE>

                                                                                     Sequential
                                                                                        Page
                                                                                     ----------

<S>    <C>
       porated  by reference to the Company's  current  report on Form 8-K
       filed with the Commission on April 29, 1999).


(a)4.  Additional Exhibits

99.3   Chief  Executive  Officer  certification  to 18 U.S.C.  Section  1350, as
       adopted to Section  906 of the  Sarbanes-Oxley  Act of 2002.*                    105

99.4   Chief  Financial  Officer  certification  to 18 U.S.C.  Section  1350, as
       adopted to Section  906 of the  Sarbanes-Oxley  Act of 2002.*                    106

(b)    Reports on Form 8-K

       Current  report  on Form 8-K  relating  to the  Company's  press  release
       announcing its intent to acquire Related Capital Company, dated and filed
       December 20, 2002.

      *Pursuant to Commission  Release No. 33-8212,  this  certification will be
       treated as "accompanying" this Annual Report on Form 10-K and not "filed"
       as part of such report for purposes of Section 18 of the Exchange Act, or
       otherwise  subject to the liability of Section 18 of the Exchange Act and
       this  certification will not be declared to be incorporated by reference3
       into any filing  under the  Securities  Act of 1933,  as amended,  or the
       Exchange  Act,  except to the  extent  that the  registrant  specifically
       incorporates it by reference.

</TABLE>


                                      -93-

<PAGE>


                                   SIGNATURES



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                    (COMPANY)




Date: March 31, 2003             By:/s/ Stuart J. Boesky
                                    --------------------
                                    Stuart J. Boesky
                                    Managing Trustee, President
                                    and Chief Executive Officer




Date: March 31, 2003             By:/s/ Stuart J. Boesky
                                    --------------------
                                    Stuart A. Rothstein
                                    Executive Vice President
                                    and Chief Financial Officer



                                      -94-


<PAGE>



                                POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Stuart
J. Boesky,  Alan P. Hirmes and Stuart A. Rothstein,  and each or either of them,
his true and  lawful  attorney-in-fact  with  full  power  of  substitution  and
resubstitution,  for  him  and in his  name,  place  and  stead,  in any and all
capacities,  to sign any and all amendments to this Annual Report,  and to cause
the  same to be  filed,  with  all  exhibits  thereto  and  other  documents  in
connection  therewith,  with the  Securities  and  Exchange  Commission,  hereby
granting to said  attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite or
desirable  to be done in and about the  premises,  as fully to all  intents  and
purposes as the undersigned  might or could do in person,  hereby  ratifying and
confirming all acts and things that said attorneys-in-fact and agents, or either
of them, or their substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this  report has been signed by the  following  persons on behalf of the Company
and in the capacities and on the dates indicated:


Signature                        Title                             Date
---------                        -----                             ----


---------------------   Managing Trustee, President
Stuart J. Boesky        and Chief Executive Officer           March 31, 2003


---------------------   Managing Trustee and
Stephen M. Ross         Chairman of the Board                 March 31, 2003


---------------------
Michael J. Brenner      Managing Trustee                      March 31, 2003


---------------------   Managing Trustee, Executive
Alan P. Hirmes          Vice President and Secretary          March 31, 2003


---------------------   Chief Financial Officer and
Stuart A. Rothstein     Chief Accounting Officer              March 31, 2003


---------------------
Peter T. Allen          Managing Trustee                      March 31, 2003


---------------------
Arthur P. Fisch         Managing Trustee                      March 31, 2003


---------------------
Thomas W. White         Managing Trustee                      March 31, 2003


---------------------
Charles L. Edson        Managing Trustee                      March 31, 2003



                                      -95-

<PAGE>


                                POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Stuart
J. Boesky,  Alan P. Hirmes and Stuart A. Rothstein,  and each or either of them,
his true and  lawful  attorney-in-fact  with  full  power  of  substitution  and
resubstitution,  for  him  and in his  name,  place  and  stead,  in any and all
capacities,  to sign any and all amendments to this Annual Report,  and to cause
the  same to be  filed,  with  all  exhibits  thereto  and  other  documents  in
connection  therewith,  with the  Securities  and  Exchange  Commission,  hereby
granting to said  attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite or
desirable  to be done in and about the  premises,  as fully to all  intents  and
purposes as the undersigned  might or could do in person,  hereby  ratifying and
confirming all acts and things that said attorneys-in-fact and agents, or either
of them, or their substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this  report has been signed by the  following  persons on behalf of the Company
and in the capacities and on the dates indicated:


Signature                        Title                          Date


/s/ Stuart J. Boesky    Managing Trustee, President
--------------------    and Chief Executive Officer        March 31, 2003
Stuart J. Boesky


/s/ Stephen M. Ross     Managing Trustee and
--------------------    Chairman of the Board              March 31, 2003
Stephen M. Ross

/s/ Michael J. Brenner
----------------------  Managing Trustee                   March 31, 2003
Michael J. Brenner


/s/ Alan P. Hirmes      Managing Trustee, Executive
------------------      Vice President and Secretary       March 31, 2003
Alan P. Hirmes


/s/ Stuart A. Rothstein Chief Financial Officer and
----------------------- Chief Accounting Officer           March 31, 2003
Stuart A. Rothstein


/s/ Peter T. Allen
------------------      Managing Trustee                   March 31, 2003
Peter T. Allen


/s/ Arthur P. Fisch
-------------------     Managing Trustee                   March 31, 2003
Arthur P. Fisch


/s/ Thomas M. White
-------------------     Managing Trustee                   March 31, 2003
Thomas M. White


/s/ Charles L. Edson
--------------------    Managing Trustee                   March 31, 2003
Charles L. Edson


                                     -95-
<PAGE>


                                  CERTIFICATION


I, Stuart J. Boesky, hereby certify that:

       1.     I have  reviewed  this  annual  report  on Form  10-K  of  Charter
              Municipal Mortgage Acceptance Company;

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

       3.     Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information  included  in this  annual  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 annual report;

       4.     The registrant's  other certifying  officers and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
              for the registrant and we have:

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

              b) evaluated  the  effectiveness  of the  registrant's  disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and

              c)  presented  in this  annual  report our  conclusions  about the
              effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;

       5.     The registrant's  other certifying  officers and I have disclosed,
              based on our most recent evaluation,  to the registrant's auditors
              and the audit  committee  of  registrant's  board of  directors or
              persons performing the equivalent functions:

              a) all  significant  deficiencies  in the design or  operation  of
              internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report  financial data
              and have  identified  for the  registrant's  auditors any material
              weaknesses in internal controls; and

              b) any fraud, whether or not material, that involves management or
              other  employees who have a significant  role in the  registrant's
              internal controls; and

       6.     The registrant's other certifying officers and I have indicated in
              this annual report whether or not there were  significant  changes
              in internal controls or in other factors that could  significantly
              affect internal controls subsequent to the date of our most recent
              evaluation,  including  any  corrective  actions  with  regard  to
              significant deficiencies and material weaknesses.


Date: March 31, 2003                        By:/s/ Stuart J. Boesky
      --------------                           --------------------
                                               Stuart J. Boesky
                                               Chief Executive Officer


                                     -96-

<PAGE>



                                  CERTIFICATION


I, Stuart A. Rothstein, hereby certify that:

       1.     I have  reviewed  this  annual  report  on Form  10-K  of  Charter
              Municipal Mortgage Acceptance Company;

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

       3.     Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information  included  in this  annual  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 annual report;

       4.     The registrant's  other certifying  officers and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
              for the registrant and we have:

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

              b) evaluated  the  effectiveness  of the  registrant's  disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and

              c)  presented  in this  annual  report our  conclusions  about the
              effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;

       5.     The registrant's  other certifying  officers and I have disclosed,
              based on our most recent evaluation,  to the registrant's auditors
              and the audit  committee  of  registrant's  board of  directors or
              persons performing the equivalent functions:

              a) all  significant  deficiencies  in the design or  operation  of
              internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report  financial data
              and have  identified  for the  registrant's  auditors any material
              weaknesses in internal controls; and

              b) any fraud, whether or not material, that involves management or
              other  employees who have a significant  role in the  registrant's
              internal controls; and

       6.     The registrant's other certifying officers and I have indicated in
              this annual report whether or not there were  significant  changes
              in internal controls or in other factors that could  significantly
              affect internal controls subsequent to the date of our most recent
              evaluation,  including  any  corrective  actions  with  regard  to
              significant deficiencies and material weaknesses.



Date: March 31, 2003                        By:/s/ Stuart A. Rothstein
      --------------                           -----------------------
                                               Stuart A. Rothstein
                                               Chief Financial Officer


                                     -97-

<PAGE>



                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Summarized condensed financial information of registrant (not including its
consolidated subsidiaries)

                            CONDENSED BALANCE SHEETS

<TABLE>

                                                             December 31,
                                               ----------------------------------------
                                                       2002                 2001
                                               ------------------   -------------------
                                                        (Dollars in thousands)
<S>                                            <C>                   <C>

                                     ASSETS
Revenue Bonds-at fair value                       $   166,477           $   10,518
Investment in ARCap                                    19,054               18,950
Cash and cash equivalents                               4,374               17,376
Interest receivable, net                                1,041                   65
Promissory notes receivable                            11,984                3,057
Investment in subsidiaries                            494,352              485,902
Deferred costs, net                                    34,683               23,150
Goodwill, net                                           1,639                1,984
Other assets                                            3,098                  598
                                                   ----------           ----------
Total assets                                      $   736,702          $   561,600
                                                   ==========           ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
 Accounts payable, accrued expenses
  and other liabilities                           $     2,121          $     1,373
 Deferred income                                        2,639                   --
 Due to Manager and affiliates                          2,405                1,467
 Due to subsidiaries                                   41,304               11,076
 Distributions payable to common
  shareholders                                         13,171               10,448
 Distributions payable to Convertible
  CRA Shareholders                                      1,125                  565
                                                   ----------           ----------
Total liabilities                                      62,765               24,929
                                                   ----------           ----------

Commitments and contingencies

Shareholders' equity:
Beneficial owners' equity-Convertible CRA
 share- holders (3,835,002 and
 1,882,364 shares issued and
 outstanding in 2002 and 2001,
 respectively)                                         58,173               25,521
Beneficial owner's equity-manager                       1,125                1,069
Beneficial owners' equity-other
 common shareholders (100,000,000
 shares authorized; 41,168,618 issued
 and 41,160,218 outstanding and
 34,834,308 issued and 34,825,908
 outstanding in 2002 and 2001,
 respectively)                                        604,496              511,456
Treasury shares of beneficial
 interest (8,400 shares)                                (103)                 (103)
Accumulated other comprehensive loss                  10,246                (1,272)
                                                   ----------           ----------

Total shareholders' equity                            673,937              536,671
                                                   ----------           ----------

Total liabilities and shareholders' equity        $   736,702          $   561,600
                                                   ==========           ==========

</TABLE>

                 See accompanying notes to financial statements

                                     -98-

<PAGE>



                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                       CONDENSED STATEMENTS OF OPERATIONS


<TABLE>

                                                        Years Ended December 31,
                                    ----------------------------------------------------------
                                            2002                   2001              2000
                                    ------------------     ------------------   --------------
                                                         (Dollars in thousands)
<S>                                 <C>                    <C>                  <C>


Revenues:
 Interest income:
  Revenue Bonds                    $      4,701            $         1          $     2,972
  Temporary investments                     505                    376                  452
  Promissory notes                          452                    820                1,002
  Other income                              262                    444                   --
  Income from subsidiaries               59,637                 40,920               28,308
                                     ----------             ----------           ----------
 Total revenues                          65,557                 42,561               32,734
                                     ----------             ----------           ----------

Expenses:
 Interest expense                             3                    412                   22
 Bond servicing                             245                     43                   34
 General and administrative               4,329                  2,630                2,063
 Amortization                               876                    727                  479
                                     ----------             ----------           ----------
  Total expenses                          5,453                  3,812                2,598
                                     ----------             ----------           ----------

Income before loss on repayment
 of revenue bonds                        60,104                 38,749               30,136

Equity in earnings of ARCap               1,116                    456                   --

Loss on repayment of Revenue Bonds         (387)                  (220)                 (45)
                                     ----------             ----------           ----------

  Net income                       $     60,833            $    38,985          $    30,091
                                    ===========             ==========           ==========

Allocation of net income:

 Special distribution to Manager   $      4,872            $     3,621          $     2,744
                                    ===========             ==========           ==========
 Manager                           $         56            $       354          $       273
                                    ===========             ==========           ==========
 Common shareholders               $     52,516            $    32,555          $    25,501
 Convertible CRA Shareholders             3,389                  2,455                1,573
                                     ----------             ----------           ----------
  Total for Shareholders           $     55,905            $    35,010          $    27,074
                                    ===========             ==========           ==========


</TABLE>



                 See accompanying notes to financial statements

                                     -99-

<PAGE>



                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>

                                                        Years Ended December 31,
                                    ----------------------------------------------------------
                                            2002                   2001              2000
                                    ------------------     ------------------   --------------
                                                         (Dollars in thousands)
<S>                                       <C>                    <C>                  <C>
Cash flows from operating
 activities:
 Net income                             $   60,833            $    38,985       $    30,091
 Adjustments to reconcile net
  income to net cash
  provided by operating
  activities:
 Loss on repayments of
  Revenue Bonds                                387                    200                45
 Amortization                                  876                    727               479
 Amortization of goodwill                      345                    182               345
 Amortization of bond selection
  costs                                      1,781                  2,511               935
 Amortization of straight-lining
  of interest income                         2,617                     --                --
 Income from investment in
  subsidiaries                             (59,637)               (40,983)          (28,307)
Equity in earnings of ARCap in
 excess of distributions received             (105)                  (456)               --
 Changes in operating assets
  and liabilities:
  Interest receivable                         (976)                   101                34
  Other assets                              (2,500)                  (181)               20
  Accounts payable, accrued
   expenses and other liabilities              748                    783               404
  Deferred income                               22                     --                --
  Due from subsidiaries                         --                  4,308               116
  Due to subsidiaries                       30,229                     --             7,575
  Due to Manager and affiliates                701                    404               115
                                        ----------            -----------        ----------
Net cash provided by
 operating activities                       35,322                  6,601            11,852
                                        ----------            -----------          --------

Cash flows from investing
 activities:
 Proceeds from repayments of
  Revenue Bonds                                200                     --                50
 Periodic principal payments
  to Revenue Bonds                             353                     85                --
 Purchase of Revenue Bonds                 (16,101)                (7,075)           (2,405)
 Proceeds from secured borrowings               --                     --                --
 Investment in subsidiaries                (82,009)               (82,763)           23,825)
 Increase in deferred bond
  selection costs                          (10,702)                (7,899)           (6,499)
 Net sale (purchase) of temporary
  investments                                   --                (18,493)           19,790
 Increase in promissory notes               (4,547)                    --                --
 Increase in other assets                       --                     --                (9)
 Increase in deferred costs                     --                     --              (545)
 Loans made to properties                     (861)               (11,971)             (200)
 Principal payments received
  from loans made to properties                784                     99               438
                                        ----------            -----------        ----------
Net cash (used in) investing
 activities                               (112,883)              (128,017)          (13,205)
                                        ----------            -----------        ----------
</TABLE>

                                                                     (continued)

                                      -100-
<PAGE>



                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>

                                                        Years Ended December 31,
                                    ----------------------------------------------------------
                                            2002                   2001              2000
                                    ------------------     ------------------   --------------
                                                         (Dollars in thousands)
<S>                                 <C>                    <C>                  <C>
Cash flows from financing
 activities:
 Repayments of note payable            $        --              $   6,226       $       --
 Increase in cash and cash
  equivalents-restricted                        --                     --              972
 Distributions paid to the Manager
  and shareholders of the Company          (53,741)               (33,456)         (24,344)
 Distributions paid to
  Convertible CRA Shareholders              (2,700)                (2,334)            (810)
 Increase in deferred costs
  relating to the Private
  Label Tender Option Program                 (921)                 (873)           (2,301)
 Increase in other deferred costs           (2,955)                    --               72
 Issuance of Common Shares                  92,353                168,264               --
 Issuance of Convertible CRA Shares         32,523                     --           34,193
 Retirement of Convertible CRA shares           --                 (8,987)              --
                                        ----------               --------        ---------
Net cash provided by financing
 activities                                 64,559                128,840            7,782
                                        ----------               --------        ---------

Net (decrease) increase in cash
 and cash equivalents                      (13,002)                 7,424            6,429
Cash and cash equivalents at
 the beginning of the year                  17,376                  9,952            3,524
                                        ----------               --------         --------
Cash and cash equivalents
 at the end of the year                $     4,374              $  17,376        $   9,953
                                        ==========               ========         ========
Supplemental information:
 Interest paid                         $         3         $          412        $      22
                                        ==========               ========         ========
Supplemental disclosure of
 noncash activities:
 Contribution of Revenue Bonds
  to subsidiaries                      $        --              $   8,345        $      --
                                        ==========               ========         ========
 Contribution of notes
  receivables to
  subsidiaries                         $        --              $  12,498        $      --
                                        ==========               ========         ========

Distribution of Revenue Bonds
 from subsidiaries                     $   128,693              $      --        $      --
                                        ==========               ========         ========
Distribution of notes
 receivables from
 subsidiaries                          $     4,503              $      --        $      --
                                        ==========               ========         ========


</TABLE>




                 See accompanying notes to financial statements

                                     -101-
<PAGE>





                  CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
                                   SCHEDULE I
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


1. Introduction and Basis of Presentation

Basis of Financial Information

The accompanying  condensed financial  statements (the "Parent Company Financial
Statements")  are  for  Charter  Municipal  Mortgage   Acceptance  Company  (not
including its consolidated subsidiaries).

The Parent Company Financial Statements,  including the notes thereto, should be
read in conjunction  with the consolidated  financial  statements of the Company
and the notes thereto which are included in this Form 10-K.

2. Transactions with Subsidiaries

During the year ended December 31, 2002, the Company  received  distributions of
Revenue Bonds from its subsidiaries of approximately $129 million.

During 2000, in  connection  with the ATEBT  merger,  the Company  issued Common
Shares valued,  at the date of issuance,  at $29,154,649 and contributed the net
assets from the merger to one of its subsidiaries.

During the year ended  December 31, 2002, the Company made no  contributions  to
subsidiaries.

During the year ended December 31, 2001, the Company  contributed  Revenue Bonds
with  an  aggregate   carrying   value  of   approximately   $8,217,000  to  its
subsidiaries.  Additionally,  the  Company  contributed  following  items to its
subsidiaries:



         Contributed Item                             Aggregate Carrying Value
         ----------------                             ------------------------
          Promissory Notes                                    $7,166,402
   Bridge and Pre-Development Loans                           $5,474,500




                                     -102-

<PAGE>


                                                                      Exhibit 12

Ratio of Earnings to Combined Fixed Charges and Preference Dividends

<TABLE>


                                                          (Dollars in thousands)


                                                     2002           2001          2000
                                                  ----------     ---------     ----------
<S>                                               <C>            <C>           <C>

Interest expense                                 $    15,823    $   13,641    $    14,291
Recurring fees related to TOPs program                 3,181         2,491          2,198
Amortized capitalized costs related to
 indebtedness                                            940           727            479
Preference security dividend requirements
 of consolidated                                      17,266        12,578          8,594
                                                  ----------     ---------     ----------
 Total fixed charges                             $    37,210    $   29,437    $    25,562
                                                  ==========     =========     ==========

Net income before allocation to preferred
 shareholders of subsidiary                      $    79,879    $   51,563    $    38,685
Add:  Total fixed charges                             37,210        29,437         25,562
Less:  Preference security dividend
 requirements of consolidated subsidiaries           (17,266)      (12,578)        (8,594)
                                                  ----------     ---------     ----------
Earnings                                      $       99,823    $   68,422    $    55,653
                                                  ==========     =========     ==========

Ratio of Earnings to Combined Fixed Charges
 and Preference Dividends                                3:1           2:1            2:1

</TABLE>


For the  purposes  of  computing  the ratio of  earnings  to fixed  charges  and
preference  dividends,  earnings were  calculated  using income before  minority
interest  adding back total fixed  charges  less  preference  security  dividend
requirements  of  consolidated  subsidiaries.  Fixed charges consist of interest
expense,  recurring  fees and  amortization  of  capitalized  costs  related  to
indebtedness  and preference  security  dividend  requirements  of  consolidated
subsidiaries. There were no periods in which earnings were insufficient to cover
combined fixed charges and preference dividends.


                                     -105-

<PAGE>

                                                                      Exhibit 21



                           Subsidiaries of the Company
                           ---------------------------

CM Holding Trust, a Delaware business trust

CharterMac Equity Issuer Trust, a Delaware business trust

CharterMac Corporation, a Delaware corporation


    Subsidiaries of CharterMac Equity Issuer Trust, a Delaware business trust
    -------------------------------------------------------------------------

CharterMac Origination Trust I, a Delaware business trust

CharterMac Owner Trust I, a Delaware business trust


                      Subsidiary of CharterMac Corporation
                      ------------------------------------

PW Funding, Inc. a  Delaware corporation


                                     -106-



<PAGE>



                                                                    Exhibit 99.3


                            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 annual report of Charter  Municipal  Mortgage  Acceptance
Company (the  "Company") on Form 10-K for the year ending  December 31, 2002, as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"), I, Stuart J. Boesky, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:


       (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.


By: /s/ Stuart J. Boesky
    --------------------
    Stuart J. Boesky
    Chief Executive Officer
    March 31, 2003

    A signed original of this written statement required by Section 906 has been
    provided  to  Charter  Municipal  Mortgage  Acceptance  Company  and will be
    retained by Charter Municipal  Mortgage  Acceptance Company and furnished to
    the Securities and Exchange Commission or its staff upon request.




<PAGE>



                                                                    Exhibit 99.4


                            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 annual report of Charter  Municipal  Mortgage  Acceptance
Company (the  "Company") on Form 10-K for the year ending  December 31, 2002, as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"), I, Stuart J. Boesky, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

     (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.


By: /s/ Stuart A. Rothstein
    -----------------------
    Stuart A. Rothstein
    Chief Financial Officer
    March 31, 2003

    A signed original of this written statement required by Section 906 has been
    provided  to  Charter  Municipal  Mortgage  Acceptance  Company  and will be
    retained by Charter Municipal  Mortgage  Acceptance Company and furnished to
    the Securities and Exchange Commission or its staff upon request.