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

                                   FORM 10-Q/A

             |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                      FOR THE QUARTER ENDED MARCH 31, 2002

            |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 33-83524


                          MERIT SECURITIES CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



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

        4551 COX ROAD, SUITE 300, GLEN ALLEN, VIRGINIA              23060
           (Address of principal executive offices)              (Zip Code)

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

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE  PRECEDING 12 MONTHS (OR FOR SUCH  SHORTER  PERIOD THAT THE  REGISTRANT  WAS
REQUIRED  TO FILE  SUCH  REPORTS),  AND  (2) HAS  BEEN  SUBJECT  TO SUCH  FILING
REQUIREMENTS FOR THE PAST NINETY DAYS. |X| YES |_| NO

As of May 10,  2002,  the latest  practicable  date,  there were 1,000 shares of
Merit Securities Corporation common stock outstanding.

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

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<PAGE>
<TABLE>
<CAPTION>
                          MERIT SECURITIES CORPORATION
                                   FORM 10-Q/A
                                      INDEX

 THIS FILING OF FORM 10-Q/A REFLECTS RESTATEMENT OF THE FINANCIAL STATEMENTS AS
DISCUSSED IN NOTE 4 TO THE FINANCIAL STATEMENTS.
                                                                                                     Page Number
PART I.           FINANCIAL INFORMATION

<S>                                 <C>                                                                     <C>
Item 1.           Financial Statements
                      Condensed Balance Sheets at March 31, 2002
                      and December 31, 2001 (unaudited)...................................................1

                      Condensed Statements of Operations for the three months ended
                      March 31, 2002 and 2001 (unaudited).................................................2

                      Condensed Statements of Cash Flows for the three months ended
                      March 31, 2002 and 2001 (unaudited).................................................3

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

Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations...........................................6

Item 3.           Quantitative and Qualitative Disclosures about Market Risk..............................8

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings.......................................................................9

Item 5.           Other Information.......................................................................9

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

SIGNATURES            ...................................................................................12
</TABLE>




                                       i
<PAGE>



                                                        12
PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS


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


                                                    March 31,       December 31,
                                                      2002              2001
                                                   -------------   -------------
                                                   (As restated,
                                                    see Note 4)
ASSETS:
   Collateral for collateralized bonds              $  1,478,539    $  1,634,460
Loans                                                      3,801           4,435
                                                   -------------   -------------
                                                    $  1,482,340    $  1,638,895
                                                   =============   =============

LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES:
   Non-recourse debt - collateralized bonds         $  1,395,545    $  1,542,924

SHAREHOLDER'S EQUITY:
   Common stock, no par value, 10,000 shares authorized,
      1,000 shares issued and outstanding                     10              10
   Additional paid-in capital                             82,034          92,774
   Accumulated other comprehensive income                  3,079           3,187
   Retained earnings                                       1,672               -
                                                  --------------   -------------
                                                          86,795          95,971
                                                  --------------   -------------
                                                    $  1,482,340    $  1,638,895
                                                  ==============   =============


See notes to unaudited condensed financial statements.




                                       1
<PAGE>




MERIT SECURITIES CORPORATION
CONDENSED STATEMENTS OF OPERATIONS, UNAUDITED
(amounts in thousands)

                                                     Three Months Ended
                                                          March 31,
                                                 ----------------------------
                                                     2002           2001
                                                     (As             (As
                                                  restated,       restated,
                                                 see Note 4)     see Note 4)
                                                 -------------   ------------

Interest income:
     Collateral for collateralized bonds         $   26,815     $    44,754
                                                -------------   --------------

Interest and related expense:
     Interest expense on collateralized bonds        16,869          35,877
     Other collateralized bond expense                  435             412
                                                -------------   --------------
                                                     17,304          36,289
                                                -------------   --------------

Net interest margin before provision for losses       9,511           8,465
Provision for losses                                 (5,877)         (4,555)
                                                -------------   --------------
Net margin                                            3,634           3,910
Impairment charges                                   (1,961)         (1,783)
                                                -------------   --------------
Net income                                       $    1,673     $     2,127
                                                =============   ==============



See notes to unaudited condensed financial statements.



                                       2
<PAGE>



MERIT SECURITIES CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS, UNAUDITED
(amounts in thousands)


                                                 --------------------------
                                                     Three Months Ended
                                                         March 31,
                                                 --------------------------

                                                      2002           2001
                                                 -------------   ----------
                                                  (As restated,  (As restated,
                                                   see Note 4)    see Note 4)
Operating activities:
   Net income ...................................   $   1,673    $   2,127
   Adjustments to reconcile net income to
     net cash provided by operating activities:
   Impairment charges ...........................       1,961        1,783
   Provision for losses .........................       5,877        4,555
   Net decrease in accrued interest receivable
    and funds held by trustee ...................      (1,260)        (462)
    Decrease in accrued interest payable ........        (130)        (217)
    Amortization, net ...........................       2,903        2,341
    Other .......................................       2,463          924
                                                    ---------    ---------
      Net cash provided by operating activities .      13,487       11,051
                                                    ---------    ---------

Investing activities:
  Collateral for collateralized bonds:
    Principal payments on collateral ............     145,578      138,495
                                                    ---------    ---------
      Net cash provided by investing activities .     145,578      138,495
                                                    ---------    ---------

Financing activities:
    Principal payments on collateralized bonds ..    (148,325)    (144,305)
    Increase in due to affiliates ...............         582           --
    Dividends and capital distributions .........     (11,322)      (5,251)
                                                    ---------    ---------
      Net cash used for financing activities ....    (159,065)    (149,556)
                                                    ---------    ---------

Net decrease in cash ............................          --          (10)
Cash, beginning of period .......................          --           10
                                                    ---------    ---------

Cash, end of period .............................   $      --    $      --
                                                    ---------    ---------
Supplemental disclosure of cash flow information:
  Cash paid for interest ........................   $  16,256    $  35,168
                                                    ---------    ---------




See notes to unaudited condensed financial statements.




                                       3
<PAGE>



MERIT SECURITIES CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2002
(amounts in thousands except share data)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

In the opinion of  management,  all material  adjustments,  consisting of normal
recurring  adjustments,  considered  necessary  for a fair  presentation  of the
financial  statements have been included.  The Condensed  Balance Sheet at March
31, 2002,  the Condensed  Statements  of  Operations  for the three months ended
March 31, 2002 and 2001,  the  Condensed  Statements of Cash Flows for the three
months  ended  March  31,  2002 and 2001,  and the  related  notes to  condensed
financial statements are unaudited. Operating results for the three months ended
March  31,  2002  are not  necessarily  indicative  of the  results  that may be
expected for the year ending December 31, 2002. For further  information,  refer
to the audited financial statements and footnotes included in the Company's Form
10-K/A for the year ended December 31, 2001.

On March 31, 2002, the Company  purchased from Dynex Capital,  Inc., its parent,
10,000 shares of common stock of Financial Asset  Securitization,  Inc.

Certain  amounts for  2001 have been reclassified to conform to the presentation
for 2002.

NOTE 2--COLLATERAL FOR COLLATERALIZED BONDS

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

Pursuant to the requirements of Statement of Financial  Accounting Standards No.
115,  Accounting  for Certain  Investments  in Debt and Equity  Securities,  the
Company has  classified  all of its debt  securities  included in collateral for
collateralized bonds as available-for-sale. As such, debt securities included in
collateral for collateralized  bonds are reported at fair value, with unrealized
gains and losses  excluded  from  earnings  and  reported as  accumulated  other
comprehensive   income.   The  following  table  summarizes  the  components  of
collateral for collateralized bonds as of March 31, 2002 and December 31, 2001.


                                       4
<PAGE>

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

  Loans, at amortized cost                    $  1,077,575        $   1,186,400
  Debt securities, at fair value                   417,323              463,424
-------------------------------------------- --------------- -- ----------------
                                                 1,494,898            1,649,824
  Reserve for loan losses                          (16,359)             (15,364)
-------------------------------------------- --------------- -- ----------------
                                              $  1,478,539        $   1,634,460
-------------------------------------------- --------------- -- ----------------

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

------------------------------------ ---------- ---------- ---------- ----------
                                                  Gross       Gross
                                     Amortized  unrealized unrealized Estimated
                                        cost      gains      losses   fair value
------------------------------------ ---------- ---------- ---------- ----------
Debt securities as of March 31, 2002 $  414,244 $   3,079    $     -  $  417,323
------------------------------------ ---------- ---------- ---------- ----------

NOTE 3 - USE OF ESTIMATES

Fair Value.  The  Company  uses  estimates  in  establishing  fair value for its
financial instruments. Estimates of fair value for collateral for collateralized
bonds are determined by calculating  the present value of the projected net cash
flows of the instruments using appropriate discount rates,  prepayment rates and
credit loss assumptions. Discount rates used are those management believes would
be used by willing buyers of these  financial  instruments at prevailing  market
rates.  The  discount  rate  used  in the  determination  of fair  value  of the
collateral for collateralized bonds at both March 31, 2002 and December 31, 2001
was 16%.  Variations in market discount rates,  prepayment rates and credit loss
assumptions  may  materially  impact the resulting  fair values of the Company's
financial  instruments.   Since  the  fair  value  of  the  Company's  financial
instruments is based on estimates, actual gains and losses recognized may differ
from those estimates recorded in the financial statements.

NOTE 4 - RESTATEMENT OF FINANCIAL STATEMENTS

Subsequent  to the  issuance of its  financial  statements  for the three months
ended  March 31,  2002,  the  Company  determined  that  certain  of the  assets
previously  reported  as debt  securities  subject to the  requirements  of SFAS
No.115,  "Accounting  for Certain  Investments  in Debt and Equity  Securities"
were, in fact, collateralized borrowings,  where the collateral being pledged as
securities were loans that should have been accounted for under the requirements
of SFAS No. 5, "Accounting for  Contingencies"  or SFAS No. 114,  "Accounting by
Creditors for  Impairment of a Loan." As a result,  the  accompanying  condensed
financial statements as of March 31, 2002 and for the three month periods ended
March 31, 2002 and 2001 have  been  restated  from  the  amounts  previously
reported  to  correct  the accounting for these assets.

A summary of the significant effects of the restatement is as follows:

--------------------------------------------- ---------------- -- --------------
As of March 31, 2002
--------------------------------------------- ---------------- -- --------------
                                              (As Previously
(amounts in thousands)                           Reported)        (As Restated)
                                              ---------------- -- --------------

Collateral for collateralized bonds             $1,445,256          $  1,478,539
Total assets                                     1,449,057             1,482,340

Accumulated other comprehensive income (loss)      (30,205)                3,079
Total shareholder's equity                          52,930                86,795



                                       5
<PAGE>

--------------------------------------------------------------------------------
For Three Months Ended
       March 31                  2002                        2001
                     ------------- ------------- --------------- ---------------
                     (As Previously               (As Previously
                       Reported)   (As Restated)     Reported)     (As Restated)
                     ------------- ------------- --------------- ---------------
Provision for losses  $    (7,838)  $    (5,877)  $     (6,338)   $     (4,555)
Net interest margin         1,673         3,634          2,127           3,910
Impairment charges              -        (1,961)             -          (1,783)
-------------------- ------------- ------------- --------------- ---------------

The restatement did not have any effect on income before  extraordinary  item or
net income.

ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS

As discussed in Note 4 to the condensed financial statements included in Item 1,
the Company has restated its  financial  statements as of March 31, 2002 and for
the three month periods ended March 31, 2002 and 2001. The following  Management
Discussion and Analysis takes into account the effects of the restatement.

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

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

                               FINANCIAL CONDITION

--------------------------------------- ------------------ ---- ----------------
                                            March 31,              December 31,
(amounts in thousands)                        2002                     2001
--------------------------------------- ------------------ ---- ----------------

Collateral for collateralized bonds      $   1,478,539            $   1,634,460
Non-recourse debt  collateralized bonds      1,395,545                1,542,924
Shareholder's equity                            86,795                   95,971

Collateralized bond series outstanding               4                        4
--------------------------------------- ------------------ ---- ----------------

Collateral for collateralized bonds
As of both March 31, 2002 and  December  31,  2001,  the Company had 4 series of
collateralized  bonds  outstanding.  The  collateral  for  collateralized  bonds
decreased  to $1.48  billion  at March 31,  2002  compared  to $1.63  billion at
December 31, 2001.  This  decrease of $155.9  million is primarily the result of
$146 million in paydowns on the collateral.

Non-recourse debt - collateralized bonds
Collateralized  bonds  decreased  to $1.40  billion at March 31, 2002 from $1.54
billion at December 31, 2001 primarily as a result of $148.3 million in paydowns
during the three months ended March 31, 2002.

Shareholder's Equity
Shareholder's  equity  decreased  to $86.8  million at March 31, 2002 from $96.0
million at December 31, 2001.  This decrease was primarily the result of a $10.8
million capital  distribution to IHC during the period,  partially offset by net
income of $1.7 million during the three months ended March 31, 2002.



                                       6
<PAGE>

                          RESULTS OF OPERATIONS

--------------------------------------------------------------------------------
                                                       Three Months Ended
                                                           March 31,
                                               ---------------------------------
(amounts in thousands)                                  2002               2001
--------------------------------------------------------------------------------

Interest income                                  $     26,815       $     44,754
Interest expense                                       17,304             36,289
Provision for losses                                    5,877              4,555
Net interest margin                                     3,634              3,910
Net income                                              1,673              2,127

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

Interest  income on the collateral for  collateralized  bonds decreased to $26.8
million for the three  months  ended  March 31, 2002 from $44.8  million for the
same  period in 2001.  This  decrease  was  primarily  a result of a decline  in
collateral for collateralized bonds between the respective periods.

Interest and other expense on  collateralized  bonds  decreased to $17.3 million
for the three  months  ended  March 31,  2002 from $36.3  million  for the three
months  ended  March 31,  2001.  This  decrease  resulted  from the  decline  in
collateralized   bonds  due  to  prepayments  on  the  related   collateral  for
collateralized  bonds,  coupled with an overall  decline in the cost of funds on
the collateralized bonds.

Provision for losses  increased to $5.9 million for the three months ended March
31, 2002 from $4.6  million for the same period in 2001.  The  increase  for the
three  months  ended March 31, 2002 was  primarily  a result of  increasing  the
reserve for probable  losses on various  loan pools  pledged as  collateral  for
collateralized  bonds where the Company has retained  credit risk,  specifically
the Company's investment in manufactured housing loan pools.

Net  interest  margin for the three months ended March 31, 2002 was $3.6 million
compared to $3.9 million for the same period in 2001.  This decline in the three
months  ended  March 31, 2002 was the result of an  increase  in  provision  for
losses.  The decline in interest earning assets was offset by reduced  borrowing
costs on collateralized bonds outstanding.

Credit Exposures
With collateralized bond structures, the Company retains credit risk relative to
the  amount  of  overcollateralization  required  in  conjunction  with the bond
issuance.  Losses are generally first applied to the overcollateralized  amount,
or in some instances surplus cash and then the overcollaterialized  amount, with
any losses in excess of that amount  borne by the bond insurer or the holders of
the  collateralized  bonds.  The Company only incurs credit losses to the extent
that  losses  are  incurred  in the  repossession,  foreclosure  and sale of the
underlying  collateral.  Such losses generally equal the excess of the principal
amount  outstanding,  less any proceeds from mortgage or hazard insurance,  over
the liquidation value of the collateral. To compensate the Company for retaining
this loss  exposure,  the  Company  generally  receives  an excess  yield on the
collateralized loans relative to the yield on the collateralized bonds. At March
31, 2002, the Company  retained $142.3 million in aggregate  principal amount of
overcollateralization.  The Company had  reserves,  or  otherwise  had  provided
coverage on $46.7 million at March 31, 2002. At March 31, 2002, $30.3 million of
these reserve amounts are in the form of a loss reimbursement guarantee.  During
the first three months of 2002, the Company provided for additional  reserves of
$5.9 million and incurred credit losses of $4.5 million.

The Company and Dynex have settled a dispute with the counter-party to the $30.3
million in reimbursement guarantees. Such guarantees are payable when cumulative
loss  trigger  levels are  reached on  certain  of the  Company's  single-family
mortgage loan securitizations.  The Company was paid $0.75 million in settlement
of $2.4 million in claims which had been carried on the Company's  books at $1.1
million.  As part of the  settlement  certain  trigger levels were reset and the
reasons  that a  loss  in the  future  would  be a  "non-qualifying"  loss  were
significantly narrowed. As of March 31, 2002, $122 million of loans were subject
to such reimbursement guarantees.



                                       7
<PAGE>

Other Matters
At March 31, 2002,  the Company had securities of  approximately  $308.6 million
remaining for issuance under a registration  statement filed with the Securities
and Exchange Commission. The Company anticipates issuing additional Bonds in the
future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The Company and IHC monitor the  aggregate  cash flow,  projected  net yield and
market value of the collateral for  collateralized  bonds under various interest
rate and prepayment assumptions.

Approximately  $574.3  million of the Company's  collateral  for  collateralized
bonds as of March 31, 2002, is comprised of loans or securities that have coupon
rates  which  adjust  over  time  (subject  to  certain  periodic  and  lifetime
limitations)  in  conjunction   with  changes  in  short-term   interest  rates.
Approximately  70% and 17% of the ARM loans underlying the Company's  collateral
for  collateralized  bonds  are  indexed  to and reset  based  upon the level of
six-month LIBOR and one-year Constant Maturity Treasury ("CMT"), respectively.

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

The remaining portion of the Company's  collateral for collateralized  bonds, as
of March 31, 2002,  approximately $919 million,  is comprised of loans that have
coupon rates that are fixed.  The Company has limited its interest  rate risk on
such  collateral  primarily  through the issuance of  fixed-rate  collateralized
bonds.  Overall,  the Company's  interest rate risk is primarily  related to the
rate of  change in  short-term  interest  rates  and to the level of  short-term
interest rates.

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

The following  table  summarizes  the  Company's  net interest  margin cash flow
sensitivity analysis as of March 31, 2002. This analysis represents management's
estimate  of the  percentage  change in net  interest  margin  cash flow given a
parallel shift in interest  rates.  The "Base" case represents the interest rate
environment  as it  existed  as of March  31,  2002.  The  analysis  is  heavily
dependent  upon the  assumptions  used in the  model.  The  effect of changes in
future  interest  rates,  the shape of the yield  curve or the mix of assets and
liabilities  may cause  actual  results to differ from the modeled  results.  In


                                       8
<PAGE>

addition,  certain financial  instruments provide a degree of "optionality." The
most  significant  option  affecting the Company's  portfolio is the  borrower's
option to prepay  the  loans.  The model  applies  prepayment  rate  assumptions
representing  management's  estimate of prepayment activity on a projected basis
for each collateral pool in the investment portfolio. The model applies the same
prepayment rate  assumptions for all five cases indicated  below.  The extent to
which  borrowers  actually  exercise  their option may cause  actual  results to
significantly differ from the analysis.


          ------------------------ ---------------------
                BASIS POINT          % CHANGE IN NET
          INCREASE (DECREASE) IN     INTEREST MARGIN
              INTEREST RATES          FROM BASE CASE
          ------------------------ ---------------------

                   +200                  (5.1)%
                   +100                  (2.6)%
                   Base                     -
                   -100                   2.6%
                   -200                   5.1%
          ------------------------ --------------------


PART II.   OTHER INFORMATION



ITEM 1.           LEGAL PROCEEDINGS:

                  None


ITEM 5.           OTHER INFORMATION:

                  None


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K:

(a)               Exhibits

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

4.9      Copy of the Series 14  Indenture  Supplement,  dated as of  November 1,
         1999, by and between the  Registrant  and Texas  Commerce Bank National
         Association,  as Trustee (related schedules and exhibits available upon
         request of the Trustee).  (Incorporated  herein by reference to Exhibit
         of Registrant's Current Report on Form 8-K, filed November 12, 1999).

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

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

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

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

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

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

(b)      Reports on Form 8-K

         None.



                                       11
<PAGE>



                                                    SIGNATURES

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

                                      MERIT SECURITIES CORPORATION



                                      By:  /s/ Stephen J. Benedetti
                                           -------------------------------------
                                           Stephen J. Benedetti
                                           (Principal Executive Officer)



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


Dated:  October 4, 2002




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