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

                                     FORM 10-Q

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

                        For the quarter ended March 31, 1998

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

                          Commission file number 33-83524


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

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

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

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

     As of April 30, 1998, the latest  practicable date, there were 1,000 shares
of Merit Securities Corporation common stock outstanding.

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

<PAGE>

                          MERIT SECURITIES CORPORATION
                                   FORM 10-Q
                                     INDEX

<TABLE>
<CAPTION>

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

                      Statements of Operations for the three months
                      ended March 31, 1998 and 1997                                      4

                      Statement of Shareholder's Equity for the three months
                      ended March 31, 1998                                               5

                      Statements of Cash Flows for the three months ended
                      March 31, 1998 and 1997                                            6

                      Notes to Unaudited Financial Statements                            7

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

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings                                                      9

Item 5.           Other Information                                                      9

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

SIGNATURES                                                                              13
</TABLE>

<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

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

                                                                     March 31,           December 31,
                                                                      1998                   1997
                                                                ------------------     ---------------
<S>                                                                     <C>                    <C>

ASSETS:
   Collateral for collateralized bonds                           $      3,279,483       $      3,835,289
   Prepaid shelf registration fees                                            334                    334
   Cash                                                                        10                     10
                                                                ==================     ==================
                                                                 $      3,279,827       $      3,835,633
                                                                ==================     ==================

LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES:
   Non-recourse debt - collateralized bonds                      $      3,099,015       $      3,622,877
   Due to affiliates                                                       35,583                 43,789
                                                                ------------------     ------------------
                                                                        3,134,598              3,666,666
                                                                ------------------     ------------------

SHAREHOLDER'S EQUITY:
   Common stock, no par value,
      10,000 shares authorized,
      1,000 shares issued and outstanding                                      10                     10
   Additional paid-in capital                                             125,952                125,952
   Accumulated other comprehensive income                                  46,887                 64,707
   Accumulated deficit                                                    (27,620 )              (21,702 )
                                                                                          ---------------
                                                                ------------------     ---
                                                                          145,229                168,967
                                                                ==================     ==================
                                                                 $      3,279,827       $      3,835,633
                                                                ==================     ==================

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


<PAGE>

MERIT SECURITIES CORPORATION
Statements of Operations
(amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                                      Three Months Ended
                                                                          March 31,
                                                               ---------------------------------
                                                                   1998               1997
                                                               --------------     --------------
<S>                                                                  <C>                <C>   

Interest Income:
    Collateral for collateralized bonds                          $    58,145       $     42,549
                                                               ---------------    ---------------

Interest and related expense:
    Interest expense on collateralized bonds                          61,190              38,974
    Other collateralized bond expense                                  1,041                 835
                                                               ---------------    ---------------
                                                                      62,231              39,809
                                                               ---------------    ---------------

Net interest margin before provision for losses                      (4,086)               2,740
Provision for losses                                                 (1,178)               (600)
                                                               ---------------    ---------------
Net interest margin                                                  (5,264)               2,140

Interest on due to affiliate                                           (654)               (646)
                                                               ---------------    ---------------

Net (loss) income                                                $   (5,918)      $      1,494
                                                               ===============    ===============



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

<PAGE>

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

<TABLE>
<CAPTION>

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

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

Comprehensive loss:
   Net loss                               -                  -                  -         (5,918)       (5,918)
   Change in net unrealized gain
      on investments classified as
      available-for-sale during
      the period                          -                  -            (17,820)               -      (17,820)
                                 ------------- --------------- ------------------  -------------- --------------
Total comprehensive loss                                                  (17,820)         (5,918)      (23,738)

Balance at March 31, 1998          $     10     $      125,952 $           46,887   $    (27,620) $     145,229
                                 ============= =============== ==================  ============== ==============

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

<PAGE>

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

<TABLE>
<CAPTION>

                                                                            Three Months Ended
                                                                                 March 31,
                                                                        1998                   1997
                                                                 -------------------     ------------------
<S>                                                                       <C>                   <C>    

Operating activities:
  Net (loss) income                                              $         (5,918)       $          1,494
  Adjustments to reconcile net loss to net cash
   provided by operating activities:
    Provision for losses                                                     1,178                    600
    Amortization, net                                                       11,212                  4,483
    Other                                                                      104                   (43)
                                                                 -------------------     ------------------
      Net cash provided by operating activities                              6,576                  6,534
                                                                 -------------------     ------------------

Investing activities:
  Collateral for collateralized bonds:
    Principal payments on collateral                                       523,891                188,825
    Decrease in accrued interest receivable                                  3,562                  1,234
                                                                 -------------------     ------------------
      Net cash provided by investing activities                            527,453                190,059
                                                                 -------------------     ------------------

Financing activities:
  Collateralized bonds:
    Principal payments on collateralized bonds                           (524,287)              (189,407)
    Decrease in accrued interest payable                                   (1,536)                   (99)
    Decrease in due to affiliate                                           (8,206)                (7,087)
                                                                 -------------------     ------------------
    Net cash used for financing activities                               (534,029)              (196,593)
                                                                 -------------------     ------------------

Cash at beginning of period                                                     10                     10
                                                                 -------------------     ------------------

Cash at end of period                                            $              10       $             10
                                                                 ===================     ==================

Supplemental disclosure of cash flow information:
  Cash paid for interest                                         $          61,375       $         39,251
                                                                 ===================     ==================


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

<PAGE>

MERIT SECURITIES CORPORATION
Notes to Unaudited Financial Statements
March 31, 1998
(amounts in thousands except share data)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

     In the opinion of  management,  all  material  adjustments,  consisting  of
normal recurring  adjustments,  considered  necessary for a fair presentation of
the  financial  statements  have been  included.  The Balance Sheet at March 31,
1998, the Statements of Operations for the three months ended March 31, 1998 and
1997, the Statement of Shareholder's Equity for the three months ended March 31,
1998, the Statements of Cash Flows for the three months ended March 31, 1998 and
1997, and the related notes to financial  statements  are  unaudited.  Operating
results for the three months ended March 31, 1998 are not necessarily indicative
of the results that may be expected for the year ending  December 31, 1998.  For
further  information,  refer to the audited  financial  statements and footnotes
included in the Company's Form 10-K for the year ended December 31, 1997.

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

NOTE 2-COLLATERAL FOR COLLATERALIZED BONDS

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

                                                     March 31, 1998                     December 31, 1997
-------------------------------------------------------------------------------------------------------------------

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

Collateral for collateralized bonds:
   Amortized cost                        $         3,255,272        6.7%       $      3,795,393         7.2%
   Allowance for losses                              (22,676 )                          (24,811 )
      Amortized cost, net                          3,232,596                          3,770,582
   Gross unrealized gains                             57,744                             77,973
   Gross unrealized losses                           (10,857 )                          (13,266 )
-------------------------------------------------------------------------------------------------------------------
                                         $         3,279,483                   $      3,835,289
-------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

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

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

     The Company was organized to facilitate the securitization of 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.

     The Company did not issue any Bonds during the three months ended March 31,
1998. As of March 31, 1998,  the Company had seven (7) series of  collateralized
bonds outstanding totaling approximately $3.1 billion,  compared to $3.6 billion
at December 31, 1997, and $2.1 billion at March 31, 1997. Interest income on the
Collateral  increased  $15.6 million to $58.1 million for the three months ended
March 31, 1998  compared to $42.5  million for the three  months ended March 31,
1997,  primarily  as a result of the  increased  number  of series  outstanding.
Interest  expense on Bonds  increased  $22.2  million from $39.0 million for the
three  months  ended March 31, 1997 to $61.2  million for the three months ended
March 31, 1998, primarily due to the additional series outstanding.

     Net interest  margin for the three months ended March 31, 1998 decreased to
a negative  $5.3  million  from a positive  $2.1 million for the same period for
1997.  This  decrease was primarily  the result of higher  premium  amortization
caused by higher  prepayments  during the three months ended March 31, 1998 than
during the same  period in 1997.  In  addition,  the Company  securitized  lower
coupon collateral, principally A+ quality single-family ARM loans during 1997.

     With  collateralized  bond  structures,  the  Company  retains  credit risk
relative to the amount of overcollateralization required in conjunction with the
bond  insurance.  Losses are generally  first applied to the  overcollateralized
amount,  with any losses in excess of that amount  borne by the bond  insurer or
the holders of the  collateralized  bonds. The Company only incurs credit losses
to the extent that losses are incurred in the repossession, foreclosure and sale
of the  underlying  collateral.  Such losses  generally  equal the excess of the
principal  amount  outstanding,  less  any  proceeds  from  mortgage  or  hazard
insurance,  over the  liquidation  value of the  collateral.  To compensate  the
Company for retaining  this loss  exposure,  the Company  generally  receives an
excess  yield on the  collateralized  securities  relative  to the  yield on the
collateralized  bonds. At March 31, 1998, the Company retained $115.5 million in
aggregate  principal  amount  of  overcollateralization,  and had  reserves,  or
otherwise  had provided  coverage on $53 million of this  potential  credit loss
exposure.  $30.3  million  of  this  reserve  amount  is in the  form  of a loss
reimbursement  guarantee from a third-party rated A by Standards & Poors Ratings
Services, Inc.

     At March 31, 1998, the Company had securities of approximately $1.2 billion
remaining for issuance under a registration  statement filed with the Securities
and Exchange Commission. The Company anticipates issuing additional Bonds in the
future.

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

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings:

                  None

Item 5.           Other Information:

                  None

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

(a)               Exhibits


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

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

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

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

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

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

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

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

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

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

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

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

     4.10 Copy of the Series 7 Indenture Supplement, dated as of May 1, 1996, by
and between the  Registrant  and Texas  Commerce Bank National  Association,  as
Trustee (related  schedules and exhibits available upon request of the Trustee).
(Incorporated  herein by reference to Exhibit to Registrant's  Current Report on
Form 8-K, filed June 19, 1996).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


(b)      Reports on Form 8-K

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

     Current  Report on Form 8-K as filed with the  Commission on April 3, 1998,
relating to the Registrant's Series 7 Bonds.

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

     Current  Report on Form 8-K as filed with the  Commission on April 3, 1998,
relating to the Registrant's Series 9 Bonds.

     Current  Report on Form 8-K as filed with the  Commission on April 3, 1998,
relating to the Registrant's Series 10 Bonds.
 
 



 






                                       SIGNATURES



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

                                 MERIT SECURITIES CORPORATION


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





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






Dated:  May 15, 1998