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                                                                   EXHIBIT 10.16
 
                      HOMEOWNERS MORTGAGE & EQUITY,  INC.

                             EMPLOYMENT AGREEMENT


     This EMPLOYMENT AGREEMENT (the "Agreement") dated as of July 1, 1997
("Effective Date"), is by and between HOMEOWNERS MORTGAGE & EQUITY, INC., a
Delaware corporation (the "Employer"), and THOMAS L. PERRITTE (the "Employee").

                                  WITNESSETH:

     WHEREAS, the Employer desires to employ the Employee, and the Employee
desires to accept such employment by the Employer, upon the terms and subject to
the conditions set forth in this Agreement;

     NOW, THEREFORE, in consideration of the promises, covenants and agreements
set forth herein, and for other good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto agree as follows:

1.  EMPLOYMENT AND DUTIES.

     1.1  Employment.  Employer hereby employs the Employee, and the Employee
hereby accepts such employment by Employer, upon and subject to the terms,
covenants, conditions and agreements set forth herein.

     1.2  Authority and Duties.  During the Term of Employment, the Employee
shall serve as an Executive Vice President of the Employer with responsibility
for marketing and production, and if elected or appointed by the applicable
board of directors, the Employee shall serve in such additional offices of
Employer or of any parent, subsidiary or Affiliate (as hereinafter defined) of
the Employer to which he may be elected or appointed from time to time, without
any compensation other than as provided in this Agreement; provided that the
election or appointment of Employee to other offices is reasonable in nature and
does not materially expand the scope of the duties required of the Employee
hereunder.  During the Term of Employment, Employee shall be subject to the
direction, supervision and control of the President of Employer ("President")
and the Board of Directors of the Employer (the "Board"), the Employee shall
perform the duties and have the powers and authority which are provided in the
Bylaws of the Employer or as otherwise determined by the President or the Board
from time to time and the President or the Board may, in their sole discretion,
withhold, withdraw, retain or reassign any of the authority and responsibility
initially delegated to the Employee pursuant to this Agreement.  Employee shall
at all times comply with and be subject to such policies and procedures as
Employer may establish from time to time.

     1.3  Employee Loyalty.  Employee acknowledges and agrees that Employee owes
a duty of loyalty, fidelity and allegiance to act at all times during employment
pursuant to this Agreement in the interests of the Employer and Employee shall
not act in any manner which would injure Employer's business, its interests, or
its reputation.  Employee shall devote his full business time, attention and
energy to the business of Employer and faithfully and diligently perform the
duties 
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required or incident to his employment hereunder and promote the interests of
Employer to be best of the ability, effort and experience of the Employee.
Employee shall not engage in any other business, investment or activity that
interferes with the performance of the duties of Employee hereunder. Employee
shall not, during the Term of this Agreement or any extension or renewal
thereof, engage, directly or indirectly, in any activity which constitutes a
Conflict of Interest (as hereinafter defined).

     1.4  Place of Employment.  The duties of Employee shall be rendered
primarily at the principal offices of Employer in Austin, Texas, and at such
other place or places as the Employer shall reasonably require or as the
interests, needs, business and opportunities of the Employer shall require or
make advisable from time to time.

2.  COMPENSATION AND BENEFITS.  The Employer hereby agrees to pay the Employee
and the Employee hereby agrees to accept as compensation for all services
rendered by the Employee in any capacity during the Term of Employment
(including, without limitation, services as any officer, director or member of
any committee of the Employer or any parent, subsidiary and Affiliate thereof)
the following compensation and benefits:

     2.1  Base Salary.  The Employee shall receive a base salary (the "Base
Salary") for the initial year of the Term of Employment of $200,000 which shall
be payable in installments in accordance with the standard payroll practice of
Employer.  The Base Salary for any period of the Term of Employment subsequent
to the initial year shall be reviewed annually by the Compensation Committee of
the Board ("Compensation Committee"), and the Base Salary for each fiscal year
of Employer (or portion thereof) beginning October 1 of each year shall be
determined by the Compensation Committee; provided that (i) the Base Salary
shall not be reduced unless it is reduced for Cause (as hereinafter defined),
and (ii) there is no understanding that the Base Salary will be increased in any
period subsequent to the first year of the Term of Employment.

     2.2  Annual Incentive Bonus.  The Employer shall pay to executive a bonus
of $50,000 at the end of the first full year of the Term of Employment.  In the
event that the Board of the Employer shall establish an incentive bonus plan
covering executive officers of the Employer ("Incentive Bonus Plan"), then the
Employee shall be eligible to receive a discretionary bonus under the Incentive
Bonus Plan for each year (or portion thereof) during the Term of Employment and
any extensions thereof subsequent to the first year, with the actual amount of
any such bonus to be determined in the sole discretion of the Board of the
Employer based upon its evaluation of Employee's performance during such year.
All such bonuses shall be reviewed annually and recommended by the Compensation
Committee.

     2.3  Grant of Stock Options.  Upon or as soon as practicable after the
Effective Date of this Agreement, the Employer shall arrange for its parent
company, HomeCapital Investment Corporation, a Nevada corporation ("HCAP"), to
grant to the Employee incentive stock options to acquire not less than 150,000
shares of the $.01 par value common stock of HCAP under the HomeCapital
Investment Corporation 1996 Stock Option Plan ("Plan") at the purchase price as
determined by the stock option committee of the Board of HCAP pursuant to the
Plan ("Stock 

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Options"). One-fifth (1/5) of the Stock Options shall vest on each succeeding
anniversary of the Effective Date.

     2.4  Employee Benefit Plans.  The Employee shall be eligible to participate
in all employee benefit and deferred compensation plans established by the
Employer for all eligible employees, including family health insurance coverage,
group life insurance, disability insurance, and any defined benefit or defined
contribution retirement plan.

     2.5  Expenses.  Employer shall pay or reimburse the Employee for all
authorized and reasonable travel and entertainment expenses incurred or paid by
him in connection with the performance of his duties hereunder, upon
presentation to Employer of expense statements and such other documentation as
the Employer may reasonably require.

     2.6  Automobile.  The Employer shall provide to the Employee an automobile
allowance of $500 per month.  The Employee shall be responsible for all other
automobile expenses, including insurance, maintenance, operating, parking and
repair expenses.

     2.7   Leave.  The Employee shall be entitled to vacations and sick leave
with pay in accordance with the published policies of the Employer during each
year during the Term of Employment and any extensions thereof, prorated for
partial years.

     2.8  Memberships.  For the Term of Employment and any extensions thereof,
the Employer shall pay or reimburse the Employee for payment of the basic
monthly dues for membership of the Employee in the State Bar of Texas and the
American Bar Association, and reasonable fees and expenses required for
continuing legal education courses essential for membership in the State Bar of
Texas and an annual securitization industry seminar.

     2.9  Relocation.  In connection with the relocation of the Employee from
the Cameron Park, California area to the Austin, Texas, area, the Employer shall
pay and/or reimburse the Employee for the following:  (i) all reasonable
preapproved expenses related to the moving of all household possessions to the
Austin, Texas, area and any additional federal state or local income tax
resulting from such payments of moving expenses, (ii) the sum of $68,400 upon
closing of the purchase of a residence in the Austin, Texas area by Employee.

     2.10  Payment Deductions.  Employer shall be entitled to withhold from any
compensation, benefits or amounts payable under this Agreement all applicable
federal, state and local income taxes, social security payments, health,
retirement or other benefit plan payments and other customary payroll
deductions.

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3.  TERM AND TERMINATION.

     3.1  Term of Employment.  The employment of the Employee under this
Agreement shall be for a term of one (1) year commencing with the Effective Date
of this Agreement, subject to continuation, renewal, extension or early
termination as provided herein (such period, as continued renewed, extended or
terminated early is referred to as the "Term of Employment").

     3.2  Renewal of Term of Employment.  On the anniversary of the Effective
Date hereof and at the end of each subsequent six (6)-month period (each, a
"Renewal Date"), this Agreement shall be automatically renewed and extended for
an additional term of six (6) months without further action by either party,
unless at least thirty (30) days prior to any such Renewal Date the Employee or
the Employer, as the case may be, shall have given written notice to the other
party hereto that this Agreement shall not be renewed and extended, in which
event the Term of Employment shall terminate as of such Renewal Date.  This
Section shall not otherwise limit or restrict the rights of the parties hereto
to terminate this Agreement pursuant to any other provision hereunder.

     3.3  Termination by Employer.  Employer shall have the right to terminate
the Term of Employment of Employee under this Agreement at any time prior to the
expiration of the Term of Employment as follows:

     (a)  Upon the death of Employee;

     (b) Upon the Disability of Employee (as hereinafter defined);

     (c) For Cause (as hereinafter defined); and

     (d) Upon thirty (30) days notice, with or without cause or reason, in the
     sole discretion of Employer.

     3.4  Termination by Employee.  Employee shall have the right to terminate
the Term of Employment under this Agreement at any time prior to the expiration
of the Term of Employment for a material default by Employer in the performance
of any material provision of this Agreement that remains in default for thirty
(30) days following written notice of such default by Employee to Employer.  The
right of termination by Employee shall constitute the sole and exclusive remedy
of Employee for default herein by Employer.

     3.5  Termination for Cause.  For purposes of this Agreement the term
"Cause" for reduction of the Base Salary or termination of the Term of
Employment by Employer shall mean and include the occurrence of any of the
following events in the good faith determination of the President or the Board:

     (a) The Employee has participated in embezzlement, theft, larceny or fraud,
     or has otherwise acted dishonestly with respect to Employer or any of its
     Affiliates or engaged in gross negligence or willful misconduct in the
     performance of any of the duties and services required of Employee pursuant
     to this Agreement;

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     (b) The Employee has breached a fiduciary duty or duty of loyalty or
     fidelity owed to the Employer or any of its Affiliates;

     (c) The Employee has materially defaulted in observing a published policy
     of the Employer communicated to the Employee in writing and that remains in
     default for thirty (30) days following written notice of such default by
     Employer;

     (d) The Employee has been convicted of or entered a plea of nolo contendere
     to a felony or a misdemeanor involving moral turpitude;

     (e) The Employee has violated any law, regulation or ordinance of a
     governmental entity (other than traffic violations and similar minor
     offenses), but including any law relating to employment, the environment,
     discrimination, libel, slander, assault or other forms of abuse, or has
     violated any judicial decree applicable to the Employer or any of its
     Affiliates which violation has or may have a material and adverse affect on
     the Employer or any of its Affiliates or the ability of the Employee to
     perform his duties hereunder; or

     (f) The Employee has failed to perform or otherwise defaulted in any of the
     material terms of this Agreement or any duties assigned to Employee by the
     President or the Board as provided herein that remain in default for thirty
     (30) days following written notice of such default by Employer to Employee.

     3.6  Disability of Employee.  For purposes of this Agreement the
"Disability" of the Employee shall have the same meaning as the term "long-term
disability" or "permanent disability" or similar term in Employee's disability
policy provided by Employer.

     3.7  Severance and Termination Payments.

     (a) Upon expiration of the Term of Employment pursuant to this Agreement,
     or upon termination of the Term of Employment by either party pursuant to
     Section 3.2 hereof, or in the event of termination of the Term of
     Employment by the Employer as a result of the death or Disability of the
     Employee or for Cause, then the Employee shall be entitled to receive any
     compensation that has been earned or accrued but not paid through the date
     of termination, and any other compensation or benefits to which the
     Employee is entitled under any pension, retirement or disability plan
     provided as part of the employee benefit programs for eligible employees of
     the Employer following such termination, and Employer shall have no further
     liability or obligation to the Employee under or pursuant to this
     Agreement.

     (b) However, if (i) the Employer terminates the Term of Employment other
     than for death, Disability or Cause or (ii) the Employee terminates the
     Term of Employment as a result of default by Employer as provided for in
     Section 3.4 hereof, then the Employer shall pay the Employee an amount (the
     "Severance Payment") equal to (x) the Base Salary payable pursuant to
     Section 2.1 hereof for one (1) year, if such termination occurs during the
     initial year of the Term of Employment, or (y) one-half (1/2) of the Base
     Salary then payable pursuant to Section 2.1 hereof, if such termination
     occurs at anytime thereafter.  The 

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     Severance Payment shall be paid to the Employee, at the election of the
     Employer, (i) in monthly installments at the applicable Base Salary, or
     (ii) a lump sum equal to the present value of the applicable monthly
     payments discounted at the prime rate of Frost Bank-Austin, Austin, Texas,
     plus two percent (2%) per annum within thirty (30) days of the date of
     termination of employment. The payment provided for in this Section shall
     be in addition to any other compensation or benefit to which Employee may
     be entitled under any employee benefit program of the Employer pursuant to
     this Agreement. Upon payment by the Employer of the Severance Payment and
     other amounts payable hereunder to the Employee (or the Employee's estate),
     the Employer shall have no other or further liability or obligation
     whatsoever under this Agreement to the Employee (or the Employee's estate)
     related to the Employee's employment or other capacities and the Employer
     or related to the termination of the Employee's employment and the
     Employer. As a condition to payment of the Severance Payment and any other
     amounts payable to the Employee upon termination of his employment, the
     Employee or his estate shall deliver to the Employer a full and
     unconditional release of the Employer under this Agreement (in form and
     substance satisfactory to the Employer) of any and all claims arising out
     of the termination of employment of Employee by the Employer.

     3.8  Payment by Employee.  Upon termination of the Term of Employment,
Employee shall pay Employer or any Affiliate of Employer any amount or amounts
owed by Employee to Employer or any such Affiliate, and Employer and any such
Affiliate shall be entitled to offset against any amounts owed to Employee any
amounts owed by Employee to Employer or any such Affiliate, without prejudice to
any other rights or remedies of Employer or any such Affiliate available at law
or in equity.

4.  EMPLOYEE REPRESENTATION

     4.1  No Violation of Other Agreements.  The Employee hereby represents and
warrants to the Employer that neither his entering into this Agreement nor the
performance of his duties and obligations hereunder shall constitute a breach or
other violation of any agreement or understanding between the Employee and any
other person, firm, corporation or other entity, including, without limitation,
any former employer of the Employee.

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5.  CONFIDENTIALITY, NONCOMPETITION AND NON-SOLICITATION COVENANTS.

     5.1  Confidentiality.  The Employee acknowledges that by reason of the
nature of the Employee's duties, the Employee will or may have access to and
become informed of confidential and secret information which is a competitive
asset of the Employer, including without limitation (i) customer information
such as names, addresses, sales histories, purchasing habits, credit status, and
pricing levels, (ii) certain prospective customer information and lists, (iii)
product and systems specifications, concepts for new or improved financial
products and other financial product or systems data, (iv) future corporate
planning data, (v) marketing strategies, (vi) the Employer financial results and
business condition, and (vii) any of the foregoing which belong to any other
person or company but to which the Employee has had access by reason of his
employment with the Employer (collectively, "Confidential Information").  The
Employee agrees to keep in strict confidence, and not, either directly or
indirectly, to make known, divulge, reveal, furnish, make available or use
(except for use in the regular course of the Employee's duties hereunder), any
Confidential Information.  The Employee acknowledges that all sales manuals,,
instruction books, catalogs, information and records, technical manuals and
documentation, drafts of instructions, guides and manuals, maintenance manuals,
and other documentation (whether in draft or final form), and other sales or
information and aids relating to the Employer's business and any and all other
documents containing Confidential Information furnished to the Employee by a
representative of the Employer or otherwise acquired or developed by the
Employee in connection with his employment with the Employer (collectively,
"Recipient Materials") shall at all times be the property of the Employer.  Upon
termination of the Employee's employment with the Employer, the Employee shall
return to the Employer any Recipient Materials which are in the Employee's
possession, custody or control.  The Employee's obligations under this Section
5.1 shall survive such termination of the Employee's employment with the
Employer, but shall not be applicable to (i) any such Confidential Information
which becomes, through no fault of the Employee, generally known to the trade or
publicly available; (ii) information in the public domain; (iii) such
information is independently derived without the aid, application or use of such
information; and (iv) such information is required to be disclosed by law or for
financial accounting purposes.  The Employee's obligations under this Section
5.1 are in addition to, and not in limitation or preemption of, all other
obligations of confidentiality which the Employee may have to the Employer under
general legal or equitable principles.

     5.2  Non-Competition.

     (a) The Employee acknowledges that during the Term of Employment, the
     Employee's access to the Confidential Information will enable the Employee
     to benefit from the Employer's goodwill and know-how.  The Employee further
     acknowledges that it would be inherent in the performance of the Employee's
     duties as a director, officer, employee, agent or consultant of any company
     which competes with the Employer or any Affiliate, as hereinafter defined,
     or which intends to or may compete with the Employer or any such Affiliate,
     to disclose or use the Confidential Information, and the Employer's or the
     Affiliate Companies' goodwill and know-how, to or for the benefit of such
     other company.  The Employer's primary business relates to residential real
     estate home improvement loans insured by the FHA under Title I of the
     National Housing Act (collectively, the "Property Improvement Loans").
     Accordingly, "Competitive Business" (as used herein) shall mean the

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     underwriting, origination, servicing, acquisition, holding, ownership,
     sale, transfer, assignment, pledge, financing and refinancing of Property
     Improvement Loans and any activities incidental to the foregoing
     activities, including without limitation any activities involving the
     origination of Property Improvement Loans from home owners or the
     acquisition of Property Improvement Loans from contractors, correspondents,
     banks or other sources of loan production and acquisition by the Employer,
     and the issuance, ownership, sale, acquisition or transfer of securities
     backed by Property Improvement Loans.  To protect these vital interests of
     the Employer and any Affiliate, the Employee agrees that during the Term of
     Employment and for a period of one (1) year following the termination of
     the Employee's employment hereunder, the Employee will not, without the
     prior written consent of the Employer, directly or indirectly, whether as a
     director, officer, employee, agent or consultant, or otherwise:

          (i) invest or engage in any Competitive Business or accept employment
          with or render services to any entity engaged in any Competitive
          Business or take any action inconsistent with the fiduciary duties of
          the Employee to the Employer;

          (ii) solicit sales of, or sell or deliver, any financial product,
          services or system of the kind and character sold, provided or
          distributed in connection with the Competitive Business of the
          Employer or any Affiliate to any person, firm, corporation or other
          entity called upon or served by the Employee on behalf of the Employer
          or any Affiliate during the Term of Employment;

          (iii) solicit, attempt to solicit or seek to divert from the Employer
          or any Affiliate, the business or patronage of any person, firm,
          corporation or other entity with whom the Employee has had business
          relations in connection with the Competitive Business of the Employer
          or any Affiliate; or

          (iv) engage, suggest, assist in, or influence, the engagement or
          hiring by any competing organization of any salesman, distributor,
          dealer, contractor, employee or source of the Employer or any
          Affiliate related to the Competitive Business of the Employer or any
          Affiliate.

          (b) This covenant not to compete shall apply whether the Employee acts
     as an individual or for his own account, or as a partner, employee, agent,
     salesman, distributor, consultant or representative of any person, firm,
     corporation or other entity.  The restriction herein contained shall be
     limited in geographical scope to each of the geographical areas in the
     United States in which the Employer conducts business, provides services or
     sells financial products at any time during the Term of Employment.
     Moreover, the restriction herein contained shall prohibit the Employee from
     competing with the Employer and any Affiliate only in the line or lines of
     a Competitive Business (as defined above) actually conducted in a
     particular geographical area by the Employer or any Affiliate.  During the
     Term of Employment, the Employee shall disclose to the Board of Employer
     any investments he may make in businesses which are related in terms of
     product line or customer base to products 

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     which, at such time, the Employer or any Affiliate is engaged in marketing
     or has definitive plans to market.

          (c) The Employee agrees that each Affiliate is a third party
     beneficiary to this Section 5.2 and each Affiliate is entitled to enforce
     the provisions of the Section 5.2 in the event that any violation of this
     Section 5.2 causes, or threatens to cause, injury to its business or
     property.

6.   MISCELLANEOUS PROVISIONS.

     6.1. Assignability.   This Agreement shall not be assignable, except that
in the event of a Change of Control of Employer the provisions of this Agreement
shall be binding upon and shall inure to the benefit of the continuing entity or
the entity resulting from such Change of Control.

     6.2  Equitable Remedies.  The Employee acknowledges and agrees that in the
event of any breach or threatened breach of the provisions of Section 13 or 14
hereof, the Employer would have no adequate remedy at law, and thus, the
Employer shall be entitled to temporary and/or permanent injunctive relief to
enforce such provisions of this Agreement without prejudice to any and all other
remedies which the Employer may have at law or in equity.

     6.3  Waiver.  A waiver by either party of any of the terms and conditions
of this Agreement in any instance shall not be deemed or construed to be a
waiver of such terms or conditions for the future, or of any subsequent breach
thereof.

     6.4  Notices.  Any and all notices required or permitted to be given
hereunder shall be in writing and be deemed delivered only when received by the
party to which it is sent.  All notices shall be sent to each party at an
address to be provided by such parties to one another from time to time during
the Term of Employment.  Either party may change by notice the address to which
notices to it are to be addressed.

     6.5  Severability.  If any provision of this Agreement, as applied to
either party or to any circumstances, shall be adjudged by a court to be void or
unenforceable, the same shall in no way affect any other provision of this
Agreement or the applicability of such provision to any other circumstances.

     6.6  Applicable Law.  This Agreement is made and entered into in Austin,
Texas, and shall be construed and interpreted under the applicable laws and
decisions of the State of Texas.  Venue of any action under this Agreement shall
be exclusively in the State and Federal courts located in Travis County, Texas.

     6.7  Counterpart Execution.  This Agreement may be executed in several
counterparts, each of which shall be fully effective as an original and all of
which together shall constitute one and the same instrument.

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     6.8  Entire Agreement.  This Agreement contains the entire understanding of
the parties hereto with respect to the employment of the Employee by the
Employer and provisions hereof may not be altered, amended, modified, waived, or
discharged in any way whatsoever, except by written agreement executed by each
party hereto.

     6.9  Headings and Captions.  Headings and Section captions used in this
Agreement are intended for convenience of reference only and shall not affect
the interpretation of this Agreement.

     6.10 Definitions.

          (a) For purposes of this Agreement the term "Affiliate" means an
     entity that directly, or indirectly through one or more intermediaries,
     controls, is controlled by, or is under common control with, Employer.

          (b) For purposes of this Agreement a "Change of Control" shall mean
     any transaction by which the Company (or any entity resulting from any
     merger or consolidation referred to in this Section or which shall be a
     purchaser or transferee so referred to) shall at any time be merged or
     consolidated into or with any other entity or entities, or in the event
     that substantially all of the assets of the Employer or any such entity
     shall, directly or indirectly, be sold or otherwise be transferred to
     another person or entity.

          (c) "Conflict of Interest" means, without limitation, any act or
     activity, or any interest in connection with, or benefit from any act or
     activity, which knowingly is adverse to the interests of or would in any
     way injure Employer or any of its Affiliates, provided that a passive
     investment of not more than 5% of the outstanding equity securities of an
     entity whose securities are then being regularly traded in open-market
     brokerage transactions (either on a stock exchange or over-the-counter)
     shall not constitute a Conflict of Interest.  In keeping with Employee's
     duties to Employer, Employee agrees that Employee shall not knowingly
     become involved in a Conflict of Interest with Employer or its Affiliates,
     or upon discovery thereof, allow such a conflict to continue.  Moreover,
     Employee agrees that Employee shall disclose to Employer's general counsel
     any facts that might involve such a Conflict of Interest that has not been
     approved by Employer's Board of Directors.

     IN WITNESS WHEREOF, the undersigned parties have executed this Employment
Agreement as of the Effective Date first above written.

Employer:                                 Employee:
--------                                  -------- 

HOMEOWNERS MORTGAGE & EQUITY, INC.,
a Delaware corporation
 


By:   /s/ John W. Ballard                /s/ Thomas L. Perritte
   ------------------------------        --------------------------------     
   JOHN W. BALLARD, President            THOMAS L. PERRITTE

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