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

                                    FORM 10-Q


(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934


For the period ended     June 30, 2001


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


For the transition period from ______________ to  ______________


Commission file number  0-13520


                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
             (Exact name of registrant as specified in its charter)


         Massachusetts                                04-2828131
(State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                     Identification No.)


              100 Second Avenue, Needham, MA                02494
          (Address of principal executive offices)        (Zip Code)


    Registrant's telephone number, including area code   (781) 444-5251


        _______________________________________________________________
                   Former address, if changed from last report

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                                                    [X] Yes     [ ] No

                            Exhibits Index on Page 25



<PAGE>

                                  Page 1 of 26

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

<TABLE>
<CAPTION>
                                      INDEX

                                                                                                                      Page
<S>                                                                                                                   <C>
Part I:  Financial Information

Item 1.  Financial Statements:

        Statement of Net Assets in Liquidation, June 30, 2001 and
         December 31, 2000                                                                                                3

        Statement of Changes of Net Assets in Liquidation for the
         Six months Ended June 30, 2001                                                                                   4

        Statement of Operations for the Three Months and Six Months Ended June 30, 2000                                   5

        Statement of Cash Flows for the Six Months Ended June 30, 2000                                                  6-7

        Notes to Financial Statements                                                                                  8-17

Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                                                                18-24

Item 3.  Quantitative and Qualitative Disclosure about Market Risk -
            Disclosure not applicable

Part II: Other Information

Item 3.  Defaults Upon Senior Securities                                                                                 25

Item 6.  Exhibits and Reports on Form 8-K                                                                                25
</TABLE>


                                       2
<PAGE>






<TABLE>
<CAPTION>
                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                     STATEMENT OF NET ASSETS IN LIQUIDATION



                                                                                    (Unaudited)                  (Audited)
                                                                                      June 30,                  December 31,
                                                                                        2001                        2000
                                                                                 ---------------------       ---------------------
<S>                                                                                        <C>                        <C>
Assets (Liquidation Basis):

    Cash and cash equivalents                                                              $461,484                   $ 376,286
    Restricted cash                                                                          58,394                     147,103
    Investments in Local Limited Partnerships                                               109,396                     296,910
                                                                                 ---------------------       ---------------------
       Total Assets                                                                        $629,274                   $ 820,299
                                                                                 =====================       =====================

Liabilities (Liquidation Basis):

    Purchase Money Notes and accrued interest liabilities                                  $ 10,198                    $ 51,983
    Accounts payable to affiliates                                                          384,271                     386,271
    Accounts payable                                                                          6,913                       3,596
    Accrued expenses                                                                        224,317                     375,250
    Interest payable                                                                            841                         841
                                                                                 ---------------------       ---------------------
       Total liabilities                                                                    626,540                     817,941
                                                                                 ---------------------       ---------------------

Net Assets in Liquidation                                                                  $  2,734                    $  2,358
                                                                                 =====================       =====================
</TABLE>













   The accompanying notes are an integral part of these financial statements.

                                       3

<PAGE>



<TABLE>
<CAPTION>
                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
              For the period from January 1, 2001 to June 30, 2001
                                   (Unaudited)


<S>                                                                       <C>                     <C>                    <C>
Net Assets in liquidation at December 31, 2000                                                                           $  2,358

Operating Activities
    Interest income                                                                               $ 9,877
                                                                                          ------------------

Operating Expenses
    Purchase Money Note interest - increase in accrual                    $  (319)
    Other operating expenses                                               (9,486)                 (9,805)
                                                                  ------------------      ------------------
          Sub-total operating activities                                                                                       72

Liquidating Activities
    Increase in investment in Local Limited Partnerships                                              319
    Change in estimated liquidation value
      Estimated sales price                                               148,500
      Actual sales price                                                  148,485                     (15)
                                                                  ------------------      ------------------
            Sub-total liquidating activities                                                                                  304
                                                                                                                  ------------------


Net Assets in liquidation at June 30, 2001                                                                               $  2,734
                                                                                                                  ==================
</TABLE>













   The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>



<TABLE>
<CAPTION>
                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                             STATEMENT OF OPERATIONS
                                   (Unaudited)

                                                                         For the Three                  For the Six
                                                                          Months Ended                 Months Ended
                                                                         June 30, 2000                June 30, 2000
                                                                   ----------------------        ----------------------

<S>                                                                          <C>                          <C>
Interest income                                                              $   4,408                    $   10,166

Expenses:
   Interest expense                                                            176,463                       359,271

   General and administrative expenses:
        Affiliates                                                              24,500                        49,000
        Other                                                                    2,984                         8,991
                                                                   ----------------------        ----------------------
   Total expenses                                                              203,947                       417,262
                                                                   ----------------------        ----------------------

Loss before other income and equity in income of Local Limited
   Partnership investments                                                    (199,539)                     (407,096)

Other income:
   Gain on sale of investment in Osuna Apartments                                    -                     2,434,099
                                                                   ----------------------        ----------------------

Income (loss) before equity in income of Local Limited
   Partnership investments                                                    (199,539)                    2,027,003

Equity in income of Local Limited partnership investments
                                                                               118,470                       121,610
                                                                   ----------------------        ----------------------

Net income (loss)                                                            $ (81,069)                   $2,148,613
                                                                   ======================        ======================

Limited partners' interest in net income (loss)                              $ (80,258)                   $2,127,127
                                                                   ======================        ======================

Weighted average number of units outstanding used in
   computing basic net income (loss) per limited
   partnership unit                                                             21,566                        21,566
                                                                                ======                        ======

Basic net income (loss) per
   Limited partnership unit                                                  $   (3.72)                   $    98.63
                                                                              =========                     ========
</TABLE>






   The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>




<TABLE>
<CAPTION>
                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                             STATEMENT OF CASH FLOWS
                                   (Unaudited)

                                                                                                       For the Six Months
                                                                                                      Ended June 30, 2000
                                                                                                    ----------------------


<S>                                                                                                           <C>
Cash flows from operating activities:
    Cash distributions from Local Limited Partnerships                                                        $  129,618
    Interest payments on Purchase Money Notes                                                                   (123,760)
    Cash paid for general and administration expenses                                                            (27,029)
    Interest received                                                                                              8,090
                                                                                                    ----------------------
          Net cash used in operating activities                                                                  (13,081)
                                                                                                    ----------------------

Cash flows from financing activity:
    Capital distributions                                                                                         (3,087)
                                                                                                    ----------------------
          Net cash used in financing activities                                                                   (3,087)
                                                                                                    ----------------------

Cash flows from investing items:
    Cash proceeds from sale of investment in Osuna
      Apartments                                                                                                 100,000
    Consulting fees                                                                                              (23,426)
    Deferred closing costs and reimbursable expenses                                                             (31,223)
    Estimated  state taxes paid from proceeds from sale of investments
      in Local Limited Partnerships                                                                             (211,271)
                                                                                                    ----------------------
          Net cash used in  investing items                                                                     (165,920)
                                                                                                    ----------------------

Net decrease in cash and cash equivalents                                                                       (182,088)

Cash and cash equivalents at:

    Beginning of period                                                                                          526,940
                                                                                                    ----------------------

    End of period                                                                                             $  344,852
                                                                                                    ======================
</TABLE>



                                   (continued)

                                       6

<PAGE>





<TABLE>
<CAPTION>
                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                       STATEMENT OF CASH FLOWS (continued)
                                   (Unaudited)

Reconciliation of net income to net cash provided by operating activities:

                                                                                                       For the Six Months
                                                                                                      Ended June 30, 2000
                                                                                                     ---------------------

<S>                                                                                                           <C>
Net income                                                                                                    $2,148,613

Adjustments to reconcile net income to net cash provided by operating
      activities:

        Share of income of Local Limited
           Partnership investments                                                                              (121,610)

        Cash distributions from Local Limited
           Partnerships                                                                                          129,618

        Interest expense added to Purchase Money
           Notes, net of discount amortization                                                                   238,757

        Gain on sale of investment in Local Limited
           Partnerships                                                                                       (2,434,099)

      (Decrease) increase in:
             Interest receivable                                                                                  (2,076)
             Accrued interest payable                                                                             (3,244)
             Accounts payable to affiliates                                                                       48,998
             Accounts payable                                                                                        962
             Accrued expenses                                                                                    (19,000)
                                                                                                              -----------
Net cash used in operating activities                                                                         $  (13,081)
                                                                                                              ===========
</TABLE>







   The accompanying notes are an integral part of these financial statements.

                                       7
<PAGE>





                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1. Organization and Liquidation of the Partnership

Organization

      Liberty Housing  Partners  Limited  Partnership  (the  "Partnership")  was
formed under the Massachusetts Uniform Limited Partnership Act on March 20, 1984
for the primary purpose of investing in other limited partnerships which own and
operate government  assisted  multi-family  rental housing complexes (the "Local
Limited Partnerships").

Liquidation and Sale of Investments in Local Limited Partnerships

      On March  30,  2001,  the  Partnership  sold its 98%  limited  partnership
interests in  Fuquay-Varina,  Oxford Homes and Williamston  Homes to the general
partner of these  partnerships or his affiliate for $148,485 plus the assumption
of the related  Purchase  Money Note  obligations.  The carrying  value of these
properties  had been  adjusted at December  31, 2000 to reflect the actual sales
transactions.

      On February 1, 2000,  the  Partnership  sold its 98% interest as a limited
partner (the  "Partnership  Interest") in Osuna Apartments  Company ("Osuna") to
the Sovereign  Management  Corporation,  the company retained by Osuna to manage
its apartment  complex (the  "Purchaser").  In consideration for the sale of the
Partnership  Interest,  the  Partnership  received a net cash purchase  price of
$100,000.  In connection  with the sale, the holders of the Purchase Money Notes
(the "Notes")  issued by the  Partnership in connection  with its acquisition of
the  Partnership  Interest  released the  Partnership  from all  liabilities  in
connection  with  the  Notes.  After  transaction  expenses,   including  $1,800
recognized in the third quarter of 2000,  the  Partnership  recognized a gain of
$2,432,299 on the sale of the investment.

      On May 28,  1999,  the  Partnership  sold its  interest in Fiddlers  Creek
Apartments in exchange for $483,451 in cash and assumption of the Purchase Money
Note obligations.  On April 13, 2000, estimated state withholding taxes totaling
$211,271 were paid from the proceeds of the sale of the Partnership's investment
in Fiddlers Creek  Apartments.  The Partnership  subsequently  reevaluated  this
obligation  and applied for a refund of the $211, 271  previously  remitted.  On
November 7, 2000 the refund was received with interest of $4,659.

      On July 15,  1999,  the  Partnership  sold its  interest  in  Linden  Park
Associates  Limited  Partnership  in exchange for $395,960 in cash.  Linden Park
Associates  refinanced  their  existing debt and also paid in full the principal
and accrued and unpaid  interest  due the  Partnership  on their notes  totaling
$241,058.  In  accordance  with the  Partnership's  agreement  with the  General
Partner of Linden  Park  Associates  (the  "Linden  GP"),  these funds have been
segregated  for use to pay the fees and expenses due the Linden GP in connection
with the  consulting  arrangement  described  below.  Interest  earned  on these
segregated funds will be available to pay these fees and expenses.


                                       8

<PAGE>

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1. Organization and Liquidation of the Partnership, continued

Liquidation and Sale of Investments in Local Limited Partnerships, continued

      The Linden GP was engaged in September, 1998 to assist the general partner
to review the  Partnership's  portfolio,  develop a strategy for  maximizing the
value of the portfolio and implementing the strategy. The agreement provides for
fees  based  on the  successful  implementation  of all or part of the  strategy
developed  which will be paid from the segregated  funds  discussed  above.  The
remaining  balance of the  segregated  funds was $58,394 as of June 30, 2001. In
the second quarter of 2001,  consulting  fees totaling  $18,018 were paid to the
Linden GP in respect to Austintown Associates. In the first quarter of 2001, the
consulting fees paid to the Linden GP in respect of the successful  sales of the
Partnership's investments in Fuquary-Varina,  Oxford Homes and Williamston Homes
totaled  $71,723.  In 2000, the consulting fees paid to the Linden GP in respect
of the successful sale of the  Partnership's  investment in Osuna Apartments was
$23,426 and reimbursed expenses totaled $407.

      Management  entered  into  negotiations  to  sell  the  Partnership's  94%
interests in Brierwood, Brierwood II, Pine Forest and Meadowwood Apartments. The
sale of the  Partnership's  interests in Brierwood,  Pine Forest and  Meadowwood
Apartments  requires  consent from all the related  Purchase Money Note holders.
Such consents were requested.  The Partnership  received  unanimous consent from
the Purchase Money Note holders  relating to Pine Forest  Apartments but did not
receive  unanimous  consent  from the Purchase  Money Note  holders  relating to
Brierwood and Meadowwood Apartments. Accordingly, the transactions could not all
be consummated as proposed.  Under the partnership  agreements relating to these
investments,  Liberty  LGP has the right to cause the sale of the  partnership's
project.  Liberty LGP has agreed to pursue the sale of these four  projects  and
has caused the respective Local Limited Partnerships to enter into contracts for
sale of the  projects.  The  proposed  purchasers  are  affiliates  of the local
general partner in these  partnerships.  . The Local Limited  Partnership  would
receive  only  a  nominal  cash  payment  in  connection  with  each  sale.  The
transactions  are not expected to result in any  distribution  in respect of the
Partnership's  interest in these partnerships.  Management presently anticipates
the closing of these transactions by the end of 2001.

      The  Partnership  entered into an agreement with the local general partner
of  Austintown  Associates  to sell the  Partnership's  98% limited  partnership
interest,  subject,  among other things,  to the consent of the related Purchase
Money Note holders.  The  Partnership did not receive  unanimous  consent of the
Purchase  Money Note  holders  and the  agreement  expired on April 1, 2000.  On
September  15, 2000  certain of the  Purchase  Money Note  holders  commenced an
action in the Court of Common Pleas Mahoning County,  Ohio seeking,  among other
things,  to  foreclose  upon  the  Partnership's   pledge  of  its  98%  limited
partnership interest in Austintown  Associates.  The Partnership did not contest
the proceeding  and, on February 26, 2001, the Court entered a default  judgment
and order appointing a receiver to sell the Partnership's interest in Austintown
Associates to satisfy the judgment. The sale proceeds,  after the costs of sale,
will be paid to the Purchase Money Note holders.

                                       9
<PAGE>





                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1. Organization and Liquidation of the Partnership, continued

Liquidation and Sale of Investments in Local Limited Partnerships, continued

      Management  commenced  discussions with the local manager for Surry Manor,
Ltd.  and  Glendale  Manor  Apartments  to  either  purchase  the  Partnership's
interests in those  partnerships or sell the Partnership's  projects.  The local
manager is now in the process of obtaining market studies for these  properties.
No agreement on the transfer of these interests or the sale of these  properties
has been reached.  The sale of these interests requires unanimous consent of the
Purchase Money Note holders.  Under the partnership agreements relating to these
investments,  Liberty  LGP has the  right to cause  the sale of these  projects.
Management will continue to pursue both options in the third quarter of 2001.

      The carrying values of the  investments in the Local Limited  Partnerships
and the Purchase Money Notes and related accrued interest were adjusted to their
estimated fair values and settlement  amounts,  respectively,  upon adopting the
liquidation basis of accounting (See Note 2).

      As discussed  above,  the  Partnership  is currently in various  stages of
negotiations  to  sell  its  interests  in the  remaining  seven  Local  Limited
Partnerships.  If the  Partnership  is  successful in disposing of its remaining
investments,   management   presently  intends  to  wind  up  the  Partnership's
operations in the fourth quarter of 2001 or the first quarter of 2002.

      No  assurance  can  be  given  that  the  Partnership   will  be  able  to
successfully  conclude  any  of  the  above  transactions.   Consequently,   the
completion of the liquidation of the Partnership may be different than currently
anticipated.

      The net amount,  if any,  ultimately  available for distribution  from the
liquidation of the Partnership  depends on many unpredictable  factors,  such as
the amounts  realized on the sale of the remaining  investments in Local Limited
Partnerships,  carrying costs of the assets prior to sale,  settlement of claims
and  commitments,  the amount of revenue and expenses of the  Partnership  until
completely liquidated and other uncertainties.

2. Significant Accounting Policies

Basis of Presentation

      In  the  opinion  of  the  General  Partner,  the  accompanying  unaudited
financial  statements  contain all normal  recurring  adjustments  necessary  to
present  fairly the  financial  statements  of the  Partnership  for the periods
presented.  Changes of net assets in  liquidation  and operating  results of any
interim  period  are not  necessarily  indicative  of the  results  that  may be
expected for a full year. The financial statements do not


                                       10
<PAGE>



                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

2. Significant Accounting Policies, continued

Basis of Presentation, continued

include all of the information and footnote  disclosures  required by accounting
principles  generally accepted in the United States of America.  These financial
statements  should  be  read  in  conjunction  with  the  Partnership's  audited
financial  statements  and notes thereto  included in the  Partnership's  annual
report on Form 10-K for the year ended December 31, 2000.

Basis of Accounting

      Effective December 31, 2000, the Partnership adopted the liquidation basis
of  accounting.  Prior  to  that  date,  the  Partnership  recorded  results  of
operations using the going concern basis of accounting.

      The accompanying  statements of net assets in liquidation and statement of
changes  of  net  assets  in  liquidation,   reflect  the  transactions  of  the
Partnership utilizing liquidation  accounting concepts as required by accounting
principles  generally  accepted  in the  United  States  of  America.  Under the
liquidation  basis of  accounting,  assets  are  stated at their  estimated  net
realizable  values  and  liabilities  are  stated at their  anticipated  payable
amounts.

      The valuation of assets and liabilities necessarily requires estimates and
assumptions,  and there are uncertainties in carrying out the dissolution of the
Partnership.  The actual values upon dissolution and costs associated  therewith
could be higher or lower than the amounts recorded.

      The  accompanying  statement  of  operations  for the three months and six
months ended June 30, 2000 reflects the operations of the  Partnership  prior to
the adoption of  liquidation  basis of accounting  and prior to the  adjustments
required to adopt the liquidation basis of accounting.

Investment in Local Limited Partnerships

      Investments  in Local  Limited  Partnerships  at June 30, 2001  consist of
investments  in seven Local Limited  Partnerships  which are stated at estimated
liquidation  value.  Prior  to  the  adoption  of  liquidation  accounting,  the
investments  in Local  Limited  Partnerships  were  accounted  for by the equity
method  whereby costs to acquire the  investments,  including  cash paid,  notes
issued  and  other  costs  of  acquisition,  were  capitalized  as  part  of the
investment account.  The Partnership's  equity in the earnings or losses of each
of the Local Limited  Partnerships  was reflected as an addition to or reduction
of the respective  investment account. The Partnership did not recognize losses,
which reduced its investment  account below zero.  Cash  distributions  received
which reduce the investment below zero were recognized as investment income.


                                       11
<PAGE>





                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

2. Significant Accounting Policies, continued

      Use of Estimates

      The  preparation  of financial  statements in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the  financial  statements  and the reported  amounts of revenue and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

3. Contingencies

      The Purchase  Money Notes  relating to Austintown  Associates,  Meadowwood
Ltd,  Brierwood  Ltd and Pine Forest  matured on October 30, 1999.  The Purchase
Money Notes  relating to Glendale  Manor matured on August 29, 2000.  These five
series Purchase Money Notes were in default at June 30, 2001. The Purchase Money
Notes for Surry Manor matured on July 9, 2001 and are now also in default.

      The sale or other  disposition by the  Partnership of its interests in the
Local Limited  Partnerships,  including in connection  with a foreclosure of the
pledged  security for Purchase  Money Note  obligations,  is likely to result in
recapture of previously claimed tax losses to the Partnership and may have other
adverse tax  consequences to the Partnership and to the Limited  Partners.  Such
recapture may cause some or all of the Limited  Partners to have taxable  income
from the Partnership  without cash distributions from the Partnership with which
to satisfy the tax liability resulting therefrom.

      As  discussed  in Note 1 above,  the  Partnership  is currently in various
stages of  negotiations  to sell its  interests  in the  remaining  seven  Local
Limited  Partnerships.  If the  Partnership  is  successful  in disposing of its
remaining investments, management presently intends to wind up the Partnership's
operations in the fourth quarter of 2001 or the first quarter of 2002.

      No  assurance  can  be  given  that  the  Partnership   will  be  able  to
successfully  conclude  any  of  the  above  transactions.   Consequently,   the
completion of the liquidation of the Partnership may be different than currently
anticipated.

      As a result of its  investments  in the Local  Limited  Partnerships,  the
Partnership is affected by certain risks and  uncertainties  associated with the
operations of the Properties owned by the Local Limited Partnerships.


                                       12
<PAGE>






                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

3. Contingencies, continued

      The  rents  of the  Properties,  many  of  which  receive  rental  subsidy
payments,  including  payments  under  Section 8 of Title II of the  Housing and
Community  Development  Act of 1974 ("Section 8"), are subject to specific laws,
regulations  and  agreements  with  federal  and  state  agencies.  The  subsidy
agreement for Surry Manor expired in April,  2001.  The local manager is working
with HUD for a one year extension.  The agreements for Austintown Associates and
Glendale  Manor  expire in October  2001 and May 2002,  respectively.  Under the
Multifamily  Assisted Housing and Reform and Affordability Act (MAHRAA) of 1997,
as amended, Congress set forth the legislation for a permanent  "mark-to-market"
program  and  provided  for  permanent  authority  for the  renewal of Section 8
Contracts. Owners with Section 8 contracts expiring after September 30, 1998 are
subject to the provisions of MAHRA. On September 11, 1998, HUD issued an interim
rule to provide clarification for implementation of the mark-to-market  program.
Since then,  revised  guidance  has been  provided  through  various HUD housing
notices,  most recently HUD housing notice 99-36, which addresses  project-based
Section 8 contracts expiring in fiscal year 2000.

      Under this  notice,  project  owners  have  several  options for Section 8
contract  renewals,  depending  on the type of project and rent  level.  Options
include  marking rents up to market,  renewing other  contracts with rents at or
below market, referring projects to the Office of Multifamily Housing Assistance
Restructuring  (OMHAR) for  mark-to-market  or "OMHAR lite"  renewals,  renewing
contracts  that are exempted  from  referral to OMHAR,  renewing  contracts  for
portfolio re-engineering demonstration and preservation projects, and opting out
of the Section 8 program.  Owners must submit  their  option to HUD at least 120
days before  expiration of their contract.  Each option contains  specific rules
and procedures that must be followed to comply with the  requirements of housing
notice 99-36.

      As such,  each Local Limited  Partnership  may choose to either opt out of
the Section 8 program, request mortgage restructuring and renewal of the Section
8  contract,  or request  renewal of the  Section 8  contract  without  mortgage
restructuring.  Each option contains a specific set of rules and procedures that
must be  followed  in order to  comply  with the  requirements  of  MAHRAA.  The
properties  are working with HUD to renew their  existing  contracts  for two to
five year periods.

      The Partnership  cannot  reasonably  predict  legislative  initiatives and
governmental  budget  negotiations,  the  outcome  of which  could  result  in a
reduction  in funds  available  for the various  federal and state  administered
housing programs  including the Section 8 program.  Such changes could adversely
affect the future net  operating  income  and debt  structure  of certain  Local
Limited Partnerships currently receiving such subsidy or similar subsidies.


                                       13
<PAGE>





                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

4. Investments in Local Limited Partnerships

      The Partnership  acquired Local Limited Partnership  interests in thirteen
Local  Limited   Partnerships   which  own  and  operate   government   assisted
multi-family  housing  complexes.  As discussed in Note 1 above, the Partnership
has sold  six of its  investments  as of June  30,  2001.  The  Partnership,  as
Investor  Limited  Partner  pursuant to Local  Limited  Partnership  Agreements,
acquired  interests  ranging  from  94%  to 98% in the  profit  or  losses  from
operations and cash from operations of each of the Local Limited Partnerships.

      As  discussed  above,  the  Partnership  is  currently  in the  process of
liquidating the  Partnership  and disposing of its remaining  investments in the
Local  Limited  Partnerships  presently  estimated  to occur  through the fourth
quarter  of 2001 or  first  quarter  of 2002.  No  assurance  can be given  that
management will be able to complete its liquidation of Partnership's investments
within this time period.

      The following is a summary of cumulative activity for investments in Local
Limited Partnerships since their dates of acquisition:

<TABLE>
<CAPTION>
                                                                                    (Unaudited)                   (Audited)
                                                                                      June 30,                   December 31,
                                                                                        2001                        2000
                                                                              -------------------------     -----------------------

<S>                                                                                      <C>                         <C>
Total acquisition cost to the Partnership                                                $ 9,356,379                 $ 9,356,379

Additional capital contributed by the Partnership                                             11,425                      11,425

Partnership's share of losses of Local Limited Partnerships                               (3,375,022)                 (3,444,200)

Cash distributions received from Local Limited Partnerships                               (4,199,256)                 (4,199,256)

Cash distributions received from Local  Limited
        Partnerships recognized as Investment Income                                          95,195                      95,195

Sales of investments in Local Limited Partnerships                                        (1,512,144)                 (1,035,518)
Adjustment to reduce investments in Local Limited Partnerships
        to liquidation accounting basis                                                     (267,181)                   (487,115)
                                                                              -------------------------     -----------------------

Investments in Local Limited Partnerships                                                  $ 109,396                   $ 296,910
                                                                              =========================     =======================
</TABLE>


                                       14
<PAGE>



                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


4.  Investments in Local Limited Partnerships, continued

      Summarized financial information from the combined financial statements of
the ten Local Limited  Partnerships  in which the Partnership  held  investments
during the six months ended June 30, 2001 is as follows:

<TABLE>
<CAPTION>
                 Summarized Statement of Operations (Unaudited)


                                                For the Three Months Ended June 30,            For the Six Months Ended June 30,
                                          --------------------------------------------    -----------------------------------------
                                                        2001                   2000                  2001                   2000
                                          ---------------------    -------------------    ------------------    -------------------

<S>                                                <C>                    <C>                 <C>                    <C>
Rental and other income                            $ 621,156              $ 847,309           $ 1,454,929            $ 1,619,168
Expenses:
   Operating expenses                                385,931                458,079               909,818                978,608
   Interest expense                                  108,672                143,579               252,251                288,437
   Depreciation and amortization                     111,556                144,423               256,305                294,530
                                          ---------------------    -------------------    ------------------    -------------------
     Total expenses                                  606,159                746,081             1,418,374              1,561,575
                                          ---------------------    -------------------    ------------------    -------------------

Net income (loss)                                  $  14,997              $ 101,228           $    36,555            $    57,593
                                          ---------------------    -------------------    ------------------    -------------------

Partnership's share of net income (loss)           $  15,382              $ 101,431           $    37,238            $    58,955
                                          ---------------------    -------------------    ------------------    -------------------

Other partners' share
   of net income (loss)                            $    (385)             $    (203)          $      (683)           $    (1,362)
                                          ---------------------    -------------------    ------------------    -------------------
</TABLE>


                                       15
<PAGE>




                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                      (A Massachusetts Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

4. Investments in Local Limited Partnerships, continued

      The difference between the Partnership's  share of income in Local Limited
Partnership  investments  in the  Partnership's  Statement of Operations for the
three  months  ended and six months ended June 30, 2000 and the share of loss in
the above  Summarized  Statement  of  Operations  consists of the  Partnership's
unrecorded share of losses and cash distributions  recorded as investment income
as follows:

<TABLE>
<CAPTION>
                                                                                   For the Three               For the Six
                                                                                    Months ended              Months Ended
                                                                                   June 30, 2000             June 30, 2000
                                                                              ---------------------     ---------------------
<S>                                                                                   <C>                       <C>
Share of income in Local Limited Partnership Investments
  in the Partnership's Statement of Operations                                        $  118,470                $  121,610

Partnership's share of income in the
  above summarized Statement of Operations                                            $  101,431                    58,955
                                                                              ---------------------     ---------------------
      Difference                                                                      $   17,039                $   62,655
                                                                              =====================     =====================

Unrecorded Losses:
      Brierwood, Ltd.                                                                       (205)                    6,642
      Brierwood II, Ltd.                                                                   8,008                    13,743
      Pine Forest Apartments, Ltd.                                                         7,933                    17,793
      Surry Manor                                                                            786                     8,365
      Glendale Manor                                                                      21,328                     6,590
      Meadowwood                                                                          (1,811)                    7,594
                                                                              ---------------------     ---------------------
            Subtotal Unrecorded Losses                                                    17,039                    60,729
Cash distributions recorded as investment income:
      Glendale Manor                                                                           -                     1,928
                                                                              ---------------------     ---------------------
Total                                                                                 $   17,039                $   62,655
                                                                              =====================     =====================
</TABLE>


                                       16
<PAGE>




                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

                        NOTES TO THE FINANCIAL STATEMENTS
                                   (Unaudited)


5. Transactions with Affiliates

      In the first six months of 2000, the Partnership recognized administrative
expenses and management fees owed to the Managing General Partner of $24,000 and
$25,000,  respectively.  In the second  quarter of 2000,  $12,000  and  $12,500,
respectively of these fees were recognized.

      In connection with the adoption of the liquidation basis of accounting, an
adjustment to record estimated  liabilities  through the liquidation of $100,000
was recorded at December 31, 2000. This amount  included  $50,000 of partnership
management fees and $50,000 of reimbursable administration expenses. At June 30,
2001,  accounts payable to affiliates  totaling $384,271 represents amounts owed
for reimbursements of Partnership administrative expenses and management fees of
$168,000  and  $167,271,   respectively  and  amounts   estimated   through  the
liquidation  for  administrative  expenses  and  management  fees of $24,000 and
$25,000,  respectively. In the first half of 2001, there were no management fees
to  the  General  Partner   recognized  in  addition  to  the  estimate  through
liquidation recorded at December 31, 2000 and estimated  administrative expenses
through liquidation were reduced by $2,000.

6. Statement of Distributable Cash from Operations

      Distributable Cash From Operations for the six months ended June 30, 2001,
as defined in Section 17 of the Partnership Agreement, is as follows:

Interest income                                                   $      9,877

Less: General and administrative expenses                              (80,732)
                                                                  -------------

Cash from Operations, as defined                                       (70,855)
                                                                  -------------

Distributable Cash from Operations, as defined                    $          0
                                                                  =============


                                       17
<PAGE>



                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

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

General

      Because of the progress which had been made during 2000 in connection with
the  Partnership's  efforts to liquidate its portfolio of  investments  in Local
Limited  Partnerships,  effective December 31, 2000, the Partnership adopted the
liquidation  basis of accounting.  Prior to that date, the Partnership  recorded
results of operations using the going concern basis of accounting.

      Under the  liquidation  basis of  accounting,  assets  are stated at their
estimated net realizable  values and liabilities are stated at their anticipated
settlement amounts. The valuation of assets and liabilities necessarily requires
many  estimates and  assumptions,  and there are  substantial  uncertainties  in
carrying out the liquidation of the Partnership's assets. The actual values upon
liquidation  and costs  associated  therewith  could be higher or lower than the
amounts  recorded.  In connection  with the  liquidation,  the  Partnership  has
recorded an accrual for additional  expenses to reflect the  Partnership's  best
estimate of the costs associated with the liquidation.

Liquidity and Capital Resources

The Partnership

      The  Partnership  is liable for the  amount of the  Purchase  Money  Notes
delivered  to purchase  its  interests  in the Local  Limited  Partnerships  (as
hereinafter described),  and for the Partnership's day-to-day administrative and
operating expenses.

      The Partnership  acquired its interests in two Local Limited  Partnerships
for cash. The  Partnership  acquired its interests in eleven other Local Limited
Partnerships by delivery of cash, short-term promissory notes (all of which have
been paid in full) and purchase  money  promissory  notes which bear interest at
the rate of 9% per annum  (the  "Purchase  Money  Notes").  The  payment of each
Purchase Money Note is secured by a pledge of the Partnership's  interest in the
Local Limited  Partnership to which the note relates.  Recourse on each Purchase
Money Note is  limited to the  pledged  partnership  interest.  Each note had an
initial  term of 15 to 17 years.  The  Partnership's  interests  in these  Local
Limited Partnerships were pledged as security for the Partnership's  obligations
under the respective Purchase Money Notes.

      In  May  1999,  the  Partnership  sold  its  interest  in  Fiddlers  Creek
Apartments and the purchaser  assumed the  Partnership's  obligations  under the
related Purchase Money Notes. In July 1999, the Partnership sold its interest in
Linden Park  Associates.  Linden Park Associates  refinanced their existing debt
and also paid in full the  principal  and  accrued and unpaid  interest  due the
Partnership on their notes. In February 2000, the Partnership  sold its interest
in Osuna Apartments Company and the holders of the Purchase Money Notes released
the Partnership  from all liabilities in connection with the Notes. On March 30,
2001,  the  Partnership  sold its  interest in  Fuquay-Varina,  Oxford Homes and
Williamston  Homes and the purchaser  assumed the Partnership  obligations under
the related Purchase Money Notes.


                                       18
<PAGE>



                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

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

Liquidity and Capital Resources, continued

The Partnership, continued

      At June 30,  2001,  five series of the Purchase  Money Notes,  relating to
Austintown  Associates,  Meadowwood Ltd., Brierwood Ltd, Pine Forest Apartments,
Ltd.  and  Glendale  Manor  Apartments,  had matured  and were in  default.  The
remaining series of Purchase Money Notes, relating to Surry Manor, Ltd., matured
on July 9, 2001.  None of the series of Purchase Money Notes is  cross-defaulted
to the others,  nor are the series of Purchase Money Notes  cross-collateralized
in any manner.

      The terms of each  Purchase  Money Note  permit  interest to accrue to the
extent cash  distributions  to the Partnership from the applicable Local Limited
Partnership are insufficient to enable the Partnership to pay the Purchase Money
Note on a current basis.  Generally,  the amount of such cash distributions have
not been  sufficient in any year to pay the full amount of interest  accrued for
that year on the Purchase  Money Notes.  The Purchase Money Notes do not require
payment of any  portion of the  principal  amount of the note prior to  maturity
(except that the Purchase  Money Notes  require  immediate  payment  following a
default (as defined therein) by the Partnership thereunder).  Accordingly,  each
Purchase  Money Note  requires a  substantial  balloon  payment at maturity.  In
connection with the adoption of the liquidation  basis of accounting,  the value
shown for the Purchase  Money Notes was adjusted to the  anticipated  settlement
amount and no further interest accruals will be recorded.

      The sale or other  disposition by the  Partnership of its interests in the
Local Limited  Partnerships,  including in connection  with a foreclosure of the
pledged  security,  is likely to result in recapture of  previously  claimed tax
losses to the  Partnership  and may have other adverse tax  consequences  to the
Partnership and to the Unit holders. Such recapture may cause some or all of the
Unit  holders  to  have  taxable  income  from  the  Partnership   without  cash
distributions  from the  Partnership  with  which to satisfy  the tax  liability
resulting therefrom.

      On March  30,  2001,  the  Partnership  sold its 98%  limited  partnership
interests in  Fuquay-Varina,  Oxford Homes and Williamston  Homes to the general
partner of these  partnerships or his affiliate for $148,485 plus the assumption
of the related  Purchase  Money Note  obligations.  The carrying  value of these
properties  had been  adjusted at December  31, 2000 to reflect the actual sales
transactions.

      On February 1, 2000,  the  Partnership  sold its 98% interest as a limited
partner (the  "Partnership  Interest") in Osuna Apartments  Company ("Osuna") to
the Sovereign  Management  Corporation,  the company retained by Osuna to manage
its apartment  complex (the  "Purchaser").  In consideration for the sale of the
Partnership  Interest,  the  Partnership  received a net cash purchase  price of
$100,000.  In connection  with the sale, the holders of the Purchase Money Notes
(the "Notes")  issued by the  Partnership in connection  with its acquisition of
the  Partnership  Interest  released the  Partnership  from all  liabilities  in
connection  with  the  Notes.  After  transaction  expenses,   including  $1,800
recognized in the third quarter of 2000,  the  Partnership  recognized a gain of
$2,432,299 on the sale of the investment.


                                       19
<PAGE>

                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

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

Liquidity and Capital Resources, continued

The Partnership, continued

      On May 28,  1999,  the  Partnership  sold its  interest in Fiddlers  Creek
Apartments in exchange for $483,451 in cash and assumption of the Purchase Money
Note obligations.  On April 13, 2000, estimated state withholding taxes totaling
$211,271 were paid from the proceeds of the sale of the Partnership's investment
in Fiddlers Creek  Apartments.  The Partnership  subsequently  reevaluated  this
obligation  and applied for a refund of the $211, 271  previously  remitted.  On
November 7, 2000 the refund was received with interest of $4,659.

      On July 15,  1999,  the  Partnership  sold its  interest  in  Linden  Park
Associates  Limited  Partnership  in exchange for $395,960 in cash.  Linden Park
Associates  refinanced  their  existing debt and also paid in full the principal
and accrued and unpaid  interest  due the  Partnership  on their notes  totaling
$241,058.  In  accordance  with the  Partnership's  agreement  with the  General
Partner of Linden  Park  Associates  (the  "Linden  GP"),  these funds have been
segregated  for use to pay the fees and expenses due the Linden GP in connection
with the  consulting  arrangement  described  below.  Interest  earned  on these
segregated funds will be available to pay these fees and expenses.

      Management  entered  into  negotiations  to  sell  the  Partnership's  94%
interests in Brierwood, Brierwood II, Pine Forest and Meadowwood Apartments. The
sale of the  Partnership's  interests in Brierwood,  Pine Forest and  Meadowwood
Apartments  requires  consent from all the related  Purchase Money Note holders.
Such consents were requested.  The Partnership  received  unanimous consent from
the Purchase Money Note holders  relating to Pine Forest  Apartments but did not
receive  unanimous  consent  from the Purchase  Money Note  holders  relating to
Brierwood and Meadowwood Apartments.  Accordingly, the transactions could not be
consummated  as proposed.  Under the  partnership  agreements  relating to these
investments,  Liberty  LGP has the right to cause the sale of the  partnership's
project.  Liberty LGP has agreed to pursue the sale of these four  projects  and
has caused the respective Local Limited Partnerships to enter into contracts for
sale of the  projects.  The  proposed  purchasers  are  affiliates  of the local
general  partner in these  partnerships.  The Local  Limited  Partnership  would
receive  only  a  nominal  cash  payment  in  connection  with  each  sale.  The
transactions  are not expected to result in any  distribution  in respect of the
Partnership's  interest in these partnerships.  Management presently anticipates
the closing of these transactions by the end of 2001.

      The  Partnership  entered into an agreement with the local general partner
of  Austintown  Associates  to sell the  Partnership's  98% limited  partnership
interest,  subject,  among other things,  to the consent of the related Purchase
Money Note holders.  The  Partnership did not receive  unanimous  consent of the
Purchase  Money Note  holders  and the  agreement  expired on April 1, 2000.  On
September  15, 2000  certain of the  Purchase  Money Note  holders  commenced an
action in the Court of Common Pleas Mahoning County,  Ohio seeking,  among other
things,  to  foreclose  upon  the  Partnership's   pledge  of  its  98%  limited
partnership interest in Austintown  Associates.  The Partnership did not contest
the proceeding and, on February 26, 2001, the Court

                                       20
<PAGE>



                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

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

Liquidity and Capital Resources, continued

The Partnership, continued

entered  a  default  judgment  and  order  appointing  a  receiver  to sell  the
Partnership's  interest in Austintown  Associates  to satisfy the judgment.  The
sale proceeds,  after the costs of sale, will be paid to the Purchase Money Note
holders

      Management  commenced  discussions with the local manager for Surry Manor,
Ltd.  and  Glendale  Manor  Apartments  to  either  purchase  the  Partnership's
interests in those  partnerships or sell the Partnership's  projects.  The local
manager is now in the process of obtaining  market  studies and  appraisals  for
these properties. No agreement on the transfer of these interests or the sale of
these  properties  has  been  reached.  The  sale of  these  interests  requires
unanimous  consent of the Purchase  Money Note  holders.  Under the  partnership
agreements relating to these investments, Liberty LGP has the right to cause the
sale of these  projects.  Management will continue to pursue both options in the
third quarter of 2001.

      As discussed  above,  the  Partnership  is currently in various  stages of
negotiations  to  sell  its  interests  in the  remaining  seven  Local  Limited
Partnerships.  If the  Partnership  is  successful in disposing of its remaining
investments,   management   presently  intends  to  wind  up  the  Partnership's
operations in the fourth quarter of 2001 or the first quarter of 2002.

      No  assurance  can  be  given  that  the  Partnership   will  be  able  to
successfully  conclude  any  of  the  above  transactions.   Consequently,   the
completion of the liquidation of the Partnership may be different than currently
anticipated.

      The net amount,  if any,  ultimately  available for distribution  from the
liquidation of the Partnership  depends on many unpredictable  factors,  such as
the amounts  realized on the sale of the remaining  investments in Local Limited
Partnerships,  carrying costs of the assets prior to sale,  settlement of claims
and  commitments,  the amount of revenue and expenses of the  Partnership  until
completely liquidated and other uncertainties.

      In  light  of the  Partnership's  adoption  of the  liquidation  basis  of
accounting,  the Partnership's net asset values as of June 30, 2001 and December
31, 2000 reflect the net realizable  values for the Investments in Local Limited
Partnerships  after giving  effect to the  estimated  closing costs upon sale or
disposal of the investments.  In addition,  an estimated  liability was recorded
for  estimates  of costs to be  incurred  in carrying  out the  dissolution  and
liquidation  of the  Partnership.  These  costs  include  estimated  legal fees,
accounting fees, tax return preparation and partnership  administration.  Actual
costs could vary  significantly  from these estimated costs due to uncertainties
related  to the  length  of  time  required  to  complete  the  liquidation  and
dissolution  of the  Partnership  and  unanticipated  events  which may arise in
disposing of the Partnership's remaining assets.


                                       21
<PAGE>




                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

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

Liquidity and Capital Resources, continued

The Partnership, continued

      At June 30, 2001, the Partnership  had total cash and cash  equivalents of
$519,878,  including cash reserves of $461,484 and restricted cash of $58,394 as
compared to total cash at December 31, 2000 of $523,389, including cash reserves
of $376,286 and restricted cash of $147,103.  Cash reserves increased  primarily
as the result of $148,485 proceeds from the sale of the Partnership's  interests
in Fuquay-Varina,  Oxford Homes and Williamston Homes. Restricted cash decreased
as a result of costs paid relating to the sale of the Partnership's investments.

      Accounts payable and accrued expenses  decreased to a total of $231,230 at
June 30, 2001 from $378,846 at December 31, 2000. The decrease was primarily the
result of payment of consulting  fees relating to the sale of the  Partnership's
investments of $89,741, legal and accounting fees of $56,224 and other operating
costs of $1,651.

The Local Limited Partnerships.

The liquidity of the Local Limited  Partnerships  in which the  Partnership  has
invested  is  dependent  on  the  ability  of  the   respective   Local  Limited
Partnerships,  which own and operate  government  assisted  multi-family  rental
housing complexes,  to generate cash flow sufficient to fund operations and debt
service and to maintain  working  capital  reserves.  Each of the Local  Limited
Partnerships  is regulated by government  agencies which require monthly funding
of certain  operating and capital  improvements  reserves and which regulate the
amount of cash to be  distributed  to owners.  Each Local Limited  Partnership's
source of funds is rental income received from tenants and government subsidies.
Certain of the Local Limited  Partnerships  receive  rental  income  pursuant to
Section 8 rental assistance  contracts.  Surry Manor's contract expired in April
2001. The local manager is working with HUD to extend this agreement for a year.
Austintown  Associates and Glendale Manor's contracts expire in October 2001 and
May 2002,  respectively.  Under the Multifamily  Assisted Housing and Reform and
Affordability  Act  (MAHRAA)  of  1997,  as  amended,  Congress  set  forth  the
legislation for a permanent  "mark-to-market" program and provided for permanent
authority  for the  renewal  of  Section  8  Contracts.  Owners  with  Section 8
contracts  expiring  after  September 30, 1998 are subject to the  provisions of
MAHRAA.   On  September  11,  1998,  HUD  issued  an  interim  rule  to  provide
clarification of the implementation of the mark-to-market  program.  Since then,
revised  guidance has been provided  through various HUD housing  notices,  most
recently HUD housing  notice  99-36,  which  addresses  project-based  Section 8
contracts expiring in fiscal year 2000.

      Under this  notice,  project  owners  have  several  options for Section 8
contract  renewals,  depending  on the type of project and rent  level.  Options
include  marking rents up to market,  renewing other  contracts with rents at or
below market, referring projects to the Office of Multifamily Housing Assistance
Restructuring


                                       22
<PAGE>



                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

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

Liquidity and Capital Resources, continued

The Local Limited Partnerships, continued

(OMHAR) for mark-to-market or "OMHAR lite" renewals, renewing contracts that are
exempted from referral to OMHAR, renewing contracts for portfolio re-engineering
demonstration  and  preservation  projects,  and  opting  out of the  Section  8
program.  Owners  must  submit  their  option  to HUD at least  120 days  before
expiration of their contract. Each option contains specific rules and procedures
that must be followed to comply with the requirements of housing notice 99-36.

      As such,  each Local Limited  Partnership  may choose to either opt out of
the Section 8 program, request mortgage restructuring and renewal of the Section
8  contract,  or request  renewal of the  Section 8  contract  without  mortgage
restructuring.  Each option contains a specific set of rules and procedures that
must be  followed  in order to  comply  with the  requirements  of  MAHRAA.  The
properties  are working with HUD to renew their  existing  contracts  for two to
five year periods.

      The Partnership  cannot  reasonably  predict  legislative  initiatives and
governmental  budget  negotiations,  the  outcome  of which  could  result  in a
reduction  in funds  available  for the various  federal and state  administered
housing programs  including the Section 8 program.  Such changes could adversely
affect the future net  operating  income  and debt  structure  of certain  Local
Limited Partnerships currently receiving such subsidy or similar subsidies.

      The Local Limited  Partnerships are impacted by inflation in several ways.
Inflation  allows for increases in rental rates generally  reflecting the impact
of higher  operating and  replacement  costs.  Inflation  also affects the Local
Limited  Partnerships  adversely by increasing operating costs such as utilities
and salaries.

      As discussed  above,  the  Partnership  is currently in various  stages of
negotiations  to  sell  its  interests  in the  remaining  seven  local  limited
partnerships.  If the  Partnership  is  successful in disposing of its remaining
seven  investments,  management  presently  intends to wind up the Partnership's
operations in the fourth quarter of 2001 or the first quarter of 2002.

      Each of the Local Limited Partnerships has incurred mortgage indebtedness.
The mortgage loans provide for equal monthly  payments of principal and interest
in  amounts,  which  will  reduce the  principal  amount of the loans to zero at
maturity.   Each  of  the  maturity  dates  of  the   respective   mortgages  is
substantially beyond the due date of the Purchase Money Note obligations.

      Upon a sale of a property  by a Local  Limited  Partnership  the  mortgage
indebtedness  of such property must be satisfied  prior to  distribution  of any
funds to the partners in the Local Limited Partnership.


                                       23
<PAGE>





                  LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
                          (A Massachusetts Partnership)

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

Liquidity and Capital Resources, continued

Partnership Operations

      Because the  Partnership  adopted the  liquidation  basis of accounting on
December 31, 2000,  the results of operations  for the three month and six month
periods  ended  June 30,  2001 are not  presented.  Instead,  the  Partnership's
operating  results have been reflected on the statement of changes of net assets
in liquidation and reflect  changes from the estimated net realizable  values of
assets and anticipated payable amounts of liabilities previously recorded.

      In the three months ended June 30, 2001,  interest  income  earned on cash
reserves increased slightly to $4,995 from $4,408 in the three months ended June
30, 2000. For the first six months of 2001,  interest income decreased  slightly
to $9,877  from  $10,166  in the first six months of 2000.  In the three  months
ended June 30,  2001 the  Partnership  incurred  additional  expenses  of $7,371
versus $27,484 in the three months ended June 30, 2000 and  additional  expenses
of $9,486 in the first  half of 2001  versus  $57,991 in the first half of 2000.
The Partnership has not booked interest expense on the remaining  Purchase Money
Notes in the first six months of 2001,  although the associated  legal liability
has  increased.  For the three  months  and six months  ended June 30,  2000 the
Partnership  incurred  purchase  money note  interest of $176,463 and  $359,271.
Under the  liquidation  basis of accounting,  the carrying value of the Purchase
Money  Notes and  accrued  interest  has been  written  down to the  anticipated
payable  amounts.  On March 30,  2001,  the  Partnership  sold its  interest  in
Fuquay-Varina,  Oxford Homes and Williamston Homes. These sales transactions did
not vary materially from previously recorded amounts.  The Partnership's  equity
in income for the three months and six months  ending June 30, 2000 was $118,470
and $121,610, respectively.


                                       24
<PAGE>



                                     PART II
                                Other Information

Item 3. Defaults Upon Senior Securities.

      The Purchase  Money Notes  relating to Austintown  Associates,  Meadowwood
Ltd,  Brierwood  Ltd and Pine Forest  matured on October 30, 1999.  The Purchase
Money Notes  relating to Glendale  Manor matured on August 29, 2000.  These five
series of Purchase  Money Notes are now in default.  The amounts due at maturity
under these  non-recourse  obligations  consisted  of  $3,280,000  in  aggregate
principal amount and $3,833,453 in accrued and unpaid interest.  As of August 1,
2001, the aggregate arrearages under these notes amounted to $7,591,673.

      The Purchase Money Notes relating to Surry Manor,  Ltd. matured on July 9,
2001 and are now also in  default.  The  amounts  due at  maturity  under  these
non-recourse obligations consisted of $360,000 in aggregate principal amount and
$420,439 in accrued and unpaid  interest.  As of August 1, 2001,  the  aggregate
arrearages under these notes amounted to $782,329.

Item 6. Exhibits and Reports on Form 8-K

      (b) Reports on Form 8-K

      On April 13, 2001, the  Partnership  filed a Current Report on form 8-K to
report the  disposition  on March 30, 2001 of its limited  partner  interests in
Oxford Homes for the Elderly,  Ltd., Williamston Homes for the Elderly, Ltd. and
Fuquay-Varina Homes for the Elderly, Ltd. The Current Report was amended on June
1, 2001 to supply pro forma financial information.


                                       25
<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.


                             LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP

                              By:        TNG Properties Inc.
                                         Managing General Partner



                              By:        /s/ Michael A. Stoller
                                         Michael A. Stoller
                                         President and CEO


                              By:        TNG Properties Inc.
                                         Managing General Partner



                              By:        /s/ Wilma R. Brooks
                                         Wilma R. Brooks
                                         Chief Financial Officer


Date: 8/3/01