FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
(Mark One)
[ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1996

                           OR

[     ]  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: 1-11017

                         NORTH AMERICAN MORTGAGE COMPANY
             (Exact name of registrant as specified in its charter)

                  Delaware                              68-0267088
         (State or other jurisdiction       (I.R.S. Employer Identification No.)
     of incorporation or organization)

 3883 Airway Drive, Santa Rosa, California             95403-1699
 (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (707) 546-3310

Securities registered pursuant to Section 12(b) of the Act:

        Title of each class            Name of each exchange on which registered

   Common Stock, $.01 Par Value                New York Stock Exchange

   Preferred Stock Purchase Rights             New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None
<PAGE>
        Indicate by check mark whether the  registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

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

         As  of  March  18,  1997,  the  latest  practicable  date,  there  were
14,057,820 shares of North American  Mortgage  Company(R) Common Stock, $.01 par
value, (the "Common Stock")  outstanding.  Based on the closing price for shares
of Common Stock on that date, the aggregate market value of Common Stock held by
non-affiliates  of  the  registrant  was  approximately  $290,845,005.  For  the
purposes  of the  foregoing  calculation  only,  all  members  of the  Board  of
Directors and executive officers of the registrant have been deemed affiliates.

                       Documents Incorporated by Reference

         Portions of the North American  Mortgage  Company 1996 Annual Report to
Stockholders (Exhibit 13 hereto) are incorporated by reference into Parts II and
IV of this Annual  Report on Form 10-K.  With the  exception  of those  portions
which are  specifically  incorporated by reference in this Annual Report on Form
10-K, the North American  Mortgage Company 1996 Annual Report to Stockholders is
not to be deemed filed as part of this Report.

         Portions of the North American Mortgage Company Proxy Statement for the
1997 Annual Meeting of Stockholders to be filed with the Commission on or before
April 30, 1997 are incorporated by reference into Part III of this Annual Report
on Form  10-K.  With the  exception  of those  portions  which are  specifically
incorporated by reference in this Annual Report on Form 10-K, the North American
Mortgage  Company Proxy Statement for the 1997 Annual Meeting of Stockholders is
not to be deemed filed as part of this Report.

<PAGE>



                                     PART I

ITEM 1.  BUSINESS

General

         North American Mortgage Company (the "Company") is engaged primarily in
the mortgage banking business and, accordingly,  originates, acquires, sells and
services mortgage loans which are principally  first-lien mortgage loans secured
by single (one to four) family residences.  The Company also sells the servicing
rights associated with a portion of such loans. The principal sources of revenue
from the Company's  business are (i) loan origination and related fees, (ii) net
interest  earned on mortgage  loans  during the period that they are held by the
Company  pending  sale,  (iii)  proceeds from the sale of mortgage  loans,  (iv)
mortgage  loan  servicing  fees and (v) proceeds  from the sale of mortgage loan
servicing rights.

         The Company  originates  mortgage loans through three primary  sources:
wholesale,  which  represents loans solicited from loan brokers;  retail,  which
represents loans generated principally through builders and real estate brokers;
and  telemarketing,  which  represents  loans  initiated by telephone  and mail.
Substantially  all mortgage loans originated by the Company through such sources
are underwritten, funded and closed by the Company.

         During 1996, total U.S. mortgage originations increased to an estimated
$785 billion from $636 billion in 1995.  Generally,  U.S.  mortgage  origination
volume varies with two factors: the level of new and existing home purchases and
the level of  refinancings  of existing  mortgage  loans.  According to industry
estimates,  1996 was the largest home purchase  market in history,  an estimated
$556  billion  compared  to $480  billion in 1995.  Mortgage  originations  from
refinances  also increased to an estimated $229 billion in 1996 compared to $156
billion during 1995.

         During 1996, 1995 and 1994, the Company  originated $9.5 billion,  $7.5
billion and $9.8  billion,  respectively,  of mortgage  loans.  The  increase in
origination volume in 1996 is primarily  attributable to the general rise in the
total level of U.S.  mortgage  originations  and to the  positive  impact of the
Company's retail sales  initiatives.  In 1996, the Company's  originations  from
purchases totaled $5.9 billion, while refinances totaled $3.6 billion. According
to an industry publication, the Company ranked twelfth in 1996 and tenth in 1995
and 1994,  among first mortgage loan  originators  in the United  States.  As of
December 31,  1996,  the  Company's  largest  loan  origination  markets were in
California,  Texas, Minnesota, Florida and Arizona. As of February 28, 1997, the
Company operated 106 origination offices located in 31 states.

         The Company customarily sells all of the mortgage loans it originates,
generally  retaining  the right to service  such loans.  The  Company  sells the
majority of the  conventional  mortgage  loans it originates  under purchase and
guarantee  programs  sponsored  by the Federal  Home Loan  Mortgage  Corporation
("FHLMC") and the Federal National Mortgage Association ("FNMA").  The Company's
loans  insured  by the  Federal  Housing  Administration  ("FHA")  or  partially
guaranteed   by  the  Veterans   Administration   ("VA")  or  the  Farmers  Home
Administration   ("FMHA")  are  pooled  to  form  Government  National  Mortgage
Association  ("GNMA")  securities.  The  Company  sells  FNMA,  FHLMC  and  GNMA
securities  to  investment  banking  firms that are usually  primary  dealers in
government securities. Loans not conforming to requirements of such agencies are
sold to private institutional investors.

         The Company also engages in mortgage loan servicing, which includes the
processing of mortgage loan payments and the  administration  of mortgage loans.
The  Company's  primary  source  of  servicing  is from  mortgage  loans  it has
originated  and sold.  At  December  31,  1996,  the  Company's  loan  servicing
portfolio  totaled  $13.3  billion.  In 1996,  the Company  sold $8.2 billion of
servicing  rights.  The  Company  may  continue  to sell  portions  of its  loan
servicing  rights  based  on cash  requirements,  the  impact  on the  Company's
earnings  and the  market  value of  servicing  rights.  See "Loan  Servicing  -
Servicing Sales."

         The  address  of  the  Company  is  3883  Airway  Drive,   Santa  Rosa,
California, 95403. Its telephone number is (707) 546-3310.

<PAGE>
         Mortgage Loan Originations

         Overview.  The Company operates nationally,  originating mortgage loans
through three primary sources:  wholesale, which represents loans solicited from
loan brokers;  retail,  which  represents  loans generated  principally  through
builders and real estate brokers;  and  telemarketing,  which  represents  loans
initiated by telephone and mail.

         Substantially all mortgage loans originated through such sources by the
Company are underwritten,  funded and closed by the Company. The following table
shows the Company's mortgage loan originations since 1994:

<TABLE>
<CAPTION>
                                                           Loan Originations
                                                             (in millions)

<S>   <C>                                                       <C>
      1996..........................................            $ 9,473
      1995..........................................            $ 7,496
      1994..........................................            $ 9,755
</TABLE>

         All loan  applications,  regardless of source,  must be approved by the
Company in accordance with its underwriting  criteria,  including  loan-to-value
ratios,  borrower  income  and  credit  qualifications,  investor  requirements,
necessary   insurance  and  property  appraisal   requirements.   The  Company's
underwriting standards also comply with the relevant guidelines set forth by the
FHA, VA, FMHA, FNMA, FHLMC,  private conduits and private mortgage insurers,  as
applicable.  The Company's  underwriting personnel function independently of the
Company's  mortgage  loan  origination  personnel  and  do  not  report  to  any
individual directly involved in the mortgage loan origination process.

         The Company  receives fees from borrowers for the origination of retail
loans,  generally in the range of one to two percent of the principal  amount of
the loan. The Company also receives fees in connection  with the  origination of
wholesale  loans which average  approximately  $360 per loan. The Company incurs
certain costs in originating loans,  including  overhead,  out-of-pocket  costs,
interest on money  borrowed to finance loans and, where the loans are subject to
a purchase  commitment  from private  investors,  related  commitment  fees. The
volume  of and type of loans  and  commitments  made by the  Company  vary  with
competitive and economic conditions,  resulting in fluctuations in revenues from
loan originations. In periods of rising interests rates, the Company's volume of
loan  originations,  particularly  refinancings,  declines,  and  the  Company's
revenues from loan originations decrease. Conversely, as mortgage interest rates
decline, the Company's revenues from loan originations  generally increase.  See
also "Management's Discussion and Analysis", 1996 Annual Report to Stockholders.

         Sources of  Originations.  As discussed  above,  the Company  presently
obtains  mortgage loans from three primary  sources of  origination:  wholesale,
retail and  telemarketing.  A summary of the Company's recent loan originations,
substantially all of which are  underwritten,  funded and closed by the Company,
is shown below:

<TABLE>
<CAPTION>

                                                   Year Ended December 31,

                                              1996          1995         1994
                                              ----          ----         ----
                                                  (Dollars in millions)


<S>                                         <C>          <C>           <C>
        Wholesale.......................    $ 5,461      $ 4,184       $ 5,932
        Retail..........................      3,494        2,972         3,140
        Telemarketing...................        518          340           683
                                                ---          ---           ---

        Total...........................    $ 9,473      $ 7,496       $ 9,755
                                            =======      =======       =======
</TABLE>

         Wholesale  Loan  Origination.   The  Company's  wholesale   origination
business utilizes  independent loan brokers to originate loans.  These loans are
funded and closed by the Company. The Company's wholesale operations sales staff
solicits loans meeting the Company's  underwriting  guidelines from loan brokers
who have been previously  approved by the Company.  Each loan is underwritten by
the  Company  according  to its own  and  its  investors'  credit  and  property
underwriting  standards.  During 1996,  the Company did business with over 6,500
approved loan brokers.  For the year ended December 31, 1996, no individual loan
broker  accounted for more than 2.6% of the Company's total  wholesale  mortgage
loan  originations.  In general,  the  Company's  volume of loan  production  is
stimulated by lower interest rates and high refinance  activity.  Reflecting the
national  trend of higher  originations  during 1996 and relatively low interest
rates during most of the year, the Company's  wholesale  originations  increased
from $4.2 billion in 1995 to $5.5 billion in 1996.

         Retail Loan Origination.  The Company  originates retail mortgage loans
through a variety of sources,  including  individuals,  home  builders  and real
estate  brokers.  The Company has been  successful in originating  loans through
home builders by  maintaining a high service level and by providing a variety of
products. These products include builder forward commitments,  which provide the
builder with interest rate protection,  mortgage revenue bond financing options,
and standard government and conventional loan programs.

         In arranging loans through  builders and real estate brokers,  the loan
officer  originating a loan is responsible  for completing the loan  application
based on information  obtained from the borrower.  The loan  application is then
routed to a loan processor or mortgage  specialist  who verifies  employment and
assets,  conducts credit checks,  has the subject property  appraised and enters
the loan into the  Company's  computerized  loan  tracking  system.  The loan is
underwritten  by the Company and, if approved,  loan documents are drawn and the
loan is closed by the Company.

         In 1996,  the  Company  continued  to focus its  efforts on  increasing
retail  originations,  which tend to be less sensitive to mortgage interest rate
fluctuations.  Additionally,  on retail loans,  the Company receives higher loan
origination fees and retains more control over loan applications and pricing. In
an effort to further  expand and improve  the retail  base of the  Company  from
which to emphasize  purchase  transactions,  in 1996, the Company  increased its
retail  branches by 15, its satellite  locations by 29 and added 172 retail loan
officers.  Additionally, the Company introduced a significant number of new loan
products. See "Loan Origination Products and Programs."

         Satellite  offices,  which are generally smaller facilities than branch
offices,  allow the Company to more conveniently and effectively  service retail
customers on a local level without adding a significant  expense to the Company.
Located in close  proximity to a branch office,  satellites give loan officers a
convenient place to meet with customers, take applications and perform some loan
processing functions,  while the loan underwriting and closing take place at the
branch office.  This hub and spoke approach  between  branches and satellites is
currently  followed in all of the  Company's  regions  and in 1997,  the Company
plans to continue expanding this approach.

         Telemarketing  Loan  Origination.  Mortgage  loans also are  originated
through  the  Company's  telemarketing  unit  which was  established  in 1986 to
originate  loans pursuant to  contractual  relationships  with major  employers,
universities and credit unions,  whose employees and membership  currently total
over 300,000  people.  The  telemarketing  unit also provides new mortgage loans
primarily to mortgagors with whom the Company has existing  relationships to try
to capture a significant portion of mortgage refinancings which occur more often
during periods of declining interest rates.

         The telemarketing unit originates loans by telephone and mail utilizing
a computerized loan solicitation and processing system.  While the telemarketing
unit is located in  California,  the Company is licensed to  originate  mortgage
loans by telemarketing in all states.  Telemarketing  activity is largely driven
by refinancings  and, as such, is particularly  sensitive to changes in mortgage
interest  rates.  Reflecting  the  national  trend of  higher  originations  and
relatively low interest  rates during most of 1996, the demand for  refinancings
increased  and the  Company's  telemarketing  originations  increased  from $340
million in 1995, to $518 million in 1996.

         Technology.  In 1996, the Company's  business  strategy also focused on
investing in the appropriate  technology to improve customer support, as well as
increase the efficiency of internal operations.  The Company focused its efforts
on  improving  its  corporate-wide   data  transmission   systems,  as  well  as
enhancements to its central computer system.  This enhanced  technology platform
provides for decentralized information access, allowing the Company a link among
production,  processing,  underwriting  and  servicing  employees  in  locations
throughout  the  country.   Additionally,  in  1996,  the  Company  began  using
artificial  intelligence  servicing  software  as an  indicator  of future  loan
performance.  In 1997, the Company plans to implement artificial intelligence in
the  underwriting  process.  See "Loan  Servicing - Credit  Risk." By the end of
1997,  the  Company  expects  to  have  automated   underwriting   installed  on
originators'  laptop  computers  so that  the  customer  can  receive  an  early
indication of potential  problems with the loan  application.  Also in 1997, the
Company  plans to leverage its presence on the Internet and to improve  internal
efficiency by further exploring its Intranet capability.

        National  Presence.  The Company has  pursued  its market  share  growth
objectives  both  through  geographic  expansion  into new  markets  and through
increased  market  penetration  in its  existing  markets.  Prior to  1988,  the
Company's loan  originations  were primarily in California and Hawaii.  In 1989,
the Company  entered the Texas  market by  acquiring  several  loan  origination
offices.  The  Company  used  its  Texas  operations  as a  base  for  expansion
throughout  the  Southwest.  In  1992,  the  Company  expanded  into the East by
acquiring  the assets of a residential  mortgage  origination  business  located
principally  in the  Washington,  D.C.  metropolitan  area,  with branch offices
located in  Virginia  and  Maryland.  By the  middle of 1994,  the  Company  had
completed  its  national  expansion  program  by adding  branch  offices  in the
Midwest,   Northeast  and   Northwest,   which   resulted  in  its  presence  in
substantially all major markets of the country.

        As of February 28, 1997, the Company's 106 offices,  doing either or all
of retail and wholesale loan origination  business or telemarketing were located
as follows: 25 were located in California; 9 were located in each of Arizona and
Texas;  5 were located in each of  Massachusetts,  Oregon and  Virginia;  4 were
located in each of Maryland,  Michigan, Nevada and Washington; 3 were located in
each of Florida  and  Louisiana;  2 were  located in each of  Colorado,  Hawaii,
Illinois,  Indiana,  Kansas,  Ohio and  Pennsylvania;  1 was  located in each of
Idaho,  Maine,  Minnesota,  Missouri,  New  Hampshire,  New Jersey,  New Mexico,
Oklahoma, Rhode Island, Tennessee, Utah and Wisconsin.

        The table below summarizes the Company's recent total loan  originations
by location of the Company's originating office:
<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                           1996            1995           1994
                                           ----            ----           ----
                                                   (Dollars in millions)

<S>                                    <C>            <C>             <C>
California(1)
     Volume.....................       $  3,060       $  2,530        $  3,989
     Percentage of Total........           32.3%          33.8%           40.9%
Texas
     Volume.....................       $    643       $    672        $  1,147
     Percentage of Total........            6.8%           9.0%           11.8%
Minnesota
     Volume.....................       $    482       $    286        $     34
     Percentage of Total........            5.1%           3.8%            0.3%
Florida
     Volume.....................       $    432       $    279        $    243
     Percentage of Total........            4.6%           3.7%            2.5%
Arizona
     Volume.....................       $    407       $    320        $    232
     Percentage of Total........            4.3%           4.3%            2.4%
Virginia
     Volume.....................       $    328       $    335        $    492
     Percentage of Total........            3.5%           4.5%            5.0%
Massachusetts
     Volume.....................       $    321       $    201        $    114
     Percentage of Total........            3.4%           2.7%            1.2%
Ohio
     Volume.....................       $    315       $    189        $     46
     Percentage of Total........            3.3%           2.5%            0.5%
Oregon
     Volume.....................       $    311       $    224        $    290
     Percentage of Total........            3.3%           3.0%            3.0%
Colorado
     Volume.....................       $    310       $    287        $    490
     Percentage of Total........            3.3%           3.8%            5.0%
Other States
     Volume.....................       $  2,864       $  2,173        $  2,678
     Percentage of Total........           30.2%          29.0%           27.4%
                                           ----           ----            ----

             Total..............       $  9,473       $  7,496        $  9,755
                                        =======        =======         =======

---------------
(1) Includes telemarketing.
</TABLE>

        In the past nine years,  the Company has  expanded so that it  currently
has a presence in substantially all major regions of the country. Because of the
Company's high concentration of loan originations in California,  however, there
can be no  assurance  that its  results  of  operations  would not be  adversely
affected  to the  extent  California  experiences  periods  of slow or  negative
economic  growth  which  result in  decreased  residential  real estate  lending
activity.

        Loan Origination Products and Programs.  The Company originates mortgage
loans insured by the FHA, mortgage loans partially  guaranteed by the VA or FMHA
and  conventional  mortgage  loans.  Approximately  60.1%  of  the  conventional
mortgage  loans  originated  by the Company in 1996  qualified  for inclusion in
purchase and guarantee programs sponsored by FNMA and FHLMC. In order to qualify
for these programs,  loans must meet the property and credit  standards and loan
size limits (currently  $214,600 in the continental  United States;  $321,900 in
Hawaii for  one-unit  properties)  established  by FNMA and FHLMC.  The  Company
customarily sells all of its mortgage loan originations, generally retaining the
servicing rights on such loans. Loans which are not eligible for sale to FNMA or
FHLMC must meet the Company's own underwriting  criteria, as well as satisfy the
criteria of those private  institutional  investors to which such loans are sold
by the Company.

        A summary of the Company's  recent loan  originations by type of loan is
shown below:

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                                    -----------------------
                                             1996            1995          1994
                                             ----            ----          ----
                                                     (Dollars in millions,
                                                   except Average Loan Size)
<S>                                      <C>            <C>           <C>
FHA/VA Loans:
  Number of Loans....................       22,838         17,062        13,853
  Volume of Loans....................    $   2,142      $   1,619     $   1,351
  Percent of Total Volume............         22.6%          21.6%         13.8%
Conventional Conforming Loans:
    Number of Loans..................       52,840         44,776        53,674
    Volume of Loans..................    $   5,696      $   4,584     $   5,608
    Percent of Total Volume..........         60.1%          61.2%         57.5%
Conventional Non-Conforming Loans:
  Number of Loans....................        6,984          3,942         7,902
  Volume of Loans....................    $   1,170      $     803     $   2,064
  Percent of Total Volume............         12.4%          10.7%         21.2%
Other Loans:
  Number of Loans....................        4,429          4,873         6,047
  Volume of Loans....................    $     465      $     490     $     732
  Percent of Total Volume............          4.9%           6.5%          7.5%
Total Loans:
  Number of Loans....................       87,091         70,653        81,476
  Volume of Loans....................    $   9,473      $   7,496     $   9,755

Average Loan Size....................    $ 109,000      $ 106,000      $120,000
</TABLE>


        In 1996,  the Company  continued its program of  increasing  product and
program  diversity while building certain channels of distribution.  The Company
focused  additional  efforts  on  consumer  direct  loan  originations   through
PurchaseExpress(R),  a  pre-approval  program for home buyers.  Now in its third
year,  loan  originations  under this program  increased to $1.2 billion in 1996
(approximately  12% of total  fundings),  from $925  million and $275 million in
1995 and 1994, respectively.

        Early in 1996, the Company  introduced a new product, a home equity line
of credit marketed as EquityEdge(R). This product can be used to augment a first
mortgage,   enhancing  a  borrower's   financial   position  by  improving   the
loan-to-value ratio on the borrower's first mortgage and thereby eliminating the
need for  mortgage  insurance,  or  eliminating  the need for a higher  interest
"jumbo"  first  mortgage.  EquityEdge(R)  is  also  available  as a  stand-alone
product,  permitting  homeowners  to access  the  equity in their  homes,  while
enjoying tax benefits that other forms of credit,  such as credit cards,  do not
offer. Through December 31, 1996, the Company's EquityEdge(R)  originations were
$59.5 million.

        In  November  1996,  the  Company  began  offering a  miles-for-mortgage
program marketed as HouseMiles(TM), which gives United's MILEAGE PLUS(R) members
frequent  flyer  miles for  taking out a mortgage  with the  Company.  Borrowers
meeting program requirements can earn 1,000 Mileage Plus miles for every $10,000
of loan  amount on purchase  and  refinance  loans,  or a flat 2,500 miles for a
qualifying home equity loan. Loan fundings under the HouseMiles(TM) program were
approximately  $4.7 million for  November,  1996 and $10.6 million for December,
1996.

        Also in 1996,  the Company  entered  the  subprime  lending  market with
B/CExpress(TM).  This product  offers a financing  option to borrowers  who have
problems on their credit record.  Using its national wholesale  presence,  local
wholesale  relationships  and reputation  for service to brokers,  who are a key
source of B/C  business,  the Company began  originating  B/C loans with a pilot
program from seven existing wholesale branches in November 1996 and increased to
fifteen branches in February 1997. The Company plans to complete the roll-out of
the subprime  product to 46 wholesale  branches by the end of the first quarter,
1997. The Company's B/C originations increased from $145,000 in November 1996 to
$7.6 million in February  1997. The Company's  subprime  program is conducted in
conjunction with a subsidiary of ContiFinancial, a major securitizer of subprime
products,  which underwrites and purchases the Company's subprime  products,  as
well as assists the Company in training  its  originators  and loan  processors.
Thus, the Company assumes neither underwriting nor purchase risk with respect to
subprime loans.

         The  Company  has   participated   in   programs   targeting   low-  to
moderate-income  and minority  borrowers  for a number of years.  Such  programs
include  mortgage  revenue  bonds,  which the Company  began in 1982,  community
seconds and mortgage credit certificates.  In 1993, the Company launched a major
initiative to expand its lending to low- to moderate-income  borrowers under the
name of Opening Doors for America. Under the program, the Company added low down
payment,  rehabilitation  and rural housing loan  products.  In 1996,  community
lending  products  accounted  for $2.6  billion,  or 27% of the  Company's  loan
originations. The Company's 203(k) product, Rehab Express(TM), accounted for $63
million of the  Company's  total 1996  originations,  and earned the Company the
ranking  of fourth  largest  203(k)  originator  in the  nation.  The FHA 203(k)
product is intended to rehabilitate the nation's housing stock,  particularly in
the inner-city, by combining acquisition and rehabilitation financing all in one
loan.

Sale of Loans

         The Company  customarily sells all of its mortgage loan originations to
investors  (generally  retaining the servicing rights on such loans),  utilizing
several  methods.   Conventional  loans  meeting  FNMA  and  FHLMC  requirements
("Conforming Loans") are normally exchanged for FNMA and FHLMC securities, which
are then sold to investment  banking firms that are usually  primary  dealers in
government  securities.  In  connection  with such  exchanges,  the Company pays
guarantee  fees for agency  guarantees  of payment of principal  and interest to
security  holders.  The  Company  also may sell  conventional  Conforming  Loans
directly  to  the  agencies  for  cash  or to  private  investors  when  pricing
advantages dictate.  Loans exceeding FNMA and FHLMC maximum loan size limits and
other loans not conforming to agency requirements  ("Non-Conforming  Loans") are
sold  directly  to private  institutional  investors.  FHA insured or VA or FMHA
guaranteed  loans are  pooled to form GNMA  securities,  issued by the  Company,
which are sold to investment banking firms. The Company's  continued  viability,
as that of any independent mortgage banker, depends on its ability to sell loans
to FNMA, FHLMC and GNMA.

         Exchanges  of loans  into  agency  securities  and  sales of loans  are
generally  made  without  recourse to the Company in the event of default by the
borrower,  subject,  in the  case  of VA  loans  used  to form  GNMA  pools,  to
limitations on the VA's loan guarantees.  See "Loan Servicing - Credit Risk." In
connection  with the  Company's  loan  exchanges  and sales,  the Company  makes
representations  and  warranties  customary in the  industry  relating to, among
other things,  compliance with laws,  regulations  and program  standards and to
accuracy of information.  In the event of a breach of these  representations and
warranties,  the Company may be required to  repurchase  such loans.  Typically,
problems  with  respect to  repurchased  loans are  corrected  and the loans are
resold, or, if in default, the repurchased loans are foreclosed and the property
is  resold.  In  1996,  1995 and  1994,  the  Company  recognized  a  charge  of
approximately $4.7 million,  $3.6 million and $2.4 million,  respectively,  with
respect to  potential  losses  arising from  repurchases  related to third party
misrepresentations.  See "Loan Servicing - Liability Under  Representations  and
Warranties."

         Accounting for Mortgage  Servicing  Rights.  In May 1995, the Financial
Accounting  Standards  Board  issued  FAS  No.  122,  "Accounting  for  Mortgage
Servicing  Rights," an amendment to FAS No. 65.  Effective  January 1, 1995, the
Company   adopted  FAS  No.  122.  Since  FAS  No.  122  prohibits   retroactive
application, the historical accounting results for 1994 and before have not been
restated and,  accordingly,  the accounting results for the years ended December
31, 1996 and December 31, 1995,  are not directly  comparable  to the year ended
December 31, 1994.  See  "Management's  Discussion  and  Analysis,"  1996 Annual
Report to Stockholders.

Loan Funding and Borrowing Arrangements

         The Company's cash flow requirements primarily depend on both the level
and cost of its loan  originations,  level of its  servicing  sales and the cash
flow generated by, or required by, its other operating activities. Additionally,
the Company may use or provide cash through its  investing  and other  financing
activities.

         The  Company's  loan   originations  are  primarily   financed  through
warehouse borrowings, commercial paper borrowings and with corporate funds. This
financing  requirement  begins at the time of loan  closing  and  extends for an
average  of  approximately  30 days  until the loan is sold  into the  secondary
market.  On January 23, 1996,  the Company  entered into a new warehouse line of
credit facility which will expire on January 23, 1999. The Company's  management
expects, although there can be no assurance, that this facility will continue to
be available in the future. The Company also has a $500 million commercial paper
borrowing program.  Borrowings under this program replace, at a reduced interest
rate,  borrowings  under the Company's  warehouse line of credit.  The warehouse
line of credit acts as the liquidity  backup  facility for the commercial  paper
borrowings.  At times, the Company will accelerate the sale of its mortgage loan
inventory  through the use of "gestation"  facilities  provided by an investment
bank and FNMA.  The  Company's  corporate  funds are  generally  invested in its
inventory  of  mortgage  loans  held for sale.  In  October  1993,  the  Company
authorized a $250 million medium-term note program.

Loan Servicing

         Overview.  The Company  recognizes revenue from servicing rights either
by collecting  servicing  fees during its  ownership of the servicing  rights or
selling a portion of its servicing rights to other servicers, resulting in gains
on sales of servicing.  See "Servicing  Sales." Mortgage loan servicing includes
collecting  payments  from  borrowers  and  remitting  such funds to  investors,
accounting  for loan  principal and  interest,  making  advances when  required,
holding  escrow  funds  for the  payment  of  taxes  and  insurance,  contacting
delinquent  borrowers,  foreclosing  in the  event of  unremedied  defaults  and
performing  other  administrative  duties.  A servicer's  obligation  to provide
mortgage  loan  servicing  and its  right to  collect  fees  are set  forth in a
servicing  contract.  The Company's  primary source of servicing  rights is from
mortgage loans originated by the Company.

         The  Company's  loan  servicing  portfolio  is subject to  reduction by
reason of normal amortization,  prepayment, or foreclosure of outstanding loans.
Additionally,  the  Company  has in the past and is likely to in the future sell
portions of its servicing  portfolio.  See "Servicing Sales" below. The value of
the Company's  loan  servicing  portfolio may be adversely  affected if mortgage
interest rates decline and loan prepayments  increase.  Conversely,  as mortgage
interest rates increase, the value of the Company's loan servicing portfolio may
be positively affected. See "Management's  Discussion and Analysis," 1996 Annual
Report to  Stockholders.  The Company  maintains  servicing and data  processing
operations at its headquarters facility in Santa Rosa,  California.  In 1996, in
order to reduce the Company's computer hardware and operational personnel costs,
the Company  entered  into an agreement  with an outside  vendor under which the
Company's  servicing software is operated by the vendor on the computer hardware
located in Dallas, Texas.

         The following table sets forth certain information  regarding the owned
servicing portfolio of the Company for the periods indicated:
<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                           1996           1995           1994
                                           ----           ----           ----
                                                  (Dollars in Millions,
                                                Except Average Loan Size)
<S>                                     <C>            <C>            <C>
Servicing Portfolio
  Beginning Portfolio................   $ 14,109       $ 14,836       $ 17,276
Add:
  Loans Originated...................      9,473          7,496          9,755
Deduct:
  Sale of Servicing Rights...........      8,246          6,679          9,853
  Loans Transferred Out(1)...........          1              9            191
  Run-off(2).........................      2,042          1,535          2,151
                                         -------         ------          -----
  Ending Portfolio (3)(4)............   $ 13,293       $ 14,109       $ 14,836
                                          ======         ======         ======
  Number of Loans....................    136,815        143,317        151,847
  Average Loan Size..................   $ 97,000       $ 98,000       $ 98,000
Weighted Average Interest Rate.......       7.80%          7.73%          7.55%
</TABLE>


---------------
     (1)  Loans  transferred  out  represent   termination  of  servicing  under
          agreements with investors.  For 1996, loans transferred out were $.725
          million.

     (2)  Run-off  refers to  regular  amortization  of loans,  prepayments  and
          foreclosures.

     (3)  Does not include  servicing  rights of $2.6 billion,  $2.1 billion and
          $1.2 billion for the years ended  December  31,  1996,  1995 and 1994,
          respectively,  which  were  sold but were  being  sub-serviced  by the
          Company prior to transfer.

     (4)  Does not  include  $.3  million,  $.3  million and $3 million for the
          years  ended  December  31,  1996,  1995 and  1994,  respectively,  of
          mortgage  loans  which  the  Company   serviced  under   sub-servicing
          contracts   with   other   companies   that  had   primary   servicing
          responsibility.

         At December 31, 1996, the Company's loan  servicing  portfolio  totaled
$13.3 billion,  excluding  servicing rights sold and sub-serviced by the Company
prior to transfer.

         The  following  table sets forth  certain  information  concerning  the
geographic  distribution  of the Company's loan servicing  portfolio at December
31, 1996:

<TABLE>
<CAPTION>
                                                                                      Percentage
                                                        Percentage        Dollar        of Dollar
                                           Number        of Total         Volume         Volume
                                          of Loans         Loans         of Loans       of Loans
   State                                 Serviced*       Serviced        Serviced*      Serviced
------------------------------------ ---------------- --------------- -------------- ---------------
                                       (in millions)

<S>                                       <C>              <C>           <C>              <C>
   California..................           50,458           37%           $5,223           39%
   Texas.......................           16,305            12            1,277            10
   Maryland....................            4,812             4              543             4
   Hawaii......................            3,139             2              499             4
   Colorado....................            5,049             4              499             4
   Virginia....................            3,953             3              436             3
   Florida.....................            5,320             4              429             3
   Arizona.....................            3,851             3              364             3
   Minnesota...................            3,829             3              354             2
   Oregon......................            3,062             2              296             2
   Other.......................           37,037            27            3,373            25
                                          ------            --            -----            --
   Total.......................          136,815           100%**       $13,293           100%**
                                         =======           ===           ======           ===
</TABLE>

---------------
     *   Does not include $2.6 billion of loan  servicing  rights sold to others
         but temporarily being sub-serviced by the Company prior to transfer.
     **  Totals do not equal 100% due to rounding.

         Servicing.  As  compensation  for  providing  servicing,   the  Company
receives  annual loan servicing fees on its  servicing,  ranging  typically from
 .25% to .50% of the unpaid principal  balance of the loan, plus any late charges
collected from  delinquent  borrowers and other fees  incidental to the services
provided. The performance of the Company's servicing operation benefits from the
limited number of investors (i.e.,  loan purchasers) with which it has servicing
contracts and the generally high quality of the loans  serviced.  As of December
31,  1996,  75% of the loans  serviced by the Company  (not  including  the $2.6
billion  of  loan  servicing  rights  sold  to  others  but  temporarily   being
sub-serviced  by the  Company  prior to transfer as  described  in the  footnote
above)  are  concentrated  with three  investors  (FNMA,  FHLMC and GNMA).  This
concentration  of  investors  reduces the costs  associated  with  reporting  to
investors.  The Company is an approved seller/servicer with VA, FHA, FMHA, FNMA,
FHLMC and GNMA.

         Management  believes  the quality of loans that the Company  originates
and its collection efforts have historically  resulted in low delinquency ratios
for its servicing portfolio.  Additionally,  the average age of the loans in the
Company's  servicing portfolio is approximately two years. For loans held beyond
the two year average, the Company has experienced higher delinquency percentages
during the third through fifth years after  origination.  Although the Company's
combined  delinquency and foreclosure ratio remains low relative to the industry
average of 5.40% as of December 31, 1995 and 5.65% as of December 31, 1996,  the
delinquency percentage of the Company's total servicing portfolio increased from
3.06%  in  1995  to  3.58%  in  1996  due in  part  to an  increased  number  of
delinquencies in loans with higher loan-to-value ratios. Mortgage loans with 80%
or more loan-to-value  ratios represented  approximately  62.0% of the Company's
loan origination volume in 1996, as compared to approximately 66.6% in 1995.

         The following  table shows in detail the Company's  recent  delinquency
statistics as of the dates indicated:

<TABLE>
<CAPTION>

                                                           As of December 31,

                                       1996                      1995                      1994
                                      ------                    ------                    ------
                                         Percentage                  Percentage                Percentage
                                          of Total                    of Total                 of Total
                              Total of     Loans         Total of       Loans      Total of      Loans
                               Loans*     Serviced        Loans*      Serviced      Loans*     Serviced

Loans Delinquent for:
<S>   <C>                      <C>          <C>           <C>           <C>         <C>           <C>
   30-59 days                  3,248         2.06%        3,015         1.84%       2,287         1.41%
   60-89 days                    735          .47           611          .37          497          .31
   90 days & over                604          .38           669          .42          635          .39
                                 ---          ---         -----        -----        -----        -----
     Total Delinquencies       4,587         2.91%        4,295         2.63%       3,419         2.10%
Foreclosures Pending           1,061          .67           705          .43          537          .33
                               -----          ---           ---         ----          ---          ---
Total                          5,648         3.58%        5,000         3.06%       3,956         2.43%
                               =====        =====         =====         ====        =====         ====
</TABLE>

---------------
*Includes  the $2.6  billion,  $2.1 billion and $1.2 billion for the years ended
December 31, 1996, 1995 and 1994, respectively, of loan servicing rights sold to
others but temporarily being sub-serviced by the Company prior to transfer.

         Servicing  Sales.  In addition to the  recognition  of revenue from the
collection of servicing fees during its ownership of the servicing  rights,  the
Company recognizes revenue from the sale of a portion of its servicing rights to
other servicers.  Since 1985, the Company has obtained  substantially all of its
servicing rights through  in-house  origination  sources (i.e.,  loans which are
funded  and  closed by the  Company).  The  Company  has sold  servicing  rights
generated by its own  origination  activities  to fund the cost of expanding its
origination  network,  to repay a substantial portion of its indebtedness and to
build its working capital.  Servicing rights were sold on loans having aggregate
principal  amounts of $8.2 billion  during 1996,  $6.7 billion  during 1995, and
$9.9 billion during 1994. All sales were made through a competitive bid process,
except for approximately $2.6 billion, $2.9 billion and $3.2 billion sold during
1996, 1995 and 1994, respectively,  under the terms of negotiated contracts. The
principal  balance of the  Company's  servicing  portfolio was $13.3 billion and
$14.1  billion at December  31,  1996,  and  December  31,  1995,  respectively.
Management  continually evaluates the Company's investment in retained servicing
rights  and  periodically   makes  decisions  to  sell  servicing  rights  after
considering  the  following  criteria:  cash  requirements,   market  value  for
servicing rights compared with their economic value to the Company,  exposure to
prepayment risk and impact on earnings. The Company's decision to sell servicing
rights  and the  timing  of such  sales  may have a  significant  impact  on the
Company's future results of operations.  While the market for servicing has been
large and active,  there can be no guarantee  that such market  conditions  will
continue.  A decreased  ability to sell  servicing  would  affect the results of
operations.  See  "Management's  Discussion and Analysis," 1996 Annual Report to
Stockholders.

         Credit  Risk.  The degree of credit  risk of a servicing  portfolio  is
largely dependent on the extent to which the servicing portfolio is non-recourse
or recourse. In non-recourse  servicing,  the credit risk to the servicer is the
cost of temporary advances of funds. In recourse servicing,  the servicer agrees
to assume the  credit  losses  with  respect  to the loans it  services  for its
investors,  such as FNMA or FHLMC.  Losses on recourse servicing occur primarily
when foreclosure sale proceeds of the property  underlying a defaulted  mortgage
loan are less than the sum of the outstanding principal balance of such mortgage
loans,  accrued  interest,  and  the  costs  of  holding  and  disposing  of the
underlying  property.  As of December 31, 1996,  approximately $8.2 million, not
including  VA  loans  as  described  below,  (.61%  of the  Company's  servicing
portfolio  at such date) was subject to recourse  provisions.  The Company has a
quality control program,  which includes an additional  review of selected loans
in an effort to minimize the credit risk.

         The Company is required to advance  from  corporate  funds,  escrow and
foreclosure costs for loans which it services.  A portion of the advances is not
recoverable for loans serviced for GNMA. In addition,  under the VA's policy for
VA-guaranteed  mortgages for the GNMA program,  the servicer may be  responsible
for credit  losses which exceed the VA's  guarantee  limitations.  The VA's loan
guarantee is expressed as a percentage of the original  loan amount  ("guarantee
amount") based upon the veteran's eligibility up to the maximum in effect at the
time the loan is  originated.  The maximum  guarantee  payment amount is revised
from  time to time by the VA.  At  present,  the VA  guarantee  limitations  are
generally  25% to 50% of the loan amount,  up to a maximum  amount  ranging from
$22,500  to  $50,750.  As of  December  31,  1996 and 1995,  a  reserve  for the
unrecoverable  advances  and losses of  approximately  $852,000 and $798,000 has
been  established  for GNMA loans in default.  GNMA FHA/VA  losses for the years
ended December 31, 1996, 1995 and 1994, were $1,444,000,  $949,000 and $572,000,
respectively.

         Upon  foreclosure,  an FHA/VA property is typically  conveyed to HUD or
VA. However, when it is in the VA's financial interest, VA has authority to deny
conveyance of the foreclosed property to the VA ("VA no-bid").  Instead,  the VA
pays the guarantee amount  described above, the foreclosed  property is conveyed
to the  Company and the Company  assumes  the market  risk of  disposing  of the
property.  GNMA VA no-bid  losses,  which are included in the GNMA FHA/VA losses
noted above,  were  approximately  $1,270,000 and $685,000 during 1996 and 1995,
respectively.  With respect to foreclosed FHA loans, prior to conveying title to
HUD,  the Company is required to return the  property to a habitable  condition.
The cost of returning the property to a habitable  condition is not  recoverable
from HUD. The related  reserve for  unrecoverable  advances and losses on FHA/VA
loans in default for potential no-bid losses as of December 31, 1996 and 1995 is
included in the reserve for unrecoverable advances described above.

         In January  1996,  the Company  installed a servicing  software  system
which  utilizes  artificial  intelligence  and  scoring to assist the Company in
identifying  those  borrowers  most likely to default on their  mortgages.  This
enables the Company's  servicing  personnel to contact such borrowers  early on,
and  potentially  prevent the  occurrence of a foreclosure  proceeding.  Also in
1996, to realize the benefits of new software developments, and to meet investor
needs for quantitative  underwriting analysis, the Company chose to implement an
automated  underwriting  system.  The system  analyzes  risk factors in borrower
characteristics,   credit   information,   loan  profile   characteristics   and
geo-demographic information.

         Liability Under Representations and Warranties.  In the ordinary course
of business,  the Company has  potential  liability  under  representations  and
warranties  made to purchasers and insurers of mortgage loans and the purchasers
of servicing rights. Under certain circumstances,  the Company may become liable
for the unpaid  principal and interest on defaulted  loans (whether  recourse or
non-recourse) if there has been a breach of  representations  or warranties.  In
this case, the Company may be required to repurchase  such mortgage  loan,  with
any  subsequent  loss on the mortgage loan being borne by the Company.  In 1996,
1995 and 1994, the Company  recognized a charge of  approximately  $4.7 million,
$3.6 million and $2.4 million,  respectively,  with respect to potential  losses
arising from repurchases related to third party misrepresentations.

         Termination.  Servicing rights represent a contractual  right and not a
beneficial  ownership  interest in the  underlying  mortgage  loans.  Failure to
service  the  loans  in  accordance  with  contract  requirements  may lead to a
termination  of the servicing  rights  without the payment of any  compensation.
There have been no terminations of servicing rights by investors  because of the
Company's failure to service in accordance with its contractual obligations.

Other Business Activities

         The Company's wholly-owned insurance agency subsidiary,  North American
Mortgage Insurance Services ("North American Mortgage Insurance"), markets life,
disability,   accidental  death,  mortgage,   homeowners,  auto  and  earthquake
coverage,  singularly or in some  combination,  in 20 states and the District of
Columbia.  Its principal market is in California.  Additionally,  North American
Mortgage  Insurance  markets group life,  group  disability and group accidental
death to its  mortgagors  in several of the states  where the  Company  services
mortgages.   Sales  are  made  through  face-to-face   meetings  with  potential
customers,  telemarketing campaigns or direct mailings. For its services,  North
American Mortgage Insurance collects a percentage of the insurance premiums as a
commission.  To date, North American  Mortgage  Insurance's  income has not been
material to the Company.

         In  November  1996,  North  American   Mortgage   Insurance   purchased
substantially  all of the operating  assets of Lomas  Insurance  Services,  Inc.
("Lomas").  The most  significant  assets  acquired  from Lomas were over 50,000
insurance  policies  insuring  property  and casualty  risks in 50 states.  This
acquisition  expanded the agency's  market position for personal lines insurance
sales,  particularly  in the  Southwest  and  Eastern  regions  of the  country,
providing  the agency with a stronger  market  presence and access to additional
high quality insurance products for all of its markets.

Forward-Looking Statements

         The Company may from time to time make oral forward-looking statements.
In  connection  with the "safe  harbor"  provisions  of the  Private  Securities
Litigation  Reform  Act of 1995,  the  Company  is  hereby  identifying  certain
important  factors that could cause  actual  results to differ  materially  from
those  contained in any  forward-looking  statement  made by or on behalf of the
Company.  Any such  statement  which  refers to this  caption  is  qualified  by
reference to the following cautionary statements.

         The volume of the Company's  loan  production is subject to an increase
or decrease in interest  rates,  an increase or decrease in price and/or product
competition,  the  Company's  inability to build retail  production  as planned,
major new competitors entering the market,  significant new products marketed by
competitors,   development  of  new  high-volume   distribution   channels,  and
introduction of subprime products by the Company found to be more difficult than
contemplated.

         The  profitability  of the Company's  loan  production is subject to an
increase or  decrease in loan  volume,  an  increase in price  competition,  the
narrowing  of margins in the subprime  market,  structural  dislocations  in the
securities market for prime and subprime mortgage-backed  securities, a decrease
in the market value for  servicing  and excess  servicing,  increased  levels of
repurchase  requests from lenders,  high bond market volatility,  an increase in
the cost of funds,  production  expenses  related to the  subprime  introduction
which exceed projections and the Company's overall financial viability.

         The Company's ability to enlarge its servicing  portfolio is subject to
increased  servicing  sales,  lower than  projected  production,  a decrease  in
interest rates and other factors leading to an increase in prepayments.

         Developments in any of these areas or in risk factors  described in the
sections  entitled  "National  Presence",  "Sale of Loans",  "Loan  Funding  and
Borrowing Arrangements",  "Loan Servicing", "Servicing Sales," and "Regulations"
could cause the Company's  results to differ  materially  from results that have
been or may be projected by or on behalf of the  Company.  The Company  cautions
that the foregoing list of important factors is not exclusive. The Company does
not undertake to update any forward-looking statement that may be made from time
to time by or on behalf of the Company.

Competition

         The business of mortgage banking is highly  competitive and fragmented.
The  Company  competes  with  other  financial  institutions,  such as  mortgage
bankers,  state and national  commercial banks,  savings and loan  associations,
credit unions and insurance companies for loan originations.  As of December 31,
1996, the Company's largest loan origination markets were in California,  Texas,
Minnesota,  Florida and Arizona  where many of the  nation's  largest  banks and
savings and loans operate.  The market shares of the Company and its competitors
are generally small. The Company believes, however, that there is a trend toward
consolidation  of the  originations  market.  For example,  based on an industry
publication,  the  combined  market share of the top five  mortgage  originators
increased  from 9.3% in 1991, to 17.0% in 1995 and to 20.0% in 1996. The Company
competes by providing a variety of products,  reasonable pricing, motivating its
sales force through incentive  compensation  based on volume of loan origination
and by providing high-quality service to borrowers, builders, real estate agents
and brokers and mortgage brokers.

         During 1996 and 1995,  competition for mortgage loans remained  intense
due to industry  overcapacity.  The  competition was largely led by major banks,
who were aggressively trying to increase market share. Additionally, the Company
encountered  intense  price  competition  for loans  sourced  through  wholesale
brokers, which, in the opinion of management,  signals that a secular change has
taken place in the pricing structure for the wholesale  origination channel. See
"Management's Discussion and Analysis," 1996 Annual Report to Stockholders.

Regulation

         Mortgage banking is a highly regulated industry. The Company is subject
to the rules and regulations of, and  examinations by, the Department of Housing
and Urban  Development,  FNMA, FHLMC, VA, GNMA and state regulatory  authorities
with  respect  to  originating,   processing,   underwriting,  making,  selling,
securitizing and servicing  residential  mortgage loans. In addition,  there are
other federal and state  statutes and  regulations  affecting  such  activities.
These rules and regulations, among other things, impose licensing obligations on
the  Company,  establish  eligibility  criteria  for  mortgage  loans,  prohibit
discrimination,  provide for inspection  and  appraisals of properties,  require
credit reports on prospective borrowers,  regulate payment features and, in some
cases,  fix maximum interest rates,  fees and loan amounts.  FHA lenders such as
the Company are required annually to submit to the Federal Housing  Commissioner
and some states audited  financial  statements,  and FNMA,  FHLMC,  GNMA and FHA
require the maintenance of specified net worth levels. The Company's affairs are
also subject to examination by the Federal Housing  Commissioner at all times to
assure  compliance with FHA  regulations,  policies and procedures.  Among other
federal consumer credit laws, mortgage origination activities are subject to the
Equal  Credit  Opportunity  Act,  Truth In Lending Act,  Real Estate  Settlement
Procedures Act, the Fair Housing Act, the Home Mortgage  Disclosure Act, as well
as the regulations promulgated thereunder.  These laws prohibit  discrimination,
kickbacks and referral fees,  and require the disclosure of certain  information
to borrowers  concerning  credit and  settlement  costs.  Many of the regulatory
requirements  are designed to protect the interests of  consumers,  while others
protect the owners or insurers of mortgage  loans.  Failure to comply with these
requirements  can lead to loss of  approved  status,  termination  of  servicing
contracts without  compensation to the servicer,  demands for indemnification or
loan repurchases,  class action lawsuits and administrative enforcement actions,
which may involve civil money penalties and, in some instances,  treble damages.
Although the Company believes that it is in compliance in all material  respects
with applicable  Federal state laws, rules and regulations,  the requirements to
which the  Company is  subject  often are  ambiguous  and  subject to  differing
interpretations. There can be no assurance that more restrictive laws, rules and
regulations  will not be adopted in the future or that existing laws,  rules and
regulations,  or the provisions of the mortgage loan documents with  mortgagors,
will  not  be  interpreted  in a  more  restrictive  manner,  which  could  make
compliance  more  difficult  or  expensive,  restrict the  Company's  ability to
originate,  purchase, sell, or service mortgage loans, further limit or restrict
the amount of interest and other charges earned from loans originated, purchased
or  serviced by the  Company,  expose the  Company to claims by  mortgagors  and
administrative  enforcement actions, or otherwise adversely affect the business,
financial condition or prospects of the Company.

         Certain  conventional   mortgage  loans  are  subject  to  state  usury
statutes. Federally-related first-lien mortgage loans are exempt from the effect
of such statutes.  Despite federal exemption of state usury limits,  the Company
must  comply  with usury  statutes  in those  states  that have opted out of the
preemption. Various state laws affect the Company's mortgage banking operations.
The  Company is licensed to do  business  in those  states  where the  Company's
operations require such licensing.

         North  American  Mortgage   Insurance  is  subject  to  the  rules  and
regulations  of the  insurance  regulatory  agencies  of the  states in which it
operates.

Employees

         As of February 28, 1997,  the business of the Company was  conducted by
approximately  2,918  employees.  None of these  employees is  represented  by a
bargaining  agent.  The Company  believes that its relations  with employees are
satisfactory.

Corporate Background

         The predecessor of the Company was founded in Santa Rosa, California in
1948 as Sonoma Mortgage Company, which operated as a residential mortgage banker
in Northern  California  until 1968,  when it was sold to Wells Fargo Bank, N.A.
and was operated as Wells Fargo Mortgage Company ("WFMC").  In 1985, IMCO Realty
Services - a California Limited Partnership, (the "Partnership") acquired WFMC's
residential mortgage lending division.

         The Company was  incorporated  in Delaware on February 8, 1991. In July
1992,  the  Company  acquired  the  business  of the  Partnership  as  part of a
reorganization (the "Reorganization") of the Partnership into corporate form and
completed  an  initial  public  offering  of  its  Common  Stock.  Prior  to the
acquisition,  the  Company  had  no  business  operations.  As a  result  of the
Reorganization, the Company acquired the business of the Partnership.

ITEM 2.      PROPERTIES

         The Company owns a 110,000  square foot office  building in Santa Rosa,
California  that  houses  its  corporate   headquarters,   marketing  and  other
administrative  departments  of the Company and from which it conducts  its loan
servicing  business.  As of February 28, 1997,  the Company  operated 106 branch
offices  located in 31 states  through  which the Company  conducts  its retail,
wholesale and  telemarketing  loan  origination  business.  See  "Mortgage  Loan
Originations - National  Presence." The Company also occupies other office space
for regional offices, satellite offices, records management,  inventory control,
telemarketing and for use by North American Mortgage Insurance Services.  All of
such offices,  aggregating  approximately  610,053 square feet of premises,  are
leased. None of the leases has a term of more than five years. The Company seeks
to include  options  to renew in each  lease and the right to early  termination
upon  payment to the  lessor of the  unamortized  portion of tenant  improvement
costs and leasing  commissions.  Generally,  the Company's leases are net leases
under  which the  Company is  obligated  to pay,  in  addition  to base rent,  a
pro-rata  portion of  increases  in the  lessor's  operating  costs  above those
incurred for a base year. The aggregate annual base rental of all leased offices
was approximately $10.8 million for the year ended December 31, 1996. Management
of the Company believes that its facilities are adequate for its operations.

ITEM 3.      LEGAL PROCEEDINGS

         The Company is a defendant in certain  litigation arising in the normal
course of its business.  Although the ultimate outcome of all pending litigation
cannot be  precisely  determined  at this time,  the Company  believes  that any
liability  resulting  from the  aggregate  amount  of  damages  for  outstanding
lawsuits  and claims will not have a material  adverse  effect on its  financial
position.

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY
             HOLDERS

         None.

<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT

         The Company's executive officers and their ages are as follows:

          Name                             Position                          Age

John F. Farrell, Jr.    Chairman of the Board, Chief Executive Officer       59
                        and Director

Terrance G. Hodel       President, Chief Operating Officer                   54
                        and Director

Harold B. Bonnikson     Executive Vice President, Manager of                 42
                        Residential Production

Michael G. Conway       Executive Vice President, Manager of Secondary       48
                        Marketing and Credit Risk Management

Robert J. Gallagher     Executive Vice President, Manager of Planning        40
                        and Business Development

Martin S. Hughes        Executive Vice President, Chief Financial Officer    39
                        and Treasurer

Gary F. Moore           Executive Vice President, Manager of Information     46
                        Technology, Human Resources and Training

Robert A. Rosen         Executive Vice President, Manager of                 46
                        Loan Administration

         All  executive  officers  hold  office at the  pleasure of the Board of
Directors.

         There  is no  family  relationship  between  any  of the  directors  or
executive officers.

         John F. Farrell,  Jr. has been Chairman of the Board,  Chief  Executive
Officer and  Director of the Company  and the General  Partner  since 1985.  Mr.
Farrell  practiced  corporate law in New York City for six years and then joined
Merrill  Lynch  in  its  investment  banking  division.  He  was  a  partner  of
Oppenheimer  & Co.  from  1971 to 1981.  Since  1981,  Mr.  Farrell  has been an
investor  involved in the  purchase  and  management  of various  companies.  He
presently  is a director of  Automatic  Service  Company,  a food  services  and
vending  company,  and also a member of the Board of Trustees of Boston  College
and the  Kennedy  Library  Foundation.  He holds a B.S.  and M.S.  from New York
University and an L.L.M. and L.L.B. from New York University Law School.

         Terrance  G. Hodel has been  President,  Chief  Operating  Officer  and
Director  of the Company and the General  Partner  since 1985.  He joined  Wells
Fargo Mortgage Company in 1979 as President and Chief Executive  Officer.  Prior
thereto,  from 1975 to 1979,  Mr. Hodel held the  positions  of  Executive  Vice
President of Sutro Mortgage  Investment Trust and Senior Vice President of Ralph
C. Sutro Company. From 1972 to 1975, Mr. Hodel served as Vice President of Ralph
C. Sutro  Company.  Mr. Hodel was a member of the National  Advisory  Council of
FNMA from 1991 to 1994.  He has been a member  of the Board of  Trustees  of the
Mortgage Bankers  Association of America since 1992 and a member of the Board of
Directors of the California  Mortgage Bankers  Association since 1991. Mr. Hodel
received an M.B.A. from Stanford University and a B.A. from Pomona College.

         Harold B.  Bonnikson has served as Executive Vice President and Manager
of Residential Production of the Company since November 1995. From April 1995 to
October 1995, he served as Manager of the Southern  California and Telemarketing
Regions.  Prior  thereto,  Mr.  Bonnikson  served as Executive  Vice  President,
Manager of Telemarketing,  Product Development and Advertising from October 1992
to April 1995.  From the  commencement  of the  Company's  operations to October
1992, Mr.  Bonnikson was Senior Vice President and Manager,  Telemarketing  Loan
Production.   Mr.  Bonnikson  served  as  Senior  Vice  President  and  Manager,
Telemarketing  Loan Production of the General Partner from 1989 to July 1992. In
1981 he joined Wells Fargo  Mortgage  Company.  Mr.  Bonnikson was employed as a
Certified Public Accountant at Peat, Marwick,  Mitchell & Co. from 1978 to 1981.
In 1996,  he became a member of the Board of Directors of CPT, Inc. Mr Bonnikson
received a B.A. in Business  Administration  from California  State  University,
Sacramento.

         Michael G.  Conway has been  Executive  Vice  President  and Manager of
Secondary  Marketing,  and Credit Risk  Management  of the Company since October
1992.  From the  commencement  of the Company's  operations to October 1992, Mr.
Conway  was  Senior  Vice  President  and  Manager,   Secondary   Marketing  and
Operations.  Mr. Conway served as Senior Vice  President and Manager,  Secondary
Marketing and Operations of the General Partner from 1985 to July 1992. Prior to
joining Wells Fargo  Mortgage  Company in 1984,  Mr.  Conway was Executive  Vice
President of Pioneer  Mortgage  Company from 1983 to 1984. From 1975 to 1983, he
was employed at Dade Savings Mortgage Corporation where he became Executive Vice
President and Chief  Operating  Officer in 1981.  Mr. Conway  received a B.S. in
Civil  Engineering from the University of California at Davis and an M.B.A. from
the University of California at Los Angeles.

         Robert J.  Gallagher has served as Executive Vice President and Manager
of Planning and Business  Development  of the Company  since January 1997 and as
Chief  Administrative  Officer since October 1992. From the  commencement of the
Company's  operations to October 1992,  Mr.  Gallagher was Senior Vice President
and Chief  Financial  Officer.  He served as  Senior  Vice  President  and Chief
Financial  Officer  of the  General  Partner  from 1987 to July  1992.  Prior to
joining  Wells Fargo  Mortgage  Company in 1984,  he was  Controller  of Westnet
Group, a stock  brokerage and financial  services joint venture  involving Wells
Fargo Bank,  United Banks of Colorado,  Valley National Bank of Arizona and Bank
of Hawaii.  From 1980 to 1982 Mr.  Gallagher  was the  Controller  for Letterman
Transaction  Services, a stock brokerage investment company.  From 1978 to 1980,
he was  employed by Peat Marwick  Mitchell & Co. In 1994,  he became a member of
the Board of  Directors  of  Interlinq.  Mr.  Gallagher  is a  Certified  Public
Accountant  and received his B.A. in Economics from the University of California
at Santa Barbara.

         Martin  S.  Hughes  has  served  as  Executive  Vice  President,  Chief
Financial  Officer and Treasurer of the Company  since  October  1992.  From the
commencement of the Company's  operations to October 1992, Mr. Hughes was a Vice
President of the Company.  Prior thereto,  Mr. Hughes served as a Vice President
of the General Partner from September 1989 to July 1992 and from January 1984 to
July 1992, he held executive  positions with various  companies.  Mr. Hughes was
controller of BTK  Industries  from 1984 to 1985.  Subsequently,  he served as a
Vice President and Chief Financial Officer of Walls Holding Company from 1985 to
1989, of L-TEC Company from 1987 to 1988, and Shirley of Atlanta, Inc. from 1989
to 1990. In addition,  Mr. Hughes was a Vice  President of Brown Jordan  Company
from 1987 to 1988. Mr. Hughes is a Certified Public  Accountant and received his
B.S. in Accounting from Villanova University.

         Gary F.  Moore has  served as  Executive  Vice  President,  Manager  of
Information Technology,  Human Resources and Training, since October, 1996. From
April,  1994  to  October,  1996,  he was  Senior  Vice  President,  Manager  of
Information  Technology  for the  Company.  From 1977 to 1994,  Mr.  Moore  held
various  positions with Electronic Data Systems Corp.  (EDS),  including Account
Executive, Customer Support, Programmer, and Business Partner. EDS is one of the
world's  largest  suppliers  of  technology   integration  services.  Mr.  Moore
currently  serves as Vice Chairman of the  Technology  Committee of the Mortgage
Bankers Association of America. Mr. Moore received a B.S. from the United States
Military Academy.

         Robert A. Rosen has served as Executive Vice President, Manager of Loan
Administration,  since February,  1994. From October, 1992 to February, 1994, he
was Senior Vice President, Loan Administration,  and from June, 1991 to October,
1992, he was Vice President, Loan Administration,  for the Company. From 1985 to
1991, Mr. Rosen was Vice President and  Controller,  Loan  Administration,  with
Imperial  Corporation  of America.  From 1972 to 1985,  Mr.  Rosen held  various
positions,  including  Vice  President,  with Dime Savings Bank of New York. Mr.
Rosen received a Bachelor of Business  Administration,  Banking and Finance from
Hofstra University.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

         The  Company's  Common  Stock is listed on the New York Stock  Exchange
("NYSE") (Symbol:  "NAC").  The following table sets forth the high and low sale
prices (as reported by the NYSE) for the Company's Common Stock.

<TABLE>
<CAPTION>

                                                 Sale Price
                                       1996                       1995
                                       ----                       ----
                                High         Low           High         Low
                                ----         ---           ----         ---

<S>                            <C>         <C>           <C>          <C>
First Quarter...............   $26.250     $19.375       $18.125      $14.500
Second Quarter..............   $21.000     $15.375       $25.875      $17.125
Third Quarter...............   $19.375     $14.750       $26.000      $20.000
Fourth Quarter..............   $23.125     $19.750       $25.375      $20.250
</TABLE>

         As of March 12, 1997, the latest practicable date, the closing price of
the Company's  Common Stock on the New York Stock  Exchange,  as reported in The
Wall Street Journal, was $21.875 per share.

         The Company  paid a cash  dividend of $.06 per share of Common Stock on
March 8, 1995, May 22, 1995, August 15, 1995,  November 15, 1995, March 4, 1996,
May 31, 1996, August 15, 1996, November 15, 1996 and March 4, 1997.

         The Certificate of Incorporation and Bylaws of the Company do not state
any dividend policy or establish any  distribution  requirements.  The Company's
ability  to pay  dividends  depends  upon  restrictions  contained  in  Delaware
corporation law and in its credit agreements. The Company's credit agreements do
not permit the aggregate of (a) all cash dividends  declared or paid upon shares
of its stock, and any other distribution of assets to its stockholders,  whether
in  cash,   property  or  securities   plus  (b)  the  cost  of  all  purchases,
acquisitions,  redemptions or retirements of any shares of the Company's capital
stock in any fiscal quarter,  when added to the cost to the Company of all other
such  dividends  and  costs  during  such  fiscal  quarter  and the  immediately
preceding  three  fiscal  quarters,  to exceed  $35,000,000  during  such fiscal
quarter and the  immediately  preceding three fiscal  quarters.  There can be no
assurance that any dividends will be paid.  The Company's  dividend  policy will
depend on the financial condition and results of operations of the Company,  its
cash needs and other factors deemed relevant by the Board of Directors, and will
be  subject  to  re-evaluation  by the Board of  Directors  of the  Company on a
continuing basis.

         As of March 12,  1997,  there  were 974  stockholders  of record of the
Company's Common Stock.

ITEM 6.  SELECTED FINANCIAL DATA

     The  information  set forth under the caption,  "Selected  Financial  Data"
which appears on page 19 of the Company's 1996 Annual Report to  Stockholders is
incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

     The information set forth under the caption,  "Management's  Discussion and
Analysis"  which  appears on pages 20 through 28 of the  Company's  1996  Annual
Report to Stockholders is incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements,  together with the report therein of
Ernst & Young  LLP  dated  January  31,  1997  and the  Supplemental  Pro  Forma
Financial  Data,  appearing on pages 29 through 33 of the Company's  1996 Annual
Report to Stockholders are incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not Applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  information  required  by this Item 10 hereby is  incorporated  by
reference  from the  information  set  forth  under  the  caption  "Election  of
Directors"  in the  Company's  definitive  proxy  statement  for the 1997 Annual
Meeting of  Stockholders  to be filed pursuant to Regulation 14A within 120 days
after the end of the registrant's fiscal year and from the information set forth
under the caption "Executive  Officers of the Registrant"  appearing on pages 22
through 24 of this report.

ITEM 11. EXECUTIVE COMPENSATION

         The  information  required  by this Item 11 hereby is  incorporated  by
reference  from the  information  as set  forth  under  the  caption  "Executive
Compensation"  in the Company's  definitive  proxy statement for the 1997 Annual
Meeting of  Stockholders  to be filed pursuant to Regulation 14A within 120 days
after the end of the registrant's fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required  by this Item 12 hereby is  incorporated  by
reference from the information set forth under the captions "Security  Ownership
of  Management"  and "Security  Ownership of Certain  Beneficial  Owners" in the
Company's definitive proxy statement for the 1997 Annual Meeting of Stockholders
to be filed  pursuant  to  Regulation  14A  within 120 days after the end of the
registrant's fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required  by this Item 13 hereby is  incorporated  by
reference  from  the   information   set  forth  under  the  captions   "Certain
Transactions"  and "Executive  Compensation"  in the Company's  definitive proxy
statement for the 1997 Annual  Meeting of  Stockholders  to be filed pursuant to
Regulation 14A within 120 days after the end of the registrant's fiscal year.

<PAGE>
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a)  Financial Statements and Financial Statement Schedules:

         The following documents are filed as part of this report:

                                                                     Page in
                                                                 Annual Report1

         1.   Consolidated Financial Statements:

              Report of Independent Auditors                             29

              Consolidated Balance Sheets at December 31, 1996
              and December 31, 1995                                      30

              Consolidated Statements of Operations for the
              three years ended December 31, 1996, 1995 and 1994         31

              Consolidated Statement of Stockholders' Equity
              for the three years ended December 31, 1996, 1995
              and 1994                                                   32

              Consolidated Statements of Cash Flows for the
              three years ended December 31, 1996, 1995 and 1994         33

              Notes to Consolidated Financial Statements                 34

                                                                    Page in
                                                                  This Report

          2.  Consolidated Financial Statement Schedules:

              Report of Independent Auditors on Financial
              Statement Schedules for the three years ended
              December 31, 1996, 1995 and 1994                           36

              VIII--Valuation and Qualifying Accounts                    37

              All  other   schedules  are  omitted   because  they  are  not
              applicable  or  the  required  information  is  shown  in  the
              financial statements or notes thereto.

--------
     1Incorporated  by reference from the indicated  pages of the Company's 1996
Annual Report to Stockholders.

Exhibit
Number                     Description
------                     -----------

3.1     Certificate of Incorporation of the Company (Exhibit 3.1(5))
3.2     Amended  and  Restated  Certificate  of  Incorporation  of  the  Company
        (Exhibit 3.2 (5))
3.3     Certificate  of  Amendment  dated April 1, 1992 to Amended and  Restated
        Certificate of Incorporation of the Company (Exhibit 3.3(5))
3.4     Certificate  of  Designation  of  Preferences  and  Rights  of  Series A
        Convertible  Preferred Stock of the Company filed July 13, 1992 (Exhibit
        3.4(5))
3.5     Certificate  of Merger dated July 16, 1992 of NAMC Sub I, Inc.  into the
        Company (Exhibit 3.5(5))
3.6     Certificate  of  Designation  of  Preferences  and  Rights  of  Series A
        Cumulative  Preferred  Stock  of the  Company  filed  November  6,  1992
        (Exhibit 3.6(5))
3.7     Amended and Restated By-Laws of the Company
4.1     Specimen Common Stock Certificate of the Company (Exhibit 4.1(2))
4.2     Specimen Class A Convertible  Preferred Stock Certificate of the Company
        (Exhibit 4.4(3))
4.3     Certificate  of  Designation  of  Preferences  and  Rights  of  Series A
        Convertible  Preferred  Stock of the  Company  filed July 13,  1992 (See
        Exhibit 3.4)
4.4     Certificate  of  Designation  of  Preferences  and  Rights  of  Series A
        Cumulative  Preferred  Stock of the Company filed  November 6, 1992 (See
        Exhibit 3.6)
4.5     Shareholder  Rights Agreement,  dated as of October 19, 1992 between the
        Company and The Bank of New York, as Rights Agent (Exhibit 4(4))
4.6     Form of Commercial Paper Note of the Company (Exhibit 4.3(9))
4.7     Form of  Indenture  between the Company  and IBJ  Schroder  Bank & Trust
        Company, as Trustee (Exhibit 4.1(7))
4.8     Form of Medium-Term  Note, Series A (Fixed Rate) of the Company (Exhibit
        4.2 (8))
4.9     Form of  Medium-Term  Note,  Series A  (Floating  Rate)  of the  Company
        (Exhibit 4.3(8))
10.1    Master  Agreement  dated  October  22,  1992  between  Federal  National
        Mortgage Association and the Company, as amended (Exhibit 10.4(5))
10.2+   North American Mortgage Company  Supplemental  Executive Retirement Plan
        (Exhibit 10.16(5))
10.3+   Form of Letter Agreement  regarding Grant of Non-qualified Stock Options
        dated February 1, 1993 (Exhibit 10.19(5))
10.4    Letters of  approval to IMCO Realty  Services  -- a  California  Limited
        Partnership*,  from Federal National Mortgage Association,  Federal Home
        Loan Mortgage  Corporation,  Government  National Mortgage  Association,
        Veterans  Administration and Department of Housing and Urban Development
        (Exhibit 10.26(1))

---------------
+This exhibit constitutes a management contract, compensatory plan or
 arrangement.
*Predecessor of the Company
<PAGE>

10.5    Priority  Forward  Commitment  dated April 30, 1993 between  Residential
        Funding Corporation and the Company (Exhibit 10.58(6))
10.6    Servicing  Rights  Purchase  Agreement  dated March 31, 1993 between the
        Company and GE Capital Mortgage Services, Inc. (Exhibit 10.59(6))
10.7    Commercial  Paper Dealer  Agreement dated October 6, 1993 between Morgan
        Stanley & Co. Incorporated and the Company (Exhibit 10.62(9))
10.8.1  First  Amendment  to Master  Agreement  dated  December 17, 1992 between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.64.1(9))
10.8.2  Second  Amendment  to Master  Agreement  dated  March 25,  1993  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.64.2(9))
10.8.3  Third Amendment to Master Agreement dated March 18, 1993 between Federal
        National Mortgage Association and the Company (Exhibit 10.64.3(9))
10.8.4  Fourth  Amendment  to Master  Agreement  dated  April 28,  1993  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.64.4(9))
10.8.5  Fifth  Amendment to Master  Agreement dated May 17, 1993 between Federal
        National Mortgage Association and the Company (Exhibit 10.64.5(9))
10.8.6  Sixth Amendment to Master  Agreement dated June 11, 1993 between Federal
        National Mortgage Association and the Company (Exhibit 10.64.6(9))
10.8.7  Seventh Amendment to Master Agreement dated July 8, 1993 between Federal
        National Mortgage Association and the Company (Exhibit 10.64.7(9))
10.8.8  Eighth  Amendment  to Master  Agreement  dated  August 16, 1993  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.64.8(9))
10.8.9  Ninth  Amendment  to Master  Agreement  dated  September 2, 1993 between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.64.9(9))
10.8.10 Tenth  Amendment  to Master  Agreement  dated  September 3, 1993 between
        Federal National Mortgage  Association and the Company (Exhibit 10.64.10
        (9))
10.9    As Soon As Pooled/Early  Purchase Option Agreement dated August 12, 1993
        between Federal National  Mortgage  Association and the Company (Exhibit
        10.65(9))
10.10   Mandatory  Commitment  Letter  Agreement dated November 11, 1993 between
        The  Prudential  Home Mortgage  Company,  Inc. and the Company  (Exhibit
        10.29(10))
10.11   Standby  Commitment  Contract  dated December 9, 1993 between GE Capital
        Mortgage Services, Inc. and the Company (Exhibit 10.30(10))
10.12   Agreement  for Purchase  and Sale of Servicing  dated as of December 24,
        1993 between  BancBoston  Mortgage  Corporation and the Company (Exhibit
        10.32(10))
10.13.1 Eleventh  Amendment to Master  Agreement dated November 15, 1993 between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.33.1(10))
10.13.2 Twelfth  Amendment to Master  Agreement  dated November 24, 1993 between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.33.2(10))
10.13.3 Thirteenth Amendment to Master Agreement dated December 22, 1993 between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.33.3(10))
<PAGE>

10.14   Renewal of Master  Agreement  dated as of December  22, 1993 between the
        Federal  Home  Loan  Mortgage   Corporation  and  the  Company  (Exhibit
        10.34(10))
10.15   Administrative  Procedures for Deferral Elections for the North American
        Mortgage Company 1994 Deferred  Compensation  Program for Executive Vice
        Presidents,  the  President  and the Chief  Executive  Officer  (Exhibit
        10.36(10))
10.16   Deferred Compensation Program and Administrative Procedures for Deferral
        Elections (Exhibit 10.37(10))
10.17   Master Agreement dated March 31, 1994 between Federal National  Mortgage
        Association and the Company (Exhibit 10.41(11))
10.18   Renewal of Master  Agreement  dated March 31, 1994 between  Federal Home
        Loan Mortgage Corporation and the Company (Exhibit 10.42(11))
10.19   First  through  Fourth  Amendments to Master  Agreement  dated March 31,
        1994,  between  Federal  National  Mortgage  Association and the Company
        (Exhibit 10.45(12))
10.20+  Form of Letter  Agreement  regarding  Grant of Qualified  Stock  Options
        dated April 29, 1994 and Schedule of Option  Agreements  with  Executive
        Officers (Exhibit 10.32(13))
10.21+  Termination Agreement between John F. Farrell, Jr. and the Company dated
        February 6, 1995 (Exhibit 10.34(13))
10.22+  Termination  Agreement  between  Terrance G. Hodel and the Company dated
        February 6, 1995 (Exhibit 10.35(13))
10.23+  Form of  Termination  Agreement for Executive  Officers,  other than the
        Chief Executive  Officer and the President,  and Schedule of Termination
        Agreements with Executive Officers (Exhibit 10.36(13))
10.24+  Form of Letter  Agreement  regarding  Grant of Qualified  Stock  Options
        dated  February  22, 1995 and  Schedule  of  Agreements  with  Executive
        Officers (Exhibit 10.37(13))
10.25+  North American  Mortgage Company Incentive Stock Option Plan, as amended
        (Exhibit 10.38(13))
10.26.1 Fifth  Amendment to Master  Agreement  dated  December 8, 1994,  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.39.1(13))
10.26.2 Sixth  Amendment to Master  Agreement  dated  January 31, 1995,  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.39.2(13))
10.26.3 Seventh  Amendment  to Master  Agreement  dated  March 7, 1995,  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.39.3(13))
10.26.4 Eighth  Amendment  to Master  Agreement  dated March 22,  1995,  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.39.4(13))
10.27   Commercial  Paper Dealer Agreement dated as of February 15, 1995 between
        the Company and Chase Securities, Inc. (Exhibit 10.42(13))
10.28   Third  Amendment to Pool  Purchase  Contract  between  Federal  National
        Mortgage Association and the Company (Exhibit 10.44(14))


---------------
+This exhibit constitutes a management contract, compensatory plan or
arrangement.

<PAGE>

10.29   Renewal of Master  Agreement  dated as of March 23, 1995 between Federal
        National Mortgage Association and the Company (Exhibit 10.45(14))
10.30   Master Agreement dated April 17, 1995 between Federal National  Mortgage
        Association and the Company (Exhibit 10.46(15))
10.31   Amendment  No. One to Master  Agreement  dated  April 17,  1995  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.47(15))
10.32   Amendment  No. Two to Master  Agreement  dated  April 17,  1995  between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.48(15))
10.33   Amendment  No.  Three to Master  Agreement  dated April 17, 1995 between
        Federal   National   Mortgage   Association  and  the  Company  (Exhibit
        10.49(15))
10.34   Consolidated  Second  Amended and Restated  Revolving  Credit  Agreement
        dated as of  January  23,  1996 by and among the  Company  and The First
        National Bank of Chicago,  as  administrative  agent,  and certain other
        parties identified therein (Exhibit 10.37(16))
10.35   Renewal of Master  Agreement  dated as of March 23, 1996 between Federal
        Home Loan Mortgage Corporation and the Company (Exhibit 10.38(16))
10.36+  Form of Letter  Agreement  regarding  Grant of Qualified  Stock  Options
        dated  February  14, 1996 and  Schedule  of  Agreements  with  Executive
        Officers  (Exhibit  10.39(16))
10.37+  North American  Mortgage  Company Deferred Base Salary or Bonus Program
        (Exhibit 10.40(16))
10.38+  National Union Fire Insurance  Company of Pittsburgh,  PA.(R)  Directors
        and  Officers  Insurance  and  Company   Reimbursement  Policy  (Exhibit
        10.41(16))
10.39+  Chubb Group of Insurance  Companies Directors and Officers Liability and
        Reimbursement Excess Policy (Exhibit 10.42(16))
10.40   Master  Agreement dated as of April 4, 1996,  between  Federal  National
        Mortgage Association and the Company (Exhibit 10.43(17))
10.41   Master Commitment Amendment dated May 31, 1996 between Federal Home Loan
        Mortgage Corporation and the Company (Exhibit 10.44(18))
10.42   Master  Commitment  Amendment  dated July 23, 1996 between  Federal Home
        Loan Mortgage Corporation and the Company (Exhibit 10.45(18))
10.43   American  International  Companies  Directors,  Officers  and  Corporate
        Insurance Policy (Exhibit 10.46(19))
10.44   Chubb Group of Insurance  Companies Directors and Officers Liability and
        Reimbursement Excess Policy (Exhibit 10.47(19))
10.45+  Senior Executive Severance Pay Plan of North American Mortgage Company
11      Statement re Computation of Per Share Earnings
13      1996 Annual Report to Stockholders
21      Subsidiaries of the Registrant
23      Consent of Independent Auditors
27      Financial Data Schedule

---------------
+This exhibit constitutes a management contract, compensatory plan or
 arrangement.
<PAGE>



(1)     Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Registration  Statement  on  Form  S-4,  filed  under  Registration  No.
        33-44681 on December 23, 1991.
(2)     Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Registration  Statement on Form S-1 and Amendment  No. 1 thereto,  filed
        under Registration No. 33-44680 on February 12, 1992.
(3)     Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Registration  Statement on Form S-4 and Amendment  No. 2 thereto,  filed
        under Registration No. 33-44681 on February 26, 1992.
(4)     Incorporated by reference to designated exhibit to the Company's Current
        Report on Form 8- K filed under  Commission File No. 1-11017 on November
        6, 1992.
(5)     Incorporated  by  reference  to  designated  exhibit or  schedule to the
        Company's  Annual  Report on Form 10-K filed under  Commission  File No.
        1-11017 on March 30, 1993.
(6)     Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        May 14, 1993.
(7)     Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Registration  Statement  on  Form  S-3,  filed  under  Registration  No.
        33-69318 on September 23, 1993.
(8)     Incorporated by reference to designated exhibit to the Company's Current
        Report on Form 8- K filed under  Commission  File No. 1-11017 on October
        25, 1992.
(9)     Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        November 12, 1993.
(10)    Incorporated  by  reference  to  designated  exhibit or  schedule to the
        Company's  Annual  Report on Form 10-K filed under  Commission  File No.
        1-11017 on March 30, 1994.
(11)    Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        May 14, 1994.
(12)    Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        November 12, 1994.
(13)    Incorporated  by  reference  to  designated  exhibit or  schedule to the
        Company's  Annual  Report on Form 10-K filed under  Commission  File No.
        1-11017 on March 30, 1995.
(14)    Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        May 14, 1995.
(15)    Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        August 14, 1995.
(16)    Incorporated  by  reference  to  designated  exhibit or  schedule to the
        Company's  Annual  Report on Form 10-K filed under  Commission  File No.
        1-11017 on March 30, 1996.
(17)    Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        May 14, 1996.
(18)    Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        August 14, 1996.
(19)    Incorporated  by  reference  to  designated  exhibit  to  the  Company's
        Quarterly Report on Form 10-Q filed under Commission File No. 1-11017 on
        September 14, 1996.

        (b)   Reports on Form 8-K

              None.

<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

Date:  March 28, 1997

                         NORTH AMERICAN MORTGAGE COMPANY


                                     By:    /s/MARTIN S. HUGHES
                                         ----------------------------
                                             (Martin S. Hughes)
                                         Executive Vice President and
                                         Chief Financial Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

     Signature                     Title                              Date
     ---------                     -----                              ----

JOHN F. FARRELL, JR.
--------------------       Chairman of the Board,                 March 28, 1997
(John F. Farrell, Jr.)     Chief Executive Officer
                           and Director

TERRANCE G. HODEL
-----------------          President,                             March 28, 1997
(Terrance G. Hodel)        Chief Operating Officer
                           and Director

MARTIN S. HUGHES
----------------           Executive Vice President,              March 28, 1997
(Martin S. Hughes)         Chief Financial Officer and
                           Treasurer (Principal Financial
                           Officer)

D. ALLAN HOFF
-------------              Senior Vice President and Corporate    March 28, 1997
(D. Allan Hoff)            Controller (Principal Accounting
                           Officer)


WILLIAM L. BROWN           Director                               March 28, 1997
----------------
(William L. Brown)


WILLIAM F. CONNELL         Director                               March 28, 1997
------------------
(William F. Connell)


MAGNA L. DODGE             Director                               March 28, 1997
--------------
(Magna L. Dodge)


WILLIAM O. MURPHY          Director                               March 28, 1997
-----------------
(William O. Murphy)


ROBERT J. MURRAY           Director                               March 28, 1997
----------------
(Robert J. Murray)


JAMES B. NICHOLSON         Director                               March 28, 1997
------------------
(James B. Nicholson)

         Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by  Registrants  Which Have Not  Registered  Securities
Pursuant to Section 12 of the Act:

         Not Applicable.
<PAGE>

         Report of Independent Auditors on Financial Statement Schedule



North American Mortgage Company


We have audited the consolidated financial statements of North American Mortgage
Company and subsidiaries (the Company) as of December 31, 1996 and 1995, and for
each of the three years in the period ended  December 31, 1996,  and have issued
our report  thereon  dated  January  31,  1997.  Our audits  also  included  the
financial  statement schedule of the Company listed in Item 14(a)(2) of the 1996
Form 10-K. This schedule is the responsibility of the Company's management.  Our
responsibility is to express an opinion based on our audits.

In our  opinion,  the  financial  statement  schedule  referred  to above,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth therein.





                                            /s/Ernst & Young LLP


San Francisco, California
January 31, 1997


<PAGE>



                                                                  SCHEDULE VIII

                         NORTH AMERICAN MORTGAGE COMPANY

                SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS

                       Three Years Ended December 31, 1996
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>

                Column A                   Column B                 Column C            Column D       Column E
               ----------                  --------                 --------             --------      ---------
                                          Balance at      Charged to     Charged                       Balance at
                                          Beginning       Costs and      to Other                       End of
                                          of Period        Expenses      Accounts       Deductions      Period
                                          ---------        --------      --------       ----------      ------

                  Description

FORECLOSURE RESERVE:
<S>                                       <C>             <C>           <C>          <C>              <C>
  Year ended December 31, 1996........     $    798        $  1,444      $   ---      $  (1,390)       $     852
  Year ended December 31, 1995........          373             949          ---           (524)             798
  Year ended December 31, 1994........          320             572          ---           (519)             373
PROVISION FOR LOAN LOSSES:
  Year ended December 31, 1996........     $  3,556        $  4,656      $   ---      $  (3,744)       $   4,468
  Year ended December 31, 1995........        2,471           3,853          ---         (2,768)           3,556
  Year ended December 31, 1994........        4,348           2,360          ---         (4,237)           2,471
RECEIVABLE RESERVE:
  Year ended December 31, 1996........     $    ---        $    ---      $   ---      $     ---        $    ---
  Year ended December 31, 1995........          ---             ---          ---            ---             ---
  Year ended December 31, 1994........          120             ---          ---           (120)            ---
DEFERRED TAXES RESERVE:
  Year ended December 31, 1996........     $    ---        $    ---      $   ---      $     ---        $    ---
  Year ended December 31, 1995........        2,519             ---      (2,519)            ---             ---
  Year ended December 31, 1994........        4,490             ---      (1,971)            ---           2,519
ORIGINATED LOAN SERVICING
   RESERVE:
  Year ended December 31, 1996........     $  2,552        $  1,537      $   ---      $     ---        $  4,089
  Year ended December 31, 1995........          ---           3,517          ---           (965)          2,552
  Year ended December 31, 1994........          ---             ---          ---            ---             ---

</TABLE>