FORM 10-Q

Securities and Exchange Commission

Washington, D. C.  20549

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934

For Quarter Ended: September 30, 2001

Commission File Numbers:  2-97573, 33-12626 and 33-19023

 

NATIONAL MORTGAGE ACCEPTANCE CORPORATION

(Exact name of registrant as specified in its charter)

	Virginia	54-1294217

	(State or other Jurisdiction	(I.R.S. Employer

	of incorporation)	Identification number)

909 East Main Street

P.O. Box 1575

Richmond, Virginia

(Address of principal executive offices)

23218

(Zip Code)

(804) 775-7904

(Registrant's telephone number, including area code)

 

	Indicate by checkmark 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 of time 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

			Class A Common Stock:		730 shares

			Class B Common Stock:		1,665 shares

 

 
**Part I:	FINANCIAL INFORMATION**
September 30, 2001

Item 1.	Financial Statements
		Attached as Appendix A.

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of
		Operations
		Attached as Appendix B.
**Part II:	OTHER INFORMATION**
Item 1.	Legal Proceedings - None

Item 2.	Changes in Securities - None

Item 3.	Defaults on Senior Securities - None

Item 4.	Submission of Matters to Vote of Security Holders - Information regarding election of directors by the registrant's voting shareholders previously reported in registrant's report on Form 10-K for its year ending December 31, 2000, as filed April 5, 2001.  There were no other matters submitted to a vote of security holders during the quarter.

Item 5.	Other Information - None

Item 6.	Exhibits and Reports on Form 8-KThere were no reports on Form 8-K filed during the 	

		quarter.  Exhibits  See index to exhibits.

SIGNATURES

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

			**	NATIONAL MORTGAGE ACCEPTANCE CORPORATION**
				(Registrant)

 

 

				By:  	______________________________________________

					Randall B. Saufley

					Secretary/Treasurer

					Principal financial officer and duly authorized officer
**Date:		November 14, 2001

 

EXHIBIT INDEX**
2.	Not Applicable.

4.1	Indenture dated as of May 1, 1985 ("Indenture") between NMAC and Texas Commerce Bank National Association as trustee ("Trustee"), previously filed as Exhibit 4.1 to Amendment No. 1 to NMAC's Registration Statement on Form S-11, Registration No. 2-97573 and incorporated by reference.

4.2	General Supplement relating to Subsequent Series dated as of January 1, 1987, previously filed as Exhibit to NMAC's Form 8-K filed on February 10, 1985, and incorporated by reference.

4.3	Series Supplement to the Indenture, dated as of July 1, 1985, relating to Series 1985-A Bonds, previously filed as Exhibit 4 to NMAC's Form 8-K filed on July 23, 1985, and incorporated by reference.

4.4	Series Supplement to the Indenture, dated as of January 20, 1987, relating to Series B Bonds, previously filed as Exhibit 4.3 to NMAC's Form 8-K filed on February 10, 1987, and incorporated by reference.

4.5	Series Supplement to the Indenture, dated as of March 20, 1987, relating to Series C Bonds, previously filed as Exhibit 4.3 to NMAC's Form 8-K filed on April 8, 1987, and incorporated by reference.

4.6	Series Supplement to the Indenture, dated as of October 30, 1987, relating to Series D Bonds, previously filed as Exhibit 4.3 to NMAC's form 8-K filed on November 12, 1987, and incorporated by reference.

4.7	Form of Second General Supplement to Indenture relating to Subsequent Series previously filed as Exhibit 4.4 to NMAC's Post-Effective Amendment No. 1 on Form S-3 to S-11 Registration No. 33-19023 and incorporated by reference.

11.	Not applicable.  Information in Appendix A.

15.	Not applicable.

18.	Not applicable.

19.	Not applicable.

20.	Not applicable.

23.	Not applicable.

24.	Not applicable.
Not applicable.

Not applicable.

 

 

 

 

 
**APPENDIX A (1/4)
Consolidated Statements of Financial Condition**NATIONAL MORTGAGE ACCEPTANCE CORPORATION
September 30, 2001
December 31, 2000
(unaudited)**ASSETS
  Cash
          $
24,254
       $
49,388
  Trading securities, at fair value
86,817
82,220
  Loans receivable from affiliates
0
6,477,570
  Accrued interest receivable
    from affiliates
0
364,363
  Other assets
122,827
138,116
                     TOTAL ASSETS
          $
233,898
       $
7,111,657**LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
     Bonds payable
          $
0
       $
6,477,570
     Accrued interest payable
0
364,363
     Other liabilities, principally to affiliates
32,845
59,377
                     TOTAL LIABILITIES
32,845
6,901,310**SHAREHOLDERS' EQUITY
  Common stock; $1 par value:
    Class A (without right to dividend)--

      Authorized 7,500 shares, issued and
      Outstanding 730 shares
730
730
    Class B (non-voting)-- authorized
      7,500 shares, issued and outstanding
      1,665 shares
1,665
1,665
  Paid-in capital
182,565
182,565
  Retained earnings
16,093
25,387
                     SHAREHOLDERS' EQUITY
201,053
210,347**TOTAL LIABILITIES AND**SHAREHOLDERS' EQUITY
          $
233,898
       $
7,111,657
The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Operations and Retained Earnings**NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Three Months Ended
Nine Months Ended
September 30,
September 30,
2001
2000
2001
2000
                (unaudited)
(unaudited)**REVENUES
  Interest on loans 
 $
0
 $
182,182
    $
322,143
 $
598,997
  Other interest
1,672
850
4,196
3,787
  Management fees
11,250
14,750
45,211
48,174
  Net unrealized securities trading gains
309
-1,449
556
-8,839
13,231
196,333
372,106
642,119**COSTS AND EXPENSES
  Interest on bonds
0
182,182
322,143
598,997
  Management fees
11,250
14,750
45,211
48,174
  Other
4,317
4,033
16,386
21,550
15,567
200,965
383,740
668,721
NET LOSS
  BEFORE INCOME TAXES
-2,336
-4,632
-11,634
-26,602

INCOME TAX BENEFIT
-470
-919
-2,340
-5,344**NET LOSS
-1,866
-3,713
-9,294
-21,258

RETAINED EARNINGS AT
  BEGINNING OF PERIOD
17,959
34,447
25,387
51,992

RETAINED EARNINGS AT
  END OF PERIOD
 $
16,093
 $
30,734
16,093
 $
30,734**LOSS PER SHARE
 $
-0.78
 $
-1.55
-3.88
 $
-8.88
                                  The accompanying notes are an integral part of these financial statements.**APPENDIX A (3/4)
Consolidated Statements of Cash Flows**NATIONAL MORTGAGE ACCEPTANCE CORPORATION
Nine Months Ended
Nine Months Ended
September 30, 2001
 September 30, 2000
(unaudited)**Cash flows from operating activities:
  Net loss
$
       -9,294
$
-21,258
  Adjustments to reconcile net
   income to net cash provided by (used for)

   operating activities:
    Trading securities
-4,597
73,147
    Cash and related investments 
     restricted - Series 1985-A

    Decrease in accrued interest receivable
     from affiliates
364,363
295,044
     Decrease in accrued interest payable
-364,363
-295,044
    Other assets
15,289
-58,531
    Other liabilities, principally
     to affiliates
-26,532
17,551

           Total adjustments
-15,840
32,167
   Net cash (used for) provided by
    operating activities
-25,134
10,909
**Cash flows from investing activities:
  Payments received on loans to
       Affiliates
6,477,570
2,006,442**Cash flows from financing activities:
  Payments on bonds payable
-6,477,570
-2,006,442
**Net (decrease) increase in cash
-25,134
10,909
Cash at beginning of period
49,388
19,308

Cash at end of period
$
24,254
$
30,217

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

 

 
** 

APPENDIX A (4/4)****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS****NATIONAL MORTGAGE ACCEPTANCE CORPORATION**
September 30, 2001

 
**NOTE A (Unaudited)**
	These financial statements should be read in conjunction with the financial statements and notes thereto in National Mortgage Acceptance Corporation's ("NMAC") Annual Report for the year ended December 31, 2000.  The financial statements for the nine months ended September 30, 2001, include all adjustments necessary for a fair presentation of the results of operations, financial position, and cash flows for the interim periods.  These amounts are not necessarily indicative of results for a full year.  The Board of Directors of NMAC authorized and directed to cause the outstanding Bonds to be redeemed in whole, but not in part, on the July 1, 2001 Bond Payment Date, all as provided and permitted under the Indenture dated as of July 1, 1985 and as amended.
**NOTE B (New Accounting Pronouncements)**
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, *Accounting for Derivative Instruments and Hedging Activities.*This statement replaces existing pronouncements and practices with a single, integrated accounting framework for derivatives and hedging activities requiring companies to formally document, designate, and assess the effectiveness of transactions that receive hedge accounting.  During 1999, the FASB issued SFAS No. 137, which deferred the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000.  In June 2000, the FASB issued SFAS No. 138, *Accounting for Certain Derivative Instruments and Certain Hedging Activities,*which amends SFAS No. 133.  SFAS No. 138 addresses a limited number of issues related to the implementation of SFAS No. 133.  On January 1, 2001, the Company adopted SFAS No. 133, as amended.  The adoption had no effect on the Company's financial position or results of operations.

	In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities."  This statement revises criteria for accounting for securitizations, other financial-asset transfers and collateral.  The statement is effective for reporting periods beginning after September 30, 2001.  However, certain disclosure provisions are effective for fiscal years ending after December 15, 2000.  On April 1, 2001, the company adopted SFAS No. 140. The adoption of this statement did not have a material effect on the Companys consolidated financial statements

	In July of 2001, the FASB issued Statements of Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141), and No. 142, "Goodwill and Other Intangible Assets" (SFAS 142).  SFAS 141 establishes accounting and reporting standards for business combinations.  This Statement eliminates the use of the pooling-of-interest method of accounting for business combinations, requiring future business combinations to be accounted for using the purchase method of accounting.  Additionally, SFAS 141 enhances the disclosures related to business combinations and requires that all intangible assets acquired in a business combination be reported separately from goodwill.  These intangible assets must then be assigned to a specifically identified reporting unit and assigned a useful life.  The provisions of this Statement apply to all business combinations initiated after June 30, 2001.  This Statement also applies to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001, or later.  It does not appear that the Statement will have a material impact on the Company's financial position or results of operations.

	SFAS 142 establishes accounting and reporting standards for goodwill and other intangible assets.  With the adoption of this Statement, goodwill is no longer subject to amortization over its estimated useful life.  Rather, goodwill will be subject to at least an annual assessment for impairment by applying a two step fair-value based test.  Additionally, SFAS 142 enhances the disclosures related to goodwill and intangible assets.  NMAC does not currently have any goodwill therefore this Statement would not have an impact on the Company's financial position or results of operations.  

 

 

 
**APPENDIX   B

TO FORM 10-Q****Management's Discussion and Analysis of Financial Condition and Results of Operations****NATIONAL MORTGAGE ACCEPTANCE CORPORATION**
September 30, 2001

	During the quarter ended September 30, 2001, National Mortgage Acceptance Corporation ("NMAC") did not issue any new series of its TIMCO (Thrift Industry Mortgage Collateralized Obligation) or Mortgage Collateralized Obligation Bonds.  

	On July 1, 2001, NMAC caused all of its issued and outstanding Thrift Industry Mortgage Collateralized Obligation (TIMCO) Bonds, Series 1985-A (FHMLC Certificates) (the "1985-A Bonds") to be redeemed.  The redemption of the Series 1985-A Bonds was effected through the provisions of the Indenture and the Series Supplement for the 1985-A Bonds, which permitted the 1985-A Bonds to be redeemed, in whole but not in part, on any Series 1985-A Bond Payment Date, commencing with the July 1, 2001 Bond Payment Date for the Series 1985-A Bonds.  Moneys to effect the redemption of the Series 1985-A Bonds were obtained by NMAC through its sale of the Funding Agreements pledged to secure the Series 1985-A Bonds to BB&T Capital Markets, a division of Scott Stringfellow, Inc., at a price in excess of the amounts required to effect the redemption of the Series 1985-A Bonds on July 1, 2001.  Sale of the Funding Agreements securing the Series 1985-A Bonds in connection with the July 1, 2001 redemption resulted in NMAC not receiving an interest payment on the loans evidenced by the Funding Agreements.  Offsetting this reduction in revenues for the period ending September 30, 2001, is an elimination of the costs to NMAC represented by the interest on the Series 1985-A Bonds.

	During the nine (9) month period ending, September 30, 2001, NMAC revenues were $372,106 which consisted primarily of Management Fees received for the on-going administration of one outstanding Bond Series: Series D Bonds (GNMA Certificates).   

	NMAC has caused an election to be made under the Internal Revenue Code of 1986, as amended (the "Code"), to have the Trust Estate for the Series D Bonds taxed as a separate real estate mortgage investment conduit (a "REMIC"), in which the Series D Bonds are "regular interests," as defined in the Code, with respect to the REMIC.  Other than its on-going fees for administration of the Series D Bond REMIC, NMAC has no future economic benefit in the segregated asset pool comprising of the Series D Bond REMIC.  The "residual interest" in the Series D Bond REMICs was sold by NMAC for cash in 1987.  Accordingly, neither the collateral for the Series D Bonds nor the Series D Bonds are recorded as assets or liabilities, respectively, of NMAC.  The interest income on the collateral for, and the related interest expense on, the Series D Bonds will be recorded only within the Series D Bond REMIC.  Neither the interest income nor the related interest expense on REMIC will have an impact on NMAC's financial statements.

	NMAC has no salaried employees and has entered into management and administrative service agreements with Scott & Stringfellow, Inc. (formerly Craigie Incorporated), an affiliate of NMAC and a wholly-owned subsidiary of BB&T Corporation, pursuant to which Scott & Stringfellow, Inc. (S&S, Inc.) provides NMAC with administrative, accounting and clerical services, office space and the use of the service mark "TIMCO" for the registrant's Bonds.  Under these agreements, S&S, Inc. receives fees from NMAC in connection with each funding agreement executed between NMAC and the participating borrowers and with respect to the residual interests with respect to the registrant's Series D Bonds.  Fees paid to NMAC by the holders of the residual interest with respect to its Series D Bonds are expected by NMAC to be sufficient to provide for all on-going costs and expenses with respect to the outstanding Series of its Bonds.  NMAC therefore anticipates that it will have no additional cash or liquidity requirements with respect to its obligations under any outstanding Series of its Bonds.  Payments under the management and administrative services agreements between NMAC and S&S, Inc. are not expected to exceed the amount received by NMAC as on-going fees paid to it by participating borrowers under their funding agreements and/or holders of the residual interest with respect to the Series D REMIC Bonds.

	With respect to certain of its administration duties for the Series D REMIC, NMAC has contracted with Asset Investors, Inc. (formerly Financial Asset Management Corporation and M.D.C. Consulting, Inc.).  Amounts due Asset Investors, Inc. for services rendered are paid from amounts received by NMAC for administrative services from holders of the Series D REMIC residual interest and are less than the gross amount payable by such holders to NMAC.

	On September 17, 1999, NMAC offered to subscribe to 1,000 shares of the Common Stock ("Stock") of National Mortgage Securities Corporation ("NMSC") and agreed, in consideration therefore, to transfer cash in the amount of $10,000 to NMSC.  NMAC also represented that the Stock would be held for investment and not for the purpose of distribution or resale.  NMAC transferred cash in December 1999 and recorded an investment in subsidiary on its books. This investment is included in "Other Assets" on the Balance Sheet for December 31, 1999 and subsequent quarters.  NMSC is a wholly owned subsidiary of NMAC.

.

NMSC was formed to purchase or otherwise acquire, own, hold, pledge, finance, transfer, assign and otherwise deal in or with mortgage assets (including mortgage loans), mortgage-backed securities, asset-backed securities, mortgage collateralized obligations, other interests in real estate, and any combination of the foregoing, including, but not limited to, (1) mortgage assets secured by senior or subordinate liens on residential property, (2) participation interests in mortgage assets, (3) pass-through, mortgage-backed certificates as to which Federal National Mortgage Association guarantees the timely payment of interest at the pass-through rate and the timely payment of principal, and other securities as dictated in NMSCs Articles of Incorporation.  NMSC has no salaried employees and its officers and directors also hold offices in NMAC. There was no business activity in NMSC during the period. 

	As of September 30, 2001, NMAC's assets were $233,898 including $111,071 in unrestricted cash and trading securities.  This cash and security balance, plus interest earnings from the investment thereof, is available to pay NMAC's annual operating expenses.

 

 

 

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