FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

          [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES ACT OF 1934

                  For the quarterly period ended June 30, 2000

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES ACT OF 1934

                         Commission File Number: 1-7614
                          -----------------------------

                              PMCC FINANCIAL CORP.
             (Exact Name of Registrant as Specified in its Charter)


           Delaware                                             11-3404072
(State or other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)

                               3 Expressway Plaza
                           Roslyn Heights, N.Y. 11577
              (Address of Principal Executive Offices and Zip Code)

                                 (516) 625-3000
              (Registrant's telephone number, including area code)

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

         Yes   X                No  ________

Number of shares outstanding of the issuer's Common Stock, par value $.01 per
share, as of August 8, 2000:  3,707,000 shares.

<PAGE>
                              PMCC FINANCIAL CORP.

                                    FORM 10-Q

                                TABLE OF CONTENTS
                                -----------------

                                                                         Page No
                                                                         -------

Part I - Financial Information

Item 1.  Financial Statements:

         Consolidated Statements of Operations (Unaudited)
             Three Months Ended June 30, 2000 and 1999                       3
             Six Months Ended June 30, 2000 and 1999                         4

         Consolidated Statements of Financial Condition (Unaudited)          5
             June 30, 2000 and December 31, 1999

          Consolidated Statements of Cash Flows (Unaudited)                  6
             Six Months Ended June 30, 2000 and 1999

         Notes to Consolidated Financial Statements (Unaudited)             7-11


Item 2.  Management's Discussion and Analysis of Financial Condition       12-22
         and Results of Operations

Part II -  Other Information                                               23-24

Signatures                                                                    25

Exhibit Index

<PAGE>
                         Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                      PMCC FINANCIAL CORP. and SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                            Three Months Ended June 30,
                                                                            ---------------------------
                                                                                2000              1999
                                                                                ----              ----
<S>                                                                       <C>             <C>
Revenues:
Sales of residential rehabilitation properties                            $  4,528,914    $ 10,037,429
Gains on sale of mortgage loans, net                                           563,448       4,078,815
Loss on sales of delinquent loans                                             (862,000)           --
Interest earned                                                                428,266       1,036,909
                                                                          ------------      ----------
                                                                             4,658,628      15,153,153
Expenses:
Costs of sales, residential rehabilitation properties                        4,715,422       9,151,254
Compensation and benefits                                                    1,458,754       2,874,131
Interest expense                                                               376,225       1,018,959
Expenses resulting from Investigation (Note 7)                                 345,644            --
Other general and administrative                                             1,050,707       1,207,836
                                                                          ------------      ----------
                                                                             7,946,752      14,252,180


(Loss) income before income tax (benefit) expense                           (3,288,124)        900,973
Income tax (benefit) expense                                                   (52,188)        369,000
                                                                          ------------      ----------
         Net  (loss) income                                               $ (3,235,936)   $    531,973
                                                                          ============    ============


Net (loss) income per share of common stock-basic                         $      (0.87)     $     0.14
                                                                          ============      ==========

Net (loss) income per share of common stock-diluted                       $      (0.87)     $     0.14
                                                                          ============      ==========

Weighted average number of shares and
   share equivalents outstanding-basic                                       3,707,000       3,724,800
                                                                             =========       =========

Weighted average number of shares and
   share equivalents outstanding-diluted                                     3,707,000       3,759,146
                                                                             =========       =========

</TABLE>

See accompanying notes to unaudited consolidated financial statements.
<PAGE>
                      PMCC FINANCIAL CORP. and SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                             Six Months Ended June 30,
                                                                             -------------------------
                                                                               2000              1999
                                                                               ----              ----
<S>                                                                       <C>             <C>
Revenues:
Sales of residential rehabilitation properties                            $ 14,451,115    $ 18,582,407
Gains on sale of mortgage loans, net                                         1,650,433       7,886,718
Loss on sales of delinquent loans                                             (900,000)           --
Interest earned                                                                999,152       2,356,344
                                                                          ------------      ----------
                                                                            16,200,700      28,825,469
Expenses:
Costs of sales, residential rehabilitation properties                       14,188,353      16,955,448
Compensation and benefits                                                    3,350,558       5,604,762
Interest expense                                                             1,072,179       2,198,915
Expenses resulting from Investigation (Note 7)                               1,490,900            --
Other general and administrative                                             2,083,665       2,363,480
                                                                             ---------       ---------
                                                                            22,185,655      27,122,605
                                                                            ----------      ----------

(Loss) income before income tax (benefit) expense                           (5,984,955)      1,702,864
Income tax (benefit) expense                                                (1,161,435)        698,000
                                                                          ------------      ----------
         Net  (loss) income                                               $ (4,823,520)   $  1,004,864
                                                                          ============    ============

Net (loss) income per share of common stock-basic                         $      (1.30)     $     0.27
                                                                          ============      ==========

Net (loss) income per share of common stock-diluted                       $      (1.30)     $     0.27
                                                                          ============      ==========

Weighted average number of shares and
   share equivalents outstanding-basic                                       3,707,000       3,724,800
                                                                             =========       =========

Weighted average number of shares and
   share equivalents outstanding-diluted                                     3,707,000       3,759,146
                                                                             =========       =========
</TABLE>


See accompanying notes to unaudited consolidated financial statements.
<PAGE>
                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                 Consolidated Statements of Financial Condition


<TABLE>
<CAPTION>
                                                                          Unaudited        Audited
                                                                           June 30,      December 31,
                                                                             2000            1999
                                                                             ----            ----
<S>                                                                     <C>             <C>
Assets
Cash and cash equivalents                                               $     57,437    $    214,957
Restricted cash                                                                 --           500,000
Mortgage loans held for sale, net                                         14,739,138      36,666,397
Mortgage loans held for investment, net                                    1,225,229       3,112,179
Receivable from sales of loans                                                  --         4,300,279
Accrued interest and other receivables, net                                2,211,914       1,521,756
Residential rehabilitation properties, net                                 2,764,137      15,189,753
Furniture, fixtures & equipment, net                                       1,065,912       1,169,327
Prepaid expenses and other assets                                            847,819         870,875
                                                                        ------------      ----------

Total assets                                                            $ 22,911,586    $ 63,545,523
                                                                        ============    ============

Liabilities and shareholders' equity
Liabilities:
Notes payable-principally warehouse lines of credit                     $ 15,816,759    $ 50,584,370
Deferred income taxes                                                           --           333,000
Accrued expenses and other liabilities                                       785,941       1,531,374
                                                                        ------------      ----------

Total liabilities                                                         16,602,700      52,448,744
                                                                          ----------      ----------

Shareholders' equity
Common stock                                                                  37,500          37,500
Additional paid-in capital                                                10,952,910      10,917,283
Retained (deficit) earnings                                               (4,427,053)        396,467
Treasury stock                                                              (254,471)       (254,471)
                                                                            --------        --------

Total  shareholders' equity                                                6,308,886      11,096,779
                                                                           ---------      ----------

Total liabilities and shareholders' equity                              $ 22,911,586    $ 63,545,523
                                                                        ============    ============
</TABLE>


See accompanying notes to unaudited consolidated financial
<PAGE>
                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Six months ended June 30,
                                                                                     -------------------------
                                                                                        2000             1999
                                                                                        ----             ----
<S>                                                                                <C>             <C>
Cash flows from operating activities:
Net  (loss) income                                                                 $ (4,823,520)   $  1,004,864
    Adjustments to reconcile net (loss) income to net cash provided by
    operating activities:
         Residential rehabilitation properties (exclusive of cash paid
         directly to/by independent contractors):
           Contractual fees received                                                   (262,762)     (1,626,959)
           Proceeds from sales of properties                                         14,451,115      18,582,407
           Costs of properties acquired                                              (1,762,737)    (16,757,616)
         Depreciation and amortization                                                  180,741         124,675
         Increase in interest and other receivables                                    (690,158)       (585,785)
         Decrease in mortgage loans held for sale and investment, net                23,814,209      21,752,245
         Decrease in receivable from sales of loans                                   4,300,279      14,202,325
         Decrease (increase) in prepaid expenses and other assets                        23,056        (467,860)
         Decrease in deferred taxes payable                                            (333,000)       (307,000)
         (Decrease) increase in accrued expenses and other liabilities                 (745,433)        622,481
                                                                                       --------         -------

         Net cash provided by operating activities                                   34,151,790      36,543,777
                                                                                     ----------      ----------

Cash flows from investing activities:
         Purchase of furniture and equipment                                            (41,699)        (86,023)
                                                                                        -------         -------
Net cash used in investing activities                                                   (41,699)        (86,023)
                                                                                        -------         -------

Cash flows from financing activities:
         Net decrease in notes payable-warehouse lines of credit                    (34,767,611)    (35,073,774)
         Net decrease in restricted cash                                                500,000            --
         Net decrease in due to affiliates                                                 --        (1,187,998)
         Distributions to S corporation shareholders                                       --          (277,700)
                                                                                     ----------        --------

Net cash used in financing activities                                               (34,267,611)    (36,539,472)
                                                                                    -----------     -----------

Net increase (decrease) in cash and cash equivalents                                   (157,520)        (81,718)

Cash and cash equivalents at beginning of period                                        214,957       3,596,002
                                                                                        -------       ---------

Cash and cash equivalents at end of period                                         $     57,437    $  3,514,284
                                                                                   ============    ============
Supplemental disclosures of cash flow  information:
         Cash paid during the period for:
          Interest                                                                 $  1,758,115    $  2,270,757
                                                                                   ============    ============
          Income taxes                                                             $     11,190    $     55,000
                                                                                   ============    ============
          Loans transferred from mortgage loans held for sale to held for
           Investment, net                                                         $    470,100    $    290,737
                                                                                   ============    ============

</TABLE>

See accompanying notes to unaudited  consolidated financial statements


<PAGE>
                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000
                                   (Unaudited)

1.   Basis of Presentation

          The  unaudited   consolidated  financial  statements  included  herein
     reflect all adjustments,  which are, in the opinion of management necessary
     for a fair  presentation  of the  Company's  financial  condition as of the
     dates  indicated and the results of operations for the periods  shown.  All
     such  adjustments  are of a  normal  recurring  nature.  In  preparing  the
     accompanying  consolidated financial statements,  management is required to
     make estimates and assumptions  that reflect the reported amounts of assets
     and liabilities as of the date of the consolidated  statements of financial
     condition  and of income and  expenses  for the  periods  presented  in the
     consolidated  statements of  operations.  The results of operations for the
     three and six months ended June 30, 2000 are not necessarily  indicative of
     the results of  operations  to be expected  for the  remainder of the year.
     Certain  information and note  disclosures  normally  included in financial
     statements  prepared  in  accordance  with  generally  accepted  accounting
     principles  have been  omitted  pursuant  to rules and  regulations  of the
     Securities and Exchange Commission.

          These unaudited  consolidated  financial  statements should be read in
     conjunction with the audited  consolidated  financial  statements and notes
     thereto included in the Company's Form 10-K for the year ended December 31,
     1999.

          Certain reclassifications have been made to conform the prior period's
     presentation to the current presentation.

2.   Initial Public Offering

          On  February  18,  1998 the  shareholders  of Premier  Mortgage  Corp.
     ("Premier")  exchanged all of their outstanding  shares of common stock for
     2.5 million shares of the Company.  Following  this  exchange,  the Company
     completed an initial  public  offering of 1.25 million new shares of common
     stock at a price of $9 per share.  The Company  received  gross proceeds of
     $11.25 million and net proceeds of approximately $9.2 million.

          At the  time  of the  exchange,  the  Company  agreed  to  make a cash
     distribution  to its existing  shareholders of $2.7 million which was equal
     to a  portion  of  the  Company's  undistributed  S  corporation  earnings.
     Approximately $1.9 million of this distribution was paid during the quarter
     ended  March 31,  1999 of which $1  million  was from the  proceeds  of the
     initial  public  offering.  The  balance  of the  distribution  was paid in
     installments,  including  interest on the undistributed  balance at 10% per
     annum, through February 18, 1999. The remaining undistributed  subchapter S
     corporation  earnings of approximately  $1.0 million were reclassified from
     retained earnings to additional paid in capital.


3.   Income Taxes

          The Company  accounts for income taxes under the  liability  method as
     required by SFAS No. 109.

4.   Earnings Per Share of Common Stock

          Basic EPS is  determined  by dividing net income for the period by the
     weighted  average  number  of common  shares  outstanding  during  the same
     period.  Diluted EPS reflects the  potential  dilution  that could occur if
     securities  or other  contracts  to issue  common  stock were  exercised or
     converted  into common  stock or resulted in the  issuance of common  stock
     which  would then share in the  earnings  of the  Company.  The  additional
     number of shares  included in the  calculation  of diluted EPS arising from
     issued stock  options and warrants was 34,346 shares for both the three and
     six months ended June 30, 1999.  There was no dilution for either the three
     months or six months ended June 30, 2000.

5.   Notes Payable

     At June 30, 2000 and 1999, substantially all of the mortgage loans held for
     sale and investment, receivable from sales of loans and certain residential
     rehabilitation  properties  were  pledged  to secure  notes  payable  under
     warehouse lines of credit  agreements.  The notes are repaid as the related
     mortgage  loans  or  residential  rehabilitation  properties  are  sold  or
     collected.

     On  February  28,  2000,  the  Company  entered  into a  Master  Repurchase
     Agreement  that provides the Company with a warehouse  facility (the "IMPAC
     Line")  through IMPAC  Warehouse  Lending Group  ("IMPAC").  The IMPAC Line
     provides  a  committed  warehouse  line of  credit of $20  million  for the
     Company's  mortgage  originations  only.  The IMPAC  Line is secured by the
     mortgage  loans  funded  with the  proceeds  of such  borrowings.  Interest
     payable is  variable  based on the Prime Rate as posted by Bank of America,
     N.A.  plus  0.50%.  The  IMPAC  Line has no stated  expiration  date but is
     terminable by either party upon written notice.

     The Company's  warehouse lines of credit with Bank United and GMAC/RFC were
     both paid in full in June  2000.  The  expiration  dates for the  Company's
     warehouse  line of credit  with Chase Bank of Texas,  National  Association
     ("Chase")  and PNC Bank  ("PNC")  is in the  process of being  extended  to
     August 15, 2000. The Company  anticipates paying down the entire facilities
     or renewing  the  extensions  under  similar  terms and  conditions  as the
     extensions  which have  previously been granted.  The total  outstanding on
     this line at August 11, 2000 is approximately $1,243,000.

6.   Related-Party Transactions

     On June 8, 2000, the Company borrowed $275,000 from a company  wholly-owned
     by Robert Friedman, owner of 17% of the Company's outstanding stock and the
     father of Ronald Friedman,  the Company's  President and CEO currently on a
     leave of  absence.  This loan is  evidenced  by a  promissory  note due and
     payable in one year. The interest rate on the note is 16% per annum payable
     monthly. The note is secured by properties and a mortgage which the Company
     owns.

     A relative of Ronald  Friedman has an economic  interest in a rehab partner
     for the purchase and sale of rehabilitation properties with a subsidiary of
     PMCC. At June 30, 2000,  the subsidiary  owned $760,100 of properties  with
     outstanding  borrowings  on  the  Company's  warehouse  lines  of  $573,800
     relating to these properties.

7.   Litigation

     The U.S.  Attorney's  Office for the  Eastern  District  of New York ("U.S.
     Attorney") is conducting an investigation  (the  "Investigation")  into the
     allegations  asserted in a criminal complaint against Ronald Friedman,  the
     former Chairman of the Board,  President and Chief Executive Officer of the
     Company,  and a loan officer formerly employed by the Company.  On December
     21,  1999,  agents of the Office of the  Inspector  General  for the United
     States Department of Housing and Urban Development  ("HUD") executed search
     and arrest warrants at the Roslyn offices of the Company. The warrants were
     issued on the basis of a federal criminal  complaint  ("Complaint"),  which
     charged  that  Ronald   Friedman  and  the  loan  officer   knowingly   and
     intentionally  made,  uttered or published  false  statements in connection
     with loans to be insured by HUD.

     In response to the allegations  against the loan officer and Friedman,  the
     Company  engaged  the legal  services of Dorsey & Whitney LLP to conduct an
     internal  investigation into the alleged misconduct and to prepare a report
     discussing  the  findings of the  internal  investigation.  As part of this
     internal investigation,  the Company worked closely and in cooperation with
     HUD and the U.S.  Attorney.  In addition,  key  employees,  including  loan
     officers, loan processors,  underwriters and managers, were interviewed. An
     audit also was  conducted of over  one-third of all 1999 FHA loans in order
     to assess  whether  the files  comported  with the HUD  guidelines  for FHA
     loans.

     A  preliminary  report  detailing  Dorsey  &  Whitney's  investigation  and
     findings  was  presented to the  Company's  Board of Directors on April 12,
     2000. A written report was issued on April 14, 2000.  The report  concludes
     that while there appears to be support for the  allegations  leveled at the
     former loan officer,  there is no evidence that the  misconduct  alleged in
     the complaint was systemic at the Company. Rather, the findings support the
     conclusion that the alleged misconduct was an isolated  occurrence,  not an
     institutional  practice.  The  available  evidence did not permit  Dorsey &
     Whitney to reach a definitive  conclusion  concerning  the charges  pending
     against Ronald Friedman.  The  investigation,  comprised of interviews with
     PMCC employees and an extensive review of mortgage loan files,  revealed no
     independent  evidence  tending to support the allegations  against Friedman
     contained in the criminal complaint.

     While the Company  believes that it has not committed  any  wrongdoing,  it
     continues  to  cooperate  fully  with the U.S.  Attorney's  Office and HUD.
     However,  it  cannot  predict  the  duration  of the  Investigation  or its
     potential  outcome.  Although the Company does not anticipate being charged
     in connection  with this  investigation,  in the event that the Company was
     charged,  it intends to vigorously  defend its position.  While the Company
     does not  anticipate its  occurrence,  in the event that it was to lose its
     ability to originate and sell FHA loans as result of the Investigation, the
     Company does not believe that the financial  effect on the Company would be
     material.  The Company  originates  approximately  7% of its  current  loan
     volume through FHA products.

     As a result of this investigation,  the Company incurred $1.491 million and
     $346,000 of direct  expenses for the six months and three months ended June
     30, 2000, respectively.  These expenses include legal and professional fees
     incurred in  connection  with the  internal  investigation  of the Company,
     criminal  defense  attorneys and  negotiations of warehouse lines of credit
     amendments.  Also  included  in these  expenses  are bank fees  relating to
     granting  amendments  to the Bank United line of credit and bonuses paid to
     the Company's officers and employees.

8.   Subsequent Event

     On  August  2,  2000,  the  Company  announced  that  Internet   Business's
     International,  Inc.  ("IBUI") is purchasing  all 2,500,000  shares of PMCC
     held by Ronald and Robert  Friedman  in a private  transaction.  IBUI is an
     internet  holding  company that trades  publicly under the symbol "IBUI" on
     the NASDAQ Bulletin Board.

<PAGE>
9.   Supplemental Information

          The  Company's  operations  consist of two  principal  activities  (a)
     mortgage banking and (b) funding the purchase, rehabilitation and resale of
     residential real estate. The following table sets forth certain information
     concerning these activities (in thousands):

                                                          (Unaudited)
                                                   Six Months Ended June 30,
                                                   -------------------------
                                                      2000        1999
                                                      ----        ----
Revenues:
   Residential rehabilitation properties           $ 14,451    $ 18,582
   Mortgage banking                                   1,750      10,243
                                                      -----      ------
                                                    $16,201   $  28,825
                                                    =======   =========
Less: (1)
   Expenses allocable to residential rehabil-
     itation properties (cost of sales, interest
     expense and compensation and benefits)          15,180      17,902
   Expenses allocable to mortgage banking
      (all other)                                     7,006       9,221
                                                      -----       -----
                                                    $22,186   $  27,123
                                                    =======   =========

Operating (Loss) Profit:
     Residential rehabilitation properties             (728)        680
     Mortgage banking                                (5,257)      1,022
                                                     ------       -----
                                                    $(5,985)  $   1,702
                                                    =======   =========

Identifiable Assets  (at June 30, 2000 and
     December 31, 1999, respectively):
     Residential rehabilitation properties          $ 2,764   $  16,294
     Mortgage banking                                20,148      61,332
                                                     ------      ------
                                                    $22,912   $  77,626
                                                    =======   =========

(1) In managing its business,  the Company does not allocate  corporate expenses
other than interest and compensation and benefits to its various activities.

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

Forward-Looking Statements

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for certain  forward-looking  statements.  This Quarterly Report on Form
10-Q may contain forward-looking  statements which reflect the Company's current
views  with  respect  to  future   events  and  financial   performance.   These
forward-looking  statements  are  subject  to certain  risks and  uncertainties,
including  those  identified  below,  which could cause actual results to differ
materially from historical results or those anticipated.  These  forward-looking
statements reflect the Company's current views with respect to future events and
financial performance.  The words "believe," "expect,"  "anticipate,"  "intend,"
"estimate,"  and other  expressions  which  indicate  future  events  and trends
identify  forward-looking  statements.  Readers are cautioned not to place undue
reliance  upon these  forward-looking  statements,  which speak only as of their
dates.  The Company  undertakes no  obligation to publicly  update or revise any
forward-looking  statements,  whether as the result of new  information,  future
events or  otherwise.  The following  factors  among others,  could cause actual
results to differ materially from historical results or those  anticipated:  (1)
the level of demand for  mortgage  credit,  which is affected  by such  external
factors as the level of interest rates,  the strength of various segments of the
economy and demographics of the Company's lending markets;  (2) the direction of
interest rates; (3) the relationship between mortgage interest rates and cost of
funds;  (4) federal  and state  regulation  of the  Company's  mortgage  banking
operations;  (5)  competition  within the  mortgage  banking  industry;  (6) the
Company's  management  of cash  flow and  efforts  to modify  its  prior  growth
strategy;  (7) the  outcome  of  governmental  investigations  and  the  effects
thereof;  (8) the Company's efforts to improve quality control;  and other risks
and  uncertainties  described in the Company's Annual Report on Form 10-K and in
PMCC   Financial   Corp.'s  other  filings  with  the  Securities  and  Exchange
Commission.  Should one or more of these risks or uncertainties materialize,  or
should underlying  assumptions  prove incorrect,  actual outcomes and events may
vary materially from those indicated.

Results of Operations

Quarter Ended June 30, 2000 Compared to Quarter Ended June 30, 1999

General

Due to recent developments regarding the Investigation referred to in "Part II -
Item 1. Legal  Proceedings"  (which recent  developments  were described in more
detail in the Company's Form 10-K for the year ended  December 31, 1999),  along
with a  continuing  significant  reduction in the  mortgage  origination  market
(particularly  in the  Northeast)  caused  by  increasing  interest  rates and a
fall-off  in  mortgage   refinancing,   the  Company   continued  to  experience
significant  losses for the three  months  ended June 30,  2000.  The  following
actions were taken:

     o    staffing at the  Company's  Roslyn  retail  office and  administrative
          offices,  which was reduced in January  2000 from 86  employees to 45,
          was further reduced in June 2000 to 17. In conjunction such reduction,
          the Company has  significantly  reduced its office  space in Roslyn by
          reducing  its current  premises by more than 50%  effective  September
          2000.  PMCC is also  pursuing a sublease  for  approximately  half its
          remaining space.

     o    staffing at the Company's New Jersey and remaining  Florida  wholesale
          locations,  which was reduced in January  2000 from 61 employees to 38
          was  further  reduced in June 2000 to 31. The Florida  locations  have
          also moved to more  cost-efficient  office locations during the second
          quarter of 2000.

     o    the Company continued its initiative to sell the completed residential
          rehabilitation properties on hand as quickly as practicable.

     At the same  time the  above  actions  are  being  taken,  PMCC's  business
strategy is to stabilize and  strengthen  its remaining  areas of business.  The
Company has added new account  executives in both New Jersey and Florida.  It is
anticipated  that  more  than 80% of  mortgage  loan  applications  taken by the
Company in 2000 will be as a result of its wholesale operations.


<PAGE>

Revenues.  The  following  table  sets  forth the  components  of the  Company's
revenues for the periods indicated:

                                                         Quarters Ended June 30,
                                                         -----------------------
                                                         2000            1999
                                                         ----            ----

Sales of residential rehabilitation properties     $  4,528,914      $10,037,429
Gains of sales of mortgage loans, net                   563,448        4,078,815
Loss on sales of delinquent loans                      (862,000)               -
Interest earned                                         428,266        1,036,909
                                                        -------        ---------
Total revenues                                     $  4,658,628      $15,153,153
                                                   ============      ===========

     Revenues from the sale of residential  rehabilitation  properties decreased
$5.5  million,  or 55%, to $4.5 million for the quarter ended June 30, 2000 from
$10.0  million for the quarter  ended June 30, 1999.  The number of  residential
rehabilitation  properties  sold was 31 for the  quarter  ended  June  30,  2000
compared to 64 for the quarter  ended June 30, 1999.  This decrease was a result
of the Company's discontinuance of the acquisition of residential rehabilitation
properties  partly offset by the initiative to sell the completed  properties on
hand as quickly as practicable.

     Gains on  sales of  mortgage  loans  decreased  $3.5  million,  or 85%,  to
$563,000  for the quarter  ended June 30, 2000 from $4.1 million for the quarter
ended June 30, 1999.  This decrease was due to a number of significant  factors.
Mortgage  loan  originations  were  $49.3  million  and $144.4  million  for the
quarters  ended June 30,  2000 and 1999,  respectively.  This 66%  decrease  was
primarily  the  result of a  decline  in retail  originations  arising  from the
decrease  in the  number of  retail  loan  officers,  along  with a  significant
reduction in the mortgage  origination  market  (particularly  in the Northeast)
caused by increasing interest rates and a fall-off in mortgage refinancing.  For
the quarter ended June 30, 2000,  approximately  27% of the  Company's  mortgage
originations were derived from its retail mortgage  operations and approximately
73% from its wholesale operations,  compared to 55% retail and 45% wholesale for
the three months ended June 30, 1999.  Wholesale  loans result in lower revenues
due to broker fees paid of  approximately  1% being  deducted  directly from the
gain on sale,  whereas  retail loan  commissions  are shown on the  statement of
operations as expenses.  Costs per loan for wholesale  loans are generally lower
overall  than  retail.  Replacing  the retail loan volume with  wholesale  loans
reduced gains by approximately $200,000 for the three-months ended June 30, 2000
compared to the three-months  ended June 30, 1999. In 1999, the Company was able
to optimize the margins  received on the sales of loans by hedging  positions in
future sales of Mortgage Backed Securities.  This activity was halted due to the
Investigation  and subsequent  suspension of trading of the Company's stock. For
the quarter ended June 30, 2000, this resulted in  approximately a 0.75% loss in
revenue per loan or $370,000 in total  compared to the  three-months  ended June
30, 1999. Additionally,  in past years, sub-prime loans were generally sold at a
higher per loan margin than  conventional  loans.  Replacing the sub-prime  loan
volume with conventional  loans reduced gains by approximately  $200,000 for the
three-months  ended June 30, 2000  compared to the  three-months  ended June 30,
1999.

     The following  table  summarizes the Company's  mortgage  originations  (in
millions):

                               Quarters Ended June 30,
                               -----------------------
                                   2000       1999
                                   ----       ----
          Conventional          $ 45,729   $ 91,915
          FHA/VA                   3,607     48,581
          Subprime                  --        3,943
                                --------      -----

          Total                 $ 49,336   $144,439
                                ========   ========

     Although there can be no assurance  thereof,  the Company expects  mortgage
originations  to increase and therefore  believes its gains on sales of mortgage
loans will increase.

     The loss on sale of  delinquent  loans for the three  months ended June 30,
2000 was the result of the Company selling at discounted  prices  delinquent and
non-performing  loans  that it  would  normally  maintain  in its  portfolio  to
eventually work out and recover its investment through foreclosure procedures or
refinancing.  In prior  years,  PMCC had  warehouse  lines where they could hold
these loans  throughout the  foreclosure  process.  Bank United  terminated this
portion of their line  immediately  after the  Investigation  began in  December
1999. In order to fulfill  agreements  with its lenders,  the Company  needed to
sell the loans to pay off the  warehouse  lines as well as to meet the Company's
additional cash requirements in the first six months of 2000. These were imposed
by increased  capital  requirements  and  Amendment  Fees for  warehouse  lines,
reduced   warehouse   commitments  and  additional   professional  fees  (legal,
consulting and audit) that were incurred as a result of the Investigation.

     Interest  earned  decreased  $609,000,  or 59%, to $428,000 for the quarter
ended June 30, 2000 from $1.0 million for the quarter ended June 30, 1999.  This
decrease was primarily due to decreased  mortgage  originations  for the quarter
ended June 30, 2000 as compared to the quarter ended June 30, 1999 and sub prime
mortgage  originations which generally are at higher rates and are held for sale
longer than conventional mortgage originations.

Expenses.  The following table sets forth the Company's expenses for the periods
indicated:

                                                         Quarters Ended June 30,
                                                         -----------------------
                                                            2000         1999
                                                            ----         ----

Cost of sales - residential rehabilitation properties   $ 4,715,422  $ 9,151,254
Compensation and benefits                                 1,458,754    2,874,131
Interest expense                                            376,225    1,018,959
Expenses resulting from Investigation                       345,644         --
Other general and administrative                          1,050,707    1,207,836
                                                          ---------    ---------
Total expenses                                          $ 7,946,752  $14,252,180
                                                        ===========  ===========

     Cost of  sales  -  residential  rehabilitation  properties  decreased  $4.5
million,  or 49%, to $4.7 million for the quarter  ended June 30, 2000 from $9.2
million for the quarter ended June 30, 1999. This decrease was the result of the
decrease in the number of  properties  sold in the  quarter  ended June 30, 2000
compared to the quarter ended June 30, 1999.

     Compensation and benefits  decreased $1.4 million,  or 48%, to $1.4 million
for the quarter ended June 30, 2000 from $2.9 million for the quarter ended June
30,1999.  This  decrease  was  primarily  due to  decreased  sales  salaries and
commission, which are based substantially on mortgage loan originations, and the
reductions in staff at the  Company's  Roslyn and New Jersey  locations,  partly
offset by the  personnel  added in Florida as part of the Prime  Mortgage  Corp.
acquisition in July 1999. Total personnel  decreased to 47 employees at June 30,
2000 from 172 at June 30, 1999.

     Interest expense  decreased  $643,000,  or 63%, to $376,000 for the quarter
ended June 30, 2000 from $1.0 million for the quarter ended June 30, 1999.  This
decrease was primarily attributable to the decrease in mortgage originations and
the decrease in the amount of sub-prime mortgage originations that generally are
held on the warehouse lines longer than conventional mortgage originations along
with the decrease in residential  rehabilitation  properties  funded through the
Company's warehouse facility.

     As a result of the  Investigation,  the Company incurred direct expenses of
$346,000  for the  three-month  period  ended  June  30,  2000.  These  expenses
primarily  include legal and  professional  fees incurred in connection with the
internal   investigation  of  the  Company,   criminal  defense   attorneys  and
negotiations  of  warehouse  lines of credit  amendments  and bonuses to Company
employees.

     Other general and  administrative  expense decreased  $157,000,  or 13%, to
$1.1  million  for the  quarter  ended June 30,  2000 from $1.2  million for the
quarter  ended June 30,  1999.  This  decrease  was  primarily  due to decreased
expenses in connection  with the  contraction  in the operations of the Company,
partly offset by increases  incurred in connection with the expansion in Florida
from the Prime acquisition, including rent and facilities expense, telephone and
marketing.

     Although there can be no assurance thereof, the Company believes that, as a
result of certain cost cutting initiatives and contraction of business expansion
in the first and second quarters of 2000, expenses will decrease.

     The net loss of $3.3  million  for the  quarter  ended June 30,  2000 was a
decrease  of $3.8  million  or 718%,  from the net  income of  $532,000  for the
quarter ended June 30, 1999.


Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999

General

Due to developments  regarding the Investigation  referred to in "Part II - Item
1. Legal Proceedings"  (which recent  developments were described in more detail
in the Company's Form 10-K for the year ended  December 31, 1999),  along with a
significant  reduction in the mortgage  origination market  (particularly in the
Northeast)  caused by  increasing  interest  rates and a  fall-off  in  mortgage
refinancing,  many of the Company's growth  initiatives were suspended or closed
down  completely in the six months ended June 30, 2000.  The  following  actions
were taken:

     o    staffing at the  Company's  Roslyn  retail  office and  administrative
          offices  was  reduced  from 86  employees  to 45 in  January  2000 and
          further reduced to 17 in June 2000. In conjunction such reduction, the
          Company  has  significantly  reduced  its  office  space in  Roslyn by
          reducing  its current  premises by more than 50%  effective  September
          2000.  PMCC is also  pursuing a sublease  for  approximately  half its
          remaining space.

     o    all retail  branches  opened  during 1998 and 1999 were closed,  along
          with one wholesale  office  acquired from Prime,  resulting in a staff
          reduction of 36 employees.  This included retail branches in potential
          high growth areas such as Las Vegas, Phoenix and Deerfield Beach which
          were in  start-up  situations  and were  incurring  high  expenses  in
          relation to their current origination volume.

     o    staffing at the Company's New Jersey and remaining  Florida  wholesale
          locations  was reduced  from 61 employees to 38 in January 2000 and to
          31  in  June  2000.   The  Florida   locations   have  moved  to  more
          cost-efficient office locations.

     o    the Company's  web-site was temporary  closed down as was the Internet
          call  center  in  Houston.  As a  start-up  operation,  this  area was
          incurring high expenses in relation to the current origination volume.

     o    the  Company   temporarily   halted  the  acquisition  of  residential
          rehabilitation   properties  and  began  an  initiative  to  sell  the
          completed properties on hand as quickly as practicable.

     At the same  time the  above  actions  are  being  taken,  PMCC's  business
strategy is to stabilize and  strengthen  its remaining  areas of business.  The
Company has added new account  executives in both New Jersey and Florida.  It is
anticipated  that  more  than 80% of  mortgage  loan  applications  taken by the
Company in 2000 will be as a result of its wholesale operations.

Revenues.  The  following  table  sets  forth the  components  of the  Company's
revenues for the periods indicated:

                                                    Six Months Ended June 30,
                                                    -------------------------
                                                     2000             1999
                                                     ----             ----

Sales of residential rehabilitation properties   $ 14,451,115    $ 18,582,407
Gains of sales of mortgage loans, net               1,650,433       7,886,718
Loss on sale of delinquent loans                     (900,000)          --
Interest earned                                       999,152       2,356,344
                                                 ------------    ------------
Total revenues                                   $ 16,200,700    $ 28,825,469
                                                 ============    ============

     Revenues from the sale of residential  rehabilitation  properties decreased
$4.1  million,  or 22%, to $14.5  million for the six months ended June 30, 2000
from  $18.6  million  for the six  months  ended  June 30,  1999.  The number of
residential rehabilitation properties sold was 103 for the six months ended June
30, 2000  compared to 116 for the six months ended June 30, 1999.  This decrease
was a result of the Company's  discontinuance  of the acquisition of residential
rehabilitation  properties partly offset by the initiative to sell the completed
properties  on  hand  as  quickly  as  practicable.   Additionally,  on  certain
properties  sold,  a discount was given from the  original  contract  pricing in
order to expedite the sale due to cash requirements.

     Gains on sales of mortgage loans  decreased  $6.2 million,  or 78%, to $1.7
million  for the six months  ended June 30,  2000 from $7.9  million for the six
months ended June 30,  1999.  This  decrease was due to a number of  significant
factors.  Mortgage loan  originations were $108.8 million and $279.3 million for
the six months ended June 30, 2000 and 1999, respectively. This 61% decrease was
primarily  the  result of a  decline  in retail  originations  arising  from the
decrease  in the  number of  retail  loan  officers,  along  with a  significant
reduction in the mortgage  origination  market  (particularly  in the Northeast)
caused by increasing interest rates and a fall-off in mortgage refinancing.  For
the six months ended June 30, 2000,  approximately 35% of the Company's mortgage
originations were derived from its retail mortgage  operations and approximately
65% from its wholesale operations,  compared to 56% retail and 44% wholesale for
the six months ended June 30, 1999. Wholesale loans result in lower revenues due
to broker fees paid of approximately 1% being deducted directly from the gain on
sale,  whereas retail loan  commissions are shown on the statement of operations
as expenses. Costs per loan for wholesale loans are generally lower overall than
retail.  Replacing the retail loan volume with wholesale  loans reduced gains by
approximately  $375,000 for the six months  ended June 30, 2000  compared to the
six months  ended June 30, 1999.  In 1999,  the Company was able to optimize the
margins  received on the sales of loans by hedging  positions in future sales of
Mortgage Backed  Securities.  This activity was halted due to the  Investigation
and subsequent  suspension of trading of the Company's stock. For the six months
ended June 30, 2000, this resulted in  approximately a 0.75% loss in revenue per
loan or  $815,000  in total  compared  to the six months  ended  June 30,  1999.
Additionally, in past years, sub-prime loans were generally sold at a higher per
loan margin than  conventional  loans.  Replacing the sub-prime loan volume with
conventional  loans  reduced  gains by  approximately  $1.0  million for the six
months ended June 30, 2000 compared to the six months ended June 30, 1999.

     The following  table  summarizes the Company's  mortgage  originations  (in
millions):

                              Six Months Ended June 30,
                              -------------------------
                                2000           1999
                                ----           ----
               Conventional   $ 93,847       $181,358
               FHA/VA           14,980         88,387
               Subprime           --            9,537
                              --------       --------
               Total          $108,827       $279,282
                              ========       ========

     Although there can be no assurance  thereof,  the Company expects  mortgage
originations  to increase and therefore  believes its gains on sales of mortgage
loans will increase.

     The loss on sale of delinquent loans for the six months ended June 30, 2000
was the  result of the  Company  selling at  discounted  prices  delinquent  and
non-performing  loans  that it  would  normally  maintain  in its  portfolio  to
eventually work out and recover its investment through foreclosure procedures or
refinancing.  In prior  years,  PMCC had  warehouse  lines where they could hold
these loans  throughout the  foreclosure  process.  Bank United  terminated this
portion of their line  immediately  after the  Investigation  began in  December
1999. In order to fulfill  agreements  with its lenders,  the Company  needed to
sell the loans to pay off the  warehouse  lines as well as to meet the Company's
additional cash requirements in the first six months of 2000. These were imposed
by increased  capital  requirements  and  Amendment  Fees for  warehouse  lines,
reduced   warehouse   commitments  and  additional   professional  fees  (legal,
consulting and audit) that were incurred as a result of the Investigation.

     Interest earned decreased $1.3 million, or 57%, to $1.0 million for the six
months  ended June 30, 2000 from $2.3  million for the six months ended June 30,
1999. This decrease was primarily due to decreased mortgage originations for the
six months ended June 30, 2000 as compared to the six months ended June 30, 1999
and sub prime mortgage  originations which generally are at higher rates and are
held for sale longer than conventional mortgage originations.
<PAGE>
Expenses.  The following table sets forth the Company's expenses for the periods
indicated:

                                                       Six Months Ended June 30,
                                                       -------------------------
                                                           2000         1999
                                                           ----         ----

Cost of sales - residential rehabilitation properties   $14,188,353  $16,955,448
Compensation and benefits                                 3,350,558    5,604,762
Interest expense                                          1,072,179    2,198,915
Expenses resulting from Investigation                     1,490,900        --
Other general and administrative                          2,083,665    2,363,480
                                                          ---------    ---------
Total expenses                                          $22,185,655  $27,122,605
                                                        ===========  ===========

     Cost of  sales  -  residential  rehabilitation  properties  decreased  $2.8
million,  or 16%, to $14.2  million for the six months  ended June 30, 2000 from
$17.0  million for the six months  ended June 30,  1999.  This  decrease was the
result of the decrease in the number of properties  sold in the six months ended
June 30, 2000 compared to the six months ended June 30, 1999.

     Compensation and benefits  decreased $2.2 million,  or 39%, to $3.4 million
for the six months  ended  June 30,  2000 from $5.6  million  for the six months
ended June 30,1999.  This decrease was primarily due to decreased sales salaries
and commission, which are based substantially on mortgage loan originations, and
the reductions in staff at the Company's Roslyn and New Jersey locations, partly
offset by the  personnel  added in Florida as part of the Prime  Mortgage  Corp.
acquisition in July 1999. Total personnel  decreased to 47 employees at June 30,
2000 from 172 at June 30, 1999.

     Interest  expense  decreased $1.1 million,  or 50%, to $1.1 million for the
six months  ended June 30, 2000 from $2.2  million for the six months ended June
30, 1999.  This decrease was primarily  attributable to the decrease in mortgage
originations and the decrease in the amount of sub-prime  mortgage  originations
that generally are held on the warehouse lines longer than conventional mortgage
originations  along with the decrease in residential  rehabilitation  properties
funded through the Company's warehouse facility.

     As a result of the  Investigation,  the Company incurred direct expenses of
$1.5 million in the six month period ended June 30, 2000. These expenses include
legal  and   professional   fees  incurred  in  connection   with  the  internal
investigation  of the Company,  criminal  defense  attorneys and negotiations of
warehouse lines of credit  amendments.  Also included in these expenses are bank
fees  relating  to  granting  amendments  to the Bank  United line of credit and
bonuses paid to the Company's officers and employees.

     Other general and  administrative  expense decreased  $279,000,  or 12%, to
$2.1  million for the six months  ended June 30, 2000 from $2.4  million for the
six months ended June 30, 1999.  This  decrease was  primarily  due to decreased
expenses in connection  with the  contraction  in the operations of the Company,
partly offset by increases  incurred in connection with the expansion in Florida
from the Prime acquisition, including rent and facilities expense, telephone and
marketing.

     Although there can be no assurance thereof, the Company believes that, as a
result of certain cost cutting initiatives and contraction of business expansion
in the first six months of 2000, expenses will decrease.

     The net loss of $4.8  million for the six months  ended June 30, 2000 was a
decrease of $5.8  million or 580%,  from the net income of $1.0  million for the
six months ended June 30, 1999.

Liquidity and Capital Resources

     The Company's  principal  financing needs consist of funding  mortgage loan
originations and residential rehabilitation properties. To meet these needs, the
Company  currently relies on borrowings under warehouse lines of credit and cash
flow from operations.  The amount of outstanding  borrowings under the warehouse
lines of  credit at June 30,  2000 was $15.8  million.  The  mortgage  loans and
residential  rehabilitation  properties  funded  with  the  proceeds  from  such
borrowings secure the warehouse lines of credit

     On August  7,  1998,  the  Company  entered  into a Senior  Secured  Credit
Agreement  (the  "Chase  Line") with Chase Bank of Texas,  National  Association
("Chase")  and PNC Bank  ("PNC").  The Chase Line  provided a warehouse  line of
credit of $120  million  ($90  million  committed  at August  11,  1998) for its
mortgage originations and residential  rehabilitation  purchases. The Chase Line
is secured by the mortgage loans and residential rehabilitation purchases funded
with the proceeds of such borrowings.  The Company has also pledged the stock of
its  residential  rehabilitation  subsidiaries  as  additional  collateral.  The
Company  is  required  to  comply  with  certain  financial  covenants  and  the
borrowings for  residential  rehabilitation  properties are guaranteed by Ronald
Friedman and Robert  Friedman.  The Chase Line  originally  was set to expire in
August 1999 but was extended  through  November 8, 1999.  Chase and PNC both had
decided to curtail  their  involvement  in  mortgage  warehouse  lending and had
decided not to renew the facility  for that  reason.  The Chase Line was further
extended to December  24,  1999 on a  declining  basis in order to complete  the
funding of all loans and  properties  on the line on  November  8, 1999.  No new
loans or  properties  were added to this line  subsequent  to  November 8, 1999.
Chase and PNC had agreed to continue to extend the line on a specified declining
basis through a series of short-term extensions through July 31, 2000. This line
in the process of being  extended to August 15, 2000.  The balance  remaining on
this line of $1.3 million at July 31, 2000 relates  entirely to the  residential
rehab portfolio.  The Company anticipates paying down the entire facility either
through  sales  of  the  underlying  properties  or by  obtaining  an  alternate
financing  source no later than August 31, 2000.  Interest  payable on the Chase
Line is variable  based on LIBOR plus 1.25% to 2.25%  based upon the  underlying
collateral. Minimal fees were paid for the extensions and there was no change in
the method of calculating interest.

     The Company also  maintained a warehouse  line of credit with GMAC/RFC (the
"RFC Line") of $20  million  that was used  primarily  for  sub-prime  loans and
residential rehabilitation properties. The RFC Line was set to expire on January
31, 2000.  RFC had decided not to renew the warehouse line due to low usage as a
result of the Company's exiting the sub-prime  business and RFC's curtailment of
their  involvement  in  residential  rehabilitation  lending.  RFC had agreed to
continue to extend the line on a declining  basis through a series of short term
extensions,  the most  recent of which  expired on June 15,  2000,  This line of
credit was paid in full in June 2000.

     To replace the  expiring  Chase Line,  the Company  entered into a one-year
Mortgage  Warehousing Loan and Security  Agreement (the "Bank United Line") with
Bank United, a federally  chartered savings bank, as lending bank and agent. The
Bank  United  Line  provided a  warehouse  line of credit of $120  million  ($40
million of which was committed by Bank United and the remainder of which was not
committed)  for  its  mortgage   originations  and  residential   rehabilitation
purchases. The Bank United Line is secured by the mortgage loans and residential
rehabilitation  purchases  funded  with the  proceeds  of such  borrowings.  The
Company  has  also   pledged  the  stock  of  its   residential   rehabilitation
subsidiaries as additional collateral.  Interest payable on the Bank United Line
was  variable  based on LIBOR  plus  1.50% to 2.50%  based  upon the  underlying
collateral.

     Due to the events relating to the Investigation, on December 22, 1999, Bank
United  declared a default  of the Bank  United  Line  agreement  and  suspended
funding under the  agreement.  Bank United  continued to fund new mortgage loans
only on a  limited  day to day basis and only  with the  personal  guarantee  of
Ronald Friedman and additional collateral in the form a $500,000 cash deposit by
the Company at Bank United. On January 18, 2000, Bank United agreed to a limited
extension of the warehouse  agreement  through January 28, 2000 and to waive the
existing default relating to the Investigation.  In return for this, Bank United
required  additional  collateral pledged to the bank in the form of the $500,000
cash  deposit  previously  noted  and  $1.5  million  in  marketable  titles  to
residential  rehabilitation  properties  owned by PMCC,  an  additional  3% cash
reduction in the funding amount of all loans funded on the Bank United Line, the
continued  personal  guarantee  of  Ronald  Friedman  and  an  Amendment  Fee of
$250,000.  The Commitment amount of the line was reduced from $40 million to $33
million and the interest  rate was  increased to LIBOR plus 2.00% to 3.50% based
upon the underlying collateral. On February 1, 2000, for an additional Amendment
Fee of $100,000,  Bank United  agreed to an extension on similar  terms  through
February 28, 2000.  Beginning  March 1, 2000, Bank United had agreed to continue
to  extend  the  line on a  declining  basis  through  a series  of  short  term
extensions,  the most  recent of which  expired on June 15,  2000,  This line of
credit was paid in full in June 2000.

     To replace a portion of the Bank United Line,  on February  28,  2000,  the
Company  entered into a Master  Repurchase  Agreement  that provides the Company
with a warehouse  facility  (the"IMPAC  Line") through IMPAC  Warehouse  Lending
Group ("IMPAC"). The IMPAC Line provides a committed warehouse line of credit of
$20 million for the  Company's  mortgage  originations  only.  The IMPAC Line is
secured by the  mortgage  loans  funded with the  proceeds  of such  borrowings.
Interest payable on the IMPAC Line is variable based on the Prime Rate as posted
by Bank of America,  N.A.  plus 0.50%.  The IMPAC Line has no stated  expiration
date but is terminable by either party upon written notice.

     The  Company  currently  expects  that  the  existing  IMPAC  Line  will be
sufficient  to fund all  anticipated  loan  originations  for the  current  year
provided all new loans are sold to  investors on a loan by loan basis.  In order
to maximize potential profits through hedging strategies, additional lines would
be required and will be applied for.

     The Company had  additional  cash  requirements  in the first six months of
2000 imposed by the increased  capital  requirements  and Amendment  Fees for it
warehouse lines, the reduced warehouse  commitments and additional  professional
fees  (legal,  consulting  and  audit)  that  were  incurred  as a result of the
Investigation.  In order to raise cash expediently, the Company sold residential
rehabilitation   properties   in  its  portfolio  at  prices  that  reduced  the
contractual  fees  the  Company  normally  received  from  the  sales  of  those
properties  and in certain  instances at a price less than the cost to PMCC. The
Company also sold at discounted prices delinquent and non-performing  loans that
it would normally  maintain in its portfolio to eventually  work out and recover
its investment through foreclosure procedures or refinancing.  Additionally, the
Company closed new "start-up"  retail branches  opened in 1998 and 1999,  closed
the newly  opened  internet  call center in Houston and reduced  staffing at all
remaining  locations.  The Company believes that a greater emphasis on wholesale
lending  presents the Company with the ability to continue to offer  consumers a
broad range of products by the most cost-effective means. The Company's existing
capital resources,  including the funds from its $20 million committed warehouse
facility with IMPAC and cash flow from its remaining operations, are expected to
be sufficient to fund its current mortgage banking operation during 2000.

     Net cash provided by operations  for the six months ended June 30, 2000 was
$34.2 million.  The Company  generated  cash from the $28.1 million  decrease in
mortgage loans held for sale and  receivable  from sales of loans and by a $12.9
million net decrease in residential  rehabilitation properties. The Company used
cash to reduce borrowings under its warehouse lines of credit by $34.8 million.

Impact of New Accounting Standards

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
instruments and Hedging Activities",  effective for fiscal years beginning after
June 15, 1999,  which has been  deferred to June 30, 2000 by the  publishing  of
SFAS No. 137. SFAS No. 133  establishes  accounting and reporting  standards for
derivative  instruments and for hedging  activities.  It requires that an entity
recognizes  all  derivatives as either assets or liabilities in the statement of
financial condition and measures those instruments at fair value. The accounting
for changes in the fair value of a derivative (that is, gain and losses) depends
on the intended use of the  derivative and the resulting  designation.  SFAS No.
133 does not require  restatement  of prior  periods.  Management  is  currently
assessing the impact of SFAS No. 133 on its  financial  condition and results of
operations.

Item 3.  Quantitative And Qualitative Disclosures About Market Risk.

None.

<PAGE>
                            PART II-OTHER INFORMATION


Item 1.  Legal Proceedings

     The Registrant is a defendant in certain  litigation  arising in the normal
course  of  its  business.  In the  opinion  of the  Registrant,  any  potential
liability  with respect to such legal actions will not,  individually  or in the
aggregate,  be material to the  Registrant's  financial  position,  liquidity or
future results of operations.

     The U.S.  Attorney's  Office for the  Eastern  District  of New York ("U.S.
Attorney")  is  conducting  an  investigation  (the  "Investigation")  into  the
allegations asserted in a criminal complaint against Ronald Friedman, the former
Chairman of the Board, President and Chief Executive Officer of the Company, and
a loan officer formerly employed by the Company. On December 21, 1999, agents of
the Office of Inspector  General for HUD executed  search and arrest warrants at
the Roslyn  offices of the Company.  The warrants  were issued on the basis of a
federal criminal complaint ("Complaint"), which charged that Ronald Friedman and
the loan officer  knowingly and intentionally  made,  uttered or published false
statements in connection with loans to be insured by HUD.

     In response to the allegations  against the loan officer and Friedman,  the
Company  engaged  the  legal  services  of Dorsey & Whitney  LLP to  conduct  an
internal  investigation  into the  alleged  misconduct  and to  prepare a report
discussing the findings of the internal investigation.  As part of this internal
investigation,  the Company worked  closely and in cooperation  with HUD and the
U.S.  Attorney.  In addition,  key  employees,  including  loan  officers,  loan
processors,  underwriters  and  managers,  were  interviewed.  An audit also was
conducted of over one-third of all 1999 FHA loans in order to assess whether the
files comported with the HUD guidelines for FHA loans.

     A  preliminary  report  detailing  Dorsey  &  Whitney's  investigation  and
findings was presented to the Company's  Board of Directors on April 12, 2000. A
written  report was issued on April 14, 2000.  The report  concludes  that while
there  appears to be support for the  allegations  leveled at the loan  officer,
there is no evidence that the  misconduct  alleged in the complaint was systemic
at the Company.  Rather,  the findings  support the conclusion  that the alleged
misconduct  was an  isolated  occurrence,  not an  institutional  practice.  The
available  evidence  did not  permit  Dorsey &  Whitney  to  reach a  definitive
conclusion   concerning  the  charges  pending  against  Ronald  Friedman.   The
investigation,  comprised of  interviews  with PMCC  employees  and an extensive
review of mortgage  loan  files,  revealed no  independent  evidence  tending to
support the allegations against Friedman contained in the criminal complaint.

     While the Company  believes that it has not committed  any  wrongdoing,  it
continues to cooperate fully with the U.S.  Attorney's  Office and HUD. However,
it cannot predict the duration of the  Investigation  or its potential  outcome.
Although the Company does not anticipate  being charged in connection  with this
investigation,  in the  event  that the  Company  was  charged,  it  intends  to
vigorously  defend its  position.  While the  Company  does not  anticipate  its
occurrence,  in the event that it was to lose its ability to originate  and sell
FHA loans as result of the Investigation,  the Company does not believe that the
financial  effect on the  Company  would be  material.  The  Company  originates
approximately 7% of its current loan volume through FHA products

Item 2.  Changes in Securities

     None.

Item 3.  Defaults Upon Senior Securities

     None.

Item 4.  Submission of Matters to a Vote of Security Holders

     None.

Item 5.  Other Information

     None.

Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits
               27   Financial Data Schedule

     (b) Reports on Form 8-K
               None.
<PAGE>
                                   SIGNATURES


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


                                            PMCC FINANCIAL CORP.
                                            (Registrant)



                                            By /s/ Andrew Soskin
                                            ------------------------------------
                                            Andrew Soskin
                                            Interim President

                                            By /s/ Keith Haffner
                                            ------------------------------------
                                            Keith Haffner
                                            Interim Chief Executive Officer


                                            By /s/ Stephen J. Mayer
                                            ------------------------------------
                                            Stephen J. Mayer
                                            Chief Financial Officer
                                            (Principal Accounting Officer)

Dated: August 11, 2000