SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    Form 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended                   Commission file number      33-13668
  December 31, 1995



                           Holco Mortgage Acceptance Corporation-I
                           ---------------------------------------

                    (Exact name of registrant as specified in its charter)

          Delaware                                     38-2733561
-------------------------------          ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

220 W. Colfax St., Suite 200, South Bend, IN             46601
--------------------------------------------------------------------------------
(Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code:    (219) 284-3789
                                                       --------------

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


                                                   Name of each Exchange 
               Title of Each Class                  on which Registered
               -------------------                 ---------------------

    Series "C" Collateralized Mortgage Bonds      American Stock Exchange

                   Common Stock                   American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:   None
                                                              ----

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X]   No [ ]
                                       

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

State the aggregate market value of the voting stock held by  non-affiliates  of
the registrant as of March 20, 1996: $422,813
                                     --------

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of March 20, 1996: 563,750 Shares of Common Stock
                                    ------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

The contents of the Prospectus of the registrant  ("Prospectus")  dated June 22,
1987,  as filed  pursuant to Rule 424(b)  under the  Securities  Act of 1933 are
incorporated  by reference  into this Form 10-K with respect to the  information
contained in Items 1, 2, 5, 10, 11 and 12, as set forth therein.




<PAGE>



                                     Part I


Item 1. Business.

The business background,  objectives and intentions of Holco Mortgage Acceptance
Corporation-I  (the  "Corporation"),  are set  forth in the  Prospectus  and are
incorporated herein by this reference.  The offering of the Corporation's common
stock (the  "Common  Stock") and three series of bonds (the  "Bonds")  closed on
August 26, 1987, at which time the proceeds of the offering  were used,  and the
Corporation  commenced business  activities,  as contemplated in the Prospectus.
The  Common  Stock  is  also  referred  to  as  "Pass-Through   Equity  Residual
Certificates"  or  "PERCs".  See also  Items  5, 6, 7 and 8 hereof  incorporated
herein by this reference.

The Corporation was formed in 1987 to engage solely in the business of investing
in Multifamily GNMA Certificates.  The Corporation has obtained the proceeds for
such  investments  by  issuing  the  Common  Stock  and  Bonds.   Therefore,   a
presentation concerning industry segments is not applicable. The Corporation has
no employees.


Item 2. Properties.

A list of the  Corporation's  Multifamily GNMA  Certificates is set forth in the
Prospectus and is incorporated herein by this reference.


Item 3. Legal Proceedings.

There are no material  pending legal  proceedings  to which the  Registrant is a
party or to which any of its property is subject.


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

No matter was submitted to a vote of security  holders during the fourth quarter
of the calendar year ended December 31, 1995.


                                     Part II


Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

The principal  United States  market for the  Corporation's  Common Stock is the
American Stock Exchange.

The quarterly high and low market information for the Common Stock and dividends
paid by the Corporation are as follows:



<PAGE>



                                                MARKET PRICES
                                               ----------------
                                               HIGH        LOW     DIVIDENDS
                                               ----        ----    ---------

03/01/94 .......................               2.00        1.63       0.15
06/01/94 .......................               2.38        1.88       0.04
09/01/94 .......................               2.94        1.38       0.75
12/01/94 .......................               3.44        2.25       0.02
03/01/95 .......................               2.75        2.00       0.02
06/01/95 .......................               2.44        1.88       0.01
09/01/95 .......................               2.31        1.88       0.01
12/01/95 .......................               1.94         .69       0.01

As of March 20,  1995,  there were  approximately  900 record  holders of Common
Stock.  The corporation pays cash dividends from available cash after paying all
expenses.


Item 6. Selected Financial Data.

For years ended December 31, 1995, 1994, 1993, 1992, and 1991:


<PAGE>
<TABLE>


                               1995          1994          1993          1992          1991
                           -----------   -----------   -----------   -----------   -----------
<S>                        <C>           <C>           <C>           <C>           <C> 
Total Revenues .........   $   934,349   $ 1,322,248   $ 1,655,939   $ 2,293,203   $ 3,952,785
Total Expense ..........       884,530     1,189,373     1,542,072     2,204,226     3,736,461
Net Income .............        49,819       132,875       113,867        88,977       216,324
Net Income allocated per
share of Common Stock              .09          0.24          0.20          0.16          0.38
                                   
GNMA Certificates, at
cost ...................     9,492,787     9,510,433    15,287,563    16,433,221    25,026,864
Total Assets ...........     9,665,218     9,701,799    16,793,408    16,834,947    25,762,068
Collateralized Mortgage
Obligation Bonds             8,900,000     8,977,000    15,552,662    15,647,740    23,803,357
                             
Cash dividends declared
per share
of Common Stock ........          0.05          0.96          0.14          1.29          1.98

</TABLE>

The  above  selected  financial  data  should  be read in  conjunction  with the
financial statements and related notes set forth in Item 8.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

The  Corporation's  results  of  operations  depend  primarily  on the amount of
interest  paid on the  Multifamily  GNMA  Certificates  securing the Bonds,  the
incidence of prepayments of principal made on the mortgage loans underlying such
Multifamily GNMA  Certificates,  the amount of earnings from the reinvestment of
distributions  on such  Multifamily  GNMA  Certificates  and the  amount  of the
Corporation's expenses,  including, among other things, interest payments on the
Bonds  and  operating  expenses  of the  Corporation.  Substantially  all of the
Corporation's expenses are interest payments due on the Bonds,  management fees,
audit,  legal,  trustee  and other  related  expenses,  state  and local  taxes,
reporting  requirements  and costs of maintaining  the  Corporation's  corporate
qualifications.  It is anticipated that scheduled  distributions of principal of
and interest on the Multifamily GNMA Certificates  pledged as collateral for the
Bonds,  together with  reinvestment  earnings thereon,  will provide  sufficient
funds to make timely payment of all amounts due on the Bonds in accordance  with
their terms and to pay all of the operating expenses of the Corporation.

The  Corporation's  primary  sources  of funds  with  respect  to the  Bonds are
payments of  principal  of and  interest on the  Multifamily  GNMA  Certificates
pledged to secure the Bonds and reinvestment  earnings thereon.  The Corporation
anticipates that it will have sufficient  liquidity and capital resources to pay
all  amounts  due on the  Bonds in  accordance  with  their  terms and all other
expenses  of the  Corporation.  The  Corporation  does not have any  significant
source of funds other than  distributions on the Multifamily  GNMA  Certificates
pledged to secure the Bonds and reinvestment earnings thereon.  Virtually all of
the assets and liabilities of the  Corporation  are monetary in nature.  Because
the Bonds are secured by  Multifamily  GNMA  Certificates  which pay interest at
specified  rates,  and because  payments on the Bonds are at specified  rates of
interest,  inflationary  pressures are not expected to affect the ability of the
Corporation to meet its obligations as they become due.

The  Corporation  expects  that  scheduled  distributions  of  principal  of and
interest  on the  Multifamily  GNMA  Certificates  pledged  to secure the Bonds,
together  with  reinvestment  earnings  thereon,  will at all times  exceed  the
aggregate  of the amount due as payments  of  principal  of and  interest on the
Bonds and operating expenses of the Corporation.

The Corporation's revenue has decreased over the past three years as a result of
the scheduled principal and prepayments of principal on the GNMA certificates.

Because  the amount of  interest  income  that the  Corporation  receives on the
Multifamily  GNMA  Certificates,  together with the  reinvest-  ment earnings on
distributions of principal of and interest on the Multifamily GNMA Certificates,
may,  in some  periods,  be less  than  the  sum of the  Corporation's  interest
expenses on the Bonds and operating expenses for such periods, the Corporation's
ratio of earnings to fixed charges for such periods may be less than one to one.
Any such income  shortfalls will not, however,  be cash flow shortfalls  because
principal and interest payments on the Multi- family GNMA Certificates, together
with reinvestment  earnings thereon,  will be available in sufficient amounts to
meet interest income shortfalls and to make required  principal  payments on the
Bonds. In addition,  the amortization of issuance costs of the Bonds reduces the
Corporation's  ratio of earnings to fixed charges but will not affect the amount
of cash available to meet fixed charges.
<PAGE>


Item 8. Financial Statements and Supplementary Data.

See Index to Financial  Statements and Financial  Statement Schedule on Page F-1
of this Form 10-K.


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

The Corporation is not aware of any such disagreements.


                                    Part III


Item 10. Directors and Executive Officers of the Registrant.

Information  relating to the management of the Corporation and persons  entitled
to exercise management discretion over the Corporation's affairs is set forth in
the Prospectus and is incorporated herein by this reference.


Item 11. Management Compensation.

Information  relating to management  compensation is set forth in the Prospectus
and incorporated  herein by this reference.  See also Item 8 hereof incorporated
herein by this reference.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

As of March 20, 1996, no person owned of record or was known to own beneficially
more  than 5% of the  outstanding  Common  Stock of the  Corporation.  Also,  no
director or officer of the Corporation owned any of the outstanding Common Stock
of the Corporation as of March 20, 1996.


Item 13. Certain Relationships and Related Transactions.

The Corporation paid HC Mortgage Company a non-recurring mortgage commitment fee
of  $700,000  and  pays an  on-going  management  fee.  See  Note 5 -  "Fees  to
Affiliate" on page F-9 of the attached financial statements.


                                     Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

    a.   The  following  documents  are  filed  as part of this  Form  10-K  and
         incorporated herein by this reference:

         1. The financial  statements and financial statement schedule listed on
            the Index to Financial Statements and on page F-1.

         2. The exhibits listed on the Index to Exhibits on page E-1.

    b.   No  reports on Form 8-K were  filed  during  the fourth  quarter of the
         calendar year ended December 31, 1995.


                           ITEM 14(a) - EXHIBIT INDEX

3        The Certificate of  Incorporation  and Bylaws of the Registrant are set
         forth as Exhibits 3.1 and 3.2,  respectively,  to Amendment No 1 to the
         Registrant's  Registration  Statement on Form S-11 dated April 22, 1987
         (Registration No. 33-13668), and are incorporated herein by reference.

4.1      A specimen of the certificate representing Pass-Through Equity Residual
         Certificates  of  the  Registrant  is  set  forth  as  Exhibit  4.1  to
         Post-Effective  Amendment  No.  1  to  the  Registrant's   Registration
         Statement  on Form S-11 dated  September  10,  1987  (Registration  No.
         33-13668), and is incorporated herein by reference.

4.2      Specimens of the Series A, B and C Collateralized  Mortgage  Obligation
         Bonds are set forth as Exhibit 4.2 to Post-Effective Amendment No. 1 to
         the  Registrant's  Registration  Statement on Form S-11 dated September
         10, 1987  (Registration  No. 33-33168),  and is incorporated  herein by
         reference.
<PAGE>


4.3      The Trust  Indenture  is set  forth as  Exhibit  4.3 to  Post-Effective
         Amendment No. 1 to the Registrant's Registration Statement on Form S-11
         dated  September  10,  1987   (Registration  No.   33-33168),   and  is
         incorporated herein by reference.

4.4      A Form of Guaranty Agreement between the servicer and GNMA with respect
         to Project  Loan  Securities  under the GNMA-I  Program is set forth as
         Exhibit  4.4 to  Post-Effective  Amendment  No.  1 to the  Registrant's
         Registration  Statement on Form S-11 dated April 22, 1987 (Registration
         No. 33-13668), and is incorporated herein by reference.

10       The Form of Multifamily  GNMA  Certificate  evidencing the Registrant's
         beneficial  ownership interest in each of the Mortgages is set forth as
         Exhibit  10.1  to  Amendment  No.  1 to the  Registrant's  Registration
         Statement  on  Form  S-11  dated  April  22,  1987   (Registration  No.
         33-13668), and is incorporated herein by reference.




<PAGE>




                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
        A DELAWARE CORPORATION
---------------------------------------
            (Registrant)


By: /s/ John T. Phair
    -----------------------------------
    John T. Phair
    Vice President, Treasurer

Date: 3/25/96


By: /s/ Kevin C. Horton
    -----------------------------------
    Kevin C. Horton
    Vice President and Secretary

Date: 3/25/96


By: /s/ Kevin J. Butler
    -----------------------------------
    Kevin J. Butler
    Director


Date: March 25, 1996
<PAGE>











                                      HOLCO MORTGAGE ACCEPTANCE CORPORATION-I

                                                 FINANCIAL REPORT

                                                 DECEMBER 31, 1995



<PAGE>












                                                  C O N T E N T S

--------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITOR                                     
--------------------------------------------------------------------------------

FINANCIAL STATEMENTS

   Balance sheets                                                        
   Statements of  income                                                 
   Statements of stockholders' equity                                    
   Statements of cash flows                                              
   Notes to financial statements                                         
--------------------------------------------------------------------------------



<PAGE>








                          INDEPENDENT AUDITOR'S REPORT


To  the  Board  of  Directors
HOLCO MORTGAGE ACCEPTANCE CORPORATION-I
South Bend, Indiana


We have audited the  accompanying  balance sheets of Holco  Mortgage  Acceptance
Corporation-I  as of December 31, 1995 and 1994,  and the related  statements of
income,  stockholders'  equity,  and cash  flows  for  each of the  years in the
three-year  period ended December 31, 1995.  These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.


We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.


In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Holco  Mortgage  Acceptance
Corporation-I  as of  December  31,  1995  and  1994,  and  the  results  of its
operations  and its cash  flows for each of the years in the  three-year  period
ended  December 31, 1995,  in  conformity  with  generally  accepted  accounting
principles.




                                        /s/ McGladrey & Pullen, LLP
                                            -----------------------




South Bend, Indiana
January 10, 1996


<PAGE>


HOLCO MORTGAGE ACCEPTANCE CORPORATION-I

BALANCE SHEETS
December 31, 1995  and  1994


ASSETS                                                       1995       1994
                                                          ---------- -----------

CASH  AND  CASH EQUIVALENTS, including amounts
   held by trustee 1995 $87,334; 1994 $87,971 ..........  $   87,334 $   88,971

INTEREST RECEIVABLE ...................................       72,938     72,567

GNMA  CERTIFICATES, at amortized cost ..................   9,492,787  9,510,433

COLLATERALIZED MORTGAGE OBLIGATION Bond Offering
    COSTS, net of accumulated amortization 1995
   $1,039,363; 1994 $1,021,694 .........................      12,159     29,828
                                                          ---------- ----------

                                                          $9,665,218 $9,701,799
                                                          ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY

 LIABILITIES
   Collateralized mortgage obligation bonds ...........   $8,900,000 $8,977,000
   Accounts payable ...................................       39,023     19,023
   Interest payable ...................................      138,878    140,089
                                                          ---------- ----------
                                                           9,077,901  9,136,112
                                                          ---------- ----------

 STOCKHOLDERS' EQUITY
   Common stock, $.01 par value; authorized
      700,000 shares; issued and outstanding
      563,750 shares .................................        5,638       5,638
   Additional paid-in capital ........................    2,862,878   2,862,878
   Retained earnings (deficit) .......................   (2,281,199)  2,302,829)
                                                         ----------  ----------
                                                            587,317     565,687
                                                         ----------  ----------
                                                         $9,665,218  $9,701,799
                                                         ==========  ==========

 See Notes  to  Financial Statements



<PAGE>


HOLCO MORTGAGE ACCEPTANCE CORPORATION-I

STATEMENTS OF INCOME
Years Ended December 31, 1995, 1994,  and  1993

                                            1995         1994          1993
                                       ------------ ------------- --------------

Revenues, interest income:
   GNMA certificates ............      $    932,051 $   1,297,737 $   1,653,006
   Funds held by trustee ........             2,298        24,511         2,933
                                       ------------ ------------- --------------
                                            934,349     1,322,248     1,655,939
                                       ------------ ------------- --------------
Expenses:
   Interest expense .............           854,802     1,161,125     1,502,956
   Management fees, related party            26,168        24,688        40,692
   Other, net ...................             3,560         3,560        (1,576)
                                       ------------ ------------- -------------
                                            884,530     1,189,373     1,542,072
                                       ------------ ------------- --------------

              Net income ........      $     49,819 $     132,875 $     113,867
                                       ============ ============= ==============

 See Notes  to  Financial Statements.



<PAGE>


HOLCO MORTGAGE ACCEPTANCE CORPORATION-I

STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1995, 1994,  and  1993
<TABLE>

                                                                        Retained
                                                       Additional       Earnings
                                      Common Stock   Paid-In Capital    (Deficit)           Total
------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>             <C>              <C> 

Balance, December 31, 1992          $          5,638 $     2,862,878 $    (1,929,444) $        939,072
   Net income                                      0               0         113,867           113,867
   Dividends declared                              0               0         (78,926)          (78,926)
                                    ------------------------------------------------------------------
Balance, December 31, 1993                     5,638       2,862,878      (1,894,503)          974,013
   Net income                                      0               0         132,875           132,875
   Dividends declared                              0               0        (541,201)         (541,201)
                                    ------------------------------------------------------------------
Balance, December 31, 1994                     5,638       2,862,878      (2,302,829)          565,687
   Net income                                      0               0          49,819            49,819
   Dividends declared                              0               0         (28,189)          (28,189)
                                    ------------------------------------------------------------------
Balance, December 31, 1995          $          5,638 $     2,862,878 $    (2,281,199) $        587,317
                                    ==================================================================

</TABLE>

See Notes  to  Financial Statements.



<PAGE>


HOLCO MORTGAGE ACCEPTANCE CORPORATION-I

STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995, 1994,  AND  1993
<TABLE>


                                                      1995         1994             1993
                                                 ------------------------------------------
<S>                                              <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                  $    49,819    $  132,875      $   113,867
     Adjustments to reconcile net income to
       net cash provided by (used in)
       operating activities:
       Amortization of GNMA certificate
         discount                                    (65,617)     (153,858)       (128,128)
       Amortization of collateralized mortgage
         obligation bond discount, net                     0        18,274          17,441
       Amortization of collateralized mortgage
         obligation bond offering costs               17,669        50,663          47,043
       Change in assets and liabilities:
         Decrease (increase) in interest 
           receivable                                   (371)       45,716           9,322
         Increase (decrease) in:
               Accounts payable                       20,000       (15,428)         28,381
               Interest payable                       (1,211)      (92,193)         (9,783)
                                                 -----------------------------------------
                Net cash provided by (used in)
                operating activities                  20,289       (13,951)         78,143
                                                 -----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Principal receipts on GNMA certificates          83,263     5,930,988       1,273,786
                                                 -----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Redemption of collateralized
       mortgage obligation bonds                     (77,000)    (6,593,936)      (112,519)
     Cash dividends paid                             (28,189)      (541,201)       (78,926)
                                                  ----------------------------------------
               Net cash (used in) financing
               activities                           (105,189)    (7,135,137)      (191,445)
                                                  ----------------------------------------

               Increase (decrease) in cash
               and cash equivalents                   (1,637)    (1,218,100)     1,160,484

Cash and cash equivalents, beginning                  88,971      1,307,071        146,587
                                                  ----------------------------------------
Cash and cash equivalents, ending                 $   87,334     $   88,971     $1,307,071
                                                  ========================================
</TABLE>
See Notes  to  Financial Statements.


<PAGE>


HOLCO MORTGAGE ACCEPTANCE CORPORATION-I

NOTES TO FINANCIAL STATEMENTS


Note 1. Organization, Use of Estimates, and Significant Accounting Policies

Organization:

Holco Mortgage Acceptance Corporation-I, a Delaware corporation, (the "Company")
was  formed  on April 3, 1987 to invest in  Multifamily  GNMA  Certificates,  by
acquiring  fully  modified  pass-through  certificates  representing  beneficial
ownership in multifamily  housing  project  mortgage loans issued by the Federal
Housing Administration ("FHA") under Section 223(f) of the National Housing Act.
These   Certificates  are  guaranteed  by  the  Government   National   Mortgage
Association ("GNMA"),  and are backed by the full faith and credit of the United
States.  The Company  obtained  proceeds for the  acquisition of the GNMA Certi-
ficates by issuing its common  stock and three  series of Bonds.  The  Company's
sole  activities  consist of  providing  monthly  interest  payments to the bond
holders;  repaying the principal of the bonds at either  redemption or maturity;
and providing  distributions to common  stockholders  ("PERC" holders) which are
expected  to  provide  them with  repayment  of their  investment  plus a return
thereon.

Use of estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting  period.  The
Company estimated prepayments of GNMA Certificates and corresponding redemptions
of  collateralized  mortgage  obligation  bonds at the time of  issuance.  These
estimates are used to determine the constant  effective yield necessary to apply
the interest method of amortization for the collateralized  mortgage  obligation
bond offering costs,  collateralized mortgage obligation bond discount, and GNMA
certificate  market discount.  Actual payments could differ from those estimates
and such differences could occur in the near term.

Significant accounting policies:

Basis of accounting:

The accompanying  financial statements are prepared in accordance with generally
accepted  accounting  principles,  including  the use of the  accrual  method of
accounting.

Cash equivalents:

For purposes of the  statement of cash flows,  the Company  considers  corporate
trust accounts held by the trustee to be cash equivalents.


<PAGE>



Collateralized mortgage obligation bond offering costs,  collateralized mortgage
obligation bond discount, and GNMA certificate market discount:

Collateralized  mortgage  obligation  bond offering  costs include  underwriting
commissions and other expenses associated with the offering.  The collateralized
mortgage  obligation bond offering costs and collateralized  mortgage obligation
bond  discount are being  amortized  over the expected life of the related bonds
using the  interest  method  and are  included  in  interest  expense.  The GNMA
certificate  market  discount is being  amortized  over the expected life of the
GNMA Certificates using the interest method and is included in interest income.


Note 2. Income Tax Status

The Company elected to be treated as a real estate mortgage  investment  conduit
("REMIC")  which has been  authorized  under  the Tax  Reform  Act of 1986.  The
sections of the federal  income tax laws  applicable  to REMICs  provide that in
lieu of corporate  income taxes, the PERC holders  separately  account for their
pro rata  share  of the  Company's  items of  income,  deductions,  losses,  and
credits.


Note 3. Cash Distributions to PERC Holders

PERC holders receive quarterly cash  distributions  consisting of the cash flows
of the Company, if any, remaining after debt service on the bonds and payment of
operating expenses.


Note 4. GNMA Certificates

The GNMA  Certificates  consist of three  Multifamily  GNMA  Certificates  as of
December 31, 1995 and 1994. The GNMA  Certificates have been assigned to a trust
for the purpose of securing the  collateralized  mortgage  obligation bonds. The
Certificates  are payable in aggregate  monthly  installments  of  approximately
$79,000 as of December 31, 1995 and 1994,  including interest at 9% to 9.25% per
annum with stated maturity dates varying between December 2021 and January 2022.
The GNMA  Certificates  are held for payment of  principal  and  interest on the
collateralized mortgage obligation bonds and, accordingly,  are reflected on the
accompanying balance sheets at amortized cost.

The principal  balances and unamortized market discount on the GNMA Certificates
as of December 31, 1995 and 1994 are as follows:

                                                          1995          1994
                                                       ----------    -----------

Principal balances                                     $9,539,000    $9,622,263
Unamortized discount                                       46,213       111,830
                                                       ----------    ----------
                                                       $9,492,787    $9,510,433
                                                       ==========    ==========

It is  anticipated  that all GNMA  Certificates  will be prepaid during the year
ending December 31, 1996.


<PAGE>


Note 5. Related Party Transactions

Purchase of GNMA Certificates:

The  proceeds  from sale of the Bonds and the PERCs were used by the  Company to
purchase  Multifamily  GNMA  Certificates  from HC Mortgage  Company,  Inc. ("HC
Mortgage"), an affiliate of the Company, and to pay the costs of the offering.

Fees to affiliate:

The  Company  pays  to HC  Mortgage  a  monthly  management  fee  which  will be
subsequently  reduced in proportion to the reduction in cash flow occurring when
any GNMA Certificate is prepaid, disposed of, or fully amortized. The management
fee paid is intended to cover  accounting  fees,  legal fees,  trustee fees, and
independent  directors' fees of the Company.  Affiliates of the Company will not
be required to pay expenses of the Company in the event that expenses exceed the
management fee. However,  the affiliates may elect to pay the excess of expenses
incurred over the  management fee received and treat such excess as an operating
expense loan. The amount of operating expense loans included in accounts payable
in the accompanying  balance sheets at December 31, 1995 and 1994 is $36,000 and
$16,000   respectively.   The   management   fee,   including   excess   expense
reimbursement,  for the  years  ended  December  31,  1995,  1994,  and 1993 was
$26,168, $24,688, and $40,692 respectively.


Note 6. Collateralized Mortgage Obligation Bonds

The  collateralized  mortgage  obligation  bonds  were  issued in the  aggregate
principal amount of $45,335,000 as follows:

                                                                    Bonds
                               Original                          Outstanding
                               Principal    Interest   Stated    December 31,
                                 Amount       Rate    Maturity*     1995
                              -----------------------------------------------
Class:
  A Bonds                     $18,060,000    9.200%    9/1/95    $        0
  B Bonds                      16,000,000    9.000     2/1/22             0
  C Bonds                      11,275,000    9.375     2/1/22     8,900,000
                              -----------                        ----------
                              $45,335,000                        $8,900,000
                              ===========                        ==========


*  Assuming no prepayments on the GNMA Certificates.

Interest is payable  monthly on the first  business day of each month.  Interest
payments are made for interest  accrued to the  beginning of the calendar  month
preceding the month of the payment date.

The bonds will bear  interest  at rates  described  above and will be subject to
prepayment  or  redemption.  Interest  will cease  accruing  on each bond at the
beginning of the calendar  month  immediately  preceding the month of the bond's
final payment or redemption.


<PAGE>



Principal  and interest  payments  received on the  Company's  Multifamily  GNMA
Certificates  are being  applied to pay principal and interest on the bonds with
sufficient monthly  redemptions,  at a minimum, to assure the bonds which remain
outstanding are fully secured by the Multifamily GNMA Certificates and the other
collateral held by the trustee.

Based upon the scheduled  repayments  and  anticipated  prepayments  of the GNMA
Certificates,  it is anticipated that all the collateralized mortgage obligation
bonds will be redeemed over the next year.


Note 7. Disclosures about Fair Value of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

Cash and cash equivalents:

The carrying  amount  approximates  fair value because of the short  maturity of
those instruments.

GNMA Certificates:

The fair values of the GNMA  Certificates  are estimated  based on quoted market
prices received by the trustee.

The estimated fair values of the Company's financial  instruments as of December
31, 1995 and 1994 are as follows:
<TABLE>

                                                   1995                              1994
                                     -------------------------------- ---------------------------------
                                     Carrying Value     Fair Value     Carrying Value     Fair Value
                                     ------------------------------------------------------------------
<S>                                  <C>             <C>              <C>              <C>

   Cash and cash equivalents         $        87,334 $         87,334 $         88,971 $         88,971
   GNMA Certificates                       9,492,787       10,066,000        9,510,433        9,667,000
</TABLE>


Collateralized Mortgage Obligation Bonds:

The fair value of the Company's  collateralized mortgage obligation bonds is not
practicable  to determine  because future cash flows are uncertain and difficult
to predict.


Note 8. Cash Flows Information

Supplemental  information relative to the statements of cash flows for the years
ended December 31, 1995, 1994, and 1993 is as follows:

                                           1995        1994           1993
                                        --------------------------------------
Supplemental disclosures of cash
  flows information:
  Cash payments for interest            $  838,344   $1,184,381     $1,448,255