##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
  Washington, D.C.
    20549
    Form 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2008o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 0-17771
  FRANKLIN CREDIT MANAGEMENT
    CORPORATION
 (Exact name of Registrant as
    specified in its charter)
  Delaware

75-2243266(State or other jurisdiction
    of
    incorporation or organization)

(IRS Employer
    Identification No.)101 Hudson Street
    Jersey City, New Jersey

07302(Zip code)(Address of Principal
    Executive Offices)   (201) 604-1800
 (Registrants telephone
    number, including area code)
  þ o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company þ(Do not check if a smaller reporting company)   Rule 12b-2 o þ




---



##### 



FRANKLIN
    CREDIT MANAGEMENT CORPORATION
  FORM 10-Q
  INDEX
   
 PagePART I. FINANCIAL INFORMATIONItem 1.


Financial Statements (Unaudited)Consolidated Balance Sheets at
    March 31, 2008 and December 31, 2007


3Consolidated Statements of Income for
    the three months ended March 31, 2008 and March 31,
    2007


4Consolidated Statement of Changes in
    Stockholders Equity for the three months ended
    March 31, 2008


5Consolidated Statements of Cash Flows
    for the three months ended March 31, 2008 and
    March 31, 2007


6Notes to Consolidated Financial Statements


7Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


18Application of Critical Accounting
    Policies and Estimates


18Portfolio Characteristics


19Results of Operations


27Liquidity and Capital Resources


29Borrowings


31Item 3.


Quantitative and Qualitative Disclosures about
    Market Risk


39Item 4.


Controls and Procedures


41PART II. OTHER INFORMATIONItem 1.


Legal Proceedings


41Item 1A.


Risk Factors


41Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


43Item 3.


Defaults Upon Senior Securities


43Item 4.


Submission of Matters to a Vote of Security
    Holders


43Item 5.


Other Information


44Item 6.


Exhibits


44SIGNATURES


46EX-10.55: JOINDER AND AMENDMENT NO. 1 TO FORBEARANCE AGREEMENTEX-10.56: SECOND AMENDED AND RESTATED TRANCHE D NOTEEX-10.57: JOINDER AND AMENDMENT NO. 1 TO TRIBECA FORBEARANCE AGREEMENTEX-10.58: PARTICIPATION AGREEMENTEX-10.59: SECOND AMENDED AND RESTATED TRANCHE A NOTEEX-10.60: SECOND AMENDED AND RESTATED TRANCHE B-1 NOTEEX-10.61: SECOND AMENDED AND RESTATED TRANCHE B-2 NOTEEX-10.62: SECOND AMENDED AND RESTATED TRANCHE B-3 NOTEEX-10.63: SECOND AMENDED AND RESTATED TRANCHE B-4 NOTEEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  March 31, 2008


December 31, 2007(Unaudited)ASSETSCash and cash equivalents

$
16,802,299


$
18,266,066Restricted cash


41,355,831



40,326,521Short-term investments


4,784,218



4,735,308Notes Receivable:Principal


1,244,104,826



1,289,550,285Purchase discount


(10,404,510
)


(10,667,649
)Allowance for loan losses


(226,910,105
)


(230,809,938
)Net notes receivable


1,006,790,211



1,048,072,698Originated loans held for investment:Principal, net of deferred fees and costs


472,826,580



501,555,859Allowance for loan losses


(24,716,882
)


(23,851,715
)Originated loans held for investment, net


448,109,698



477,704,144Accrued interest receivable


21,563,197



22,989,901Other real estate owned


68,699,919



58,838,831Deferred financing costs, net


8,552,250



8,808,089Other receivables


5,008,154



4,917,598Building, furniture and equipment, net


3,046,680



3,363,306Income tax receivable


3,238,529



3,682,861Other assets


786,174



807,879Total assets

$
1,628,737,160


$
1,692,513,202LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Notes payable, net of debt discount of $225,526 at
    March 31, 2008 and $232,365 at December 31, 2007

$
1,579,024,148


$
1,628,537,798Financing agreements


733,367



1,033,073Accounts payable and accrued expenses


15,598,775



23,108,149Derivative liabilities


5,048,748



Deferred tax liability


543,507



543,507Total liabilities


1,600,948,545



1,653,222,527Commitments and ContingenciesStockholders Equity:Preferred stock, $.01 par value; authorized 3,000,000;
    issued  none






Common stock and additional paid-in capital, $0.01 par
    value, 22,000,000 authorized shares; issued and outstanding:
    8,025,295 at March 31, 2008 and 8,025,295 at
    December 31, 2007


23,156,656



23,091,510Accumulated other comprehensive income


(5,048,748
)


Retained earnings


9,680,707



16,199,165Total stockholders equity


27,788,615



39,290,675Total liabilities and stockholders equity

$
1,628,737,160


$
1,692,513,202    3




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF INCOMEThree Months Ended March 31, 2008 and 2007 Three Months Ended March 31,2008


2007(Unaudited)Revenues:Interest income

$
32,320,130


$
38,903,935Purchase discount earned


781,341



1,413,558Gain on sale of originated loans






3,039Gain on sale of other real estate owned


90,816



121,175Prepayment penalties and other income


2,022,723



2,099,980Total revenues


35,215,010



42,541,687Operating Expenses:Interest expense


22,882,009



31,559,804Collection, general and administrative


9,623,169



8,893,445Provision for loan losses


8,655,825



4,333,464Amortization of deferred financing costs


255,839



775,835Depreciation


316,626



347,546Total expenses


41,733,468



45,910,094(Loss) before provision for income taxes


(6,518,458
)


(3,368,407
)Income tax (benefit)






(1,414,731
)Net (loss)

$
(6,518,458
)

$
(1,953,676
)Net (loss) per common share:Basic

$
(0.82
)

$
(0.25
)Diluted

$
(0.82
)

$
(0.25
)Weighted average number of shares outstanding:Basic


7,970,295



7,930,462Diluted


7,970,295



7,930,462    4




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF CHANGES IN
    STOCKHOLDERS EQUITY
 Three Months Ended March 31, 2008
  AccumulatedCommon Stock and


OtherAdditional Paid-in Capital


Comprehensive


RetainedShares


Amount


Loss


Earnings


Total(Unaudited)BALANCE, JANUARY 1, 2008


8,025,295


$
23,091,510


$



$
16,199,165


$
39,290,675Stock-based compensation






65,146











65,146Net unrealized (losses) on derivatives










(5,048,748
)






(5,048,748
)Net (loss)














(6,518,458
)


(6,518,458
)BALANCE, MARCH 31, 2008


8,025,295


$
23,156,656


$
(5,048,748
)

$
9,680,707


$
27,788,615      5




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 Three
    Months Ended March 31, 2008 and 2007
  Three Months Ended March 31,2008


2007(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss)

$
(6,518,458
)

$
(1,953,676
)Adjustments to reconcile income to net cash provided by/(used
    in) operating activities:Gain on sale of other real estate owned


(90,816
)


(121,175
)Gain on sale of originated loans






(3,041
)Depreciation


316,626



347,546Amortization of deferred costs and fees on originated loans


(136,351
)


202,251Amortization of deferred financing costs


255,839



775,835Amortization of debt discount and success fees


6,839



43,141Non-cash compensation


65,146



121,844Proceeds from the sale of and principal collections on loans
    held for sale






5,231,263Deferred tax provision






31,145Purchase discount earned


(781,341
)


(1,413,558
)Provision for loan losses


8,655,825



4,333,464Origination of loans held for sale






(17,345,360
)Changes in operating assets and liabilities:Accrued interest receivable


1,426,704



137,734Other receivables


(90,556
)


(953,153
)Income tax receivable


444,332



(1,456,658
)Other assets


21,705



(132,374
)Accounts payable and accrued expenses


(7,509,374
)


(271,972
)Net cash (used in) operating activities


(3,933,880
)


(12,426,744
)CASH FLOWS FROM INVESTING ACTIVITIES:(Increase) in restricted cash


(1,029,310
)


(3,583,401
)Purchase of notes receivable






(125,386,390
)Principal collections on notes receivable


26,132,881



61,039,166Principal collections on loans held for investment


19,752,241



52,786,302Origination of loans held for investment






(73,818,177
)Investment in short-term securities


(48,910
)


(239,762
)Putback of acquired notes receivable


123,591



Proceeds from sale of other real estate owned


7,359,816



8,497,239Purchase of building, furniture and equipment






(798,047
)Net cash provided by/(used in) investing activities


52,290,309



(81,503,070
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from notes payable






207,419,884Principal payments of notes payable


(49,520,489
)


(119,219,279
)Proceeds from financing agreements


87,822



119,415,324Principal payments of financing agreements


(387,529
)


(91,835,960
)Repurchase obligation






(18,094,061
)Payment of deferred financing costs






(1,003,683
)Net cash (used in)/provided by financing activities


(49,820,196
)


96,682,225NET CHANGE IN CASH AND CASH EQUIVALENTS


(1,463,767
)


2,752,411CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


18,266,066



3,983,104CASH AND CASH EQUIVALENTS, END OF PERIOD

$
16,802,299


$
6,735,515SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash payments for interest

$
26,041,731


$
31,284,167Cash payments for taxes

$
131,665


$
10,781NON-CASH INVESTING AND FINANCING ACTIVITY:Transfer from notes receivable and loans held for investment to
    OREO

$
21,290,396


$
10,996,584  6




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    BUSINESS  Overview
             7




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form 10-Q
  Form 10-Q
  Loan
    Acquisitions
      
    performing loans  loans to borrowers who
    are contractually current, but may have been delinquent in the
    past and which may have deficiencies relating to credit history,
    loan-to-value ratios, income ratios or documentation;
    reperforming loans  loans to borrowers
    who are not contractually current, but have recently made
    regular payments and where there is a good possibility the loans
    will be repaid in full; and
    nonperforming loans  loans to borrowers
    who are delinquent, not expected to cure, and for which a
    primary avenue of recovery is through the sale of the property
    securing the loan.    Loan
    Originations
    and/or
 8




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Due
    Diligence Services
    Loan
    Servicing
      Financing
    2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Basis of Presentation Form 10-Q.
   9




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form 10-K
  Notes Receivable and Income
    Recognition
    Discounts on Acquired Loans SOP 03-3,
     10




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  SOP 03-3
  Three Months Ended March 31,2008


2007Accretable DiscountBalance, beginning of period

$
26,507,403


$
12,842,755New acquisitions






29,080Accretion


(511,900
)


(722,759
)Transfers from nonaccretable






4,163,501Net reductions relating to loans sold






Net reductions relating to loans repurchased






Other






(1,372
)Balance, end of period

$
25,995.503


$
16,311,205Nonaccretable DiscountBalance, beginning of period

$
102,141,880


$
60,531,503New acquisitions






20,879,024Transfers to accretable






(4,163,501
)Net reductions relating to loans sold






Net reductions relating to loans repurchased


(21,337
)


(153,267
)Net reduction relating to loans charged off


(759,387
)


(2,085,241
)Loans transferred to OREO, other


(725,004
)


(1,225,980
)Balance, end of period

$
100,636,152


$
73,782,538   SOP 03-3
  Originated Loans Held for Sale loan-by-loan
      Originated Loans Held for Investment
 11




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Allowance for Loan Losses
  Three Months Ended March 31,2008


2007Allowance for loan losses, beginning of period

$
254,661,653


$
53,290,841Provision for loan losses


5,166,376



2,196,656Loans transferred to OREO


(2,439,870
)


(1,787,531
)Loans charged off


(5,684,862
)


(3,202,673
)Other, net


(76,310
)


41,520Allowance for loan losses, end of period

$
251,626,987


$
50,538,813     Stock-Based Compensation Plans Accounting for Stock Issued to
    Employees Accounting for Stock-Based
    Compensation
 12




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Share-Based Payment
    Stock Options
      Three Months EndedMarch 31, 2007Risk-free interest rate


4.96
%Weighted average volatility


95.15Expected lives (years)


6.0  13




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageWeighted


Remaining


AggregateAverage


Contractual


IntrinsicShares


Exercise


Term


ValueBalance, January 1, 2008


370,000


$
3.44



4.82 years


$
23,400Options activity










Balance, March 31, 2008


370,000



3.44



4.37 years



47,800Options exercisable at March 31, 2008


370,000


$
3.44



4.37 years


$
47,800         
    Restricted Stock  Restricted shares of
    the Companys common stock have been awarded to certain
    executives. The stock awards are subject to restrictions on
    transferability and other restrictions, and step vest over a
    three year period.    WeightedAverage GrantShares


Date Fair ValueNon-vested balance, January 1, 2008


65,000


$
8.24Vested


(10,000
)


10.38Forfeited






Non-vested balance, March 31, 2008


55,000


$
7.85     Operating
    Segments Disclosures about Segments of an Enterprise and Related
    Information
 14




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended March 31,2008


2007CONSOLIDATED REVENUE:Portfolio asset acquisition and resolution

$
24,983,907


$
32,029,363Mortgage banking


10,231,103



10,512,324Consolidated revenue

$
35,215,010


$
42,541,687CONSOLIDATED NET INCOME:Portfolio asset acquisition and resolution

$
(3,523,361
)

$
(1,559,886
)Mortgage banking


(2,995,097
)


(393,790
)Consolidated net income

$
(6,518,458
)

$
(1,953,676
)   March 31, 2008


December 31, 2007CONSOLIDATED ASSETS:Portfolio asset acquisition and resolution

$
1,103,432,862


$
1,149,317,726Mortgage banking


525,304,298



543,195,476Consolidated assets

$
1,628,737,160


$
1,692,513,202   Recent Accounting Pronouncements The
    Fair Value Option for Financial Assets and Financial
    Liabilities, including an amendment of FASB Statement
    No. 115.
  Fair Value
    Measurements
  Accounting for Uncertainty in Income
    Taxes
 15




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
    and/or
  Derivatives Accounting for
    Derivative Instruments and Hedging Activities
         16




---



##### Table of Contents



FRANKLIN
    CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Ineffective AmountSwaps in Cash Flow

Amount Recognized in

Recognized inHedging Relationships

OCI (Effective Portion)

EarningsInterest rate contracts

$
(5,048,748
)

$
   non-amortizing,
  Fair
    Value Measurements
    
    Level 1  Inputs to the valuation
    methodology are quoted prices (unadjusted) for identical assets
    or liabilities in active markets.
    Level 2  Inputs to the valuation
    methodology include quoted prices for similar assets and
    liabilities in active markets and inputs that are observable for
    the asset of liability, either directly or indirectly, for
    substantially the full term of the financial instrument. Fair
    values for these instruments are estimated using pricing models,
    quoted prices of securities with similar characteristics, or
    discounted cash flows.
    Level 3  Inputs to the valuation
    methodology are unobservable and significant to the fair value
    measurement. Fair values are initially valued based upon
    transaction price and are adjusted to reflect exit values as
    evidenced by financing and sale transactions with third parties.      Level 1

Level 2

Level 3Interest rate swaps

$



$
(5,048,748
)

$
Short-term investments

$



$
4,784,218


$
  17




---



##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  General
  Safe Harbor Statements. Form 10-K Form 10-Q,
  Allowance
    for Loan Losses
   Application
    of Critical Accounting Policies and Estimates  Form 10-K.
 18




---



##### Table of Contents



Portfolio
    Characteristics  Overall
    Portfolio
    Percentage of TotalProperty Types

Principal Balance


Principal BalanceResidential 1-4 family

$
1,533,189,453



82.99
%Condos, co-ops, PUD dwellings


228,839,712



12.39
%Manufactured and mobile homes


17,755,167



0.96
%Multi-family


621,204



0.03
%Secured, property type unknown(1)


27,794,344



1.50
%Commercial


3,304,093



0.18
%Unsecured loans(2)


35,734,557



1.93
%Other


313,329



0.02
%Total

$
1,847,551,859



100.00
%     (1)
    
    The loans included in this category are principally small
    balance (less than $10,000) second-lien loans acquired, and are
    collateralized by residential real estate.(2)
    
    The loans included in this category are principally second-lien
    loans where the residential real estate collateral has been
    foreclosed by the first-lien holder.  Geographic Dispersion.
  Percentage of TotalLocation

Principal Balance


Principal BalanceCalifornia

$
260,167,172



14.08
%New York


201,068,783



10.88
%New Jersey


175,036,552



9.47
%Florida


163,101,452



8.83
%Texas


87,099,543



4.72
%Pennsylvania


83,579,740



4.52
%Ohio


62,681,978



3.39
%Illinois


61,047,432



3.31
%Maryland


57,506,030



3.11
%Michigan


54,446,593



2.95
%All Others


641,816,584



34.74
%Total

$
1,847,551,859



100.00
%    19




---



##### Table of Contents



Asset
    Quality
  Delinquency.
  March 31, 2008Contractual Delinquency


Recency DelinquencyDays Past Due

Amount


%


Amount


%Current

0  30 days

$
807,747,859



43.72
%

$
972,241,130



52.62
%Delinquent

31  60 days


103,497,149



5.60
%


61,121,709



3.31
%61  90 days


69,502,410



3.76
%


31,565,181



1.71
%90+ days


218,923,394



11.85
%


134,742,792



7.29
%Bankruptcy

0  30 days


28,245,371



1.53
%


84,923,618



4.60
%Delinquent

31  60 days


5,779,636



0.31
%


8,506,372



0.46
%61  90 days


4,244,864



0.23
%


3,138,790



0.17
%90+ days


116,678,499



6.32
%


58,379,590



3.16
%Foreclosure

0  30 days


1,063,122



0.06
%


45,969,447



2.49
%Delinquent

31  60 days


3,218,375



0.17
%


18,738,335



1.02
%61  90 days


15,109,085



0.82
%


17,678,899



0.95
%90+ days


473,542,095



25.63
%


410,545,996



22.22
%Total

$
1,847,551,859



100.00
%

$
1,847,551,859



100.00
%Total loans

0  30 days

$
837,056,352



45.31
%

$
1,103,134,195



59.71
%   December 31, 2007Contractual Delinquency


Recency DelinquencyDays Past Due

Amount


%


Amount


%Current

0  30 days

$
959,844,059



49.89
%

$
1,120,797,311



58.25
%Delinquent

31  60 days


125,213,791



6.51
%


95,761,778



4.98
%61  90 days


8,929,391



0.46
%


34,790,945



1.81
%90+ days


286,038,884



14.87
%


128,676,091



6.69
%Bankruptcy

0  30 days


29,384,478



1.53
%


87,622,292



4.55
%Delinquent

31  60 days


6,383,420



0.33
%


7,556,925



0.39
%61  90 days


2,556,033



0.13
%


3,995,884



0.21
%90+ days


114,241,573



5.94
%


53,390,403



2.78
%Foreclosure

0  30 days


1,991,903



0.10
%


32,997,880



1.71
%Delinquent

31  60 days


3,597,615



0.19
%


11,465,656



0.60
%61  90 days


374,471



0.02
%


10,356,000



0.54
%90+ days


385,324,958



20.03
%


336,469,411



17.49
%Total

$
1,923,880,576



100.00
%

$
1,923,880,576



100.00
%Total loans

0  30 days

$
991,220,440



51.52
%

$
1,241,417,483



64.53
%  20




---



##### Table of Contents



March 31, 2007Contractual Delinquency


Recency DelinquencyDays Past Due

Amount


%


Amount


%Current

0  30 days

$
1,013,493,945



57.09
%

$
1,159,305,946



65.31
%Delinquent

31  60 days


82,342,837



4.64
%


51,271,485



2.89
%61  90 days


56,476,615



3.18
%


23,656,433



1.33
%90+ days


178,831,781



10.08
%


96,911,314



5.46
%Bankruptcy

0  30 days


35,063,745



1.98
%


98,410,653



5.54
%Delinquent

31  60 days


7,154,753



0.40
%


7,120,326



0.40
%61  90 days


6,785,534



0.38
%


4,020,254



0.23
%90+ days


107,104,713



6.03
%


46,557,512



2.62
%Foreclosure

0  30 days


891,504



0.05
%


12,871,037



0.73
%Delinquent

31  60 days


1,100,125



0.06
%


2,613,114



0.15
%61  90 days


2,005,989



0.12
%


3,222,596



0.18
%90+ days


210,891,786



11.88
%


196,182,657



11.05
%Not Boarded*




73,005,029



4.11
%


73,005,029



4.11
%Total

$
1,775,148,356



100.00
%

$
1,775,148,356



100.00
%Total loans

0  30 days

$
1,049,449,194



59.12
%

$
1,270,587,636



71.58
%     *
    
    Not boarded represents recently acquired loans serviced by the
    seller on a temporary basis. 21




---



##### Table of Contents



Notes
    Receivable Portfolio
    March 31, 2008


December 31, 2007Performing loans

$
984,868,463


$
1,087,987,060Allowance for loan losses


92,764,298



129,967,195Nonaccretable discount*


44,914,268



61,590,526Total performing loans, net of allowance for loan losses and
    nonaccretable discount


847,189,897



896,429,339Impaired loans


385,868,018



330,212,508Allowance for loan losses


134,145,807



100,842,743Nonaccretable discount*


55,721,884



40,551,354Total impaired loans, net of allowance for loan losses and
    nonaccretable discount


196,000,327



188,818,411Total notes receivable, net of allowance for loan losses and
    nonaccretable discount


1,043,190,224



1,085,247,750Accretable discount*


25,995,503



26,507,403Total Notes Receivable, net of allowance for loan losses and
    accretable/nonaccretable discount

$
1,017,194,721


$
1,058,740,347     *
    
    Represents purchase discount not reflected on the face of the
    balance sheet in accordance with
    SOP 03-3
    for loans acquired after December 31, 2004. Accretable
    Discount is the excess of the loans estimated cash flows
    over the purchase prices, which is accreted into income over the
    life of the loan. Nonaccretable Discount is the excess of the
    undiscounted contractual cash flows over the undiscounted cash
    flows estimated at the time of acquisition.   22




---



##### Table of Contents



March 31, 2008


December 31, 2007Performing Loans:Fixed rate

$
723,843,757


$
765,622,654Adjustable rate


168,260,408



192,397,211Total Performing Loans

$
892,104,165


$
958,019,865Impaired Loans:Fixed rate

$
159,958,706


$
143,666,475Adjustable rate


91,763,505



85,703,290Total Impaired Loans

$
251,722,211


$
229,369,765Total Notes

$
1,143,826,376


$
1,187,389,630Accretable discount

$
25,995,503


$
26,507,403Nonaccretable discount

$
100,636,152


$
102,141,880Total Notes Receivable, net of allowance for loan losses

$
1,017,194,721


$
1,058,740,347     Lien Position.
  March 31, 2008


December 31, 2007Percentage of Total





Percentage of TotalLien Position

Principal Balance


Principal Balance


Principal Balance


Principal Balance1st
    Liens

$
471,208,615



34.38
%

$
497,433,756



35.08
%2nd
    Liens


899,527,866



65.62
%


920,765,812



64.92
%Total

$
1,370,736,481



100.00
%

$
1,418,199,568



100.00
%   Loan
    Acquisitions
    Three Months EndedMarch 31, 2007Number of loans


2,114Aggregate unpaid principal balance at acquisition

$
146,296,402Purchase price

$
125,386,390Purchase price percentage


86
%Percentage of
    1st
    liens


52
%Percentage of
    2nd
    liens


48
%  23




---



##### Table of Contents



Notes
    Receivable Dispositions
    Tribecas
    Loan Originations
    Three Months EndedMarch 31, 2007Number of loans originated


380Original principal balance

$
91,163,537Average loan amount

$
239,904Originated as fixed(1)

$
15,575,499Originated as ARM(2)

$
75,588,038Number of loans sold


15Aggregate face value(3)

$
3,842,462Gain on sale

$
128,583Gain on sale percentage


3.35
%     (1)
    
    Includes $9.9 million of Alt-A loans
    from the pipeline of loans assumed with the acquisition of the
    wholesale origination unit in February 2007.(2)
    
    Originated ARM loans are principally fixed-rate for the first
    two years and six-month adjustable-rate for the remaining term.(3)
    
    Net of loans repurchased; aggregate face amount of loans sold
    was $5.2 million.  Property Types of Originated Loans Held for
    Investment.
  Loans Held for Investmentat March 31, 2008Percentage of TotalProperty Types

Principal Balance


Principal BalanceResidential 1-4 family

$
443,664,983



93.05
%Condos, co-ops, PUD dwellings


30,383,507



6.37
%Commercial


2,601,464



0.55
%Other


165,424



0.03
%Total

$
476,815,378



100.00
%  24




---



##### Table of Contents



Geographic Dispersion of Originated Loans Held for
    Investment.
  Loans Held for Investmentat March 31, 2008Principal


Percentage of TotalLocation

Balance


Principal BalanceNew York

$
144,858,435



30.38
%New Jersey


134,563,590



28.22
%Pennsylvania


44,121,542



9.25
%Florida


28,837,906



6.05
%Massachusetts


22,812,721



4.78
%Maryland


22,437,998



4.71
%Connecticut


17,493,997



3.67
%Virginia


16,280,972



3.42
%California


11,251,645



2.36
%North Carolina


5,732,043



1.20
%All Others


28,424,529



5.96
%Total

$
476,815,378



100.00
%   Delinquency. and/or
  March 31, 2008Contractual Delinquency


Recency DelinquencyDays Past Due

Amount


%


Amount


%Current

0  30 days

$
140,488,265



29.46
%

$
194,871,147



40.87
%Delinquent

31  60 days


36,869,684



7.73
%


13,753,348



2.88
%61  90 days


21,728,473



4.56
%


2,175,640



0.46
%90 + days


14,673,111



3.08
%


2,959,398



0.62
%Bankruptcy

0  30 days


165,269



0.03
%


11,271,630



2.36
%Delinquent

31  60 days


54,979



0.01
%


2,926,471



0.61
%61  90 days


130,000



0.03
%


959,254



0.20
%90 + days


38,868,898



8.15
%


24,061,791



5.05
%Foreclosure*

0  30 days


678,922



0.14
%


30,172,086



6.33
%Delinquent

31  60 days


2,739,372



0.58
%


15,627,664



3.28
%61  90 days


13,962,983



2.93
%


13,715,512



2.88
%90 + days


206,455,422



43.30
%


164,321,437



34.46
%Total

$
476,815,378



100.00
%

$
476,815,378



100.00
%Total loans

0  30 days

$
141,332,456



29.64
%

$
236,314,863



49.56
%     *
    
    $223.8 million of loans were in various stages of the
    foreclosure process; our servicing practice for this portfolio
    is to move loans into our foreclosure collection process at an
    early stage of delinquency. 25




---



##### Table of Contents



December 31, 2007Contractual Delinquency


Recency DelinquencyDays Past Due

Amount


%


Amount


%Current

0  30 days

$
200,864,760



39.72
%

$
248,843,281



49.21
%Delinquent

31  60 days


44,725,779



8.85
%


31,105,569



6.15
%61  90 days


1,064,362



0.21
%


4,859,698



0.96
%90 + days


44,466,458



8.79
%


6,312,811



1.25
%Bankruptcy

0  30 days


166,127



0.03
%


9,925,751



1.96
%Delinquent

31  60 days


120,973



0.03
%


1,260,665



0.25
%61  90 days










278,405



0.06
%90 + days


32,572,842



6.44
%


21,395,121



4.23
%Foreclosure*

0  30 days


1,336,973



0.26
%


21,252,751



4.20
%Delinquent

31  60 days


2,774,853



0.55
%


6,860,658



1.36
%61  90 days


190,867



0.04
%


7,353,839



1.45
%90 + days


177,397,014



35.08
%


146,232,459



28.92
%Total

$
505,681,008



100.00
%

$
505,681,008



100.00
%Total loans

0  30 days

$
202,367,860



40.02
%

$
280,021,783



55.38
%     *
    
    $181.7 million of loans were in various stages of the
    foreclosure process; our servicing practice for this portfolio
    is to move loans into our foreclosure collection process at an
    early stage of delinquency.  March 31, 2007Contractual Delinquency


Recency DelinquencyDays Past Due

Amount


%


Amount


%Current

0  30 days

$
231,760,797



50.23
%

$
286,386,661



62.07
%Delinquent

31  60 days


24,188,753



5.24
%


17,883,929



3.88
%61  90 days


19,486,584



4.23
%


4,252,886



0.92
%90 + days


57,244,033



12.41
%


24,156,691



5.24
%Bankruptcy

0  30 days


139,190



0.03
%


6,478,176



1.40
%Delinquent

31  60 days


55,358



0.01
%


993,419



0.22
%61  90 days


477,750



0.10
%


889,350



0.19
%90 + days


20,365,832



4.42
%


12,677,185



2.75
%Foreclosure*

0  30 days


264,533



0.06
%


4,645,971



1.01
%Delinquent

31  60 days


602,462



0.13
%


336,760



0.07
%61  90 days


1,455,504



0.31
%


1,235,173



0.27
%90 + days


105,325,358



22.83
%


101,429,953



21.98
%Total

$
461,366,154



100.00
%

$
461,366,154



100.00
%Total loans

0  30 days

$
232,164,520



50.32
%

$
297,510,808



64.48
%     *
    
    $107.6 million of loans were in various stages of the
    foreclosure process; our servicing practice for this portfolio
    is to move loans into our foreclosure collection process at an
    early stage of delinquency.   26




---



##### Table of Contents



Other
    Real Estate Owned
    Three Months Ended March 31,2008


2007Other real estate owned

$
68,699,919


$
25,598,245OREO as a percentage of total assets


4.22
%


1.45
%OREO sold

$
7,268,999


$
8,352,780Gain on sale

$
90,816


$
121,175  Results
    of Operations  Three
    Months Ended March 31, 2008 Compared to Three Months Ended
    March 31, 2007
  Overview.
  Revenues.
 27




---



##### Table of Contents



Operating Expenses.
     28




---



##### Table of Contents



Liquidity
    and Capital Resources  General
       29




---



##### Table of Contents



Short-term Investments.
  Cost of Funds.
  Under the Terms of CreditIn Accordance with the


Agreements ExcludedTerms of the Forbearance


from the ForbearanceAgreements as Amended


Agreements as AmendedLIBOR plus 2.25%

$
990,541,633


$
LIBOR plus 2.75%


419,788,418



0% (fixed)*


125,000,000



FHLB one-month LIBOR advance rate plus 2.35%






18,179,979FHLB one-month LIBOR advance rate plus 2.50%






25,739,644$
1,535,330,051


$
43,919,623     *
    
    Interest of 20% begins to accrue after the Franklin
    Tranche A debt, $580 million as of March 31,
    2008, is paid off in full.    Cash
    Flow from Operating, Investing and Financing
    Activities
       30




---



##### Table of Contents



Borrowings    Forbearance
    Agreements with Lead Lending Bank
      
    $44.5 million of the Companys indebtedness under the
    Master Credit and Security Agreement, dated as of
    October 13, 2004, as amended, by and among Franklin Credit,
    certain subsidiaries of Franklin Credit and the bank; and,
    $44.8 million of Tribecas indebtedness to BOS (USA)
    Inc., an affiliate of Bank of Scotland, under the Master Credit
    and Security Agreement, dated March 24, 2006, by and among
    Tribeca, certain subsidiaries and BOS.    Loan Restructuring.
  
    the Company acknowledged, and the bank waived, certain existing
    defaults under the Companys existing credit facilities
    with the bank;
    Franklin Credits indebtedness to the bank was reduced by
    $300 million and Franklin Credit paid a restructuring fee
    of $12 million to the bank;
    the remaining approximately $1.54 billion of outstanding
    indebtedness to the bank, including approximately
    $1.05 billion of outstanding indebtedness of Franklin
    Credit and approximately $491.1 million of outstanding
    indebtedness of Tribeca, was restructured into six term loans
    with modified terms and a maturity date of May 15, 2009;
    and,
    the Company paid all of the accrued interest on its debt
    outstanding to the bank through December 27, 2007 and
    guaranteed payment and performance of the restructured
    indebtedness. 31




---



##### Table of Contents



Terms of the Restructured Indebtedness.
  ApplicableOutstanding


Interest


Required Monthly


Required MonthlyOutstanding


Principal


Margin Over


Principal


PrincipalPrincipal Amount


Amount


LIBOR


Amortization


AmortizationFranklin Credit


Tribeca


(basis points)


Franklin Credit


TribecaTranche A

$
600,000,000


$
400,000,000



225


$
5,400,000


$
3,600,000Tranche B

$
323,255,000


$
91,142,000



275


$
750,000


$
250,000Tranche C

$
125,000,000



N/A



N/A
(1)


N/A
(2)


N/ATranche D

$
1,033,000
(3)


N/A



250
(4)


N/A



N/AUnrestructured Debt

$
44,537,000


$
44,835,000



235-250


$
148,000


$
498,000     (1)
    
    The applicable interest rate is fixed at 10% per annum. Interest
    will be paid in kind during the term of the forbearance.(2)
    
    Tranche C requires no principal amortization. All principal
    is due at maturity.(3)
    
    Tranche D serves as a revolving credit line with a maximum
    availability of $5 million, and an additional
    $5 million which may be used for issuance of letters of
    credit.(4)
    
    Does not include a letter of credit facing fee of 0.125% per
    annum on the average daily undrawn amount of each issued and
    outstanding letter of credit.      Total OutstandingPrincipal Amount

Weighted Average(Franklin Credit and Tribeca)(1)

Applicable Interest RateImmediately after restructuring

$
1.63 billion



7.49
%Immediately prior to restructuring

$
1.93 billion



7.71
%     (1)
    
    Includes the Unrestructured Debt.    Cash Flow.
  
    to pay interest in respect of Tranche A advances,
    Tranche B advances and, in the case of Franklin Credit,
    Tranche D advances, in that order;
    to pay fees related to the Companys letters of credit from
    the bank;
    to pay the minimum required principal payments in respect of
    Tranche A advances and Tranche B advances, in that
    order;
    to prepay outstanding Tranche A advances;
    to prepay outstanding Tranche B advances;
    to prepay Unrestructured Debt (excluding that owed to BOS);
    in the case of Franklin Credit, to repay Tranche D
    advances, any letter of credit exposure, and any obligations in
    respect of any interest rate hedge agreements with the bank; 32




---



##### Table of Contents




    in the case of Franklin Credit, 90% of the available cash flow
    to repay interest and then principal of the Tranche C
    advances if Franklin Credit is acting as servicer of the
    underlying collateral, or 100% otherwise; and,
    in the case of Franklin Credit and Tribeca, to pay any advances
    then outstanding in respect of the others indebtedness to
    the bank, other than for Unrestructured Debt.  Covenants; Events of Default.
  
    the Companys reimbursable expenses in the ordinary course
    of business during each of the first two months after the date
    of the agreement will not exceed $2.5 million, excluding
    reimbursement of certain bank expenses after the date of the
    Restructuring, and thereafter, an amount provided for in an
    approved budget;
    the Company will not originate or acquire mortgage loans or
    other assets, perform due diligence or servicing, broker loans,
    or participate in off-balance sheet joint ventures and special
    purpose vehicles, without the prior consent of the bank;
    the Company will use its best efforts to obtain interest rate
    hedges acceptable to the bank in respect of the $1 billion
    of Tranche A indebtedness;
    the Company will not make certain restricted payments to its
    stockholders or certain other related parties;
    the Company will not engage in certain transactions with
    affiliates;
    the Company will not incur additional indebtedness other than
    trade payables and subordinated indebtedness;
    the Company together will maintain a minimum consolidated net
    worth of at least $5 million, plus a certain percentage, to
    be mutually agreed upon, of any equity investment in the Company
    after the date of the Restructuring;
    the Company will together maintain a minimum liquidity of
    $5 million;
    the Company will maintain prescribed interest coverage ratios
    based on EBITDA (as defined) to Interest Expense (as defined);
    the Company will not enter into mergers, consolidations or sales
    of assets (subject to certain exceptions); and,
    the Company will not, without the banks consent, enter
    into any material change in its capital structure that the bank
    or a nationally recognized independent public accounting firm
    determine could cause a consolidation of its assets with other
    persons under relevant accounting regulations.    Servicing.
 33




---



##### Table of Contents



Security.
  Gain on Debt Forgiveness.
  March
    2008 Modifications to Forbearance Agreements and Refinancing of
    BOS Loan
        
    to provide that Tranche C interest shall not accrue until
    the first business day after all outstanding amounts under the
    Tranche A facility have been paid in full;
    to increase the Tranche C interest rate to 20% from and
    after such time it begins to accrue;
    to extend an additional period of forbearance through
    July 31, 2008, from May 15, 2008, in respect of the
    remaining Unrestructured Loans; and,
    to increase the maximum availability under the Tranche D
    line of credit to $10,000,000 for working capital and general
    corporate purposes to enable the Company to purchase real
    property in which it may have a lien, and for purposes of
    meeting licensing requirements.       34




---



##### Table of Contents



Master
    Credit Facilities  Term Loans
    General. 30-day
    Interest Rates and Fees. 30-day 30-day
  For Loans FundedPrior to July 1, 2005

On or After July 1, 2005If the
    30-day
    advance rate is

the applicable margin is

the applicable margin isLess than 2.26%

350 basis points

300 basis points2.26 to 4.50%

325 basis points

275 basis pointsGreater than 4.50%

300 basis points

250 basis points   August
    2006 Modifications to Huntington National Bank Financing
    Arrangements
    December
    2006 Modifications to Huntington National Bank Financing
    Arrangements
   35




---



##### Table of Contents



30-day 30-day
  If the
    30-day
    advance rate is

the applicable margin isLess than 2.26%

300 basis points2.26 to 4.50%

260 basis pointsGreater than 4.50%

235 basis points   30-day
  If the
    30-day
    advance rate is

the applicable margin isLess than 2.26%

300 basis points2.26 to 4.50%

225 basis pointsGreater than 4.50%

200 basis points   30-day
  For Loans FundedOn or After November 15, 2006Purchase of First

Tribeca Originated Loans/Prior to November 15, 2006

Mortgages

Second Mortgage PurchasesIf the
    30-day
    advance rate is

the applicable margin is

the applicable margin is

the applicable margin isLess than 2.26%

300 basis points

300 basis points

300 basis points2.26 to 4.50%

275 basis points

225 basis points

260 basis pointsGreater than 4.50%

250 basis points

200 basis points

235 basis points     Principal; Prepayments; Termination of
    Commitments.
    Covenants; Events of Default.
  Security.
 36




---



##### Table of Contents



Bank
    of Scotland Term Loan
  30-day
  If the
    30-day
    advance rate is

the applicable margin isLess than 2.26%

300 basis points2.26 to 4.50%

275 basis pointsGreater than 4.50%

250 basis points         Warehouse
    Facilities
  Tribeca Warehouse.
    Flow Warehouse.
 37




---



##### Table of Contents



Interest
    Rate Caps
    non-amortizing
    Interest Rate Caps

Notional Amount


Expiration Date


Premium Paid


Fair ValueCap 1

$
200,000,000



September 30, 2008


$
102,000


$
Cap 2


400,000,000



September 30, 2008



90,000



Total

$
600,000,000






$
192,000


$
   Interest
    Rate Swaps
  non-amortizing,
   38




---



##### Table of Contents



EstimatedNotional Amount


Term

Fixed Rate


Fair Value*$
220,000,000


1 year


2.62
%

$
(224,316
)390,000,000


2 years


2.79
%


(3,101,632
)70,000,000


3 years


3.11
%


(914,037
)45,000,000


4 years


3.43
%


(808,763
)$
725,000,000








$
(5,048,748
)     *
    
    Determined in accordance with SFAS 157 based upon a
    Level 2 valuation methodology.    Recent
    Development
  non-amortizing,
    ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Impact of
    Inflation
    Interest
    Rate Risk
   39




---



##### Table of Contents



30-day
    Real
    Estate Risk
     40




---



##### Table of Contents



ITEM 4.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-Q.
  Changes
    in Internal Controls over Financial Reporting
   PART II
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS    Form 10-K.
  ITEM 1A.
    RISK
    FACTORS  Form 10-K Form 10-K
  Risks
    Related to Our Business
  
    We may experience higher loan losses than we have reserved for
    in our financial statements.
    A prolonged economic slowdown or a lengthy or severe recession
    could harm our operations, particularly if it results in a
    decline in the real estate market. 41




---



##### Table of Contents




    Our credit facilities require us to observe certain covenants,
    and our failure to satisfy such covenants could render us
    insolvent.
    If our lenders fail to renew our loans for additional terms or
    provide us with refinancing opportunities, our indebtedness will
    become due and payable in May 2009.
    If we do not comply with certain minimum servicing standards in
    the Forbearance Agreements with the bank, the bank can transfer
    our rights as servicer to a third party.
    Our ability to fund operating expenses depends on our principal
    lender continuing to provide an adequate operating allowance.
    Our business is sensitive to, and can be materially affected by,
    changes in interest rates.
    The bank may prevent our pursuing future business opportunities.
    We use estimates for recognizing revenue on a majority of our
    portfolio investments and our earnings would be reduced if
    actual results are less than our estimates.
    When we acquired S&D loans, the price we paid was based on
    a number of assumptions. Material differences between the
    assumptions we used in determining the value of S&D loans
    we acquired and our actual experience could harm our financial
    position.
    If we do not obtain and maintain the appropriate state licenses,
    we will not be allowed to broker or service mortgage loans in
    some states, which would adversely affect our operations.
    A significant amount of our loans held for investment are
    secured by property in New York and New Jersey, and our
    operations could be harmed by economic downturns or other
    adverse events in these states.
    We may not be adequately protected against the risks inherent in
    subprime residential mortgage loans.
    A number of our second lien mortgage loans are subordinated to
    ARM or interest-only mortgages that may be subject to monthly
    payment increases, which may result in delinquencies and
    increase our risk of loss on these loans.
    We are subject to losses due to fraudulent and negligent acts on
    the part of loan applicants, mortgage brokers, sellers of loans
    we acquired, vendors and our employees.
    We may not be successful in entering into or implementing our
    planned business of providing servicing and other mortgage
    related services for other entities on a fee-paying basis.
    The success and growth of our servicing business will depend on
    our ability to adapt to and implement technological changes, and
    any failure to do so could result in a material adverse effect
    on our business.
    If we do not manage the changes in our businesses effectively,
    our financial performance could be harmed.
    The inability to attract and retain qualified employees could
    significantly harm our business.
    An interruption in or breach of our information systems may
    result in lost business and increased expenses.
    We are exposed to the risk of environmental liabilities with
    respect to properties to which we take title.
    A loss of our Chairman may adversely affect our operations.  Risks
    Related to Our Financial Statements
  
    We may become subject to liability and incur increased
    expenditures as a result of the restatement in 2006 of certain
    previously issued financial statements.
    We may become subject to liability and incur increased
    expenditures as a result of our reassessment of our allowance
    for loan losses.
    Failures in our internal controls and disclosure controls and
    procedures could lead to material errors in our financial
    statements and cause us to fail to meet our reporting
    obligations. 42




---



##### Table of Contents



Risks
    Related to the Regulation of Our Industry
  
    New legislation and regulations directed at curbing predatory
    lending practices could restrict our ability to price, sell, or
    finance non-prime residential mortgage loans, which could
    adversely impact our earnings.
    The broad scope of our operations exposes us to risks of
    noncompliance with an increasing and inconsistent body of
    complex laws and regulations at the federal, state and local
    levels.
    If financial institutions face exposure stemming from legal
    violations committed by the companies to which they provide
    financing or underwriting services, this could negatively affect
    the market for whole-loans and mortgage-backed securities.
    We may be subject to fines or other penalties based upon the
    conduct of our independent brokers.
    We are subject to reputational risks from negative publicity
    concerning the subprime mortgage industry.
    We are subject to significant legal and reputational risks and
    expenses under federal and state laws concerning privacy, use
    and security of customer information.
    If many of our borrowers become subject to the Servicemembers
    Civil Relief Act of 2003, our cash flows and interest income may
    be adversely affected.
    Legislative action to provide mortgage relief may negatively
    impact our business.  Risks
    Related to Our Securities
  
    Thomas J. Axon effectively controls our company, substantially
    reducing the influence of our other stockholders.
    We may be delisted from The Nasdaq Stock Market, in which case
    the price and liquidity of our common stock and our ability to
    access the capital markets would be adversely affected.
    Our organizational documents, Delaware law and our credit
    facilities may make it harder for us to be acquired without the
    consent and cooperation of our board of directors, management
    and lender.
    Our quarterly operating results may fluctuate and cause our
    stock price to decline.
    Various factors unrelated to our performance may cause the
    market price of our common stock to become volatile, which could
    harm our ability to access the capital markets in the future.
    Future sales of our common stock may depress our stock price.
    Compliance with the rules of the market in which our common
    stock trades and proposed and recently enacted changes in
    securities laws and regulations are likely to increase our costs.  Form 10-K
  ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS    ITEM 3.
    DEFAULTS
    UPON SENIOR SECURITIES    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   43




---



##### Table of Contents



ITEM 5.
    OTHER
    INFORMATION  Market
    Information
      ITEM 6.
    EXHIBITS  ExhibitNumber3
.1

Fifth Amended and Restated Certificate of Incorporation.
    Incorporated by reference to Appendix A to the
    Registrants Definitive Information Statement on
    Schedule 14C, filed with the Securities and Exchange
    Commission (the Commission) on January 20, 2005.3
.2

Amended and Restated By-laws. Incorporated by reference to
    Appendix B to the Registrants Definitive Information
    Statement on Schedule 14C, filed with the Commission on
    January 20, 2005.10
.53

Letter Agreement, dated January 3, 2008, by and among the
    borrowers listed on Schedule 1 to the Forbearance
    Agreement, Franklin Credit Management Corporation and The
    Huntington National Bank. Incorporated by reference to
    Exhibit 10.6 to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on January 4, 2008.10
.54

ISDA Master (Swap) Agreement between the Registrant and the
    Huntington National Bank, dated as of February 27, 2008 and
    the Schedule thereto. Incorporated by reference to
    Exhibit 10.6 to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2007, filed with the
    Commission on April 3, 2008.10
.55*

Joinder and Amendment No. 1 to Forbearance Agreement, dated
    March 31, 2008, by and among the borrowers listed on
    Schedule 1 thereof, Franklin Credit Management Corporation
    and The Huntington National Bank.10
.56*

Second Amended and Restated Tranche D Note, dated
    March 31, 2008, by the borrowers listed on Schedule 1
    to the Forbearance Agreement, in favor of The Huntington
    National Bank.10
.57*

Joinder and Amendment No. 1 to Tribeca Forbearance
    Agreement, dated March 31, 2008, by and among the borrowers
    listed on Schedule 1 thereof, including without limitation
    Tribeca Lending Corp. and Franklin Credit Management
    Corporation, and The Huntington National Bank.10
.58*

Participation Agreement, dated March 31, 2008, by and
    between The Huntington National Bank, BOS (USA) Inc., and
    Tribeca Lending Corp. and its subsidiaries.10
.59*

Second Amended and Restated Tranche A Note, dated
    March 31, 2008, by the borrowers listed on Schedule 1
    to the Forbearance Agreement, in favor of The Huntington
    National Bank. 44




---



##### Table of Contents



ExhibitNumber10
.60*

Second Amended and Restated
    Tranche B-1
    Note, dated March 31, 2008, by the borrowers listed on
    Schedule 1 to the Tribeca Forbearance Agreement, in favor
    of The Huntington National Bank.10
.61*

Second Amended and Restated
    Tranche B-2
    Note, dated March 31, 2008, by the borrowers listed on
    Schedule 1 to the Tribeca Forbearance Agreement, in favor
    of The Huntington National Bank.10
.62*

Second Amended and Restated
    Tranche B-3
    Note, dated March 31, 2008, by the borrowers listed on
    Schedule 1 to the Tribeca Forbearance Agreement, in favor
    of The Huntington National Bank.10
.63*

Second Amended and Restated
    Tranche B-4
    Note, dated March 31, 2008, by the borrowers listed on
    Schedule 1 to the Tribeca Forbearance Agreement, in favor
    of The Huntington National Bank.31
.1*

Rule 13a-14(a)
    Certification of Chief Executive Officer of the Registrant in
    accordance with Section 302 of the Sarbanes-Oxley Act of
    2002.31
.2*

Rule 13a-14(a)
    Certification of Chief Financial Officer of the Registrant in
    accordance with Section 302 of the Sarbanes-Oxley Act of
    2002.32
.1*

Section 1350 Certification of Chief Executive Officer of
    the Registrant in accordance with Section 906 of the
    Sarbanes-Oxley Act of 2002.32
.2*

Section 1350 Certification of Chief Financial Officer of
    the Registrant in accordance with Section 906 of the
    Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith. 45




---



##### Table of Contents



SIGNATURES      By:
    /s/  ALEXANDER
    GORDON JARDIN         Signature

Title

Date/s/  ALEXANDER
    GORDON JARDINAlexander
    Gordon Jardin

Chief Executive Officer
    (Principal Executive Officer)

May 15, 2008/s/  PAUL
    D. COLASONOPaul
    D. Colasono

Executive Vice President
    and Chief Financial Officer
    (Principal Financial Officer)

May 15, 2008  46