UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


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

                For the quarterly period ended September 30, 2003

                         Commission file number 0-17771


                     FRANKLIN CREDIT MANAGEMENT CORPORATION
             (Exact name of Registrant as specified in its charter)


                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                      (I.R.S. Employer identification No.)
                                   75-2243266


                               Six Harrison Street
                            New York, New York 10013
                                 (212) 925-8745
                    (Address of principal executive offices)



     Indicate by check mark  whether the  registrant:  (1) has filed all
reports required to be filed by Section 13 or 15(d) of the  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 .


As of November 13, 2003 the issuer had 5,916,527 of shares of Common Stock,
par value $0.01 per share, outstanding.





<PAGE>



                     FRANKLIN CREDIT MANAGEMENT CORPORATION
                                    FORM 10-Q

                            As of September 30, 2003

                                 C O N T E N T S


PART I. FINANCIAL INFORMATION                                            Page

Item 1. Condensed Consolidated Financial Statements (unaudited)

        Consolidated Balance Sheets at September 30, 2003
        and December 31,2002                                               3

        Consolidated Statements of Income for the three months
        and nine months ended September 30, 2003 and
        September 30, 2002                                                 4

        Consolidated Statements of Stockholders' Equity for the
        nine months ended September 30, 2003                               5

        Consolidated Statements of Cash Flows for the nine months
        ended September 30, 2003 and September 30, 2002                    6

        Notes to Consolidated Financial Statements                      7-13

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                            14-22

Item 3. Quantitative and Qualitative Disclosure about
        Market Risk                                                       23

Item 4. Controls and Procedures                                           23

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                 23

Item 2. Changes in Securities and Use of Proceeds                         23

Item 3. Defaults Upon Senior Securities                                   23

Item 4. Submission of Matters to a Vote of Security Holders               23

Item 5.  Other Information                                                23

Item 6.  Exhibits and Reports on Form 8-K                                 24

SIGNATURES                                                                25

CERFTIFICATIONS                                                        26-27
<PAGE>



<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS

<S>                                       <C>                     <C>
ASSETS                                September 30, 2003     December 31, 2002


CASH AND CASH EQUIVALENTS                 $ 8,681,230             $ 10,576,610

RESTRICTED CASH                               461,946                  632,883

NOTES RECEIVABLE:
 Principal                                484,960,489              435,259,394
 Purchase discount                        (26,819,189)             (22,974,310)
 Allowance for loan losses                (51,394,821)             (45,841,651)
                                          -----------              -----------
  NET NOTES RECEIVABLE                    406,746,479              366,443,433

ORIGINATED LOANS HELD FOR SALE             19,200,338               22,869,947

ORIGINATED LOANS HELD FOR INVESTMENT       10,871,430                     _

ACCRUED INTEREST RECEIVABLE                 4,349,483                4,157,615

OTHER REAL ESTATE OWNED                    10,160,786                9,353,884

OTHER RECEIVABLES                           3,786,422                2,259,543

DEFERRED TAX ASSET                            479,157                  387,767

OTHER ASSETS                                3,509,244                2,633,082

BUILDING, FURNITURE AND FIXTURES - Net      1,371,185                1,106,865

DEFERRED FINANCING COSTS- Net               4,374,795                3,997,405
                                        -------------            -------------
TOTAL ASSETS                            $ 473,992,495            $ 424,419,034
                                        =============            =============
LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
 Accounts payable and accrued expenses    $ 4,297,259              $ 3,818,557
 Financing agreements                      16,053,732               11,557,369
 Notes payable                            435,481,992              395,266,144
 Deferred tax liability                       433,618                  783,115
                                          -----------              -----------
           TOTAL LIABILITIES              456,266,601              411,425,185
                                          -----------              -----------
COMMITMENTS AND CONTENGENCIES

STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 10,000,000
authorized shares; issued and
outstanding: 5,916,527 shares                  59,167                  59,167
Additional paid-in capital                  6,985,968               6,985,968
Retained earnings                          10,680,759               5,948,714
                                          -----------              ----------
          TOTAL STOCKHOLDERS' EQUITY       17,725,894              12,993,849
                                          -----------              ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY                                  $ 473,992,495            $ 424,419,034
                                        =============            =============
See notes to consolidated financial statements


</TABLE>


<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

-------------------------------------------------------------------------------
<S>                            <C>         <C>          <C>         <C>
                                     Three Months             Nine Months
                                     Ended Sept 30            Ended Sept 30
                                    2003        2002        2003        2002
                                ----------- ----------  ----------- -----------
REVENUES:

 Interest income               $10,438,099 $9,452,180   $31,721,768 $27,125,332
 Purchase discount earned        1,385,753    882,458     3,366,675   2,601,163
 Gain on sale of notes
 receivable                         36,991    114,019       633,105     114,019
 Gain on sale of originated
 loans held for sale               895,774    689,432     2,302,819   1,586,017
 Gain on sale of other real
 estate owned                      174,651    271,931       927,845     670,306
 Rental income                      29,874     44,959       103,674     130,885
 Other  income                   1,096,582    765,523     2,899,019   1,970,539
                                ---------- ----------    ----------  ----------
                                14,057,724 12,220,502    41,954,905  34,198,261
                                ---------- ----------    ----------  ----------

OPERATING EXPENSES:
 Interest expense                5,489,147  4,966,438    16,102,017  14,056,770
 Collection, general and
 administrative                  4,476,633  3,279,258    12,995,727   8,894,753
 Recovery of special charge          -           -            -      (1,662,598)
 Provision for loan losses         783,854    723,603     2,368,299   1,819,367
 Amortization of deferred
 financing costs                   516,483    313,280     1,356,875     957,203
 Depreciation                      120,283     92,143       327,742     253,787
                                ---------- ----------    ----------  ----------
                                11,386,400  9,374,722    33,150,660  24,319,282
                                ---------- ----------    ----------  ----------


INCOME BEFORE PROVISION
FOR INCOME TAXES                 2,671,324  2,845,780     8,804,245   9,878,979
                                ---------- ----------    ----------  ----------

PROVISION FOR INCOME TAXES       1,215,900  1,280,601     4,072,200   4,489,351
                                ---------- ----------    ----------  ----------

NET INCOME                     $ 1,455,424 $1,565,179   $ 4,732,045 $ 5,389,628

                               =========== ==========    ========== ===========

NET INCOME PER COMMON SHARE:
    Basic                      $      0.25 $     0.26   $      0.80  $     0.91

    Diluted                    $      0.22 $     0.25   $      0.73  $     0.86

                               =========== ==========   ===========  ==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING BASIC      5,916,527  5,916,527     5,916,527   5,916,527

                               =========== ==========   ===========  ==========
WEIGHTED AVERAGE NUMBER
SHARES OUTSTANDING DILUTED       6,573,879  6,261,550     6,506,560   6,248,352
                               =========== ==========   ===========  ==========


See notes to consolidated financial statements

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2003 (Unaudited)
-------------------------------------------------------------------------------
<S>                 <C>        <C>       <C>           <C>          <C>

                        Common Stock     Additional
                       --------------      Paid-In      Retained
                       Shares  Amount      Capital      Earnings       Total
-------------------------------------------------------------------------------

January 1, 2003     5,916,527  $59,167   $6,985,968    $5,948,714   $12,993,849

  Net income                                            4,732,045     4,732,045

                    -----------------------------------------------------------
September 30, 2003  5,916,527  $59,167   $6,985,968   $10,680,759   $17,725,894

                    ===========================================================

See notes to consolidated financial statements.

</TABLE>



<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

-------------------------------------------------------------------------------
<S>                                           <C>                  <C>
                                              Nine months ended September 30,
                                                   2003              2002
CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income                                      $4,732,045         $5,389,628
 Adjustments to reconcile net income to
  net cash used in operating activities:
  Depreciation                                      327,742            253,787
  Amortization of deferred financing costs        1,356,875            957,203
  Origination of loans held for sale            (67,934,759)       (51,497,518)
  Proceeds on sale of loans held
  for sale and principal collections             59,941,543         25,378,346
  Purchase discount earned                       (3,366,675)        (2,601,163)
  Gain on sale of other real estate owned          (927,845)          (670,306)
  Gain on sale of notes receivable                 (633,105)          (114,019)
  Provision for loan losses                       2,368,299          1,819,367
Change in:
  Accrued interest receivable                       191,868            461,251
  Other receivables                              (1,526,879)         3,318,091
  Other assets                                     (876,162)        (1,509,603)
  Deferred tax asset                                (91,390)           687,248
  Current tax liability                               -               (225,000)
  Deferred tax liability                           (349,497)           346,287
  Accounts payable and accrued expenses             478,702            (96,370)
                                                 -----------       ------------
  Net cash used in operating activities          (6,309,238)       (18,102,771)
                                                 -----------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Acquisition and loan fees                       (1,887,363)        (1,549,353)
 Acquisition of notes receivable               (163,332,881)      (134,050,300)
 Proceeds from sale of other real estate owned   11,345,657          5,410,057
 Proceeds from the sale of notes receivable       4,280,676            910,083
 Purchase of building, furniture & fixtures        (592,062)          (262,652)
 Principal collection on notes receivable       109,716,685         77,041,102
 (Increase) decrease in restricted cash             170,937           (132,756)
                                                ------------       ------------
   Net cash used in investing activities        (40,298,351)       (46,204,724)
                                                ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on subordinated debentures                -                 (24,262)
  Payments on financing agreements              (67,722,555)       (52,248,536)
  Proceeds from financing agreements             72,218,917         53,579,279
  Proceeds from notes payable                   173,789,284        139,354,638
  Payments on notes payable                    (133,573,437)       (77,440,376)
                                               -------------       ------------
Net cash provided by financing activities        44,712,209         63,245,005
                                               -------------       ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS        (1,895,380)        (1,062,490)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   10,576,610          7,784,162

CASH AND CASH EQUIVALENTS END OF PERIOD          $8,681,230         $6,721,672
                                                ===========        ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash payments for interest                      $14,902,010        $12,556,770
                                               ============        ===========
                                               ============        ===========
Cash payment for taxes                           $4,742,329         $4,125,000
                                               ============        ===========

 Notes to Consolidated Financial Statements

</TABLE>




<PAGE>



             NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - Franklin Credit Management Corporation (the  "Company"), a
Delaware corporation, was formed to acquire performing, nonperforming,
nonconforming and subperforming notes receivable and promissory notes from
financial institutions, and mortgage and finance companies.  The Company
services and collects such notes receivable through enforcement of the original
note term, modification of original note terms and, if necessary, liquidation
of the underlying collateral.

In January 1997, a wholly owned subsidiary was formed, to originate or purchase,
sub-prime residential mortgage loans to individuals whose credit histories,
income and other factors cause them to be classified as nonconforming borrowers.

A summary of the Company's significant accounting policies is as follows.

Basis of Presentation - The accompanying consolidated financial are unaudited.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and changes in cash flows have been made. Certain
information and footnote disclosures normally included in consolidated financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 2002 as filed with
the Securities and Exchange Commission.  The results of operations for the three
and nine months ended September 30, 2003 are not necessarily indicative of the
operating results for the full year.

Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

Reclassification - Certain prior years amounts have been reclassed to conform
with current year presentation.

Operating Segments - Statement of Financial Accounting Standards ("SFAS") No.131
"Disclosures about Segments of an Enterprise and Related  Information" requires
companies to report financial and descriptive information about their reportable
operating segments, including segment profit or loss, certain specific revenue
and expense items, and segment assets. The Company is currently operating in
two business segments:(i) portfolio asset acquisition;and (ii) mortgage banking.

Estimates - The preparation of consolidated financial statements in conformity
with accounting  principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial  statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates.  The most significant estimates of the Company are
allowance for loan losses.

Earnings per share - Basic earnings per share is calculated by dividing net
income by the weighted average number of shares outstanding during the year.
Diluted earnings per share is calculated by dividing net income by the weighted
average number of shares outstanding, including the dilutive effect, if any, of
stock options outstanding, calculated under the treasury stock method.

Cash  and  Cash  Equivalents  - Cash and cash equivalents includes cash and
short-term investments with original maturities of three months or less, with
the exception of restricted cash. The Company maintains accounts at banks, which
at times may exceed federally insured limits.  The Company has not experienced
any losses from such concentrations.

Notes Receivable and Income Recognition  - The notes receivable portfolio
consists  primarily of secured real estate mortgage loans  purchased from
financial institutions, and mortgage and finance companies.  Such notes
receivable are performing,  nonperforming  or underperforming at the time of
purchase and are usually  purchased  at a discount  from the  principal  balance
remaining.  Notes receivable  are  stated at the  amount  of unpaid  principal,
reduced by purchase discount and an allowance for loan losses.  The Company has
the ability and intent to hold these notes until maturity, payoff or liquidation
of collateral. Impaired notes receivable are measured based on the present value
of expected future cash flows discounted at the note's  effective  interest rate
or,  as a practical expedient,  at the  observable  market  price  of the note
receivable  or the  fair  value  of the  collateral  if the  note is collateral
dependent.  The Company  periodically  evaluates  the  collectability  of  both
interest and  principal of its notes  receivable  to determine whether they are
impaired.  A note  receivable  is considered  impaired  when it is probable the
Company  will be  unable to  collect all  contractual  principal  and  interest
payments due in  accordance  with the terms of the note  agreement.  In general,
interest on the notes  receivable is calculated  based on  contractual  interest
rates applied to daily balances of the collectible  principal amount outstanding
using the accrual  method.  Accrual of interest on notes  receivable, including
impaired notes  receivable,  is  discontinued  when management  believes, after
considering  economic and business conditions and collection  efforts, that the
borrowers'  financial condition is such that collection of interest is doubtful.
When interest accrual is discontinued,  all unpaid accrued interest is reversed.
Subsequent  recognition of income occurs only to the extent payment is received
subject  to  management's  assessment  of the  collectability  of the remaining
interest and principal. A non-accrual note is restored to an accrual status when
it is no longer delinquent and  collectability  of interest and principal is no
longer in doubt and past due interest is recognized at that time.

Loan purchase discounts are amortized into income using the interest method over
the period to maturity.  The interest method  recognizes  income by applying the
effective  yield on the net  investment in the loans to the projected cash flows
of the loans.  Discounts are amortized if the projected payments are probable of
collection  and the timing of such  collections  is  reasonably  estimable.  The
projection of cash flows for purposes of amortizing  purchase loan discount is a
material estimate,  which could change significantly,  in the near term. Changes
in the  projected  payments  are  accounted  for as a change in estimate and the
periodic  amortization is prospectively  adjusted over the remaining life of the
loans.

In the event projected  payments do not exceed the carrying value of the loan,
the periodic amortization is suspended and either the loan is written down or
an allowance for uncollectibility is recognized.

Allowance for Loan Losses - The allowance for loan losses, a material  estimate
which could change  significantly in the near term, is initially established by
an allocation of the purchase loan discount based on management's assessment of
the  portion of  purchase  discount  that  represents  uncollectable principal.
Subsequently, increases to the  allowance are made through a provision for loan
losses charged to expense  and the allowance  is  maintained  at a level that
management  considers adequate to absorb potential losses in the loan portfolio.
An  allowance of  $51,394,821and $208,677 is included in notes  receivable  and
loans held for investment, respectively, at September 30 ,2003.

Management's  judgment in determining the adequacy of the allowance is based on
the evaluation of individual loans within the portfolios,the known and inherent
risk characteristics and size of the note receivable portfolio,  the assessment
of current economic and real estate market conditions, estimates of the current
value of underlying  collateral,  past loan loss experience  and other relevant
factors.  Impaired notes receivable, are charged against the allowance for loan
losses when management believes that the collectability of principal is unlikely
based on a note-by-note  review.  In connection  with the determination  of the
allowance for loan losses,  management  obtains independent  appraisals for the
underlying collateral when considered necessary.

The  Company's  notes  receivable  are  collateralized  by real  estate located
throughout  the United  States with a concentration  in  California, New York,
Texas, and Florida.  Accordingly, the collateral value of a substantial portion
of the Company's real estate notes receivable and real estate acquired  through
foreclosure is susceptible to changes in market conditions.

Management  believes  that the  allowance  for loan  losses is  adequate. While
management uses available  information to recognize losses on notes receivable,
future additions to the  allowance  or  write-downs  may be necessary  based on
changes in economic conditions.

Originated  Loans Held for Sale - The loans held for sale consist  primarily of
secured real estate first and second mortgages originated by the Company.  Such
loans held for sale are  performing  and are carried at lower of cost or market.
The gain/loss on sale is recorded as the difference  between the carrying amount
of, the loan and the proceeds  from sale on a loan-by-loan  basis.  The Company
records a sale when the title transfers to the seller.

Originated  Loans Held for Investment - Such loans consist primarily of secured
real estate first and second  mortgages  originated  by the Company. Such loans
held for  investment  are  performing  and are carried at amortized cost of the
loan. In the second  quarter of 2003 the Company's holding  strategy on several
loans originated  changed. The unamortized cost of these loans were transferred
from the loans  held for sale  category  into  loans  held for investment.  The
Company has both the intent and ability to hold these loans to maturity.

Other  Real  Estate  Owned  - Other  real  estate  owned  ("OREO") consists  of
properties acquired through, or in lieu of, foreclosure or other proceedings and
are held for sale and carried at the lower of cost or fair value less  estimated
costs to sell.  Subsequent write-downs  are  charged to  operations  based upon
management's  continuing  assessment  of  the  fair  value  of  the  underlying
collateral.  Property is evaluated  periodically  to ensure  that the  recorded
amount is  supported  by current fair values and  write-downs  are  recorded as
necessary to reduce the  carrying  amount to fair value less estimated  cost to
sell.  Revenue  and  expenses  from the  operation  of OREO and changes  in the
valuation  allowance are included in  operations.  Direct costs relating to the
development  and  improvement  of the property are  capitalized, subject to the
limit of fair value of the  collateral,  while  costs  related  to holding  the
property are expensed. Gains or losses are included in operations upon disposal.

Building,  Furniture  and  Equipment  - Building,  furniture  and  equipment is
recorded at cost net of accumulated depreciation. Depreciation is computed using
the  straight-line  method over the estimated useful lives of the assets, which
range from 3 to 40 years. Maintenance and repairs are expensed as incurred.

Deferred  Financing  Costs - Costs,  incurred in connection with obtaining
financing, are deferred and are amortized over the term of the related debt.

Retirement  Plan - The Company has a defined contribution  retirement plan (the
"Plan") covering all full-time  employees who have completed one month of
service.  Contributions to the Plan are made in the form of payroll deductions
based on employees'pretax wages. Currently, the Company matches 50% of the
first 3% of the employees' contribution.

Income Taxes - Income taxes are accounted for under SFAS No. 109 Accounting for
Income Taxes, which requires an asset and liability approach in accounting for
income taxes.  This method provides for deferred income tax assets or
liabilities based on the temporary difference between the income tax basis of
assets and liabilities and their carrying amount in the consolidated financial
statements.  Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.  Deferred tax assets are
reduced by a valuation allowance when management determines that it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.  Deferred tax assets and  liabilities are adjusted for the effects of
changes in tax laws and rates on the date of the enactment.

Fair Value of Financial  Instruments - SFAS No. 107, Disclosures About Fair
Value of Financial Instruments, requires disclosure of fair value information
of financial instruments, for which it is practicable to estimate that value.
In cases where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques.  Those techniques
are significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows.  In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and, in
many cases, could not be realized in immediate settlement of the instruments.
Statement  No. 107 excludes certain financial instruments and all non-financial
assets and liabilities from its disclosure requirements.  Accordingly, the
aggregate fair value amounts do not represent the underlying value of the
Company.

The following methods and assumptions were used by the Company in estimating
the fair value of its financial instruments:

a.  Cash, Restricted Cash,  Accrued Interest Receivable, Other Receivable and
    Accrued Interest Payable - The carrying values reported in the consolidated
    balance sheets are a reasonable estimate of fair value.
b.  Notes Receivable - Fair value of the net note receivable portfolio is
    estimated by discounting the future cash flows using the interest method.
    The carrying amounts of the notes receivable approximate fair value.
c.  Short-Term  Borrowings - The carrying amounts of the financing  agreements
    and other short-term  borrowings approximate their fair value.
d.  Long-Term  Debt - Fair value of the Company's  long-term debt (including
    notes payable, and subordinated  debentures) is estimated using discounted
    cash flow analysis based on the Company's current incremental  borrowing
    rates for similar types of borrowing arrangements.  The carrying amounts
    reported in the accompanying consolidated balance sheets approximate their
    fair value.

Comprehensive Income - SFAS No. 130, Reporting Comprehensive Income defines
comprehensive  income as the  change in  equity  of a  business  enterprise
during a period  from  transactions  and other  events  and  circumstances,
excluding  those  resulting  from  investments  by  and   distributions  to
stockholders. The Company had no items of other comprehensive income during
2003 or 2002 therefore net income was the same as its comprehensive income.

Accounting  for Stock  Options - The stock option plan is accounted for under
the recognition and measurement  principles  of Accounting  Principles Board
(APB)  Opinion 25,  Accounting  for Stock  Issued to  Employees  and  related
interpretations.  No stock-based  employee compensation cost is reflected in
net income for stock options,  as all options granted under these plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant.


Recently Adopted Accounting Pronouncements
In  April-2002,  the FASB issued SFAS  No.-145,  Rescission  of SFAS No.-4, 44,
and 64,  Amendment of SFAS No.-13,  and Technical Correction.  SFAS-No.-145,
among other things, rescinds SFAS-No.-4,  Reporting Gains and Losses from
Extinguishment of Debt, and,  accordingly, the reporting of gains or losses
from the early extinguishment of debt as extraordinary items will only be
allowed if they met the specific criteria for extraordinary items included in
APB Opinion-30, Reporting the Results of Operations.  The Company adopted this
statement on January 1, 2003 and it did not have an effect on the Company's
consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities  (effective January 1, 2003).- SFAS No. 146
replaces  current  accounting  literature and requires the  recognition of
costs associated with exit or disposal  activities  when they are incurred
rather than at the date of a commitment to an exit or disposal  plan.- The
adoption of this statement did not have an effect on the Company's consolidated
financial statements.

In November of 2002, the FASB issued  Interpretation No. 45, Guarantors'
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others.  The Interpretation elaborates on the
disclosures to be made by a guarantor in its financial  statements  about its
obligations under certain guarantees that it has issued.  It also clarifies that
a guarantor is required to recognize,  at the inception of a guarantee,  a
liability for the fair value of the obligation undertaken in issuing the
guarantee.  The  disclosure provisions of this Interpretation  were  effective
for the Company's December 31, 2002 financial  statements.  The initial
recognition and initial  measurement  provisions of this Interpretation are
applicable on a prospective  basis to guarantees  issued or modified after
December 31, 2002.  This interpretation did not have an effect on the Company's
consolidated financial statements.

In January of 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities.  This Interpretation  clarifies the application  of
existing accounting pronouncements to certain entities in which equity
investors do not have the  characteristics  of a  controlling  financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
The provisions  of the  Interpretation  are  effective  for  all variable
interests in variable interest entities created after January 31, 2003 and to
all variable interest activities on December  31, 2003.  The Company  believes
that it does not hold any investments in entities that will be  deemed variable
interest entities,  and accordingly,  that the implementation of this
Interpretation did not have an effect on the Company's consolidated financial
statements.

In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based
Compensation-Transition and Disclosure. This statement amends  SFAS No. 123 to
provide alternative  methods of  transition  for a  voluntary  change to the
fair value based method of accounting for stock-based  employee  compensation
and amends the disclosure  requirements of SFAS No. 123. Other than the
additional disclosure  requirements  below  adoption of the provisions of the
Statement on January 1, 2003 did not have any impact because the Company will
continue to use the intrinsic value method as set forth in APB No. 25.

The Company  applies APB  Opinion 25 and  related  interpretations  in
accounting  for stock  options.  Had the Company determined  compensation
costs based on the fair value of the stock options at the grant date consistent
with the method of SFAS No.123,  the  Company's  nine months ended  September
30, 2003 and 2002 net income and earnings per share would have been reduced to
the pro forma amounts indicated in the table that follows.
<TABLE>
<CAPTION>
<S>                                   <C>                     <C>
                                          2003                     2002


Net income  - as reported             $ 1,455,424             $ 1,565,179
Net income  -  pro forma              $ 1,438,758             $ 1,549,307

Net income  per common share
- basic - as reported                 $      0.25             $    0.2625
Net income per common share
- basic - pro forma                   $      0.24             $    0.2624
Net income per common share
- diluted - as reported               $      0.22             $    0.2522
Net income per common share
- diluted - pro forma                 $      0.22             $    0.2522

</TABLE>


The Company's nine months ended  September 30, 2003 and 2002 net income and
earnings  per share  would  have  been  reduced  to the pro  forma  amounts
indicated in the table that follows.
<TABLE>
<CAPTION>

<S>                                   <C>                     <C>
                                         2003                   2002

Net income  - as reported             $ 4,732,045             $ 5,389,628
Net income  -  pro forma              $ 4,682,046             $ 5,363,176

Net income  per common share
- basic - as reported                 $     0.80              $    0.9180
Net income per common share
- basic - pro forma                   $     0.79              $    0.9179
Net income per common share
- diluted - as reported               $     0.73              $    0.8673
Net income per common share
- diluted - pro forma                 $     0.72              $    0.8672

</TABLE>




There were 39,000  options  granted during the nine months ended  September 30,
2003. The weighted  average fair value of options granted  during the nine
months ended  September 30, 2003 was $2.58.  The fair value of the options
granted was estimated using the Black-Scholes option-pricing model.

In April 2003,  the FASB issued SFAS No.149,  Amendment of Statement 133 on
Derivative  Instruments  and Hedging  Activities.SFAS 149 amends and clarifies
the accounting for derivative  instruments,  including certain derivative
instruments embedded in other contracts,  and for hedging activities under SFAS
133, Accounting for Derivative Instruments and Hedging Activities.  SFAS 149 is
generally  effective for contracts  entered into or modified after  September
30, 2003 and for hedging  relationships  designated after  September  30,  2003.
The  adoption  of SFAS  No.149  on July 1,  2003,  as  required,  had no effect
on the Company's consolidated financial statements.

In May  2003,  the FASB  issued  SFAS No.  150,  Accounting  for  Certain
Financial  Instruments  with  Characteristics  of Both  Liabilities  and Equity.
SFAS No 150  establishes  standards  for how an  issuer  classifies  and
measures  certain financial instruments with  characteristics  of both
liabilities and equity.  SFAS No. 150 requires that certain  financial
instruments be classified as liabilities that were previously considered equity.
The adoption of this standard on July 1, 2003, as required, had no effect on
the Company's consolidated financial statements.




<PAGE>

BUSINESS SEGMENTS

The Company has two reportable operating segments: (i) portfolio asset
acquisition and resolution; and  (ii) mortgage banking. The portfolio asset
acquisition and resolution segment acquires performing, nonperforming,
nonconforming and subperforming notes receivable and promissory notes from
financial institutions, mortgage and finance companies, and services and
collects such notes receivable through enforcement of terms of original note,
modification of original note terms and, if necessary, liquidation of the
underlying collateral.  The mortgage-banking segment originates or purchases,
sub prime residential mortgage loans for individuals whose credit histories,
income and other factors cause them to be classified as nonconforming borrowers.

The Company's management evaluates the performance of each segment based on
profit or loss from operations before unusual and extraordinary items and
income taxes.  The accounting policies of the segments are the same as those
described in the summary of significant accounting policies.
<TABLE>
<CAPTION>
<S>                                         <C>                    <C>
                                       Three Months Ended September 30,
                                            2003                    2002

CONSOLIDATED REVENUE
 Portfolio asset acquisition and
 resolution                              $ 12,067,078           $ 10,495,429
 Mortgage banking                           1,990,646              1,725,073
                                         ------------           ------------
 Consolidated Revenue                    $ 14,057,724           $ 12,220,502
                                         ============           ============

CONSOLIDATED  INCOME
 Portfolio asset acquisition and
 resolution                               $ 2,236,779            $ 2,273,810
 Mortgage banking                             434,545                571,970
                                          -----------            -----------
Consolidated  Income before income
taxes                                     $ 2,671,324            $ 2,845,780
                                          ===========            ===========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                         <C>                    <C>
                                         Nine Months Ended September 30,
                                             2003                   2002

CONSOLIDATED REVENUE
 Portfolio asset acquisition and
 resolution                              $ 36,621,059           $ 29,723,517
 Mortgage banking                           5,333,846              4,474,744
                                         ------------           ------------
Consolidated Revenue                     $ 41,954,905           $ 34,198,261
                                         ============           ============
CONSOLIDATED INCOME
 Portfolio asset acquisition and
 resolution                               $ 7,768,991            $ 8,272,668
 Mortgage banking                           1,035,254              1,606,311
                                          -----------            -----------
Consolidated Income before income taxes   $ 8,804,245            $ 9,878,979
                                          ===========            ===========11
</TABLE>

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

General

Forward-Looking  Statements.  Statements  contained  herein that are not
historical fact may be  forward-looking  statements within the meaning of
Section 27A of the  Securities Act of 1933, as amended,  and Section 21E of the
Securities  Exchange Act of 1934, as amended,  that are subject to a variety of
risks and uncertainties.  There are a number of important factors that could
cause actual results to differ  materially  from those  projected or suggested
in forward-looking  statements  made by the Company.  These  factors include,
but are not limited to: (i) unanticipated  changes in the U.S economy,
including changes in business conditions and interest rates and changes in the
level of growth in the finance and housing markets;  (ii) the status of
relations  between the Company and its sole Senior Debt Lender and the Senior
Debt Lender  willingness to extend additional credit to the Company;  (iii) the
availability for purchases of additional loans;  (iv) the status of relations
between the Company and its sources for loan purchases; (v) unanticipated
difficulties in collections  under loans in the Company's  portfolio;  and (vi)
other risks detailed from time to time in the Company's SEC reports. Additional
factors that would cause actual results to differ  materially  from those
projected or suggested or suggested in any forward-looking  statements are
contained in the Company's filings with the Securities and Exchange Commission,
including,  but not limited to,  those  factors  discussed  under the caption
"Real  Estate  Risk" in the  Company's  Annual  Report on Form 10-K and
Quarterly  Reports on Form 10-Q,  which the Company  urges  investors to
consider.  The Company  undertakes  no  obligation to publicly release the
revisions to such  forward-looking  statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrences of
unanticipated  events,  except as other wise required by securities and other
applicable  laws.  Readers are cautioned not to place undue reliance on these
forward-looking  statements,  which speak only as of the date thereof.  The
Company undertakes  no  obligation  to release  publicly  the  results on any
events or  circumstances  after the date hereof or to reflect the occurrence of
unanticipated events.

Critical Accounting Policies
The following  management's  discussion and analysis of financial  condition
and results of operations is based on the amounts reported in the Company's
consolidated  financial statements.  In preparing the consolidated financial
statements in conformity with accounting principles  generally accepted in the
United States of America ("GAAP"),  management is required to make estimates
and assumptions that affect the  financial  statements  and  disclosures.
These  estimates  require  management's  most  difficult, complex or subjective
judgments.  The  Company's  critical  accounting  policies are described in its
Form 10-K for the year ended December 31, 2002.  There have been no significant
changes in the Company's critical accounting policies since December 31, 2002.


Acquisition  Activity.  During the nine months ended  September 30, 2003, the
Company  purchased  loans with an aggregate face value of $188 million for an
aggregate  purchase price of $163 million or 87%,  compared with the purchase
during the nine months ended September  30, 2002 of $154  million at an
aggregate  purchase  price of $134 million or 87% of aggregate  face value. The
purchases during the nine months ended September 30, 2003 included 32 bulk
portfolios  consisting  primarily of first and second mortgages,  with an
aggregate face value of $140 million at an  aggregate  purchase  price of $122
million  or 87% of the face  value,  and 194 flow purchase  transactions
consisting  primarily of first and second mortgages with an aggregate face
value of $48 million at an aggregate purchase  price of $41 million or 85% of
face value.  Acquisition  of these  portfolios  was fully  funded  through
Senior Debt in the amount equal to the purchase price plus a 1% loan
origination fee.

The Company  believes  these  acquisitions  will result in  increases in the
level of interest  income and purchase  discount income during future periods.
Payment streams are generated once the loans are incorporated into the
Company's loan tracking system.

There can be no assurance the Company will be able to acquire any additional
loans on favorable terms or at all.

Single-Family Residential Lending- In January 1997, the Company formed a wholly
owned subsidiary,  Tribeca Lending Corp.  ("Tribeca"), to  originate
residential  mortgage  loans made to  individuals  whose credit  histories,
income and other  factors  cause them to be classified as  non-conforming
borrowers.  Management  believes that lower credit  quality  borrowers
present an  opportunity for the Company to earn superior  returns for the risks
assumed.  Tribeca  provides first and second  mortgages that are originated on
a retail basis through  marketing  efforts that include  utilization of
marketing  firms that supply leads to the Company.  Tribeca is currently
licensed as a mortgage  banker in Alabama,  California,  Colorado,  Connecticut,
District of  Columbia,  Florida,  Georgia,  Kentucky, Illinois,  Maryland,
Massachusetts,  Michigan,  Missouri, New York, New Jersey, North Carolina, Ohio,
Oklahoma, Oregon,  Pennsylvania, South Carolina,  Tennessee,  Texas, Virginia,
Washington State, and West Virginia and is a Department of Housing and Urban
Development FHA Title I and Title II approved lender.  Tribeca-originated
loans are typically  expected to be sold in the secondary market through
servicing-released  sales.  Tribeca  anticipates  holding  certain of its
mortgages in its  portfolio  when it believes that the return from holding the
mortgage,  on a risk-adjusted  basis,  outweighs the return from selling the
mortgage in the secondary market.  Since commencing operations in 1997, Tribeca
has originated  approximately  $235 million in loans.  During the year the
Company changed the holding  strategy  of several  of its  originated  loans
and  reclassified  $13.2  million  of  principal  and fees into loans held for
investments.

During the nine months ended September 30, 2003, Tribeca  originated 370 loans
with an aggregate  principal amount of $67,934,759 loans compared to 385 loans
with an aggregate  principal of  $51,497,518  during the nine months ended
September  30, 2002.  During the nine months ended September 30, 2003,  Tribeca
had income before taxes of $1,035,254 as compared to $1,606,311  during the
nine months ended September 30, 2002.  This  decrease in income  reflected the
cost  associated  with the expansion of a three new branch  offices in New
Jersey,  Florida and Maryland and salaries for new employees during the period
and slightly  decreased  margins at point of sale due to originations of higher
quality borrowers.  As of September 30, 2003,  Tribeca had approximately  $19.2
million face value of loans held for sale and $10.9 million held for investment.
Revenues and expenses related to loans held for sale, other than periodic
interest payments, and fee are expected to be realized upon sale of such loans.


Cost of Funds.  As of September 30, 2003,  the Company had Senior Debt
outstanding  under  several  loans with an aggregate  principal balance of
approximately  $435  million.  Additionally  the Company has  financing
agreements,  which had an  outstanding  balance of approximately $16 million at
September 30, 2003.

The  majority of the loans  purchased by the Company  bear  interest at a fixed
rate,  while the Senior Debt  incurred to acquire such loans bears interest at
a variable rate.  Consequently,  changes in market interest rate conditions
caused direct corresponding changes in the Company's  interest  expense.  On
March 1, 2003, the Company and its Senior Debt Lender  entered into a two-year
agreement that the interest  rate for Senior Debt will be based on the Federal
Home Loan Bank of  Cincinnati  (FHLB) thirty (30) day advance rate plus an
additional  spread of 3.50%.  Under the  amendment  approximately  $40 million
of Senior Debt will continue to accrue  interest at a rate equal to the prime
rate plus a margin of between 0% and 1.75%.  The weighted average cost of funds
was 4.77% and 5.31% during the three months ended September 30, 2003 and
September 30, 2002.

Inflation.  The impact of inflation  on the  Company's  operations during the
nine months  ending  September  30,  2003, and 2002 was immaterial.



Results of Operations

Three Months Ended September 30, 2003 Compared to Three Months Ended
September 30, 2002.

Total revenue,  which is comprised of interest income,  purchase discount
earned,  gain on portfolio sale of notes receivable, gain on sale of notes
receivable originated,  gain on sale of OREO, rental income and other income,
increased by $1,837,222 or 15%, to $14,057,724 during the three months ended
September 30, 2003, from $12,220,502 during the three months ended September
30, 2002.

Interest income on notes receivable increased by $985,919 or 10%, to $10,438,099
during the three months ended September 30, 2003 from  $9,452,180  during the
three months ended  September 30, 2002. The Company  recognizes interest income
on notes included in its  portfolio  based upon three  factors:  (i) interest
on  performing  notes,  (ii) interest  received  with  settlement payments on
non-performing  notes and (iii) the balance of settlements in excess of the
carried face value. This increase  resulted  primarily from the net  increase
of  $77,715,503  or 18% in the size of the  portfolio  between  September  30,
2002 and  September  30, 2003 and was partially offset by a reduction in yield
due to prepayments.

Purchase  discount earned  increased by $503,295 or 57%, to $1,385,753  during
the three months ended September 30, 2003, from $882,458 during the three months
ended  September 30,  2002.  This  increase  reflected  the growth in size of
the portfolio and prepayments in portfolio's that earn purchase discount which
accelerated the earning of discount income.

Gain on sale of notes  receivable  decreased by $77,028 or 68% to $36,991
during the three months ended  September 30, 2003 as compared to $114,019
realized  during the three months ended September 30, 2002. The Company sold $2
million in non-performing loans during the three  months ended  September 30,
2003 as compared to $1 million of low interest  rate  performing  loans during
the three months ended September 30, 2002.

Gain on sale of notes  originated by Tribeca  increased by $206,342 or 30% to
$895,774 during the three months ended September 30, 2003,  from  $689,432
during the three months ended  September  30, 2002.  This  increase is based on
an increase in the volume of notes sold to $21 million  during the three months
ended  September 30, 2003,  compared to sales of $10 million during the three
months ended September 30, 2002 that was partially offset by a decline in
margin.

Gain on sale of OREO  decreased by $97,280 or 36% to $174,651  during the three
months ended  September 30, 2003 from $271,931 during the three months ended
September 30, 2002.  This decrease  reflected the lesser quality of several REO
properties sold at losses during the three months ended  September  30, 2003 as
compared to the three months ending  September 30, 2002.  The Company sold 54
and 33 OREO properties during the three months ended September 30, 2003 and
September 30, 2002 respectively.

Rental income  decreased by $15,085 or 34% to $29,874  during the three months
ended  September 30, 2003,  from $44,959 during the three months ended
September 30, 2002.  Rental income  decreased due to the reduction of rental
properties  held during the three months ended September 30, 2003 as compared
to September 30, 2002. The Company had 4 and 12 rental  properties  during the
three months ended September 30, 2003 and September 30, 2002 respectively.

Other income  increased by $331,059 or 43%, to  $1,096,582  during the three
months  ended  September  30, 2003 from  $765,523 during the three months ended
September 30, 2002. This increase  reflected  increases in prepayment  penalty
income due to prepayments, the growth in the size of the portfolio and
increased loans fees associated with Tribeca loans sold.


Total operating  expenses  increased by $2,011,679 or 21% to $11,386,400 during
the three months ended September 30, 2003 from $9,374,721 during the three
months ended September 30, 2002. Total operating  expenses includes interest
expense,  collection,  general and administrative expenses, provisions for loan
losses, amortization of deferred financing costs and depreciation expense.

Interest  expense  increased  by $522,709 or 11%, to  $5,489,147  during the
three  months  ended  September  30,  2003, from $4,966,438 during the three
months ended September 30, 2002. This increase  resulted  primarily from a 17%
increase in debt measured on the last day of the two periods,  which was
partially  offset by a 10% decrease in costs of funds.  The weighted  average
cost of funds was 4.77% and 5.31% during the three months ended  September 30,
2003 and September  30, 2002.  Total debt  increased by $66 million or 17%, to
$451 million as of September 30, 2003,  from $385 million as of September 30,
2002.  Total debt consists  principally of Senior Debt and financing agreements.

Collection,  general and  administrative  expenses  increased by $1,197,375 or
37% to $4,476,633 during the three months ended September  30, 2003 from
$3,279,258  during the three  months ended  September  30,  2002.  The increase
resulted in part from an 18% increase  in  the  Company's  portfolio  at
September  30,  2003  as  compared  with  September  30,  2002.  Collection,
general  and administrative  expense consists  primarily of personnel  expense,
and all other collection  expenses  including OREO related expense, litigation
expense, and miscellaneous collection expense.

Personnel  expenses  increased  by $775,982 or 52% to  $2,266,724  during the
three  months  ended  September  30, 2003 from $1,490,742  during the three
months ended September  30,2002.  This increase  resulted largely from
increases in staffing in Tribeca as the Company opened three new branch offices
during the quarter and increased  commissions due to increased loan  production.
All other collection  expenses  increased  by $421,393 or 24% to  $2,209,909
during the three months ended  September  30, 2003 from  $1,788,516 during the
three months ended  September 30, 2002.  This increase  resulted  primarily
from increased  legal and  collection expenses associated with the growth in
size of the Company's nonperforming portfolio and increased professional and
advertising expenses.

Provisions  for loan losses  increased  by $60,251 or 8% to $783,854  during
the three months  ended  September  30, 2003 from $723,603 during the three
months ended September 30, 2002. This increase  resulted  primarily from
write-offs in portfolios where there was no longer purchase discount available
to increase reserves.

Amortization  of deferred  financing  costs  increased by $203,203 or 65% to
$516,483  during the three months ended September 30, 2003,  from  $313,280
during the three months ended  September  30, 2002.  This increase  resulted
primarily  from an increase in collections  due to  prepayments,  which
accelerated  the pay down of senior debt,  which  accelerates  the amortization
of deferred financing  costs. On September 30, 2003 and September 30, 2002,
deferred  financing  costs, as a percentage of Senior Debt outstanding
was 1.00% and 1.01%, respectively

Depreciation expense increased by $28,140 or 31%, to $120,283 during the three
months ended September 30, 2003, from $92,143 during the three months ended
September 30, 2002. This increase resulted from increased purchases of computer
equipment, furniture, and the leasehold improvements on new office space.

Operating  income  decreased by $174,457 or 6% to $2,671,324  during the three
months ended September 30, 2003 from $2,845,781 during the three months ended
September 30, 2002.

During the three months ended  September  30, 2003 the Company made a provision
for income taxes of $1,215,900 as compared to $1,280,601 during the three
months ended September 30, 2002.

Net income decreased by $109,755 or 7% to $1,455,424  during the three months
ended September 30, 2003 from $1,565,179  during the three months ended
September 30, 2002.



Nine Months Ended September 30, 2003 Compared to Nine Months Ended
September 30, 2002.

Total  revenue,  increased by  $7,756,644  or 23%, to  $41,954,905  during the
nine months ended September 30, 2003, from $34,198,261 during the nine months
ended September 30, 2002.

Interest  income on notes  receivable  increased by $4,596,436 or 17%, to
$31,721,768  during the nine months ended  September 30, 2003 from $27,125,332
during the nine months ended September 30, 2002. This increase  resulted
primarily from the net increase of $77,715,503 or 18% in the size of the
portfolio between September 30, 2002 and September 30, 2003.

Purchase  discount  earned  increased by $765,512 or 29%, to $3,366,675 during
the nine months ended September 30, 2003 from $2,601,163 during the nine months
ended  September  30,  2002.  This increase reflected the growth in size of the
portfolio and prepayments in portfolios that earn purchase discount accelerating
the earning of the related discount income.

Gain on sale of notes  receivable  increased by $519,086 or 455% to $633,105
during the nine months ended  September 30, 2003 from  $114,019  during the
nine months  ended  September  30,  2002.  The Company  sold $6 million of
nonperforming  loans  during the nine-month  period  ended  September  30, 2003
as compared to $1 million of  low-coupon  performing  loans during the nine
months ended September 30, 2002.

Gain on sale of notes  originated  by  Tribeca  increased  by  $716,802  or 45%
to  $2,302,819  during the nine  months  ended September 30, 2003 from
$1,586,017  during the nine months ended  September  30,  2002.  This  increase
reflected an increase in the number of Tribeca  loans sold during the nine
months  ended  September  30, 2003 to $59 million as compared to $25 million
sold during the nine months ended  September 30, 2002 and was  partially offset
by a decline in margin due to a  competitive  loan  origination market.

Gain on sale of OREO increased by $257,539 or 38% to $927,845  during the nine
months ended  September 30, 2003, from $670,306 during the nine months ended
September  30,2002.  This increase  resulted from the sale of 164 OREO
properties due to higher inventory during the nine months ended  September  30,
2003 as compared to 70 OREO  properties  sold during the nine months ended
September 30, 2002.

Rental income  decreased by $27,211 or 21% to $103,674  during the nine months
ended September 30, 2003, from $130,885 during the nine months ended September
30, 2002.  Rental income  decreased due to the reduction of properties held for
rent to 4 during the nine months ended September 30, 2003 as compared to 12
during the nine months ended September 30, 2002.

Other income  increased by $928,480 or 47%, to  $2,899,019  during the nine
months ended  September  30, 2003 from  $1,970,539 during the nine months ended
September 30, 2002.  This increase  reflected  increased  prepayment  penalties
and fees  associated with increased  prepayments,  increased late charges
resulting from the increase in size of the Company's portfolio and loan fees
associated with Tribeca loans sold.

Total  operating  expenses  increased by $7,168,780 or 28%, to  $33,150,660
during the nine months ended  September 30, 2003, from $25,981,880 exclusive of
the special recovery transaction during the nine months ended September 30,
2002.

Interest  expense  increased  by  $2,045,247  or 15%, to  $16,102,017  during
the nine months  ended  September  30, 2003 from $14,056,770  during the nine
months ended September 30, 2002. This increase resulted  primarily from a 17%
increase in debt measured on the last day of the two periods,  which was only
partially  offset by a 10% decrease in costs of funds.  The weighted  average
cost of funds was 4.77% and 5.31% during the nine months ended  September 30,
2003 and September 30, 2002.  Total debt increased by $66 million or 17%, to
$451 million as of September 30, 2003, from $385 million as of September 30,
2002.

Collection,  general and  administrative  expenses increased by $4,100,974 or
46%, to $12,995,727 during the nine months ended September  30,  2003 from
$ 8,894,753  during the nine months  ended  September  30,  2002.  The increase
resulted in part from a 18% increase in the Company's portfolio at September
30, 2003 as compared with September 30, 2002.

Personnel  expenses  increased  by  $1,954,289  or 42%, to  $6,617,218
during the nine months ended  September  30, 2003 from $4,662,929  during the
nine months ended  September 30, 2002. This increase  resulted  largely from
increases in staffing in Tribeca as the Company  staffed three new branch
offices during the period,  increased  commissions due to increased loan
production and additions to legal and servicing  staff.  All other  collection
expenses  increased by  $2,146,685 or 51%, to $6,378,509  during the nine
months ended  September 30, 2003 from  $4,231,824  during the nine months ended
September 30, 2002.  This increase resulted primarily from increased  legal and
collection  expenses  associated  with the growth in size of the  Company's
nonperforming  portfolio, increased professional fees associated with the
migration to a new servicing system and increased  marketing  expenses
associated with leads for Tribeca Lending.

Provisions  for loan losses  increased by $548,932 or 30% to $2,368,299  during
the nine months ended  September 30, 2003 from $1,819,367  during the nine
months ended September 30, 2002.  This increase resulted  primarily from higher
write-offs in maturing portfolios where there is no longer purchase discount
available to increase reserves.

Amortization of deferred  financing  costs increased by $399,672 or 42%, to
$1,356,875  during the nine months ended September 30, 2003,  from  $957,203
during the nine months ended  September  30, 2002.  This  increase  resulted
primarily  from an increase in collections  due to  prepayments,  which
accelerated  the pay down of senior debt,  which  accelerates  the amortization
of deferred financing costs.

Depreciation  expense  increased by $73,955 or 29%, to $327,742 during the nine
months ended September 30, 2003, from $253,787 during the nine months ended
September 30,2002. This increase resulted from increased purchases of computer
equipment, furniture, and the renovations of office space.

Operating  income  decreased by  $1,074,734  or 11% to  $8,804,245 during the
nine months ended September  30,  2003, from $9,878,979  during the nine months
ended September 30, 2002. This was primarily due to the nonrecurring recovery
of special charge of $1,662,598 received during the nine months ended September
30, 2002.

During the nine months ended  September  30, 2003 the Company made a provision
for income taxes of  $4,072,200 as compared to $4,489,351 during the nine
months ended September 30, 2002.

Net income decreased by $657,583 or 12% to $4,732,045  during the nine months
ended September 30, 2003 from $5,389,628  during the nine months ended
September 30, 2002 for the reasons set forth above.



Liquidity and Capital Resources

General.  During the nine months ended  September 30, 2003 the Company
purchased  2,622 loans in several  portfolios with an aggregate  face value of
$188  million at an  aggregate  purchase  price of $163  million or 87% of face
value.  During the nine months ended  September  30, 2002 the Company purchased
3,120 loans with an aggregate  face value of $154  million at an aggregate
purchase price of $134 million or 87% of aggregate face value.

The  Company's  portfolio of notes  receivable  at September  30, 2003 had a
face value of $485 million and included net notes receivable of approximately
$407 as compared with a face value of $435 million and net notes receivable of
approximately $366 million as of December 31, 2002. Net notes receivable  are
stated at the amount of unpaid principal, net of purchase discount and allowance
for loan losses.  The Company has the ability to hold its notes until maturity,
payoff or liquidation  of  collateral.  The Company's portfolio of originated
loans, which includes  mortgages  originated by Tribeca and held for sale and
investment at September 30, 2003, had a combined  face value of $30 million as
compared to $23 million at December 31, 2002.  Originated  loans held for
investment are stated at the amount of unpaid  principal,  reduced by net
deferred cost and fees.  The Company has the ability to hold its  originated
loans held for investment, that have a higher coupon than cost of funds, until
maturity, payoff or liquidation of collateral.

During the nine months  ended  September  30,  2003,  the  Company used cash in
the amount of $6.3  million in its  operating activities  primarily for the
originations  of loans,  interest  expense,  increased  infrastructure  in the
Company's  core business, litigation  expense  incidental to its ordinary
collection  activities and for the  foreclosure  and  improvement of OREO. The
Company used $40.3 million in its investing  activities,  primarily reflecting
purchases of notes  receivable  which purchases were offset by principal
collections  upon its notes  receivable  and proceeds from sales of loans and
OREO. The amount of cash used in operating and investing activities was funded
by $44.7 million of net cash provided by financing activities,  including
primarily,  a net increase in Senior Debt of $40 million.  The above activities
resulted in a net decrease in cash at September 30, 2003 over December 31, 2002
of $1.9 million.

In the ordinary course of its business, the Company accelerates and forecloses
upon real estate  securing  non-performing notes  receivable  included in its
portfolio.  As a result of such  foreclosures  and selective  direct purchases
of OREO, at September 30, 2003 and  December  31, 2002,  the Company  held OREO
recorded on the  financial  statements  at $10.1  million and $9.4  million,
respectively.  OREO is recorded on the  financial  statements  of the  Company
at the lower of cost or fair market  value.  The Company estimates,  based on
third party  appraisals  and broker price  opinions,  that the OREO  inventory
held at September 30, 2003, in the aggregate,  had a net realizable value
(market value less estimated  commissions and legal expenses  associated with
the disposition of the asset) of approximately  $11.1 million.  There can be no
assurance,  however,  that such estimate is substantially  correct or that an
amount approximating such amount would actually be realized upon liquidation of
such OREO.  The Company  generally  holds OREO as rental property or sells such
OREO in the ordinary course of business when it is economically beneficial to
do so.

Cash Flow From Operating and Investing Activities

Substantially  all of the assets of the Company are invested in its portfolios
of notes  receivable and OREO.  Primary sources of the Company's  cash flow for
operating and investing  activities  are borrowings  under its senior debt
facilities,  collections on notes receivable and gain on sale of notes and
OREO properties.

At September 30, 2003, the Company had unrestricted cash, cash equivalents and
marketable securities of $8.7 million.

Cash Flow From Financing Activities

Senior Debt.  As of  September  30,  2003,  the Company owed an aggregate of
$435 million to the Lender of Senior Debt,  under several loans.

The Senior Debt is  collateralized  by first liens on the  respective  loan
portfolios for the purchase of which the debt was incurred and is guaranteed by
the Company.  The monthly  payments on the Senior Debt have been,  and the
Company intends for such payments to continue to be, met by the collections
from the respective loan  portfolios.  The loan agreements for the Senior Debt
call for minimum interest and principal  payments each month and  accelerated
payments based upon the collection of the notes  receivable  securing the debt
during the preceding  month.  The Senior Debt accrues  interest  based on the
Federal Home Loan Bank of  Cincinnati  (FHLB) 30-day advance rate plus an
additional  spread of 3.50%.  Approximately $40 million of Senior Debt will
accrue interest at a rate equal to the prime rate plus a margin of between 0%
and 1.75%.  The accelerated  payment provisions are generally of two types: the
first requires that all collections from notes  receivable,  other than a fixed
monthly allowance for servicing  operations,  be applied to reduce the Senior
Debt,  and the second  requires a weekly  additional  principal reduction from
cash collected  before  scheduled  principal and interest  payments have been
made. As a result of the accelerated  payment  provisions,  the Company is
repaying the amounts due on the Senior Debt at a rate faster than the
contractual  scheduled  payments.  While the Senior Debt remains  outstanding,
these accelerated payment provisions may limit the cash flow that is available
to the Company.

In March 2003, the Company  negotiated with its Senior Debt Lender a
modification  to provisions of the Senior Debt,  pursuant to which the Senior
Debt Lender has provided the Company with a cash advance of  $1,825,000  per
month.  Management believes that this modification may reduce irregular periods
of cash flow shortages  arising from  operations.  Management  believes that
sufficient cash flow from the  collection  of notes  receivable  will be
available  to repay the  Company's  secured  obligations  and that  sufficient
additional cash flows will exist, through collections of notes receivable,  the
bulk sale of performing loan  portfolios,  sales and rental  of OREO,  or
additional  borrowing,  to repay the  current  liabilities  arising  from
operations  and to repay the long term indebtedness of the Company.

Certain Senior Debt credit agreements required establishment of restricted cash
accounts,  funded by an initial deposit at the loan closing and  additional
deposits  based upon monthly collections  up to a specified  dollar limit.  The
Company is no longer required to maintain these restricted  accounts but has
continued to do so under the prior agreement.  The Company typically uses these
funds to place  deposits on loan  portfolio bids and to refinance  loans in the
Company's  own  portfolio.  The restricted cash is maintained in an interest
bearing  account,  with the Company's  Senior Debt Lender.  The aggregate
balance of restricted cash in such accounts was $461,946 on September 30, 2003
and $632,883 on December 31, 2002.  The decrease in  restricted  cash at
September 30, 2003 was due to funding the originations of OREO properties
during the nine months ended September 30, 2003.

Total Senior Debt availability was approximately  $500 million at September 30,
2003, of which  approximately $435 million had been drawn down as of such date.
As a result,  the Company has approximately $65 million  available to purchase
additional portfolios of notes receivable and OREO.

The  Company's Senior Debt Lender has provided Tribeca with a warehouse
financing  agreement of $30 million.  This Senior Debt accrues interest based
on prime.  At September 30, 2003, Tribeca had drawn down $ 15.2  million on the
line.  The Company is actively seeking other sources of financing for Tribeca.

Financing  Agreements.  The  Company  has a  financing  agreement  with the
Senior  Debt  Lender  permitting  it to borrow a maximum of approximately
$2,500,000 at a rate equal to such lender's prime rate plus two percent per
annum.  Principal  repayment of the lines is due six months from the date of
each cash advance and interest is payable monthly.  The total amounts
outstanding  under the financing agreements  as of September  30, 2003 and
December  31, 2002,  were  $666,297  and  $1,250,451  respectively.  Advances
made under the financing  agreement  were used to satisfy senior lien positions
and fund capital  improvements in connection with foreclosures  of certain real
estate  loans financed by the Company.  Management believes  the  ultimate sale
of these properties  will satisfy the related outstanding  financing agreements
and accrued interest,  as well as surpass the collectible value of the original
secured notes receivable.  Management  has reached an  agreement in principal
with its Senior Debt Lender to increase  the  availability  under this credit
facility  to cover  additional  properties  foreclosed  upon by the  Company,
which the  Company may choose to hold as rental property to maximize its return.
The Company uses when available  OREO sales proceeds to pay down financing
agreements to help reduce interest expense

 Additionally, the Company has a financing agreement with Citibank.  The
agreement provides the Company with the ability to borrow a maximum of $150,000
at a rate equal to the bank's prime rate plus one percent per annum. As of
September 30, 2003 and December 31, 2002, $101,736 and $109,942 respectively,
were outstanding on the financing agreement.



Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Interest  rate  fluctuations  can  adversely  affect the  Company's  income and
value of its common  shares in many ways and present a variety of risks,
including the risk of mismatch between asset yields and borrowing  rates,
variances in the yield curve and changing prepayment rates.

The Company's  operating  results will depend in large part on  differences
between the income from its assets (net of credit  losses) and its borrowing
costs. Most of the Company's assets,  consisting  primarily of mortgage notes
receivable,  generate fixed returns and have terms in excess of five years. The
Company funds the origination and acquisition of a significant portion of these
assets with borrowings,  which have  interest  rates  that are based on the
monthly  Federal  Home Loan Bank of  Cincinnati  30-day advance  rateb ("FHLB").
In most cases, the income from assets will respond more slowly to interest rate
fluctuations than the cost of borrowings, creating a mismatch  between yields
and borrowing  rates.  Consequently  changes in interest rates,  particularly
short-term rates may influence the Company's net income.  The Company's
borrowing under  agreements with its Senior Debt Lender bear interest at rates
that fluctuate with the FHLB rate of Cincinnati and the prime rate.  Based on
approximately  $435 million of borrowings  outstanding  under this facility at
September 30, 2003, a 1% increase in FHLB and prime rate,  would  decrease the
Company's  quarterly net income and net cash flows by  approximately  $592,240,
absent any other  changes.  Increases  in these rates will  decrease the net
income and market value of the Company's net assets. Interest rate fluctuations
that result in interest expense exceeding  interest income would result in
operating losses.

The value of the Company's  assets may be affected by prepayment rates on
investments.  Prepayments  rates are influenced by changes in current interest
rates and a variety of economic,  geographic and other factors beyond the
Company's control,  and consequently,  such prepayment  rates cannot be
predicted with certainty.  When the Company  originates and purchases  mortgage
loans, it expects that such mortgage loans will have a measure of protection
from prepayment in the form of prepayments lockout periods or prepayment
penalties. In periods of declining  mortgage interest rates, prepayments on
mortgages  generally  increase.  If general interest rates decline as
well,  the proceeds of such  prepayments  received  during such periods are
likely to be reinvested  by the Company in assets yielding less than the yields
on the  investments  that were  prepaid.  In addition the market value of
mortgage  investments  may,  because the risk of prepayment,  benefit less from
declining interest rates than from other fixed-income  securities.  Conversely,
in periods of rising interest rates,  prepayments on mortgage,  generally
decrease,  in which case the Company would not have the prepayment proceeds
available to invest in assets with higher yields.  Under certain interest rate
and prepayment  scenarios the Company may fail to recoup fully its cost of
acquisition of certain investments.

Real Estate Risk
Multi-family  and residential  property values and net operating  income
derived from such properties are subject to volatility and may
be affected  adversely by number of factors,  including,  but not limited to,
national,  regional and local economic  conditions (which
may be  adversely  affected  by  industry  slowdowns  and other  factors);
local real  estate  conditions  (such as the over supply of housing).  In the
event net operating  income  decreases,  a borrower may have  difficultly
paying the Company's  mortgage loan, which could  result in losses to the
Company.  In  addition,  decreases  in  property  values  reduce  the value of
the collateral and the potential proceeds available to a borrower to repay the
Company's mortgage loans, which could also cause the Company to suffer losses.



Item 4.  Controls and Procedures.

The Company's Chief Executive Officer and Chief Financial Officer evaluated the
Company's disclosure controls and procedures within the 90 days preceding the
filing of this quarterly report on Form 10Q and judged such controls and
procedures to be adequate and effective.

There have been no significant  changes in the Company's  internal controls or
in other factors that could  significantly  affect those controls  subsequent
to the date of that  evaluation,  including any corrective actions with regard
to significant  deficiencies and material weaknesses.


                            Part II Other Information

Item 1. Legal Proceedings
              None.

Item 2. Changes in Securities
              None

Item 3. Defaults Upon Senior Securities
              None

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

              None

Item 5. Other Information
              None


Item 6.  Exhibits and Reports on Form 8-K

<PAGE>


(a)                                 EXHIBIT TABLE

 Exhibit No.    Description
  3(a)          Restated Certificate of Incorporation.  Previously filed with,
                and incorporated  herein by reference to, the Company's 10-KSB,
                filed with the Commission on December 31, 1994.
   (b)          Bylaws of the Company.  Previously filed with, and incorporated
                herein by reference to, the Company's Registration Statement on
                Form S-4, No. 33-81948, filed with the Commission on November
                24, 1994.
 10(i)          Promissory Note between Thomas J. Axon and the Company dated
                December 31,1998. Previously  filed with, and  incorporated
                herein by reference to, the Company's  10-KSB, filed with the
                Commission on April 14, 1999.
 10(j)          Promissory Note between Steve Lefkowitz,  board member, and the
                Company dated March  31,1999. Previously filed with, and
                incorporated  herein by reference to, the Company's 10-KSB,
                filed with the Commission on March 30, 2000.
 10(k)          Loan Purchase Agreement dated March 31,1999 between the Company
                and Steve Lefkowitz.  Previously filed with, and incorporated
                herein by reference to, the Company's 10-KSB, filed with the
                Commission on March 30, 2000.
 10(l)          Employment  Agreement  dated July 17, 2000 between the Company
                and Seth Cohen.  Filed with the Commission with form 10KSB on
                March 31, 2001.

 31.1           Chief Executive Officer Certification  required by Rules 13a-14
                and 15d-14 under the Securities Exchange Act of 1934 as amended.

 31.2           Chief Financial Officer Certification required by Rules 13a- 14
                and 15d-14 under the Securities Exchange Act of 1934 as amended.

 32.1           Certification pursuant to 18 U.S.C  section  1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.










<PAGE>



'
                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

November 14, 2003
                               FRANKLIN CREDIT MANAGEMENT
                                      CORPORATION



                                By:      THOMAS J. AXON
                                         --------------
                                         Thomas J. Axon
                                      Chairman of the Board


In accordance  with the Exchange Act, this report has been signed below by the
following  persons on behalf of the registrant and in the capacities and on the
dates indicated.



Signature                           Title                Date

SETH COHEN                 Chief Executive Officer       November 14, 2003
------------                                             -----------------
Seth Cohen
(Principal executive officer)


JOSEPH CAIAZZO             Senior Vice President,        November 14, 2003
--------------             Chief Operating Officer,      -----------------
Joseph Caiazzo             Secretary and Director
(Secretary)


ALAN JOSEPH                Executive Vice President,     November 14, 2003
-----------                Chief Financial Officer       -----------------
Alan Joseph                and Director
(Principal financial officer)




<PAGE>



Exhibit 31.1
                                  CERTIFICATION

I, Seth Cohen, Chief Executive Officer of Franklin Credit Management
Corporation (the "Company"), certify that:
1.   I have reviewed this quarterly report on Form 10-Q of the Company;

2.   Based on my knowledge,  this quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances  under which such
     statements were made, not misleading with respect to the period covered
     by this quarterly report;

3.   Based on my knowledge, the financial  statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition,  results of operations and cash
     flows of the Company as of, and for, the periods presented in this
     quarterly report;

4.   The Company's other certifying  officers and I are responsible for
     establishing  and  maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and we
     have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the Company, including its
         consolidated subsidiaries,  is made known to us by others within those
         entities,  particularly during the period in which this quarterly
         report is being prepared;

     b)  evaluated the effectiveness of the Company's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure  controls and procedures as of the end
         of the period covered by this report based on such evaluation (the
         "Evaluation Date"); and

     c)  Disclosed in this report any change in the  registrant's  internal
         control over financial reporting that occurred during the Company's
         most recent fiscal  quarter (the Company's fourth fiscal quarter in
         the case of an annual report) that has materially  affected,  or is
         reasonably likely to materially  affect,  the Company's  internal
         control over financial reporting; and

5.    The Company's  other certifying  officers and I have  disclosed, based on
      our most recent  evaluation of internal control over financial reporting
      to the Company's auditors and the Audit Committee of the Board of
      Directors:

      a)  all  significant  deficiencies and  material weaknesses in the design
          or operation of internal controls  over financial reporting which are
          reasonably  likely to adversely  affect the Company's  ability to
          record,  process,  summarize and report financial data and have
          identified for the Company's auditors any material weaknesses in
          internal controls; and

      b)  any fraud, whether or not material, that involves management or other
          employees who have a significant role in the Company's internal
          controls over financial reporting; and



  DATE:  November 14, 2003         By:  /s/
                                  --------------------------

                                  Chief Executive Officer

<PAGE>

Exhibit 31.2



                                  CERTIFICATION

I, Alan Joseph, Chief Financial Officer of Franklin Credit Management
Corporation (the "Company"), certify that:

1.   I have reviewed this quarterly report on Form 10-Q of the Company;

2.   Based on my knowledge,  this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements  made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial  condition,  results of operations
     and cash flows of the Company as of, and for, the periods presented in
     this quarterly report;

4.   The Company's other  certifying  officers and I are  responsible for
     establishing  and  maintaining  disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and we
     have:

     a)  designed such disclosure controls and procedures to ensure that
         material  information  relating to the Company,  including its
         consolidated subsidiaries,  is made known to us by others within those
         entities,  particularly during the period in which this quarterly
         report is being prepared;

     b)  evaluated the  effectiveness  of the  Company's  disclosure  controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness  of the disclosure  controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   The Company's other certifying officers and I have disclosed, based on our
     most recent evaluation, to the Company's auditors and the Audit Committee
     of the Board of Directors:

     a)   all  significant deficiencies in the design or operation of internal
          controls  which could  adversely affect the Company's ability to
          record,  process,  summarize and report financial data and have
          identified for the Company's  auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the Company's internal
          controls; and


  DATE:  November 14, 2003                By:  /s/
                                      --------------------------
                                      Chief Financial Officer



<PAGE>

 Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Seth Cohen,  Chief  Executive  Officer of Franklin  Credit  Management
Corporation  (the  "Company") and Alan Joseph,  Chief Financial Officer of the
Company,  each  hereby  certifies,  pursuant  to 18 U.S.C.  Section  1350,  as
adopted  pursuant  to Section 906 of the Sarbanes-Oxley  Act of 2002,  that the
quarterly  report of the Company on Form 10-Q for the fiscal  quarter  ended
September 30, 2003 (the  "Quarterly  Report") fully complies with the
requirements  of Section 13(a) or 15(d) of the Securities  Exchange Act of 1934,
as amended,  and that information  contained in the Quarterly Report fairly
presents,  in all material respects,  the financial  condition and results of
operations of the Company.

Date:  November 14, 2003

                                            By: ___________________
                                           Name:  Seth Cohen
                                          Title:   Chief Executive Officer



                                            By:____________________
                                          Name:  Alan Joseph
                                         Title:  Chief Financial Officer

A signed  original of this written  statement  required by Section 906 has been
provided to Nastech and will be retained by Nastech and furnished to the
Securities Exchange Commission or its staff upon request.