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 March 31, 2003

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
               For the transition period from _____________ to _____________


                         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)


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


                               Six Harrison Street
                            New York, New York 10013
                                 (212) 925-8745
   (Address of principal executive offices, including zip code, and
    telephone number, including area code)




         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the 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 May 14, 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

                    For the Three months ended March 31, 2003

                                 C O N T E N T S


PART I. FINANCIAL INFORMATION                                          Page

Item 1.
Financial Statements (unaudited)


Consolidated Balance Sheets March 31, 2003 and
December 31,2002                                                          3

Consolidated Statements of Income for the three months ended
March 31, 2003 and March 31, 2002                                         4


Consolidated Statements of Cash Flows for the three months ended
March 31, 2003 and March 31, 2002                                         5

Notes to Consolidated Financial Statements                             6-10

Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations                                             11-19

Item 3.
Quantitative and Qualitative Disclosure about Market Risk             19-20

Item 4.
Controls and Procedures                                                  20

PART II.   OTHER INFORMATION

Item 1.  Legal Proceedings                                               21

Item 2.  Changes in Securities and Use of Proceeds                       21

Item 3.  Defaults Upon Senior Securities                                 21

Item 4.  Submission of Matters to a Vote of Security Holders             21

Item 5.  Other Information                                               21

Item 6.  Exhibits and Reports on Form 8-K                                22

SIGNATURES                                                               23

CERFTIFICATIONS                                                       24-27





<PAGE>
<TABLE>
<CAPTION>

Part I Financial Information
Item 1. Financial Statements
FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
-------------------------------------------------------------------------------
<S>                                             <C>              <C>
                                                  March 31,       December 31,
ASSETS                                              2003             2002
                                                (unaudited)


CASH AND CASH EQUIVALENTS                       $ 8,916,619      $ 10,576,610

RESTRICTED CASH                                     501,665           632,883

NOTES RECEIVABLE:
  Principal                                     460,843,805       435,259,394
  Purchase discount                             (27,472,310)      (22,974,310)
  Allowance for loan losses                     (47,459,877)      (45,841,651)
                                                ------------      ------------
    NET NOTES RECEIVABLE                        385,911,618       366,443,433

LOANS HELD FOR SALE-NET                          23,217,832        22,869,947

ACCRUED INTEREST RECEIVABLE                       4,020,867         4,157,615

OTHER REAL ESTATE OWNED                          10,638,736         9,353,884

OTHER RECEIVABLES                                 1,991,383         2,259,543

DEFERRED TAX ASSET                                  507,441           387,767

OTHER ASSETS                                      2,955,180         2,633,082

BUILDING, FURNITURE AND FIXTURES - Net            1,099,611         1,106,865

DEFERRED FINANCING COSTS- Net                     4,166,224         3,997,405
                                              -------------     -------------
TOTAL ASSETS                                  $ 443,927,176     $ 424,419,034
                                              -------------     -------------
                                              -------------     -------------
LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
  Accounts payable and accrued expenses         $ 4,061,631       $ 3,818,557
  Financing agreements                           10,072,662        11,557,369
  Notes payable                                 413,540,885       395,266,144
  Tax liability
   Current                                           -                 -
   Deferred                                       1,410,604           783,115
                                                ------------      -----------

  TOTAL LIABILITIES                             429,085,782       411,425,185
                                               ------------       -----------

STOCKHOLDERS' EQUITY
 Common stock, $.01 par value, 10,000,000
 authorized shares; issued and
 outstanding: 5,916,527                              59,167            59,167
 Additional paid-in capital                       6,985,968         6,985,968
 Retained earnings                                7,796,259         5,948,714
                                                -----------       -----------
TOTAL STOCKHOLDERS' EQUITY                       14,841,394        12,993,849
                                                -----------       -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 443,927,176     $ 424,419,034
                                              -------------     -------------
                                              -------------     -------------

See notes to consolidated financial statements.

</TABLE>




<PAGE>
<TABLE>
<CAPTION>

Part I Financial Information
Item 1. Financial Statements

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
-------------------------------------------------------------------------------
                                                  Three months ended March 31,
                                                    2003            2002
<S>                                                  <C>              <C>
REVENUES:
 Interest income                                 $10,561,251      $ 8,530,461
 Purchase discount earned                            902,903          964,028
 Gain on sale of notes receivable                    596,114            -
 Gain on sale of loans held for sale                 678,390          182,510
 Gain on sale of other real estate owned             303,795          381,117
 Rental income                                        50,461           43,408
 Other                                               846,313          569,937
                                                  ----------       ----------
                                                  13,939,227       10,671,461
                                                  ----------       ----------
OPERATING EXPENSES:
 Interest expense                                  5,037,121        4,411,158
 Collection, general and administrative            4,107,556        2,749,452
 Provision for loan losses                           849,594          254,000
 Amortization of deferred financing costs            423,313          268,144
 Depreciation                                        100,298           75,821
                                                  ----------       ----------
                                                  10,517,882        7,758,575
                                                  ----------       ----------

INCOME BEFORE PROVISION FOR INCOME TAXES           3,421,345        2,912,886

PROVISION FOR INCOME TAXES                         1,573,800        1,354,500
                                                   ---------       ----------

NET INCOME                                       $ 1,847,545      $ 1,558,386
                                                 -----------      -----------
                                                 -----------      -----------

NET INCOME PER COMMON SHARE:
  Basic                                               $ 0.31           $ 0.26
                                                     -------           ------
  Diluted                                             $ 0.30           $ 0.26
                                                     -------           ------

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

WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING, DILUTED                             6,220,325        5,916,527
                                                   ---------        ---------
See notes to consolidated financial statements.
</TABLE>




<PAGE>
<TABLE>
<CAPTION>
Part I Financial Information
Item 1. Financial Statements
FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
MARCH 31, 2003 AND MARCH 31, 2002
-------------------------------------------------------------------------------
                          Three Months Ended March 31,
                                    2003 2002

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                               <C>              <C>
 Net Income                                       $ 1,847,545      $ 1,558,386
 Adjustments to reconcile income to net cash
 used in
  Operating activities:
  Gain on sale of notes receivable                   (596,114)          -
  Gain on sale of other real estate owned            (303,795)        (381,117)
  Depreciation                                        100,298           75,821
  Amortization of deferred financing costs            423,313          268,144
  Origination of mortgage loans held for sale     (17,294,052)     (16,489,895)
  Proceeds on sale of mortgage loans               16,663,800        7,090,069
  Purchase discount earned                           (902,903)        (964,028)
  Provision for loan losses                           849,594          254,000
  Changes in assets and liabilities:
    Decrease in accrued interest receivable           136,748          140,330
    Decrease in other receivables                     268,160        3,066,716
    Increase in deferred tax asset                   (119,674)          -
    Increase in other assets                         (322,098)        (245,083)
    Increase in deferred tax liability                627,489        1,579,500
    (Decrease) increase in accounts payable
    and accrued expenses                              243,074         (649,574)
    (Decrease) in notes payable, affiliates
    and stockholders                                                   (24,262)

      Net cash provided by(used in)operating       ----------       -----------
      activities                                    1,621,385       (4,720,993)
                                                   ----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 (Increase) decrease in restricted cash               131,218         (124,080)
 Purchase of notes receivable                     (56,060,446)     (38,878,267)
 Principal collections on notes receivable         30,922,358       24,747,657
 Acquisition and loan fees                           (660,974)        (437,879)
 Proceeds from sale of other real estate owned      2,853,782        1,919,201
 Proceeds from sale of notes receivable             2,835,696            -
 Purchase of building, furniture and fixtures         (93,044)         (38,021)
                                                  ------------      -----------
     Net cash used in by investing activities     (20,071,410)       2,811,389)
                                                  ------------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from notes payable                       59,378,948       48,811,012
 Principal payments of notes payable              (41,104,207)     (31,600,386)
 Proceeds from financing agreements                19,405,920        3,988,084
 Payments on financing agreements                 (20,890,627)      (3,764,098)
                                                  ------------     ------------
   Net cash provided by financing activities       16,790,034       17,434,612
                                                  ------------     ------------

DECREASE IN CASH AND CASH EQUIVALENTS.             (1,659,991)         (97,770)

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD      10,576,610        7,784,162
                                                  ------------     ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD          $ 8,916,619      $ 7,686,392
                                                  ------------     ------------
                                                  ------------     ------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash payments for interest                        $ 4,884,683      $ 4,840,082
                                                  -----------      -----------

Cash payments for taxes                           $ 1,065,985        $ 869,000
                                                  -----------      -----------
See notes to consolidated financial statements.
</TABLE>

<PAGE>









1. 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 follows.

      Basis of Presentation- The consolidated balance sheet as of March 31,
      2003, the consolidated statements of income for the three months ended
      March 31, 2003 and 2002 and the consolidated statements of cash flows for
      the three months ended March 31, 2003 and 2002 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 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 Securties and Exchange Commisssion.
      The result of operatings for the three months ended March 31, 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.
<PAGE>

      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 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 generally 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 collectibility 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.
<PAGE>

      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.

      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. Notes receivable,
      including 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 Texas, Florida, New
      York, and California. 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.

      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.

      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. Any write-down to fair value, less
      cost to sell, at the time of acquisition is charged to the allowance for
      loan losses. 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.
<PAGE>

      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
      loan.

      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 offers
      a company match of 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, whether or not recognized in the
      balance sheet 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 Receivables, 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 in 2003, and 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.

      Recent 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 rescission of SFAS No. 4 is effective January 1, 2003. The
      adoption of this statement did not have a material 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 a material
      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. This
      Interpretation does not prescribe a specific approach for subsequently
      measuring the guarantor's recognized liability over the term of the
      related guarantee. The disclosure provisions of this Interpretation were
      effective for the Company's December 31, 2002 inancial 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. The Company adopted this
      interpretations as of January 1, 2003 and it did not have a material
      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 will be
      immediately effective for all variable interests in variable interest
      entities created after January 31, 2003, and the Company will need to
      apply its provisions to any existing variable interest in variable
      interest entities by no later than the third quarter of 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 will not have a material 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 1st, 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 compension cost
      based on the fair value of the stock options at the grant date consistent
      with the method of SFAS No.123, the Company's first quarter 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>
<S>                                           <C>                 <C>
                                                2003                 2002


Net income  - as reported                     $ 1,847,545         $ 1,558,386
Net income  -  pro forma                      $ 1,831,032         $ 1,558,386

Net income  per common share -
basic - as reported                                $0.31                $0.26
Net income per common share -
basic - pro forma                                  $0.31                $0.26
Net income per common share -
diluted  - as reported                             $0.30                $0.26
Net income per common share -
diluted  - pro forma                               $0.30                $0.26

</TABLE>



<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 (see Note 1).
<TABLE>

MORTGAGE BANKING

                                                Three Months Ended March 31,
                                                  2003              2002
<S>                                             <C>                <C>

 CONSOLIDATED REVENUE
  Portfolio asset acquisition and
  resolution assets                          $ 12,691,335        $ 9,577,912

  Mortgage banking assets                       1,247,892          1,093,549
                                             ------------       ------------
 Consolidated Revenue                        $ 13,939,227       $ 10,671,461
                                             ------------       ------------
                                             ------------       ------------

CONSOLIDATED INCOME BEFORE TAXES
  Portfolio asset acquisition and
  resolution asset                            $ 3,308,635        $ 2,576,136
  Mortgage banking assets                         112,710            336,751
                                              -----------        -----------
Consolidated Income before taxes              $ 3,421,345        $ 2,912,887
                                              -----------        -----------
                                              -----------        -----------


</TABLE>


<PAGE>


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. (Forward-looking statements include, but are not limited to,
statements about (i)...(ii)... and (iii)... 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; (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 "Risk
Factors" 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 three months ended March 31, 2003, the Company
purchased loans with an aggregate face value of $66 million for an aggregate
purchase price of $56 million or 85% of face value, compared with the purchase
during the three months ended March 31, 2002 of $46 million at an aggregate
purchase price of $38 million or 84% of aggregate face value. The purchases
during the three months ended March 31, 2003 included 14 bulk portfolios
consisting primarily of first and second mortgages, with an aggregate face value
of $55 million at an aggregate purchase price of $46 million or 84% of the face
value, and 56 flow purchase transactions consisting primarily of first and
second mortgages with an aggregate face value of $11.4 million at an aggregate
purchase price of $9.9 million or 87% 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.

         Management intends to continue to expand the Company's earning asset
base through the acquisition of additional portfolios including performing first
and second mortgages at a positive interest rate spread based upon the Company's
cost of funds. 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 primarily
sub-prime 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 $167 million in loans.

During the three months ended March 31, 2003, Tribeca originated 89 loans with
an aggregate principal amount of $19,527,052 of which 12 loans for $2,233,000
were brokered compared to 132 loans with an aggregate principal of $16,489,895
during the three months ended March 31, 2002. During the three months ended
March 31, 2003, Tribeca had income before taxes of $324,788 as compared to
$336,751 during the three months ended March 31, 2002. This decrease in income
reflected the expansion of a new branch office in New Jersey, and salaries for
new employees during the quarter. As of March 31, 2003,
Tribeca had approximately $23 million face value of loans held for sale.
Revenues and expenses related to such loans, other than periodic interest
payments, and fee income are expected to be realized upon sale of such loans.


Cost of Funds- As of March 31, 2003, the Company had Senior Debt outstanding
under several loans with an aggregate principal balance of approximately $413
million. Additionally the Company has financing agreements, which had an
outstanding balance of approximately $10 million at March 31, 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 have
caused direct corresponding changes in 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 $48 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 interest rate on borrowed funds for the Senior Debt based
on the balances as of March 31, 2003 and March 31, 2002 was 4.98% and 5.30%,
respectively.

Inflation- The impact of inflation on the Company's operations during the three
months ended March 31, 2003, and 2002 was immaterial.


Results of Operations

The Three Months Ended March 31, 2003 Compared to the Three Months Ended March
31, 2002.

         Total revenue, comprised of interest income, purchase discount earned,
gains recognized on the sale of notes receivable, gain on sale of loans held for
sale, gain on sale of OREO, rental income and other income, increased by
$3,267,766 or 31%, to $13,939,227 during the three months ended March 31, 2003
from $10,671,461 during the three months ended March 31, 2002.

         Interest income increased by $2,030,790 or 24%, to $10,561,251 during
the three months ended March 31, 2003 from $8,530,461 during the three month
ended March 31, 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 $232 million in notes acquired by the Company
between April 1, 2002 and March 31, 2003, which was only partially offset by
collections, prepayments, and loan sales.

         Purchase discount earned decreased by $61,125 or 6%, to $902,903 during
the three months ended March 31, 2003 from $964,028 during the three months
ended March 31, 2002. This decrease reflected increased reserves and write-offs
in certain portfolios that deteriorated which would normally earned discount
income.

           The Company consummated two bulk sales of nonperforming loans during
the three months ended March 31, 2003 for a gain of $596,114. The Company did
not have any bulk sales of loans during the three months ended March 31, 2002.

         Gain on sale of loans held for sale increased by $495,880 or 272% to
$678,390 during the three months ended March 31, 2003, from $182,510 during the
three months ended March 31, 2002. This increase reflected an increase in the
number of loans sold during the three months ended March 31, 2003, as compared
to the three months ended March 31, 2002. Tribeca sold $16.3 million and $4.9
million in loans respectively during the three months ended March 31, 2003 and
March 31, 2002.

         Gain on sale of OREO decreased by $77,322 or 20% to $303,795 during the
three months ended March 31, 2003 from $381,117 during the three months ended
March 31, 2002. Gain on sale of REO decreased due to the sale of lower valued
OREO properties during the three months ended March 31, 2003 as compared to the
three months ended March 31, 2002 when the company sold higher valued rental
OREO properties. The Company sold 37 and 24 OREO properties during the three
months ended March 31, 2003 and March 31, 2002, respectively.

          Rental income increased by $7,053 or 16% to $50,461 during the three
months ended March 31, 2003, as compared to $43,408 during the three months
ended March 31, 2002. This increase reflected surrendered security deposits from
former tenants recognized into income for past due rent during the quarter. The
Company had seven and sixteen rental properties at March 31, 2003, and March 31,
2002 respectively.

         Other income increased by $276,376 or 48%, to $846,313 during the three
months ended March 31, 2003 from $569,937 during the three months ended March
31, 2002. The increase was due primarily to increases in prepayment penalties
due to an increase in prepayments during the three months ended March 31, 2003,
late charges resulting primarily from the growth in the size of the portfolio
and increased loan fees due to an increase in origination volume.

         Total operating expenses increased by $2,759,308 or 36% to $10,517,882
during the three months ended March 31, 2003, from $7,758,575 during the three
months ended March 31, 2002. Total operating expenses includes interest expense,
collection, general and administrative expenses, provisions for loan losses,
amortization of deferred financing cost and depreciation expense.

         Interest expense increased by $625,963 or 14% to $5,037,121 during the
three months ended March 31, 2003, from $4,411,158 during the three months ended
March 31, 2002, as a result of the growth in size of the portfolio. This
increase resulted primarily from an increase in total debt of $84 million or 24%
, to $423 million as of March 31, 2003 as compared with $339 million as of
March 31, 2002 and partially offest by a decrease in our cost of funds. Total
debt includes Senior Debt, debentures, financing agreements and loans from
affiliates.

         Collection, general and administrative expenses increased by $1,358,104
or 49% to $4,107,556 during the three months ended March 31, 2003 from
$2,749,452 during the three months ended March 31, 2002. Collection, general and
administrative expense consists primarily of personnel expense, OREO related
expense, litigation expense, and miscellaneous collection expense.

           Personnel expenses increased by $567,896 or 37% to $2,096,073 during
the three months ended March 31, 2003 from $1,528,177 during the three months
ended March 31, 2002. This increase resulted largely from staff upgrades, the
expansion of Tribeca's sales force, and bonus expense. All other collection
expenses increased by $790,209 or 65% during the three months ended March 31,
2003 to $2,011,483 from $1,221,274 during the three months ended March 31, 2002.
This increase resulted primarily from increased legal expenses for asset
protection, collection expenses associated with carrying a higher nonperforming
portfolio balance and professional fees associated with increased audit fees.

         Provisions for loan losses increased by $595,594 or 234% to $849,594
during the three months ended March 31, 2003 from $254,000 during the three
months ended March 31, 2002. This increase was primarily due to reserve
increases in specific portfolios, where there is no longer purchase discount
available to increase reserves.


         Amortization of deferred financing costs increased by $155,169 or 58%,
to $423,313 during the three months ended March 31, 2003 from $268,144 during
the three months ended March 31, 2002. This increase resulted primarily from the
growth in size of the portfolio, increased prepayments and collections, which
caused a corresponding increase in the pay down of Senior Debt. On March 31,
2003 and March 31, 2002, deferred financing costs, as a percentage of Senior
Debt outstanding was 1.01% and 1.03%, respectively.

         Depreciation expense increased $24,477 or 32%, to $100,298 during the
three months ended March 31, 2003, from $75,821 during the three months ended
March 31, 2002. This increase resulted from the purchase of office equipment.

         The Company net income increased by $289,159 to $1,847,545 during
the three months ended March 31, 2003 for the reasons set forth above.

         During the three months ended March 31, 2003 the Company had a
provision for income taxes of $1,573,800 as compared to $1,354,500 during the
three months ended March 31, 2002 due primarily to an increase in income.


Liquidity and Capital Resources

 General. During the three months ended March 31, 2003, the Company purchased
1,000 loans with an aggregate face value of $66 million at an aggregate purchase
price of $56 million or 85% of the face value. During the three months ended
March 31, 2002 the Company purchased 725 loans with an aggregate face value of
$46.3 million at an aggregate purchase price of $37.9 million or 84% of
aggregate face value. The Company's portfolio acquisitions exceeded expectations
during the three months ended March 31, 2003. This increase reflected the
Company's enhanced marketing efforts, which generated increased market
penetration.

         The Company's portfolio of notes receivable at March 31, 2003, had a
face value of $461 million and included net notes receivable of approximately
$386 million. The Company's portfolio of notes receivable at March 31, 2002, had
a face value of $350 million and included net notes receivable of approximately
$289 million. Net notes receivable are stated at the amount of unpaid principal,
reduced by purchase discount, and allowance for loan losses. The Company has the
ability and intent to hold its notes until maturity, payoff or liquidation of
collateral or where economically advantageous, sale.

         The Company's portfolio of loans held for sale, which includes
mortgages originated by Tribeca and held for sale at March 31, 2003, had a face
value of $23 million as compared to $ 38 million at March 31, 2002. On December
31, 2002 the Company transferred $23 million of refinanced loans back to its
parent company to be held in notes receivable. Loans held for sales are stated
at the amount of unpaid principal, reduced by net deferred cost and fees. The
Company has the ability to hold its loans held for sale until maturity, payoff
or liquidation of collateral or where economically advantageous, sale.

         During the three months ended March 31, 2003, the Company provided cash
in the amount of $1.6 million in its operating activities primarily for interest
expense, overhead and for the foreclosure and improvement of OREO. The Company
used $20 million in its investing activities, which primarily reflected the use
of $56 million for the purchase of notes receivable partially offset by
principal collections on its notes receivable and proceeds from the sale of
notes receivables and OREO. The amount of cash used in operating and investing
activities was offset by $17 million of net cash provided by financing
activities. The above activities resulted in a net decrease in cash at March 31,
2003 over December 31, 2002 of $1.7 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 at March 31, 2003 and 2002, the
Company held OREO recorded on the financial statements at $10.6 million and $3.9
million, respectively. OREO is recorded on the financial statements of the
Company at the lower of cost or net realizable value. The Company estimates,
based on third party appraisals and broker price opinions, that the OREO
inventory held at March 31, 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 $11.7 million based on market
analyses of the individual properties less the estimated closing costs. 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, loans held and OREO. Primary sources of the
Company's cash flow for operating and investing activities are collections on
notes receivable and gain on sale of notes and OREO properties.

         At March 31, 2003, the Company had unrestricted cash, cash equivalents
and marketable securities of $8.9 million.



Cash Flow From Financing Activities

         Senior Debt- As of March 31, 2003, the Company owed an aggregate of
$413 million to the Senior Debt Lender.

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) thirty-day advance rate plus an additional spread of
3.50%. 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 for
the year. 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 under the prior agreement. The Company typically uses these
funds to place deposits on loan portfolio bids. 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 $501,665
on March 31, 2003 and $632,883 on December 31, 2002. The decrease in restricted
cash at March 31, 2003 was due to funding the origination of two OREO properties
during the quarter.

         Total Senior Debt availability was approximately $500 million at March
31, 2003, of which approximately $413 million had been drawn down as of such
date. As a result, the Company has approximately $87 million available to
purchase additional portfolios of notes receivable and OREO.

         In March 2003, the Company's Senior Debt agreement was amended to
provide that the interest rate on new Senior Debt incurred to finance portfolio
acquisitions will be based on the Federal Home Loan Bank of Cincinnati (FHLB)
thirty-day advance rate plus an additional spread of 3.50%. Under the new
agreement the Company's new cost of funds is 4.98% as of March 31, 2003,
compared to 5.30% at March 31, 2002.

           The Company's Senior debt Lender has provided Tribeca with a
warehouse financing agreement of $15 million. This line of credit accrues
interest at prime rate plus 2%. At March 31, 2003, Tribeca had drawn down $9
million on the line.


         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 March 31, 2003 and December 31, 2002, were $779,373
and $1,360,393, 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 be required 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 opened a financing agreement with a bank.
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 March 31, 2003 and December 31, 2002, $107,736 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 will 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 rate ("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 $365 and $48
million of borrowings outstanding under these facilities at March 31, 2003, a 1%
change in FHLB and prime rate, would impact the Company's quarterly net income
and cash flows by approximately $557,000. 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>


                                     PART IV


(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.

       99-1         Certification from the Chief Executive Officer pursuant to
                    section 906 of the Sarbanes Oxley Act of 2002.

       99-2         Certifications from the Chief Financial Officer 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.

May 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                   May 14, 2003


Seth Cohen
(Principal executive officer)


JOSEPH CAIAZZO          Senior Vice President,Chief Operating      May 14, 2003


Joseph Caiazzo             Officer, Secretary and Director
(Secretary)


ALAN JOSEPH             Executive Vice President,Chief Financial   May 14, 2003


Alan Joseph                  Officer and Director
(Principal financial officer)





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                                  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 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

6.     The Company's other certifying officers and I have indicated in this
       quarterly report whether or not there were significant changes in
       internal controls or in other factors that could significantly affect
       internal controls subsequent to the date of our most recent evaluation,
       including any corrective actions with regard to significant deficiencies
       and material weaknesses.



  DATE:  May 8, 2003                           By:  /s/
                                          --------------------------

                                            Chief Executive Officer


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                                  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
           reportis 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

6.    The Company's other certifying officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.



  DATE:  May 8, 2003                By:  /s/
                                      --------------------------

                                      Chief Financial Officer

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