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




                                  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 June 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)

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


                            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 August 12, 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 and Six months ended June 30, 2003

                                 C O N T E N T S


PART I. FINANCIAL INFORMATION                                          Page
                                                                       ----

Item 1.
Financial Statements (unaudited)

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

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

     Consolidated Statements of Stockholders' Equity                    5

     Consolidated Statements of Cash Flows for the six
     months ended June 30, 2003 and June 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>

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


ASSETS                                        June 30,2003     December 31,2002
                                               (Unaudited)


<S>                                                <C>                 <C>
RESTRICTED CASH                                    500,952             632,883

NOTES RECEIVABLE:
  Principal                                    481,450,824         435,259,394
  Purchase discount                            (25,487,403)        (22,974,310)
  Allowance for loan losses                    (52,228,545)        (45,841,651)
                                               -----------         -----------
     NET NOTES RECEIVABLE                      403,734,876         366,443,433

ORIGINATED LOANS HELD FOR SALE                  13,204,162          22,869,947

ORIGINATED LOANS HELD FOR INVESTMENT            13,522,546              _

ACCRUED INTEREST RECEIVABLE                      4,114,381           4,157,615

OTHER REAL ESTATE OWNED                         10,355,740           9,353,884

OTHER RECEIVABLES                                4,106,162           2,259,543

DEFERRED TAX ASSET                                 480,625             387,767

OTHER ASSETS                                     3,221,597           2,633,082

BUILDING, FURNITURE AND FIXTURES - Net           1,247,307           1,106,865

DEFERRED FINANCING COSTS- Net                    4,339,482           3,997,405
                                              ------------        ------------
TOTAL ASSETS                                  $467,909,451        $424,419,034
                                              ============        ============
LIABILITIES AND STOCKHOLDERS EQUITY

LIABILITIES:
  Accounts payable and accrued expenses        $ 3,952,147         $ 3,818,557
  Financing agreements                          15,742,609          11,557,369
  Notes payable                                431,509,565         395,266,144
  Tax Liability
    Deferred                                       434,661             783,115
                                               -----------         -----------
       TOTAL LIABILITIES                       451,638,982         411,425,185
                                               -----------         -----------
COMMITMENTS AND CONTENGENCIES

STOCKHOLDERS EQUITY
 Common stock, $.01 par value, 10,000,000
 authorized shares; issued and outstanding:
 5,916,527 and 5,916,527                            59,167              59,167
  Additional paid-in capital                     6,985,968           6,985,968
  Retained earnings                              9,225,334           5,948,714
                                               -----------        ------------
      TOTAL STOCKHOLDERS' EQUITY                16,270,469          12,993,849
                                               -----------        ------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY     $467,909,451        $424,419,034
                                              ============        ============


See notes to consolidated financial statements

</TABLE>









<PAGE>

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                    Three Months            Six Months
                                    Ended June 30          Ended June 30
                                 2003       2002           2003       2002
                                --------   --------     -------     -------
REVENUES:
<S>                          <C>          <C>          <C>          <C>
 Interest income             $10,722,418  $9,142,691   $21,283,669  $17,673,152
 Purchase discount earned      1,078,019     754,677     1,980,922    1,718,706
 Gain on sale of notes
 receivable                       -             -          596,114        -
 Gain on sale of originated
 loans held for sale             728,654     634,899     1,407,044      817,409
 Gain on sale of other real
 estate owned                    449,399      17,258       753,194      398,375
 Rental income                    23,338      42,518        73,800       85,926
 Other                           956,125     714,255     1,802,438    1,284,191
                              ----------  ----------    ----------   ----------
                              13,957,953  11,306,298    27,897,181   21,977,759
                              ----------  ----------    ----------   ----------

OPERATING EXPENSES:
 Interest expense              5,575,748   4,679,174    10,612,870    9,090,333
 Collection, general and
 administrative                4,411,539   2,866,044     8,519,096    5,615,495
 Recovery of special charge        -      (1,662,598)         -      (1,662,598)
 Provision for loan losses       734,851     841,764     1,584,445    1,095,764
 Amortization of deferred
 financing costs                 417,078     375,779       840,391      643,923
 Depreciation                    107,161      85,822       207,459      161,644
                              ----------  ----------    ----------  -----------
                              11,246,377   7,185,985    21,764,261   14,944,561
                              ----------  ----------    ----------  -----------


INCOME BEFORE PROVISION FOR
INCOME TAXES                   2,711,576   4,120,312     6,132,920    7,033,198
                              ----------  ----------    ----------   ----------

PROVISION FOR INCOME TAXES     1,282,500   1,854,250     2,856,300    3,208,750
                              ----------  ----------    ----------   ----------

NET INCOME                   $ 1,429,076  $2,266,062   $ 3,276,620  $ 3,824,448

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

NET INCOME PER COMMON SHARE:
 Basic                       $      0.24   $    0.38   $      0.55   $     0.65

 Diluted                     $      0.22   $    0.36   $      0.49   $     0.61

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

                             ===========   ==========   ===========  ==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING
DILUTED                        6,557,239    6,243,953    6,557,239    6,243,953
                             ===========   ==========   ==========   ==========


See notes to consolidated financial statements

</TABLE>


<PAGE>





<TABLE>
<CAPTION>



CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOE THE YEAR
JUNE 30, 2003
-------------------------------------------------------------------------------

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


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

     Net Income                                          3,276,620    3,276,620

                      ---------------------------------------------------------
June 30, 2003          5,916,527  $59,167  $6,985,968   $9,225,334  $16,270,469
                      =========================================================

See notes to consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

-------------------------------------------------------------------------------
                                                     Six months ended June 30,
                                                        2003           2002
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                 <C>             <C>
 Net income                                         $3,276,620      $3,824,448
 Adjustments to reconcile net income to
  net cash used by operating activities:
  Depreciation                                         207,459         161,644
  Amortization of deferred financing costs             840,391         643,923
  Origination of loans held for sale               (42,101,242)    (35,969,133)
  Proceeds on sale of loans held for sale           37,223,887      18,546,111
  Purchase discount earned                          (1,980,922)     (1,718,706)
  Gain on sale of other real estate owned             (753,194)       (398,376)
  Provision for loan losses                          1,584,445       1,095,764
Change in:                                             (92,858)        687,248
  Accrued interest receivable                           43,234         461,251
  Other receivables                                 (1,846,619)      3,390,616
  Other assets                                        (588,515)     (1,037,743)
  Deferred tax liability                              (348,454)        277,146
  Accounts payable and accrued expenses                133,590      (1,356,463)
                                                   ------------    ------------
Net cash used by operating activities               (4,402,178)    (11,392,270)
                                                   ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Acquisition and loan fees                          (1,346,543)     (1,126,460)
 Acquisition of notes receivable                  (112,718,301)    (90,045,271)
 Proceeds from sale of other real estate owned       7,500,632       3,815,380
 Proceeds from the sale of notes receivable          2,835,696           0
 Purchase of building, furniture & equipment          (347,902)       (130,529)
 Principal collection on notes receivable           66,423,015      52,426,980
(Increase) decrease in restricted cash                 131,931        (119,949)
                                                  -------------    ------------
Net cash used by investing activities              (37,521,472)    (35,179,849)
                                                  -------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Payments on subordinated debentures                    -              (24,262)
 Payments on financing agreements                  (41,666,966)    (37,054,703)
 Proceeds from financing agreements                 45,852,206      36,997,728
 Proceeds from notes payable                       118,389,550     106,507,117
 Payments on notes payable                         (82,146,129)    (62,603,684)
                                                   ------------    ------------
Net cash provided by financing activities           40,428,661      43,822,196
                                                   ------------    ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS           (1,494,989)     (2,749,923)

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

CASH AND CASH EQUIVALENTS END OF PERIOD             $9,081,621      $5,034,239
                                                   ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash payments for interest                         $10,277,680      $9,554,063
                                                  =============    ============
                                                  =============    ============
Cash payment for taxes                              $3,285,985      $2,318,000
                                                  =============    ============

</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 follows.

 Basis of Presentation-  The consolidated  balance sheet as of June 30, 2003,
 the consolidated statements of income for the three and six months ended June
 30, 2003 and 2002 and the consolidated statements of cash flows for the six
 months ended June 30, 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 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 there to 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 six months ended June 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.

 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.


<PAGE>

 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 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.

 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 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.


<PAGE>

 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.

 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.


<PAGE>

 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.

 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 Costs - Costs, incurred in connection with obtaining financing, are
 deferred and are amortized over the term of the related debt. Costs associated
 with loans, which are classified as held for investment, are deferred and
 recorded net. Cost associated with loans held for sale are not amortized.
 Cost associated with loans held for investment are amortized into income over
 the life of 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, 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.



<PAGE>

 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.

  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 variabl  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 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.


<PAGE>

         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 six months ended June 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>
                                                     2003              2002

<S>                                              <C>                <C>
Net income  - as reported                        $ 1,429,076        $ 2,266,062
Net income  -  pro forma                         $ 1,409,658        $ 2,266,062

Net income  per common share
 - basic - as reported                                $ 0.24            $ 0.38
Net income per common share
 - basic - pro forma                                  $ 0.24            $ 0.38
Net income per common share
 - diluted - as reported                              $ 0.22            $ 0.36
Net income per common share
 - diluted - pro forma                                $ 0.21            $ 0.36


</TABLE>



           The Company's six months ended June 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>
                                                     2003              2002

<S>                                               <C>               <C>
Net income  - as reported                         $ 3,276,620       $ 3,824,448
Net income  -  pro forma                          $ 3,240,688       $ 3,824,448

Net income  per common share
 - basic - as reported                                 $ 0.55           $ 0.65
Net income per common share
 - basic - pro forma                                   $ 0.55           $ 0.65
Net income per common share
 - diluted - as reported                               $ 0.50           $ 0.61
Net income per common share
 - diluted - pro forma                                 $ 0.49           $ 0.61


</TABLE>



<PAGE>


  There were 39,000 options granted during the three months ended June 30, 2003.
  The weighted average fair value of options granted during the three months
  ended June 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 June
  30, 2003 and for hedging relationships designated after June 30, 2003. The
  adoption of SFAS No.149 on July 1, 2003, as required, had no impact 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 impact 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>
                                                Three Months Ended June 30,
                                                 2003              2002
<S>                                         <C>                 <C>
CONSOLIDATED REVENUE
 Portfolio asset acquisition and

 resolution                                 $ 12,238,233        $ 9,650,176
 Mortgage banking                              1,719,720          1,656,122
 Consolidated Revenue                       $ 13,957,953       $ 11,306,298

CONSOLIDATED  INCOME
 Portfolio asset acquisition and
 resolution                                  $ 2,435,655        $ 3,422,721
 Mortgage banking                                275,921            697,591
 Consolidated  Income before income taxes    $ 2,711,576        $ 4,120,312
</TABLE>

<TABLE>
<CAPTION>

                                                 Six Months Ended June 30,
                                                 2003               2002
<S>                                            <C>               <C>
CONSOLIDATED REVENUE
 Portfolio asset acquisition and
 resolution                                 $ 24,553,980      $ 19,228,088
 Mortgage banking                              3,343,201         2,749,671
 Consolidated Revenue                       $ 27,897,181      $ 21,977,759

CONSOLIDATED INCOME
 Portfolio asset acquisition and
 resolution                                  $ 5,532,211       $ 5,998,857
 Mortgage banking                                600,709         1,034,341
 Consolidated Income before income taxes     $ 6,132,920       $ 7,033,198
</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 and the Senior Debt Lender willingness to extend additional
  credit to the Comoany; (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 six months ended June 30, 2003, the
  Company purchased loans with an aggregate face value of $129.8 million for an
  aggregate purchase price of $112.7 million or 87%, compared with the purchase
  during the six months ended June 30, 2002 of $103.3 million at an aggregate
  purchase price of $90 million or 87% of aggregate face value. The purchases
  during the six months ended June 30, 2003 included 23 bulk portfolios
  consisting primarily of first and second mortgages, with an aggregate face
  value of $100.3 million at an aggregate purchase price of $86.9 million or
  87% of the face value, and 122 flow purchase transactions consisting
  primarily of first and second mortgages with an aggregate face value of $29.5
  million at an aggregate purchase price of $25.8 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.

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


<PAGE>

  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, Tribec  has originated approximately $209
  million in loans. For the three months period ended June 30 ,2003, the
  Company changed the holding strategy of several of its originated loans and
  reclassed $13.2 million of principal and fees into loans held for investments
  as of June 30, 2003.

  During the six months ended June 30, 2003, Tribeca originated 244 loans with
  an aggregate principal amount of $42,101,242 and $3,839,300 in brokered loans
  compared to 279 loans with an aggregate principal of $35,969,133 during the
  six months ended June 30, 2002. During the six months ended June 30, 2003,
  Tribeca had income before taxes of $600,708 as compared to $1,034,341 during
  the six months ended June 30, 2002. This decrease in income reflected 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 June 30, 2003, Tribeca had approximately $13.2 million face value of loans
  held for sale and $13.5 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 June 30, 2003, the Company had Senior Debt outstanding
  under several loans with an aggregate principal balance of approximately $431
  million. Additionally the Company has financing agreements, which had an
  outstanding balance of approximately $16 million at June 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 $44 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%.

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



<PAGE>


  Results of Operations

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

         Total revenue, which is comprised of interest income, purchase
  discount earned, gains on bulk sale of notes receivable, gain on sale of
  notes receivable originated, gain on sale of OREO, rental income and other
  income, increased by $2,651,655 or 23%, to $13,957,953 11,306,298 during the
  three months ended June 30, 2003, from $11,306,298 during the three months
  ended June 30, 2002.

         Interest income on notes receivable increased by $1,579,727 or 17%, to
  $10,722,418 during the three months ended June 30, 2003 from $9,142,691
  during the three months ended June 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 $90,655,723 or 22% in the size of the portfolio between June
  30, 2002 and June 30, 2003.


         Purchase discount earned increased by $323,342 or 43%, to $1,078,019
  during the three months ended June 30, 2003, from $754,677 during the three
  months ended June 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 originated by Tribeca increased by $93,755 or
  15% to $728,654 during the three months ended June 30, 2003, from $634,899
  during the three months ended June 30, 2002. This increase is based on an
  increase in the volume of notes sold during the three months ended June 30,
  2003, compared to the three months ended June 30, 2002 and was partially
  offset by a decline in margin. The Company sold $21 million during the three
  months ended June 30, 2003 as compared to $9 million during the three months
  ended June 30, 2002.

         Gain on sale of OREO increased by $432,141 or 2504% to $449,399 during
  the three months ended June 30, 2003 from $17,258 during the three months
  ended June 30, 2002. The Company sold 67 and 23 OREO properties during the
  three months ended June 30, 2003 and June 30, 2002 respectively. This
  increase reflected an increase in the quantity of OREO properties sold during
  the three months ended June 20, 2003.

         Rental income decreased by $19,180 or 45% to $23,338 during the three
  months ended June 30, 2003, from $42,518 during the three months ended June
  30, 2002. Rental income decreased due to the reduction of rental properties
  held during the three months ended June 30, 2003 as compared to June 30, 2002.
  The Company had 6 and 13 rental properties during the three months ended June
  30, 2003 and June 30, 2002 respectively.

         Other income increased by $241,870 or 34%, to $956,125 during the
  three months ended June 30, 2003 from $714,255 during the three months ended
  June 30, 2002. This increase reflected increases in prepayment penalty income
  due to the growth in the size of the portfolio and increased loans fees
  associated with Tribeca loans sold.


         Total operating expenses increased by $4,060,392 or 56% to $11,246,377
  during the three months ended June 30, 2003 from $7,185,985 during the three
  months ended June 30, 2002. Exclusive of the one-time recovery of a special
  charge related to the PCC transaction of $1,662,598 total operating expenses
  increased by $2,397,793 or 27% during the three months ended June 30, 2003 as
  compared to the three months ended June 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.



<PAGE>

      Interest expense increased by $896,574 or 19%, to $5,575,748 during the
  three months ended June 30, 2003, from $4,679,174 during the three months
  ended June 30, 2002. This increase resulted primarily from a 22% increase in
  debt measured on the last day of the two periods, which was partially offset
  by a 7% decrease in costs of funds. The weighted average cost of funds was
  4.98% and 5.33% during the three months ended June 30, 2003 and June 30, 2002.
  Total debt increased by $82 million or 22%, to $447 million as of June 30,
  2003, from $365 million as of June 30, 2002. Total debt consists principally
  of Senior Debt and financing agreements.

         Collection, general and administrative expenses increased by
  $1,545,495 or 54% to $4,411,539 during the three months ended June 30, 2003
  from $2,866,044 during the three months ended June 30, 2002. The overall
  increase resulted in part from a 22% increase in the Company's portfolio at
  June 30, 2003 as compared with June 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 $610,077 or 37% to $2,254,421 during
   the three months ended June 30, 2003 from $1,644,344 during the three months
   ended June 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 $935,418 or 76% to $2,157,118 during
  the three months ended June 30, 2003 from $1,221,700 during the three months
  ended June 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 decreased by $106,913 or 13% to $734,851
  during the three months ended June 30, 2003 from $841,764 during the three
  months ended June 30, 2002. This decrease resulted primarily from fewer
  write-offs in portfolios where there was no longer purchase discount
  available to increase reserves.

         Amortization of deferred financing costs increased by $41,299 or 11%
  to $417,078 during the three months ended June 30, 2003, from $375,779 during
  the three months ended June 30, 2002. This increase resulted primarily from
  an increase in collections due to prepayments due to the growth in size of
  the portfolio. On June 30, 2003 and June 30, 2002, deferred financing costs,
  as a percentage of Senior Debt outstanding was 1.01% and 1.01%, respectively

         Depreciation expense increased by $21,339 or 25%, to $107,161 during
  the three months ended June 30, 2003, from $85,822 during the three months
  ended June 30, 2002. This increase resulted from increased purchases of
  computer equipment, furniture, and the leasehold improvements on new office
  space.

         Operating income decreased by $1,408,736 or 34% to $2,711,576 during
  the three months ended June 30, 2003 from $4,120,312 during the three months
  ended June 30, 2002. This was primarily due to the nonrecurring recovery of
  special charge received during the three months ended June 30, 2002.


         During the three months ended June 30, 2003 the Company made a
  provision for income taxes of $1,282,500 as compared to $1,854,250 during the
  three months ended June 30, 2002.

         Net income decreased by $836,986 or 37% to $1,429,076 during the three
  months ended June 30, 2003 from $2,266,062 during the three months ended June
  30, 2002 for the reason set forth above.



<PAGE>


  Six Months Ended June 30, 2003 Compared to Six Months Ended June 30, 2002.

         Total revenue, increased by $5,919,421 or 27%, to $27,897,181 during
  the six months ended June 30, 2003, from $21,977,759 during the six months
  ended June 30, 2002.

         Interest income on notes receivable increased by $3,610,517 or 20%, to
  $21,283,669 during the six months ended June 30, 2003 from $17,673,152 during
  the six months ended June 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
  $90,655,723 or 22% in the size of the portfolio between June 30, 2002 and
  June 30, 2003.

         Purchase discount earned increased by $262,216 or 15%, to $1,980,922
  during the six months ended June 30, 2003 from $1,718,706 during the six
  months ended June 30, 2002. This increase reflected the growth in size of the
  portfolio and prepayments in portfolio's that earn purchase discount
  accelerating the earning of the related discount income.

         Gain on portfolio sale increased by $596,114 during the six months
  ended June 30, 2003. The Company did not consummate any portfolio sales
  during the six months ending June 30, 2002.

         Gain on sale of notes originated by Tribeca increased by $589,635 or
  72% to $1,407,044 during the six months ended June 30, 2003 from $817,409
  during the six months ended June 30, 2002. This increase reflected an
  increase in the number of Tribeca loans sold during the six months ended June
  30, 2003, as compared to the six months ended June 30, 2002 and was partially
  offset by a decline in margin. The Company sold $37 million in loans during
  the three months ended June 30, 2003 as compared to $15 million in loans
  during the three months ended 2002.

         Gain on sale of OREO increased by $354,818 or 89% to $753,194 during
  the six months ended June 30, 2003, from $398,375 during the six months ended
  June 30,2002. This increase resulted from the increase in the Company's
  portfolio of OREO held for sale. The Company sold 110 OREO properties during
  the six months ended June 30, 2003, and 47 OREO properties during the six
  months ended June 30, 2002.

          Rental income decreased by $12,126 or 14% to $73,800 during the six
  months ended June 30, 2003, from $85,926 during the six months ended June 30,
  2002. Rental income decreased due to the reduction of rental properties held
  during the six months ended June 30, 2003 as compared to June 30, 2002. The
  Company had 6 and 13 rental properties during the six months ended June 30,
  2003 and June 30, 2002 respectively.

          Other income increased by $518,247 or 40%, to $1,802,438 during the
  six months ended June 30, 2003 from $1,284,191 during the six months ended
  June 30, 2002. This increase reflected increases in prepayment penalties, and
  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 $5,157,102 or 31%, to
  $21,764,261 during the six months ended June 30, 2003, from $16,607,159
  exclusive of the special recovery transaction during the six months ended
  June 30, 2002.




<PAGE>

          Interest expense increased by $1,522,537 or 17%, to $10,612,870
  during the six months ended June 30, 2003 from $9,090,333 during the six
  months ended June 30, 2002. This increase resulted primarily from a 22%
  increase in debt measured on the last day of the two periods, which was only
  partially offset by a 7% decrease in costs of funds. The weighted average
  cost of funds was 4.98% and 5.33% during the six months ended June 30, 2003
  and June 30, 2002. Total debt increased by $82 million or 22%, to $447
  million as of June 30, 2003, from $365 million as of June 30, 2002.

          Collection, general and administrative expenses increased by
  $2,903,601 or 52%, to $8,519,096 during the six months ended June 30, 2003
  from $ 5,615,495 during the six months ended June 30, 2002. The overall
  increase resulted in part from a 22% increase in the Company's portfolio at
  June 30, 2003 as compared with June 30, 2002.

          Personnel expenses increased by $1,177,973 or 37%, to $4,350,494
  during the six months ended June 30, 2003 from $3,172,521 during the six
  months ended June 30, 2002. This increase resulted largely from increases in
  staffing in Tribeca as the Company opened 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
  $1,725,628 or 71%, to $4,168,602 during the six months ended June 30, 2003
  from $2,442,974 during the six months ended June 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 $488,681 or 45% to $1,584,445
  during the six months ended June 30, 2003 from $1,095,764 during the six
  months ended June 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 $196,468 or 31%,
  to $840,391 during the six months ended June 30, 2003, from $643,923 during
  the six months ended June 30, 2002. This increase resulted primarily from an
  increase in collections primarily a result of prepayments due to the growth
  in size of the portfolio.

         Depreciation expense increased by $45,815 or 28%, to $207,459 during
  the six months ended June 30, 2003, from $161,644 during the six months ended
  June 30,2002. This increase resulted from increased purchases of computer
  equipment, furniture, and the renovations of office space.

         Operating income decreased by $900,278 or 13% to $6,132,920 during the
  six months ended June 30, 2003, from $7,033,198 during the six months ended
  June 30, 2002. This was primarily due to the nonrecurring recovery of special
  charge received during the six months ended June 30, 2002.

         During the six months ended June 30, 2003 the Company made a provision
  for income taxes of $2,856,300 as compared to $3,208,750 during the six
  months ended June 30, 2002.

         Net income decreased by $547,828 or 14% to $3,276,620 during the six
  months ended June 30, 2003 from $3,824,448 during the six months ended June
  30, 2002 for the reasons set forth above.



<PAGE>


  Liquidity and Capital Resources

          General. During the six months ended June 30, 2003 the Company
  purchased 1,878 loans in several portfolios with an aggregate face value of
  $130 million at an aggregate purchase price of $113 million or 87% of face
  value. During the six months ended June 30, 2002 the Company purchased 1,959
  loans in several portfolios with an aggregate face value of $103 million at
  an aggregate purchase price of $90 million or 87% of aggregate face value.

         The Company's portfolio of notes receivable at June 30, 2003 had a
  face value of $481 million and included net notes receivable of approximately
  $403 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 or, where deemed to be
  economically advantageous to sell. The Company's portfolio of originated
  loans, which includes mortgages originated by Tribeca and held for sale and
  investment at June 30, 2003, had a combined face value of $27 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 six months ended June 30, 2003, the Company used cash in
  the amount of $4.4 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 $37.5 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 $40.4 million of net cash provided by financing activities,
  including primarily, a net increase in Senior Debt of $36.3 million. The
  above activities resulted in a net decrease in cash at June 30, 2003 over
  December 31, 2002 of $1.5 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 June 30, 2003 and December 31, 2002, the Company held
  OREO recorded on the financial statements at $10.4 million and $9.3 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
  June 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 $11.4 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.





<PAGE>

 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 June 30, 2003, the Company had unrestricted cash, cash equivalents
  and marketable securities of $9 million.

  Cash Flow From Financing Activities

         Senior Debt.  As of June 30, 2003, the Company owed an aggregate of
  $432 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 $44 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 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
  $1,166,854 on June 30, 2003 and $1,359,693 on December 31, 2002. The decrease
  in restricted cash at June 30, 2003 was due to funding the origination of two
  OREO properties during the six months ended June 30, 2003.

         Total Senior Debt availability was approximately $500 million at June
  30, 2003, of which approximately $358 million had been drawn down as of such
  date. As a result, the Company has approximately $142 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 $15 million. This Senior Debt accrues
  interest based on prime plus an additional spread of 2.00%. At June 30, 2003,
  Tribeca had drawn down $ 15 million on the line. The Company is actively
  seeking other sources of financing for Tribeca.


<PAGE>

  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 June 30, 2003 and December 31, 2002, were
  $500,952 and $632,883 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 June 30, 2003 and December 31, 2002 $104,736 and $109,942 respectively,
  were outstanding on the financing agreement.




<PAGE>

  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 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 $387 and $44 million of borrowings
  outstanding under this facility at June 30, 2003, a 1% increase in FHLB and
  prime rate, would decrease the Company's quarterly net income and net cash
  flows by approximately $583,000, 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.




<PAGE>

  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


  On May 8, 2003 at the Company's annual meeting the shareholders voted to
  elect nine directors to the Company's Board of Directors, and to ratify the
  appointment of Deloitte & Touche LLP as the Company's independent public
  auditors for the fiscal year ending December 31, 2003.


-------------       ----------- ----------- ----------   ----------- ----------
Election of
Directors                For      Against    Abstained    No-votes     Total
Director
-----------------   ---------   ----------   ---------   ----------   ---------
-----------------   ---------   ----------   ---------   ----------   ---------
Thomas J. Axon      4,183,579        0         2,115      1,730,833   5,916,527
------------------  ---------   ----------   ---------   ----------   ---------
------------------  ---------   ----------   ---------   ----------   ---------
Seth Cohen          4,183,579        0         2,115      1,730,833   5,916,527
------------------  ---------   ----------   ---------   ----------   ---------
------------------  ---------   ----------   ---------   ----------   ---------
Joseph Caiazzo      4,183,579        0         2,115      1,730,833   5,916,527
------------------  ---------   ----------   ---------   ----------   ---------
------------------  ---------   ----------   ---------   ----------   ---------
Michael Bertash     4,183,579        0         2,115      1,730,833   5,916,527
------------------  ---------   ----------   ---------   ----------   ---------
------------------  ---------   ----------   ---------   ----------   ---------
Frank B. Evans      4,183,579        0         2,115      1,730,833   5,916,527
------------------  ---------   ----------   ---------   ----------   ---------
------------------  ---------   ----------   ---------   ----------   ---------
Alan Joseph         4,183,579        0         2,115      1,730,833   5,916,527
------------------- ---------   ----------   ---------   ----------   ---------
------------------- ---------   ----------   ---------   ----------   ---------
Steven W. Lefkowitz 4,183,579        0         2,115      1,730,833   5,916,527
------------------- ---------   ----------   ---------   ----------   ---------
------------------- ---------   ----------   ---------   ----------   ---------
Allan R. Lyons      4,183,579        0         2,115      1,730,833   5,916,527
------------------- ---------   ----------   ---------   ----------   ---------
------------------- ---------   ----------   ---------   ----------   ---------
William F. Sullivan 4,183,579        0         2,115      1,730,833   5,916,527
------------------- ---------   ----------   ---------   ----------   ---------


Independent Public
Auditors                For       Against    Abstained    No Votes      Total
-------------------------------------------------------------------------------
Deloitte & Touche
LLP                 4,183,579       0          1,450     1,731,498    5,916,527


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.

    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.

  August 12, 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           August 12, 2003
 ------------                                                 ---------------
 Seth Cohen
 (Principal executive
  officer)


 JOSEPH CAIAZZO             Senior Vice President, Chief      August 12, 2003
 --------------             Operating                         ---------------
 Joseph Caiazzo             Officer, Secretary and Director
 (Secretary)

 ALAN JOSEPH                Executive Vice President, Chief   August 12, 2003
 -----------                Financial                         ---------------
 Alan Joseph                Officer and Director
 (Principal financial
  officer)



<PAGE>


                                  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:  August 12, 2003                By:  /s/
                                       --------------------------
                                        Chief Executive Officer



<PAGE>



                                  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:  August 12, 2003                By:  /s/
                                        -------------------------
                                         Chief Financial Officer