10-Q: Quarterly report pursuant to Section 13 or 15(d)

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 quarter ended March 31, 1995

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission file number 1-9819



RESOURCE MORTGAGE CAPITAL, INC.
(Exact name of registrant as specified in its charter)




Virginia 52-1549373
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2800 East Parham Road, Richmond, Virginia 23228
(Address of principal executive offices) (Zip Code)

(804) 967-5800
(Registrant's telephone number, including area code)

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

On April 30, 1995, the registrant had 20,117,925 shares of common stock of
$.01 value outstanding, which is the registrant's only class of common stock.




RESOURCE MORTGAGE CAPITAL, INC.
FORM 10-Q

INDEX





PAGE

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets at March 31, 1995 and
December 31, 1994 3

Consolidated Statements of Operations for the three months
ended March 31, 1995 and 1994 4

Consolidated Statement of Shareholders' Equity for
the three months ended March 31, 1995 5

Consolidated Statements of Cash Flows for
the three months ended March 31, 1995 and 1994 6

Notes to Consolidated Financial Statements 7

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9


PART II OTHER INFORMATION

Item 1. Legal Proceedings 14

Item 2. Changes in Securities 14

Item 3. Defaults Upon Senior Securities 14

Item 4. Submission of Matters to a Vote of Security Holders 14

Item 5. Other Information 14

Item 6. Exhibits and Reports on Form 8-K 14


SIGNATURES 15



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RESOURCE MORTGAGE CAPITAL, INC.

CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share data)
March 31, December 31,
1995 1994
ASSETS

Mortgage investments:
Collateral for CMOs $ 553,094 $ 441,222
Adjustable-rate mortgage securities, net 2,080,946 2,321,388
Fixed-rate mortgage securities, net 117,529 194,078
Other mortgage securities 62,535 64,293
Mortgage warehouse lines of credit 3,400 7,938
2,817,504 3,028,919
Mortgage loans in warehouse 355,399 518,131
Cash 2,720 6,340
Accrued interest receivable 15,962 19,019
Other assets 38,694 28,187
$ 3,230,279 $ 3,600,596

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Collateralized mortgage obligations $ 536,754 $ 424,800
Repurchase agreements 2,298,838 2,804,946
Notes payable 128,445 135,110
Accrued interest payable 10,685 11,450
Deferred income - 12,117
Other liabilities 18,222 14,702
2,992,944 3,403,125
SHAREHOLDERS' EQUITY

Common stock, par value $.01 per share,
50,000,000 shares authorized, 20,078,013
issued and outstanding 201 201
Additional paid-in capital 279,296 279,296
Net unrealized loss on
available-for-sale mortgage securities (32,182) (72,678)
Retained deficit (9,980) (9,348)
237,335 197,471
$ 3,230,279 $ 3,600,596

See notes to consolidated financial statements.





RESOURCE MORTGAGE CAPITAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share data) Three Months Ended
March 31,
1995 1994

Interest Income:
Collateral for CMOs $ 9,672 $ 8,539
Adjustable-rate mortgage securities 34,550 25,296
Fixed-rate mortgage securities 2,736 4,118
Other mortgage securities 3,124 2,428
Mortgage warehouse lines of credit 193 1,429
Mortgage loans in warehouse 10,541 9,485
60,816 51,295
Interest and CMO-related expense:
Collateralized mortgage obligations:
Interest 8,258 8,040
Other 434 408
Repurchase agreements 40,599 26,883
Notes payable 2,722 770
Commercial paper - 803
Other 1,190 1,129
53,203 38,033

Net margin on mortgage assets 7,613 13,262

Gain on sale of mortgage assets,
net of associated costs 2,454 6,841
Other income, net 947 229
General and administrative expenses (4,418) (4,832)

Net income $ 6,596 $ 15,500

Net income per share $ 0.33 $ 0.80

Weighted average number of
common shares outstanding 20,078,013 19,447,618


See notes to consolidated financial statements.



RESOURCE MORTGAGE CAPITAL, INC.

CONSOLIDATED STATEMENT OF Net
SHAREHOLDERS' EQUITY unrealized
(amounts in thousands except share data) loss on
available-
Additional for-sale
Number of Common paid-in mortgage Retained
shares stock capital securities deficit Total

Balance at December 31, 1994 $201 $279,296 $(72,678) $(9,348) $197,471

Net income - three months ended
March 31, 1995 - - - - 6,596 6,596
Net change in unrealized loss on
available-for-sale mortgage securities
- - - 40,496 - 40,496
Dividends declared - $0.36 per share
- - - - (7,228) (7,228)

Balance at March 31, 1995
20,078,013 $201 $279,296 $(32,182) $(9,980) $ 237,335



See notes to consolidated financial statements.




RESOURCE MORTGAGE CAPITAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended
(amounts in thousands) March 31,

1995 1994
Operating activities:
Net income $ 6,596 $ 15,500
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization and depreciation 2,578 1,343
Net decrease in mortgage loans held for sale 159,952 200,554
Net (increase) decrease in accrued interest,
other assets and other liabilities (15,893 ) 20,251
Net loss (gain) from sales of
mortgage investments 901 (1,514)
Other (1,128) 85
Net cash provided by operating activities 153,006 236,219

Investing activities:
Collateral for CMOs:
Purchases of mortgage loans
subsequently securitized (164,746) -
Principal payments on collateral 51,101 48,501
Net decrease in funds held by trustees 1,607 2,337
(112,038) 50,838

Purchase of other mortgage investments (2,210) (260,152)
Payments on other mortgage investments 48,620 136,071

Proceeds from sales of other mortgage investments 305,980 67,844
Capital expenditures (59) (883)

Net cash provided by (used for)
investing activities 240,293 (6,282)

Financing activities:
Proceeds from issuance of CMOs 162,055 -
Principal payments on CMOs (46,202) (50,232)
Repayments of borrowings, net (512,772) (166,583)
Proceeds from stock issuance, net - 7,897
Dividends paid - (15,167)
Net cash used for financing activities (396,919) (224,085)

Net (decrease) increase in cash (3,620) 5,852
Cash at beginning of period 6,340 1,549
Cash at end of period $ 2,720 $ 7,401


Cash paid for interest $ 52,6970 $ 40,376

See notes to consolidated financial statements.




RESOURCE MORTGAGE CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
(amounts in thousands except share data)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. The consolidated financial statements include
the accounts of Resource Mortgage Capital, Inc., its wholly owned
subsidiaries, and certain other entities. As used herein, the "Company"
refers to Resource Mortgage Capital, Inc. ("RMC") and each of the entities
that is consolidated with RMC for financial reporting purposes. A portion of
the Company's mortgage operations are operated by a taxable corporation that
is consolidated with RMC for financial reporting purposes, but is not
consolidated for income tax purposes. All significant intercompany balances
and transactions have been eliminated in consolidation.

In the opinion of management, all material adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation have been
included. The Consolidated Balance Sheet at March 31, 1995, the Consolidated
Statements of Operations for the three months ended March 31, 1995 and 1994,
the Consolidated Statement of Stockholders' Equity for the three months ended
March 31, 1995, the Consolidated Statements of Cash Flows for the three months
ended March 31, 1995 and 1994 and related notes to consolidated financial
statements are unaudited. Operating results for the three months ended March
31, 1995 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1995. For further information, refer to the
audited consolidated financial statements and footnotes included in the
Company's Form 10-K for the year ended December 31, 1994.

Certain amounts for 1994 have been reclassified to conform with the
presentation for 1995.




NOTE 2--AVAILABLE-FOR-SALE MORTGAGE INVESTMENTS

The Company has classified all of its mortgage securities as available-for-
sale. The following tables summarize the Company's mortgage securities
held at March 31, 1995 and mortgage securities sold during 1995. The basis
of securities sold is computed using the specific identification method.

Securities held at March 31, 1995
Gross Gross
Amortized unrealized unrealized
cost basis Fair value gain loss
Collateral for CMOs $ 546,155 $ 553,094 $ 7,730 $ (791)
Adjustable-rate
mortgage securities 2,124,461 2,080,946 8,844 (52,359)
Fixed-rate
mortgage securities 118,669 117,529 1,007 (2,147)
Other mortgage securities 57,001 62,535 11,231 (5,697)
$ 2,846,286 $ 2,814,104 $ 28,812 $ (60,994 )


Securities sold during 1995
Amortized Proceeds Gross Gross
cost basis from sale realized realized
gain loss


Collateral for CMOs $ - $ - $ - $ -
Adjustable-rate
mortgage securities 299,531 302,525 12,117 9,123
Fixed-rate
mortgage securities - - - -
Other mortgage
securities 7,350 3,455 175 4,070
$ 306,881 $ 305,980 $ 12,292 $ 13,193

The unamortized cost basis of adjustable-rate mortgage securities sold during
1995 includes the basis in the repurchase obligation related to adjustable-
rate mortgage loans previously securitized or sold.

NOTE 3--OTHER MATTERS

The gain on sale of mortgage assets for the three months ended March 31, 1995
is net of tax expense totaling $6,284.



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Resource Mortgage Capital, Inc. (the "Company") originates, purchases,
services and securitizes residential mortgage loans (collectively, the
mortgage operations) and invests in a portfolio of residential mortgage
securities. The Company's primary strategy is to use its mortgage operations
to create investments for its portfolio. The Company's principal sources of
income are net interest income on its investment portfolio, gains on the
securitization and sales of mortgage loans and the interest spread realized
while the mortgage loans are being accumulated for securitization or sale.

The Company's results were negatively impacted during the three months
ended March 31, 1995 by the rapid increase in interest rates during 1994 and
the resulting lower level of overall mortgage loan originations in the market.
As a result of this rapid increase in interest rates during 1994, the Company
experienced a decrease in the net interest spread earned on the adjustable-
rate mortgage securities, which constitute a significant portion of the
portfolio of mortgage investments. Lower anticipated mortgage loan
origination volume is expected to substantially reduce the gain on
securitization or sales of mortgage loans during the remainder of 1995
relative to the levels experienced in 1994.

Results of Operations

Three Months Ended
(amounts in thousands except per share March 31,
information) 1995 1994

Net margin on mortgage assets $ 7,613 $ 13,262
Net gain on sale of mortgage assets 2,454 6,841
General and administrative expenses 4,418 4,832
Net income 6,596 15,500
Net income per share 0.33 0.80

Principal balance of mortgage
loans funded 237,119 958,772

Three Months Ended March 31, 1995 Compared to Three Months Ended March 31,
1994 The decrease in the Company's earnings during the three months ended
March 31, 1995 as compared to the same period in 1994 is primarily the result
of the decrease in the net margin on mortgage assets and the gain on sale of
mortgage assets.

Net margin on mortgage assets decreased to $7.6 million for the three
months ended March 31, 1995 from $13.3 million for three months ended March
31, 1994. This decrease resulted primarily from the decrease in the net
interest spread on the portfolio from 1.40% for the three months ended March
31, 1994 to 0.61% for the three months ended March 31, 1995.

The gain on sale of mortgage assets decreased to $2.5 million for the three
months ended March 31, 1995 from $6.8 million for the three months ended March
31, 1994. This decrease resulted primarily from lower mortgage loan funding
levels by the Company as a result of a decrease in overall mortgage loan
originations in the market and a higher level of price competition for
mortgage loans. Lower funding levels resulted in lower gain on sale relating
to loans securitized or sold.



The following tables summarize the average balances of the Company's
interest-earning assets and their average effective yields, along with the
Company's average interest-bearing liabilities and the related average
effective interest rates, for each of the periods presented.

Average Balances and Effective Interest Rates
Three Months Ended March 31,
(amounts in thousands) 1995 1994
Average Effective Average Effective
Balance Rate Balance Rate

Interest-earning assets : (1)
Collateral for CMOs (2) $ 461,135 8.39% $ 384,179 8.89%
Adjustable-rate
mortgage securities 2,169,935 6.37 2,126,564 4.76
Fixed-rate mortgage
securities 145,535 7.52 209,951 7.85
Other mortgage securities 57,951 21.56 74,841 12.97
Mortgage warehouse
lines of credit 8,527 9.05 103,456 5.53
Total portfolio-
related assets 2,843,083 7.07 2,898,991 5.77
Mortgage loans in
warehouse 563,877 7.48 650,776 5.83
Total interest-
earning assets $ 3,406,961 7.14% $ 3,549,767 5.78%

Interest-bearing liabilities:
Portfolio-related liabilities:
CMOs $ 460,134 7.18% $ 394,540 8.15%
Repurchase agreements:
Adjustable-rate
mortgage securities 1,949,852 6.35 2,055,643 3.62
Fixed-rate
mortgage securities 134,188 5.40 197,114 5.19
Other mortgage securities 6,236 6.35 11,214 3.71
Warehouse lines of credit 8,424 7.60 96,732 3.32
Total portfolio-
related liabilities 2,558,834 6.46 2,755,243 4.37
Warehouse-related liabilities:
Repurchase agreements 444,708 7.06 508,760 4.41
Notes payable 54,585 8.26 51,098 6.03
Total warehouse-
related liabilities 499,293 7.19 559,858 4.56
Total interest-
bearing liabilities $3,058,127 6.58% $3,315,101 4.40%
Net interest spread 0.56% 1.38%
Net yield on average
interest earning assets 1.24% 1.67%

(1) Average balances exclude adjustments made in accordance with Statement
of Financial Accounting Standards No. 115, Accounting for Certain Investments
in Debt and Equity Securities to record available-for-sale securities at fair
value.
(2) Average balances exclude funds held by trustees of $6,137 and $12,632 for
the three months ended March 31, 1995 and March 31, 1994, respectively.



The decrease in net interest spread is primarily the result of the decrease
in the spread on adjustable-rate mortgage securities. Adjustable-rate
mortgage securities reset throughout the year, generally on a semiannual
basis. These securities are subject to certain periodic and lifetime interest
rate caps. Due to the nature of the periodic caps, semiannual rate increases
are generally limited to 1%. As a result of rapidly increasing short-term
interest rates since February 1994, the interest rate on certain repurchase
borrowings, which are not subject to caps, increased at a faster rate than the
interest rate earned on the adjustable-rate mortgage securities which
collateralize these borrowings, decreasing the net interest spread on these
securities. Additionally, the decrease in the spread on adjustable-rate
mortgage securities resulted from the increase in securities retained in the
portfolio during late 1993 and early 1994 with low initial pass-through rates
(i.e., a teaser rate). As of March 31, 1995, adjustable-rate mortgage
securities in the Company's portfolio were "teased" approximately 1.90% on a
weighted average basis. Comparatively, as of March 31, 1994, adjustable-rate
mortgage securities in the Company's portfolio were "teased" approximately
0.40% on a weighted average basis. In future periods, the rate the Company
earns on adjustable-rate securities will increase approximately 0.50% during
each three month period until these securities become fully indexed or are
limited by their lifetime interest rate caps. The spread on adjustable-rate
mortgage securities may increase to the extent the rates on the related
repurchase borrowings increase more slowly than the resets on these
securities. Conversely, the spread on these securities could decrease further
should the rates on the related repurchase borrowings continue to increase
faster than the interest rates reset on these securities.

Portfolio Activity

The Company's investment strategy is to create a diversified portfolio of
mortgage securities that in the aggregate generate stable income in a variety
of interest rate and prepayment rate environments and preserve the capital
base of the Company. However, the rapid increase in short-term interest rates
has reduced the portfolio income since the first quarter of 1994, and further
rapid increases in short-term interest rates could lead to further reductions
in the portfolio net margin. This rise in interest rates during 1994 also had
a negative impact on the value of the Company's portfolio. However, the value
of the Company's available-for-sale mortgage securities increased by $40.5
million during the first three months of 1995 as a result of the stabilization
of interest rates. This increase is attributable primarily to the increase in
value of ARM securities. The Company anticipates that the value of
adjustable-rate mortgage securities will continue to increase assuming a
relatively stable interest rate environment during the remainder of 1995.

The Company has pursued its strategy of concentrating on its mortgage
operations to create investments with attractive yields and to benefit from
potential gains on sale or securitization. In many instances the Company's
investment strategy involves not only the creation or acquisition of the
asset, but also the related borrowing to finance a portion of that asset.

Three Months Ended March 31, 1995 Compared to Three Months Ended March 31,
1994 The net margin on the Company's portfolio of mortgage investments
decreased to $7.4 million for the three months ended March 31, 1995 from $10.2
million for the three months ended March 31, 1994. This decrease resulted
from a decrease in the net interest spread on the portfolio.

During the three months ended March 31, 1995, the Company sold certain
investments to (i) reduce the Company's exposure to periodic cap risk as
discussed above, (ii) reduce the Company's exposure to further declines in the
market value of such securities and (iii) increase liquidity. The aggregate
principal amount of investments sold was $319.0 million, consisting of $311.6
million principal amount of ARM securities and $7.4 million of other mortgage
securities from its portfolio. Additionally during the three months ended
March 31, 1995, the Company sold its repurchase obligation on all convertible
adjustable-rate mortgage loans previously securitized or sold. During the
three months ended March 31, 1994, the Company sold $55.5 million principal
amount of adjustable-rate mortgage securities and $5.7 million of other
mortgage securities from its portfolio. The Company realized a net loss of
$0.9 million on the sale of mortgage securities and its repurchase obligation
for the three months ended March 31, 1995 compared to a net gain of $1.5 for
the three months ended March 31, 1994. Additionally, during the three months
ended March 31, 1995, the Company added approximately $165.2 million of
collateral for CMOs, with $162.2 million of associated borrowings and $1.8
million of other mortgage securities to its portfolio through its mortgage
operations.


Mortgage Operations

The Company originates, purchases and services single-family mortgage
loans. When a sufficient volume of mortgage loans is accumulated, the Company
sells or securitizes these mortgage loans through the issuance of CMOs or
pass-through securities. During the accumulation period, the Company finances
its funding of mortgage loans through warehouse lines of credit or through
repurchase agreements.

The following table summarizes mortgage operations activity for the three
months ended March 31, 1995 and 1994.

Three Months Ended
March 31,
(amounts in thousands) 1995 1994

Principal amount of loans funded $ 237,119 $ 958,772
Principal amount securitized or sold 402,788 1,155,432
Investments added to portfolio
from mortgage operations,
net of associated borrowings 4,840 19,837

Three Months Ended March 31, 1995 Compared to Three Months Ended March 31,
1994 The decrease in the funding volume of mortgage loans for the three
months ended March 31, 1995 as compared to the three months ended March 31,
1994 is a result of the lower overall mortgage loan originations in the market
and an increased level of price competition for mortgage loans. The gain on
securitizations and sales of mortgage loans, excluding recognition of deferred
gains, decreased to $2.1 million for the three months ended March 31, 1995
from $4.4 million for the three months ended March 31, 1994, resulting
primarily from this lower funding volume and the Company's current
securitization strategy.

The Company's current securitization strategy includes securitizing a
significant portion of its loan production through the issuance of CMOs.
These securitizations are recorded as financing transactions and as such, no
gain on sale is recognized. Instead, income related to these securitizations
will be recognized over time as part of net margin income. With respect to
the remaining portion of the Company's loan production, the Company will
generally continue its strategy of either selling these loans in whole loan
pools or securitizing them using a senior subordinated structure. The Company
will recognize a gain or loss on sale of mortgage assets as a result of such
sales or securitizations.

During the three months ended March 31, 1995, the Company sold a portion of
its purchased mortgage servicing rights which were acquired along with the
Company's servicing operation in 1994. The gain resulting from this sale
totaled $1.2 million. Pursuant to the original acquisition strategy, the
Company will continue to sell purchased mortgage servicing rights as it adds
its own mortgage loan products to the servicing portfolio.

Other Matters

The Company has exposure to credit losses related to delinquent loans in
warehouse. Additionally, in certain circumstances, the Company may retain a
portion of the credit risk after securitization. Such credit loss exposure
is generally limited to an amount equal to a fixed percentage of the
principal balance of the pool of mortgage loans at the time of
securitization. After securitization, the Company may also be exposed to
losses due to fraud during the origination of a mortgage loan or special
hazards. The Company establishes discounts and reserves for these estimated
potential losses. At March 31, 1995, these discounts and reserves totaled
$35.2 million.

The Company and its qualified REIT subsidiaries (collectively "Resource
REIT") have elected to be treated as a real estate investment trust for
federal income tax purposes, and therefore is required to distribute annually
substantially all of its taxable income. Resource REIT estimates that its
taxable income for the three months ended March 31, 1995 was approximately
$6.8 million. Taxable income differs from the financial statement net income
which is determined in accordance with generally accepted accounting
principles.


Liquidity and Capital Resources

The Company uses its cash flow from operations, issuance of CMOs or pass-
through securities, other borrowings and capital resources to meet its working
capital needs. Historically, these sources of cash flow have provided
sufficient liquidity for the conduct of the Company's operations. However, if
a significant decline in the market value of the Company's mortgage securities
should occur, the Company's available liquidity may be reduced. As a result
of such a reduction in liquidity, the Company may be forced to sell certain
mortgage assets in order to maintain liquidity. If required, these sales
could be made at prices lower than the carrying value of such assets, which
could result in losses.

The Company's borrowings may bear fixed or variable interest rates, may
require additional collateral in the event that the value of the existing
collateral declines, and may be due on demand or upon the occurrence of
certain events. If borrowing costs are higher than the yields on the mortgage
assets purchased with such funds, the Company's ability to acquire mortgage
assets may be substantially reduced and it may experience losses.

The Company borrows funds on a short-term basis to support the accumulation
of mortgage loans prior to the sale of such mortgage loans or the issuance of
mortgage securities. These short-term borrowings consist of the Company's
warehouse lines of credit and repurchase agreements and are paid down as the
Company securitizes or sells mortgage loans. The Company has a $150 million
credit facility to finance the purchase of mortgage loans that expires in May
1996. This facility includes a sub-agreement which allows the Company to
borrow up to $30 million for working capital purposes. The Company also has
various committed repurchase agreements totaling $260 million maturing in June
and August 1995 relating to mortgage loans in warehouse. The Company expects
that these credit facilities will be renewed, if necessary, at their
respective expiration dates, although there can be no assurance of such
renewal. The Company may also finance a portion of its mortgage loans in
warehouse with repurchase agreements on an uncommitted basis. At March 31,
1995, the Company had borrowed $301.5 million under these credit facilities.
The lines of credit contain certain financial covenants which the Company met
as of March 31, 1995. However, changes in asset levels or results of
operations could result in the violation of one or more covenants in the
future.

The Company finances adjustable-rate mortgage securities and certain other
mortgage assets through repurchase agreements. Repurchase agreements allow
the Company to sell mortgage assets for cash together with a simultaneous
agreement to repurchase the same mortgage assets on a specified date for an
increased price, which is equal to the original sales price plus an interest
component. At March 31, 1995, the Company had outstanding obligations of $2.1
billion under such repurchase agreements, of which $2.0 billion, $108.9
million and $5.6 million were secured by adjustable-rate mortgage securities,
fixed-rate mortgage securities and other mortgage securities, respectively.
Increases in either short-term interest rates or long-term interest rates
could negatively impact the valuation of these mortgage assets and may limit
the Company's borrowing ability or cause various lenders to initiate margin
calls. Additionally, certain of the Company's adjustable-rate mortgage
securities are AA or AAA rated classes that are subordinate to related AAA
rated classes from the same series of securities. Such AA or AAA rated
classes have less liquidity than securities that are not subordinated, and the
value of such classes is more dependent on the credit rating of the related
insurer or the credit performance of the underlying mortgage loans. As a
result of such a downgrade of an insurer, or the deterioration of the credit
quality of the underlying mortgage collateral, the Company may be required to
sell certain mortgage assets in order to maintain liquidity. If required,
these sales could be made at prices lower than the carrying value of the
assets, which could result in losses. Additionally, the Company owns
approximately $67.5 million of its CMOs and has financed such CMOs with $67.4
million of short-term debt. The Company plans to sell the majority of these
CMOs during the second quarter of 1995. For financial statement presentation
purposes, the Company has classified the $67.4 million of short-term debt as
CMOs outstanding.

A substantial portion of the assets of the Company are pledged to secure
indebtedness incurred by the Company. Accordingly, those assets would not be
available for distribution to any general creditors or the stockholders of the
Company in the event of the Company's liquidation, except to the extent that
the value of such assets exceeds the amount of the indebtedness they secure.

The Company has outstanding $50 million in unsecured notes maturing between
1999 and 2001. The proceeds from this issuance were used for general
corporate purposes. The note agreements contain certain financial covenants
which the Company met as of March 31, 1995. However, changes in asset levels
or results of operations could result in the violation of one or more
covenants in the future.

The REIT provisions of the Internal Revenue Code require Resource REIT to
distribute to shareholders substantially all of its taxable income, thereby
restricting its ability to retain earnings. The Company may issue additional
common stock or other securities in the future in order to fund growth in its
operations, growth in its portfolio of mortgage investments, or for other
purposes.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
In March 1993, the Company was notified by the Securities and
Exchange Commission (the "Commission") that a formal order of
investigation had been issued to review trading activity in the
Company's stock during April and May of 1992. In this regard, the
Company and certain of its officers and directors have produced
documents and testified before the staff of the Commission. The
Company and the subpoenaed officers and directors are complying
with the requests of the Commission. Based on information
available to the Company, and upon advice of counsel, management
does not believe that the investigation will result in any action
that will have a material adverse impact on the Company.


Item 2. Changes in Securities
Not applicable

Item 3. Defaults Upon Senior Securities
Not applicable

Item 4. Submission of Matters to a Vote of Security Holders
Not applicable

Item 5. Other Information
None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits
None

(b) Reports on Form 8-K
Non



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




RESOURCE MORTGAGE CAPITAL, INC.


By:Thomas H. Potts
-------------------
Thomas H. Potts, President
(authorized officer of registrant)





Lynn K. Geurin
---------------------
Lynn K. Geurin, Executive Vice
President and Chief
Financial Officer
(principal accounting officer)

Dated: May 15, 1995


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