SC 13D: Schedule filed to report acquisition of beneficial ownership of 5% or more of a class of equity securities

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934

(Amendment No. ___)*

Dynex Capital, Inc.
(Name of Issuer)

Common Stock, $0.01 par value per share
(Title of Class Securities)

26817Q506
(CUSIP Number)

Ernest C. Garcia II
2525 E. Camelback Road, Suite 1150
Phoenix, Arizona 85016
(602) 522-3200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

October 20, 1999
(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. / /

Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).


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COVER PAGES
_____________________________ ______________________________
CUSIP NO. 26817Q506 13D PAGE 2 OF 4 PAGES
_____________________________ ______________________________

______________________________________________________________________________
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
Verde Reinsurance Company, Ltd.
66-0558988
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 SOURCE OF FUNDS*
WC
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Island of Nevis
______________________________________________________________________________
NUMBER OF 7 SOLE VOTING POWER 0
SHARES
BENEFICIALLY ______________________________________________________
OWNED BY 8 SHARED VOTING POWER 440,700
EACH
REPORTING ______________________________________________________
PERSON WITH 9 SOLE DISPOSITIVE POWER 0

______________________________________________________
10 SHARED DISPOSITIVE POWER 440,700

______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 440,700
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.8%

______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
______________________________________________________________________________

* See Instructions


2
_____________________________ ______________________________
CUSIP NO. 26817Q506 13D PAGE 3 OF 4 PAGES
_____________________________ ______________________________


______________________________________________________________________________
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
Verde Investments, Inc.
86-0706842
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
______________________________________________________________________________
3 SEC USE ONLY

______________________________________________________________________________
4 SOURCE OF FUNDS*
WC
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
ARIZONA
______________________________________________________________________________
NUMBER OF 7 SOLE VOTING POWER 0
SHARES
BENEFICIALLY ______________________________________________________
OWNED BY 8 SHARED VOTING POWER 152,200
EACH
REPORTING ______________________________________________________
PERSON WITH 9 SOLE DISPOSITIVE POWER 0

______________________________________________________
10 SHARED DISPOSITIVE POWER 152,200

______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 152,200
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.3%

______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
______________________________________________________________________________

* See Instructions


3
_____________________________ ______________________________
CUSIP NO. 26817Q506 13D PAGE 4 OF 4 PAGES
_____________________________ ______________________________


______________________________________________________________________________
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
Ernest C. Garcia II
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
______________________________________________________________________________
3 SEC USE ONLY

______________________________________________________________________________
4 SOURCE OF FUNDS*
PF
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
______________________________________________________________________________
NUMBER OF 7 SOLE VOTING POWER 0
SHARES
BENEFICIALLY ______________________________________________________
OWNED BY 8 SHARED VOTING POWER 592,900
EACH
REPORTING ______________________________________________________
PERSON WITH 9 SOLE DISPOSITIVE POWER 0

______________________________________________________
10 SHARED DISPOSITIVE POWER 592,900

______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 592,900
______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
IN
______________________________________________________________________________

* See Instructions


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ITEM 1. SECURITY AND ISSUER.

Title of Class of
Equity Security: Common Stock, $0.01 par value per share

Name of Issuer: Dynex Capital, Inc. ("Dynex")
Address of 10900 Nuckols Road, 3rd Floor
Principal Office: Glen Allen, Virginia 23060


ITEM 2. IDENTITY AND BACKGROUND.

(a) NAME OF PERSON FILING:

A. Verde Reinsurance Company, Ltd., a corporation of the Island of Nevis
("Verde Reinsurance")

B. Verde Investments, Inc., an Arizona corporation ("Verde Investments")

C. Ernest C. Garcia II ("Garcia")
(Verde Reinsurance, Verde Investments and Garcia collectively, the
"Reporting Persons")

This Schedule 13D is jointly filed pursuant to Rule 13d-1(k)(1) promulgated by
the Securities and Exchange Commission ("SEC") under Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Act") by: (i) Verde
Reinsurance, by virtue of its direct beneficial ownership of Common Stock of
Dynex; (ii) Verde Investments, by virtue of its direct beneficial ownership of
Common Stock of Dynex and indirect beneficial ownership by virtue of its
ownership of convertible preferred stock of Dynex, and (iii) Garcia, by virtue
of his indirect beneficial ownership of Common Stock of Dynex via his sole
ownership of all of the common stock of Verde Reinsurance and Verde Investments.

Certain information required by this Item 2 concerning the directors and
executive officers of Verde Reinsurance and Verde Investments is set forth on
Schedule 1 attached hereto, which is incorporated herein by reference.

The Reporting Persons may be deemed to constitute a "group" for purposes of
Section 13(d)(3) of the Act.

(b) RESIDENCE OR BUSINESS ADDRESS:

A. Verde Reinsurance -- 2525 East Camelback Road, Suite 1150, Phoenix,
Arizona 85016. Also, see Schedule 1 attached hereto.


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B. Verde Investments -- 2525 East Camelback Road, Suite 1150, Phoenix,
Arizona 85016 Also, see Schedule 1 attached hereto.

C. Ernest C. Garcia II -- 2525 East Camelback Road, Suite 1150, Phoenix,
Arizona 85016

(c) PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND THE NAME,
PRINCIPAL BUSINESS AND ADDRESS OF CORPORATION IN WHICH EMPLOYMENT
IS CONDUCTED:

A. Verde Reinsurance -- Verde Reinsurance is a corporation primarily engaged
in reinsurance of credit insurance policies. Also, see Schedule 1 attached
hereto.

B. Verde Investments -- Verde Investments is an investment company involved
in real estate and other types of investments. Also, see Schedule 1
attached hereto.

The principal business and principal office of each of Verde Reinsurance
and Verde Investment is set forth under Item 2(b).

C. Mr. Garcia -- (1) Chairman of Ugly Duckling Corporation, used automobile
retail sales and finance company, whose address is 2525 E. Camelback Road,
Suite 500, Phoenix, AZ 85016; (2) President, sole director and sole
shareholder of Verde Investments; and (3) President, director and sole
shareholder of Verde Reinsurance.

(d) WHETHER DURING THE LAST FIVE YEARS, SUCH PERSON HAS BEEN CONVICTED IN A
CRIMINAL PROCEEDING (EXCLUDING TRAFFIC VIOLATIONS OR SIMILAR MISDEMEANORS)
AND, IF SO, GIVE THE DATES, NATURE OF CONVICTION, NAME AND LOCATION OF
COURT, ANY PENALTY IMPOSED, OR OTHER DISPOSITION OF THE CASE:

During the past five years, none of the Reporting Persons nor, to the best
knowledge of such persons, any of the persons named in Schedule 1 to this
Schedule 13D, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). However, prior to 1992, Mr. Garcia was
involved in various real estate, securities, and banking ventures. Arising out
of two transactions in 1987 between Lincoln Savings and Loan Association
("Lincoln") and entities controlled by Mr. Garcia, the Resolution Trust
Corporation ("RTC"), which ultimately took over Lincoln, asserted that Lincoln
improperly accounted for the transactions and that Mr. Garcia's participation in
the transactions facilitated the improper accounting. Facing severe financial
pressures, Mr. Garcia agreed to plead guilty to one count of bank fraud, but in
light of his cooperation with authorities both before and after he was charged,
was sentenced to only three years probation, which has expired, was fined $50
(the minimum fine the court could assess), and during the period of his
probation, which ended in 1996, was banned from becoming an officer, director or
employee of any federally-insured financial institution or a securities firm
without governmental approval. In separate actions arising out of this matter,
Mr. Garcia agreed not to violate the securities


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laws, and filed for bankruptcy both personally and with respect to certain
entities he controlled. The bankruptcies were discharged by 1993.

(e) WHETHER DURING THE LAST FIVE YEARS, SUCH PERSON WAS A PARTY TO A
CIVIL PROCEEDING OF A JUDICIAL OR ADMINISTRATIVE BODY OF
COMPETENT JURISDICTION AND AS A RESULT OF SUCH PROCEEDING WAS OR
IS SUBJECT TO A JUDGMENT, DECREE OR FINAL ORDER ENJOINING FUTURE
VIOLATIONS OF, OR PROHIBITING OR MANDATING ACTIVITIES SUBJECT TO,
FEDERAL OR STATE SECURITIES LAWS OR FINDING ANY VIOLATION WITH
RESPECT TO SUCH LAWS; AND, IF SO, IDENTIFY AND DESCRIBE SUCH
PROCEEDINGS AND SUMMARIZE THE TERMS OF SUCH JUDGMENT, DECREE OR
FINAL ORDER:

During the past five years, none of the Reporting Persons nor, to the best
knowledge of such persons, any of the persons named in Schedule 1 to this
Schedule 13D, was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which such person was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activity subject to, federal or state securities laws
or finding any violation with respect to such laws. However, for Mr. Garcia, see
the summary under Item 2(d) above.

(f) CITIZENSHIP:

A. Verde Reinsurance - Island of Nevis. Also, see Schedule 1 attached hereto.

B. Verde Investments - Arizona. Also, see Schedule 1 attached hereto.

C. Mr. Garcia - United States of America


ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

To date, working capital of Verde Reinsurance and Verde Investments has been
used to purchase the Dynex securities at an approximate total cost of
$2,807,742.69 and $1,267,213.70, respectively. No borrowings or other types of
consideration other than cash has been used to date for these purchases. If and
when future purchases of Dynex securities are made, the Reporting Persons may
use a variety of sources of funds; however, the Reporting Persons have no
present plan, arrangement, or understanding in connection with sources of funds
for future purchases of the securities.


ITEM 4. PURPOSE OF TRANSACTION.

The Reporting Persons' purposes for the acquisition of the Dynex securities may
include, without limitation, plans or proposals such as the following: (1)
dispositions of the Dynex securities through


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sales, transfers and other means of disposing of the securities; (2) causing the
sale or transfer of assets of Dynex or any of its subsidiaries; (3) a change in
the present board of directors or management of Dynex; (4) change in the
capitalization of Dynex; (5) change in Dynex's charter, bylaws or other
corporate documents and instruments; (6) causing a class of securities of Dynex
to be delisted or not traded on an exchange, system or association; (7) causing
a class of securities of Dynex to become eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; (8) a corporate transaction, such as a merger, reorganization
or liquidation involving Dynex or any of its subsidiaries; (9) a joint venture,
partnership or management arrangement impacting Dynex, or any of its
subsidiaries and/or affiliate entities or persons; (10) acquisitions of
additional securities of Dynex; (11) other changes in Dynex's business or
corporate structure; and (12) other actions similar to any of those listed
above.

On October 21, 1999, Mr. Garcia sent a letter to the president and board of
directors of Dynex requesting the board to authorize a sale or liquidation of
the assets of Dynex. A copy of this letter is attached as an exhibit to this
Schedule 13D.


ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.

(a) AGGREGATE NUMBER AND PERCENTAGE OF SECURITIES BENEFICIALLY OWNED:

Verde Reinsurance is the direct beneficial owner of 440,700 shares of
Common Stock, representing approximately 3.8% of Dynex's Common Stock,
which amount includes 8,350 shares of Common Stock that may be acquired by
Verde Reinsurance upon the conversion of shares of preferred stock of
Dynex held by Verde Reinsurance. Verde Investments is the direct
beneficial owner of 152,200 shares of Common Stock, representing
approximately 1.3% of Dynex's Common Stock. Mr. Garcia is the indirect
beneficial owner of 592,900 shares of Common Stock owned by Verde
Reinsurance and Verde Investments, representing approximately 5.1% of
Dynex's Common Stock, which amount includes 8,350 shares of Common Stock,
that may be acquired by Verde Reinsurance upon the conversion of shares of
preferred stock of Dynex held by Verde Reinsurance. By virtue of the
relationship between Mr. Garcia and Verde Reinsurance and Verde
Investments described in Item 2, Mr. Garcia may be deemed to possess
indirect beneficial ownership of the shares of Common Stock beneficially
owned by Verde Reinsurance and Verde Investments. Ownership percentages of
Common Stock is based upon the common shares outstanding per Dynex's Form
10-Q Report for the Quarter ended June 30, 1999 (11,508,237 shares of
Common Stock outstanding at June 30, 1999, reflecting a one-for-four
reverse Common Stock split effective August 2, 1999), plus the 8,350
shares of Common Stock into which the Dynex preferred stock held by Verde
Reinsurance is convertible.


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(b) NUMBER OF SHARES AS TO WHICH SUCH PERSON HAS VOTING AND DISPOSITIVE POWER:

A. Verde Reinsurance:

(i) Sole power to vote or to direct the vote -- 0

(ii) Shared power to vote or to direct the vote -- 440,700

(iii) Sole power to dispose or to direct the disposition -- 0

(iv) Shared power to dispose or to direct the disposition --
440,700

B. Verde Investments:

(i) Sole power to vote or to direct the vote -- 0

(ii) Shared power to vote or to direct the vote -- 152,200

(iii) Sole power to dispose or to direct the disposition -- 0

(iv) Shared power to dispose or to direct the disposition --
152,200

C. Ernest C. Garcia II

(i) Sole power to vote or to direct the vote -- 0

(ii) Shared power to vote or to direct the vote -- 592,900

(iii) Sole power to dispose or to direct the disposition -- 0

(iv) Shared power to dispose or to direct the disposition --
592,900

(c) TRANSACTIONS EFFECTED DURING THE PAST 60 DAYS OR SINCE THE MOST RECENT
FILING ON SCHEDULE 13D, WHICHEVER IS LESS: