SEC Info - Ryland Group Inc - ‘424B3’ on 6/28/96

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Ryland Group Inc – ‘424B3’ on 6/28/96

As of: Friday, 6/28/96 · Accession #: 85974-96-13 · File #: 333-03791

  As Of                Filer                Filing    For·On·As Docs:Size

 6/28/96  Ryland Group Inc                  424B3                  1:223K

Prospectus — Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Prospectus                                            58    378K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Description of the Notes Offering, The The offering Underwriting Use of Proceeds
1	1st Page - Filing Submission
"	Underwriting
5	The offering
11	Use of Proceeds
29	Description of the Notes

424B3 1st Page of 58 TOC ↑Top Previous Next ↓Bottom Just 1st
 
SUBJECT TO COMPLETION DATED JUNE 18, 1996   

Prospectus Supplement (To Prospectus Dated June 10, 1996) 

$100,000,000  

RYLAND  

% Senior Notes due 2006   

Interest on the Senior Notes (the "Notes") is payable on October 1 and
April 1 of each year commencing, October 1, 1996. The Notes are not redeemable  
prior to          . On and after that date, the Notes are redeemable at any     
time at the option of the Company, in whole or in part, at the redemption       
prices set forth herein plus accrued and unpaid interest, if any, to the date   
of redemption.                                                                  

 Upon a Change of Control (as defined herein) of the Company, holders of
the Notes will have the right to require the Company to purchase the Notes at   
a purchase price of 101% of the aggregate principal amount thereof, plus        
accrued and unpaid interest, if any, to the date of purchase.                   

   The Notes will be unsecured and unsubordinated obligations of the Company
and will rank equally and ratably with all other unsecured and unsubordinated   
indebtedness of the Company which is not guaranteed by or otherwise an          
obligation of a subsidiary of the Company. As of March 31, 1996, the Company    
had $426 million of unsecured indebtedness, $218 million of which has been      
guaranteed by the Company's homebuilding segment subsidiaries and $200 million  
of which is subordinate to the Notes. In addition, as of March 31, 1996, there  
was $379 million of financial services segment subsidiary debt and $324         
million of non-recourse limited-purpose segment debt, none of which has been    
guaranteed by the Company. At March 31, 1996, after giving effect to the        
issuance of the Notes offered hereby and the application of the net proceeds    
therefrom, $120 million represents indebtedness of the Company guaranteed by    
the Company's homebuilding subsidiaries, all of which is structurally senior    
to the Notes to the extent of homebuilding assets contained in the              
homebuilding subsidiaries. See ''Risk Factors_Leverage and Liquidity,''         
''Capitalization'' and ''Description of the Notes.''                            

See ''Risk Factors'' beginning on page S-9 for a discussion of certain
factors which should be considered by prospective purchasers of the Notes.      

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES   
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY       
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                           

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED     
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.    

                                                                [Download Table]

                                          Underwriting                        
                              Price to    Discounts and          Proceeds to  
                              Public(F1)   Commissions(F2)       Company (F3) 
                                                                              
Per Note     .                          %                 %                  %
 Total     .                      $            $                   $          

<FN>                                                                          
(F1)  Plus accrued interest, if any, from the date of issuance.               
(F2)  The Company has agreed to indemnify the Underwriters against certain    
      liabilities, including liabilities under the Securities Act of 1933, as 
      amended. See "Underwriting."                                            
(F3)  Before deducting expenses, payable by the Company, estimated at $       

The Notes are being offered by the Underwriters as set forth in       
''Underwriting'' herein. It is expected that delivery thereof will be made      
through the book-entry facilities of The Depository Trust Company on or about   
, 1996 against payment therefor in immediately available funds. The 
Underwriters are:                                                               

Dillon, Read & Co. Inc.                                                         
Chase Securities Inc.                                                           
NationsBanc Capital Markets, Inc.                                               

The date of this Prospectus Supplement is June          , 1996.                 

Information contained in this Prospectus Supplement is subject to completion    
or amendment. This Prospectus Supplement and the accompanying Prospectus shall  
not constitute an offer to sell or the solicitation of an offer to buy nor      
shall there be any sale of these securities in any State in                     
which such offer, solicitation or sale would be unlawful prior to registration  
or qualification under the securities laws of any such State.                   

424B3 2nd Page of 58 TOC 1st Previous Next ↓Bottom Just 2nd
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR  
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES   
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH    
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.                     

424B3 3rd Page of 58 TOC 1st Previous Next ↓Bottom Just 3rd
 PROSPECTUS SUPPLEMENT SUMMARY

 The following summary is qualified in its entirety by the more detailed
information, including Management's Discussion and Analysis of Results of       
Operations and Financial Condition, appearing elsewhere in this Prospectus      
Supplement and the financial statements and notes thereto incorporated by       
reference in this Prospectus Supplement. See ''Risk Factors'' for a discussion  
of certain factors which should be considered by prospective purchasers of the  
Notes.                                                                          

 The Company

The Ryland Group, Inc. (the ''Company'') is a leading national        
homebuilder and mortgage-related financial services firm. The Company designs,  
markets and constructs single family homes generally targeted to entry level,   
first and second time move-up home buyers. As of March 31, 1996, the Company    
offered homes for sale in approximately 300 communities and operated in 26      
metropolitan markets located in 20 states. With homebuilding revenues of $1.46  
billion in 1995, the Company is the nation's third largest homebuilder based    
on 1995 revenues. The Company's financial services segment, conducted through   
Ryland Mortgage Company and its subsidiaries (''RMC''), complements the         
Company's homebuilding activities by providing a full range of competitive      
mortgage finance programs, as well as title, escrow and settlement services.    

Under the direction of a new Chief Executive Officer appointed in     
November 1993, the Company implemented an extensive operating improvement plan  
(the ''Operating Plan'') designed to focus on and substantially improve the     
profitability of its homebuilding operations. The Company believes that the     
strategies inherent in the Operating Plan are now beginning to positively       
impact the financial results of its homebuilding operations. Homebuilding       
gross margins increased for the third consecutive quarter to 13.6% for the      
three months ended March 31, 1996, a nearly 200 basis point increase over the   
comparable 1995 period. The Company believes that the average gross margin      
performance for those communities whose first closings occurred after January   
1, 1995 (''New Communities'') is a key measure of the success of the Operating  
Plan. For the first quarter of 1996, gross margins in New Communities averaged  
15.0%, compared to 11.4% in the Company's other communities. Closings from New  
Communities represented 54% of total closings in the first quarter of 1996.     
The Company expects that the proportion of closings from New Communities will   
increase during the balance of 1996, which should contribute to continued       
improvement in homebuilding profitability.                                      

The major components of the Operating Plan include:                   

Organizational and Management Changes.   The Company has largely      
completed an organizational and management restructuring in order to implement  
the Operating Plan and to support the Company's long-term growth. Over the      
past two years, the Company has replaced a significant portion of the           
leadership positions in each of its five operating regions with individuals     
who possess both substantial homebuilding experience and local market           
knowledge. In addition, corporate staff functions have been refocused to more   
effectively support the activities of the Company's homebuilding and financial  
services operations and have been reduced from 217 positions as of December     
31, 1993 to 129 positions as of March 31, 1996.                                 

New Product Offerings and Improved Marketing Strategies.   The Company
has significantly updated its product offerings over the past two years by      
introducing over 300 new home designs. The Company's new product designs,       
which are based on local market research, emphasize volume, natural light and   
flexible floor plans. The Company has increased its ability to respond quickly  
to market changes through the use of outside architects and flexible supply     
arrangements which have significantly reduced the time-to-market for new        
product offerings. The Company's new product portfolio is supported by a        
revitalized sales and marketing effort and an improved retail presentation,     
which includes an expanded model home program, high caliber sales               
representatives and targeted merchandising techniques. The Company believes     
that its new products and improved marketing strategies have contributed to     
increased sales per community.                                                  

424B3 4th Page of 58 TOC 1st Previous Next ↓Bottom Just 4th
   Disciplined Approach to Land Acquisition.   The Company, which utilized a
strategy of acquiring control of land primarily through the use of option       
contracts prior to the implementation of the Operating Plan, now employs a      
balanced approach to land acquisition including both direct acquisition and     
option contracts. The Company believes that, in many instances, direct          
acquisition and development of building lots enables it to gain greater access  
to prime locations, increase margins and improve the positioning of its         
housing inventory in its communities. The Company's land acquisition objective  
is to control a two- to three-year supply of building lots. The Company         
conducts a thorough land acquisition due diligence process at multiple levels   
throughout the organization, including a review by a senior management land     
committee of each prospective land purchase or option contract. At March 31,    
1996, the Company controlled 21,605 building lots, 51% of which were owned by   
the Company and the remainder of which were controlled through option           
contracts. The percentage of building lots owned by the Company at March 31,    
1996 represented an increase from 42% at December 31, 1994. At March 31, 1996,  
77% of the Company's total building lots were in New Communities.               

 Return-Oriented Capital Allocation.   In order to improve the return on
capital invested in its homebuilding segment, the Company has initiated         
various inventory control procedures, including the imposition of inventory     
targets for each of its five regions and the establishment of aggregate         
homebuilding inventory levels. The Company has reallocated capital among its    
existing markets and expanded to certain new markets where the Company expects  
that it can achieve higher returns. The Company believes that the resulting     
increased geographic diversity reduces the impact on the Company of             
unfavorable changes in homebuilding market conditions in any single             
metropolitan market. In addition, the Company significantly altered the         
composition of its inventory position in 1995 by reducing its unsold homes      
under construction from $141.5 million at December 31, 1994 to $82.2 million    
at March 31, 1996.                                                              

Repositioning of Financial Services Activities.   The Company is      
repositioning its financial services segment through a strategy which includes  
(i) focusing on retail mortgage loan origination and servicing activities,      
(ii) divesting non-core assets and lines of business, (iii) increasing          
origination volume by leveraging its affiliation with the Company's             
homebuilding segment and (iv) reaching mortgage customers directly at the       
point of sale through the use of technology. Pursuant to this strategy, the     
Company sold its institutional mortgage securities administration business in   
June of 1995 and its wholesale loan origination business in February of 1996.   
The percentage of the homebuilding segment's customers who obtain financing     
for their home purchases through RMC has increased from 60% for the year ended  
December 31, 1994 to 67% for the quarter ended March 31, 1996.                  

  The Company believes that the strategies and disciplines inherent in the
Operating Plan are now beginning to positively impact the financial results of  
its homebuilding operations. The Company's near-term business strategy is to    
continue to implement the Operating Plan with emphasis on margin improvement    
and increased return on capital in order to position the Company for            
profitable long-term growth. The Company periodically reviews new markets for   
future expansion and expects that it will pursue opportunities in selected      
domestic homebuilding markets which are characterized by growing employment     
and favorable demographic trends.                                               

424B3 5th Page of 58 TOC 1st Previous Next ↓Bottom Just 5th
The Offering  

Securities Offered         $100 million principal amount of          % Senior   
     Notes due 2006 (the ''Notes'').

Interest Payment Dates     October 1 and April 1, commencing October 1, 1996.   

Maturity Date     .              ., 2006.                                       

Optional Redemption        Redeemable at the option of the Company, in whole    
                      or in part, at any time on or after           at
                         the redemption prices set forth herein plus accrued
                 and unpaid interest, if any, to the date of
                         redemption. See  "Description of the Notes-General-
Optional Redemption."     

Rank     .                 The Notes will be unsecured and unsubordinated       
                      obligations of the Company and will rank equally
              and ratably with all other unsecured and
                         unsubordinated indebtedness of the Company which is
                       not guaranteed by or otherwise an obligation of a
                      subsidiary of the Company. As of March 31, 1996,
               the Company had $426 million of unsecured
                  indebtedness, $218 million of which has been
                      guaranteed by the Company's homebuilding segment
               subsidiaries and $200 million of which is
                        subordinate to the Notes. In addition, as of March
                   31, 1996, there was $379 million of financial
                       services segment subsidiary debt and $324 million
                        of non-recourse limited-purpose segment debt, none
                     of which has been guaranteed by the Company. At
                         March 31, 1996, after giving effect to the issuance
                        of the Notes offered hereby and the application of
                         the net proceeds therefrom, $120 million represents
                   indebtedness of the Company guaranteed by the
                       Company's homebuilding subsidiaries, all of which
                       is structurally senior to the Notes to the extent
             of homebuilding assets contained in the
homebuilding subsidiaries.

Change of Control          In the event of a Change of Control (as defined      
                   herein), each holder of Notes may require the
                       Company to repurchase such holder's Notes at 101%
                        of their principal amount, plus accrued and unpaid
                interest, if any, to the date of purchase.

Offer to Purchase          The Company will be required to make an offer to     
                repurchase 10% of the original outstanding
                    principal amount of the Notes at 100% of their
                         principal amount, plus accrued and unpaid interest,
                      if the Company's Adjusted Consolidated Net Worth
                      (as defined herein) is less than $200 million at
                         the end of each of two consecutive fiscal quarters.
                  As of March 31, 1996, the Company's Adjusted
                Consolidated Net Worth was $301.3 million.

Certain Covenants          The Indenture will contain certain covenants which,  
                 among other things, limit the incurrence of
                       additional indebtedness, the incurrence of liens,
                  the making of certain distributions or other
                        restricted payments, and the ability to enter into
                    certain transactions with affiliates or merge,
                      consolidate or transfer substantially all of the
                       Company's assets. Although the Indenture contains
                       limitations concerning the amount of indebtedness
                     the Company and its Restricted Subsidiaries (as
                    defined herein) may incur, the Company and its
                        Restricted Subsidiaries will retain the ability to
                    incur significant additional indebtedness. The
                      limitations on incurrence of indebtedness do not
                   restrict borrowings of the financial services
              segment. See "Description of the Notes."

Use of Proceeds            Reduction of bank debt outstanding under the         
                        Company's unsecured revolving credit facility (the
                    "Revolving Credit Facility") and other general
                corporate purposes. See "Use of Proceeds."

424B3 6th Page of 58 TOC 1st Previous Next ↓Bottom Just 6th
SUPPLEMENTARY FINANCIAL INFORMATION AND STATISTICAL DATA                        

The following supplementary financial information for the fiscal years
ended December 31, 1991, 1992, 1993, 1994 and 1995 and the three months ended   
March 31, 1995 and 1996 has been derived from the consolidated financial        
statements of the Company. The summary should be read in conjunction with the   
consolidated financial statements and the notes thereto incorporated by         
reference herein and ''Management's Discussion and Analysis of Results of       
Operations and Financial Condition.''                                           

                                                                [Download Table]

                                             Year ended December 31           
                                  --------------------------------------------
                                  1991                1992              1993  
                                 ------              ------            -------
                           (dollars in millions, except average closing price)
                                                                              
CONSOLIDATED OPERATING DATA:                                                  
Revenues                                                                      
     Homebuilding               $   859             $ 1,077           $ 1,204 
     Financial services and                                                   
      limited-purpose                                                         
       subsidiaries                 334                 347               247 
                                -------             -------           ------- 
     Total revenues               1,193               1,424             1,451 
Cost of sales-homebuilding          744                 940             1,059 
Interest expense(1)                 302                 249               162 
Selling, general &                                                            
 administrative                     126                 200               201 
Impairment of inventories                                                     
 and joint venture                                                            
     investments(2)                  13                  --                45 
                                -------              -------           ------ 
Earnings (loss) from continuing operations before                             
     taxes(3)(4)                      8                  35               (16)
Tax expense (benefit)                 3                  12                (6)
                                  -----               -----             ------
Net earnings (loss) from                                                      
 continuing operations                5                  23               (10)
Discontinued operations and                                                   
 cumulative effect of                                                         
 accounting change, net of taxes      4                   5                 7 
                                  -----              ------            ------ 
Net earnings (loss)             $     9             $    28           $    (3)

SELECTED CONSOLIDATED BALANCE SHEET DATA (AT PERIOD END):                     
Homebuilding inventories        $   355             $   485           $   492 
Homebuilding assets                 469                 607               647 
Financial services assets           394                 700               821 
Total assets                      3,559               2,897             2,316 

Debt:                                                                         
Homebuilding long-term debt     $   219             $   318           $   381 
Financial services short-term                                                 
 notes payable(5)                   348                 588               717 
Bonds payable of limited-                                                     
 purpose subsidiaries(5)          2,617               1,533               778 
                                -------             -------           ------- 
Total debt                      $ 3,184             $ 2,439           $ 1,876 
Stockholders' equity                219                 306               293 
                                -------             -------           ------- 

Total capitalization            $ 3,403             $ 2,745           $ 2,169 

HOMEBUILDING OPERATING DATA:                                                  
Gross profit                    $   115             $   138           $   145 
Gross margin                      13.4%               12.8%             12.0% 
Average closing price                                                         
 ($ in thousands)               $   134             $   141           $   148 
Outstanding contracts (units)     2,357               2,429             2,719 
Dollar value of outstanding                                                   
  contracts                     $   371             $   373           $   441 

OTHER FINANCIAL INFORMATION:                                                  
Adjusted EBIT(6)(7)             $    53             $    86           $    90 
Adjusted EBITDA(6)(8)                74                 117               116 
Interest incurred(9)                 37                  56                62 
Adjusted EBIT/Interest                                                        
 incurred                         1.45x               1.55x             1.46x 
Adjusted EBITDA/Interest                                                      
 incurred                         2.01x               2.10x             1.88x 

<FN>                                                                          
(1)     Interest expense includes interest of the limited-purpose subsidiaries
and excludes the amortization of previously capitalized interest which is     
included in cost of sales.                                                    

(2)     1995 and 1993 reflect $45 million pretax charges related to           
homebuilding inventories and investments in unconsolidated joint ventures,    
and 1991 reflects a $13 million pretax charge related to investments in       
unconsolidated joint ventures.                                                

(3)     In 1994, the Company adopted Statement of Financial Accounting        
Standards No. 115_''Accounting for Certain Investments in Debt and Equity     
Securities.'' The cumulative effect of adopting this statement as of          
January 1, 1994 increased net income by $2,076 (net of $1,384 in deferred     
income taxes), or $.13 per share. Earnings (loss) from continuing             
operations exclude the cumulative effect of this accounting change in         
1994.                                                                         

(4)     The Company sold its institutional mortgage-securities administration 
business in the second quarter of 1995. Earnings (loss) from continuing       
operations exclude net operating earnings as well as the gain on the sale     
of this business.                                                             

(5)     Limited-purpose subsidiaries indebtedness represents obligations      
solely of the limited-purpose subsidiaries, is non-recourse and is not        
guaranteed or insured by the Company or any of its subsidiaries. In           
addition, the Company has not guaranteed any of the debt of the Company's     
financial services subsidiaries.                                              

(6)     The Company has included information concerning Adjusted EBIT and     
Adjusted EBITDA as it is relevant for debt covenant analysis and because      
it is used by certain investors as a measure of the Company's ability to      
service its debt. Neither Adjusted EBIT or Adjusted EBITDA should be used     
as an alternative to, or be construed as more meaningful than, operating      
income or cash flow from operations as an indicator of the operating          
performance of the Company.                                                   

(7)     "Adjusted EBIT" means earnings (loss) before taxes, cumulative effect 
of change in accounting principle in 1994 and discontinued operations and     
before (i) interest expensed, (ii) amortization of capitalized interest       
included in cost of sales, (iii) equity in earnings (losses) of               
unconsolidated joint ventures and (iv) impairment charges of $45 million      
for 1995 and 1993 related to homebuilding inventories and investments in      
joint ventures and an impairment charge of $13 million for 1991 related to    
investments in joint ventures.                                                

(8)     "Adjusted EBITDA" means earnings (loss) before taxes, cumulative      
effect of change in accounting principle in 1994 and discontinued             
operations and before (i) interest expensed, (ii) amortization of             
capitalized interest included in cost of sales, (iii) equity in earnings      
(losses) of unconsolidated joint ventures, (iv) depreciation and              
amortization and (v) impairment charges of $45 million for 1995 and 1993      
related to homebuilding inventories and investments in joint ventures and     
an impairment charge of $13 million for 1991 related to investments in        
joint ventures.                                                               

(9)     Interest incurred represents interest expensed and interest           
capitalized for the applicable periods and excludes interest attributable     
to the limited-purpose subsidiaries.                                          
</FN>                                                                         

                                                                [Download Table]

                                                     Year ended December 31   
                                                     -------------------------
                                                      1994              1995  
                                                     ------            -------
                           (dollars in millions, except average closing price)
                                                                              
CONSOLIDATED OPERATING DATA:                                                  
Revenues                                                                      
     Homebuilding                                   $ 1,443           $ 1,458 
     Financial services and                                                   
      limited-purpose                                                         
       subsidiaries                                     176               127 
                                                    -------           ------- 
     Total revenues                                   1,619             1,585 
Cost of sales_homebuilding                            1,262             1,280 
Interest expense(1)                                     105                91 
Selling, general &                                                            
 administrative                                         225               211 
Impairment of inventories                                                     
 and joint venture                                                            
     investments(2)                                      _                 45 
                                                     -------           ------ 
Earnings (loss) from continuing operations before                             
     taxes(3)(4)                                         27               (42)
Tax expense (benefit)                                    11               (17)
                                                      -----             ------
Net earnings (loss) from                                                      
 continuing operations                                   16               (25)
Discontinued operations and                                                   
 cumulative effect of                                                         
 accounting change, net of taxes                          8                22 
                                                     ------            ------ 
Net earnings (loss)                                 $    24           $    (3)

SELECTED CONSOLIDATED BALANCE SHEET DATA (AT PERIOD END):                     
Homebuilding inventories                            $   600           $   538 
Homebuilding assets                                     740               697 
Financial services assets                               455               449 
Total assets                                          1,704             1,581 

Debt:                                                                         
Homebuilding long-term debt                         $   409           $   397 
Financial services short-term                                                 
 notes payable(5)                                       378               367 
Bonds payable of limited-                                                     
 purpose subsidiaries(5)                                447               365 
                                                    -------           ------- 
Total debt                                          $ 1,234           $ 1,129 
Stockholders' equity                                    312               301 
                                                    -------           ------- 

Total capitalization                                $ 1,546           $ 1,430 

HOMEBUILDING OPERATING DATA:                                                  
Gross profit                                        $   181           $   178 
Gross margin                                          12.6%             12.2% 
Average closing price                                                         
 ($ in thousands)                                   $   160           $   164 
Outstanding contracts (units)                         2,553             2,744 
Dollar value of outstanding                                                   
  contracts                                         $   425           $   477 

OTHER FINANCIAL INFORMATION:                                                  
Adjusted EBIT(6)(7)                                 $    94           $    68 
Adjusted EBITDA(6)(8)                                   120               103 
Interest incurred(9)                                     67                71 
Adjusted EBIT/Interest                                                        
 incurred                                             1.40x             0.96x 
Adjusted EBITDA/Interest                                                      
 incurred                                             1.79x             1.45x 

<FN>                                                                          
(1)     Interest expense includes interest of the limited-purpose subsidiaries
and excludes the amortization of previously capitalized interest which is     
included in cost of sales.                                                    

(2)     1995 and 1993 reflect $45 million pretax charges related to           
homebuilding inventories and investments in unconsolidated joint ventures,    
and 1991 reflects a $13 million pretax charge related to investments in       
unconsolidated joint ventures.                                                

(3)     In 1994, the Company adopted Statement of Financial Accounting        
Standards No. 115_''Accounting for Certain Investments in Debt and Equity     
Securities.'' The cumulative effect of adopting this statement as of          
January 1, 1994 increased net income by $2,076 (net of $1,384 in deferred     
income taxes), or $.13 per share. Earnings (loss) from continuing             
operations exclude the cumulative effect of this accounting change in         
1994.                                                                         

(4)     The Company sold its institutional mortgage-securities administration 
business in the second quarter of 1995. Earnings (loss) from continuing       
operations exclude net operating earnings as well as the gain on the sale     
of this business.                                                             

(5)     Limited-purpose subsidiaries indebtedness represents obligations      
solely of the limited-purpose subsidiaries, is non-recourse and is not        
guaranteed or insured by the Company or any of its subsidiaries. In           
addition, the Company has not guaranteed any of the debt of the Company's     
financial services subsidiaries.                                              

(6)     The Company has included information concerning Adjusted EBIT and     
Adjusted EBITDA as it is relevant for debt covenant analysis and because      
it is used by certain investors as a measure of the Company's ability to      
service its debt. Neither Adjusted EBIT or Adjusted EBITDA should be used     
as an alternative to, or be construed as more meaningful than, operating      
income or cash flow from operations as an indicator of the operating          
performance of the Company.                                                   

(7)     "Adjusted EBIT" means earnings (loss) before taxes, cumulative effect 
of change in accounting principle in 1994 and discontinued operations and     
before (i) interest expensed, (ii) amortization of capitalized interest       
included in cost of sales, (iii) equity in earnings (losses) of               
unconsolidated joint ventures and (iv) impairment charges of $45 million      
for 1995 and 1993 related to homebuilding inventories and investments in      
joint ventures and an impairment charge of $13 million for 1991 related to    
investments in joint ventures.                                                

(8)     "Adjusted EBITDA" means earnings (loss) before taxes, cumulative      
effect of change in accounting principle in 1994 and discontinued             
operations and before (i) interest expensed, (ii) amortization of             
capitalized interest included in cost of sales, (iii) equity in earnings      
(losses) of unconsolidated joint ventures, (iv) depreciation and              
amortization and (v) impairment charges of $45 million for 1995 and 1993      
related to homebuilding inventories and investments in joint ventures and     
an impairment charge of $13 million for 1991 related to investments in        
joint ventures.                                                               

(9)     Interest incurred represents interest expensed and interest           
capitalized for the applicable periods and excludes interest attributable     
to the limited-purpose subsidiaries.                                          
</FN>                                                                         

                                                                [Download Table]

                                                             Three months     
                                                                 ended        
                                                                March 31      
                                                     -------------------------
                                                      1995              1996  
                                                     ------            -------
                           (dollars in millions, except average closing price)
                                                                              
CONSOLIDATED OPERATING DATA:                                                  
Revenues                                                                      
     Homebuilding                                   $   312           $   298 
     Financial services and                                                   
      limited-purpose                                                         
       subsidiaries                                      33                30 
                                                    -------           ------- 
     Total revenues                                     345               328 
Cost of sales_homebuilding                              276               257 
Interest expense(1)                                      23                20 
Selling, general &                                                            
 administrative                                          48                49 
Impairment of inventories                                                     
 and joint venture                                                            
     investments(2)                                     --                 -- 
                                                     -------           ------ 
Earnings (loss) from continuing operations before                             
     taxes(3)(4)                                         (2)                2 
Tax expense (benefit)                                    (1)                1 
                                                      -----             ------
Net earnings (loss) from                                                      
 continuing operations                                   (1)                1 
Discontinued operations and                                                   
 cumulative effect of                                                         
 accounting change, net of taxes                          2                -- 
                                                     ------            ------ 
Net earnings (loss)                                 $     1          $      1 

SELECTED CONSOLIDATED BALANCE SHEET DATA (AT PERIOD END):                     
Homebuilding inventories                            $   602           $   578 
Homebuilding assets                                     755               708 
Financial services assets                               362               468 
Total assets                                          1,602             1,565 

Debt:                                                                         
Homebuilding long-term debt                         $   456           $   434 
Financial services short-term                                                 
 notes payable(5)                                       268               379 
Bonds payable of limited-                                                     
 purpose subsidiaries(5)                                430               324 
                                                    -------           ------- 
Total debt                                          $ 1,154           $ 1,137 
Stockholders' equity                                    310               303 
                                                    -------           ------- 

Total capitalization                                $ 1,464           $ 1,440 

HOMEBUILDING OPERATING DATA:                                                  
Gross profit                                        $    37           $    41 
Gross margin                                          11.7%             13.6% 
Average closing price                                                         
 ($ in thousands)                                   $   157           $   170 
Outstanding contracts (units)                         3,115             3,414 
Dollar value of outstanding                                                   
  contracts                                         $   519           $   609 

OTHER FINANCIAL INFORMATION:                                                  
Adjusted EBIT(6)(7)                                 $    13           $    16 
Adjusted EBITDA(6)(8)                                    19                24 
Interest incurred(9)                                     17                16 
Adjusted EBIT/Interest                                                        
 incurred                                             0.77x             1.00x 
Adjusted EBITDA/Interest                                                      
 incurred                                             1.13x             1.49x 

<FN>                                                                          
(1)     Interest expense includes interest of the limited-purpose subsidiaries
and excludes the amortization of previously capitalized interest which is     
included in cost of sales.                                                    

(2)     1995 and 1993 reflect $45 million pretax charges related to           
homebuilding inventories and investments in unconsolidated joint ventures,    
and 1991 reflects a $13 million pretax charge related to investments in       
unconsolidated joint ventures.                                                

(3)     In 1994, the Company adopted Statement of Financial Accounting        
Standards No. 115_''Accounting for Certain Investments in Debt and Equity     
Securities.'' The cumulative effect of adopting this statement as of          
January 1, 1994 increased net income by $2,076 (net of $1,384 in deferred     
income taxes), or $.13 per share. Earnings (loss) from continuing             
operations exclude the cumulative effect of this accounting change in         
1994.                                                                         

(4)     The Company sold its institutional mortgage-securities administration 
business in the second quarter of 1995. Earnings (loss) from continuing       
operations exclude net operating earnings as well as the gain on the sale     
of this business.                                                             

(5)     Limited-purpose subsidiaries indebtedness represents obligations      
solely of the limited-purpose subsidiaries, is non-recourse and is not        
guaranteed or insured by the Company or any of its subsidiaries. In           
addition, the Company has not guaranteed any of the debt of the Company's     
financial services subsidiaries.                                              

(6)     The Company has included information concerning Adjusted EBIT and     
Adjusted EBITDA as it is relevant for debt covenant analysis and because      
it is used by certain investors as a measure of the Company's ability to      
service its debt. Neither Adjusted EBIT or Adjusted EBITDA should be used     
as an alternative to, or be construed as more meaningful than, operating      
income or cash flow from operations as an indicator of the operating          
performance of the Company.                                                   

(7)     "Adjusted EBIT" means earnings (loss) before taxes, cumulative effect 
of change in accounting principle in 1994 and discontinued operations and     
before (i) interest expensed, (ii) amortization of capitalized interest       
included in cost of sales, (iii) equity in earnings (losses) of               
unconsolidated joint ventures and (iv) impairment charges of $45 million      
for 1995 and 1993 related to homebuilding inventories and investments in      
joint ventures and an impairment charge of $13 million for 1991 related to    
investments in joint ventures.                                                

(8)     "Adjusted EBITDA" means earnings (loss) before taxes, cumulative      
effect of change in accounting principle in 1994 and discontinued             
operations and before (i) interest expensed, (ii) amortization of             
capitalized interest included in cost of sales, (iii) equity in earnings      
(losses) of unconsolidated joint ventures, (iv) depreciation and              
amortization and (v) impairment charges of $45 million for 1995 and 1993      
related to homebuilding inventories and investments in joint ventures and     
an impairment charge of $13 million for 1991 related to investments in        
joint ventures.                                                               

(9)     Interest incurred represents interest expensed and interest           
capitalized for the applicable periods and excludes interest attributable     
to the limited-purpose subsidiaries.                                          
</FN>                                                                         

424B3 7th Page of 58 TOC 1st Previous Next ↓Bottom Just 7th
 Homebuilding Data

   The following tables set forth certain unaudited information with respect
to revenues, new orders, closings and outstanding contracts for the Company's   
homebuilding segment for the periods indicated.                                 

                                                                [Download Table]

                                           Year ended December 31,            
                                 -------------------------------------------  
                                 1993              1994                 1995  
                                 -------------------------------------------  
                                                                              
Revenues (in thousands)                                                       
Mid-Atlantic                $   434,489       $   392,239          $   397,539
Midwest                         122,924          160,246              169,921 
Southeast                       183,865          173,702              193,719 
Southwest                       203,815          271,554              271,379 
West                            258,470           445,471              425,616
                            ------------------------------------------------- 
   Total                    $ 1,203,563      $ 1,443,212          $ 1,458,174 
                            ================================================= 

                                                                [Download Table]

                                          Year ended December 31,           
                                 -------------------------------------------
                                 1993              1994                 1995
                                 -------------------------------------------
                                                                            
New Orders (in units)                                                       
Mid-Atlantic                      2,815            2,492               2,011
Midwest                             999            1,001               1,307
Southeast                         1,365            1,161               1,399
Southwest                         1,414            1,829               1,923
West                              1,840            2,472               2,501
                           -------------------------------------------------
   Total                          8,433            8,955               9,141
                           =================================================

                                                                [Download Table]

                                           Year ended December 31,          
                                 -------------------------------------------
                                 1993              1994                 1995
                                 -------------------------------------------
                                                                            
Closings (in units)                                                         
Mid-Atlantic                      2,888            2,546               2,385
Midwest                             899            1,054               1,112
Southeast                         1,426            1,221               1,260
Southwest                         1,428            1,776               1,794
West                              1,678            2,524               2,399
                                 -------------------------------------------
   Total                          8,319            9,121               8,950
                                 ===========================================

                                                                [Download Table]

                                           Year ended December 31,              
                                 -------------------------------------------    
                                 1993              1994                 1995    
                                 -------------------------------------------    
                                                                                
Outstanding Contracts (in units)                                                
Mid-Atlantic                      1,074            1,020                646     
Midwest                             352               299                494    
Southeast                           370               310                449    
Southwest                           380               433                562    
West                                543                   491                593
                                 ------------------------------------------     
   Total                          2,719            2,553              2,744     
                                 ==========================================     

                                                                [Download Table]

                                                            Three months      
                                                           ended March 31     
                                                   -------------------------  
                                                   1995                 1996  
                                                   -------------------------  
                                                                              
Revenues (in thousands)                                                       
Mid-Atlantic                                  $   102,789          $    65,726
Midwest                                           32,877               41,736 
Southeast                                         40,978               46,701 
Southwest                                         58,003               57,324 
West                                               77,662               86,188
                                            --------------------------------- 
   Total                                     $   312,309          $   297,675 
                                            ================================= 

                                                                [Download Table]

                                                            Three months    
                                                           ended March 31   
                                                   -------------------------
                                                   1995                 1996
                                                  ------                ----
                                                                            
New Orders (in units)                                                       
Mid-Atlantic                                         687                 408
Midwest                                              334                 447
Southeast                                            393                 418
Southwest                                            497                 477
West                                                 649                 653
                                            --------------------------------
   Total                                           2,560               2,403
                                             ===============================

                                                                [Download Table]

                                                            Three months    
                                                           ended March 31   
                                                   -------------------------
                                                   1995                 1996
                                                                            
Closings (in units)                                                         
Mid-Atlantic                                         660                 359
Midwest                                              211                 244
Southeast                                            276                 292
Southwest                                            386                 370
West                                                 465                 468
                                            --------------------------------
   Total                                           1,998               1,733
                                             ===============================

                                                                [Download Table]

                                                            Three months        
                                                           ended March 31       
                                                   -------------------------    
                                                   1995                 1996    
                                                                                
Outstanding Contracts (in units)                                                
Mid-Atlantic                                       1,047                695     
Midwest                                              422                697     
Southeast                                             427                575    
Southwest                                            544                669     
West                                                      675                778
                                             ------------------------------     
   Total                                           3,115              3,414     
                                             ==============================     

424B3 8th Page of 58 TOC 1st Previous Next ↓Bottom Just 8th
 CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Certain statements contained and incorporated by reference in this    
Prospectus Supplement and the accompanying Prospectus regarding matters that    
are not historical facts, including, among others, statements regarding the     
Company's and management's belief or expectation with respect to matters such   
as operating margins, closings from New Communities, land acquisitions,         
housing inventories, return on invested capital, homebuilding results and       
market conditions, are forward looking statements (as such term is defined in   
the Securities Act of 1933, as amended). Because such statements involve risks  
and uncertainties, actual results may differ materially from those expressed    
or implied by such forward looking statements. Factors that could cause actual  
results to differ materially include, but are not limited to, those discussed   
herein under ''Risk Factors.''                                                  

  RISK FACTORS

  Prospective investors should carefully consider the specific factors set
forth below as well as the other information included or incorporated by        
reference in this Prospectus Supplement or the accompanying Prospectus before   
deciding to invest in the Notes offered hereby.                                 

Real Estate, Economic and Certain Other Conditions                              

The Company is significantly affected by the cyclical nature of the   
homebuilding industry, which is sensitive to fluctuations in economic           
activity, interest rates and levels of consumer confidence, the effects of      
which differ among the various geographic markets in which the Company          
operates. Sales of new homes are also affected by market conditions for resale  
homes and rental properties. Certain of the markets in which the Company        
operates have at times in the past experienced significant declines in housing  
demand. There can be no assurance that such declines will not occur in the      
future.                                                                         

 Inventory risk can be substantial for homebuilders. The market value of
land, building lots and housing inventories can fluctuate significantly as a    
result of changing market and economic conditions. In addition, inventory       
carrying costs can be significant and can result in losses in poorly            
performing projects or markets. The Company's results for 1995 include an       
after-tax impairment charge of $27 million (pretax $45 million), primarily      
related to the Company's early adoption of Statement of Financial Accounting    
Standards No. 121, ''Accounting for the Impairment of Long-Lived Assets and     
for Long-Lived Assets To Be Disposed Of'' that resulted in a reduction in the   
carrying value of certain inventories and joint venture investments to fair     
value. The charge related principally to certain California inventories, where  
in response to competitive market conditions, the Company determined that some  
product repositioning, increased homebuyer incentives and reduced selling       
prices would be necessary. The Company also decided to dispose of certain       
joint venture investments in the Washington, D.C. metropolitan area and         
certain other subdivision inventories because the Company believes that it can  
achieve higher returns on alternative uses of capital. In the event of          
significant changes in economic or market conditions, there can be no           
assurance that the Company will not make further provisions relating to its     
inventory. The Company must, in the ordinary course of its business,            
continuously seek and make acquisitions of land for expansion into new markets  
as well as for replacement and expansion of land inventory within its current   
markets. Although the Company employs various measures designed to manage       
inventory risks, there can be no assurance that such measures will be           
successful. See ''Management's Discussion and Analysis of Results of            
Operations and Financial Condition_Homebuilding.''                              

Contribution of Financial Services Segment                                      

 The financial services segment has been a significant source of profits
for the Company in recent years. Profits from the Company's financial services  
segment have been lower in recent periods due to the sale of its institutional  
mortgage securities administration business, declines in earnings from the      
Company's investment operations and reductions in the Company's loan servicing  
portfolio. The Company does not expect operating performance of this segment    
to return to prior levels.                                                      

424B3 9th Page of 58 TOC 1st Previous Next ↓Bottom Just 9th
Success of Operating Plan                                                       

  The Operating Plan represents a change in the strategic direction of the
Company. Although the Company believes that it has begun to experience          
benefits from the Operating Plan, achievement of continued improvements is      
dependent upon a number of factors, including the Company's success in          
managing and implementing the Operating Plan, general and local economic and    
market conditions, changes in materials costs and competition. There can be no  
assurance that the benefits realized to date under the Operating Plan will      
continue or that the Company will realize additional improvements in its        
operating results in the future.                                                

Leverage and Liquidity                                                          

At March 31, 1996, after giving effect to the issuance of the Notes   
offered hereby and the application of the net proceeds therefrom, the Company   
would have had total consolidated homebuilding debt of approximately $435.6     
million and a ratio of total consolidated homebuilding debt to stockholders'    
equity of approximately 1.4 to 1.0. Of this amount, $120 million represents     
indebtedness of the Company guaranteed by the Company's homebuilding            
subsidiaries, all of which is structurally senior to the Notes to the extent    
of homebuilding assets contained in the homebuilding subsidiaries, which        
amount will increase in the event of additional borrowings under the Company's  
Revolving Credit Facility. In addition, the financial services subsidiaries     
had outstanding debt at March 31, 1996 of $379.0 million and the limited-       
purpose subsidiaries segment had outstanding non-recourse debt of $323.9        
million, none of which has been guaranteed by the Company.                      

 The ability of the Company to meet its debt service obligations will be
dependent upon the future performance of the Company, which, in turn, will be   
subject to general economic conditions and to financial, competitive, business  
and other factors, including factors beyond the Company's control. The level    
of the Company's leverage could restrict its flexibility in responding to       
changing business and economic conditions. If the Company is at any time        
unable to generate sufficient cash flow from operations to service its debt,    
it may be required to seek refinancing for all or a portion of that debt or to  
obtain additional financing. There can be no assurance that any such            
refinancing would be possible or that any additional financing could be         
obtained on terms that are favorable or acceptable to the Company. See          
''Management's Discussion and Analysis of Results of Operations and Financial   
Condition_Financial Condition and Liquidity.''                                  

The Company's Revolving Credit Facility and senior debt and senior    
subordinated debt instruments contain financial covenants with which the        
Company currently is in compliance. Significant losses in the Company's         
homebuilding segment could result in the violation of one or more of these      
covenants which could result in the unavailability of the liquidity provided    
by the Revolving Credit Facility. The Company's Revolving Credit Facility is    
guaranteed by its homebuilding subsidiaries.                                    

A significant portion of the homebuilding operations and all of the   
financial services business are conducted through subsidiaries. Accordingly,    
the Company derives a significant portion of its operating income and cash      
flows from its homebuilding and financial services subsidiaries, and relies on  
these subsidiaries to generate the funds necessary to meet its obligations,     
including the payment of principal and interest on the Notes. The ability of    
the Company's subsidiaries to pay dividends or otherwise make payments to the   
Company will be subject to, among other things, applicable state laws. In       
addition, the ability of the financial services segment to provide funds to     
the Company is subject to certain restrictions in its debt instruments. There   
can be no assurance that the Company will be able to realize from these         
subsidiaries any funds required to meet its principal or interest obligations   
on the Notes.                                                                   

Interest Rate Risk                                                              

   The Company's lines of business can be significantly affected by interest
rates. The level and expected direction of interest rates can adversely affect  
the sales of new homes, the profitability of such sales, the level of mortgage  
originations and refinancings, the value of the financial services segment's    
servicing portfolio and the value of and interest spread earned on mortgage-    
backed securities held for sale, any of which could have an adverse impact on   
results of operations or financial position.                                    

424B3 10th Page of 58 TOC 1st Previous Next ↓Bottom Just 10th
Competition                                                                     

 The residential housing industry is highly competitive, and the Company
competes in each of its markets with a large number of national, regional and   
local homebuilding companies. Some of these companies are larger than the       
Company and have greater financial resources. In addition, the general          
increase in the availability of capital and financing in recent years has made  
it easier for both large and small homebuilders to expand and enter new         
markets and has increased competition. Such competition could result in         
difficulty in acquiring suitable land at acceptable prices, increased selling   
incentives or lower sales per community, any of which could have an adverse     
impact on results of operations.                                                

Regulatory and Environmental Matters                                            

 The Company and its competitors are subject to various local, state and
federal statutes, ordinances, rules and regulations concerning zoning,          
building design, construction and similar matters, including local regulation   
which impose restrictive zoning and density requirements in order to limit the  
number of homes that can eventually be built within the boundaries of a         
particular area. The Company may also be subject to periodic delays in its      
homebuilding projects due to building moratoria in any of the areas in which    
it operates.                                                                    

  The Company and its competitors are subject to a variety of local, state
and federal statutes, ordinances, rules and regulations concerning the          
protection of health and the environment. The Company is also subject to a      
variety of environmental conditions that can affect its business and its        
homebuilding projects. The particular environmental laws which apply to any     
given homebuilding site vary greatly according to the site's location, the      
site's environmental condition and the present and former uses of the site, as  
well as adjoining properties. Environmental laws and conditions may result in   
delays, may cause the Company to incur substantial compliance and other costs,  
and can prohibit or severely restrict homebuilding activity in certain          
environmentally sensitive regions or areas.                                     

Natural Disasters                                                               

The climate and geology of many of the states in which the Company    
operates present increased risks of natural disasters. To the extent that       
hurricanes, severe storms, earthquakes, droughts, floods, wildfires or other    
natural disasters or similar events occur, the Company's business in such       
states may be adversely affected.                                               

Change of Control                                                               

Upon a Change of Control (as defined herein), the Company will be     
required to offer to repurchase all of the outstanding Notes at 101% of the     
principal amount thereof, plus accrued and unpaid interest to the date of       
repurchase. There can be no assurance that the Company will have sufficient     
funds available or will be permitted by its other debt agreements to            
repurchase the Notes upon the occurrence of a Change of Control. In addition,   
a Change of Control may require the Company to offer to repurchase other        
outstanding indebtedness and may cause a default under the Company's Revolving  
Credit Facility. The inability to repurchase all of the tendered Notes would    
constitute an Event of Default (as defined herein) under the Indenture. See     
''Description of the Notes_Certain Covenants_Change of Control.''               

No Prior Market for the Notes                                                   

The Notes are a new issue of securities, have no established trading  
market and may not be widely distributed. The Underwriters have notified the    
Company that they intend to make a market in the Notes; however, they are not   
obligated to do so and any market making may be discontinued at any time        
without notice. No application will be made to list the Notes on any stock      
exchange. Accordingly, no assurance can be given as to the liquidity of,        
trading market for or secondary market prices for the Notes.                    

424B3 11th Page of 58 TOC 1st Previous Next ↓Bottom Just 11th
USE OF PROCEEDS 

The net proceeds from the sale of the Notes are estimated to be       
approximately $98.1 million. The Company expects to apply such net proceeds     
initially to the repayment of the bank debt outstanding under its Revolving     
Credit Facility which had an outstanding balance of $188.0 million as of March  
31, 1996. The Company's Revolving Credit Facility bears interest at a floating  
rate (approximately 7% at March 31, 1996), permits borrowing subject to         
certain financial covenants of up to $400 million and matures in July 1998.     
The Company may reborrow amounts repaid under the Revolving Credit Facility     
for general corporate purposes and expects to reborrow $30 million for senior   
notes maturing in 1996 and 1997. See "Management's Discussion and Analysis of   
Results of Operations and Financial Condition-Financial Condition and           
Liquidity."                                                                     

CAPITALIZATION      

The following table sets forth the consolidated capitalization of the 
Company at March 31, 1996 and as adjusted to give effect to the sale of the     
Notes and the application of the net proceeds therefrom.                        

                                                                [Download Table]

                                                           March 31, 1996    
                                                     Actual       As Adjusted
                                                           (unaudited)       
                                                      (dollars in thousands) 
                                                                             
Debt:                                                                        
   Homebuilding:                                                             
     Long-term debt                                                          
     (including current portion (1)):                                        
        Revolving Credit Facility (2)               $   188,000   $    89,900
        Industrial revenue bonds                          1,909         1,909
        Secured notes payable                             5,766         5,766
        10.50% Senior Notes due 1996-1997(2)             30,000        30,000
        9.45% Senior Notes due 2000                       8,000         8,000
          % Senior Notes due 2006                           --        100,000
        10 1/2% Senior Subordinated Notes due 2002      100,000       100,000
        9 5/8% Senior Subordinated Notes due 2004       100,000       100,000
                                                      ---------      --------
           Total long-term debt_homebuilding            433,675       435,575
   Financial Services (3):                                                   
        Short-term notes payable                        379,059       379,059
   Limited-Purpose Subsidiaries (3):                                         
        Bonds payable, net                              323,944       323,944
                                                      ----------    ---------
          Total debt                                  1,136,678     1,138,578
Total stockholders' equity                              303,046       303,046
                                                     -----------   ----------
Total capitalization                                 $1,439,724    $1,441,624
                                                     ==========    ==========
<FN>                                                                         
(1)     Scheduled principal amortization through 2000 of the Company's long- 
term debt (excluding amounts under the Company's Revolving Credit            
Facility) as adjusted for the sale of the Notes and the application of the   
net proceeds therefrom, are as follows: $19.3 million in 1996, $15.6         
million in 1997, $2.5 million in 1998, $0.3 million in 1999 and $8.0         
million in 2000.                                                             
(2)     Represents Company indebtedness guaranteed by the Company's          
homebuilding segment subsidiaries.                                           
(3)     Limited-purpose subsidiaries' indebtedness represents obligations    
solely of the limited-purpose subsidiaries, is non-recourse and is not       
guaranteed or insured by the Company or any of its subsidiaries. In          
addition, the Company has not guaranteed any of the debt of its financial    
services subsidiaries.                                                       
</FN>                                                                        

424B3 12th Page of 58 TOC 1st Previous Next ↓Bottom Just 12th
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
       RESULTS OF OPERATIONS AND FINANCIAL CONDITION

  Operations of the Company consist of two business segments: homebuilding
and financial services. The Company's homebuilding segment constructs and       
sells single-family attached and detached homes and operates in 26              
metropolitan markets in 20 states throughout the United States. The financial   
services segment provides various mortgage-related products and services for    
retail customers and conducts investment activities. See ''Cautionary           
Statements Regarding Forward Looking Information'' and ''Risk Factors.''        

Results of Operations                                                           

Consolidated                                                          

Three Months ended March 31, 1996 Compared to Three Months ended March
31, 1995.   For the first quarter of 1996, the Company reported consolidated    
net earnings of $.9 million, or $.03 per share. This compares with 1995 first   
quarter consolidated net earnings of $.7 million, or $.01 per share, and a      
1995 first quarter net loss from continuing operations of $1.5 million, or      
$.13 per share. The Company's results from continuing operations for the first  
quarter of 1995 excluded net earnings of $2.2 million, or $.14 per share, from  
the discontinued institutional mortgage securities administrations business.    
The Company's homebuilding segment recorded pretax earnings of $1.3 million     
for the first quarter of 1996, compared with a pretax loss of $4.3 million for  
the same period last year. The improvement reflects an increase in gross        
profit margins from 11.7 percent in 1995 to 13.6 percent in 1996, which more    
than offset the impact of lower closing volume. The Company's financial         
services segment reported pretax earnings of $3.2 million for the first         
quarter of 1996, compared with $5.5 million for the same period in 1995. The    
decline from last year's results is primarily due to a first quarter 1995 gain  
of $3.1 million from the sale of mortgage-backed securities.                    

   1995 Compared to 1994.   In 1995, the Company reported a consolidated net
loss of $2.6 million, or $.31 per share, compared with consolidated net         
earnings of $24.5 million, or $1.42 per share, for 1994. The Company's results  
for 1995 include an after-tax impairment charge of $27 million (pretax $45      
million), primarily related to the Company's early adoption of Statement of     
Financial Accounting Standards No. 121, ''Accounting for the Impairment of      
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of'' (''FASB 121'')  
that resulted in a reduction in the carrying value of certain inventories and   
joint venture investments to fair value. The Company's 1995 results also        
include a net after-tax gain of $19.5 million related to the second-quarter     
sale of the Company's institutional mortgage-securities administration          
business. The sale of this business is consistent with the Company's long-term  
strategy to focus on its core homebuilding and retail mortgage-finance          
operations. The 1994 results include $2.1 million, or $.13 per share, for the   
cumulative impact of an accounting change to adopt Statement of Financial       
Accounting Standards No. 115, ''Accounting for Certain Investments in Debt and  
Equity Securities,'' as of January 1, 1994.                                     

 The Company's continuing operations, which exclude the gain on the sale
and the results of the institutional mortgage-securities administration         
business, reported a consolidated net loss of $25.5 million, or $1.78 per       
share, for 1995 compared with consolidated net earnings of $16.4 million, or    
$.90 per share, for 1994. The homebuilding segment recorded a pretax loss of    
$47.5 million for 1995, primarily due to the $45 million FASB 121 impairment    
charge, compared with pretax earnings of $10.9 million for 1994. Homebuilding   
results in 1995, excluding the impairment charge, declined from 1994 primarily  
due to lower closing volume and gross profit margins. The financial services    
segment reported pretax earnings of $17.9 million in 1995, compared with        
pretax earnings of $33.5 million for 1994. The decline from 1994 is primarily   
attributable to lower gains from sales of mortgages and mortgage servicing      
rights and a lower level of investment earnings. Corporate expenses represent   
the costs of corporate functions which support the business segments.           
Corporate expenses totaling $12.9 million for 1995 were down $4.3 million from  
1994 primarily as a result of staff reductions which occurred in the latter     
part of 1994 and lower payouts under the Company's performance-based incentive  
plans.                                                                          

424B3 13th Page of 58 TOC 1st Previous Next ↓Bottom Just 13th
 1994 Compared to 1993.   The Company reported consolidated net earnings
of $24.5 million, or $1.42 per share, for 1994 compared with a consolidated     
net loss of $2.7 million, or $.34 per share, for 1993. The net earnings for     
1994 reflected improved performance compared with 1993, when the Company        
recorded a pretax impairment charge of $45 million caused by a decline in       
economic and market conditions that resulted in reducing the carrying value of  
certain inventories and joint venture investments to net realizable value       
based on accounting rules in effect prior to the adoption of FASB 121.          
Homebuilding results for 1994, as compared with 1993 excluding the impairment   
charge, improved primarily due to higher closing volume and improved gross      
profit margins. The financial services segment's results reflect the impact of  
a 40 percent decline in loan originations and lower gains from the sale of      
mortgage-backed securities which were partially offset by higher gains from     
the sale of mortgage servicing rights. The 1993 results for the financial       
services segment included a non-recurring gain of $5.3 million from the sale    
of the Company's remaining interest in a real estate investment trust.          

The Company's limited-purpose subsidiaries are no longer issuing      
mortgage-backed securities and mortgage-participation securities. They do       
continue to hold collateral for previously issued mortgage-backed bonds in      
which the Company maintains a residual interest. Revenues, expenses and         
portfolio balances for the limited-purpose subsidiaries continue to decline as  
the mortgage collateral pledged to secure the bonds decreases due to scheduled  
principal payments, prepayments and exercises of early redemption rights.       

Homebuilding                                                          

Results of operations of the Company's homebuilding segment are       
summarized as follows:                                                          

                                                                [Download Table]

                                       Year ended December 31,       
                                 1993          1994          1995    
                                ------        ------        ------   
                 (dollars in thousands, except average closing price)
                                                                     
Revenues     .               $1,203,563    $1,443,212     $1,458,174 
Gross profit                    144,734       181,391        178,428 
Impairment of inventories                                            
   and joint venture                                                 
   investments                   45,000             0         45,000 
Selling, general                                                     
   and administrative expenses  119,546       142,254        151,087 
Interest expense                 26,118        28,209         29,807 
                             -----------   ----------     ---------- 
Homebuilding pretax                                                  
   earnings (loss)           $  (45,930)   $   10,928     $ (47,466) 
Operational Unit Data:                                               
(includes joint ventures)                                            
     Average closing price   $  148,000    $  160,000     $  164,000 
     Closings (units)             8,319         9,121          8,950 
     New orders (units)           8,433         8,955          9,141 
     Outstanding contracts                                           
       (units)                    2,719         2,553          2,744 

                                                                [Download Table]

                                 Three months ended March 31,     
                                      1995            1996        
                                    --------        ---------     
              (dollars in thousands, except average closing price)
                                                                  
Revenues     .                      $312,309       $297,675       
Gross profit                          36,591         40,632       
Impairment of inventories                                         
   and joint venture                                              
   investments                             0              0       
Selling, general and                                              
   administrative expenses            33,369         33,497       
Interest expense                       7,509          5,794       
                                   ----------      --------       
Homebuilding pretax                                               
   earnings (loss)                 $  (4,287)      $  1,341       
Operational Unit Data:                                            
(includes joint ventures)                                         
     Average closing price         $ 157,000       $170,000       
     Closings (units)                  1,998          1,733       
     New orders (units)                2,560          2,403       
     Outstanding contracts (units)     3,115          3,414       

Three Months ended March 31, 1996 Compared to Three Months ended March
31, 1995.   The Company's homebuilding segment reported pretax earnings of      
$1.3 million for the first quarter of 1996, compared with a pretax loss of      
$4.3 million for the same period last year. An increase in gross profit         
margins more than offset the impact of lower closing volume. For the three      
months ended March 31, 1996 revenues decreased 4.7 percent compared with the    
same period in 1995. The decline in revenue was due to lower closings for the   
quarter which were partially offset by an increase in the average closing       
price. Closings were down in the first quarter in part due to adverse weather   
conditions in several markets.                                                  

  Gross profit as a percentage of revenue for the three months ended March
31, 1996 was 13.6 percent, a significant improvement from the 11.7 percent      
reported for the first quarter of 1995. This represents the third consecutive   
quarter in which gross profit margins have increased compared with the          
immediately preceding quarter. The improvement is primarily attributable to a   
greater volume of closings from new, higher-margin communities with new         
product and better land positions. The sale of older inventories in the         
California and Mid-Atlantic regions and the Company's focus on reducing unsold  
homes under construction negatively impacted gross margins during 1995,         
particularly in the first half of the year.                                     

424B3 14th Page of 58 TOC 1st Previous Next ↓Bottom Just 14th
New orders for the first quarter of 1996 decreased by 6.1 percent from
the first quarter of 1995 as growth in new markets was more than offset by the  
lower sales in the Mid-Atlantic region. Sales in several markets were affected  
by adverse weather conditions, and volume in the Mid-Atlantic region was also   
impacted by the Company's decision to reallocate capital to other markets.      

   Outstanding contracts at March 31, 1996 were 3,414 compared with 3,115 at
March 31, 1995 and 2,744 at December 31, 1995. Outstanding contracts represent  
the Company's backlog of sold but not closed homes, which generally are built   
and closed, subject to cancellations, over the next two quarters. The value of  
outstanding contracts as of March 31, 1996 was $609.0 million, an increase of   
17.3 percent from March 31, 1995 and 27.6 percent from December 31, 1995.       

Selling, general and administrative expenses as a percent of revenues 
were 11.3 percent for the first quarter of 1996 compared with 10.7 percent for  
the same period of 1995. The overall increase as a percentage of revenues was   
in part due to the decline in the revenue base. General and administrative      
expenses, excluding selling expenses, increased as a percentage of revenues     
compared with the same period last year. This increase is primarily due to the  
costs of entering new markets, some of which are nonrecurring. Selling          
expenses declined as a percentage of revenues compared with the first quarter   
of 1995. This decrease is primarily related to reduced sales and marketing      
expenses, which were higher in the first quarter of 1995 due to new             
merchandising programs and marketing initiatives directed at reducing unsold    
inventories.                                                                    

Interest expense for the first quarter of 1996 decreased $1.7 million 
compared with the same period of 1995. This decrease was due to a decline in    
average homebuilding borrowings compared with the quarter ended March 31,       
1995, combined with a lower average cost of funds and an increase in the        
amount of interest capitalized due to an increase in land under development.    

1995 Compared to 1994.   The Company's homebuilding segment reported a
pretax loss of $47.5 million in 1995 compared with pretax earnings of $10.9     
million in 1994.                                                                

The pretax loss reported for the homebuilding segment in 1995 was     
primarily related to a pretax impairment charge of $45 million. The impairment  
charge was primarily related to the Company's early adoption of FASB 121,       
which affected its valuation of homebuilding inventories and investments in     
joint ventures. Of the $45 million pretax impairment charge taken in 1995, $31  
million related to California inventories and $14 million related to assets to  
be disposed of, including certain joint venture investments and subdivision     
lots.                                                                           

 FASB 121 provides that when events or changes in circumstances indicate
that the carrying amount of assets might not be recoverable, companies should   
evaluate the need for an impairment writedown. In the fourth quarter of 1995,   
in response to competitive market pressures in California, the Company          
determined that some product repositioning, increased home buyer incentives     
and reduced selling prices would be necessary in certain of its California      
subdivisions. The land inventory in most of these subdivisions was acquired in  
1988 and 1989 and had a cost basis substantially in excess of current market    
values. Accordingly, the Company evaluated the affected California              
subdivisions and determined that certain subdivision inventories were           
impaired. Under FASB 121, a writedown of $31 million was required to state the  
impaired inventories at their fair value. Fair value was based upon an          
evaluation of comparable market prices, discounted cash flow analysis and       
expected returns for comparable properties.                                     

   In addition, the Company decided in the fourth quarter of 1995 to dispose
of certain joint venture investments and certain other subdivision inventories  
because the Company believes that it can achieve higher returns on alternative  
uses of capital. As a result, the Company recorded a reserve of $14 million in  
the fourth quarter of 1995 to reduce the carrying value of these assets to      
their fair value less cost to sell. Of the total reserve, $7 million pertained  
to joint venture investments in the Washington, D.C. metropolitan area which    
the Company plans to dispose of in 1996. The remaining $7 million reserve       
primarily pertained to certain subdivision lots that the Company plans to       
dispose of during 1996, including lots in the Columbus, Dallas, and             
Washington, D.C. metropolitan areas.                                            

424B3 15th Page of 58 TOC 1st Previous Next ↓Bottom Just 15th
 In 1995, homebuilding revenues increased 1.0 percent compared with 1994
primarily due to a $4,000 increase in average closing price. The positive       
impact of the increase in closing price was partially offset by a .9 percent    
decline in wholly-owned closings. Closing volume was down in 1995, primarily    
due to slower sales earlier in the year, particularly in the Mid-Atlantic       
region. Earlier in 1995 due to economic uncertainties and competitive           
pressures in the Mid-Atlantic, the Company began redistributing capital to      
other regions where the Company believes it can achieve higher returns.         

  Gross profit margins, excluding the impairment charge, decreased to 12.2
percent for the year 1995, down from 12.6 percent for 1994. However, for the    
fourth quarter of 1995, gross margins improved to 13.1 percent compared with    
12.2 percent for the fourth quarter of 1994. The sale of older inventories in   
the California and Mid-Atlantic regions and the Company's focus on reducing     
unsold homes under construction negatively impacted gross margins during 1995,  
particularly in the first half of the year. The Company's gross profit margins  
during 1995 and 1994 were negatively impacted by the build-out of inventory in  
California. In conjunction with the implementation of FASB 121 and the          
resultant impairment charge taken in 1995, the affected California lots are     
now carried at fair value. As a result, the Company does not expect that gross  
profit margins for 1996 and beyond will be negatively impacted by the build-    
out and sale of homes on these lots.                                            

 Selling, general and administrative expenses, as a percent of revenues,
were 10.4 percent for 1995 compared with 9.9 percent for 1994. Included in      
general and administrative expenses for 1995 were $2.2 million of               
reorganization costs associated with the Company's initiatives to restructure   
its Mid-Atlantic and Southwest divisional operations. Selling expenses as a     
percentage of revenues increased in 1995 primarily due to costs associated      
with expansion into new markets and higher costs associated with the Company's  
new marketing and merchandising programs initiated in 1994.                     

Interest expense increased in 1995 and 1994 due to increases in the   
average homebuilding debt outstanding required to fund higher average           
inventories and increases in the average cost of funds. Increases in interest   
expense were mitigated by an increase in the amount of interest capitalized     
due to an increase in land under development.                                   

1994 Compared to 1993.   The homebuilding segment recorded pretax     
earnings of $10.9 million in 1994 versus a pretax loss of $45.9 million in      
1993. The 1993 loss was due to a pretax impairment charge of $45 million which  
was caused by a decline in economic and market conditions in California and     
the Mid-Atlantic and resulted in the reduction of the carrying value of         
certain inventories and joint venture investments to net realizable value. Of   
the total charge taken in 1993, $40 million related to properties in            
California and $5 million primarily related to inventories and joint venture    
investments in the Washington, D.C. metropolitan area.                          

  Homebuilding revenues increased 19.9 percent in 1994 compared with 1993,
due to a 11.7 percent increase in wholly-owned closings and a $12,000 increase  
in average closing price. The increased volume in 1994 was in large part due    
to growth in new markets and higher sales in California. Also contributing to   
the increase was the impact of a full-year's sales from Scott Felder Homes in   
Texas, which was acquired in March 1993.                                        

  Gross profit margins increased to 12.6 percent in 1994 from 12.0 percent
in 1993, excluding the 1993 impairment charge. The improvement in gross profit  
margins during 1994 was primarily attributable to a greater volume of closings  
from new, higher-margin communities, which more than offset the impact of       
higher closings from low-margin California communities which were negatively    
impacted by a decline in economic and market conditions.                        

 Selling, general and administrative expenses, as a percent of revenues,
were 9.9 percent for 1994 and 1993. General and administrative expenses as a    
percentage of revenue, declined in 1994, as compared with 1993, due to the      
higher revenue base. Selling expenses as a percentage of revenues increased in  
1994 primarily due to costs associated with expansion into new markets and      
higher costs associated with the Company's new marketing and merchandising      
programs initiated in 1994.                                                     

424B3 16th Page of 58 TOC 1st Previous Next ↓Bottom Just 16th
Financial Services                                                    

 The Company's financial services segment, which excludes the results of
the discontinued institutional mortgage-securities administration business,     
reported pretax earnings by line of business as follows:                        

                                                                [Download Table]

                                  Year ended December 31,  
                               1993       1994       1995  
                              ------     ------     ------ 
                                (dollars in thousands)     
                                                           
Retail                      $20,642     $21,484    $  9,672
Investments                  23,109      12,042       8,198
                            -------     -------    --------
          Total     .       $43,751     $33,526    $ 17,870
                            =======     =======    ========

                                                                [Download Table]

                                 Three months ended March 31,
                                    1995          1996       
                                   ------         -----      
                                   (dollars in thousands)    
                                                             
Retail                            $1,143          $1,862     
Investments                        4,354           1,366     
                                  -------         -------    
          Total     .             $5,497          $3,228     
                                  ======          ======     

  Three Months ended March 31, 1996 Compared to Three Months ended March 31,
1995.   For the three months ended March 31, 1996 pretax earnings were $3.2     
million compared with $5.5 million for the same period of 1995. The increase    
in retail pretax earnings in the first quarter of 1996 was more than offset by  
a lower level of investment earnings. Results of investment operations in the   
first quarter of 1995 included a $3.1 million gain from the sale of mortgage-   
backed securities. There were no sales of mortgage-backed securities in the     
first quarter of 1996. The decline in investment earnings will likely continue  
as the Company's investment portfolio declines.                                 

1995 Compared to 1994 and 1994 Compared to 1993.   The Company's      
financial services segment recorded pretax earnings of $17.9 million in 1995,   
compared with $33.5 million in 1994 and $43.8 million in 1993. The decline in   
pretax earnings in 1995 was primarily related to lower gains from sales of      
mortgages and mortgage servicing rights and a lower level of investment         
earnings. In 1994, the financial services segment recorded lower earnings as    
compared with 1993 primarily due to the decline in earnings from investment     
operations. Results of investment operations in 1993 included a nonrecurring    
gain of $5.3 million from the sale of the Company's remaining interest in a     
real estate investment trust and higher gains from sales of mortgage-backed     
securities. The Company's retail operations were adversely affected by rising   
interest rates in 1994, as loan originations declined by 40 percent. The        
impact of this decline was offset by higher gains from the sale of mortgage     
servicing rights.                                                               

   Revenues and expenses for the financial services segment were as follows:

                                                                [Download Table]

                                        Year ended December 31,     
                                    1993         1994        1995   
                                   ------       ------      ------  
                                       (dollars in thousands)       
                                                                    
Retail Revenues                                                     
  Interest and                                                      
    net origination fees         $  28,335    $  19,468     $16,727 
  Gains on sales of mortgages                                       
    and servicing rights            28,308       37,191      17,362 
  Loan servicing                    43,635       37,578      32,650 
  Title/escrow                       3,610        4,597       5,246 
                                  --------      -------      -------
     Total retail revenues         103,888       98,834      71,985 
Revenues from                                                       
  investment operations             32,641       24,797      17,626 
                                   -------     --------     --------
Total revenues                    $136,529     $123,631     $89,611 
Expenses:                                                           
  Interest                          30,631       26,694      23,750 
  General and administrative        62,147       63,411      47,991 
                                   -------      -------      ------ 
Total expenses                      92,778       90,105      71,741 
                                 ---------    ---------     ------- 
Pretax earnings                  $  43,751    $  33,526     $17,870 
                                 =========    =========     ========

                                                                [Download Table]

                                          Three months ended March 31,
                                              1995          1996      
                                             ------        ------     
                                            (dollars in thousands)    
                                                                      
Retail Revenues                                                       
  Interest and net origination fees        $  3,034      $  4,198     
  Gains on sales of mortgages                                         
    and servicing rights                      3,026         5,551     
  Loan servicing                              8,693         7,430     
  Title/escrow                                1,019         1,198     
                                            -------        ------     
    Total retail revenues     .              15,772        18,377     
Revenues from investment operations           7,115         3,392     
                                            --------     ---------    
Total revenues                              $22,887       $21,769     
Expenses:                                                             
  Interest                                    5,540         5,799     
  General and administrative                 11,850        12,742     
                                             -------        ------    
Total expenses                               17,390        18,541     
                                           --------      ---------    
Pretax earnings                            $  5,497      $  3,228     
                                           ========      =========    

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Three Months ended March 31, 1996 Compared to Three Months ended March
31, 1995.   Revenues for the financial services segment decreased for the       
first quarter of 1996 as higher retail revenues from increased origination      
activity and higher gains on sales of mortgage servicing rights were more than  
offset by lower investment revenues and a decrease in loan servicing revenues   
due to a decline in the Company's loan servicing portfolio. Investment          
revenues declined because there were no sales of mortgage-backed securities in  
1996. Interest expense increased as a result of a higher level of warehouse     
borrowings required to fund the increased volume of originations. General and   
administrative expenses were up in part as a result of costs associated with    
the Company's 1996 process reengineering initiatives.                           

In February 1996, the Company announced the sale of its wholesale     
mortgage operations. The sale of this business, which was part of the retail    
operations of the financial services segment, could result in a decline in      
mortgage originations in 1996. However, the sale of this business is not        
expected to have a significant impact on the future operating results of the    
financial services segment.                                                     

1995 Compared to 1994 and 1994 Compared to 1993.   Revenues for the   
financial services segment decreased 27.5 percent in 1995 primarily due to      
lower gains from sales of mortgages and mortgage servicing rights and lower     
revenues from investment operations due to a decline in the investment          
portfolio. Revenues for the financial services segment decreased 9.4 percent    
in 1994 as compared with 1993 in large part due to an industry-wide decline in  
mortgage originations resulting from rising interest rates. During 1993,        
interest rates were at historically low levels, resulting in a high level of    
refinancing activity. In addition, investment revenues declined in 1994         
primarily due to a nonrecurring 1993 gain on the sale of the Company's          
interest in a real estate investment trust. Retail loan servicing revenue       
declined in both 1995 and 1994 due to reductions in the Company's loan          
servicing portfolio. Declines in interest expense for 1995, 1994, and 1993      
were directly related to the level of borrowings required to fund mortgage      
loan originations and investment portfolio balances in those periods. General   
and administrative expenses for the financial services segment declined 24      
percent in 1995 as a result of cost reduction measures in retail operations     
initiated in the latter part of 1994. General and administrative expenses for   
the financial services segment increased slightly in 1994, as the cost          
reduction measures implemented in response to the decline in loan origination   
activity during the year were offset by the costs of downsizing.                

   Retail Operations.   Retail operations include mortgage origination, loan
servicing and title/escrow services for retail customers.                       

A summary of mortgage origination activities is as follows:           

                                                                [Download Table]

                                        Year ended December 31,     
                                       1993       1994       1995   
                                      ------     ------      -----  
                                                                    
Dollar volume of mortgages                                          
   originated (in millions)          $ 3,596    $ 2,055    $ 1,952  
Number of mortgages originated        27,872     16,740     15,330  
Percentages                                                         
     Ryland home closings                20%        28%         35% 
     Other closings                      80%        72%         65% 
                                        ----       ----        -----
     Total closings                     100%       100%        100% 

                                                                [Download Table]

                                        Three months ended March 31,
                                           1995          1996       
                                          -------       ------      
                                                                    
Dollar volume of mortgages                                          
   originated (in millions)             $   328        $   484      
Number of mortgages originated            2,662          3,784      
Percentages                                                         
     Ryland home closings                   40%             30%     
     Other closings                         60%             70%     
                                           ----            -----    
     Total closings                        100%            100%     

Three Months ended March 31, 1996 Compared to Three Months ended March
31, 1995.   Mortgage origination volume increased by 42 percent in the first    
quarter compared with the first quarter of last year reflecting the favorable   
interest rate environment in the early part of the first quarter.               

 1995 Compared to 1994 and 1994 Compared to 1993.   Mortgage origination
volume in 1995 was down as compared with 1994, although declines early in the   
year were offset by increases later in the year. The more favorable interest    
rate environment in the latter part of 1995 resulted in a 34 percent increase   
in originations in the fourth quarter as compared with the fourth quarter of    
1994. The 40 percent decline in mortgage origination volume in 1994 as          
compared with 1993 was due to an industry-wide decline in mortgage              
originations caused by rising interest rates.                                   

424B3 18th Page of 58 TOC 1st Previous Next ↓Bottom Just 18th
 The Company earns interest on mortgages held for sale and pays interest
on borrowings secured by mortgages. Significant data related to these           
activities are as follows:                                                      

                                                                [Download Table]

                                         Year ended December 31,      
                                        1993        1994        1995  
                                       ------      ------      ------ 
                                                                      
Net interest earned (in thousands)    $12,159      $9,598      $5,766 
Average balance of mortgages                                          
   held for sale (in millions)        $   418      $  293      $  211 
Net interest spread                       2.9%        3.3%        2.7%

                                                                [Download Table]

                                          Three months ended March 31,
                                           1995           1996        
                                          ------          ------      
                                                                      
Net interest earned (in thousands)        $1,160         $1,551       
Average balance of mortgages                                          
   held for sale (in millions)            $  155         $  235       
Net interest spread                          3.0%           2.7%      

Three Months ended March 31, 1996 Compared to Three Months ended March
31, 1995.   Net interest earned increased in the first quarter of 1996 due to   
an increase in the average balance of mortgages held for sale partially offset  
by a lower net interest spread.                                                 

1995 Compared to 1994 and 1994 Compared to 1993.   Net interest earned
decreased in 1995 due to a lower average balance of mortgages held for sale     
combined with a lower net interest spread. Net interest earned decreased in     
1994 primarily due to the lower average balance of mortgages held for sale.     

   The Company services loans that it originates as well as loans originated
by others. Loan servicing portfolio balances were as follows:                   

                                                                [Download Table]

                                        December 31,        
                                  1993       1994      1995 
                                 ------     ------    ------
                                   (dollars in billions)    
                                                            
Originated                     $  4.0      $  2.8     $  2.4
Acquired                          4.6         4.0        3.5
Subserviced     .                 1.2          .1         .3
                               -------     ------     ------
   Total serviced              $  9.8      $  6.9     $  6.2
                               =======    =======     ======

                                                                [Download Table]

                                         March 31,    
                                   1995         1996  
                                  ------       ------ 
                                 (dollars in billions)
                                                      
Originated                      $  2.7         $  2.4 
Acquired                           3.9            3.4 
Subserviced                         .1             .2 
                                ------         ------ 
   Total serviced               $  6.7         $  6.0 
                                ======         ====== 

Three Months ended March 31, 1996 Compared to Three Months ended March
31, 1995.   The decrease in the portfolio balance in the first quarter of 1996  
is primarily attributable to normal mortgage prepayment activity.               

1995 Compared to 1994 and 1994 Compared to 1993.   The decrease in the
portfolio balance in 1995 as compared with 1994 was primarily attributable to   
normal mortgage prepayment activity. The decrease in the portfolio balance in   
1994 is primarily attributable to the decline in origination volume combined    
with higher sales of servicing rights.                                          

   Investment Operations.   The Company's investment operations hold certain
assets, primarily mortgage-backed securities and notes receivable, which were   
obtained as a result of the exercise of redemption rights on various mortgage-  
backed bonds previously owned by the Company's limited-purpose subsidiaries.    
Pretax earnings were comprised of the following:                                

                                                                [Download Table]

                                       Year ended December 31, 
                                     1993       1994      1995 
                                    ------     ------    ------
                                       (dollars in thousands)  
                                                               
Sale of interest in                                            
   real estate investment trust    $  5,322   $     0   $    0 
Sale of mortgage-backed securities  . 5,635     2,349    4,839 
Net interest earned and other     .  12,152     9,693    3,359 
                                    --------  -------   -------
Pretax earnings                     $23,109   $12,042   $8,198 
                                    =======   =======   =======

                                                                [Download Table]

                                         Three months ended March 31,
                                            1995         1996        
                                           ------        -----       
                                          (dollars in thousands)     
                                                                     
Sale of interest in                                                  
   real estate investment trust          $      0      $      0      
Sale of mortgage-backed securities          3,124             0      
Net interest earned and other               1,230         1,366      
                                         ---------     --------      
Pretax earnings                          $  4,354      $  1,366      
                                         ========      ========      

Three Months ended March 31, 1996 Compared to Three Months ended March 31,
1995.   Pretax earnings for the first quarter of 1996 decreased compared with   
the same period last year because results for the first quarter                 
of 1995 included a $3.1 million gain from the sale of mortgage-backed           
securities.                                                                     

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1995 Compared to 1994 and 1994 Compared to 1993.   Pretax earnings for
1995 decreased as compared with 1994 due to decreases in the net interest       
earned on mortgage-backed securities and notes receivable. These decreases are  
attributable to lower average investment balances along with lower net          
interest spread. Partially offsetting the lower net interest earned in 1995     
were higher gains from sales of mortgage-backed securities. Pretax earnings in  
1994 declined substantially as compared with 1993 primarily due to lower gains  
on the sale of mortgage-backed securities and the nonrecurring gains on the     
1993 sale of the Company's remaining interest in a real estate investment       
trust.                                                                          

Significant data from investment operations are as follows:           

                                                                [Download Table]

                                               Year ended December 31,   
                                              1993       1994      1995  
                                             ------     -------    ----- 
                                                                         
Net interest earned (in thousands)          $13,413    $12,989    $4,433 
Average balance outstanding (in millions)   $   207    $   205    $  122 
Net interest spread                            6.5%        6.3%      3.6%

                                                                [Download Table]

                                           Three months ended March 31,
                                                 1995        1996      
                                                -----        -----     
                                                                       
Net interest earned (in thousands)              $1,493      $1,026     
Average balance outstanding (in millions)       $  153      $  111     
Net interest spread                               3.9%        3.9%     

  The Company earns a net interest spread on the investment portfolio from
the difference between the interest rates on the mortgage-backed securities     
and notes receivable and the related borrowing rates.                           

Three Months ended March 31, 1996 Compared to Three Months ended March
31, 1995.   The decrease in the net interest earned between the first quarter   
of 1996 and the first quarter of 1995 is primarily due to a decline in the      
average investment portfolio balance outstanding.                               

 1995 Compared to 1994 and 1994 Compared to 1993.   The 1995 decrease in
the net interest earned is primarily due to a decline in the average            
investment portfolio balance outstanding combined with a lower net interest     
spread resulting from an increase in borrowing rates. The decrease in the net   
interest earned in 1994 as compared with 1993 primarily reflects the lower net  
interest spread.                                                                

 Discontinued Institutional Operations.   In the second quarter of 1995,
the Company sold its institutional mortgage securities administration business  
which included master servicing, securities administration, investor            
information services, and tax calculation and reporting. The results for this   
business (formerly reported as institutional financial services) as well as     
the gain on the sale of the business, have been reported as discontinued        
operations in the accompanying consolidated statements of earnings. Revenues    
from operations of the discontinued business were $24.0 million, $23.6 million  
and $11.4 million, for 1993, 1994 and 1995, respectively. Net earnings from     
operations of the discontinued business were $6.9 million (net of taxes of      
$4.6 million) for 1993, $6.0 million (net of taxes of $4.0 million) for 1994    
and $3.3 million (net of taxes of $2.2 million) for 1995.                       

The Company reported a net gain from the sale of the institutional    
mortgage securities administration business of $19.5 million in the second      
quarter of 1995. Proceeds from the sale were used to repay long-term debt of    
the homebuilding segment and short-term notes payable of the financial          
services segment. The Company's future earnings will no longer benefit from     
the results of these operations.                                                

Financial Condition and Liquidity                                               

The Company generally provides for the cash requirements of the       
homebuilding and financial services businesses from outside borrowings and      
internally generated funds. The Company believes that its current sources of    
cash are sufficient to finance its current requirements.                        

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The homebuilding segment borrowings include the Revolving Credit      
Facility, senior notes, senior subordinated notes and non-recourse secured      
notes payable. The Company uses its Revolving Credit Facility to finance        
increases in its homebuilding inventory and changes in working capital. This    
facility was renewed in July 1995 for a three-year period and total borrowing   
capacity was increased from $250 million to $400 million. The facility is       
guaranteed by the Company's homebuilding subsidiaries. As of March 31, 1996,    
the outstanding borrowings under this facility were $188 million, compared      
with $137 million as of December 31, 1995. In addition, the Company had         
letters of credit outstanding under this facility totaling $20.9 million at     
March 31, 1996 and $22.2 million at December 31, 1995. To finance land          
purchases, the Company may also use seller-financed, non-recourse secured       
notes payable. At March 31, 1996, such notes payable outstanding amounted to    
$5.8 million, compared with $4.5 million at December 31, 1995. Senior notes     
amounting to $15 million matured and were paid off in January 1996.             

Housing inventories increased to $577.6 million as of March 31, 1996, 
from $537.9 million as of the end of 1995. This primarily represents normal     
seasonal increases in sold homes under construction.                            

The financial services segment uses cash generated from operations and
borrowing arrangements to finance its operations. In May 1996, the Company      
renewed its bank facility which provides up to $325 million for mortgage        
warehouse funding and $40 million for working capital advances, and extended    
the maturity of the facility to May 1998. Other borrowing arrangements as of    
March 31, 1996 included repurchase agreement facilities aggregating $925        
million, a $100 million Revolving Credit Facility used to finance investment    
portfolio securities and a $35 million credit facility to be used for the       
short-term financing of optional bond redemptions. At March 31, 1996 and        
December 31, 1995, the combined borrowings of the financial services segment    
outstanding under all agreements were $379.1 million and $367.5 million,        
respectively.                                                                   

  Mortgage loans, notes receivable, and mortgage-backed securities held by
the limited-purpose subsidiaries are pledged as collateral for the issued       
bonds, the terms of which provide for the retirement of all bonds from the      
proceeds of the collateral. The source of cash for the bond payments is cash    
received from the mortgage loans, notes receivable and mortgage-backed          
securities.                                                                     

   The Company has not guaranteed the debt of the financial services segment
or limited-purpose subsidiaries.                                                

424B3 21st Page of 58 TOC 1st Previous Next ↓Bottom Just 21st
BUSINESS

The Company                                                                     

The Company is a leading national homebuilder and mortgage-related    
financial services firm. The Company designs, markets and constructs single     
family homes generally targeted to entry level, first and second time move-up   
home buyers. As of March 31, 1996, the Company offered homes for sale in        
approximately 300 communities and operated in 26 metropolitan markets located   
in 20 states. With homebuilding revenues of $1.46 billion in 1995, the Company  
is the nation's third largest homebuilder based on 1995 revenues. RMC, the      
Company's financial services segment, complements the Company's homebuilding    
activities by providing a full range of competitive mortgage-finance programs,  
as well as title, escrow and settlement services.                               

Operating Strategy                                                              

Under the direction of a new Chief Executive Officer appointed in     
November 1993, the Company implemented the Operating Plan which is designed to  
focus on and substantially improve the profitability of its homebuilding        
operations. The Company believes that the strategies inherent in the Operating  
Plan are now beginning to positively impact the financial results of its        
homebuilding operations. Homebuilding gross margins increased for the third     
consecutive quarter to 13.6% for the three months ended March 31, 1996, a       
nearly 200 basis point increase over the comparable 1995 period. The Company    
believes that the average gross margin performance for New Communities is a     
key measure of the success of the Operating Plan. For the first quarter of      
1996, gross margins in New Communities averaged 15.0%, compared to 11.4% in     
the Company's other communities. Closings from New Communities represented 54%  
of total closings in the first quarter of 1996. The Company expects that the    
proportion of closings from New Communities will increase during the balance    
of 1996, which should contribute to continued improvement in homebuilding       
profitability.                                                                  

The major components of the Operating Plan include:                   

Organizational and Management Changes.   The Company has largely      
completed an organizational and management restructuring in order to implement  
the Operating Plan and to support the Company's long-term growth. Over the      
past two years, the Company has replaced a significant portion of the           
leadership positions in each of its five operating regions with individuals     
who possess both substantial homebuilding experience and local market           
knowledge. In addition, corporate staff functions have been reduced from 217    
positions as of December 31, 1993 to 129 positions as of March 31, 1996 and     
have been refocused to more effectively support the activities of the           
Company's homebuilding and financial services operations.                       

New Product Offerings and Improved Marketing Strategies.   The Company
has significantly updated its product offerings over the past two years by      
introducing over 300 new home designs. The Company's new product designs,       
which are based on local market research, emphasize volume, natural light and   
flexible floor plans. The Company has increased its ability to respond quickly  
to market changes through the use of outside architects and flexible supply     
arrangements which have significantly reduced the time-to-market for new        
product offerings. The Company's new product portfolio is supported by a        
revitalized sales and marketing effort and an improved retail presentation,     
which includes an expanded model home program, high caliber sales               
representatives and targeted merchandising techniques. The Company believes     
that its new products and improved marketing strategies have contributed to     
increased sales per community.                                                  

   Disciplined Approach to Land Acquisition.   The Company, which utilized a
strategy of acquiring control of land primarily through the use of option       
contracts prior to the implementation of the Operating Plan, now employs a      
balanced approach to land acquisition including both direct acquisition and     
option contracts. The Company believes that, in many instances, direct          
acquisition and development of building lots enables it to gain greater access  
to prime locations, increase margins and improve the positioning of its         
housing inventory in its communities. The Company's land acquisition objective  
is to control a two- to three-year supply of building lots. The Company         
conducts a thorough land acquisition due diligence process at multiple levels   
throughout the organization, including a review by a senior management land     
committee of each prospective land purchase or option contract. At March 31,    
1996, the Company controlled 21,605 building lots, 51% of which were owned by   
the Company and the remainder of which were controlled through option           
contracts. The percentage of building lots owned by the Company at March 31,    
1996 represents an increase from 42% at December 31, 1994. At March 31, 1996,   
77% of the Company's total building lots were in New Communities.               

424B3 22nd Page of 58 TOC 1st Previous Next ↓Bottom Just 22nd
 Return-Oriented Capital Allocation.   In order to improve the return on
capital invested in its homebuilding segment, the Company has initiated         
various inventory control procedures, including the imposition of inventory     
targets for each of its five regions and the establishment of aggregate         
homebuilding inventory levels. The Company has reallocated capital among its    
existing markets and expanded to certain new markets where the Company expects  
that it can achieve higher returns. The Company believes that the resulting     
increased geographic diversity reduces the impact on the Company of             
unfavorable changes in homebuilding market conditions in any single market. In  
addition, the Company significantly altered the composition of its inventory    
position in 1995 by reducing its unsold homes under construction from $141.5    
million at December 31, 1994 to $82.2 million at March 31, 1996.                

Repositioning of Financial Services Activities.   The Company is      
repositioning its financial services segment through a strategy which includes  
(i) focusing on retail mortgage loan origination and servicing activities,      
(ii) divesting non-core assets and lines of business, (iii) increasing          
origination volume by leveraging its affiliation with the Company's             
homebuilding segment and (iv) reaching mortgage customers directly at the       
point of sale through the use of technology. Pursuant to this strategy, the     
Company sold its institutional mortgage securities administration business in   
June of 1995 and its wholesale loan origination business in February of 1996.   
The percentage of the homebuilding segment's customers who obtain financing     
for their home purchases                                                        
through RMC has increased from 60% for the year ended December 31, 1994 to    
67% for the quarter ended March 31, 1996.                                       

Markets                                                                         

The homebuilding segment markets and builds homes that are constructed
on-site in five regions comprised of 26 metropolitan markets throughout the     
nation. As of June 1, 1996, the Company operated in the following markets:      

Region                                   Market                       
------                                   ------                       
Mid-Atlantic               Baltimore, Washington, D.C., Philadelphia            
Midwest                    Chicago, Cincinnati, Columbus, Indianapolis,         
Minneapolis/St. Paul      
Southeast                  Atlanta, Charlotte, Orlando, Tampa, Greenville,      
Columbia                  
Southwest                  Houston, Dallas, Austin, San Antonio                 
West                       San Francisco Bay Area, Los Angeles, San Diego,      
                  Denver, Phoenix, Salt Lake City, Sacramento,
Portland                  

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The following map identifies the Company's principal regions and markets:       

                                                                [Download Table]

     Region                                   Market                          
     ------                                   ------                          
                                                                              
Mid-Atlantic               Baltimore (1), Washington, D.C.(1), Philadelphia(2)
Midwest                    Chicago(2), Cincinnati(1), Columbus(1),            
                           Indianapolis(1), Minneapolis/St. Paul(2)           
Southeast                  Atlanta(1), Charlotte(1), Orlando(1), Tampa(2),    
                           Greenville(2), Columbia(2)                         
Southwest                  Houston(1), Dallas(1), Austin(2), San Antonio(2)   
West                       San Francisco Bay Area(2), Los Angeles(1),         
                           San Diego(1), Denver(1), Phoenix(1),               
                           Salt Lake City(2), Sacramento(1), Portland(2)      

<FN>                                                                          
(1)  Existing Market                                                          
(2)  New Market                                                               
</FN>                                                                         

The Company evaluates its homebuilding inventories in each region and 
allocates capital to new markets and among existing markets in order to be in   
a position to take advantage of favorable housing market conditions. Over the   
past three years, the Company entered a number of new markets where it expects  
to generate a higher return on capital. These new markets are Philadelphia,     
Chicago, Minneapolis/St. Paul, Austin, San Antonio, Greenville and Columbia,    
South Carolina, Tampa, the San Francisco Bay Area, Salt Lake City and           
Portland, Oregon. The Company entered the Austin and San Antonio markets        
through the acquisition of Scott Felder Homes and entered the remaining new     
markets through start-up operations. Gross profit margins on closings in new    
markets for the first quarter of 1996 were approximately 280 basis points       
higher than gross profit margins on closings in existing markets.               

   In December 1995, the Company announced its decision to exit homebuilding
operations in the Columbus, Ohio market by the end of 1996. The Company's       
decision was based on its relatively weak market position in Columbus and on    
the opportunities available to the Company to employ its capital in more        
attractive markets in the Midwest. In 1995, due to economic uncertainties and   
competitive pressures in the Mid-Atlantic region, the Company began             
reallocating capital to other regions where the Company believes it can         
achieve higher returns.                                                         

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 The following table summarizes the Company's sales by units, by region,
for the periods indicated.                                                      

                                                                [Download Table]

                                  Year ended December 31,
New Orders (in units)             1993     1994    1995  
---------------------            ------    -----   ----- 
                                                         
Mid-Atlantic                     2,815     2,492   2,011 
Midwest                            999     1,001   1,307 
Southeast                        1,365     1,161   1,399 
Southwest                        1,414     1,829   1,923 
West                             1,840     2,472   2,501 
                                 -----     -----   ----- 
    Total                        8,433     8,955   9,141 
                                 ======    ======  ===== 

                                                                [Download Table]

                                    Three months ended March 31,
New Orders (in units)                  1995        1996         
---------------------                ------      ------         
                                                                
Mid-Atlantic                           687         408          
Midwest                                334         447          
Southeast                              393         418          
Southwest                              497         477          
West                                   649         653          
                                     ------      ------         
    Total                            2,560       2,403          
                                     ======      ======         

   The Company's sales activities for the first three months of 1996 reflect
regional economic conditions as well as the Company's efforts to allocate its   
capital to those markets where it believes higher returns can be obtained.      

   Outstanding contracts at March 31, 1996 were 3,414 compared with 3,115 at
March 31, 1995 and 2,744 at December 31, 1995. Outstanding contracts represent  
the Company's backlog of sold but not closed homes, which generally are built   
and closed, subject to cancellations, over the next two quarters. The value of  
outstanding contracts as of March 31, 1996 was $609.0 million, an increase of   
17.3% from March 31, 1995 and 27.6% from December 31, 1995. The value of        
outstanding contracts as of March 31, 1996, excluding the Mid-Atlantic region,  
was $473.0 million, an increase of 41.4% from March 31, 1995 and 34.3% from     
December 31, 1995.                                                              

Product Lines                                                                   

 The Company markets detached and attached single family homes generally
targeted to the entry level, first and second time move-up home buyer through   
a diverse product line tailored to the local styles and preferences in each of  
its geographic markets. The product line constructed in a particular            
community, which is determined in conjunction with the land acquisition         
feasibility process, is dependent upon a number of factors, including consumer  
preferences, competitive product offerings and the cost of building lots in     
the community. In 1995, the Company's average closing price was $164,000.       

The Company has significantly updated its product line in conjunction 
with the Operating Plan by introducing over 300 new home designs. The Company   
has adopted a strategy of outsourcing architectural services to a network of    
respected architects in order to increase creativity and to ensure that its     
home designs are consistent with local market preferences. In addition,         
through flexible supply arrangements and construction methods, including        
reduced use of pre-constructed panels and trim packages, the Company has        
significantly improved its ability to quickly bring new home designs to market  
and modify existing products.                                                   

Production Management                                                           

  Substantially all on-site construction is performed for a fixed price by
independent subcontractors selected on a competitive bid basis. The Company     
generally requires a minimum of three competitive bids for each phase of        
construction. All construction activities are supervised by the Company's       
production supervisors who schedule and coordinate all subcontractor work,      
monitor quality and ensure compliance with local zoning and building codes.     
The Company recently completed the implementation of an integrated financial    
and homebuilding management information system which assists in scheduling      
production and controlling costs. Through this system, the Company monitors     
the construction status and job costs incurred for each home for each phase of  
construction. The system provides for detailed budgeting and allows the         
Company to monitor and control actual costs versus construction bids for each   
subcontractor.                                                                  

  The Company generally does not commence the construction of a home until
a contract of sale has been fully executed and the customer has received        
preliminary mortgage approval. However, in certain cases it may be necessary    
to begin the construction of an unsold home in order to achieve construction    
efficiencies, meet consumer demand for expedited delivery or to commence the    
construction of sold attached single family homes.                              

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Substantially all materials used in the construction of homes are     
available from a number of sources, but may fluctuate in price due to various   
factors. To increase purchasing efficiencies, the Company uses standardized     
building materials and products in its homes and may procure such products      
through national supply contracts. In those cases where products and services   
are procured locally, the Company controls costs through competitive bidding    
practices among qualified subcontractors and suppliers.                         

Land Acquisition and Development                                                

   As of June 1, 1996, the Company operated in approximately 300 communities
in 26 metropolitan markets in 20 states. The following table summarizes the     
Company's available lot inventory, by region, as of March 31, 1996.             

                                                                [Download Table]

                     Total Inventory                Lot Inventory       
                                                     Controlled         
                     --------------                 -------------       
Region             Sold        Unsold (F1)          Owned       Optioned
                  ------      ---------            -------      --------
                 (dollars in thousands)               (in units)        
                                                                        
Mid-Atlantic     .$  45,949  $  91,004             1,724        1,682   
Midwest              32,401     40,941             1,890        1,833   
Southeast            29,744     43,560             1,105        3,230   
Southwest            33,264     78,299             3,202        1,684   
West                 49,211    130,027             3,152        2,103   
                  ---------  ---------            ------       ------   
    Total       . $ 190,569  $ 383,831            11,073       10,532   
                  =========  =========            ======       ======   
<FN>                                                                    
(F1) Includes land, model homes and unsold homes under construction.    
</FN>                                                                   

  At March 31, 1996, 77% of the Company's total of 21,605 of building lots
were in New Communities.                                                        

The Company's objective is to maintain a portfolio of building lots to
meet anticipated homebuilding requirements for a period of two to three years.  
Based on 1995 closing volume, the Company's lot inventory at March 31, 1996 is  
sufficient to meet approximately 29 months of homebuilding deliveries. The      
Company utilizes both direct acquisition and option contracts to control        
building lots. The Company's direct land acquisition activities include the     
bulk purchase of finished building lots from land developers and the purchase   
of undeveloped, entitled land from various third parties. Option contract       
agreements are generally limited to finished building lots.                     

Although control of lot inventory through the use of option contracts 
minimizes the Company's investment, such a strategy is not viable in certain    
markets due to the absence of third party land developers. In other markets,    
competitive conditions may preclude the Company from controlling quality        
building lots solely through the use of option contracts. In order to improve   
its land positions, the Company acquires both finished lots on a bulk basis     
and undeveloped, entitled land. The Company utilizes selective development of   
entitled land in order to gain access to prime locations, increase margins and  
position the Company as a leader in the community through its influence over    
the community's character, layout and amenities.                                

  The Company believes that the flexibility afforded by its strong balance
sheet provides it with a competitive advantage over other local and regional    
homebuilders that may not have comparable resources when competing for certain  
land positions. The Company's land acquisition policies seek to avoid           
transactions that involve entitlement risk and are designed to mitigate         
substantial real estate price risk inherent in a lengthy holding, development   
or build-out period.                                                            

 As of December 31, 1995, the Company had deposits and letters of credit
totaling $29.8 million securing options and other commitments to purchase land  
having a total value of $334 million.                                           

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Marketing and Customer Service                                                  

   The Company generally markets its homes to entry level, first and second-
time move-up buyers through targeted product offerings in each of the           
communities in which it operates. The Company's marketing strategy is           
determined during the land acquisition and feasibility stage of a community's   
development. The Company's homes are sold by employees, generally by showing    
furnished model homes.                                                          

Over the past two years, the Company has significantly improved its   
retail presentation. The Company's merchandising strategy includes increased    
utilization of furnished model homes supported by high caliber sales and        
marketing personnel. The Company is augmenting traditional print advertising    
with marketing efforts directed to potential customers actively seeking to      
purchase a new home.                                                            

The Company's sales representatives are supported by a recently       
implemented sales and marketing management information system. This system      
provides the Company with an integrated sales contact management system for     
potential buyers and allows the Company's sales representatives to quickly      
capture buyer data, qualify potential buyers and easily price various model,    
lot and option packages.                                                        

The Company provides each homeowner with a comprehensive one-year     
warranty at the time of sale and a ten-year warranty covering loss related to   
structural defects. The Company believes its warranty program meets or exceeds  
terms customarily offered in the homebuilding industry.                         

Financial Services                                                              

The Company has repositioned its financial services segment through a 
strategy consisting of (i) a focus on retail mortgage loan origination and      
servicing activities, (ii) the divestiture of non-core assets and lines of      
business, (iii) increasing origination volume by leveraging its affiliation     
with the Company's homebuilding segment and (iv) reaching mortgage customers    
directly at the point of sale through the use of technology. RMC's operations   
include retail loan production, loan servicing, related title, escrow and       
closing services and investment activities.                                     

  Loan Production:   RMC's retail loan production activities includes both
builder loans, which originate in connection with the sale of the Company's     
homes, and spot loans, which are unrelated to the financing of homes built by   
the Company. During 1995, RMC originated 9,573 retail mortgage loans totaling   
approximately $1.2 billion (excluding the wholesale operations which were sold  
in the first quarter of 1996). RMC's origination volume included 5,360 loans    
for customers of the Company's homebuilding segment and 4,213 loans for buyers  
of homes other than those built by the Company and for customers seeking        
refinancing of existing mortgage loans.                                         

During 1995, RMC increased its focus on builder loan production by    
deploying RMC loan officers directly in the Company's homebuilding communities  
and by utilizing traffic and prospect information generated by the Company's    
homebuilding sales and marketing staff. RMC's capture rate of the Company's     
homebuilding segment customers increased from 60 percent in 1994 to 67 percent  
during the first quarter of 1996.                                               

The Company arranges various types of mortgage financing including    
conventional, Federal Housing Administration and Veterans Administration        
mortgages with various fixed and adjustable rate structures. The Company's      
mortgage operations are approved by Federal Home Loan Mortgage Corporation,     
Federal National Mortgage Association and Government National Mortgage          
Association. RMC's mortgage origination operations have loan production         
offices, generally co-located with the Company's homebuilding operations.       

 Loan Servicing.   The Company services loans that it originates as well
as loans originated by others. As of March 31, 1996, RMC serviced loans in all  
50 states with a servicing portfolio totaling $6.0 billion. RMC continually     
evaluates the economics of selling versus retaining the rights to service       
loans it originates. The Company expects that it will sell substantially all    
of the servicing rights related to loans it originates during 1996 due to the   
attractive economies currently available in this market.                        

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   Title & Escrow Services.   As of June 1, 1996, the Company had 16 offices
in nine states and captured more than 90% of the title and escrow business      
related to settlement of the Company's homes in those markets in which it       
operates.                                                                       

Management and Employees of the Company                                         

  The following identifies the principal executive officers of the Company
and its business segments.                                                      

Name            Age      Position (date elected to position);         
     Prior Business Experience
-------      ------      ------------------------------------         
Corporate                                                                       
---------                                                                       
R. Chad Dreier       48       Chairman of the Board of the Company (1994),      
                        President and Chief Executive Officer of the
                        Company (1993). Executive Vice President and
                        Chief Financial Officer of Kaufman and Broad
                        Home Corporation and Chairman of Kaufman and
               Broad Mortgage Company (1986-1993).

Michael D. Mangan    39       Executive Vice President and Chief Financial      
                         Officer of the Company (1994). Executive Vice
                          President and Group Chief Financial Officer of
                  GMAC Mortgage Corporation (1991-1994).

David Lesser         40       Executive Vice President, General Counsel and     
                           Secretary of the Company (1995). Executive Vice
                           President and General Counsel of Riggs National
    Corporation (1987-1995).

Homebuilding                                                                    
-----------                                                                     
Timothy R. Doyle     45       Senior Vice President of the Company (1991) and   
                    President of Mid-Atlantic Region (1994).
               President of Midwest Region (1991).

John M Garrity       49       Senior Vice President of the Company and          
                          President of Southeast Region (1994). Division
                        General Manager of Arvida Homes (1992-1994).

William R. Rollo     37       Senior Vice President of the Company and          
                           President of Southwest Region (1994). Executive
                            Vice President of Scott Felder L.P. (1990-1994).

Frank J. Scardina    47       Senior Vice President of the Company (1994),      
                            President of West Region (1996) and President of
          California Region (1994-1996).

Kipling W. Scott     41       Senior Vice President of the Company and          
                       President of Midwest Region (1994). Midwest
                        Region Director of Land Resources & Planning
(1993-1994).        

Financial Services                                                              
------------------                                                              
Michael C. Brown     38       Senior Vice President of the Company and          
                        President of Ryland Mortgage Company (1996).
                      Chief Operating Officer of Ryland Mortgage
                           Company (1995). Senior Vice President of Ryland
         Mortgage Company (1987-1995).

J. Sidney Davenport  54       Vice President of the Company (1984) and          
                       Executive Vice President of Ryland Mortgage
                           Company (1993). Senior Vice President of Ryland
         Mortgage Company (1990-1993).

James R. Fratangelo  37       Senior Vice President of Marketing of Ryland      
              Mortgage Company (1993). Marketing
                     Representative of Ryland Mortgage Company
(1983-1993).        

   At March 31, 1996, the Company employed approximately 2,448 persons, five
percent of whom were employed in corporate staff functions and twenty-five      
percent in the financial services segment. The Company has substantially        
completed a management restructuring and organizational redesign which has      
resulted in significant change in the Company's corporate and homebuilding      
organizations.                                                                  

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 Over the past two years, the Company has replaced a significant portion
of the leadership positions in its local regions and divisions. The Company     
has been successful in recruiting management teams with both substantial        
homebuilding experience and local market knowledge. The Company's region and    
division vice presidents average 18 and 12 years of homebuilding experience,    
respectively. Corporate staff functions have been refocused to more             
effectively support the activities of the Company's homebuilding and financial  
services operations and have been reduced from 217 positions as of December     
31, 1993 to 129 positions as of March 31, 1996.                                 

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DESCRIPTION OF THE NOTES    

The following description of the particular terms of the Notes offered
hereby supplements, and to the extent is inconsistent therewith, replaces the   
descriptions of the general terms and provisions of the Debt Securities set     
forth in the accompanying Prospectus, to which description reference is hereby  
made. Capitalized terms used but not defined herein have the meanings set       
forth in the accompanying Prospectus.                                           

General                                                                         

 The Notes will constitute a series of Senior Debt Securities. The Notes
will be limited to $100 million aggregate principal amount and will mature on   
, 2006. The Notes will be general unsecured obligations of the Company and      
will be issued in fully registered form in denominations of $1,000 or any       
amount in excess thereof that is an integral multiple of $1,000.                

  The Notes are being issued under an indenture dated as of June    , 1996
between the Company and Chemical Bank, as trustee (the ''Senior Trustee''), as  
supplemented by resolutions setting forth the terms of the Notes duly adopted   
by the Finance Committee of the Board of Directors of the Company (as so        
supplemented, the ''Senior Indenture''). The Notes are subject to all such      
terms and prospective purchasers are referred to the Senior Indenture for a     
statement thereof.                                                              

 The following statements relating to the Notes and the Senior Indenture
are summaries and do not purport to be complete. Such summaries are qualified   
in their entirety by express reference to the Senior Indenture. A copy of the   
Senior Indenture is filed with the Commission.                                  

Interest                                                              

   The Notes will bear interest from         , 1996 at the rate shown on the
cover page of this Prospectus Supplement, payable semi-annually on October 1    
and April 1 (each, an ''Interest Payment Date'') of each year, commencing on    
October 1, 1996, to Holders of record at the close of business on the           
September 15 and March 15 immediately preceding each Interest Payment Date.     
The Notes will mature on          , 2006.                                       

Optional Redemption                                                   

 The Notes may be redeemed at any time on or after         ,         and
prior to maturity at the option of the Company, in whole or in part, on not     
less than 30 nor more than 60 days' prior notice, mailed by first-class mail    
to the Holders' last addresses as they shall appear upon the register, at the   
following redemption prices (expressed as percentages of the principal amount)  
plus accrued and unpaid interest, if any, to the date fixed for redemption:     

If redeemed during the 12-month period beginning         , in the year          
indicated, the redemption price shall be:                                       

Year                             Percentage                           
             %

   If less than all of the Notes are to be redeemed, the Trustee will select
the Notes to be redeemed on a pro rata basis. The Trustee will mail a notice    
of redemption to each Holder of Notes, which notice will specify the portion    
of the principal amount of such Notes to be redeemed.                           

 The Notes will not be subject to the operation of any mandatory sinking
fund.                                                                           

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Certain Covenants                                                               

Disposition of Proceeds of Asset Sales                                

The Notes will provide, subject to the provisions of the Indenture    
described under the caption ''Limitations on Mergers and Consolidations'',      
that the Company will not, and will not permit any Restricted Subsidiary to,    
directly or indirectly, make any Asset Sale unless (i) the Company or the       
Restricted Subsidiary, as the case may be, receives consideration at the time   
of such Asset Sales at least equal to the fair market value for the shares or   
assets sold or otherwise disposed of (as determined by the Board of Directors   
of the Company whose determination shall be conclusive and evidenced by a       
resolution of such Board of Directors filed with the Senior Trustee);           
provided, that the aggregate fair market value of the consideration received    
from any Asset Sale that is not in the form of cash or cash equivalents will    
not, when aggregated with the fair market value of all other noncash            
consideration received by the Company and its Restricted Subsidiaries from all  
previous Asset Sales since the date of the issuance of the Notes that has not   
been converted into cash or cash equivalents, exceed 5% of the Consolidated     
Tangible Net Assets of the Company at the time of the Asset Sale under          
consideration and (ii) the Company will apply the aggregate Net Proceeds        
received by the Company or any Restricted Subsidiary from all Asset Sales       
occurring subsequent to the date of the issuance of the Notes as follows: (A)   
to repay any outstanding Indebtedness of the Company that is not subordinated   
to the Notes or other Indebtedness of the Company, or to the payment of any     
Indebtedness of any Restricted Subsidiary, in each case, within one year after  
such Asset Sale or (B) to acquire or improve properties and assets that will    
be used in the businesses of the Company and its Restricted Subsidiaries        
existing on the date of the issuance of the Notes or any business related       
thereto within one year after such Asset Sale. The amount of such Net Proceeds  
neither used to repay the Indebtedness described above nor used or invested as  
set forth in the preceding sentence constitutes ''Excess Proceeds.''            

 The Notes will also provide that, notwithstanding the foregoing, to the
extent the Company or any of its Restricted Subsidiaries receives securities    
or other noncash property or assets as proceeds of an Asset Sale, the Company   
will not be required to make any application of such noncash proceeds required  
by the provisions of the Notes described in the preceding paragraph until it    
receives cash or cash equivalent proceeds from a sale, repayment, exchange,     
redemption or retirement of or extraordinary dividend or return of capital on   
such noncash property. Any amounts deferred pursuant to the preceding sentence  
will be applied in accordance with the provisions of the Notes described in     
the preceding paragraph when cash proceeds are thereafter received from a       
sale, repayment, exchange, redemption or retirement of an extraordinary         
dividend or return of capital on such noncash property.                         

The Notes will also provide that, when the aggregate amount of Excess 
Proceeds equals $5,000,000 or more, the Company will so notify the Trustee in   
writing by delivery of an Officers' Certificate and will offer to purchase      
from all Holders (an ''Excess Proceeds Offer''), and will purchase from         
Holders accepting such Excess Proceeds Offer on the date fixed for the closing  
of such Excess Proceeds Offer (the ''Asset Sale Offer Date''), the maximum      
principal amount (expressed as a multiple of $1,000) of Notes that may be       
purchased out of the Excess Proceeds, at an offer price (the ''Asset Sale       
Offer Price'') in cash in an amount equal to 100% of the principal amount       
thereof plus accrued and unpaid interest, if any, to the Asset Sale Offer       
Date, in accordance with the procedures set forth below. To the extent that     
the aggregate amount of Notes tendered pursuant to an Excess Proceeds Offer is  
less than the Excess Proceeds relating thereto, then the Company may use the    
Excess Proceeds which exceed the aggregate amount of the Notes tendered         
pursuant to such Excess Proceeds Offer for general corporate purposes. Upon     
completion of an Excess Proceeds Offer, the amount of Excess Proceeds will be   
reset at zero.                                                                  

Within 30 days after the date on which the amount of Excess Proceeds  
equals $5,000,000 or more, the Company, or the Trustee at the Company's         
request, will mail or cause to be mailed to all Holders of Notes of record on   
the date such Excess Proceeds equals $5,000,000, a notice of such occurrence    
and of such Holders' rights arising as a result thereof. Such notice will       
contain instructions and materials necessary to enable Holders of Notes to      
tender their Notes to the Company.                                              

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The Notes will also provide that:                                     

 (a) In the event the aggregate principal amount of Notes surrendered by
Holders exceeds the amount of Excess Proceeds, the Company will select the      
Notes to be purchased on a pro rata basis from all Notes so surrendered, with   
such adjustments as may be deemed appropriate by the Company so that only       
Notes in denominations of $1,000, or integral multiples thereof, will be        
purchased. To the extent that the Excess Proceeds remaining are less than       
$1,000, the Company may use such Excess Proceeds for general corporate          
purposes. Holders whose Notes are purchased only in part will be issued new     
Notes equal in principal amount to the unpurchased portion of the Notes         
surrendered.                                                                    

 (b) The Company will not, and will not permit any Restricted Subsidiary
to, create or permit to exist or become effective any restriction (other than   
any restriction set forth in any agreement, indenture, document or instrument   
relating to any Existing Indebtedness or Refinancing Indebtedness with respect  
thereto or entered into in connection with refinancing of the Revolving Credit  
Facility or any successor bank credit facility) that would materially impair    
the ability of the Company to make an Excess Proceeds Offer. Notwithstanding    
the foregoing, if an Excess Proceeds Offer is made, the Company will pay for    
Notes tendered for purchase in accordance with the provisions set forth below.  

   (c) Not later than one Business Day prior to the Asset Sale Offer Date in
connection with which the Excess Proceeds Offer is being made, the Company      
will (i) accept for payment Notes or portions thereof tendered pursuant to the  
Excess Proceeds Offer (on a pro rata basis if required pursuant to the          
provisions of the Notes described in paragraph (a) above), (ii) deposit with    
the Paying Agent money sufficient, in immediately available funds, to pay the   
purchase price of all Notes or portions thereof so accepted and (iii) deliver   
to the Paying Agent an Officers' Certificate identifying the Notes or portions  
thereof accepted for payment by the Company. The Paying Agent will promptly     
after acceptance mail or deliver to Holders of Notes so accepted payment in an  
amount equal to the Asset Sale Offer Price of the Notes purchased from each     
such Holder, and the Company will execute and upon receipt of an Officers'      
Certificate of the Company the Trustee will promptly authenticate and mail or   
deliver to such Holder a new Note equal in principal amount to any unpurchased  
portion of the Note surrendered. Any Notes not so accepted will be promptly     
mailed or delivered by the Paying Agent at the Company's expense to the Holder  
thereof. The Company will publicly announce the results of the Excess Proceeds  
Offer on the Asset Sale Offer Date. For purposes of the provisions of the       
Notes described above, the Company will choose a Paying Agent which will not    
be the Company or a Subsidiary thereof.                                         

(d) Any Excess Proceeds Offer will be conducted by the Company in     
compliance with applicable tender offer rules, including Section 14(e) of the   
Exchange Act and Rule 14e-1 thereunder.                                         

(e) Whenever Excess Proceeds are received by the Company, and prior to
the allocation of such Excess Proceeds pursuant to the provisions set forth     
above, such Excess Proceeds will be set aside by the Company in a separate      
account to be held in trust for the benefit of the Holders; provided however,   
that in the event the Company will be unable to set aside such Excess Proceeds  
in a separate account because of provisions of applicable law or any            
agreement, indenture, document or instrument relating to Existing Indebtedness  
or Refinancing Indebtedness with respect thereto, the Company will not be       
required to set aside such Excess Proceeds.                                     

  There can be no assurance that sufficient funds will be available at the
time of an Excess Proceeds Offer to make any required repurchases or that such  
repurchases will not be prohibited by another debt agreement of the Company.    
The Company's failure to make any required repurchases in the event of an       
Excess Proceeds Offer will create an Event of Default under the Senior          
Indenture.                                                                      

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Limitation on Restricted Payments                                     

The Notes will provide that neither the Company nor its Restricted    
Subsidiaries shall make any Restricted Payment if, at the time of such          
Restricted Payment, or after giving effect thereto, (i) an Event of Default     
shall have occurred and be continuing; or (ii) the aggregate amount of          
Restricted Payments subsequent to the date of the Senior Indenture would        
exceed the sum of: (a) 50% of the Consolidated Net Income (or, in case such     
Consolidated Net Income shall be a deficit, minus 100% of such deficit) of the  
Company (excluding cash dividends and distributions from Unrestricted           
Subsidiaries) accrued on a cumulative basis subsequent to March 31, 1996, (b)   
the aggregate net cash proceeds, including the fair market value of property    
other than cash (as determined by the Board of Directors of the Company whose   
determination shall be conclusive and evidenced by a resolution of such Board   
of Directors filed with the Senior Trustee), received by the Company from the   
issue or sale after March 31, 1996, of Capital Stock of the Company, including  
Capital Stock of the Company issued upon the conversion of indebtedness of the  
Company, but excluding Disqualified Stock, (c) cash dividends and               
distributions received from Unrestricted Subsidiaries after March 31, 1996 up   
to, but not to exceed, the sum of the Company's and its Restricted              
Subsidiaries' previous Investments in the respective Unrestricted Subsidiary    
on the date of the Indenture plus any Investments thereafter made, plus 50% of  
any cash dividends received in excess thereof, (d) the amount of any guarantee  
of Indebtedness or other obligation of any Person that was initially treated    
as a Restricted Payment under this covenant and which has subsequently          
terminated or expired, net of any amounts paid by the Company or a Restricted   
Subsidiary in respect of such guarantee and (e) $50 million; or (iii) the       
Company would be unable to incur an additional $1.00 of Indebtedness pursuant   
to the covenant described in ''Limitation on Incurrence of Indebtedness'';n     
provided however, that the foregoing provisions shall not prevent (a) the       
payment of any dividend or distribution within 60 days after the date of        
declaration thereof, if the payment would have complied with the foregoing      
provisions on the date of such declaration, (b) the retirement of any shares    
of the Company's Capital Stock in exchange for, upon conversion of or out of    
the proceeds of a substantially concurrent sale (other than to a Subsidiary of  
the Company) of other shares of such Capital Stock of the Company (other than   
Disqualified Stock) or (c) the redemption or retirement of Indebtedness of the  
Company which is subordinate in right of payment to the Notes, in exchange      
for, by conversion into, or out of the proceeds of a substantially concurrent   
(x) issue or sale of Capital Stock (other than Disqualified Stock) of the       
Company or (y) incurrence of Refinancing Indebtedness.                          

Limitation on Payment Restrictions Affecting Subsidiaries             

 The Notes will provide that the Company shall not, and shall not permit
any Non-Financial Services Restricted Subsidiary to, make any Investment in     
any Financial Services Subsidiary, if, at the time of such Investment, such     
Financial Services Subsidiary would not be permitted to pay, by dividend,       
distribution, loan payment or otherwise, to the Company or such Non-Financial   
Services Restricted Subsidiary the amount of the Aggregate Net Investment of    
the Company and the Non-Financial Services Restricted Subsidiaries in such      
Financial Services Subsidiary after giving effect to such additional            
Investment. In addition, if at any time the Financial Services Subsidiaries     
are not permitted to, or would by virtue of incurring additional Indebtedness   
become not permitted to, pay, by dividend, distribution, loan payment or        
otherwise, to the Company or its Non-Financial Services Restricted              
Subsidiaries, the amount of the Aggregate Net Investment of the Company and     
the Non-Financial Services Restricted Subsidiaries in the Financial Services    
Subsidiaries, the Financial Services Subsidiaries may not incur any             

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Indebtedness. Notwithstanding the foregoing, the Financial Services             
Subsidiaries may incur Indebtedness during any period in which the Financial    
Services Subsidiaries are not permitted to pay, by dividend, distribution,      
loan payment or otherwise, to the Company and any Non-Financial Services        
Restricted Subsidiary, the amount of the Aggregate Net Investment, if after     
giving effect to such incurrence the total amount of Indebtedness of the        
Financial Services Subsidiaries would be an amount less than or equal to the    
Indebtedness of the Financial Services Subsidiaries on the date the Financial   
Services Subsidiaries first were prohibited from paying to the Company and its  
Non-Financial Services Restricted Subsidiaries the amount of the Aggregate Net  
Investment. For purposes of the foregoing, ''Aggregate Net Investment'' shall   
mean the cumulative amount of any Investment by the Company and its Non-        
Financial Services Restricted Subsidiaries in any such Financial Services       
Subsidiary after July 15, 1992, the date of the Company's Subordinated          
Indenture relating to its outstanding Subordinated Notes, less the cumulative   
amount of any cash dividends or distributions in respect of, or purchases,      
redemptions or retirements of, Capital Stock, or repayment or release of any    
other form of Investment, paid by such Financial Services Subsidiary to the     
Company or its Non-Financial Services Restricted Subsidiaries after July 15,    
1992. As of March 31, 1996, the Aggregate Net Investment based on this          
definition was a negative $93.1 million, reflecting the net dividends and       
distributions paid by the Financial Services Subsidiaries to the Company and    
the Non-Financial Services Restricted Subsidiaries after July 15, 1992.         
Accordingly, the Company and its Non-Financial Services Restricted              
Subsidiaries would be entitled to invest this amount in the Financial Services  
Subsidiaries without restriction. The Notes will further provide that the       
Financial Services Subsidiaries shall not amend, modify or change, or consent   
or agree to any amendment, modification or change to any of the terms of, or    
suffer to exist, any debt instrument to which any of the Financial Services     
Subsidiaries is a party, the effect of which would be to impose restrictions    
on the payment of dividends, directly or indirectly, to or for the benefit of   
the Company which would limit such dividends to an aggregate amount for all     
Financial Services Subsidiaries which are Restricted Subsidiaries in any        
fiscal year which is less than the combined Net Income for the then-current     
fiscal year, determined on a combined basis in accordance with GAAP, of the     
Financial Services Subsidiaries; provided, that provisions which by their       
terms would impose such restrictions only in the event of a default under any   
such debt instrument and solely as a result of such default shall not be        
deemed to be included in this restriction. In addition, the Notes will provide  
that the Restricted Subsidiaries other than the Financial Services              
Subsidiaries shall not amend, modify or change, or consent or agree to any      
amendment, modification or change to any of the terms of, or suffer to exist,   
any debt instrument to which any of such Restricted Subsidiaries is a party,    
the effect of which would be to impose restrictions on the payment of           
dividends, directly or indirectly, to or for the benefit of the Company,        
except for restrictions arising in connection with Refinancing Indebtedness     
which are not more restrictive than those under the agreement creating or       
evidencing the Indebtedness being refunded, refinanced or extended; provided,   
that provisions which by their terms would impose such restrictions only in     
the event of a default under any such debt instrument and solely as a result    
of such default shall not be deemed to be included in the foregoing             
restriction. Notwithstanding the foregoing, any Restricted Subsidiary which is  
acquired by the Company or by any Subsidiary of the Company after the date of   
the issuance of the Notes will not be subject to the restrictions contained in  
the preceding two sentences, so long as that Restricted Subsidiary and any      
other Restricted Subsidiaries acquired after the date of the issuance of the    
Notes which are not subject to such restrictions do not in the aggregate        
contribute greater than 10% of the Company's consolidated EBITDA for any one    
year period consisting of the last four fiscal quarters of the Company and its  
Restricted Subsidiaries for which financial statements are available, measured  
(a) as of the time the Company's quarterly or year end financial statements,    
as applicable, are filed with the Securities and Exchange Commission and (b)    
as of the date of each acquisition (and measured on a pro forma basis giving    
effect to any acquisition of a Restricted Subsidiary not owned for the entire   
period); provided, however, if after any such measurement date identified in    
subparagraph (a), all Restricted Subsidiaries not subject to such restrictions  
shall constitute more than 10% of the Company's consolidated EBITDA as so       
measured on that date, the Company will not be in default of this provision so  
long as the Company is in compliance on the measurement date for the next       
succeeding fiscal quarter, after giving effect to any refinancing, repayment    
or modification of indebtedness of any such Restricted Subsidiaries.            

Maintenance of Consolidated Net Worth                                 

If the Company's Adjusted Consolidated Net Worth at the end of each of
two consecutive fiscal quarters (the last day of such second fiscal quarter     
being referred to as the ''Trigger Date'') is less than $200 million, then the  
Company shall make an offer to acquire (a ''Net Worth Offer'') on a pro rata    
basis on or before the last day of the next following fiscal quarter (the       
''Trigger Payment Date'') Notes in an aggregate principal amount equal to 10%   
of the initial outstanding principal amount of the Notes at a purchase price    
of 100% of principal amount, plus accrued interest to the Trigger Payment       
Date. The Company may credit against its obligation to purchase the Notes       
under these provisions the principal amount of Notes acquired by the Company    
and surrendered for cancellation through purchase, optional redemption or       
exchange subsequent to the Trigger Date. In no event shall the failure to meet  
the minimum Adjusted Consolidated Net Worth requirement set forth above at the  
end of any fiscal quarter be counted toward the making of more than one such    
offer.                                                                          

Limitation on Transactions with Affiliates                            

The Company may not, and may not permit any Restricted Subsidiary to, 
directly or indirectly, knowingly (other than pursuant to contractual           
arrangements in effect on the date of the issuance of the Notes) conduct any    
business or enter into any transaction or series of related transactions with   
any officer or director or any beneficial owner of 10% or more of any class of  
Capital Stock of the Company or with any Affiliate of any such owner known to   
the Company or its Restricted Subsidiaries (other than the Company or a         
Restricted Subsidiary) unless (i) the terms of such business, transaction or    
series of transactions are as favorable to the Company or such Restricted       
Subsidiary as terms that would be obtainable at the time for a comparable       
transaction or series of related transactions in arm's-length dealings with an  
unrelated third person and (ii) if the business or transaction or series of     
related transactions is in an aggregate amount greater than $10 million, (A)    
the terms thereof are set forth in writing and (B) the Board of Directors has,  
by resolution, determined that such business or transaction or series of        
transactions meets the criterion set forth in (i) above. Notwithstanding the    
foregoing, this provision will not apply to any transaction with an officer or  
director of the Company or of any Subsidiary in their capacity as officer or    
director entered into in the ordinary course of business (including             
compensation and employee benefit arrangements with any officer or director of  
the Company or of any Subsidiary).                                              

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Limitation on Liens                                                   

   The Notes will provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, Incur or suffer to exist any Liens, other    
than Permitted Liens, on any of its or their assets, property, income or        
profits therefrom unless contemporaneously therewith or prior thereto all       
payments due under the Senior Indenture and the Notes are secured on an equal   
and ratable basis with the obligation or liability so secured until such time   
as such obligation or liability is no longer secured by a Lien.                 

Limitation on Guarantees                                              

The Company will not, and will not permit any of its Restricted       
Subsidiaries to, directly or indirectly, guarantee any payments of or on the    
Indebtedness of any Financial Services Subsidiary or any Unrestricted           
Subsidiary. Notwithstanding the foregoing, any Financial Services Subsidiary    
may, directly or indirectly, guarantee any payments of or on the Indebtedness   
of any other Financial Services Subsidiary.                                     

Limitation on Incurrence of Indebtedness                              

The Company will not, and will not permit any of its Restricted       
Subsidiaries to, Incur any Indebtedness; provided, that the Company may Incur   
Indebtedness if, after giving effect to the incurrence and the receipt and      
application of the proceeds thereof, either (i) the Fixed Charge Coverage       
Ratio for the Company and its Restricted Subsidiaries (determined on a pro      
forma basis for the last four fiscal quarters of the Company and its            
Restricted Subsidiaries for which financial statements are available at the     
date of determination) is greater than 2 to 1 or (ii) the ratio of              
Indebtedness of the Company and the Restricted Subsidiaries (excluding, for     
purposes of this calculation, Indebtedness of the Financial Services            
Subsidiaries) to Adjusted Consolidated Net Worth of the Company is less than    
2.5 to 1. Notwithstanding the foregoing, the Company and its Restricted         
Subsidiaries may Incur: (i) Existing Indebtedness; (ii) Non-Recourse            
Indebtedness, (iii) Indebtedness of the Financial Services Subsidiaries; (iv)   
Refinancing Indebtedness (provided, that for purposes of this clause (iv),      
application of the proceeds from the sale of assets of the Company or its       
Restricted Subsidiaries in the ordinary course of business to reduce            
Indebtedness and the subsequent reborrowing within six months to purchase       
assets in the ordinary course of business shall be deemed to be Refinancing     
Indebtedness), (v) outstanding Indebtedness of a Restricted Subsidiary          
acquired by the Company after the date of the issuance of the Notes which,      
when taken together with all other Indebtedness Incurred pursuant to this       
clause (v) and not subsequently repaid or replaced by the Company, is not in    
excess of 10% of Homebuilding Assets and is Incurred and outstanding on or      
prior to the date on which such Restricted Subsidiary was acquired by the       
Company (other than Indebtedness Incurred as consideration in, or to provide    
all or any portion of the funds or credit support utilized to consummate, the   
transaction or series of related transactions pursuant to which such            
Restricted Subsidiary became a Subsidiary or was otherwise acquired by the      
Company); provided, however, that at the time such Restricted Subsidiary is     
acquired by the Company, the Company would have been able to Incur at least $1  
of additional Indebtedness under the Fixed Charge Coverage Ratio described      
under the caption ''Limitation on Incurrence of Indebtedness'' after giving     
effect to the Incurrence of such Indebtedness pursuant to this clause (v) and   
(vi) Indebtedness to the Company or to Restricted Subsidiaries.                 

Change of Control                                                     

Upon the occurrence of a Change of Control, the Company shall offer (a
''Change of Control Offer'') to purchase all outstanding Notes at a purchase    
price equal to 101% of the aggregate principal amount of the outstanding        
Notes, plus accrued and unpaid interest to the date of purchase.                

 Within 30 days after any Change of Control, the Company, or the Trustee
at the Company's request, will mail or cause to be mailed to all Holders of     
Notes of record on the date of the Change of Control a notice of the            
occurrence of such Change of Control and of the Holders' rights arising as a    
result thereof. Such notice will contain instructions and materials necessary   
to enable Holders of Notes to tender their Notes to the Company. Any Change of  
Control Offer will be conducted in compliance with applicable tender offer      
rules, including Section 14(e) of the Exchange Act and Rule 14e-1 thereunder.   

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Limitations on Mergers and Consolidations                             

The Notes will provide that the Company will not consolidate with or  
merge into any other corporation or convey, transfer or lease its properties    
and assets substantially as an entirety to any Person (other than a transfer    
of properties and assets to one or more wholly-owned Subsidiaries of the        
Company), and the Company shall not permit any Person to consolidate with or    
merge into the Company or convey, transfer or lease its properties and assets   
substantially as an entirety to the Company, unless: (i) in case the Company    
shall consolidate with or merge into another corporation or convey, transfer    
or lease its properties and assets substantially as an entirety to any Person   
(other than a transfer of properties and assets to one or more wholly-owned     
Subsidiaries of the Company), the corporation formed by such consolidation or   
into which the Company is merged or the Person which acquires by conveyance or  
transfer, or which leases, the properties and assets of the Company             
substantially as an entirety (the ''Successor'') shall be a corporation         
organized and existing under the laws of the United States of America, any      
State thereof or the District of Columbia and shall expressly assume, by an     
indenture supplemental hereto, executed and delivered to the Senior Trustee,    
in form satisfactory to the Senior Trustee, the due and punctual payment of     
the principal of (and premium, if any) and interest on all the Notes and the    
performance of every covenant of the Senior Indenture on the part of the        
Company to be performed or observed; (ii) immediately after giving effect to    
such transaction and treating any Indebtedness which becomes an obligation of   
the Company or a Subsidiary as a result of such transaction as having been      
incurred by the Company or such Subsidiary at the time of such transaction, no  
Event of Default, and no event which, after notice or lapse of time or both,    
would become an Event of Default, shall have occurred and be continuing; (iii)  
immediately after giving effect to such transaction and the use of any net      
proceeds therefrom on a pro forma basis, the Consolidated Net Worth of the      
Company or the Successor, as the case may be, would be at least equal to the    
Consolidated Net Worth of the Company immediately prior to such transaction;    
(iv) the Fixed Charge Coverage Ratio for the Company and its Restricted         
Subsidiaries (determined on a pro forma basis for the last four fiscal          
quarters of the Company and its Restricted Subsidiaries for which financial     
statements are available at the date of determination) of the Company or the    
Successor, as the case may be, immediately after giving effect to such          
transaction, would be such that the Company or the Successor, as the case may   
be, would be entitled to Incur at least $1 of additional Indebtedness under     
the Fixed Change Coverage Ratio test described under the caption ''_Limitation  
on Incurrence of Indebtedness''; and (v) in case the Company shall consolidate  
with or merge into any other corporation or convey, transfer or lease its       
properties and assets substantially as an entirety to any Person (other than a  
transfer of properties and assets to one or more wholly-owned Subsidiaries of   
the Company), the Company has delivered to the Senior Trustee an Officers'      
Certificate and an Opinion of Counsel, each stating that such consolidation,    
merger, conveyance, transfer or lease and such supplemental indenture comply    
with the applicable provisions of the Senior Indenture and that all conditions  
precedent provided for in the Senior Indenture relating to such transaction     
have been complied with.                                                        

Events of Default                                                               

The following shall constitute events of default with respect to the  
Notes: (i) default for a period of 30 days in payment of any interest on any    
Note when due; (ii) default in payment of principal of (or premium, if any,     
on) any Note when due (including any default in payment pursuant to a Change    
of Control Offer, a Net Worth Offer or an Excess Proceeds Offer); (iii)         
default in performance of any other covenant in the Senior Indenture with       
respect to the Notes or in the Notes which continues for 60 days after written  
notice to the Company by the Trustee or by the Holders of at least 25% in       
principal amount of the Notes; (iv) the occurrence of any event that results    
in the acceleration of any Indebtedness (other than Non-Recourse Indebtedness)  
of the Company or any of its Restricted Subsidiaries that has an outstanding    
principal amount of $10 million or more in the aggregate; (v) default in the    
payment of any principal or interest in respect of any Indebtedness of the      
Company or any of its Restricted Subsidiaries (other than Non-Recourse          
Indebtedness) that has an outstanding principal amount of $10 million or more   
and the continuation of such default for ten business days from the date such   
principal or interest payment became due and payable (after giving effect to    
any applicable grace period set forth in the documents governing such           
Indebtedness); and (vi) certain events of bankruptcy, insolvency or             
reorganization.                                                                 

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Certain Definitions                                                             

   ''Adjusted Consolidated Net Worth'' of the Company means the Consolidated
Net Worth of the Company less (i) the pro rata Company owned portion of the     
Consolidated Net Worth of each of the Unrestricted Subsidiaries, and (ii) any   
Investment (other than Investments in Capital Stock) of the Company in each of  
the Unrestricted Subsidiaries.                                                  

''Affiliate'' of any Person means (i) any Person who, directly or     
indirectly, is in control of, is controlled by or is under common control with  
such Person or (ii) any Person who is a director or officer of such Person.     
For purposes of this definition, control of a Person means the power, direct    
or indirect, to direct or cause the direction of the management and policies    
of such Person whether by contract or otherwise; and the terms ''controlling''  
and ''controlled'' have meanings correlative to the foregoing. Notwithstanding  
the foregoing, the term ''Affiliate'' shall not include, with respect to the    
Company or any Restricted Subsidiary, any Subsidiary of the Company.            

  ''Asset Sale'' for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger, consolidation or sale    
and leaseback transaction, and whether by operation of law or otherwise) of     
any of that Person's assets (including, without limitation, the sale or other   
disposition of Capital Stock of any Subsidiary of such Person, whether by such  
Person or such Subsidiary), whether owned on the date of the issuance of the    
Notes or subsequently acquired in one transaction or a series of related        
transactions, in which such Person and/or Subsidiaries receive cash and/or      
other consideration (including, without limitation, the unconditional           
assumption of Indebtedness of such Person and/or its Subsidiaries) having an    
aggregate fair market value of $5,000,000 or more as to such transaction or     
series of related transactions; provided however, (i) sales of homes and sales  
of mortgages on homes in the ordinary course of business consistent with past   
practices will not constitute Asset Sales, (ii) sales, leases, conveyances or   
other dispositions, including, without limitation, exchanges or swaps, of real  
estate or other assets in the ordinary course of business consistent with past  
practices will not constitute Asset Sales, (iii) sales, leases, sale-           
leasebacks or other dispositions of model homes, amenities and other            
improvements at the Company's or its Subsidiaries' communities in the ordinary  
course of business will not constitute Asset Sales and (iv) transactions        
between the Company and any of its Restricted Subsidiaries which are wholly-    
owned Subsidiaries, or among such Restricted Subsidiaries which are wholly-     
owned Subsidiaries of the Company, will not constitute Asset Sales.             

''Capital Stock'' of any Person means any and all shares, interests,  
participations or other equivalents of interests in (however designated) the    
equity (which includes, but is not limited to, common stock, preferred stock    
and partnership and joint venture interests) of such Person.                    

 ''Capitalized Lease Obligations'' of any Person means any obligation of
such Person to pay rent or other amounts under a lease that is required to be   
capitalized for financial reporting purposes in accordance with GAAP, and the   
amount of such obligation will be the capitalized amount thereof determined in  
accordance with GAAP.                                                           

A ''Change of Control'' of the Company will be deemed to have occurred
upon the occurrence of any of the following: (i) whether or not approved by     
the Board of Directors of the Company, any Person or ''group'' within the       
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934  
is or becomes the beneficial owner, directly or indirectly, of securities       
having 30% or more of the voting power of the Common Stock or (ii) there shall  
occur any consolidation of the Company with, or merger of the Company into,     
any other entity, any merger of another entity into the Company, or any sale    
or transfer of all or substantially all of the assets of the Company (other     
than any such sale or transfer to one or more Restricted Subsidiaries of the    
Company), in one transaction or a series of related transactions, to one or     
more Persons (other than (w) a merger which does not result in any              
reclassification, conversion, exchange or cancellation of outstanding shares    
of Common Stock of the Company, (x) a merger which is effected solely to        
change the jurisdiction of incorporation of the Company, (y) the sale or        
transfer of any of the stock or assets of the Limited-Purpose Subsidiaries, or  
(z) a merger pursuant to which the holders of Common Stock of the Company       
prior to the effective date of such merger hold immediately after such          
effective date 70% or more of the class of stock of the surviving entity or     
its parent corporation that is entitled to vote generally for the election of   
directors).                                                                     

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''Common Stock'' of any Person means all Capital Stock of such Person 
that is generally entitled to (i) vote in the election of directors of such     
Person or (ii) if such Person is not a corporation, vote or otherwise           
participate in the selection of the governing body, partners, managers or       
others that will control the management and policies of such Person.            

 ''Consolidated Interest Expense'' of the Company means, for any period,
the aggregate amount of interest which, in conformity with GAAP, would be set   
forth opposite the caption ''interest expense'' or any like caption on an       
income statement for the Company and its Restricted Subsidiaries on a           
consolidated basis (including, but not limited to, imputed interest included    
on capitalized lease obligations, all commissions, discounts and other fees     
and charges owed with respect to letters of credit and bankers' acceptance      
financing, the net costs associated with hedging obligations, amortization of   
other financing fees and expenses, the interest portion of any deferred         
payment obligation, amortization of discount or premium, if any, and all other  
non-cash interest expense (other than interest amortized to cost of sales))     
plus without duplication, all capitalized interest for such period and all      
interest incurred or paid under any guarantee of Indebtedness (including a      
guarantee of principal, interest or any combination thereof) of any Person. In  
making such calculation on a pro forma basis, interest attributable to          
Indebtedness bearing a floating interest rate shall be computed as if the rate  
in effect on the date of computation had been the applicable rate for the       
entire period.                                                                  

''Consolidated Net Income'' of the Company means, for any period, the 
aggregate of the Net Income of the Company and its Restricted Subsidiaries for  
such period, on a consolidated basis, determined in accordance with GAAP,       
provided that (i) the Net Income of any Person which is not a Restricted        
Subsidiary or is accounted for by such Person by the equity method of           
accounting shall be included only to the extent of the amount of dividends or   
distributions paid to the Company or a Restricted Subsidiary by such Person,    
(ii) the Net Income of any Person acquired in a pooling of interests            
transaction for any period prior to the date of such acquisition shall be       
excluded and (iii) the Net Income of any Subsidiary (other than a Financial     
Services Subsidiary) that is subject to restrictions, direct or indirect, on    
the payment of dividends or the making of distributions to such Person shall    
be excluded, except to the extent dividends are actually received by the        
Company or a Restricted Subsidiary from such Subsidiary.                        

''Consolidated Net Worth'' means, with respect to any Person, the     
consolidated net worth of such Person determined in accordance with GAAP.       

  ''Consolidated Tangible Net Assets'' of the Company as of any date means
the total amount of assets of the Company and its Restricted Subsidiaries       
(less applicable reserves) on a consolidated basis at the end of the fiscal     
quarter immediately preceding such date, as determined in accordance with       
GAAP, less: (i) Intangible Assets and (ii) appropriate adjustments on account   
of minority interests of other Persons holding equity investments in            
Restricted Subsidiaries, in the case of each of clauses (i) and (ii) above as   
reflected on the consolidated balance sheet of the Company and its Restricted   
Subsidiaries as of the end of the fiscal quarter immediately preceding such     
date.                                                                           

''Consolidated Tax Expense'' of the Company means, for any period, the
aggregate of the federal, state, local and foreign tax expense of the Company   
and its Restricted Subsidiaries for such period, determined on a consolidated   
basis in accordance with GAAP.                                                  

  ''Disqualified Stock'' means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is       
exchangeable), or upon the happening of any event, matures or is mandatorily    
redeemable, pursuant to a sinking fund obligation or otherwise, or is           
redeemable at the option of the holder thereof, in whole or in part, on or      
prior to the final maturity date of the Notes.                                  

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''EBITDA'' means earnings (loss) before (i) taxes, (ii) interest      
expensed, (iii) amortization of capitalized interest included in cost of        
sales, (iv) equity in earnings (losses) of unconsolidated joint ventures and    
(v) depreciation and amortization.                                              

 ''ESOP Stock'' means the Company's class of Convertible Preferred Stock
outstanding on the date of the Senior Indenture.                                

''Existing Indebtedness'' means all of the Indebtedness of the Company
and its Subsidiaries that is outstanding on the date of the Indenture.          

   ''Financial Services Subsidiaries'' means the Subsidiaries of the Company
engaged in the mortgage banking (including mortgage origination, loan           
servicing, mortgage brokerage and title and escrow businesses), master          
servicing, securities administration, advisory, management and securities       
issuance services and related activities, which as of the date of Indenture     
included RMC but excluded the Limited-Purpose Subsidiaries.                     

 ''Fixed Charge Coverage Ratio'' means, for any period, the ratio of (i)
the sum of Consolidated Net Income, Consolidated Interest Expense and           
Consolidated Tax Expense, plus all depreciation, and without duplication, all   
amortization which includes the allocation of non-cash costs to cost of sales,  
in each case, for such period, of the Company and its Restricted Subsidiaries,  
to (ii) Consolidated Interest Expense of the Company and its Restricted         
Subsidiaries for such period, provided however, that in making such             
computation, the Consolidated Interest Expense attributable to interest on any  
Indebtedness computed on a pro forma basis and bearing a floating interest      
rate shall be computed as if the rate in effect on the date of computation had  
been the applicable rate for the entire period.                                 

  ''GAAP'' means generally accepted accounting principles as in effect and
implemented by the Company.                                                     

A ''guarantee'' by any Person means any obligation, contingent or     
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness  
of any other Person including, without limiting the generality of the           
foregoing, any obligation, direct or indirect, contingent or otherwise, of      
such Person to purchase or pay principal of, or interest on (or advance or      
supply funds or pledge assets for the purchase or payment of or payment of      
interest on), such Indebtedness of such other Person (whether by agreement to   
provide additional capital or to maintain financial condition or other similar  
agreement).                                                                     

''Homebuilding Assets'' means the total assets of the Company's       
homebuilding business segment as reported in its consolidated financial         
statements prepared in accordance with GAAP.                                    

''Incur'' means to, directly or indirectly, create, incur, assume,    
guaranty, extend the maturity of, or otherwise become liable with respect to    
any Indebtedness.                                                               

 ''Indebtedness'' means (i) any liability of any Person (a) for borrowed
money or for the deferred purchase price of property or services (other than    
current liabilities, including trade payables, arising in the ordinary course   
of business) or which is evidenced by a note, bond, debenture or similar        
instrument, and which would appear as a liability upon a balance sheet of such  
Person prepared on a consolidated basis in accordance with GAAP, or (b) for     
the payment of money relating to a Capitalized Lease Obligation; (ii) any       
liability of any Person under any obligation incurred under letters of credit   
not in the ordinary course of business; and (iii) any liability of others       
described in clause (i) or (ii) with respect to which such Person had made a    
guarantee or similar arrangement, directly or indirectly (to the extent of      
such guarantee or arrangement), but does not include obligations in respect of  
performance bonds, banker's acceptances, escrow agreements, letters of credit   
and surety bonds provided in the ordinary course of business. The amount of     
Indebtedness of any Person at any date shall be the outstanding balance at      
such date of all unconditional obligations described above and the maximum      
liability of such Person for any such contingent obligations at such date. To   
the extent such Person guarantees the obligation of another Person to pay       
interest on indebtedness owed by such other Person, then a designated           
percentage of the interest guaranteed or the principal amount of the            
underlying indebtedness, as the case may be, shall be deemed indebtedness of    
the referent Person. For purposes of this definition, the amount of such        
deemed indebtedness of the referent Person shall be equal to the lesser of:     
(a) the aggregate principal amount of the underlying indebtedness relating to   
such interest guarantee or (b) the aggregate amount of interest due and         
payable over the term of such indebtedness (or the term of the Notes, if        
shorter) determined based upon the rate of interest in effect as of the date    
of such determination, together with the maximum prepayment premium or penalty  
which could become due or payable with respect to such indebtedness if such     
indebtedness was prepaid prior to the maturity of the Notes.                    

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  ''Intangible Assets'' of the Company means all unamortized debt discount
and expense, unamortized deferred charges, goodwill, patents, trademarks,       
service marks, trade names, copyrights, write-ups of assets over their          
carrying value at the end of the last fiscal quarter ended prior to the date    
of the issuance of the Notes or the date of acquisition, if acquired            
subsequent thereto, and all other items which would be treated as intangibles   
on the consolidated balance sheet of the Company and its Restricted             
Subsidiaries prepared in accordance with GAAP.                                  

   ''Investments'' means, with respect to any Person, (i) all investments by
such Person in any other Person in the form of loans, advances, capital         
contributions, (ii) all guarantees of Indebtedness or other obligations of any  
other Person by such Person and (iii) all purchases (or other acquisitions for  
consideration) by such Person of Indebtedness, Capital Stock or other           
securities of any other Person and purchases of assets outside the ordinary     
course of business.                                                             

''Lien'' means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind upon or in   
respect of such asset, whether or not filed, recorded or otherwise perfected    
under applicable law (including, without limitation, any conditional sale or    
other title retention agreement, and any lease in the nature thereof, any       
option or other agreement to sell, and any filing of, or agreement to give,     
any financing statement under the Uniform Commercial Code (or equivalent        
statutes) of any jurisdiction).                                                 

''Limited-Purpose Subsidiaries'' means the Subsidiaries of the Company
which facilitate the financing of mortgage loans and mortgage-backed            
securities and the securitization of mortgage-backed bonds and other related    
activities.                                                                     

 ''Net Income'' means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP, excluding, however, (i)     
any gain (but not loss) realized upon the sale or other disposition             
(including, without limitation, dispositions pursuant to sale and leaseback     
transactions) of any real property or equipment of such Person which is not     
sold or otherwise disposed of in the ordinary course of business, and (ii) any  
non-cash gain (but not loss) realized upon the sale or other disposition by     
such Person of any Capital Stock or marketable securities.                      

 ''Net Proceeds'' means cash (in U.S. dollars or freely convertible into
U.S. dollars) received by the Company or any Restricted Subsidiary from an      
Asset Sale net of (i)(a) all brokerage commissions, investment banking fees     
and all other fees and expenses (including, without limitation, fees and        
expenses of counsel and investment bankers) related to such Asset Sale, (b)     
provisions for all income and other taxes measured by or resulting from such    
Asset Sale, (c) payments made to retire Indebtedness where payment of such      
Indebtedness is required in connection with such Asset Sale, (d) amounts        
required to be paid to any Person (other than the Company or a Restricted       
Subsidiary) owning a beneficial interest in the assets subject to the Asset     
Sale and (e) appropriate amounts to be provided by the Company or any           
Restricted Subsidiary thereof, as the case may be, as a reserve, in accordance  
with GAAP, against any liabilities associated with such Asset Sale and          
retained by the Company or any Restricted Subsidiary thereof, as the case may   
be, after such Asset Sale, including, without limitation, pension and other     
post-employment benefit liabilities, liabilities related to environmental       
matters and liabilities under any indemnification obligations associated with   
such Asset Sale, all as reflected in an Officers' Certificate delivered to the  
Trustee and (ii) all noncash consideration received by the Company or any of    
its Restricted Subsidiaries from such Asset Sale upon the liquidation or        
conversion of such consideration received from an Asset Sale into cash,         
without duplication, net of all items enumerated in subclauses (a) through (e)  
of clause (i) hereof.                                                           

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''Non-Financial Services Restricted Subsidiary'' means any Restricted 
Subsidiary which is not a Financial Services Subsidiary.                        

''Non-Recourse Indebtedness'' means Indebtedness or other obligations 
secured by a lien on property to the extent that the liability for such         
Indebtedness or other obligations is limited to the security of the property    
without liability on the part of the Company or any Subsidiary for any          
deficiency, including liability by reason of any agreement by the Company or    
any Subsidiary to provide additional capital or maintain the financial          
condition of or otherwise support the credit of the Subsidiary incurring such   
Indebtedness.                                                                   

''Permitted Liens'' means (i) Liens for taxes, assessments or         
governmental charges or claims that either (a) are not yet delinquent or (b)    
are being contested in good faith by appropriate proceedings and as to which    
appropriate reserves have been established or other provisions have been made   
in accordance with GAAP, (ii) statutory Liens of landlords and carriers',       
warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other     
Liens imposed by law and arising in the ordinary course of business and with    
respect to amounts that, to the extent applicable, either (a) are not yet       
delinquent or (b) are being contested in good faith by appropriate proceedings  
and as to which appropriate reserves have been established or other provisions  
have been made in accordance with GAAP, (iii) Liens (other than any Lien        
imposed by the Employee Retirement Income Security Act of 1974, as amended)     
incurred or deposits made in the ordinary course of business in connection      
with workers' compensation, unemployment insurance and other types of social    
security and deposits securing liability to insurance carriers under insurance  
or self-insurance arrangements, (iv) Liens incurred or deposits made to secure  
the performance of tenders, trade contracts, bids, leases, statutory            
obligations, surety and appeal bonds, progress payments, government contracts   
and other obligations of like nature (exclusive of obligations for the payment  
of borrowed money), in each case incurred in the ordinary course of business    
of the Company and its Subsidiaries, (v) attachment or judgment Liens not       
giving rise to an Event of Default and which are being contested in good faith  
by appropriate proceedings, (vi) easements, rights-of-way, restrictions and     
other similar charges or encumbrances which, in the aggregate, are not          
substantial in amount and which do not materially detract from the value of     
the property subject thereto or are not materially interfering with the         
ordinary course of business of the Company and its Subsidiaries, (vii) zoning   
restrictions, licenses, restrictions on the use of real property or minor       
irregularities in title thereto, which do not materially impair the use of      
such real property in the ordinary course of business of the Company and its    
Subsidiaries or the value of such real property for the purpose of such         
business, (viii) leases or subleases granted to others not materially           
interfering with the ordinary course of business of the Company and its         
Subsidiaries, (ix) purchase money mortgages (including, without limitation,     
Capitalized Lease Obligations and purchase money security interests), (x)       
Liens securing Refinancing Indebtedness; provided, that such Liens only extend  
to assets which are similar to the type of assets securing the Indebtedness     
being refinanced and such refinanced Indebtedness was previously secured by     
such similar assets, (xi) Liens securing Indebtedness of the Company and its    
Restricted Subsidiaries permitted to be incurred under the Senior Indenture;    
provided, that the aggregate amount of Indebtedness secured by Liens (other     
than Non-Recourse Indebtedness secured by Liens) will not exceed 40% of         
Homebuilding Assets, (xii) any interest in or title of a lessor to property     
subject to any Capitalized Lease Obligations incurred in compliance with the    
provisions of the Senior Indenture, (xiii) Liens existing on the date of the    
issuance of the Notes, including, without limitation, Liens securing Existing   
Indebtedness, (xiv) any option, contract or other agreement to sell an asset,   
provided , that such sale is not otherwise prohibited under the Senior          
Indenture, (xv) Liens securing Non-Recourse Indebtedness of the Company or a    
Restricted Subsidiary thereof, (xvi) Liens on property or assets of any         
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary       
owing to the Company or one or more Restricted Subsidiaries, (xvii) Liens       
securing Indebtedness of an Unrestricted Subsidiary, Financial Services         
Subsidiary or Affiliate, (xviii) any right of a lender or lenders to which the  
Company or a Restricted Subsidiary may be indebted to offset against, or        
appropriate and apply to the payment of, such Indebtedness any and all          
balances, credits, deposits, accounts or monies of the Company or a Restricted  
Subsidiary with or held by such lender or lenders and (xix) any pledge or       
deposit of cash or property in conjunction with obtaining surety and            
performance bonds and letters of credit required to engage in constructing on-  
site and off-site improvements required by municipalities or other              
governmental authorities in the ordinary course of business by the Company or   
any Restricted Subsidiary.                                                      

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   ''Person'' means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political     
subdivision thereof.                                                            

''Refinancing Indebtedness'' means Indebtedness that solely refunds,  
refinances or extends, within six months of the repayment of, any Notes,        
Existing Indebtedness or other Indebtedness incurred by the Company or its      
Subsidiaries in accordance with the terms of the Senior Indenture, but only to  
the extent that (i) the Refinancing Indebtedness is subordinated to the Notes   
to the same extent as the Indebtedness being refunded, refinanced or extended,  
if at all, (ii) the Refinancing Indebtedness is scheduled to mature either (a)  
no earlier than the Indebtedness being refunded, refinanced or extended, or     
(b) after the maturity date of the Notes, (iii) the portion, if any, of the     
Refinancing Indebtedness that is scheduled to mature on or prior to the         
maturity date of the Notes has a Weighted Average Life to Maturity at the time  
such Refinancing Indebtedness is incurred that is equal to or greater than the  
Weighted Average Life to Maturity of the portion of the Indebtedness being      
refunded, refinanced or extended that is scheduled to mature on or prior to     
the maturity date of the Notes, (iv) such Refinancing Indebtedness is in an     
aggregate principal amount that is equal to or less than the aggregate          
principal amount then outstanding under the Indebtedness being refunded,        
refinanced or extended and (v) such Refinancing Indebtedness is incurred by     
the same Person that initially incurred the Indebtedness being refunded,        
refinanced or extended except that (a) the Company may incur Refinancing        
Indebtedness to refund, refinance or extend Indebtedness of any Restricted      
Subsidiary, other than the Financial Services Subsidiaries and (b) any          
Restricted Subsidiary may incur Refinancing Indebtedness to refund, refinance   
or extend Indebtedness of any Restricted Subsidiary, except that Indebtedness   
of any Financial Services Subsidiaries may be refinanced only by that           
Subsidiary or another Financial Services Subsidiary.                            

''Restricted Investment'' means Investments in any Unrestricted       
Subsidiary or any Affiliate of the Company.                                     

''Restricted Payment'' means (i) with respect to the Company, any     
Restricted Investment made after the date of the Senior Indenture, any          
dividend, either in cash or in property (except dividends payable in Capital    
Stock (other than Disqualified Stock) of the Company), on, or the making by     
the Company of any other distribution in respect of, its Capital Stock, now or  
hereafter outstanding, or the redemption, repurchase, retirement or other       
acquisition for value by the Company or any Subsidiary, directly or             
indirectly, of the Company's Capital Stock or any warrants, rights (other than  
exchangeable or convertible indebtedness of the Company), or options to         
purchase or acquire shares of any class of the Company's Capital Stock, now or  
hereafter outstanding, and (ii) with respect to any Restricted Subsidiary, any  
Restricted Investment made after the date of the Indenture, any dividend,       
either in cash or property (except (x) dividends payable in Capital Stock,      
other than Disqualified Stock, of such Subsidiary and (y) dividends or          
distributions payable to the Company or to a Restricted Subsidiary of the       
Company) on, or the making by any Restricted Subsidiary of any other            
distribution in respect of, its Capital Stock, now or hereafter outstanding,    
or the redemption, repurchase, retirement or other acquisition for value,       
directly or indirectly, of such Restricted Subsidiary's Capital Stock or any    
warrants, rights (other than exchangeable or convertible indebtedness of any    
Restricted Subsidiary), or options to purchase or acquire shares of any class   
of such Restricted Subsidiary's Capital Stock now or hereafter outstanding      
(except with respect to such Capital Stock or such warrants, rights or options  
owned by the Company or a Restricted Subsidiary). Notwithstanding the           
foregoing, Restricted Payments shall not include dividends on or distributions  
in respect of, or any redemption, repurchase, retirement or acquisition for     
value of the ESOP Stock.                                                        

   ''Restricted Subsidiaries'' means each of the Subsidiaries of the Company
which is not, as of a determination date, an Unrestricted Subsidiary of the     
Company.                                                                        

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''Senior Debt of the Company'' includes (a) all indebtedness of the   
Company (i) for money borrowed, (ii) evidenced by a note or similar instrument  
given in connection with the acquisition of any business, properties or         
assets, including securities, (iii) evidenced by notes, debentures, bonds or    
other instruments of indebtedness for the payment of which the Company is       
responsible or liable, by guarantees or otherwise, whether outstanding on the   
date of execution of the Indenture or thereafter created, incurred or assumed,  
(iv) with respect to an obligation under a swap agreement to exchange payments  
of a differing rate or rates or in differing currency or currencies, or (v)     
with respect to any other obligation of the Company which by agreement of the   
Company with or for the benefit of the holder of such obligation is expressly   
made superior in right of payment to the Notes, and (b) amendments, renewals,   
modifications, extensions and refundings of any such indebtedness,              
liabilities, obligations or guarantees; unless in any instrument or             
instruments evidencing or securing the same or pursuant to which the same is    
outstanding, or in any such amendment, renewal, extension or refunding, it is   
provided that such indebtedness, liabilities, obligations or guarantees are     
not superior in right of payment to the Notes or that such indebtedness,        
liabilities, obligations or guarantees are pari passu with or junior in right   
of payment to the Notes. Senior Debt does not include (a) any indebtedness,     
liability, guarantee or obligation of the Company to any Subsidiary or to an    
Affiliate of the Company or any Subsidiary of the Affiliate or (b) any          
indebtedness, liability, guarantee or obligation of the Company, which          
provides by its terms that such indebtedness, liability, guarantee or           
obligation is subordinated in right of payment to any other indebtedness,       
liability, guarantee or obligation of the Company.                              

  ''Subsidiary'' means (i) a corporation, the majority of the Common Stock
of which is owned, directly or indirectly through other subsidiaries, by the    
Company or a subsidiary of the Company, and (ii) any entity other than a        
corporation, the majority of the Common Stock of which is owned, directly or    
indirectly through other subsidiaries, by the Company or a subsidiary of the    
Company.                                                                        

   ''Unrestricted Subsidiaries'' means (a) the Limited-Purpose Subsidiaries,
(b) each of the Subsidiaries so designated by a resolution adopted by the       
Company's Board of Directors and whose creditors have no direct or indirect     
recourse (including, but not limited to, recourse with respect to the payment   
of principal or interest on Indebtedness of such Subsidiary) to the Company or  
a Restricted Subsidiary and (c) any Subsidiary of an Unrestricted Subsidiary.   
The Board of Directors of the Company may designate an Unrestricted Subsidiary  
to be a Restricted Subsidiary, provided that any such redesignation shall be    
deemed to be an incurrence by the Company and its Restricted Subsidiaries of    
the Indebtedness (if any) of such redesignated Subsidiary for purposes of the   
Limitation of Incurrence of Indebtedness covenant in the Senior Indenture as    
of the date of such redesignation. Subject to the foregoing, the Board of       
Directors of the Company also may designate any Restricted Subsidiary to be an  
Unrestricted Subsidiary, provided that (i) all previous Investments by the      
Company and its Restricted Subsidiaries in such Restricted Subsidiary shall be  
deemed to be Restricted Payments at the time of such designation and shall      
reduce the amount available for Restricted Payments under the Limitation on     
Restricted Payments covenant in the Senior Indenture and (ii) immediately       
after giving effect to such designation and reduction of amounts available for  
Restricted Payments under the Limitation on Restricted Payments covenant in     
the Senior Indenture, the Company and its Restricted Subsidiaries could make    
$1 of additional Restricted Payments pursuant to the Limitation on Restricted   
Payments covenant in the Senior Indenture. Any such designation or              
redesignation by the Board of Directors shall be evidenced to the Trustee by    
the filing with the Trustee of a certified copy of the Board Resolution of the  
Company giving effect to such designation or redesignation and officer's        
certificate certifying that such designation or redesignation complied with     
the foregoing conditions and setting forth the underlying calculations of such  
certificate. As of the date of the Senior Indenture, the only Unrestricted      
Subsidiaries are Limited-Purpose Subsidiaries.                                  

''Weighted Average Life to Maturity'' means, when applied to any      
Indebtedness or portion thereof (if applicable) at any date, the number of      
years obtained by dividing (i) the then outstanding principal amount of such    
indebtedness or portion thereof (if applicable) into (ii) the sum of the        
products obtained by multiplying (a) the amount of each then remaining          
installment, sinking fund, serial maturity or other required payment of         
principal, including payment at final maturity, in respect thereof, by (b) the  
number of years (calculated to the nearest one-twelfth) that will elapse        
between such date and the making of such payment.                               

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UNDERWRITING          

Subject to the terms and conditions set forth in an underwriting      
agreement (the ''Underwriting Agreement''), the Company has agreed to sell to   
Dillon, Read & Co. Inc. (''Dillon Read''), Chase Securities Inc. and            
NationsBanc Capital Markets, Inc. (collectively, the ''Underwriters''), and     
the Underwriters have severally agreed to purchase, the respective principal    
amounts of the Notes set forth opposite their names below.                      

                                                                [Download Table]

        Underwriter                            Principal 
                                                Amount   
        -----------                            ----------
                                                         
Dillon, Read & Co. Inc.                                  
Chase Securities Inc.                                    
NationsBanc Capital Markets, Inc.                        
                                             ------------
   Total                                     $100,000,000
                                             ============

 The Underwriting Agreement provides that the Underwriters are obligated
to purchase all the Notes, if any are purchased.                                

The Underwriters propose to offer the Notes directly to the public at the       
initial public offering price set forth on the cover page of this Prospectus    
Supplement and to certain dealers at such price less a concession not in        
excess of       % of the principal amount. The Underwriters may allow, and      
such dealers may reallow, a concession not in excess of       % of the          
principal amount on sales to certain other dealers. The offering of the Notes   
is made for delivery when, as and if accepted by the Underwriters and subject   
to prior sale and to withdrawal, cancellation or modification of the offer      
without notice. The Underwriters reserve the right to reject any offer for the  
purchase of the Notes. After the initial public offering, the public offering   
price and other selling terms may be changed by the Underwriters.               

The Company has agreed to indemnify the Underwriters against certain  
liabilities, including liabilities under the Securities Act of 1933, as         
amended, or to contribute to payments the Underwriters may be required to make  
in respect thereof.                                                             

It is possible that more than 10% of the proceeds from the sale of the
Notes, not including underwriting compensation, will be received by lenders in  
the Company's Revolving Credit Facility who are affiliates of members of the    
National Association of Securities Dealers, Inc. (''NASD'') participating in    
the offering of the Notes. Therefore, the offering of the Notes is being        
conducted pursuant to Article III, Section 44(c)(8) of the NASD Rules of Fair   
Practice. In accordance with this provision, Dillon Read has agreed to act as   
''qualified independent underwriter,'' and the yield on the Notes will be no    
lower than that recommended by Dillon Read, as qualified independent            
underwriter, in compliance with the requirements of Section 3(c) of Schedule E  
to the NASD By-Laws. In connection with the offering of the Notes, Dillon Read  
in its role as qualified independent underwriter has performed due diligence    
investigations and reviewed and participated in the preparation of this         
Prospectus Supplement.                                                          

 Certain of the Underwriters and their respective affiliates have in the
past engaged, and may in the future engage, in investment banking business and  
various financing and banking transactions with the Company in the ordinary     
course of their respective businesses. In particular, Chemical Bank, an         
affiliate of Chase Securities Inc., and NationsBank, N.A., an affiliate of      
NationsBanc Capital Markets, Inc., are agents and two of the lenders under the  
Company's Revolving Credit Facility and will receive their proportionate share  
of any repayment by the Company of amounts outstanding under the Revolving      
Credit Facility from the proceeds of the sale of the Notes. In addition, a      
director of Dillon Read and a director of NationsBank, N.A. serve as directors  
of the Company.                                                                 

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VALIDITY OF THE NOTES     

  The validity of the Notes will be passed upon for the Company by Piper &
Marbury, L.L.P., Baltimore, Maryland, and for the Underwriters by Simpson       
Thacher & Bartlett (a partnership which includes professional corporations),    
New York, New York. Attorneys at Piper & Marbury, L.L.P beneficially own an     
aggregate of approximately 98,200 shares of Common Stock of the Company.        

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$200,000,000

THE RYLAND GROUP, INC.

DEBT SECURITIES 

  The Ryland Group, Inc. (the ''Corporation'') may from time to time offer
up to $200,000,000 aggregate principal amount of its unsecured debt securities  
(the ''Debt Securities'') consisting of debentures, notes and/or other          
unsecured evidences of indebtedness in one or more series. The Debt Securities  
may be offered as separate series in amounts, at prices and on terms to be      
determined in light of market conditions at the time of offering and set forth  
in a Prospectus Supplement or Prospectus Supplements. The Corporation may sell  
Debt Securities to or through underwriters, or to dealers, acting as            
principals for their own accounts, and reserves the right to sell Debt          
Securities directly to other purchasers or through agents on its own behalf.    

This Prospectus will be supplemented and accompanied by a Prospectus  
Supplement which shall set forth with regard to the Debt Securities to be       
offered hereunder, where applicable and relevant, the title, aggregate          
principal amount, denominations, maturity, interest rate (which may be fixed    
or variable) and time of payment of interest, if any, terms for redemption, if  
any, at the option of the Corporation or the holder, any terms for sinking or   
purchase fund payments, any terms for optional or mandatory redemption, any     
listing on a securities exchange, the initial public offering price, the names  
of any underwriters or agents involved in the sale of the Debt Securities, the  
principal amounts, if any, to be purchased by underwriters or agents, the       
compensation, if any, of such underwriters or agents and any other terms in     
connection with the offering and sale of the Debt Securities in respect of      
which this Prospectus is being delivered.                                       

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES   
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS  
A CRIMINAL OFFENSE.                                                             

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED     
THE MERITS OF THIS OFFERING. ANY REPRESENTATION                                 
TO THE CONTRARY IS UNLAWFUL.                                                    

The date of this Prospectus is June 10, 1996.                                   

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 AVAILABLE INFORMATION

The Corporation is subject to the informational requirements of the   
Securities Exchange Act of 1934, as amended (the ''Exchange Act''), and, in     
accordance therewith, files reports, proxy or information statements and other  
information with the Securities and Exchange Commission (the ''Commission'').   
This Prospectus contains information concerning the Corporation but does not    
contain all of the information set forth in the Registration Statement and      
exhibits thereto which the Corporation has filed with the Commission under the  
Securities Act of 1933, as amended (the ''Securities Act''). Such reports and   
other information filed by the Corporation with the Commission can be           
inspected and copied at the public reference facilities maintained by the       
Commission at Room 1024, 450 Fifth St., N.W., Washington, D.C. 20549, and at    
the Regional Offices of the Commission at 7 World Trade Center, New York, New   
York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite      
1400, Chicago, Illinois 60661. Copies of such material can be obtained from     
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,       
Washington, D.C. 20549, at prescribed rates. Such materials can also be         
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad         
Street, New York, New York 10005.                                               

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE             

 The Corporation hereby incorporates by reference in this Prospectus its
(i) Annual Report on Form 10-K for the year ended December 31, 1995 and (ii)    
its Quarterly Report on Form 10-Q for the three months ended March 31, 1996.    

   All documents filed by the Corporation pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and   
prior to the termination of the offering of the Securities shall be deemed to   
be incorporated by reference in this Prospectus and made a part hereof from     
the date of filing of such documents. Any statement contained in a document     
incorporated or deemed to be incorporated by reference herein shall be deemed   
to be modified or superseded for purposes of this Prospectus to the extent      
that a statement contained herein or in any other document subsequently filed   
with the Commission which also is or is deemed to be incorporated by reference  
herein modifies or supersedes such statement. Any such statement so modified    
or superseded shall not be deemed, except as so modified or superseded, to      
constitute a part of this Prospectus.                                           

 The Corporation will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a     
copy of any or all of the documents incorporated by reference herein (not       
including the exhibits to such documents, unless such exhibits are              
specifically incorporated by reference in such documents). Requests for such    
copies should be directed to: Lawrence P. Cates, Director, Investor Relations,  
The Ryland Group, Inc., 11000 Broken Land Parkway, Columbia, Maryland 21044     
(telephone number: (410) 715-7000).                                             

THE CORPORATION         

   Ryland is a leading national homebuilder and a mortgage-related financial
services firm. The Corporation was incorporated in the State of Maryland in     
1967. Its principal executive office is located at 11000 Broken Land Parkway,   
Columbia, Maryland 21044, telephone number (410) 715-7000.                      

RATIO OF EARNINGS TO FIXED CHARGES          

   The ratios of earnings to fixed charges set forth below are computed on a
consolidated basis. On a consolidated basis, the ratios of earnings to fixed    
charges include the earnings and fixed charges of Ryland Mortgage Company and   
subsidiaries, and the Corporation's limited-purpose subsidiaries.               

                                                                [Download Table]

                            Year ended December 31,              Three Months
                                                                    Ended    
                                                                   March 31, 
                       --------------------------------------     -----------
                        1991    1992    1993     1994    1995        1996    
                       -----    ----    -----    -----   ----        ----    
                                                                             
Ratio of Earnings                                                            
   to Fixed Charges     1.00    1.11     -(F1)   1.26      -(F1)      1.00   

<FN>                                                                         
(F1)  For 1993, earnings were insufficient to cover fixed charges by $14.4   
million, primarily due to a provision of $45 million for homebuilding        
inventories and joint venture investments. For 1995, earnings were           
insufficient to cover fixed charges by $47.5 million, primarily due to a $45 
million impairment charge relating to homebuilding inventories and joint     
venture investments.                                                         
</FN>                                                                        

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Earnings available for fixed charges represent earnings before income 
taxes and fixed charges (excluding interest capitalized, net of amortization).  
Fixed charges represent interest incurred, amortization of debt expense, plus   
that portion of rental expense deemed to be the equivalent of interest.         

USE OF PROCEEDS       

 Except as otherwise stated in a Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the general funds of the  
Corporation and will be available for general corporate purposes, including     
the refinancing of existing indebtedness.                                       

DESCRIPTION OF DEBT SECURITIES        

  The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any        
Prospectus Supplement may relate. The particular terms of the Debt Securities   
offered by any Prospectus Supplement (the ''Offered Debt Securities''),         
including the nature of any variations from the following general provisions    
applicable to such Offered Debt Securities, will be described in the            
Prospectus Supplement relating to such Offered Debt Securities.                 

Any Senior Debt Securities (the ''Senior Dept Securities'') are to be 
issued under an Indenture (the ''Senior Indenture'') between the Corporation    
and the trustee identified in the applicable Prospectus Supplement (the         
''Senior Trustee''). Any Subordinated Debt Securities (the ''Subordinated Debt  
Securities'') are to be issued under an Indenture dated as of July 15, 1992     
(the ''Subordinated Indenture'') between the Corporation and First Union        
National Bank of Virginia, as trustee. The Senior Indenture and Subordinated    
Indenture are sometimes referred to collectively as the ''Indenture.'' Each of  
First Union National Bank of Virginia and the Senior Trustee is hereinafter     
referred to as a ''Trustee'' and they are collectively referred to as           
''Trustees.'' Copies of the Indentures are filed as exhibits to the             
Registration Statement of which this Prospectus is a part. The following        
summaries of certain provisions of the Debt Securities and Indentures do not    
purport to be complete and are subject to, and qualified in their entirety by   
reference to, all the provisions of the Indentures, applicable to a particular  
series of Debt Securities, including the definitions therein of certain terms.  
Wherever reference is made to particular sections, articles or defined terms    
of the Indentures, such sections or defined terms are incorporated herein by    
reference. Certain defined terms in the Indentures are capitalized herein and   
have the same meaning as in the Indenture.                                      

General                                                                         

The Indentures do not limit the amount of debentures, notes or other  
evidences of indebtedness which may be issued thereunder. The Indentures        
provide that Debt Securities may be issued from time to time in one or more     
series up to the aggregate principal amount authorized by the Corporation for   
each series. Unless otherwise specified in the Prospectus Supplement, the       
Senior Debt Securities when issued will be unsecured and unsubordinated         
obligations of the Corporation and will rank equally and ratably with all       
other unsecured and unsubordinated indebtedness of the Corporation. The         
Subordinated Debt Securities when issued will be subordinated in right of       
payment to the prior payment in full of all Senior Debt (as defined below) of   
the Corporation, as described under ''Subordination of Subordinated Debt        
Securities'' and in the Prospectus Supplement applicable to an offering of      
Subordinated Debt Securities.                                                   

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The Corporation's financial services and some of its homebuilding     
operations are conducted through subsidiaries and any right of the Corporation  
to receive assets of these subsidiaries upon the liquidation or                 
recapitalization of any such subsidiaries (and the consequent right of holders  
of the Debt Securities to participate in those assets) will be subject to the   
claims of such subsidiary's creditors, except to the extent that the            
Corporation is itself recognized as a creditor of such subsidiary. Even in the  
event the Corporation is recognized as a creditor of a subsidiary, the          
Corporation's claims would still be subject to any security interests in the    
assets of such subsidiary and any indebtedness of such subsidiary senior to     
that of the Corporation. Accordingly, the Debt Securities will in effect be     
subordinated to the claims of indebtedness of such subsidiaries against the     
assets of such subsidiaries. As of March 31, 1996, $834,247,000 of the          
Corporation's consolidated liabilities represents liabilities of such           
subsidiaries.                                                                   

   The Prospectus Supplement relating to the Offered Debt Securities offered
thereby will describe the following terms, where applicable, of the Offered     
Debt Securities: (1) the title of the Offered Debt Securities and the series    
of which the Offered Debt Securities shall be a part; (2) any limit on the      
aggregate principal amount of the Offered Debt Securities; (3) the price        
(expressed as a percentage of the aggregate principal amount thereof) at which  
the Offered Debt Securities will be issued; (4) the date or dates (or manner    
of determining the same) on which the principal of the Offered Debt Securities  
is payable; (5) the rate or rates (which may be fixed or variable) per annum    
(or a manner of determining the same) at which the Offered Debt Securities      
will bear interest, if any, and whether the interest rate on the Offered Debt   
Securities may be reset upon certain designated events; (6) the date from       
which such interest, if any, on the Offered Debt Securities will accrue, the    
dates on which such interest, if any, will be payable, the date on which        
payment of such interest, if any, will commence and the record dates for such   
interest payment dates, if any, and the extent to which, or the manner in       
which, any interest payable on a Global Security on an Interest Payment Date    
will be paid; (7) the place or places where principal of (and premium, if any)  
and interest on the Offered Debt Securities will be payable; (8) the period or  
periods within which, the price or prices at which, and the terms and           
conditions upon which the Offered Debt Securities may be redeemed, in whole or  
in part, at the option of the Corporation; (9) the obligation, if any, of the   
Corporation to redeem or purchase the Offered Debt Securities at the option of  
a Holder thereof, and the period or periods within which, the price or prices   
at which, and the terms and conditions upon which the Offered Debt Securities   
will be redeemed or purchased, in whole or in part, pursuant to such            
obligation; (10) the dates, if any, on which and the price or prices at which   
the Offered Debt Securities will, pursuant to any mandatory sinking fund        
provisions, or may, pursuant to any optional sinking fund provisions or         
pursuant to any purchase fund provisions, be redeemed by the Corporation, and   
the other detailed terms and provisions of such sinking and/or purchase fund;   
(11) the denominations in which the Offered Debt Securities are authorized to   
be issued; (12) if other than the full principal amount thereof, the portion    
of the principal amount of the Offered Debt Securities which will be payable    
upon declaration of acceleration of the maturity thereof; (13) if other than    
the currency of the United States of America, the currency or currencies,       
including composite currencies, in which payment of the principal of (and       
premium, if any) and interest on the Offered Debt Securities will be payable;   
(14) if the amount of payments of principal of (and premium, if any) or         
interest on the Offered Debt Securities may be determined with reference to an  
index, the manner in which such amounts will be determined; (15) whether the    
Offered Debt Securities are to be issued with original issue discount within    
the meaning of Section 1273(a) of the Internal Revenue Code of 1986, as         
amended; (16) whether the Offered Debt Securities are to be issued in whole or  
in part in the form of one or more Global Securities and, if so, the identity   
of the depositary, if any, for such Global Security or Securities; (17) any     
addition to, or modification or deletion of, any Events of Default or           
covenants provided for with respect to the Offered Debt Securities; and (18)    
any other terms of the Offered Debt Securities.                                 

 Debt Securities may be issued under the Indentures at an original issue
discount, that is sold at a discount from their principal amount. Certain       
federal income tax and other considerations applicable thereto will be          
described in the Prospectus Supplement relating to any such Debt Securities.    

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Denominations, Registration and Transfer                                        

Unless otherwise provided in an applicable Prospectus Supplement with 
respect to a series of Offered Debt Securities, the Debt Securities will be     
issuable in fully registered form and in denominations of $1,000 or any         
integral multiple thereof. Offered Debt Securities of a series may be issuable  
in whole or in part in certificate form or in the form of one or more Global    
Securities, as described below under ''Global Securities.''                     

   Offered Debt Securities of any series (other than a Global Security) will
be exchangeable for other Debt Securities of the same series and of a like      
aggregate principal amount and tenor of different authorized denominations.     
Debt Securities may be presented for exchange as provided below, and Debt       
Securities (other than a Global Security) may be presented for registration of  
transfer (with the form of transfer endorsed thereon duly executed) at the      
Corporate Trust Office of the applicable Trustee, without service charge and    
upon payment of any taxes and other governmental charges payable in connection  
therewith. Such transfer or exchange will be effected upon the Trustee (as      
Security Registrar) being satisfied with the documents of title and identity    
of the person making the request.                                               

Payment and Paying Agents                                                       

Unless otherwise indicated in the applicable Prospectus Supplement,   
payment of principal of, and premium, if any, and any interest on Debt          
Securities will be made at the office of such Paying Agent or Paying Agents as  
the Corporation may designate from time to time except that at the option of    
the Corporation payment of any interest may be made (i) by check mailed to the  
address of the Person entitled thereto as such address shall appear in the      
Security Register or (ii) by wire transfer to an account maintained by the      
Person entitled thereto. Unless otherwise indicated in the applicable           
Prospectus Supplement, payment of any installment of interest on Debt           
Securities will be made to the Person in whose name such Debt Security is       
registered at the close of business on the Regular Record Date for such         
interest.                                                                       

Unless otherwise indicated in an applicable Prospectus Supplement, the
applicable Trustee will act as the Corporation's sole Paying Agent through its  
principal office with respect to the Debt Securities. Any Paying Agents         
outside the United States and other Paying Agents in the United States          
initially designated by the Corporation for the Offered Debt Securities will    
be named in an applicable Prospectus Supplement. The Corporation may at any     
time designate additional Paying Agents or rescind the designation of any       
Paying Agent or approve a change in the office through which any Paying Agent   
acts; provided, however, the Corporation will be required to maintain a Paying  
Agent in each Place of Payment for such series.                                 

  All moneys paid by the Corporation to the applicable Trustee or a Paying
Agent for the payment of principal of, and premium, if any, and any interest    
on any Debt Security which remains unclaimed at the end of two years after      
such principal, premium or interest shall have become due and payable will be   
repaid to the Corporation and the Holder of such Debt Security will thereafter  
look only to the Corporation for payment thereof.                               

Global Securities                                                               

  The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with or on behalf  
of a depository (a ''Depository'') identified in the Prospectus Supplement      
relating to such series. Unless otherwise indicated in an applicable            
Prospectus Supplement, Global Securities will be issued in registered form and  
may be issued in either temporary or permanent form.                            

   The specific terms of the depository arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating  
to such series. The Corporation anticipates that the following provisions will  
apply to all depository arrangements.                                           

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Debt Securities which are to be represented by a Global Security to be
deposited with or on behalf of a Depository will be registered in the name of   
such Depository or its nominee. Upon the issuance of a Global Security, the     
Depository for such Global Security will credit the respective principal        
amounts of the Debt Securities represented by such Global Security to the       
accounts of institutions that have accounts with such depository or its         
nominee (''participants''). The accounts to be credited shall be designated by  
the underwriters or agents of such Debt Securities or by the Corporation, if    
such Debt Securities are offered and sold directly by the Corporation.          
Ownership of beneficial interests in such Global Securities will be limited to  
participants or persons that may hold interests through participants.           
Ownership of beneficial interests by participants in such Global Securities     
will be shown on, and the transfer of that ownership interest will be effected  
only through, records maintained by the Depository or its nominee for such      
Global Security. Ownership of beneficial interest in Global Securities by       
persons that hold through participants will be shown on, and the transfer of    
that ownership interest within such participant will be effected only through,  
records maintained by such participant. The laws of some jurisdictions require  
that certain purchasers of securities take physical delivery of such            
securities in definitive form. Such limits and such laws may impair the         
ability to transfer beneficial interests in a Global Security.                  

 So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such depository or such nominee, as   
the case may be, will be considered the sole owner or holder of the Debt        
Securities represented by such Global Security for all purposes under the       
applicable Indenture. Except as set forth below, owners of beneficial           
interests in such Global Securities will not be entitled to have Debt           
Securities of the series represented by such Global Security registered in      
their names, will not receive or be entitled to receive physical delivery of    
Debt Securities of such series in definitive form and will not be considered    
the owners or holders thereof under the applicable Indenture.                   

Payment of principal of, premium, if any, and any interest on Debt    
Securities registered in the name of or held by a Depository or its nominee     
will be made to the Depository or its nominee, as the case may be, as the       
registered owner or the holder of the Global Security. None of the              
Corporation, the Trustee, any Paying Agent or the Security Registrar for such   
Debt Securities will have any responsibility or liability for any aspect of     
the records relating to or payments made on account of beneficial ownership     
interests in a Global Security or for maintaining, supervising or reviewing     
any records relating to such beneficial ownership interests.                    

The Corporation expects that the Depository for a permanent Global    
Security, upon receipt of any payment of principal, premium or interest in      
respect of a permanent Global Security, will credit immediately participants'   
accounts with payments in amounts proportionate to their respective beneficial  
interests in the principal amount of such Global Security as shown on the       
records of such Depository. The Corporation also expects that payments by       
participants to owners of beneficial interests in such Global Security held     
through such participants will be governed by standing instructions and         
customary practices, as is now the case with securities held for the accounts   
of customers in bearer form or registered in ''street name,'' and will be the   
responsibility of such participants.                                            

A Global Security may not be transferred except as a whole by the     
Depository for such Global Security to a nominee of such depository or by a     
nominee of such depository to such depository or another nominee of such        
depository or by such depository or any such nominee to a successor of such     
depository or a nominee of such successor. If a Depository for a permanent      
Global Security is at any time unwilling or unable to continue as depository    
and a successor depository is not appointed by the Corporation with 90 days,    
the Corporation will issue Debt Securities in definitive form in exchange for   
all of the Global Securities representing such Debt Securities. In addition,    
the Corporation may at any time and in its sole discretion determine not to     
have any Debt Securities represented by one or more Global Securities and, in   
such event, will issue Debt Securities in definitive form in exchange for all   
of the Global Securities representing such Debt Securities. Further, if the     
Corporation so specifies with respect to the Debt Securities of a series, an    
owner of a beneficial interest in a Global Security representing Debt           
Securities of a series may, on terms acceptable to the Corporation and the      
Depository for such Global Security, receive Debt Securities of such series in  
definitive form. In any such instance, an owner of a beneficial interest in a   
Global Security will be entitled to physical delivery in definitive form of     
Debt Securities of the Series represented by such Global Security equal in      
principal amount to such beneficial interest and to have such Debt Securities   
registered in its name.                                                         

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Events of Default                                                               

The following shall constitute events of default with respect to Debt 
Securities of any series then Outstanding: (i) default for a period of 30 days  
in payment of any interest on the Debt Securities of such series when due;      
(ii) default in payment of principal of (or premium, if any, on) the Debt       
Securities of such series when due; (iii) default on the deposit of any         
sinking fund payment, when and as due by the terms of a Debt Security of that   
series; (iv) default in performance of any other covenant in the applicable     
Indenture with respect to a series of Debt Securities which continues for 60    
days after written notice to the Corporation by the applicable Trustee or by    
the Holders of at least 25% in principal amount of the Outstanding Debt         
Securities of that series; (v) certain events of bankruptcy, insolvency or      
reorganization; and (vi) such other events as may be established for the Debt   
Securities of a particular series as set forth in the related Prospectus        
Supplement.                                                                     

If an event of default with respect to Debt Securities of any series  
shall occur and be continuing, the applicable Trustee or the Holders of at      
least 25% in principal amount of the Outstanding Debt Securities of such        
series may declare the principal (or, if the Debt Securities of that series     
are Original Issue Discount Securities, such portion of the principal amount    
as may be specified in the terms of that series) of all of the Debt Securities  
of that series to be due and payable immediately. At any time after a           
declaration of acceleration with respect to Debt Securities of any series has   
been made, but before a judgment or decree based on acceleration has been       
obtained, the Holders of a majority in principal amount of the Outstanding      
Debt Securities of that series may, under certain circumstances, rescind and    
annul such acceleration.                                                        

 The Indentures provide that the applicable Trustee will, within 90 days
after the occurrence of a default, give to Holders of the series of Debt        
Securities with respect to which a default has occurred notice of all uncured   
defaults known to it; but, except in the case of a default in the payment of    
principal (including any sinking fund payment) or interest on a series of Debt  
Securities with respect to which such default has occurred, the Trustee shall   
be protected in withholding such notice if it in good faith determines that     
the withholding of such notice is in the interest of such Holders.              

The Indentures provide that the applicable Trustee will be under no   
obligation, subject to the duty of the Trustee during default to act with the   
required standard of care, to exercise any of its rights or powers under the    
applicable Indenture at the request or direction of any of the Holders, unless  
such Holders shall have offered to the Trustee reasonable security or           
indemnity. Subject to such right of indemnification, the Indentures provide     
that the Holders of a majority in principal amount of the Outstanding Debt      
Securities of any series will have the right to direct the time, method and     
place of conducting any proceeding for any remedy available to the Trustee or   
exercising any trust or power conferred upon the Trustee with respect to the    
Debt Securities of that series.                                                 

The Corporation will be required to furnish to the Trustees annually a
statement as to the performance by the Corporation of its obligations under     
the Indentures and as to any default in such performance.                       

Subordination of Subordinated Debt Securities                                   

 Unless indicated in the Prospectus Supplement, the following provisions
will apply to the Subordinated Debt Securities.                                 

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The indebtedness evidenced by the Subordinated Debt Securities will be
subordinated in right of payment to the extent set forth in the Subordinated    
Indenture to the prior payment in full of all Senior Debt of the Corporation.   
Senior Debt is defined in the Subordinated Indenture to include (a) all         
indebtedness of the Corporation (i) for money borrowed, (ii) evidenced by a     
note or similar instrument given in connection with the acquisition of any      
business, properties or assets, including securities, (iii) evidenced by        
notes, debentures, bonds or other instruments of indebtedness for the payment   
of which the Corporation is responsible or liable, by guarantees or otherwise,  
whether outstanding on the date of execution of the Indenture or thereafter     
created, incurred or assumed, (iv) with respect to an obligation under a swap   
agreement to exchange payments of a differing rate or rates or in differing     
currency or currencies, or (v) with respect to any other obligation of the      
Corporation which by agreement of the Corporation with or for the benefit of    
the holder of such obligation is expressly made superior in right of payment    
to the Subordinated Debt Securities, and (b) amendments, renewals,              
modifications, extensions and refundings of any such indebtedness,              
liabilities, obligations or guarantees; unless in any instrument or             
instruments evidencing or securing the same or pursuant to which the same is    
outstanding, or in any such amendment, renewal, extension or refunding, it is   
provided that such indebtedness, liabilities, obligations or guarantees are     
not superior in right of payment to the Subordinated Debt Securities or that    
such indebtedness, liabilities, obligations or guarantees are pari passu with   
or junior in right of payment to the Subordinated Debt Securities. Senior Debt  
does not include (a) the Corporation's 101/2% Senior Subordinated Notes due     
July 15, 2002; (b) the Corporation's 95/8% Senior Subordinated Notes due June   
1, 2004; (c) any indebtedness, liability or obligation of the Corporation to    
any Subsidiary or to an Affiliate of the Corporation or any Subsidiary; or (d)  
any indebtedness, liability, guaranty or obligation of the Corporation, which   
provides by its terms that such indebtedness, liability, guaranty or            
obligation is subordinated in right of payment to any other indebtedness,       
liability, guaranty or obligation of the Corporation. At March 31, 1996, the    
Corporation had outstanding indebtedness in principal amount totaling           
$234,406,000 which would have constituted Senior Debt. The Indentures do not    
limit the amount of Senior Debt which the Corporation may incur.                

In the event of any voluntary or involuntary insolvency or bankruptcy 
proceedings or any receivership, liquidation, reorganization, dissolution or    
other winding-up of the Corporation (whether or not involving insolvency or     
bankruptcy) or similar proceeding relating to the Corporation, its property or  
its creditors as such, the holders of all Senior Debt then outstanding will be  
entitled to receive payment in full of the Senior Debt before the holders of    
the Subordinated Debt Securities are entitled to receive any payment on         
account of the principal of, premium, if any, or interest on the Subordinated   
Debt Securities. In addition, if (a) the principal on any Senior Debt is not    
paid when due or any other default on Senior Debt occurs and is continuing      
which permits the holders of Senior Debt to accelerate its maturity, and (b)    
such non-payment of principal or other default is the subject of a judicial     
proceeding or the Corporation receives notice of such a default, then the       
Corporation may not pay principal or interest on any Subordinated Debt          
Securities or acquire any Subordinated Debt Securities for cash or property     
other than capital stock of the Corporation or other securities that are        
subordinate to the Senior Debt at least to the same extent as the Subordinated  
Debt Securities. If any such notice of default is provided, a similar notice    
of default on any issue of Senior Debt given within nine months thereafter      
shall not be effective. The Corporation may resume payments on and acquire the  
Subordinated Debt Securities upon (a) the cure or waiver of the subject         
default, or (b) the passage of 120 days after the notice of default is given    
if such default has not become the subject of a judicial proceeding and         
payments are otherwise permitted under the Indenture. By reason of the          
foregoing subordination, in the event of insolvency, creditors of the           
Corporation who are not holders of the Subordinated Debt Securities may         
recover more ratably than holders of the Subordinated Debt Securities.          

Defeasance and Discharge                                                        

 The Indentures provide if such provision is made applicable to the Debt
Securities of any series, that the Corporation will be discharged from any and  
all obligations in respect of the Debt Securities of such series (except for    
certain obligations to register the transfer or exchange of Debt Securities of  
such series, to replace stolen, lost or mutilated Debt Securities of such       
series, to maintain paying agencies and to hold monies for payment in trust)    
upon the deposit with the applicable Trustee, or another qualified corporate    
trustee, in trust, of money and/or U.S. Government Obligations which through    
the payment of interest and principal in respect of such U.S. Government        
Obligations in accordance with their terms will provide money in an amount      
sufficient to pay the principal of (and premium, if any), and each installment  
of principal of (and premium, if any) and interest, if any, on the Debt         
Securities of such series on the Stated Maturity of such payments and any       
mandatory sinking fund payments or analogous payments applicable to the Debt    
Securities of such series on the day on which such payments are due and         
payable in accordance with the terms of the applicable Indenture and the Debt   
Securities of such series. Such a trust may only be established if, among       
other things, (i) the Corporation has received from, or there has been          
published by, the Internal Revenue Service a ruling to the effect that Holders  
of the Debt Securities of such series will not recognize income, gain or loss   
for federal income tax purposes as a result of such deposit, defeasance and     
discharge and will be subject to federal income tax on the same amounts and in  
the same manner and at the same times, as would have been the case if such      
deposit, defeasance and discharge had not occurred, and (ii) the Corporation    
has delivered to the Trustee an Opinion of Counsel to the effect that the Debt  
Securities of such series, if then listed on The New York Stock Exchange, will  
not be delisted as a result of such deposit, defeasance and discharge.          

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Modification and Waiver                                                         

   The Corporation is permitted, with the consent of the Holders of not less
than a majority in principal amount of the Outstanding Debt Securities of each  
series affected by the modification or amendment, to supplement the applicable  
Indenture to modify or amend the rights of the Holders of the Debt Securities;  
provided that no such modification or amendment shall, without the consent of   
the Holder of each Outstanding Debt Security affected thereby, (i) change the   
Stated Maturity of the principal of any Outstanding Debt Security or change     
the Redemption Price; (ii) reduce the principal amount of or the rate of        
interest on or any premium payable on redemption of any Outstanding Debt        
Security; (iii) modify the manner of determination of the rate of interest so   
as to affect adversely the interest of a Holder or reduce the amount of the     
principal of an Original Issue Discount Debt Security; (iv) change the place    
or currency of payment of principal of or interest, if any, on any Debt         
Security; (v) impair the right to institute suit for the enforcement of any     
payment on or with respect to any Debt Security; or (vi) reduce the percentage  
in principal amount of Outstanding Debt Securities of any series, the consent   
of whose Holders is necessary to modify or amend the applicable Indenture or    
to waive compliance with, or defaults of, certain restrictive provisions of     
the applicable Indenture.                                                       

   The Holders of a majority in principal amount of an outstanding series of
Debt Securities may, on behalf of all the Holders of such series, waive any     
past default except (i) a default in payment of the principal of (or premium,   
if any) or interest, if any, on any Debt Security of such series, or (ii) a     
default in respect of a covenant or provision of the applicable Indenture       
which cannot be amended or modified without the consent of the Holder of each   
Outstanding Debt Security of such series affected.                              

Consolidation, Merger and Sale of Assets                                        

The Corporation may, without the consent of any Holders of Outstanding
Debt Securities, consolidate or merge with or into, or transfer or lease its    
assets substantially as an entirety to any Person (other than a transfer of     
assets to one or more wholly-owned subsidiaries of the Corporation) and any     
other Person may consolidate or merge with or into, or transfer or lease its    
assets substantially as an entirety to, the Corporation, provided that (i) the  
Person formed by such consolidation or into which the Corporation is merged,    
or the Person which acquires or leases the assets of the Corporation            
substantially as an entirety, is organized under the laws of any United States  
jurisdiction and assumes the Corporation's obligations on the Debt Securities   
and under the applicable Indenture, (ii) after giving effect to the             
transaction, no Event of Default, and no event related to such transaction      
which, after notice or lapse of time or both, would become an Event of          
Default, shall have happened and be continuing, and (iii) certain other         
conditions are met.                                                             

Concerning The Trustees                                                         

The applicable Trustees will act under the Indentures as Security     
Registrar, Authenticating Agent and Paying Agent unless otherwise designated    
by the Corporation.                                                             

Notices                                                                         

 Notices to Holders will be transmitted by mail to the addresses of such
Holders as they appear in the Security Register.                                

Governing Law                                                                   

   The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State in which the principal office of the  
Trustee is located.                                                             

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PLAN OF DISTRIBUTION        

 The Corporation may sell Debt Securities to or through underwriters, or
to dealers, acting as principals for their own accounts, and reserves the       
right to sell Debt Securities directly to other purchasers or through agents    
on its own behalf. The distribution of the Debt Securities may be effected      
from time to time in one or more transactions at a fixed price or prices which  
may be changed from time to time, at market prices prevailing at the time of    
sale, at prices related to such prevailing market prices or at negotiated       
prices. Each Prospectus Supplement will describe the method of distribution of  
the offered Debt Securities.                                                    

  In connection with the sale of Debt Securities, underwriters and dealers
may receive compensation from the Corporation or from purchasers of Debt        
Securities for whom they may act as agents, in the form of discounts,           
concessions or commissions. Underwriters may sell Debt Securities to or         
through dealers, and such dealers may receive compensation in the form of       
discounts, concessions or commissions from the underwriters and/or commissions  
from the purchasers for whom they may act as agents. Underwriters, dealers and  
agents who participate in the distribution of Debt Securities may be deemed to  
be underwriters under the Securities Act and any discounts or commissions       
received by them and any profit on the resale of Debt Securities by them may    
be deemed to be underwriting discounts and commissions under the Securities     
Act. Any such underwriter or agent will be identified and any such              
compensation will be described in the Prospectus Supplement.                    

Under agreements which may be entered into by the Corporation,        
underwriters and agents who participate in the distribution of Debt Securities  
are expected to be entitled to indemnification by the Corporation against       
certain liabilities, including liabilities under the Securities Act.            

If so indicated in the Prospectus Supplement, the Corporation will    
authorize underwriters or other persons acting as the Corporation's agents to   
solicit offers by certain institutions to purchase Offered Debt Securities      
from the Corporation pursuant to contracts providing for payment and delivery   
on a future date. Institutions with which such contracts may be made include    
commercial and savings banks, insurance companies, pension funds, investment    
companies, educational and charitable institutions and others, but in all       
cases such institutions must be approved by the Corporation. The obligations    
of any purchaser under any such contract will be subject to the condition that  
the purchase of the Offered Debt Securities shall not at the time of delivery   
be prohibited under the laws of the jurisdiction to which such purchaser is     
subject. The underwriters and such other agents will not have any               
responsibility in respect of the validity or performance of such contracts.     

VALIDITY OF SECURITIES      

 The legal validity of the Securities offered hereby will be passed upon
for the Corporation by Piper & Marbury, L.L.P., Charles Center South, 36 South  
Charles Street, Baltimore, Maryland 21201.                                      

EXPERTS       

  The consolidated financial statements and schedule of the Corporation at
December 31, 1995 and 1994, and for the three years in the period ended         
December 31, 1995, appearing in the Corporation's Annual Report (Form 10-K)     
have been audited by Ernst & Young LLP, independent auditors, as set forth in   
their reports thereon included therein and incorporated herein by reference.    
Such consolidated financial statements are incorporated herein by reference in  
reliance upon such reports given upon the authority of such firm as experts in  
accounting and auditing.                                                        

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No person is authorized to give any information or to make any representation   
not contained or incorporated by reference in this Prospectus Supplement or     
the Prospectus, and any information or representations other than those         
contained or incorporated by reference herein must not be relied upon as        
having been authorized by the Company or any Underwriter. This Prospectus       
Supplement and the Prospectus do not constitute any offer of any securities     
other than the registered securities to which they relate or an offer to any    
person in any jurisdiction where such an offer would be unlawful. Neither the   
delivery of this Prospectus Supplement or the Prospectus, nor any sales made    
hereunder, shall under any circumstances create any implication that there has  
been no change in the affairs of the Company since the date hereof.             

TABLE OF CONTENTS   

PROSPECTUS SUPPLEMENT     

                                      Page
Prospectus Supplement Summary                             S-3                   
Cautionary Statement Regarding Forward                                          
Looking Statements                                   S-9              
Risk Factors                                              S-9                   
Use of Proceeds                                          S-12                   
Capitalization                                           S-12                   
Management's Discussion and Analysis of                                         
Results of Operations and Financial                                   
Condition                                           S-13              
Business                                                 S-22                   
Description of the Notes                                 S-30                   
Underwriting                                             S-44                   
Validity of the Notes                                    S-45                   

PROSPECTUS                                                                      

Available Information                                       2                   
Incorporation of Certain Documents by                                           
Reference                                              2              
The Corporation                                             2                   
Ratio of Earnings to Fixed Charges                          2                   
Use of Proceeds                                             3                   
Description of Debt Securities                              3                   
Plan of Distribution                                       10                   
Validity of Securities                                     10                   
Experts                                                    10                   

RYLAND    
THE RYLAND GROUP      

$100,000,000      

% Senior Notes due 2006     

PROSPECTUS SUPPLEMENT     

Dillon, Read & Co. Inc.         

Chase Securities Inc.         

NationsBanc Capital Markets, Inc.

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B3’ Filing	Date	First	Last	Other Filings

	6/1/04	53
	7/15/02	53
	10/1/96	1	29
Filed on:	6/28/96			11-K, SC 13D
	6/18/96	1
	6/10/96	1	46
	6/1/96	22	27
	3/31/96	1	53	10-Q
	12/31/95	14	55	10-K405, 11-K, 8-K, DEF 14A
	3/31/95	6	24	10-Q
	1/1/95	3
	12/31/94	4	55	10-K, DEF 14A
	1/1/94	6	12
	12/31/93	3	28	10-K, 11-K, DEF 14A
	7/15/92	33	48
				List all Filings

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Filing Submission 0000085974-96-000013 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Ryland Group Inc – ‘424B3’ on 6/28/96

As of: Friday, 6/28/96 · Accession #: 85974-96-13 · File #: 333-03791

Prospectus — Rule 424(b)(3)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(3)
Filing Table of Contents