<SUBMISSION>
<ACCESSION-NUMBER>0000950147-00-500095
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20000930
<FILING-DATE>20001114
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>MERITAGE CORP
<CIK>0000833079
<ASSIGNED-SIC>6798
<IRS-NUMBER>860611231
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-09977
<FILM-NUMBER>766360
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>6613 N SCOTTSDALE RD
<STREET2>STE 200
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85250
<PHONE>6029988700
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>6613 NORTH SCOTTSDALE ROAD
<STREET2>SUITE200
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85250
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MONTEREY HOMES CORP
<DATE-CHANGED>19970113
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>HOMEPLEX MORTGAGE INVESTMENTS CORP
<DATE-CHANGED>19920703
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>EMERALD MORTGAGE INVESTMENTS CORP
<DATE-CHANGED>19900502
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>e-5667.txt
<DESCRIPTION>QUARTERLY REPORT FOR THE QTR ENDED 9/30/00
<TEXT>

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                          COMMISSION FILE NUMBER 1-9977


                              MERITAGE CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)


                Maryland                                        86-0611231
     (State or Other Jurisdiction                             (I.R.S. Employer
   of Incorporation or Organization)                         Identification No.)


 6613 North Scottsdale Road, Suite 200
          Scottsdale, Arizona                                      85250
(Address of Principal Executive Offices)                         (Zip Code)


                                 (480) 998-8700
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days: Yes [X] No [ ].

As of October 10, 2000,  4,827,209 shares of Meritage  Corporation  common stock
were outstanding.

================================================================================
<PAGE>
                              MERITAGE CORPORATION
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000
                                TABLE OF CONTENTS


                                                                            PAGE
                                                                            ----
PART I. FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS

             Condensed Consolidated Balance Sheets as of
             September 30, 2000 and December 31, 1999........................  3

             Condensed Consolidated Statements of Earnings for the Three
             and Nine Month Periods ended September 30, 2000 and 1999........  4

             Condensed Consolidated Statements of Cash Flows for the Nine
             Month Periods ended September 30, 2000 and 1999.................  5

             Notes to Condensed Consolidated Financial Statements............  6

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS............................. 10

     ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
             MARKET RISK..................................................... 13

PART II. OTHER INFORMATION

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................ 14

SIGNATURES ................................................................. S-1

                                       2
<PAGE>
                                           PART I FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      MERITAGE CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)


                                                     SEPTEMBER 30,  DECEMBER 31,
                                                         2000          1999
                                                       ---------     ---------
                                                      (UNAUDITED)
ASSETS
  Cash and cash equivalents                            $   1,578     $  13,422
  Real estate under development                          222,464       171,012
  Deposits on real estate under option or contract        19,094        15,700
  Receivables                                              1,619         1,643
  Deferred tax asset                                         670           699
  Goodwill                                                17,941        18,742
  Property and equipment, net                              4,727         4,040
  Other assets                                             1,676         1,301
                                                       ---------     ---------

       Total Assets                                    $ 269,769     $ 226,559
                                                       =========     =========
LIABILITIES
  Accounts payable and accrued liabilities             $  44,248     $  41,950
  Customer deposits on sales contracts                    12,561         8,261
  Notes payable                                          106,567        85,937
                                                       ---------     ---------

       Total Liabilities                                 163,376       136,148
                                                       ---------     ---------
STOCKHOLDERS' EQUITY
 Common stock, par value $.01 per share; 50,000,000
  Shares authorized; issued and outstanding -
  5,612,362 shares at September 30, 2000, and
  5,474,906 shares at December 31, 1999                       56            55
 Additional paid-in capital                              101,043       100,407
 Accumulated earnings (deficit)                           15,704        (8,149)
 Less cost of shares held in treasury (785,153
  shares at September 30, 2000, and 186,000 shares
  at December 31, 1999)                                  (10,410)       (1,902)
                                                       ---------     ---------

       Total Stockholders' Equity                        106,393        90,411
                                                       ---------     ---------

Total Liabilities and Stockholders' Equity             $ 269,769     $ 226,559
                                                       =========     =========

      See accompanying notes to condensed consolidated financial statements

                                       3
<PAGE>
                      MERITAGE CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED         NINE MONTHS ENDED
                                            SEPTEMBER 30,             SEPTEMBER 30,
                                      -----------------------     -----------------------
                                         2000          1999          2000          1999
                                      ---------     ---------     ---------     ---------
<S>                                   <C>           <C>           <C>           <C>
Home sales revenue                    $ 134,464     $  76,786     $ 346,919     $ 204,584
Land sales revenue                          944             0         2,601           155
                                      ---------     ---------     ---------     ---------
                                        135,408        76,786       349,520       204,739

Cost of home sales                     (105,574)      (62,232)     (276,924)     (164,295)
Cost of land sales                         (851)            0        (2,321)          (69)
                                      ---------     ---------     ---------     ---------
                                       (106,425)      (62,232)     (279,245)     (164,364)

Home sales gross profit                  28,890        14,554        69,995        40,289
Land sales gross profit                      93             0           280            86
                                      ---------     ---------     ---------     ---------
                                         28,983        14,554        70,275        40,375

Commissions and other sales costs        (7,291)       (4,572)      (19,528)      (12,480)
General and administrative expense       (5,363)       (3,531)      (14,212)      (10,356)
Interest expense                             (2)           (2)           (6)           (4)
Other income, net                           319           362         1,273         1,395
                                      ---------     ---------     ---------     ---------

Earnings before income taxes             16,646         6,811        37,802        18,930
Income taxes                             (6,137)       (2,784)      (13,949)       (8,037)
                                      ---------     ---------     ---------     ---------
Net earnings                          $  10,509     $   4,027     $  23,853     $  10,893
                                      =========     =========     =========     =========

Basic earnings per share              $    2.06     $     .74     $    4.57     $    2.00
                                      =========     =========     =========     =========

Diluted earnings per share            $    1.85     $     .67     $    4.15     $    1.80
                                      =========     =========     =========     =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>
                      MERITAGE CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           NINE MONTHS ENDED
                                                                              SEPTEMBER 30,
                                                                       --------------------------
                                                                         2000             1999
                                                                       ---------        ---------
<S>                                                              <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                                         $  23,853        $  10,893
  Adjustments to reconcile net earnings to net
   cash provided by operating activities:
    Depreciation and amortization                                          2,320            1,608
    Stock option compensation expense                                         73              445
    Decrease in deferred tax asset                                            28            6,363
    Increase in real estate under development                            (51,452)         (75,393)
    Increase in deposits on real estate under option or contract          (3,394)          (6,327)
    (Increase) decrease in receivables and other assets                     (350)              39
    Increase in accounts payable and accrued liabilities                   7,455            1,639
    Increase in customer deposits on sales contracts                       4,300            2,511
                                                                       ---------        ---------
        Net cash used in operating activities                            (17,167)         (58,222)
                                                                       ---------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash paid for merger/acquisition                                        (5,158)          (6,967)

  Purchases of property and equipment                                     (2,206)          (2,273)
                                                                       ---------        ---------
        Net cash used in investing activities                             (7,364)          (9,240)
                                                                       ---------        ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings                                                             318,723          213,469
  Repayment of borrowings                                               (298,093)        (154,940)
  Purchase of treasury shares                                             (8,507)            (113)
  Proceeds from employee stock options exercised                             564              495
                                                                       ---------        ---------
        Net cash provided by financing activities                         12,687           58,911
                                                                       ---------        ---------

Net decrease in cash and cash equivalents                                (11,844)          (8,551)
Cash and cash equivalents at beginning of period                          13,422           12,387
                                                                       ---------        ---------
Cash and cash equivalents at end of period                             $   1,578        $   3,836
                                                                       =========        =========
</TABLE>

      See accompanying notes to condensed consolidated financial statements

                                       5
<PAGE>
                      MERITAGE CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

     We develop, construct and sell new high-quality, single-family homes in the
semi-custom  luxury,   move-up  and  entry-level  markets.  We  operate  in  the
Dallas/Fort  Worth,  Austin and Houston,  Texas markets as Legacy Homes,  in the
Phoenix and Tucson,  Arizona  metropolitan  markets under the Monterey Homes and
Meritage  Homes  of  Arizona  brand  names,  and in the  San  Francisco  Bay and
Sacramento, California markets as Meritage Homes of Northern California.

     BASIS OF PRESENTATION.  The consolidated  financial  statements include the
accounts of Meritage Corporation and its subsidiaries. Intercompany balances and
transactions  have been  eliminated  in  consolidation  and certain prior period
amounts have been reclassified to be consistent with current financial statement
presentation. In the opinion of management, the unaudited condensed consolidated
financial  statements  reflect  all  adjustments,   consisting  only  of  normal
recurring  adjustments,  necessary to fairly present our financial  position and
results of operations for the periods  presented.  The results of operations for
any interim period are not necessarily  indicative of results to be expected for
a full fiscal year.

NOTE 2 - REAL ESTATE UNDER DEVELOPMENT AND CAPITALIZED INTEREST

Real estate under development consisted of the following (in thousands):

                                                     SEPTEMBER 30,  DECEMBER 31,
                                                         2000          1999
                                                       --------      --------
Homes under contract, in production                    $110,654      $ 71,987
Finished home sites and home sites under development     82,370        63,610
Model homes and homes held for resale                    24,392        31,797
Land held for development                                 5,048         3,618
                                                       --------      --------
                                                       $222,464      $171,012
                                                       ========      ========

     We capitalize  certain  interest  costs  incurred  during  development  and
construction. Capitalized interest is allocated to real estate under development
and  charged to cost of sales  when the  property  is  delivered.  Summaries  of
interest capitalized and interest expensed follow (in thousands):

<TABLE>
<CAPTION>
                                                 QUARTER ENDED         NINE MONTHS ENDED
                                                 SEPTEMBER 30,           SEPTEMBER 30,
                                              -------------------     -------------------
                                                2000        1999        2000        1999
                                              -------     -------     -------     -------
<S>                                           <C>         <C>         <C>         <C>
Beginning unamortized capitalized interest    $ 4,911     $ 2,653     $ 3,971     $ 1,982
Interest capitalized                            2,975       1,942       7,617       4,541
Amortized in cost of home and land sales       (2,203)     (1,118)     (5,905)     (3,046)
                                              -------     -------     -------     -------
Ending unamortized capitalized interest       $ 5,683     $ 3,477     $ 5,683     $ 3,477
                                              =======     =======     =======     =======

Interest incurred                             $ 2,977     $ 1,944     $ 7,623     $ 4,545
Interest capitalized                           (2,975)     (1,942)     (7,617)     (4,541)
                                              -------     -------     -------     -------
Interest expensed                             $     2     $     2     $     6     $     4
                                              =======     =======     =======     =======
</TABLE>

                                       6
<PAGE>
                      MERITAGE CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE 3 - NOTES PAYABLE

Notes payable consist of the following (in thousands):

                                                     SEPTEMBER 30,  DECEMBER 31,
                                                          2000         1999
                                                        --------     -------
$100 million bank revolving construction line of
  credit, interest payable monthly approximating
  prime (9.5% at September 30, 2000) or LIBOR (90
  day LIBOR 6.8% at September 30, 2000), plus
  1.75% payable December 31, 2001, secured by
  first deeds of trust on real estate                   $ 71,807     $36,180

$65 million bank revolving construction line of
  credit, interest payable monthly approximating
  prime or LIBOR plus 2.0%, payable at the earlier
  of close of escrow, maturity date of individual
  homes within the line or July 31, 2001, secured
  by first deeds of trust on real estate                  16,164      26,104

$15 million unsecured bank revolving line of credit,
  interest payable monthly at prime, matured
  January 17, 2000                                            --       6,000

Acquisition and development credit facilities and
  seller carry back financing totaling $5.7
  million, interest payable monthly, ranging from
  prime to prime plus .25% or at a fixed 10% per
  annum rate; payable at the earlier of funding of
  construction financing or the maturity date of
  the individual projects, secured by first deeds
  of trust on real estate                                  3,580       2,627

Senior unsecured notes, maturing September 15,
  2005, annual interest of 9.10% payable quarterly,
  principal payable in three equal installments on
  September 15, 2003, 2004 and 2005                       15,000      15,000

Other                                                         16          26
                                                        --------     -------

     Total                                              $106,567     $85,937
                                                        ========     =======

                                       7
<PAGE>
                      MERITAGE CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE 4 - EARNINGS PER SHARE INFORMATION

     A summary of the  reconciliation  from basic  earnings per share to diluted
earnings  per share for the three and nine months ended  September  30, 2000 and
1999 follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                            QUARTER ENDED        NINE MONTHS ENDED
                                                             SEPTEMBER 30,         SEPTEMBER 30,
                                                          ------------------    -------------------
                                                            2000       1999      2000         1999
                                                          -------     ------    -------     -------
<S>                                                       <C>         <C>       <C>         <C>
Net earnings                                              $10,509     $4,027    $23,853     $10,893
Basic EPS - Weighted average shares outstanding             5,097      5,463      5,224       5,448
                                                          -------     ------    -------     -------

Basic earnings per share                                  $  2.06     $  .74    $  4.57     $  2.00
                                                          =======     ======    =======     =======

Basic EPS - Weighted average shares outstanding             5,097      5,463      5,224       5,448
Effect of dilutive securities:
 Contingent shares and warrants                                --         70         25          83
 Stock options                                                582        491        496         527
                                                          -------     ------    -------     -------

Dilutive EPS - Weighted average shares outstanding          5,679      6,024      5,745       6,058
                                                          -------     ------    -------     -------

Diluted earnings per share                                $  1.85     $  .67    $  4.15     $  1.80
                                                          =======     ======    =======     =======

Antidilutive stock options not included in diluted EPS        102        272        265         275
                                                          =======     ======    =======     =======
</TABLE>

NOTE 5 - INCOME TAXES

     Components of income tax expense are (in thousands):

                                     QUARTER ENDED           NINE MONTHS ENDED
                                     SEPTEMBER 30,              SEPTEMBER 30,
                                 --------------------       --------------------
                                  2000          1999          2000         1999
                                 ------       -------       -------       ------
Current taxes:
  Federal                        $5,263       $   724       $12,202       $  964
  State                             710           250         1,719          709
                                 ------       -------       -------       ------
                                  5,973           974        13,921        1,673
                                 ------       -------       -------       ------
Deferred taxes:
  Federal                           147         1,770            25        6,236
  State                              17            40             3          128
                                 ------       -------       -------       ------
                                    164         1,810            28        6,364
                                 ------       -------       -------       ------

  Total                          $6,137       $ 2,784       $13,949       $8,037
                                 ======       =======       =======       ======

                                       8
<PAGE>
                      MERITAGE CORPORATION AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE 6 - SEGMENT INFORMATION

     We classify our operations into three primary geographic  segments:  Texas,
Arizona and California.  These segments  generate  revenues  through the sale of
homes to external customers. We are not dependent on any one major customer.

     Operational   information  relating  to  the  different  business  segments
follows.  Certain  information  has not  been  included  by  segment  due to the
immateriality  of the amount to the  segment or in total.  We  evaluate  segment
performance based on several factors,  of which the primary financial measure is
earnings  before  interest  and taxes  (EBIT).  The  accounting  policies of the
business segments are the same as those described in Notes 1 and 2. There are no
significant transactions between segments.

<TABLE>
<CAPTION>
                                              QUARTER ENDED            NINE MONTHS ENDED
                                              SEPTEMBER 30,              SEPTEMBER 30,
                                         ----------------------     -----------------------
                                           2000          1999          2000         1999
                                         ---------     --------     ---------     ---------
<S>                                      <C>           <C>          <C>           <C>
                                                          (in thousands)
HOME SALES REVENUE:
   Texas                                 $  58,932     $ 43,604     $ 160,643     $ 116,399
   Arizona                                  45,168       26,056        99,367        75,585
   California                               30,364        7,126        86,909        12,600
                                         ---------     --------     ---------     ---------
          Total                          $ 134,464     $ 76,786     $ 346,919     $ 204,584
                                         =========     ========     =========     =========
EBIT:
   Texas                                 $  10,449     $  5,790     $  26,228     $  15,344
   Arizona                                   4,862        2,565         8,619         8,270
   California                                5,033          515        12,975         1,288
   Corporate and other                      (1,493)        (937)       (4,109)       (2,921)
                                         ---------     --------     ---------     ---------
          Total                          $  18,851     $  7,933     $  43,713     $  21,981
                                         =========     ========     =========     =========
AMORTIZATION OF CAPITALIZED INTEREST:
   Texas                                 $     585     $    445     $   1,876     $   1,112
   Arizona                                   1,213          559         2,724         1,750
   California                                  405          114         1,305           184
                                         ---------     --------     ---------     ---------
          Total                          $   2,203     $  1,118     $   5,905     $   3,046
                                         =========     ========     =========     =========

                                                           AT                        AT
                                                       SEPTEMBER 30,             DECEMBER 31,
                                                           2000                     1999
                                                        ---------                 ---------
ASSETS:
   Texas                                                $ 100,809                 $  97,832
   Arizona                                                116,596                    77,195
   California                                              49,785                    43,773
   Corporate                                                2,579                     7,759
                                                        ---------                 ---------
          Total                                         $ 269,769                 $ 226,559
                                                        =========                 =========
</TABLE>

NOTE 7 - RELATED PARTY TRANSACTIONS

     In September  2000,  the Company  purchased  312,500  shares from a current
director at a cost of $5 million. These shares are held as treasury shares.

                                       9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     This Quarterly Report on Form 10-Q contains forward-looking statements. The
words "believe,"  "expect,"  "anticipate," and "project" and similar expressions
identify  forward-looking  statements,  which  speak  only  as of the  date  the
statement was made.  Such  forward-looking  statements are within the meaning of
that term in Section 27A of the  Securities  Act of 1933, and Section 21E of the
Securities  Exchange  Act of 1934.  Such  statements  may  include,  but are not
limited to, projections of revenues, income or loss, capital expenditures, plans
for future  operations,  financing  needs or plans and liquidity,  the impact of
inflation,  the impact of changes  in  interest  rates,  plans  relating  to our
products or services,  potential real property acquisitions,  and new or planned
development projects, as well as assumptions relating to the foregoing.

     Statements in Exhibit 99 to this  Quarterly  Report on Form 10-Q and in our
Annual Report on Form 10-K for the year ended  December 31, 1999,  including the
Notes to the Consolidated Financial Statements and "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations,"  describe  factors,
among others, that could contribute to or cause such differences, which could be
material.   Additional  factors  that  could  cause  actual  results  to  differ
materially from those expressed in such forward-looking statements are described
in  "Business"  and  "Market  for the  Registrant's  Common  Stock  and  Related
Stockholder Matters" in our December 31, 1999 Annual Report on Form 10-K.

     RESULTS OF OPERATIONS

     The following  discussion and analysis provides  information  regarding the
results of our operations for the three and nine months ended September 30, 2000
and 1999. All material balances and transactions between us and our subsidiaries
have  been  eliminated.   In  management's   opinion,   the  data  reflects  all
adjustments,  consisting  of only normal  recurring  adjustments,  necessary  to
fairly present our financial  position and results of operations for the periods
presented.  The results of operations for any interim period are not necessarily
indicative of results expected for a full fiscal year.

     HOME SALES REVENUE

     Home sales  revenue is the product of the number of homes closed during the
period and the average sales price per home.  Comparative home sales revenue for
the third  quarter  and first nine  months of 2000 and 1999  follow  (dollars in
thousands):

<TABLE>
<CAPTION>
                           QUARTER ENDED                               NINE MONTHS ENDED
                           SEPTEMBER 30,     DOLLAR/UNIT  PERCENTAGE     SEPTEMBER 30,       DOLLAR/UNIT  PERCENTAGE
                       -------------------    INCREASE     INCREASE   --------------------     INCREASE    INCREASE
                         2000        1999    (DECREASE)   (DECREASE)    2000        1999      (DECREASE)  (DECREASE)
                       --------    -------    --------    ----------  --------    --------    ---------   ----------
<S>                    <C>         <C>        <C>        <C>          <C>         <C>         <C>             <C>
Total
  Dollars              $134,464    $76,786    $57,678         75%     $346,919    $204,584    $142,335        70%
  Homes closed              588        399        189         47%        1,553       1,030         523        51%
  Average sales price  $  228.7    $ 192.5    $  36.2         20%     $  223.4    $  198.6    $   24.8        12%

Texas
  Dollars              $ 58,932    $43,604    $15,328         35%     $160,643    $116,399    $ 44,244        38%
  Homes closed              334        283         51         18%          939         758         181        24%
  Average sales price  $  176.4    $ 154.1    $  22.4         15%     $  171.1    $  153.6    $   17.5        11%

Arizona
  Dollars              $ 45,168    $26,056    $19,112         73%     $ 99,367    $ 75,585    $ 23,782        31%
  Homes closed              165         97         68         70%          361         238         123        52%
  Average sales price  $  273.7    $ 268.6    $   5.1          2%     $  275.3    $  317.6    $  (42.3)      (13)%

California
  Dollars              $ 30,364    $ 7,126    $23,238        326%     $ 86,909    $ 12,600    $ 74,309       590%
  Homes closed               89         19         70        368%          253          34         219       644%
  Average sales price  $  341.2    $ 375.1    $ (33.9)        (9)%    $  343.5    $  370.6    $  (27.1)       (7)%
</TABLE>
                                       10
<PAGE>
     The increase in total home sales revenue and number of homes closed in 2000
compared to 1999 results  mainly from strong  market  performance  in all of our
divisions and additional  closings from our expanding  mid-priced market segment
in Arizona.

     HOME SALES GROSS PROFIT

     Gross profit is home sales  revenue,  net of housing  cost of sales,  which
include  developed home site costs,  home  construction  costs,  amortization of
common  community costs (such as the cost of model complexes and  architectural,
legal and zoning costs),  interest,  sales tax, warranty,  construction overhead
and closing  costs.  Comparative  2000 and 1999  housing  gross  profit  follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                            QUARTER ENDED SEPTEMBER 30,              NINE MONTHS ENDED SEPTEMBER 30,
                                     ----------------------------------------    ----------------------------------------
                                                         DOLLAR/                                     DOLLAR/
                                                       PERCENTAGE  PERCENTAGE                      PERCENTAGE  PERCENTAGE
                                     2000      1999     INCREASE    INCREASE     2000      1999     INCREASE    INCREASE
                                     ----      ----     --------    --------     ----      ----     --------    --------
<S>                                <C>       <C>        <C>            <C>     <C>       <C>        <C>            <C>
Dollars                             $28,890   $14,554    $14,336       99%     $69,995   $40,289     $29,706       74%
Percentage of home sales revenues      21.5%     19.0%       2.5%      --         20.2%     19.7%         .5%      --
</TABLE>

     The dollar  increase in gross  profit for the three and nine  months  ended
September 30, 2000 over the prior year periods is  attributable  to the increase
in number of homes closed. The gross profit margin increased  marginally in both
periods  due to an  increase  in gross  margins in Texas and  California  caused
mainly by home sale price  increases and due to a larger number of deliveries of
high margin California homes.

     LAND SALES GROSS PROFIT

     Meritage will occasionally sell land that the Company originally  purchased
for development.  These lots are no longer needed for use in current operations,
and are therefore considered to be excess.

     COMMISSIONS AND OTHER SALES COSTS

     Commissions  and other sales costs,  such as advertising  and sales offices
expenses, were approximately $7.3 million, or 5.4% of home sales revenue for the
three months ended  September 30, 2000  compared  with $4.6 million,  or 6.0% of
home sales revenue for the third  quarter of 1999.  For the first nine months of
2000,  commissions and other sales costs were  approximately  $19.5 million,  or
5.6% of home sales revenue,  compared with $12.5 million,  or 6.1% of home sales
revenue for the first nine months of 1999.  The decrease in these  expenses as a
percentage  of home  sales  revenue  was  caused  by  controlling  increases  in
advertising and other marketing costs, while revenues expanded.

     GENERAL AND ADMINISTRATIVE EXPENSES

     General and  administrative  expenses were approximately $5.4 million (4.0%
of revenue) in the third quarter of 2000, as compared  with  approximately  $3.5
million (4.6% of revenue) in 1999. For the nine months ended September 30, 2000,
G&A expenses were approximately  $14.2 million (4.1% of revenue),  compared with
$10.4 million (5.1% of revenue) for the same period of 1999.  The higher expense
as a percentage of revenue for the nine months ended September 30, 1999 includes
approximately  $600,000  related to the buyout of an  employment  agreement of a
former  managing  director.  Operating  costs  in 1999  were  also  higher  as a
percentage  of  revenue  due  to  overhead  increases  incurred  related  to our
California expansion,  and the start-up of our new Meritage Division in Phoenix,
Arizona.

     INCOME TAXES

     The  increases  in income tax expense for the quarter and nine months ended
September  30, 2000 from prior  year's  periods  were  caused by higher  taxable
income offset by a slightly lower effective tax rate.

     SALES CONTRACTS

     Sales  contracts  for any period  represent  the number of homes ordered by
customers (net of cancellations)  multiplied by the average sales price per unit
ordered.   Comparative   2000  and  1999  sales  contracts  follow  (dollars  in
thousands):

                                       11
<PAGE>
<TABLE>
<CAPTION>
                           QUARTER ENDED                                  NINE MONTHS ENDED
                           SEPTEMBER 30,                                    SEPTEMBER 30,
                         ----------------   DOLLAR/UNIT  PERCENTAGE      ----------------    DOLLAR/UNIT  PERCENTAGE
                         2000        1999    INCREASE     INCREASE       2000        1999      INCREASE    INCREASE
                         ----        ----    --------     --------       ----        ----      --------    --------
<S>                    <C>         <C>       <C>         <C>           <C>         <C>         <C>            <C>
Total
  Dollars              $173,930    $93,955   $79,975        85%        $470,601    $295,969    $174,632       59%
  Units ordered             731        405       326        81%           1,950       1,455         495       34%
  Average sales price  $  237.9    $ 232.0   $   5.9         3%        $  241.3    $  203.4    $   37.9       19%

Texas
  Dollars              $ 71,684    $36,562   $35,122        96%        $190,166    $156,178    $ 33,988       22%
  Units ordered             422        219       203        93%           1,094         996          98       10%
  Average sales price  $  169.9    $ 166.9   $   2.9         2%        $  173.8    $  156.8    $   17.0       11%

Arizona
  Dollars              $ 59,912    $39,027   $20,885        54%        $148,771    $100,265    $ 48,506       48%
  Units ordered             194        132        62        47%             474         344         130       38%
  Average sales price  $  308.8    $ 295.7   $  13.2         5%        $  313.9    $  291.5    $   22.4        8%

California
  Dollars              $ 42,334    $18,366   $23,968       131%        $131,664    $ 39,526    $ 92,138      233%
  Units Ordered             115         54        61       113%             382         115         267      232%
  Average sales price  $  368.1      340.1   $  28.0         8%        $  344.7    $  343.7    $    1.0        *
</TABLE>

* Represents less than one percent

     We do not include sales  contingent upon the sale of a customer's  existing
home as a sales contract until the contingency is removed. Historically, we have
experienced a  cancellation  rate of  approximately  25% or less of gross sales.
Total  sales  contracts  increased  in 2000  compared  to 1999 due mainly to the
expansion into  California and the start-up of our mid-priced  Meritage  Phoenix
division,  along with  continued  economic  strength in our  operating  markets,
particularly Texas.

     NET SALES BACKLOG

     Backlog  represents net sales  contracts that have not closed.  Comparative
September 30, 2000 and 1999 net sales backlog follows (dollars in thousands):

                              AT SEPTEMBER 30,     DOLLAR/UNIT    PERCENTAGE
                              ----------------      INCREASE       INCREASE
                              2000       1999      (DECREASE)     (DECREASE)
                              ----       ----      ----------     ----------
Total
  Dollars                   $344,566   $236,524     $108,042          46%
  Homes in backlog             1,390      1,113          277          25%
  Average sales price       $  247.9   $  212.5     $   35.4          17%

Texas
  Dollars                   $123,505   $116,957     $  6,548           6%
  Homes in backlog               721        741          (20)         (3)%
  Average sales price       $  171.3   $  157.8     $   13.5           9%

Arizona
  Dollars                   $143,722   $ 90,904     $ 52,818          58%
  Homes in backlog               437        286          151          53%
  Average sales price       $  328.9   $  317.8     $   11.0           4%

California
  Dollars                   $ 77,339   $ 28,663     $ 48,676         170%
  Homes in backlog               232         86          146         170%
  Average sales price       $  333.4   $  333.3     $     .1           *

* Represents less than one percent

                                       12
<PAGE>
     Total dollar  backlog at  September  30, 2000  increased  46% over the 1999
amount due to an increase in the number of homes in backlog and increased  sales
prices in most of our markets.  Units in backlog at September 30, 2000 increased
25% over the same  period in the prior  year due to the  increase  in net orders
caused by expansion into  California,  the start-up of our new Meritage  Phoenix
division and strong housing markets in which we operate.

     LIQUIDITY AND CAPITAL RESOURCES

     Our  principal  uses of  working  capital  are land  purchases,  home  site
development and home construction.  We use a combination of borrowings and funds
generated by operations to meet our working capital requirements.

     At September 30, 2000 we had short-term secured revolving construction loan
and  acquisition and development  facilities  totaling $170.7 million,  of which
approximately  $90.3  million  was  outstanding.  An  additional  $49 million of
unborrowed  funds  supported by approved  collateral  were  available  under our
credit  facilities  at that  date.  We also  have  $15  million  outstanding  in
unsecured, senior subordinated notes due in three equal installments,  September
15, 2003, 2004 and 2005, which were issued in October 1998.

     In May 1999,  our Board of  Directors  authorized  the  buyback of up to $6
million of outstanding  Meritage stock. This amount was increased to $20 million
at subsequent board meetings.  As of September 30, 2000,  approximately  785,000
shares  had been  repurchased  for an  aggregate  price of  approximately  $10.4
million, including 312,500 shares purchased from a current director in the third
quarter, 2000, at a cost of $5 million.

     We believe that the current borrowing  capacity,  cash on hand at September
30, 2000 and  anticipated  cash flows from operations are sufficient to meet our
liquidity needs for the foreseeable future. There is no assurance, however, that
future  amounts  available  from our sources of liquidity  will be sufficient to
meet future capital needs.  The amount and types of  indebtedness  that we incur
may be limited by the terms of the indenture  governing our senior  subordinated
notes and our credit agreements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We do not have or trade in derivative financial instruments.  We have other
financial instruments in the form of notes payable and senior debt, which are at
fixed interest rates. Our lines of credit and credit  facilities are at variable
interest  rates and are  subject  to market  risk in the form of  interest  rate
fluctuations.

                                       13
<PAGE>
                            PART II OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) EXHIBITS

         EXHIBIT                                                    PAGE OR
         NUMBER                DESCRIPTION                      METHOD OF FILING
         ------                -----------                      ----------------

          10.1  Modification to Loan Agreement with Guaranty     Filed herewith
                Federal Bank, Dated as of July 31, 2000

          27    Financial Data Schedule                          Filed herewith

          99    Private Securities Reform Act of 1995 Safe       Filed herewith
                Harbor Compliance Statement for Forward-Looking
                Statements

     (b) REPORTS ON FORM 8-K

         No reports on form 8-K were filed during the quarter ended
         September 30, 2000.

                                       14
<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused this report on Form 10-Q to be signed on its behalf
by the undersigned, thereunto duly authorized, this 14th day of November 2000.

                           MERITAGE CORPORATION,
                           a Maryland Corporation


                           By /s/ LARRY W.SEAY
                              --------------------------------------------------
                              Larry W. Seay
                              Chief Financial Officer and Vice President-Finance
                              (Principal Financial Officer and Duly Authorized
                              Officer)

                                       S-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex_101.txt
<DESCRIPTION>SIXTH MODIFICATION AGREEMENT
<TEXT>

                                                                    Exhibit 10.1

                          SIXTH MODIFICATION AGREEMENT

     This SIXTH  MODIFICATION  AGREEMENT (this  "AGREEMENT") is made and entered
into as of July 31, 2000, by and between  LEGACY/MONTEREY HOMES L.P., an Arizona
limited partnership  ("BORROWER"),  and GUARANTY FEDERAL BANK, F.S.B., a federal
savings  bank  organized  and  existing  under  the  laws of the  United  States
("LENDER").

                                   WITNESSETH:

     WHEREAS, pursuant to a certain Master Loan Agreement (the "LOAN AGREEMENT")
dated as of January 31, 1993,  between  Lender and Borrower,  Lender made a loan
(the "LOAN") to Borrower,  evidenced by a certain Revolving Promissory Note (the
"NOTE") dated as of January 31, 1993,  payable to Lender in the stated principal
amount of SIXTY-FIVE MILLION AND NO/100 DOLLARS ($65,000,000.00),  with interest
and principal payable as set forth therein; and

     WHEREAS,  to secure the Note and Loan,  Master Form  Deed(s) of Trust (With
Security Agreement and Assignment of Rents and Leases) (hereinafter collectively
referred to as the "MASTER DEEDS OF TRUST,"  whether one or more),  which Master
Deeds of Trust have been  recorded in certain  counties in the State of Texas as
more particularly described on Exhibit A attached hereto; and which Master Deeds
of Trust are  incorporated by reference  pursuant to the terms and provisions of
certain  Deeds of Trust  Incorporating  by Reference a Master Form Deed of Trust
(With  Security  Agreement  and  Assignment  of  Rents  and  Leases)  (hereafter
collectively  referred to as the  "SUPPLEMENTAL  DEEDS OF TRUST," whether one or
more) recorded in such counties and encumbering  certain real and other property
(the  "PROPERTY")  described  in such  Supplemental  Deeds of Trust (such Master
Deeds of Trust and Supplemental Deeds of Trust hereafter  collectively  referred
to as the "DEEDS OF TRUST," whether one or more); and

     WHEREAS,  the  Deeds of Trust  were  modified  pursuant  to a  Modification
Agreement (the "FIRST MODIFICATION"), and recorded in various counties in Texas,
which First  Modification  modified  certain terms and provisions of the Loan as
set forth therein; and

     WHEREAS,  the Deeds of Trust were further pursuant to a Second Modification
Agreement (the "SECOND  MODIFICATION") dated as of May 19, 1998, and recorded in
various counties in Texas, which Second Modification  modified certain terms and
provisions of the Loan as set forth therein; and

SIXTH MODIFICATION AGREEMENT - Page 1
<PAGE>
     WHEREAS,  the Deeds of Trust were further pursuant to a Third  Modification
Agreement (the "THIRD MODIFICATION") dated as of March 30, 1999, and recorded in
various counties in Texas, which Third  Modification  modified certain terms and
provisions of the Loan as set forth therein; and

     WHEREAS,  the Deeds of Trust were further pursuant to a Fourth Modification
Agreement (the "FOURTH MODIFICATION") dated as of July 31, 1999, and recorded in
various counties in Texas, which Fourth Modification  modified certain terms and
provisions of the Loan as set forth therein; and

     WHEREAS,  the Deeds of Trust were further pursuant to a Fifth  Modification
Agreement  (the "FIFTH  MODIFICATION")  dated March 24,  2000,  and  recorded in
various counties in Texas, which Fifth  Modification  modified certain terms and
provisions of the Loan as set forth therein; and

     WHEREAS,  the Note and the Loan are  guaranteed  pursuant  to that  certain
Guaranty  Agreement  dated as of June 30,  1997 (the  "GUARANTY"),  executed  by
MTH-Texas  GP, Inc.,  an Arizona  corporation,  MTH-Texas  LP, Inc.,  an Arizona
corporation,  and Meritage  Corporation,  a Maryland  corporation  ("GUARANTOR,"
whether one or more); and

     WHEREAS, the Loan Agreement,  the Note, the First Modification,  the Second
Modification,  the  Third  Modification,  the  Fourth  Modification,  the  Fifth
Modification,  the  Deeds of Trust and all other  documents  evidencing  and/ or
securing the Loan are hereinafter  collectively  called the "LOAN  INSTRUMENTS";
and

     WHEREAS,  Lender,  the owner and  holder of the Note and the Deeds of Trust
and all rights and titles evidenced thereby,  and Borrower,  the record owner of
the Property  and being  liable for the payment of the Note and Loan,  desire to
modify the Loan Instruments as herein provided.

     NOW,  THEREFORE,  in consideration of Ten and No/ 100 Dollars ($ 10.00) and
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

     1. The stated maturity date of the Note is hereby extended to and including
July 31, 2001, when the entire unpaid  principal  balance of the Note,  together
with  all  accrued  and  unpaid  interest  shall be due and  payable;  provided,
however, such date may be extended as set forth in the Loan Agreement.

     2. Borrower shall execute and deliver to Lender a letter agreement (in form
and  substance  satisfactory  to Lender  in its sole  discretion)  (the  "LETTER
AGREEMENT")  dated  as of the date  hereof  amending  certain  other  terms  and
provisions of the Loan  Instruments.  (Hereafter,  this Agreement and the Letter
Agreement shall be included in the defined term "LOAN INSTRUMENTS.")

SIXTH MODIFICATION AGREEMENT - Page 2
<PAGE>
     3. Borrower  acknowledges and agrees, that as an accommodation to Borrower,
Exhibit A hereto  (which  exhibit  describes the  recording  information  of the
Master Deeds of Trust) shall be attached to this  Agreement  (and to any and all
other  documents  which may  require  the  attachment  of a  description  of the
recording  information of the Master Deeds of Trust) after Borrower's  execution
of same.  Accordingly,  Borrower hereby  authorizes and directs Lender to attach
such Exhibit A to this Agreement.

     4. Notwithstanding anything to the contrary in any of the Loan Instruments,
Borrower  acknowledges and agrees,  that to the extent that Lender is relying on
Chapter 303 of the Texas  Finance  Code to  determine  the  Maximum  Lawful Rate
(hereafter  defined)  payable  on the  Note  and/  or the  Related  Indebtedness
(hereafter  defined) Lender will utilize the weekly ceiling from time to time in
effect as provided in such Chapter 303, as amended.  To the extent United States
federal law permits Lender to contract for, charge,  take,  receive or reserve a
greater  amount of  interest  than under  Texas law,  Lender will rely on United
States  federal law instead of such  Chapter 303 for the purpose of  determining
the Maximum Lawful Rate.  Additionally to the extent permitted by applicable law
now or  hereafter  in effect,  Lender  may, at its option and from time to time,
utilize any other  method of  establishing  the  Maximum  Lawful Rate under such
Chapter 303 or under other  applicable  law by giving  notice,  if required,  to
Borrower as provided  by  applicable  law now or  hereafter  in effect.  As used
herein,  the term  "MAXIMUM  LAWFUL RATE" shall mean the maximum  lawful rate of
interest which may be contracted for,  charged,  taken,  received or reserved by
Lender  in  accordance  with the  applicable  laws of the  State  of  Texas  (or
applicable  United  States  federal law to the extent that it permits  Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all Charges (as hereafter defined) made in
connection  with  the  transaction  evidenced  by the Note  and the  other  Loan
Instruments.  As used herein,  the term "CHARGES"  shall mean all fees,  charges
and/ or any other things of value, if any,  contracted for,  charged,  received,
taken or reserved by Lender in connection with the transactions  relating to the
Note and the  other  Loan  Instruments,  which are  treated  as  interest  under
applicable law. As used herein, the term "RELATED  INDEBTEDNESS"  shall mean any
and all  debt  paid or  payable  by  Borrower  to  Lender  pursuant  to the Loan
Instruments  or any other  communication  or writing by or between  Borrower and
Lender related to the transaction or transactions  that are the subject mater of
the Loan  Instruments,  except  such debt  which has been paid or is  payable by
Borrower to Lender.

     5. Notwithstanding anything to the contrary contained in the Deeds of Trust
or other Loan Instruments,  with respect to any amendment to the Master Deeds of
Trust, the following terms and provisions shall apply:

     With respect to any amendment or  modification of the Master Deeds of Trust
     now or hereafter  executed by Borrower (or any future owner of the Property
     if different from Borrower) and duly recorded in the  appropriate  official
     public  records,  Borrower  acknowledges  and agrees that such amendment or
     modification of the Master Deeds of Trust shall  constitute an amendment or
     modification to the terms and provisions of any such Supplemental  Deeds of
     Trust (and shall be incorporated into any such Supplemental  Deeds of Trust
     and made a part  thereof  for all  purposes,  as though such  amendment  or

SIXTH MODIFICATION AGREEMENT - Page 3
<PAGE>
     modification  of the Master  Deeds of Trust  specifically  referred to such
     Supplemental  Deeds  of  Trust)  without  the  necessity  of  any  specific
     reference in such amendment or modification to any such Supplemental  Deeds
     of Trust;  and no such  amendment  or  modification  of the Master Deeds of
     Trust shall impair the obligations of Borrower under any such  Supplemental
     Deeds of Trust or any other of the Loan Instruments.

     6. Borrower hereby  expressly  promises to pay to the order of Lender,  the
principal  amount of the Note (as  modified  and  extended)  and all accrued and
unpaid  interest now or hereafter to become due and payable under the Note,  and
Borrower hereby expressly promises to perform all of the obligations of Borrower
under the Loan Instruments (as modified and extended).

     7. The liens of the Deeds of Trust are hereby  acknowledged  by Borrower to
be good,  valid and  subsisting  liens,  and such liens are hereby  renewed  and
extended  so as to secure  the  payment  of the Note and Loan (as  modified  and
extended).

     8. Borrower  hereby  represents and warrants to Lender that (a) Borrower is
the sole legal and beneficial  owner of the Property;  (b) Borrower has the full
power and authority to make the agreements  contained in this Agreement  without
joinder  or  consent  of any  other  party;  (c)  the  execution,  delivery  and
performance  of this  Agreement will not contravene or constitute an event which
itself or which  with the  passing  of time or  giving  of notice or both  would
constitute a default under any deed of trust, loan agreement, indenture or other
agreement to which  Borrower or Guarantor is a party or by which Borrower or any
of its  property  is bound;  and (d)  there  exists  no  default  under the Loan
Instruments  (as modified).  BORROWER HEREBY AGREES TO INDEMNIFY AND HOLD LENDER
HARMLESS  AGAINST  ANY LOSS,  CLAIM,  DAMAGE,  LIABILITY  OR EXPENSE  (INCLUDING
WITHOUT LIMITATION,  ATTORNEYS' FEES) INCURRED AS A RESULT OF ANY REPRESENTATION
OR  WARRANTY  MADE BY  BORROWER  HEREIN  PROVING  TO BE UNTRUE  IN ANY  MATERIAL
RESPECT.

     9. The terms and conditions hereof may not be modified, amended, altered or
otherwise  affected  except by  instrument  in  writing  executed  by Lender and
Borrower.

     10.  All Loan  Instruments  are hereby  amended  and  modified  in a manner
consistent with the  modifications,  terms and/ or provisions  contained herein.
Except as  expressly  modified  hereby,  the terms  and  conditions  of the Loan
Instruments are and shall remain in full force and effect.

     11. Borrower agrees to pay to Lender,  contemporaneously with the execution
and delivery  hereof,  all costs and expenses  incurred in connection  with this
transaction,  title insurance endorsement premiums,  reasonable fees of Lender's
counsel and recording fees.

     12.  Borrower  hereby  agrees to execute and deliver to Lender such further
documents and instruments  evidencing or pertaining to the Loan, as modified and
increased hereby, as may be reasonably  requested by Lender from time to time so
as to evidence the terms and conditions hereof.

             [The balance of this page is intentionally left blank.]

SIXTH MODIFICATION AGREEMENT - Page 4
<PAGE>
     EXECUTED  on the  date(s)  set forth in the  acknowledgment(s)  below to be
EFFECTIVE as of the date first above written.

                                         BORROWER:

                                         LEGACY/ MONTEREY HOMES L.P.,
                                         an Arizona limited partnership

                                         BY: MTH-TEXAS GP, INC.,
                                             an Arizona corporation,
                                             General Partner

                                             By: /s/ Rick Morgan
                                                 -------------------------------
                                                 Name: Rick Morgan
                                                 Title: Vice President

                                         LENDER:

                                         GUARANTY FEDERAL BANK, F.S.B.,
                                         a federal savings bank

                                         By: /s/ Sam A. Meade
                                             -----------------------------------
                                             Name: Sam A. Meade
                                             Title: Senior Vice President

STATE OF TEXAS        ss.
                      ss.
COUNTY OF COLLIN      ss.

     This  instrument  was  ACKNOWLEDGED  before me on August 8,  2000,  by Rick
Morgan, Vice President of MTH-TEXAS GP, INC., an Arizona corporation, as General
Partner of LEGACY/  MONTEREY  HOMES L.P.,  an Arizona  limited  partnership,  on
behalf of said limited partnership.

[SEAL]                                  /s/ Ana Patterson
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:                  Ana Patterson
                                        ----------------------------------------
     08-28-2003                         Printed Name of Notary Public
---------------------


SIXTH MODIFICATION AGREEMENT - Page 5
<PAGE>
                              CONSENT OF GUARANTOR

     Each of the undersigned,  as a guarantor ("GUARANTOR," whether one or more)
of the loan (the  "LOAN"),  evidenced  by the Note and  secured  by the Deeds of
Trust described in the foregoing Fifth Modification  Agreement (the "AGREEMENT")
to which this Consent is attached,  hereby  acknowledge and consent (jointly and
severally) to the terms of the Agreement and agree (jointly and severally)  that
the  execution  and  delivery of the  Agreement  will in no way change or modify
Guarantor's  respective  obligations under their respective Guaranty (as defined
in the  Agreement);  and each  Guarantor  acknowledges  and agrees  (jointly and
severally)  that the  Indebtedness  (as  defined in the  respective  instruments
comprising  the  Guaranty)  includes the Loan,  together  with any and all other
Indebtedness now or at any time hereafter owing by Guarantor to Lender; and each
Guarantor  (jointly  and  severally)  hereby   unconditionally   and  absolutely
guarantees  to Lender  the  payment  when due of such  Indebtedness,  and hereby
acknowledge  and agree  that  their  respective  Guaranty  is in full  force and
effect,  and that there are no claims,  counterclaims,  offsets or  defenses  to
their respective Guaranty; and each Guarantor acknowledges and consents (jointly
and severally) to the terms of any and all prior  modifications  to the terms of
the Loan  (including,  without  limitation,  any and all  extensions of the term
thereof and  increases in the  principal  thereof  prior to the date hereof,  if
any).

     EXECUTED  on the  date(s)  set forth in the  acknowledgment(s)  below to be
EFFECTIVE as of the 31st day of July, 2000.

                                         GUARANTOR:

                                         MERITAGE CORPORATION,
                                         a Maryland corporation

                                         By: /s/ John R. Landon
                                             -----------------------------------
                                             Name: John R. Landon
                                             Title: Co-CEO


                                         MTH-TEXAS GP, INC.,
                                         an Arizona corporation

                                         By: /s/ Rick Morgan
                                             -----------------------------------
                                             Name: Rick Morgan
                                             Title: Vice President


                                         MTH-TEXAS LP, INC.,
                                         an Arizona corporation

                                         By: /s/ Rick Morgan
                                             -----------------------------------
                                             Name: Rick Morgan
                                             Title: Vice President

SIXTH MODIFICATION AGREEMENT - Page 6
<PAGE>
STATE OF TEXAS        ss.
                      ss.
COUNTY OF COLLIN      ss.

     This  instrument was  ACKNOWLEDGED  before me on August 8, 2000, by John R.
Landon,  Co-CEO of MERITAGE CORPORATION,  a Maryland  corporation,  on behalf of
said corporation.

[SEAL]                                  /s/ Ana Patterson
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:                  Ana Patterson
                                        ----------------------------------------
     08-28-2003                         Printed Name of Notary Public
---------------------


STATE OF TEXAS        ss.
                      ss.
COUNTY OF COLLIN      ss.

     This  instrument  was  ACKNOWLEDGED  before me on August 8,  2000,  by Rick
Morgan, Vice President of MTH-TEXAS GP, INC., an Arizona corporation,  on behalf
of said corporation.

[SEAL]                                  /s/ Ana Patterson
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:                  Ana Patterson
                                        ----------------------------------------
     08-28-2003                         Printed Name of Notary Public
---------------------


SIXTH MODIFICATION AGREEMENT - Page 7
<PAGE>
STATE OF TEXAS        ss.
                      ss.
COUNTY OF COLLIN      ss.


     This  instrument  was  ACKNOWLEDGED  before me on August 8,  2000,  by Rick
Morgan, Vice President of MTH-TEXAS LP, INC., an Arizona corporation,  on behalf
of said corporation.

[SEAL]                                  /s/ Ana Patterson
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:                  Ana Patterson
                                        ----------------------------------------
     08-28-2003                         Printed Name of Notary Public
---------------------

SIXTH MODIFICATION AGREEMENT - Page 8
<PAGE>
                                    EXHIBIT A

                       Description of the Deed(s) of Trust










EXHIBIT A, Description of the Deeds of Trust - Page 1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>ex_99.txt
<DESCRIPTION>SAFE HARBOR COMPLIANCE STATEMENT
<TEXT>

                                                                      Exhibit 99

                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
         SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS

     In  passing  the  Private  Securities  Litigation  Reform  Act of 1995 (the
"PSLRA"),   Congress  encouraged  public  companies  to  make   "forward-looking
statements" by creating a safe-harbor to protect  companies from  securities law
liability in connection with  forward-looking  statements.  Meritage  intends to
qualify  both its written and oral  forward-looking  statements  for  protection
under the PSLRA.

     In general,  "forward-looking statements" can be identified by use of words
such as "expect", "believe", "estimate",  "project",  "forecast",  "anticipate",
"plan" and  similar  expressions.  In this  report,  forward-looking  statements
address such matters but are not limited to, projections of revenues,  income or
loss,  capital  expenditures,  plans for future  operations,  financing needs or
plans and liquidity,  the impact of inflation, the impact of changes in interest
rates,  plans  relating to our products or  services,  potential  real  property
acquisitions,  and new or planned development  projects,  as well as assumptions
relating to the foregoing.

     Important  factors  currently  known to management  that could cause actual
results to differ materially from those in forward-looking  statements  include,
but are not  limited  to,  the  following:  (i)  changes in  national  and local
economic  and other  conditions,  such as  employment  levels,  availability  of
mortgage financing,  interest rates,  consumer  confidence,  and housing demand;
(ii) risks inherent in homebuilding activities, including delays in construction
schedules,  cost overruns,  changes in government regulation,  increases in real
estate taxes and other local fees;  (iii)  changes in costs or  availability  of
land,  materials,  and labor; (iv)  fluctuations in real estate values;  (v) the
timing of home closings and land sales;  (vi) Meritage's  ability to continue to
acquire  additional  land or options to acquire  additional  land on  acceptable
terms;  (vii)  a  relative  lack of  geographic  diversification  of  Meritage's
operations,  especially  when real estate  analysts are predicting that new home
sales in certain markets may slow during 2001;  (viii)  Meritage's  inability to
obtain  sufficient  capital on terms  acceptable to Meritage to fund its planned
capital and other  expenditures;  (ix) changes in local, state and federal rules
and regulations  governing real estate  development and homebuilding  activities
and environmental  matters,  including "no growth" or "slow growth" initiatives,
building permit allocation ordinances and building moratoriums; (x) expansion by
Meritage into new geographic or product  markets in which Meritage has little or
no operating experience;  (xi) the inability of Meritage to identify acquisition
candidates  that will result in  successful  combinations;  (xii) the failure of
Meritage  to  make   acquisitions  on  terms  acceptable  to  Meritage,   or  to
successfully  integrate acquired operations,  into Meritage; and (xiii) the loss
of key employees of the Company, including Steven J. Hilton and John R. Landon.

     Forward-looking  statements  express  expectations  of future  events.  All
forward-looking statements are inherently uncertain as they are based on various
expectations  and assumptions  concerning  future events and they are subject to
numerous  known and unknown  risks and  uncertainties  which could cause  actual
events or  results  to differ  materially  from  those  projected.  Due to these
inherent  uncertainties,  the  investment  community is urged not to place undue
reliance on  forward-looking  statements.  In addition,  Meritage  undertakes no
obligations to update or revise  forward-looking  statements to reflect  changed
assumptions, the occurrence of anticipated events or changes to projections over
time.




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>4
<FILENAME>fds.xfd
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<ARTICLE>    5

<S>                                                      <C>
<PERIOD-TYPE>                                          9-MOS
<PERIOD-START>                                   Jan-01-2000
<FISCAL-YEAR-END>                                Dec-31-2000
<PERIOD-END>                                     Sep-30-2000
<CASH>                                                 1,578
<SECURITIES>                                               0
<RECEIVABLES>                                          1,619
<ALLOWANCES>                                               0
<INVENTORY>                                          222,464
<CURRENT-ASSETS>                                     246,431
<PP&E>                                                 9,505
<DEPRECIATION>                                         4,778
<TOTAL-ASSETS>                                       269,769
<CURRENT-LIABILITIES>                                 56,809
<BONDS>                                              106,567
<PREFERRED-MANDATORY>                                      0
<PREFERRED>                                                0
<COMMON>                                                  56
<OTHER-SE>                                           106,337
<TOTAL-LIABILITY-AND-EQUITY>                         269,769
<SALES>                                              349,520
<TOTAL-REVENUES>                                     349,520
<CGS>                                                279,245
<TOTAL-COSTS>                                         19,528
<OTHER-EXPENSES>                                      12,939
<LOSS-PROVISION>                                           0
<INTEREST-EXPENSE>                                         6
<INCOME-PRETAX>                                       37,802
<INCOME-TAX>                                          13,949
<INCOME-CONTINUING>                                   23,853
<DISCONTINUED>                                             0
<EXTRAORDINARY>                                            0
<CHANGES>                                                  0
<NET-INCOME>                                          23,853
<EPS-BASIC>                                             4.57
<EPS-DILUTED>                                           4.15


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
