UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549
                              FORM 10-Q
  
  
 [X]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30,
        1997
  
                                    OR
  
       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
  
  For the transition period from ________________ to ________________
  
  Commission File Nos.: 33-73748
  
  
                  FUND AMERICA INVESTORS CORPORATION II         
         (Exact name of registrant as specified in its charter)
  
  
             Delaware                             84-1218906       
  (State or other jurisdiction of              (I.R.S. Employer
  incorporation or organization)            identification number)
  
  
  6400 S. Fiddler's Green Circle, Suite 1200B, Englewood, Colorado 80111 
                (Address of principal executive offices)
  
    Registrant's telephone number including area code: (303) 290-6025
  
  
  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 [] 
  
  Indicate the number of shares outstanding of each of the issuer's classes
  of common stock as of November 14, 1997 -- 349,000 shares
  
  

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                   FUND AMERICA INVESTORS CORPORATION II
                             FORM 10-Q FOR THE
                    NINE MONTHS ENDED SEPTEMBER 30, 1997
  
  
                                   INDEX
  
  
  
  PART I.  FINANCIAL INFORMATION                            PAGE NO.   
  
           Item 1.   Financial Statements                      3
  
           Item 2.   Management's Discussion and
                     Analysis of Financial Condition
                     and Results of Operations                 8
  
  PART II.  OTHER INFORMATION
     
            Item 1.   Legal Proceedings                        9
  
            Item 2.   Changes in Securities                    9
  
            Item 3.   Defaults upon Senior Securities          9
  
            Item 4.   Submission of Matters to a Vote
                      of Security Holders                      9
  
            Item 5.   Other Information                        9
  
            Item 6.   Exhibits and Reports                     9
  
            SIGNATURES                                        10
    

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                       PART I.  FINANCIAL INFORMATION
  
  Item 1.  Financial Statements
  
                   FUND AMERICA INVESTORS CORPORATION II
                              BALANCE SHEETS
                                (Unaudited)                                 
  
<CAPTION>

                                         September 30,     December 31,
                                             1997              1996
                                         ____________      ____________

<S>                                      <C>               <C>
  Assets
    Cash                                    $292,937         $190,574
    Deferred offering costs                  200,433          251,124
    Organizational costs, net                    106              583
    Prepaid expenses                               -              163
                                            ________         ________

       Total assets                         $493,476         $442,444
                                            ========         ========  
                                                    
                                                     
  Liabilities - accounts payable                $ 10             $  -
                                            ________         ________

  Shareholder's equity
     Common stock, par value $.01 per share;
     10,000 shares authorized; 349,000
     shares issued and outstanding             3,490            3,490
    Retained earnings                        489,976          438,954
                                            ________         ________

       Total shareholder's equity            493,466          442,444
                                            ________         ________
       Total liabilities and
       shareholder's equity                 $493,476         $442,444
                                            ========         ========
  
  
    

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                  FUND AMERICA INVESTORS CORPORATION II
                          Statements of Operations
                                (Unaudited)
  
<CAPTION>             
                                   Three months ended   Nine months ended
                                       September 30,       September 30,
                                   __________________   _________________
                                      1997      1996      1997      1996
                                   ________   _______  ________   ________
<S>                               <C>        <C>      <C>        <C>
  Revenue
   Issuance fee income             $125,995   $    -   $125,995   $193,335
   Interest income                    1,490    2,137      4,629      4,121
                                   ________   ______   ________   ________

         Total revenue              127,485    2,137    130,624    197,456
                                   ________   ______   ________   ________  

  Expenses
   Deferred offering costs           50,995        -     50,995    119,900
   General and administrative         1,543      459     10,130      9,917
   Amortization of organization
   costs                                159       159        477       477
   Management fees                    6,000     6,000     18,000    18,000
                                    _______   _______   ________   _______

         Total expenses              58,697     6,618     79,602   148,294
                                    _______   ________   _______   _______  

         Net income/(loss)          $68,788   $(4,481)   $51,022   $49,162
                                    =======   =======    =======   =======
         

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                   FUND AMERICA INVESTORS CORPORATION II
                          Statement of Cash Flows
                                (Unaudited)
   
                                          Nine months ended           
                                             September 30,
                                   _____________________________
                                       1997                1996  
                                   ________             ________
<S>                              <C>                  <C>
  Net cash flow from
  operating activities:
  
    Net income                     $ 51,022             $ 49,162
  
   Adjustments to reconcile net
   income to net cash flow
   from operating activities:
    Amortization of organizational
    costs                               477                  477
    Deferred offering costs          50,995              119,900
    Changes in operating assets
    and liabilities:  
       Prepaid expenses                 163                    -
       Accounts payable                  10                   56 
                                    _______               _______
  Net cash flow provided by
  operating activities              102,667               169,595
                                    _______               _______
                                               
  Net cash provided by/(used in)             
  investing activities:                                                     
    Reimbursements of deferred              
    offering costs                        -                41,866
    Increase in deferred
    offering costs                   (  303)             ( 13,360)
                                    _______               _______
  Net cash flow provided by/
  (used in) investing activities     (  303)               28,506
                                    _______               _______

  Net increase in cash              102,364               198,101
  
  Cash at beginning of period       190,574                40,450
                                   ________              ________ 

  Cash at end of period            $292,938              $238,551
                                   ========              ========  
  


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                   FUND AMERICA INVESTORS CORPORATION II
                       NOTES TO FINANCIAL STATEMENTS
                                (Unaudited)
               Nine months ended September 30, 1997 and 1996
  
  1.  Basis of Presentation
  
  Organization
  
  Fund America Investors Corporation II (the "Company") was incorporated in
  the State of Delaware on December 14, 1992 as a limited purpose finance
  corporation.  The Company was established to engage in the issuance and
  administration of Collateralized Mortgage Obligations (the "Bonds") and
  Asset-Backed Certificates (the "Certificates", and together with the
  Bonds, the "Securities").  The Securities are issuable in one or more
  series, from time to time, by the Company in accordance with the
  provisions in the prospectus and series-related prospectus supplement of
  the Company's latest effective registration statement. 
  
  The Securities of each series can be issued by the Company, but typically
  the Company forms a separate trust to act as the issuer solely for the
  purpose of issuing one series.  Series of Securities which include Bonds
  will be issued pursuant to an indenture and will represent indebtedness
  of the trust or issuer.  Series of Securities which include Certificates
  will represent beneficial ownership in the related trust or issuer.  The
  sole source of payments to Bondholders or Certificateholders within
  each series of Securities are produced from the related trust property. 
  The property or assets within each trust are comprised of
  mortgage-related assets as defined in each of the series' related
  prospectus supplements.  
  
  The Company may not, either directly or indirectly through a
  beneficially owned trust, engage in any business or investment activity
  other than (i) issuing and selling the Securities; (ii) purchasing,
  owning, holding, pledging or selling the Collateral or other
  mortgage-related assets; (iii) investing and maintaining cash balances on
  an interim basis in high quality short-term securities; and (iv) engaging
  in other activities which are necessary or convenient to accomplish the
  foregoing and are incidental thereto.
  
  Issuance of Securities 
  
  At the beginning of the third quarter ended September 30, 1997, the
  Company has $533 million registered and unissued Securities remaining on
  its Registration Statement No. 33-73748.  During the third quarter, the
  Company issued $122 of these Securities through Fund America Investors
  Trust 1997-NMC1.  This owner trust was established by the Company on
  September 1, 1997, specifically for the purpose of issuing these
  Securities.
  


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  As described in the Prospectus Supplement dated September 17, 1997, the
  Securities issued by Fund America Investors Trust 1997-NMC1 are
  Collateralized Mortgage Obligations, Series 1997-NMC1 Bonds.  The Bonds
  represent non-recourse obligations of the trust.  The trust property
  consisting of a pool of adjustable rate mortgage loans has been pledged
  to secure the Bonds.  
  
  The mortgage loans in Series 1997-NMC1 were originated or acquired by
  National Mortgage Corporation ("NMC"), an affiliate of the Company.  In
  addition to NMC's participation as the seller of the mortgage loans in
  this series,  NMC is servicing the mortgage loans and is the holder,
  through a wholly-owned subsidiary, of the residual interest that
  represents all of the beneficial ownership interest in Fund America
  Investors Trust 1997-NMC1.  
  
  The Company and National Mortgage Corporation are affiliated through
  common control.
  
  Activity on Registration Statements
  
  At the end of the third quarter, $411 million registered and unissued
  Securities remain on the Company's Registration Statement No. 33-73748.
  
  The Company filed  its fourth Registration Statement No. 333-33823 on
  Form S-3 with the Securities and Exchange Commission. The filing,
  submitted on August 15, 1997, registered $1 million in Securities to be
  offered on a delayed or continuous basis. 
  
  As of September 30, 1997, Registration Statement No. 333-33823 was
  subject to completion or amendment.  At such time when the registration
  statement is completed, the Company will file an amendment which
  specifically states that this Registration Statement will become
  effective in accordance with Section 8(a) of the Securities Act of 1933,
  as amended (the "Act") or as determined by the Commission.
  
  Subsequent to the third quarter ended September 30, 1997, Amendment
  No. 1 to Form S-3, Registration Statement No.333-33823 was filed on 
  October 28, 1997.  This amendment increased the amount of Securities 
  being registered by $500 million.

  Registration Statement No. 333-33823 was declared effective by the
  Commission on October 30, 1997, and pursuant to rule 429 of the Act, the
  prospectus included therein is a combined prospectus relating also to
  Registration Statement No. 33-73748.
  


                                 PAGE 7


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  2. Unaudited Financial Statements
  
  In the opinion of management, the accompanying unaudited financial
  statements contain all adjustments necessary to present fairly the
  financial position of the Company at September 30, 1997, and the results
  of its operations and  cash flows for the periods ended September 30,
  1997 and 1996.
  
  Item 2.  Management's Discussion and Analysis of Financial Condition and 
           Results of Operations
  
  Liquidity and Capital Resources
  
  The Company expects to fund its ongoing operations from its cash
  balances, revenue derived from the issuance of Securities, and, if
  necessary, with borrowings from its sole shareholder.  As of September
  30, 1997, $1,000,000 was available to be borrowed from the Company's
  shareholder under a Line of Credit dated April 3, 1995.  Any borrowings
  will be subordinate and junior to any issued Securities.
  
  Results of Operations 
  
  The Company does not have any significant assets other than cash held for
  operations and capitalized deferred offering costs. Major operating
  activity is initiated from the issuance of Securities or the preparation
  in registering Securities to be issued. Costs incurred with registering
  Securities are capitalized until such time the Securities are issued in
  an offering. 
  
  Net income may fluctuate from period to period based on the use of the
  Company's registered and unissued Securities. The Company generally
  charges the issuer of a series of Securities a flat fee and a
  proportionate share of deferred costs associated with its registration
  statement.
  
  Typically, periods reporting net income are the result of issuance fees
  earned by the Company for the use of its shelf registration.  Conversely
  in periods reflecting net losses, no issuance fees were earned and the
  loss is the result of fixed general and administrative expenses.
  
  For the three months ended September 30, 1997, the Company reported net
  income of $68,788 compared to a net loss of $4,481 for the three months
  ended September 30, 1996.  The issuance fees that were earned during
  third quarter in 1997 is the primary difference between the two reporting
  periods.
  
  For the nine months ended September 30, 1997, net income of $51,022 is
  comparable to net income of $49,162 reported for the nine months ended
  September 30, 1996.  Both of these periods reflected issuance fees earned
  from the issuance of one series of Securities.         
  

                               PAGE 8

                           

  
  
                      PART II. OTHER INFORMATION
  
  
  
  Item 1.  Legal Proceedings
  
           None.
  
  Item 2.  Changes in Securities
  
           None.
  
  Item 3.  Defaults Upon Senior Securities
  
           None.
  
  Item 4.  Submission of Matters to a Vote of Security Holders
  
           None.
  
  Item 5.  Other Information
  
           None.
  
  Item 6.  Exhibits and Reports on Form 8-K
  
           (a) Exhibits
  
               Exhibit 27. Financial Data Schedule
  
           (b) Form 8-K 
  
               -   Filing dated September 18, 1997 attaching computational
                   materials for Fund America Investors Trust 1997-NMC1
                   Collateralized Mortgage Obligations, Series 1997-NMC1
                   and other exhibits.
  
               -   Filing dated September 24, 1997 attaching as an exhibit,
                   Form of Indenture and Form T-1 Statement of Eligibility.
  
               -   Filing dated September 29, 1997 attaching as an exhibit,
                   consent of Deloitte & Touche LLP (regarding financial
                   statements).
  
    
                                 PAGE 9

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                               SIGNATURES
  
  
  
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
  
  
  
                                     FUND AMERICA INVESTORS CORPORATION II
                                     (Registrant)
  
  
  Date:    November 14, 1997          By: /s/ Helen M. Dickens
                                               
                                         Helen M. Dickens
                                         Vice President,Secretary/Treasurer
                                               


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