UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549
                              FORM 10-Q
  
  
       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998,
  
                                    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 August 14, 1998 -- 349,000 shares
  
  
                                  
                                  
                                  
                                  
</PAGE>
<PAGE>                                
  
  
               FUND AMERICA INVESTORS CORPORATION II
                          FORM 10-Q FOR THE
                    SIX MONTHS ENDED JUNE 30, 1998
  
  
                                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                         7
  
  PART II.  OTHER INFORMATION
  
       Item 1.   Legal Proceedings                                 8
  
       Item 2.   Changes in Securities                             8
  
       Item 3.   Defaults upon Senior Securities                   8
  
       Item 4.   Submission of Matters to a Vote
                 of Security Holders                               8
  
       Item 5.   Other Information                                 8
  
       Item 6.   Exhibits and Reports                              8
  
       SIGNATURES                                                  9
     


                                Page 2


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<TABLE>


                    PART I.  FINANCIAL INFORMATION
  
  Item 1.  Financial Statements
  
                   FUND AMERICA INVESTORS CORPORATION II
                              BALANCE SHEETS
                                (Unaudited)                                 
                
                                     
<CAPTION>  
                                         June 30,            December 31,
                                           1998                 1997
                                        ---------            -----------  
<S>                                    <C>                   <C>
  Assets
    Cash                                $444,105              $110,311 
    Deferred offering costs              229,379               364,797
    Prepaid expenses                           -                   172 
                                        --------              --------
       Total assets                     $673,484              $475,280 
                                        ========              ========
  
  Liabilities -
       Accounts payable                 $    171              $  8,801 
                                        --------              --------
  
  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                    669,823              462,989 
                                        --------             --------
       Total shareholder's equity        673,313              466,479 
                                        --------             --------
       Total liabilities and
          shareholder's equity          $673,484             $475,280 
                                        ========             ========
  
  
  See notes to financial statements
    


                                  Page 3


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<TABLE>
  
  
                   FUND AMERICA INVESTORS CORPORATION II
                         Statements of Operations
                                (Unaudited)
  
  
<CAPTION>
                                 Three months ended         Six months ended
                                       June 30,                  June 30,   
                                 ------------------         ----------------
                                  1998         1997          1998       1997
                                 ------       ------        ------     ------
  
<S>                            <C>          <C>          <C>         <C>
  Revenue                         
   Issuance fee income          $360,418     $     -      $360,418    $     -
   Interest income                 1,924       1,544         3,092      3,139
                                --------     -------      --------    -------
     Total revenue               362,342       1,544       363,510      3,139
                                --------     -------      --------    -------
              
  Expenses
   Deferred offering costs       135,418           -       135,418          -
   General and administrative        690         654         9,258      8,587 
   Amortization of organization
       costs                           -         159             -        318
   Management fees                 6,000       6,000        12,000     12,000 
                                --------     -------      --------    -------
     Total expenses              142,108       6,813       156,676     20,905
                                --------     -------      --------    -------
     Net income/(loss)          $220,234     $(5,269)     $206,834   $(17,766)
                                ========     =======      ========    =======
  
    See notes to financial statements



                                   Page 4

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                  FUND AMERICA INVESTORS CORPORATION II
                        Statements of Cash Flows
                               (Unaudited)
  
                                                                            

<CAPTION>
                     
                                               Six months ended  
                                                    June 30,                
                                             --------------------
                                             1998            1997 
                                             --------------------

<S>                                      <C>            <C>
Net cash flow used in operating
  activities:                               
     Net income/(loss)                    $206,834       $(17,766)
   Adjustments to reconcile net
     loss to net cash flow from
     operating activities:
   Amortization deferred
     offering costs                        135,418            163 
   Amortization of 
     organizational costs                        -            318 
  Changes in operating assets and
     liabilities:
       Accounts payable                     (8,630)         2,010 
       Prepaid expenses                        172              - 
                                          --------       --------
Net cash flow provided by/(used in)
   operating activities                    333,794        (15,275)
                                          --------       --------

Net increase/(decrease) in cash            333,794        (15,275)

Cash at beginning of period                110,311        190,574 
                                          --------       --------
Cash at end of period                     $444,105       $175,299 
                                          ========       ========
  
  
See notes to financial statements
          

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                  FUND AMERICA INVESTORS CORPORATION II
                      NOTES TO FINANCIAL STATEMENTS
                               (Unaudited)
                 Six months ended June 30, 1998 and 1997
  
  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 issued 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 directly by the Company, but
  typically the Company forms a separate trust to act as the issuer solely
  for the purpose of issuing a series of Securities.  A series of
  Securities that consist of Bonds will be issued pursuant to an indenture
  and will represent indebtedness of the trust or issuer.  A series of
  Securities that consist of 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 is
  produced from the related trust property.  The trust property is
  generally comprised of mortgage loans and/or mortgage-related assets as
  described 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 to;
  (1) issue and sell Bonds; (2) purchase, own, hold, pledge or sell
  mortgage loans or other mortgage-related assets; (3) invest and maintain
  cash balances on an interim basis in high quality short-term securities;
  and (4) engage in other activities which are necessary or convenient to
  accomplish the foregoing and are incidental thereto.
  
  Issuance of Securities
  
  During the second quarter ended June 30, 1998, the Company issued $348
  million of Securities in three series from its combined Registration
  Statement No. 333-33823.  Each series of Securities was issued pursuant
  to a separate prospectus supplement, listed below.  
    


                                Page 6

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  Prospectus Supplement Information:                 
                                              Amount     Type of  
     Date     Issuer/Series                 of Offering Securities
  
  04-28-98    Fund America Investors
              Corporation II/Pass-Through
              Certificates, Series 1998-A    $ 60,373,853 Certificates
      
  06-24-98    Fund America Investors
              Trust 1998-NMC1/
              Collateralized Mortgage
              obligations,Series 1998-NMC1   $236,526,000 Bonds
          
  06-28-98    Fund America Investors
              Corporation II/Pass-Through
              Certificates, Series 1998-B    $ 50,703,106 Certificates   
  
  The Certificates in Series 1998-A and Series 1998-B represent the entire
  beneficial ownership in trusts specifically formed for each series.  Each
  trust holds underlying securities which are the sole source of
  distribution payments to the certificateholders. These Certificates do
  not represent an interest in or obligation of the Issuer or the Company.
  
  The Bonds in Series 1998-NMC1 represent non-recourse obligations of the
  Issuer, Fund America Investors Trust 1998-NMC1 (the "Trust"), and do not
  represent interests in or obligations of the Company.  The assets that
  were pledged to the Trust are the sole source of payments on the Bonds. 
  The pledged assets consist of adjustable rate, fully amortized mortgage
  loans that are secured by residential properties.
  
  The mortgage loans in Series 1998-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 these mortgage loans,
  NMC is servicing the mortgage loans and is the holder of the residual
  interest that represents all of the beneficial ownership interest in Fund
  America Investors Trust 1998-NMC1.  
      
  With the  issuance of these Securities, the remaining and unissued
  Securities on the Company's Registration Statement No. 333-33823
  decreased from $933 million at March 31, 1998 to $585 million at the end
  of the second quarter, June 30, 1998. 
   
  2.  Unaudited Financial Statements
  
  The accompanying unaudited financial statements have been prepared in
  accordance with generally accepted accounting principles for interim
  reporting periods and in accordance with the instructions to Form 10-Q. 
  In complying to the guidelines, the accompanying financial statements do
  not include all of the information and footnotes that are required for
  complete annual reporting periods.   
  
  In the opinion of management, the accompanying unaudited financial
  statements contain all adjustments necessary to present fairly the
  financial position of the Company at June 30, 1998, and the results of
  its operations and cash flows for the periods ended June 30, 1998 and
  1997. 
  
  

                               Page 7

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<PAGE>

  Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations 
  
  Financial Condition and Liquidity
   
  The Company's cash position increased by $333,794 from $110,311 at its
  fiscal year-end, December 31, 1997, to $444,105 at the second
  quarter-end, June 30, 1998.  The increase was provided by operating
  activities which primarily consisted of net income of $206,834 and a
  return of $135,318 for capitalized offering costs that were reported in
  prior periods.  The Company expects to fund its ongoing operations from
  its cash balances and any additional revenue generated from the issuance
  of Securities.  
  
  In the event that additional capital resources may be required, the
  Company maintains an open line of credit for $1,000,000 with its sole
  shareholder.  The line of credit was established on April 3, 1995, and
  the borrowing provisions under the initial agreement have continued for
  each subsequent year.  As of June 30, 1998, the available balance
  remained at $1,000,000.  Any balance due will be subordinate and junior
  to any issued Securities.     
  
  Results of Operations
  
  The Company operates on a relatively fixed general and administrative
  costs which have not substantially deviated from comparable periods in
  prior years.  The periodical fluctuations in net income are directly
  related to activity from the issuance of Securities.   Periods reporting
  net income are the result of issuance fees earned by the Company, and in
  periods reporting a net loss, typically, no issuance fees were earned. 
  For the three months ended June 30, 1998, the Company earned net
  issuance fees of $225,000 which resulted in net income for the period of
  $220,234.  For the three months ended June 30, 1997, the Company did not
  earn any issuance fees and reported a net loss of $5,269.  
  
  The six month period ended June 30, 1998 as compared to the six months
  ended June 30, 1997 had similar results.  The Company earned $225,000 in
  issuance fees for 1998 and reported a net income of $206,834.  For the
  comparable six month period in 1997, no issuance fees were earned, and
  the Company reported a net loss of $17,766.
  
  
  
                                Page 8

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<PAGE>  
  
  
  
  
  
  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 -
    
               Form 8-K filed on May 12, 1998 submitted the Underwriting
               Agreement and the Pooling Agreement for Fund America Investor
               Corporation II, Pass-Through Certificates, Series 1998-A.
  
               Form 8-K filed on June 29, 1998 submitted the Consents of
               Accountants for Fund America Investors Trust 1998-NMC1,
               Collateralized Mortgage Obligations, Series 1998-NMC1.
  
               Form 8-K filed on June 29, 1998 submitted the Form of Indenture,
               the Opinion of Legality, the Opinion of Tax Matters and the T-1
               Statement of Eligibility for Fund America Investors Trust
               1998-NMC1, Collateralized Mortgage Obligations, Series 1998-NMC1.
  
  
    
               SIGNATURES
  
    

                                      Page 9
  
  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:   August 14, 1998            By:   /s/ Helen M. Dickens 
       ------------------------           -----------------------------
                                           Helen M. Dickens
                                           Vice President,
                                           Secretary/Treasurer
                                           (Duly authorized and
                                           Principal Financial Officer<PAGE>