FORM 10-QSB/A--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                        Quarterly or Transitional Report

                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                  Form 10-QSB/A

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


                      For the quarterly period ended June 30, 1999


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

                        For the transition period from to

                         Commission file number 0-14458

                      NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                            (A Maryland Limited Partnership)
           (Exact name of small business issuer as specified in its charter)


           Maryland                                              52-1365317
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

                        9200 Keystone Crossing, Suite 500
                        Indianapolis, Indiana 46240-7602
                        (Address of principal executive offices)

                                 (317) 817-7500
                            Issuer's telephone number

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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

<PAGE>

                         PART I - FINANCIAL INFORMATION

(This  document  amends the Form 10-QSB for the quarter ended June 30, 1999, due
to the  correction  of an accrual for  interest on notes  payable to the General
Partner  which was  originally  overstated  for the three months ended March 31,
1999 and adjusted during the three months ended June 30, 1999).

ITEM 1.     FINANCIAL STATEMENTS

a)
                      NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                         Statement of Financial Position

                                   (Unaudited)

                                  June 30, 1999

                          ASSETS

    Cash and cash equivalents                              $    29,316
    Investments in and advances to Local Limited
       Partnerships (Note 2)                                 4,385,484
                                                           $ 4,414,800

        LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

    Other accrued expenses                                 $    41,727
    Administrative and reporting fee payable to
       General Partner                                       1,183,690
    Notes payable to General Partner                         2,414,468
    Accrued interest on notes payable
       to General Partner                                    3,421,605
                                                             7,061,490

Partners' deficit

    General Partner-The National Housing
       Partnership (NHP)                                      (181,556)
   Original Limited Partner-1133 Fifteenth
      Street Two Associates                                   (186,456)
   Other Limited Partners-18,300 investment
      units                                                 (2,278,678)

                                                            (2,646,690)

                                                           $ 4,414,800


                     See Accompanying Notes to Financial Statements

<PAGE>

b)
                  NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                            Statements of Operations

                                   (Unaudited)
<TABLE>
<CAPTION>

                                             Three Months Ended       Six Months Ended
                                                  June 30,                June 30,
                                              1999        1998        1999        1998
Revenues:
  Share of profits from Local
<S>                                         <C>         <C>         <C>        <C>
     Limited Partnership                    $ 67,023    $ 77,752    $124,800   $  97,610
  Interest income                                161         182         316         320
  Interest income from Local
     Limited Partnership                     123,685          --     123,685          --
                                             190,869      77,934     248,801      97,930
costs and Expenses:
  Administrative and reporting fees
    to General Partner                        34,313      34,312      68,625      68,624
  Interest on deferred acquisition to
    General Partner                           60,361      60,361     120,723     120,723
  Interest on partner loans                      416          --       1,216          --
  Other operating expenses                    13,666      14,119      32,182      28,345
                                             108,756     108,792     222,746     217,692

Net income (loss)                           $ 82,113    $(30,858)   $ 26,055   $(119,762)
allocation of net income (loss):
  General Partner - NHP                     $    821    $   (309)   $    261   $  (1,198)
  Original Limited Partner - 1133
    Fifteenth Street Two Associates              821        (309)        261      (1,198)
  Other limited partners - 18,300
  Investment units                            80,471     (30,240)     25,533    (117,366)
                                            $ 82,113    $(30,858)   $ 26,055   $(119,762)
net income (loss) per limited partnership
  interest                                  $      4    $     (2)   $      1   $      (6)
</TABLE>

                     See Accompanying Notes to Financial Statements

<PAGE>

c)
                  NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                         Statements of Partner's Deficit

                                   (Unaudited)
<TABLE>
<CAPTION>

                                       The National     1133
                                          Housing     Fifteenth      Other
                                        Partnership   Street Two    Limited
                                           (NHP)      Associates    Partners       Total

<S>                 <C> <C>             <C>          <C>          <C>          <C>
Deficit at December 31, 1998            $(181,817)   $(186,717)   $(2,304,211) $(2,672,745)

Net income for the six months ended
   June 30, 1999                        $     261    $     261    $    25,533  $    26,055

Deficit at June 30, 1999                $(181,556)   $(186,456)   $(2,278,678) $(2,646,690)

Percentage interest at
   June 30, 1999                                1%           1%            98%         100%
                                               (A)          (B)            (C)
</TABLE>

(A)   General Partner
(B)   Original Limited Partner
(C)   Consists of 18,300 investment units


                     See Accompanying Notes to Financial Statements

<PAGE>

d)
                  NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                             Statements of Cash Flow

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                 Six Months Ended
                                                                     June 30,
                                                                1999          1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>          <C>
   Interest received                                        $     316    $     320
   Operating expenses paid                                    (48,286)      (7,076)
   Interest income received from Local Limited
      Partnership                                             123,685           --
   Payment of administrative reporting fees to General
      Partner                                                 (97,014)          --
   Payment of interest on partner loans                        (2,917)          --

   Net cash used in operating activities                      (24,216)      (6,756)

CASH FLOWS FROM FINANCING ACTIVITIES
   Repayment of advances from General Partner                 (33,650)          --

Cash flows from investing activities
   Distributions from Local Limited Partnership                61,593           --

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            3,727       (6,756)

CASH AND CASH EQUIVALENTS AT  BEGINNING OF PERIOD              25,589       23,409

CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $  29,316    $  16,653

RECONCILIATION OF NET LOSS TO NET CASH USED IN
   OPERATING ACTIVITIES:
     Net income (loss)                                      $  26,055    $(119,762)
     Adjustments to reconcile net income (loss) to net
     cash used in operating activities:
      Share of profits from Local Limited Partnerships       (124,800)     (97,610)
      Increase in accrued interest on deferred
        acquisition notes                                     120,723      120,723
      Decrease in accrued interest on Partner loans            (1,701)         --
      (Decrease) increase in administrative and
        reporting fees payable                                (28,389)      68,624
      (Decrease) increase in other accrued expenses           (16,104)      21,269

      Total adjustments                                       (50,271)     113,006

Net cash used in operating activities                       $ (24,216)   $  (6,756)
</TABLE>

                     See Accompanying Notes to Financial Statements

<PAGE>

                  NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                          Notes to Financial Statements

                                   (Unaudited)

(1)   ACCOUNTING POLICIES

Organization

National  Housing   Partnership  Realty  Fund  Two  (the  "Partnership"  or  the
"Registrant")  is a limited  partnership  organized  under the Maryland  Revised
Uniform Limited  Partnership Act on January 22, 1985. The Partnership was formed
for the purpose of raising capital by offering and selling  limited  partnership
interests   and  then   investing  in  limited   partnerships   (Local   Limited
Partnerships),  each of which  owns and  operates  an  existing  rental  housing
project  which is  financed  and/or  operated  with one or more  forms of rental
assistance or financial assistance from the U.S. Department of Housing and Urban
Development  (HUD). On April 30, 1985, the Partnership began raising capital and
acquiring interests in Local Limited Partnerships.

The General  Partner was  authorized  to raise  capital for the  Partnership  by
offering  and  selling  to  additional  limited  partners  not more than  18,300
interests at a price of $1,000 per interest.  During 1985, the sale of interests
was closed after the sale of 18,300 interests to limited partners.

On June 3,  1997,  Apartment  Investment  and  Management  Company,  a  Maryland
corporation  ("AIMCO" and,  together with its  subsidiaries and other controlled
entities,  the  ("AIMCO  Group"),  acquired  all of the issued  and  outstanding
capital stock of NHP Partners,  Inc., a Delaware  corporation  ("NHP Partners"),
and the AIMCO Group  acquired all of the  outstanding  interests in NHP Partners
Two Limited  Partnership,  a Delaware limited  partnership ("NHP Partners Two").
The  acquisitions  were made  pursuant to a Real Estate  Acquisition  Agreement,
dated  as of  May  22,  1997  (the  "Agreement"),  by  and  among  AIMCO,  AIMCO
Properties,  L.P., a Delaware limited partnership (the "Operating Partnership"),
Demeter Holdings Corporation,  a Massachusetts  corporation ("Demeter"),  Phemus
Corporation, a Massachusetts corporation ("Phemus"),  Capricorn Investors, L.P.,
a Delaware limited  partnership  ("Capricorn"),  J. Roderick Heller, III and NHP
Partners Two LLC, a Delaware limited liability company ("NHP Partners Two LLC").
NHP  Partners  owns  all of  the  outstanding  capital  stock  of  the  National
Corporation  for  Housing  Partnerships,  a  District  of  Columbia  corporation
("NCHP"),  which is the general partner of The National Housing  Partnership,  a
District of  Columbia  limited  partnership  ("NHP" or the  "General  Partner").
Together,  NCHP  and NHP  Partners  Two own all of the  outstanding  partnership
interests in NHP. NHP is the general partner of the  Registrant.  As a result of
these transactions,  the AIMCO Group has acquired control of the general partner
of the Registrant and, therefore,  may be deemed to have acquired control of the
Registrant.

The Original  Limited  Partner of the  Partnership is 1133 Fifteenth  Street Two
Associates,  whose  limited  partners  were key employees of an affiliate of the
Partnership at the time the  Partnership was formed and whose general partner is
the sole shareholder of the Partnership's General Partner.

Basis of Presentation

The accompanying  unaudited interim financial statements reflect all adjustments
which are, in the opinion of  management,  necessary to a fair  statement of the
financial condition and results of operations for the interim periods presented.
All such adjustments are of a normal and recurring nature.

While the General Partner  believes that the disclosures  presented are adequate
to make the  information  not  misleading,  it is suggested that these financial
statements  be read in  conjunction  with the  financial  statements  and  notes
included  in the  Partnership's  Annual  Report  filed on Form 10-K for the year
ended December 31, 1998.

(2)   INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

During 1985, the Partnership  acquired a 94.5% limited partnership interest (98%
with respect to allocation of losses) in twenty-one Local Limited  Partnerships:
Meadows Apartments Limited Partnership,  Esbro Limited Partnership,  Rodeo Drive
Limited   Partnership,   Menlo  Limited   Partnership,   Mayfair  Manor  Limited
Partnership,  Hurbell I Limited  Partnership,  Hurbell II  Limited  Partnership,
Hurbell III Limited  Partnership,  Tinker Creek  Limited  Partnership,  Rockwell
Limited  Partnership,  Meadows East Apartments  Limited  Partnership,  Kimberton
Apartments   Associates  Limited  Partnership,   San  Juan  del  Centro  Limited
Partnership,  Gulfway Limited  Partnership,  Caroline Arms Limited  Partnership,
Hilltop Limited Partnership,  Harold House Limited Partnership, Park Avenue West
I Limited Partnership, West Oak Village Limited Partnership, Park Avenue West II
Limited  Partnership,  and Windsor Apartments  Associates  Limited  Partnership.
During 1998, the Partnership's  interest in Gulfway Limited  Partnership,  Menlo
Limited  Partnership and Rockwell  Limited  Partnership were foreclosed upon and
Tinker Creek Limited Partnership sold its property.

The Menlo  Limited  Partnership  had a note payable which was due on October 31,
1997. On November 10, 1997, the note holder  notified Menlo Limited  Partnership
that the note was in default and demanded immediate  payment.  The Local Limited
Partnership  did not have the  resources to pay amounts due on the note payable.
On January 5, 1998, pursuant to the security agreement of the note payable,  the
note  holder  was  substituted  as sole  limited  partner  of the Local  Limited
Partnership  in place of the  Partnership  and the note  holder's  assignee  was
substituted  as the  general  partner.  No gain or loss has been  recorded  as a
result  of the  transfer  of this  partnership  interest.  With  the loss of the
Partnership's  interest in Menlo  Limited  Partnership  to the note holder,  the
Partnership  will not  receive  any  future  benefits  from this  Local  Limited
Partnership  and taxable income will be generated and flow to the  Partnership's
investors  without  any  distributable  cash.  The  specific  impact  of the tax
consequence is dependent upon each partner's individual tax situation.

Additionally,  the Gulfway and Rockwell  Limited  Partnerships had notes payable
which were due on November 7, 1997. The Local Limited  Partnerships did not have
the  resources  to pay  amounts  due on the  notes  payable.  On June 29,  1998,
pursuant to the security agreements of the notes payable,  the note holders were
substituted as sole limited  partner of the Local Limited  Partnerships in place
of NHP Realty Fund Two and the note  holders'  assignee was  substituted  as the
general partner.  No gain or loss has been recorded as a result of the transfers
of the  partnership  interest.  With the loss of the  Partnership's  interest in
Gulfway and Rockwell Limited  Partnerships to the note holders,  the Partnership
will not receive any future benefits from these Local Limited  Partnerships  and
taxable income will be generated and flow to the Partnership's investors without
any distributable  cash. The specific impact of the tax consequence is dependent
upon each partner's individual tax situation.

Tinker Creek Limited Partnership had a note payable due on June 30, 1998. During
February 1998, Tinker Creek Limited  Partnership  entered into a sales agreement
with Artcraft  Investment,  L.L.C. for the sale of Tinker Creek Apartments.  The
closing  occurred  on July 2, 1998,  with a purchase  price of  $1,785,000.  Net
proceeds of $750,081  were divided  between the holders of the Tinker Creek note
payable and Tinker Creek Limited  Partnership,  with the note holders  receiving
80% of the net proceeds in full  satisfaction of amounts due on their notes. Any
unpaid  balances were forgiven.  Tinker Creek Limited  Partnership  received the
remaining 20% of the net proceeds.  The Partnership's share of the gain from the
sale,  in excess of  cumulative  losses not taken,  in the amount of $33,818 was
recorded in the  statements of operations  for the year ended December 31, 1998,
as an extraordinary item - gain on extinguishment of debt. The sale may generate
taxable income to the  Partnership's  investors.  The specific impact of the tax
consequences is dependent upon each specific partner's individual tax situation.

Since the Partnership,  as a limited partner, does not exercise control over the
activities of the Local Limited  Partnerships in accordance with the partnership
agreements,  these investments are accounted for using the equity method.  Thus,
the  investments are carried at cost less the  Partnership's  share of the Local
Limited  Partnerships'  losses and distributions plus the Partnership's share of
Local Limited  Partnerships'  profits.  However,  since the  Partnership  is not
legally liable for the obligations of the Local Limited Partnerships, and is not
otherwise committed to provide additional support to them, it does not recognize
losses once its investment in each of the individual Local Limited  Partnerships
reduced for its share of losses and cash  distributions,  reaches zero.  Once an
investment account has been reduced to zero, profits reported by a Local Limited
Partnership  are not  recognized  by the  Partnership  until such profits  equal
losses not recognized plus distributions  received and previously  recognized as
revenue. As a result, the Partnership did not recognize $443,401 and $928,101 of
losses from thirteen and seventeen  Local  Limited  Partnerships  during the six
months ended June 30, 1999 and 1998,  respectively.  During the six months ended
June  30,  1999,  the  Partnership's  share  of  profits  in two  Local  Limited
Partnerships  in the amount of $84,868 was offset  against prior year losses not
taken. As of June 30, 1999, the  Partnership  has not recognized  $22,105,402 of
its allocated cumulative share of losses from fifteen Local Limited Partnerships
in which its investment has been reduced to zero.

No working capital  advances or repayments were made between the Partnership and
the Local Limited  Partnerships.  During 1993 the Partnership  re-evaluated  the
timing of the collectibility of the advances and determined,  based on the Local
Limited  Partnerships'  operations,  that  such  advances  are not  likely to be
collected.  For accounting purposes, the Partnership treated the advance balance
as additional  investments  in the Local Limited  Partnerships.  The balance was
then reduced to zero,  with a  corresponding  charge to  operations to reflect a
portion of the previously unrecognized losses on investments.

Advances  to the  Local  Limited  Partnership  remain  due  and  payable  to the
Partnership.  Interest is calculated at the Chase Manhattan Bank prime rate plus
2% (9.75% at June 30,  1999).  Payment of principal  and interest is  contingent
upon the Local Limited Partnerships having available surplus cash, as defined by
HUD  regulations,  from  operations or from the sale or refinancing of the Local
Limited  Partnership  Properties.  Any future  repayment of advances or interest
will be reflected as  Partnership  income when  received.  During the six months
ended June 30, 1999 the  Partnership  received  $123,685 of interest from Harold
House Limited Partnership on its advance from the Partnership.

The following are combined statements of operations for the three and six months
ended June 30, 1999 and 1998, respectively, of the Local Limited Partnerships in
which the Partnership  has invested.  The statements are compiled from financial
statements of the Local Limited  Partnerships,  prepared on the accrual basis of
accounting,  as  supplied  by the  management  agents of the  projects,  and are
unaudited.

                        COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                         Three Months Ended        Six Months Ended
                                              June 30,                 June 30,
                                          1999         1998         1999         1998

<S>                                    <C>         <C>          <C>          <C>
Rental income                          $2,964,292  $3,435,894   $5,901,976   $6,924,317
Other income                              116,024      94,143      224,940      235,588

  Total income                          3,080,316   3,530,037    6,126,916    7,159,905

Operating expenses                      1,831,086   2,265,616    3,732,045    4,727,068
Interest, taxes and insurance             812,733   1,073,121    1,665,951    2,137,461
Depreciation                              486,745     560,428      959,497    1,118,722

  Total expense                         3,130,564   3,899,165    6,357,493    7,983,251

Net income (loss)                      $  (50,248) $ (369,128)  $ (230,577)  $ (823,346)

National Housing Partnership Realty
 Fund Two share of income (losses)     $  (54,845) $ (363,153)  $ (233,733)  $ (811,210)
</TABLE>

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the six month  periods  ended  June 30,  1999 and 1998,  the  Partnership
accrued  administrative and reporting fees payable to the General Partner in the
amount of $68,625  and  $68,624,  respectively,  for  services  provided  to the
Partnership.  The Partnership paid $97,014 to the General Partner for these fees
during the six months  ended June 30,  1999.  The  Partnership  did not make any
payments to the General  Partner for these fees during the six months ended June
30, 1998. The amount of fees due to the General  Partner by the  Partnership was
$1,183,690 at June 30, 1999.

During the six months  ended June 30,  1999,  the  Partnership  paid the General
Partner  $33,650  and $2,917 for  repayment  of a working  capital  advance  and
accrued interest on the advance,  respectively. No working capital advances were
made during the six months ended June 30, 1999. During the six months ended June
30,  1998,  no working  capital  advances or  repayments  were made  between the
General  Partner and the  Partnership.  Interest is charged on borrowings at the
Chase  Manhattan  Bank rate of prime plus 2% (9.75% at June 30,  1999).  Accrued
interest on this loan amounted to $1,701 at December 31, 1998.

The accrued  administrative  and reporting  fees payable to the General  Partner
will be paid as cash flow permits or from the sale or refinancing of one or more
of the underlying properties of the Local Limited Partnerships.

(4)   SEGMENT INFORMATION

As defined in SFAS No. 131  "Disclosure  about  Segments  of an  Enterprise  and
Related  Information",  the Partnership has only one reportable segment.  Due to
the nature of the  Partnership's  operations,  the General Partner believes that
segment-based disclosures will not result in a more meaningful presentation than
the financial statements as currently presented.

(5)   LEGAL PROCEEDINGS

In July 1999, NHP received a grand jury subpoena  requesting  documents relating
to NHP's  management of  HUD-assisted or HUD-insured  multi-family  projects and
NHP's  operation of a group  purchasing  program created by NHP, known as Buyers
Access.  The  subpoena  relates  to the same  subject  matter as  subpoenas  NHP
received in October  and  December of 1997 from the HUD  Inspector  General.  To
date,  neither the HUD  Inspector  General nor the grand jury has  initiated any
action  against NHP or AIMCO or, to NHP's or AIMCO's  knowledge,  any owner of a
HUD property  managed by NHP. AIMCO believes that NHP's  operations and programs
are  in  compliance,  in  all  material  respects,  with  all  laws,  rules  and
regulations relating to HUD-assisted or HUD-insured  properties.  AIMCO does not
believe that the investigations  will result in a material adverse impact on its
or NHP's operations. However, as with any similar investigation, there can be no
assurance  that these  will not result in  material  fines,  penalties  or other
costs.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>

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

The  matters  discussed  in this Form  10-QSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-QSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operation.  Accordingly,  actual  results  could  differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

Liquidity And Capital Resources

As of June 30, 1999,  the  Partnership  retained an interest in seventeen of its
original  twenty-one  Local Limited  Partnerships.  The  properties in which the
Local  Limited  Partnerships  have  invested,  receive  one  or  more  forms  of
assistance  from  the  Federal  Government.  As  a  result,  the  Local  Limited
Partnerships'  ability to  transfer  funds  either to the  Partnership  or among
themselves  in the form of cash  distributions,  loans or advances is  generally
restricted by these  government-assistance  programs.  These  restrictions could
impact  the  Partnership's  ability to meet its cash  obligations  given the low
level of reserves at the Partnership level.

For the past several years,  various  proposals have been advanced by the United
States Department of Housing and Urban Development ("HUD"),  Congress and others
proposing the restructuring of HUD's rental assistance  programs under Section 8
of the United States Housing Act of 1937 ("Section 8"), under which 1,739 units,
76 percent of the total units owned by the  properties in which the  Partnership
has  invested,  receive  rental  subsidies.  On October 27, 1997,  the President
signed into law the Multifamily Assisted Housing Reform and Affordability Act of
1997 (the "1997 Housing Act").  Under the 1997 Housing Act,  certain  properties
assisted  under  Section 8, with rents above  market  levels and  financed  with
HUD-insured  mortgage loans, will be restructured by adjusting  subsidized rents
to market levels,  thereby  potentially  reducing rent  subsidies,  and lowering
required  debt  service  costs as needed to ensure  financial  viability  at the
reduced  rents and rent  subsidies.  The 1997 Housing Act retains  project-based
subsidies for most properties (properties in rental markets with limited supply,
properties serving the elderly, and certain other properties).  The 1997 Housing
Act phases out project-based subsidies on selected properties servicing families
not located in rental markets with limited supply,  converting such subsidies to
a  tenant-based  subsidy.  Under a tenant-based  system,  rent vouchers would be
issued to  qualified  tenants  who then could elect to reside at  properties  of
their  choice,  provided  such  tenants  have the  financial  ability to pay the
difference  between the selected  properties'  monthly rent and the value of the
vouchers,  which would be established  based on HUD's regulated fair market rent
for the relevant geographical areas. With respect to Housing Assistance Payments
Contracts  ("HAP  Contracts")  expiring  before  October 1, 1998,  Congress  has
elected to renew them for one-year  terms,  generally at existing rents, so long
as the  properties  remain  in  compliance  with the HAP  Contracts.  While  the
Partnership  does not expect the provisions of the 1997 Housing Act to result in
a significant  number of tenants  relocating from properties  owned by the Local
Limited  Partnerships,  there can be no assurance that the  provisions  will not
significantly  affect the  operations  of the  properties  of the Local  Limited
Partnerships.  Furthermore,  there can be no  assurance  that  other  changes in
Federal  housing  subsidy policy will not occur.  Any such changes could have an
adverse effect on the operation of the Partnership.

No working capital  advances or repayments were made between the Partnership and
the Local  Limited  Partnerships  during the six months  ended June 30, 1999 and
1998. The combined amount carried as due to the Partnership by the Local Limited
Partnerships was $424,600, as of June 30, 1999.

Distributions   received   from  Local   Limited   Partnerships   represent  the
Partnership's  proportionate share of the excess cash available for distribution
from the Local Limited Partnerships. As a result of the use of the equity method
of accounting for the Partnership's investments, as of June 30, 1999 investments
in  fifteen of the  remaining  seventeen  Local  Limited  Partnerships  had been
reduced to zero. For these investments, cash distributions received are recorded
in income as  distributions  received in excess of  investment  in Local Limited
Partnerships.  For those investments not reduced to zero, distributions received
are  recorded  as  distributions  from  Local  Limited   Partnerships.   A  cash
distribution of $61,593 from a Local Limited Partnership was received during the
six months ended June 30, 1999. There were no cash distributions  during the six
months ended June 30, 1998. The receipt of  distributions in future quarters and
years is dependent upon the operations of the underlying properties of the Local
Limited  Partnerships to generate sufficient cash for distribution in accordance
with applicable HUD regulations.

Net cash used in  operations  for the six months ended June 30, 1999 was $24,216
as compared to $6,756 for the six months  ended June 30,  1998.  The increase in
cash  used  in   operations   is  primarily  due  to  increases  in  payment  of
administrative reporting fees to the General Partner and operating expenses paid
partially  offset by  interest  income  received  from one of the Local  Limited
Partnerships.  Cash used in  financing  activities  consisted  of  repayment  of
advances  from the  General  Partner.  Cash  provided  by  investing  activities
consisted of a distribution from one of the Local Limited Partnerships.

Cash and cash  equivalents  amounted  to $29,316 at June 30, 1999 as compared to
$25,589  at  December  31,  1998.  The  ability of the  Partnership  to meet its
on-going  cash  requirements  in  excess  of cash on  hand at June  30,  1999 is
dependent  upon the  future  receipt  of  distributions  from the Local  Limited
Partnerships  or  proceeds  from  sales  or  refinancing  of one or  more of the
underlying  properties of the Local Limited  Partnerships.  Cash on hand at June
30, 1999 plus any distributions  from the underlying  operations of the combined
Local Limited  Partnerships is expected to adequately fund the operations of the
Partnership in the current year. However,  there can be no assurance that future
distributions will be adequate to fund the operations beyond the current year.

The Partnership currently owes the General Partner $1,183,690 for administrative
and reporting services performed.  The payment of the unpaid  administrative and
reporting  fees will most  likely  result  from the sale or  refinancing  of the
underlying  properties  of the Local Limited  Partnerships,  rather than through
recurring operations.

Each Local  Limited  Partnership  in which the  Partnership  currently  holds an
interest has a note payable due to the original owner of each Property. With the
exception  of West Oak  Village  Limited  Partnership,  these  notes are  either
currently  due or  become  due in 1999.  These  notes  are  secured  by both the
Partnership's and NHP's interests in the applicable Local Limited  Partnerships.
In the event of a default on the notes, the note holders would be able to assume
NHP's and the Partnership's interests in the Local Limited Partnerships.

The West Oak Village  Limited  Partnership  note payable matured on November 30,
1996.  During 1997, the note holders entered into an agreement with the West Oak
Village  Limited  Partnership  under  which  the  maturity  date of the note was
extended  until  November  2013.  Under  the terms of the  agreement,  the Local
Limited  Partnership must pay the note holders annual interest on or before each
December 31,  during the term of the note at a variable  rate based on the prior
year's interest rate payment  multiplied by the most recent Consumer Price Index
rate,  with any  increase  subject  to a floor of 2% and a ceiling of 5%. At any
time prior to the note's maturity,  the Local Limited  Partnership has an option
to pay off the note payable at a discount equal to 70% of the property's  annual
scheduled  rent but no less than  $700,000.  At June 30, 1999,  the  outstanding
principal and related  interest,  respectively,  were $2,046,695 and $2,528,381.
There  can  be no  assurance  that  the  Local  Limited  Partnership  will  have
sufficient  cash or that the General  Partner will loan  additional  cash to the
Local Limited Partnership, if necessary, to make the annual installment payments
required  under the  Agreement.  The failure to make the  required  payments may
result in a loss of interest in this Local Limited Partnership, which may result
in the investors incurring adverse tax consequences.

The Menlo  Limited  Partnership  had a note payable which was due on October 31,
1997. On November 10, 1997, the note holder  notified Menlo Limited  Partnership
that the note was in default and demanded immediate  payment.  The Local Limited
Partnership  did not have the  resources to pay amounts due on the note payable.
On January 5, 1998, pursuant to the security agreement of the note payable,  the
note  holder  was  substituted  as sole  limited  partner  of the Local  Limited
Partnership  in place of the  Partnership  and the note  holder's  assignee  was
substituted as the general partner. With the loss of the Partnership's  interest
in Menlo  Limited  Partnership  to the note  holder,  the  Partnership  will not
receive any future  benefits  from this Local  Limited  Partnership  and taxable
income will be generated  and flow to the  Partnership's  investors  without any
distributable cash. The specific impact of the tax consequence is dependent upon
each partner's individual tax situation.

Additionally,  the Gulfway and Rockwell  Limited  Partnerships had notes payable
which were due on November 7, 1997. The Local Limited  Partnerships did not have
the  resources  to pay  amounts  due on the  notes  payable.  On June 29,  1998,
pursuant to the security agreements of the notes payable,  the note holders were
substituted as sole limited  partner of the Local Limited  Partnerships in place
of NHP Realty Fund Two and the note  holders'  assignee was  substituted  as the
general partner.  No gain or loss has been recorded as a result of the transfers
of the  partnership  interest.  With the loss of the  Partnership's  interest in
Gulfway and Rockwell Limited  Partnerships to the note holders,  the Partnership
will not receive any future benefits from these Local Limited  Partnerships  and
taxable income will be generated and flow to the Partnership's investors without
any distributable  cash. The specific impact of the tax consequence is dependent
upon each partner's individual tax situation.

Mayfair Manor and Esbro Limited Partnerships have notes payable which matured on
October 25, 1997.  Effective  February 16,  1998,  both Mayfair  Manor and Esbro
Limited Partnerships executed Amended and Restated Promissory Notes ("ARPN") for
each of their notes payable.  The general terms of the ARPN's require payment of
the  following  upon the  earlier of the sale,  transfer or  refinancing  of the
underlying property, or October 25, 1999:

      a)    the original principal sum of the note payable, plus
      b)    interest  which accrued on such  principal at the rate of 9% per
            annum from the original  date to October 25, 1997,  plus
      c)    interest on the foregoing sums of principal and interest from
            October  25,  1997  at the  rate  of  5.54%  per  annum,  compounded
            annually.

The ARPN's are  collateralized by a security interest in the general and limited
partnership interests of the Local Limited  Partnerships.  The note holders were
paid an  extension  fee of $90,000  and  $70,000  for  Mayfair  Manor and Esbro,
respectively,  which  was paid  from the  proceeds  of  loans  from the  General
Partner.

Tinker Creek Limited Partnership had a note payable due on June 30, 1998. During
February 1998, Tinker Creek Limited  Partnership  entered into a sales agreement
with Artcraft  Investment,  L.L.C. for the sale of Tinker Creek Apartments.  The
closing  occurred  on July 2, 1998,  with a purchase  price of  $1,785,000.  Net
proceeds of $750,081  were divided  between the holders of the Tinker Creek note
payable and Tinker Creek Limited  Partnership,  with the note holders  receiving
80% of the net proceeds in full  satisfaction of amounts due on their notes. Any
unpaid  balances were forgiven.  Tinker Creek Limited  Partnership  received the
remaining 20% of the net proceeds.  The sale may generate  taxable income to the
Partnership's  investors.  The  specific  impact  of  the  tax  consequences  is
dependent upon each specific partner's individual tax situation.

The note  payable  with respect to Rodeo Drive  Limited  Partnership  matured on
December 6, 1998. The Local Limited  Partnership  does not have the resources to
pay amounts due on the note payable.  The holders of the note  commenced a civil
action seeking to gain control of the general and limited partnership  interests
of the Rodeo Drive Limited Partnership. If the Partnership loses its interest in
Rodeo Drive Limited  Partnership to the note holder,  the  Partnership  will not
receive any future  benefits  from this Local  Limited  Partnership  and taxable
income will be generated  and flow to the  Partnership's  investors  without any
distributable cash. The specific impact of the tax consequence is dependent upon
each partner's individual tax situation.

Additionally,  both Meadows Apartments and Meadows East Apartments Local Limited
Partnerships  had notes payable  which were due on December 12, 1997.  The Local
Limited  Partnerships  do not have the resources to pay the amounts due on their
respective notes payable and are currently in default on their respective notes.
The holders of the notes have started proceedings to take back the Partnership's
interest in each Local  Limited  Partnership.  Effective  August 5, 1999 Meadows
East was  foreclosed  upon. The effects of this  foreclosure on the  Partnership
will  be  reflected  in  the  quarter  ended  September  30,  1999.  Should  the
Partnership lose its interest in the Local Limited Partnerships, partners in the
Partnership  may  incur  adverse  tax  consequences.   The  impact  of  the  tax
consequence is dependent upon each partner's individual tax situation.

The notes related to the other eleven Local Limited Partnerships, in addition to
the  extensions  to the notes  relating to Mayfair Manor and Esbro Local Limited
Partnerships  discussed  above,  will  reach  final  maturity  during the fourth
quarter of 1999. As of June 30, 1999, the Local Limited  Partnerships'  have not
renegotiated  the terms of the notes,  including  the extension of the due date.
Continuation of the Local Limited  Partnerships'  operations in the present form
is dependent on their ability to extend the maturity  dates of these notes or to
repay or refinance the notes.  These notes are secured by both the Partnership's
and the General Partner's  interests in the Local Limited  Partnerships.  In the
event of a default on the notes,  the note  holders  would be able to assume the
General  Partner's  and  the  Partnership's   interests  in  the  Local  Limited
Partnerships.  Should  the  Partnership  lose its  interest  in a Local  Limited
Partnership, partners in the Partnership may incur adverse tax consequences. The
impact of the tax  consequence is dependent  upon each partner's  individual tax
situation. There can be no assurance that the General Partner will be successful
in extending or restructuring the notes payable as they mature.

During 1998, the General Partner  advanced the Partnership  $33,650 to pay legal
expenses  of the  Partnership.  During  the six months  ended June 30,  1999 the
Partnership  paid the General  Partner  $33,650 and $2,917 for  repayment of the
advance and accrued interest on the advance,  respectively.  Interest is charged
on borrowings at the Chase  Manhattan Bank prime interest rate plus 2% (9.75% at
June 30, 1999).

Results Of Operations

At June 30,  1999,  the  Partnership  continued to hold an interest in seventeen
Local Limited  Partnerships.  To the extent the Partnership still has a carrying
basis in a respective  Local  Limited  Partnership,  results of  operations  are
significantly  impacted by the  Partnership's  share of the profits or losses in
the Local Limited Partnership.  These profits or losses include depreciation and
accrued note payable  interest  expense which are noncash in nature.  As of June
30, 1999, the  Partnership had no carrying basis in fifteen of the Local Limited
Partnerships and therefore reflected no results of operations, from its share of
losses from these Local Limited Partnerships.

The  Partnership  had net  income of $26,055  for the six months  ended June 30,
1999, compared to a net loss of $119,762 for the six months ended June 30, 1998.
Net income (loss) per unit of limited partnership  increased to $1 from $(6) for
the  18,300  units  outstanding  at June 30,  1999 and 1998,  respectively.  The
increase  in net income was  primarily  attributable  to an increase in share of
profits from Local Limited  Partnerships and an increase in interest income from
a Local Limited Partnership. Partially offsetting these increases were increases
in  interest  expense  on  partner  loans  and  other  operating  expenses.  The
Partnership  did not recognize  $443,401 of its  allocated  share of losses from
fifteen  Local Limited  Partnerships  for the six months ended June 30, 1999, as
the  Partnership's  net carrying basis in these Local Limited  Partnerships  had
been reduced to zero. The  Partnership's  share of losses from the Local Limited
Partnerships,  if not  limited to its  investment  account  balance,  would have
decreased  $484,700  between  periods,  primarily  due to a decrease in expenses
offset partially by a decrease in rental income.

Year 2000 Compliance

General  Description  of the Year 2000 Issue and the  Nature and  Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent  upon the  General  Partner  and its  affiliates  for  management  and
administrative  services  ("Managing  Agent").  Any of the computer  programs or
hardware  that have  date-sensitive  software or embedded  chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a  system  failure  or  miscalculations   causing   disruptions  of  operations,
including,  among other things, a temporary  inability to process  transactions,
send invoices, or engage in similar normal business activities.

Over the past two  years,  the  Managing  Agent has  determined  that it will be
required to modify or replace  significant  portions of its software and certain
hardware so that those systems will properly  utilize dates beyond  December 31,
1999.  The  Managing  Agent  presently   believes  that  with  modifications  or
replacements of existing software and certain hardware,  the Year 2000 issue can
be mitigated.  However,  if such modifications and replacements are not made, or
not completed in time,  the Year 2000 issue could have a material  impact on the
operations of the Partnership.

The  Managing  Agent's plan to resolve  Year 2000 issues  involves  four phases:
assessment,  remediation,  testing,  and  implementation.  To date, the Managing
Agent has fully  completed its  assessment of all the  information  systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing  and  implementation  phases  on both  hardware  and  software  systems.
Assessments are continuing in regards to embedded systems. The status of each is
detailed below.

Status of Progress in Becoming  Year 2000  Compliant,  Including  Timetable  for
Completion of Each Remaining Phase

Computer Hardware:

During 1997 and 1998, the Managing Agent  identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the main computer system used by the Managing Agent became fully
functional.  In addition to the main computer system,  PC-based network servers,
routers and desktop PCs were  analyzed for  compliance.  The Managing  Agent has
begun to replace each of the non-compliant  network  connections and desktop PCs
and, as of June 30, 1999, had completed approximately 90% of this effort.

The total cost to the Managing  Agent to replace the PC-based  network  servers,
routers and desktop PCs is expected to be  approximately  $1.5  million of which
$1.3 million has been incurred to date. The remaining  network  connections  and
desktop  PCs are  expected  to be  upgraded  to Year 2000  compliant  systems by
September 30, 1999. The completion of this process is scheduled to coincide with
the release of a compliant version of the Managing Agent's operating system.

Computer Software:

The  Managing  Agent  utilizes  a  combination  of  off-the-shelf,  commercially
available software programs as well as custom-written programs that are designed
to fit  specific  needs.  Both of these  types of  programs  were  studied,  and
implementation  plans  written  and  executed  with the intent of  repairing  or
replacing any non-compliant software programs.

In April,  1999 the  Managing  Agent  embarked  on a data  center  consolidation
project that unifies its core  financial  systems under its Year 2000  compliant
system. The estimated completion date for this project is October, 1999.

During  1998,  the  Managing  Agent  began  converting  the  existing   property
management and rent  collection  systems to its management  properties Year 2000
compliant systems. The estimated additional costs to convert such systems at all
properties,  is  $200,000,  and  the  implementation  and  testing  process  was
completed in June, 1999.

The final software area is the office software and server operating systems. The
Managing Agent has upgraded all non-compliant office software systems on each PC
and has upgraded  90% of the server  operating  systems.  The  remaining  server
operating  systems  are  planned to be  upgraded  to be Year 2000  compliant  by
September,  1999.  The  completion of this process is scheduled to coincide with
the release of a compliant version of the Managing Agent's operating system.

Operating Equipment:

The Managing  Agent has operating  equipment,  primarily at the property  sites,
which needed to be evaluated for Year 2000  compliance.  In September  1997, the
Managing  Agent  began  taking  a  census  and  inventory  of  embedded  systems
(including  those  devices  that use time to control  systems  and  machines  at
specific  properties,  for  example  elevators,  heating,  ventilating,  and air
conditioning systems, security and alarm systems, etc.).

The  Managing  Agent has  chosen to focus its  attention  mainly  upon  security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems  and  switches,  and  sprinkler  systems.  While  this  area is the most
difficult to fully research  adequately,  management has not yet found any major
non-compliance  issues  that  put the  Managing  Agent  at risk  financially  or
operationally.

A  pre-assessment  of the properties by the Managing Agent has indicated no Year
2000 issues. A complete, formal assessment of all the properties by the Managing
Agent is in process and will be  completed in  September,  1999.  Any  operating
equipment that is found non-compliant will be repaired or replaced.

The total cost incurred for all  properties  managed by the Managing Agent as of
June 30, 1999 to replace or repair the  operating  equipment  was  approximately
$75,000.  The  Managing  Agent  estimates  the cost to  replace  or  repair  any
remaining operating equipment is approximately $125,000.

The  Managing  Agent  continues to have  "awareness  campaigns"  throughout  the
organization  designed to raise  awareness  and report any  possible  compliance
issues regarding operating equipment within its enterprise.

Nature and Level of Importance  of Third Parties and Their  Exposure to the Year
2000

The Managing Agent  continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness.  The Managing
Agent has banking relationships with three major financial institutions,  all of
which have  indicated  their  compliance  efforts will be complete  before July,
1999. The Managing Agent has updated data transmission standards with all of the
financial institutions.  The Managing Agent's contingency plan in this regard is
to move  accounts  from any  institution  that  cannot  be  certified  Year 2000
compliant by September 1, 1999.

The  Partnership  does not rely  heavily  on any  single  vendor  for  goods and
services,  and does not have significant  suppliers and subcontractors who share
information  systems  (external  agent). To date the Partnership is not aware of
any  external  agent with a Year 2000  compliance  issue  that would  materially
impact the Partnership's results of operations, liquidity, or capital resources.
However,  the  Partnership has no means of ensuring that external agents will be
Year 2000 compliant.

The  Managing  Agent does not believe that the  inability of external  agents to
complete  their Year 2000  remediation  process in a timely  manner  will have a
material  impact on the  financial  position  or  results of  operations  of the
Partnership.  However,  the effect of  non-compliance  by external agents is not
readily determinable.

Costs to Address Year 2000

The total cost of the Year 2000  project to the  Managing  Agent is estimated at
$3.5  million  and is being  funded from  operating  cash  flows.  To date,  the
Managing Agent has incurred  approximately  $2.9 million ($0.7 million  expensed
and $2.2  million  capitalized  for new  systems and  equipment)  related to all
phases  of  the  Year  2000  project.  Of the  total  remaining  project  costs,
approximately  $0.5 million is  attributable to the purchase of new software and
operating  equipment,  which will be  capitalized.  The  remaining  $0.2 million
relates to repair of hardware and software and will be expensed as incurred. The
Partnership's portion of these costs are not material.

Risks Associated with the Year 2000

The Managing Agent believes it has an effective  program in place to resolve the
Year 2000 issue in a timely manner.  As noted above,  the Managing Agent has not
yet completed all necessary  phases of the Year 2000 program.  In the event that
the Managing Agent does not complete any additional  phases,  certain worst case
scenarios  could  occur.  The worst  case  scenarios  could  include  elevators,
security  and  heating,  ventilating  and air  conditioning  systems  that  read
incorrect  dates and operate with  incorrect  schedules  (e.g.,  elevators  will
operate  on  Monday  as if it were  Sunday).  Although  such a  change  would be
annoying to residents, it is not business critical.

In  addition,  disruptions  in the economy  generally  resulting  from Year 2000
issues could also adversely  affect the  Partnership.  The Partnership  could be
subject to  litigation  for,  among  other  things,  computer  system  failures,
equipment shutdowns or failure to properly date business records.  The amount of
potential  liability  and lost revenue  cannot be  reasonably  estimated at this
time.

Contingency Plans Associated with the Year 2000

The Managing Agent has contingency  plans for certain critical  applications and
is working on such plans for others.  These  contingency  plans  involve,  among
other  actions,  manual  workarounds  and selecting new  relationships  for such
activities as banking relationships and elevator operating systems.
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

In July 1999, NHP received a grand jury subpoena  requesting  documents relating
to NHP's  management of  HUD-assisted or HUD-insured  multi-family  projects and
NHP's  operation of a group  purchasing  program created by NHP, known as Buyers
Access.  The  subpoena  relates  to the same  subject  matter as  subpoenas  NHP
received in October  and  December of 1997 from the HUD  Inspector  General.  To
date,  neither the HUD  Inspector  General nor the grand jury has  initiated any
action  against NHP or AIMCO or, to NHP's or AIMCO's  knowledge,  any owner of a
HUD property  managed by NHP. AIMCO believes that NHP's  operations and programs
are  in  compliance,  in  all  material  respects,  with  all  laws,  rules  and
regulations relating to HUD-assisted or HUD-insured  properties.  AIMCO does not
believe that the investigations  will result in a material adverse impact on its
or NHP's operations. However, as with any similar investigation, there can be no
assurance  that these  will not result in  material  fines,  penalties  or other
costs.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)   Exhibits

                  Exhibit No.

                  27    Financial Data Schedule.

            (b)   Reports on Form 8-K

                  None filed during the quarter ended June 30, 1999.

<PAGE>

                                   SIGNATURES


In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed  on its  behalf  by the  undersigned  thereunto  duly
authorized.

                                   NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                                   (Registrant)

                                   By:   The National Housing Partnership,
                                         Its sole General Partner

                                   By:   National Corporation for Housing
                                         Partnerships, its sole General Partner

                                   By:   /s/Patrick J. Foye
                                         Patrick J. Foye
                                         President

                                   By:   /s/Martha L. Long
                                         Martha L. Long
                                         Senior Vice President and
                                         Controller

                                   Date: