FORM 10-QSB-- 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

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

                   For the quarterly period ended March 31, 2002


[ ] 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
        (Exact name of small business issuer as specified in its charter)


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

                          55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29601
                      (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  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___


                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

a)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                                  Balance Sheet
                                   (Unaudited)

                                 March 31, 2002
                          (in thousands, except unit data)


<TABLE>
<CAPTION>

ASSETS
<S>                                                                          <C>
   Cash and cash equivalents                                                 $   43

                                                                             $   43
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Liabilities
   Accrued expenses                                                          $   11
   Administrative and reporting fees payable to
      General Partner (Note 3)                                                1,343
   Advances from General Partner (Note 3)                                        49


Partners' capital (deficit)
   General Partner                                             $  629
   Original Limited Partner                                      (181)
   Other Limited Partners                                      (1,808)       (1,360)

                                                                             $  43


                   See Accompanying Notes to Financial Statements
</TABLE>


<PAGE>


b)

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                            Statements of Operations
                                   (Unaudited)
                        (in thousands, except per unit data)


<TABLE>
<CAPTION>

                                                                  Three Months Ended
                                                                       March 31,
                                                                   2002         2001
REVENUES:
<S>                                                                <C>          <C>
  Share of profits from Local Limited Partnerships                 $ --         $ 441
  Other income                                                        --           97
                                                                      --          538
COSTS AND EXPENSES:
  Administrative and reporting fees to General Partner                 5           15
  Interest on notes payable                                           --           10
  Other operating expenses                                            13           24
  Interest on advances from General Partner                            1           --
                                                                      19           49

(Loss) income before extraordinary item                              (19)         489
Extraordinary gain on forgiveness of debt (Note 4)                    --          708

Net (loss) INCOME                                                  $ (19)      $1,197

ALLOCATION OF NET (LOSS) INCOME:
  General Partner                                                  $ --          $ 5
  Original Limited Partner                                            --           12
  Other limited partners                                             (19)       1,180

                                                                   $ (19)      $1,197
PER LIMITED PARTNERSHIP UNIT:
  (Loss) income before extraordinary item                         $(1.05)      $26.24
  Extraordinary gain on forgiveness of debt                           --        38.39

NET (LOSS) INCOME PER LIMITED PARTNERSHIP INTEREST                $(1.05)      $64.63


                   See Accompanying Notes to Financial Statements
</TABLE>


<PAGE>


c)

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                Statement of Changes in Partners' Capital (Deficit)
                                   (Unaudited)
                          (in thousands, except unit data)

<TABLE>
<CAPTION>

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

Partners' capital (deficit) at
<S>        <C> <C>                     <C>          <C>           <C>           <C>
  December 31, 2001                    $ 629        $ (181)       $(1,789)      $(1,341)

Net loss - three months
  ended March 31, 2002                     --            --           (19)          (19)

Partners' capital (deficit) at
  March 31, 2002                       $ 629        $ (181)       $(1,808)      $(1,360)

Percentage interest at
  March 31, 2002                         1%            1%           98%          100%
                                        (A)           (B)           (C)


(A)   General Partner
(B)   Original Limited Partner
(C)   Consists of 18,138 investment units at March 31, 2002 and 18,258 investment
      units at March 31, 2001.
</TABLE>




                   See Accompanying Notes to Financial Statements


<PAGE>


d)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                            Statements of Cash Flows
                                   (Unaudited)
                                   (in thousands)
<TABLE>
<CAPTION>

                                                                    Three Months Ended March 31,
                                                                        2002           2001
CASH FLOWS FROM OPERATING ACTIVITIES:
  Distributions received in excess of investment in Local
<S>                                                                     <C>            <C>
   Limited Partnership                                                  $   --         $    97
  Advances made in excess of investment in Local Limited
   Limited Partnership                                                      --             (3)
  Operating expenses paid                                                  (43)           (45)
  Payment of interest on note payable                                       --         (1,575)
        Net cash used in operating activities                              (43)        (1,526)

Cash flows from investing activities:
  Distributions from Local Limited Partnerships                             43          2,027
  Advances to Local Limited Partnership                                     --             (3)
        Net cash provided by investing activities                           43          2,024

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of advances from General Partner                                --            (33)
  Payments on deferred acquisition note payable                             --           (452)
  Advances from General Partner                                             38             --
        Net cash provided by (used in) financing activities                 38           (485)

NET INCREASE IN CASH AND CASH EQUIVALENTS                                   38             13

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                             5              1

CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $   43           $ 14

RECONCILIATION OF NET (LOSS) INCOME TO NET CASH USED IN
  OPERATING ACTIVITIES:
   Net (loss) income                                                    $  (19)       $ 1,197
   Adjustments to reconcile net (loss) income to net
     cash used in operating activities:
      Share of income from Local Limited Partnerships                       --           (441)
      Extraordinary gain on forgiveness of debt                             --           (708)
      Changes in operating assets and liabilities:
        Decrease in accrued interest on deferred acquisition
          note                                                              --         (1,564)
        Increase in administrative and reporting fees payable                5             15
        Decrease in other accrued expenses                                 (30)           (25)
        Increase in accrued interest on advances from General
          Partner                                                            1             --
        Total adjustments                                                  (24)        (2,723)

Net cash used in operating activities                                   $ (43)        $(1,526)


                   See Accompanying Notes to Financial Statements
</TABLE>


<PAGE>



e)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                          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 National Housing  Partnership,  a District of Columbia  limited  partnership
("NHP" or 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  unit.  During  1985,  the sale of
interests  was closed after the sale of 18,300  interests  to limited  partners.
Apartment  Investment and Management Company  ("AIMCO"),  a publicly traded real
estate  investment  trust,  and its  affiliates  ultimately  control the General
Partner.  The original  Limited  Partner of the  Partnership  is 1133  Fifteenth
Street Two Associates,  whose limited partners were key employees of the general
partner of NHP at the time the  Partnership  was formed.  The general partner of
1133 Fifteenth Street Two Associates is NHP.

Basis of Presentation

The accompanying  unaudited interim financial statements reflect all adjustments
which are, in the opinion of  management,  necessary for 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-KSB for the year
ended December 31, 2001.

(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.
At March 31, 2002, the Partnership  continues to hold an interest in three Local
Limited  Partnerships:  San Juan del Centro Limited  Partnership,  Caroline Arms
Limited  Partnership  and Harold  House  Limited  Partnership.  During the three
months ended March 31,  2002,  the  Partnership  received its share of the final
distribution of Windsor Apartments  Associates Limited Partnership and the Local
Limited Partnership was liquidated.  During 2001, the Partnership's interests in
Esbro Limited Partnership,  Mayfair Manor Limited Partnership and Hurbell II and
III Limited  Partnership were foreclosed upon. Also, during 2001, the properties
owned by Windsor Apartments  Associates Limited Partnership and West Oak Village
Limited Partnership were sold.

Caroline Arms,  Harold House,  and San Juan Del Cantro Limited  Partnerships all
have notes  payable which are  currently in default and  accordingly,  the Local
Limited Partnership interests are subject to potential foreclosure. Continuation
of the Local Limited  Partnerships'  operations in the present form is dependent
on their  ability to extend the maturity  date of the  respective  notes,  or to
repay or refinance  their notes.  The  financial  statements  do not include any
adjustments which might result from the outcome of this uncertainty.

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  approximately  $46,000
and $345,000 of losses from three and six Local Limited  Partnerships during the
three  months  ended  March 31,  2002 and 2001,  respectively.  During the three
months ended March 31,  2001,  the  Partnership's  share of profits in two Local
Limited  Partnerships  of  approximately  $6,000 was offset  against  prior year
losses not taken.  For the three  months  ended  March 31,  2002,  there were no
profits  offset  against prior year losses not taken.  As of March 31, 2002, the
Partnership  has  not  recognized  approximately  $3,005,000  of  its  allocated
cumulative  share of losses from three Local Limited  Partnerships  in which its
investment has been reduced to zero.

During the three  months  ended March 31,  2001,  the  Partnership  made working
capital advances of approximately $6,000 to two Local Limited  Partnerships.  No
repayments  were made during the three months  ended March 31, 2001.  No working
capital  advances were made or repayments  received  between the Partnership and
the Local Limited Partnerships for the three months ended March 31, 2002. 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 prime rate plus 2% (6.75% at March
31,  2002).  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.

The  following  are unaudited  combined  statements of operations  for the three
months ended March 31, 2002 and 2001 of the Local Limited  Partnerships in which
the  Partnership  has  invested.  The  statements  are compiled  from  financial
statements of the Local Limited  Partnerships  which are prepared on the accrual
basis of accounting and supplied by the managing agents of the projects.

                        COMBINED STATEMENTS OF OPERATIONS

                                                Three Months Ended
                                                    March 31,
                                                2002          2001
                                                  (in thousands)
Rental income                                  $  623        $1,655
Other income                                       38            81
Gain on sale of property                           --           667
   Total income                                   661         2,403

Operating expenses                                386         1,190
Interest, taxes and insurance                     126           509
Depreciation                                      196           462
   Total expense                                  708         2,161

Net (loss) income                              $ (47)         $ 242

Partnership's share of (losses) income         $ (46)         $ 214

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the three month  periods ended March 31, 2002 and 2001,  the  Partnership
accrued  administrative  and  reporting  fees payable to the General  Partner of
approximately  $5,000 and $15,000,  respectively,  for services  provided to the
Partnership.  The amount of fees due to the General  Partner by the  Partnership
was approximately  $1,343,000 at March 31, 2002. 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.

The General Partner  advanced the Partnership  approximately  $38,000 during the
three months ended March 31, 2002.  No such  advances were made during the three
months  ended March 31, 2001.  For the three  months  ended March 31, 2001,  the
Partnership  repaid advances of  approximately  $33,000 to the General  Partner.
There were no  repayments  made during the three  months  ended March 31,  2002.
Interest is charged on borrowings  at the Chase  Manhattan  Bank prime  interest
rate plus 2% and amounted to  approximately  $1,000 and less than $1,000 for the
three months ended March 31, 2002 and 2001, respectively. Chase Manhattan Bank's
prime rate was 4.75% at March 31, 2002. At March 31, 2002, the Partnership  owed
approximately $49,000 in unpaid borrowings due to the General Partner, including
accrued interest.

Beginning in 2001, the Local Limited  Partnerships began insuring its properties
up to certain  limits  through  coverage  provided by AIMCO  which is  generally
self-insured  for a  portion  of  losses  and  liabilities  related  to  workers
compensation,  property  casualty  and  vehicle  liability.  The  Local  Limited
Partnerships  insures its properties  above the AIMCO limits  through  insurance
policies obtained by AIMCO from insurers  unaffiliated with the General Partner.
During  the three  months  ended  March 31,  2002 and  2001,  the Local  Limited
Partnerships were charged by AIMCO and its affiliates  approximately $31,000 and
$93,000,  respectively,  for insurance  coverage and fees associated with policy
claims administration.

(4)   SALE OF INVESTMENT PROPERTY OWNED BY LOCAL LIMITED PARTNERSHIP

On January 31, 2001, Windsor Apartment  Associates Limited  Partnership sold its
investment property to an unaffiliated third party for $4,600,000.  After paying
closing  costs,  a portion of the net  proceeds  were used to repay the mortgage
encumbering the property. The Partnership received approximately $2,027,000 from
the Local Limited  Partnership as its portion of the sales  proceeds  during the
three months ended March 31, 2001. The  Partnership  used these funds to repay a
portion  of the note  payable  and  accrued  interest  which was  secured by the
Partnership's interest in the Windsor Apartments Associates Limited Partnership.
The  remaining  unpaid  balance  of  approximately  $708,000  was  forgiven  and
recognized as an extraordinary gain.

On December 28, 2001, West Oak Village Limited  Partnership  sold its investment
property to an  unaffiliated  third party for  approximately  $3,172,000.  After
paying  closing  costs,  the net  proceeds  were  used  to  repay  the  mortgage
encumbering the property. The remaining proceeds were used to repay a portion of
the deferred acquisition note and accrued interest thereon which was held by the
general partner of the Local Limited Partnership. The unpaid portion of the note
was  forgiven  and  treated  as a  capital  contribution  to the  Local  Limited
Partnership.  With the sale of the Local  Limited  Partnership's  property,  the
Partnership will receive no future benefits from this Local Limited Partnership.

(5)   LEGAL PROCEEDINGS

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

(6)   GOING CONCERN

All of the  Local  Partnership's  notes  payable  are  past  due  (see  Note 2).
Continuation  of the Local  Partnerships'  operations  in their  present form is
dependent on their ability to extend the maturity date, repay or refinance these
notes.  These  conditions  raise  substantial  doubt  about the  ability  of the
Partnership  to continue as a going  concern.  The  financial  statements do not
include any adjustments which might result from the outcome of this uncertainty.



<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
operations.  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.

This item should be read in conjunction with the financial  statements and other
items contained elsewhere in this report.

Liquidity and Capital Resources

As of March 31,  2002,  the  Partnership  retained  an  interest in three 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.

During the three  months  ended March 31,  2001,  the  Partnership  made working
capital advances of approximately $6,000 to two Local Limited  Partnerships.  No
repayments  were made during the three months  ended March 31, 2001.  No working
capital  advances were made or repayments were received  between the Partnership
and the Local Limited Partnerships for the three months ended March 31, 2002.

Distributions  received in excess of investment  in 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,  investments in
all of the remaining Local Limited  Partnerships  had been reduced to zero as of
March 31, 2002. For these investments,  cash distributions received are recorded
in income as  distributions  received in excess of  investment  in Local Limited
Partnerships.  If these investments had not been reduced to zero,  distributions
received would be recorded as distributions from Local Limited  Partnerships.  A
distribution of approximately  $43,000  comprised of the final proceeds from the
sale of Windsor  Apartments was received during the three months ended March 31,
2002. A distribution of approximately $2,027,000,  comprised of initial proceeds
from the sale of Windsor Apartments and distributions in excess of investment in
Local Limited  Partnerships of approximately  $97,000,  were received during the
three months ended March 31, 2001. The receipt of distributions in the future 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.

Cash and cash equivalents  amounted to  approximately  $43,000 at March 31, 2002
compared to approximately  $5,000 at December 31, 2001. The increase in cash and
cash equivalents is due to approximately $43,000 and $38,000 of cash provided by
investing  and  financing   activities,   respectively,   partially   offset  by
approximately  $43,000 of cash used in operating  activities.  Cash  provided by
investing  activities  consisted of the final  distribution from the proceeds of
the sale of Windsor Apartments.  Cash provided by financing activities consisted
of advances to the Partnership from the General Partner.  Cash used in operating
activities  consisted of the payment of operating  expenses.  The ability of the
Partnership to meet its on-going cash  requirements in excess of cash on hand at
March 31, 2002 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
March 31, 2002 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 approximately  $1,343,000 for
administrative  and  reporting  services  performed.  The  payment of the unpaid
administrative  and reporting fees will most likely result,  if at all, from the
sale  or  refinancing  of  the  underlying   properties  of  the  Local  Limited
Partnerships, rather than through recurring operations.

On January 31, 2001, Windsor Apartment  Associates Limited  Partnership sold its
investment property to an unaffiliated third party for $4,600,000.  After paying
closing  costs,  a portion of the net  proceeds  were used to repay the mortgage
encumbering the property. The Partnership received approximately $2,027,000 from
the Local Limited  Partnership as its portion of the sales  proceeds  during the
three months ended March 31, 2001. The  Partnership  used these funds to repay a
portion  of the note  payable  and  accrued  interest  which was  secured by the
Partnership's interest in the Windsor Apartments Associates Limited Partnership.
The  remaining  unpaid  balance  of  approximately  $708,000  was  forgiven  and
recognized as an extraordinary gain.

On December 28, 2001, West Oak Village Limited  Partnership  sold its investment
property to an  unaffiliated  third party for  approximately  $3,172,000.  After
paying  closing  costs,  the net  proceeds  were  used  to  repay  the  mortgage
encumbering the property. The remaining proceeds were used to repay a portion of
the deferred acquisition note and accrued interest thereon which was held by the
general partner of the Local Limited Partnership. The unpaid portion of the note
was  forgiven  and  treated  as a  capital  contribution  to the  Local  Limited
Partnership.  With the sale of its  property,  the  Partnership  will receive no
future benefits from this Local Limited Partnership.

Each Local  Limited  Partnership  in which the  Partnership  currently  holds an
interest  has a note  payable  due to the  original  owner  of  each  respective
property. These notes are all past due and are in default.

Caroline  Arms,  Harold House and San Juan Del Centro Limited  Partnerships  all
have notes which were executed by the respective Local Limited Partnerships with
the  seller as part of the  acquisition  of the  property  by the Local  Limited
Partnership.  The notes were nonrecourse notes secured by a security interest in
all Partnership  interests in the Local Limited Partnership and are subordinated
to the  respective  mortgage  notes on each property for as long as the mortgage
notes are insured by HUD. Any payments due from project  income are payable from
surplus cash, as defined by the HUD  Regulatory  Agreement.  Neither the Limited
Partnership  nor any  partners  thereof,  present or future  assume any personal
liability for the payment of the notes.  The notes were due November,  15, 1999,
November 15, 1999 and December 20, 1999,  respectively.  Each note is in default
and  the  Local   Limited   Partnership   interests  are  subject  to  potential
foreclosure.  Continuation of the Local Limited Partnerships'  operations in the
present form is  dependent  on its ability to extend the maturity  date of their
respective  notes, or to repay or refinance their note. All of the Local Limited
Partnerships are actively attempting to sell their respective net assets.
Esbro and  Mayfair  Manor  Limited  Partnerships  had notes  payable  which were
originally due on October 15, 1997.  Effective February 16, 1998, both Esbro and
Mayfair  Manor Limited  Partnerships  executed  Amended and Restated  Promissory
Notes  for each of their  respective  notes.  The  Amended  Notes  extended  the
maturity of the notes to October 25, 1999.  The Local Limited  Partnerships  did
not have the  resources to pay the amounts due. On July 20, 2001,  the holder of
these notes  exercised its remedy under the security  agreement  with respect to
such notes and was  substituted as the sole limited partner of the Local Limited
Partnerships  in place of the  Partnership  and the  noteholder's  assignee  was
substituted  as the  General  Partner.  No gain or loss has been  recorded  as a
result of the  transfer  of these  partnership  interests.  With the loss of the
Partnership's  interest in Esbro and Mayfair  Manor,  the  Partnership  will not
receive any future  benefits from these Local Limited  Partnerships  and taxable
income  through the date of  foreclosure  will be generated and allocated to the
Partnership's  investors without any distributable  cash. The specific impact of
the tax consequence is dependent upon each partners' individual tax situation.

Hurbell II and Hurbell III Limited Partnerships had notes payable which were due
on November 2, 1999. The Local Limited  Partnerships  did not have the resources
to pay the amounts due. On April 2, 2001 and March 28, 2001,  respectively,  the
holder of these notes  exercised  its remedy under the security  agreement  with
respect to such notes and was  substituted  as the sole  limited  partner of the
Local  Limited  Partnerships  in place of the  Partnership  and the  noteholders
assignee  was  substituted  as the  general  partner.  No gain or loss  has been
recorded as a result of the transfer of these  partnership  interests.  With the
loss  of  the  Partnership's  interest  in  Hurbell  II  and  Hurbell  III,  the
Partnership  will not  receive  any future  benefits  from these  Local  Limited
Partnerships  and  taxable  income  through  the  date  of  foreclosure  will be
generated and allocated to the Partnership's investors without any distributable
cash. The specific impact of the tax consequence is dependent upon each specific
partners' individual tax situation.

As a result  of the  conditions  above,  there is  substantial  doubt  about the
Partnership's  ability to continue as a going concern.  The financial statements
do  not  include  any  adjustments  to  reflect  the  possible  effects  on  the
recoverability  and  classification of assets or amounts and  classifications of
liabilities that may result from these uncertainties.

Results of Operations

The  Partnership  invested as a limited  partner in Local  Limited  Partnerships
which  operated  twenty-one  rental housing  properties.  At March 31, 2002, the
Partnership  continued to hold an interest in three 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 March 31, 2002, the  Partnership had
no  carrying  basis  in any of the  Local  Limited  Partnerships  and  therefore
reflected no results of operations  for its share of profits or losses for these
Local Limited Partnerships.

The  Partnership  had a net loss of  approximately  $19,000 for the three months
ended March 31, 2002, compared to net income of approximately $1,197,000 for the
three months ended March 31, 2001. Net loss per unit of limited  partnership was
$1.05 for the three months ended March 31, 2002 compared to net income of $64.63
per limited  partnership  unit for the three months  ended March 31,  2001.  The
decrease  is  primarily  attributable  to the  Partnership's  share  of the gain
recognized  during the three  months ended March 31, 2001 related to the sale of
Windsor  Apartments and an extraordinary gain on forgiveness of debt relating to
the note  payable  secured by the  Partnership's  interest in the Local  Limited
Partnership  which owned Windsor  Apartments.  The Partnership did not recognize
approximately  $46,000 of its allocated share of losses from three Local Limited
Partnerships for the three months ended March 31, 2002, 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  approximately
$298,000  between  periods.  The decrease is primarily due to the foreclosure on
the properties held by Esbro,  Mayfair Manor, Hurbell II and Hurbell III Limited
Partnerships during 2001.


<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

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

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  None.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended March 31, 2002.


<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,
                                          General Partner


                                    By:   National Corporation for Housing
                                          Partnerships, 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: