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, 2000


[ ] 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.)

                        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  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

                         Statement of Financial Position

                                   (Unaudited)

                                 March 31, 2000

                                 (in thousands)

ASSETS

   Cash and cash equivalents                               $     1
   Investments in and advances to Local Limited
      Partnerships (Note 2)                                  4,540
                                                           $ 4,541

LIABILITIES AND PARTNERS' DEFICIT

Liabilities

   Accrued expenses                                        $    45
   Administrative and reporting fees payable to
      General Partner                                        1,248
   Notes payable to General Partner                          2,414
   Accrued interest on notes payable to General Partner      3,599
                                                             7,306

Partners' deficit

   General Partner -- The National Housing

      Partnership (NHP)                                       (183)
   Original Limited Partner -- 1133 Fifteenth
      Street Two Associates                                   (187)
   Other Limited Partners -- 18,258 investment
      units                                                 (2,395)
                                                            (2,765)
                                                           $ 4,541

b)

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                            Statements of Operations

                                   (Unaudited)

                        (in thousands, except unit data)

                                                        Three Months Ended
                                                             March 31,
                                                         2000        1999
REVENUES:

  Share of profits from Local Limited Partnerships    $    2      $   58
                                                           2          58

COSTS AND EXPENSES:
  Administrative and reporting fees to General            29          34
  Partner

  Interest on notes payable to General Partner            56          60
  Interest on partner loans                               --           1
  Other operating expenses                                12          19
                                                          97         114

Net loss                                              $  (95)     $  (56)

ALLOCATION OF NET LOSS:
  General Partner - NHP                               $   (1)     $   (1)
  Original Limited Partner - 1133
   Fifteenth Street Two Associates                        (1)         (1)
  Other limited partners                                 (93)        (54)
                                                      $  (95)     $  (56)

NET LOSS PER LIMITED PARTNERSHIP INTEREST             $   (5)     $   (3)


c)

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                         Statement of Partner's Deficit

                                   (Unaudited)

                                 (in thousands)

<TABLE>
<CAPTION>

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

<S>                                  <C>          <C>           <C>           <C>
Deficit at December 31, 1999        $ (182)      $ (186)       $(2,302)      $(2,670)

Net loss - three months ended
   March 31, 2000                       (1)          (1)           (93)          (95)

Deficit at March 31, 2000           $ (183)      $ (187)       $(2,395)      $(2,765)

Percentage interest at
   March 31, 2000                       1%           1%            98%          100%
                                        (A)          (B)            (C)


(A)   General Partner
(B)   Original Limited Partner
(C)   Consists of 18,258 investment units

</TABLE>

d)

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                            Statements of Cash Flows

                                   (Unaudited)

                                 (in thousands)

<TABLE>
<CAPTION>

                                                                 Three Months Ended
                                                                       March 31,

                                                                  2000         1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                             <C>          <C>
    Operating expenses paid                                     $   (1)      $   (1)
      Net cash used in operating activities                         (1)          (1)

NET DECREASE IN CASH AND CASH EQUIVALENTS                           (1)          (1)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                     2           26

CASH AND CASH EQUIVALENTS AT END OF PERIOD                      $    1       $   25

RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING
   ACTIVITIES:
     Net loss                                                   $  (95)      $  (56)
     Adjustments to reconcile net loss to net
      cash used in operating activities:
     Share of profits from Local Limited Partnerships               (2)         (58)
CHANGE IN OTHER OPERATING ASSETS AND LIABILITIES:
     Accrued interest on notes payable to General
         Partner                                                    56           60
     Administrative and reporting fees payable to General
         Partner                                                    29           34
     Accrued expenses                                               11           19

        Total adjustments                                           94           55

Net cash used in operating activities                           $   (1)      $   (1)

</TABLE>


e)
                    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 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")  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, 1999.

Certain reclassifications have been made to the 1999 information to conform with
the 2000 presentation.

(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 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  Partnerhsip  sold its property.  During 1999,  the  Partnership's
interest in Meadows East Apartments  Limited  Partnership and Meadows Apartments
Limited  Partnership were foreclosed upon. During the first quarter of 2000, the
Partnership's  interest in Esbro  Limited  Partnership,  Mayfair  Manor  Limited
Partnership, Park Avenue West I Limited Partnership, Park Avenue West II Limited
Partnership, and Rodeo Drive Limited Partnership was foreclosed upon.

Meadows  Apartments and Meadows East Apartments  Limited  Partnerships  both had
notes  payable  which  were  due  on  December  12,  1997.   The  Local  Limited
Partnerships did not have the resources to pay the amounts due. Effective August
5, 1999 and December 1, 1999,  Meadows  Apartments  and Meadows East  Apartments
Limited  Partnership  notes  were  foreclosed  upon.  Pursuant  to the  security
agreement  of the note  payable,  the note  holder was  substituted  as the 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 Meadows  Apartments and Meadows
East Apartments to the note holders, the Partnership will not receive any future
benefits from these Local Limited Partnerships.

Esbro,  Mayfair  Manor,  Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  all had notes  payable  which were due October  15,  1997,
October 15, 1997,  December  20,  1999,  December 20, 1999 and December 6, 1997,
respectively.  The Local Limited  Partnerships did not have the resources to pay
the amounts due. During January 2000, the holders of the notes payable  relating
to Esbro, Mayfair Manor, Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  properties  exercised  their  remedies  under the security
agreement  with respect to such note payable,  and were  substituted as the sole
limited  partner of the  applicable  Local Limited  Partnership  in place of the
Partnership  and such 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 Esbro,
Mayfair  Manor,  Park  Avenue West I, Park Avenue West II and Rodeo Drive to the
note holders,  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 partner's individual tax situation.

In addition Caroline Arms, Harold House, Hilltop, Hurbell I, Hurbell II, Hurbell
III, 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 its ability
to extend the maturity date of the  respective  notes,  or to repay or refinance
their note. 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  $320,000
and $205,000 of losses from nine and seventeen Local Limited Partnerships during
the three months ended March 31, 2000 and 1999,  respectively.  During the three
months ended March 31,  2000,  the  Partnership's  share of profits in two Local
Limited  Partnerships in the amount of approximately  $13,000 was offset against
prior year  losses not taken.  As of March 31,  2000,  the  Partnership  has not
recognized  approximately $8,999,000 of its allocated cumulative share of losses
from seven Local Limited  Partnerships  in which its investment has been reduced
to zero.  The  Partnership's  allocated  cumulative  share of losses in the five
Local Limited Partnerships foreclosed on during the three months ended March 31,
2000 was $9,912,000.

No working capital  advances or repayments were made between the Partnership and
the Local  Limited  Partnerships  for the three  months ended March 31, 2000 and
1999. 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% (10.83% at March 31,  2000).  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 combined  statements of operations  for the three months ended
March 31, 2000 and 1999,  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  managing  agents  of the  projects,  and  are
unaudited.

                        COMBINED STATEMENTS OF OPERATIONS

                                                Three Months Ended
                                                    March 31,
                                                2000          1999
                                                  (in thousands)

Rental income                                $  1,986       $  2,938
Other income                                       66            109
   Total income                                 2,052          3,047

Operating expenses                              1,395          1,901
Interest, taxes, and insurance                    567            853
Depreciation                                      400            473

   Total expense                                2,362          3,227

Net loss                                    $    (310)      $   (180)

National Housing Partnership

   Realty Fund Two share of losses          $    (305)      $   (179)

(3) TRANSACTIONS WITH THE GENERAL PARTNER

During the three month  periods ended March 31, 2000 and 1999,  the  Partnership
accrued  administrative and reporting fees payable to the General Partner in the
amount of approximately $29,000 and $34,000,  respectively for services provided
to the  Partnership.  The  amount  of fees  due to the  General  Partner  by the
Partnership was approximately $1,248,000 at March 31, 2000.

No working  capital  advances or  repayments  were made during the three  months
ended March 31, 2000 and 1999.

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)   NOTES PAYABLE

The notes payable by the  Partnership  bear simple interest at a rate of 10% per
annum.  The notes are  payable to NHP in the same amount and same terms as notes
executed  by  NHP  to  former  project   owners,   are   nonrecourse,   and  are
collateralized by the Partnership's  interests in Windsor Apartments  Associates
Limited Partnership and Kimberton Apartments Associates Limited Partnership. The
notes were both due on October 24, 1999. The Partnership is currently in default
of these notes and has  received  notification  from the holders of the notes of
their intent to initiate foreclosure proceedings.

(5) SEGMENT INFORMATION

The Partnership has only one reportable  segment.  Due to the very 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.

(6) LEGAL PROCEEDINGS

In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting
documents relating to arrangements whereby NHP or any of its affiliates provided
compensation to owners of HUD-assisted or HUD-insured  multi-family  projects in
exchange for or in connection with property management of a HUD project. In July
1999, NHP received a grand jury subpoena  requesting  documents  relating to the
same  subject  matter as the HUD IG  subpoenas  and NHP's  operation  of a group
purchasing  program created by NHP, known as Buyers Access. To date, neither the
HUD IG nor the grand jury has  initiated  any action  against  NHP or  Apartment
Investment and Management Company ("AIMCO"),  the ultimate controlling entity of
NHP 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. NHP and AIMCO are cooperating with the investigations
and do not believe  that the  investigations  will result in a material  adverse
impact on their 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.

(7)   GOING CONCERN

The  Partnership's  note  payable and certain of the Local  Partnership's  notes
payable  are  past  due  (see  Notes  2  and  4).   Continuation  of  the  Local
Partnerships'  operations  in the present  form is  dependent  on its ability to
extend the maturity date of these notes,  or to repay or to refinance the notes.
These  conditions raise  substantial  doubt about their ability to continue as a
going concern.  The financial  statements do not include any  adjustments  which
might result from the outcome of this uncertainty.

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,  2000,  the  Partnership  retained  an  interest  in ten 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.

No working capital  advances or repayments were made between the Partnership and
the Local Limited  Partnerships during the three months ended March 31, 2000 and
1999.

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
seven of the remaining ten Local Limited  Partnerships  had been reduced to zero
as of March 31, 2000. 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.  No cash
distributions  from Local Limited  Partnerships  were received  during the three
months  ended March 31, 2000 and 1999.  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 both the three months ended March 31, 2000 and
1999 was approximately $1,000.

Cash and cash equivalents  amounted to approximately $1,000 at March 31, 2000 as
compared to approximately  $2,000 at December 31, 1999. The decrease in cash and
cash equivalents is due to cash used in operating activities. The ability of the
Partnership to meet its on-going cash  requirements in excess of cash on hand at
March 31, 2000 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, 2000 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  $1,248,000 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.

Each Local  Limited  Partnership  with the  exception  of  Kimberton  Apartments
Associates  Limited  Partnership  and  Windsor  Apartments   Associates  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 all past due and are currently
in default.  West Oak Village Limited Partnership is currently in default due to
non-payment of required annual interest payments for 1999 (see below). The notes
related to Kimberton Apartments  Associates and Windsor Apartments Associates of
approximately $1,254,000 and $1,160,000, respectively, are collateralized by the
Partnership's  interest in these two Local Limited  Partnerships and were due on
October 24, 1999. The Partnership is currently in default on these notes and has
received  notification from the holders of the notes of their intent to initiate
foreclosure  proceedings.  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 bears interest at the rate of 9%
per annum. The note is nonrecourse and is secured by a security  interest in the
Partnership's  interest  in the Local  Limited  Partnership.  During  1997,  the
noteholders  entered into an  agreement  with the  Partnership,  under which the
maturity date of the note was extended  until  November  2013,  assuming  annual
payments  of  interest  are  made to the  noteholders.  Under  the  terms of the
agreement,  payments  are to be made equal to the annual  interest 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 Partnership has
the option to pay off the  acquisition  note at a  discount  equal to 70% of the
property's annual scheduled rent but not less than $700,000. The required annual
installment   of  interest  for  1999,   pursuant  to  the  agreement  with  the
noteholders,  was not  made.  Accordingly,  the  Local  Limited  Partnership  is
currently  in  default  on  the  required  annual  interest   payments  and  the
Partnership  interests are subject to potential  foreclosure.  The Local Limited
Partnership is actively attempting to sell its net assets.

Caroline Arms, Harold House, Hilltop, Hurbell I, Hurbell II, Hurbell III 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,  November 2, 1999,
December  19, 1999,  November 2, 1999,  December 19, 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.  Caroline  Arms,  Harold House,  Hilltop and Hurbell I Local Limited
Partnerships are all actively attempting to sell their respective net assets.

Esbro,  Mayfair  Manor,  Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  all had notes  payable  which were due October  15,  1997,
October 15, 1997,  December  20,  1999,  December 20, 1999 and December 6, 1997,
respectively.  The Local Limited  Partnerships did not have the resources to pay
the amounts due. During January 2000, the holders of the notes payable  relating
to Esbro, Mayfair Manor, Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  properties  exercised  their  remedies  under the security
agreement  with respect to such note payable,  and were  substituted as the sole
limited  partner of the  applicable  Local Limited  Partnership  in place of the
Partnership  and such 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 Esbro,
Mayfair  Manor,  Park  Avenue West I, Park Avenue West II and Rodeo Drive to the
note holders,  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 partner's individual tax situation.

Meadows  Apartments and Meadows East Apartments  Limited  Partnerships  both had
notes  payable  which  were  due  on  December  12,  1997.   The  Local  Limited
Partnerships did not have the resources to pay the amounts due. Effective August
5, 1999 and December 1, 1999,  Meadows  Apartments  and Meadows East  Apartments
Limited  Partnership  properties were foreclosed upon.  Pursuant to the security
agreement  of the note  payable,  the note  holder was  substituted  as the 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 Meadows  Apartments and Meadows
East Apartments to the note holders, the Partnership will not receive any future
benefits from these Local Limited Partnerships.

As a result of the 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, 2000, the
Partnership continued to hold an interest in ten 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, 2000, the  Partnership had
no  carrying  basis in seven of the Local  Limited  Partnerships  and  therefore
reflected  no results  of  operations,  for its share of losses for these  Local
Limited Partnerships.

The  Partnership  had a net loss of  approximately  $95,000 for the three months
ended March 31, 2000,  compared to a net loss of  approximately  $56,000 for the
three  months  ended March 31,  1999.  Net loss per unit of limited  partnership
increased to $(5) from $(3) for the 18,258 and 18,300 units outstanding at March
31,  2000 and  1999,  respectively.  The  increase  in net  loss  was  primarily
attributable  to  a  decrease  in  the  share  of  profits  from  Local  Limited
Partnerships.  The Partnership did not recognize  approximately  $320,000 of its
allocated  share of losses from nine Local  Limited  Partnerships  for the three
months ended March 31, 2000, as the  Partnership's  net carrying  basis in these
Local Limited Partnerships had been reduced to zero. In addition the Partnership
did not recognize  approximately  $13,000 of its allocated share of profits from
two of the Local Limited  Partnerships for the three months ended March 31, 2000
as the Partnership had cumulative  unrecognized losses with respect to these two
Local Limited  Partnerships.  The  Partnership's  share of losses from the Local
Limited  Partnerships,  if not limited to its investment account balance,  would
have increased approximately $115,000 between periods. The decrease is primarily
the result of the loss of the Partnership's  interests in the Meadows Apartments
and Meadows East Apartments  Limited  Partnerships  in 1999 and Esbro,  Mayfair,
Park Avenue West I, Park  Avenue  West II and Rodeo Drive  Limited  Partnerships
during the three months ended March 31, 2000 due to foreclosures.

                           PART II - OTHER INFORMATION

ITEM 1      LEGAL PROCEEDINGS

In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting
documents relating to arrangements whereby NHP or any of its affiliates provided
compensation to owners of HUD-assisted or HUD-insured  multi-family  projects in
exchange for or in connection with property management of a HUD project. In July
1999, NHP received a grand jury subpoena  requesting  documents  relating to the
same  subject  matter as the HUD IG  subpoenas  and NHP's  operation  of a group
purchasing  program created by NHP, known as Buyers Access. To date, neither the
HUD IG nor the grand jury has  initiated  any action  against  NHP or  Apartment
Investment and Management Company ("AIMCO"),  the ultimate controlling entity of
NHP 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. NHP and AIMCO are cooperating with the investigations
and do not believe  that the  investigations  will result in a material  adverse
impact on their 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 27, Financial Data Schedule

            b)    Reports on Form 8-K:

                  None filed during the quarter ended March 31, 2000.

                                   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: May 19, 2000