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 March 31, 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

                           PART I - FINANCIAL INFORMATION

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

ITEM 1.     FINANCIAL STATEMENTS

a)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                          (A Maryland Limited Partnership)
                          Statement of Financial Position
                                    (Unaudited)

                                   March 31, 1999

                          ASSETS
    Cash and cash equivalents                              $    25,344
    Investments in and advances to Local Limited
       Partnerships (Note 2)                                 4,380,054
                                                           $ 4,405,398
        LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
    Other accrued expenses                                 $    75,948
    Administrative and reporting fee payable to
       General Partner                                       1,246,391
    Notes payable to General Partner                         2,414,468
    Accrued interest on notes payable
       to General Partner                                    3,361,243
    Due to the General Partner                                  33,650
    Accrued interest on partner loans                            2,501

                                                             7,134,201
Partners' deficit
    General Partner-The National Housing
       Partnership (NHP)                                      (182,377)
   Original Limited Partner-1133 Fifteenth
      Street Two Associates                                   (187,277)
   Other Limited Partners-18,300 investment
      units                                                 (2,359,149)
                                                            (2,728,803)
                                                           $ 4,405,398

                   See Accompanying Notes to Financial Statements

b)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                          (A Maryland Limited Partnership)
                              Statements of Operations
                                    (Unaudited)

                                                           Three Months Ended
                                                                March 31,
                                                            1999         1998
Revenues:
     Share of profits from Local Limited Partnership      $  57,777    $ 19,858
    Interest income                                            155         138
                                                            57,932      19,996
costs and expenses:
    Administrative and reporting fees to General
      Partner                                               34,312      34,312
    Interest on deferred acquisition notes
     to General Partner                                     60,362      60,362
   Interest on partner loans                                   800          --
   Other operating expenses                                 18,516      14,226
                                                           113,990     108,900
NET LOSS                                                 $ (56,058)   $(88,904)
ALLOCATION OF NET LOSS:
   General Partner - NHP                                 $    (560)   $   (889)
   Original Limited Partner - 1133 Fifteenth Street
     Two Associates                                           (560)       (889)
   Other limited partners - 18,300 investment units        (54,938)    (87,126)
                                                         $ (56,058)   $(88,904)
NET LOSS PER LIMITED PARTNERSHIP INTEREST                $      (3)   $     (5)

                   See Accompanying Notes to Financial Statements

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      Limited
                                           (NHP)      Associates    Partners       Total

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

Net loss - three months ended
   March 31, 1999                      $     (560)   $    (560)   $   (54,938) $   (56,058)

Deficit at March 31, 1999              $ (182,377)   $(187,277)   $(2,359,149) $(2,728,803)

Percentage interest at
   March 31, 1999                               1%           1%            98%         100%
                                               (A)          (B)            (C)

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

                   See Accompanying Notes to Financial Statements
</TABLE>

d)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                          (A Maryland Limited Partnership)
                              Statements of Cash Flow
                                    (Unaudited)

<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                  March 31,
                                                                1999          1998

 CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>          <C>
   Interest received                                        $     155    $    138
   Operating expenses paid                                       (400)       (476)
   Net cash used in operating activities                         (245)       (338)
CASH AND CASH EQUIVALENTS AT  BEGINNING OF PERIOD              25,589      23,409
CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $  25,344    $ 23,071
RECONCILIATION OF NET LOSS TO NET CASH USED IN
   OPERATING ACTIVITIES:
     Net loss                                               $ (56,058)   $(88,904)
     Adjustments to reconcile net loss to net cash
     used in operating activities:
      Share of profits from Local Limited Partnerships        (57,777)    (19,858)
      Increase in accrued interest on deferred
        acquisition notes                                      60,362      60,362
      Increase in accrued interest on Partner loans               800          --
      Increase in administrative and reporting fees
        payable                                                34,312      34,312
      Increase in other accrued expenses                       18,116      13,750
      Total adjustments                                        55,813      88,566
Net cash used in operating activities                       $    (245)   $   (338)

                   See Accompanying Notes to Financial Statements
</TABLE>


                    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 laws of the State of
Maryland 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 in 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 $205,498 and $466,915 of
losses from seventeen and eighteen Local Limited  Partnerships  during the three
months  ended March 31,  1999 and 1998,  respectively.  During the three  months
ended March 31, 1999, the Partnership's  share of profits in three Local Limited
Partnerships  in the amount of $33,038 were offset against prior year losses not
taken. As of March 31, 1999, the  Partnership has not recognized  $21,983,534 of
its allocated cumulative share of losses from sixteen 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 March 31,  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.

The following are combined  statements of operations  for the three months ended
March 31, 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

                                          Three Months Ended March 31,
                                            1999                1998

Rental income                           $2,937,684         $3,488,423
Other income                               108,916            141,445

  Total income                           3,046,600          3,629,868

Operating expenses                       1,900,959          2,461,452
Interest, taxes and insurance              853,218          1,064,340
Depreciation                               472,752            558,294

  Total expenses                         3,226,929          4,084,086

Net loss                                $ (180,329)        $ (454,218)

National Housing Partnership
  Realty Fund Two share of losses       $ (178,888)        $ (447,057)

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the three month  periods ended March 31, 1999 and 1998,  the  Partnership
accrued  administrative and reporting fees payable to the General Partner in the
amount of $34,312 for services provided to the Partnership.  The Partnership did
not make any  payments  to the  General  Partner for these fees during the three
months  ended  March 31,  1999 and 1998.  The amount of fees due to the  General
Partner by the Partnership was $1,246,391 at March 31, 1999.

During the three  months  ended  March 31,  1999 and 1998,  no  working  capital
advances  or  repayments   were  made  between  the  General   Partner  and  the
Partnership.  The  amount  owed to the  General  Partner  at March 31,  1999 was
$33,650.  Interest is charged on borrowings at the Chase  Manhattan Bank rate of
prime plus 2% (9.75% at March 31, 1999).  Accrued interest on this loan amounted
to $2,501 and $1,701 at March 31, 1999 and December 31, 1998, respectively.

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

In June 1997,  the  Financial  Accounting  Standards  Board issued SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related  Information",  which is
effective for years  beginning  after  December 15, 1997.  SFAS 131  established
standards for the way that public business  enterprises report information about
operating  segments  in annual  financial  statements  and  requires  that those
enterprises  report selected  information  about  operating  segments in interim
financial reports.  It also establishes  standards for related disclosures about
products and services, geographic areas, and major customers. As defined in SFAS
No. 131, the Partnership has only one reportable segment.  Moreover,  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

     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 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

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.

All of the units (1,739 in total)  receiving  rent subsidies from Section 8 have
their  contracts  expiring  during the year ending  December 31,  1999.  HUD has
issued new regulations that govern the continuance of  project-based  subsidies.
Under the new  regulations,  owners with HAP contracts  expiring after September
30, 1998 may elect to (1) renew the contract without restructuring for one year,
(2) opt out of the contract, or (3) enter into the Mark-to Market program, which
includes a potential  restructuring of the mortgage and renewal of the contract.
At this time it is not  possible  to  determine  which  option each of the Local
Limited  Partnerships  will  elect,  and  accordingly,  it is  not  possible  to
determine  the  ultimate   impact  on  the   operations  of  the  Local  Limited
Partnerships and therefore the Partnership.

No working capital  advances or repayments were made between the Partnership and
the Local Limited  Partnerships during the three months ended March 31, 1999 and
1998. The combined amount carried as due to the Partnership by the Local Limited
Partnerships was $424,600, as of March 31, 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  March  31,  1999,
investments in eighteen 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.   There  were  no  cash
distributions   during  the  three   months  ended  March  31,  1999  and  1998,
respectively.  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 three months ended March 31, 1999 was $245
as compared to net cash used in  operations  of $338 for the three  months ended
March 31, 1998. The decrease in cash used in operations resulted from a decrease
in operating  expenses paid partially  offset by an increase in interest  income
during the three months ended March 31, 1999, compared to the three months ended
March 31, 1998.

Cash and cash  equivalents  amounted to $25,344 at March 31, 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 March 31,  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 March
31, 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 $1,246,391 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 March 31, 1999,  the  outstanding
principal and related  interest,  respectively,  were $2,046,695 and $2,482,331.
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, 1997. 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.  With the loss of the  Partnership's
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.  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 March 31, 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.  No repayments were made for the three months ended
March 31, 1999 or 1998. Interest is charged on borrowings at the Chase Manhattan
Bank prime  interest rate plus 2% (9.75% at March 31,  1999).  At March 31, 1999
the  Partnership  owed the General  Partner  $33,650 in  advances  and $2,501 in
accrued interest.

Results Of Operations

The Partnership has invested as a limited partner in Local Limited  Partnerships
which operate  twenty-one  rental  housing  properties.  At March 31, 1999,  the
partnership   continued   to  hold  an  interest  in  eighteen   Local   Limited
Partnerships,  one of which sold its only  property  in 1998.  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, 1999, the  Partnership had
no carrying  basis in eighteen 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 $56,058 for the three months ended March 31,
1999,  compared  to a net loss of $88,904 for the three  months  ended March 31,
1998. Net loss per unit of limited  partnership  decreased to $3 from $5 for the
18,300 units outstanding at March 31, 1999 and 1998, respectively.  The decrease
in net loss was primarily  attributable  to an increase in share of profits from
Local Limited  Partnerships.  The Partnership did not recognize  $236,665 of its
allocated share of losses from sixteen Local Limited  Partnerships for the three
months ended March 31, 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 $332,374 between periods, primarily due to
a  decrease  in rental  income  offset  partially  by a  decrease  in  operating
expenses.

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  mainframe  system used by the Managing  Agent became fully
functional. In addition to the mainframe,  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
March 31, 1999, had completed approximately 75% 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 July
31, 1999.

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.

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 the testing  process is
expected to be completed by July 31, 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  80% of the server  operating  systems.  The  remaining  server
operating  systems are planned to be upgraded to be Year 2000  compliant by July
31, 1999.

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. The Managing Agent intends to have a third-party conduct an audit
of these systems and report their findings by July 31, 1999.

Any of the above operating  equipment that has been found to be non-compliant to
date has been  replaced  or  repaired.  To date,  these have  consisted  only of
security systems and phone systems.  As of March 31, 1999 the Managing Agent has
evaluated  approximately  86% of the  operating  equipment  for  the  Year  2000
compliance.

The total cost incurred for all  properties  managed by the Managing Agent as of
March 31, 1999 to replace or repair the operating  equipment  was  approximately
$400,000.  The  Managing  Agent  estimates  the cost to  replace  or repair  any
remaining operating equipment is approximately $325,000, which is expected to be
completed by August 30, 1999.

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 May 1999.
The Managing Agent has updated data transmission standards with two of the three
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 June 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  $2.8 million ($0.6 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.

                            PART II - OTHER INFORMATION

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 March 31, 1999.


                                     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