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, 2001


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


             For the transition period from _________to _________

                         Commission file number 0-14458


                 NATIONAL  HOUSING  PARTNERSHIP  REALTY  FUND TWO
        (Exact name of small business issuer as specified in its charter)


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

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

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


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act  during the past 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been  subject to such filing  requirements  for the past 90 days.  Yes X
No___

<PAGE>

                         PART I - FINANCIAL INFORMATION

(This  document  amends the Form 10-QSB for the quarter  ended March 31, 2001 to
properly reflect the forgiveness of debt by the holder of the Partnership's note
payable.)

ITEM 1.     FINANCIAL STATEMENTS

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

                                 March 31, 2001
                       (in thousands, except unit data)
<TABLE>
<CAPTION>

ASSETS
<S>                                                                          <C>
   Cash and cash equivalents                                                 $   14
   Investments in and advances to Local Limited
      Partnerships (Note 2)                                                     585
                                                                             $  599

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Liabilities
   Accrued expenses                                                          $   19
   Accrued interest on note payable (Note 4)                                    241
   Administrative and reporting fees payable to
      General Partner (Note 3)                                                1,310


Partners' capital (deficit)
   General Partner -- The National Housing
      Partnership (NHP)                                        $  633
   Original Limited Partner -- 1133 Fifteenth
      Street Two Associates                                      (177)
   Other Limited Partners -- 18,258 investment
      units                                                    (1,427)         (971)

                                                                             $  599

                See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>

b)

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

<TABLE>
<CAPTION>

                                                                 Three Months Ended
                                                                       March 31,
                                                                  2001        2000
REVENUES:
<S>                                                               <C>          <C>
  Share of profits from Local Limited Partnerships                $ 441        $  2
  Other income                                                       97          --
                                                                    538           2
COSTS AND EXPENSES:
  Administrative and reporting fees to General Partner               15          21
  Interest on notes payable                                          10          56
  Other operating expenses                                           24          12
                                                                     49          89

Income (loss) before extraordinary item                             489         (87)
Extraordinary gain on forgiveness of debt (Note 4)                  708          --

NET INCOME (LOSS)                                                $1,197       $ (87)

ALLOCATION OF NET INCOME (LOSS):
  General Partner - NHP                                            $ 5        $ (1)
  Original Limited Partner - 1133 Fifteenth Street Two
   Associates                                                        12          (1)
  Other limited partners                                          1,180         (85)

                                                                 $1,197       $ (87)
PER LIMITED PARTNERSHIP UNIT:
  Income (loss) before extraordinary item                         26.24       (4.66)
  Extraordinary gain on forgiveness of debt                       38.39          --

NET INCOME (LOSS) PER LIMITED PARTNERSHIP INTEREST               $64.63      $(4.66)

                See Accompanying Notes to Financial Statements

</TABLE>
<PAGE>
c)

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

<TABLE>
<CAPTION>

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

Partners' deficit at
<S>        <C> <C>                    <C>           <C>           <C>           <C>
  December 31, 2000                   $ (177)       $ (181)       $(1,810)      $(2,168)

Transfer of interest                      805            (8)         (797)           --

Net income - three months
  ended March 31, 2001                      5            12         1,180         1,197

Partners' capital (deficit) at
  March 31, 2001                       $ 633        $ (177)       $(1,427)      $ (971)

Percentage interest at
  March 31, 2001                         1%            1%           98%          100%
                                        (A)           (B)           (C)


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

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

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

                                                                    Three Months Ended March 31,
                                                                        2001           2000
CASH FLOWS FROM OPERATING ACTIVITIES:
  Distributions received in excess of investment in Local
<S>                                                                     <C>            <C>
   Limited Partnership                                                  $ 97           $ --
  Advances made in excess of investment in Local Limited
   Limited Partnership                                                      (3)            --
  Operating expenses paid                                                  (45)            (1)
  Payment of interest on note payable                                   (1,575)            --
        Net cash used in operating activities                           (1,526)            (1)

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

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

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        13             (1)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                             1              2

CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $ 14            $ 1

RECONCILIATION OF NET INCOME (LOSS) TO NET CASH USED IN
  OPERATING ACTIVITIES:
   Net income (loss)                                                   $ 1,197         $ (87)
   Adjustments to reconcile net income (loss) to net
     cash used in operating activities:
      Share of income from Local Limited Partnerships                     (441)            (2)
        Changes in operating assets and liabilities:
        Extraordinary gain on forgiveness of debt                         (708)            --
        (Decrease) increase in accrued interest on deferred
          acquisition note                                              (1,564)            56
        Increase in administrative and reporting fees payable               15             21
        (Decrease) increase in other accrued expenses                      (25)            11
        Total adjustments                                               (2,723)            86

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


                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>
e)

                 NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                          Notes to Financial Statements
                                   (Unaudited)


(1)   ACCOUNTING POLICIES

Organization

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

The National Housing  Partnership,  a District of Columbia  limited  partnership
("NHP" or the  "General  Partner"),  was  authorized  to raise  capital  for the
Partnership by offering and selling to additional limited partners not more than
18,300  interests  at a price of  $1,000  per  unit.  During  1985,  the sale of
interests  was closed after the sale of 18,300  interests  to limited  partners.
Apartment  Investment  and  Management  Company  ("AIMCO")  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, 2000.

(2)   INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

During 1985, the Partnership  acquired a 94.5% limited partnership interest (98%
with respect to allocation of losses) in twenty-one Local Limited  Partnerships.
At March 31, 2001, the Partnership  continues to hold an interest in seven Local
Limited   Partnerships:   Esbro  Limited  Partnership,   Mayfair  Manor  Limited
Partnership,  Hurbell  II  Limited  Partnership,  San  Juan del  Centro  Limited
Partnership, Caroline Arms Limited Partnership, Harold House Limited Partnership
and West  Oak  Village  Limited  Partnership.  During  2000,  the  Partnership's
interests in Park Avenue West I Limited Partnership, Park Avenue West II Limited
Partnership,  Rodeo Drive Limited  Partnership,  Hurbell I Limited  Partnership,
Hilltop Limited  Partnership and Kimberton  Limited  Partnership were foreclosed
upon.  During the first quarter of 2001, the  Partnership's  interest in Hurbell
III Limited  Partnership  was foreclosed  upon and the property owned by Windsor
Apartments  Associates  Limited  Partnership  was sold.  Subsequent to March 31,
2001,  the  Partnership's   interest  in  Hurbell  II  Limited  Partnership  was
foreclosed upon.

In  addition,  Caroline  Arms,  Harold  House,  and San Juan Del Cantro  Limited
Partnerships  all  have  notes  payable  which  are  currently  in  default  and
accordingly,  the Local Limited  Partnership  interests are subject to potential
foreclosure. West Oak Village Limited Partnership is currently in default due to
non-payment  of required  annual  interest  payments,  and this interest is also
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
notes.  The  financial  statements  do not include any  adjustments  which might
result from the outcome of this uncertainty.

Since the Partnership,  as a limited partner, does not exercise control over the
activities of the Local Limited  Partnerships in accordance with the partnership
agreements,  these investments are accounted for using the equity method.  Thus,
the  investments are carried at cost less the  Partnership's  share of the Local
Limited  Partnerships'  losses and distributions plus the Partnership's share of
Local Limited  Partnerships'  profits.  However,  since the  Partnership  is not
legally liable for the obligations of the Local Limited Partnerships, and is not
otherwise committed to provide additional support to them, it does not recognize
losses once its investment in each of the individual Local Limited  Partnerships
reduced for its share of losses and cash  distributions,  reaches zero.  Once an
investment account has been reduced to zero, profits reported by a Local Limited
Partnership  are not  recognized  by the  Partnership  until such profits  equal
losses not recognized plus distributions  received and previously  recognized as
revenue. As a result, the Partnership did not recognize  approximately  $345,000
and $223,000 of losses from six and nine Local Limited  Partnerships  during the
three  months  ended  March 31,  2001 and 2000,  respectively.  During the three
months ended March 31, 2001 and 2000, the Partnership's  share of profits in two
and three  Local  Limited  Partnerships  of  approximately  $6,000 and  $13,000,
respectively,  was offset  against prior year losses not taken.  As of March 31,
2001,  the  Partnership  has not  recognized  approximately  $11,768,000  of its
allocated  cumulative  share of losses from six Local  Limited  Partnerships  in
which its  investment  has been  reduced to zero.  The  Partnership's  allocated
cumulative share of losses in the Local Limited Partnership foreclosed on during
the three months ended March 31, 2001 was approximately $581,000.

During the three  months  ended March 31,  2001,  the  Partnership  made working
capital advances of approximately $6,000 to two Local Limited  Partnerships.  No
repayments  were made during the three months  ended March 31, 2001.  No working
capital  advances or repayments  were made between the Partnership and the Local
Limited Partnerships for the three months ended March 31, 2000. During 1993, the
Partnership  re-evaluated the timing of the  collectibility  of the advances and
determined,  based on the  Local  Limited  Partnerships'  operations,  that such
advances  are  not  likely  to  be  collected.   For  accounting  purposes,  the
Partnership  treated the advance balance as additional  investments in the Local
Limited Partnerships. The balance was then reduced to zero, with a corresponding
charge to operations to reflect a portion of the previously  unrecognized losses
on investments.

Advances  to the  Local  Limited  Partnership  remain  due  and  payable  to the
Partnership.  Interest is  calculated  at the prime rate plus 2% (10.5% at March
31,  2001).  Payment of  principal  and  interest is  contingent  upon the Local
Limited   Partnerships   having  available  surplus  cash,  as  defined  by  HUD
regulations,  from  operations  or from the  sale or  refinancing  of the  Local
Limited  Partnership  properties.  Any future  repayment of advances or interest
will be reflected as Partnership income when received.

The  following  are unaudited  combined  statements of operations  for the three
months ended March 31, 2001 and 2000 of the Local Limited  Partnerships in which
the  Partnership  has  invested.  The  statements  are compiled  from  financial
statements of the Local Limited  Partnerships  which are prepared on the accrual
basis of accounting and supplied by the managing agents of the projects.

                        COMBINED STATEMENTS OF OPERATIONS

                                                Three Months Ended
                                                    March 31,
                                                2001          2000
                                                  (in thousands)
Rental income                                  $1,655        $2,347
Other income                                       81            85
Gain on sale of property                          667            --
   Total income                                 2,403         2,432

Operating expenses                              1,190         1,543
Interest, taxes and insurance                     509           651
Depreciation                                      462           449
   Total expense                                2,161         2,643

Net income (loss)                              $ 242         $ (211)

National Housing Partnership Realty
   Fund Two share of income (losses)           $ 214         $ (208)

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the three month  periods ended March 31, 2001 and 2000,  the  Partnership
accrued  administrative and reporting fees payable to the General Partner in the
amount of approximately $15,000 and $21,000,  respectively for services provided
to the  Partnership.  The  amount  of fees  due to the  General  Partner  by the
Partnership  was  approximately  $1,310,000  at  March  31,  2001.  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.

During the three  months  ended March 31,  2001,  the  Partnership  made working
capital advances of approximately $6,000 to two Local Limited  Partnerships.  No
repayments  were made during the three months  ended March 31, 2001.  No working
capital  advances or repayments  were made between the Partnership and the Local
Limited Partnerships for the three months ended March 31, 2000.

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

On January 31, 2001, Windsor Apartment  Associates Limited  Partnership sold its
investment property to an unaffiliated third party for $4,600,000.  After paying
closing costs, the net proceeds were used to repay the mortgage  encumbering the
property.  The  Partnership  received  approximately  $2,027,000  from the local
limited  partnership  as  its  portion  of  the  initial  sales  proceeds.   The
Partnership  used these funds to repay a portion of the note payable and accrued
interest. The remaining principal balance of approximately $708,000 was forgiven
and recognized as income.  Accrued  interest of  approximately  $241,000 remains
unpaid at March 31, 2001.  As part of the  negotiated  settlement  with the note
holder, the accrued interest balance will be repaid with the Partnership's share
of the remaining undistributed proceeds from the sale.

(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 October  1997,  NHP received a subpoena  from the  Inspector  General  ("IG")
requesting  documents  relating  to  any  agreement  whereby  NHP  or any of its
affiliates provides or has provided compensation to owners (or their affiliates)
of  HUD-assisted  properties in  connection  with  management of a  HUD-assisted
property  (the  "Transactions").  Documents  were  produced  which may have been
responsive  to the HUD subpoena and  submitted to the HUD  Inspector  General in
1998.

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, 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 investigations and does not believe that the investigations
will result in a material adverse impact on its 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

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


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,  2001,  the  Partnership  retained  an  interest in seven of its
original  twenty-one  Local Limited  Partnerships.  The  properties in which the
Local Limited Partnerships have invested receive one or more forms of assistance
from the  Federal  Government.  As a  result,  the Local  Limited  Partnerships'
ability to transfer funds either to the  Partnership or among  themselves in the
form of cash distributions,  loans, or advances is generally restricted by these
government-assistance    programs.   These   restrictions   could   impact   the
Partnership's  ability  to meet  its cash  obligations  given  the low  level of
reserves at the Partnership level.

During the three  months  ended March 31,  2001,  the  Partnership  made working
capital advances of approximately $6,000 to two Local Limited  Partnerships.  No
repayments  were made during the three months  ended March 31, 2001.  No working
capital  advances or repayments  were made between the Partnership and the Local
Limited Partnerships for the three months ended March 31, 2000.

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
six of the remaining seven Local Limited  Partnerships  had been reduced to zero
as of March  31,  2001.  The  Partnership  also  has an  investment  in  Windsor
Apartments Limited  Partnership which represents the Partnership's  share of the
remaining undistributed sales proceeds from the sale of the underlying property.
For these  investments,  cash  distributions  received are recorded in income as
distributions  received in excess of investment  in Local Limited  Partnerships.
For those investments not reduced to zero,  distributions  received are recorded
as   distributions   from  Local  Limited   Partnerships.   A  distribution   of
approximately $2,027,000, comprised of initial proceeds from the sale of Windsor
Apartments  and   distributions   in  excess  of  investment  in  Local  Limited
Partnerships  of  approximately  $97,000,  were received during the three months
ended March 31, 2001. No  distributions  were received during the  corresponding
period in 2000.  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.

Cash and cash equivalents  amounted to  approximately  $14,000 at March 31, 2001
compared to approximately  $1,000 at December 31, 2000. The increase in cash and
cash  equivalents  is  due to  approximately  $2,024,000  of  cash  provided  by
investing  activities  offset by  approximately  $1,526,000 and $485,000 of cash
used in operating  and  financing  activities,  respectively.  Cash  provided by
investing  activities  consisted primarily of the initial  distribution from the
proceeds of the sale of Windsor  Apartments.  Cash used in operating  activities
consisted of  repayment of the accrued  interest on the note payable in addition
to payment of operating  expenses offset by distributions  received in excess of
investment.  Cash used in  financing  activity  consisted  of  payments  on note
payable and advances from the General Partner. The ability of the Partnership to
meet its on-going cash  requirements in excess of cash on hand at March 31, 2001
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, 2001 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  $1,310,000 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  in which the  Partnership  currently  holds an
interest  has a note  payable  due to the  original  owner  of  each  respective
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 (see below).

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
installments of interest,  pursuant to the agreement with the noteholders,  have
not been 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 and San Juan Del Centro Limited  Partnerships  all
have notes which were executed by the respective Local Limited Partnerships with
the  seller as part of the  acquisition  of the  property  by the Local  Limited
Partnership.  The notes were nonrecourse notes secured by a security interest in
all Partnership  interests in the Local Limited Partnership and are subordinated
to the  respective  mortgage  notes on each property for as long as the mortgage
notes are insured by HUD. Any payments due from project  income are payable from
surplus cash, as defined by the HUD  Regulatory  Agreement.  Neither the Limited
Partnership  nor any  partners  thereof,  present or future  assume any personal
liability for the payment of the notes.  The notes were due November,  15, 1999,
November 15, 1999 and December 20, 1999,  respectively.  Each note is in default
and  the  Local   Limited   Partnership   interests  are  subject  to  potential
foreclosure.  Continuation of the Local Limited Partnerships'  operations in the
present form is  dependent  on its ability to extend the maturity  date of their
respective  notes, or to repay or refinance their note. All of the Local Limited
Partnerships are actively attempting to sell their respective net assets.

Esbro  and  Mayfair  Manor  Limited  Partnerships  notes  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 are  nonrecourse
notes  secured  by a  security  interest  in all  Partnership  interests  in the
respective  Local Limited  Partnership.  The notes were initially due on October
15, 1997.  Effective  February 16, 1998,  both Esbro and Mayfair  Manor  Limited
Partnerships  executed  Amended and Restated  Promissory Notes for each of their
respective  notes.  The  Amended  Notes  extended  the  maturity of the notes to
October 25, 1999. Neither Limited Partnership not any partners thereof,  present
or future,  assume any  personal  liability  for the payment of the notes.  Both
Local  Limited  Partnerships  received  notice of  demand  for  payment  and the
commencement  of  foreclosure  proceedings.  Such  foreclosure is subject to HUD
approval, which is pending. Continuation of both the Local Limited Partnerships'
operations  in  the  present  form  is  dependent  upon  the  outcome  of  these
proceedings. The financial statements do not include any adjustments which might
result from the outcome of this uncertainty.

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

As of March 31, 2001,  Hurbell II Limited  Partnership  has a note payable which
was due on November 2, 1999.  The Local  Limited  Partnership  does not have the
resources  to pay the  amount  due.  On April 2,  2001,  the  holder of the note
payable related to Hurbell II exercised its remedy under the security  agreement
with  respect to such note  payable,  and was  substituted  as the sole  limited
partner of the Local Limited  Partnership  in place of the  Partnership  and the
noteholders assignee was substituted as the general partner. No gain or loss has
been recorded as a result of the transfer of this partnership interest. With the
loss of the  Partnership's  interest  in Hurbell  II, the  Partnership  will not
receive any future  benefits  from this Local  Limited  Partnership  and taxable
income  through the date of  foreclosure  will be generated and allocated to the
Partnership's  investors without any distributable  cash. The specific impact of
the tax  consequence  is dependent upon each specific  partners'  individual tax
situation.

Park Avenue West I, Park Avenue West II and Rodeo Drive Limited  Partnership all
had notes  payable  which were due  December  20,  2000,  December  20, 2000 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 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 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, 2000 and December 1, 2000,  Meadows  Apartments  and Meadows East  Apartments
Limited Partnerships'  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  conditions  above,  there is  substantial  doubt  about the
Partnership's  ability to continue as a going concern.  The financial statements
do  not  include  any  adjustments  to  reflect  the  possible  effects  on  the
recoverability  and  classification of assets or amounts and  classifications of
liabilities that may result from these uncertainties.

Results of Operations

The  Partnership  invested as a limited  partner in Local  Limited  Partnerships
which  operated  twenty-one  rental housing  properties.  At March 31, 2001, the
Partnership  continued to hold an interest in seven 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, 2001, the  Partnership had
no  carrying  basis  in six of the  Local  Limited  Partnerships  and  therefore
reflected no results of operations, for its share of profits or losses for these
Local Limited Partnerships.

The Partnership had net income of approximately  $1,197,000 for the three months
ended March 31, 2001,  compared to a net loss of  approximately  $87,000 for the
three months ended March 31,  2000.  Net income per unit of limited  partnership
increased  to  $64.63  from a net loss of $4.66 per unit.  The  increase  in net
income  was  primarily  attributable  to the  Partnership's  share  of the  gain
recognized  related to the sale of Windsor  Apartments and an extraordinary gain
on forgiveness  of debt relating to the note payable.  The  Partnership  did not
recognize approximately $345,000 of its allocated share of losses from six Local
Limited  Partnerships  for  the  three  months  ended  March  31,  2001,  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
$6,000  of its  allocated  share  of  profits  from  one of  the  Local  Limited
Partnerships  for the three months ended March 31, 2001, 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 $122,000 between periods. The increase is primarily due
to higher  net losses at West Oak  Village  Apartments  during the three  months
ended March 31, 2001 as compared to the corresponding period in 2000.


<PAGE>


                           PART II - OTHER INFORMATION



ITEM 1.     LEGAL PROCEEDINGS

In October  1997,  NHP received a subpoena  from the  Inspector  General  ("IG")
requesting  documents  relating  to  any  agreement  whereby  NHP  or any of its
affiliates provides or has provided compensation to owners (or their affiliates)
of  HUD-assisted  properties in  connection  with  management of a  HUD-assisted
property  (the  "Transactions").  Documents  were  produced  which may have been
responsive  to the HUD subpoena and  submitted to the HUD  Inspector  General in
1998.

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, 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 investigations and does not believe that the investigations
will result in a material adverse impact on its 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:

                  None.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended March 31, 2001.


<PAGE>


                                   SIGNATURES



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



                                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                                    (Registrant)


                                    By:   The National Housing Partnership,
                                          General Partner


                                    By:   National Corporation for Housing
                                          Partnerships, General Partner


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


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


                                    Date: