UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

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

              For the quarterly period ended September 30, 2002


[ ]   TRANSITION REPORT UNDER 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)

<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS


                 NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                         Statement of Financial Position
                                   (Unaudited)
                        (in thousands, except unit data)

                               September 30, 2002


ASSETS
   Cash and cash equivalents                                                 $ 1
   Investments in and advances to Local Limited
      Partnerships (Note 2)                                                   --

                                                                             $ 1
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Liabilities
   Accrued expenses                                                         $ 33
   Administrative and reporting fees payable to
      General Partner (Note 3)                                             1,353
   Notes payable to General Partner (Note 3)                                  13
   Accrued interest on note payable to General Partner
      (Note 3)                                                                 1

Partners' capital (deficit)
   General Partner -- The National Housing
      Partnership (NHP)                                       $ 628
   Original Limited Partner -- 1133 Fifteenth
      Street Two Associates                                     (182)
   Other Limited Partners -- 18,043 investment
      units                                                   (1,845)    (1,399)

                                                                            $ 1


                See Accompanying Notes to Financial Statements


<PAGE>




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

<TABLE>
<CAPTION>

                                                   Three Months Ended      Nine Months Ended
                                                      September 30,          September 30,
                                                    2002        2001        2002       2001
Revenues:
  Share of profits from Local Limited
<S>                                                 <C>         <C>         <C>        <C>
     Partnership                                    $ --        $ --        $ --       $ 459
  Interest income                                       --          --         --           1
  Distributions in excess of investment in
    Local Limited Partnership                           --          --         --          98
  Gain on forgiveness of debt (Note 4)                  --          --         --         708
                                                        --          --         --       1,266
Costs and Expenses:
  Administrative and reporting fees to
    General Partner                                      5           8         15          34
  Other operating expenses                              13          14         42          60
  Interest on notes payable to General Partner          --          --          1          10
                                                        18          22         58         104

Net (loss) income                                   $ (18)      $ (22)     $ (58)     $ 1,162

Allocation of net (loss) income:
  General Partner - NHP                             $ (1)       $ --        $ (1)      $ 12
  Original Limited Partner - 1133 Fifteenth
    Street Two Associates                               (1)         --         (1)         12
  Other limited partners                               (16)        (22)       (56)      1,138

                                                    $ (18)      $ (22)     $ (58)     $ 1,162

Net (loss) income per limited partnership
  interest                                         $ (0.88)    $ (1.20)   $ (3.09)   $ 62.33

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

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

<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, 2001                   $ 629        $ (181)      $(1,789)       $(1,341)

Net loss - nine months ended
  September 30, 2002                      (1)          (1)          (56)           (58)

Partners' capital (deficit) at
  September 30, 2002                  $ 628        $ (182)      $(1,845)       $(1,399)

Percentage interest at
  September 30, 2002                     1%           1%            98%         100%
                                         (A)          (B)           (C)


(A)   General Partner
(B)   Original Limited Partner
(C)   Consists of 18,043 investment units at September 30, 2002 and 18,138 at
      December 31, 2001 (see "Footnote 5" in Notes to Financial Statements;
      "Abandonment of Limited Partnership Units).

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

                 NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                            Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                 Nine Months Ended September 30,
                                                                      2002             2001
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                   <C>              <C>
  Interest income received                                            $ --             $ 1
  Distributions received in excess of investment in Local
   Limited Partnership                                                    --              98
  Advances made in excess of investment in Local Limited
   Limited Partnership                                                    --              (7)
  Operating expenses paid                                                (50)            (64)
  Payment of interest on note payable                                     --          (1,575)
        Net cash used in operating activities                            (50)         (1,547)

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

CASH FLOWS FROM FINANCING ACTIVITIES:
  Advances from General Partner                                           41               8
  Repayment of advances from General Partner                             (38)            (33)
  Payments on deferred acquisition note payable                           --            (452)
        Net cash provided by (used in) financing activities                3            (477)

NET DECREASE IN CASH AND CASH EQUIVALENTS                                 (4)             --

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                           5               1

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

RECONCILIATION OF NET (LOSS) INCOME TO NET CASH USED IN
  OPERATING ACTIVITIES:
   Net (loss) income                                                  $ (58)         $ 1,162
   Adjustments to reconcile net (loss) income to net cash
     used in operating activities:
      Share of income from Local Limited Partnerships                     --            (459)
      Changes in operating assets and liabilities:
        Gain on forgiveness of debt                                       --            (708)
        Decrease in accrued interest on deferred acquisition
          note                                                            --          (1,564)
        Increase in administrative and reporting fees payable             15              34
        Decrease in other accrued expenses                                (8)            (12)
        Increase in accrued interest on loans from General
          Partner                                                          1              --
        Total adjustments                                                  8          (2,709)

Net cash used in operating activities                                 $ (50)         $(1,547)

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

                 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 presentation of
the financial condition and results of operations for the interim periods
presented. All such adjustments are of a normal and recurring nature. Operating
results for the three and nine month periods ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. While the General Partner believes that the disclosures
presented are adequate to make the information not misleading, it is suggested
that these financial statements be read in conjunction with the financial
statements and notes included in the Partnership's Annual Report filed on Form
10-KSB for the year ended December 31, 2001.

(2) INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

During 1985, the Partnership acquired a 94.5% limited partnership interest (98%
with respect to allocation of losses) in twenty-one Local Limited Partnerships.
At September 30, 2002, the Partnership continues to hold an interest in three
Local Limited Partnerships: San Juan del Centro Limited Partnership, Caroline
Arms Limited Partnership and Harold House Limited Partnership. During the nine
months ended September 30, 2002, the Partnership received its share of the final
distribution of Windsor Apartments Associates Limited Partnership and the Local
Limited Partnership was liquidated. During 2001, the Partnership's interest in
Esbro Limited Partnership, Mayfair Manor Limited Partnership, and Hurbell II and
III Limited Partnership were foreclosed upon. Also during 2001, the properties
owned by Windsor Apartment Associates and West Oak Village Limited Partnership
were sold.

Caroline Arms, Harold House, and San Juan Del Centro Limited Partnerships all
have notes payable which are currently in default and accordingly, the Local
Limited Partnership interests are subject to foreclosure. Continuation of the
Local Limited Partnerships' operations in the present form is dependent on their
ability to extend the maturity date of the respective notes, or to repay or
refinance their respective 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 $167,000
and $620,000 of losses from three and six Local Limited Partnerships during the
nine months ended September 30, 2002 and 2001, respectively. During the nine
months ended September 30, 2001, the Partnership's share of profits in one Local
Limited Partnership in the amount of approximately $6,000 was offset against
prior years' losses not taken. For the nine months ended September 30, 2002,
there were no profits offset against prior years' losses not taken. As of
September 30, 2002, the Partnership has not recognized approximately $3,121,000
of its allocated cumulative share of losses from three Local Limited
Partnerships in which its investment has been reduced to zero.

Effective April 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 145, "Rescission of FASB Statements No. 4, 44
and 64". SFAS No. 4 "Reporting Gains and Losses from Extinguishment of Debt,"
required that all gains and losses from extinguishment of debt be aggregated
and, if material, classified as an extraordinary item. SFAS No. 145 rescinds
SFAS No. 4, and accordingly, gains and losses from extinguishment of debt should
only be classified as extraordinary if they are unusual in nature and occur
infrequently. Neither of these criteria applies to the Partnership. As a result,
the accompanying statements of operations have been restated to reflect the gain
on forgiveness of the balance of the note payable secured by the Partnership's
interest in Windsor Apartments Associates Limited Partnership in 2001 (see Note
4 - Sale of Investment Property Owned by Local Limited Partnership) in
operations rather than as an extraordinary item.

During the nine months ended September 30, 2001, the Partnership made working
capital advances of approximately $10,000 to six Local Limited Partnerships. No
repayments were received during the nine months ended September 30, 2001. No
working capital advances or repayments were made between the Partnership and the
Local Limited Partnerships for the nine months ended September 30, 2002. During
1993, the Partnership re-evaluated the timing of the collectibility of the
advances and determined, based on the Local Limited Partnerships' operations,
that such advances are not likely to be collected. For accounting purposes, the
Partnership treated the advance balance as additional investments in the Local
Limited Partnerships. The balance was then reduced to zero, with a corresponding
charge to operations to reflect a portion of the previously unrecognized losses
on investments.

Advances to the Local Limited Partnership remain due and payable to the
Partnership. Interest is calculated at the prime rate plus 2% (6.75% at
September 30, 2002). Payment of principal and interest is contingent upon the
Local Limited Partnerships having available surplus cash, as defined by HUD
regulations, from operations or from the sale or refinancing of the Local
Limited Partnership properties. Any future repayment of advances or interest
will be reflected as Partnership income when received.

The following are unaudited combined statements of operations for the nine
months ended September 30, 2002 and 2001 of the Local Limited Partnerships in
which the Partnership has invested. The statements are compiled from financial
statements of the Local Limited Partnerships which are prepared on the accrual
basis of accounting and supplied by the managing agents of the projects. Certain
reclassifications have been made to the 2001 information to conform to the 2002
presentation.

<TABLE>
<CAPTION>

                        COMBINED STATEMENTS OF OPERATIONS

                                          Three Months Ended       Nine Months Ended
                                            September 30,            September 30,
                                           2002        2001        2002        2001
                                            (in thousands)          (in thousands)

<S>                                       <C>          <C>        <C>         <C>
Rental income                             $ 627        $ 974      $1,919      $3,828
Other income                                 121         409         352         541
Gain on sale of property                      --          --          --         631
   Total income                              748       1,383       2,271       5,000

Operating expenses                           379         748       1,202       2,635
Interest, taxes and insurance                220         549         663       1,445
Depreciation                                 193         252         575       1,023
   Total expense                             792       1,549       2,440       5,103

Net loss                                  $ (44)      $ (166)     $ (169)     $ (103)

National Housing Partnership
  Realty Fund Two share of net
  loss                                    $ (43)      $ (162)     $ (166)     $ (125)
</TABLE>

(3) TRANSACTIONS WITH THE GENERAL PARTNER

During the nine month periods ended September 30, 2002 and 2001, the Partnership
accrued administrative and reporting fees payable to the General Partner in the
amount of approximately $15,000 and $34,000, respectively, for services provided
to the Partnership. The amount of fees due to the General Partner by the
Partnership was approximately $1,353,000 at September 30, 2002. The accrued
administrative and reporting fees payable to the General Partner will be paid as
cash flow permits or from the sale or refinancing of one or more of the
underlying properties of the Local Limited Partnerships.

The General Partner advanced the Partnership approximately $41,000 and $8,000
during the nine months ended September 30, 2002 and 2001, respectively. For the
nine months ended September 30, 2002 and 2001, the Partnership repaid advances
of approximately $38,000 and $33,000, respectively, to the General Partner.
Interest is charged on borrowings at the Chase Manhattan Bank prime interest
rate plus 2% and amounted to approximately $1,000 and less than $1,000 for the
nine months ended September 30, 2002 and 2001, respectively. Chase Manhattan
Bank's prime rate was 4.75% at September 30, 2002. At September 30, 2002, the
Partnership owed approximately $14,000 in unpaid borrowings due to the General
Partner, including accrued interest.

During the nine months ended September 30, 2001, the Partnership made working
capital advances of approximately $10,000 to six Local Limited Partnerships. No
repayments were received during the nine months ended September 30, 2001. No
working capital advances or repayments were made between the Partnership and the
Local Limited Partnerships for the nine months ended September 30, 2002.

Beginning in 2001, the Local Limited Partnerships began insuring their
properties up to certain limits through coverage provided by AIMCO which is
generally self-insured for a portion of losses and liabilities related to
workers compensation, property casualty and vehicle liability. The Local Limited
Partnerships insure their properties above the AIMCO limits through insurance
policies obtained by AIMCO from insurers unaffiliated with the General Partner.
During the nine months ended September 30, 2002 and 2001, the Local Limited
Partnerships were charged by AIMCO and its affiliates approximately $31,000 and
$93,000, respectively, for insurance coverage and fees associated with policy
claims administration.

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

On January 31, 2001, Windsor Apartment Associates Limited Partnership sold its
investment property to an unaffiliated third party for $4,600,000. After paying
closing costs, a portion of the net proceeds were used to repay the mortgage
encumbering the property. The Partnership received approximately $2,027,000 from
the Local Limited Partnership as its portion of the sales proceeds during the
nine months ended September 30, 2001. The Partnership used these funds to repay
a portion of the note payable and accrued interest which was secured by the
Partnership's interest in the Windsor Apartments Associates Limited Partnership.
The remaining unpaid balance of approximately $708,000 was forgiven and
recognized as a gain on debt forgiveness.

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

(5) ABANDONMENT OF LIMITED PARTNERSHIP UNITS

During the nine months ended September 30, 2002 the number of limited
partnership units decreased by 95 units due to limited partners abandoning their
units. In abandoning his or her Limited Partnership Unit(s), a limited partner
relinquishes all right, title, and interest in the partnership as of the date of
abandonment. However, the limited partner is allocated his or her share of net
income or loss for that year. The income or loss per other limited partnership
unit in the accompanying statements of operations is calculated based on the
number of units outstanding at the beginning of the year. There were no such
abandonments during the nine months ended September 30, 2001.

(6) 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.

(7) GOING CONCERN

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

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

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. The matters discussed
in this report contain certain forward-looking statements, including, without
limitation, statements regarding future financial performance and the effect of
government regulations. The discussions of the Registrant's business and results
of operations, including forward-looking statements pertaining to such matters,
do not take into account the effects of any changes to the Registrant's business
and results of operations. Actual results may differ materially from those
described in the forward-looking statements and will be affected by a variety of
risks and factors including, without limitation: national and local economic
conditions; the terms of governmental regulations that affect the Registrant and
interpretations of those regulations; the competitive environment in which the
Registrant operates; financing risks, including the risk that cash flows from
operations may be insufficient to meet required payments of principal and
interest; real estate risks, including variations of real estate values and the
general economic climate in local markets and competition for tenants in such
markets; and possible environmental liabilities. Readers should carefully review
the Registrant's financial statements and the notes thereto, as well as the risk
factors described in the documents the Registrant files from time to time with
the Securities and Exchange Commission.

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 September 30, 2002, the Partnership retained an interest in three of its
original twenty-one Local Limited Partnerships. The properties in which the
Local Limited Partnerships have invested receive one or more forms of assistance
from the Federal Government. As a result, the Local Limited Partnerships'
ability to transfer funds either to the Partnership or among themselves in the
form of cash distributions, loans, or advances is generally restricted by these
government-assistance programs. These restrictions could impact the
Partnership's ability to meet its cash obligations given the low level of
reserves at the Partnership level. The General Partner monitors developments in
the area of legal and regulatory compliance and is studying new federal laws,
including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002
mandates or suggests additional compliance measures with regard to governance,
disclosure, audit and other areas. In light of these changes, the Partnership
expects that it will incur higher expenses related to compliance, including
increased legal and audit fees.

During the nine months ended September 30, 2001, the Partnership made working
capital advances of approximately $10,000 to six Local Limited Partnerships. No
repayments were made during the nine months ended September 30, 2001. No working
capital advances were made or repayments received between the Partnership and
the Local Limited Partnerships for the nine months ended September 30, 2002.

Distributions received in excess of investment in Local Limited Partnerships
represent the Partnership's proportionate share of the excess cash available for
distribution from the Local Limited Partnerships. As a result of the use of the
equity method of accounting for the Partnership's investments, investments in
all of the remaining Local Limited Partnerships had been reduced to zero as of
September 30, 2002. For these investments, cash distributions received are
recorded in income as distributions received in excess of investment in Local
Limited Partnerships. If these investments had not been reduced to zero,
distributions received would be recorded as distributions from Local Limited
Partnerships. A distribution of approximately $43,000 comprised of the final
proceeds from the sale of Windsor Apartments was received during the nine months
ended September 30, 2002. A distribution of approximately $2,027,000, comprised
of initial proceeds from the sale of Windsor Apartments and distributions in
excess of investment in Local Limited Partnerships of approximately $98,000,
were received during the nine months ended September 30, 2001. The receipt of
distributions in the future is dependent upon the operations of the underlying
properties of the Local Limited Partnerships to generate sufficient cash for
distribution in accordance with applicable HUD regulations.

Cash and cash equivalents amounted to approximately $1,000 at September 30, 2002
compared to approximately $5,000 at December 31, 2001. The decrease in cash and
cash equivalents is due to approximately $50,000 of cash used in operating
activities partially offset by approximately $43,000 and $3,000 of cash provided
by investing and financing activities, respectively. Cash provided by investing
activities consisted of the final distribution from the proceeds of the sale of
Windsor Apartments. Cash provided by financing activities consisted of advances
to the Partnership from the General Partner partially offset by repayments of
prior advances from the General Partner. Cash used in operating activities
consisted of the payment of operating expenses. The ability of the Partnership
to meet its on-going cash requirements in excess of cash on hand at September
30, 2002 is dependent upon the future receipt of distributions from the Local
Limited Partnerships or proceeds from sales or refinancing of one or more of the
underlying properties of the Local Limited Partnerships. The Partnerships only
other form of liquidity is advances from the General Partner. During the nine
months ended September 30, 2002 approximately $41,000 of working capital
advances were made by the General Partner to the Partnership. The Partnership
repaid advances of approximately $38,000 during the nine months ended September
30, 2002. The General Partner will evaluate advancing the Partnership additional
funds as such funds are needed, but is in no way legally obligated to make such
advances.

The Partnership currently owes the General Partner approximately $1,353,000 for
administrative and reporting services performed. The payment of the unpaid
administrative and reporting fees will most likely result, if at all, from the
sale or refinancing of the underlying properties of the Local Limited
Partnerships, rather than through recurring operations.

On January 31, 2001, Windsor Apartment Associates Limited Partnership sold its
investment property to an unaffiliated third party for $4,600,000. After paying
closing costs, a portion of the net proceeds were used to repay the mortgage
encumbering the property. The Partnership received approximately $2,027,000 from
the Local Limited Partnership as its portion of the sales proceeds during the
nine months ended September 30, 2001. The Partnership used these funds to repay
a portion of the note payable and accrued interest which was secured by the
Partnership's interest in the Windsor Apartments Associates Limited Partnership.
The remaining unpaid balance of approximately $708,000 was forgiven and
recognized as a gain on debt forgiveness.

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

Caroline Arms, Harold House and San Juan Del Centro Limited Partnerships all
have notes which were executed by the respective Local Limited Partnerships with
the seller as part of the acquisition of the property by the Local Limited
Partnership. The notes were nonrecourse notes secured by a security interest in
all Partnership interests in the Local Limited Partnership and are subordinated
to the respective mortgage notes on each property for as long as the mortgage
notes are insured by HUD. Any payments due from project income are payable from
surplus cash, as defined by the HUD Regulatory Agreement. Neither the Limited
Partnership nor any partners thereof, present or future assume any personal
liability for the payment of the notes. The notes were due November, 15, 1999,
November 15, 1999 and December 20, 1999, respectively. Each note is in default
and the Local Limited Partnership interests are subject to potential
foreclosure. Continuation of the Local Limited Partnerships' operations in the
present form is dependent on its ability to extend the maturity date of their
respective notes, or to repay or refinance their note. All of the Local Limited
Partnerships are actively attempting to sell their respective net assets.

Esbro and Mayfair Manor Limited Partnerships had notes payable which were
originally due on October 15, 1997. Effective February 16, 1998, both Esbro and
Mayfair Manor Limited Partnerships executed Amended and Restated Promissory
Notes for each of their respective notes. The Amended Notes extended the
maturity of the notes to October 25, 1999. The Local Limited Partnerships did
not have the resources to pay the amounts due. On July 20, 2001, the holder of
these notes exercised its remedy under the security agreement with respect to
such notes and was substituted as the sole limited partner of the Local Limited
Partnerships in place of the Partnership and the noteholder's assignee was
substituted as the General Partner. No gain or loss has been recorded as a
result of the transfer of these partnership interests. With the loss of the
Partnership's interest in Esbro and Mayfair Manor, the Partnership will not
receive any future benefits from these Local Limited Partnerships and taxable
income through the date of foreclosure will be generated and allocated to the
Partnership's investors without any distributable cash. The specific impact of
the tax consequence is dependent upon each partners' individual tax situation.

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

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

Results of Operations

The Partnership invested as a limited partner in Local Limited Partnerships
which operated twenty-one rental housing properties. At September 30, 2002, the
Partnership continued to hold an interest in three Local Limited Partnerships.
To the extent the Partnership still has a carrying basis in a respective Local
Limited Partnership, results of operations are significantly impacted by the
Partnership's share of the profits or losses in the Local Limited Partnership.
These profits or losses include depreciation and accrued note payable interest
expense which are noncash in nature. As of September 30, 2002, the Partnership
had no carrying basis in any of the Local Limited Partnerships and therefore
reflected no results of operations for its share of profits or losses for these
Local Limited Partnerships.

The Partnership had a net loss of approximately $58,000 for the nine months
ended September 30, 2002, compared to net income of approximately $1,162,000 for
the nine months ended September 30, 2001. The Partnership had a net loss of
approximately $18,000 for the three months ended September 30, 2002, compared
with a net loss of approximately $22,000 for the nine months ended September 30,
2002. Net loss per unit of limited partnership was $3.09 for the nine months
ended September 30, 2002 compared to net income of $62.33 per limited
partnership unit for the nine months ended September 30, 2001. The decrease in
net income for the nine months ended September 30, 2002 is primarily
attributable to the Partnership's share of the gain recognized during the nine
months ended September 30, 2001 related to the sale of Windsor Apartments and a
gain on forgiveness of debt relating to the note payable secured by the
Partnership's interest in the Local Limited Partnership which owned Windsor
Apartments. The Partnership did not recognize approximately $167,000 of its
allocated share of losses from three Local Limited Partnerships for the nine
months ended September 30, 2002, as the Partnership's net carrying basis in
these Local Limited Partnerships had been reduced to zero. The Partnership's
share of losses from the Local Limited Partnerships, if not limited to its
investment account balance, would have decreased approximately $453,000 between
periods. The decrease is primarily due to the foreclosure on the properties held
by Esbro, Mayfair Manor, Hurbell II and Hurbell III Limited Partnerships during
2001.

ITEM 3.     CONTROLS AND PROCEDURES

The principal executive officer and principal financial officer of the General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have, within 90 days of the
filing date of this quarter report, evaluated the effectiveness of the
Partnership's disclosure controls and procedures (as defined in Exchange Act
Rules (13a-14(c) and (15d-14(c)) and have determined that such disclosure
controls and procedures are adequate. There have been no significant changes in
the Partnership's internal controls or in other factors that could significantly
affect the Partnership's internal controls since the date of evaluation. The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.



<PAGE>


                           PART II - OTHER INFORMATION



ITEM 6      EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits

                  Exhibit 99,  Certification  of Chief  Executive  Officer and
                  Chief Financial Officer.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended September 30, 2002.


<PAGE>


                                   SIGNATURES



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



                                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                                    (Registrant)


                                    By:   The National Housing Partnership,
                                          Its sole General Partner


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


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


                                    By:   /s/Thomas C. Novosel
                                          Thomas C. Novosel
                                          Senior Vice President
                                          and Chief Accounting Officer


                                    Date:

<PAGE>

                                  CERTIFICATION


I, Patrick J. Foye, certify that:


1. I have reviewed this quarterly report on Form 10-QSB of National Housing
Partnership Realty Fund Two;


2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;


3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;


4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a) Designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and


      c) Presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):


      a) All significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and


6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  _________ __, 2002

                                    Patrick J. Foye
                                    Executive Vice President of National
                                    Corporation for Housing Partnerships,
                                    equivalent of the chief executive officer of
                                    the Partnership


<PAGE>



                                  CERTIFICATION


I, Paul J. McAuliffe, certify that:


1. I have reviewed this quarterly report on Form 10-QSB of National Housing
Partnership Realty Fund Two;


2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;


3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;


4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a) Designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and


      c) Presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):


      a) All significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and


6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  _________ __, 2002

                                    Paul J. McAuliffe
                                    Executive Vice President and Chief Financial
                                    Officer of National Corporation for Housing
                                    Partnerships, equivalent of the chief
                                    financial officer of the Partnership


<PAGE>


Exhibit 99


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002



In connection with the Quarterly Report on Form 10-QSB of National Housing
Realty Fund II (the "Partnership"), for the quarterly period ended September 30,
2002 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Patrick J. Foye, as the equivalent of the chief executive
officer of the Partnership, and Paul J. McAuliffe, as the equivalent of the
chief financial officer of the Partnership, each hereby certifies, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                    /s/    Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:


                                    /s/    Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:


This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.