FORM 10-Q

               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549


 X   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
 Act of 1934

For the quarterly period ended September 30, 1997 or

     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:  0-17582

  AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
     (Exact name of registrant as specified in its charter)

Delaware                                                47-0719051            
(State or other jurisdiction                            (IRS Employer 
of incorporation or organization)                       Identification No.)


Suite 400, 1004 Farnam Street, Omaha, Nebraska          68102       
(Address of principal executive offices)                (Zip Code)


(402) 444-1630                              
(Registrant's telephone number, including area code)


     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 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>                               - i -
Part I.  Financial Information
  Item 1.  Financial Statements
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                                              
                                                                                             Sept. 30, 1997       Dec. 31, 1996
                                                                                             --------------      --------------
<S>                                                                                          <C>                 <C>
Assets
 Cash and temporary cash investments, at cost which                                                                            
  approximates market value                                                                  $   2,568,226       $   2,072,577
 Investment in mortgage-backed securities (Note 5)                                               7,534,693           8,506,853
 Investment in preferred real estate participations (PREPs),
  net of valuation allowance (Note 6)                                                                 -                   -
 Interest receivable																																																																															 56,488              60,561
 Other assets                                                                                       34,922 		     						50,805
                                                                                             --------------      --------------
                                                                                             $  10,194,329       $  10,690,796
                                                                                             ==============      ==============
Liabilities and Partners' Capital
 Liabilities                                                                                                                   
  Accounts payable (Note 7)                                                                  $      45,830       $      54,401
  Distribution payable (Note 4)                                                                     98,193             101,945
                                                                                             --------------      --------------
                                                                                                   144,023             156,346
                                                                                             --------------      --------------
 Partners' Capital
  General Partner                                                                                      100                 100
  Beneficial Unit Certificate Holders
  ($11.09 per BUC in 1997 and $11.63 in 1996)                                                   10,050,206          10,534,350
                                                                                             --------------      --------------
                                                                                                10,050,306          10,534,450
                                                                                             --------------      --------------
                                                                                             $  10,194,329       $  10,690,796
                                                                                             ==============      ==============
</TABLE>
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
                                                           For the             For the        For the Nine        For the Nine
                                                     Quarter Ended       Quarter Ended        Months Ended        Months Ended
                                                    Sept. 30, 1997      Sept. 30, 1996      Sept. 30, 1997      Sept. 30, 1996
                                                    ---------------     ---------------     ---------------     ---------------
<S>                                                 <C>                 <C>                 <C>                 <C>
Income
 Mortgage-backed securities income                  $     139,052       $      163,273      $      424,589      $      501,796
 Equity in earnings (losses) of property partnerships      12,791              (24,919)             59,852              17,808
 Interest income on temporary cash investments             35,317               24,262             103,058              69,793
                                                    ---------------     ---------------     ---------------     ---------------
                                                          187,160              162,616             587,499             589,397
Expenses
 General and administrative expenses (Note 7)             120,526               45,278             218,942             137,083
                                                    ---------------     ---------------     ---------------     ---------------
Net income                                          $      66,634       $      117,338      $      368,557      $      452,314
                                                    ===============     ===============     ===============     ===============
Net income allocated to:
 General Partner                                    $       2,958       $        3,109      $        8,987      $        9,437
 BUC Holders                                               63,676              114,229             359,570             442,877
                                                    ---------------     ---------------     ---------------     ---------------
                                                    $      66,634       $      117,338      $      368,557      $      452,314
                                                    ===============     ===============     ===============     ===============
Net income per BUC                                  $         .07       $          .13      $          .40      $          .49
                                                    ===============     ===============     ===============     ===============

The accompanying notes are an integral part of the financial statements.
</TABLE>





<PAGE>                               - 1 -
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>

                                                                                           Beneficial Unit
                                                                              General          Certificate
                                                                              Partner              Holders               Total
                                                                        --------------     ----------------     ---------------
<S>                                                                     <C>                <C>                  <C>   
Partners' Capital (excluding net unrealized holding losses)
 Balance at December 31, 1996                                           $         100      $    10,573,074      $   10,573,174
 Net income                                                                     8,987              359,570             368,557
 Cash distributions paid or accrued (Note 4)                                   (8,987)            (889,759)           (898,746)
                                                                        --------------     ----------------     ---------------
                                                                                  100           10,042,885          10,042,985
                                                                        --------------     ----------------     ---------------
Net unrealized holding gains (losses)
 Balance at December 31, 1996                                                    -                 (38,724)            (38,724)
 Net change                                                                      -                  46,045              46,045
                                                                        --------------     ----------------     ---------------
                                                                                 -                   7,321               7,321
                                                                        --------------     ----------------     ---------------
Balance at September 30, 1997                                           $         100      $    10,050,206      $   10,050,306
                                                                        ==============     ================     ===============
</TABLE>
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                                              For the Nine        For the Nine
                                                                                              Months Ended        Months Ended
                                                                                            Sept. 30, 1997      Sept. 30, 1996
                                                                                            ---------------     ---------------
<S>                                                                                         <C>                 <C>   
Cash flows from operating activities                                                                                           
 Net income                                                                                 $      368,557      $      452,314
  Adjustments to reconcile net income to net cash 
   provided by operating activities
    Equity in earnings of property partnerships                                                    (59,852)            (17,808)
    Amortization of discount on mortgage-backed securities                                          (6,495)             (8,421)
    Decrease in interest receivable                                                                  4,073               3,595
    Decrease in other assets                                                                        15,883               5,585
    Decrease in accounts payable                                                                    (8,571)             (6,029)
                                                                                            ---------------     ---------------
Net cash provided by operating activities                                                          313,595             429,236
                                                                                            ---------------     ---------------
Cash flows from investing activities                                                                          
 Mortgage principal payments received                                                            1,024,700             649,228
 Distributions received from PREPs                                                                  59,852              65,804
 Investment in PREPs                                                                                  -                (47,996)
                                                                                            ---------------     ---------------
Net cash provided by investing activities                                                        1,084,552             667,036
                                                                                            ---------------     ---------------
Cash flow used in financing activity
 Distributions paid                                                                               (902,498)         (1,053,608)
                                                                                            ---------------     ---------------
Net increase in cash and temporary cash investments                                                495,649              42,664
Cash and temporary cash investments at beginning of period                                       2,072,577           1,813,499 
                                                                                            ---------------     ---------------
Cash and temporary cash investments at end of period                                        $    2,568,226      $    1,856,163 
                                                                                            ===============     ===============
The accompanying notes are an integral part of the financial statements.
</TABLE>









<PAGE>                               - 2 -
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)

1. Organization

America First PREP Fund 2 Pension Series Limited Partnership (the Partnership) 
was formed on February 2, 1988, under the Delaware Revised Uniform Limited 
Partnership Act for the purpose of acquiring a portfolio of federally-insured 
multifamily mortgages and other investments including preferred real estate 
participations (PREPs).  PREPs consist of equity interests which are intended 
to provide the Partnership with a participation in the net cash flow and net 
sale or refinancing proceeds of the properties collateralizing the mortgage 
loans.  The Partnership began operations with the first escrow closing on May 
25, 1988, and will continue in existence until December 31, 2017, unless 
terminated earlier under the provisions of the Partnership Agreement.  The 
General Partner of the Partnership is America First Capital Associates Limited 
Partnership Six (AFCA 6).    

2. Summary of Significant Accounting Policies

 A) Financial Statement Presentation
    The financial statements of the Partnership are prepared without audit on 
    the accrual basis of accounting in accordance with generally accepted 
    accounting principles.  The financial statements should be read in 
    conjunction with the financial statements and notes thereto included in 
    the Partnership's Annual Report on Form 10-K for the year ended December 
    31, 1996.  In the opinion of management, all normal and recurring 
    adjustments necessary to present fairly the financial position at September
    30, 1997, and results of operations for all periods presented have been 
    made.

    The preparation of financial statements in conformity with generally 
    accepted accounting principles requires management to make estimates and 
    assumptions that affect the reported amounts of assets and liabilities and 
    disclosure of contingent assets and liabilities at the date of the 
    financial statements and the reported amounts of revenues and expenses 
    during the reporting period.  Actual results could differ from those 
    estimates.

 B) Investment in Mortgage-Backed Securities
    Investment securities are classified as held-to-maturity, 
    available-for-sale, or trading.  Investments classified as 
    held-to-maturity are carried at amortized cost.  Investments classified as 
    available-for-sale are reported at fair value with any unrealized gains or 
    losses excluded from earnings and reflected as a separate component of 
    partners' capital.  Subsequent increases and decreases in the net 
    unrealized gain/loss on the available-for-sale securities are reflected as 
    adjustments to the carrying value of the portfolio and adjustments to the 
    component of partners' capital.  The Partnership does not have investment 
    securities classified as trading.

 C) Investment in PREPs
    The investment in PREPs consists of interests in limited partnerships 
    which own properties underlying the mortgage-backed securities and is 
    accounted for using the equity method.  When an investment in a PREP has 
    been reduced to zero, earnings are recorded to the extent that 
    distributions are received.  PREPs are not insured or guaranteed.  The 
    value of these investments is a function of the value of the real estate 
    underlying the PREPs.

 D) Allowance for Losses on Investments in PREPs
    The allowance for losses on investments in PREPs is a valuation reserve 
    which has been established at a level that management feels is adequate to 
    absorb potential losses on investments in PREPs.  The allowance is based 
    on the fair value of the properties underlying the PEPs.  The allowance is 
    periodically reviewed and adjustments are made to the allowance when there 
    are significant changes in the estimated fair value of the properties 
    underlying the PREPs.






<PAGE>                               - 3 -
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)

 E) Income Taxes
    No provision has been made for income taxes since Beneficial Unit 
			 Certificate (BUC) Holders are required to report their share of the 
			 Partnership's income for federal and state income tax purposes.

 F) Temporary Cash Investments
    Temporary cash investments are invested in short-term debt securities 
			 purchased with an original maturity of three months or less. 

	G) Net Income Per BUC
			 Net income per BUC has been calculated based on the number of BUCs 
			 outstanding (905,974) for all periods presented.

3. Partnership Reserve Account

The Partnership maintains a reserve account which consists of the following 
at September 30, 1997:

<TABLE>
<S>                                                                   <C>
 Cash and temporary cash investments                                  $    2,483,206
 GNMA Certificates                                                         1,347,533
 FNMA Certificates                                                           983,046
                                                                      ---------------
                                                                      $    4,813,785
																																																																						===============
</TABLE>

The reserve account was established to maintain working capital for the 
Partnership and is available for distribution to BUC Holders and for any 
contingencies related to Permanent Investments and the operation of the 
Partnership.  See Note 5 regarding the investment in mortgage-backed 
securities.

4. Partnership Income, Expenses and Cash Distributions

The Partnership Agreement contains provisions for distributing the cash 
available for distribution and for the allocation of income and expenses for 
tax purposes among AFCA 6 and BUC Holders.    	

Cash distributions included in the financial statements represent the actual 
cash distributions made during each period, and the cash distributions accrued 
at the end of each period.

5. Investment in Mortgage-Backed Securities

The mortgage-backed securities held by the Partnership represent Government 
National Mortgage Association (GNMA) Certificates and Federal National 
Mortgage Association (FNMA) Certificates.  The GNMA Certificates are backed by 
first mortgage loans on multifamily housing properties and pools of 
single-family properties.  The FNMA Certificates are backed by pools of 
single-family properties.  The GNMA Certificates are debt securities issued by 
a private mortgage lender and are guaranteed by GNMA as to the full and timely 
payment of principal and interest on the underlying loans.  The FNMA 
Certificates are debt securities issued by FNMA and are guaranteed as to the 
full and timely payment of principal and interest on the underlying loans.

At September 30, 1997, the total amortized cost, gross unrealized holding 
gains, gross unrealized holding losses, and aggregate fair value of 
available-for-sale securities are $2,323,258, $26,478, $19,157 and $2,330,579, 
respectively.  The total amortized cost, gross unrealized holding gains, gross 
unrealized holding losses, and aggregate fair value of held-to-maturity 
securities are $5,204,114, $159,205, $284,681 and $5,078,638, respectively. 








<PAGE>                               - 4 -
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)

Descriptions of the Partnership's mortgage-backed securities at September 30, 
1997, are as follows:

<TABLE>
<CAPTION>
                                          		                  Number	  Interest	      Maturity           Carrying
  Type of Security and Name         	Location               of Units       Rate           Date             Amount
  ----------------------------------	--------------------   --------   --------   -------------    ---------------
  <S>                              	<C>                     <C>        <C>        <C>	             <C>
  Held-to-Maturity
    GNMA Certificates:
     Broadmoor Court	              	Colorado Springs, CO         47	     9.25%    	    10/15/29    $      579,348
     Owings Chase Apartments		      Pikesville, MD		            234	     6.75%    	    12/15/23	        3,163,129
     Pools of single-family mortgages 				                            	  8.74%(1)  2016 to 2018	        1,461,637
                                                                                                    --------------
                                                                                                        5,204,114
                                                                                                    --------------

  Available-for-Sale
    GNMA Certificates:
     Pools of single-family mortgages			  		                             6.03%(1)          2008	          668,780(2)
     Pools of single-family mortgages		 			                              7.58%(1)	         2008	          678,753(2)

    FNMA Certificates:
     Pools of single-family mortgages					                               5.52%(1)          2000	          983,046(2)
												                                                                                       ---------------
													                                                                                           2,330,579
                                                                                              	    ---------------
  Balance at September 30, 1997                                                                    $    7,534,693
                                                                                              	    ===============
</TABLE>
(1) Represents yield to the Partnership.
(2)	Reserve account asset - see Note 3.

Reconciliation of the carrying amount of the mortgage-backed securities is as 
follows:
<TABLE>
<S>																																																																																																					    	<C>
Balance at December 31, 1996								                                                                         $    8,506,853
		Additions
		 Amortization of discount on mortgage-backed securities					                                                        6,495 
   Change in net unrealized holding gains (losses) on                                                              
    available-for-sale securities                                                                                    46,045
		Deduction
		 Mortgage principal payments received (1)						                                                                (1,024,700)
											                                                                                                  ---------------
Balance at September 30, 1997                                        							                                 $    7,534,693
																																																																																																							    		===============
(1) Includes proceeds of $556,444 received from GNMA due to the redemption
of the GNMA Certificate related to Ashwood Apartments.

</TABLE>

6.	Investment in PREPs

The Partnership's PREPs consist of interests in limited partnerships which own 
multifamily properties financed by the Partnership.  The limited partnership 
agreements originally provided for the payment of a base return on the equity 
provided to the limited partnerships and for the payment of additional amounts 
out of a portion of the net cash flow or net sale or refinancing proceeds of 
the properties subject to various priority payments.  Certain of the 
agreements have been amended to defer payment of the base return.









<PAGE>                               - 5 -
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)

Descriptions of the PREPs at September 30, 1997, are as follows:

<TABLE>
<CAPTION>
                                                                                                               Carrying
  Name                             Location                 Partnership Name                                     Amount 
  --------------------------       --------------------     -----------------------------              -----------------
  <S>                              <C>                      <C>                                        <C> 
  Broadmoor Court                  Colorado Springs, CO     Stazier Associates Colorado Springs, Ltd.  $         53,547
  Owings Chase Apartments          Pikesville, MD           Owings Chase Limited Partnership                    150,000
  Laurel Park Apartments           Riverdale, GA            Gold Key Venture                                       -
                                                                                                       -----------------
                                                                                                                203,547
  Less valuation allowance                                                                                     (203,547)
                                                                                                       -----------------
  Balance at September 30, 1997                                                                        $           -
                                                                                                       =================
</TABLE>
Reconciliation of the carrying amount of the PREPs is as follows:

<TABLE>
<S>                                                                                                    <C>
Balance at December 31, 1996                                                                           $           -
  Addition
   Equity in earnings of property partnerships                                                                   59,852
  Deduction
   Distributions received from PREPs                                                                            (59,852)
                                                                                                       -----------------
Balance at September 30, 1997                                                                          $           -
                                                                                                       =================
</TABLE>

7. Transactions with Related Parties

Substantially all the Partnership's general and administrative expenses are 
paid by AFCA 6 or an affiliate and reimbursed by the Partnership.  The amount 
of such expenses reimbursed to AFCA 6 during 1997 was $213,258 ($105,171 for 
the quarter ended September 30, 1997).  The reimbursed expenses are presented 
on a cash basis and do not reflect accruals made at quarter end.

AFCA 6 is entitled to an administrative fee of .35% per annum of the 
outstanding principal amounts invested in mortgage-backed securities, PREPs, 
and temporary cash investments to be paid by the Partnership to the extent 
such amount is not paid by property owners.  During 1997, AFCA 6 earned 
administrative fees of $18,599 ($6,138 for the quarter ended September 30, 
1997), all of which was paid by the Partnership.

The general partner of the property partnership which owns Owings Chase 
Apartments is principally owned by an employee of an affiliate of AFCA 6.  
Such employee has a nominal interest in the affiliate.  Affiliates of AFCA 6 
also own small interests in the general partner.  The general partner has a 
nominal interest in the property partnership's profits, losses and cash flow 
which is subordinate to the interest of the Partnership.  The general partner 
did not receive cash distributions from the property partnership in 1997.

An affiliate of AFCA 6 has been retained to provide property management 
services for Laurel Park Apartments and Owings Chase Apartments.  The fees for 
services provided represent the lower of (i) costs incurred in providing 
management of the property, or (ii) customary fees for such services 
determined on a competitive basis and amounted to $32,086 in 1997 ($10,660 for 
the quarter ended September 30, 1997).










<PAGE>                               - 6 -
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)

8. Proposed Merger

On July 29, 1997, the Partnership announced that it had signed an Agreement 
and Plan of Merger, dated as of July 29, 1997 (the Merger Agreement), among 
the Partnership, America First Participating Preferred Equity Mortgage Fund 
Limited Partnership, a Delaware limited partnership (Prep Fund 1), America 
First PREP Fund 2 Limited Partnership, a Delaware limited partnership (Prep 
Fund 2 and together with the Partnership and Prep Fund 1, the Funds), America 
First Mortgage Investments, Inc., a newly formed Maryland corporation (AFM), 
and AF Merger, L.P., a newly formed Delaware limited partnership and a 
subsidiary of AFM (AFM L.P.), which contemplates a business combination 
transaction (the Merger) pursuant to which Prep Fund 1 and Prep Fund 2 will 
merge with AFM, with AFM surviving such merger, and the Partnership will merge 
with AFM L.P., with the Partnership surviving such merger.  The Merger, which 
is expected to be accomplished on a tax-deferred basis for investors in the 
Funds, will not be consummated unless both Prep Fund 1 and Prep Fund 2 
participate in the Merger.  The participation of the Partnership is not a 
condition to the closing of the Merger with respect to Prep Fund 1 and Prep 
Fund 2.

As a result of the Merger, (i) the outstanding BUCs of the Partnership 
(Pension BUCs) will be converted, at the rate of approximately 1.31 shares for 
each Pension BUC, into a maximum of 1,183,373 shares of common stock, par 
value $0.01 per share, of AFM (the Common Stock), (ii) the outstanding 
Exchangeable Units of Prep Fund 1 will be converted, at the rate of 1.00 share 
for each Exchangeable Unit, into 5,775,797 shares of Common Stock and (iii) 
the outstanding BUCs of Prep Fund 2 (Prep Fund 2 BUCs) will be converted, at 
the rate of approximately 1.26 shares for each Prep Fund 2 BUC, into 2,012,336 
shares of Common Stock.  If the Partnership participates in the Merger, 
holders of Pension BUCs will be given the option, in lieu of receiving shares 
of Common Stock, to remain as investors in the Partnership (the Retention 
Option).  To the extent that holders of Pension BUCs elect the Retention 
Option, the aggregate number of shares of Common Stock otherwise issuable to 
the such holders in the Merger will be accordingly reduced.  In connection 
with the organization of AFM, the general partners of the Funds (the General 
Partners) were issued 90,621 shares of Common Stock and will not be issued any 
additional shares as a result of the Merger.

Upon consummation of the Merger, AFM will become an externally advised 
mortgage real estate investment trust owning, directly and indirectly, the 
mortgage-backed securities, mortgage loans and other assets, subject to 
liabilities, held by the Funds.  AFM's business strategy will be to build on 
and extend the business plans and investment methods and policies of the Funds 
by employing leverage, investing primarily in adjustable-rate mortgage-backed 
securities and mortgage loans and varying its investments over time.  
Consequently, following the Merger, AFM intends to replace a substantial 
portion of the Funds' current portfolio with a portfolio of adjustable-rate 
mortgage-backed securities, mortgage loans and other related assets.

Pursuant to the Merger Agreement, each of the Funds shall generally bear their 
own expenses in connection with the Merger.  However, if the Merger Agreement 
is terminated because a Fund (the Terminating Fund) has triggered certain of 
the events of termination specified therein and such Terminating Fund has, on 
or prior to the date of such termination, received a proposal constituting a 
superior Competing Transaction (as such term is defined in the Merger 
Agreement) that has not been offered on substantially equivalent terms to any 
of the other Funds (each, an Excluded Fund), then each Terminating Fund agrees 
to reimburse each Excluded Fund for its share of the out-of-pocket expenses 
incurred in connection with the Merger Agreement, plus any expenses incurred 
in enforcing the provisions of the obligations thereunder.  Furthermore, if 
the Partnership is the Terminating Fund, Prep Fund 1 and Prep Fund 2 shall 
have the right (i) to continue with the Merger, (ii) to terminate the 
Partnership's obligations under the Merger Agreement and (iii) to be 
reimbursed by the Partnership for its share of such expenses.







<PAGE>                               - 7 -
     Item 2.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

Liquidity and Capital Resources

The Partnership originally acquired: (i) five mortgage-backed securities 
guaranteed as to principal and interest by the Government National Mortgage 
Association (GNMA) collateralized by first mortgage loans on multifamily 
housing properties located in four states (the GNMA Certificates); (ii) 
various mortgage-backed securities collateralized by pools of single-family 
mortgages and guaranteed as to principal and interest by either GNMA or the 
Federal National Mortgage Association (FNMA) (the Single-Family Certificates); 
and (iii) limited partnership interests (PREPs) in five limited partnerships 
which own the multifamily housing properties financed by the GNMA 
Certificates.  The Partnership has been repaid by GNMA on the GNMA 
Certificates collateralized by the Villages at Moonraker, Laurel Park 
Apartments and, during January of 1997, Ashwood Apartments. During 1995, the 
Partnership withdrew as a limited partner of the operating partnership which 
owns the Villages at Moonraker and, therefore, no longer holds its PREP in 
this property.  During the fourth quarter of 1996, the Partnership sold its 
PREP in Ashwood Apartments.  The Partnership has retained its PREP in Laurel 
Park Apartments.  Collectively, the two remaining GNMA Certificates and the 
three remaining PREPs are referred to as the Permanent Investments.  In 
addition, the Partnership held various Single-Family Certificates at September
30, 1997.

The following table shows the occupancy levels of the properties financed by 
the Partnership and in which the Partnership continues to hold an equity 
interest at September 30, 1997.

<TABLE>
<CAPTION>
                                                                                                     Number          Percentage
                                                                                 Number            of Units            of Units
 Property Name                               Location                          of Units            Occupied            Occupied
-------------------------------------        ------------------               ---------          ----------         -----------
<S>                                          <C>                              <C>                <C>                <C>
 Broadmoor Court                             Colorado Springs, CO                   47                  41                  87%
 Laurel Park Apartments                      Riverdale, GA                         387                 368                  95%
 Owings Chase Apartments                     Pikesville, MD                        234                 221                  94%
                                                                              ---------          ----------         -----------
   				                                                                            668                 630                  94%
                                                                              =========          ==========         ===========
</TABLE>

Distributions

Cash distributions paid or accrued per Beneficial Unit Certificate (BUC) were 
as follows:

<TABLE>
<CAPTION>
                                                                                               For the Nine        For the Nine
                                                                                               Months Ended        Months Ended
                                                                                             Sept. 30, 1997      Sept. 30, 1996
                                                                                             --------------      --------------
<S>                                                                                          <C>                 <C>
Regular monthly distributions
 Income                                                                                      $       .3969       $       .4888
 Return of Capital                                                                                   .5852               .5424
                                                                                             --------------      --------------
                                                                                             $       .9821       $      1.0312
                                                                                             ==============      ==============
Distributions
	Paid out of cash flow (including mortgage principal payments)                               $       .9821       $      1.0312
                                                                                             ==============      ==============
</TABLE>









<PAGE>                               - 8 -
Regular monthly distributions to investors consist primarily of interest and 
principal received on GNMA Certificates and Single-Family Certificates. 
Additional cash for distributions is received from PREPs and temporary cash 
investments.  The Partnership may draw on reserves to pay operating expenses 
or to supplement cash distributions to BUC Holders.  The Partnership is 
permitted to replenish its reserves through the sale or refinancing of 
assets.  During 1997, a net amount of $494,511 of undistributed mortgage 
principal payments was placed in reserves (a net amount of $2,188 was 
withdrawn from reserves for the quarter ended September 30, 1997).  The total 
amount held in reserves at September 30, 1997, was $4,813,785 of which 
$2,330,579 was invested in Single-Family Certificates.  

The Partnership believes that cash provided by operating and investing 
activities and, if necessary, withdrawals from the Partnership's reserves will 
be adequate to meet its short-term and long-term liquidity requirements, 
including the payments of distributions to BUC Holders.  Under the terms of 
the Partnership Agreement, the Partnership has the authority to enter into 
short-term and long-term debt financing arrangements; however, the Partnership 
currently does not anticipate entering into such arrangements.  The 
Partnership is not authorized to issue additional BUCs to meet short-term and 
long-term liquidity requirements.

Asset Quality

The Partnership continues to receive monthly principal and interest payments 
on its GNMA Certificates and Single-family Certificates which are fully 
guaranteed either by GNMA or FNMA.  The obligations of GNMA are backed by the 
full faith and credit of the United States government.  

PREPs, however, are not insured or guaranteed.  The value of these investments 
is a function of the value of the real estate underlying the PREPs.  It is the 
policy of the Partnership to make a periodic review of the real estate 
underlying the PREPs in order to establish, when necessary, a valuation 
reserve on the investment in PREPs.  The allowance for losses on investment in 
PREPs is based on the fair value of the properties underlying the PREPs.  The 
fair value of the properties underlying the PREPs is based on management's 
best estimate of the net realizable value of such properties; however, the 
ultimate realized values may vary from these estimates.  The allowance is 
periodically reviewed and adjustments are made to the allowance when there are 
significant changes in the estimated net realizable value of the properties 
underlying the PREPs.  Internal property valuations and reviews performed 
during the nine months ended September 30, 1997, indicated that the PREPs 
recorded on the balance sheet at September 30, 1997, required no adjustments 
to their current carrying amounts.

The overall status of the Partnership's Permanent Investments has remained 
relatively constant since June 30, 1997.

Results of Operations

The tables below compare the results of operations for each period shown.
<TABLE>
<CAPTION>
                                                                               For the             For the            Increase
                                                                         Quarter Ended       Quarter Ended           (Decrease)
                                                                        Sept. 30, 1997      Sept. 30, 1996           From 1996
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Mortgage-backed securities income                                       $      139,052      $      163,273      $      (24,221)
Equity in earnings (losses) of property partnerships                            12,791             (24,919)             37,710
Interest income on temporary cash investments                                   35,317              24,262              11,055
                                                                        ---------------     ---------------     ---------------
                                                                               187,160             162,616              24,544
General and administrative expenses                                            120,526              45,278              75,248
                                                                        ---------------     ---------------     ---------------
Net income                                                              $       66,634      $      117,338      $      (50,704)
                                                                        ===============     ===============     ===============
</TABLE>








<PAGE>                               - 9 -
<TABLE>
<CAPTION>
                                                                          For the Nine        For the Nine            Increase
                                                                          Months Ended        Months Ended           (Decrease)
                                                                        Sept. 30, 1997      Sept. 30, 1996           From 1996
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Mortgage-backed securities income                                       $      424,589      $      501,796      $      (77,207)
Equity in earnings of property partnerships                                     59,852              17,808              42,044 
Interest income on temporary cash investments                                  103,058              69,793              33,265
                                                                        ---------------     ---------------     ---------------
                                                                               587,499             589,397              (1,898)
General and administrative expenses                                            218,942             137,083              81,859 
                                                                        ---------------     ---------------     ---------------
Net income                                                              $      368,557      $      452,314      $      (83,757)
                                                                        ===============     ===============     ===============
</TABLE>

Mortgage-backed securities income decreased for the quarter and nine months 
ended September 30, 1997, compared to the same periods in 1996.  Approximately 
$13,000 of such decrease for the quarter and $38,800 of such decrease for the 
nine months was due to the redemption of the GNMA Certificate related to 
Ashwood Apartments.  The remaining decrease of approximately $11,200 for the 
quarter and $38,400 for the nine months was due to the continued amortization 
of the principal balances of the Partnership's other mortgage-backed 
securities.

Equity in earnings (losses) of property partnerships is a function of the cash 
flow received by the Partnership from its interest in the operating 
partnerships which own the properties.  Prior to the write-down of each 
investment in PREPs to zero, equity in earnings (losses) of property 
partnerships also reflects the Partnership's allocable share of earnings 
generated by each of the properties. The Partnership recorded a loss of 
approximately $48,000 for Laurel Park Apartments for the quarter and nine 
months ended September 30, 1996, which reduced the Partnership's investment in 
Laurel Park Apartments to zero.  Excluding such loss, equity in earnings 
(losses) of property partnerships decreased approximately $10,300 and $6,000, 
respectively, for the quarter and nine months ended September 30, 1997, 
compared to the same periods in 1996.  Approximately $2,600 and $17,300 of 
such decreases for the quarter and nine months, respectively, is attributable 
to the sale of the Partnership's PREP in Ashwood Apartments in December 1996.  
The remaining decrease of $7,700 for the quarter is due to a decrease in cash 
flow received from Broadmoor Court.  The decrease of $17,300 from Ashwood 
Apartments for the nine months ended September 30, 1997, compared to the same 
period in 1996, together with a decrease of approximately $9,700 in cash flow 
received from Broadmoor Court, was partially offset by approximately $21,000 
in cash flow received from Owings Chase Apartments during the nine months 
ended September 30, 1997.  No distributions were received from Owings Chase 
Apartments during the comparable period of 1996.  

The increase in interest on temporary cash investments for the quarter and 
nine months ended September 30, 1997, compared to the same periods in 1996 is 
primarily attributable to the increase in cash reserves as a result of the 
redemption of the GNMA Certificate related to Ashwood Apartments and the sale 
of the Partnership's PREP in Ashwood Apartments.

General and administrative expenses increased for the quarter and nine months 
ended September 30, 1997, compared to the same periods in 1996 due primarily 
to transaction costs of approximately $64,600 and $70,200, respectively, 
incurred during the quarter and nine months ended September 30, 1997, in 
conjunction with the proposed merger described in Note 8 to the financial 
statements and an increase in salaries expense.  














<PAGE>                               - 10 -
PART II.  OTHER INFORMATION

     Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits

               4(a) Agreement of Limited Partnership dated May 25, 1988
                    (incorporated herein by reference to Form 10-Q dated 
                    June 30, 1988 filed pursuant to Section 13 or 15(d) of 
                    the Securities Act of 1934 by America First PREP Fund 2 
                    Pension Series Limited Partnership (Commission File No.
                    0-17582)).

               4(b) Form of Certificate of Beneficial Unit Certificate 
                    (incorporated herein by reference to Form 10-Q dated 
                    June 30, 1988 filed pursuant to Section 13 or 15(d) of 
                    the Securities Act of 1934 by America First PREP Fund 2 
                    Pension Series Limited Partnership (Commission File No. 
                    0-17582)).

               4(c) Agreement and Plan of Merger, dated as of July 29, 1997, 
                    among the Registrant, America First 
                    Participating/Preferred Equity Mortgage Fund Limited 
                    Partnership, America First Prep Fund 2 Limited Partnership 
                    and AF Merger, L.P.  (incorporated herein by reference to 
                    Form 10-Q dated June 30, 1997, filed pursuant to Section 
                    13 or 15(d) of the Securities Act of 1934 by America First 
                    PREP Fund 2 Pension Series Limited Partnership (Commission 
                    File No. 0-17582)).

          (b)  Form 8-K

               The registrant did not file a report on Form 8-K during the 
               quarter for which this report is filed.










































<PAGE>                               - 11 -
	                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.

Dated:  November 13, 1997     AMERICA FIRST PREP FUND 2
                              PENSION SERIES LIMITED PARTNERSHIP

                              By America First Capital
                                   Associates Limited
                                   Partnership Six, General
                                   Partner of the Registrant

                              By America First Companies L.L.C.,
                                   General Partner of America
																																			First Capital Associates
																																			Limited Partnership Six


                              By /s/ Michael Thesing             
                                   Michael Thesing,
                                   Vice President and
                                   Principal Financial
                                   Officer



















































<PAGE>                               - 12 -