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                                                                    EXHIBIT 4.1 

                         CERTIFICATE OF DESIGNATIONS

                                     OF THE

                              NEW PREFERRED STOCK
                               ($0.01 Par Value)

                                       OF

                        FIRSTCITY FINANCIAL CORPORATION

                         ------------------------------

                         Pursuant to Section 151 of the

                General Corporation Law of the State of Delaware

                         ------------------------------


     The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted on May 30, 1997, by the Board of Directors (the "Board") of FirstCity
Financial Corporation, a Delaware corporation (the "Corporation"), at a duly
convened meeting of the Board at which a quorum was present and active
throughout;

     RESOLVED, that pursuant to authority expressly granted to and vested in the
Board by the provisions of the Amended and Restated Certificate of Incorporation
of the Corporation (the "Certificate of Incorporation"), the issuance of a
series of preferred stock (the "New Preferred Stock"), which shall consist of up
to 2,000,000 of the 100,000,000 shares of the Optional Preferred Stock, par
value $0.01 per share (the "Optional Preferred Stock"), which the Corporation
now has authority to issue, be, and the same hereby is, authorized, and the
Board hereby fixes the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations and restrictions thereof, of the shares of such series (in addition
to the powers, designations, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or restrictions
thereof, set forth in the Certificate of Incorporation which may be applicable
to the Optional Preferred Stock) as follows:

     For the purposes of this resolution:   (a) "Common Stock" means the shares
of Common Stock, $0.01 par value per share, of the Corporation; and (b) "Special
Preferred Stock" means the shares of Special Preferred Stock, $0.01 par value
per share, of the Corporation.

     I.   Designation and Amount.  The series of Optional Preferred Stock
authorized by this resolution shall be designated the "New Preferred Stock". The
maximum number of shares of New Preferred Stock shall be 2,000,000.
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     II.  Dividends and Distributions.  Holders of shares of New Preferred Stock
shall be entitled to receive, when, as and if declared by the Board out of funds
of the Corporation legally available therefor, dividends at an annual rate of
$3.15 per share until and including September 30, 1998, and thereafter at an
annual rate of $2.10 per share, payable in quarterly installments on the last
business day of March, June, September and December of each year, commencing
September 30, 1997 (each a "Dividend Payment Date").  Dividends on the New
Preferred Stock shall accrue and be cumulative from July 1, 1997. Dividends
shall be payable to holders of record as they appear on the stock books of the
Corporation on such record dates, not more than sixty (60) days nor less than
ten (10) days preceding the payment dates thereof, as shall be fixed by the
Board (each a "Dividend Payment Record Date").  No Dividend Payment Record Date
shall precede the date upon which the resolution fixing the Dividend Payment
Record Date is adopted.  Unless full cumulative dividends on the New Preferred
Stock shall have been paid, dividends (other than in Common Stock (as defined in
Paragraph III below), other stock ranking junior to the New Preferred Stock and
rights to acquire the foregoing) may not be paid or declared and set aside for
payment and other distributions may not be made upon the Common Stock or on any
other stock of the Corporation, except for dividends on the Special Preferred
Stock (as defined in Paragraph III below), nor may any Common Stock or any other
stock of the Corporation be redeemed, purchased or otherwise acquired for any
consideration by the Corporation (except for redemption of the Special Preferred
Stock and except by conversion into or exchange for stock of the Corporation
ranking junior to the New Preferred Stock as to dividends).  Dividends payable
for any partial dividend period shall be calculated on the basis of a 360-day
year of twelve 30-day months.  Accrued but unpaid dividends shall not bear
interest.

     III.  Rank.  The shares of New Preferred Stock shall rank prior to the
shares of the Corporation's Common Stock, par value $0.01 per share (the "Common
Stock") and any other class of stock of the Corporation except the Special
Preferred Stock ("Junior Liquidation Stock"), so that in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the New Preferred Stock shall be entitled to receive
out of the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, before any distribution
is made to holders of shares of Common Stock or any Junior Liquidation Stock, an
amount equal to $21.00 per share (the "Liquidation Preference") plus an amount
equal to all dividends (whether or not earned or declared) accumulated and
unpaid on the shares of New Preferred Stock to the date of final distribution.
After payment of the full amount of the Liquidation Preference and accumulated
dividends to which holders of shares of New Preferred Stock are entitled, the
holders of shares of New Preferred Stock shall not be entitled to any further
participation in any distribution of assets by the Corporation.  For the
purposes hereof, neither a consolidation or merger of the Corporation with or
into any other corporation, nor a sale or transfer of all or any part of the
Corporation's assets for cash or securities, shall be considered a liquidation,
dissolution or winding up of the Corporation.

     IV.  Status.  Upon any conversion, exchange or redemption of shares of New
Preferred Stock, the shares of New Preferred Stock so converted, exchanged or
redeemed shall have the status of authorized and unissued shares of New
Preferred Stock, and the number of shares of New Preferred Stock which the
Corporation shall have authority to issue shall not be decreased by the
conversion, exchange or redemption of shares of New Preferred Stock.
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     V.   Voting Rights.  The holders of shares of New Preferred Stock shall
have no voting rights whatsoever, except for any voting rights to which they may
be entitled under the laws of the State of Delaware, and except as follows:

          (a) (i) If and whenever at any time or times dividends payable on the
     New Preferred Stock shall have been in arrears and unpaid in an aggregate
     amount equal to or exceeding of any the amount of dividends payable thereon
     for six quarterly periods, then the holders of the New Preferred Stock and
     of any class or series of Optional Preferred Stock having similar voting
     rights then exercisable ("Voting Parity Preferred Stock") shall have the
     exclusive right, voting as a single class without regard to series, to
     elect two directors of the Corporation, such directors to be in addition to
     the number of directors constituting the Board immediately prior to the
     accrual of that right.  The remaining directors shall be elected in
     accordance with the provisions of the Corporation's Certificate of
     Incorporation and Bylaws by the other class or classes of stock entitled to
     vote thereof at each meeting of stockholders held for the purpose of
     electing directors.  Such voting right of the New Preferred Stock shall
     continue until such time as all cumulative dividends accumulated on the New
     Preferred Stock shall have been paid in full at which time the voting right
     of the holders of the New Preferred Stock shall terminate, subject to
     revesting in accordance with the provisions of the first sentence of this
     Subparagraph V(a)(i) in the event of each and every subsequent event of
     default of the character indicated above.

          (ii)  Whenever the voting right described in Subparagraph V(a)(i)
     above shall have vested in the holders of the New Preferred Stock, the
     right may be exercised initially either at a special meeting of the holders
     of the New Preferred Stock and Voting Parity Preferred Stock (if any),
     called as hereinafter provided, or at any annual meeting of stockholders
     held for the purpose of electing directors, and thereafter at each
     successive annual meeting.

          (iii)  At any time when the voting rights described in Subparagraph
     V(a)(i) above shall have vested in the holders of the New Preferred Stock,
     and if the right shall not already have been initially exercised, a proper
     officer of the Corporation shall, upon the written request of the holders
     of record of 10% in number of the shares of the New Preferred Stock then
     outstanding, addressed to the Secretary of the Corporation, call a special
     meeting of the holders of the New Preferred Stock and Voting Parity
     Preferred Stock for the purpose of electing directors.  Such meeting shall
     be held at the earliest practicable date upon the notice required for
     annual meetings of stockholders at the place for holding of annual meetings
     of stockholders of the Corporation, or, if none, at a place designated by
     the Secretary of the Corporation.  If the meeting shall not be called by
     the proper officers of the Corporation within thirty (30) days after the
     personal service of such written request upon the Secretary of the
     Corporation, or within thirty (30) days after mailing it within the United
     States of America, by registered mail, addressed to the Secretary of the
     Corporation at its principal office (such mailing to be evidenced by the
     registery receipt issued by the postal authorities), then the holders of
     record of 10% in number of shares of the New Preferred Stock then
     outstanding may designate in writing one of their number to call such
     meeting at the expense of the Corporation, and such meeting may be called
     by such person so
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     designated upon the notice required for annual meetings of stockholders and
     shall be held at the same place as is elsewhere provided for in this
     Subparagraph V(a).  Any holder of the New Preferred Stock shall have access
     to the stock books of the Corporation for the purpose of causing a meeting
     of the stockholders to be called pursuant to the provisions of this
     Subparagraph V(a)(iii).  Notwithstanding the provision of this
     Subparagraph, however, no such special meeting shall be held during a
     period within ninety (90) days immediately preceding the date fixed for the
     next annual meeting of stockholders.

          (iv)  At any meeting held for the purpose of electing directors at
     which the holders of the New Preferred Stock shall have the right to elect
     directors as provided herein, the presence in person or by proxy of the
     holders of a majority of the then outstanding shares of the New Preferred
     Stock and Voting Parity Preferred Stock shall be required and be sufficient
     to constitute a quorum of the holders of such preferred stock for the
     election of directors by the holders of such preferred stock.  At any such
     meeting or adjournment thereof (A) the absence of a quorum of the holders
     of the New Preferred Stock and Voting Parity Preferred Stock shall not
     prevent the election of directors other than those to be elected by the
     holders of such preferred stock, and the absence of a quorum or quorums of
     the holders of other classes or series of capital stock entitled to elect
     such other directors shall not prevent the election of directors to be
     elected by the holders of the New Preferred Stock and Voting Parity
     Preferred Stock, and (B) in the absence of a quorum of the holders of New
     Preferred Stock and Voting Parity Preferred Stock, a majority of the
     holders present in person or by proxy of such preferred stock shall have
     the power to adjourn the meeting, or appropriate portion thereof, for the
     election of directors which the holders of such preferred stock are
     entitled to elect, from time to time, without notice other than
     announcement at the meeting, until a quorum shall be present.

          (v)  The directors elected pursuant to this Subparagraph V(a) shall
     serve until the next annual meeting or until their respective successors
     shall be elected and shall qualify; provided, however, that when the right
     of the holders of the New Preferred Stock to elect directors as herein
     provided shall terminate, the terms of office of all persons so elected by
     the holders of the New Preferred Stock shall terminate, and the number of
     directors of the Corporation shall thereupon be such number as may be
     provided in accordance with the Certificate of Incorporation and Bylaws of
     the Corporation irrespective of any increase made pursuant to this
     Subparagraph V(a).

          (vi)  So long as any shares of New Preferred Stock are outstanding,
     the Certificate of Incorporation and Bylaws of the Corporation shall
     contain provisions ensuring that the number of Directors of the Corporation
     shall at all times be such that the exercise by the holders of shares of
     New Preferred Stock of the right to elect directors under the circumstances
     provided in this Subparagraph V(a) shall not contravene any provisions of
     the Corporation's Certificate of Incorporation or Bylaws.

     (b) So long as any shares of the New Preferred Stock remain outstanding,
the Corporation shall not, (i) create or issue or increase the authorized number
of shares of any class or classes or series of stock ranking prior to the New
Preferred Stock either as to dividends or upon
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liquidation, (ii) amend, alter or repeal any of the provisions of the
Certificate of Incorporation (including this resolution) so as to affect
adversely the preferences, special rights or powers of the New Preferred Stock
or (iii) authorize any reclassification of the New Preferred Stock.

     VI.  Redemption by the Corporation.

          (a) The shares of New Preferred Stock may be redeemed for cash at the
     option of the Corporation, in whole or from time to time in part, at any
     time on or after September 30, 2003, on at least fifteen (15) but not more
     than sixty (60) days' prior notice mailed to the holders of the shares to
     be redeemed, at $21.00 per share, together with an amount equal to all
     dividends (whether or not earned or declared) accumulated and unpaid to the
     date fixed for redemption.  The shares of New Preferred Stock shall be
     redeemed for cash on September 30, 2005, at $21.00 per share together with
     an amount equal to all dividends (whether or not earned or declared)
     accumulated and unpaid as of September 30, 2005.

          (b) If full cumulative dividends on the New Preferred Stock have not
     been paid through the most recent Dividend Payment Date, the New Preferred
     Stock may not be redeemed in part and the Corporation may not purchase or
     acquire any shares of the New Preferred Stock otherwise than pursuant to a
     purchase or exchange offer made on the same terms to all holders of the New
     Preferred Stock.  If less than all the outstanding shares of New Preferred
     Stock are to be redeemed, redemption may be either a pro rata proportion of
     the shares of the New Preferred Stock to be redeemed or the Corporation may
     select the shares of the New Preferred Stock to be redeemed by lot or a
     substantially equivalent method.

          (c) (i) If a notice of redemption has been given pursuant to this
     Paragraph VI and if, on or before the date fixed for the redemption, the
     funds necessary for the redemption shall have been set aside by the
     Corporation, separate and apart from its other funds, in trust for the pro
     rata benefit of the holders of the shares so called for redemption, then,
     notwithstanding that any certificates for those shares have not been
     surrendered for cancellation, on the date fixed fore redemption dividends
     shall cease to accrue on the shares of New Preferred Stock to be redeemed,
     and at the close of business on the date fixed for redemption the holders
     of those shares shall cease to be stockholders with respect to those shares
     and shall have no interest in or claims against the Corporation by virtue
     thereof and shall have no voting or other rights with respect to the
     shares, except the right to receive the monies payable upon such redemption
     and the right to accumulated and unpaid dividends, without interest
     thereon, upon surrender (the endorsement, if required by the Corporation)
     of their certificates, and, unless the Corporation subsequently shall
     default in mailing payment of these amounts, the shares shall default in
     mailing payment of these amounts, the shares evidenced thereby shall no
     longer be deemed outstanding for any purpose.

              (ii)  If on or before the date fixed for redemption (but not less
     than fifteen (15) days after the date the notice of redemption is mailed to
     the holders of the New Preferred Stock) the Corporation shall deposit, in a
     trust fund, with any bank or trust
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     company organized under the laws of the United States of America or any
     state thereof having a combined capital and surplus of at least $5,000,000
     (the "Redemption Agent") monies sufficient to redeem on the date fixed for
     redemption the shares of New Preferred Stock to be redeemed, with
     irrevocable instructions and authority to the Redemption Agent on behalf
     and at the expense of the Corporation, to pay, on the date fixed for
     redemption or prior to that date, the full amount of the consideration
     (consisting of the redemption price plus accrued and unpaid dividends, if
     any, to the date fixed for redemption, without interest) payable to the
     holders of the New Preferred Stock upon the redemption, upon surrender (and
     endorsement, if required by the Corporation) of their certificates, then,
     from and after the close of business on the date of such deposit (although
     prior to the dated fixed for redemption) the "Deposit Date"), the deposit
     shall be deemed to constitute full and final payment for the shares of New
     Preferred Stock to be redeemed to the holders thereof and, notwithstanding
     that any certificates for those shares have not been surrendered for
     cancellation, on the date fixed for redemption dividends shall cease to
     accrue on the shares of New Preferred Stock to be redeemed, and at the
     close of business on the Deposit Date the holders of those shares shall
     cease to be stockholders with respect to those shares and shall have no
     interest in or claims against the Corporation by virtue thereof and shall
     have no voting or other rights with respect to the shares, except the right
     to receive the monies payable upon redemption and the right to accumulated
     and unpaid dividends to the date fixed for redemption without interest
     thereof, upon surrender (and endorsement, if required by the Corporation)
     of their certificates, and the shares evidenced thereby shall no longer be
     deemed outstanding for any purposes.

              (iii)  Subject to applicable escheat laws, any monies necessary
     for redemption set aside or deposited by the Corporation and unclaimed at
     the end of two years from the date fixed for redemption shall revert to the
     general funds of the Corporation, after which reversion the holders of such
     shares so called for redemption but not surrendered shall look only to the
     general funds of the Corporation for the payment of the amounts payable
     upon such redemption.  Any interest accrued on funds so set aside or
     deposited shall belong to the Corporation and shall be paid to it from time
     to time.

     VII.  Consent.  No consent of the holders of the New Preferred Stock shall
be required for (a) the creation of any indebtedness of any kind of the
Corporation, (b) the creation or issuance, or increase or decrease in the
amount, of any class or series of stock of the Corporation not ranking prior as
to dividends or upon liquidation to the New Preferred Stock, (c) any increase or
decrease in the amount of authorized Common Stock or any increase, decrease or
change in the par value thereof or in any other terms thereof or (d) of any
increase or decrease in the authorized amount of preferred stock issuable by the
Board of Directors in series.

     VIII.   Number of Shares of New Preferred Stock.  The Board reserves the
right by subsequent amendment of this resolution from time to time to amend this
resolution within the limitations provided by law, this resolution and the
Certificate of Incorporation.

     IX.  Miscellaneous
 .
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          (a)  Except as otherwise expressly provided, whenever in this
     resolution notices or other communications are required to be made,
     delivered or otherwise given to holders of shares of New Preferred Stock,
     the notice or other communication shall be deemed properly given if
     deposited in the United States mail, postage prepaid, addressed to the
     persons shown on the books of the Corporation as such holders at the
     addresses as they appear in the books of the Corporation, as of a record
     date or dates determined in accordance with the Corporations' Certificate
     of Incorporation and Bylaws and applicable law, as in effect from time to
     time.

          (b) The holders of the New Preferred Stock shall not have any
     preemptive right to subscribe for or purchase any shares or any other
     securities which may be issued by the Corporation.

          (c) Except as may otherwise be required by law, the shares of New
     Preferred Stock shall not have any designations, preferences, limitations
     or relative rights, other than those specifically set forth in this
     resolution (as such resolution may be amended from time to time) and in the
     Certificate of Incorporation.

          (d) The headings of the various subdivisions hereof are for
     convenience of reference only and shall not affect the interpretation of
     any of the provisions hereof.

          (e) If any right, preference or limitation of the New Preferred Stock
     set forth in this resolution (as such resolution may be amended from time
     to time) is invalid, unlawful or incapable of being enforced by reason of
     any rule or law or public policy, all other rights, preferences and
     limitations set forth in this resolution (as so amended) which can be given
     effect without the invalid, unlawful or unenforceable right, preference or
     limitation shall, nevertheless, remain in full force and effect, and no
     right, preference or limitation herein set forth shall be deemed dependent
     upon any other such right, preference or limitation unless so expressed
     herein.


     IN WITNESS WHEREOF, FirstCity Financial Corporation has caused this
certificate to be made under the seal of the Corporation and signed by James T.
Sartain, its President, and attested by Joe S. Greak, its Secretary, this 31st
day of July, 1997.

                                              FirstCity Financial Corporation
                                        
                                        

                                               By: /s/ JAMES T. SARTAIN
                                                  ----------------------------
                                                  James T. Sartain, President
ATTEST:                                 

/s/ JOE S. GREAK, SECRETARY
------------------------------------
Joe S. Greak, Secretary