Form 10-QSB



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

     For the quarterly period ending September 30, 1998

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

     For the transition period from _________ to _________


Commission file number 333-10109


UNITED MORTGAGE TRUST


(Exact Name of Registrant as Specified in its 
Governing Instruments)

     (a Maryland trust)        (IRS Employer Identification 
                                     Number 75-6496585)



1701 N. GREENVILLE, SUITE 403
RICHARDSON TX 75081
(972) 705-9805



     Check whether the issuer (1) filed all reports 
required to be filed by Section 13 or 15(d) of the Exchange 
Act during the past 12 months (or for such shorter period 
that the registrant was required to file such reports), and 
(2) has been subject to such filing requirements for the 
past 90 days. Yes  X        No ___


UNITED MORTGAGE TRUST
INDEX TO FORM 10-QSB
                                               Page Number


PART I  -- FINANCIAL INFORMATION . . . . . . . . . . . . 3

Item 1. Financial Statements . . . . . . . . . . . . . . 3

     Balance Sheets
        September 30, 1998 and December 31, 1997  . . . F1

     Statements of Operations
        Three and Nine Months Ending 
        September 30, 1998 and 1997 . . . . . . . . . . F2

     Statements of Cash Flows
        Nine Months Ending 
        September 30, 1998 and 1997 . . . . . . . . . . F3

     Notes to Financial Statements . . . . . . . . . . . 8

Item 2. Management's Discussion and Analysis 
  of Financial Condition and Results of Operations . . .10

PART II -- OTHER INFORMATION . . . . . . . . . . . . . .14

Item 6. Exhibits and Reports on Form 8-K . . . . . . . .14

SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . 15


PART I  -- FINANCIAL INFORMATION

ITEM 1. Financial Statements

<TABLE>

Balance Sheets

September 30, 1998 and December 31, 1997

<CAPTION>



                                           Sept 30,         Dec 31,
                                             1998            1997
                                          (unaudited)     (audited)
ASSETS
<S>                                        <C>          <C>
Cash                                       $    1,240   $       248
Investment in first lien mortgage notes     8,407,679     2,722,036
Interim mortgage loans                      2,885,140       877,275
Accrued interest receivable                    99,239        38,746
Receivable from affiliate (Note 4)                 --        12,116
Equipment, less accumulated depreciation
     of $1,126 and $736, respectively           2,076         1,850
Other assets                                   12,952         2,337

Total Assets                              $11,408,326    $3,654,608

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Note payable (Note 3)                    $  431,000    $  138,000
  Dividend payable                            100,826        33,799
  Accounts payable & accrued 
      liabilities (Note 5)                      5,056           883

      Total Liabilities                    $  536,882    $  172,682

Shareholders' equity:
  Shares of beneficial interest; $.01 par 
    Value; 100,000,000 shares authorized
    608,262 and 202,508 shares
    outstanding                            $    6,083    $    2,025
  Additional paid-in capital               10,815,012     3,467,964
  Retained earnings                            50,349        11,937

      Total Shareholders' Equity          $10,871,444    $3,481,926

Total                                     $11,408,326    $3,654,608
<FN>
See accompanying notes to financial statements.
Page F1
</FN>
</TABLE>

<TABLE>
Statements of Operations
For the Three Months and Nine Months Ended
September 30, 1998 and 1997
<CAPTION>
                             Three Months Ended     Nine Months Ended
                                September 30,         September 30,
                             1998          1997      1998        1997
                           (unaudited) (unaudited) (audited) (audited)
<S>                        <C>         <C>         <C>       <C>
Revenues:
  Gain on sale of notes    $  4,533     $    --    $  4,533  $     --
  Interest income           313,275      58,950     700,147     60,773

Expenses:
  Salaries and wages         16,148      13,456      29,832    46,051
  General and 
    administrative           45,311      27,079     162,082    36,157
  Interest expense            7,416       1.954      17,222     3,362
  Expense reimburse-
    ment from affiliate
    (Note 4)                (41,223)        --     (150,161)      --
                             27,652      42,489      58,975    85,570

Net income (loss)          $290,156    $ 16,461    $645,705  $(24,797)

Net income (loss) per
  share of beneficial
  interest                    $0.52      $.0.12       $1.60    $(0.46)

Weighted average shares
  outstanding               555,169     140,663     404,269    53,554
<FN>
See accompanying notes to financial statements.
Page F2
</FN>
</TABLE>

<TABLE>
Statements of Cash Flows
For the Nine Months Ending September 30, 1998 and 1997
<CAPTION>

                                                Sept 30,     Sept 30,
                                                  1998         1997
                                              (unaudited)  (unaudited)
<S>                                           <C>           <C>
Cash flows from operating activities:
  Net income (loss)                          $   645,705  $   (24,797)
  Adjustments to reconcile net income
    to net cash provided by operating 
    activities:
      Depreciation and amortization                  525       (4,055)
      Amortization of discount on 
      Gain on sale of notes                       (4,533)          --
        mortgage notes                           (38,988)          --
      Accrued interest receivable                (60,492)     (26,921)
      Other assets                                (6,365)      (1,600)
      Accounts payable and accrued 
      liabilities                                  4,174)     (17,081)
        Net cash provided by operating 
          activities:                        $   540,026   $  (74,454)

Cash flows from investing activities:
  Investment in first lien mortgage note     $(5,586,840) $(2,528,847)
  Principal receipts on first lien 
    mortgage notes                                33,688        1,382
  Mortgage notes sold                             84,701           --
  Investment in interim mortgage notes        (2,007,865)          --
  Loan acquisition costs                        (173,674)          --
        Net cash used in investing 
         activities:                         $(7,649,990) $(2,527,465)

Cash flows from financing activities:
  Proceeds from issuance of shares of 
    beneficial interest                      $ 7,351,106    2,406,213
  Offering costs                                      --      (48,437)
  Net borrowings on note payable                 293,000      160,000
  Receivable from affiliate                        7,116)     140,468
  Dividends                                     (540,226)          --
        Net cash provided by financing 
          activities:                        $ 7,110,956   $2,589,142

Net increase (decrease) in cash                      992      (12,777)

Cash at beginning of period                          248       13,051

Cash at end of period                        $     1,240   $      274 

Interest paid                                $    17,222   $       --
<FN>
See accompanying note to financial statements.

Page F3
</FN>
</TABLE>




                   UNITED MORTGAGE TRUST
               Notes to Financial Statements
                     September 30, 1998

1. Description of Business

The Company

     United Mortgage Trust ("UMT" or the "Company") is a 
Maryland real estate investment trust which intends to 
qualify as a real estate investment trust under federal 
income tax laws. The advisor to the Company is Mortgage 
Trust Advisors, Inc. (the "Advisor"), a Texas corporation. 
The Company invests in the following types of Mortgage 
Investments: (1) first lien, fixed rate mortgages and 
contracts for deed secured by single family residential 
property throughout the United States ("Residential 
Mortgages"), and (2) loans of 12 months or less in term, 
made to borrowers for the purchase, renovation and sale of 
single family homes ("Interim Mortgages"). Such loans will 
be originated by others to the Company's specifications or 
to specifications approved by the Company. Most, if not 
all, of such loans are not insured or guaranteed by a 
federally owned or guaranteed mortgage agency. 

     Operations commenced on March 5, 1997 when approval 
was given by the Securities and Exchange Commission for the 
Company's initial public offering of shares. The Company is 
currently offering up to 2,500,000 shares at an offering 
price of $20 per share. 

2. Basis of Presentation

     The accompanying unaudited financial statements have 
been prepared in accordance with generally accepted 
accounting principles for interim financial information and 
with the instructions to Form 10-QSB of Regulation S-B. 
They do not include all information and footnotes required 
by generally accepted accounting principles for complete 
financial statements. However, except as disclosed herein, 
there has been no material change in information disclosed 
in the notes to the financial statements for the year 
ending December 31, 1997 included in the Company's 10-KSB 
filed with the Securities and Exchange Commission. The 
interim unaudited financial statements should be read in 
conjunction with those financial statements. In the opinion 
of management, all adjustments considered necessary for a 
fair presentation, consisting solely of normal recurring 
adjustments, have been made. Operating results for the 
three months and nine months ending September 30, 1998 are 
not necessarily indicative of the results that may be 
expected for the year ending December 31, 1998.

3. Notes Payable

     On March 27, 1998 the Company renewed and increased 
its Revolving Loan Agreement (the "Agreement") with Abrams 
Centre National Bank (the "Bank"), wherein the Company can 
borrow up to $500,000 on a revolving basis for a term of 
one year from the date of the Agreement. Interest on the 
outstanding principal balance of the loan is paid monthly 
at a varying rate per annum of one and one-half percent (1-
1/2%) in excess of the Bank's prime rate of interest. The 
borrowing base in the Agreement is an amount equal to fifty 
percent (50%) of the aggregate unpaid principal of the 
Collateral pledged to the Bank. Collateral for the 
Agreement is $1,000,000 unpaid principal balance of 
residential mortgages owned by the Company. As security for 
the prompt satisfaction of all obligations of the 
Agreement, the Company agreed to assign, transfer and set 
over to the Bank all of its right, title and interest in 
and to the Collateral. As of September 30, 1998 the 
outstanding balance of the Revolving Line of Credit was 
$431,000. The Company used the funds to purchase Mortgage 
Investments.

4. Related Party Transactions

     In 1997 UMT entered into a Funding Agreement with the 
Advisor whereby the Advisor agreed to fund the Company's 
general and administrative expenses. In connection with 
this Agreement, the Company received $41,223 and $150,161 
in expense reimbursements for the three months and nine 
months ending September 30, 1998, respectively. In 
consideration of the Agreement, the Company contributed to 
the Advisor an amount equal to one-half of one percent 
(.5%) of the Company's average invested assets for the 
immediately preceding month.

     The Company also paid the Advisor Acquisition Fees of 
$80,049 and $173,674 during the three months and nine 
months ending September 30, 1998,respectively, calculated 
at 3% of the unpaid principal balance of the Residential 
Mortgages as of the purchase date.

5. Accounts Payable 

     On November 12, 1998, the Company entered into an 
Order Assessing Administrative Penalty, Offer of Rescission 
and Consent to Same ("Order") with the Arizona Corporation 
Commission ("ACC"). The Order arose from the inadvertent 
sale of approximately $169,000 worth of the Company's 
securities to ten Arizona residents during a time when, due 
to a lapse in communications, the Company believed that an 
effective order of registration of the Company's securities 
existed. In fact, the ACC had not issued such an order. 
Under the Order, the Company has paid a $5,000 
administrative penalty, and is required to make a written 
offer to repurchase the securities sold to the Arizona 
residents.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF 
OPERATION

Results of Operations

     During the quarter ending September 30, 1998 UMT 
purchased 64 Residential Mortgages secured by single 
family, residential property in Texas, with an unpaid 
principal balance of $2,713,951 as of the purchase dates of 
the notes. The Residential Mortgages were acquired for 
$2,605,245, or for 95.99% of the outstanding unpaid 
principal balance of the notes, as of the purchase date. 
They had a blended annual interest rate of 11.55%, a 
current annual yield of 12.03% and an investment-to-value 
ratio of 84.0% (the Company's investment in the note 
divided by the value of the home that is security for the 
note.) On average, the notes had an unpaid principal 
balance $42,399 and a term remaining of 329 months. Thirty-
seven of the notes were acquired from South Central 
Mortgage, Inc. and twenty-seven were acquired from private 
individuals. 

     For the nine months ending September 30, 1998 UMT 
purchased 137 Residential Mortgages secured by single 
family, residential property in Texas, with an unpaid 
principal balance of $5,834,773 as of the purchase dates of 
the notes. The Residential Mortgages were acquired for 
$5,528,370, or for 94.75% of the outstanding unpaid 
principal balance of the notes, as of the purchase date. 
They had a blended annual interest rate of 11.53%, a 
current annual yield of 12.17% and an investment-to-value 
ratio of 83.54% (the Company's investment in the note 
divided by the value of the home that is security for the 
note.) On average, the notes had an unpaid principal 
balance $40,355 and a term remaining of 331 months. Ninety-
two of the notes were acquired from South Central Mortgage, 
Inc. and forty-five were acquired from private individuals. 

 By comparison, during the three months and nine 
months ending September 30, 1997 UMT purchased 53 
Residential Mortgages secured by single family, residential 
property in Texas, with an unpaid principal balance of 
$2,056,756 as of the purchase dates of the notes. The 
Residential Mortgages were acquired for $1,896,003, or for 
92.18% of the outstanding unpaid principal balance of the 
notes, as of the purchase date. They had a blended annual 
interest rate of 11.26%, a current annual yield of 12.24% 
and an investment-to-value ratio of 82.33% (the Company's 
investment in the note divided by the value of the home 
that is security for the note.) On average, the notes had 
an unpaid principal balance $38,807 and a term remaining of 
312 months. Forty-nine of the notes were acquired from 
South Central Mortgage, Inc. and four were acquired from 
private individuals.

     UMT's total portfolio of Residential Mortgages as of 
September 30, 1998 consisted of 209 Residential Mortgages 
with an aggregate unpaid principal balance of $8,658,631 as 
of the purchase dates of the notes. The Residential 
Mortgages were acquired for an aggregate sum of $8,163,896, 
or for 94.29% of the outstanding principal balance of the 
notes as of the purchase date. The Residential Mortgages 
had a blended annual interest rate of 11.48%, a current 
annual yield of 12.18% and an investment-to-value ratio of 
83.40%. On average the notes had an unpaid principal 
balance of $41,425 and a term remaining of 323 months.

     As of September 30, 1998 the Company had investments 
in 80 Interim Mortgages for an aggregate total of 
$2,885,140. The Interim Mortgages had terms of no greater 
than 12 months and were made to borrowers for the purchase, 
renovation and sale of single family homes. These loans, 
which are first lien mortgage notes secured by properties 
in Texas, had a blended interest rate of 13.16% and 
investment-to-values of 46%.

     By comparison, as of September 30, 1997 the Company 
had investments in 16 interim mortgage loans for an 
aggregate total of $570,665. The Interim Mortgages had 
terms of no greater than 12 months and were made to 
borrowers for the purchase, renovation and sale of single 
family homes. These loans, which are first lien mortgage 
notes secured by properties in Texas, had a blended 
interest rate of 16.75% and investment-to-values of 50%.

     All of the properties that are security for the 
Residential Mortgages and Interim Mortgages are located in 
Texas. Each of the properties was adequately covered by a 
mortgagees title insurance policy and hazard insurance.

     The Company's Residential Mortgages and Interim 
Mortgages generated $317,808 of income during the quarter 
ending September 30, 1998. Expenses of $68,875 were offset 
by reimbursement from the Advisor of $41,223. During the 
quarter the Company realized net income of $290,156 and 
earnings per share of $.52. This compares to income during 
the quarter ending September 30, 1997 of $58,950 and 
expenses of $42,489, resulting in net income of $16,461 or 
$.12 per share.

     For the nine months ending September 30, 1998 
Residential Mortgages and Interim Mortgages generated 
$704,680 of income. Expenses of $209,136 were offset by 
reimbursement from the Advisor of $150,161. During the 
nine-month period the Company realized net income of 
$645,705 and earnings per share of $1.60. This compares to 
income during the nine months ending September 30, 1997 of 
$60,773 and expenses of $85,570, resulting in a net loss of 
$24,797 or $.46 per share.

Capital Resources and Liquidity

     During the quarter ending September 30, 1998 UMT added 
88 new shareholders increasing the total number of 
shareholders to 388. The Company issued 186,845 shares of 
beneficial interest thereby increasing the outstanding 
shares to 608,262. Gross Offering Proceeds received 
increased by $3,736,900 resulting in aggregate Gross 
Offering Proceeds received of $12,165,240. The Gross 
Offering Proceeds received for the quarter ending September 
30, 1998 were distributed as follows: $3,343,946 to the 
Company as Net Offering Proceeds; 10% or $373,690 to the 
Selling Group Manager for Selling Commissions; 0.5% or 
$18,685 to the Selling Group Manager for Due Diligence 
Fees; and $580 to the Escrow Agent as compensation for 
distributing interest accrued to subscribers. 

     For the nine months ending September 30, 1998 UMT 
added 216 new shareholders increasing the total number of 
shareholders to 388. The Company issued 405,754 shares of 
beneficial interest thereby increasing the outstanding 
shares to 608,262. Gross Offering Proceeds received 
increased by $8,115,080 resulting in aggregate Gross 
Offering Proceeds received of $12,165,240. The Gross 
Offering Proceeds for the nine months ending September 30, 
1998 were distributed as follows: $7,261,747 to the Company 
as Net Offering Proceeds; 10% or $811,508 to the Selling 
Group Manager for Selling Commissions; 0.5% or $40,575 to 
the Selling Group Manager for Due Diligence Fees; and 
$1,250 to the Escrow Agent as compensation for distributing 
interest accrued to subscribers. 

     By comparison, during the three months and nine months 
ending September 30, 1997 UMT added 137 new shareholders 
increasing the total number of shareholders to 138. The 
Company issued 134,463 shares of beneficial interest 
thereby increasing the outstanding shares to 144,463. Gross 
Offering Proceeds received increased by $2,689,260 
resulting in aggregate Gross Offering Proceeds received of 
$2,889,260. The Gross Offering Proceeds for the nine months 
ending September 30, 1997 were distributed as follows: 
$2,406,213 to the Company as Net Offering Proceeds; 10% or 
$268,926 to the Selling Group Manager for Selling 
Commissions; 0.5% or $13,446 to the Selling Group Manager 
for Due Diligence Fees; and $675 to the Escrow Agent as 
compensation for distributing interest accrued to 
subscribers.

     During the quarter ending September 30, 1998 UMT used 
Net Offering Proceeds to purchase 64 Residential Mortgages 
for $2,605,245, or for 95.99% of the unpaid principal 
balance of the notes as of the purchase date. Net Offering 
Proceeds were used to increase the Interim Mortgage Loan 
balance outstanding from $1,744,911, at June 30, 1998, to 
$2,885,140. Net Offering Proceeds were also used to pay an 
Acquisition Fee of $80,093 to the Advisor, calculated at 3% 
of the unpaid principal balance of the Residential 
Mortgages as of the purchase date. 

     During the nine months ending September 30, 1998 UMT 
used Net Offering Proceeds to purchase 137 Residential 
Mortgages for $5,528,370, or for 94.75% of the unpaid 
principal balance of the notes as of the purchase date. Net 
Offering Proceeds were used to increase the Interim 
Mortgage Loan balance outstanding from $1,774,911, at June 
30, 1998, to $2,885,140 at September 30, 1998. Net Offering 
Proceeds were also used to pay an Acquisition Fee of 
$173,718 to the Advisor, calculated at 3% of the unpaid 
principal balance of the Residential Mortgages as of the 
purchase date.

     By comparison, during the three months and nine months 
ending September 30, 1997 UMT used Net Offering Proceeds to 
purchase 53 Residential Mortgages for $1,896,003 or for 
92.18% of the unpaid principal balance of the notes as of 
the purchase date. Net Offering Proceeds were used to 
increase the Interim Mortgage Loan balance outstanding to 
$570,665. Net Offering Proceeds were also used to pay an 
Acquisition Fee of $61,702 to the Advisor, calculated at 3% 
of the unpaid principal balance of the Residential 
Mortgages as of the purchase date.

 	UMT declared and paid three dividends to shareholders 
during the quarter ending September 30, 1998. The 
annualized rate-of-return to shareholders was 10.05%. Nine 
dividends were declared and paid to shareholder during the 
nine months ended September 30, 1998. The annualized rate-
of-return to shareholders for the nine months period was 
10.33%. 

     By comparison, UMT declared and paid its first 
dividend during the three months and nine months ending 
September 30, 1997, subsequent to the Initial Escrow 
Closing. Dividends paid to shareholders during the periods 
provided annualized rates-of-return to shareholder of 
10.44%.

     On March 27, 1998 UMT renewed and increased its 
Revolving Loan Agreement (the "Agreement") with its lending 
bank (the "Bank") wherein the Company can borrow up to 
$500,000 on a revolving basis for a term of one year from 
the date of the Agreement. Interest on the outstanding 
principal balance of the loan is paid monthly at a varying 
rate per annum, which is one and one-half percent (1-1/2%) 
in excess of the Bank's prime rate of interest. The 
outstanding balance of the line of credit at September 30, 
1998 was $431,000. The Company uses the line of credit to 
purchase Mortgage Investments prior to its two monthly 
closings.


PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Reports on Form 8-K

     During the period covered by this report, the Company 
filed reports on Form 8-K dated July 31, 1998 and September 
10, 1998 to report the status of its offering of shares.


SIGNATURES

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


                                    UNITED MORTGAGE TRUST
                                        (Registrant)



Date:  November 7, 1998             /S/Christine A. Griffin
                                      Christine A. Griffin
                                           President



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