SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549



                            Form 10-Q



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

         For the quarterly period ended September 30, 2004

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

         For the transition period from _________ to _________


                  Commission file number 000-32409


                       UNITED MORTGAGE TRUST


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

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


                        5740 Prospect Avenue
                            Suite 1000
                        Dallas, Texas 75206
                          (214) 237-9305



     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 [   ]

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act) Yes [ X ]  No [   ]


                             7,052,417

              Number of shares of Registrant's shares of
        beneficial interest outstanding as of September 30, 2004.


                               (i)


<Page>
TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
Item 1. Financial Statements
     Consolidated Balance Sheets
     Unaudited Consolidated Statements of Income
     Unaudited Consolidated Statements of Cash Flows
     Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures

PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K

SIGNATURE
EXHIBITS




                             (ii)


<Page>
PART I  -- FINANCIAL INFORMATION
<TABLE>
                           UNITED MORTGAGE TRUST
                        CONSOLIDATED BALANCE SHEETS
<Caption>
                                           September 30,     December 31,
                                              2004              2003
                                           ------------------------------
ASSETS                                     (unaudited)        (audited)
<S>                                        <C>              <C>
Cash and cash equivalents                  $  1,547,407     $  4,199,455

Mortgage investments:
  Residential mortgages
    and contracts for deed                      --            29,780,352
  Investment in trust receivables            16,288,913           --
  Residential mortgages and contracts
    for deed foreclosed                       1,966,779        3,346,004
  Interim mortgages                          73,809,882       71,547,192
  Interim mortgages foreclosed                2,173,842        1,263,350
  Reserve for loan losses                      (218,890)        (350,000)
                                            -----------      -----------
Total mortgage investments, net              94,020,526      105,586,898

Line-of-credit receivable, affiliate         16,153,843        6,093,493
Accrued interest receivable                   3,679,734        3,453,824
Receivable from affiliate                     2,101,563           59,117
Equipment, less accumulated depreciation
  of $7,270 and $4,612, respectively             18,587           21,245
Other assets                                  1,947,084          911,786
                                           ------------     ------------
Total Assets                               $119,468,744     $120,325,818
                                           ------------     ------------
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Line-of-credit, payable                  $  1,480,000     $     --
  Distributions payable                         939,000        1,071,000
  Accounts payable and accrued
    liabilities                                   5,646          152,175
  Amounts due for redemption of
    beneficial interest                           --             611,970
                                            -----------     ------------
Total Liabilities                             2,424,646        1,835,145
                                            -----------     ------------

Commitments and contingencies                    --               --

Shareholders' equity:
  Shares of beneficial interest; $.01 par
    value; 100,000,000 shares authorized;
    7,634,470 and 7,470,872 shares
    issued; 7,052,417 and 7,028,106
    outstanding, respectively                    76,345           74,708
  Additional paid-in capital                133,609,809      130,539,921
  Advisor's reimbursement                       397,588          397,588
  Cumulative distributions in excess
    of earnings                              (5,445,013)      (3,728,496)
                                            -----------     ------------
                                            128,638,729      127,283,721
  Less treasury stock, 582,053 and
     442,766 shares, respectively,
     at cost                                (11,594,631)      (8,793,048)
                                            -----------     ------------

Total Shareholders' Equity                  117,044,098      118,490,673
                                           ------------     ------------
Total Liabilities and Shareholders'
  Equity                                   $119,468,744     $120,325,818
                                           ------------     ------------
<FN>
See accompanying notes.
</FN>
</Table>

                                    -1-



<Page>
<TABLE>
                           UNITED MORTGAGE TRUST
                          CONSOLIDATED STATEMENTS OF INCOME
                                    (unaudited)

<CAPTION>
                                 Three Months Ended       Nine Months Ended
                                    September 30,            September 30,
                               2004              2003   2004              2003
                               ----------------------   ----------------------
                                     (unaudited)              (unaudited)
<S>                            <C>         <C>          <C>         <C>
Revenues:
  Interest income              $3,404,317  $3,088,519   $9,899,471  $8,814,068


Expense:
  Reserve for and loss from
    sales of foreclosed
    properties                    522,124      41,287    1,181,101     166,803
  Interest(income) expense, net    10,322      (1,154)      39,197     139,487
  Loan servicing fee               24,293      31,348       85,269     107,518
  Management fee                  302,686     188,585      706,132     526,615
  General and administrative       82,442      63,221      298,251     263,263
                               ----------  ----------   ----------  ----------
                                  941,867     323,287    2,309,950   1,203,686
                               ----------  ----------   ----------  ----------
Net income                     $2,462,450  $2,765,232   $7,589,521  $7,610,382
                               ==========  ==========   ==========  ==========
Net income per share
   of beneficial interest           $0.35       $0.45        $1.08       $1.38
                               ==========  ==========   ==========  ==========
Weighted average
    shares outstanding          7,049,777   6,124,492    7,053,240   5,518,647
                               ==========  ==========   ==========  ==========

Cash distributions declared
   per share of beneficial
   interest                        $ 0.40       $0.46        $1.32       $1.38
                                   ======       =====        =====       =====

<FN>
See accompanying notes.
</FN>
</TABLE>

                                        -2-


<Page>
<TABLE>
                         UNITED MORTGAGE TRUST
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (unaudited)
<CAPTION>
                                                  Nine Months Ended
                                                    September 30,
                                                  2004          2003
                                              ------------------------

<S>                                          <C>            <C>
Cash flows from operating activities:
  Net income                                  $ 7,589,521   $ 7,610,382
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
      Reserve for and loss from sales
        of foreclosed properties                1,181,101       166,803
      Depreciation                                  2,658         1,145
      Net amortization of discount on
        mortgage investments                       29,804       (48,681)
      Changes in assets and liabilities:
        Accrued interest receivable              (225,911)   (1,155,406)
        Other assets                           (1,035,298)      (76,249)
        Accounts payable and accrued
          liabilities                            (146,529)     (540,287)
          Net cash provided by operating      -----------    ----------
            activities:                         7,395,346     5,957,707
                                              -----------    ----------
Cash flows from investing activities:
  Investment in residential mortgages
    and contracts for deed                       (781,185)   (1,908,716)
  Principal receipts on residential
    mortgages and contracts for deed            5,164,308     5,266,269
  Proceeds from sale of mortgage
    loans, securitization                       9,455,520        --
  Line-of-credit receivable, affiliate        (10,060,350)       --
  Investment in interim mortgages             (59,229,988)  (72,239,079)
  Principal receipts on interim mortgages      55,746,812    56,175,022
  Receivable from affiliate                    (2,042,446)       53,115
         Net cash used in investing           -----------   -----------
           activities:                         (1,747,329)  (12,653,389)
                                              -----------   -----------
Cash flows from financing activities:
  Proceeds from issuance of shares of
    beneficial interest                         3,071,526    36,436,403
  Purchases of treasury stock                  (2,801,583)   (4,884,603)
  Shares of beneficial interest redeemed         (611,970)      --
  Net borrowings (payments) on line-
    of-credit, payable                          1,480,000    (6,245,000)
  Dividends                                    (9,438,038)   (7,441,013)
        Net cash provided by (used in)        -----------   -----------
          financing activities:                (8,300,065)   17,895,787
                                              -----------   -----------
Net increase (decrease) in cash                (2,652,048)   11,200,105

Cash and cash equivalents
  at beginning of period                        4,199,455       646,570
                                              -----------   -----------
Cash and cash equivalents at end
  of period                                   $ 1,547,407   $11,846,675
                                              -----------   -----------
Interest paid                                 $    39,197   $   139,487
                                              -----------   -----------
<FN>
See accompanying notes.
</FN>
</TABLE>

                                  -3-


                            UNITED MORTGAGE TRUST
                 Notes to Consolidated Financial Statements
                             September 30, 2004
                                (Unaudited)

1. Description of Business

The Company

United Mortgage Trust (the 'Company') is a Maryland real estate
investment trust which qualifies as a real estate investment trust (a
'REIT') under federal income tax laws. The Advisor to the Company is
UMT Advisors, Inc., (the 'Advisor') a Texas corporation.  The Company
invests exclusively in first-lien, fixed-rate mortgages secured by
single-family residential property throughout the United States
('Mortgage Investments'). Such loans are 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.

The Company completed its public offering of securities in October
2003, raising approximately $130,540,000 in net offering proceeds. In
November 2003, the Company received a merger proposal from UMT
Holdings, L.P, an entity organized by persons that include some of the
officers and owners of the Company and the Advisor. A committee
comprised of the Company's Independent Trustees is currently evaluating
the proposal.

2. Basis of Presentation

The accompanying unaudited financial statements were prepared in
accordance with accounting principles generally accepted in the United
States of America for interim financial information and with the
instructions to Form 10-Q of Regulation S-X. They do not include all
information and footnotes required by accounting principles generally
accepted in the United States of America 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 ended December 31, 2003 included in the
Company's 10-K 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, were made. Operating results
for the three months and nine months ended September 30, 2004 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2004.

3. Line-of-Credit, Payable

Effective July 11, 2004 the Company's line-of-credit, payable was
extended for twelve months and modified setting the new borrowing
limit to $6,500,000. The line-of-credit payable was collateralized
by certain residential mortgages.  Interest on the outstanding
balance accrues at prime plus 0.5% (5.25% per annum at September 30,
2004).

                                   -4-
<Page>
4. Related Party Transactions

a). Fees paid to the Advisor, a related party: On January 1, 2001,
the Company entered into an Advisory Agreement with the Advisor
whereby the Advisor provides the Company with day-to-day management
and administrative services subject to the supervision and review by
the Trustees. In consideration for these services, the Company paid
the Advisor a trust administration fee of $302,686 and $188,585 for
the 2004 and 2003 quarters, respectively, and $706,132 and $526,615
for the nine month respective periods.  The fee was calculated as
1/12th of 1/2 of 1% paid monthly of the first $50,000,000 of income
producing assets and 1/12th of 1% of income producing assets in
excess of $50,000,000, paid monthly. The terms of the Advisory
Agreement calculates the Acquisition Fee (paid for sourcing suitable
investments) as 3% of net offering proceeds (net offering proceeds
are gross offering proceeds less commissions and marketing
reallowances). There were no acquisition fees paid in 2004 since the
Company's offering ended in 2003. Acquisition fees paid in the three
months and nine months of 2003 were $481,115 and $988,891,
respectively.

b). Loan servicing fees paid to an affiliate: Under the terms of a
Mortgage Servicing Agreement with Prospect Service Corp. ('PSC'),
the Company incurred loan servicing fees of $24,293 and $31,348 in
the three months of 2004 and 2003, and $85,269 and $107,518 in the
respective nine-month periods.

c). Purchasing Mortgage Investments from affiliates:

Residential Mortgages and Contracts for Deed: The Company purchases
residential mortgages and contracts for deed from South Central
Mortgage ('SCMI'), an affiliate. The Company purchased four
residential mortgages during the September 2004 quarter, five
residential mortgages in the 2003 quarter, seven residential
mortgages in the nine months of 2004, and 17 residential mortgages
and seven contracts for deed during the 2003 nine-month period.
During the nine-month period of 2004, 54 contracts for deed were
converted to notes and deeds of trust.

Interim Mortgages: The Company purchases interim mortgages from
various sources including the below listed affiliates:
<Table>
<Caption>
                              Three Months                 Nine Months
Affiliated Company       2004              2003     2004                2003
---------------------    ----------------------     ------------------------
<S>                      <C>         <C>            <C>          <C>
Capital Reserve Corp.    $  137,000  $  874,000     $ 1,475,000  $13,228,000
Ready America Funding     8,176,000   7,700,000      16,335,000   16,139,000
REO Property Company        357,000   1,681,000         805,000    1,681,000
Ready Mortgage Corp.          3,000   3,078,000         453,000   15,182,000
South Central Mortgage        --          9,000           2,000       72,000
UMTH Lending              3,724,000   6,405,000      12,217,000    8,375,000
United Development
  Funding                 6,165,000      --           6,165,000       --
</Table>
                                    -5-
<Page>
d). SCMI Recourse Agreement: SCMI has agreed that, if the obligor on
any residential mortgage or contract for deed sold to the Company by
SCMI or its affiliates, and that has had less than 12 payments made on
it, defaults in the making of any payment or other obligation thereon
during the period ending before the 12th payment after the Company
bought that residential mortgage or contract for deed, then SCMI
shall buy that Mortgage Investment from the Company or advance on a
month-to-month basis, all lost interest, tax and insurance escrow
payments, as well as any costs incurred by it related to curing the
default or obtaining title of the property securing the defaulted
obligation.

e.) Line-of-Credit Receivable, Affiliate: The Company extended a
revolving line-of-credit ('LOC') to an affiliate, United Development
Funding, L.P. ('UDF'), which is collateralized by the affiliate's real
estate assets. Accrued interest on the LOC is payable monthly at 15% to
the Company with the principal balance being due on September 1, 2004.
The Company renewed and extended the facility on that date for another
12 months. The Company has the ability, but not an obligation, to renew
the affiliate's LOC agreement on an annual basis. The Company monitors
the LOC for collectibility on a continuing basis based on the
affiliate's payment history. No valuation allowance or charge to
earnings was recorded for the nine months ended September 30, 2004,
based on the Company's evaluation.

f.) A two percent fee in the amount of $188,000 was paid to the Advisor
as compensation for facilitating the Bayview securitization.

5. Investment in Trust Receivable

Prior to the Bayview securitization, all residential mortgages and
contracts for deed were transferred to a qualified special purpose
entity, wholly-owned by the Company.

6. Bayview Securitization

On April 13, 2004, the Company, through two newly created qualifying
special purpose entities, completed a securitization of approximately
$12.6 million in principal amount of mortgage loans carrying a weighted
average interest rate of 11.66% and sold approximately $9.5 million of
such securitized loans to Bayview Financial Trading Group, L.P.
("Investor"). In connection with the securitization, the Company
retained servicing responsibilities and a $3.1 million subordinated
interest.  The Company will receive annual servicing fees of 0.5
percent of the outstanding balance, which the Company has assigned to
PSC, a related party of the Company. As a result, PSC will receive the
0.5 percent servicing fees.  The Company has rights to future cash
flows arising after the Investor in the securitization trust has
received the return for which they are contracted, 9.25 percent.  The
Investor and the securitization trust have no recourse to the Company's
other assets for failure of debtors to pay when due.  The Company's
retained interests are subordinate to the Investor's interests.  The
value of the transferred mortgage loans is subject to credit and
prepayment risks.

                                  -6-



<Page>
The Company did not record a servicing asset or liability for the
servicing rights retained as the fees that will be received will
fairly compensate the assigned servicer for costs to be incurred with
such service, and the Company will pay all associated fees directly to
PSC.

Any resulting gain or loss on the sale of the mortgage loans depends
in part on the previous carrying value of the loans involved in the
transfer, allocated between the assets sold and the retained interests
based on their relative fair market value at the date of transfer.  To
obtain fair values, quoted market prices are used if available.
However, quotes were not available for the Company's retained
interests, so the Company estimated fair value based on the present
value of future expected cash flows using management's best estimate
of the key assumptions: credit losses, prepayment speeds and discount
rates commensurate with the risks involved.  The Company used an
expected weighted-average life of 5.5 years.  Based on expected credit
losses of 1.5%, prepayment speed of 18.2% and a discount rate of 11.0%
no gain or loss was recognized related to the sale of these mortgage
loans as the carrying value approximated the fair value at the date of
the securitization.

The sensitivity to an immediate 10% and 20% adverse change in the
assumptions used to measure fair value of the securitized mortgage
loans is as follows:

Prepayment speed assumption (annual rate):

Impact on fair value of 10% adverse change
$  9,000
Impact on fair value of 20% adverse change
  18,000


Expected credit losses (over remaining life of
loans):

Impact on fair value of 10% adverse change
  11,000
Impact on fair value of 20% adverse change
  23,000


Residual cash flows discount rate (annual):

Impact on fair value of 10% adverse change
 213,000
Impact on fair value of 20% adverse change
$418,000

These sensitivities are hypothetical and should be used with caution.
Changes in fair value based on a 10 percent variation in assumptions
generally cannot be extrapolated because the relationship of the
change in assumption to the change in fair value may not be linear.
Also, in this table, the effect of a variation in a particular
assumption on the fair value of the retained interest is calculated
without changing any other assumption; in reality, changes in one
factor may result in changes in another (for example, increases in
market interest rates may result in lower prepayments and increased
credit losses), which might magnify or counteract the sensitivities.

                                  -7-




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

     The following section contains forward-looking statements within
the meaning of Section 27A of the Securities Act, and Section 21E of
the Exchange Act and should be read in conjunction with our Financial
Statements and related notes appearing in this Form 10-Q. Such forward-
looking statements may be identified by the words "anticipate,"
"believe," "estimate," "expect" or "intend" and similar expressions.
Forward looking statements are likely to address such matters as our
business strategy,  future operating  results, future sources of
funding for  mortgage  loans  brokered by us, future  economic
conditions  and pending litigation  involving us each of which are
discussed herein under the caption "Factors that may Affect Future
Results."

RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 2004 AND 2003

     We were formed on July 12, 1996, however our business operations
commenced in March 1997 when the Securities and Exchange Commission
issued an order of registration for our initial public offering of
shares. We completed our public offering of our securities in October
2003, raising approximately $130,540,000 in net offering proceeds. In
November 2003, we received a merger proposal from UMT Holdings, L.P, an
entity organized by persons that include some of our officers and
owners and our Advisor. A committee comprised of our Independent
Trustees is currently evaluating the proposal.
<Table>
<Caption>
LOANS PURCHASED
During the nine months ended September 30, 2004, we had 54 contracts for deed
refinanced to residential mortgages which we retained in our portfolio. The
following table records new loans purchased excluding the refinanced properties:

                                  Three months                Nine months
Loan Category                2004              2003    2004                 2003
-------------------------    -----------------------   -------------------------
<S>                          <C>          <C>          <C>           <C>
Residential Mortgages        4            5            7             17
Unpaid principal balance     $169,000     $442,000     $293,000      $1,011,000

Contracts for Deed           0            0            0             7
Unpaid principal balance     --           --           --            $286,000

Interim Mortgages
Purchased during period      $24,659,000  $27,679,000  $59,230,000   $72,239,000
--------------------------------------------------------------------------------
</Table>
                                    -8-


<Page>
     In April 2004, but effective January 1, 2004, we transferred our
residential mortgages and contracts for deed to a wholly-owned special
purpose entity called UMT LT Trust ('UMTLT'), a Maryland real estate
investment trust.

     On April 13, 2004, we, through UMTLT ('Seller') and another newly
created, wholly-owned subsidiary, UMT Funding Trust as the 'Depositor', a
Maryland real estate investment trust, completed a securitization of
$12,593,587 principal amount of mortgage loans through the private issuance
of $9,455,520 in 9.25% Class A Notes ('Notes'). The Notes, together with
$3,138,067 in Class B Certificates (the 'Certificates'), collectively
referred to as the 'Securities' were issued by Wachovia Bank as Trustee
pursuant to a Trust Agreement dated as of April 1, 2004 between the Bank and
the Depositor. The Class A Notes were then sold by the Depositor to Bayview
Financial Trading Group, L.P. ('Bayview'), pursuant to a Purchase Agreement
dated as April 13, 2004 (the 'Note Purchase Agreement') between Bayview, the
Depositor and United Mortgage Trust.  The Notes were sold pursuant to an
exemption from the registration requirements of the Securities Act of 1933,
as amended.

      The Securities evidence the entire beneficial ownership interest in a
Trust Fund created under the Trust Agreement, which consists of a pool of
performing first lien residential mortgage loans (the 'Mortgage Loans') with
an aggregate principal balance of $12,593,587 as of April 13, 2004. United
Mortgage Trust transferred the Mortgage Loans to the Seller as a capital
contribution and the Seller sold the Mortgage Loans to the Depositor pursuant
to a Mortgage Loan Sale Agreement dated as of April 1, 2004. The Mortgage
Loan Sale Agreement includes a right on the part of the Depositor to require
the Seller to repurchase certain Mortgage Loans upon the Seller's breach of a
representation or warranty with respect to certain characteristics of the
Mortgage Loans.  United Mortgage Trust has agreed to guarantee the
obligations of the Seller under the Mortgage Loan Sale Agreement, including
the obligation of the Seller to repurchase Mortgage Loans as to which the
Seller has breached a representation or warranty. The Class B Certificates
give the Depositor the right to receive all remaining monthly interest after
all payments due on the Class A Notes and all principal and interest on the
Mortgage Loans after retirement of the Class A Notes. The Class B
certificates will be retained by the Depositor.

     Simultaneously with the Depositor's conveyance of the Mortgage Loans to
the Trustee and pursuant to the terms of a Servicing Rights Transfer
Agreement dated as of April 1, 2004 by and between Prospect Service Corp., as
owner of the servicing rights to the Mortgage Loans, and Bayview, United
Mortgage Trust transferred the servicing rights to the Mortgage Loans to
Bayview.

     Upon receipt of the funds from Bayview we paid our line of credit down
by six million dollars. We intend to use the balance of the proceeds for
general corporate purposes.

     At September 30, 2004, our investment in interim mortgages
increased by approximately 3% compared to year-end and increased 13%
compared to September 30, 2003.

                                  -9-


<Page>
     As of September 30, 2004, our mortgage portfolio in the aggregate
consisted of 555 residential mortgages and 11 contracts for deed, held
in our subsidiary UMTLT. Two hundred seventy-five of the residential
mortgages are the Notes that make up the Bayview securitization. As of
the dates of purchase, the loans had an unpaid principal balance of
$25,717,000. The average loan in the portfolio had a blended interest
rate of 11.68%, a current annual yield of 11.89%, an investment-to-
value ratio of 83.82%, an unpaid principal balance of $46,000, with a
term remaining of 333 months. In addition, as of September 30, 2004,
our interim mortgages portfolio consisted of 1,054 with an unpaid
principal balance of $73,810,000 with an average interest rate of
13.66% and a current annual yield of 13.81%. Terms of the interim
mortgage are less than 12 months.

     As of September 30, 2003, our mortgage portfolio in the aggregate
consisted of 543 residential mortgages, 167 contracts for deed and
1,088 interim mortgages. As of the dates of purchase, the portfolio
had an unpaid principal balance of $100,700,000 and was purchased for
a discounted price of $99,995,000 (99.30% of the unpaid principal
balance). The average loan in the portfolio had a blended interest
rate of 13.04%, a current annual yield of 13.13%, an investment-to-
value ratio of 70.82%, an unpaid principal balance of $56,000, and a
term remaining of 274 months for residential mortgages and contracts
for deed and less than 12 months for interim mortgages.

----------------------------------------------------------------
                                            September 30,
Balances as of the purchase date    2004                    2003
----------------------------------------------------------------
Residential Mortgages               555             543
Unpaid principal balance            $25,210,000     $29,808,000

Contracts for Deed                  11              167
Unpaid principal balance            $507,000        $9,167,000

Interim Mortgages                   1,054           1,088
Unpaid principal balance            $73,810,000     $71,547,000
----------------------------------------------------------------

     All of the properties that were security for the residential
mortgages, contracts for deed and interim mortgages were located in
the United States. Each of the properties was adequately covered by a
mortgagee's title insurance policy and hazard insurance.

     We extended a revolving line-of-credit ('LOC') to an affiliate,
United Development Funding, L.P. ('UDF'), which is collateralized by
the affiliate's real estate assets. Accrued interest on the LOC is
payable monthly to the Company with the principal balance being due
September 1, 2005. The Company has the ability, but not an obligation,
to renew the affiliate's LOC agreement on an annual basis. The Company
monitors the LOC for collectibility on a continuing basis based on the
affiliate's payment history. No valuation allowance or charge to
earnings was recorded for the quarter ended September 30, 2004, based
on the Company's evaluation. We have increased our investment in UDF by
165% over year end. We were not invested in UDF in the 2003 periods.
                              -10-

 <Page>
     During the three and nine months ended September 30, 2004 and
2003 our investments generated approximately $3,404,000 and $3,089,000
and $9,899,000 and $8,814,000 of interest income, respectively, 10%
and 12% increases. The rise was attributed to the changing nature of
our loan portfolio purchasing now almost exclusively interim mortgage
loans. In addition, our line-of-credit facility with UDF has grown
162% in the 2004 nine month period.

     The table below shows our major concentration of investments as a
percentage of our income producing assets excluding loans securitized
and held by others:
----------------------------------------------------------------
                                            September 30,
Loan Category                       2004               2003
---------------------           --------------------------------
Residential Mortgages##             15%                27%
Contracts for Deed                   1%                 8%
Interim Mortgages                   69%                65%
United Development Funding          15%                --
----------------------------------------------------------------
## Net assets in UMTLT after Bayview securitization

     Operating expenses for the three-month and nine-month periods of
2004 and 2003 were approximately $942,000 and $323,000 and $2,310,000
and $1,204,000, respectively, 191% and 92% increases, respectively.
Increases can be primarily attributed to the following three
categories:

Loan loss reserves and loan losses - $522,000 compared to
$41,000 for the comparable three months and $1,181,000 and
$167,000 for the comparable nine-month periods.  The Company
reserves approximately 0.1% of interim balances and 0.5% of
residential mortgage and contract for deed balances. We did
not reserve for loan losses in 2003.  We will continue to
reserve for losses during the balance of 2004 and going
forward. The amount we reserve is based on a formula that is
adjusted if necessary quarterly.

Trust management fee - $303,000 and $189,000 for the
comparable three months and $706,000 and $527,000 for the
comparable nine-month periods. The trust management fee is
calculated as a percentage of income producing assets. We
should only see the monthly fee vary as our cash balances
increase and decrease, as cash is not an income producing
asset. On average the monthly fee has been approximately
$70,000 during 2004.

     Our loan loss reserves are calculated as approximately one-half
percent of book value of residential mortgages and contracts for deed
and approximately one-tenth percent of the book value of interim
mortgages at period end. Losses have primarily been recognized in
residential mortgages and contracts for deed categories although we
experienced our first loan loss in the interim mortgages category

                                 -11-


<Page>
during the second quarter. Since inception, of the approximate
$271,000,000 interim mortgages we have acquired, we have realized
losses of $314,000, 0.12% of the total.

     Since inception, of the approximate $53,000,000 residential
mortgages and contracts for deed we have acquired, we have realized
approximately $2,855,000 in losses, 5.39% of the total. We anticipate
loan losses to continue and therefore are continuing to monitor the
adequacy of our loan loss reserve and will increase our loan loss
reserves on a go-forward basis as needed.

     Our default rate as of September 30, 2004 and 2003 was 3.78%
compared to 3.42%. Interim mortgages represent approximately 53% of
our defaulted loans. This increase number was expected as our
percentage of our portfolio in short-term loans increased.

     Operating expenses, less interest (income) expense, net, as a
percentage of income were 27.36% and 10.47% for the comparable three-
month periods and 22.94% and 12.07% for the comparable nine-month
periods, and operating expenses as a percentage of invested assets
were 0.88% and 0.88% and 0.85% and 0.34% for the comparable three and
nine-month periods, respectively.

     Net income for the three and nine months ended September 30, 2004
and 2003 was approximately $2,462,000 and $2,765,000, and $7,590,000
and $7,610,000, a 11% decrease between quarters and a less than 1%
decline between nine-month periods, respectively. Earnings per
weighted average share were $0.35 and $0.45 and $1.08 and $1.38,
respectively, for the comparable three and nine months.

    Distributions to shareholders per share of beneficial interest
during the comparable nine-month periods were $0.1466 and $0.1533 per
share per month. We advised last quarter that we lowered our
distribution rate to an 8% annualized yield in an effort to more
closely reflect earnings. We will continue to forecast earnings and
adjust our distribution rate quarterly as necessary.


CAPITAL RESOURCES AND LIQUIDITY FOR THE THREE MONTHS AND NINE MONTHS
ENDED SEPTEMBER 30, 2004 AND 2003

     We utilize funds made available from the sale of our shares,
funds made available on our bank line of credit and repayment of
principal on our loans to purchase mortgage investments.

--------------------------------------------------------------------
                                         For the Three Months ending
                                                September 30,
                                           2004              2003
                                        ----------------------------
Shares issued                                49,800          980,000
Number of new shareholders                      --               176
Gross offering proceeds                 $   996,000      $19,639,000
Net offering proceeds (after deduction
  of selling commissions and fees)      $   996,000      $17,337,000
Treasury shares purchased               $(1,322,000)     $(3,715,000)
Principal receipts from Residential
  Mortgages and Contracts for Deed      $    90,000      $ 2,284,000
Principal receipts from
  Interim Mortgages                     $20,845,000      $27,241,000
Net borrowings (payments on)
  line-of-credit, payable               $ 1,480,000      $(2,550,000)
---------------------------------------------------------------------
                                  -12-
<Page>
--------------------------------------------------------------------
                                         For the Nine Months ending
                                                  September 30,
                                           2004              2003
                                        ----------------------------
Shares issued                               163,600        2,070,000
Number of new shareholders                      --               821
Gross offering proceeds                 $ 3,072,000      $41,444,000
Net offering proceeds (after deduction
  of selling commissions and fees)      $ 3,072,000      $36,436,000
Share repurchases                       $(2,802,000)     $(4,885,000)
Shares redeemed                         $(  611,000)           --
Principal receipts from Residential
  Mortgages and Contracts for Deed      $ 5,164,000      $ 5,266,000
Proceeds from Bayview Securitization    $ 9,456,000            --
Principal receipts from
  Interim Mortgages                     $55,747,000      $56,175,000
Net borrowings (payments on)
  line-of-credit, payable               $ 1,480,000      $(6,245,000)
---------------------------------------------------------------------

   We are no longer offering shares in the public markets except to
existing shareholders through our new dividend reinvestment plan which
was implemented in November 2003. We completed our public offering of
our securities in October 2003, raising approximately $130,540,000 in
net offering proceeds. In November 2003, we received a merger proposal
from UMT Holdings, L.P, an entity organized by persons that include
some of our officers and owners and our Advisor. A committee comprised
of our Independent Trustees is currently evaluating the proposal.

     As of September 30, 2004, we had issued an aggregate of 7,634,470
shares of beneficial interest and repurchased into treasury, through
our Share Repurchase Plan, 582,053 shares. Total shares outstanding
were 7,052,417. Gross Offering proceeds were $152,437,230.

     Effective July 11, 2004 the Company's line-of-credit payable
was extended for twelve months and modified setting the new
borrowing limit to $6,500,000. The line-of-credit payable was
collateralized by certain residential mortgages.  Interest on the
outstanding balance accrues at prime plus 0.5% per annum (5.25% at
September 30, 2004). We utilized the credit facility to acquire and
warehouse mortgage investments as they become available. The
outstanding balance of the line-of-credit was reduced as new
offering proceeds were received. Our line of credit balance was
$1,480,000 at September 30, 2004 and zero as of September 30, 2003.

                                -13-


<Page>
     In addition, the Company is negotiating a new credit facility
with a borrowing limit of $15,000,000. If finalized the new credit
facility would replace the $6,500,000 line-of-credit. We expect the
final terms to be approved by our board of trustees in early
November 2004.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

No change.

Item 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure
that information disclosed in our annual and periodic reports is
recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and
forms. In addition, we designed these disclosure controls and
procedures to ensure that this information is accumulated and
communicated to our management, including our chief executive
officer (our "CEO") and chief financial officer (our "CFO"), to
allow timely decisions regarding required disclosure. SEC rules
require that we disclose the conclusions of our CEO and CFO about
the effectiveness of our disclosure controls and procedures.

         We do not expect that our disclosure controls and
procedures will prevent all errors or fraud. A control system, no
matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system
are met. In addition, the design of disclosure controls and
procedures must reflect the fact that there are resource
constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitation in a
cost-effective control system, misstatements due to error or fraud
could occur and not be detected.

         We evaluate the effectiveness of our disclosure controls
and procedures as of the end of each fiscal quarter. Based on our
most recent evaluation, our CEO and CFO believe, and have certified,
that our disclosure controls and procedures are effective to (1)
ensure that material information relating to us is made known to
management, including the CEO and CFO, particularly during the
period when our periodic reports are being prepared, and (2) provide
reasonable assurance that our financial statements fairly present in
all material respects our financial condition and results of
operations.

      Since the date of this most recent evaluation, there have been
no significant changes in our internal controls or in other factors
that could significantly affect the internal controls subsequent to
the date we completed our evaluation.


                                -14-


<Page>
PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Changes in Securities and Use of Proceeds.

     We are offering up to 511,000 shares of beneficial interest at $20
per share through our dividend reinvestment plan. There are no
commissions or fees paid from the proceeds. We use proceeds from the
plan primarily to repurchase shares in our share redemption plan.
Absent applications for repurchase, we use the proceeds to buy mortgage
investments.

     The following table sets forth information relating to shares of
beneficial interest issued and the use of proceeds of the offering during
the quarter ended September 30, 2004:

Shares issued                               163,598
Gross offering proceeds                  $3,072,000


Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.


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

Form 8-K - None
Exhibit 31. Certification pursuant to Section 302 of the Sarbanes-Oxley
Act
Exhibit 32. Certification pursuant to Section 906 of the Sarbanes-Oxley
Act

                               -15-




<Page>
SIGNATURES

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


                                        UNITED MORTGAGE TRUST
                                        (Registrant)


Date:  November 8, 2004                /S/Christine A. Griffin
                                         Christine A. Griffin
                                              President


                                  -16-


<Page>
EXHIBITS

Exhibit 31. Certification pursuant to Section 302 of the Sarbanes-Oxley
Act

I, Christine A. Griffin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Mortgage
Trust;

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

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

4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the registrant and have:

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

     (b) Evaluated the effectiveness of the registrant's disclosure
     controls and procedures and presented in this report our conclusions
     about the effectiveness of the disclosure controls and procedures, as
     of the end of the period covered by this report based on such
     evaluation; and

5. I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's registered
independent public accounting firm and the audit committee of the
registrant's board of trustees:

     (a) All significant deficiencies and material weaknesses in the design
     or operation of internal control over financial reporting which are
     reasonably likely to adversely affect the registrant's ability to
     record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or
     other employees who have a significant role in the registrant's
     internal control over financial reporting.


November 8, 2004

/s/ Christine Griffin
---------------------
Christine Griffin
President and Chief Executive Officer

                                   -17-

<Page>
Exhibit 32. Certification pursuant to Section 906 of the Sarbanes-Oxley
Act

I, Christine A. Griffin, Chief Executive Officer and Chief Financial
Officer of United Mortgage Trust (the "Registrant"), have executed this
certification for furnishing to the Securities and Exchange Commission
in connection with the filing with the Commission of the Registrant's
Quarterly Report on Form 10-Q for the period ended September 30, 2004
(the "Report"). I hereby certify that:

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

     (2)      the information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Registrant as of and for the end of that
period.


November 8, 2004


/s/ Christine A Griffin
-----------------------
Christine A Griffin
Chief Executive Officer/Chief Financial Officer


                               -18-