<PAGE> 1
                  U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                                FORM 10-KSB
                                     
      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                         AND EXCHANGE ACT OF 1934
                                     
                 For the fiscal year ended April 30, 1998
                                     
                     Commission file number:  0-18108
                                     
                        FINET HOLDINGS CORPORATION
              (Name of small business issuer in its charter)
                                     
                                 DELAWARE
                                94-3115180
  (State or other jurisdiction of incorporation or organization)     (IRS
                       Employer Identification No.)
                                     
                3021 CITRUS CIRCLE, WALNUT CREEK, CA 94598
                  (Address of principal executive offices)
                                     
                Issuer's telephone number:  (925) 988-6550
                                     
(Former name, former address and former fiscal year, if changed since last
                                  report)

Securities registered under Section 12(b) of the Exchange Act:    NONE

Securities registered under Section 12(g) of the Exchange Act:  $.01 PAR
VALUE COMMON STOCK

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.... No..X..

Check  if  disclosure  of  delinquent filers in response  to  Item  405  of
Regulation  S-B  is not contained in this form, and no disclosure  will  be
contained,  to the best of registrant's knowledge, in definitive  proxy  or
information statements incorporated by reference in Part III of  this  Form
10-KSB or any amendment to this Form 10-KSB. [   ]

The issuer's revenues for the fiscal year ended April 30, 1998 were
$12,561,000.

The aggregate market value of voting common stock held by non-affiliates of
the registrant as of July 27, 1998 was $99.1 million.

The number of shares outstanding of the issuer's common stock, as of July
27, 1998 was 32,475,867.

Documents incorporated by reference: None

Transitional Small Business Disclosure Format (check one): Yes...
No....X.....
==========================================================================
<PAGE> 2
                        FINET HOLDINGS CORPORATION
==========================================================================
This  report  contains  forward-looking statements within  the  meaning  of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange  Act  of  1934. Readers are cautioned that  actual  results  could
differ  materially from those indicated in such statements as a  result  of
certain   factors,  including  those  set  forth  under  "Certain  Business
Considerations"  and  "Management's Discussion and  Analysis  of  Financial
Condition  and Results of Operations" and elsewhere in, or incorporated  by
reference into, this report.

                             TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item  Description                                                 Page
----  ----------------------------------------------------------  ----
<S>   <C>                                                         <C>
                                  PART I
                                     
1     Description of Business......................................  3
2     Description of Property...................................... 24
3     Legal Proceedings............................................ 25
4     Submission of Matters to a Vote of Security Holders.......... 25

                                  PART II
                                     
5     Market for Registrant's Common Equity
        and Related Stockholder Matters............................ 26
6     Management's Discussion and Analysis of Financial Condition
        and Results of Operations.................................. 28
7     Financial Statements......................................... 34
8     Changes in and Disagreements with Accountants
        on Accounting and Financial Disclosure..................... 34

                                  PART III
                                     
9     Directors, Executive Officers, Promoters and Control Persons;
        Compliance With Section 16(a) of the Exchange Act.......... 35
10    Executive Compensation....................................... 36
11    Security Ownership of Certain Beneficial Owners
        and Management............................................. 39
12    Certain Relationships and Related Transactions............... 40
13    Exhibits and Reports on Form 8-K............................. 41
      Signatures................................................... 45

                                 APPENDIX
      Independent Auditors' Reports................................ 46
      Consolidated Balance Sheet at April 30, 1998................. 48
      Consolidated Statements of Operations for the years ended
        April 30, 1998 and 1997.................................... 49
      Consolidated Statements of Stockholders' Equity
        for the years ended April 30, 1998 and 1997 ............... 50
      Consolidated Statements of Cash Flows for the years ended
        April 30, 1998 and 1997.................................... 51
      Notes to Consolidated Financial Statements................... 53
</TABLE>
<PAGE> 3
                                  PART I
                                     
                     ITEM 1.  DESCRIPTION OF BUSINESS
OVERVIEW

     Finet Holdings Corporation (the "Company" or "Finet") is a leader in
delivering homeownership-related solutions to consumers and real estate
services providers through electronic commerce. Finet is focused on
developing and providing connectivity solutions that will enable a seamless
electronic real estate transaction, producing a faster, easier, lower cost,
pleasurable experience, in sharp contrast to the current process.

      The  Company's proprietary technology solutions include  iQualify,  a
unique  award-winning  Internet  service enabling  consumers  to  obtain  a
financing decision directly from Fannie Mae's Automated Underwriting System
("AUS")  in  under  ten  minutes, and Agent Connector,  a  unique  Internet
productivity   tool   enabling   Realtors   to   manage   their    business
electronically.  Additionally, to broaden the Company's  revenue  base  and
develop   and  demonstrate  its  concepts  and  products  in   an   applied
environment,   Finet's  Homeowner  Services  Group  also  provides   highly
automated  mortgage  financing  and  transaction  settlement  services  and
operates  retail service centers where salaried counselors assist consumers
in selecting appropriate solutions to their homeownership-related needs.

INDUSTRY BACKGROUND

     Growth of the Internet and Electronic Commerce

      The  Internet  has  emerged  as a significant  global  communications
medium,  enabling  millions  of  people to share  information  and  conduct
business  electronically.   A number of factors  have  contributed  to  the
growth of the Internet and its commercial use, including (i) the large  and
growing installed base of personal computers in homes and businesses;  (ii)
improvements  in  network infrastructure and bandwidth;  (iii)  easier  and
cheaper  access to the Internet; (iv) increased awareness of  the  Internet
among  consumer and business users; and (v) rapidly expanding  availability
of  online content and commerce which increases the value to users of being
connected  to  the  Internet.  According to International Data  Corporation
("IDC"), the number of Internet users worldwide will grow from an estimated
69 million at the end of 1997 to an estimated 320 million by 2002.

      The increasing functionality, accessibility and overall usage of  the
Internet  have  made it an attractive commercial medium. Online  businesses
can  interact directly with consumers, and can frequently adjust  features,
interfaces  and pricing in response to competition.  The ability  to  reach
and  serve a large and widespread group of consumers electronically from  a
central  location  and  the  potential  for  low-cost  customized  customer
interactions and solutions provide additional economic benefits for  online
businesses.   Because  of  these advantages,  online  businesses  have  the
potential to build large, widespread customer bases quickly and to  achieve
superior  economic  returns  over  the long  term.  An  increasingly  broad
selection  of  products  and  services is being sold  successfully  online,
including  travel  services,  brokerage  services,  software  products  and
computers.   IDC  estimates  that the total value  of  goods  and  services
purchased  over  the  Web worldwide will increase from an  estimated  $12.4
billion in 1997 to an estimated $133.0 billion in 2000.

     The Homeownership Market

      According to the Mortgage Bankers Association 67.1 million, or  65.7%
of  the 102 million U.S. households, own their home. Many more desire to be
homeowners. The homeownership rate is expected to rise above 70% within the
next  several  years.  According to the National Association  of  Realtors,
sales  of  existing homes reached a record 4.31 million in 1997, while  the
Department of Commerce says new home sales in 1997 of over 800,000 was  the
third best year ever. According to Chicago Title and Trust Co., the average
U.S.  home  is  sold to a new owner every 11.9 years. Turnover  rates  vary
across  the nation, with New York having the lowest rate at 18.7 years  and
Arizona        having        the        highest        turnover        rate
<PAGE> 4

at  6.4 years. With the working age population increasing about 1% per year
and  the percentage of homeownership on the rise, barring a severe economic
downturn,  home transactions should steadily increase throughout  the  next
decade.

      There is an array of services connected with the sale and purchase of
a   home  including  inspections,  warranties,  furnishings  and  fixtures,
landscaping,  mortgage financing, escrow, title search, title  as  well  as
flood,  earthquake,  wind  and  general homeowners  insurance,  moving  and
storage, temporary housing, and relocation assistance. These annual  sales,
financing  and related services activities generate revenues exceeding  $50
billion. The primary functional sectors are sales, financing and settlement
services.

     Sales.

      Licensed  real  estate brokers and agents represent home  sellers  by
listing properties for sale and performing marketing services. According to
Internet  World magazine, realtors as a whole are older, less educated  and
less  familiar with the Internet than the average consumer. The same  study
indicates  that  the average age of realtors in the United  States  is  51,
while  the  average homebuyer age is 35.  Finet believes that  as  realtors
leave  the  business  or retire, they are increasingly  being  replaced  by
younger,  technology-savvy  individuals  professionally  educated  in  real
estate.  According  to Real Estate Confronts Reality, 50%  of  real  estate
practitioners in five years are not in the industry today.

      When  addressing  significant, complex financial decisions,  such  as
personal  financial,  investment,  tax and  estate  planning  issues,  most
consumers turn to a trained and trusted expert for advice and guidance. The
Company   believes  that  this  is  and  will  remain  no  less  true   for
homeownership  decisions and that personal service and  a  human  interface
will  remain  important to real estate consumers.  No matter how  paperless
and  swift the process of homeownership becomes, there will remain  a  need
for  qualified  professionals  to explain and facilitate  the  transaction.
Accordingly, Finet has developed electronic commerce enabling products  and
services  for  real  estate sales professionals  as  part  of  its  overall
strategy.

     Financing.

      The  combination of new home sales, turnover of existing housing  and
the  refinancing of existing residential loans requires a large annual flow
of  funds. According to the Mortgage Bankers Association, in the 1990's new
mortgage loans in the United States have ranged from $700 billion  to  $1.1
trillion  annually, with loans for home purchases averaging in  the  $4-500
billion  range annually. During the same period, the average annual  volume
of  refinancing  loans  has  been similar, but with  significantly  greater
volatility, as refinancings varied from a low of $90 billion in 1994  to  a
high   of  $770  billion  in  1993,  as  interest  rates  rose  and   fell,
respectively.  The  deductibility of home mortgage  interest  from  taxable
income encourages owners to leverage home purchases with high loan-to-value
financing. According to Fannie Mae, residential loan originations will  top
$875 billion in 1998, of which $550 billion will be purchase money loans.

      Some  mortgage  financing is provided directly to  buyers  by  retail
lenders,  many  of which also function as wholesale lenders  funding  loans
originated  by  independent  mortgage brokers, who  typically  represent  a
number  of  wholesale  lenders. According to the  National  Association  of
Mortgage  Brokers, mortgage brokers and retail lender agents each originate
approximately  half the annual volume of new mortgage loans.  Historically,
in  addition  to  the  costs of other transaction  related  services,  loan
origination fees average one to two percent of the loan amount.

      Mortgage  lenders  generally  fall into  two  categories:  depository
institutions, such as banks and savings and loans, and independent mortgage
bankers.  Mortgage  bankers provide a large share of  residential  mortgage
funds,  primarily through mortgage warehouse lines of credit,  provided  by
financial  institutions and investment banks. Mortgage  bankers  use  these
funds  to provide loans to borrowers through their own retail loan officers
and/or by wholesaling through independent mortgage brokers. After funding a
loan,  the  mortgage banks typically sell the loan in the secondary  market
<PAGE> 5

  and  reduce  their line of credit balance. Depending on their objectives,
they  may  retain the servicing rights and service those loans or sell  the
servicing rights to others.

      Over the past several decades, the supply of mortgage funds has moved
from deposit-based local sources to investment-based national sources. Many
local  and  regional  banks and savings and loans  have  transitioned  from
"portfolio lenders" to "pass-through lenders," selling a high percentage of
their residential loans in the secondary market to Fannie Mae, Freddie Mac,
Ginnie  Mae  and  others, who then securitize and sell loan  portfolios  to
pension plans, insurance companies and investors in national funds markets.
In  another  trend,  the mortgage banking industry has experienced  in  the
1990's  a  period  of widespread consolidation as many mortgage  banks  and
mortgage  brokers  have  closed, merged, or  been  acquired.   The  Company
estimates  that  the  number of mortgage brokers  has  declined  from  over
200,000  agents and 40,000 offices nationwide in 1993 to nearly  half  that
number today.

     Settlement Services.

       In  addition to sales and financing services, completion of  a  real
estate transaction typically requires a number of additional services prior
to  the  closing  of  the  sale, collectively referred  to  as  "settlement
services."  Historically these services, which include  credit,  appraisal,
title,  escrow,  inspection, engineering, warranty and insurance  services,
are  provided  by  independent specialists, most of whom  are  small  local
businesses.  Until recently, there has been limited ability for  settlement
service firms to communicate and document their services other than through
traditional, costly, paper-intensive processes.  Because each  real  estate
transaction  involves many service providers, the fees of each include  the
cost  of  duplicate  marketing to the same customer.  These  inefficiencies
create an opportunity for an organization that can bundle and deliver these
services electronically at lower cost from a central point-of-sale.

     Buyers and Sellers.

      From a buyer's perspective, acquiring and financing a home can  be  a
daunting  and complex process. Few, if any, buyers are aware  of  the  full
range  of homes, loan products and services available to them. Due  to  the
complexity of choices and the difficulty of comparing loan products, it  is
difficult  even for analytically inclined borrowers to determine  the  most
suitable  product.  The true cost of seemingly similar loans  can  vary  by
hundreds of thousands of dollars over the term of the loan.

      The traditional home sale process also involves difficulties for home
sellers.  The  presentation of a home to prospective  buyers  traditionally
involves  a  grainy black and white photo and specifications on  a  listing
sheet. Few prospective buyers who wander through a seller's home have  been
fully  pre-approved  for a loan to assure they are financially  capable  of
purchasing that home. Not until after the seller accepts an offer and takes
the  home  off the market have buyers traditionally initiated the financing
process.

     Recent Trends

      For  years,  real estate agents and mortgage brokers  have  acted  as
"information  gatekeepers"  in the home sale process.   Sales  agents  have
carefully  controlled information about homes for sale, the  foundation  on
which  a  purchase transaction occurs. Subscription-based multiple  listing
services  ("MLS") and local Boards of Realty have maintained a system  that
puts  the  sales agent at the center of the transaction. This control  over
the  data  has  allowed sales commissions to become fixed at six  to  seven
percent of the purchase price.  Similarly, mortgage brokers have controlled
a significant portion of the home financing process, in part as a result of
the myriad of choices confronting consumers and the difficulty of selecting
among those choices.

<PAGE> 6

      The  Internet  is  pulling down the barriers surrounding  information
about  thousands of loan programs and an average of 1.4 million  homes  for
sale.   Today,  consumers  are  increasingly  able  to  bypass  information
gatekeepers and go directly to the data they want. This loss of control has
become  a  significant threat to these organizations,  leaving  gatekeepers
looking to define a new role.

     Fannie Mae and Freddie Mac, the two largest purchasers of loans in the
secondary  market,  have led the industry in improving and  automating  the
financing  process, principally by developing and improving  effective  AUS
that  automate the process of determining which loans will be approved  for
subsequent  purchase by Fannie Mae and Freddie Mac. Fannie  Mae's  "Desktop
Underwriter"  is  a  comprehensive, sophisticated  $100  million  AUS  with
impressive  capabilities. Freddie Mac's "Loan Prospector" is an  effective,
but less widely used competitor.

      Access  to  an  AUS  is available only to approved  lenders  and  the
mortgage  brokers  they  sponsor. Fannie Mae's  AUS  makes  a  decision  in
minutes,  allows  a  simple and streamlined data verification  and  closing
process,  assures  that  Fannie Mae will buy the loan  after  funding,  and
eliminates  certain lender underwriting risks. A growing number of  lenders
use  its  AUS  to  quickly  assess  the  suitability  of  a  borrower,  but
unfortunately, the vast majority of those lenders continue to rely on their
traditional "fat-file" full-documentation loan underwriting process,  which
requires  the borrower to submit a significant amount of unnecessary  paper
documentation,  including  tax  returns, account  verifications  and  other
financial information.

      In  part,  this  reluctance  to use these new  streamlined  processes
relates  to  many  lenders'  perceived need to  continue  with  proprietary
methods  and  documentation. According to National Mortgage News,  publicly
many lenders claim not to be frightened of the Internet, but privately they
often tell a different story. The Internet, they say, "is the place to  be,
the opportunities are enormous," but, they add, "our company's identity  is
aligned with the 3,000 loan officers we employ. Our corporate image is tied
up  with  maintaining  a large staff of originators." Thus,  while  lenders
using  an  AUS  can  claim to be "automated" and are assured  of  having  a
saleable  loan,  their  underwriting and processing  staff  costs  are  not
reduced and borrowers do not benefit from the speed and simplicity that AUS
offer.

      The  ability  of  computers  to access and  process  data  and  apply
sophisticated risk analysis algorithms enables them to make better, faster,
less expensive underwriting decisions than humans. The ability to view home
listings,  make  virtual  home tours, compare  financing  alternatives  and
obtain  loan  approvals on the Internet is changing consumer  expectations.
Finet  believes that a trend toward integration and simplification  of  the
real  estate  transaction process exists and is continuing.   Technological
advances  now  offer  the  opportunity to provide integrated,  rapid,  cost
effective homeownership solutions to consumers.

      However, despite increasing acceptance of electronic commerce in  the
real  estate  industry, Finet believes that personal service  and  a  human
interface  will  remain  important to real estate consumers.   When  facing
large,  complex  personal financial decisions such as home purchases,  most
consumers  prefer to turn to a trusted expert for advice and  guidance.  No
matter how paperless and swift the process of homeownership becomes,  there
will  remain  a need for qualified professionals to explain and  facilitate
the transaction.

THE FINET SOLUTION

      The Company is a leading provider of electronic commerce products and
services  for  real  estate  services  providers  and  consumers   in   the
homeownership industry. The Company has designed its portfolio of  products
and  services,  including  iQualify,  Agent  Connector,  and  the  Property
Transaction Network (the "PTN"), to provide rapid approval of mortgages and
simplified,  integrated, technology-driven real estate  transactions.   The
Company's  products and services allow consumers to determine the  vendors,
products, services and level of assistance utilized in the home acquisition
process.   In addition, the Finet approach enables the Company to  leverage
its  access  to  consumer information and data and its  relationships  with
other  real  estate  services providers to promote its  mortgage  financing
business,                                                             which
<PAGE> 7

includes  Finet Lending, which focuses on conforming and government  loans,
and Finet Acceptance, which focuses on sub prime mortgage loans.

      Proprietary Electronic Homeownership Services Network. The  Company's
solution  links  the  principal participants in a real  estate  transaction
through  an  electronic commerce network. Home buyers,  realtors,  lenders,
mortgage  brokers  and secondary market investors such as  Fannie  Mae  and
Freddie   Mac  can  communicate  and  exchange  information  electronically
directly  and over the Internet, providing the opportunity to reduce  costs
and increase the efficiency of the entire transaction process.

      Benefits  to Consumers.  Consumers have several faster, easier,  more
cost-effective  ways to meet their home acquisition needs.  Consumers  can:
(i) use iQualify to obtain an unassisted loan decision directly from Fannie
Mae's  Desktop  Underwriter AUS in as little as four  minutes,  twenty-four
hours a day, seven days a week and select a lender (including Finet Lending
and   Finet   Acceptance);  (ii)  contact  a  Finet   Service   Center   at
www.interloan.com, www.finet.com or other Finet Web sites, as  well  as  by
phone  and fax, for access to a customer service representative or a Fannie
Mae  or Freddie Mac certified lender or a mortgage broker; (iii) contact  a
realtor through Finet's PTN; (iv) review homes for sale at various Internet
real  estate  listing  Web  sites  providing  iQualify  functionality;  (v)
contact  a  Finet-sponsored  mortgage  broker;  and  (vi)  access  required
settlement services.

      Because  real  estate transactions have traditionally  required  many
service providers, there are inefficiencies and duplicative costs and fees.
Finet  believes that, by eliminating unnecessary requirements,  simplifying
the  business process and reducing costs, consumers will be able to realize
significant time and cost savings.

      Benefits  to  Realtors.   Realtors  can  use  the  Company's  PTN  to
communicate  over  the  Internet  and  complete  real  estate  transactions
electronically through the Company's Connector series of products.  This is
particularly  beneficial  for  realtors  who  are  required  to   spend   a
significant  amount of time in the field since the PTN and Agent  Connector
provide  the  ability to conduct business in the field via laptop  computer
and wireless modem or phone line.

      Benefits  to Other Service Providers.  Through the use  of  AUS,  the
Company  has been able to establish special benefits for other real  estate
industry  participants.   During fiscal 1997,  the  Company  sponsored  and
trained  more  mortgage  brokers to use Fannie Mae's  AUS  than  any  other
company.   In  addition,  Finet  was the  first  lender  to  open  the  AUS
gatekeeper  controls  for selected brokers, giving them  unimpeded,  direct
access to AUS.  As a result, these brokers can receive the fastest possible
response  time  and  a  preferred  lending rate.   Construction  companies,
relocation firms and credit unions can also use Finet's solution to connect
to iQualify and Finet service centers in order to enable sales personnel to
quickly identify qualified homebuyers and arrange required financing.

      Strategic Relationships. A key element of the Finet solution  is  the
concept  of  "coopetition". By supporting a "vendor-neutral" approach  that
empowers  consumers to choose the products, services and vendors that  best
meet  their  requirements,  would  be competitors  can  become  cooperative
partners.  The  Company  has entered into a number of  business-to-business
strategic  vendor  relationships and technology  development  relationships
that  enhance  its  ability  to distribute its  connectivity  products  and
services  and  create  value-added customers for its partners  through  its
electronic network.
<PAGE> 8

      The  following illustrates the process through which the Company uses
its  technology,  products  and services  and the  Internet  to  facilitate
electronic real estate transactions:


STRATEGY

     The Company's objective is to leverage the Internet infrastructure and
other  connectivity and process technologies to become the leading provider
of   electronic  commerce  enabling  solutions  for  real  estate  services
providers and consumers in the homeownership industry.  The Company intends
to achieve this objective through the following strategies:

      Build Strong Brand Recognition.  The Company's marketing strategy  is
to  promote, advertise and increase its brand equity and visibility through
comprehensive   service  and  a  variety  of  marketing   and   promotional
techniques, including advertising on leading Web sites and other media  and
developing business alliances and strategic partnerships.  The Company also
intends  to build brand recognition by fully exploiting its first-to-market
advantage  with  iQualify and its Connector products  in  the  online  real
estate market.

     Maintain Technology Leadership.  The Company has played a leading role
in  creating  and  defining the market for electronic commerce  based  real
estate  transactions  and  intends to continue to  develop  and  distribute
software  and  services  that  electronically  link  businesses  to   their
customers  and other businesses.  The Company believes that its  innovative
technology and its technology development relationships with Fannie Mae and
Freddie  Mac have given the Company a competitive advantage.  The Company's
internal  development group has expanded and the Company will  continue  to
invest  in  and  enhance its technology in order to  further  simplify  and
automate  the process of applying for and acquiring mortgage financing  and
related transaction services.
<PAGE> 9

      Promote  Strategic  Relationships.   Finet  intends  to  continue  to
leverage  its  strategic  relationships  with  Stewart  Title  ("Stewart"),
Brightware, Fannie Mae, Freddie Mac and others to enhance brand recognition
and  increase revenues resulting from all types of real estate transactions
involving the Company's electronic commerce solution. The Company will also
selectively pursue strategic alliances and business partnerships  in  order
to  leverage  the  Company's current market position, increase  its  online
visibility  and  accelerate  distribution of  its  products.   The  Company
believes  that  opportunities also exist for  it  to  further  broaden  its
product and services offerings through strategic alliances.

      Expand Product and Service Offerings.  The Company intends to broaden
its  product offerings into related homeownership areas, including  bundled
settlement  services,  insurance  and other  complementary  services.   The
Company   also  intends  to  continue  to  connect  homeownership  industry
participants  on an open platform and to accelerate the enabling  of  fully
electronic  homeownership  transactions.  The  Company  believes  that  the
centralized  call center currently under development will  further  enhance
the  level  of  service  the Company is able to provide  as  the  Company's
skilled  customer  service representatives cultivate ongoing  relationships
with homebuyers.

       Expand   Distribution.   Finet  intends  to   aggressively   develop
distribution  channels for its iQualify service.  The Company will  promote
products  and  services for real estate professionals, such  as  its  Agent
Connector for realtors, which will leverage these professionals' access  to
potential  homebuyers.  The Company also intends to expand distribution  of
its  services  by  strengthening its existing strategic  relationships  and
forming  additional relationships with key industry participants,  such  as
Internet  home listing sites, title companies and other settlement services
providers,  and major insurers.  Through these relationships,  the  Company
seeks to increase access to the Company's services through traditional  and
Web-based distribution channels.

      Pursue  Strategic  Acquisitions.  The  Company  believes  that  there
continues to be a significant opportunity for it to expand its products and
services  through  acquisitions of complementary  businesses.  The  Company
believes  that the completion of additional acquisitions that  enhance  the
Company's  technology portfolio and the development  of  new  products  and
services   will   enhance  the  Company's  ability  to  make  homeownership
transactions  faster,  easier and less expensive for industry  participants
and consumers.

PRODUCTS AND SERVICES

      The  Company  provides  a  broad range of products  and  services  to
consumers and real estate service providers in the homeownership industry.

     iQualify

      iQualify is Finet's proprietary, Internet-based software system  that
provides  a  simple,  fast decision for consumers seeking  to  finance  the
purchase  of  a  home.  Through iQualify and the  Company's  status  as  an
approved  lender, Finet has provided a way for consumers  to  receive  from
Fannie  Mae's  AUS a loan approval decision in as little as  four  minutes.
Prior to the development of iQualify, only Fannie Mae approved lenders  and
the mortgage brokers they sponsor could access its AUS.  With iQualify, the
prospective homebuyer completes a simple data form, authorizes credit  card
payment of Finet's $39 processing fee and submits the loan application  via
a  computer  with  Internet  access.   iQualify  automatically  merges  the
consumer's  credit  information  from three national  credit  repositories,
merges  and  formats the data and transmits it over a dedicated high  speed
line  to  the  AUS  in  Washington, D.C.  In as  little  as  four  minutes,
consumers  are notified by email that their application has been  processed
and a credit decision is available.  If the application is approved, Fannie
Mae   agrees,   subject  to  verification  of  the  consumer's  application
information,  to  buy  the loan from any approved  Fannie  Mae  lender  the
consumer selects to fund the loan.
<PAGE> 10

     iQualify provides significant advantages for the parties involved in a
real  estate transaction.  iQualify empowers consumers by allowing them  to
(i)  assess their buying power and determine the amount they can afford  to
spend   on  a  home  before  they  go  shopping;  (ii)  obtain  an   answer
confidentially  and  without any sales pressure; (iii) obtain  an  approval
that  will  be  honored   by any of the hundreds  of  Fannie  Mae  approved
lenders;  and (iv) shop for the best loan terms.  In addition, sellers  are
assured  that  the buyer can afford a selected home before  they  take  the
property  off  the  market.  The AUS decision also permits  a  very  simple
streamlined  verification  and  closing  process  and  eliminates   certain
traditional lender underwriting risks.

     The Property Transaction Network.

      The  PTN  is  an  Internet-based network of realtors and  other  home
acquisition  service providers.  Internet connectivity  as  well  as  other
specialized  realtor  services are provided by Finet's Connector  products.
Realtors  pay  a  nominal  monthly  fee  to  maintain  access  to  all  the
Connector's  Internet features. Also available to PTN realtor  members  are
customized  marketing  services  provided by  Mortgage  Marketing  Concepts
("MMC"),  a  specialized, fee-for-services marketing division of  the  PTN.
MMC  also  develops and sells mortgage leads to Finet service  centers  and
independent  mortgage  brokers. Leads are developed through  a  variety  of
methods, including direct mail, list purchases and telemarketing.

     The Connector Series of Products.

      In  November  1997, Finet introduced Agent Connector,  an  integrated
business  management  and  Internet  application  designed  and  customized
specifically for realtors.  Agent Connector is a technologically innovative
real  estate  application  that  has been nominated  for  several  industry
awards.   It  provides,  among  other things, a  personal  e-mail  address,
Internet  templates for creating and posting personal Web  pages  and  home
listings  on  the Internet, an electronic contact manager, connectivity  to
AUS  for  fast loan approvals and to counselors at a Finet Service  Center,
and  the  ability to download leads from Finet.  Because of the  nature  of
their  business,  realtors  seek  to maximize  their  direct  contact  with
customers.   Agent Connector enables realtors to conduct  business  in  the
field  with  a  laptop  computer and wireless  modem  or  phone  line.   In
addition,  realtors  may  use Agent Connector to facilitate  electronically
completed real estate transactions.

      Finet  is  developing a non-contact manager version for realtors  who
have  and  prefer  to keep any of several widely marketed  realtor-oriented
contact managers. The Internet Connector will interface with other vendors'
contact  manager applications. In addition, private label versions of  both
Connector  products are being developed for Stewart Title Company,  one  of
the  Company's strategic partners and a leader in digitizing  the  nation's
property  records  and facilitating electronic settlement  services.  These
versions,  which  will  be distributed by Stewart's  3,900  office,  10,000
person national distribution system, will also provide electronic access to
an extensive array of settlement services in which Stewart is an automation
leader.

     Finet Lending.

      Finet  Lending,  formerly Monument Mortgage, Inc. ("MMI")  and  Mical
Mortgage,  Inc.  ("Mical"), is the Company's mortgage banking  unit,  which
offers  prime mortgage loans for borrowers with good credit.  Finet Lending
develops  competitive loan programs, underwrites loans, funds  those  loans
using  its  mortgage lines of credit and sells those loans in the secondary
market.   Finet  Lending's primary sources of loans are wholesale  mortgage
brokerage  firms, its retail offices and the Finet service centers.   Finet
Lending  has been a technology leader and active participant in the  Fannie
Mae  and Freddie Mac's AUS development programs throughout the 1990's.   In
June  1998, Finet Lending was recognized as one of the most technologically
advanced  mortgage bankers, both in using technology and  in  adapting  its
business processes to benefit consumers when it and Fannie Mae became joint
recipients of the Computerworld / Smithsonian Award.
<PAGE> 11

     Finet Acceptance.

     Finet Acceptance, formerly Monument Acceptance Corporation and Coastal
Federal  Mortgage Company ("Coastal"), is the Company's alternative lending
unit  which  offers sub-prime mortgage loans to the one out of every  seven
borrowers  who  has some type of credit impairment, such  as  a  less  than
perfect  payment  history, recent loss of employment or a  recent  personal
bankruptcy.   This  unit is one of the Company's fastest growing  and  most
profitable areas of business.

     Finet Service Centers.

      Through  its integrated retail service centers, the Company offers  a
comprehensive  and competitive array of loan products, including  those  of
its  own  and other lenders, in order to meet the home financing  needs  of
consumers.   The  service centers function as mortgage  brokers.   Licensed
counselors  assist  consumers  to  select the  most  appropriate  financing
solution and settlement services to meet their needs. These counselors  are
equipped to communicate via phone, fax, e-mail or Internet conferencing.

     Finet Loan Servicing.

      Finet  is  certified  to provide servicing for mortgages.   Servicing
entails collecting and disbursing monthly mortgage payments.  When  a  loan
is  sold, the servicing rights may be retained by the seller or released to
the purchaser for a fee.  From time to time, Finet retains servicing rights
on the most desirable loans and releases the servicing rights when it sells
loans of relatively less desirable loans.

      As  an  approved servicer of loans, Finet can buy and sell  servicing
portfolios.  This capability in combination with the Service Center's  loan
origination capability creates the opportunity to acquire discounted, early
maturity  servicing portfolios whose loans can then be reset or  refinanced
into  a more valuable servicing portfolio.  Although servicing fees  are  a
small  percentage of the monthly mortgage payments received from borrowers,
they  provide  a  steady source of revenue.  Since the value  of  servicing
rights is generally a function of interest rates and expected average  time
to  loan  maturity  or payoff, the bulk sale of loan servicing  rights  can
provide significant revenues to the Company.

     Bundled Settlement Services.

      In  addition to sales and financing services, completion  of  a  real
estate  transaction requires a number of settlement services prior  to  its
closing.  Historically,  small, independent companies  that  specialize  in
providing  such  services have provided real estate transaction  settlement
services.  Due to varying circumstances and risks in different parts of the
country  (such  as  flood, tornado & earthquake risks) and  the  increasing
automation  of  property  title  and  valuation  information,  transactions
require differing levels and combinations of settlement services.

      In concert with its strategic partners, the Company is developing the
ability to coordinate the single point delivery of required services  as  a
bundled  package with attendant marketing cost savings which can be  shared
with  consumers.  For example, Stewart Title, the nation's  fourth  largest
settlement  services  firm, a technology leader and one  of  the  Company's
strategic partners, has developed SureClose, a suite of electronic commerce
products  that  enable  lenders to order and  check  the  status  over  the
Internet  of all the services necessary to close a real estate transaction.
Access  to  this type of service is being incorporated into the  co-branded
Finet Connector products to be distributed by Stewart's sales force.
<PAGE> 12

TECHNOLOGY AND THE INTERNET

      Personal computers and the Internet are changing the way business  is
conducted  in  nearly  all business sectors. As a result,  Internet-related
businesses  are  growing  rapidly. According to a 1998  Bessemer  Trust  e-
commerce  report, during the last three quarterly periods of 1997,  airline
ticket reservations rose 300%, stock and mutual fund purchases jumped 291%,
computer  hardware sales were up 111% and car rental reservations  doubled,
while the seven million households making an online purchase were more than
double  the  3.2  million  households making online  purchases  during  the
corresponding periods of 1996.

      Yet, in spite of this explosive growth more than half of the homes in
the  United  States do not have personal computers and  less  than  25%  of
computer  owners nationwide have Internet access. Continuing rapid Internet
growth  is expected. Market researchers expect that by the year 2000,  46.0
million  consumers  will be making on-line purchases in  the  aggregate  of
approximately  $6.0 billion per year primarily for services  and  commodity
types  of products. This consumer activity number is small compared to  the
$2.5 trillion total retail sales in the United States in 1997.

      Of greater importance to the Company's strategy, business-to-business
electronic  commerce transactions are generating nearly ten times  as  much
revenues  as  consumer sales.  Bessemer Trust estimated that in  1997  over
$8.0  billion of trade was done over the Internet, compared to $1.0 billion
of  retail  sales.   In  addition, it also indicated  that  Internet  trade
projections  are  $105.0 billion for the year 2000 and  $325.0  billion  by
2002.

      Business managers can no longer think of their companies as  discrete
entities performing the traditional functions of purchasing, producing  and
selling  in  semi-isolation from those with whom  they  do  business.   The
Company  believes  that  additional  productivity  gains  will  come   from
repositioning  business  practices  away  from  companies  as   stand-alone
entities  toward  the activities that bind multiple organizations  together
across the spectrum of suppliers, producers and customers. As a result, the
optimum business strategy will be to manage an individual business  as  one
link in the entire supply chain system. The Internet provides the link that
enables businesses to share information and computing power.

      The  Company  focuses  on  connectivity  and  solutions  that  enable
electronic  homeownership  transactions  between  businesses  and   between
businesses  and  consumers.  Finet's proprietary  technology  products  and
strategic  distribution  partnerships are  designed  to  link  real  estate
participants  and  facilitate electronic commerce in this  market  segment.
The  Company  recognizes that it can not disregard  those  individuals  and
businesses  which  have  not  yet  become Internet  enabled.   Accordingly,
Finet's  multiple distribution channels are intended to support an  orderly
transition from the old ways of doing business to the new.

     To that end Finet is undertaking a significant internal transformation
in  the  way its various divisions, products, Internet technologies  -  and
eventually  its  customers - communicate. The Company  expended  over  $1.6
million  in  technology research and development costs during fiscal  1998.
Following an enterprise strategy that focuses on leveraging the Internet as
a  mass  communications medium, Finet is implementing a  nationwide  Citrix
Winframe-based  wide area network; is preparing to deploy an Internet-based
telephony solution; is designing a Virtual Private Network (VPN) that  will
provide  remote access capability to its data, products, and  services  for
staff  and  customers;  and  has arranged with Frontier  Global  Center  to
provide  nationwide  co-location and disaster  recovery  services  for  its
Internet web serving technologies.
<PAGE> 13

STRATEGIC RELATIONSHIPS

     Home Listing Web Sites

      iQualify  empowers consumers to get a faster, easier and  lower  cost
mortgage  on their own. It is the only open, vendor-neutral Web  site  that
delivers  Fannie Mae's technology solely for the benefit of consumers.  One
of  the  most appropriate times for consumers to determine their  financing
capability is when they are reviewing homes for sale. The Company has  been
approached  by  several of the leading home listing Web site operators  who
are interested in making iQualify functionality available to their viewers.
The  Company  has  entered  into  such agreements  with  the  operators  of
homeseekers.com and citynet.com and is in discussions with several others.

      Citynet.com is a private Intranet site that combines the over 600,000
home  listings of NDS Software, Inc.'s ("NDS") www.homeseekers.com Internet
site  with  an  end  user interface for AUS. This site was  customized  for
agents  who  specialize in representing buyers rather than  sellers.  These
agents are reluctant to refer their buyers to public home search sites  and
expose them to hundreds of ads from competing agents. With CityNet, a buyer
client  receives an access code that lets them view all listings,  but  the
only agent ad they see is that of the referring buyer agent.

     Stewart Title Company

      Stewart is the nation's fourth largest title company and a leader  in
assisting  governmental property recording agencies across  the  nation  to
digitize  their  information  so  that it can  be  utilized  in  electronic
databases.  Its  corporate  focus is on facilitating  paperless  electronic
delivery  of  transaction  settlement  services.   Stewart  is  an   active
development   partner  with  the  Company  in  pursuing  its  complementary
objectives.   The  Company and Stewart have entered into an  agreement  for
Stewart  to  distribute private label versions of the  Company's  Connector
products to realtors through Stewart's national distribution system,  which
consists of approximately 10,000 salespersons at 3,900 Stewart offices.

     Fannie Mae / Freddie Mac

      Fannie  Mae  and Freddie Mac are the major purchasers  of  conforming
loans  in  the  secondary  market and have  played  leading  roles  in  the
development  of  highly  sophisticated, large scale automated  underwriting
systems.  Finet  is  an  active  participant  on  Fannie  Mae's  technology
development committee and is pioneering several projects under Fannie Mae's
auspices  to  provide  and  advance new improvements  in  the  real  estate
transaction  process.   The  unique combination  of  Fannie  Mae's  Desktop
Underwriter  AUS  and  Finet's  innovative iQualify  service  were  jointly
awarded  the  1998 Smithsonian Award. Since inception of the  project,  the
Company  also  has  played  an  active role in  assisting  Freddie  Mac  in
development of its AUS, called Loan Prospector.

     Performance Advantage Technologies

      Performance  Advantage Technologies ("PAT") has  developed  a  highly
effective  sales  communication system called Predictive Decision  Patterns
("PDP")  and  has  expertise in call center management.  PDP  training  has
resulted  in substantial increases in sales closing percentages in  similar
sales  environments and is being customized for use throughout the Company.
PAT  is  working with the Company to design a fully integrated call  center
system  using these advanced techniques. Additionally, PAT is assisting  in
developing  PDP  based  responses for the Company's  customized  Brightware
automated communication system applications.

     Brightware

       Brightware,  a  software  developer,  has  created  a  sophisticated
automated  response system designed to answer customer  inquiries  in  real
time  with human-like characteristics. In similar applications, the  system
has                             performed                            better
<PAGE> 14

than  live customer service personnel, answering 80% of inquiries  in  real
time with 98% accuracy while appropriately referring the remainder for more
expert  human response. The Company is customizing its response  rule  base
and  vocabulary  in conjunction with Brightware for use in several  of  its
distribution channels and expects this system to substantially improve  the
responsiveness of iQualify's automated service.

       Additionally,  Brightware  has  entered  into  a  joint  development
agreement  with  the  Company  to develop a companion  product  to  perform
automated  outbound sales agent functions. These applications are  expected
to also incorporate the use of PAT's PDP technology.

     iMall

      iMall  is an Internet-based virtual shopping mall.  iMall provides  a
way  for  the  Company  to  supply  various  tangible  products  and  post-
transaction  service needs to homeowners. iMall consists of several  retail
sites,  including PTN Direct, through which computers and related equipment
are  sold at competitive prices.  The Company believes that iMall can serve
as a model for the vast array of diversified products and services that can
be offered and distributed to the homeownership industry by the Company.

     Additional Technology Resources

      The  Company  has key technology resources in place  to  assist  with
various  technology and infrastructure issues, including Gartner Group  for
Y2K compliance, Ryno Technologies for national Citrix wide area networking,
Gensler  Associates for service center design, and Frontier  Global  Center
for Internet web server co-location services.

COMPETITION

      The electronic commerce market is new, rapidly evolving and intensely
competitive,  and  the  Company expects competition  to  intensify  in  the
future.  Barriers to entry are minimal, and current and new competitors can
launch new sites on the Internet at relatively low cost.  In addition,  the
residential  mortgage loan business is intensely competitive.  The  Company
currently competes with a variety of other companies including (i)  various
online  mortgage  brokers,  including E-Loan Inc.,  HomeShark  and  AllTell
Information Services; (ii) a number of indirect competitors that specialize
in  online commerce or derive a substantial portion of their revenues  from
online commerce, including Yahoo! and Microsoft Corporation, through  which
other  online mortgage companies may offer products; (iii) mortgage banking
companies, commercial banks, savings associations, credit unions and  other
financial  institutions which originate mortgage loans; and  (iv)  mortgage
brokers.

     Most of these competitor financial institutions have greater financial
strength,   larger   organizations,  more  experience  and   larger,   more
established  market share than the Company.  Competition for borrowers  and
loan  personnel  is intense, especially in California.   In  addition,  the
barriers  to  entry in the mortgage brokerage industry are relatively  few;
thus,  there  can be no assurance that the Company will not face  increased
competition  from  new entrants to this industry.  Many  of  the  Company's
mortgage  banking and mortgage brokerage competitors have longer  operating
histories  and  significantly greater financial, technical,  marketing  and
other  resources than the Company.  In addition, many of these  competitors
offer  a  wider range of services and financial products than the  Company,
and  thus  may  be  able  to  respond more  quickly  to  new  or   changing
opportunities,  technologies and customer requirements.  Many  current  and
potential competitors also have greater name recognition and more extensive
customer bases that can be leveraged, thereby gaining market share  to  the
Company's  detriment.   Such  competitors may be  able  to  undertake  more
extensive  promotional activities, offer more attractive terms to customers
and  adopt more aggressive pricing policies than the Company, possibly even
sparking  a  price  war  in  the electronic mortgage  business.   Moreover,
current and potential competitors have established, or could in the  future
establish  cooperative relationships with each other or with third  parties
to  enhance their services and products.  For example, E-Loan has formed  a
joint         venture        with        the        Internet        browser
<PAGE> 15

Yahoo!  that gives E-Loan a presence on a highly visited site on the  World
Wide  Web.   Accordingly, it is possible that new competitors or  alliances
among  competitors may emerge and rapidly acquire significant market share.
There  can  be  no  assurance that the Company  will  be  able  to  compete
successfully  against current and future competitors, and any inability  to
do  so  could  have  a  material adverse effect on the Company's  business,
financial condition and results of operations.

GOVERNMENT REGULATION

      The  Company's  mortgage  broker/banker  operations  are  subject  to
extensive  regulation by federal and state authorities. The  United  States
Department  of  Housing  and  Urban Development ("HUD")  regulates  certain
aspects  of  the  mortgage  lending business. The  Real  Estate  Settlement
Procedures Act of 1974 ("RESPA"), a Federal statute, requires that  certain
disclosures, such as a Truth-in-Lending Statement, be made to borrowers and
that  certain  information, such as the HUD Settlement  Costs  booklet,  be
provided  to  borrowers.  The  Fair  Housing  Act  prohibits  among   other
practices,  discrimination,  unfair  and  deceptive  trade  practices,  and
requires  disclosure of certain basic information to mortgagors  concerning
credit  terms.  If  the  Company  fails to comply  with  such  regulations,
possible  consequences could include loss of approved status,  demands  for
indemnification,  class  action  lawsuits, and  administrative  enforcement
actions.

     Additionally, RESPA contains certain prohibitions regarding the giving
or  taking  of  a fee, kickback, or anything of value for the  referral  of
business  to  any  specific person or organization. However,  there  is  no
prohibition  regarding  the  payment of  reasonable  compensation  for  the
provision of goods, services and facilities.

      From  time  to  time  in  its debate over tax  reform,  Congress  has
discussed  eliminating  deductibility of  mortgage  interest.  Should  this
occur,  it  will  reduce the number of those who can afford  homeownership,
which  would  reduce  potential  demand  for  the  Company's  products  and
services.  Additionally, several large law firms have promoted class action
claims  alleging that certain industry fee practices violate  RESPA.  While
the  industry  has responded vigorously to these activities, no  assurances
can be given as to their outcome and the impact on the industry.

      In  California,  regulation and licensing of mortgage  brokers  falls
under  the California Department of Real Estate ("DRE"). Other than banking
industry  employees,  who  are  exempt  from  DRE  licensing  requirements,
individuals   engaged  directly  in  the  origination  of  loans   or   the
dissemination  of certain information are required to be  licensed  by  the
DRE.   Accordingly, the Company and some of its affiliates will be required
to be licensed in accordance with the differing requirements of the various
states  in  which offices and operations are established.  Failure  by  the
Company  to  comply  with  the  multitude  of  government  regulations  and
licensing requirements to which it is subject could have a material adverse
effect  on  the  Company's  business, financial condition  and  results  of
operations.

EMPLOYEES

      As  of  April  30, 1998, the Company employed 207 people  in  various
capacities:  16  executive  and  administrative  personnel,  27  technology
development  and services personnel, and 164 homeowner services  personnel,
of which 178 were full-time and 29 were part-time.

     None of the Company's employees is represented by a union. The Company
believes its relations with its employees and affiliates are good.
<PAGE> 16

BUSINESS RISKS

      In  addition  to  the other information included or  incorporated  by
reference in this Annual Report on Form 10-KSB, the following business risk
factors  should be considered carefully in evaluating the Company  and  its
business.   This  Annual  Report  on Form 10-KSB  contains  forward-looking
statements  that  involve risks and uncertainties.   The  Company's  actual
results  may  differ materially from the results discussed in the  forward-
looking  statements.   Factors that might cause such a difference  include,
but  are  not  limited to, those discussed in here and  elsewhere  in  this
Annual Report on Form 10-KSB.

      History  of  Operating Losses and Anticipated Future  Losses.   As  a
result  of  its  acquisition by Finet, the Company's  historical  financial
statements  became those of MMI, an independent mortgage  banker  that  was
profitable  from  inception through its fiscal year ended April  30,  1996.
Finet  has  incurred  net operating losses in each fiscal  year  since  its
inception in 1989, including from its former business discontinued in  1991
and  subsequent to its acquisition of MMI in December 1996. As of April 30,
1998,  the Company had an accumulated deficit of $10,637,000. There can  be
no  assurance that the Company's revenues will remain at current levels  or
increase, and the Company's ability to generate significant future revenues
is  subject  to  uncertainty.  In addition, as a result of the  anticipated
significant  investment that the Company plans to make in  connection  with
its  systems,  sales, marketing, research and development, recruitment  and
training  of  personnel, customer support and administrative infrastructure
and  possible  business acquisitions over the near term,  the  Company  may
continue to incur significant operating losses on both a quarterly  and  an
annual  basis.   While  there can be no assurance  that  the  Company  will
achieve  or be able to sustain profitability, the Company has, as of  April
30,  1998,  sufficient  resources  and  sources  of  financing  to  sustain
operations through the coming fiscal year end.

      The  Company's  continuing operations in  the  real  estate  industry
commenced  in December 1991. It began providing services electronically  in
the  mid-1990's  as Fannie Mae's and Freddie Mac's AUS became  operational.
Its  iQualify  and  Agent Connector Internet products  were  introduced  in
October  1997.   Through the period ended December 31, 1996, the  Company's
revenues  were insufficient to cover its operating expenses, at which  time
the Company acquired MMI.  The acquisition of MMI, a mortgage banker, was a
reverse  acquisition whereby MMI's historical financial  statements  became
the  Company's  financial  statements for  accounting  purposes.   MMI  was
profitable from inception through the fiscal year ended April 30, 1996, but
when  combined  with  the Company's operations after  consummation  of  the
acquisition, MMI posted a loss of approximately $2.8 million for the fiscal
year ended April 30, 1997 (as restated for the Coastal acquisition).  Prior
to  its acquisition by Finet, MMI's profitability fluctuated in part  as  a
result  of interest rate changes and attendant variations in the number  of
loans originated. MMI is being merged into Finet Homeowner Services, a  new
subsidiary, and will do business as Finet Lending.

      Limited  Operating  History.  While the  Company's  mortgage  banking
operations  have  operated for a decade and its AUS development  activities
began  in the mid 1990's, The Company is in an early stage of operation  as
an  electronic  commerce focused organization. As a  result  of  the  rapid
growth  of the Internet, the Company's structural changes that occurred  in
1996  and the corporate acquisitions consummated in the last 20 months,  it
has  a  limited operating history upon which to base an evaluation  of  its
business  and  prospects.  The Company and its business prospects  must  be
considered  in  light  of  the risks, expenses and difficulties  frequently
encountered  by  companies  in  the new and  rapidly  evolving  market  for
Internet products and services.  To address these risks, the Company  must,
among  other  things,  successfully respond  to  competitive  developments,
market  additional Internet and other electronic commerce services, upgrade
its technologies and commercialize products and services incorporating such
technologies, and attract, retain and motivate qualified personnel.   There
can  be no assurance that the Company will succeed in addressing any or all
of  these  risks,  and the failure to do so would have a  material  adverse
effect  on  the  Company's  business, financial condition  and  results  of
operations.   Furthermore,  there can be no assurance  that  the  Company's
services  will be rendered successfully or on a timely basis, or  that  the
Company  will be successful in obtaining market acceptance of its  products
or  services.  Accordingly,  the  Company  believes  that  period-to-period
comparisons  of  its  operating results are not  meaningful  and  that  the
results for any period should not be relied upon as an indication of future
performance.
<PAGE> 17

      Anticipated Fluctuations in Quarterly Operating Results.  As a result
of  the  early stage of development of Internet commerce and the  Company's
limited  online  operating history, the Company's revenue expectations  are
based significantly on its current combined mortgage banking operations and
internal  estimates of future demand for its electronic  commerce  services
and  not  on  actual experience.  Moreover, the Company  has  only  limited
historical financial data for quarterly or annual periods on which to  base
planned  operating  expenses.  The  Company's  expense  levels  have   been
established  in  large  part  due to its current  expectations  for  future
revenues and its expected development and marketing requirements.   In  the
event market demand and revenues do not meet expectations, the Company  may
be unable to adjust its spending levels on a timely basis to compensate for
unexpected  revenue  shortfalls.  In  addition,  the  Company's   operating
expenses  have increased substantially in recent periods, and  the  Company
currently anticipates that its operating expenses will continue to increase
substantially  for  the  foreseeable future as  the  Company  continues  to
develop  and  market  its  initial products  and  services,  increases  its
marketing  and  sales  activities, creates  and  expands  the  distribution
channels  for its services, and broadens its customer support capabilities.
There  can  be  no  assurance  that revenues associated  with  use  of  the
Company's   online   homeownership-related  services  will   be   increased
significantly  as required for the Company to attain profitability,  or  at
all.   Any  material  shortfall of demand for the  Company's  products  and
services  in relation to the Company's expectations would have  a  material
adverse effect on the Company's business and financial condition and  could
cause significant fluctuations in the Company's results of operations.

      The  Company expects its future operating results over both the short
and  the long term will be subject to annual and quarterly fluctuations due
to  several  factors, many of which are beyond the control of the  Company,
including,  among  others, (i) market acceptance of  Internet  commerce  in
general   and   the   concept  of  conducting  real   estate   transactions
electronically  in  particular,  (ii) fluctuating  market  demand  for  the
Company's products and services including the rate of sales and refinancing
of  residential real estate, (iii) fluctuations of mortgage  loan  interest
rates,  (iv)  the  degree of acceptance of the Internet as  a  provider  of
homeownership  related-services,  (v)  the  timing  and  effectiveness   of
collaborative  marketing  efforts  initiated  by  the  Company's  strategic
partners, (vi) the timing of the introduction of new products and  services
offered by the Company, (vii) the timing of the release of enhancements  to
the  Company's  products  and services, (viii)  product  introductions  and
service  offerings  by the Company's competitors, (ix) termination  of  any
strategic  alliances  on  agreements with key service  providers,  such  as
Fannie  Mae  or Freddie Mae, (x) the timing and rate at which  the  Company
increases  its  expenses  to support projected growth,  (xi)  the  cost  of
compliance with applicable federal and state government regulations,  (xii)
competitive  conditions in the Company's marketplace,  and  (xiii)  general
economic  conditions.  Due to the foregoing factors, among  others,  it  is
possible  that  the Company's future quarterly or annual operating  results
from  time  to  time will not meet the expectations of market  analysts  or
investors,  which may have a material adverse effect on the  price  of  the
Company's Common Stock.

      Going Concern Qualification.  From inception in 1989 through December
31,  1995,  the  Report of Independent Public Accountants on the  Company's
year-end  financial  statements  contained a  qualification  regarding  the
uncertainty  of the Company's ability to continue as a going concern.   The
Company  changed  its  fiscal  year end  from  December  31,  to  April  30
immediately  following  its acquisition of MMI on December  31,  1996.  The
Company's  accountants have not included a going concern  qualification  in
the  Company's  annual reports on Form 10-KSB for the  fiscal  years  ended
April 30, 1997 and April 30, 1998.

     Dependence on the Internet, Growth in Electronic Commerce and Internet
Infrastructure  Development.   The market for electronic  residential  real
estate  services, particularly over the Internet, is at an early  stage  of
development  and is evolving rapidly.  The Company's future sales  and  any
future  profits are substantially dependent upon the widespread  acceptance
and   use  of  the  Internet  as  an  effective  medium  of  commerce   and
communication by end-users.  Rapid growth in the use of and interest in the
Internet and other online services is a recent development and there can be
no assurance
<PAGE> 18

that  acceptance  and use will continue to develop or that  a  sufficiently
broad  base of consumers will adopt, and continue to use, the Internet  and
other  online  services  as  a medium by which to  communicate  and  obtain
services traditionally provided in person to person and paper transactions.
The  Company  relies on realtors, mortgage brokers and lenders,  homebuyers
and  homeowners  who  have  historically used traditional  means  to  sell,
purchase  and  refinance residential real estate.  For the  Company  to  be
successful, these end-users must accept and utilize new ways of  conducting
business and exchanging information.

      In  addition, the Internet may not be accepted as a viable commercial
marketplace  for  a  number  of reasons, including  potentially  inadequate
development  of the necessary network infrastructure or delayed development
of  enabling technologies and performance improvements.  To the extent that
the  Internet continues to experience significant growth in the  number  of
users,  their frequency of use or an increase in their bandwidth resources,
there can be no assurance that the infrastructure for the Internet will  be
able  to  support  the demands placed upon it.  In addition,  the  Internet
could  lose  its viability due to delays in the development or adoption  of
new standards and protocols required to handle increased levels of Internet
activity,  or  due  to increased governmental regulation.   Changes  in  or
insufficient  availability  of  communications  services  to  support   the
Internet  also  could result in slower response times and adversely  affect
usage of the Internet.  If use of the Internet does not continue to grow or
grows  more  slowly than expected, if the infrastructure for  the  Internet
does not effectively support growth that may occur, or if the Internet does
not  become  a  viable  commercial  marketplace,  the  Company's  business,
financial condition and results of operations would be materially adversely
affected.

      Market  Acceptance by Customers and Service Providers  and  Potential
Affiliates.   The  Company's revenues are, and will be,  derived  primarily
from fees for services related to the purchase and financing of homes.  The
Company's  revised  business  strategy is  materially  different  than  its
earlier  operations.   Therefore, the success and  growth  of  the  Company
cannot  be forecast with confidence and will depend upon the acceptance  of
the  Company's  approach  by  customers and  service  providers,  including
realtors, mortgage lenders, mortgage brokers, settlement services providers
and  homeowner  services firms.  While the initial acceptance  of  its  new
approach  appears  favorable to date, there can be  no  assurance  of  such
acceptance generally and, therefore, no assurance that the Company will  be
able  to  achieve  its plans for growth.  Although the Company  has  formed
strategic  alliances  with  some  national  homeownership-related   service
providers  which  provide services in many geographic regions  through  the
United  States,  to  operate successfully in other geographic  regions  the
Company also will have to form strategic alliances with regional and  local
homeownership-related service providers in such areas.  While  the  Company
believes that it will be able to establish these relationships, there is no
assurance  that  a  sufficient  number  of  homeownership-related   service
providers  in any given area will be willing to cooperate with the  Company
or its affiliates.

      The  Company's ability to operate profitably will also depend on  its
ability  to substantially increase loan originations, which, in turn,  will
depend  on  the  Company's ability to significantly expand  the  number  of
realtors, mortgage brokers and loan agents who offer the Company's services
to  home  buyers  and owners.  The Company believes that it  has  developed
several  profitable  means  of  expanding  the  number  of  loan  closings,
including  systems  and services provided through the  PTN,  the  Company's
service  centers, Finet Lending's mortgage banking and alternative  lending
activities.  While the Company believes it offers attractive advantages  to
homebuyers  and mortgage brokers, there can be no assurance that  providers
of  homeownership-related  services will perceive  such  advantages  to  be
attractive and thereby offer them to homeowners and buyers.  Failure by the
Company  to substantially increase loan originations could have a  material
adverse  effect on the Company's business, financial condition and  results
of operations.

      Cyclical Industry.  The residential real estate and mortgage business
is  dependent upon the sale and refinancing of residential real  estate  as
well  as  on  mortgage  loan interest rates and is, therefore,  a  cyclical
industry.   Shifts  in the economy, as well as in residential  real  estate
values,  generally affect the number of home sales and new housing  starts.
The  demand for mortgage loan financing increases as the frequency of  home
sales increases.  Declining interest rates generally increase mortgage loan
financing  activity  as  homeowners refinance existing  mortgage  loans  to
obtain                                                                 more
<PAGE> 19

favorable  interest rates.  Rising interest rates, in contrast,  discourage
refinancing activities and generally reduce the number of home  sales  that
occur.   Any  large  fluctuation in interest rates  or  adverse  change  in
general  economic  conditions,  both of which  are  outside  the  Company's
control,  could have a material adverse impact upon the Company's business,
financial condition and results of operations.

      The effect of interest rate changes tends to be greater on the market
for refinancing loans than they are on the market for purchase loans, since
refinancing  a  mortgage  loan is voluntary and motivated  primarily  by  a
homeowner's  desire to lower its financing costs, whereas  home  purchasers
are  motivated by a need or desire for a new home.  Accordingly, the annual
volume  of  new  home acquisition loans is relatively stable,  whereas  the
annual volume of new mortgage refinance loans is quite volatile.  There can
be  no assurance regarding future interest rate trends, their impact on the
Company's  business, or the Company's ability to manage its  business  mix.
In  addition,  a  major  thrust  of  the  Company's  business  strategy  is
developing relationships with realtors, which is intended to provide a more
stable flow of purchase financings. The Company's failure to anticipate  or
make  timely  adjustments  in  its business strategies  to  compensate  for
fluctuations  in  interest  rates in the future,  or  to  establish  strong
relationships  with realtors could have a material adverse  effect  on  the
Company's business, financial condition and results of operations.

      Dependence on Lenders as a Mortgage Broker.  Lenders that the Company
represents  as  mortgage brokers are under no obligation to continue  their
relationship  with  the Company or to make loans to any potential  borrower
presented  to  them  by the Company or its affiliates.  While  the  Company
maintains relationships with over 100 lenders, most of the loans originated
by  the  Company  have originated through a much smaller  subset  of  these
lenders.  This reliance on a small group of lenders has been the result  of
favorable  rates  and  other terms offered by such  lenders.   The  Company
believes that if and when other lenders offer comparable terms, the sources
of  loans  will  shift accordingly.  If lenders with the  most  competitive
terms  do  not  continue to accept loans originated by the Company  or  its
affiliates,  the  Company's business, financial condition  and  results  of
operations could be materially adversely affected.

      Some lenders have attempted to enter into agreements with the Company
that  would require the Company to repurchase certain mortgage loans funded
by  such  lenders in the event of fraud by the Company or the discovery  of
misrepresentations  or  inaccuracies in borrowers' loan  applications.   To
date,  the  Company  has been successful in modifying  such  agreements  to
eliminate such requirements and no lenders have requested that the  Company
repurchase  any of the mortgage loans originated by the Company.   However,
Finet  Lending  has  occasionally been required to  repurchase  loans  from
institutional  investors  because  of misrepresentations  and  inaccuracies
discovered in a borrower's loan application. In the past, Finet Lending has
been  able  to resell the loan to another investor or to otherwise  resolve
the  matter without material financial consequences.   Although the Company
has  errors  and omissions liability insurance to partially protect  itself
from  this  risk, there can be no assurance that the Company  will  not  be
compelled  to  repurchase loans in the future, or that  the  repurchase  of
loans by the Company in the future will not have material adverse effect on
the Company's business, financial condition or results of operations.

      Potential  Liabilities to Borrowers.  Borrowers could claim  to  have
suffered  adverse  financial  effects from  utilization  of  the  Company's
products  and  services.   The most common instance  of  complaint  in  the
industry occurs when a borrower fails to lock in an interest rate  and,  at
the  time  of  the  closing  of the transaction,  the  available  rate  has
increased  from  the  rate  available at the time  of  application.   While
assessment  of  such claims is highly subjective, there  have  been  a  few
instances where it was considered possible that the borrower had  not  been
made  sufficiently  aware  of the possibility of  rate  increases  and  the
protection  afforded  by  a  rate lock.  In these  instances,  the  Company
resolved the matter to the borrower's satisfaction by discounting its fees.
There can be no assurance that there will not be similar situations in  the
future,  or  that  the  Company will be able to successfully  resolve  such
situations.   Any  failure  by the Company in the  future  to  successfully
resolve  such  situations  could  have a material  adverse  effect  on  the
Company's business, financial condition and results of operations.
<PAGE> 20

      Mortgage  Banking Risks.  Through its subsidiary Finet  Lending,  the
Company  also  functions as a lender for some of the loans  it  originates.
The real estate financing sector is in a period of consolidation, with many
lenders  closing  or  ceasing  mortgage  banking  operations.   As  a  non-
depository  mortgage banker, Finet Lending is dependent upon a  specialized
mortgage  credit facility to finance its mortgage lending activities.   Its
current  mortgage banking lines of credit are provided by a  single  lender
with  whom  it  has had a relationship since 1988.  The warehouse  facility
currently  has  an  $104  million  limit. The  Company's  loan  volume  has
increased  to the point where, as is common in the industry, its increasing
credit  facility needs are best provided by a group of such lenders sharing
the  total  credit  risk.  The Company is currently  negotiating  with  its
current lenders and others who are interested in acting as the lead manager
of  such  group.   There  can  be no assurance that  the  Company  will  be
successful  in  arranging such a syndicated credit  facility  or  that  the
Company's  current  relationship with its single lender  can  be  sustained
until  such  time.   Failure  by the Company  to  do  so  could  materially
adversely affect the Company's business, financial condition and results of
operations.

      As interest rates rise and the economy declines, the rate of mortgage
loan  foreclosures  tends to rise accordingly.  As a  result,  the  Company
occasionally  is  required to hold foreclosed residential  real  estate  in
inventory  ("REO") until it can be resold.  Depending on the  circumstances
of the transaction, the Company may or may not be able to sell the property
for more than the outstanding loan balance.  There can be no assurance that
such  transactions will not have a material adverse effect on the Company's
business, financial condition or results of operations.

      Electronic  Commerce  Security Risks.   The  secure  transmission  of
confidential information over public networks is critical to the acceptance
of  electronic  commerce.   The Company relies on  certain  encryption  and
authentication  technology licensed from third parties  to  provide  secure
transmission  of  confidential information, such as  homebuyers'  financial
statements.    There  can  be  no  assurance  that  advances  in   computer
capabilities, new discoveries in the field of cryptography, or other events
or developments will not result in a compromise or breach of the algorithms
used  by  the  Company to protect customer transaction data.  If  any  such
compromise  were to occur, it could have a material adverse effect  on  the
Company's business, financial condition and results of operations.  A party
who   is   able  to  circumvent  the  Company's  security  measures   could
misappropriate  proprietary  information  or  cause  disruptions   in   the
Company's  operations.  The Company may be required to  expend  significant
capital and other resources to protect against such security breaches or to
alleviate problems caused by such breaches.  Concerns over the security  of
transactions  conducted on the Internet and the privacy of users  may  also
inhibit  the  growth of the Internet generally, and electronic commerce  in
particular.   To  the  extent that activities of the  Company  involve  the
storage  and  transmission of proprietary information, such as  homebuyers'
financial  statements  and  profile information,  security  breaches  could
damage the Company's reputation and expose the Company to a risk of loss or
litigation  and  possible liability.  There can be no  assurance  that  the
Company's  security  measures  will prevent security  breaches  or  that  a
failure  to prevent such security breaches will not have a material adverse
effect  on  the  Company's  business, financial condition  and  results  of
operations.

      Competition.  The electronic commerce market is new, rapidly evolving
and intensely competitive, and the Company expects competition to intensify
in  the  future.   Barriers  to  entry are minimal,  and  current  and  new
competitors  can launch new sites on the Internet at relatively  low  cost.
In   addition,   the  residential  mortgage  loan  business  is   intensely
competitive.   The  Company currently competes  with  a  variety  of  other
companies  including (i) various online mortgage brokers, including  E-Loan
Inc., HomeShark and AllTell Information Services; (ii) a number of indirect
competitors  that  specialize in online commerce or  derive  a  substantial
portion  of  their  revenues  from online commerce,  including  Yahoo!  and
Microsoft  Corporation, through which other online mortgage  companies  may
offer products; (iii) mortgage banking companies, commercial banks, savings
associations,   credit  unions  and  other  financial  institutions   which
originate mortgage loans; and (iv) mortgage brokers.
<PAGE> 21

     Most of these competitor financial institutions have greater financial
strength,   larger   organizations,  more  experience  and   larger,   more
established  market share than the Company.  Competition for borrowers  and
loan  personnel  is intense, especially in California.   In  addition,  the
barriers  to  entry in the mortgage brokerage industry are relatively  few;
thus,  there  can be no assurance that the Company will not face  increased
competition  from  new entrants to this industry.  Many  of  the  Company's
mortgage  banking and mortgage brokerage competitors have longer  operating
histories  and  significantly greater financial, technical,  marketing  and
other  resources than the Company.  In addition, many of these  competitors
offer  a  wider range of services and financial products than the  Company,
and  thus  may  be  able  to  respond more  quickly  to  new  or   changing
opportunities,  technologies and customer requirements.  Many  current  and
potential competitors also have greater name recognition and more extensive
customer bases that can be leveraged, thereby gaining market share  to  the
Company's  detriment.   Such  competitors may be  able  to  undertake  more
extensive  promotional activities, offer more attractive terms to customers
and  adopt more aggressive pricing policies than the Company, possibly even
sparking  a  price  war  in  the electronic mortgage  business.   Moreover,
current and potential competitors have established, or could in the  future
establish  cooperative relationships with each other or with third  parties
to  enhance their services and products.  For example, E-Loan has formed  a
joint venture with the Internet browser Yahoo! that gives E-Loan a presence
on  a  highly  visited  site on the World Wide  Web.   Accordingly,  it  is
possible that new competitors or alliances among competitors may emerge and
rapidly  acquire significant market share.  There can be no assurance  that
the Company will be able to compete successfully against current and future
competitors,  and  any  inability to do so could have  a  material  adverse
effect  on  the  Company's  business, financial condition  and  results  of
operations.

     Rapid Technological Change; Lack of Proprietary Technology.  To remain
competitive,  the  Company  must  continue  to  enhance  and  improve   the
responsiveness,  functionality and features of its  online  services.   The
Internet  and the electronic commerce industry are characterized  by  rapid
technological  change,  changes  in  user  and  customer  requirements  and
preferences,  frequent new product and service introductions embodying  new
technologies and the emergence of new industry standards and practices that
could render the Company's existing technology and systems obsolete.

      While  the  Company  believes it currently  offers  capabilities  and
services  that  would  be  difficult for independent  mortgage  brokers  to
duplicate,  little  of  its  computer software,  information  databases  or
applications  is  proprietary.   Consequently,  it  may  be  possible   for
competitors to develop programs similar or even superior to that  currently
marketed  by the Company.  Additionally, although the connectivity features
offered  by  PTN  and  iQualify  are  currently  unique,  proprietary   and
operational,  there can be no assurance that others will  not  develop  and
offer  competitive  services, or, if so offered, that they  will  not  gain
greater  acceptance among potential customers.  The Company's success  will
depend,  in  part,  on its ability to both license and  internally  develop
leading technologies useful in its business, enhance its existing services,
develop   new   services  and  technology  that  address  the  increasingly
sophisticated and varied needs of its clients, and respond to technological
advances  and emerging industry standards and practices on a cost-effective
and  timely  basis.   The  development of Web sites and  other  proprietary
technology entails significant technical and business risks.  There can  be
no  assurance  that  the  Company will successfully  use  new  technologies
effectively  or  adapt  its Web site, technology and transaction-processing
systems  to customer requirements or emerging industry standards.   If  the
Company  is  unable, for technical, legal, financial or other  reasons,  to
adapt   in   a  timely  manner  to  changing  market  conditions,  customer
requirements  or  emerging  industry  standards,  its  business,  financial
condition and results of operations could be materially adversely affected.

     Risks of Systems Failures.  A key element of the Company's strategy is
to  generate  a  high  volume of traffic on, and use  of,  its  Web  sites.
Accordingly, the satisfactory performance, reliability and availability  of
the   Company's  Web  sites,  transaction-processing  systems  and  network
infrastructure are critical to the Company's reputation and its ability  to
attract and retain customers and maintain adequate customer service levels.
The  Company's revenues depend in part on the number of customers who visit
its  Web sites and the volume of transactions processed via the sites.  Any
system interruptions that result in the unavailability of the Company's Web
sites       or       reduced       transaction      performance       would
<PAGE> 22

reduce  the  volume  of  services provided and the  attractiveness  of  the
Company's  product  and service offerings.  In the past,  the  Company  has
experienced periodic system interruptions, which it believes will  continue
to  occur  from  time to time.  Any substantial increase in the  volume  of
traffic  on  the Company's Web sites may require the Company to expand  and
upgrade  further its technology, transaction-processing systems and network
infrastructure.  There can be no assurance that the Company will be able to
accurately project the rate or timing of increases, if any, in the  use  of
its  Web  sites  or  expand and upgrade its systems and  infrastructure  to
accommodate such increases in a timely manner, and failure to do  so  would
have  a  material  adverse  effect  on the  Company's  business,  financial
condition and results of operations.

      Risks  Associated with Sales of Mortgage Loans, Federal Programs  and
Related   Agreements.  The  Company  funds  its  mortgage  loan  production
operations  by selling or exchanging the mortgage loans that it  originates
in  the  secondary markets to entities such as Fannie Mae, Freddie Mac  and
Ginnie  Mae.   The  Company's  ability to sell mortgage  loans  is  largely
dependent upon the continuation of programs administered by these entities,
which  facilitate the pooling of those mortgage loans into  mortgage-backed
securities,  as well as the Company's continued eligibility to  participate
in  such programs.  The discontinuation of, or a significant reduction  in,
the  operation of such programs would have a material adverse effect on the
Company's  business, financial condition and results  of  operations.   The
Company expects that it will continue to remain eligible to participate  in
these  programs,  but any significant impairment of such eligibility  would
also   materially  adversely  affect  the  Company's  business,   financial
condition  and  results of operations.  In addition, the  products  offered
under these programs may be changed from time to time by the sponsor.   The
profitability  of  specific products may vary  depending  on  a  number  of
factors,  including the administrative costs to the Company of  originating
these products.

      The  Company  is  also  dependent upon private investors  other  than
Freddie Mac, Fannie Mae and Ginnie Mae to purchase the mortgage loans  that
the Company originates which do not qualify for programs conducted by these
agencies  (primarily as a result of limitations as to maximum  loan  size).
To  the extent that private investors reduce their purchases, the price and
level  of  the market for those mortgage loans will be negatively affected,
which would adversely impact the Company's mortgage loan production volume,
potentially  its  profitability,  and, in  turn,  the  Company's  business,
financial condition and results of operations.

      Nasdaq  Maintenance Requirements; Possible Delisting from the  Nasdaq
National  Market  and  Market Illiquidity.  The Company'  Common  Stock  is
included  in  The Nasdaq SmallCap Market.  For continued inclusion  on  The
Nasdaq  SmallCap  Market, (i) the Company will have to  maintain  at  least
$2,000,000 in total assets and $1,000,000 in capital and surplus; (ii)  the
minimum  bid  price of the Common Stock will have to be  $1.00  per  share;
(iii)  there must be at least 500,000 shares in the public float valued  at
$1,000,000  or  more; (iv) the Common Stock must have at least  two  active
market  makers;  and  (v) the Common Stock must be held  by  at  least  300
holders.   If  the  Company is unable to satisfy Nasdaq's requirements  for
continued listing, such securities may be delisted from The Nasdaq SmallCap
Market.   In  such  event,  trading,  if  any,  in  such  securities  would
thereafter be conducted in the over-the-counter market in the "pink sheets"
or  the  Nasdaq's "Electronic Bulletin Board."  Consequently, the liquidity
of  the  Company's securities could be impaired, not only in the number  of
securities which could be bought and sold, but also through delays  in  the
timing  of  transactions,  reduction in security  analysts'  and  the  news
media's  coverage  of  the  Company, and lower  prices  for  the  Company's
securities  than  might otherwise be attained, all of which  could  have  a
material adverse effect on the Company's business, financial condition  and
results of operations.

      Risks of Low-Priced Stock; Penny Stock Regulations.  If the Company's
Common  Stock is delisted from the Nasdaq SmallCap Market the  Company  may
become  subject to Rule 15(g)-9 under the Securities Exchange Act of  1934,
as amended, which imposes additional sales practice requirements on broker-
dealers  which  sell  such  securities to persons  other  than  established
customers and institutional accredited investors.  For transactions covered
by this rule, a broker-dealer must make a special suitability determination
for  the purchaser and have received the purchaser's written consent to the
transaction  prior to sale.  Consequently, the rule may affect the  ability
of         broker-dealers        to        sell        the        Company's
<PAGE> 23

  Common Stock and Warrants and may affect the ability of future purchasers
of  the  Company's  securities  to sell such securities  in  the  secondary
market.

      The  Securities  Exchange Commission's regulations  define  a  "penny
stock"  to  be  any  equity security that has a market  price  (as  therein
defined)  less than $5.00 per share or with an exercise price of less  than
$5.00   per  share,  subject  to  certain  exceptions.   The  penny   stock
restrictions will not apply to the Company's Common Stock, Units, Preferred
Stock  and  Warrants  if  the Common Stock remains  listed  on  The  Nasdaq
SmallCap Market and certain price and volume information is provided  on  a
current  and  continuing basis and the Company meets  certain  minimum  net
tangible  assets  or average revenue criteria.  There can be  no  assurance
that  the Company's securities will continue to qualify for exemption  from
these  restrictions.  If the Company's securities were subject to the rules
on  penny  stocks,  the market liquidity for the Common Stock  or  Warrants
could be materially adversely affected.

      No  Dividends on Common Stock.  To date, the Company has not paid any
dividends  on  its  Common  Stock,  and the  Company  anticipates  that  no
dividends will be paid on the Common Stock in the foreseeable future.

      Dependence  on  Key  Personnel; Need for Additional  Personnel.   The
Company's  ability to grow and its future success depend on its ability  to
identify,  attract, hire, train, retain and motivate other  highly  skilled
technical,   managerial,  sales  and  marketing,   customer   service   and
professional  personnel.  Competition for such personnel  is  intense,  and
there  can  be  no assurance that the Company will be able to  successfully
attract,  assimilate  or  retain  sufficiently  qualified  personnel.   The
failure  to  retain and attract the necessary technical, managerial,  sales
and  marketing,  customer  service personnel and experienced  professionals
could  have a material adverse effect on the Company's business,  financial
condition and results of operations.

      Possible  Need  for Additional Financing.  To achieve  the  sustained
growth  envisioned, the Company will require significant capital and  other
resources  that  the  Company  does not  currently  possess.   The  Company
anticipates  that  it  may  continue to  incur  operating  losses  for  the
remainder  of  fiscal 1999, and until such time, if ever, as the  Company's
operations  generate sufficient revenue to offset its costs.   The  Company
expects  to  incur substantial expenses principally as the  result  of  the
various costs associated with corporate acquisitions, implementation  of  a
sales  and  marketing  program and distribution channels,  recruitment  and
training  of personnel and other operating activities.  The Company  issued
equity  and/or debt securities in fiscal years 1993 through 1998 to finance
its  operations,  and  is exploring the possibility  of  additional  equity
issuances  in  the  second  quarter of fiscal 1999.   The  Company  has  no
commitments from others to provide such additional financing and there  can
be  no  assurance that any such additional financing will be  available  if
needed or, if available, will be on terms acceptable to the Company.

      Year  2000  Compliance.   The Company uses a  significant  number  of
computer   software  programs  and  operating  systems  in   its   internal
operations.   The  use  of computer programs that rely  on  two-digit  date
programs  to perform computations and decision-making functions  may  cause
computer  systems to malfunction in the year 2000 and lead  to  significant
business  delays  and  disruptions. While the  Company  believes  that  the
software  applications  that  it  uses  or  has  developed  are  year  2000
compliant,  to  the extent that any of these software applications  contain
source code that is unable to appropriately interpret the upcoming calendar
year  2000,  some  level of modification or possible  replacement  of  such
source code or applications will be necessary.  The Company, together  with
outside  consultants it has engaged, has analyzed the software applications
that  it  uses or has developed and, as a result, the Company at this  time
does  not anticipate any significant expense in ensuring that they are year
2000 compliant. However, until the year 2000 arrives, the Company cannot be
absolutely certain that its analysis is correct.  The Company is  currently
unable  to predict the extent to which the year 2000 issue will affect  its
customers  or  strategic  partners, or the extent  to  which  it  would  be
vulnerable to any failure by the customers or strategic partners to  remedy
any  year  2000  issues on a timely basis.  The failure of  a  customer  or
strategic  partner subject to the year 2000 to convert  its  systems  on  a
timely  basis  or  a  conversion that is incompatible  with  the  Company's
systems  could  have  a material adverse effect on the Company's  business,
financial condition and results of operations.
<PAGE> 24

COMPANY HISTORIES

     Finet  Holdings  Corporation  was  founded  in  1989  as  William  and
Clarissa,  Inc.  In 1991, the Company was reorganized, its unrelated  prior
business  was  discontinued and a private mortgage brokerage  business  was
acquired. In l992, its name was changed to Finet Holdings Corporation and a
strategy was implemented to develop a franchised national loan distribution
network  by  converting  existing mortgage brokers  to  Finet  franchisees.
However,  no  franchises were licensed, the Company  remained  unprofitable
and, in 1995, the Company's founder/Chairman and the CEO both resigned.  In
1996,  the  Company  was operationally dormant and active  trading  of  its
common   shares  ceased  while  new  management  initiated   a   successful
recapitalization that included negotiated settlements with trade creditors,
conversion  of  certain liabilities to equity, a series of  equity  private
placements  and  several acquisitions.  On December 31, 1996,  the  Company
acquired  Monument  Mortgage,  Inc. ("MMI"),  a  private  mortgage  banking
company.   This  report  includes historical  financial  information  about
Finet,  the  Registrant, and MMI since, as a result  of  the  form  of  its
acquisition,  MMI  is  deemed  to be the reporting  entity  for  accounting
purposes and MMI's historical financial results became Finet's. Other  than
retaining the name and logo, the Company has no material connection to  its
strategies, activities or personnel prior to 1996.

     MMI, a California corporation, was founded in 1987 as an independent
mortgage banker.  Beginning with a single retail office, by 1993 MMI's
business activity and profits had increased to annual loan fundings of $844
million and profits of $2.8 million. Since the peak of the mortgage loan
refinance market in 1993, MMI's operating results declined to a $1.9
million loss for the fiscal year ended April 30, 1997. Business development
focus shifted from retail to wholesale lending operations and retained loan
servicing rights grew to $660 million.  The ability to retain servicing
created an annuity and an off balance sheet asset which sustained
operations during the period of rising interest rates and declining loan
originations that followed through 1996.  Loan products offered were
limited to a few popular Freddie Mac programs while conservative
underwriting ensured a low risk, high quality portfolio of loans.  This
strategy resulted in a loan servicing portfolio with historical delinquency
ratios less than half industry averages. Beginning in fiscal 1995, an
aggressive effort was begun to leverage MMI's technology expertise to
reduce the cost of originating loans and support expansion of the Company's
products and market presence. Recognized as a mortgage industry technology
leader, the Company was invited to participate in the development of Fannie
Mae and Freddie Mac automated underwriting systems and is now one of the
most active users of these systems.

     The genesis of the Company in its present form and breadth of its
activity essentially began in early 1997, with completion of the
recapitalization plan.  The Company changed significantly, with new
capabilities, a new electronic commerce business strategy, as well as a new
management team and Board of Directors.  Since then, Coastal was acquired
in a pooling of interests transaction and the assets of Real Estate Office
Software, Inc., a software developer, Mical, a retail and wholesale
mortgage banker specializing in FHA and VA loans, and Interloan, a popular
Internet Web site have been acquired. Two unique first to market Internet
products have been developed and introduced, iQualify, the Connector Series
and a number of key strategic distribution relationships have been
established.

                     ITEM 2.  DESCRIPTION OF PROPERTY

      The  Company's leases the following offices: its 17,042  square  foot
headquarters in Walnut Creek, California, a 2,918 square foot office in San
Ramon,  California,  a 1,400 square foot telemarketing office  in  Modesto,
California, a 3,492 square foot PTN office in Incline Village, Nevada  and,
as  a  result  of its acquisition of  Coastal, a 1,446 square  foot  branch
office  in  Jamison, Pennsylvania, a 400 square foot office in Bridgeville,
Pennsylvania,  a 1,354 square foot office in Tampa, FL and a  8,860  square
foot  main  office in Manalapan, NJ. The Company believes these  facilities
are adequate for its current level of operations.

<PAGE> 25
                        ITEM 3.  LEGAL PROCEEDINGS

      The  Company and certain subsidiaries are defendants in various legal
proceedings.   After  reviewing with counsel all such  proceedings  pending
against or involving the Company and its subsidiaries, management does  not
expect  the  aggregate liability or loss, if any, resulting therefrom  will
have  a  material adverse effect on the Company's results of operations  or
consolidated financial position.

      On  May  19,  1998,  the  Company acquired 100%  of  the  issued  and
outstanding   stock  of  Mical  from  its  shareholders.  Prior   to   said
acquisition, on January 14, 1998, a lawsuit was filed against Mical in  the
United  States  District  Court for the Middle  District  of  Georgia  (the
"Action").  The complaint alleges, among other things, that  in  connection
with  residential  mortgage loan closings, Mical made certain  payments  to
mortgage brokers in violation of the Real Estate Settlement Procedures  Act
and  induced mortgage brokers to breach their alleged fiduciary  duties  to
their  customers. The plaintiffs seek unspecified compensatory and punitive
damages as to certain claims.

     Mical's management believes that its compensation programs to mortgage
brokers  comply  with  applicable  laws and  with  long  standing  industry
practices,  and that it has meritorious defenses to the Action.  Management
has  been  advised by counsel, that the facts of the underlying transaction
are  not  supportive  of  a court order granting class  certification.  The
Company  intends to defend vigorously against the Action and believes  that
the  ultimate  resolution will not have a material adverse  effect  on  the
Company's results of operations or consolidated financial position.

       ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None


<PAGE> 26

                                  PART II
                                     
              ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY
                      AND RELATED STOCKHOLDER MATTERS

MARKET FOR COMMON EQUITY

     Since November 11, 1997, the Company's Common Stock has traded on  the
Nasdaq SmallCap Market under the Nasdaq symbol "FNHC."  Prior to that  date
the  Common  Stock  was  quoted over-the-counter on the  NASD's  Electronic
Bulletin  Board (the "Pink Sheets"). Prior to a one-for-two  reverse  stock
split  on  October  24, 1996, the Company's common stock traded  under  the
symbol "FTHC".

     The  following table sets forth, for the periods indicated, the  range
of  high  and  low sales prices, all as reported by Nasdaq.   These  prices
reflect   inter-dealer  prices,  without  retail  mark-up,   mark-down   or
commission and may not necessarily represent actual transactions.

<TABLE>
YEARS ENDED APRIL 30:                       HIGH BID      LOW BID
-----------------------------------------   --------      -------
<S>                                         <C>           <C>
First Quarter through July 31, 1998         $ 4.17         $ 2.13

YEAR ENDED APRIL 30, 1998:
Fourth Quarter                                4.25           2.88
Third Quarter                                 7.63           3.50
Second Quarter                                8.00           2.56
First Quarter                                 6.38           2.19

YEAR ENDED APRIL 30, 1997:
Fourth Quarter                                2.63           0.88
Third Quarter                                 2.88           0.75
October 25 to 31, 1996 <F1>                   1.75           0.75
Second Quarter thru October 24, 1996          2.63           0.25
First Quarter                                 1.25           0.25

<FN>
<F1>
On October 25, 1996 the Company's trading symbol changed from FTHC to FNHC.
</FN>
</TABLE>

     Common  stock  issued  and  outstanding  as  of  April  30,  1998  was
32,052,000 shares, held by approximately 1,100 stockholders, not  including
10,596,000 warrants and 738,000 options. During the fiscal year ended April
30,  1998,  average monthly trading volume was 895,000 shares. The  closing
price of the Company's Common Stock on Nasdaq on July 27, 1998 was $3.05.

RECENT SALES OF UNREGISTERED SECURITIES

     On  December 16, 1996 the Company sold 1,000,000 Common shares  and  a
Common  Stock purchase warrant for a further 1,000,000 Common shares  to  a
single  investor,  pursuant  to  the federal  exemption  from  registration
provided  by  Section 4(2) of the Securities Act.  The  aggregate  purchase
price  of  $500,000  included conversion of $270,000 of  debt  into  Common
Stock.   The warrant granted has a five-year term and an exercise price  of
$1.00 per Common share.
<PAGE> 27

     On  December  31, 1996 the Company sold 6,000,000 Common shares  to  a
group  of non-U.S. investors for an aggregate purchase price of $3,000,000.
The  offering was effected pursuant to the registration exemption  provided
by  Regulation  S  under the Securities Act.  Placement agent  warrants  to
purchase  600,000  Common  shares  were  granted  in  connection  with  the
offering.   In addition, a warrant for 2,500,000 Common shares was  granted
to  an  individual who was instrumental in assisting the  Company  to  sell
5,000,000  of the shares in the offering. such warrant affords  the  holder
exercise  prices varying from $0.50 to $3.00 per share and has a  five-year
term.

     On  March  21,  1997 the Company sold 1,000,000 Common  shares  and  a
warrant to purchase 600,000 Common shares to a single non-U.S. investor  in
reliance  on  the  federal  exemption  provided  by  Section  4(2)  of  the
Securities Act.  The aggregate purchase price was $600,000.  The five  year
warrant  contains  varying exercise prices from $1.50 to $2.50  per  share.
Placement agent warrants for 50,000 Common shares were issued in connection
with  the  offering, such warrants having a four-year term and an  exercise
price of $1.50 per share.

     In  April,  1997 the Company effected a private placement of 3,991,250
Common  shares and 743,125 warrants pursuant to the registration  exemption
provided by Rule 506 of Regulation D of the Securities Act.  Total offering
price  of  the Common shares was $3,991,250.  The warrants exhibit  varying
exercise  prices  from $1.50 to $3.50 per Common share and  expire  between
2001 and 2002.  In addition, the Company issued warrants for 399,125 Common
shares to a placement agent in connection with the offering.  The placement
agent  warrants have a five-year term and an exercise price  of  $1.50  per
share.

     In  October,  1997  a group of eleven individuals purchased  1,300,000
Common  shares  for  an  aggregate purchase price of  $3,500,000  and  were
granted 1,300,000 five-year warrants having an exercise price of $5.00  per
share.   The  offering  was made in reliance on the registration  exemption
provided by Section 4(2) of the Securities Act.

     On  March 18, 1998 the Company entered into a stock purchase agreement
with  three non-U.S. investors for the sale of $7,000,000 principal  amount
of  the Company's 3% Subordinated Convertible Debentures.  The offering was
held  in  three  traunches and effected in reliance on the  exemption  from
registration  afforded by Rule 506 of Regulation D of the  Securities  Act.
The  first  traunch closed on March 18, 1998 and resulted in  the  sale  of
$4,000,000 debentures and the issuance of 3-year warrants to purchase up to
100,000 Common shares at an exercise price of $5.71 per share.  The Company
also issued 5-year warrants to purchase 80,000 Common shares at an exercise
price  of $5.71 per share to a placement agent in connection with the first
traunch.  An additional $1,500,000 face amount of debentures were sold in a
second  traunch to the same investors on April 20, 1998, with the investors
further  receiving  37,500  3-year  warrants  to  purchase  shares  of  the
Company's Common Stock at an exercise price of $4.88.  The placement  agent
was  issued 30,000 5-year warrants at the same exercise price.  On May  26,
1998 the third and final traunch of the debenture offering was closed,  for
an  additional  $1,500,000  principal amount of Debentures,  an  additional
37,500  3-year warrants at an exercise price of $5.25 per share, and 30,000
5-year warrants issued to the placement agent at an exercise price of $5.25
per share.

     The  number  of shares of the Company's Common Stock issuable  to  the
debenture  holders upon conversion is determined by dividing the  aggregate
principal amount, plus any accrued interest at 3% per annum, by the  lesser
of (i) $5.00 per share, or (ii) 78% of the average of the closing bid price
for  the Company's Common Stock for the ten consecutive trading days ending
on  the  trading  day and immediately preceding the conversion  date.   The
first  traunch debentures are convertible commencing on September 18, 1998,
the  second  traunch beginning on October 20, 1998, and the  third  traunch
beginning on November 26, 1998.


<PAGE> 28

DIVIDENDS

     The Company has not paid, and the Company does not currently intend to
pay,  cash  dividends  on  its common stock.  The  current  policy  of  the
Company's  Board  of Directors is to retain earnings, if  any,  to  provide
funds  for operation and expansion of the Company's business.  The  payment
of  cash dividends in the future will be at the discretion of the Board  of
Directors and will depend upon, among other things, the Company's earnings,
capital  requirements and financial position.  In addition,  the  Company's
ability to pay dividends may be limited under future loan agreements of the
Company which restrict or prohibit the payment of dividends.


   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS

GENERAL

      The Company facilitates homeownership through electronic commerce  by
providing  a variety of technology-based products and services to consumers
and  other  real  estate  service  vendors,  including  realtors,  mortgage
brokers,  home  listing aggregators, title companies and  other  settlement
service providers. The Company's current Internet products are iQualify and
its  Connector series of transaction management software for realtors.  Its
primary services are the fulfillment of consumer homeownership needs by its
call  center  counselors,  the  offering of  automated  mortgage  financing
solutions to consumers, directly and through mortgage brokers, and the sale
of customer leads to other industry vendors.

      On  April  30,  1998  the Company acquired Coastal  Federal  Mortgage
Company  ("Coastal"),  a New Jersey-based mortgage banker  specializing  in
providing  sub  prime mortgage financing, i.e., to consumers with  impaired
credit.  The  acquisition  is  accounted for as  a  pooling  of  interests.
Accordingly, the financial statements of the Company as of and for the year
ended  April 30, 1997 have been restated. The Company is in the process  of
renaming Coastal and integrating it into the Finet Acceptance lending unit.

      On December 31, 1996, Finet acquired Monument Mortgage, Inc. ("MMI"),
a  highly  automated  mortgage  banker  specializing  in  prime  conforming
mortgage   loans,   in   a  reverse  acquisition   accounted   for   as   a
recapitalization of MMI. Due to the requirements of such accounting, MMI is
deemed  to  be  the  reporting entity, although Finet  is  the  Registrant.
Accordingly,  the financial statements presented for the 1997  fiscal  year
include  12  months of operations of MMI, combined with 4 months  of  Finet
operations  (from  the acquisition date through April  30,  1997)  and  the
results of Coastal.

      Prior  to  December 31, 1996, the reported operations of the  Company
involve   only  MMI's  wholesale  mortgage  banking  activities   and   the
development of its automated loan origination technology. The operations of
the  Company  after  January 1, 1997 have been  and  will  continue  to  be
materially  different  than  prior periods.  Thus,  the  meaningfulness  of
comparisons  below between the fiscal years ended April 30, 1998  and  1997
may be limited and may not be representative of future events.

      The  Company's  revenues for the fiscal year  ended  April  30,  1998
increased  24% to $12.6 million from $10.1 million in 1997. These operating
results  are attributable primarily to revenue increases from increases  in
core  financing and loan servicing activities and revenue growth in several
new  distribution  channels, including iQualify, the  Property  Transaction
Network  ("PTN")  and  Finet's  service center.  The  Company's  loss  from
operations  before income taxes and extraordinary items increased  217%  to
$9.2  million  from $2.9 million in 1997. Expenses increased 67%  to  $21.7
million  in  1998  as  a  result of higher technology  costs,  new  product
introduction  expense and business unit start up costs,  acquisition  costs
and  related  professional fees, the write-off of  intangible  assets,  and
staff increases in anticipation of future growth.
<PAGE> 29

REVENUES

      The  Company  has  a  growing base of electronic  commerce  revenues,
including:  (a)  from mortgage financing and settlement  services  provided
directly  to  consumers by the Company's retail activities (including  both
loans funded by the Company's lending unit as well as loans funded by other
lenders);  (b)  from  loans funded for mortgage brokers  by  the  Company's
wholesale  lending activities; (c) from loan servicing fees; (d)  from  the
sale of customer leads to other real estate service providers; and (e) from
providing Internet products and services to PTN realtors, loan brokers  and
consumers.

      While  the  Company provides certain services that are comparable  to
those  provided by more traditional manual means within the  industry,  the
methods  by  which  the  Company earns revenues from  delivering  them  are
increasingly electronic and non-traditional. The Company policy is  to  use
the most automated processes currently available and to fully implement the
business  process  simplifications that electronic  commerce  enables.  For
example, the Company is the most active sponsor of mortgage brokers to  use
Fannie Mae's Automated Underwriting System and is one of only a few lenders
to allow borrowers to fully use the simplified loan documentation that this
streamlined process provides.

     Of the Company's 1998 24% revenue increase to $12.6 million, Coastal's
revenue  increased  16%  to  $6.7 million while the  remainder  of  Finet's
revenues increased 34% to $5.9 million.

      Retail  and  wholesale electronic commerce mortgage banking  revenues
represented  the Company's largest revenue source in fiscal 1998.  However,
consistent  with the Company's focus on developing a diversified  group  of
electronic  commerce revenues, mortgage banking revenues  now  represent  a
smaller  percentage  of  total revenues. The Company's  wholesale  mortgage
banking  revenues,  excluding Coastal, which were  78%  and  70%  of  total
revenue  in  fiscal 1996 and 1997, respectively, represented  only  50%  of
total revenues for the year ended April 30, 1998.

     In fiscal 1998, mortgage financing revenues were affected favorably by
a  broad  advance  in mortgage loan volume, as a result  of  industry  wide
stimulation  of  refinancing from lower mortgage  interest  rates  and  the
increased  contributions of the Company's newer business units. Total  loan
volume  increased  36%  to $613 million from $453  million  in  1997.  This
increase  was  comprised  of a 10% increase in  sub  prime  loans  to  $113
million,  a  40% increase to $472 million in wholesale loans originated  by
mortgage brokers, and a 115% increase to $29 million in financing solutions
provided directly to consumers through the Company's retail channels.

      After  a  mortgage  loan  is funded, there are  two  primary  revenue
components  for  the Company: (a) the amount received for the  loan  itself
when sold in the secondary market, less the amount actually funded, and (b)
the  amount received for the right to service that loan, if and  when  that
right is sold. Under current industry pricing practices, the loan itself is
typically  sold for a loss of approximately 75 basis points less  than  the
amount  actually funded. Depending on the specific loan product, the  right
to  service  that loan is typically sold for 125 basis points of  the  loan
amount  or more. The combination of the two revenue components is  included
in the net Gain on Sale of Mortgage Loans and Servicing Rights. The Company
normally  sells loans with the servicing rights released, but  occasionally
retains  some servicing rights as a revenue producing asset until the  loan
either  pays off or until the servicing right is later sold as  part  of  a
bulk sales transaction. The servicing right owner earns a monthly servicing
fee for collecting and disbursing loan payments.

      The  gain on sale of mortgage loans of $3.2 million and the  gain  on
sale  of servicing rights of $4.3 million for 1998 total $7.5 million, $0.7
million  (11%)  higher than 1997's $6.8 million. This improvement  resulted
from increased loan volume and proportionately lower loan origination costs
assessed  against these gains in 1998 as the proportion of loans  processed
electronically increased over 1997.
<PAGE> 30

      Interest  income is earned primarily from funded loans  in  inventory
awaiting  sale.  Due to increased loan activity, interest income  increased
33% to $3.2 million from $2.4 million in 1997.

      Loan  servicing fees increased 47% to $868,000 from $589,000 in 1997.
This  fee  revenue is derived from the servicing rights retained  on  loans
originated and from purchased servicing rights. The Company purchased  $4.5
million  of servicing rights during the fiscal year, retained $1.2  million
of  originated loan servicing rights and sold $583,000 of servicing  rights
in  bulk  sales, resulting in a net increase in the value of the  Company's
servicing portfolio of $4.9 million or 745%. The principal balance  of  the
servicing  portfolio increased to $673 million at the end  of  fiscal  1998
from $168 million at the end of 1997.

      Retail  brokerage  fees  from the retail delivery  of  financing  and
transaction  services  to  consumers  from  the  Company's  service  center
increased 345% to $418,000 in 1998 from its start up activity of $94,000 in
1997.

      The  Property Transaction Network ("PTN") provides fee-based Internet
and  marketing  services, primarily to realtors and mortgage  brokers.  PTN
revenue  increased 512% to $367,000 in 1998 from its start up  activity  of
$60,000  in  1997 as its Agent Connector series of products were introduced
in November 1997.

EXPENSES

     Primarily as a result of the one-time costs associated with funding of
start up operations, the write-off of intangibles, and the costs associated
with acquisitions and real estate foreclosures, expenses increased 65% from
$13.0 million in 1997 to $21.7 million in 1998.

      Compensation  and  employee benefits expense increased  55%  to  $9.4
million in 1998 from $6.1 million in 1997, as a result of competitive merit
increases,  severance benefits and increases in the number of employees  to
207 as of April 30, 1998 from 185 as of April 30, 1997. The increase of  22
employees  was  attributable primarily to technical  and  customer  support
staff  additions. Automated processes enabled the Company to meet increased
1998 business activity levels with minimal increases in production staff.

      Interest expense is comprised of interest on the Company's borrowings
against  its  warehouse  lines of credit (which  finance  funded  loans  in
inventory awaiting sale) and interest on the Company's non-mortgage related
borrowings.  Warehouse  interest expense is  offset  by  mortgage  interest
income  from mortgages in inventory awaiting sale and delivery to secondary
market  investors.  In 1998 interest expense was $3.2 million  compared  to
$2.0  million in 1997, resulting in net interest income of $72,000 in  1998
compared  to  $441,000  in  1997. The decline in  net  interest  income  is
primarily  attributable to the discount amortization  associated  with  the
issuance  of  debentures,  increased  credit  line  borrowing,  the  margin
compression  effect  of  increasing loan volume while  long  term  mortgage
interest rates declined faster than short term borrowing costs, and accrued
debenture interest.

     Office expense increased 40% to $1.8 million in 1998 from $1.3 million
in  1997,  primarily as a result of increased business activity  and  staff
expansion.

      Marketing expense increased $997,000 in 1998 from $667,000  in  1997,
primarily as a result of the marketing costs of new product releases.

      Professional fees increased 90% to $1.6 million in 1998 from $856,000
in  1997.  The increase is due primarily to a full year of consulting  fees
related to the acquisition of MMI in December 1996, expenses related to the
acquisitions  of  Coastal  and,  in May  1998,  of  Mical  Mortgage,  Inc.,
including   due  diligence,  legal,  accounting,  auditing  and  consulting
expenses.
<PAGE> 31
      In  1998, the Company wrote down $1.0 million of intangibles and $0.7
million in accounts receivable related to foreclosed real estate.

      Occupancy expense increased 57% to $667,000 in 1998 from $425,000  in
1997, primarily as a result of leasing additional space.

CAPITAL EXPENDITURES, LIQUIDITY, AND CAPITAL RESOURCES

OPERATING ACTIVITIES

     The Company's operating activity cash requirements are to fund ongoing
expenses,  including sales and marketing and geographic  and  product  line
expansion,  and  to  satisfy obligations as they become due.  Historically,
these  cash  requirements have been satisfied through  cash  receipts  from
mortgage  lending and servicing activities and the proceeds from  the  bulk
sale of servicing rights.

     During fiscal year 1997 and 1998, additional revenue sources were
developed. However, to date the cash consumed from the commencement of
these activities exceeded total cash generated. Accordingly, cash from
financing activities was used to offset the operating cash shortfall. The
Company experienced a slight improvement in negative quarterly cash flows
during fiscal 1998.

     The Company believes that its cash resources, including unused
borrowing capacity and other sources of liquidity, are sufficient to
finance the Company's operations through April 30, 1999.

INVESTING ACTIVITIES

      The  Company's  investing activities included the  purchase  of  loan
servicing  rights,  business acquisitions, purchase of  capital  assets  to
support the expanded business development strategy, and expenses related to
capital  raising.  Investing  activities were  funded  primarily  from  the
proceeds of the sale of common stock.

     During fiscal year 1998, one private placement resulted in stock
subscriptions totaling $3.9 million to acquire 1,300,000 shares of the
Company's common stock. In addition to the capital raised from this sale of
the Company's common stock, warrants to purchase additional shares were
issued to purchasers of the above described shares.  These warrants were
issued at exercise prices ranging from $1.50 per share to $5.00 per share
for a total of 105,000 shares.

FINANCING ACTIVITIES

      On  March  18,  1998  the Company issued 3% Subordinated  Convertible
Debentures in a private placement with interest payable in common stock  of
the  Company  when  converted  or  in  cash  at  maturity,  redemption   or
retirement.  These debentures have been issued in three separate  traunches
together  with  175,000 detachable warrants for purchase of  the  Company's
common stock. The debentures and accrued interest are convertible into  the
Company's  common stock at the lesser of $5.00 per common share or  78%  of
the  determined market price prior to conversion. The Company has  recorded
$1,551,000 as additional paid in capital for the discount deemed related to
the  imputed interest in the debenture. The discount is being amortized  to
interest  expense over the period from the date of issuance to the earliest
date of conversion. Among other things the debenture agreement provides for
redemption of the debentures by the Company at 115% of the principal amount
plus any unpaid interest accrued at the time of redemption. As of April 30,
1998                                                                    the
<PAGE> 32

Company  had  received  $5.5  million with  completion  of  the  first  two
traunches.  On  May 26, 1998, the Company received payment  for  the  third
traunch of $1.5 million.

     The Company's primary financing activities involve the use of cash to
fund its lending activities.  The Company must advance cash on a daily
basis to fund newly originated loans to its borrower customers.  The
majority of these funds are provided through a conventional mortgage
warehouse line of credit from Residential Funding Corporation ("RFC").  The
Company maintains a $79 million committed warehouse facility and a $25
million uncommitted gestation facility with RFC.  The warehouse and
gestation borrowing facilities function as short term (less than 45 days)
borrowing sources.  RFC will advance up to 98% of the face amount of the
loans being funded by the Company with the remaining 2% "haircut" funded by
the Company.  One warehouse and the gestation lines bear interest at LIBOR
plus a variable margin; a second warehouse line bears interest at LIBOR
plus 2.5%.  When loans are funded, the borrowings are drawn from the
warehouse line. When the loans are sold and shipped to a secondary market
investor, the borrowings are transferred to the gestation line awaiting for
receipt of the sale proceeds from the investor.  The borrowing is secured
by the underlying mortgage loans and is repaid with the proceeds from the
sale of loans to secondary market investors.  The warehouse and gestation
borrowing arrangements were increased during the fiscal year to support
increased monthly loan originations.

     RFC also provides the Company with a $1 million working capital
facility.  The working capital facility is a revolving line of credit that
the Company can draw upon for intermediate term (3 months) cash needs.  RFC
requires that the Company pay this line off entirely for at least 5
calendar days each quarter.  The working capital facility bears interest at
Prime plus 0.625% and is secured by the Company's loan servicing rights and
certain other assets of the Company.  RFC will advance up to 70% of the
value of the Company's loan servicing portfolio to the maximum amount of
the working capital line.

    In addition, the Company has a $1.9 million long term (5 years) loan
agreement with RFC.  This loan also carries an interest rate of Prime plus
0.625% and is repaid on a fully amortizing basis over the remaining term.
As with the working capital facility, the term loan is secured by the
Company's loan servicing portfolio and certain other assets.  Typically,
this term loan is used to fund longer term investments such as PMSRs.

    The Company has had a mortgage warehouse borrowing relationship with
RFC for nearly nine years, and has never experienced a disruption in
borrowing capability.  In view of the Company's increased mortgage funding
levels as a result of focused business development and acquisitions, the
Company is reviewing its borrowing facilities and anticipated future needs,
including proposals received from other lenders. With a single lender
relationship, sudden termination or suspension of a borrowing agreements
could result in a major disruption and the Company's business relationships
with its brokers, investors and borrowers could be seriously damaged.
Multiple lending relationships could provide the Company with contingency
options should one lender curtail, cancel or fail to renew its borrowing
agreement with the Company.  However, multiple relationships can be more
expensive in terms of commitment fees and administrative overhead.
Management believes that it is unlikely that RFC would terminate the
existing borrowing agreements with less than a 30 day notice unless the
Company was to experience a sudden and severe degradation in its financial
position.
                                     
YEAR 2000 COMPLIANCE

     The  Company  has  and  will continue to make  investments  to  ensure
compliance with issues associated with the change of the millennium.  These
costs are being expensed by the Company during the period in which they are
incurred.  The financial impact to the Company of implementing the  systems
changes  necessary to become Year 2000 compliant has not been  and  is  not
anticipated  to  be  material  to  its financial  position  or  results  of
operations  in  any  given year. However, the Company's expectations  about
future  costs  associated with the Year 2000 are subject  to  uncertainties
that could cause the actual results to differ materially from the Company's
expectations.       Factors      that       could       influence       the
<PAGE> 33

amount  and  timing of future costs include the success of the  Company  in
identifying  systems  and programs that are not Year  2000  compliant,  the
nature and amount of programming required to upgrade or replace each of the
affected  programs, the availability, rate and magnitude of  related  labor
and  consulting  costs and the success of the Company's business  partners,
vendors and clients in addressing the Year 2000 issue.

MATERIAL SUBSEQUENT EVENTS
                                     
     MICAL MORTGAGE, INC.
     
      On  May  19, 1998 the Company acquired all the issued and outstanding
shares of Mical Mortgage, Inc. ("Mical"), a non-public mortgage banker with
offices  in  San Diego, California and Las Vegas, Nevada, in  exchange  for
552,430  shares  of  the  Company's common stock.  Since  this  transaction
occurred  after  April 30, 1998, no consideration for this transaction  has
been  given  in  the Company's financial statements. However,  due  to  the
financial  requirements of Mical, certain transactions  and  advances  were
made in anticipation of the acquisition.
     
     RECEIPT OF ADDITIONAL CAPITAL

     At May 22, 1998, the third and final traunch of the Company's 3%
Convertible Debenture offering was completed when  an additional $1,500,000
of the Convertible Debentures were purchased. As part of the agreement
37,500 and 30,000 five year warrants to purchase shares of the Company's
common stock at an exercise price of $5.25 were issued to the investors and
to J. P. Carey, the placement agent, respectively.

     INTERLOAN ACQUISTION

     On June 23, 1998 the Company acquired, from an individual, certain
assets which include an internet site, "interloan. com", in exchange for
100,000 shares of the Company's common stock.  The Company also entered
into a three year employment agreement with the individual.

     CONTINGENT OBLIGATION

     Under the terms of a services purchase agreement with NDS in which the
consideration  paid to NDS included 202,000 shares of the Company's  common
stock,  the  Company  had  a  contingent obligation  to  adjust  the  share
consideration if the market price of the Company's common shares was not at
or  above $4.00 per share upon the earlier of the Company's registration of
NDS's shares or June 3, 1998, to maintain a value equal to $808,000 at that
time, to a maximum additional shares issuable of 1,414,000 shares. With the
Company's  consent, the shares and the contingent obligation were purchased
by  an institutional shareholder. The closing price of the Company's shares
on  June  3,  1998 was $2.9375. Accordingly, the Company will issue  73,063
shares to the purchaser to satisfy this obligation.
     
     STOCK OPTIONS AND WARRANTS GRANTED
     
      The  Company  has  prepared a new 1998 Stock Option  Plan  (2,000,000
common stock share reserve), a 1998 Stock Bonus Plan (875,000 common  stock
share  reserve)  and  a  1998 Non-Employee Directors Option  Plan  (500,000
common  stock  share  reserve).  In June 1998,  option  awards  to  acquire
1,200,000  common  shares were approved by the Board  of  Directors  at  an
exercise price of $2.75 per share.
     
      In  June 1998, the Board of Directors authorized the sale of warrants
to purchase 700,000 common shares at $2.75 per share for a consideration of
$7,000  to  two officers of the Company, and warrants to purchase 1,000,000
common  shares  at  $2.75 per share to a director  of  the  Company  for  a
consideration of $10,000.
<PAGE> 34

                       ITEM 7.  FINANCIAL STATEMENTS

The following are  filed in an Appendix as part of this report:
<TABLE>
<CAPTION>
                                                                  Page
----------------------------------------------------------------  ----
<S>                                                               <C>
(a)  Financial Statements

Independent Auditors' Reports.....................................  46

Consolidated Balance Sheet at April 30, 1998......................  48

Consolidated Statements of Operations for the years ended
  April 30, 1998 and 1997..... ...................................  49

Consolidated Statements of Stockholders' Equity for the years ended
 April 30, 1998 and 1997 .........................................  50

Consolidated Statements of Cash Flows for the years ended
 April 30, 1998 and 1997 .........................................  51

Notes to Consolidated Financial Statements........................  53
</TABLE>
                                     
         ITEM 8.  CHANGES IN OR DISAGREEMENTS WITH ACCOUNTANTS ON
                    ACCOUNTING AND FINANCIAL DISCLOSURE

None
<PAGE> 35
                                 PART III
                                     
  ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
             COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
                                     
The  Company's  bylaws  provide for a maximum of nine  Directors  that  are
elected on an annual basis at the Company's annual meeting of stockholders.
The  present term for each Director will expire at the next annual  meeting
of  stockholders  or  at  such  time as a successor  is  duly  elected  and
qualified.   Executive officers are elected annually  and,  except  to  the
extent  governed  by employment contracts, serve at the discretion  of  the
Board of Directors.

<TABLE>
                     DIRECTORS AND EXECUTIVE OFFICERS
<CAPTION>
NAME                      AGE POSITION       SINCE
------------------------  --- -------------  ----------------------------
<S>                       <C> <C>            <C>
Jose Salema Garcao        51  Chairman       October, 1997
Stephen J. Sogin, Ph.D..  55  Director       March, 1990
L. Daniel Rawitch.......  39  Director       September, 1994
                              CEO            May, 1995
Jan C. Hoeffel..........  62  Director       November, 1995
                              President      November, 1995
James W. Noack..........  45  Pres, MMI      1987 to May, 1998
                              Director       January, 1997
                              Vice Chairman  May, 1998
Jose Philipe Guedes.....  51  Director       January, 1997
S. Lewis Meyer..........  53  Director       January, 1997
George P. Winkel          56  CFO            September, 1997
</TABLE>

Jose  Salema Garcao, 51, became a Director and Chairman of the  Company  in
October  1997. Mr. Salema is an independent investor and, since  1987,  has
also  been  President and CEO of Gigeste, S.A., a real  estate  development
company  headquartered in Lisbon, Portugal. Mr. Salema earned a  mechanical
engineering  degree  from  the Instituto Superior Technico-Lisbon  and  has
extensive business experience in real estate and investments.

Stephen  J.  Sogin,  Ph.D., 55,  has been a Director of the  Company  since
March,  1990.  From 1982 until 1995, he was a general partner of the entity
that was the general partner of Montgomery Medical Ventures II, formerly  a
significant  Finet  shareholder.   Dr. Sogin  is  the  author  of  over  30
scientific papers on theoretical and applied microbiology and is  a  member
of  the American Society for Microbiology and the American Association  for
the  Advancement  of Science.  Dr. Sogin is also a Director  of  Osteotech,
Inc.

L.  Daniel  Rawitch, 39, has served as Chief Executive Officer  since  May,
1995  and  as a Director since September, 1994.  He acquired the  operating
rights  to  Residential Pacific Mortgage, Inc. (RPM) in 1989 and served  as
its Chief Executive Officer until it was acquired by the Company in August,
1994,  at which time he became Vice Chairman of the Company and focused  on
marketing capabilities development.

Jan  C.  Hoeffel, 62, was a founder and President of Finex  Corporation,  a
technology-oriented  mortgage broker acquired by the Company  in  December,
1991, after which he served as Executive Vice President until resigning  in
mid-1992.  He rejoined the Company in mid-1995 and became President  and  a
Director  in  November, 1995.  He is a director and  major  shareholder  of
Typography  Express, a computer-based national service bureau  for  graphic
arts  professionals, and a director and majority shareholder  of  San  Luis
Avionics,  Inc., an FAA certified repair station providing avionics  sales,
installation and maintenance for general aviation aircraft.
<PAGE> 36

James W. Noack, 45, was a founder and President of Monument Mortgage,  Inc.
until  becoming Vice Chairmen in May 1998. He became a Director in January,
1997  when MMI was acquired by the Company.  Mr. Noack received a B.A. from
the  University  of California at Fullerton, is a member  of  Fannie  Mae's
technical advisory committee, a frequent author and speaker to the industry
and  is  widely  recognized as an innovative leader in the  application  of
technology to the real estate financing industry.

Jose Philipe Guedes, 51, became a Director in January, 1997.  Mr. Guedes is
Managing Partner of Ceramic, a ceramic tile manufacturer, and Pinto  Basil,
a  real  estate  investment firm.  From 1982-1995, he was  Chief  Executive
Officer  of  Cerexport/Vista Alegre, a ceramic manufacturer refining  firm.
He  earned  a degree in chemical engineering from the University of  Lisbon
and has served as a Director of R. Schedel, a Lisbon Stock Exchange broker,
and  SOCI, a newspaper publisher, and is a past President of the Portuguese
Ceramic Manufacturers Association.

S.  Lewis  Meyer  Ph.D.,  53, became a Director in  January,  1997.  He  is
President  and  CEO  of  Imatron Inc., a public,  technology-based  company
engaged principally in Electron Beam Computed Tomography scanning, both  in
Imatron's  Coronary Artery Scanning clinics and in Research  &  Development
work  for  other  firms.  Mr. Meyer received a B.S.  in  Physics  from  the
University  of  Pacific  and  a  M.S. and  Ph.D.  in  Physics  from  Purdue
University. Mr. Meyer is also a Director of BSD Medical Company.

George  P.  Winkel,  56,  is the Company's Chief Financial  Officer  and  a
Certified  Public  Accountant.  Prior to joining Finet in September,  1997,
for  five  years he was a Managing Partner of Reuben E. Price  &  Co.,  the
Company's  auditor and earlier, over 20 years, held a number of  accounting
and financial management positions with RJR Nabisco.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers  and  directors, and persons who own more than ten  percent  of  a
registered  class of the Company's equity securities, to  file  reports  of
ownership  and  changes  in  ownership with  the  Securities  and  Exchange
Commission.   Officers, directors and greater than ten-percent shareholders
are  required by SEC regulation to furnish the Company with copies  of  all
Section 16(a) forms they file.

Based  solely  on  review  of the copies of such  forms  furnished  to  the
Company,  or  written representations that no Forms 5  were  required,  the
Company  believes  that during the fiscal year ended April  30,  1998,  all
Section 16(a) filing requirements applicable to its officers, directors and
greater  than ten-percent beneficial owners were complied with,  except  as
follows: Jose Maria Salema Garcao , a director and greater than ten-percent
beneficial  owner  of  the Company, filed late two  Forms  4,  covering  an
aggregate of 184 transactions; James W. Noack, a director and greater  than
ten-percent beneficial owner of the Company, filed late a Form 4, reporting
one  transaction; S. Lewis Meyer, a director of the Company, filed  late  a
Form  3  reporting one transaction; David Purvis, a former director of  the
Company,  filed late a Form 3 reporting one transaction; Paul R. Garrigues,
a  former executive officer of the Company filed a late Form 3 and two late
Form 4s reporting a total of three transactions, and James A. Umphryes,   a
former ten-percent beneficial shareholder of the Company, filed late a Form
3, and filed late two Forms 4 reporting a total of four transactions.
                                     
                      ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following table sets forth information regarding compensation received
by the Company's Chief Executive Officer and each of the Company's other
executive officers whose total annual compensation exceeded $100,000 with
respect to the fiscal years ended April 30, 1998, 1997, and 1996,
respectively.
<PAGE> 37
<TABLE>
                        SUMMARY COMPENSATION TABLE
<CAPTION>
                   Annual Compensation       Awards            Other
                   ------------------- ----------------------  ------
Name and                     Other     Restricted  Securities  All
Principal  Fiscal            Annual    Stock       Underlying  Other
Position   Year    Salary    Comp      Awards      Options     Comp <F1>
---------  ------  --------  --------  ----------  ----------  ------
<S>        <C>     <C>       <C>       <C>         <C>         <C>
L. Daniel  1998    $150,000      -         -           -         -
Rawitch    1997     150,000    58,341      -           -       35,000
CEO        1996     150,000    38,789      -       100,000       -

Jan C.     1998     111,818      -         -          -          -
Hoeffel,   1997     150,000    53,762      -          -        18,000
President  1996     107,000     1,500      -       100,000       -

James W.   1998     150,000      -        -           -          -
Noack, MMI 1997     150,000     8,735      -           -         -
President,
Director

<FN>
<F1>
During fiscal year 1997 prior to the acquisition of MMI by Finet, Mr.
Rawitch and Mr. Hoeffel were employed by an MMI affiliate on a part time
basis. Mr. Rawitch received compensation of $35,000, and Mr. Hoeffel
received consulting fees of $18,000.
</FN>
</TABLE>

On  June 2, 1998, the Company hired Mr. S. Lewis Meyer, a director  of  the
Company, to serve as Vice Chairman.

DIRECTOR COMPENSATION

The  Company pays outside Directors $15,000 annually for their services and
attendance  at  all regular quarterly Board meetings and  $1,000  for  each
additional  Board  or  committee  meeting.  Outside  directors   are   also
reimbursed  for  expenses actually incurred in attending  meetings  of  the
Board  and its committees.  Additionally, members of the Board of Directors
are eligible to participate under the Company's Stock Option Plan.

The  1989 Option Plan and the 1998 Non-Employee Directors Option Plan  each
provide  for automatic grants of non-qualified options to outside Directors
(Directors  who  are not full-time employees).  Upon becoming  a  Director,
each  outside Director is granted a five-year, currently exercisable option
for  40,000 shares at the then current fair market value and, for  each  of
the  next  three years on each anniversary date of becoming a Director,  is
granted  an  additional  five-year option for an additional  25,000  shares
which  vest  at the rate of 6,250 shares per quarter, subject to continuing
service as a Director.  Directors may also be granted additional options at
the discretion of the Board.

EMPLOYMENT AGREEMENTS

Members of the Company's executive management, including certain executives
of  subsidiaries, have entered into employment agreements with the Company.
Except  for  certain base salary and performance compensation  differences,
the  agreements are standard and contain specific confidentiality and  non-
competitive language.
<PAGE> 38
<TABLE>
<CAPTION>
                     OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
                                    % Total
                          Options   Options     Exercise     Expiration
Name                      Granted   Granted    Price($/sh)     Date
-----------------------   -------   --------   -----------   ----------
<S>                       <C>       <C>        <C>           <C>
Stapleton Communication    9,000     4.7%      $ 3.00        Expired
David Purvis              40,000    21.3%        3.25        10/1998
Lionel Pober              24,000    12.7%        3.00        8/2002
Jose Salema Garcao        40,000    21.3%        5.50        10/2002
Stephen J. Sogin          25,000    13.3%        4.50        1/2003
Jose Philipe Guedes       25,000    13.3%        4.50        1/2003
S. Lewis Meyer            25,000    13.3%        4.50        1/2003
                         -------    -----
                          188,000   100.0%
                         =======    ======
</TABLE>

STOCK OPTION PLANS

On  February  18,  1998,  the Company's Board of Directors  authorized  the
adoption  of  a  new 1998 Stock Option Plan (2,000,000 common  stock  share
reserve), a 1998 Stock Bonus Plan (875,000 common stock share reserve)  and
a  1998  Non-Employee  Directors Option Plan (500,000  common  stock  share
reserve).  In  June 1998, option awards to acquire 1,200,000 common  shares
were  approved by the Board of Directors at an exercise price of $2.75  per
share.

The  Company's  1989  Stock Option Plan will remain  in  effect  until  all
options have expired or have been exercised.

The  provisions of both the 1989 and 1998 Employee Stock Option  Plans  are
similar.  They  provide  for grants to employees,  which  are  intended  to
qualify  as  "incentive stock options" under Section 422A of  the  Internal
Revenue  Code  of 1986, as amended (the "Code"), as well as  non-qualifying
options  for  employees, consultants and Directors  of  the  Company.   The
purpose  of all Plans is to encourage stock ownership by certain  officers,
Directors,  consultants and full-time employees of the  Company  by  giving
them a greater personal interest in the success of the Company's business.

The  Option Plans are administered by the Board of Directors or by a  Stock
Option  Committee  appointed  by the Board.  The  exercise  price  for  all
options  must be at least equal to the fair market value of the  shares  on
the  date  of  grant.   Payment may be made in cash or with  the  Company's
approval,  in common stock or a combination of cash and common stock.   The
exercise  of  incentive stock options granted to any participant  who  owns
stock  possessing  more  than 10% of the voting  rights  of  the  Company's
outstanding  common  stock must be at least equal to 110%  of  fair  market
value on the date of grant.  The Option Plans limit the amount of incentive
stock options that any one employee may be granted in any calendar year  in
accordance  with the Code's limitations.  The maximum option  term  is  ten
years.   The 1989 Plan authorizes the granting of stock appreciation rights
in connection with the exercise of an option.

The  1989  Option  Plan  and the 1998 Non-Employee  Directors  Option  Plan
provide  for automatic grants of non-qualified options to outside Directors
(Directors  who  are not full-time employees).  Upon becoming  a  Director,
each  outside Director is granted a five-year, currently exercisable option
for  40,000 shares at the then current fair market value and, for  each  of
the  next  three years on each anniversary date of becoming a Director,  is
granted  an  additional  five-year option for an additional  25,000  shares
which  vest  at the rate of 6,250 shares per quarter, subject to continuing
service as a Director.  Directors may also be granted additional options at
the discretion of the Board.

<PAGE> 39

As of April 30, 1998, there were 738,000 options outstanding under the 1989
Stock  Option  Plan, of which 674,000 were vested. During the fiscal  year,
approximately  10,000  options  expired unexercised  and  no  options  were
exercised.

       ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                                MANAGEMENT

The  following  table sets forth certain information with  respect  to  the
beneficial ownership of the Company's common stock at July 14, 1998: (1) by
each person known by the Company to own beneficially more than five percent
of  the  Company's outstanding shares of common stock; (2) by each Director
and executive officer of the Company; and (3) by all Directors and Officers
as  a group.  Except as otherwise indicated in the notes to this table, the
holders listed below have sole voting and investment power with respect  to
such  shares.   For  purposes of this table, a person  is  deemed  to  have
"beneficial  ownership" of any shares as of a given date which such  person
has  the right to acquire within 60 days after such date.  For purposes  of
computing  the percentage of outstanding shares held by each  person  named
below  on  a  given date, any security which such person has the  right  to
acquire within 60 days after such date is deemed to be outstanding, but  is
not  deemed  to be outstanding for the purpose of computing the  percentage
ownership of any other person.

<TABLE>
                           Beneficial Ownership
               -----------------------------------------------
               Name and Address of      ----Common Stock----
               Beneficial Owner           # Owned    % Owned
------------   ----------------------   ----------   -------
<S>            <C>                      <C>         <C>
Beneficial     Cumberland Associates    2,612,281 <F1>    8.1%
Owners of      1114 Ave of Americas
more than 5%   New York, NY 10036
of shares
outstanding    Fondation Pamalu         2,500,000 <F2>    7.8%
               4536 Mozelos VFR
               Portugal

               Americo Ferreira Amorim  2,000,000         6.2%
               Estefania 163
               Porto, Portugal

Directors      Jose Salema Garcao       12,263,900 <F3>  31.5%
And Officers   James W. Noack            4,404,238 <F4>  13.8%
               Jan C. Hoeffel            1,264,075 <F5>   3.9%
               L. Daniel Rawitch           946,973 <F6>   2.9%
               Jose Philipe Guedes         385,000 <F7>   1.2%
               Stephen J. Sogin            180,633 <F8>   0.6%
               S. Lewis Meyer               65,000 <F9>   0.1%
               George P. Winkel                 50        0.0%

8 Directors
and Officers
as a group                              19,509,869       49.3%

The percent of class calculation is based on 32,051,684 shares of Common
Stock outstanding as of April 30, 1998

<FN>
<F1>
Reflects 2,350,000 shares beneficially owned and currently exercisable
warrants to acquire 262,281 shares.
<PAGE> 40

<F2>
Reflects 1,500,000 shares beneficially owned and currently exercisable
warrants to acquire 1,000,000 shares.
<F3>
Reflects 5,373,900 shares beneficially owned, currently exercisable
warrants to acquire 6,850,000 shares and currently exercisable options to
acquire 40,000 shares.
<F4>
Reflects 4,301,237 shares beneficially owned by him, 28,000 beneficially
owned by his minor child and currently exercisable warrants to acquire
75,001 shares.
<F5>
Reflects 1,037,917 shares beneficially owned by him, 917 shares
beneficially owned by his spouse and currently exercisable options to
acquire 225,241 shares.
<F6>
Reflects 798,973 shares beneficially owned by him and currently exercisable
options to acquire 148,000 shares.
<F7>
Reflects 320,000 shares beneficially owned by him and currently exercisable
options to purchase 65,000 shares.
<F8>
Reflects 50,000 shares beneficially owned by him and currently exercisable
options to purchase 130,633 shares.
<F9>
Reflects currently exercisable options to purchase 65,000 shares.
</FN
</TABLE>
                                     
         ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

It  is  the Company's policy not to enter into transactions with affiliates
of  the  Company,  unless  such transactions are  for  bona  fide  business
purposes  and  are on terms at least as favorable to the Company  as  those
that could be obtained from unaffiliated parties.

At  present, the Company has no material related party relationships  other
than  a 3 year consulting agreement with James Umphryes, a shareholder  and
former  50%  owner of MMI. The agreement calls for payments of $15,000  per
month through December, 2000.

Pending  completion  of the April, 1997 offering and  an  increase  in  the
Company's  working  capital, James Noack, an officer and  director  of  the
Company, lent the Company a total of $625,000 at an interest rate of  8.5%.
These  loans  were  secured by three foreclosed residential  properties  in
inventory.  The loans were retired as each property was sold.  As of  April
30, 1997, all borrowings had been fully repaid.

Effective December 31, 1996 the Company issued a total of 8,400,000  shares
of  its common stock and paid a total of $1,000,000 in cash to James  Noack
and  James Umphryes, collectively, as consideration for the acquisition  of
MMI.   At  the same time, the Company acquired PreferenceAmerica  from  its
shareholders, two of whom were Messrs. Noack and Umphryes, for $250,000.

The  Company  rents on a month-to-month basis a 3,500 square  foot  storage
facility  from James Noack for $600 per month for the storage of  furniture
and equipment.

During  fiscal  year 1997 and earlier, the Company made  loans  to  several
officers and employees. As of April 30, 1998 total loan balances of $59,000
to two individuals remained outstanding.

<PAGE> 41

On  December 16, 1996, Jose Maria Salema Garcao purchased 1,000,000  shares
of  the  Company's  common stock for $500,000 and  was  granted  five  year
warrants to purchase 1,000,000 shares of the Company's common stock  at  an
exercise  price  of  $1.00 per share.  On December 28, 1996,  he  purchased
1,000,000  shares  of  the  Company's common stock  for  $500,000  and  was
instrumental  in  assisting  the Company to sell  an  additional  5,000,000
shares  of  its  common  stock for $2,500,000, for  which  he  was  granted
2,500,000  five  year warrants at an average exercise  price  of  $.85  per
share.   On  March 21, 1997, he purchased 1,000,000 shares of the Company's
common  stock for $600,000 for which he was granted five year  warrants  to
purchase  600,000  shares  of  the Company's common  stock  at  an  average
exercise  price  of $2.00 per share. In April 1997, he purchased  1,400,000
shares  for  $1,400,000, for which he was granted  five  year  warrants  to
purchase  600,000  shares  of  the Company's common  stock  at  an  average
exercise  price  of $2.83 per share. In October 1997, he purchased  150,000
shares  for $450,000 and was granted five year warrants to purchase 150,000
shares  of  the Company's common stock at an exercise price  of  $5.00  per
share.

In  October 1997, James Noack purchased 75,001 shares for $225,000 and  was
granted  five  year  warrants to purchase 75,001 shares  of  the  Company's
common stock at an exercise price of $5.00 per share.

At  April  30, 1998 a total of $305,000 of compensation was deferred  by  5
executive officers.

                ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

The  exhibits  listed in the accompanying Index to Exhibits, below  and  on
page 71, are filed as part hereof and are incorporated herein by reference.
<TABLE>
                             INDEX TO EXHIBITS
<CAPTION>
        Foot
Exhibit Note Description                                          Page
------- ---- ---------------------------------------------------  ----
<S>     <C>  <C>                                                  <C>
3.1     <F1> Certificate of Amendment of the Restated Certificate
             of Incorporation of the Company, as of October 9,
             1996 and incorporated herein by reference

3.2          Certificate of Amendment of the Restated Certificate
             of Incorporation of the Company, dated as of October
             29, 1997............................................   74

3.3     <F2> Bylaws, as amended, as of July 14, 1993 and
             incorporated herein by reference

4.1          Form of Common Stock Purchase Agreement between the
             Company and Jose Maria Salema Garcao  dated
             December 16, 1996...................................   76

4.2          Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao  dated
             December 16, 1996...................................   87

4.3          Form of Warrant issued to Jose Maria Salema Garcao
             dated December 16, 1996.............................   96
<PAGE> 42

4.4          Common Stock Purchase Agreement between the Company
             and investors in the Private Offering concluded
             December 31, 1996...................................  101

4.5          Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao  dated
             December 30, 1996...................................  117

4.6          Form of Warrant issued to Jose Maria Salema Garcao
             dated December 30, 1996.............................  127

4.7          Form of Common Stock Purchase Agreement between the
             Company and Jose Maria Salema Garcao
             dated March 21, 1997................................  132

4.8          Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao
              dated March 21, 1997...............................  142

4.9          Form of Warrant issued to Jose Maria Salema Garcao
             dated March 21, 1997................................  151

4.10         Form of Stock Purchase Agreement between the Company
             and investors in the Private Offering concluded
             April 30, 1997......................................  156

4.11         Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao
             dated April 30, 1997................................  166

4.12         Form of Warrant Issued to investors in the Private
             Offering concluded April 30, 1997...................  177

4.13         Form of Common Stock Purchase Agreement between the
             Company and investors in the Private Offering
             concluded October 31, 1997..........................  184

4.14         Form of Common Stock Purchase Warrant issued to
             investors in the Private Offering concluded
             October 31, 1997....................................  192

4.15    <F3> Form of Securities Purchase Agreement between the
             Company and investors in the Debenture Offering
             concluded May 26, 1998 and incorporated herein by
             reference

4.16    <F3> Filed as an Exhibit to the Company's Current Report
             on Form 8-K filed with the Commission on
             April 6, 1998 and incorporated herein by reference

4.17    <F3> Form of Registration Rights Agreement between the
             Company and investors in the Debenture Offering
             concluded May 26, 1998 and incorporated herein by
             reference
<PAGE> 43

4.18    <F3> Form of 3% Subordinated Convertible Debenture issued
             to investors in the Debenture Offering concluded
             May 26, 1998 and incorporated herein by reference

4.19    <F3> Form of Warrant Purchase Agreement between the
             Company and Investors in the Debenture Offering
             concluded May 26, 1998 and incorporated herein by
             reference

4.20    <F3> Form of Warrant Issued to Investors in the Debenture
             Offering concluded May 26, 1998 and incorporated
             herein by reference

10.1    <F1> Merger Agreement and Plan of Reorganization between
             the Company and Monument Mortgage, Inc., dated
             December 20, 1996 and incorporated herein by
             reference

10.2    <F1> Consulting Agreement between the Company and James
             Umphryes, dated January 1, 1997 and incorporated
             herein by reference

10.3    <F4> 1998 Stock Option Plan incorporated herein by
             reference

10.4         Asset Purchase Agreement between Finet and Real
             Estate Office Software, Inc. dated August 30, 1997..  198

10.5         Stock Purchase Agreement between the Company and
             Coastal Federal Mortgage Company,
             dated April 30, 1998................................  209

10.6         Stock Purchase Agreement between Finet and MICAL
             Mortgage, Inc., dated May 19, 1998..................  229

21.1         Subsidiaries of Finet Holdings Corporation..........  249

23.1         Consent of Independent Auditors.....................  250

27.1    <F1> Financial Data Schedule, 1997 incorporated herein
             by reference

27.2         Financial Data Schedule, 1998.......................  251

<FN>
<F1>
Filed as an Exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended April 30, 1997 and incorporated herein by reference.
<F2>
Filed as an Exhibit to the Company's Registration Statement on Form SB-2
filed with the Commission on March 18, 1994 and incorporated herein by
reference.
<PAGE> 44
<F3>
Filed as an Exhibit to the Company's Current Report on Form 8-K filed with
the Commission on April 6, 1998 and incorporated herein by reference.

<F4>
Filed as an Exhibit to the Company's Registration Statement on Form S-8
filed with the Commission on June 19, 1998 (Registration No. 333-57287) and
incorporated herein by reference.
</FN>
</TABLE>

<TABLE>
<CAPTION>
                            REPORTS ON FORM 8-K
Date      Item  Description
--------  ----  -----------------------------------------------------
<S>       <C>   <C>
5/12/97    4    Concurrence of MMI's former independent accountant with
4/10/97
                Form 8-K and 4/24/97 Form 8-K/A

1/6/98     5    Announcement of purchase of residential mortgage loan
servicing
                rights with a current outstanding loan balances of $427
million.

1/15/98    2    Announcement of a Letter of Intent to acquire 100% of the
issued
                and outstanding stock of Coastal Federal Mortgage Company.

3/4/98     2    Announcement of a Letter of Intent to acquire 100% of the
issued
                and outstanding stock of Mical Mortgage Inc.

4/6/98     5    Announcement of the sale of a 3 % Convertible Debenture for
an
                aggregate principal amount of $7,000,000.

5/18/98    2    Announcement of the acquisition of 100% of the issued and
                outstanding stock of Coastal Federal Mortgage Company

5/28/98    2    Announcement of the acquisition of 100% of the issued and
                outstanding stock of Mical Mortgage, Inc.
<PAGE> 45

                                 SIGNATURE
                                     
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

FINET HOLDINGS CORPORATION


</TABLE>
<TABLE>
<S>                           <C>
Date: August 12, 1998              /S/     L. DANIEL RAWITCH
                               ------------------------------------
                               L. DANIEL RAWITCH
                               (CEO, PRINCIPAL EXECUTIVE OFFICER
                                AND DIRECTOR)

Date: August 12, 1998              /S/     GEORGE P. WINKEL
                               ------------------------------------
                               GEORGE P. WINKEL
                               (PRINCIPAL FINANCIAL OFFICER)


Date: August 12, 1998              /S/     JAN HOEFFEL
                               ------------------------------------
                               JAN C. HOEFFEL
                               (PRESIDENT AND DIRECTOR)


Date: August 12, 1998              /S/     JOSE SALEMA GARCAO
                               ------------------------------------
                               JOSE SALEMA GARCAO
                               (DIRECTOR)


Date: August 12, 1998              /S/     S. LEWIS MEYER
                               ------------------------------------
                               S. LEWIS MEYER
                               (DIRECTOR)


</TABLE>
<PAGE> 46
                                 APPENDIX
                                     
                           REUBEN E. PRICE & CO.
                      PUBLIC ACCOUNTANCY CORPORATION
                             703 MARKET STREET
                          SAN FRANCISCO, CA 94103
                                     

INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Finet Holdings Corporation
Walnut Creek, CA

We  have  audited  the  accompanying consolidated balance  sheet  of  Finet
Holdings Corporation and Subsidiaries as of April 30, 1998, and the related
consolidated statements of operations, stockholders' equity  and cash flows
for  the  years  ended April 30, 1998 and 1997. The consolidated  financial
statements  give  retroactive  effect  to  the  merger  of  Finet  Holdings
Corporation  and Coastal Federal Mortgage Company on April 30, 1998,  which
has  been  accounted for using the pooling of interests method as described
in  the  notes to the consolidated financial statements. These consolidated
financial  statements  are the responsibility of the Company's  management.
Our  responsibility is to express an opinion on these financial  statements
based  on  our  audits.  We  did  not audit the  1998  and  1997  financial
statements  of  Coastal Federal Mortgage Company, which statements  reflect
total  assets  and  revenues of approximately 10 percent  and  53  percent,
respectively,  of  the related consolidated totals as of  April  30,  1998.
Those  statements  were  audited by other auditors whose  report  has  been
furnished  to  us, and our opinion, insofar as it relates to data  included
for  Coastal Federal Mortgage Company, is based solely on the report of the
other auditors.

We  conducted  our  audits in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the audits  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement.  An audit includes examining, on a test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements.   An  audit  also includes assessing the accounting  principles
used  and  significant estimates made by management, as well as  evaluating
the  overall financial statement presentation.  We believe that our  audits
provide a reasonable basis for our opinion.

In  our opinion, based on our audits and the report of other auditors,  the
consolidated  statements referred to above present fairly, in all  material
respects,  the  financial  position  of  Finet  Holdings  Corporation   and
Subsidiaries  as  of  April  30, 1998, the consolidated  results  of  their
operations and their cash flows for the years ended April 30, 1998 and 1997
in conformity with generally accepted accounting principles.


/s/ REUBEN E. PRICE & CO.

San Francisco, CA
August 12, 1998
<PAGE> 47
                     Richard A. Eisner & Company, LLP
                        Accountants and Consultants
                             100 Campus Drive
                      Florham Park, New Jersey 07932
                               973-593-7000
                                     
INDEPENDENT AUDITORS REPORT

To the Board of Directors
Coastal Federal Mortgage Company

We have audited the accompanying balance sheet of Coastal Federal Mortgage
Company as of April 30, 1998, and the related statements of income,
stockholders' equity and cash flows for each of the years in the two year
period then ending (not presented separately herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.

We  conducted  our  audit  in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement.  An audit includes examining, on a test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements.   An  audit  also includes assessing the accounting  principles
used  and  significant estimates made by management, as well as  evaluating
the  overall financial statement presentation.  We believe that  our  audit
provides a reasonable basis for our opinion.

In  our  opinion,  the  consolidated statements  enumerated  above  present
fairly, in all material respects, the financial position of Coastal Federal
Mortgage  Company as of April 30, 1998, the results of its  operations  and
its cash flows for each of the years in the two year period then ended,  in
conformity with generally accepted accounting principles.


/s/ Richard A. Eisner & Company, LLP

Florham Park, New Jersey
July 9, 1998
With respect to Note C
July 31, 1998


<PAGE> 48
<TABLE>
                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEET
                              APRIL 30, 1998
                   (In thousands, except per share data)
<CAPTION>
<S>                                                              <C>
                                  ASSETS
Cash and cash equivalents......................................  $   1,993
Accounts receivable from sales of mortgage loans...............     23,008
Mortgage loan servicing advances and
  other receivables............................................      1,248
Notes and advances receivable from Mical Mortgage, Inc.
  ("Mical") (Note 14)..........................................      1,930
Notes receivable from officers (Note 14).......................         59
Mortgages held for sale, net of allowance for losses of $396...     20,226
Mortgages held for sale on behalf of Mical (Note 14)...........     42,808
Mortgage servicing rights (Note 3).............................      5,478
Furniture, fixtures and equipment, net of
  accumulated depreciation of $1,854 (Note 4)..................      1,441
Other assets (Note 5)..........................................      3,277
                                                                 ---------
    Total assets...............................................  $ 101,468
                                                                 =========

                   LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Warehouse line of credit (Note 6)..............................  $  42,851
Warehouse line of credit on behalf of Mical (Notes 6 & 14).....     42,808
Accounts payable...............................................      2,951
Revolving line of credit (Note 6)..............................      1,000
Note payable and capitalized leases (Note 6)...................        860
3% Convertible subordinated debentures (Note 6)................      5,500
Accrued expenses and other liabilities.........................      1,701
Liabilities subject to compromise (Note 7).....................        438
                                                                 ---------
    Total liabilities..........................................     98,109
                                                                 ---------
Commitments and contingencies (Note 8)

Stockholders' equity: (Notes 10 and 16)
Preferred stock: $.01 par value (100 shares
  authorized, no shares outstanding)...........................        -
Common stock: $.01 par value, (60,000 shares
  authorized, 32,052 shares issued and outstanding)............        386
Paid in capital................................................     13,610
Accumulated deficit............................................    (10,637)
                                                                 ----------
    Total stockholders' equity.................................      3,359
                                                                 ----------
    Total liabilities and stockholders' equity.................  $ 101,468
                                                                 ==========
</TABLE>
 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE> 49
<TABLE>
                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED APRIL 30, 1998 AND 1997
                 (In thousands, except for per share data)
                                     
                                                      1998        1997
                                                  -----------  ----------
<S>                                               <C>          <C>
REVENUE
Gain on sale of mortgage loans and servicing
 rights, net of loan origination costs.........     $  7,543   $   6,827
Interest income................................        3,247       2,433
Loan servicing fees............................          868         589
Retail broker fees.............................          418          94
Marketing services.............................          367          60
Other..........................................          118         146
                                                  -----------  ----------
Total revenue..................................       12,561      10,149
                                                  -----------  ----------
EXPENSES
Compensation and employee benefits.............        9,403       6,083
Interest expense...............................        3,175       1,992
Office.........................................        1,808       1,289
Marketing......................................          997         667
Professional fees..............................        1,629         856
Write down of intangibles and other assets.....        1,728         164
Depreciation and amortization..................          953         543
Occupancy......................................          667         425
Insurance......................................          125          87
Data processing services.......................          174         111
Other..........................................        1,055         797
                                                  -----------  ----------
Total expenses.................................       21,714      13,014
                                                  -----------  ----------
LOSS BEFORE INCOME TAXES AND
 EXTRAORDINARY GAIN............................       (9,153)     (2,865)
INCOME TAX (Note 12)...........................         (226)       (225)
                                                  -----------  ----------
LOSS BEFORE EXTRORDINARY GAIN..................       (9,379)     (3,090)
EXTRORDINARY GAIN ON LIABILITIES
  SUBJECT TO COMPROMISE (Note 7) ..............           -          312
                                                  -----------  -----------
NET LOSS.......................................     $ (9,379)  $  (2,778)
                                                  ===========  ===========
BASIC AND DILUTED LOSS PER SHARE BEFORE
    EXTRAORDINARY GAIN.........................     $  (0.31)  $   (0.21)
EXTRAORDINARY GAIN ON LIABILITIES
 SUBJECT TO COMPROMISE.........................           -         0.02
                                                  -----------  ----------
BASIC AND DILUTED NET LOSS PER COMMON SHARE....     $  (0.31)  $   (0.19)
                                                  ===========  ==========
SHARES USED IN COMPUTING BASIC AND DILUTED
 SHARE DATA....................................        30,433      14,313
                                                  ===========  ==========
</TABLE>
 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE> 50
<TABLE>
                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED APRIL 30, 1998 AND 1997
                              (In thousands)
<CAPTION>

Common
                                 -----Common Stock-----   Capital in
Stock      Retained
                                 Shares  Amount  Sub-     Excess of     Sub-
Earnings     Total
                                                scribed    Par Value
scription     (Deficit)  Capital
                                 ------   ----   ------   ---------    ----
---    ---------   --------
<S>                              <C>      <C>    <C>      <C>          <C>
<C>        <C>
Balance April 30, 1996            9,650   $162            $ 1,413
$  2,261   $ 3,836
Issue of common shares:
  (Notes 2,7 and 10)
 Common stock
  offerings                      11,992     80   $ 40       7,233
$(2,693)                 4,660
 Reverse acquisition              6,412     64             (3,455)
(3,391)
 Debt & note payable conversion   2,314     23              1,136
1,159
 Liabilities subject to
  compromise settlements            230      2                113
115
 Common stock rights              2,403     24                (24)
 Stock option exercise                3
Repurchase of common shares      (3,000)   (30)              (150)
(180)

Distributions to shareholders
(741)     (741)

Net loss
(2,778)   (2,778)
                                --------  -----   -----   -------     -----
---     --------   --------
Balance April 30, 1997           30,004    325      40      6,266
(2,693)      (1,258)    2,680

Proceeds of subscription
   receivable                               40     (40)
2,693                  2,693
Issue of common shares:
  (Notes 2,7 and 10)
 In connection with acquisitions
  Real Estate Office Software       150      2                373
375
  iQualify, Inc.                     50      1                180
181
 Purchase of software from NDS      202      2                806
808
 Private placement                1,300     13              3,887
3,900
Settlement of liabilities           232      2                355
357
Employee bonuses                      9      -                 35
35
Warrants exercised                  105      1                157
158
Additional paid in capital related
 to imputed interest on issue of
 convertible subordinated
  debentures (Note 6)
                                       1,551
1,551






Net loss
(9,379)   (9,379)
                                --------  -----   -----   -------      ----
----    --------   --------
Balance April 30, 1998           32,052   $386    $ -     $13,610      $
-       $(10,637)  $ 3,359
                                ========  =====   =====   =======
========    =========  ========

</TABLE
 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE> 51

</TABLE>
<TABLE>
                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED APRIL 30, 1998 AND 1997
                              (In thousands)
<CAPTION>
                                                                   1998
1997
                                                                 ----------
-   ---------
<S>                                                              <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................................   $  (9,379)
$ (2,778)
Adjustments to reconcile net loss to net cash
   used in operating activities:
 Depreciation and amortization................................         953
543
 Amortization of mortgage servicing rights....................         596
-
 Amortization of imputed interest on convertible debt.........         287
-
 Write down of intangibles and provision for losses...........       1,728
164
 Extraordinary gain on liabilities subject to compromise......          -
(312)
 Gain on sale of purchased mortgage servicing rights..........        (229)
-
 Expenses paid through issuance of common stock...............         392
52
Changes in operating assets and liabilities:
 (Increase) decrease in receivables from sales
    of mortgage loans and loan servicing rights...............     (19,554)
7,972
 Decrease (increase) in mortgage loans held for sale..........       4,246
(6,130)
 Increase in mortgage loans funded on behalf of Mical.........     (42,808)
-
 Increase in originated mortgage servicing rights, net........      (1,248)
(876)
 (Increase) decrease in mortgage loan servicing advances and
    other receivables.........................................        (942)
440
 Net increase in other assets.................................         317
(498)
 Net increase in other liabilities............................       3,006
106
                                                               ------------
- -------------
   Net cash used by operating activities......................     (62,635)
(1,317)
                                                               ------------
- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of mortgage servicing rights........................      (4,515)
(287)
 Proceeds from sale of mortgage servicing rights..............         497
-
 Acquisition of mortgage loans held for investment............          -
(87)
 Principal payments on mortgage loans held for investment.....         110
68
 Purchase of furniture, fixtures and equipment................        (647)
(265)
 Acquisition of purchased technology..........................      (1,007)
(67)
 Proceeds from sale of life insurance to officer..............          -
166
 Pre-acquisition advances to affiliates.......................      (1,930)
(1,377)
 Repayment of pre-acquisition advances to affiliates..........          -
660

                                                               ------------
- -------------
  Net cash used by investing activities.......................      (7,492)
(1,189)
                                                               ------------
- -------------
<PAGE> 52

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock.......................        6,582
4,438
 Proceeds from issuance of convertible debt...................        5,058
-
 Repurchase of common stock...................................           -
(180)
 Proceeds from exercise of common stock warrants and other....          219
-
 Net increase (decrease) in warehouse borrowings..............       58,357
(345)
 Proceeds from advances on note payable and line of credit....        2,550
1,950
 Principal payments on note payable, capitalized leases
   and line of credit.........................................
(1,665)    (2,305)
 Repayments of loans and distributions to former shareholders.
(129)    (1,707)
 Proceeds from notes payable to officers......................           -
625
                                                               ------------
- -----------
  Net cash provided (used) by financing activities.............      70,972
2,476
                                                               ------------
- -----------
Net increase (decrease) in cash...............................          845
(30)
Cash at beginning of period...................................        1,148
1,178
                                                               ------------
- -----------
Cash at end of period......................................... $      1,993
$  1,148

============= ===========
</TABLE>
 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE> 53
                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     
1. SIGNIFICANT ACCOUNTING POLICIES
                                     
DESCRIPTION OF BUSINESS
Finet Holdings Corporation ("Finet" or "Company") operates in one business
segment, homeownership services, and is primarily engaged in mortgage
lending, as both a wholesale mortgage banker and as a retail mortgage
broker, and the delivery of transaction settlement services. During the
past year the Company has continued to develop technology-based Internet
applications and business processes and is a leader in delivering
homeownership-related solutions to consumers and real estate services
providers through electronic commerce. The majority of its revenues,
including those related to mortgage lending, is derived from increasingly
automated electronic processes. The Company's principal operating
subsidiary is Monument Mortgage, Inc. ("MMI"), a California mortgage
banking company. The majority of the Company's business activity is carried
out in California, with lesser activity throughout the remainder of the 42
states in which the Company is currently licensed.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Finet and its
subsidiaries. All significant intercompany transactions have been
eliminated.

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

CASH AND CASH EQUIVALENTS
Cash  and  cash  equivalents consist of cash balances and instruments  with
maturities of three months or less at the time of purchase.

MORTGAGE LOANS HELD FOR SALE
Mortgage loans held for sale are carried at the lower of aggregate cost  or
market  as determined by outstanding commitments from investors or  current
investor  yield  requirements  calculated  on  the  aggregate  loan  basis.
Mortgage loans sold to investors generally settle within fifteen to  thirty
days  of  funding.  Gains or losses on sales of mortgage loans are computed
as  the difference between the selling price and the carrying value of  the
related  mortgage loans sold, net of applicable discounts. Loan origination
fees  on  mortgage  loans  held  for  sale,  net  of  certain  direct  loan
origination costs, are deferred until the time of sale and are included  in
the computation of the gain or loss on sale of the related loans.  The sale
of  mortgage loan inventory is recorded when the loans are shipped  to  the
investor.

MORTGAGE SERVICING RIGHTS
Mortgage servicing rights are carried at values based on the allocation  of
the  cost  of  originated  or  purchased mortgage  loans  to  the  mortgage
servicing rights and the loans based on their relative fair values  at  the
date of purchase or, for originated mortgage servicing rights, the date  of
sale  of  the  related  mortgage loan.  The fair  values  of  the  mortgage
servicing  rights  are based upon prices available in the secondary  market
for  servicing rights of mortgage loans with similar characteristics.  When
material, capitalized mortgage servicing rights are amortized in proportion
to,  and over the period of, estimated net servicing income.  In evaluating
and  measuring  impairment, capitalized servicing  rights  are  tested  for
impairment based on the expected future net servicing revenue stream.
<PAGE> 54

LOAN SERVICING
The  Company  sells  mortgages on both a servicing retained  and  servicing
released  basis.   Loan  servicing fee income represents  fees  earned  for
servicing real estate mortgages owned by institutional investors.  The fees
are generally calculated on the outstanding principal balances of the loans
serviced  and  are  recorded  as income when  earned.   Servicing  released
premiums are based on a contractual percentage of the outstanding principal
balance and credited to income when the loan servicing rights are sold.

HEDGE ACCOUNTING
The  Company  does  not project interest rates but rather  uses  a  hedging
strategy  to determine the portion of the pipeline loans that are  at  risk
given  the current interest rates.  The Company's hedging activity consists
of  mandatory forward commitments on mortgage-backed securities  which  are
usually  paired-off  to hedge the gain (loss) experience  from  whole  loan
sales.   Additionally, the Company enters into either optional or mandatory
forward  commitments  to  sell mortgage loans  when  funded.   The  Company
assesses  the pipeline interest rate risk based upon a number  of  factors,
including the remaining term of the rate locks, the interest rate at  which
the   locks  are  provided,  current  interest  rates  and  interest   rate
volatility.   The Company controls the credit risk of the pipeline  through
credit  evaluations, limits, and monitoring procedures.  Unrealized hedging
losses  are  recorded through a valuation allowance  that  is  shown  as  a
reduction  in  the carrying value of the related loan sale.  Fees  paid  to
investors are deferred and recognized as expense as loans are delivered  to
the  investor  in  proportion  to  the  percentage  relationship  of  loans
delivered  to the total commitment amount.  Any remaining fee is recognized
as  a  period expense at the expiration of the commitment period or earlier
if exercise of the commitment is deemed remote.

FURNITURE, FIXTURES AND EQUIPMENT
Depreciation  and amortization, which includes the amortization  of  assets
recorded under capital leases, is computed over the estimated useful  lives
of  the furniture, fixtures and equipment of two to twelve years using both
straight-line and accelerated methods.  The cost of repairs and maintenance
of furniture, fixtures and equipment is charged to operating expenses.

OTHER ASSETS
Purchased  technology  is  stated  at cost less  accumulated  amortization.
Amortization is provided over the estimated useful lives of the  respective
assets. Purchased technology costs are amortized using the greater  of  the
ratio  of  current  product revenue to the total  current  and  anticipated
product  revenue or the straight-line method over the software's  estimated
useful economic life, generally 24 to 36 months.

INCOME TAXES
The Company and its consolidated subsidiaries file consolidated federal and
combined  state income tax returns. Income taxes are accounted for  by  the
asset/liability approach in accordance with the provisions of Statement  of
Financial  Accounting  Standards ("SFAS") No. 109,  Accounting  for  Income
Taxes. Under this pronouncement, deferred income taxes, if any, reflect the
estimated  future  tax  consequences when reported amounts  of  assets  and
liabilities are recovered or paid. They arise from differences between  the
financial  reporting  and  tax  basis of assets  and  liabilities  and  are
adjusted  for  changes  in tax laws and tax rates when  those  changes  are
enacted.  The provision for income taxes represents the total income  taxes
paid  or  payable for the current year, plus the change in  deferred  taxes
during  the year.  The tax benefits related to operating loss carryforwards
are recognized if management believes, based on available evidence, that it
is more likely than not that they will be realized.
<PAGE> 55

EARNINGS PER SHARE
In  February 1997, the Financial Accounting Standards Board issued SFAS No.
128,  Earnings   per  Share.  SFAS No. 128  simplifies  the  standards  for
computing  earnings  per  share  ("EPS")  and  makes  them  comparable   to
international  standards.   SFAS  No.  128  was  effective  for   financial
statements issued for periods ending after December 15, 1997, with  earlier
application not permitted. Upon adoption, all prior EPS data was restated.

Basic  EPS  is determined using net income divided by the weighted  average
shares  outstanding during the period.  Diluted EPS is computed by dividing
net  income  by  the  weighted  average shares  outstanding,  assuming  all
dilutive potential common shares were issued.

Since  the  fully  diluted  loss per share for fiscal  1998  and  1997  was
antidilutive,  basic  and  diluted  earnings  per  share  are   the   same.
Accordingly, options to purchase common stock in fiscal 1998  and  1997  of
738,000  shares  and  559,000 shares, respectively,  warrants  to  purchase
common  stock  in fiscal 1998 and 1997 of 10,596,000 and 6,907,000  shares,
respectively,  and  2,659,000  common  shares  potentially  issuable   upon
conversion  of convertible subordinated debentures existing  at  April  30,
1998 and issued in May 1998 were not included in the calculation of diluted
earnings per common share.

STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation in accordance with SFAS
No. 123, Accounting for Stock-Based Compensation. Under SFAS No. 123,
companies may elect to recognize stock-based compensation expense based on
the fair value of the awards or continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(APB No. 25). The Company has elected to continue to apply the provisions
of APB No. 25.

NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and presentation of comprehensive income and its components in a
full set of general-purpose financial statements. This statement does not,
however, require a specific format for the disclosure but requires the
Company to display an amount representing total comprehensive income for
the period in its financial statements. The Company will be required to
implement SFAS No. 130 for its fiscal year 1999.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures  about Segments of an Enterprise and Related Information.  SFAS
No.  131  establishes  standards for the manner in  which  public  business
enterprises report information about operating segments in annual financial
statements  and requires that those enterprises report selected information
about   operating   segments  in  interim  financial  reports   issued   to
shareholders.  This  Statement requires that a public  business  enterprise
report financial and descriptive information about its reportable operating
segments.  The  Company  is  currently  evaluating  the  operating  segment
information  that  it  will  be required to report.  The  Company  will  be
required to implement SFAS No. 131 for its fiscal year 1999.

In  February 1998, the Financial Accounting Standards Board issued SFAS No.
132,   Employers'  Disclosure  about  Pensions  and  Other   Postretirement
Benefits.  SFAS  No. 132 revises employers' disclosures about  pension  and
other  postretirement  benefit  plans; however,  it  does  not  change  the
measurement or recognition of those plans. The Company will be required  to
implement SFAS No. 132 for its fiscal year 1999.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No.  133
is  effective for fiscal quarters and years beginning after June 15,  1999.
Since  the  Company's mortgage banking operations involve  taking  interest
rate  risk,  the Company routinely attempts to mitigate such  risk  through
hedging.  The  Company  considers its hedging to  qualify  as  "fair  value
hedging"  as  defined  by SFAS No. 133. The Company  will  be  required  to
implement  SFAS No. 133 for its fiscal quarter ending September  30,  1999.
<PAGE> 56

2. ACQUISITIONS

On  May 19, 1998 the Company acquired all the issued and outstanding shares
of  Mical  Mortgage,  Inc.  ("Mical"), a non-public  mortgage  banker  with
offices  in  San Diego, California and Las Vegas, Nevada, in  exchange  for
552,000  shares  of  the  Company's common stock.  Since  this  transaction
occurred  after  April 30, 1998, no consideration for this transaction  has
been  given  in  these financial statements. However, due to the  financial
requirements  of  Mical, certain transactions and  advances  were  made  in
anticipation  of  the  acquisition (See Note 14). The acquisition  will  be
accounted for as a purchase. As such, the excess of the purchase price over
the fair value of the acquired net assets, which approximates $3.3 million,
will  be  recorded as goodwill. The following condensed pro forma statement
of financial position of the Company as of April 30, 1998 and condensed pro
forma  statement  of operations of the Company for the  fiscal  year  ended
April  30,  1998  give  effect to the acquisition of Mical  as  though  the
transaction had occurred at the beginning of fiscal 1998:

<TABLE>
(In thousands)
-----------------Condensed Unaudited Pro Forma----------------
Balance Sheet                          Statement of Operations
-----------------------  ----------    ------------  ---------
<S>                      <C>           <C>          <C>
Cash                     $  2,344      Revenues     $  24,184
Mortgages held for sale   129,174                   ==========
Other assets               18,202      Net loss       (11,995)
                         --------                   ==========
Total assets             $149,720
                         ========

Warehouse line of credit $126,262
Other liabilities          19,024
Stockholders' equity        4,434
                         --------
Liabilities & equity     $149,720
                         ========
</TABLE>

On  April  30,  1998  the Company acquired all the issued  and  outstanding
common  shares  of  Coastal Federal Mortgage Company  ("Coastal"),  a  non-
public,  sub prime mortgage banker with offices in New Jersey, Pennsylvania
and  Florida,  in  exchange for 1,250,000 shares of  the  Company's  common
stock.  This  transaction is accounted for as a pooling of  interests  and,
consequently,  the consolidated financial statements of  the  Company  have
been restated to include the balance sheet and statements of operations  of
Coastal  for all periods reported. The table below sets forth the condensed
balance  sheet  and  condensed statements of  operations  for  the  periods
indicated:
<PAGE> 57

<TABLE>
(In thousands)                     1998
                         ---------------------------
Balance Sheet            Finet     Coastal  Combined
-----------------------  --------  -------  --------
<S>                        <C>         <C>       <C>         <C>        <C>
<C>
Cash                     $  1,144  $   849  $  1,993
Mortgages held for sale    55,074    7,960    63,034
Other assets               35,696      745    36,441
                         --------  -------  --------
Total assets             $ 91,914  $ 9,554  $101,468
                         ========  =======  ========
Warehouse line of credit $ 77,952  $ 7,707  $ 85,659
Other liabilities          11,554      896    12,450
Stockholders' equity        2,408      951     3,359
                         --------  -------  --------
Liabilities & equity     $ 91,914  $ 9,554  $101,468
                         ========  =======  ========

                                   1998                         1997
                         --------------------------   ---------------------
-----
Statement of Operations  Finet     Coastal  Combined    Finet   Coastal
Combined
                         -------   -------  --------   -------  -------  --
------
Net revenues             $ 5,862  $ 6,699  $ 12,561   $ 4,366  $ 5,783
$10,149
Net income (loss)         (8,678)    (701)   (9,379)   (3,168)     390
2,778)
</TABLE>

On  February 9, 1998 the Company acquired all of the issued and outstanding
stock of iQualify, Inc., a software developer whose principal asset is  the
iQualify  software  currently used by the Company, for a  consideration  of
50,000  shares  of  the  Company's common stock valued  at  $180,000,  plus
certain future usage-based payments. The acquisition was accounted for as a
purchase. As such, the excess of the purchase price over the estimated fair
value of the acquired net assets, which approximates $171,000, was recorded
as purchased technology.

In  December 1997, the Company completed the purchase of substantially  all
of  the  assets  of  Real Estate Office Software, Inc. ("REOS"),  a  Nevada
corporation.  REOS  is a software development and marketing  company  whose
primary product is a proprietary realtor productivity tool called the  Real
Estate  Office. The total price paid was $1,141,000 of which  $641,000  was
paid in cash and assumption of liabilities. The remaining $500,000 is to be
paid with 200,000 shares of the Company's common stock valued at $2.50  per
share;  150,000 of these shares have been issued as of April 30, 1998.  The
remaining 50,000 shares have been placed in an escrow account and  will  be
issued to the seller periodically as certain audits are performed. The  net
issuance  value  of  the stock will be adjusted downward  for  any  adverse
changes in the value and content of the net assets purchased, as determined
by the audits. The acquisition cost was recorded as purchased technology.

On  December  31, 1996, the Company acquired all of the outstanding  common
stock of MMI in exchange for 8.4 million common shares of Finet and a  cash
payment  of  $1  million.  For accounting purposes, the  cash  payment  was
deemed  a dividend payment to MMI shareholders and the common shares issued
in the acquisition have been treated as a recapitalization of MMI, with MMI
as  the  reverse acquisition acquirer. The historical financial  statements
prior  to December 31, 1996 are those of MMI and are deemed to be those  of
the  reporting  entity.  Since the Company's  operations  were  minimal  or
dormant  during  the year ended December 31, 1996, the reverse  acquisition
was  considered a capital transaction rather than a business  combination..
Following the reverse acquisition, the Company changed its fiscal year  end
from December 31 to April 30 to conform to the fiscal year end of MMI.
<PAGE> 58

3. MORTGAGE SERVICING RIGHTS

During the year ended April 30, 1998, the changes in mortgage servicing
rights were as follows:

<TABLE>
(In thousands)                  1998
----------------------------  --------
<S>                           <C>
Beginning balance, May 1      $   579
    Acquisitions............    5,763
    Sales...................     (268)
    Amortization............     (596)
                              --------
Ending balance, April 30      $ 5,478
                              ========
</TABLE>

The estimated fair value of mortgage servicing rights aggregated $5,478,000
at April 30, 1998. Fair value is determined by discounting estimated net
future cash flows from mortgage servicing activities using discount rates
that approximate current market rates and using current expected future
prepayment rates.

A provision for impairment was not required at April 30, 1998. In measuring
impairment the underlying financial assets were stratified primarily by
type and term of loan being serviced.

In connection with mortgage servicing activities, the Company segregates
escrow and custodial funds in a separate trust account and excludes this
balance of $16.0 million at April 30, 1998 from the accompanying balance
sheet.

4. FURNITURE, FIXTURES AND EQUIPMENT

The  total net book value of furniture, fixtures and equipment at April 30,
1998 was comprised of the following:

<TABLE>
(In thousands)
<S>                                            <C>
    Furniture and fixtures...................  $ 1,010
    Computer equipment.......................    1,855
    Office equipment.........................      225
    Leasehold improvements...................      205
                                               --------
        Total cost...........................    3,295

Less: Accumulated depreciation...............   (1,854)
                                               --------
Furniture, fixtures and equipment, net.......  $ 1,441
                                               ========
</TABLE>
<PAGE> 59

5. OTHER ASSETS

Other assets at April 30, 1998 are summarized as follows:

<TABLE>
(In thousands)
<S>                                            <C>
    Purchased technology  ...................  $ 1,358
    Debt discount and issuance expenses......    1,981
    Other....................................      641
                                               --------
        Total cost...........................    3,980
        Less: Accumulated amortization.......     (703)
                                               --------
        Other assets, net....................  $ 3,277
                                               ========
</TABLE>

In May 1997, the Company acquired from NDS Software, Inc. ("NDS") a
combination of Internet mortgage leads, software development services and
rights to access and market certain of the seller's customer base for
approximately $1 million (See Notes 10 and 16). Amortization expense,
related to other assets, was $379,000 and none in fiscal 1998 and 1997,
respectively. During the fourth quarter of fiscal 1998, the Company wrote-
down $1.0 million of intangible assets, $358,000 of other assets, provided
$342,000 of amortization of purchased technology and $287,000 amortization
of debt discount as interest expense (See Note 6).

6. DEBT

The  Company's warehouse borrowings as of April 30, 1998 were approximately
$85,259,000, of which $77,552,000 was borrowed by the Company  against  its
$80,000,000  credit line. These borrowings include $42,808,000 borrowed  in
anticipation  of the Mical acquisition (See Notes 2 and 14).  In  addition,
Coastal  had  borrowed $7,707,000 against its credit line  of  $24,000,000.
These  loans  are  collateralized by the  mortgage  loans  held  for  sale,
servicing rights and other assets of the Company.

The  following table and comments present summary information regarding the
Company's debt as of April 30, 1998:

<TABLE>
<CAPTION>
(In thousands)
                                                                   Interest
Expires or
Facility                            Balance         Rate              Due
----------------------------------  --------------  --------------   ------
-------------
<S>                                 <C>             <C>              <C>
REVOLVING
Warehouse line of credit:
  $55 million committed             $  55,000       LIBOR +
  $25 million uncommitted gestation    22,552       variable spread  August
31, 1998
                                    ---------
                                       77,552
  $24 million committed                 7,707       LIBOR + 2.5%     August
31, 1998
Servicing acquisition
  $1,870 committed                        400       Prime + 0.625%   August
31, 1998
                                    ---------
                                    $  85,659
                                                                  =========
<PAGE> 60

Revolving line of credit:
    $1  million  committed               $    1,000        Prime  +  0.625%
Requires payment to
                                     ==========                        zero
balance 5 days
                                                                        per
quarter

NOTES AND CAPITAL LEASES:
Note payable
  $1 million original note          $    500        Prime + 0.625%   Due in
2000
  Capitalized leases                     360        3.5% to 11.5%    Varies
to 2002
                                    ---------
Total                               $    860
                                    =========
</TABLE>

On March 18, 1998 the Company issued 3% Subordinated Convertible Debentures
in a private placement with interest payable in common stock of the Company
when  converted  or  in cash at maturity, redemption or  retirement.  These
debentures  have  been  issued in three separate  traunches  together  with
175,000 detachable warrants for purchase of the Company's common stock. The
debentures  and accrued interest are convertible into the Company's  common
stock  at  the  lesser of $5.00 per common share or 78% of  the  determined
market  price  prior to conversion. The Company has recorded $1,551,000  as
additional  paid in capital for the discount deemed related to the  imputed
interest  in  the debentures. The discount is being amortized  to  interest
expense over the period from the date of issue to the date it first becomes
convertible.  Among  other  things  the debenture  agreement  provides  for
redemption of the debentures by the Company at 115% of the principal amount
plus any unpaid interest accrued at the time of redemption. As of April 30,
1998 the Company had received $5.5 million with completion of the first two
traunches.  On  May 26, 1998, the Company received payment  for  the  third
traunch of $1.5 million.

Principal payments on long-term debt outstanding at April 30, 1998 for  the
five years ending April 30, 2003 are as follows:

<TABLE>
<CAPTION>
(In thousands)
                                                   Capitalized   Total
Year                                 Note Payable     Leases    Payments
----                                 ------------  -----------  ---------
<S>                                    <C>           <C>        <C>
1999                                   $250          $  225     $  475
2000                                    250             124        374
2001                                     -               42         42
2002                                     -                5          5
2003                                     -               -          -
                                      -----------  -----------  ----------
                                        500             396        896
Amounts representing interest            -              (36)       (36)
                                      -----------  -----------  ----------
                                       $500          $  360     $  860
                                      ===========  ===========  ===========
</TABLE>

COLLATERAL
The  warehouse line of credit, the revolving line of credit  and  the  note
payable are with the same lender. The collateral for these obligations is a
combination of mortgages held for sale, receivables from sales of  mortgage
loans, servicing assets, other assets of the Company.

<PAGE> 61

The  collateral  for  the  capitalized  leases  is  the  equipment  thereby
financed.

DEBT COVENANTS
The  Borrowing Agreements ("Agreements") for the warehouse line of  credit,
the revolving line of credit and the note payable contain various financial
covenants  including  net  worth  computed  in  accordance  with  generally
accepted  accounting  principles, current  ratio  and  tangible  net  worth
leverage  ratio requirements. Should an event of default occur, as  defined
in  the  Agreements, outstanding principal and interest on all four of  the
Company's credit facilities are due on demand.

As  of  April 30, 1998, the Company was in breach of the tangible net worth
requirement of its debt covenants. Subsequent to April 30, 1998, the lender
issued a formal waiver of the breach.

The  Company is in the process of negotiating new Borrowing Agreements with
the  lender,  and has no reason to believe that negotiations  will  not  be
successful. However, no assurances can be given that the Agreements will be
renewed.

7. LIABILITIES SUBJECT TO COMPROMISE

Prior  to  the  December 31, 1996 reverse acquisition, Finet  had  incurred
$969,000  of  unsecured trade creditor accounts payable.  The  Company  had
settled a majority of these claims by April 30, 1997.  The creditors agreed
to  accept,  on  average, 33.8% of what they were owed.  The payments  were
made  in  the  form of cash and shares of the Company's common  stock.  The
reduction of this liability gave rise to extraordinary gain of $312,000 for
the  year  ended  April  30, 1997. The balance of  liabilities  subject  to
compromise was $438,000 at April 30, 1998.

8. COMMITMENTS AND CONTINGENCIES

DEBT COVENANTS
As  discussed in Note 6, at April 30, 1998, the Company was in violation of
the  tangible net worth requirement of its debt covenants. Subsequently,  a
waiver for this violation was received from the lender.

LOAN SALE COMMITMENTS
The Company has entered into optional and mandatory forward commitments  to
deliver mortgage loans of $46.4 million as of April 30, 1998.

MORTGAGE LOAN APPLICATIONS IN PROCESS
The   Company  has  open  short-term  commitments  to  fund  mortgage  loan
applications  in  process  subject to credit approval.   Such  commitments,
which  had  interest  rates committed to the borrower,  amounted  to  $87.3
million as of April 30, 1998.  Commitments to fund loans are agreements  to
lend  to  a  customer  as long as there is no violation  of  any  condition
established in the contract.  Interest rate risk is mitigated by the use of
forward contracts to sell loans to investors.

LEASES
The  Company  leases  its  facilities  and  certain  equipment  under  non-
cancelable  operating leases.  As of April 30, 1998, future minimum  annual
rental payments under these leases are as follows:

<PAGE>62
<TABLE>
<CAPTION>
(In thousands)
                               Lease
Fiscal Year ending             Expense
---------------------          -------
<S>                            <C>
  1999.......................  $  540
  2000.......................     414
  2001.......................     325
  2002.......................      13
  2003.......................       2
                               -------
                               $1,294
                               =======
</TABLE>

Rental  expense amounted to $601,000 and $514,000 in fiscal year  1998  and
1997, respectively.

CONTINGENCIES
Prior  to  the  Mical acquisition (See Note 2) a lawsuit  was  filed  which
alleges,  among other things, that Mical made certain payments in violation
of  the  Real Estate Settlement Procedures Act and induced mortgage brokers
to  breach  their  alleged fiduciary duty. The plantiffs  seek  unspecified
compensatory  and  punitive damages. The Company believes its  compensation
programs  comply with applicable laws and long standing industry  practices
and that it has meritorious defenses to the action. The Company intends  to
defend  vigorously against the action and believes the ultimate  resolution
will  not  have  a  material  adverse effect on the  Company's  results  of
operations or financial position.

The   Company  and  its  subsidiaries  are  defendants  in  various   legal
proceedings.  Management does not expect the aggregate liability,  if  any,
resulting  therefrom will have a material adverse effect on  the  Company's
results of operations or financial position.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The  following  disclosures  of  the estimated  fair  values  of  financial
instruments are made in accordance with the requirements of SFAS  No.  107,
Disclosures about Fair Value of Financial Instruments.  The estimated  fair
value  amounts  have been determined by the Company using available  market
information and appropriate methodologies.  However, considerable  judgment
is  necessarily required to interpret market data to develop the  estimates
of  fair  value.  Accordingly, the estimates presented herein  may  not  be
indicative  of  the amounts the Company could realize in a  current  market
exchange.   The  use  of  different market  assumptions  and/or  estimation
methodologies  may  have  a  material effect on the  estimated  fair  value
amounts disclosed in the following paragraph.
<PAGE> 63

The  estimated fair values of the Company's financial instruments at  April
30, 1998 are as follows:

<TABLE>
<CAPTION>
(In thousands)
                                                 Carrying         Estimated
                                                     Value             Fair
Value
--------------------------------------------  -----------        ----------
-
<S>                                           <C>                <C>
Assets:
  Cash                                         $  1,993          $ 1,993
  Receivables from sales of mortgage loans
    and loan servicing rights                    23,008           23,008
  Mortgage loan servicing advances and
    other receivables                             1,248            1,248
  Mortgages held for sale                        63,034           63,363
  Mortgage loan servicing rights                  5,478            5,478

Liabilities:
  Warehouse borrowings                           85,659           85,659
  Revolving line of credit                        1,000            1,000
  Note payable and capitalized leases               860              860
  3% Convertible subordinated debentures          5,500            5,500

Off Balance Sheet Cash                           16,009           16,009

                                                Contract        Unrealized
                                                 Amount         Gain (Loss)
                                               ----------       ----------
OFF BALANCE SHEET:
  Loan commitments to fund                     $ 87,300          $   (34)
  Loan commitments to sell                       46,400          $    43
</TABLE>

The  following methods and assumptions were used to estimate the fair value
of  each  class  of  financial instruments for which it is  practicable  to
estimate such value:

For  cash,  receivables  from sales of mortgage loans  and  loan  servicing
rights, mortgage loans held for sale, mortgage loan servicing rights, other
accounts and notes receivable, warehouse line of credit, revolving line  of
credit,  note  payable and capitalized leases and convertible  subordinated
debentures, the carrying value is considered to be a reasonable estimate of
fair value based on interest rates of similar financial instruments in  the
marketplace. The cash and receivables from sales of mortgage loans and loan
servicing  rights  are financial instruments which can potentially  subject
the Company to concentrations of credit risk.

For  mortgage  servicing  rights, the fair value  is  determined  based  on
projected  net  cash  flows  (including inflows from  servicing  offset  by
estimated  costs  of  servicing), using the consensus projected  prepayment
levels  published by several large securities dealers that approximate  the
characteristics of the underlying portfolios and discounted using rates  of
return required for financial assets with similar risk characteristics.

For  loan  commitments, the fair value is estimated using quoted prices  at
April 30, 1998.  The fair value of commitments to sell can be estimated  by
the  amount  the  Company  would receive or pay to  terminate  the  forward
delivery  contract  at  the reporting date based  upon  market  prices  for
similar financial instruments.  The fair value of commitments to fund can
<PAGE> 64

be  estimated by comparing the Company's cost to acquire mortgages  to  the
current prices for similar mortgages, taking into account the terms of  the
commitment and the creditworthiness of the counterparts.

The Company does not acquire or issue derivative financial instruments.

10. STOCKHOLDERS' EQUITY

The Company is authorized to issue 60,000,000 shares of common stock, par
value $.01 per share, and 100,000 shares of preferred stock, par value $.01
per share.  An increase in the number of common shares authorized from
40,000,000 to 60,000,000 was approved by shareholders in October 1997.

COMMON STOCK
In  October 1997, a total of 1,300,000 shares of the Company's common stock
were  subscribed  in  a  private placement under  Regulation  D  for  total
proceeds  of  $3.9 million, of which $1.4 million was received and  467,000
common shares and warrants to purchase 467,000 common shares at an exercise
price  of  $5.00  per  share and expiring in 2002  were  issued.  Of  these
proceeds,  $1,175,000 was designated and used for investment purposes.  The
Company  received  the  final  subscription proceeds  of  $2.5  million  on
December 29, 1997 and issued 833,000 common shares and warrants to purchase
833,000 common shares under the same terms.

On May 29, 1997 the Company and NDS, a generic software development company
and  operator  of  a nationwide homes for sale Web site,  entered  into  an
agreement  whereby the Company purchased certain rights  to  NDS'  customer
lists,  programming services and mortgage leads for $202,000  in  cash  and
202,000 shares of the Company's common stock (See Notes 5 and 6).

On  April  30, 1997, the Company had subscriptions for 3,991,000 shares  of
its  common  stock  and  subscriptions  receivable  of  $2.7  million.  All
subscriptions receivable were received in May, 1997.

In  April,  1997,  four private placements resulted in stock  subscriptions
totaling  $8.1  million  to acquire 11.9 million shares  of  the  Company's
common stock.  Of these subscriptions, $4.2 million were received by  April
30,  1997,  with the remainder received shortly thereafter,  for  net  cash
receipts of $7.35 million. As part of these offerings, a total of 5,243,000
investor warrants and 859,000 placement agent warrants were granted.

During fiscal 1998, a total of 232,000 shares and warrants expiring in 2002
to  purchase 2,237,000 common shares at exercise prices of $1.50  to  $4.00
per  share were issued to fulfil the terms of various agreements. A further
9,000 common shares were issued to 133 employees and consultants as a year-
end bonus in amounts of 25, 50 and 100 shares, depending on their length of
service  with  the Company. At April 30, 1998 a total of 32,052,000  common
shares and 10,596,000 warrants were issued and outstanding.

In  February and March 1997 the Company issued approximately 230,000 common
shares  in  settlement of certain creditors' claims recorded as liabilities
subject  to  compromise and assumed by the Company in connection  with  the
reverse acquisition with Finet.

Warrants  to  purchase 105,000 common shares were exercised  during  fiscal
1998  at prices averaging $1.50 per share. Options to purchase 3,000 common
shares  were exercised during fiscal 1997 at an average price of $0.06  per
share.

In  connection with the December 1996 reverse acquisition between  MMI  and
Finet  (See  Note 2), 6,412,000 outstanding common shares of Finet  at  the
date  of  the transaction were treated as shares issued for the acquisition
of Finet in fiscal 1997.
<PAGE> 65

Immediately  following the reverse acquisition, 3.0 million  common  shares
were  repurchased  from  a major shareholder at the shareholders'  original
cost  of  $180,000.  This  shareholder also held  an  $800,000  convertible
debenture assumed by the Company in the reverse acquisition, which together
with  accrued  interest, was converted into 1,850,000  common  shares.   In
total,  the  Company  issued  2,314,000 common  shares  for  principal  and
interest of Finet debt comprised of the $800,000 convertible debenture  and
outstanding bridge loans totaling $370,000. The Company subsequently issued
2,403,000   common   shares  to  officers  and  designated   employees   in
satisfaction of common stock rights outstanding at the date of the  reverse
acquisition.

WARRANTS
Warrants for the purchase of common shares that were issued and outstanding
at April 30, 1998 are summarized below:
<TABLE>
(in thousands, except per share data)
Number of   Exercise        Year of
Warrants     Price        Expiration
---------   ----------  --------------
<S>         <C>         <C>          <C>
 4,011      $0.50-1.50    2001-2002
 2,905       1.50-3.00    2001-2002
 2,131       3.00-4.50    2001-2002
 1,549       4.50+        2001-2003
---------
10,596
=========
</TABLE>

In  June  1998, the Board of Directors authorized the sale of  warrants  to
purchase  700,000  common shares at $2.75 per share for a consideration  of
$7,000  to  two officers of the Company, and warrants to purchase 1,000,000
common  shares  at  $2.75 per share to a director  of  the  Company  for  a
consideration of $10,000.

11.  STOCK OPTION PLAN

The  Company  maintains a stock option plan (the "1989 Stock Option  Plan")
for  key employees, non-employee Directors and others which permits  grants
of  stock  options  for the purchase of common stock with  exercise  prices
equal to the fair market value on the date of grant; or, in the case of any
participant who owns stock representing more than 10% of the voting  rights
of  the  Company's  outstanding common stock, the  exercise  price  of  the
options  must be at least equal to 110% of the fair value on  the  date  of
grant.   The  maximum  option  term is ten  years.   Employee  options  are
exercisable upon grant of the option and non-employee Director options vest
at  a  rate  of  25%  per  year.   The  1989  Plan  also  authorizes  stock
appreciation rights to be issued in connection with the grant and  exercise
of  options.  To date no stock appreciation rights have been awarded  which
would require stock appreciation rights accounting treatment.

On February 18, 1998, the Company's Board of Directors unanimously resolved
to  add  a  new  ten  year qualified incentive stock  option  plan  to  the
Company's  1989  Stock Option Plan which expires in 1999,  and  to  form  a
separate non-qualified stock option plan for non-employee directors, and to
form  a  stock  bonus plan. The number of shares reserved for  these  three
plans  was 2,000,000, 500,000 and 875,000, respectively. Currently  granted
and  unexercised options to acquire 748,249 shares under the 1989 plan  are
unaffected by the new plan. The new plans will be submitted to shareholders
for approval later this calendar year.

The  Company applies Accounting Principles Board Opinion No. 25 and related
interpretations  in accounting for its stock option plan.  Accordingly,  no
compensation expense has been recognized as the exercise price has  equaled
the  stock fair value on the date of grant.  Had compensation expense  been
determined for stock options granted in fiscal 1998 and 1997
<PAGE> 66

based  on  the fair value at grant dates consistent with SFAS No.  123  the
Company's condensed Pro Forma Statement of Operations for fiscal  1998  and
1997 would have been as follows:

<TABLE>
(In thousands, except for per share data)
                                           1998     1997
                                         --------  -------
<S>                                      <C>       <C>
Estimated stock-based compensation       $   200   $   125
(Loss) as reported                        (9,379)   (2,778)
Pro forma net (loss)                      (9,579)   (2,903)
(Loss) per share as reported                (.31)    (.19)
Pro forma (loss) per share                  (.32)    (.20)
</TABLE>

The pro forma amounts were estimated using the Black-Scholes option pricing
model   with   the  following  assumptions  for  fiscal  1998   and   1997,
respectively: risk-free interest rate of 5.5% and 6.6% to 6.7%;  volatility
factor  of the expected market price of the Company's common stock  of  50%
and  50%; no dividend growth rate since the Company does not intend to  pay
dividends  on  its common stock; and expected lives equal to the  remaining
option terms for both years.

The  following table summarizes employee stock option plan activity for the
years ended April 30, 1998 and 1997:

<TABLE>
(Shares in thousands)
                                    ----------- 1998 ----------    --------
1997 --------
                                                                   Weighted
Weighted
                                                                    Average
Average
                                                                   Exercise
Exercise
                                      Options      Price            Options
Price
                                     --------      --------          ------
------------
<S>                                   <C>             <C>               <C>
<C>
Outstanding,  May  1                   559            $  0.15           468
$ 0.06
Granted  during  the  year              188              4.18           120
0.50
Expired  during  the year               (9)             2.81           (26)
0.06
Exercised  during  the  year                                            (3)
0.06
                                    -------                      --------
Outstanding,  April  30                738              1.15            559
0.15

Eligible  for  exercise, end of  year   673              0.83           559
0.15

Weighted-average fair value of
options     granted    during     the     year                         4.27
2.15
</TABLE>
<PAGE> 67

The   following  table  summarizes  information  regarding  stock   options
outstanding at April 30, 1998:
<TABLE>
<CAPTION>
(Shares in thousands)
----------Options Outstanding----------  --------Options Exercisable-------
-
                       Weighted          Weighted
Range of  Number       Average           Average       Number       Average
Exercise     Outstanding    Remaining           Exercise        Exercisable
Exercise
Prices    4/30/98      Contractual Life  Price         at 4/30/98   Price
--------  -----------  ----------------  ------------  ----------   -------
-
<C>       <C>          <C>               <C>           <C>          <C>
$ 0.06    439          7.5 years         $ 0.06        439          $ 0.06
  0.50    120          3.5 years           0.50        120            0.50
  3.00     24          4.3 years           3.00         16            3.00
  3.25     40          4.2 years           3.25         40            3.25
  4.50     75          4.8 years           4.50         18            4.50
  5.50     40          4.5 years           5.50         40            5.50
         -----                                        -----
          738                                          673
         =====                                        =====
</TABLE>

The  Company  has  prepared a new 1998 Stock Option Plan (2,000,000  common
stock  share reserve), a 1998 Stock Bonus Plan (875,000 common stock  share
reserve)  and  a  1998 Non-Employee Directors Option Plan  (500,000  common
stock  share  reserve).  In June 1998, option awards to  acquire  1,200,000
common shares were approved by the Board of Directors at an exercise  price
of $2.75 per share.

12. INCOME TAXES

The  provisions  for income taxes for the years ended April  30,  1998  and
1997consist of the following:

<TABLE>
                        PROVISION FOR INCOME TAXES
(In thousands)
                                     Federal  State    Total
                                     -------  ------   ------
<S>                                  <C>      <C>      <C>
                                              1998
                                     ------------------------
Current                              $ 236    $  80    $ 316
Deferred                               (70)     (20)     (90)
                                     -------  ------   ------
                                     $ 166    $  60    $ 226
                                     =======  ======   ======

                                               1997
                                     ------------------------
Current                              $ 219    $  71    $ 290
Deferred                               (50)     (15)     (65)
                                     -------  ------   ------
                                     $ 169    $  56    $  225
                                     =======  ======   ======
</TABLE>
<PAGE> 68

The  differences  between the statutory federal  income  tax  rate  on  the
Company's  income before provision for income taxes and the  effective  tax
rates  for  the years ended April 30, 1998 and 1997 primarily  result  from
changes in the deferred tax valuation allowance.

SFAS  No.  109  requires  an  asset and liability  approach  for  financial
accounting and reporting for income taxes.  A valuation allowance  for  all
or  a  portion of deferred tax assets is established if it is  more  likely
than not that all or some of a deferred tax asset will not be realized.

Deferred  income  taxes  reflect the tax effect  of  temporary  differences
between  the  carrying  amount  of assets  and  liabilities  for  financial
reporting purposes and the amounts used for income tax purposes.   Deferred
tax  assets  and  liabilities  at  April 30,  1998  are  comprised  of  the
following:

<TABLE>
(In thousands)
<S>                                          <C>
DEFERRED TAX ASSETS:
  Net operating loss carryforwards(NOL's)    $12,366
  Goodwill                                     1,116
  Other                                          432
                                             -------
  Total deferred tax assets                   13,914
  Valuation allowance, net                   (13,341)
                                             -------
Net deferred tax assets                          573
                                             =======

DEFERRED TAX LIABILITIES:
  Originated mortgage servicing rights           460
  Property plant and equipment, net of
     accumulated depreciation                    113
                                              -------
   Total deferred tax liabilities                573
                                              -------
Total net deferred tax assets and liabilities $   -
                                              =======
</TABLE>

At  April  30,  1998,  the  Company has U.S. federal  and  state  NOL's  of
approximately  $31 million which will expire beginning in the  fiscal  year
2004.   Due  to ownership changes, approximately $24 million  of  the  U.S.
federal  and  state  NOL's are subject to restrictions.  Such  restrictions
generally limit the Company to using a portion of the NOL's existing at the
date  of  the  ownership changes, based on the fair market  values  of  the
Company's  stock immediately before the ownership changes.   A  significant
portion  of  the NOL's subject to restriction, approximately  $19  million,
will be limited to approximately $20,000 per year until they expire in  the
year  2011.  Accordingly, the Company has established a valuation allowance
against  deferred  tax  assets, except to the  extent  that  future  years'
deductible  items  will offset future years' taxable items.  During  fiscal
1998,  the  valuation  was  increased by  $3,560,000  to  $13,341,000  from
$9,781,000.
<PAGE> 69

A summary of the NOL's and years of expiration follows:

<TABLE>
<CAPTION>
(In thousands)
    Year
    <S>                 <C>
    2004                $2,210
    2005                 7,051
    2006                   -
    2007                 2,308
    2008                 1,600
    2009-2013           17,746
                        ------
        Total          $30,915
                        ======
</TABLE>

13. SUPPLEMENTAL CASH FLOW INFORMATION

The  following table presents additional cash flow information for the  two
years ended April 30, 1998 and 1997:

<TABLE>
<CAPTION>
(In thousands)
                                                                       1998
1997
                                                           --------   -----
----
<S>                                                        <C>        <C>
Interest  paid                                               $  1,877     $
1,966
Income    taxes    paid                                                  57
351
Distributions to prior shareholders:
   Distributions   declared   or   imputed                                -
741
     Distributions    paid                                                -
1,040
Assets   and   lease  obligations   capitalized                          59
260
Transfer of mortgage loans held for sale
   to   held   for  investment                                           89
23
Foreclosure  of  mortgage  loan  held  for   sale                       374
-
Common stock issued for settlement of
    liabilities   subject  to   compromise                               22
115
Common   stock   issued  for   expenses                                 158
260
Common   stock   issued  for  purchased  intangibles                    150
-
Common   stock  issued  in  exchange  for  debt                       1,364
1,170
Acquired in acquisition:
      Cash                                                                -
50
   Furniture,   fixtures   &   equipment                                  -
246
     Other    assets                                                      -
280
   Accounts   payable  and  other  accrued  expenses                      -
(1,609)
      Debt                                                                -
(1,389)
   Liabilities   subject   to   compromise                                -
(969)
     Accumulated    deficit                                               -
3,391
</TABLE>
<PAGE> 70

14. RELATED PARTY TRANSACTIONS

MICAL MORTGAGE, INC.
During  fiscal 1998 and in anticipation of the May 19, 1998 acquisition  of
Mical (See Note 2), the Company advanced $1.9 million to Mical and utilized
the Company's available warehouse lines of credit to fund $42.8 million  of
loans  originated  by Mical. Subsequently, these loans were  sold  and  the
proceeds used to pay off the associated warehouse debt.

iQUALIFY
On  February 9, 1998 the Company purchased the outstanding common stock  of
iQualify,  Inc., a software developer, from T. Lee Decker and James  Noack,
employees and officers of the Company, for a consideration of 50,000 shares
of the Company's common stock (See Note 2).

LOANS TO OFFICERS
The  Company  has outstanding at April 30, 1998 loans to an  officer  of  a
subsidiary and a former officer of a subsidiary, as follows:

<TABLE>
(Amounts in thousands)            Loan    Interest
Officer                 Title    Amount    Rate     Term   Collateral
-----------------     ---------  ------    -------   ----   ---------------
--
<S>                   <C>        <C>       <C>       <C>    <C>
T.  Lee  Decker         MMI SVP    $ 53      5.27%     5 yrs  2nd  Deed  of
Trust
William Dullaghan                   6      8.0%      2 yrs  Securities
                                 ------
  Total loans to officers        $ 59
                                 ======
</TABLE

Pending  completion  of  the April 1997 offering and  an  increase  in  the
Company's  working  capital, James Noack, an officer and  director  of  the
Company, lent the Company $625,000 at an interest rate of 8.5%. These loans
were  secured by three foreclosed residential properties in inventory.  The
loans  were  retired as each property was sold. As of April 30,  1997,  all
borrowings had been fully repaid.

CONSULTING AGREEMENTS
The  Company  entered into a consulting agreement with  James  Umphryes,  a
greater than 5% shareholder and former MMI shareholder.  The contract  term
is  3  years  beginning January 1, 1997 at a monthly fee of $15,000  for  a
total contract cost of $540,000.

FACILITY LEASE
The  Company leases a 3,500 square foot storage facility from James  Noack,
President  of  MMI  and  a greater than 5% shareholder.   The  facility  is
utilized  by  the  Company to store excess office furniture.   The  monthly
lease  payment  is $600 and the term of the lease is on a  month  to  month
basis.

15. EMPLOYEE BENEFIT PLAN

The  Company  adopted  a  contributory  pension  plan  (the  "Plan")  which
qualifies  under Section 401(K) of the Internal Revenue Code in 1993.   The
Plan  covers  all  employees meeting certain eligibility  requirements  and
provides  for matching employer contributions.  There were no contributions
for the years ended April 30, 1998 and 1997.
<PAGE> 71

16. MATERIAL SUBSEQUENT EVENTS

CONTINGENT OBLIGATION
Under  the  terms of a services purchase agreement with NDS  in  which  the
consideration  paid to NDS included 202,000 shares of the Company's  common
stock,  the  Company  had  a  contingent obligation  to  adjust  the  share
consideration if the market price of the Company's common shares was not at
or  above $4.00 per share upon the earlier of the Company's registration of
NDS's shares or June 3, 1998, to maintain a value equal to $808,000 at that
time, to a maximum additional shares issuable of 1,414,000 shares. With the
Company's  consent, the shares and the contingent obligation were purchased
by  an institutional shareholder. The closing price of the Company's shares
on  June  3,  1998 was $2.9375. Accordingly, the Company will issue  73,063
shares to the purchaser to satisfy this obligation (See Notes 5 and 10).

INTERLOAN ACQUISITION
On June 23, 1998 the Company acquired from an individual certain assets
which include an internet site, "interloan.com", in exchange for 100,000
shares of the Company's common stock.  The Company also entered into a
three year employment agreement with the individual.


</TABLE>
<TABLE>
                        FINET HOLDINGS CORPORATION
                                     
                               EXHIBIT INDEX
        Foot
Exhibit Note Description                                            Page
------- ---- -----------------------------------------------------  ----
<S>     <C>  <C>                                                    <C>
3.1     <F1> Certificate of Amendment of the Restated Certificate
             of Incorporation of the Company, as of October 9,
             1996 and incorporated herein by reference

3.2          Certificate of Amendment of the Restated Certificate
             of Incorporation of the Company, dated as of October
             29, 1997.............................................  74

3.3     <F2> Bylaws, as amended, as of July 14, 1993 and
             incorporated herein by reference

4.1          Form of Common Stock Purchase Agreement between the
             Company and Jose Maria Salema Garcao  dated
             December 16, 1996....................................  76

4.2          Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao  dated
             December 16, 1996....................................  87

4.3          Form of Warrant issued to Jose Maria Salema Garcao
             dated December 16, 1996..............................  96

4.4          Common Stock Purchase Agreement between the Company
             and investors in the Private Offering concluded
             December 31, 1996.................................... 101
<PAGE> 72

4.5          Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao  dated
             December 30, 1996.................................... 117

4.6          Form of Warrant issued to Jose Maria Salema Garcao
             dated December 30, 1996.............................. 127

4.7          Form of Common Stock Purchase Agreement between the
             Company and Jose Maria Salema Garcao
             dated March 21, 1997................................. 132

4.8          Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao
              dated March 21, 1997................................ 142

4.9          Form of Warrant issued to Jose Maria Salema Garcao
             dated March 21, 1997................................. 151

4.10         Form of Stock Purchase Agreement between the Company
             and investors in the Private Offering concluded
             April 30, 1997....................................... 156

4.11         Form of Warrant Purchase Agreement between the
             Company and Jose Maria Salema Garcao
             dated April 30, 1997................................. 166

4.12         Form of Warrant Issued to investors in the Private
             Offering concluded April 30, 1997.................... 177

4.13         Form of Common Stock Purchase Agreement between the
             Company and investors in the Private Offering
             concluded October 31, 1997........................... 184

4.14         Form of Common Stock Purchase Warrant issued to
             investors in the Private Offering concluded
             October 31, 1997..................................... 192

4.15    <F3> Form of Securities Purchase Agreement between the
             Company and investors in the Debenture Offering
             concluded May 26, 1998 and incorporated herein by
             reference

4.16    <F3> Filed as an Exhibit to the Company's Current Report
             on Form 8-K filed with the Commission on
             April 6, 1998 and incorporated herein by reference

4.17    <F3> Form of Registration Rights Agreement between the
             Company and investors in the Debenture Offering
             concluded May 26, 1998 and incorporated herein by
             reference

4.18    <F3> Form of 3% Subordinated Convertible Debenture issued
             to investors in the Debenture Offering concluded
             May 26, 1998 and incorporated herein by reference
<PAGE> 73

4.19    <F3> Form of Warrant Purchase Agreement between the
             Company and Investors in the Debenture Offering
             concluded May 26, 1998 and incorporated herein by
             reference

4.20    <F3> Form of Warrant Issued to Investors in the Debenture
             Offering concluded May 26, 1998 and incorporated
             herein by reference

10.1    <F1> Merger Agreement and Plan of Reorganization between
             the Company and Monument Mortgage, Inc., dated
             December 20, 1996 and incorporated herein by
             reference

10.2    <F1> Consulting Agreement between the Company and James
             Umphryes, dated January 1, 1997 and incorporated
             herein by reference

10.3    <F4> 1998 Stock Option Plan incorporated herein by
             reference

10.4         Asset Purchase Agreement between Finet and Real
             Estate Office Software, Inc. dated August 30, 1997... 198

10.5         Stock Purchase Agreement between the Company and
             Coastal Federal Mortgage Company,
             dated April 30, 1998................................. 209

10.6         Stock Purchase Agreement between Finet and MICAL
             Mortgage, Inc., dated May 19, 1998................... 229

21.1         Subsidiaries of Finet Holdings Corporation........... 249

23.1         Consent of Independent Auditors...................... 250

27.1    <F1> Financial Data Schedule, 1997 incorporated herein
             by reference

27.2         Financial Data Schedule, 1998........................ 251
<FN>
<F1>
Filed as an Exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended April 30, 1997 and incorporated herein by reference.
<F2>
Filed as an Exhibit to the Company's Registration Statement on Form SB-2
filed with the Commission on March 18, 1994 and incorporated herein by
reference.
<F3>
Filed as an Exhibit to the Company's Current Report on Form 8-K filed with
the Commission on April 6, 1998 and incorporated herein by reference.
<PAGE> 74
<F4>
Filed as an Exhibit to the Company's Registration Statement on Form S-8
filed with the Commission on June 19, 1998 (Registration No. 333-57287) and
incorporated herein by reference.
</FN>
</TABLE>