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


                             _____________________


                                   FORM 10-Q



[ X ]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 For the quarterly period ended September 30, 1999

                                      or

[   ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 For the transition period from ___________________
       to __________________


                        Commission File Number 0-19847


                          FIRST MORTGAGE CORPORATION
            (Exact name of registrant as specified in its charter)



           California                                  95-2960716
 (State or other jurisdiction of             (I.R.S. Employer Identification
 incorporation or organization)                           No.)





                            3230 Fallow Field Drive
                         Diamond Bar, California 91765
         (Address, including zip code, of principal executive offices)

                                (909) 595-1996
             (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                      YES  X                       NO____

As of September 30, 1999, 5,270,897 shares of the registrant's common stock
were outstanding.

<PAGE>

                          FIRST MORTGAGE CORPORATION
                                   FORM 10-Q

                                     INDEX




Part I - Financial Information                                   Page

Item 1. Financial Statements:

        Balance Sheet
           September 30, 1999 (Unaudited) and March 31, 1999       3

        Unaudited Statement of Operations
           Three Months and Six Months Ended September 30, 1999
           and 1998                                                4

        Unaudited Statement of Cash Flows
           Six Months Ended September 30, 1999 and 1998            5

        Notes to Unaudited Financial Statements                   6-7

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                       8-13

Part II - Other Information

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

Signatures                                                        15
<PAGE>
                        PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements
<TABLE>

FIRST MORTGAGE CORPORATION
BALANCE SHEET
<CAPTION>
                                                 September 30, 1999  March 31, 1999
                                                 (Unaudited)
<S>                                              <C>                 <C>
ASSETS
Cash                                              $9,742,000         $14,839,000
Mortgage loans and mortgage-backed
  securities held for sale                        73,169,000          45,463,000
Other receivables and servicing advances           5,965,000           7,378,000
Capitalized servicing rights, net                 13,165,000          12,475,000
Property and equipment, net                          697,000             761,000
Prepaid expenses and other assets                  1,738,000             765,000

TOTAL ASSETS                                    $104,476,000         $81,681,000

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
   Notes payable, banks                          $43,828,000         $35,469,000
   Note payable, other                            24,886,000                   -
   Sight drafts payable                              330,000           9,450,000
   Accounts payable and accrued liabilities          795,000           2,967,000
   Deferred income taxes                           5,171,000           4,065,000

      Total Liabilities                           75,010,000          51,951,000

STOCKHOLDERS' EQUITY
   Preferred stock, no par value:
      Authorized shares - 1,000,000
      Issued and outstanding shares - None                 -                   -
   Common stock, no par value:
      Authorized shares - 10,000,000
      Issued and outstanding shares - 5,270,897
      at September 30, 1999 and 5,347,197 at
      March 31, 1999                               2,613,000           2,924,000
   Retained earnings                              26,853,000          26,806,000

         Total Stockholders' Equity               29,466,000          29,730,000

TOTAL LIABILITIES AND STOCKHOLDERS'
   EQUITY                                       $104,476,000         $81,681,000


See accompanying notes
</TABLE>
<PAGE>
<TABLE>

                          FIRST MORTGAGE CORPORATION
                       UNAUDITED STATEMENT OF OPERATIONS
<CAPTION>

                                                 Three Months Ended       Six Months Ended
                                                 September 30,            September 30,
                                                 1999       1998          1999         1998
<S>                                              <C>        <C>           <C>          <C>
REVENUES:
   Loan origination income                        $629,000    $989,000     $1,404,00    $2,100,000
   Loan servicing income                         1,948,000   1,957,000      3,873,000    3,881,000
   Gain on sale of mortgage loans                  187,000   4,807,000      2,651,000    8,460,000
   Interest income                               1,462,000     935,000      2,308,000    1,966,000
   Other Income                                      4,000          -           4,000            -

         Total revenues                          4,230,000   8,688,000     10,240,000   16,407,000

EXPENSES:
   Compensation and benefits                     1,666,000   2,585,000      3,973,000    5,003,000
   General and administrative expenses           1,071,000   2,444,000      2,893,000    4,634,000
   Amortization of capitalized servicing rights  1,236,000     829,000      2,393,000    1,700,000
   Interest expense                                558,000     266,000        895,000      525,000

         Total expenses                          4,531,000   6,124,000     10,154,00    11,862,000

INCOME (LOSS) BEFORE INCOME TAXES                 (301,000)  2,564,000        86,000     4,545,000

INCOME TAX (BENEFITS)                             (122,000)  1,060,000        39,000     1,885,000

NET INCOME (LOSS)                                $(179,000) $1,504,000    $   47,000   $ 2,660,000


BASIC AND DILUTED
  EARNINGS (LOSS) PER SHARE                      $   (0.03) $     0.27    $     0.01   $      0.47




See accompanying notes


<PAGE>

</TABLE>
<TABLE>
                          FIRST MORTGAGE CORPORATION
                       UNAUDITED STATEMENT OF CASH FLOWS
<CAPTION>
                                                              Six Months Ended
                                                              September 30
                                                              1999               1998
<S>                                                           <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                                       $ 47,000         $2,660,000
 Adjustments to reconcile net income to net
  cash provided by (used in) operating activities:
 Provision for deferred income taxes                             1,106,000            569,000
 Provision for losses on foreclosure                              (250,000)           (54,000)
 Amortization of capitalized servicing rights                    2,393,000          1,700,000
 Depreciation and amortization of property and equipment           138,000            130,000
 Change in excess service fee                                       18,000             36,000
 Loss on sale of assets                                             (2,000)                 -
 Originations and purchases of mortgage loans
  held for sale                                               (173,658,000)      (433,509,000)
 Sales and principal repayments of mortgage
  loans held for sale                                          145,952,000        429,209,000
 Change in other receivables and servicing advances              1,663,000          1,832,000
 Change in prepaid expenses and other assets                      (973,000)           223,000
 Change in accounts payable and accrued liabilities             (2,172,000)           571,000
 Change in income taxes payable                                          -             57,000

Net cash provided by (used in) operating activities            (25,738,000)         3,424,000

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of mortgage servicing rights                            (518,000)           (23,000)
 Originated mortgage servicing rights                           (2,583,000)        (4,220,000)
 Purchase of furniture, equipment and leasehold improvements       (76,000)          (163,000)
 Proceeds from sale of assets                                        4,000                  -

Net cash used in investing activities                           (3,173,000)        (4,406,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Change in notes payable, banks                                  8,359,000         (2,573,000)
 Change in sight drafts payable                                 (9,120,000)           180,000
 Change in note payable, other                                  24,886,000                  -
 Repurchase of common stock                                       (311,000)        (1,075,000)

Net cash provided by (used in) financing activities             23,814,000         (3,468,000)

DECREASE IN CASH                                                (5,097,000)        (4,450,000)

CASH, BEGINNING OF PERIOD                                       14,839,000          8,182,000

CASH, END OF PERIOD                                             $9,742,000         $3,732,000

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
 Interest                                                         $859,000           $416,000
 Income taxes                                                            -          1,000,000

See accompanying notes

</TABLE>
<PAGE>
                          FIRST MORTGAGE CORPORATION
                    NOTES TO UNAUDITED FINANCIAL STATEMENTS
                              September 30, 1999

1.  BASIS OF PRESENTATION

    The accompanying unaudited financial statements have been prepared in
    accordance with generally accepted accounting principles for interim
    financial information and in accordance with the instructions to Form 10-Q
    and Regulation S-X.  In the opinion of management, all adjustments
    (consisting only of normal recurring accruals) necessary for a fair
    presentation of the results for the interim periods have been included.
    The results of operations for the interim periods are not necessarily
    indicative of the results to be expected for the full year.  In addition,
    this document should be read in conjunction with the financial statements
    and footnotes included in the Company's annual report on Form 10-K for
    fiscal year ended March 31, 1999.

    The preparation of the financial statements of the Company requires
    management to make estimates and assumptions that affect reported amounts.
    These estimates are based on information available as of the date of the
    financial statements.  Therefore, actual results could differ from those
    estimates.


2.  CAPITALIZED SERVICING RIGHTS
<TABLE>

    Activities in capitalized servicing rights are summarized as follows:
<CAPTION>
                                Six Months ended
                                September 30
                                1999       1998
<S>                             <C>         <C>
Beginning balance               $12,475,000  $7,490,000
   Additions                      3,101,000   4,243,000
   Amortizations and write offs  (2,411,000) (1,736,000)

Ending balance                  $13,165,000  $9,997,000

</TABLE>
3.  NOTES PAYABLE

    At September 30, 1999, the Company had mortgage loan warehousing agreements
    with two nonaffiliated banks, which provided for borrowings up to
    $50,000,000 and $35,000,000 with annual interest payable monthly at 1.25%
    or the bank's reference rate, depending on the level of borrowings and the
    compensating balances maintained.  At September 30, 1999, borrowings under
    these lines of $43,828,000 were collateralized by mortgage loans and
    mortgage-backed securities held for sale.

    The mortgage loan warehousing agreements are subject to renewal on August
    31, 2000, and both contain certain requirements, including but not limited
    to, the maintenance of minimum net worth, debt to net worth ratio, current
    ratio, net income and servicing portfolio, and restrict the Company's
    ability to pay dividends.  The Company believes its warehousing agreements
    will be renewed prior to their expiration.

   In addition to the warehousing agreements, the Company makes use of the
   short-term reverse repurchase agreement provided by an investment banking
   firm in connection with its inventory of mortgage-backed securities.  This
   facility tends to carry lower interest rates and also allows the Company to
   better utilize its warehousing lines.  Borrowings outstanding under this
   facility totaled $24.89 million at September 30, 1999.

<PAGE>

4.  EARNINGS PER SHARE
<TABLE>

   The following table sets forth the computation of basic and diluted
   earnings per share:
<CAPTION>
                                                                Three Months Ended      Six Months Ended
                                                                September 30,           September 30,
                                                                1999       1998         1999      1998
<S>                                                             <C>        <C>          <C>       <C>
Numerator:
Net income                                                      $(179,000) $1,504,000     $47,000 $2,660,000

Denominator:
 Shares used in computing basic earnings per share              5,298,983   5,569,697   5,308,816  5,658,069
 Effect of stock options treated as equivalents under the
  treasury stock method                                             2,636       4,768       6,358      9,494
 Denominator for diluted earnings per share                     5,301,619   5,574,465   5,315,174  5,667,563
 Basic earnings per share                                           $(.03)       $.27        $.01       $.47
 Diluted earnings per share                                         $(.03)       $.27        $.01       $.47
</TABLE>


5.  NEW ACCOUNTING PRONOUNCEMENTS

    In June 1998, the FASB issued SFAS 133, Accounting for Derivative
    Instruments and Hedging Activities.  This Statement provides guidance for
    the way public enterprises report information about derivatives and hedging
    in annual financial statements and in interim financial reports.  The
    derivatives and hedging disclosure is required for financial statements for
    fiscal years beginning after June 15, 2000.  The Statement will require the
    Company to recognize all derivatives on the balance sheet at fair value.
    Derivatives that are not hedged must be adjusted to fair value through
    income.  If the derivative is a hedge, depending on the nature of the
    hedge, changes in fair value of derivatives will either be offset against
    the change in fair value of the hedged assets, liabilities, or firm
    commitments through earnings or recognized in earnings.  The ineffective
    portion of a derivative's change in fair value will be immediately
    recognized in earnings.  The Company is in the process of evaluating the
    effect of Statement 133, if any, will have on the earnings and financial
    position of the Company.



6.  CONTINGENCIES

    The Company is currently a defendant in certain litigation arising in the
    ordinary course of business.  It is management's opinion that the outcome
    of these actions will not have a material effect on the financial position
    or results of operations of the Company.


<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD LOOKING STATEMENTS

Certain statements in this Form 10-Q are forward-looking statements, including
those that discuss strategies, goals, outlook, projected revenues, income,
return and other financial measures.  These forward-looking statements are
subject to risk and uncertainties that may cause actual results to differ
materially from those contained in the statements, including the following
factors: (i) the direction of interest rates; (ii) the demand for mortgage
credits; (iii) the ability to obtain sufficient financial sources for liquidity
and working capital; (iv) changes in laws or regulations governing mortgage
banking operations; and (v) level of competition within the mortgage banking
industry.  In addition, the words "believe," "expect," "anticipate," "intend,"
"will" and similar words identify forward-looking statements in this Form 10-Q.


RESULTS OF OPERATIONS:

Three months ended September 30, 1999 compared to three months ended September
30, 1998.


GENERAL

     First Mortgage reported a net loss of $179,000 or $0.03 per share for the
     quarter ended September 30, 1999, compared to net income of $1.504 million
     or $0.27 per share for the comparable 1998 quarter.  The decrease was
     primarily attributable to the increase in mortgage interest rates during
     the course of the period, which resulted in a sharp fall-off in new loan
     production.  In turn, reductions in income from origination and gain on
     sale of mortgages outran a substantial reduction in most expense
     categories.


REVENUES

     For the quarter ended September 30, 1999, the volume of new mortgage loans
     closed decreased by 72.8% to $57.28 million from $210.44 million in the
     prior year quarter and loan origination revenue decreased by approximately
     36.4% to $629,000 from the September 1998 quarter.  The decrease is a
     reflection of higher long-term interest rates, which significantly
     impacted refinancing loans in the market place, and to a lesser degree,
     loans for the purchase of housing.

     As of September 30, 1999, the Company serviced $1.638 billion in loans
     compared to $1.662 billion at September 30, 1998, a decrease of 1.44%.
     Total loan servicing income, including late charges and other
     miscellaneous fees also fell slightly to $1.95 million in the September
     1999 quarter, from $1.96 million in the prior year quarter.  The small
     decrease was primarily due to lower loan production volume as explained in
     the preceding paragraphs.



<PAGE>

<TABLE>
     The following table sets forth certain information pertaining to the
     servicing portfolio of the Company for the period indicated.
<CAPTION>
                                            Three Months Ended
                                            September 30,
                                            1999            1998
                                            (Dollars in thousands except average loan balance)
     <S>                                     <C>            <C>
     Beginning loan service portfolio        $1,523,082      $1,570,671

     Add: Loans originated                       57,284         210,440
          Purchased Loans                        70,505               -

     Less: Prepayment and amortization           91,706         207,161

     Ending loan servicing portfolio          1,559,165       1,573,950
     Sub-Servicing                               78,540          88,450
     Total servicing portfolio               $1,637,705      $1,662,400
     Average loan balance (end of period)      $ 91,380       $  94,214
     Number of Loans                             17,922          17,645

</TABLE>

     Due to an increase in long-term mortgage interest rates during the
     quarter, coupled with the resulting sharp reduction in new loan
     originations, the gain on sale of mortgage loans was $187,000 for the
     three months ended September 30, 1999, a decrease of 96.1% over the
     comparable 1998 period.

     Interest income, which reflects the interest received on mortgage loans
     and mortgage-backed securities held for sale, increased to $1.46 million
     for the three months ended September 30, 1999 from $935,000 for the
     comparable prior year quarter.  This increase was due primarily to the
     larger mortgage-backed securities inventory carried in the warehouse line
     by the Company during the September 1999 quarter.


EXPENSES

     The major components of the Company's total expenses are (i) compensations
     and benefits, (ii) general and administrative expenses, (iii) amortization
     of capitalized servicing rights, and (iv) interest expense.  Total
     expenses for the three months ended September 30, 1999 decreased by 26% to
     $4.53 million from the three months ended September 30, 1998.
     Compensations and benefits were $1.67 million for the September 1999
     quarter, a decrease of 35.6% over the year-ago quarter.  General and
     administrative expense decreased by $1.37 million, or 56.2% over the prior
     year.  These lower expenses were a direct result of contracting production
     operations in the quarter, along with other cost reduction measures taken
     by the Company over the course of this year.

     Amortization of capitalized servicing rights in fiscal 1999 increased over
     prior years due mainly to the larger investment in mortgage servicing
     rights and higher volume of prepayments from refinances over the
     comparable prior period.

     Interest expense increased 109.8% to $558,000 for quarter ended September
     1999 from $266,000 for the same period in 1998.  The increase was due to a
     larger volume of loans and mortgage-backed securities carried in the
     warehouse line during the quarter, as compared to the same period a year
     ago.




<PAGE>

RESULTS OF OPERATIONS:

Six months ended September 30, 1999 compared to six months ended September 30,
1998


GENERAL

     In the six months ended September 30, 1999, the Company reported net
     income of $47,000 or $0.01 per share, compared to net income of $2.66
     million or $0.47 per share for the same period of 1998.  Total revenue
     decreased by 37.6% to $10.24 million from $16.41 million in the
     comparable prior period.  The decrease in net income was largely due to
     the increase in mortgage interest rates during this period, which
     resulted in a nearly 60% falloff in new loan production.


REVENUES

     For the six months ended September 30, 1999 the volume of new mortgage
     loan originations decreased 59.9% to $173.66 million from $433.51 million
     in the comparable period last year, and the loan origination revenue
     decreased 33.1% to $1.40 million from $2.10 million for the six months
     ended September 30, 1998.  The lower loan origination revenue was largely
     due to the reduction of new loans originated by the Company.

     Loan servicing income, representing the loan servicing fees, late charges
     and other fees earned by the Company for administering the loans in its
     servicing portfolio, fell slightly to $3.87 million for the six months
     ended September 30, 1999 from $3.88 million for the same period in 1998.
     The decrease in servicing income is primarily due to a small drop in the
     Company's servicing portfolio as compared to the same period last year.

     The following table sets forth certain information pertaining to the
     servicing portfolio of the Company for the period indicated:
<TABLE>
<CAPTION>
                                            Six Months Ended September 30,
                                            1999           1998
                                            (Dollars in thousands except average loan balance)
       <S>                                  <C>            <C>
       Beginning loan service portfolio     $1,527,507     $1,570,143
       Add: Loans originated                   173,514        433,509
            Purchased Loans                     70,505              -

       Less: Prepayment and amortization       212,361        429,702

       Ending loan servicing portfolio       1,559,165      1,573,950
       Sub-Servicing                            78,540         88,450
       Total servicing portfolio            $1,637,705     $1,662,400
       Average loan balance (end of period)    $91,380        $94,214
       Number of Loans                          17,922         17,645

</TABLE>

     The sale of mortgages for the six months ended September 30, 1999
     resulted in a gain of $2.65 million compared to a gain of $8.46 million
     for the 1998 period.  The decrease is primarily attributable to the
     unfavorable trend in long-term interest rates in 1999, coupled with the
     sharp reduction in new loans originated.

     Interest income, which reflects the interest earned on mortgage loans and
     mortgage-backed securities held for sale, was $2.31 million for the six
     months ended September 30, 1999 as compared to $1.97 million over the
     comparable 1998 period.  The increase was as a result of the higher
     volume of loans and mortgage-backed securities carried in the warehouse
     line compared to the earlier period.


<PAGE>



EXPENSES

     The major components of the Company's total expenses are (i) compensation
     and benefits, (ii) general and administrative expenses, (iii)
     amortization of capitalized servicing rights, and (iv) interest expenses.
     Total expenses for the six months ended September 30, 1999 decreased by
     $1.71 million or 14.4% from the six months ended September 30, 1998.
     Compensation and benefits decreased 20.6% to $3.97 million compared to
     $5.00 million in the first six months of fiscal year 1998.  General and
     administrative expenses decreased by 37.6% to $2.89 million from the
     comparable period in 1998.  The decreases in these expenses were largely
     a result of the reduction in loan originations and associated
     compensation and general and administrative expenses in the first half of
     fiscal year 1999.

     The increase in amortization of capitalized servicing rights was mainly
     due to larger investment in servicing rights and higher volume of loan
     prepayments over the prior period.

     Interest expense increased 70.5% to $895,000 as compared to $525,000 in
     the year-earlier six months, due primarily to the larger volume of loans
     carried in the warehouse line during the period.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal liquidity requirement is the funding of its new
     mortgage loans and loan origination expenses.  To meet these funding
     needs, the Company relies on warehouse lines of credit with banks, its own
     capital, and also cash flows from operations.

     At September 30, 1999, maximum permitted borrowings under the mortgage
     loan warehousing agreements with two nonaffiliated banks totaled $85
     million and the amount outstanding was $43.83 million.  Borrowings under
     these facilities are secured by mortgage loans and mortgage-backed
     securities.  The agreements contain various covenants, including minimum
     net worth, current ratio, net income, servicing portfolio balances, debt
     to net worth ratio, and restrict the Company's ability to pay dividends.
     The Company was in compliance with all debt covenants at September 30,
     1999.  The Company believes that the warehouse agreements will be renewed
     when the current term expires.

     In addition to the warehouse lines of credit, the Company makes use of the
     short-term reverse repurchase agreement provided by an investment banking
     firm in connection with its inventory of mortgage-backed securities.  This
     facility tends to carry lower interest rates and also allows the Company
     to better utilize its warehousing lines.  Borrowings outstanding under
     this facility totaled $24.89 million at September 30, 1999.

     In the first six months in fiscal year 2000, the Company repurchased in
     open market transactions 76,300 shares of its common stock at an aggregate
     cost of $311,000.

     The Company had stockholders' equity of $29.47 million at September 30,
     1999.  Management believes that its current financing arrangements are
     adequate to meet its projected operational needs.


DISCLOSURE ABOUT MARKET RISK

    The Company manages many risks in its normal course of business, however,
     the management considers interest rate risk to be the most significant
     market risk which could materially impact its financial position and
     results of operations. The movements in interest rates affect the value of
     capitalized mortgage servicing rights, the mortgage inventory held for
     sale, volume of loan production and total net interest income earned.

     The Company has been managing this risk by striving to balance its loan
     origination and loan servicing segments, which generally are counter
     cyclical in nature. In an environment of raising interest rates, loan
     production will slow down, but the drop in origination income is mitigated
     by decrease in the loan

 <PAGE>

     prepayment rate in its servicing portfolio and hence write-offs,
     amortization and impairment charges against income will fall. Conversely,
     the opposite scenario is true during a period of declining interest rates.
     The overall objective is to offset changes in the values of the following
     items arising from fluctuations in interest rates, such as the production
     pipeline, mortgage loan inventory, mortgage-backed securities held for
     sale and capitalized mortgage servicing rights. The Company does not
     speculate on the direction or movement of the interest rates.

     Based on the information available and the interest environment as of
     September 30, 1999, the Company believes that a 50 basis point change in
     long-term interest rates over a twelve month period, up or down and all
     else being constant, would increase or decrease the Company's gross income
     by approximately $2.5 million dollars. These estimates are limited by the
     fact that they are performed at a particular point in time and do not
     incorporate many other factors and, consequently, should not be relied on
     as a forecast of actual results.


YEAR 2000 ISSUES

     Many companies will face serious information problems because their
     software programs written in the past may not properly recognize calendar
     dates beginning in the year 2000. Since the Company utilizes various
     vendors and interfaces with numerous financial institutions in conducting
     its business, the Company is exposed to the risk that its own systems and
     systems of vendors and institutions may not be Year 2000 compliant.
     Failure to adequately address these challenges could have an adverse
     impact on the operations of the Company.

     The Company has adopted its Year 2000 Plan to prepare its entire computer
     systems to properly calculate dates beyond December 31, 1999. Service
     bureaus responsible for maintaining the Company's Loan Administration
     System and Accounting System were contacted and upgrades for converting
     the system to become Year 2000 compliant have been installed and
     implemented successfully.  The Company is also taking steps to ensure that
     the vendors and institutions that it utilizes are also taking necessary
     steps to be Year 2000 compliant.

     Additionally, the Company decided to enroll in the Mortgage Bankers
     Association (`MBA') Year 2000 Readiness Test. Through this extensive inter-
     industry testing over a ninety-day period, the Company has gained valuable
     information of its systems and of the various communication hardware and
     interface pieces. The Company has passed the MBA Year 2000 Readiness Test.

     The estimated total pre-tax cost of the Year 2000 Plan, including new
     hardware and software modifications, will be approximately $150,000 to
     $200,000, of which $150,000 has been incurred through September 30, 1999.

     The Company has developed contingency plans including identifying
     alternative processing platforms, outsourcing certain critical functions
     and the ability to process monthly government reportings manually.  The
     Company believes that all its systems will be Year 2000 compliant prior to
     December 31, 1999, however there can be no assurance that its warehouse
     lenders, depository institutions, custodians, business partners and
     vendors can resolve their own Year 2000 issues in a timely manner. Neither
     can the Company be assured that any failure by these other parties would
     not have an adverse impact on the Company's operations and financial
     condition.


PROSPECTIVE TRENDS

     Late in the last fiscal year ended March 31, 1999, long term interest
     rates began to move steadily upwards from the levels which prevailed
     during most of that fiscal year.  For example, the prevailing interest
     rate for our standard 30 year fixed-rate loan progressed from 6.75% on
     September 30, 1998, to 7.25% on March 31, 1999, to 7.75% on June 30, 1999,
     and 8.125% as of October 25, 1999.  Each move up eliminated more

<PAGE>

     loans eligible for refinancing and, since the majority of our production
     was in refinance loans, our new loan production began to fall accordingly.
     Compared to last year, in the first quarter our originations fell 47.8%,
     and in the second quarter 72.8%, a cumulative total reduction of 59.9% for
     the entire period.  Should mortgage interest rates remain at, or increase
     from, today's level, we expect similar reductions in new loan production
     to continue, as compared to last year.  Operating results would therefore
     continue to be adversely affected over the near future.

     Although the production numbers being reported for this fiscal year are
     being compared against year-earlier numbers, and those numbers were all-
     time records for the Company and the industry, the loan production
     refinance wave is over for this cycle, and loans for the purchase of new
     housing are also being negatively impacted.  We are also entering the
     traditional seasonal slowdown in housing sales, so the outlook for the
     rest of the fiscal year is poor.

     This can all turn around of course, should interest rates return to the
     lower levels of last year.  Be that as it may, we have taken several steps
     to adjust our operations for the higher interest rates now prevailing in
     the market.  The entire management staff have taken salary cuts; our
     employee staffing has been reduced by 42%, with many of the remaining
     employees on reduced workweeks; and our commission compensation expense is
     falling along with the reduction in production.

     We are refocusing emphasis to our retail branch production channel, which
     traditionally is more heavily directed towards loans for the purchase of
     housing rather than refinancing.  This channel has withered over the past
     year, with several branches closing, and a new retail production manager
     has been brought into the Company to turn this channel around and re-build
     the retail branch system.  He has extensive experience and an excellent
     track record in similar past endeavors, and we believe he will be
     successful in the retail re-building process.  We've also opened an
     Internet website structured towards potential borrowers for purchase
     financing.  Our direct marketing channel has been re-tooled to home equity
     loans and traditional cash-out refinancing, instead of the previous
     concentration on interest rate-reduction refinance loans.

     The Company has entered into an exclusive loan sale partnership with a
     west coast bank which gives us a very competitive menu of conventional
     loan products to $750,000.  We've also entered into correspondent
     agreements with a thrift institution and two Real Estate Investment Trusts
     which specialize in adjustable rate (ARM) loans.  This is important
     because in a higher interest rate environment ARM loans become more
     attractive to consumers, and we are now well equipped with the ARM
     products and the investors to compete for any such demand.

     We believe we are taking the right steps to operate effectively in the
     current environment, but the volume of available mortgage production is
     always dependent, almost exclusively, on the level of interest rates.  The
     higher rates will definitely hurt us going forward.  Pricing, as we've
     often reported, is also under pressure and is likely to become more
     intense as the pool of available mortgages shrinks with the return of
     higher interest rates.  The combination of higher rates, low new loan
     production, and pricing pressures will continue to negatively impact our
     revenues and profits at least through the next quarter, and perhaps
     longer.
<PAGE>


                         PART II.  OTHER INFORMATION.


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

        (a)  No exhibits are filed with this report.

        (b)  The Company did not file any reports on Form 8-K during the quarter
             ended September 30, 1999.
<PAGE>
                                  SIGNATURES


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


Date:  November 10, 1999                FIRST MORTGAGE CORPORATION



                                        BY S/Clement Ziroli
                                          Clement Ziroli
                                          Chairman of the Board of Directors
                                          Chief Executive Officer




Date:  November 10, 1999                FIRST MORTGAGE CORPORATION



                                        BY S/Pac W. Dong
                                          Pac W. Dong
                                          Executive Vice President,
                                          Chief Financial Officer