FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549


/X/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

      For the quarterly period ended March 31, 1998

                              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 2-63708

           METROPOLITAN MORTGAGE & SECURITIES CO., INC.
      (Exact name of registrant as specified in its charter)

          WASHINGTON                             91-0609840
 (State or other jurisdiction of            (I.R.S. Employer
  incorporation or organization)             Identification No.)

       929 WEST SPRAGUE AVENUE, SPOKANE, WASHINGTON   99201
         (Address of principal executive offices)  (Zip Code)

Registrant's telephone number, including area code: (509)838-3111

Former  name,  former address and former fiscal year, if  changed  since  last
report:  N/A.

       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 / /

      APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:  N/A.

       Indicate  by check mark whether the registrant has filed all  documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes / /   No / /   N/A.

      APPLICABLE ONLY TO CORPORATE ISSUERS:

       Indicate  the  number  of shares outstanding of each  of  the  issuer's
classes of common stock, as of the latest practicable date.

      Common "A": 130 shares at April 30, 1998.
      Common "B":   0 shares at April 30, 1998.

                 METROPOLITAN MORTGAGE & SECURITIES CO., INC.
                                     INDEX

                        PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

      Condensed Consolidated Balance Sheets
      As of March 31, 1998 and September 30, 1997 (unaudited)

      Condensed Consolidated Statements of Income
      Three and Six Months Ended March 31, 1998 and 1997 (unaudited)

      Condensed Consolidated Statements of Cash Flows
      Six Months Ended March 31, 1998 and 1997 (unaudited)

      Notes to Condensed Consolidated Financial Statements

                        PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

         METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                             March 31,      September 30,
                                               1998              1997
                                          ______________    ______________
<S>                                       <C>               <C>
ASSETS                                                      
  Cash and Cash Equivalents               $   31,991,298    $   58,924,958
  Investments                                               
    Trading Securities, at market             45,416,588        34,477,091
    Available-for-Sale Securities, at                       
      Market                                  30,752,548        36,621,351
    Held-to-Maturity Securities, at                         
      Amortized cost (market value                          
      $109,072,753 and $112,711,688)         108,788,268       113,730,535
                                                            
  Accrued Interest on Investments              1,347,678    _____1,516,739
                                                            
      TOTAL CASH AND INVESTMENTS             218,296,380    __ 245,270,674
                                                            
  Real Estate Contracts and Mortgage                        
    Notes and Other Receivables              678,362,731       677,398,455
  Pledged Real Estate Contracts and                         
    Mortgage Notes
      Nikko Financial Services                93,975,099    
      Nation's Banc Mortgage Capital          48,686,164    
  Real Estate for Sale and Development,                     
    Including Foreclosed Real Estate          87,987,130        81,802,266
                                          ______________    ______________
  Total Receivables and Real Estate                         
    Assets                                   909,011,124       759,200,721
  Less Allowance for Losses                  (12,310,751)      (12,327,098)
                                          ______________    ______________
      NET RECEIVABLES AND REAL ESTATE                       
         ASSETS                              896,700,373       746,873,623
                                          ______________    ______________
  Deferred Acquisition Costs, Net             72,703,766        72,503,095
  Land, Building and Equipment - net                        
    of accumulated depreciation               21,292,198         9,408,578
  Other Assets, net of allowance              37,355,586        38,333,490
                                          ______________    ______________
      TOTAL ASSETS                        $1,246,348,303    $1,112,389,460
                                          ==============    ==============
</TABLE>

The  accompanying  notes  are an integral part of the  condensed  consolidated
financial statements.

         METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                             March 31,      September 30,
                                               1998              1997
                                          ______________    ______________
<S>                                       <C>               <C>
LIABILITIES                                                 
  Life Insurance and Annuity Reserves     $  818,675,648    $  825,368,988
  Debenture Bonds                            186,493,066       185,213,688
  Notes Payable                                             
    Nikko Financial Services                  92,095,597    
    Nation's Banc Mortgage Capital            46,695,874    
  Other Debt Payable                           4,927,334         4,917,779
  Accounts Payable and Accrued Expenses       18,550,502        19,114,354
  Deferred Income Taxes                       21,264,126        22,029,778
  Minority Interest in Consolidated                         
    Subsidiaries                               1,658,939         1,632,139
                                          ______________    ______________
    TOTAL LIABILITIES                      1,190,361,086     1,058,276,726
                                          ______________    ______________
STOCKHOLDERS' EQUITY                                        
  Preferred Stock, Series A, B, C, D,                       
    E Cumulative with Variable Rate,                        
    $10 Par Value, Authorized 8,325,000,                    
    issued 2,060,962 Shares and                             
    2,095,414 Shares (Liquidation                           
    Preference $51,041,957 and                              
    $50,729,084, respectively)                20,609,621        20,954,141
  Class A Common Stock-Voting, $2,250                       
    par value, authorized 222 shares,                       
    issued 130 shares                            293,417           293,417
  Additional Paid-In Capital                  19,259,024        18,596,231
  Retained Earnings                           16,372,087        14,536,114
  Net Unrealized Losses on                                  
    Investments, Net of Income Taxes            (546,932)         (267,169)
                                          ______________    ______________
    TOTAL STOCKHOLDERS' EQUITY                55,987,217        54,112,734
                                          ______________    ______________
    TOTAL LIABILITIES AND STOCKHOLDERS'                     
      EQUITY                              $1,246,348,303    $1,112,389,460
                                          ==============    ==============
</TABLE>

   The accompanying notes are an integral part of the condensed consolidated
                             financial statements.
          METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                  Three Months Ended               Six Months Ended           
                                                       March 31,                        March 31,
                                                 1998             1997            1998           1997
                                             ____________     ____________    ____________   ____________
<S>                                          <C>              <C>             <C>            <C>
REVENUES                                                                                     
  Insurance Premiums Earned                  $    700,000     $    750,000    $  1,400,000   $  1,500,000
  Interest and Earned Discounts                23,706,733       22,774,077      45,930,186     46,879,593
  Real Estate Sales                             6,014,128        7,305,686      15,038,043     14,152,386
  Fees, Commissions, Service and Other                                                       
    Income                                      1,667,923        1,177,497       3,448,743      2,385,584
  Investment Gains (Losses), Net                2,309,758           43,996       6,463,234     (2,116,159)
  Realized Gains on Sales of Receivables          212,819        1,712,582         311,209     11,547,541
                                             ____________     ____________    ____________   ____________
    TOTAL REVENUES                             34,611,361       33,763,838      72,591,415     74,348,945
                                             ____________     ____________    ____________   ____________
EXPENSES                                                                                     
  Insurance Policy and Annuity Benefits        12,162,952       12,009,603      24,428,059     25,065,014
  Interest Expense                              5,093,247        3,983,599       9,157,889      9,818,921
  Cost of Real Estate Sold                      5,769,929        7,702,652      14,227,663     15,142,661
  Provision for Losses on Real Estate                                                        
    Assets                                        932,769        1,410,613       2,698,803      1,996,834
  Salaries and Employee Benefits                4,301,927        3,337,224       8,385,724      6,370,158
  Commissions to Agents                         2,302,027        2,065,315       4,260,157      4,224,085
  Other Operating and Underwriting                                                           
    Expenses                                    1,677,123        1,517,514       3,225,705      3,817,418
  Decrease in Deferred Acquisition Costs          242,085           (5,582)        651,187        232,373
                                             ____________     ____________    ____________   ____________
    TOTAL EXPENSES                             32,482,059       32,020,938      67,035,187     66,667,464
                                             ____________     ____________    ____________   ____________
Income Before Income Taxes and                                                               
  Minority Interest                             2,129,302        1,742,900       5,556,228      7,681,481
Provision for Income Taxes                       (733,190)        (595,884)     (1,891,772)    (2,618,051)
                                             ____________     ____________    ____________   ____________
Income Before Minority Interest                 1,396,112        1,147,016       3,664,456      5,063,430
Income of Consolidated Subsidiaries                                                          
  Allocated to Minority Stockholders              (15,860)         (26,740)        (45,800)       (62,300)
                                             ____________     ____________    ____________   ____________
Net Income                                      1,380,252        1,120,276       3,618,656      5,001,130
Preferred Stock Dividends                        (929,981)      (1,013,595)     (1,918,252)    (2,036,960)
                                             ____________     ____________    ____________   ____________
INCOME APPLICABLE TO COMMON STOCKHOLDERS     $    450,271     $    106,681    $  1,700,404   $  2,964,170
                                             ============     ============    ============   ============
Basic and Diluted Income per Share                                                           
Applicable to Common Stockholders            $      3,464     $        821    $     13,080   $     22,801
                                             ============     ============    ============   ============
Weighted Average Number of shares of Common                                                  
Stock Outstanding                                     130              130             130            130
                                             ============     ============    ============   ============

</TABLE>

The accompanying notes are an integral part of the condensed consolidated
financial statements.

METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                             Six Months Ended March 31,
                                               1998              1997
                                          ______________    ______________
<S>                                       <C>               <C>
NET CASH PROVIDED BY (USED IN)                              
  OPERATING ACTIVITIES                    $   12,798,368    $ (108,186,295)
                                          ______________    ______________
CASH FLOWS FROM INVESTING ACTIVITIES                        
  Change in Restricted Cash and Cash                        
    Equivalents                                                132,652,334
  Principal Payments on Real Estate                         
    Contracts and Mortgage Notes and                        
    Other Receivables                         69,097,991        67,805,747
  Proceeds From Real Estate Sales              9,728,421         3,137,570
  Proceeds From Investment Maturities          9,113,052        11,065,918
  Proceeds from Sale of Available-for-                      
    Sale Securities                            1,769,954         1,266,029
  Purchase of Available-for-Sale                            
    Securities                                  (296,213)      (46,041,430)
  Purchase of Held to Maturity                              
    Securities                                                     (99,625)
  Proceeds From Sale of Real Estate                         
    Contracts and Mortgage Notes and                        
    Other Receivables                         16,173,667       172,200,857
  Acquisition of Real Estate Contracts                      
    and Mortgage Notes and Other                            
    Receivables                             (236,203,708)     (185,348,456)
  Additions to Real Estate Held               (8,317,048)      (10,858,716)
  Capital Expenditures                       (12,653,630)       (1,061,356)
                                          ______________    ______________
    NET CASH PROVIDED BY (USED IN)                          
      INVESTING ACTIVITIES                  (151,587,514)      144,718,872
                                          ______________    ______________
CASH FLOWS FROM FINANCING ACTIVITIES                        
  Net Change Short Term Borrowings From                     
    Brokers and Banks                        138,805,971       (25,484,750)
  Receipts From Life and Annuity              34,443,890        36,290,797
Products
  Withdrawals on Life and Annuity                           
    Products                                 (65,394,799)      (54,523,739)
  Ceding of Life and Annuity Products to                    
    Reinsurers, Net                            1,280,927    
  Repayment to Banks and Others                 (716,101)       (1,995,409)
  Issuance of Debenture Bonds                 34,889,197        21,561,718
  Issuance of Preferred Stock                  1,046,570         1,099,990
  Repayment of Debenture Bonds               (29,989,189)      (26,696,985)
  Preferred Stock Dividends                   (1,918,252)       (2,036,960)
  Redemption of Capital Stock                   (728,297)          (77,465)
  Receipt of Contingent Sale Price for                      
    Subsidiary Sold to Related Party             135,569           249,721
                                          ______________    ______________
NET CASH  PROVIDED BY (USED IN) FINANCING                   
ACTIVITIES                                   111,855,486       (51,613,082)
                                          ______________    ______________
Net Change in Cash and Cash Equivalents      (26,933,660)      (15,080,505)
Cash and Cash Equivalents at Beginning                      
  Of Period                                   58,924,958        35,226,746
                                          ______________    ______________
CASH AND CASH EQUIVALENTS AT END                            
  OF PERIOD                               $   31,991,298    $   20,146,241
                                          ==============    ==============
</TABLE>

The accompanying notes are an integral part of the condensed consolidated
financial statements.

         METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    In  the  opinion  of  the Company, the accompanying unaudited  condensed
      consolidated  financial statements contain all adjustments necessary  to
      present  fairly the Company's financial position as of March  31,  1998,
      and  the results of operations for the three and six months ended  March
      31,  1998 and 1997 and the cash flows for the six months ended March 31,
      1998  and  1997.  The results of operations for the three and six  month
      periods ended March 31, 1998 and 1997 are not necessarily indicative  of
      the  results  to  be  expected for the full year.  As  provided  for  in
      regulations  promulgated by the Securities and Exchange Commission,  all
      financial  statements  included  herein  are  unaudited;  however,   the
      condensed  consolidated balance sheet at September  30,  1997  has  been
      derived  from  the audited consolidated balance sheet.  These  financial
      statements should be read in conjunction with the consolidated financial
      statements including notes thereto included in the Company's fiscal 1997
      Form 10-K.

2.    The principal amount of receivables as to which payments were in arrears
      more than three months was $34,600,000 at March 31, 1998 and $36,000,000
      at September 30, 1997.

3.    The  Company  had  no outstanding legal proceedings  other  than  normal
      proceedings  associated with receivable foreclosures and/or the  general
      business activities of the Company.

4.    Certain  amounts  in  the prior year's condensed consolidated  financial
      statements  have  been reclassified to conform with the  current  year's
      presentation.   These reclassifications had no effect on net  income  or
      retained earnings as previously reported.

5.    The   Company  has  retained  residual  interests  from  its  receivable
      securitizations.   At  March  31, 1998, the Company  held  approximately
      $23.7  million in residual certificates at their estimated  fair  market
      value.   The  Company currently values its residual certificates  at  an
      approximate 12% return which is after considering expected losses and an
      approximate 15% prepayment rate.

6.    In  February 1997, Statement of Financial Accounting Standards  No.  128
      (SFAS  128),  "Earnings  per Share" was issued.   SFAS  128  establishes
      standards  for  computing and presenting earnings per  share  (EPS)  and
      simplifies   the  existing  standards.   This  standard   replaces   the
      presentation of primary EPS with a presentation of basic EPS.   It  also
      requires the dual presentation of basic and diluted EPS on the  face  of
      the  income  statement for all entities with complex capital  structures
      and  requires a reconciliation of the numerator and denominator  of  the
      basic  EPS  computation to the numerator and denominator of the  diluted
      EPS  computation.  SFAS 128 is effective for financial statements issued
      for  periods  ending after December 15, 1997, including interim  periods
      and  requires  restatement  of  all  prior-period  EPS  data  presented.
      Accordingly,  the Company applied this new standard during  the  quarter
      ended December 31, 1997 and all prior-period EPS data has been restated.
      The  application of this standard did not have a material effect on  the
      presentation of the Company's EPS disclosures as the Company did not and
      does not have potentially dilutive securities.

7.    On  November  14,  1997,  the Company acquired an approximately  200,000
      square  foot office building located at 601 West First Avenue,  Spokane,
      Washington,  approximately three blocks from the  current  headquarters.
      The  purchase  price was approximately $11.7 million with remodel  costs
      estimated  at  an  additional  $5 million.   Approximately  50%  of  the
      building  is currently leased by other tenants.  The Company anticipates
      moving its headquarters into this building in late June, 1998.

8.    In  April,  1998,  the Company and its subsidiary, Western  United  Life
      Assurance Company (WULA), participated as two of the four co-sellers  in
      a  receivable  securitization sponsored by Metropolitan  Asset  Funding,
      Inc.  II,  an  affiliated company.  Proceeds from the  transaction  were
      approximately  $170.3  million,  including  the  fair  market  value  of
      retained  certificates and the valuation of retained  servicing  rights.
      The  transaction  resulted  in  pre-tax  gains  of  approximately  $10.5
      million.

9.    The  Company  currently  has  credit  facilities  with  Nikko  Financial
      Services  for $200 million and with Nation's Banc Mortgage  Capital  for
      $100 million.  The advances are secured by pledged real estate contracts
      and  mortgage notes.  As of March 31, 1998, the Company had  outstanding
      advances of approximately $138.8 million from these credit facilities.

10.   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 dates of the
      financial  statements and the reported amounts of revenues and  expenses
      during  the  reporting periods.  Actual results could differ from  those
      estimates.
ITEM 2.     MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION  AND
            RESULTS OF OPERATIONS

      The discussions may contain some forward-looking statements.  A forward-
looking statement may contain words such as "will continue to be," "will  be,"
"continue  to,"  "expect to," "anticipates that," "to be,"  or  "can  impact."
Management cautions that forward-looking statements are subject to  risks  and
uncertainties  that  could  cause  the  Company's  actual  results  to  differ
materially from those projected in forward-looking statements.

Significant Transactions:

      In November 1996, Metropolitan Mortgage & Securities Co., Inc. (Metro or
the  Company) and its subsidiary Western United Life Assurance Company  (WULA)
participated  as  two  of  the four co-sellers in a receivable  securitization
sponsored  by  Metropolitan Asset Funding, Inc, an  affiliated  company.   The
Company's  proceeds  from  the transaction were approximately  $110.4  million
including the fair market value of retained certificates and the valuation  of
retained  servicing  rights.  The transaction resulted in  approximately  $8.9
million   in  pre-tax  gains.   As  an  economic  hedge  for  this  receivable
securitization  sale,  the  Company had previously sold  short  U.S.  Treasury
securities  of  varying  maturities.  Concurrent with the  completion  of  the
securitization transaction, the Company purchased and delivered  the  borrowed
securities.   The Company lost approximately $2.5 million on this short  sale.
Thereby from an economic standpoint, the Company realized an approximate  $6.4
million in pre-tax gains on the securitization sale.

      In  September 1997, Metro and WULA again participated as two of the four
co-sellers  in  a  receivable securitization sponsored by  Metropolitan  Asset
Funding,  Inc.  II.       The  Company's proceeds from  the  transaction  were
approximately  $143.0  million including the fair  market  value  of  retained
certificates  and  valuation of retained servicing  rights.   The  transaction
resulted  in  pre-tax gains of approximately $7.2 million.   Additionally,  in
September  1997, the Company securitized and sold approximately $29.7  million
of  timeshare  receivables recording approximately  $1.5  million  in  pre-tax
gains.
      
      The  Company  has  currently  negotiated credit  facilities  with  Nikko
Financial  Services for $200 million and with Nation's Banc  Mortgage  Capital
for  $100 million.  Advances on these credit facilities are secured by pledged
real  estate contracts and mortgage notes.  As of March 31, 1998, the  Company
had  outstanding  advances of approximately $138.8 million from  these  credit
facilities.
      
      In April 1998, Metro and WULA participated as two of the four co-sellers
in  a  receivable securitization sponsored by Metropolitan Asset Funding, Inc.
II,  an affiliated company.  The Company's proceeds from the transaction  were
approximately  $170.3  million including the fair  market  value  of  retained
certificates and the valuation of retained servicing rights.  The  transaction
resulted in pre-tax gains of approximately $10.5 million.
      
      WULA  entered  into  a  reinsurance agreement  with  Old  Standard  Life
Insurance Company (OSL), an affiliated company, whereby WULA reinsured 75%  of
the risk on six different annuity products through OSL.  This agreement became
effective  January 23, 1997 and continued through September 30,  1997,  during
which  time  approximately $28 million in premiums was reinsured through  OSL.
Effective October 1, 1997, the agreement was suspended and is expected  to  be
reinstated in June, 1998 retroactive to April 1, 1998.

       On  January  31, 1995, the Company concluded an agreement  with  Summit
Securities, Inc. (Summit), whereby it sold Metropolitan Investment Securities,
Inc.  (MIS)  to  Summit, at a sale price of $288,950, which  approximated  the
current  book  value  of MIS at date of sale.  On May 31,  1995,  the  Company
concluded  an  agreement with Summit, whereby it sold OSL to Summit  effective
May  31,  1995, at a sale price of $2,722,000, which approximated the  current
book  value of OSL at date of sale, with future contingency payments based  on
earnings  of OSL.  The sales price plus estimated future contingency  payments
approximates the actuarial appraised valuation of OSL.  As of March 31,  1998,
the Company has received approximately $385,000 in contingent consideration.


Financial Condition and Liquidity:

       As of March 31, 1998, the Company had cash or cash equivalents of $32.0
million  and liquid investments (trading or available-for-sale securities)  of
$76.2 million compared to $33.4 million and $76.1 million at December 31, 1997
and  $58.9  million  and  $71.1  million at September  30,  1997.   Management
believes  that  cash,  cash  equivalents  and  other  liquidity  provided   by
investments are adequate to meet planned asset additions, debt retirements  or
other  business  operational  requirements  during  the  next  twelve  months.
Additionally, the Company has negotiated credit facilities of $300 million  to
add  additional  liquidity  for  the purchase of  real  estate  contracts  and
mortgage notes.  Total cash and investments at March 31, 1998, including held-
to-maturity  securities, were $218.3 million compared  to  $222.6  million  at
December  31, 1997 and $245.3 million at September 30, 1997.  During  the  six
month  period  ended March 31, 1998, operating activities  provided  funds  of
approximately  $12.8  million.  Funds used in investing activities  of  $151.6
million  were  primarily  the  result of  $236.2  million  of  new  receivable
acquisitions,  plus  additions to real estate held of  $8.3  million  and  new
capital  expenditures of $12.7 million, which included the purchase of  a  new
home office headquarters building, exceeding the sale proceeds and collections
of receivables of $85.3 million, proceeds from the sale of real estate of $9.7
million  and  sales  and maturities of investments of  $10.9  million.   Funds
provided  by financing activities of $111.9 million were primarily the  result
of increases in short-term borrowings of $138.8 million and a $5.2 million net
cash  inflow  from debentures sales less maturities and preferred stock  sales
less redemption's exceeding the net cash outflow of $31.0 million in life  and
annuity products and payment of preferred stock dividends of $1.9 million.

       The  receivable  portfolio totaled $821.0 million  at  March  31,  1998
compared  to  $739.1  million  at December 31,  1997  and  $677.4  million  at
September 30, 1997.  During the six months ended March 31, 1998, the  increase
primarily resulted from the acquisition of receivables totaling $236.2 million
plus an additional $5.3 million in loans to facilitate the sale of real estate
being  partially  offset  by principal collections  on  receivables  of  $69.1
million, reduction for the cost basis of receivables sold of $15.9 million and
reductions due to foreclosed receivables of approximately $14.6 million.

       Real estate held for sale and development increased to $88.0 million at
March  31,  1998  compared to $83.3 million at December  31,  1997  and  $81.8
million at September 30, 1997.  For the six months ended March 31, 1998,  real
estate  additions  of   $22.9 million, including $14.6 million  of  foreclosed
receivables,  were  offset  by costs of real estate  sold  of  $14.2  million,
depreciation  of $1.0 million and charge-offs to the allowance for  losses  of
$1.5 million.

      Life insurance and annuity policy reserves decreased $6.7 million during
the  six  months  ended March 31, 1998 to approximately  $818.7  million  from
$820.9 million at December 31, 1997 and $825.4 million at September 30,  1997.
This  decrease  was the result of withdrawals in the amount of  $65.4  million
exceeding credited earnings of $23.0 million, receipts from sales of new  life
and  annuity  products of $34.4 million and $1.3 million  in  net  reinsurance
ceded.   For  the  six  months  ended March  31,  1998,  net  debenture  bonds
outstanding increased by $1.3 million to $186.5 million from $185.9 million at
December  31, 1997 and $185.2 million at September 30, 1997.  Net cash  inflow
from  issuance  less maturities of debentures was approximately  $4.9  million
less  a  $3.6  million decrease in credited interest held.  Additionally,  the
Company  had cash flow, net of redemptions, of approximately $.3 million  from
the  sale  of  preferred stock and reinvestment of preferred  stock  dividends
during the six months ended March 31, 1998.  During the six month period ended
March  31,  1998,  the Company increased its short-term borrowings  by  $138.8
million to an approximate outstanding amount of $141.7 million.  At March  31,
1998,  the  Company  had  a total of $161.2 million  in  unused  credit  lines
available to pledge real estate contracts and mortgage notes against.

       Total  assets increased by $133.9 million to $1,246.3 million at  March
31,  1998  from $1,112.4 million at September 30, 1997.  During the  six-month
period ended March 31, 1998, the Company primarily used existing cash and cash
flow   from  short-term  borrowings  to  increase  its  receivable  investment
portfolio and to purchase a new home office headquarters.  At March 31,  1998,
the  Company had net unrealized losses on securities available-for-sale in the
amount  of  $547,000 as compared to unrealized losses of $267,000 at September
30, 1997.  Net unrealized losses on securities available-for-sale is presented
as a separate component of stockholders' equity.


Results of Operations:

       The Company recorded net income before preferred dividends for the  six
months  ended March 31, 1998 of  $3.6 million compared to $5.0 million in  the
prior  year's period.  Comparing the current year's six month period with  the
prior  year's  similar period, a decrease in gains on the sale of receivables,
an  increase in the provision for losses on real estate assets, and  increased
salaries,  commissions and benefits were only partially offset by an  increase
in  the  net  interest spread, increased gains from the sale of  real  estate,
increased  gains  on  investments, an increase in other  fees  and  commission
revenues and a reduction in other operating expenses along with a reduction in
the related provision for income taxes.

       For  the six-month period ended March 31, 1998, the Company reported  a
positive  spread  on  its interest sensitive assets and liabilities  of  $13.7
million as compared to $13.5 million in the prior year's period.  The increase
was primarily the result of an increase in the receivable portfolio funded  by
increases in short-term borrowings.  It has been the strategy of management to
finance   receivable  portfolio  increases  with  short-term   borrowings   in
anticipation  of  its  next  receivable  securitization  sale.   The   Company
completed its most recent securitization in April 1998.  While there has  been
some  contraction in portfolio investment earnings rates in the current year's
period, the Company has also experienced reduced renewal rates on some of  its
life  and  annuity  policies  and has used lower interest  costing  short-term
borrowings  resulting  in the improved net interest  spread.   Currently,  the
Company continues to control life and annuity policy surrenders by maintaining
current  market  credited rates.  Normally, the Company's investment  earnings
rates  are  not as sensitive to market conditions as is its life  and  annuity
policy rates and thus a sustained rise in interest rates could have a negative
impact  on its net interest spread as its liabilities reprice faster than  its
assets.

       During  the  six months ended March 31, 1998, the Company realized  net
gains on investments of $6.5 million compared to net losses of $2.1 million in
the prior year's period.  The current period gain includes both gains on sales
of  investments and mark-to-market gains as lower interest rates have improved
the  valuation  of the Company's trading securities. The prior  year's  period
loss  was  primarily  the result of a short sale of U.S. Treasury  securities.
The  short sale was used by the Company as an economic hedge of its receivable
securitization  in November 1996.  Additionally, in the prior  year's  period,
the  Company  realized gains of $11.5 million from the sale  of  approximately
$160.7 million of receivable investments, while in the current year, sales  of
approximately $15.9 million of receivable investments produced realized  gains
of $311,000.  The Company realized gains of $810,000 on sales of $15.0 million
of  real estate in the current year's period compared to losses of $990,000 on
sales  of  $14.2  million  in  the prior year.  It  has  been  the  policy  of
management  to actively sell its real estate in order to return the investment
to an earning asset.  In addition to returning these assets to earning status,
the  Company has been able to reduce other operating expenses associated  with
its real estate, such as insurance, taxes, maintenance and amenities.

       In the six months ended March 31, 1998, the Company recorded other fees
and  commission  revenues of $3.4 million as compared to $2.4 million  in  the
prior  year.  The increase in the current year is primarily the result of  net
servicing  revenues related to the retained servicing rights  from  receivable
securitizations.

       In the six months ended March 31, 1998, the Company made provisions for
losses on receivables and real estate assets of approximately $2.7 million  as
compared  to $2.0 million in the prior year's period.  The increased provision
is  the result of the increase in the receivable portfolio and the real estate
asset  portfolio.  As an offset to the portfolio increases,  the  Company  has
experienced  improved receivable delinquency rates and a stable  to  improving
real estate market.

       In  comparing the three months ended March 31, 1998 with the prior year
similar period, the Company recorded net income before preferred dividends  of
$1.4 million as compared to $1.1 million.  The increase in net income for  the
comparative  three  months was primarily the result of improvements  from  (1)
increased  gains on investments, (2) increased gains on sale of  real  estate,
(3)  a decrease in the provision for losses on real estate assets, and (4)  an
increase  in other fees and commissions which were partially offset by  (1)  a
decrease  in  gains  on the sale of receivables, (2) a  decrease  in  the  net
interest  spread,  and  (3) increases in salaries, commissions,  benefits  and
other operating expenses

       For the three months ended March 31, 1998, the net interest spread  was
$7.2  million  compared to $7.5 million in the prior year.  The reduction  was
primarily  the  result of the lower interest rate market, which  affected  the
yield on new receivable investments and a slightly higher incremental cost  of
funds  when  using  short-term  borrowings to  finance  the  increase  in  the
receivable portfolio in preparation for the next receivable securitization.

      During the three months ended March 31, 1998, the Company recorded gains
on  the  sale or valuation of investments of $2.3 million and $213,000 on  the
sale  of  receivables.  In the prior year, the Company recorded gains  on  the
sale of investments of $44,000 and $1.7 million on the sale of receivables.

       During  the  three  months ended March 31, 1998, the Company  generated
approximately $1.7 million of fee revenues as compared to $1.2 million in  the
prior year.  The increase is primarily service fee income associated with  the
retained servicing rights from the receivable securitizations.

       The  Company  realized gains of $244,000 on real estate sales  of  $6.0
million  in  the current year's three-month period as compared  to  losses  of
$397,000 on sales of $7.3 million in the prior year.  The Company continues to
actively sell its real estate in order to return the investment to an  earning
asset  and  reduce  operating expenses associated with  the  holding  of  real
estate.

       In conjunction with the Company's evaluation of its real estate assets,
the  Company  provided  for loss on these assets of $933,000  in  the  current
year's  three-month  period as compared to $1.4 million  in  the  prior  year.
Improvement in the Company's delinquency rates and improvements in real estate
resale market has allowed the Company to reduce its current provision.
 .

New Accounting Rules:

       In  June  1997, the Financial Accounting Standards Board (FASB)  issued
SFAS  No.130,  "Comprehensive  Income" (SFAS  No.130).   SFAS  No.130  becomes
effective  for  fiscal years beginning after December 31,  1997  and  requires
reclassifications  of  earlier financial statements for comparative  purposes.
SFAS No.130 requires that amounts of certain items, including foreign currency
translation  adjustments  and  gains and  losses  on  certain  securities,  be
included  in  comprehensive income in the financial statements.   SFAS  No.130
does  not  require  a  specific format for the financial  statement  in  which
comprehensive income is reported, but does require that an amount representing
total comprehensive income be reported in that statement.  Management has  not
yet  determined  the  effects  of SFAS No.130 on  the  consolidated  financial
statements.

       Also,  in  June  1997, the FASB issued SFAS No.131, "Disclosures  about
Segments  for  an  Enterprise and Related Information"  (SFAS  No.131).   This
Statement  will  change  the  way public companies  report  information  about
segments  of their business in their annual financial statements and  requires
them  to report selected segment information in their quarterly reports issued
to  shareholders.  It also requires entity-wide disclosures about the products
and  services  an entity provides, the material countries in  which  it  holds
assets  and  reports  revenues, and its major  customers.   The  Statement  is
effective for fiscal years beginning after December 15, 1997.  Management  has
not  yet  determined  the effect, if any, of SFAS No.131 on  the  consolidated
financial statements.



Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

      Not currently applicable.  Pursuant to General Instructions to Item 305,
disclosures  are applicable to the registrant in filings with  the  commission
that include financial statements for fiscal years ended after June 15, 1998.


PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

      There are no material legal proceedings or actions pending or threatened
against  Metropolitan Mortgage & Securities Co., Inc. or to which its property
is subject.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

      None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

      None.

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

       On  February  23,  1998, the Annual Meeting of  Stockholders  was  held
wherein the stockholders unanimously elected the following Directors to  serve
until the next annual meeting:

      C.  Paul  Sandifur,  Jr., Bruce Blohowiak, Harold Erfurth,  Irv  Marcus,
      Charles H. Stolz, Reuel Swanson, John Trimble and Neal Fosseen, Honorary
      Director.

      No other matters were submitted to a vote of security holders during the
reporting period.

ITEM 5.     OTHER INFORMATION

      None.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

                3(a).    Restated   Articles  of  Incorporation,  as  amended,
                         dated   November   30,   1987   (Exhibit   3(a)    to
                         Metropolitan's Annual Report on Form 10-K for  fiscal
                         1987).

                3(b).    Amendment   to   Articles  of   Incorporation   dated
                         November  5,  1991 (Exhibit 3(c) to Registration  No.
                         33-40220).

                3(c).    Amendment   to   Articles  of   Incorporation   dated
                         September  20,  1992 (Exhibit 3(c) to  Metropolitan's
                         Annual Report on Form 10-K for fiscal 1992).

                3(d).    Bylaws  as amended to October 31, 1988 (Exhibit  3(b)
                         to  Metropolitan's Annual Report  on  Form  10-K  for
                         fiscal 1988).

                4(a).    Indenture,   dated  as  of  July  6,  1979,   between
                         Metropolitan   and   Seattle-First   National   Bank,
                         Trustee  (Exhibit 3 to Metropolitan's  Annual  Report
                         on Form 10-K for fiscal 1979).

                4(b).    First Supplemental Indenture, dated as of October  3,
                         1980,    between   Metropolitan   and   Seattle-First
                         National  Bank,  Trustee (Exhibit 4 to Metropolitan's
                         Annual Report on Form 10-K for fiscal 1980).

                4(c).    Second  Supplemental Indenture, dated as of  November
                         12,  1984,  between  Metropolitan  and  Seattle-First
                         National  Bank, Trustee (Exhibit 4(d) to Registration
                         No. 2-95146).

                4(d).    Third  Supplemental Indenture, dated as  of  December
                         31,   1997  between  Metropolitan  and  First   Trust
                         (Exhibit 4(d)) to Form 10-K filed January 8, 1998).

                4(e).    Amended   Statement  of  Rights,   Designations   and
                         Preferences of Variable Rate Preferred Stock,  Series
                         C (Exhibit 4(g) to Registration No. 33-2699).

                4(f).    Statement of Rights, Designations and Preferences  of
                         Variable  Rate  Preferred Stock,  Series  D  (Exhibit
                         4(a) to Registration No. 33-25702).

                4(g).    Statement of Rights, Designations and Preferences  of
                         Variable  Rate Preferred Stock, Series  E-1  (Exhibit
                         4(a) to Registration No. 33-19238).

                4(h).    Amended   Statement  of  Rights,   Designations   and
                         Preferences of Variable Rate Preferred Stock,  Series
                         E-2 (Exhibit 4(a) to Registration No. 33-25702).

                4(i).    Statement of Rights, Designations and Preferences  of
                         Variable  Rate Preferred Stock, Series  E-3  (Exhibit
                         4(a) to Registration No. 33-32586).

                4(j).    Statement of Rights, Designations and Preferences  of
                         Variable Rate Cumulative Preferred Stock, Series  E-4
                         (Exhibit 4(h) to Registration No. 33-40221).

                4(k).    Form   of  Statement  of  Rights,  Designations   and
                         Preferences of Variable Rate Preferred Stock,  Series
                         E-5 (Exhibit 4(i) to Registration No. 33-57396).

                4(l).    Statement of Rights, Designations and Preferences  of
                         Variable Rate Cumulative Preferred Stock, Series  E-6
                         (Exhibit 4(1) to Registration No. 333-19755).

                4(m).    Statement of Rights, Designations and Preferences  of
                         Variable Rate Cumulative Preferred Stock, Series  E-7
                         (Exhibit 4(d) to Amendment 1 to Registration No. 333-
                         19755).


                10(a).   Employment  Agreement  between Metropolitan  Mortgage
                         and   Securities   Co.,  Inc.  and  Bruce   Blohowiak
                         (Exhibit 10(a) to Form 10-K filed January 8, 1998).

                10(b).   Employment  Agreement  between Metropolitan  Mortgage
                         and  Securities Co., Inc. and Michael  Kirk  (Exhibit
                         10(b) to Form 10-K filed January 8, 1998).

                10(c).   Employment  Agreement  between Metropolitan  Mortgage
                         and  Securities  Co., Inc. and Jon McCreary  (Exhibit
                         10(c) to Form 10-K filed January 8, 1998).

                10(d).   Reinsurance  Agreement between  Western  United  Life
                         Assurance  Company  and Old Standard  Life  Insurance
                         Company (Exhibit 10(d) to Form 10-K filed January  8,
                         1998).

                11.      Statement   indicating   Computation   of   Per-Share
                         Earnings   (see   Condensed  Consolidated   Financial
                         Statements).

                *27.     Financial Data Schedule

                *Filed herewith.

      (b)   Reports on Form 8-K
      
            None.
SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on this 20th day  of  May,
1998 on its behalf by the undersigned, thereunto duly authorized.

            METROPOLITAN MORTGAGE & SECURITIES CO., INC.

            /s/ BRUCE J. BLOHOWIAK

            ______________________________________________
            Bruce J. Blohowiak
            Executive Vice President, Chief Operating Officer and
              Director


            /s/ STEVEN CROOKS

            ______________________________________________
            Steven Crooks
            Vice President, Principal Accounting Officer