SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.  20549


                               FORM 10-K SB


          ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended                              Commission File No.
December 31, 1997                                               333-15151


                   FEDERAL MORTGAGE MANAGEMENT II, INC.
          (Exact name of registrant as specified in its charter)


         Florida                                      65-0625618
------------------------------                 ---------------------------
State or other jurisdiction of                 IRS Employer Identification
incorporation or organization                              Number

          1800 Second Street, Suite 780, Sarasota, Florida  34236
          -------------------------------------------------------
            (Address of principal executive offices, zip code)

                               941-954-2328
                                -----------
           (Registrant's telephone number, including area code)

Indicate  by  check  mark  whether the registrant  (1)  filed  all  reports
required to be filed by Section 13 or 15(b) 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 report(s), and (2) has been subject to
such filing requirements for the past 90 days.    / X / Yes   /  /  No.

As  of  December  31,  1997  the Company has 121 secured  promissory  Notes
Payable  (Notes) with a total of $1,606,500 principal balance  outstanding.
As  indicated, the Company is a Company organized pursuant to Florida  law.
The Company had total revenues of $26,340 in 1997.


                                  PART I

Item 1.   Description of Business

      FEDERAL  MORTGAGE MANAGEMENT II, INC., (the "Company") was  organized
under  the  Florida General Corporation Act in November 1995.  All  of  the
outstanding  voting  Common Stock is owned beneficially  by  Guy  S.  Della
Penna,  the  sole member of the Board of Directors and the sole officer  of
the Company.

      The  Company  was  formed  and  is  being  capitalized  primarily  to
originate,  underwrite, acquire, hold and deal in a portfolio of  primarily
first lien residential mortgage loans.

     The purchase of mortgage loans and insured instruments of deposit have
been acquired in accordance with a specific acquisition policy described in
the registration statement.

      Pending  the  purchase  of Portfolio Loans, the  Company  may  invest
available  cash  in deposit or certificate accounts of state  or  federally
chartered banking institutions with a least $500 million of assets or  debt
securities  of  the  United States or instrumentalities thereof  (  Federal
Instruments  )  or  money market or equivalent funds at a  New  York  Stock
Exchange  member  firm  with net assets of at least $200  million  (  Money
Market Funds ).

     In accordance with the acquisition policy the Company may:

     (a)   Originate and acquire residential real estate mortgage loans (i)
     secured by a first lien on the collateral real estate, and (ii) with a
     loan  balance not in excess of 90% of the estimated fair market  value
     of  the  collateral  real estate at the time  of  acquisition  of  the
     Portfolio Loan by the Company or, alternatively, a Portfolio Loan with
     a  loan to value ratio in excess of 90% may be acquired by the Company
     provided  that the Company s cost to acquire the loan does not  exceed
     85%  of  the  estimated  fair  market value  of  the  real  estate  as
     determined at the time of acquisition of the Portfolio Loan;

     (b)   Originate  and  acquire unimproved real  estate  mortgage  loans
     having a loan balance at the time of loan acquisition not greater than
     50%  of  the estimated fair market value of the collateral real estate
     property,   subject  to  the  further  condition  that  the  aggregate
     principal  balance of unimproved real estate mortgage loans shall  not
     at  any  time  exceed 10% of the aggregate principal  balance  of  all
     Portfolio Loans;

     (c)   In cases when the Company is acquiring a promissory note secured
     by a first lien mortgage on a parcel of property, originate or acquire
     a  residential real estate mortgage loan secured by a second  lien  on
     the  collateral real estate, provided that both loans, on an aggregate
     basis,  meet  the  criteria of paragraph (a) above; provided  however,
     that  the  aggregate principal balance of all second lien loans  shall
     not  at any time exceed 10% of the aggregate brincipal balance of  all
     second  lien  loans shall not at any time exceed 10% of the  aggregate
     principal balance of all Portfolio Loans;

     (d)  Originate, without limitation as to amount, short-term (up to  12
     months)   mortgage  loans  for  purposes  of  purchasing   undervalued
     residential real estate, as more fully described below; and

     (e)   In  all  loan  acquisition transactions, take into  account  the
     relative  contribution in terms of cash flow to be  provided  by  such
     loan  or group of loans in the context of the Company s principal  and
     interest obligations under the outstanding Notes.

      On  November  26,  1997, the Company had received gross  proceeds  in
excess  of  the  minimum  amount of $1,500,000 to break  escrow  under  the
Prospectus  dated  July  15,  1997, Commission  Number  333-15151.   As  of
December  31,  1997,  the  Company  had received  gross  note  proceeds  of
$1,606,500.  Presented below is a summary of the use of proceeds  from  the
Note offering as of December 31, 1997:

<TABLE>
<CAPTION>
               <S>                                   <C>
               Selling commissions                   $   109,320
               Offering management fee                    48,195
               Non-accountable  expense allowance         32,130
               Organizational and offering expense       122,729
               Purchase of federal instruments           175,539
               Purchase of residential mortgages
                  and interim financings               1,028,008
               Payment of note interest                   34,124
               Organizational expense reimbursement       32,520

               Cash remaining                             23,935
                                                     -----------
                  Gross offering proceeds            $ 1,606,500
                                                     ===========
</TABLE>


      The  notes  were and continue to be sold on a best efforts  basis  by
Executive  Wealth Management Services, Inc., the managing underwriter.   As
of December 31, 1997, the offering was still open.

Supply of Portfolio Loans

      In  the  recent past there has been a limited supply of the types  of
mortgage  loans intended to be purchased as Portfolio Loans.  The types  of
loans  sought  by  the  Company  are not generally  available  through  any
recognized national market; rather, in each geographic region there appears
to  be a limited number of buyers and sellers involved in the market.   Mr.
Della  Penna has established relationships with several buyers and  sellers
in  Arkansas, California, Florida, Kansas, Missouri, North Carolina,  Ohio,
Oklahoma,  Pennsylvania and Texas.  Management believes that  such  sellers
should  be  able  to  provide a steady source of Portfolio  Loans  for  the
Company,  and that such buyers will provide a ready market for all  of  the
mortgage  notes  purchased by the Company after the Company  has   seasoned
and   scrubbed  such loans.  At present, one company in Texas,  Homevestors
of  America,  Inc.,  (  Homevestors ),  is  providing  a  majority  of  the
residential mortgage loans being purchased by FMIL and FMMI, and such  loan
originator may be the source of a significant amount of the mortgage  loans
purchased  by the Company as Portfolio Loans.  Mr. Della Penna beneficially
owns approximately 17% of the Common Stock of Homevestors.  Homevestors  is
establishing a network of individuals and companies which will buy and sell
residential  real estate with a focus on sales to credit  impaired   buyers
and,  in connection with such sales, originate mortgage loans on such  real
estate which will meet the Acquisition Policy of the Company.

Portfolio Loan Servicing

      The responsibility of servicing the Portfolio Loans of the Company is
vested  in the management of the Company.  In that regard, management  will
be  responsible  for the collection of all principal and interest  payments
due  under  the  terms  of  the Portfolio Loans, for  the  institution  and
prosecution of collection proceedings, including foreclosure, with  respect
to  Portfolio  Loans  which  are in default, the  sale  of  property  after
completion  of  foreclosure, the acquisition and disposition  of  Portfolio
Loans,  including  origination  activities,  and  where  appropriate,   the
elimination  of  origination deficiencies from  nonconforming  loans  which
otherwise  involve  acceptable  credit  and  payment  histories.    Company
management intends to arrange for the performance of Portfolio Loan service
operations  through FMIL, utilizing a loan servicing system which  complies
with  FNMA  standards.   The Company will pay a monthly  servicing  fee  of
$1,500 plus .5% (on an annual basis) of the aggregate outstanding principal
balance of the Portfolio Loans as of the end of the prior month.


Competition

      The  Company anticipates that it will encounter competition from many
sources  in its efforts to acquire acceptable mortgage loans.  The type  of
loans  sought  by  the  Company  are not generally  available  through  any
recognized national market; rather, in each geographic region there appears
to  be  a  limited  number of buyers and sellers involved  in  the  market.
Numerous  investment  and other entities are in the business  of  acquiring
residential real estate mortgage loans on an ongoing basis.  The  basis  of
such  competition in Portfolio Loan acquisitions is expected to  relate  to
the  ability  of  the  Company to rapidly identify  sources  of  loans  for
purchase,  the  ability of the Company to rapidly and effectively  evaluate
mortgage  loans and the price that the Company is able and willing  to  pay
for  acceptable residential mortgage loans.  FMIL and FMMI,  affiliates  of
the Company and Guy S. Della Penna, are engaged in the acquisition, holding
and  disposition of residential real estate mortgage loans having the  same
or  substantially  the  same characteristics as the mortgage  loans  to  be
acquired for the Company.  In addition, Mr. Della Penna may form additional
companies  in the future which will engage in the same or similar business.
All  of  such companies may compete with each other from time  to  time  in
acquiring mortgage loans from a limited pool of mortgage loans, as well  as
in the sale of such loans to third parties.

Custody Agreement.

      The  Notes were issued pursuant to an indenture and custody agreement
(the   Custody  Agreement ), and the notes   and mortgages  comprising  the
Portfolio  Loans are held by, and in the name of, Michael  Hric,  P.A.,  as
trustee (the  Trustee ), acting as agent for the holders of the Notes.  The
Custody  Agreement does not contain provisions meeting the requirements  of
the  Trust Indenture Act of 1939, although the holders of the Notes and the
Trustee  will  have  certain  rights  which  correspond  to  some  of   the
requirements of such act.  The Trustee will acquire and maintain a lien  on
the  Portfolio  Loans (as well as the proceeds of any sale of  a  Portfolio
Loan until the same is reinvested in another Portfolio Loan or paid out  to
the  Noteholders)  and  any  real estate acquired  upon  foreclosure  of  a
Portfolio  Loan.  Pending the purchase of Portfolio Loans, the Company  may
invest  available cash in Federal Instruments or Money Market  Funds  which
will  also  be  held  by  the  Trustee under the  Custody  Agreement.   The
Portfolio Loans and Federal Instruments, as well as the cash proceeds  from
the  sale  thereof, Money Market Funds, and any real estate  acquired  upon
foreclosure  of  a Portfolio Loan are hereinafter referred to  as  Eligible
Collateral.   As  a  general matter, cash payments on the Portfolio  Loans,
representing the repayment of principal and interest thereon, will be  paid
directly  to  the  Company, and the Trustee will not  have  possession  and
control  over  the  cash  from these payments.   Pursuant  to  the  Custody
Agreement, the Trustee will at all times hold Eligible Collateral  with  an
aggregate Unadjusted Value (as defined below) equal to at least 60% of  the
aggregate outstanding principal balance of the Notes.  The Unadjusted Value
of  a Federal Instrument is the cash value of the instrument.  Money Market
Funds  are  considered cash equivalents and the Unadjusted Value  of  Money
Market Funds is the current balance of such funds.  The Unadjusted Value of
a  Portfolio Loan is equal to the outstanding balance due under  the  loan,
and may exceed the amount which could be obtained upon an immediate sale of
the  same.  The Unadjusted Value of real estate owned by the Company  as  a
result of a Portfolio loan foreclosure will be valued at the lesser of  the
estimated  fair market value of the property received by the  Company  upon
foreclosure or the principal balance of the loan at the time of foreclosure
plus  accrued  interest  and  fees and costs incurred  by  the  Company  in
connection  with such foreclosure process, and also may exceed  the  amount
which  could be obtained upon an immediate sale of the same.  To the extent
that  the value of the Eligible Collateral held by the Trustee is less than
the  aggregate principal and interest obligations represented by the Notes,
or  if  the Trustee does not maintain a perfected security interest on  the
Eligible  Collateral  held  by  it, the Notes  will  be  general  unsecured
obligations of the Company.

Item 2.   Properties

      At  December  31,  1997, the significant assets of the  Company  were
constituted by the first lien residential mortgage loans, interim financing
loans and certificates of deposit in the amount of $1,010,508 and $175,539,
respectively.  The mortgaged properties included in the loan  portfolio  at
December  31,  1997,  are located in Florida, Kansas, Missouri  and  Texas.
(See  Item  1 for discussion of mortgage activity, including servicing  and
portfolio turnover policy.)


Item 3.   Legal Proceedings

      The  Company  was not a party to any litigation for the period  ended
December 31, 1997 nor is any litigation or claim threatened.


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

     NOT APPLICABLE


                                  PART II



Item 5.   Market for Common Equity and Related Stockholder Matters

      At December 31, 1997, all of the outstanding voting equity securities
of the Company were  held  of  record and beneficially by Guy S. Della Penna.
Mr.  Della Penna  is the promoter and sole director and officer of the
Company.  There is no present market for the Common Stock of the Company.


Item 6.   Management s Discussion and Analysis or Plan of Operations

     Plan of Operation

      The  Company  received gross Note proceeds in excess of  the  minimum
principal  amount  of  $1,500,000 on November 26, 1997.   The  Company  was
required to pay monthly interest to Noteholders starting December, 1997  in
accordance with the registration statement, even though the Company was not
fully invested in a portfolio of mortgage loans.

      The Company utilizing the Note proceeds from the public offering, has
acquired  mortgage  loans secured by first liens on  real  estate,  interim
financing,  as well as insured certificates and instruments of  deposit  or
debt  securities issued by the United States and instrumentality s  thereof
in  accordance  with  an expressed Acquisition Policy.   Acquired  mortgage
loans  must have an amortization schedule with respect to monthly  payments
or  principal and interest not in excess of 360 months (30 years) from  the
time that the mortgage loan acquired was originated or periodic payments of
interest only.

      Scheduled  principal  and interest payments  on  portfolio  loans  at
December  31, 1997, represent an annualized rate of return of approximately
16% on the basis of the Company costs in acquiring such portfolio loans and
an  annualized rate of return of approximately 15.03% (stated rate) on  the
basis  of  the unpaid principal balance of the Portfolio Loans at  December
31, 1997.
      At  December  31,  1997, the portfolio of the  Company  consisted  of
mortgage  notes  with a carrying value of $1,010,508.  The following  table
shows  the  mortgage notes at a face value and carrying value  which  takes
into  consideration the discount, principal payments and an  allowance  for
loss:

<TABLE>
<CAPTION>
                                             Allowance
                                Principal    for
   Face Value      Discount     Payments     Loss         Carrying Value
   ----------     ----------    ----------   ---------    --------------
   <S>            <C>           <C>          <C>          <C>
   $1,128,563     $(100,555)    $  (0)       $(17,500)      $1,010,508
</TABLE>

      At  December 31, 1997, the underlying real estate collateral  of  the
Company  s  portfolio  of  mortgage  loans  have  an  appraised  value   of
approximately  $1,639,234 or a carrying value to appraised value  ratio  of
 .62  to  1.  The collateral real estate securing such loans as of  December
31,  1997  was residential real estate and interim financing.  The  Company
held no unimproved real estate loans as of December 31, 1997.

      Upon  capitalization  during December, 1997,  the  Company  purchased
residential  mortgage loans and interim financing loans having a  principal
balance  of  $1,128,563 for $967,636.  The Company did not  consummate  any
sales of mortgage loans during December 1997.


7.    Managements Discussion and Analysis of Financial Condition and
      Results of Operation

<TABLE>
<CAPTION>
                                     1997         1996      Increase
(Decrease)
                                   --------     --------    ----------
<S>                                <C>          <C>         <C>
REVENUE

Interest income-residential
   mortgage loans                  $  6,827     $   ---     $  6,827
Other revenue                        19,513         ---       19,513

EXPENSES

Advertising                          12,935          165      12,770
Consulting                           20,120          ---      20,120
Interest expense                     47,098          ---      47,098
Management fees                      41,096          ---      41,096
Other expense                           349          892        (543)
Provision for loss                   17,500          ---      17,500
Service fees                          1,500          ---       1,500

</TABLE>

      For  the year ended December 31, 1997, the Company experienced a  net
loss  of  $114,260.   This loss was attributed to the  initial  operational
activities  such as interest expense of $47,098.  This reflects  the  first
payment due to the investors, accrued from the date that their subscription
document was accepted and at their invested note rate.

      Advertising expense of $12,935 reflects expenses reimbursed  for  the
raising of additional capital.

      Consulting  fees of $20,120 reflect legal fees of $6,294,  accounting
fees of $9,017, other consulting-mortgage broker $3,309 and trustee fees of
$1,500.

      Management  fees  of  $41,096 which reflects a  standard  3%  of  the
aggregate face value of the Eligible Collateral as of December 31, 1997.

       Provision  for  loss  of  $17,500  reflects  an  allowance  for  the
possibility  of  losses  sustained in the process  of  buying  and  selling
mortgage notes.

Item 8.   Financial Statements and Supplementary Data

      Included  in the Annual Report on Form 10K-SB as Exhibit  1  are  the
audited financial statements specified in Instruction (a) to Item 7.

Item 9.      Changes  in  and Disagreements with Accountants on  Accounting
       and Financial Disclosure

     NOT APPLICABLE

                                 PART III

Item 10.     Directors, Executive Officers, Promoters and Control  Persons;
       Compliance with Section 16(a) of the Exchange Act

      The  day-to-day business and affairs of the Company are  managed  and
carried  out the by President.  Mr. Guy S. Della Penna serves as  the  sole
director and President of Federal Mortgage Management II, Inc.  Information
concerning Mr. Della Penna is presented below:

      Mr.  Della  Penna,  age 45, has been a resident of Sarasota,  Florida
since  1980  and is the founder and President of Capital Management  Group,
Inc.   Capital Management Group, Inc. was organized by Mr. Della  Penna  in
1989.   Under  the  auspices of Capital Management Group, Inc.,  Mr.  Della
Penna  has  provided financial and tax consulting and advisory services  to
individuals  and corporate entities.  Capital Management Group,  Inc.  also
acts as general agent for various insurance companies.  Mr. Della Penna  is
a  General  Securities  Principal and Financial  and  Operations  Principal
pursuant  to  NASD Rules.  Additionally, at December 31,  1996,  Mr.  Della
Penna  was  the  majority shareholder, director and  officer  of  Executive
Securities,  Inc., the manager of the Note offering.  Mr. Della  Penna  has
been  active in the financial industry for approximately 19 years.   During
the  period  April  1980 to January 1986, Mr. Della  Penna  served  as  the
Assistant  to  the Chairman of the Board of Snelling & Snelling,  Inc.,  as
well as Assistant Treasurer.  Snelling & Snelling, Inc. is a franchiser  of
an  employee  recruitment business.  While with such firm, Mr. Della  Penna
also  served  as  a member of the Executive, Acquisition  and  Pension  and
Profit  Sharing  committees.  Mr. Della Penna also served as  the  personal
business  manager  and  financial  advisor  to  the  Snelling  family   and
affiliated  entities  and  in  such  capacity,  was  responsible  for  cash
management,  tax  and  investment analysis and commitments.   The  Snelling
family  are the principal shareholders of Snelling & Snelling, Inc.  During
the  period  April,  1978 through February 1980, Mr.  Della  Penna  was  an
associated  person  of Lehman Brothers, New York, New York,  where  he  was
involved  in  the structuring, documentation and marketing  of  tax  exempt
financings issued by state and local governments.  Mr. Della Penna holds  a
Bachelor  of Science degree in Business Administration from Ithaca College,
Ithaca, New York and received a Master of Business Administration degree in
Finance from the State University of New York, Albany, New York.

Item 11.  Executive Compensation
<TABLE>
<CAPTION>
                                SUMMARY COMPENSATION TABLE

                                Long Term Compensation

                Annual Compensation               Awards    Payouts

(a)       (b)   (c)        (d)     (e)     (f)        (g)        (h)        (I)

                                   Other              Securities
Name                               Annual  Restricted Under-     All Other
and                                Compen- Stock      lying      LTIP      Compen-
Principal                          sation  Award(s)   Options/   Payouts   sation
Position  Year  Salary($) Bonus($)  ($)     ($)       SARs (#)   ($)         ($)
--------- ----  --------- -------- ------  ---------- --------   --------  ---------
<S>       <C>   <C>       <C>     <C>      <C>        <C>        <C>     <C>
Guy S.
Della Penna
President/CEO
          1997   ---       ---    $41,096     ---      ---         ---        ---

</TABLE>



Item 12.  Security Ownership of Certain Beneficial Owners and Management

     As of December 31, 1997, Mr. Della Penna, President and CEO, owns 100%
of the outstanding shares of common stock.

Item 13.  Certain Relationships and Related Transactions


     Management fees of $41,096 were paid for the period ending December
31, 1997, to an affiliated company, Capital Mortgage Management.  Mr. Della
Penna is the 100% stockholder of this affiliated Company.



Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

       NOT APPLICABLE

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on  its behalf by the undersigned, thereunto duly authorized.

                              FEDERAL MORTGAGE MANAGEMENT II, INC.




BY:                                      Guy S. Della Penna
                              --------------------------------------
                               Guy S. Della Penna, President & Chief
Executive Officer


March 1998