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 June 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 0-22041

           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.)

       601 W. 1ST AVENUE, SPOKANE, WASHINGTON   99201-5015
         (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 July 31, 1999.
      Common "B":   0 shares at July 31, 1999.

                 METROPOLITAN MORTGAGE & SECURITIES CO., INC.
                                     INDEX

                        PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

      Condensed Consolidated Balance Sheets
      As of June 30, 1999 and September 30, 1998 (unaudited)

      Condensed Consolidated Statements of Operations
      Three and Nine Months Ended June 30, 1999 and 1998 (unaudited)

      Consolidated Statements of Comprehensive Income (Loss)
      Three and Nine Months Ended June 30, 1999 and 1998 (unaudited)

      Condensed Consolidated Statements of Cash Flows
      Nine Months Ended June 30, 1999 and 1998 (unaudited)

      Notes to Condensed Consolidated Financial Statements

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

ITEM 3.     QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


                        PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                              June 30,        September 30,
                                                1999              1998
                                          ______________    ______________
<S>                                       <C>               <C>
ASSETS
  Cash and Cash Equivalents               $   23,398,733    $   31,733,362
  Investments
    Trading Securities, at market             41,831,752        55,865,875
    Available-for-Sale Securities, at
      market                                 142,513,891        25,988,789
    Held-to-Maturity Securities, at
      amortized cost (market value
      $67,367,729 and $86,396,021)            68,239,104        83,036,525

  Accrued Interest on Investments         _____2,450,859    _____1,646,527

      TOTAL CASH AND INVESTMENTS          ___278,434,339    __ 198,271,078

  Real Estate Contracts and Mortgage
    Notes and Other Receivables              650,070,404       692,822,886
  Real Estate Contract Securities,
    pledged to Bank of America               113,567,707       122,128,970
  Real Estate for Sale and Development,
    Including Foreclosed Real Estate          89,037,604        89,713,967
                                          ______________    ______________
  Total Receivables and Real Estate
    Assets                                   852,675,715       904,665,823
  Less Allowance for Losses                   (9,580,827)      (11,000,618)
                                          ______________    ______________
      NET RECEIVABLES AND REAL ESTATE
         ASSETS                              843,094,888       893,665,205
                                          ______________    ______________
  Deferred Acquisition Costs, net             67,598,159        71,262,489
  Land, Building and Equipment - net
    of accumulated depreciation               26,041,473        25,889,102
  Mortgage Servicing Rights, net               8,771,874         6,292,375
  Other Assets, net                           41,114,855        31,284,532
                                          ______________    ______________
      TOTAL ASSETS                        $1,265,055,588    $1,226,664,781
                                          ==============    ==============
</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>
                                              June 30,      September 30,
                                                1999             1998
                                          ______________    ______________
<S>                                       <C>               <C>
LIABILITIES
  Life Insurance and Annuity Reserves     $  804,486,492    $  800,848,929
  Debenture Bonds                            197,956,335       198,205,294
   Advances under line of credit                 107,889,322       118,342,972
  Other Debt Payable                          48,595,520         7,359,339
  Accounts Payable and Accrued Expenses       19,290,229        18,687,539
  Deferred Income Taxes                       13,675,350        22,725,052
  Minority Interest in Consolidated
    Subsidiaries                               2,043,887         1,738,887
                                          ______________    ______________
    TOTAL LIABILITIES                      1,193,937,135     1,167,908,012
                                          ______________    ______________
STOCKHOLDERS' EQUITY
  Preferred Stock, Series A, B, C, D,
    E Cumulative with Variable Rate,
    $10 Par Value, Authorized 8,325,000
    shares issued 1,948,042 and
    1,945,407 shares (Liquidation
    Preference $51,173,288 and
    $49,200,583, respectively)                19,480,420        19,454,071
  Class A Common Stock-Voting, $2,250
    par value, authorized 222 shares,
    issued 130 shares                            293,417           293,417
  Additional Paid-In Capital                  20,482,170        18,580,051
  Retained Earnings                           34,321,749        21,109,849
  Accumulated Other Comprehensive Loss        (3,459,303)         (680,619)
                                          ______________    ______________
    TOTAL STOCKHOLDERS' EQUITY                71,118,453        58,756,769
                                          ______________    ______________
    TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY                              $1,265,055,588    $1,226,664,781
                                          ==============    ==============
</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 OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                  Three Months Ended               Nine Months Ended
                                                       June 30,                         June 30,
                                                  1999             1998            1999           1998
                                             ____________     ____________    ____________   ____________
<S>                                          <C>              <C>             <C>            <C>
REVENUES
  Insurance Premiums Earned                  $    700,000     $    700,000    $  2,050,000   $  2,100,000
  Interest and Earned Discounts                22,867,505       23,295,437      67,143,107     69,225,623
  Real Estate Sales                            11,190,586        8,182,351      29,489,659     23,220,394
  Fees, Commissions, Service and Other
    Income                                      2,175,326        1,827,110       6,189,834      5,275,853
  Investment Gains (Losses), Net                 (570,515)         250,767      (3,703,708)     6,714,001
  Realized Gains on Sales of Receivables          239,961       11,663,283      19,906,860     11,974,492
                                             ____________     ____________    ____________   ____________
    TOTAL REVENUES                             36,602,863       45,918,948     121,075,752    118,510,363
                                             ____________     ____________    ____________   ____________
EXPENSES
  Insurance Policy and Annuity Benefits        11,417,592       11,595,215      34,104,091     36,023,274
  Interest Expense                              5,363,797        5,031,303      16,087,921     14,189,192
  Cost of Real Estate Sold                     10,386,467        7,473,116      28,095,061     21,700,779
  Provision for Losses on Real Estate
    Assets                                      1,907,510        1,521,818       7,547,318      4,220,621
  Salaries and Employee Benefits                5,993,450        5,093,510      16,939,081     13,479,234
  Commissions to Agents                         2,254,257        2,660,928       5,588,621      6,921,085
  Other Operating and Underwriting
    Expenses                                      936,175        1,808,040       4,948,402      5,033,745
Decrease (Increase) in Deferred Acquisition
Costs                                           1,168,266          (55,920)      4,071,971        595,267
                                             ____________     ____________    ____________   ____________
    TOTAL EXPENSES                             39,427,514       35,128,010     117,382,466    102,163,197
                                             ____________     ____________    ____________   ____________
Income (Loss) Before Income Taxes and
  Minority Interest                            (2,824,651)      10,790,938       3,693,286     16,347,166
Income Taxes Benefit (Provision)                  985,285       (3,696,253)     12,697,277     (5,588,025)
                                             ____________     ____________    ____________   ____________
Income (Loss) Before Minority Interest         (1,839,366)       7,094,685      16,390,563     10,759,141
Income of Consolidated Subsidiaries
  Allocated to Minority Stockholders              (16,790)         (53,590)       (305,000)       (99,390)
                                             ____________     ____________    ____________   ____________
Net Income (Loss)                              (1,856,156)       7,041,095      16,085,563     10,659,751
Preferred Stock Dividends                        (910,479)        (930,512)     (2,638,929)    (2,848,764)
                                             ____________     ____________    ____________   ____________
INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS                                 $ (2,766,635)    $  6,110,583    $ 13,446,634   $  7,810,987
                                             ============     ============    ============   ============
Basic and Diluted Income (Loss) per Share
Applicable to Common Stockholders            $    (21,282)    $     47,004    $    103,436   $     60,085
                                             ============     ============    ============   ============
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
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                             Three Months Ended June 30,         Nine Months Ended June 30,
                                               1999              1998              1999              1998

                                          ______________    ______________    ______________    ______________
<S>                                       <C>               <C>               <C>               <C>
  NET INCOME (LOSS)                       $   (1,856,156)   $    7,041,095    $   16,085,563    $   10,659,751
                                          ______________    ______________    ______________    ______________
OTHER COMPREHENSIVE LOSS, BEFORE INCOME
TAXES:
Change in unrealized gains (losses) on
investments                                      428,199          (167,300)       (4,225,279)         (468,546)
Less deferred income tax provision
(benefit)                                        144,586           (56,883)       (1,446,595)          (78,366)
                                          ______________    ______________    ______________    ______________
  Net other comprehensive income (loss)          283,613          (110,417)       (2,778,684)         (390,180)
                                          ______________    ______________    ______________    ______________

  COMPREHENSIVE INCOME (LOSS)             $   (1,572,543)   $    6,930,678    $   13,306,879    $   10,269,571
                                          ==============    ==============    ==============    ==============
</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>
                                             Nine Months Ended June 30,
                                               1999              1998
                                          ______________    ______________
<S>                                       <C>               <C>
NET CASH PROVIDED BY (USED IN)
  OPERATING ACTIVITIES                    $  (13,992,879)   $   13,078,887
                                          ______________    ______________
CASH FLOWS FROM INVESTING ACTIVITIES
  Principal Payments on Real Estate
    Contracts and Mortgage Notes and
    Other Receivables                         93,609,289        93,156,352
  Proceeds From Real Estate Sales             22,763,866        14,910,747
  Proceeds From Investment Maturities         29,297,583        16,091,098
  Proceeds from Sale of Available-for-
    Sale Securities                            6,853,358         1,769,954
  Purchase of Available-for-Sale
    Securities                               (94,152,657)         (592,421)
  Proceeds From Sale of Real Estate
    Contracts and Mortgage Notes and
    Other Receivables                        420,206,011       212,241,886
  Acquisition of Real Estate Contracts
    and Mortgage Notes and Other
    Receivables                             (458,333,730)     (356,163,115)
  Additions to Real Estate Held              (12,855,675)      (12,802,871)
  Capital Expenditures                        (1,465,756)      (16,325,228)
                                          ______________    ______________
    NET CASH PROVIDED BY (USED IN)
      INVESTING ACTIVITIES                     5,922,289       (47,713,598)
                                          ______________    ______________
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Short-Term
Borrowings                                    31,379,850        36,750,713
  Receipts From Life and Annuity              83,301,077        60,935,212
Products
  Withdrawals on Life and Annuity
    Products                                 (78,628,060)     (105,084,777)
  Ceding of Life and Annuity Products to
    Reinsurers, Net                          (32,544,634)        2,175,181
  Repayment to Banks and Others               (1,371,939)         (274,627)
  Issuance of Debenture Bonds                 28,463,256        49,170,232
  Issuance of Preferred Stock                  2,235,096         1,549,430
  Repayment of Debenture Bonds               (29,918,394)      (40,413,961)
  Cash Dividends                              (2,873,663)       (2,927,008)
  Redemption of Capital Stock                   (306,628)       (2,198,424)
  Receipt of Contingent Sale Price for
    Subsidiary Sold to Related Party                               135,568
                                          ______________    ______________
NET CASH USED IN FINANCING ACTIVITIES           (264,039)         (182,461)
                                          ______________    ______________
Net Change in Cash and Cash Equivalents      ( 8,334,629)      (34,817,172)
Cash and Cash Equivalents at Beginning
  Of Period                                   31,733,362        58,924,958

                                          ______________    ______________
CASH AND CASH EQUIVALENTS AT END
  OF PERIOD                               $   23,398,733    $   24,107,786
                                          ==============    ==============
</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 June 30, 1999, and
      the  results of operations for the three and nine months ended June  30,
      1999 and 1998 and the cash flows for the nine months ended June 30, 1999
      and  1998.   The  results of operations for the  three  and  nine  month
      periods  ended June 30, 1999 and 1998 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,  1998  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 1998
      Form 10-K.

2.    The principal amount of receivables as to which payments were in arrears
      more  than three months was $30,000,000 at June 30, 1999 and $34,000,000
      at September 30, 1998.

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.    In  November, 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.  Approximately $194.4 million of receivables,
      with  $182.4 million provided by the Company and WULA, were sold in  the
      securitization.   The  Company  and  WULA  recorded  approximately  $8.8
      million  in pre-tax gains from their portion of the sale.  In  December,
      1998,  the  Company  participated as one of  the  two  co-sellers  in  a
      structured  settlement securitization sponsored by Select Asset  Funding
      Corporation,  an  affiliated company.  Approximately  $37.7  million  in
      structured  settlements at amortized costs, with $21.8 million  provided
      by  the  Company, were sold in the securitization.  The Company recorded
      approximately  $1.4  million in pre-tax gains from its  portion  of  the
      sale.   In  March  1999, the Company and its subsidiary, Western  United
      Life  Assurance  Company,  participated as co-sellers  in  a  receivable
      securitization  sponsored by Metropolitan Asset Funding,  Inc.,  II,  an
      affiliated  company.  Approximately $124.8 million of  receivables  were
      sold  in  the  securitization.  The Company, including  its  subsidiary,
      recorded approximately $8.1 million in pre-tax gains from the sale.

6.    The  Company's income tax provision for the three and nine months  ended
      June  30,  1999 reflects the income tax benefit associated with  capital
      losses  generated  by an implemented tax strategy  which  were  used  to
      offset   certain   tax   timing  differences.   The   Company   recorded
      approximately $14.0 million in income tax benefits associated with  this
      transaction, which reduced income taxes previously recorded.

7.    In  October, 1998, Statement of Financial Accounting Standards No.  134,
      "Accounting for Mortgage-Banking Enterprise" ("SFAS 134"), was issued.
      SFAS  134 requires that after the securitization of mortgage loans  held
      for  sale, an entity engaged in mortgage banking activities classify the
      resulting  mortgage-backed securities or other retained interests  based
      on  its  ability  and  intent to sell or hold those  investments.   This
      statement  conforms  the subsequent accounting for  securities  retained
      after  the  securitization  of  mortgage loans  by  a  mortgage  banking
      enterprise with the subsequent accounting for securities retained  after
      the  securitization  of other types of assets by a non-mortgage  banking
      enterprise.   The  Company adopted this statement effective  January  1,
      1999.   Concurrent  with  the  adoption, the Company  transferred  $46.3
      million in mortgage-backed securities from its trading category  to  its
      available-for-sale category.

8.    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

       These  discussions may contain 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 Third Quarter Transactions:

      The  Company  had  no  significant or unusual  transactions  during  the
quarter  ending  June  30, 1999.  During the quarter, the Company  accumulated
receivables  for an anticipated securitization transaction expected  to  close
during  the  month of August 1999.  The Company financed a majority  of  these
receivable  investments  with advances under a line of  credit  with  Bank  of
America.   The maximum amount available for advances under the line of  credit
is  $200  million.   Advances under the line of credit  totaled  approximately
$107.9 million at June 30, 1999.


Financial Condition and Liquidity:

       As  of June 30, 1999, the Company had cash or cash equivalents of $23.4
million  and liquid investments (trading or available-for-sale securities)  of
$184.3 million compared to $15.7 million and $184.2 million at March 31, 1999,
$106.9  million and $112.8 million at December 31, 1998 and $31.7 million  and
$81.9  million at September 30, 1998.  Management believes that cash and  cash
equivalents and other liquidity provided by investments and available lines of
credit,   along  with  the  Company's  ability  to  securitize   real   estate
collateralized receivables, are adequate to meet planned asset additions, debt
retirements or other business operational requirements during the next  twelve
months.     Total  cash  and investments at June 30, 1999, including  held-to-
maturity  securities,  were $278.4 million as compared to  $273.8  million  at
March  31,  1999,  $299.5 million at December 31, 1998 and $198.3  million  at
September  30,  1998.   During  the nine month period  ended  June  30,  1999,
approximately  $14.0 million were used in operating activities.   The  primary
reason  for  the  use of funds in operating activities was the acquisition  of
approximately  $42.9  million  of  trading  securities.   Funds  provided   by
investing  activities  of  $5.9  million were primarily  the  result  of  sale
proceeds  and collections of receivables of $513.8 million, proceeds from  the
sale  of  real estate of $22.8 million and sales and maturities of investments
of  $36.2  million,  which  exceeded  the $458.3  million  of  new  receivable
acquisitions,  additions  to real estate held of $12.9  million,  purchase  of
available-for-sale  securities of $94.2 million and  capital  expenditures  of
$1.5  million.   Funds  used  in financing activities  of  $0.3  million  were
primarily  the result of a $1.5 million net outflow from debenture  maturities
less sales, payment of cash dividends of $2.9 million, repayments to banks and
others of $1.4 million and the net ceding of annuity products to reinsurers of
$32.5 million, which exceeded the net cash inflow of $4.7 million in life  and
annuity products, increases in short-term borrowings of $31.4 million and  the
net  inflow  from  the issuance less redemptions of preferred  stock  of  $1.9
million.

       The  receivable  portfolio totaled $763.6  million  at  June  30,  1999
compared  to $636.1 million at March 31, 1999, $634.3 million at December  31,
1998  and  $815.0 million at September 30, 1998.  During the nine months ended
June  30, 1999, the decrease was primarily the result of principal collections
on receivables of $93.6 million, a reduction for the cost basis of receivables
sold  of  $400.3  million  and a reduction due to  foreclosed  receivables  of
approximately $24.8 million, exceeding the acquisition of receivables totaling
$458.3  million,  an  increase in accrued interest of  $1.8  million  plus  an
additional $6.7 million in loans to facilitate the sale of real estate.

       Real  estate held for sale and development decreased slightly to  $89.0
million  at June 30, 1999 from $89.9 million at March 31, 1999, $89.9  million
at  December 31, 1998 and $89.7 million at September 30, 1998.  For  the  nine
months ended June 30, 1999, real estate additions of  $33.4 million, including
$20.6  million of foreclosed receivables, were offset by costs of real  estate
sold  of  $28.1 million, depreciation of $2.5 million and charge-offs  to  the
allowance for losses of $3.5 million.

      Life insurance and annuity policy reserves increased $3.7 million during
the  nine  months  ended June 30, 1999 to approximately  $804.5  million  from
$800.8  million  at  September 30, 1998.  This  increase  was  the  result  of
insurance  product  receipts  in  the amount of  $83.3  million  and  credited
earnings  of  $31.5 million exceeding insurance product withdrawals  of  $78.6
million and net reinsurance ceded of $32.5 million.  For the nine months ended
June  30,  1999, net debenture bonds outstanding decreased by $0.2 million  to
$198.0  million from $198.2 million at September 30, 1998.  Net  cash  outflow
from  maturities  less issuance of debentures was approximately  $1.5  million
less   an  additional  $1.2  million  increase  in  credited  interest   held.
Additionally,  the Company had cash flow, net of redemptions, of approximately
$1.9 million from the issuance of preferred stock during the nine months ended
June  30, 1999.  During the nine month period ended June 30, 1999, the Company
had a net increase in short-term borrowings of $31.4 million to an approximate
outstanding  amount  of  $154.2 million on June 30, 1999.   The  increase  was
primarily  the  result  of  the  use  of  short-term  borrowings  to   finance
accumulation of receivables for an anticipated securitization in August 1999.

       Total  assets increased by $38.4 million to $1.265 billion at June  30,
1999 from $1.227 billion at September 30, 1998.  At June 30, 1999, the Company
had  net  unrealized losses on securities available-for-sale in the amount  of
$3.5  million  as compared to unrealized losses of $681,000 at  September  30,
1998.  Net unrealized losses on securities available-for-sale is presented  as
a component of accumulated other comprehensive loss in stockholders' equity.

Results of Operations:

       The Company recorded net income before preferred dividends for the nine
months  ended June 30, 1999 of $16.1 million compared to $10.7 million in  the
prior year's period.  Comparing the current year's nine month period with  the
prior year's similar period, the increase in gains on the sale of receivables,
an  increase  in fees, commissions and service income and the benefits  of  an
implemented  income tax strategy completely offset increases in the  provision
for  losses  on  real  estate assets, increases in salaries,  commissions  and
benefits, a decrease in the net interest spread, a decrease in gains from  the
sale  of  real  estate, a loss on investment securities  and  increased  other
operating expenses.

       For  the nine-month period ended June 30, 1999, the Company reported  a
positive  spread  on  its interest sensitive assets and liabilities  of  $19.0
million as compared to $21.1 million in the prior year's period.  The decrease
was   primarily  the  result  of  a  shift  from  higher  yielding  receivable
investments  into  lower  yielding bond investments  as  a  result  of  recent
securitizations and management's decision to reduce the investment  percentage
of   its   insurance  subsidiary  in  real  estate  related   assets.    After
securitizations,  it often takes the Company several months  to  reinvest  the
proceeds  in  new receivable investments along with the fact that the  Company
often elects to retain some of the subordinate bonds from the securitizations.
While  there has been some contraction in the earnings rate on the  investment
portfolio  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
short-term borrowings with a lower interest cost in an effort to maintain  its
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  nine months ended June 30, 1999, the Company realized  net
gains on sales of receivables of $19.9 million as compared to $12.0 million in
the  prior  year's period.  The current year included gains from  real  estate
receivable  securitizations in November 1998 and March 1999 and  a  structured
settlement  securitization in December 1998.  The prior  year  included  gains
from a real estate receivable securitization in April 1998.

       During  the  nine months ended June 30, 1999, the Company realized  net
losses on investments of $3.7 million, including mark-to-market adjustments on
trading securities and losses incurred to implement its tax strategy, compared
to  net  gains of $6.7 million in the prior year's period.  The current period
loss  includes  both  realized  gains and  mark-to-market  losses,  as  higher
interest  rates  and  increased  spreads  to  treasuries  have  decreased  the
valuation  of  certain  trading  securities.  Additionally,  included  in  the
current  year's  period  are  approximately $2.6 million  in  investment  loss
associated with the implementation of the tax strategy.  The prior year's gain
was  primarily the result of reduced interest rates and tightening of  spreads
to  treasuries, thus increasing the value of trading securities.  Also, in the
prior  year, the Company revalued some of its retained securities  from  prior
securitizations.  The Company realized gains of $1.4 million on sales of $29.5
million of real estate in the current year's period compared to gains of  $1.5
million  on  sales of $23.2 million in the prior year.  It is  the  policy  of
management to actively market real estate in order to return the investment to
an earning asset.

             In  the  nine  months  ended  June 30,  1999,  the  Company  made
provisions  for losses on receivables and real estate assets of  approximately
$7.5  million  as  compared to $4.2 million in the prior year's  period.   The
increase  in  the  provision was based upon updated appraisals  on  delinquent
receivables  and  appraisals  or  fair market  valuations  of  newly  acquired
repossessed properties.

       For  the  nine  months  ended June 30, 1999, the Company  has  incurred
salary, commission and benefits expense of $22.5 million as compared to  $20.4
million  in the previous year's similar period.  Increases were partially  the
result of additional employees hired to meet servicing demands related to  the
increase  in managed assets from prior securitizations.  To date, the  Company
has  retained  the servicing of all securitized assets.  Partially  offsetting
this  expense increase has been a $0.9 million increase in fees,  service  and
commission  income  with  fees of $6.2 million in the  current  year's  period
compared to $5.3 million in the prior year.

      In  the  nine  months  ended  June 30, 1999, the  Company  has  incurred
increases  in  other  operating  expenses,  including  decreases  in  deferred
acquisition costs related to its insurance business.  A $1.4 million reduction
in  operating expenses after capitalized contract acquisition costs was almost
entirely offset by additional depreciation and amortization expenses  of  $1.3
million.   Additionally, in the current year's period, the Company experienced
a  larger  decrease  in deferred acquisition costs related  to  its  insurance
business  as increased amortization and reduced capitalization resulted  in  a
$3.5 million increase in expense.

      In  comparing the three months ended June 30, 1999 with the prior year's
similar period, the Company recorded a net loss before preferred dividends  of
$1.9  million  as compared to net income of $7.0 million.  The  loss  for  the
comparative three months was primarily the result of (1) a decrease in the net
interest spread, (2) increased losses on investments, (3) a decrease in  gains
from  the sale of receivables, (4) an increase in the provision for losses  on
real  estate assets, and (5) increases in salaries, commissions, benefits  and
other  operating expenses, which were only partially offset by (1) an increase
in  gains  from  the  sale  of  real estate, and  (2)  an  increase  in  fees,
commissions and service income.

      For  the  three months ended June 30, 1999, the net interest spread  was
$6.8  million  compared to $7.4 million in the prior year.  The reduction  was
primarily  the result of the Company carrying increased balances in  cash  and
cash  equivalents  generated  from  recent receivable  securitizations  and  a
reallocation  of  investments.  Until funds received from the  securitizations
can  be  reinvested in similar receivables, the Company is forced to  purchase
short-term  investments  with lower yields.   The reduction  was  additionally
effected  by the lower interest rate market, which affected the yield  on  new
receivable investments.

       During  the three months ended June 30, 1999, the Company realized  net
losses  on  investments  of  $571,000  and  realized  gains  on  the  sale  of
receivables  of $240,000.  In the prior year, the Company recorded  investment
gains of $251,000 and gains on the sale of receivables of $11.7 million.   The
prior  year's  investment gains were primarily the result of reduced  interest
rates  and the tightening of spreads to treasuries, thus increasing the  value
of trading securities.  Additionally, in the three months ended June 30, 1999,
the Company did not complete a real estate receivable securitization while the
Company  did  complete  one in April 1998.  The Company anticipates  its  next
securitization to take place in August 1999.

       In conjunction with the Company's evaluation of its real estate assets,
the  Company  provided for loss on real estate assets of $1.9 million  in  the
current  year's three-month period as compared to $1.5 million  in  the  prior
year.    The   increase  was  based  upon  updated  appraisals  on  delinquent
receivables  and  appraisals  or  fair market  valuations  of  newly  acquired
repossessed properties.

New Accounting Rules:

       In  June  1997,  Statement of Financial Accounting Standards  No.  131,
"Disclosures  about Segments for an Enterprise and Related Information"  (SFAS
131)  was  issued.   SFAS 131 establishes standards for the  way  that  public
business  enterprises report information about operating  segments  in  annual
financial  statements  and  requires that those  enterprises  report  selected
information  about operating segments in interim financial reports  issued  to
shareholders.   It  also establishes standards for related  disclosures  about
products  and services, geographic areas and major customers.  This  Statement
supersedes   SFAS  14,  "Financial  Reporting  for  Segments  of  a   Business
Enterprise,"  but  retains the requirement to report information  about  major
customers.   The  application of SFAS 131 is not expected to have  a  material
effect on the Company's consolidated financial statements.

      In December 1997, the American Institute of Certified Public Accountants
issued  Statement  of  Position  97-3,  "Accounting  by  Insurance  and  Other
Enterprises for Insurance-Related Assessments" ("SOP 97-3").  SOP 97-3 applies
to  all entities that are subject to guaranty-fund and other insurance-related
assessments.  Assessments covered by this SOP include any charge  mandated  by
statute  or  regulatory authority that is related directly  or  indirectly  to
underwriting  activities (including self-insurance), except for  income  taxes
and  premium taxes.  SOP 97-3 is effective for financial statements for fiscal
years  after  December  15,  1998.  The Company  does  not  believe  that  the
application  of  SOP  97-3  will have a material effect  on  its  consolidated
financial statements.

       In  June  1998,  Statement of Financial Accounting Standards  No.  133,
"Accounting  for Derivative Instruments and Hedging Activities" ("SFAS  133"),
was  issued.   SFAS  133  establishes accounting and reporting  standards  for
derivative  instruments, including certain derivative instruments embedded  in
other  contracts, (collectively referred to as "Derivatives") and for  hedging
activities.   It requires that an entity recognize all derivatives  as  either
assets or liabilities in the statement of financial position and measure those
instruments  at  fair value.  In June 1999, Statement of Financial  Accounting
Standards  No.  137,  "Accounting  for  Derivative  Instruments  and   Hedging
Activities-Deferral  of  the  Effective Date of SFAS  133"  ("SFAS  137")  was
issued.  SFAS  137  amends SFAS 133 to become effective for  all  quarters  of
fiscal  years  beginning after June 15, 2000, however, earlier application  is
encouraged as of the beginning of any fiscal quarter.  The Company has not yet
determined the effect of the application of this statement on its consolidated
financial statements.

       In  October 1998, Statement of Financial Accounting Standards No.  134,
"Accounting  for Mortgage-Banking Enterprise" ("SFAS 134"), was issued.   SFAS
134 requires that after the securitization of mortgage loans held for sale, an
entity engaged in mortgage banking activities classify the resulting mortgage-
backed  securities or other retained interests based on its ability and intent
to  sell  or  hold those investments.  This statement conforms the  subsequent
accounting for securities retained after the securitization of mortgage  loans
by a mortgage banking enterprise with the subsequent accounting for securities
retained  after the securitization of other types of assets by a  non-mortgage
banking  enterprise.  The Company adopted this statement effective January  1,
1999.  Concurrent with the adoption, the Company transferred $46.3 million  in
mortgage-backed  securities for its trading category to its available-for-sale
category.

Year 2000 Disclosure

      The  Consolidated Group (Metropolitan and its subsidiaries) is aware  of
the  potential  effect  that the year 2000 and the new  century  may  have  on
computer  hardware,  computer software and applications  and  embedded  micro-
controllers in non-computer equipment (collectively "Information Technology").
The  problem is insuring that the Consolidated Group is "Year 2000  Compliant"
meaning  that the Information Technology is able to (i) process date and  time
data  accurately  and  (ii) calculate, compare and  sequence  from,  into  and
between  the  twentieth and twenty-first centuries, the years 1999,  2000  and
leap years.

      The Consolidated Group and its affiliates share many software, hardware,
facilities and other systems.  Therefore, the Consolidated Group's  Year  2000
efforts  are a combined and coordinated effort among all companies within  the
Consolidated Group and its affiliates.  The following are statements regarding
the Year 2000 compliance of the Consolidated Group.  The information below has
not  been  independently  verified  by  the  Consolidated  Group,  other  than
statements relating to the Consolidated Group.

      State of Readiness

      The  Consolidated Group has established a Year 2000 task force which has
developed  an  action plan for addressing issues related  to  the  Year  2000.
Management  currently contemplates that the plan, with the  exception  of  the
contingency  plan,  will be substantially completed by August  1,  1999.   The
contingency  plan  is expected to be substantially completed  by  December  1,
1999,  but  will  continue to be revised thereafter  as  needed  in  order  to
maintain  an  effective  contingency  plan.   The  action  plan  includes  the
following phases:

      Inventory - Identify all internal and external systems and services that
      may utilize date sensitive information.

      Assessment  -  Determine  whether  each  system  or  service  meets  the
      Consolidated Group's definition of Year 2000 Compliance and  assess  the
      potential business impact of non-compliance.

      Renovation - Modify and/or replace any systems or services that  do  not
      satisfy the Consolidated Group's  definition of Year 2000 Compliance.

      Certification  - Obtain certification that each system or service  meets
      the definition of compliance.

      Training - Develop and implement any training and procedural changes  to
      ensure correct data-entry.

      Contingency  Planning - Develop and implement contingency plans  against
      possible failures.

      The  plan  includes a timeline for the completion of each of the  phases
and  components  of the work within each phase.  Many of the different  phases
have  overlapping  timelines  and  are therefore  progressing  simultaneously,
therefore  the  status  of progress on any particular phase  is  difficult  to
assess  at  any point in time.  The Year 2000 task force meets  as  needed  to
coordinate its efforts as well as to monitor progress.

      The  status of the Consolidated Group's Year 2000 efforts are  regularly
monitored  by the internal auditor.  In addition, during the first quarter  of
calendar  1999,  the Consolidated Group engaged a third party  to  provide  an
external  evaluation of its Year 2000 plan and the status of the  preparations
of the Consolidated Group at that time.

      The  Consolidated  Group  has completed the testing  of  its  internally
developed   and  supported  software  applications,  hardware  and  facilities
systems.   Updates and modifications were made to systems if  and  as  needed.
Testing  to  date  has  not produced any results which were  not  able  to  be
resolved.   Testing  for  newly acquired or upgraded  software,  hardware  and
facilities  systems will continue as deemed appropriate through the  remainder
of the year.

      The  Consolidated  Group  is requesting vendor documentation  certifying
Year  2000 compliance with respect to third party software applications, third
party  services, equipment and facilities related systems.  Certain  equipment
and facilities systems which have been identified as higher priority have been
tested  for  compliance, where testing is possible.  Where  such  testing  has
occurred,  the tests have not produced any results which were not able  to  be
resolved.   To  date, the Consolidated Group has not received  any  indication
from  any  third party that a mission critical system or service will  not  be
able to be certified by them as Year 2000 compliant.  The Year 2000 task force
is  monitoring  and tracking projected certification dates  from  third  party
providers.

      The  Consolidated  Group  has  begun the  development  of  a  Year  2000
contingency  plan  to  address  potential  Year  2000  related  failures.    A
contingency  planning task force has developed preliminary  contingency  plans
which  will  be further refined and tested during the remainder of  the  year.
There  can  be no assurance that this contingency plan or that the  Year  2000
action  plan will be able to prevent a material disruption of the Consolidated
Group's business.

      Expected Costs of Remediation

      Prior  to  fiscal 1998, the Consolidated Group did not track  Year  2000
related costs. The Consolidated Group and its affiliates had developed a  Year
2000  budget  of  approximately $1.3 million for the  fiscal  year  commencing
October  1, 1998.  Certain of these costs will be charged to or reimbursed  by
the  affiliated  companies, and certain of these costs will  be  paid  by  the
Consolidated Group with respect to their respective costs associated with  the
Year  2000  action plan.  The predominant components of both past  and  future
costs  consist of soft costs related to employee time and resource allocations
rather than direct costs such as the acquisition of new software.

      Risks

      The  Consolidated Group, as a financial institution, relies heavily upon
computers  and  information technology systems to acquire,  service  and  sell
Receivables as well as for its securities and insurance sales activities.  The
Consolidated Group faces extensive Year 2000 related risks.  The order  within
which  these  risks are presented is not intended as a prioritization  of  the
potential  risks nor an exhaustive identification of the risks.   These  risks
include, but are not limited to the following:

      unavailability of electrical power or telecommunication systems supplied
      by third parties;

      inability of obligors on the Receivables to access their funds  to  make
      required payments;

      inability  of  the  mail systems or wire transfer systems  performed  by
      third parties to deliver such payments;

      inability of banks to process those payments;

      failure  of  any of the software/hardware systems which the Consolidated
      Group  uses to track insurance products, securities products or acquire,
      service and sell Receivables;

      inability of the Consolidated Group to access its own funds or  to  make
      wire  transfers  or  otherwise make payments on its obligations  due  to
      internal or third party (generally banking) system failures; and

      inability of the Consolidated Group to process data accurately or timely
      for  general business management purposes, regulatory reporting purposes
      or other purposes.

      Contingency Plans

      The  Consolidated Group has commenced the development of  a  contingency
plan  but  has not finalized such a plan to date.  Development of  contingency
plans  for  mission  critical  items is the first  and  top  priority  of  the
contingency  planning phase.  Where appropriate and feasible,  the  plan  will
also  address  alternatives  for  internally  developed  systems  as  well  as
externally  developed ones, and will include steps to implement transition  to
an  alternative system.  The plan will include trigger dates for  implementing
alternative  solutions prior to the Year 2000, where system testing  or  third
party  documentation indicates that a system is not and will not be compliant.
There  can  be no assurance that this contingency plan, or that the Year  2000
action  plan will be able to prevent a material disruption of the Consolidated
Group's business.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       The  Company is in a "liability sensitive" position in that it interest
sensitive  liabilities reprice or mature more quickly  than  do  its  interest
sensitive  assets.  Consequently, in a rising interest rate  environment,  the
net  return  from  interest  sensitive assets and  liabilities  will  tend  to
decrease, thus rising interest rates will have a negative impact on results of
operations.   Conversely,  in a falling interest  rate  environment,  the  net
return  from  interest sensitive assets and liabilities will tend to  improve,
thus  falling  interest  rates  will have a  positive  impact  on  results  of
operations.  As with the impact on operations from changes in interest  rates,
the Company's Net Present Value ("NPV") of financial assets and liabilities is
subject  to fluctuations in interest rates.  The Company continually  monitors
the  sensitivity of net interest income and NPV to changes in interest  rates.
NPV  is  calculated  based on the net present value of  estimated  cash  flows
utilizing market prepayment assumptions and market rates of interest  provided
by independent broker quotations and other public sources.  Any computation of
forecasted effects of hypothetical interest rate changes are based on numerous
assumptions,  including  relative  levels  of  market  interest  rates,   loan
prepayments and redemptions of certificates, and should not be relied upon  as
indicative of actual future results.

       The  Company believes that there has not been a material change in  its
market risk since the end of its last fiscal year.


                          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

       No  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).    Restated Bylaws as amended to December 26, 1995
                         (Exhibit 3(e) to Metropolitan's Annual Report on
                         Form 10-K for fiscal 1995).

                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 &
                         Securities Co., Inc. and Bruce Blohowiak (Exhibit
                         10(a) to Form 10-K filed January 8, 1998).

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

                10(c).   Employment Agreement between Metropolitan Mortgage &
                         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) for the fiscal year ended
                         September 30, 1998.)

                10(e).   Employment Agreement between Metropolitan Mortgage &
                         Securities Co., Inc. and William D. Snider (Exhibit
                         10(e) to Form 10-Q filed May 20, 1999).

                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 12th day of
August, 1999 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/ WILLIAM D. SNIDER

            ______________________________________________
            William D. Snider
            Chief Financial Officer