FORM 10-Q
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED 
JUNE 30, 1997

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE AT 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.)

West 929 Sprague Ave., Spokane, WA              99204
(Address of principal executive offices)      (Zip Code)

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

__________________________________________________________
(Former name, former address and former fiscal
year, if changed since last report)

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:  (Not Applicable)

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.
130 SHARES - Common "A" at July 31, 1997
0 SHARES - Common "B" at July 31, 1997


METROPOLITAN MORTGAGE & SECURITIES CO., INC.
Index


Part I - Financial Information:

Item 1.	Financial Statements

   Consolidated Condensed Balance Sheets --				
     June 30, 1997 and 
     September 30, 1996	(unaudited)

   Consolidated Condensed Statements of Income
     Three and Nine Months Ended June 30, 1997
     and 1996 (unaudited)          					

   Consolidated Condensed Statements of Cash Flows
     Nine Months Ended June 30, 1997 and 1996
     (unaudited)                   					

   Notes to Consolidated Condensed Financial Statements    	

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

Item 3:  Quantative 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 I - Financial Information


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



<TABLE>
<CAPTION>
                                                 June 30,         September 30,
                                                   1997                1996    
								(unaudited)
<S>                                            <C>              <C>
ASSETS
  Cash and Cash Equivalents                    $   42,414,304    $   35,226,746
  Restricted Cash and Cash Equivalents                              132,652,334
  Investments:
    Trading Securities, at Market                   8,902,636
    Available-for-Sale Securities, 
	at market                                    47,186,351        38,554,498
    Held-to-Maturity Securities, 
     at amortized cost (market value 
	$114,929,073 and $119,200,084)              118,446,213       124,748,490
  Accrued Interest on Investments                   2,342,360         1,516,390
                                               --------------     -------------
      Total Cash and Investments                  219,291,864       332,698,458
                                               --------------     -------------
  Real Estate Contracts and Mortgage
    Notes and Other Receivables                   792,159,770       758,427,480
  Real Estate for Sale and
    Development - Including 
    Foreclosed Real Estate                         81,404,957        84,333,288
                                                -------------     -------------
  Total Receivables and 
    Real Estate Assets                            873,564,727       842,760,768
  Less Allowance for Losses                        (9,500,783)      (10,192,584)
                                                -------------     -------------
      Net Receivables and 
      Real Estate Assets                          864,063,944       832,568,184
                                                -------------     -------------

  Deferred Acquisition Costs, Net                  73,056,725        74,530,361

  Land, Building and Equipment - net 
    of accumulated depreciation                     9,065,040         8,516,598

  Other Assets, net of allowance                   34,422,581        34,345,227
                                               --------------      ------------

    TOTAL ASSETS                               $1,199,900,154    $1,282,658,828
                                               ==============    ==============

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


       METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                    CONSOLIDATED CONDENSED BALANCE SHEETS
                                
<TABLE>
<CAPTION>
                                                      June 30,      September 30,
                                                        1997             1996    
		                                        (unaudited)

<S>                                               <C>             <C>
LIABILITIES
 Life Insurance and Annuity Reserves             $  833,348,929    $  837,366,108
 Debenture Bonds                                    180,180,951       192,173,751
 Other Debt Payable                                  93,445,293        38,601,146
 Securities Sold, Not Owned                                           132,652,334
 Accounts Payable and Accrued
   Expenses                                          25,594,096        18,082,782
 Deferred Income Taxes                               14,759,346        15,894,831
 Minority Interest in Consolidated
   Subsidiaries                                       1,585,674         1,544,544
                                                  -------------    --------------
   TOTAL LIABILITIES                              1,148,914,289     1,236,315,496
                                                  -------------    --------------
                            
STOCKHOLDERS' EQUITY
 Preferred Stock, Series A, B, C, D, 
   E Cumulative with Variable Rate,
   $10 Par Value, Authorized 8,325,000
   Issued 2,123,556 Shares and 
   2,151,820 Shares (Liquidation 
   Preference $50,705,465 and 
   $49,495,906, respectively)                        21,235,559        21,518,198
 Class A Common Stock - Voting, 
   $2,250 Par Value, Authorized 
   222 Shares, Issued 130 Shares                        293,417           293,417
 Additional Paid-In Capital                          18,287,402        16,791,670
 Retained Earnings                                   11,704,459         8,731,070
 Net Unrealized Losses on
    Investments                                        (534,972)         (991,023)
                                                   ------------     -------------
    TOTAL STOCKHOLDERS' EQUITY                       50,985,865        46,343,332
                                                   ------------     -------------
      TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY                     $1,199,900,154    $1,282,658,828
                                                 ==============    ===============

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


	METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
                                            Three Months Ended                         Nine Months Ended
                                                  June 30,                                  June 30,                    
                                          1997               1996                  1997                1996
                                         --------------------------                ---------------------------
<S>                                   <C>           <C>		
REVENUES:
 Insurance Premiums Earned              $   750,000    $   750,000             $ 2,250,000          $ 2,250,000
 Interest and Earned Discounts           23,401,038     22,572,267              70,280,631           67,247,148
 Real Estate Sales                        9,820,370     13,326,831              23,972,756           36,618,195
 Fees, Commissions, Service
  and Other Income                        1,227,344      1,069,167               3,612,928            2,521,857
 Realized Investment Gains (Losses)       1,416,282         (3,039)               (699,877)              21,051
 Realized Gains on Sales of
  Receivables                                38,988      7,602,836              11,586,529            8,738,556
                                       ------------     ----------             ----------           -----------

  TOTAL REVENUES                         36,654,022     45,318,062             111,002,967          117,396,807
                                       ------------     ----------             -----------          -----------
EXPENSES:
 Insurance Policy and Annuity
   Benefits                              12,772,479     12,127,104              37,837,493           35,936,979
 Interest Expense                         4,309,694      4,315,805              14,128,615           12,396,569
 Cost of Real Estate Sold                 9,572,797     12,851,751              24,715,458           35,381,532
 Provision for Losses on Real
   Estate Assets                          1,400,781      1,353,838               3,397,615            3,625,331
 Salaries and Employee
   Benefits                               3,544,021      2,609,658               9,914,179            7,444,466
 Commissions to Agents                    1,614,104      2,692,753               5,838,189            8,054,364
 Other Operating and 
   Underwriting Expenses                    939,060      1,793,455               4,756,478            4,952,040
 Decease (Increase) in Deferred
   Acquisition Costs                      1,223,639         65,442               1,456,012             (136,558)
                                         ----------     ----------               ---------            ---------

   TOTAL EXPENSES                        35,376,575     37,809,806             102,044,039          107,654,723
                                         ----------     ----------             ------------         -----------
Income Before Income Taxes and
   Minority Interest                      1,277,447      7,508,256               8,958,928            9,742,084
Provision For Income Taxes                 (443,662)    (2,563,902)             (3,061,713)          (3,324,295)
                                         -----------     ----------             -----------           --------

Income Before Minority
   Interest                                 833,785      4,944,354               5,897,215            6,417,789

Income of Consolidated
   Subsidiaries Allocated to     
   Minority Stockholders                    (13,600)       (38,464)                (75,900)             (74,662)
                                         ----------     -----------              ---------            ---------

NET INCOME                                  820,185      4,905,890               5,821,315            6,343,127

Preferred Stock Dividends                (1,060,687)    (1,006,688)             (3,097,647)          (2,830,583)
                                        -----------     -----------             ----------            ---------
Income (Loss) Applicable to
   Common Stockholders                  $  (240,502)   $ 3,899,202              $2,723,668          $ 3,512,544
                                        ===========    ===========              ==========          ===========

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

</TABLE>


       METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                               (UNAUDITED)
<TABLE>
<CAPTION> 
                                                   Nine Months Ended
                                                       June 30,
                                                1997             1996
                                               ----------------------- 

<S>                                             <C>           <C>
Net Cash Provided By  (Used In)  
  Operating Activities                       $(95,354,775)   $ 38,669,083
                                              ------------    -----------
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                      88,032,412      87,452,164
Proceeds From Real Estate Sales                 6,045,297       9,600,449
Proceeds From Investment Maturities            14,371,647      23,497,107
Proceeds from Sale of Available-
    for-Sale Securities                        22,556,364      31,684,176
Purchase of Available-for-Sale
    Securities                                (46,409,515)     (4,289,580)
Purchase of Held-to-Maturity
    Securities                                    (99,625)    (12,181,445)
Proceeds From Sale of Real Estate 
    Contracts and Mortgage Notes 
    and Other Receivables                     184,761,380     135,535,851
Acquisition of Real Estate Contracts and
     Mortgage Notes and Other Receivables    (285,109,122)   (297,574,808)
Additions to Real Estate Held                 (16,563,297)    (23,267,320)
Capital Expenditures                           (1,335,335)     (1,012,383)
                                              -----------     ------------

Net Cash Provided By (Used In)
    Investing Activities                       98,902,540     (50,555,789)
                                              -----------     ------------
Cash Flows From Financing Activities:
Net Change in Short Term Borrowings from
  Brokers and Banks                            55,948,711      (4,750,375)
Receipts From Life and Annuity Products        48,298,041      84,971,944
Withdrawals on Life and Annuity Products      (87,604,090)    (75,290,856)
Repayment to Banks and Others                  (2,326,345)     (2,002,042)
Issuance of Debenture Bonds                    24,988,240       7,650,338
Issuance of Preferred Stock                     1,667,187       1,596,054
Repayment of Debenture Bonds                  (34,029,931)    (19,276,305)
Preferred Stock Dividends                      (3,097,647)     (2,830,622)
Redemption of Capital Stock                      (454,094)       (311,935)
Receipt of Contingent Sale Price
  for Subsidiary Sold to Related Party            249,721
                                               ----------     -------------

Net Cash Provided By (Used In)
  Financing Activities                          3,639,793     (10,243,799)
                                              -----------    -------------
Net Increase (Decrease) in Cash and
  Cash Equivalents                              7,187,558     (22,130,505)
Cash and Cash Equivalents at Beginning
  of Period                                    35,226,746      32,798,627
                                             ------------    ------------

Cash and Cash Equivalents at End
  of Period                                  $ 42,414,304    $ 10,668,122
                                             ============    ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial 
statements


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



1.	In the opinion of the Company, the accompanying 
unaudited consolidated condensed financial statements 
contain all adjustments necessary to present fairly the 
Company's financial position as of June 30, 1997, and 
the results of operations for the three and nine months 
ended June 30, 1997 and 1996 and the changes in cash 
flows for the nine months ended June 30, 1997 and 1996. 
The results of operations for the nine month periods 
ended June 30, 1997 and 1996 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, 
1996 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 1996 Form 10-K.

2.	The principal amount of receivables as to which payments 
were in arrears more than three months was $30,800,000 
at June 30, 1997 and $26,500,000 at September 30, 1996.

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 consolidated 
condensed 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 1996, Metropolitan Mortgage & Securities 
Co., Inc. (Metropolitan 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.  
Approximately $126.7 million of receivables, with $115.5 
million provided by Metropolitan and WULA, were sold in 
a securitization transaction with proceeds, after costs, 
of approximately $121.1 million, of which $110.4 million 
was allocated to Metropolitan and WULA.  With an 
amortized carrying value of approximately $101.5 million 
in the receivables sold in the securitization, 
Metropolitan and WULA  recorded approximately $8.9 
million in pre-tax gains from their portion of the sale. 
 Metropolitan Asset Funding, Inc. sold approximately 
$113.4 million in varying classes of mortgage pass-
through certificates.  In addition to the certificates 
sold to the public, approximately $13.3 million in 
subordinate class certificates and residual class 
certificates were returned to the various co-sellers of 
the receivables included in the securitization.  
Metropolitan and WULA received approximately $101.6 
million, after costs, from the securitization and 
received approximately $12.0 million (estimated fair 
value) in subordinate class and residual class 
certificates.  As an economic hedge for this receivable 
securitization sale, the Company had previously sold 
short approximately $128 million of 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.

6.	In December 1995, the Company reassessed the 
appropriateness of the classifications of its securities 
investments.  Based on this reassessment, the Company 
transferred $72,572,322 of securities from the Held-to-
Maturity classification to the Available-for-Sale 
classification.  This transfer was based on guidance 
included in the special report issued by the Financial 
Accounting Standards Board, "A Guide to Implementation 
of Statement 115 on Accounting for Certain Investments 
in Debt and Equity Securities". 

	Additionally, during the quarter ended June 30, 1997, 
the Company transferred $8,057,636 of residual class 
certificates from prior receivable securitizations from 
the Available-for-Sale classification to the Trading 
classification.  SFAS No. 115 establishes that trading 
securities are to be measured at fair market value with 
unrealized gains and losses included in earnings. During 
the quarter ended June 30, 1997, $845,000 of unrealized 
gains on trading securities are included in net 
earnings.

7.	In 1995, the Company sold its wholly owned subsidiary, 
Old Standard Life Insurance Company (OSL) to Summit 
Securities, Inc. (Summit), an affiliated company through 
common control.  In connection with the purchase, Summit 
agreed to pay a contingent purchase price consideration 
to Metropolitan based upon the future earnings of OSL.  
During the quarter ended March 31, 1997, the Company 
received approximately $250,000 of contingent purchase 
price from Summit.  Due to the affiliated nature of 
these companies, payment was recorded an increase in 
retained earnings.

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

	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. (Metropolitan 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.  Approximately $126.7 million of receivables, with 
$115.5 million provided by Metropolitan and WULA, were sold 
in a securitization transaction with proceeds, after costs, 
of approximately $121.1 million, which $110.4 million was 
allocated to Metropolitan and WULA.  With an amortized 
carrying value of approximately $101.5 million in the 
receivables sold in the securitization, Metropolitan and WULA 
 recorded approximately $8.9 million in pre-tax gains from 
their portion of the sale.  Metropolitan Asset Funding, Inc. 
sold approximately $113.4 million in varying classes of 
mortgage pass-through certificates.  In addition to the 
certificates sold to the  public, approximately $13.3 million 
in support class certificates and residual class certificates 
were returned to the various co-sellers of the receivables 
included in the securitization.  Metropolitan and WULA 
received approximately $101.6 million, after costs, from the 
securitization and received approximately $12.0 million 
(estimated fair value) in support class and residual class 
certificates.  As an economic hedge for this receivable 
securitization sale, the Company had previously sold short 
approximately $128 million of 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.

	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 Old 
Standard Life Insurance Company (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.  During the three 
months ended March 31, 1997, the Company received 
approximately $250,000 of contingent consideration from 
Summit.
	
	On February 21, 1997, WULA entered into a reinsurance 
agreement with OSL, whereby WULA agreed to reinsure 75% of 
certain single premium deferred annuity contracts.  The 
amount of deferred annuity contracts coinsured with OSL 
totaled approximately $21.3 million at June 30, 1997.
        
Financial Condition and Liquidity:

	As of June 30, 1997, the Company had cash or cash 
equivalents of $42.4 million and liquid investments (trading 
or available-for-sale securities) of $56.1 million compared 
to $20.1 million in cash or cash equivalents and $76.0 
million in liquid investments at March 31, 1997, $63.2 
million in cash and cash equivalents and $56.7 million in 
liquid investments at December 31, 1996 and $35.2 million in 
cash and cash equivalents and $38.6 million in liquid 
investments at September 30, 1996.  Management believes that 
cash, cash equivalents and liquidity provided by other 
investments are adequate to meet planned asset additions, 
debt retirements or other business operational requirements 
during the next twelve months.  At  June 30, 1997, total cash 
and investments, including restricted cash and held-to-
maturity securities, were $219.3 million as compared to 
$332.7 million at September 30, 1996.  During the nine month 
period ended June 30, 1997, the Company used approximately 
$95.4 million in its operating activities including $132.7 
million to close the previously described short sale of U.S. 
Treasury securities.  Funds provided by investing activities 
of $98.9 million resulted primarily from changes in 
restricted cash of $132.7 million, sale proceeds and 
collections of receivables of $272.8 million, investment 
maturities of $14.4 million, real estate sales proceeds of 
$6.0 million and proceeds from investment securities of $22.6 
million being offset by new receivable acquisitions of $285.1 
million, purchase of investment securities of $46.5 million, 
addition to real estate held of $16.6 million and other 
capital expenditures of $1.3 million.  Funds provided by 
financing activities of $3.6 million were primarily the 
result of an increase of $55.9 million in short-term 
borrowings, $1.2 million net cash inflow from preferred stock 
sales less redemptions and a $250,000 contingent price 
adjustment on the sale of a subsidiary, all of which were 
used to finance a net cash outflow of $39.3 million in life 
and annuity products, finance a net cash outflow of $9.0 
million in debenture bonds, repayments to banks and others of 
$2.3 million and payment of preferred stock dividends of $3.1 
million. 

	The receivable portfolio totaled $792.2 million at June 
30, 1997 compared to $720.7 million at March 31, 1997, $703.2 
at million December 31, 1996 and $758.4 million at September 
30, 1996.  During the nine months ended June 30, 1997, the 
increase primarily resulted from the acquisition of 
receivables totaling $285.1 million plus an additional $17.9 
million in loans to facilitate the sale of real estate being 
partially offset by principal collections on receivables of 
$88.0 million, reduction for the cost basis of receivables 
sold of $173.2 million and reductions due to foreclosed 
receivables of approximately $9.8 million.

	Real estate held for sale and development decreased to 
$81.4 million at June 30, 1997 from $82.2 million at March 
31, 1997, $84.2 million at December 31, 1996 and $84.3 
million at September 30, 1996.  For the nine months ended 
June 30, 1997, real estate additions of  $27.1 million, 
including $10.6 million of foreclosed receivables, were 
offset by costs of real estate sold of $24.7 million, 
depreciation of $2.6 million and charge-offs to the allowance 
for losses of $2.7 million.

	Life insurance and annuity policy reserves decreased 
$4.1 million during the nine months ended June 30, 1997 to 
approximately $833.3 million from $837.4 million at September 
30, 1996.  This decrease resulted from credited earnings of 
$35.3 million offset by a $39.3 million of net cash outflow 
as receipts from sales of new life and annuity products of 
$48.3 million were exceeded by withdrawals of $87.6 million 
from existing policies.  Additionally, current year sales of 
annuity products have been reduced through reinsurance of 
over $21 million of annuity products to OSL through June 30, 
1997.  Net debenture bonds outstanding decreased by $12.0 
million to $180.2 million at June 30, 1997 from $192.2 
million at September 30, 1996.  Net cash outflow from 
maturities less issuance of debentures was approximately $9.0 
million plus an additional $3.0 million decrease in credited 
interest held.  The Company had cash flow, net of 
redemptions, of approximately $1.2 million from the sale of 
preferred stock and reinvestment of preferred stock dividends 
during the nine months ended June 30, 1997.  During the nine 
month period ended June 30, 1997, the Company increased the 
portion of its other debt payable represented by short term 
borrowings by $55.9 million to an approximate outstanding 
amount of $91.4 million on June 30, 1997.

	At June 30, 1997, the Company had negotiated lines-of-
credit with Contitrade Services, LLC and Smith Barney 
Mortgage Capital Group.  The Conti line was for $25 million 
secured by timeshare receivables.  The Company had drawn $17 
million with interest at one-month libor + 250 bpts. as of 
June 30, 1997.  The Smith Barney line was for $100 million 
secured by first position residential contracts and 
mortgages.  The Company had drawn $25 million with interest 
at one-month libor + 100 bpts as of June 30, 1997.  Both 
lines were granted in conjunction with planned 
securitizations of timeshare receivables and residential 
mortgages. 

	Total assets decreased by $82.8 million to $1,199.9 
million at June 30, 1997 from $1,282.7 million at September 
30, 1996.  At June 30, 1997, the Company had net unrealized 
losses on securities available-for-sale in the amount of 
$535,000 as compared to unrealized losses of $1.0 million at 
September 30, 1996.  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 nine months ended June 30, 1997 of 
$5,821,000 compared to $6,343,000 in the prior year's period. 
 Comparing the current year's nine month period with the 
prior year's similar period, increases in gains from sales of 
receivables, increases in other fees and commission revenues, 
a reduction in the provision for losses on real estate 
assets, a reduction in commission expense and decrease in 
other operating expense were more than offset by a reduction 
in the net interest spread, increased losses from the sale of 
real estate, increased losses from the sale of investment 
securities, increases in salaries and benefits and a decrease 
in deferred acquisition costs (costs capitalized net of 
amortization).

	For the nine month period ended June 30, 1997, the 
Company reported a positive spread on its interest sensitive 
assets and liabilities of $20.6 million as compared to $21.2 
million in the prior year's period.  The reduction was 
primarily the result of a reduction in the receivable 
portfolio due to the securitization sale in November 1996 
which took several months to reinvest along with the 
contraction in portfolio investment earnings rates in the 
current year's period as new investment yields are slightly 
lower than previous investments. The Company has also 
experienced reduced renewal rates on some of its life and 
annuity policies and has continued to reinsure some annuity 
products.  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, 1997, the Company 
realized net losses from the sale of investments of $700,000 
compared to net gains of $21,000 in the prior year's period. 
 The current 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.  The $2.5 million loss on 
the short sale was partially offset by gains on sales of 
investment securities and gains on trading securities.  
Additionally, in the current year's period, the Company 
realized gains of $11.6 million from the sale of 
approximately $173.2 million of receivable investments, while 
in the prior year, sales of approximately $135.5 million of 
receivable investments produced realized gains of $8.7 
million.  The Company realized losses of $743,000 on sales of 
$24.0 million of real estate in the current year's period 
compared to net gains of $1.2 million on sales of  $36.6 
million in the prior year.  Significant in the current year 
compared to the prior year is the level of the Company's 
timeshare sales at its resort in Hawaii.  In the current 
year, the Company has recorded timeshare sales of 
approximately $10.4 million with losses of $1.8 million as 
compared to sales of $18.7 million and losses of $.8 million 
in the prior year.  The Company has experienced an 
improvement in timeshare sales during the last two months and 
expects future timeshare operations to continue to improve as 
an off-site sales office has been closed which should reduce 
operating expenses and the Company's selling agent has 
replaced the project and sales managers.  The Company 
anticipates that these changes will improve the results from 
timeshare operations in the future.   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 nine months ended June 30, 1997, the Company 
recorded other fees and commission revenues of $3.6 million 
as compared to $2.5 million in the prior year.  The increase 
in the current year is primarily the result of net servicing 
revenues related to the receivable securitizations. 

	In the nine months ended June 30, 1997, the Company made 
provisions for losses on receivables and real estate assets 
of approximately $3.4 million as compared to $3.6 million in 
the prior year's period.  The decreased provision in the 
current year is primarily the result of the decrease in the 
Company's portfolio of real estate held for sale and 
development.  The Company has experienced a slight increase 
in receivable delinquency rates; however, a stable to 
improving real estate market has offset the effects of the 
delinquency rate increases.

	In comparing the three months ended June 30, 1997 with 
the prior year's similar period, net income was $820,000 on 
revenues of $36.7 million as compared to net income of $4.9 
million on revenues of $45.3 million.  The reduction in 
revenues was primarily the result of a $3.5 million reduction 
in real estate sales, with sales of $9.8 million in 1997 as 
compared to $13.3 million in 1996, and a decrease of $7.6 
million in gains on the sale of receivables being partially 
offset by an increase of $1.4 million in realized investment 
gains, an $800,000 increase in interest income and a $160,000 
increase in revenues from fees, commissions, service and 
other income.  Prior year net income included pre-tax gains 
of approximately $7.1 million, after-tax $4.7 million, from a 
receivable securitization in May 1996.  

	Net income for the comparative three months showed a 
substantial reduction as improvements from (1) an slight 
increase in the spread between interest sensitive income and 
interest sensitive expense, (2) an increase in realized gains 
on investments, and (3) a small increase in fees, commissions 
and service income were more than offset by (1) a small 
increase in losses on the sale of real estate, (2) a 
substantial reduction in gains from the sale of receivables, 
(3) a slight increase in the provision for loss on real 
estate assets, (3) a small net increase in expenses, 
including salaries, commissions, operating expenses and 
deferred acquisition expenses.

	For the three months ended June 30, 1997, the net 
interest spread was $7.1 million compared to $6.9 million in 
the prior year's similar period.  The increase of only 
$200,000 was primarily the result of  the timing of the 
reinvestment of the proceeds from its November 1996 
receivable securitization.  

	During the three months ended June 30, 1997, the Company 
recorded gains on the sale of investments of $1.4 million.  
In the prior year, the Company recorded realized losses on 
the sale of investments of $3,000.

	During the three months ended June 30, 1997, the Company 
realized gains on the sale of receivables of $39,000 compared 
to $7.6 million in the prior year's similar period.  
Significant in the prior year was the Company's first 
receivable securitization in May 1996 at which approximately 
$105.9 million in receivables were sold at gains of  $7.1 
million.

	During the three months ended June 30, 1997, the Company 
generated approximately $1.2 million of fee revenues as 
compared to $1.1 million in the prior year.  The increase is 
primarily service fee income associated with the two 
securitizations which the Company participated in during May 
1996 and November 1996.  

	The Company realized gains of $248,000 on sales of $9.8 
million of real estate in the current year's three month 
period as compared to gains of $475,000 on sales of $13.3 
million of real estate in the prior year's period.  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.  Included in the current year were approximately 
$168,000 in losses on sales of approximately $3.4 million in 
timeshare sales, while the prior year included losses of 
$85,000 on sales of $6.0 million.

	In conjunction with the Company's evaluation of its real 
estate assets, the Company provided for loss on these assets 
of $1.4 million in the current year's three month period as 
compared to $1.3 million in the prior year.
	      
New Accounting Rules:

	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.  The Company does not believe that the application 
of this standard will have a material effect on the 
presentation of its earnings per share disclosures.

	In June 1997, SFAS No.130, "Comprehensive Income" was 
issued.  SFAS No.130 becomes effective in 1998 and requires 
reclassification 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 effect, if any, of SFAS 
No.130 on the consolidated financial statements.

	Also in June 1997, SFAS No.131, "Disclosures about 
Segments for an Enterprise and Related Information" (SFAS 
No.131) was issued.  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 stockholders.  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.  SFAS 
No.130 is effective for fiscal years beginning after December 
31, 1997.  Management has not yet determined the effect, if 
any, of SFAS No.131 on the consolidated financial statements.




                        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

		None

Item 3.	Defaults Upon Senior Securities

		None

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

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

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

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

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

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

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

			4(j).	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(k).	Form of Statement of Rights, Designations and 
Preferences of variable rate cumulative Preferred 
Stock, Series E-6.

			11.	Statement Indicating Computation of Per-Share 
Earnings.  (SEE "CONSOLIDATED FINANCIAL STATEMENTS".)

			*27.	Financial Data Schedule

		b).	There have been no reports on Form 8-K filed during the
		quarter which this report is filed.	


                                 SIGNATURES

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

                     METROPOLITAN MORTGAGE & SECURITIES CO., INC.
                                   (Registrant)


                          /s/STEVEN CROOKS

Date	August 19, 1997
                         ---------------------------------------------
                            Steven Crooks
                            Vice President
                            Principal Financial Officer




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