SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549


FORM 10-K SB


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


For the fiscal year ended                     Commission File No.
December 31, 1998                                       333-15151         


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


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

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

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

Indicate by check mark whether the registrant (1) filed all reports required 
to be filed by Section 13 or 15(b) of the Securities Exchange Act of 1934 
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report(s), and (2) has been subject to such filing 
requirements for the past 90 days.    /X/  Yes  / / No.

As of December 31, 1998 the Company has 144 secured promissory Notes Payable 
(Notes) with a total of $2,368,500 principal balance outstanding.  As indicated,
the Company is a Company organized pursuant to Florida law.  The Company had 
total revenues of $409,291 in 1998.


PART I 

Item 1.	Description of Business

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

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

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

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

In accordance with the acquisition policy the Company may:

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

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

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

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

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

On November 26, 1997, the Company had received gross proceeds in excess of 
the minimum amount of $1,500,000 to break escrow under the Prospectus dated July
15, 1997, Commission Number 333-15151.  As of December 31, 1998, the Company had
received gross note proceeds of $2,368,500.  Presented below is a summary of the
use of proceeds from the Note offering as of December 31, 1998:

<TABLE>
<CAPTION>

<S>                                            <C> 
	Selling commissions		                          $ 161,800
Offering management fee		                        	 71,055	
Non-accountable expense allowance		                47,370
Organizational and offering expense		             219,319
Purchase of assets			                              18,330
Purchase of federal instruments		                 322,367
Purchase of residential mortgages 
   and interim financings		                     1,028,008
Payment of note interest		                       	223,816
Organizational expense reimbursement		             32,520
Operating expenses			                             262,245
                                               			-------
   Gross offering proceeds		                   $2,368,500
</TABLE>

The notes were sold on a best efforts basis by FAS Wealth Management 
Services, Inc., formerly Executive Wealth Management, Inc., the managing 
underwriter.  As of December 31, 1998, the offering was closed.

Supply of Portfolio Loans

In the recent past there has been a limited supply of the types of mortgage 
loans intended to be purchased as Portfolio Loans.  The types of loans sought by
the Company are not generally available through any recognized national market; 
rather, in each geographic region there appears to be a limited number of buyers
and sellers involved in the market.  Mr. Della Penna has established 
relationships with several buyers and sellers in Arkansas, California, 
Florida, Kansas, Missouri, North Carolina, Ohio, Oklahoma, Pennsylvania and
Texas.  Management believes that such sellers should be able to provide a 
steady source of Portfolio Loans for the Company, and that such buyers will 
provide a ready market for all of the mortgage notes purchased by the 
Company after the Company has "seasoned" and "scrubbed" such loans.  At 
present, one company in Texas, Homevestors of America, Inc., ("Homevestors"),
is providing a majority of the residential mortgage loans being purchased by 
FMIL and FMMI, and such loan originator may be the source of a significant 
amount of the mortgage loans purchased by the Company as Portfolio 
Loans.  Mr. Della Penna beneficially owns approximately 13.2% of the Common 
Stock of Homevestors.  Homevestors is establishing a network of individuals 
and companies which will buy and sell residential real estate with a focus
on sales to credit impaired  buyers and, in connection with such sales, 
originate mortgage loans on such real estate which will meet the Acquisition
Policy of the Company.  

Portfolio Loan Servicing

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

Competition.  

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

Custody Agreement.

The Notes were issued pursuant to an indenture and custody agreement (the 
"Custody Agreement"), and the notes and mortgages comprising the Portfolio 
Loans are held by, and in the name of, Michael Hric, P.A., as trustee (the 
"Trustee"), acting as agent for the holders of the Notes.  The Custody 
Agreement does not contain provisions meeting the requirements of the Trust
Indenture Act of 1939, although the holders of the Notes and the Trustee 
will have certain rights which correspond to some of the requirements of 
such act.  The Trustee will acquire and maintain a lien on the Portfolio 
Loans (as well as the proceeds of any sale of a Portfolio Loan until the 
same is reinvested in another Portfolio Loan or paid out to the Noteholders)
 and any real estate acquired upon foreclosure of a Portfolio Loan.  Pending
 the purchase of Portfolio Loans, the Company may invest available cash in 
Federal Instruments or Money Market Funds which will also be held by the 
Trustee under the Custody Agreement.  

The Portfolio Loans and Federal Instruments, as well as the cash proceeds 
from the sale thereof, Money Market Funds, and any real estate acquired upon 
foreclosure of a Portfolio Loan are hereinafter referred to as Eligible 
Collateral. 
 As a general matter, cash payments on the Portfolio Loans, representing the 
repayment of principal and interest thereon, will be paid directly to the 
Company, and the Trustee will not have possession and control over the cash
from these payments.  Pursuant to the Custody Agreement, the Trustee will at
all times hold Eligible Collateral with an aggregate Unadjusted Value (as 
defined below) equal to at least 60% of the aggregate outstanding principal 
balance of the Notes.  The Unadjusted Value of a Federal Instrument is the 
cash value of the instrument.  Money Market Funds are considered cash 
equivalents and the Unadjusted Value of Money Market Funds is the current 
balance of such funds.  The Unadjusted Value of a Portfolio Loan is equal to 
the outstanding balance due under the loan, and may exceed the amount which 
could be obtained upon an immediate sale of the same.  The Unadjusted Value 
of real estate owned by the Company as a result of a Portfolio loan 
foreclosure will be valued at the lesser of the estimated fair market value 
of the property received by the Company upon foreclosure or the principal 
balance of the loan at the time of foreclosure plus accrued interest and 
fees and costs incurred by the Company in connection with such foreclosure 
process, and also may exceed the amount which could be obtained upon an 
immediate sale of the same.  To the extent that the value of the Eligible 
Collateral held by the Trustee is less than the aggregate principal and 
interest obligations represented by the Notes, or if the Trustee does not 
maintain a perfected security interest on the Eligible Collateral held by 
it, the Notes will be general unsecured obligations of the Company.

Item 2.	Properties

At December 31, 1998, the significant assets of the Company were constituted 
by the first lien residential mortgage loans, interim financing loans and 
certificates of deposit in the amount of $952,892 and $347,827, respectively.
The mortgaged properties included in the loan portfolio at December 31, 1998,
are located in Florida, Kansas, Missouri, California, S. Carolina and Texas.
(See Item 1 for discussion of mortgage activity, including servicing and 
portfolio turnover policy.)

Item 3.	Legal Proceedings

The Company was not a party to any litigation for the period ended December 
31, 1998 nor is any litigation or claim threatened.


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

NOT APPLICABLE


PART II



Item 5.	Market for Common Equity and Related Stockholder Matters

An affiliate of the Registrant, Federal Mortgage Management, Inc. ("FMMI"), 
conducted and concluded in 1993 and 1994 a public offering of its Secured 
Promissory Notes designated as the Series 1993A Notes of FMMI.  FMMI is in 
default  with respect to the sub-Series 1993A-IV Notes in aggregate principal 
amount of $2,740,000.  FMMI is in the process of offering to exchange 
$1,945,200 principal amount of such notes held by residents of the State of 
Florida for new Notes in the same principal and interest amounts but having 
an extended due date of June 21, 2002.

The Registrant, in separate and distinct transaction, has privately offered 
to approximately 25 holders of such 1993A-IV sub-Series of Notes who are not 
residents of the State of Florida its Subordinated Secured Promissory Notes, 
First Series (the "Subordinated Notes") in aggregate principal amount of 
$716,500 which is the principal amount of the unpaid 1993A-IV notes held by 
such non-Florida resident holders.

The principal and interest obligation of the Subordinated Notes will be 
junior and inferior to the principal and interest obligation represented by the 
1997A Series of Notes of the Registrant which were publicly offered during the 
recent past.  The terms of issuance of the 1997A Series of Notes of the 
Registrant remains unchanged and the obligation represented by the 
Subordinated Notes and the lien securing the Subordinated Notes will be 
junior and inferior to the first priority lien which presently secures the 
principal and interest obligation of the 1997A Series of Secured Promissory 
Notes of the Registrant.

As of the time of the filing of this report, the Registrant cannot predict 
whether such Subordinated Notes will be issued.  

At December 31, 1998, all of the outstanding voting equity securities of the 
Company were held of record and beneficially by Guy S. Della Penna.  Mr. Della 
Penna is the promoter and sole director and officer of the Company.  There is
no present market for the Common Stock of the Company.


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

Plan of Operation

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

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

Scheduled principal and interest payments on portfolio loans at December 31, 
1998, represent an annualized rate of return of approximately 17% on the basis 
of the Company costs in acquiring such portfolio loans and an annualized 
rate of return of approximately 16% (stated rate) on the basis of the unpaid 
principal balance of the Portfolio Loans at December 31, 1998.

At December 31, 1998, the portfolio of the Company consisted of mortgage 
notes with a carrying value of $1,010,508.  The following table shows the 
mortgage notes at a face value and carrying value which takes into 
consideration the discount, principal payments and an allowance for loss:

<TABLE>
<CAPTION>

                                         Allowance
                            Principal       for
  Face Value		 Discount    	Payments      	 Loss	      Carrying Value
  ----------		 --------    	---------	  ----------	    --------------
  <S>           <C>         <C>         <C>            <C>
  $1,006,425		  $(34,072)	  $   (760)  	$  (18,701)	   $952,892

</TABLE>

At December 31, 1998, the underlying real estate collateral of the Company's 
portfolio of mortgage loans have an appraised value of approximately $1,575,565 
or a carrying value to appraised value ratio of .64 to 1.  The collateral 
real estate securing such loans as of December 31, 1998 was residential real 
estate and interim financing.  The Company held no unimproved real estate 
loans as of December 31, 1998.

7.	Management's Discussion and Analysis of Financial Condition and Results of 
Operation

<TABLE>
<CAPTION>


REVENUE		                                          1998  		      1997    	Increase
                                                                          (Decrease)
                                        	        ---------   	---------	   ----------
<S>                                              <C>          <C>          <C>
Interest income-residential 
 mortgage loans	                                 $	145,824   	$	 6,827     	$	138,997 
Gain on sale of mortgage notes	                   	226,283 		     ---   	    	226,283 
Other revenue	                                     	37,184 		   19,513 		      17,671
                                                 ---------    --------      ---------
EXPENSES
Advertising		                                        7,757 		   12,935 		      (5,178)
Consulting	                                        	47,786 	   	20,120 		      27,666 
Interest expense		                                 223,816 		   47,098 		     176,718 
Management fees	                                   	47,814 		   41,096 		       6,718 
Other expense		                                    228,902 	      	349 	     	228,553 
Service fees		                                      13,506 		    1,500 		      12,006 

</TABLE>

For the year ended December 31, 1998, the Company experienced a net loss of 
$165,490 compared to a $114,260 loss for the year ended 1997.  This increase
of $51,230 reflects the start up operations of the Company during fiscal 1998.

Overall income increased $382,951 for the year ended December 31, 1998, as 
compared to the same period ended 1997.  This increase relates to the Company 
completing its offering of notes in the amount of $2,368,500 and initiating 
operations during 1998.

Expenses also increased for the year ended December 31, 1998, as compared to 
the  same period ended 1997.

Advertising expense decreased $5,178 for the year ended December 31, 1998 as 
compared to the same period ended 1997.  This decrease is due to the fact that
the offering closed in early fiscal 1998.

Consulting fees increased $27,666 for the year ended December 31,1998, as 
compared to the same period ended 1997.  This increase relates to increased 
accounting and legal fees associated with  the Company.

Interest expense increased from $47,098 for the year ended December 31, 1997 to 
$223,816 for the same period ended 1998.  This increase relates to a larger 
amount  of notes outstanding for a longer period of time during fiscal 1998 
compared to 1997.

Management fees increased $6,618 for the year ended December 31, 1998, as 
compared to the same period ended 1997.  This increase is due to the fact that 
there were more funds available for investment purposes during fiscal 1998, as 
compared to 1997.

Service fees increased $12,006 for the year ended December 31, 1998, as 
compared to the same period ended 1997.  This increase relates to more funds 
being invested in mortgages at December 31, 1998, as compared to 1997, and 
for a longer period of time.


Item 8.	Financial Statements and Supplementary Data

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

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

NOT APPLICABLE

PART III

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

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

Mr. Della Penna, age 46, has been a resident of Sarasota, Florida since 1980 
and is the founder and President of Capital Management Group, Inc.  Capital 
Management Group, Inc. was organized by Mr. Della Penna in 1989.  Under the 
auspices of Capital Management Group, Inc., Mr. Della Penna has provided 
financial and tax consulting and advisory services to individuals and 
corporate entities.  Capital Management Group, Inc. also acts as general 
agent for various insurance companies.  Mr. Della Penna is a General 
Securities Principal and Financial and Operations Principal pursuant to NASD 
Rules.  Additionally, at December 31, 1996, Mr. Della Penna was the majority 
shareholder, director and officer of Executive Securities, Inc., the manager 
of the Note offering.  Mr. Della Penna has been active in the financial 
industry for approximately 19 years.  During the period April 1980 to 
January 1986, Mr. Della Penna served as the Assistant to the Chairman of the 
Board of Snelling & Snelling, Inc., as well as Assistant Treasurer.  Snelling
& Snelling, Inc. is a franchiser of an employee recruitment business.  While 
with such firm, Mr. Della Penna also served as a member of the Executive, 
Acquisition and Pension and Profit Sharing committees.  Mr. Della Penna also 
served as the personal business manager and financial advisor to the Snelling
family and affiliated entities and in such capacity, was responsible for cash
management, tax and investment analysis and commitments.  The Snelling family 
are the principal shareholders of Snelling & Snelling, Inc.  During the 
period April, 1978 through February 1980, Mr. Della Penna was an associated 
person of Lehman Brothers, New York, New York, where he was involved in the 
structuring, documentation and marketing of tax exempt financings issued by 
state and local governments.  Mr. Della Penna holds a Bachelor of Science 
degree in Business Administration from Ithaca College, Ithaca, New York and 
received a Master of Business Administration degree in Finance from the 
State University of New York, Albany, New York.

Item 11.	Executive Compensation

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                          Long Term Compensation	
                           Annual Compensation      			     Awards		             	Payouts	
(a)  	   	    (b)     (c)	     (d)    (e)       (f)         (g)	   	     (h) 		   (i)
<S>           <C>     <C>      <C>    <C>       <C>         <C>          <C>      <C>

                                      Other		              	Securities
Name				                             	Annual   	Restricted  Under- 	     All      Other
and						                             Compen-   Stock       lying 	      LTIP 	   Compen-
Principal				                        	sation	   Award(s)   	Options/     Payouts  sation
Position       Year	  Salary   Bonus  SARs 
---------     -----  -------- ------ -------    ----------  ---------    -------  --------

Guy S.
Della Penna											
President/CEO		1997	                	$ 41,096	
               1998	                 	 47,814	
</TABLE>

Item 12.	Security Ownership of Certain Beneficial Owners and Management

As of December 31, 1998, Mr. Della Penna, President and CEO, owns 100% of 
the outstanding shares of common stock.

Item 13.	Certain Relationships and Related Transactions


Management fees of $47,814 and $41,096 were paid for the period ending 
December 31, 1998 and 1997, respectively, to an affiliated company, Capital 
Mortgage Management.  Mr. Della Penna is the 100% stockholder of this 
affiliated Company.  



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

NOT APPLICABLE

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

FEDERAL MORTGAGE MANAGEMENT II, INC.



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


March 1999

6