<PAGE>



                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
                                 FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996

/ / 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 January 31, 1997
0 SHARES - Common "B" at January 31, 1997


<PAGE>
                METROPOLITAN MORTGAGE & SECURITIES CO., INC.



Part I - Financial Information: Index

Item 1.	Financial Statements

   Consolidated Condensed Balance Sheets --				
     December 31, 1996 and 
     September 30, 1996	(Unaudited)

   Consolidated Condensed Statements of Income
     Three Months Ended December 31, 1996
     and 1995 (Unaudited)          					

   Consolidated Condensed Statements of Cash Flows
     Three Months Ended December 31, 1996 and 1995
     (Unaudited)                   					

   Notes to Consolidated Condensed Financial Statements    	

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


<PAGE>


                       Part I - Financial Information


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


<TABLE>
<CAPTION>
                                               December 31,       September 30,
                                                   1996                1996    

<S>                                            <C>              <C>
ASSETS
  Cash and Cash Equivalents                     $  63,155,394    $  167,879,080
  Investments:
    Available-for-Sale Securities, 
	at market                                    56,709,148        38,554,498
    Held-to-Maturity Securities, 
     at amortized cost (market value 
	$120,153,286 and $119,200,084)              124,109,220       124,748,490
  Accrued Interest on Investments                   2,485,931         1,516,390
                                               --------------     -------------
      Total Cash and Investments                  246,459,693       332,698,458
                                               --------------     -------------
  Real Estate Contracts and Mortgage
    Notes and Other Receivables                   703,215,661       758,427,480
  Real Estate for Sale and
    Development - Including 
    Foreclosed Real Estate                         84,178,660        84,333,288
                                                -------------     -------------
  Total Receivables and 
    Real Estate Assets                            787,394,321       842,760,768
  Less Allowance for Losses                        (9,900,266)      (10,192,584)
                                                -------------     -------------
      Net Receivables and 
      Real Estate Assets                          777,494,055       832,568,184
                                                -------------     -------------

  Deferred Acquisition Costs, Net                  74,151,226        74,530,361

  Land, Building and Equipment - net 
    of accumulated depreciation                     8,446,566         8,516,598

  Other Assets, net of allowance                   35,670,861        34,345,227
                                               --------------      ------------

    TOTAL ASSETS                               $1,142,222,401    $1,282,658,828
                                               ==============    ==============
</TABLE>


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


<PAGE>


       METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                    CONSOLIDATED CONDENSED BALANCE SHEETS
                                  (Unaudited)                                
<TABLE>
<CAPTION>
                                                  December 31,      September 30,
                                                        1996             1996     


<S>                                               <C>             <C>
LIABILITIES
 Life Insurance and Annuity Reserves             $  844,106,537    $  837,366,108
 Debenture Bonds                                    196,069,990       192,173,751
 Other Debt Payable                                   8,757,554        38,601,146
 Securities Sold, Not Yet Purchased                   4,177,773       132,652,334
 Accounts Payable and Accrued
   Expenses                                          21,610,379        18,082,782
 Deferred Income Taxes                               15,444,286        15,894,831
 Minority Interest in Consolidated
   Subsidiaries                                       1,580,104         1,544,544
                                                  -------------    --------------
   TOTAL LIABILITIES                              1,091,746,623     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 2,157,308 Shares and 
   2,151,820 Shares (Liquidation 
   Preference $50,044,751 and 
   $49,495,906, respectively)                        21,573,083        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                          17,286,228        16,791,670
 Retained Earnings                                   11,588,559         8,731,070
 Net Unrealized Losses on
    Investments                                        (265,509)         (991,023)
                                                   ------------     -------------
    TOTAL STOCKHOLDERS' EQUITY                       50,475,778        46,343,332
                                                   ------------     -------------
      TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY                     $1,142,222,401    $1,282,658,828
                                                 ==============    ===============
</TABLE>

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


<PAGE>
<TABLE>
<CAPTION>
	            METROPOLITAN MORTGAGE & SECURITIES CO., INC. AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                         (UNAUDITED)

                                            Three Months Ended
                                                December 31,
                                           1996               1995
<S>                                   <C>           <C>		
REVENUES:
 Insurance Premiums Earned              $   750,000    $   750,000
 Interest and Earned Discounts           24,105,516     21,919,875
 Real Estate Sales                        6,846,700     10,608,025
 Fees, Commissions, Service
  and Other Income                        1,208,087        691,557
 Realized Investment Gains (Losses)      (2,160,155)         2,800
 Realized Gains on Sales of
  Receivables                             9,834,959         84,490
                                       ------------     ----------

  TOTAL REVENUES                         40,585,107     34,056,747
                                       ------------     ----------
EXPENSES:
 Insurance Policy and Annuity
   Benefits                              13,055,411     12,061,640
 Interest Expense                         5,835,322      3,778,835
 Cost of Real Estate Sold                 7,440,009     10,466,642
 Provision for Losses on Real
   Estate Assets                            586,221        934,543
 Salaries and Employee
   Benefits                               3,032,934      2,280,868
 Commissions to Agents                    2,158,770      2,431,199
 Other Operating and 
   Underwriting Expenses                  2,299,904      1,628,563
 Decease (Increase) in Deferred
   Acquisition Costs                        237,955         (9,132)
                                         ----------     ----------

   TOTAL EXPENSES                        34,646,526     33,573,158
                                         ----------     ----------

Income Before Income Taxes and
   Minority Interest                      5,938,581        483,589
Provision For Income Taxes               (2,022,167)      (170,933)
                                         -----------     ----------

Income Before Minority
   Interest                               3,916,414        312,656

Income of Consolidated
   Subsidiaries Allocated to     
   Minority Stockholders                    (35,560)        (9,311)
                                         ----------     -----------

NET INCOME                                3,880,854         303,345

Preferred Stock Dividends                (1,023,365)       (923,406)
                                         ----------     ------------
Income (Loss) Applicable to
   Common Stockholders                  $ 2,857,489      $ (620,061)
                                        ===========     ============

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> 
                                                   Three Months Ended
                                                       December 31,
                                                1996             1995 

<S>                                             <C>           <C>
Net Cash Provided By  (Used In)  
  Operating Activities                      $(116,924,803)    $ 12,326,474
                                              ------------     -----------
Cash Flows From Investing Activities:
Principal Payments on Real Estate
    Contracts and Mortgage Notes
    and Other Receivables                      29,383,414      27,684,554
Proceeds From Real Estate Sales                   709,061         921,950
Proceeds From Investment Maturities             6,596,423         226,100
Proceeds from Sale of Available
    for Sale Securities                                        28,121,115
Purchase of Available for Sale
    Securities                                (23,684,536)
Proceeds From Sale of Real Estate 
    Contracts and Mortgage Notes 
    and Other Receivables                     119,209,316       2,335,415
Acquisition of Real Estate Contracts and
     Mortgage Notes and Other Receivables     (79,616,347)    (77,570,084)
Additions to Real Estate Held                  (6,351,906)     (8,938,063)
Capital Expenditures                             (198,228)       (336,713)
                                              -----------     ------------

Net Cash Provided By (Used In)
    Investing Activities                       46,047,197     (27,555,726)
                                              -----------     ------------
Cash Flows From Financing Activities:
Net Change Short Term Borrowings from
  Brokers and Banks                           (30,328,500)    (12,646,875)
Receipts From Life and Annuity Products        20,337,089      25,261,674
Withdrawals on Life and Annuity Products      (25,369,936)    (20,748,194)
Repayment to Banks and Others                     (55,545)        (33,496)
Issuance of Debenture Bonds                     4,140,969       4,791,350
Issuance of Preferred Stock                       549,743         554,336
Repayment of Debenture Bonds                   (2,096,235)     (7,206,402)
Preferred Stock Dividends                      (1,023,366)       (923,406)
Redemption of Capital Stock                          (300)        (57,143)
                                               ----------     -------------

Net Cash Used In
  Financing Activities                        (33,846,080)    (11,008,156)
                                              -----------    -------------

Net Decrease in Cash and
  Cash Equivalents                           (104,723,686)    (26,237,408)
Cash and Cash Equivalents at Beginning
  of Period                                   167,879,080      32,798,627
                                             ------------    -------------

Cash and Cash Equivalents at End
  of Period                                  $ 63,155,394    $  6,561,219
                                            =============     ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial 
statements



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



1.	In the opinion of the Company, the accompanying unaudited 
consolidated condensed financial statements contain all adjustments 
necessary to present fairly the financial position as of December 
31, 1996, and the results of operations for the three months ended 
December 31, 1996 and 1995 and changes in cash flows for the three 
months ended December 31, 1996 and 1995. The results of operations 
for the three month period ended December 31, 1996 and 1995 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 $26,750,000 at 	December 31, 1996 
and $26,500,000 at September 30, 1996.

3.	Metropolitan Mortgage & Securities Co., Inc. 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. 
(Metro or the Company) and its subsidiary Western United Life 
Assurance Company (WULA) participated as two of the four co-sellers 
in a receivable securitization sponsored by Metropolitan Asset 
Funding, Inc, an affiliated company.  Approximately $126.7 million 
of receivables, with $115.5 million provided by Metro and WULA, 
were sold in a securitization transaction with proceeds, after 
costs, of approximately $121.1 million, which $110.4 million was 
allocated to Metro and WULA.  With an amortized carrying value of 
approximately $101.5 million in the receivables sold in the 
securitization, Metro 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.  Metro 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".

7.	The preparation of financial statement in conformity with generally 
accepted accounting principles require 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.



<PAGE>
Item 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS


Significant Transactions:

	In November 1996, Metropolitan Mortgage & Securities Co., Inc. 
(Metro or the Company) and its subsidiary Western United Life Assurance 
Company (WULA) participated as two of the four co-sellers in a receivable 
securitization sponsored by Metropolitan Asset Funding, Inc, an 
affiliated company.  Approximately $126.7 million of receivables, with 
$115.5 million provided by Metro and WULA, were sold in a securitization 
transaction with proceeds, after costs, of approximately $121.1 million, 
which $110.4 million was allocated to Metro and WULA.  With an amortized 
carrying value of approximately $101.5 million in the receivables sold in 
the securitization, Metro 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.  Metro 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.

	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.        

	
Financial Condition and Liquidity:

	As of December 31, 1996, the Company had cash or cash equivalents 
of $63.2 million and liquid investments (trading or available-for-sale 
securities) of $56.7 million compared to $167.9 million in cash and cash 
equivalents and $38.6 million in liquid investments at September 30, 
1996.  The significant transaction causing the decrease in cash and cash 
equivalents was the approximately $128 million used by the Company to 
close its short sale at the completion of its receivable securitization 
in November 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  December 31, 1996, total 
cash and investments, including held-to-maturity securities, were $246.5 
million as compared to $332.7 million at September 30, 1996.  During the 
three month period ended December 31, 1996, the Company used 
approximately $116.9 million in its operating activities including $128 
million to close a short sale of U.S. Treasury securities.  Funds 
provided by investing activities of $46.0 million resulted primarily from 
sale proceeds and collections of receivables of $148.6 million and 
investment maturities of $6.6 million being offset by new receivable 
acquisitions of $79.6 million, purchase of available-for-sale securities 
of $23.7 million and addition to real estate held of $6.4 million.  Funds 
used in financing activities of $33.8 million, including a $2.0 million 
net cash inflow from debentures sales less maturities, were used 
primarily to payoff short-term borrowings of $30.3 million, finance a net 
cash outflow of $5.0 million in life and annuity products and payment of 
preferred stock dividends of $1.0 million. 

	The receivable portfolio totaled $703.2 million at December 31, 
1996 compared to $758.4 million at September 30, 1996.  During the three 
months ended December 31, 1996, the decrease primarily resulted from the 
acquisition of receivables totaling $79.6 million plus an additional $6.1 
million in loans to facilitate the sale of real estate being totally 
offset by principal collections on receivables of $29.4 million, 
reduction for the cost basis of receivables sold of $109.1 million and 
reductions due to foreclosed receivables of approximately $2.7 million.

	Real estate held for sale and development decreased to $84.2 
million at December 31, 1996 from $84.3 million at September 30, 1996.  
For the three months ended December 31, 1996, real estate additions of  
$9.5 million, including $2.7 million of foreclosed receivables, were 
offset by costs of real estate sold of $7.4 million, depreciation of $1.5 
 million and charge-offs to the allowance for losses of $.7 million.

	Life insurance and annuity policy reserves increased $6.7 million 
during the three months ended December 31, 1996 to approximately $844.1 
million from $837.4 million at September 30, 1996.  This increase 
resulted from credited earnings of $11.8 million offset by a $5.1 million 
of cash outflow as receipts from sales of new life and annuity products 
of $20.3 million were exceeded by withdrawals of $25.4 million from 
existing policies.  Net debenture bonds outstanding increased by $3.9 
million to $196.1 million at December 31, 1996 from $192.2 million at 
September 30, 1996.  Net cash inflow from issuance less maturities of 
debentures was approximately $2.0 million plus an additional $1.9 million 
increase in credited interest held.  Additionally, the Company had cash 
flow, net of redemptions, of approximately $550,000 from the sale of 
preferred stock and reinvestment of preferred stock dividends during the 
three months ended December 31, 1996.  During the three month period 
ended December 31, 1996, the Company decreased the portion of its other 
debt payable represented by short term borrowings by $30.3 million to an 
approximate outstanding amount of $5.2 million on December 31, 1996.

	Total assets decreased by $140.5 million to $1,142.2 million at 
December 31, 1996 from $1,282.7 million at September 30, 1996.  During 
the three month period, the Company primarily used cash flow from its 
receivable securitization along with existing cash and investments to 
repurchase securities previously sold and not owned and paydown short-
term borrowings.  At December 31, 1996, the Company had net unrealized 
losses on securities available-for-sale in the amount of $265,000 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 
three months ended December 31, 1996 of $3,881,000 compared to $303,000 
in the prior year's period.  Comparing the current year's three month 
period with the prior year's similar period, increases in gains from 
sales of receivables, increases in other fees and commission revenues and 
a reduction in the provision for losses on real estate assets were only 
partially 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, an increase in operating expenses and related 
provision for income taxes.

	For the three month period ended December 31, 1996, the Company 
reported a positive spread on its interest sensitive assets and 
liabilities of $6.0 million as compared to $6.8 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. 
 While there has been some contraction in portfolio investment earnings 
rates in the current year's period, the Company has also experienced 
reduced renewal rates on some of its life and annuity policies.  
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 three months ended December 31, 1996, the Company 
realized net losses from the sale of investments of $2.2 million compared 
to net gains of $2,800 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.  Additionally, in the 
current year's period, the Company realized gains of $9.8 million from 
the sale of approximately $109.4 million of receivable investments, while 
in the prior year, sales of approximately $2.3 million of receivable 
investments produced realized gains of $84,000.  The Company realized 
losses of $593,000 on sales of $6.8 million of real estate in the current 
year's period compared to net gains of $141,000 on sales of  $10.6 
million in the prior year.  It has been the policy of management to 
actively sell its real estate in order to return the investment to an 
earning asset.  In addition to returning these assets to earning status, 
the Company has been able to reduce other operating expenses associated 
with its real estate, such as insurance, taxes, maintenance and 
amenities.  

	In the three months ended December 31, 1996, the Company recorded 
other fees and commission revenues of $1.2 million as compared to 
$700,000 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 three months ended December 31, 1996, the Company made 
provisions for losses on receivables and real estate assets of 
approximately $586,000 as compared to $935,000 in the prior year's 
period.  The decreased provision is the result of the decrease in the 
receivable portfolio and the real estate asset portfolio.  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.  

New Accounting Rules:

	In June 1996, Statement of Financial Accounting Standards No. 125 
(SFAS 125), "Accounting for Transfers and Servicing of Financial Assets 
and Extinguishments of Liabilities" was issued.  SFAS 125 provides 
accounting and reporting standards based on a consistent application of a 
financial-components approach that focuses on control.  Under this 
approach, after a transfer of financial assets, an entity recognizes the 
financial and servicing assets it controls and the liabilities it has 
incurred, derecognizes financial assets when control has been surrendered 
and derecognizes liabilities when extinguished.  This statement provides 
consistent standards for distinguishing transfers of financial assets 
that are sales from transfers that are secured borrowings.  SFAS 125 is 
effective for transfers and servicing of financial assets and 
extinguishments of liabilities occurring after December 31, 1996.
 



<PAGE>

                        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

		None

Item 5.	Other Information

		None

Item 6.	Exhibits and Reports on Form 8-K

		A Form 8-K was filed December 10, 1996, which disclosed the 
sale through a securitization of approximately 115.5 million in first lien 
residential mortgages, as more fully described in such Form 8-K


<PAGE>
                                 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/ C. PAUL SANDIFUR, JR.

Date	February 18, 1996
                        ---------------------------------------------
                        C. Paul Sandifur, Jr.
                        Chairman, President, Chief Executive Officer

                          /s/ BRUCE J. BLOHOWIAK

Date	February 18, 1996
                        ---------------------------------------------
                        Bruce J. Blohowiak
                        Executive Vice President, Chief Operating        
                                 Officer and Director

                          /s/STEVEN CROOKS

Date	February 18, 1996
                         ---------------------------------------------
                            Steven Crooks
                            Vice President
                           (Principal Accounting Officer)