UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549
                       ________________________
                               FORM 10-K

 X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934
               For The Fiscal Year Ended December 31, 2000
                                    OR
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934

                        Commission File No. 0-8630

                             AMRESCO, INC.
        (Exact name of registrant as specified in its charter)

             Delaware                             59-1781257
  (State or other jurisdiction of    (I.R.S. Employer Identification No.)
  incorporation or organization)

 700 N. Pearl St. Ste 1900 LB 342 Dallas, TX.           75201-7424
  (Address of principal executive offices)              (zip code)
  Registrant's telephone number, including area code: (214) 953-7700

      Securities registered pursuant to Section 12(b) of the Act:

                               None

      Securities registered pursuant to Section 12(g) of the Act:

           Shares of common stock, par value $0.25 per share

      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.  [X] Yes [ ] No

      Indicate  by  check  mark  if disclosure  of  delinquent  filers
pursuant  to  Item 405 of Regulation S-K is not contained herein,  and
will  not  be  contained,  to the best of registrant's  knowledge,  in
definitive  proxy or information statements incorporated by  reference
in Part III of this Form 10-K or any amendment to this Form 10-K [ ]

      As  of  March  23,  2001, 10,586,164 shares of the  registrant's
common  stock  were outstanding.  The aggregate market  value  of  the
voting  stock  held by non-affiliates of the registrant,  computed  by
reference to the closing price of such stock as of March 23, 2001, was
approximately $11,500,000.

                  DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Registrant's Proxy Statement to be filed for the
Annual  Meeting  of  Shareholders to be held  on  May  15,  2001,  are
incorporated by reference in Part III hereof.

                                PART I

Item 1.  Business

                                General

     AMRESCO, INC., a Delaware corporation (the "Company"), is a small
and middle market business lending company, making loans primarily  to
franchisees  of  nationally  recognized  restaurant,  hospitality  and
service organizations and to small business owners.  In addition,  the
Company  has  retained certain assets from business  operations  which
have  been  sold or discontinued and is in the process of  liquidating
such assets.

      The Company began operations in 1987, providing asset management
and   resolution   services   to  governmental   agencies,   financial
institutions  and others relating to nonperforming and underperforming
commercial and real estate loans. From 1994 through 1998, the  Company
entered  commercial mortgage banking, commercial finance,  residential
mortgage lending and loan servicing businesses, and oriented its asset
management  activities towards direct investments  in  distressed  and
underperforming  assets.  As a result of disruptions  in  the  capital
markets  in late 1998, changes in the financial services market  since
late 1998 and losses incurred by the Company, the Company has divested
or  discontinued many of its businesses, including commercial mortgage
banking, residential mortgage lending, loan servicing and investing in
distressed and underperforming assets.

      Financial information regarding the Company's operating segments
is  presented  in  Note  15  of the Notes  to  Consolidated  Financial
Statements included in "Item 8. Financial Statements and Supplementary
Data."   Additional  financial  information  regarding  the  company's
operating  segments is presented in "Item 7.  Management's  Discussion
and Analysis of Financial Conditions and Results of Operations".

                          Recent Developments

      Since  January 1, 2000, the Company has consumated a  number  of
transactions  that  have  affected  the  Company's  structure,  future
operations, business strategy and operating results.  The following is
a summary of these events.

Sale of Real Estate Structured Finance Loans

      In  January 2000, the Company sold $182.4 million of real estate
structured finance loans for $170.2 million in cash.  Consistent  with
the  Company's strategy to de-leverage its balance sheet, the proceeds
were  used to pay down indebtedness outstanding under its secured bank
credit  facility.   In  connection with the sale of  certain  business
operations  to  Lend  Lease (US) Services, Inc.  ("Lend  Lease"),  the
Company   also  sold  its  real  estate  structured  finance  business
operation.   See "Business - Recent Developments - Sale of  Assets  to
Lend Lease (US) Services, Inc."

Sale of Assets and Operations to Lend Lease

      In  March 2000, the Company and certain of its subsidiaries sold
the   Company's   commercial  mortgage  banking  business   (including
commercial  mortgage  servicing,  commercial  mortgage  brokerage  and
commercial  loan origination (excluding the Company's conduit  lending
programs, the operations of which the Company discontinued))  and  its
asset   management  and  real  estate  structured  finance   platforms
(collectively,   the  "Business")  to  Lend  Lease.  The   transaction
encompassed  both  the domestic and international  operations  of  the
Business,  other than those business operations conducted  in  Europe.
The  purchase  price was $224.0 million in cash and a promissory  note
receivable  (the "Note") in the principal amount of $25 million.   The
cash  proceeds from the sale were used to reduce the Company's secured
bank credit facility.

      Interest  on the Note accrues at a rate of 7.5% per  annum.   An
initial principal payment of approximately $20 million under the  Note
is  due  on  March  17,  2002 and the remaining principal  balance  is
payable  on  March 17, 2003.  Payment of the principal is subject  to,
and may be offset by, obligations of the Company in excess of $750,000
to  Lend  Lease under the purchase agreement, including the  Company's
indemnity obligations thereunder.

      Until  March 17, 2003, the Company may neither compete, directly
or   indirectly,  in  any  manner  with  the  Businesses  nor  solicit
employees, customers, clients, suppliers or licensors with respect  to
any  business  conducted by the Company substantially similar  to  the
Businesses.

      Lend  Lease manages pursuant to a management agreement  for  the
Company  various  financial  and other assets  held  by  the  Company,
including commercial and industrial loans, commercial and multi-family
real estate (including partnership and other equity interests therein)
and  commercial and multi-family real estate loans.  These assets  had
been  originated and managed by the Businesses prior to being acquired
by  Lend Lease.  The services provided by Lend Lease include advisory,
consultation, management, servicing and disposition services.

Sale of Asset Management Assets and Operations in the United Kingdom

      In  March  2000,  the  Company sold  its  United  Kingdom  asset
management  assets  and operations for $160.0  million.   The  Company
received  net  cash  proceeds of $47.0 million  and  notes  receivable
aggregating $25.0 million.  In addition, indebtedness relating to such
assets  was retired.  Such notes are denominated in equal amounts  and
payable  in March 2001 and 2002.  The Company received a $6.9  million
payment  in  March  and  $16.4  million, including  accrued  interest,
remains  outstanding.   One  note is subject  to  offset  for  certain
potential   tax  liabilities.   The  Company  has  ceased  all   asset
management  operations in the United Kingdom.  Cash proceeds  received
by the Company from the sale were used to reduce non-recourse and bank
debt.

Transfer of Mortgage Investors Corporation

      In  April  2000,  the  Company  transferred  Mortgage  Investors
Corporation  ("MIC"),  a producer of Veteran's  Administration  ("VA")
streamlined  re-financed  loans,  to  its  previous  owners,   thereby
discontinuing the Company's residential mortgage banking business.

      The  consideration for such transfer was a cash payment  by  the
Company  of  $25.0 million to the former owners of MIC and forgiveness
of  a $17.0 million  aggregate principal amount of notes due from such
previous  owners in substitution of the obligation of the  Company  to
issue $86.1 million worth of its common stock to the previous owners.

Sale of Builder Finance Operations

      In  September 2000, the Company sold substantially  all  of  the
assets and the operations of its Builder Finance Group, a part of  the
Company's  Commercial  Finance line of  business,  to  Prism  Mortgage
Company  ("Prism"),  a subsidiary of The Royal Bank  of  Canada.   The
Builder Finance Group provided financing to home builders.

      The  net purchase price for the Builder Finance Group was $132.6
million.  Of this amount, the Company received $129.3 million in  cash
and  used  the  proceeds  to fund the repurchase  of  certain  of  its
outstanding senior subordinated notes.  The remaining $3.3 million  is
being  held  back by Prism and is payable in two installments  between
September  2001 and March 2002.  The holdback payments are subject  to
reduction  for  amounts  for  which may  become  payable  pursuant  to
indemnities contained in the asset purchase agreement.

      Until  September 2003, the Company may neither compete with  the
Builder  Finance Group in the United States or Canada nor solicit  its
customers.  The Company entered into a servicing agreement with  Prism
whereby  Prism  services $2.4 million, before reserves,  of  the  home
builders' loans retained by the Company.

Sale of Securitized Loans

      In October 2000, the Company sold substantially all of the loans
held  by the AMRESCO Home Builders Loan Trust 1999 A (the "Securitized
Loans")  to Prism.  The Securitized Loans were held by the  Trust  and
were  collateral under the Trust's Adjustable Rate Home  Builder  Loan
Notes,  Class  A, Class B and Class C (the "Notes").  The  Notes  were
repaid by funds provided by Prism, the liens on the Securitized  Loans
were  released  and  the  Securitized Loans were  transferred  to  the
Company.   The  Company  then transferred  substantially  all  of  the
Securitized  Loans to Prism, and Prism paid the Company $26.1  million
in  cash.  The Company used the $26.1 million of proceeds to fund  the
repurchase of certain of its outstanding senior subordinated notes.

Retirement of Bank Debt

      In  October  2000, the Company retired its secured  bank  credit
facility  which had an outstanding principal amount of $384.7  million
at January 1, 2000.


Telecapital Operations

     During 2000, the Company ceased making loans to the pay telephone
industry.

                          Commercial Finance

      The commercial finance line of business began operations in 1997
and  focus  on two lending sub-markets; conventional small and  middle
market   business  loans  and  government  guaranteed  Small  Business
Administration ("SBA") loans.

      Conventional  business lending, conducted through the  Company's
wholly-owned  subsidiary, AMRESCO Commercial Finance,  Inc.  ("ACFI"),
concentrates on the origination, securitization and servicing of loans
made  to  small and middle market business owners.  Borrower  profiles
emphasize,  among  other things, the borrower's  experience  with  the
particular operating concept and cash flow of the respective operating
units.  Typically, loans are for refinance, remodeling or purchase  of
existing  facilities relating to restaurants, hospitality,  automotive
and service organizations and other small to middle market businesses.
The loans are funded primarily by a dedicated warehouse facility until
they are securitized and sold.

      The  SBA lending is conducted through the Company's wholly-owned
subsidiary,   AMRESCO   Independence  Funding,   Inc.   ("Independence
Funding").   Independence  Funding  holds  one  of  only  14  non-bank
licenses issued by the SBA and they make SBA loans to qualifying small
business owners.  Typically 75% of the principal balance is guaranteed
by  the  SBA and sold at a premium to individual investors via  a  bid
process  approximately two to three weeks after the  loan  is  funded.
The  remaining  non-guaranteed portion of the  loan  is  retained  for
future  securitization  along  with the interest  spread  between  the
contractual  rate on the SBA loans and the investor pass-through  rate
on  the  guaranteed portion which has been sold.  The  SBA  loans  are
funded primarily by a warehouse debt facility.

      The  commercial finance line of business processes, underwrites,
sells,  securitizes and services loans originated by  producers.   The
producers  solicit  business using a combination of marketing  efforts
that  include direct solicitation, convention attendance and referrals
from  brokers and previous borrowers.  The following table  summarizes
loan  origination volumes for the years ended December  31,  2000  and
1999 (dollars in thousands):

                          2000        %        1999        %
Conventional lending    $235,638     55.5%   $553,636    76.9%
SBA lending              189,066     44.5     166,403    23.1
    Total               $424,704    100.0%   $720,039   100.0%

      The  decrease in the volume of conventional business lending  is
attributable  to  four  primary factors:  (i) a higher  interest  rate
environment  early  in 2000, (ii) tighter credit  standards,  (iii)  a
slowing economy during the later half of 2000 and (iv) limitations  on
asset types and amounts imposed by the Company's warehouse lenders.

     Since 1997, the Company's commercial finance line of business has
completed   ten   securitizations  aggregating  $1.6   billion.    The
securitization   structure  consists  of  (i)  multiple   classes   of
investment  grade certificates that are sold via private placement  to
investors  and  (ii) an equity interest and subordinated  certificates
retained by the Company.

      Investment grade ratings for the securities are achieved by  (i)
limited  cross-guaranteed loan provisions for  the  various  borrowers
with  loans in certain securitization transactions, (ii) retention  by
the  Company  of  an equity or subordinated interest,  (iii)  pledging
excess  spreads of the loans to the trust and (iv) financial guarantee
insurance,  if applicable.  In the limited cross-guarantee arrangement
present  in the conventional business loans activities, each  borrower
signs  a  note  for an amount greater (5% or 10%, depending  upon  the
business  operated by the borrower) than their net loan  proceeds  and
makes  payments based on the higher note amount.  This increment above
the loan amount, known as the credit enhancement amount, is rebated to
the  borrower  after  they  make their  monthly  payment  assuming  no
deficiencies  exist  in the securitization pool.  Should  deficiencies
occur  within the pool, the rebates of the performing loans have  been
pledged  to  cure such deficiencies and are applied in  an  amount  to
bring  the  loan pool to a non-delinquent status.  Once the deficiency
is  cured,  the  recovered  rebates are returned  to  the  appropriate
borrowers.  For each securitization loan pool, the cash flow from  the
subordinated  interest retained by the Company is used  as  additional
credit  support  for  the  payment  of  the  investment  grade   rated
securities  issued  in  such  securitization.   Accordingly,  if   the
aggregate amount of all loan delinquencies in a pool exceeds the cross-
guarantee  credit enhancement amount for such pool, the cash  flow  to
the  Company from the related subordinated interest would be  delayed,
but  would  not  necessarily decrease the total cash  flow  therefrom,
which  will reduce the value of such subordinated interest.   If  such
delinquencies cause enough losses, the cash flow to the  Company  from
the  related  subordinated  interest could be  substantially  reduced,
which will reduce the value of such subordinated interest.

      Furthermore, if any loans in a pool are delinquent for more than
a  certain  number  of  days (which varies between  105  to  360  days
depending  upon the securitization transaction), the payments  to  the
investors  related to such loans are accelerated.  If  the  cash  flow
from  the  cross-guarantee credit enhancement amount is not sufficient
to  satisfy  such accelerated payment obligation to the purchasers  of
such  securities,  then the cash flow to the Company  on  its  related
subordinated  interest  will  be  used  to  satisfy  such  accelerated
payment, which will result in a delay in cash flow to the Company  and
a  possible  reduction  in  the value of  the  Company's  subordinated
interest.

     As noted above, the commercial finance line of business retains a
subordinated  interest  in  its  securitizations.   The  value  of   a
subordinated  interest at any point in time is based on its  projected
future  cash flow.  The following table depicts the commercial finance
line  of  business'  retained interest in securitization  balances  at
December 31, 2000 and 1999 (dollars in thousands):

                          2000                 1999
                        Retained             Retained
                        Interest             Interest
                        Balance      %       Balance      %
Conventional lending    $146,030   85.0%     $127,746   88.7%
SBA lending               25,675   15.0        16,315   11.3
     Total              $171,705  100.0%     $144,061  100.0%

      The  commercial finance line of business retains  the  servicing
rights  to  loans following sale or securitization.  Due primarily  to
the  cross-guarantee  credit enhancement feature of  the  conventional
lending  securities  described above,  the  Company  has  developed  a
specialized  servicing  process for these loans.   In  addition,  loan
servicing  utilizes a third party software system customized  for  the
servicing  of  SBA  loans.  The following table  summarizes  the  loan
servicing  portfolio and related delinquency profile at  December  31,
2000 and 1999 (dollars in thousands):

                            2000         %         1999          %
Conventional lending      $1,465,675   73.5%     $1,380,298    78.0%
SBA lending                  528,496   26.5         388,360    22.0
    Total                 $1,994,171  100.0%     $1,768,658   100.0%

Conventional lending:                  % of                    % of
    Delinquencies (1):               Portfolio               Portfolio
     31-60 days          $  11,875     0.81%     $  4,668      0.34%
     61-90 days             53,062     3.62         1,677      0.12
     90+ days               66,648     4.55        22,244      1.61
       Totals             $131,585     8.98%      $28,589      2.07%

SBA lending
   Delinquencies (1):
     31-60 days            $16,160    3.06%      $  9,175     2.36%
     61-90 days              3,674    0.70          1,909     0.49
     90+ days               15,571    2.94          7,866     2.03
       Totals              $35,405    6.70%       $18,950     4.88%

      (1)  The period of delinquency  is based on the number of days
           payments are contractually past due. See Note 6 of the Notes
           to Consolidated Financial Statements included in "Item
           8. Financial Statements and Supplementary Data" for  a
           discussion of borrower cross guarantees.

       The   substantial  increase  in  delinquencies  in   both   the
conventional and SBA loans during 2000 was due to the general slowdown
in  the economy.  The delinquencies of a few large borrowers accounted
for  a  substantial portion of the total delinquencies in conventional
lending.   The delinquencies in SBA lending were comprised of numerous
small  borrowers.  At December 31, 2000, such delinquencies had caused
the  Company to take a write down of $4.6 million and $0.3 million  of
the  retained  interests in securitizations of  conventional  and  SBA
loans,  respectively.   At  February 28, 2001,  delinquencies  in  the
conventional and SBA loans as a percentage of total loan balances  had
increased  to  12.31%  and  8.07%, respectively.   In  the  event  the
delinquencies  remain at current levels or increase, additional  write
downs of such retained interests will most likely be necessary.
                      Other Assets and Operations

      The  Company has retained various types of assets in  connection
with the sale or discontinuance of certain of its business operations.
See  "Recent  Developments"  and the information  under  the  captions
Loans,   Investments  in  loan  and  asset  portfolios,   Asset-backed
securities-available for sale and Notes receivable  in  the  table  on
page  17  hereof.  These assets had a net book value of $180.4 million
as  of December 31, 2000 and the majority will be liquidated over  the
next  18  to  24  months.  Cash proceeds will be used  for  day-to-day
operations,  acquisition  of businesses, servicing  credit  agreements
and/or  repurchase  of the Company's outstanding  senior  subordinated
notes.

Intangible assets

      At  December  31,  2000,  the  Company  had  $122.1  million  in
intangible  assets  with $87.8 million relating  to  the  conventional
lending and $34.3 million related to the SBA lending businesses.   The
Company periodically assesses the recoverability of intangible  assets
by  reviewing projected undiscounted cash flow from these  operations.
During  2000, the Company determined that intangible assets  of  $23.0
million  related to home equity and its investment in Finance  America
and  $11.8  million  related  to  TeleCapital  operations  were  fully
impaired.   Offsetting  these write offs  was  an  increase  of  $37.5
million  during 2000 to record the final earnout payment  relating  to
the conventional small business lending operations.

Competition

      The markets in which the Company operates are highly competitive
and  are  characterized by competitive factors that  vary  based  upon
product  and  geographic  region.  The Company's  competitors  include
captive  and  independent  diversified  finance  companies,  specialty
finance  companies (including specialty franchise finance  companies),
commercial  banks,  thrift  institutions,  asset-based  lenders,  real
estate   investment  trusts  and  leasing  companies.   Many  of   the
competitors  of the Company are large companies that have  substantial
capital,  technological and marketing resources,  and  some  of  these
companies may have lower costs of capital.

Employees

      At  December 31, 2000, the Company and its subsidiaries employed
208  persons.   The Company believes that its employee  relations  are
generally   good.    The   Company  has   no   collective   bargaining
arrangements.

Item 2.  Properties

     The Company leases approximately 102,000 square feet in the North
Tower  of  the  Plaza  of  the  Americas  in  Dallas,  Texas  for  its
centralized   corporate   functions  including   executive,   business
development  and  marketing, accounting, legal,  human  resources  and
support  and  also  certain line of business operations.   This  lease
expires  October 31, 2006 and has an annual base rent of approximately
$1.6  million during 2000.  The Company also leases space  for  branch
offices pursuant to leases with varying terms.

      The  Company believes that its facilities are adequate  for  its
immediate needs or substitute space is available, if needed.

Item 3.  Legal Proceedings

      The  Company  is  involved from time to time  in  various  legal
proceedings arising in the ordinary course of business.  In connection
with  the  Company's loan servicing, asset management  and  resolution
activities, the Company is indemnified to varying degrees by the party
on  whose  behalf the Company is acting.  The Company  also  maintains
insurance  that  management  believes is adequate  for  the  Company's
operations.   None of the legal proceedings in which  the  Company  is
currently involved, either individually or in the aggregate (and after
consideration of available indemnities and insurance), is expected  to
have  a material adverse effect on the Company's business or financial
condition.

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

      No  matters  were submitted to a vote of the Company's  security
holders during the fiscal quarter ended December 31, 2000.

                                PART II

Item   5.     Market  for  Registrant's  Common  Equity  and   Related
Shareholder Matters

     The Company's common stock (Symbol: AMMB) is listed on the NASDAQ
Stock  Market.   At  March  23,  2001, there  were  approximately  500
stockholders of record of the Company's common stock.  Presented below
are  the  high and low last sale prices per share for each quarter  of
2000  and 1999, as reported by NASDAQ and have been restated  for  the
one-for-five reverse stock split on August 25, 2000.  The Company does
not expect to declare dividends on its common stock in the foreseeable
future.

                                High       Low
2000
 First Quarter                 $11.5625   $5.3125
 Second Quarter                  6.0937    2.6562
 Third Quarter                   2.8906    1.0000
 Fourth Quarter                  2.5000    1.1875
1999
 First Quarter                 $61.5625  $38.4375
 Second Quarter                 39.6875   20.3125
 Third Quarter                  39.3750   15.0000
 Fourth Quarter                 15.9375    7.0312

Item 6.   Selected Financial Data

      The  selected financial data set forth below for the five  years
ended  December  31, 2000 has been derived from the Company's  audited
consolidated financial statements.  This information should be read in
conjunction   with  "Item  1.  Business"  and  "Item  7.  Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results   of
Operations," as well as the audited consolidated financial  statements
and  notes  thereto  included  in "Item 8.  Financial  Statements  and
Supplementary Data."
<TABLE>
CAPTION

                                                       Year Ended and as of December 31,
                                                2000       1999      1998     1997      1996
                                               (in thousands, except per share data)
  Operating Results:
<S>                                         <C>        <C>       <C>         <C>       <C>
   Revenues                                   $170,657   $363,257  $397,259   $320,769  $145,486
   Income (loss) from continuing operations   (314,953)  (149,378)  (21,744)    39,111    24,250
  Income (loss) from discontinued operations
   net of income taxes                          43,023    (71,471)  (47,427)    17,113     7,082
  Extraordinary gain on early retirement of
   debt, net of income taxes                    53,989
  Net income (loss)                           (217,941)  (220,849)  (69,171)    56,224    31,332
  Earnings (loss) per share from continuing
  operations:
    Basic                                       (32.35)    (15.60)    (2.54)      5.52      4.48
    Diluted                                     (32.35)    (15.60)    (2.54)      5.34      4.16
  Earnings (loss) per share from
   discontinued operations:
    Basic                                         4.42      (7.46)    (5.53)      2.42      1.31
    Diluted                                       4.42      (7.46)    (5.53)      2.33      1.12
  Extraordinary gain on early retirement
   of debt, net of income taxes
    Basic                                         5.54
    Diluted                                       5.54
   Earnings (loss) per share:
    Basic                                       (22.39)    (23.06)    (8.07)      7.94      5.79
    Diluted                                     (22.39)    (23.06)    (8.07)      7.67      5.28
   Dividends per share                               -          -         -          -         -
  Balance Sheet Data:
   Total assets                                715,035  1,939,966  2,578,963 2,373,131   998,029
   Long-term obligations (1)                   362,491    580,033  1,150,179   695,845   293,956
   Total liabilities                           549,399  1,480,247  1,993,556 1,964,631   696,514
   Total shareholders' equity                  165,636    459,719    585,407   408,500   301,515
</TABLE>
___________________________
(1)   For  1999, does not include the $384.7 million outstanding under
  the Company's Credit Agreement which was due June 30, 2000.  For 1998,
  does not include the $70.2 million short-term portion of the Company's
  Credit  Agreement  outstanding as of December 31,  1998,  and  $57.5
  million of indebtedness under the Company's Senior Notes due July 1,
  1999.

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

Overview

     The Company is a small and middle market business lending company
with  three principal segments in continuing operations for  financial
statement  presentation purposes: commercial finance, asset management
and  home  equity  lending.  In its commercial  finance  segment,  the
Company  focuses  on  loans  to restaurant,  hospitality,  automotive,
service  organizations and loans to other types of  small  and  middle
market business owners.  During 2000, the Company ceased operations in
its   commercial   finance  line  of  business  of   its   residential
construction lending division through the sale of substantially all of
such  division's assets and operations.  The asset management  segment
owns  and is in the process of liquidating asset portfolios which  are
managed by Lend Lease. The home equity lending segment consists  of  a
minority  interest  in  a limited liability company,  Finance  America
Holdings  LLC  ("Finance America"), which, through  its  wholly  owned
subsidiary,  originates and sells nonconforming first mortgage  loans,
and  the management of a portfolio of retained interests from previous
securitizations of home equity loans.

      During  the latter part of 1998, the capital markets experienced
rapid  and  extreme changes evidenced by a decline of investor  demand
for  fixed  income  investments, including mortgage-backed  securities
("MBS"),  and a widening of spreads between interest rates on treasury
securities and interest rates on MBS.  This trend continued throughout
1999  and  the  market for MBS remained depressed.   The Company  also
experienced a lack of available capital for new investments.   Capital
constraints  particularly impacted the Company's ability to  make  new
investments  in  asset  management, real  estate  structured  finance,
communications lending and commercial mortgage servicing.  These areas
were  highly dependent on capital in order to grow.  Facing a lack  of
capital, the Company decided in 1999 to exit these businesses.

      On January 18, 2000, the Company sold $182.4 million of its real
estate  structured finance portfolio for $170.2 million and recognized
a  loss in the accompanying 1999 financial statement line item -  Gain
on  Sale  of Loans and Investments, net.  Proceeds from the sale  were
used to reduce bank debt.

      The  commercial mortgage banking segment, which was discontinued
during   1999,   involved  fee-based  origination  and  servicing   of
commercial real estate mortgages and commercial real estate brokerage.
On March 17, 2000, the Company completed the sale to Lend Lease of the
commercial  mortgage  banking business, asset management  (except  for
Europe)  and  real estate structured finance platforms.  The  proceeds
from the Lend Lease transaction were allocated between continuing  and
discontinued  operations resulting in a pre-tax loss  on  disposal  of
assets of $23.3 million in continuing operations and a pre-tax gain on
disposal of assets of $83.8 million in discontinued operations.

      In  March 2000, the Company and the former shareholders  of  the
predecessor  to  ACFI  agreed to amend the  Asset  Purchase  Agreement
pursuant  to  which  the  Company  acquired  such  predecessor.   This
amendment  provided that the amount of the final earn-out payment  due
on  June  30,  2000  was fixed at $37.5 million and that  the  Company
issued  to  such former shareholders promissory notes in the aggregate
principal amount of $37.5 million in lieu of the issuance of shares of
the  Company's common stock having such value.  During the second  and
third quarters of 2000, these notes were paid in full.

      On  March  22,  2000, the Company sold its United Kingdom  asset
management  assets  and operations for $160.0  million.   The  Company
received net cash proceeds of $47.0 million, which was used to  reduce
bank  debt, and two notes receivable aggregating $25.0 million. A loss
of  $4.9  million on this transaction was recorded as loss on disposal
of assets in the accompanying financial statements.

      The residential mortgage banking segment was discontinued during
the  first  quarter of 2000.  This segment consisted of  the  acquired
operations   of  MIC,  which  originated  and  sold  Federal   Housing
Administration ("FHA") and Veterans Administration ("VA")  streamlined
re-financed  loans. The Company's interest in MIC was terminated  with
the  exercise of its option to (i) return MIC to its previous  owners,
(ii) pay $25.0 million to the previous owners of MIC in cash and (iii)
forgive  $17.0  million of notes from the previous owners  of  MIC  in
substitution of the obligation to issue $86.1 million of common stock.
The option was exercised on April 20, 2000.

      During  the  first quarter of 2000, the Company transferred  net
assets  of $6.2 million of the home equity lending business to Finance
America in exchange for a 36% interest therein.  An additional capital
contribution  of  $1.2 million was made in the  second  quarter.   The
formation  of  Finance  America  represented  the  completion  of  the
Company's  previously announced plan to exit the home equity  subprime
mortgage  finance  business.  Finance America took over  the  subprime
home   equity  mortgage  origination  and  sale  business   previously
conducted  by  the Company's subsidiary, AMRESCO Residential  Mortgage
Corporation.  This transaction allowed the Company to cap  its  future
investment in the home equity mortgage business, partner with a  major
investment  bank  that is substantially involved in  the  home  equity
mortgage  business, both as a lender and as an investment banker,  and
retain an equity interest.  During the fourth quarter of 2000, a write-
off  of  goodwill of $23.0 million and a loss of $2.9 million relating
to  this  investment was recorded as an impairment of  assets  in  the
accompanying  financial statements, leaving an investment  balance  of
$0.9 million.

     On September 22, 2000, the Company sold certain of the assets and
operations  of  its homebuilder finance division for  $132.6  million.
The Company has received $129.3 million of cash through March 27, 2001
and is scheduled to receive $3.3 million in cash within twelve months.
On  October  25, 2000, through a series of simultaneous  transactions,
the Company (i) repurchased approximately $130.6 million in loans from
the  homebuilders  securitization resulting  in  a  payoff  of  $111.4
million  in  non-recourse debt and (ii) sold such loans at  par.   The
Company  received net cash proceeds of $26.1 million, after  repayment
of  the non-recourse debt and recovery of servicing advances.  A  loss
of  $5.8 million on these transactions was recorded as a loss  on  the
disposal  and impairment of assets line in the accompanying  financial
statements.

     During 2000, the Company repurchased $217.4 million of its senior
subordinated notes.  A $54.0 million after tax gain, or $87.4  million
gain  before  taxes,  was  recorded as an extraordinary  gain  in  the
accompanying financial statements.


Continuing Operations Overview

      Following  the sale of the commercial mortgage banking  line  of
business to Lend Lease, the exercise of its option regarding  MIC  and
the sale of the United Kingdom asset management assets and operations,
the  Company's  operations  are  now centered  around  the  commercial
finance  line  of  business which conducts  small  and  middle  market
business lending.

      Revenues from the Company's commercial finance line of  business
are  primarily earned from (i) interest and fees on loans to small and
middle  market  business  owners, (ii) accrued  earnings  on  retained
interests  in  securitizations,  (iii)  servicing  fees  on  its  loan
portfolios   being  serviced and (iv) gains on the securitization  and
sale   of   loans.   Revenues  from  the  Company's  asset  management
activities  primarily consist of earnings on asset  portfolios,  which
are  managed  by Lend Lease.  Revenues from the Company's home  equity
lending  activities primarily consist of interest earned on loans  and
accrued earnings on retained interests in securitizations.

     Retained  interests in securitizations are classified as  trading
and are carried at estimated fair value.  Changes in such market value
are  included  in  earnings.   Cash flows for  retained  interests  in
securitizations  are generally subordinated to other security  holders
in  a securitization trust.  The retained interests in securitizations
are  valued  at the discounted present value of the cash  flows  based
upon  the  expected  timing  of  the  release  of  the  cash  by   the
securitization trust ("cash-out method") over the anticipated life  of
the  assets  sold  after  estimated future  credit  losses,  estimated
prepayments  and  normal  servicing  and  other  related  fees.    The
discounted present value of such retained interests is computed  using
management's  assumptions of market discount rates, prepayment  rates,
default  rates, credit losses and other costs.  The carrying value  of
the retained interests in securitizations is determined by the Company
on  a disaggregated basis and considers historical prepayment and loss
experience,  economic  conditions and trends,  collateral  values  and
other  relevant  factors.   For additional information  regarding  the
Company's retained interests in securitizations see "Item 1. Business"
and  Notes  1 and 6 to the Notes to Consolidated Financial  Statements
included in "Item 8. Financial Statements and Supplementary Data."


Results of Operations

      The  following discussion and analysis presents the  significant
changes  in  financial  condition and results  of  operations  of  the
Company  by  primary  business line for the years ended  December  31,
2000, 1999 and 1998.  The results of operations of acquired businesses
are included in the consolidated financial statements from the date of
acquisition.  This discussion should be read in conjunction with "Item
1.   Business"  and  "Item 8.  Financial Statements and  Supplementary
Data" (in thousands, except per share data).
<TABLE>
CAPTION

                                                   2000      1999       1998
Revenues:
<S>                                                <C>          <C>        <C>
 Commercial finance                                   $ 111,087   $ 176,202    $122,047
 Asset management                                        33,615     106,461     111,890
 Home equity lending                                     14,553      85,150     161,169
 Corporate, other and intercompany eliminations          11,402      (4,556)      2,153
     Total revenues                                     170,657     363,257     397,259

Operating expenses:
 Commercial finance                                     128,020     109,470      75,456
 Asset management                                        67,439      70,295      65,256
 Home equity lending                                    211,308     293,792     235,888
 Corporate, other and intercompany eliminations          68,667      53,495      51,047

     Total operating expenses                           475,434     527,052     427,647

Operating income (loss):
 Commercial finance                                     (16,933)     66,732      46,591
 Asset management                                       (33,824)     36,166      46,635
 Home equity lending                                   (196,755)   (208,642)    (74,719)
 Corporate, other and intercompany eliminations          (57,265)    (58,051)   (48,895)
   Total operating loss from continuing operations      (304,777)  (163,795)    (30,388)
Income tax expense (benefit)                              10,176    (14,417)     (8,644)
Loss from continuing operations                         (314,953)  (149,378)    (21,744)
Income (loss) from discontinued operation, net of taxes   43,023    (71,471)    (47,427)
Loss before extraordinary gain                          (271,930)  (220,849)    (69,171)
Extraordinary gain on early retirement of debt,
 net of taxes                                             53,989
Net loss                                               $(217,941) $(220,849)  $ (69,171)

Weighted average earnings (loss) per share - basic
  and diluted:
 Loss from continuing operations                         $(32.35)   $(15.60)     $(2.54)
 Income (loss) from discontinued operation, net of taxes    4.42      (7.46)      (5.53)
 Extraordinary gain on early retirement of debt,
  net of taxes                                              5.54
 Net loss                                                $(22.39)   $(23.06)     $(8.07)
Weighted average number of common shares
outstanding - basic and diluted                            9,735      9,576       8,569
</TABLE>

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

     The  Company reported (i) revenues of $170.7 million, a  decrease
of $192.6 million, or 53%, from the year ended December 31, 1999, (ii)
an  operating  loss  from continuing operations of $304.8  million  as
compared  to 1999 operating loss from continuing operations of  $163.8
million and (iii) a net loss of $217.9 million as compared to  a  1999
net loss of $220.8 million.  The losses in 2000 were due primarily  to
home  equity  lending  non-cash write-downs of retained  interests  in
securitizations, impairments in home equity lending related to Finance
America,  impairment  of  the  Company's mortgage  backed  securities,
increased  the valuation allowance to the full amount of the  deferred
tax  asset, impairments in commercial finance related to the telephone
equipment   lending  division,  losses  on  sales  of   U.K.   assets,
homebuilder  assets  and real estate assets,  the  impairment  of  the
Company's  loans  and  asset  portfolios and  the  impairment  of  the
Company's  investment  in  AMRESCO Capital  Trust.   Diluted  weighted
average  common  shares  outstanding increased  2%  primarily  due  to
restricted stock grants.

     Commercial  Finance.  Revenues for the year  ended  December  31,
2000  primarily  consisted  of $67.1 million  of  interest  and  other
investment income, $35.2 million of gain on securitization and sale of
loans  and investments and $7.9 million in servicing fees.  The  $65.1
million  decrease in revenues from $176.2 million for the  prior  year
period  to $111.1 million for the year ended December 31, 2000 related
primarily to a $50.3 million decrease in interest and other investment
income and a $17.6 million decrease in gain on sale and securitization
of  loans.   The decrease in interest and other investment income  was
due  to decreased balances of loans primarily resulting from the  sale
of  $182.4 million real estate structured finance loans early  in  the
first  quarter of 2000 and the sale of $130.0 million of communication
loans in the fourth quarter of 1999.  The decrease in gain on sale was
due  primarily to the securitization and sale of approximately  $275.0
million  of  small  and middle market business loans  during  2000  as
compared to $547.8 million of securitization and sales in 1999.

     Operating expenses for the year ended December 31, 2000 primarily
consisted  of  $41.1  million in interest expense,  $22.1  million  in
personnel  cost,  $19.7 million of provision for  loan  losses,  $12.0
million  of  impairment  of  assets related  the  telephone  equipment
lending  division,  $10.6 million in other general and  administrative
expenses,  $5.2  million  in losses from the disposal  of  assets  and
operations of the Builder Finance Group and the real estate structured
finance  platform and $4.9 million in losses on retained interests  in
securitizations  of conventional business loans.   A  continuation  of
existing  levels  or  increases in delinquencies  and  losses  in  the
conventional  loans  which  have  been  securitized  will  result   in
additional   write   downs   of  the  retained   interests   in   such
securitizations in the future.  The $18.5 million increase in expenses
from  $109.5 million for the prior year to $128.0 million for the year
ended  December  31,  2000 was due primarily  to  increases  of  $25.2
million in provisions for loan losses, $12.0 million in impairment  of
intangible  and  loan  assets, $5.2 million in  loss  on  disposal  of
assets,   $4.9   million   in   losses  on   retained   interests   in
securitizations  which was related primarily to a slow  down  in  cash
flow  due  to  delinquencies  and $3.1  million  in  depreciation  and
amortization  related to the settlement of the  ACFI  earnout.   These
increases  were  partially offset by decreases  of  $21.2  million  in
interest  expense  related to the financing for  decreased  levels  of
loans  and  loans held for sale from 1999, $7.8 million  in  personnel
expense  due to lower headcount resulting from above noted  sales  and
$2.8 million in other general and administrative expense.

     Asset Management.  Revenues for the year ended December 31,  2000
were  $33.6  million  and  primarily consisted  of  $33.0  million  in
interest and other investment income, $6.3 million in asset management
and  resolution fees and $1.6 million in other income offset, in part,
by  $7.2 million of loss on sales of loans and investments.  The $72.9
million  decrease in revenues from $106.5 million for  1999  to  $33.6
million  for  the  year ended December 31, 2000 was primarily  due  to
decreases  of  $33.7 million in interest and other investment  income,
$25.9  million  in  gain  on sale of loans and investments  and  $13.5
million in asset management and resolution fees.  These decreases were
primarily  due  to the sale of the asset management platform  and  the
sale of the United Kingdom assets in the first quarter of 2000 and the
liquidation of asset management assets during 2000.

     Operating expenses for the year ended December 31, 2000 primarily
consisted  of $26.6 million in asset impairments relating to permanent
impairments   in  the  values  of  mortgage  backed  securities,   the
investment  in  AMRESCO Capital Trust, real estate  and  loan  assets,
$11.6 million in interest expense, $11.0 million in other general  and
administrative expenses, $10.1 million in loss on disposal  of  assets
and $7.2 million in personnel expenses.  The $2.9 million decrease  in
expenses  from $70.3 million for the prior year to $67.4  million  for
the  year  ended December 31, 2000 was due primarily to  decreases  of
$18.4  million  in interest expense, $12.9 million in personnel  costs
and $5.9 million in other general and administrative costs offset,  in
part,  by increases of $25.1 million in impairment of assets and $10.1
million in loss on the disposal of assets.

     Home  Equity  Lending.  Revenues for the year ended December  31,
2000  primarily  consisted  of $12.6 million  of  interest  and  other
investment  income and $1.4 million in mortgage banking and  servicing
fees.  The $70.6 million decrease in revenues to $14.6 million for the
year  ended  December 31, 2000 from $85.2 million for the  year  ended
December 31, 1999 primarily consisted of decreases of $44.3 million in
interest and other investment income, $18.0 million in gain on sale of
loans  and investments and $7.2 million in mortgage and banking  fees.
These decreases were due to lower balances of loans held for sale  and
retained interests during the year and the transfer of the origination
platform to Finance America.

     Operating expenses for the year ended December 31, 2000 consisted
of   $143.0   million   non-cash  loss  on   retained   interests   in
securitization,  $32.4 million in interest expense, $25.9  million  in
impairment  of  assets related to home equity, $6.2 million  in  other
general  and administrative expense, $2.3 million in depreciation  and
amortization  and  $0.9  million  in  provision  for  loan  and  asset
portfolio losses.  Operating expenses decreased by $82.5 million  from
$293.8  million  for the prior year period to $211.3 million  for  the
year  ended  December  31, 2000 primarily due to  decreases  of  $41.8
million  in  personnel expenses, $37.3 million in  other  general  and
administrative  expenses,  $8.0  million  in  interest  expense,  $7.0
million  in depreciation and amortization and $3.4 million in loss  on
retained  interests in securitizations offset, in  part,  by  a  $17.3
million increase in impairment of assets.  The $143.0 million loss  on
retained  interests consisted of $133.4 million in  write-downs  which
were  driven primarily by increased losses in 2000 and a $9.6  million
loss  on  the  sale of retained interests.  The decreases in  expenses
were  due  primarily  to  the aforementioned transfer  of  assets  and
operations to Finance America.

      Corporate, Other and Intercompany Eliminations.  Operating  loss
of  $57.3 million for the year ended December 31, 2000 decreased  $0.8
million  over the operating loss of $58.1 million for the prior  year.
The  decreased  loss  consisted of an  increase  of  $7.4  million  in
interest  and  other  investments from income on residential  mortgage
backed securities, an increase of $8.2 million in gain on sale related
to  a  prior year loss, a decrease of $10.4 million in personnel costs
and  a  decrease of $6.7 million in interest expense, offset, in part,
by  an increase of $18.6 million in disposal of assets related to  the
Lend  Lease  transaction and a $14.9 million increase in  general  and
administrative costs.

      Income Taxes.   As of December 31, 2000, the Company had  a  net
income tax payable of $1.2 million primarily due to state taxes.   The
continuing operations tax expense was due primarily to establishing of
a  valuation  reserve in the fourth quarter 2000 against the  deferred
tax asset which more than offset tax benefits previously recognized in
the  prior three quarters.  As a result the Company has $165.2 million
in   net  operating  losses  currently  available.   The  Company  has
substantial net operating loss carry forwards and deferred tax  assets
which  can  offset up to $115.4 million of future income tax  expense.
The  Company has not recognized any net deferred tax asset at December
31,  2000.   Therefore, the Company does not expect to record  federal
tax expense for the foreseeable future on income that it may earn.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     The  Company reported (i) revenues of $363.3 million, a  decrease
from  $397.3  million, or 9%, from the year ended December  31,  1998,
(ii) an operating loss from continuing operations of $149.4 million as
compared  to 1998 operating loss from continuing operations  of  $21.7
million and (iii) a net loss of $220.8 million as compared to  a  1998
net  loss  of  $69.2 million.  The losses were due primarily  to  home
equity   lending  non-cash  write-downs  of  retained   interests   on
securitization, non-cash impairment on home equity retail  operations,
impairment of the Company's investment in AMRESCO Capital Trust, mark-
to-market  losses and operating losses resulting from a low volume  of
home  equity  originations.  Diluted weighted  average  common  shares
outstanding  increased 12% primarily due to CLC earn-out payments  and
restricted stock grants.

     Commercial  Finance.  Revenues for the year  ended  December  31,
1999  primarily  consisted of $117.3 million  of  interest  and  other
investment income and $62.4 million of gain on securitization and sale
of loans and investments offset, in part, by a $9.6 million unrealized
loss  on  the sale of certain real estate loans in January 2000.   The
$54.2  million increase in revenues from $122.0 million for the  prior
year  period  to $176.2 million for the year ended December  31,  1999
relates  primarily to a $36.8 million increase in interest  and  other
investment income generated by higher average balances of real  estate
structured finance, communication, small business and franchise  loans
held  for  sale  held during 1999 and increased balances  of  retained
interests.  The net gain on sale increased $14.2 million due primarily
to  the  securitization and sale of approximately  $547.8  million  of
small business and franchise loans by business lending during 1999  as
compared  to  $375.8  million of securitization  and  sales  in  1998,
offset,  in  part, by the previously mentioned $9.6 million unrealized
loss  on  the sale of a substantial part of the real estate structured
finance portfolio.

     Operating expenses for the year ended December 31, 1999 primarily
consisted  of  $62.3  million in interest expense,  $29.9  million  in
personnel  cost,  $13.5  million in other general  and  administrative
expenses,  offset, in part, by reversing a $5.5 million provision  for
loan  losses.   The  $34.0  million increase in  expenses  from  $75.5
million  for  the  prior year to $109.5 million  for  the  year  ended
December 31, 1999 was due primarily to an increase of $23.6 million in
interest  expense  related to the financing for  increased  levels  of
investments  and  loans  held for sale from  1998,  $12.3  million  in
personnel  expense related to expanded operations and $5.6 million  in
other  general  and  administrative  expenses  primarily  related   to
expanded  operations, offset by the aforementioned  reversal  of  $5.5
million of provision for loan losses.

     Asset Management.  Revenues for the year ended December 31,  1999
were  $106.5  million  and primarily consisted  of  $66.6  million  in
interest   and  other  investment  income,  $19.8  million  in   asset
management and resolution fees and $18.7 million of gains on sales  of
loans  and  investments.  The $5.4 million decrease in  revenues  from
$111.9  million for 1998 to $106.5 million for the year ended December
31,  1999  was  primarily  comprised of a $15.6  million  decrease  in
interest  and  other  investment income offset, in  part,  by  a  $6.5
million increase in gain on sale of loans and investments, and a  $4.3
million increase in management and resolution fees. Interest and other
investment  income decreased due primarily to a decrease in  aggregate
investments for the Company's own account.  Gain on sale of loans  and
investments  increased due primarily to a decrease in  impairment  and
hedging losses on Mortgage Backed Securities (MBS) in 1999 as compared
to the prior period.

     Operating expenses for the year ended December 31, 1999 primarily
consisted of $30.0 million in interest expense, $16.8 million in other
general  and  administrative expenses and $20.0 million  in  personnel
expenses.   The $5.0 million increase in expenses from $65.3  for  the
prior  year to $70.3 million for the year ended December 31, 1999  was
due  primarily to a $6.0 million increase in personnel costs,  a  $1.7
million increase in other general and administrative costs, and a $1.5
million  impairment  on the Company's investment  in  AMRESCO  Capital
Trust  offset, in part, by a $3.2 million decrease in interest expense
related to the financing of decreased levels of investments.

     Home  Equity  Lending.  Revenues for the year ended December  31,
1999  primarily  consisted  of $56.9 million  of  interest  and  other
investment  income, a $18.0 million gain on sale of  loans  and  other
investments  and $8.7 million in mortgage banking and servicing  fees.
The  $76.0 million decrease in revenues to $85.2 million for the  year
ended  December  31,  1999  from $161.2 million  for  the  year  ended
December 31, 1998 primarily consisted of a $111.9 million decrease  in
interest  and other investment income offset, in part, by an  increase
of $34.6 million in gain on sale of loans and investments.

     Operating expenses for the year ended December 31, 1999 consisted
of   $146.4   million   non-cash  loss  on   retained   interests   in
securitization,  $40.3 million in interest expense, $42.3  million  in
personnel  expense, $43.5 million in other general and  administrative
expense, $9.3 million in depreciation and amortization, a $8.7 million
non-cash  impairment of assets related to closing the retail branches,
and  a  $3.3  million provision for loan and asset  portfolio  losses.
Operating expenses increased by $57.9 million from $235.9 million  for
the  prior  year period to $293.8 million for the year ended  December
31,  1999.  The largest component of the increase was a $130.3 million
increase  in  losses on retained interests in securitizations   partly
due   to  changes  in  prepayment  and  loss  assumptions  and   other
assumptions   influenced  by  market  conditions  and   mark-to-market
charges, a reduction in origination volume, soft pricing for sub-prime
product  and  underwriting issues.  Operating expenses also  increased
$8.7  million impairment on assets, $6.1 million in other general  and
administrative   expenses  and  $2.9  million  in   depreciation   and
amortization.  The increases in operating expenses were  offset  by  a
$58.9  million  decrease in interest expense related to lower  average
balances of warehouse debt supporting higher average balances of loans
held  for  sale, a $18.5 million decrease in provision  for  loan  and
asset  portfolio  losses  from the prior  year  and  a  $12.7  million
decrease  in  personnel  expenses  due  primarily  to  closing  retail
operations  during  the  year  and other staffing  reductions  in  the
wholesale and home office operations.

      Corporate, Other and Intercompany Eliminations.  Operating  loss
of  $58.1 million for the year ended December 31, 1999 increased  $9.2
million  over the operating loss of $48.9 million for the prior  year.
The increased loss consisted of a decrease of $4.4 million in interest
and other investments, a decrease of $2.2 million in revenues from the
pension advisory business resulting from the sale of this business  in
1998,  $4.7  million in increased personnel costs and $3.4 million  in
increased  interest expenses, offset, in part, by a decrease  of  $6.2
million  in  general and administrative costs as these  expenses  were
allocated to the lines of business.

      Income Taxes.   As of December 31, 1999, the Company had  a  net
federal income tax receivable due primarily to the 1999 net loss.   In
addition,  as  of December 31, 1999, the Company had  a  deferred  tax
asset  for  which  the  Company must have  future  taxable  income  to
realize.   Certain of these benefits begin to expire in 2002  and  are
subject  to annual utilization limitations.  The decrease in the  1999
effective  tax  rate to 22% from 152% in 1998 was due primarily  to  a
minimum  level  of  net  income in 1998  which  results  in  taxes  at
statutory   rates  being  increased  dramatically  by   non-deductible
goodwill and state taxes.


Liquidity and Funding

      Liquidity is a measure of a company's ability to meet  potential
cash  requirements, including ongoing commitments to repay borrowings,
fund  lending activities and for general business purposes.  Cash  for
originating  and  funding  loans  and general  operating  expenses  is
primarily  obtained through cash flow from operations, asset portfolio
runoff  and credit facilities, including mortgage warehouse lines  and
non-recourse debt.

      The  Company has significant ongoing liquidity needs to  support
its existing business and growth in commercial finance.  The Company's
liquidity  is  actively  managed on a daily basis  and  the  Company's
financial status, including its liquidity, is reviewed periodically by
the  Board  of  Directors.  This process is  intended  to  ensure  the
maintenance of sufficient funds to meet the needs of the Company.

     Cash and cash equivalents totaled $46.0 million and $36.7 million
at  December  31,  2000  and  1999,  respectively.   Cash  flows  from
operating activities, plus principal cash collections from liquidation
of  assets totaled $1.1 billion for the year ended December  31,  2000
compared to $861.9 million for 1999.  The increase in cash flows  from
these  activities resulted primarily from liquidation of assets.   The
following  is  a  summary  of  certain  cash  flow  data  (dollars  in
thousands):
<TABLE>
CAPTION
                                                                    Year Ended December 31,
                                                                         2000        1999
<S>                                                                 <C>         <C>
Net cash provided by operating activities from continuing operations  $ 152,812   $ 106,466
Net cash provided by investing activities from continuing operations    504,093     105,530
Net cash used in financing activities from continuing operations       (777,060)   (305,953)
Net cash provided by discontinued operations                            129,492      98,661
Net cash used in repurchasing senior subordinated notes                (125,447)          -
Other financial measures:
Cash flow from operations and collections on and sales of loans,
 asset portfolios and asset-backed securities                         1,068,587     861,894
Cash used for new capital and borrowings (used in repayment),
 net (excluding warehouse loans payable)                               (777,060)   (306,005)
Cash used for purchase of asset portfolios, asset-backed securities,
 mortgage servicing rights and originations of loans                   (396,279)   (653,979)
The following table is a summary of selected debt ratios as of
 December 31, 2000 and December 321, 1999:
 Ratio of total debt to equity                                           3.01:1       3.0:1
Ratio of core debt to equity (excludes indebtedness under
 warehouse lines of credit)                                              2.5:1        2.8:1
</TABLE>

     The following table shows the components of the Company's capital
structure, including certain short-term debt, as of December 31,  2000
and 1999 (dollars in millions):

                                      2000                1999
                                Amount       %      Amount       %
Shareholders' equity            $165.6     25%      $459.7      25%
Senior subordinated notes       362.5      55        580.0      31
Mortgage warehouse loans        78.2       12        101.9       6
Notes payable                   57.1        8        708.6      38
Total                         $663.4      100%    $1,850.2     100%

      Total  assets decreased $1.2 billion to $0.7 billion at December
31,  2000  from $1.9 billion at December 31, 1999.  This decrease  was
due  primarily  to  the  sale of business  operations,  the  sale  and
liquidation  of  assets, the impairment write down on the  residential
mortgage   banking  operations  and  the  goodwill   associated   with
businesses  or  operations discontinued and  the  establishment  of  a
valuation allowance against the deferred tax asset.


Senior Credit Facility

      Effective  August 12, 1998, the Company entered  into  a  Credit
Agreement (the "Credit Agreement") with a syndicate of lenders led  by
Bank  of  America,  N.A., as administrative agent, and  Credit  Suisse
First  Boston, as syndication agent, replacing the Third  Amended  and
Restated  Loan  Agreement  (as  modified  and  amended)  dated  as  of
September  30,  1997.   At  December  31,  1999,  $384.7  million  was
outstanding  under  the Credit Agreement.  The  Credit  Agreement  was
amended and restated as of January 18, 2000.  The amended and restated
Credit  Agreement provided for a revolving commitment of $92.0 million
and  two  term commitments of $56.2 million (Term Loan A)  and  $320.4
million  (Term Loan B).  On August 15, 2000, the Credit Agreement  was
amended to extend the maturity of the facility to September 15, 2000.

      With  each  material sale transaction executed  by  the  Company
during  the  year  ended December 31, 2000, the Credit  Agreement  was
concurrently  amended  and  restated  to  reduce  the  maximum  amount
available under the facility until finally the outstanding balance  on
the Credit Agreement was paid in full by the Company and terminated by
the Lenders on October 16, 2000.

Commercial Finance Facilities

     The Interim Warehouse and Security Agreement (the "Small Business
Facility")  between ACFI and Prudential Securities Credit  Corporation
("Prudential")  provides financing in an amount not to  exceed  $200.0
million for the origination and purchase of small business loans.   At
December  31,  2000,  $37.5 million was outstanding  under  the  Small
Business Facility.

      The  Interim  Warehouse and Security Agreement  (the  "Franchise
Agreement"  and  together  with  the  Small  Business  Facility,   the
"Prudential   Facilities")  between  ACFI  and   Prudential   provides
financing  in  an  amount  not  to  exceed  $150.0  million  for   the
origination and purchase of certain franchise and construction  loans.
At December 31, 2000, $1.6 million was outstanding under the Franchise
Agreement.  The Prudential Facilities provide financing in  an  amount
not to exceed $250.0 million.

      Prudential  has  informed the Company that  it  has  ceased  its
business operations under which the Prudential Facilities were issued.
Prudential has agreed to extend the Prudential Facilities through  May
31,  2001;  however,  they  will  not fund  thereunder  any  new  ACFI
conventional  loans  after March 28, 2001.  The Company  is  currently
negotiating   with   lenders  to  provide  warehouse   financing   for
conventional   loans  originated  by  ACFI.   The  Company   currently
anticipates  that  prior  to  May 31,  2001,  it  will  have  obtained
warehouse  financing  necessary  for  ACFI  to  finance  its  existing
portfolio of conventional loans and to fund additional loans; however,
no  assurances  can  be  given that such warehouse  financing  can  be
obtained.   Until  any such new warehouse financing is  obtained,  the
Company's  ability  to  fund additional loans  will  be  substantially
limited,  which  will have an adverse effect upon its  operations  and
prospects.  In the event that the Company cannot obtain new  warehouse
financing   or  obtain  an  additional  extension  of  the  Prudential
Facilities prior to May 31, 2001, ACFI would be required to change its
operations,  which would have a material and adverse effect  upon  the
operations and financial condition of the Company.

      The  Loan  Agreement ("Loan Agreement") dated August  31,  1998,
between  a wholly-owned subsidiary of the Company and Salomon Brothers
Realty  Corporation  provides financing in an  amount  not  to  exceed
$200.0  million  for  the  origination of  commercial  mortgage  loans
secured by certain real estate properties originated or acquired.   At
December  31,  1999,  $15.2  million was outstanding  under  the  Loan
Agreement.   The  maturity date of the Loan Agreement  was  April  30,
2000.  This facility was paid in full on April 12, 2000.

      The  Loan  Agreement  ("Transamerica  Loan  Agreement")  between
Independence  Funding  and  Transamerica Business  Credit  Corporation
("Transamerica") provides a working capital facility  in  the  maximum
aggregate principal amount of $75.0 million for the purpose of funding
new  SBA loans. On November 30, 1999, an amendment of the Transamerica
Loan  Agreement changed the mandatory repayment period  applicable  to
advances from one year to 359 days from the date of each advance.   At
December   31,   2000,  $39.1  million  was  outstanding   under   the
Transamerica  Loan Agreement.  The Transamerica Loan Agreement  has  a
maturity  date  of December 17, 2001.  Transamerica has  informed  the
Company  that  it is no longer in the business of providing  warehouse
lending  for  SBA  loans  and,  therefore,  it  will  not  extend  the
Transamerica  Loan  Agreement or otherwise provide financing  for  the
Company's SBA loans after December 17, 2001.  The Company is currently
negotiating with a lender to provide warehouse financing for  the  SBA
loans  and  the Company currently anticipates that, prior to  December
17, 2001, it will have obtained such warehouse financing necessary for
Independence   Funding  to  continue  funding  loans.    However,   no
assurances can be given that such warehouse financing will be obtained
prior  to  December 17, 2001.  The failure to obtain such a  warehouse
facility  or other similar financing would cause Independence  Funding
to change its operations and would have a material  and adverse effect
upon the operations and financial condition of the Company.

      On May 1, 1999, a wholly-owned subsidiary of the Company entered
into  a  Financing  Agreement  (the "Financing  Agreement")  in  which
approximately $111.4 million of loans made by such subsidiary to small-
to-medium  sized  local  and  regional home  building  companies  were
financed by Adjustable Rate Home Builder Loan Notes issued through the
means  of  a private securitization.  The Financing Agreement's  final
maturity  was  May  25, 2007. On October 25, 2000,  the  wholly  owned
subsidiary  entered  into  a Purchase and Sale  agreement  with  Prism
whereby  $130.6  million  of loans were sold;  simultaneous  with  the
closing  of the sale, the Financing Agreement was terminated  and  all
outstanding amounts owed thereunder were repaid.

      On  September 13, 2000, a wholly owned subsidiary of the Company
entered  into  a  repurchase  agreement in which  approximately  $35.8
million  of retained interest in securitizations were sold  for  $12.0
million  with  an obligation to repurchase the retained  interests  on
December  7,  2000.   By letter agreements, the  repurchase  date  was
extended  to January 26, 2001.  At December 31, 2000 $8.9 million  was
outstanding under the repurchase agreement. On January 26,  2001,  the
retained interests were repurchased.

      A wholly owned subsidiary of the Company entered into a Transfer
and   Administration  Agreement  (the  "Transfer  and   Administration
Agreement")  with Kitty Hawk Funding Corporation and Bank of  America,
N.A.,  as  agent, on June 26, 1998, which was subsequently amended  on
November  26,  1999.   As  of  December 31,  1999,  the  Transfer  and
Administration Agreement provided financing in an amount not to exceed
$55.0  million for construction financing to various homebuilders  and
was  secured by the specific assets funded by such debt. The  Transfer
and  Administration  Agreement commitment to lend  additional  amounts
terminated  on April 30, 2000 and all amounts owed under the  Transfer
and Administration Agreement were subsequently repaid.

Home Equity Lending Facilities

      The  Master Repurchase Agreement ("the Agreement") dated October
17,  1996,  between  a  wholly owned subsidiary  of  the  Company  and
Donaldson  Lufkin & Jenrette, provided financing for certain  retained
interests  purchased  or  created during the Company's  securitization
process.  On  September  12,  2000 the  Company  sold  the  underlying
retained  interest  and simultaneously terminated  and  paid  off  the
Master Repurchase Agreement.

      On  June  30,  1999, a wholly owned subsidiary  of  the  Company
entered  into  a Master Repurchase Agreement Governing  Purchases  and
Sales   of  Mortgage  Loans  (the  "Master  Agreement")  with   Lehman
Commercial Paper Inc., for the sale and repurchase of certain mortgage
loans.  On September 20, 1999, the Master Agreement was modified by  a
Letter Agreement ("Letter Agreement") to provide financing for certain
exception loans, as defined in the Letter Agreement.  At December  31,
1999,  $1.4  million was outstanding related to the Letter  Agreement.
This facility was repaid in full on February 1, 2000.

General

      Current liquidity, consisting of unrestricted cash balances,  as
of  March  27,  2001,  was approximately $18.9 million.   The  primary
sources  of  liquidity  currently include  unrestricted  cash  on  the
Company's  balance  sheet  and  to the  extent  described  above,  the
Warehouse  Facilities and internally generated funds.  In addition  to
asset  liquidations  and  other  means described  above,  the  Company
expects  to  manage its liquidity from cash flows generated  from  its
existing  operations and returns of and on investments in the ordinary
course  of  business.   The  inability to  find  suitable  replacement
warehouse  financing at maturity will have a material  adverse  effect
upon the financial condition and future operations of the Company.

     The Warehouse Facilities of ACFI and Independence Funding and the
Company's  indentures  under which its senior subordinated  notes  are
issued  contain certain financial covenants relating to,  among  other
things,  interest coverage, leverage and tangible net worth, which  if
not  met,  could  cause the Company to be in default or  could  impose
certain restrictions on the Company's ability to pay dividends on  and
repurchase  its  capital  stock and incur  additional  debt.   If  the
Company  experiences additional losses it may be in default under  the
financial  covenants.  Any such default could materially and adversely
impact  the Company's financial condition and prospects.  At  December
31,  2000,  the Company did not anticipate that it will be in  default
under  any  of its credit agreements and facilities in the foreseeable
future.   The  Company  is  not in compliance with  certain  financial
covenants,  which prohibit the Company from incurring additional  debt
with  a  term in excess of 360 days, paying dividends and repurchasing
its common stock.

      The Company has historically accessed the capital markets as  an
important part of its capital raising activities, including  to  raise
funds  in  debt  and equity offerings, to finance the  acquisition  of
assets  and  the  origination  and  accumulation  of  loans,  and   to
securitize and sell loans originated by its different business  lines.
The  Company  anticipates that its access to the capital markets  will
continue  to  be  limited for the foreseeable future  and  that  other
sources of third party financing will also be limited.

      The  following table shows the components of the Company's loans
held  for  sale, loans and asset portfolios, asset backed  securities,
notes  receivable  and retained interests in securitizations  and  the
corresponding debt as of December 31, 2000 and December 31,  1999  (in
millions):
<TABLE>
CAPTION
                                                         2000                  1999
                                                   Assets     Debt        Asset      Debt
<S>                                            <C>        <C>      <C>   <C>     <C>       <C>
 Loans held for sale:
  SBA                                             $ 51.5    $ 39.1  (a)   $ 57.5    $ 47.2  (a)
  Conventional lending                              42.2      39.1  (b,h)   63.2      53.3  (b,g,h)
  Other                                              4.3                    11.9
  Real estate structured finance                                           162.4
      Total loans held for sale                     98.0                   295.0

 Loans:
  Homebuilder lending                                1.4                   217.2     142.5  (f,i)
  Real estate structured finance and communication  26.5                    62.0
  Home equity lending servicing advance                                      9.6
  Other                                              5.1                    26.8
      Total loans                                   33.0                   315.6

 Investments in loan and other asset portfolios:
  Loan portfolios                                   33.3                   135.8
  Real estate                                       24.2      1.7  (c)     189.2     125.8  (c)
  Partnerships, preferred stock                     20.4                    52.1
  Other                                              6.4                    12.7
   Total purchased loan and other asset portfolios  84.3                   389.8
  Total loans and asset portfolios                 117.3                   705.4

 Asset-backed securities - available for sale:
  Commercial mortgage backed securities              7.6                    59.0
  Residential mortgage backed                       46.5     46.5  (d)      48.0      48.0  (d)
    Total asset backed securities                   54.1                   107.0

 Notes receivable:
  Lend Lease sale                                   26.5                     -
  U.K. asset sale                                   23.8                     -
  Builders asset sale                                6.9                     -
    Total notes receivable                          57.2                     -

 Retained interests in securitizations:
  Conventional lending                             146.0      8.9  (e)     127.7
  SBA                                               25.7                    16.3
  Home equity lending                               10.6                   155.3       7.6  (j)
    Total retained interests in securitizaitons    182.3                   299.3

 Other related debt:
  Senior Credit Facility                                                             384.7
  Other                                                                                1.4
 Totals                                           $508.9  $135.3        $1,406.7    $810.5

 (a)  Transamerica SBA warehouse line of credit
 (b)  Prudential small business warehouse line of credit
 (c)  Other non-recourse debt
 (d)  Non-recourse debt related to securitization of RMBS assets
 (e)  Repurchase agreement non-recourse financing
 (f)  Homebuilder lending commercial paper conduit
 (g)  Salomon Brothers small CMBS warehouse line of credit
 (h)  Prudential franchise warehouse line of credit
 (i)  Kitty Hawk commercial paper conduit
 (j)  Donaldson Lufkin & Jenrette residual security non-recourse debt
</TABLE>

Other Matters

     See New Accounting Standards presented in Note 1 of the Company's
Consolidated  Financial Statements in "Item 8.   Financial  Statements
and Supplemental Data."

Private Litigation Securities Reform Act of 1995

      This  report  contains  forward-looking  statements  based  upon
current expectations that involve a number of risks and uncertainties.
The  forward-looking  statements are  made  pursuant  to  safe  harbor
provisions  of the Private Litigation Securities Reform Act  of  1995.
The  factors  that  could cause actual results  to  differ  materially
include  the following: industry conditions and competition,  interest
rates,  business  mix, availability of additional financing,  and  the
risks  described  from time to time in the Company's  reports  to  the
Securities and Exchange Commission.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

     Market risk generally represents the risk of loss that may result
from the potential change in the value of a financial instrument as  a
result  of fluctuations in, among other things, interest and  currency
exchange  rates  and in equity and commodity prices.  Market  risk  is
inherent  to both derivative and non-derivative financial instruments,
and  accordingly,  the scope of the Company's market  risk  management
procedures  extends  beyond derivatives to  include  all  market  risk
sensitive financial instruments.

      The  following  is a discussion of the Company's primary  market
risk exposures as of December 31, 2000, including a discussion of  how
those exposures are managed.

Interest Rate Risk

      The  Company is subject to interest rate risk through its normal
operating  activities.  The Company generates fixed and floating  rate
loans and investments through its origination of loans.  A substantial
portion  of the fixed rate loans are financed by LIBOR based warehouse
loans payable. In the normal course of business, the Company may be  a
party  to  financial instruments with off-balance sheet  risk.   These
financial  instruments are designed to help hedge against  changes  in
interest  rates.  Information regarding new accounting  standards  for
financial  investments  is  presented  in  Note  1  of  the  Company's
Consolidated  Financial Statements in "Item 8.   Financial  Statements
and  Supplemental  Data."   The Company may  reduce  its  exposure  to
fluctuations  in  interest  rates  by  creating  offsetting  positions
through the use of derivative financial instruments.  Derivatives  are
used  to  lower funding costs, to diversify sources of funding  or  to
alter  interest rate exposures arising from mismatches between  assets
and  liabilities.   The  Company  does not  use  derivative  financial
instruments  for trading or speculative purposes, nor is  the  Company
party  to  highly leveraged derivatives.  These financial  instruments
may  include interest rate cap agreements, put options and forward and
futures  contracts.   The  instruments involve,  to  varying  degrees,
elements  of  risk  in  excess  of  the  amount  recognized   in   the
consolidated statements of financial condition.  The Company  controls
the  risk of its hedging agreements, interest rate cap agreements  and
forward and futures contracts through approvals, limits and monitoring
procedures.   Prime  based variable rate loans are financed  by  LIBOR
and/or  Prime  based  warehouse loans  payable.   As  of  and  through
December  31, 2000, the Company has not hedged its LIBOR-Prime  spread
risk.

      The  Company may purchase interest rate cap agreements to reduce
the  impact  of changes in interest rates on its floating  rate  debt.
The  Company enters into these agreements to change the fixed/variable
interest  rate  mix  of  the debt portfolio to  reduce  the  Company's
aggregate  risk  to  movements in interest  rates.   Accordingly,  the
Company may enter into agreements to effectively convert variable-rate
debt  to  fixed-rate debt to reduce the Company's  risk  of  incurring
higher  interest costs due to rising interest rates.   Cap  agreements
entitle the Company to receive from the counterparties the amounts, if
any,  by  which an interest rate index exceeds agreed-upon thresholds.
The  potential  loss  in  fair value related to  such  cap  agreements
resulting from a 10% adverse change in interest rates is not material.

      Futures and forward contracts are commitments to either purchase
or  sell  designated  financial instruments at a  future  date  for  a
specified  price and may be settled in cash or through delivery.   The
Company  may enter into these contracts to reduce the risk of loss  in
value  on  certain investments and loan portfolios due to  changes  in
interest   rates   and  currency  exchange  rates.    Initial   margin
requirements are met in cash or other instruments.  Futures  contracts
have   little   credit  risk  because  futures   exchanges   are   the
counterparties.  Forward agreements and interest rate swaps  and  caps
are  subject to the creditworthiness of the counterparties, which  are
principally large financial institutions.

      Interest  rate  sensitivity analyses are  used  to  measure  the
Company's  interest rate risk related to its trading  and  other  than
trading portfolios by computing hypothetical changes in fair values of
interest  rate  sensitive assets, liabilities and  off  balance  sheet
items  in the event of a hypothetical changes in interest rates.   The
following are the Company's interest rate sensitivity analyses  as  of
December 31, 2000 (dollars in millions):

     Retained interests in securitization (trading):

    Change in                   Hypothetical   Hypothetical
  Interest Rates   Fair Value    Change ($)     Change (%)
       10%           $176.7        $(5.6)         (3.1)%
        0             182.3            -             -
      (10)%           187.9          5.6           3.1

     Retained interests in securitization have been generated from the
commercial finance and home equity divisions.  The performance of  the
retained   interests  vary  by  securitizations  based  upon  numerous
factors,  including, loan type, collateral underlying loans,  year  of
origination,  market conditions at origination and changes  in  market
conditions subsequent to origination.  The fair value of each retained
interest and their sensitivity to changes in interest rates have  been
determined   based  upon  discounted  cash  flow  analysis   of   each
securitization, utilizing various discount rates, prepayment rates and
loss assumptions.

     Other than trading:

    Change in                    Hypothetical   Hypothetical
 Interest Rates    Fair Value     Change ($)     Change (%)
       10%          $20.2           $(0.1)         (0.5)%
        0            20.3               -             -
      (10)%          20.4             0.1           0.5

      The  other than trading category includes loans held  for  sale,
loans   and  asset  portfolios,  asset-backed  securities,  derivative
positions, senior subordinated notes and warehouse facilities  to  the
extent the fair value could be affected by a widening of spreads.  The
fair  value  of these assets and liabilities and their sensitivity  to
changes  in  interest rates have been determined based upon discounted
cash flow analysis, historical market variances, mark to market quotes
from dealers and Bloomberg quotations.  In an increasing interest rate
environment,  the  Company  projects  the  fair  value  of  its   debt
obligations to decrease offset, in part, by a fair value reduction  in
its asset and derivative portfolio.

      Any  market  interest  rate change would  adjust  the  Company's
projected  cash  flows from its variable rate assets and  liabilities.
Such changes in cash flows are not reflected in the above analysis  as
the   fair  values  of  variable  assets  and  liabilities  would  not
materially be affected by a 10% change in interest rates.  As with any
method  of  measuring  interest rate risk,  certain  shortcomings  are
inherent  in the method of analysis presented in the foregoing  table.
For  example, although certain assets and liabilities may have similar
maturities  or  periods  to re-pricing, they may  react  in  different
degrees  to  changes  in interest rates.  Changes  in  interest  rates
related  to  certain types of assets and liabilities may fluctuate  in
advance  of changes in market interest rates while changes in interest
rates  related to other types of assets and liabilities may lag behind
changes  in  market interest rates.  Certain assets, such as  variable
rate loans, have features that restrict changes in interest rates on a
short-term  basis  and  over  the life of  the  asset.   Additionally,
changes in market interest rates may increase or decrease due to  pre-
payments  and defaults influenced by changes in market interest  rates
affecting  the  valuation of certain assets.   Accordingly,  the  data
presented  in the above table should not be relied upon as  indicative
of actual results in the event of changes in interest rates.

Foreign Exchange Risk

     Foreign exchange risk arises from the possibility that changes in
foreign exchange rates will impact the value of financial instruments.
The Company is subject to foreign exchange risk to the extent that its
foreign  income bearing assets exceed its related foreign  denominated
debt.   At December 31, 2000, the Company had no forward contracts  in
place  to  hedge  against  its foreign exchange  rate  exposure.   The
following  table summarizes the hypothetical impact to  the  Company's
financial  position due to changes in foreign currency exchange  rates
(dollars in millions):


   Change in
    Foreign
 Exchange Rates                 Hypothetical  Hypothetical
   per Dollar     Fair Value     Change ($)    Change (%)
      10%          $32.0           $(2.7)        (7.8)%
       0            34.7               -           -
     (10)%          39.0             4.3         12.4%

Other Market Risks

      As  with  any  entity's loans and other assets, the  Company  is
subject  to the risk that certain unpredictable conditions  can  exist
which combine to have the effect of limiting the Company's ability  to
liquidate its assets through sale or securitization.  As was the  case
in late 1998 when unprecedented market conditions caused a widening of
interest  rate  spreads  resulting  in  losses  to  the  Company   and
substantial requirements on the Company's liquidity position,  certain
events,  however remote a possibility, could again exist reducing  the
Company's  ability to liquidate certain assets.  The Company  believes
its  liquidity risk would not be materially impacted solely by  a  10%
change in interest rates without a more substantial change in spreads.


Item 8.   Financial Statements and Supplementary Data

      See  Index  to Financial Statements on Page F-1 of  this  Annual
Report on Form 10-K.

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

     None.

                               PART III

Item 10.  Directors and Executive Officers of the Registrant

      The  information required by this Item is set  forth  under  the
caption "Management" in the Company's definitive Proxy Statement  (the
"Proxy  Statement"),  which  will be filed  with  the  Securities  and
Exchange  Commission pursuant to Regulation 14A under  the  Securities
Exchange Act of 1934 and is incorporated herein by reference.

Item 11.  Executive Compensation

      The  information required by this Item is set  forth  under  the
caption "Executive Compensation" in the Proxy Statement, which will be
filed  with  the  Securities  and  Exchange  Commission  pursuant   to
Regulation  14A  under the Securities Exchange  Act  of  1934  and  is
incorporated herein by reference.

Item  12.    Security  Ownership  of  Certain  Beneficial  Owners  and
Management

      The  information required by this Item is set  forth  under  the
caption   "Security  Ownership  of  Certain  Beneficial   Owners   and
Management"  in  the Proxy Statement, which will  be  filed  with  the
Securities  and Exchange Commission pursuant to Regulation  14A  under
the  Securities  Exchange Act of 1934 and is  incorporated  herein  by
reference.

Item 13.   Certain Relationships and Related Transactions

      The  information required by this Item is set  forth  under  the
caption "Certain Relationships and Related Transactions" in the  Proxy
Statement,  which  will  be  filed with the  Securities  and  Exchange
Commission  pursuant  to Regulation 14A under the Securities  Exchange
Act of 1934 and is incorporated herein by reference.


                                PART IV

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

(1)  Financial Statements

      See  Index  to Financial Statements on page F-1 of  this  Annual
Report on Form 10-K.

(2)  Financial Statement Schedules

      Financial  statement  schedules under the applicable  rules  and
regulations  of  the  Securities  and Exchange  Commission  have  been
omitted  as  the  schedules  are  not applicable  or  the  information
required  thereby is included in the Company's consolidated  financial
statements or notes thereto.

(3)  Exhibits

     The following instruments are included as exhibits to the report.
Exhibits incorporated by reference are so indicated.

Exhib
 it   Description of Exhibit
Numbe
  r

3.(a) Restated  Certificate of Incorporation, filed as exhibit  3(a)
     to  Registrant's Form 10K for the fiscal year  ended  December
     31, 1997, which is incorporated herein by reference.
  (b) Certificate  of Amendment of Articles of Incorporation,  dated
     August 26, 2000.(1)
  (c) Amendment  and  Restated by Bylaws, effective as  of  May  31,
     2000.(1)
4.(a) See Exhibits 3(a), (b) and (c).
  (b) Indenture,   dated  as  of  January  15,  1996,  between   the
     Registrant and Bank One, Columbus, N.A., as trustee, filed  as
     Exhibit  4.1  to the Registrant's Form 8-K dated  February  2,
     1996, which exhibit is incorporated herein by reference.
  (c) Indenture, dated as of March 1, 1997, between the Company  and
     Bank One, Columbus, N.A., as trustee, filed as Exhibit 4.1  to
     the  Registrant's Form 8-K dated March 12, 1997, which exhibit
     is incorporated herein by reference.
  (d) Officers' Certificate and Company Order dated as of March  12,
     1997,   establishing  the  terms  of  the   Company's   Senior
     Subordinated Notes, Series 1997-A due 2004, filed  as  Exhibit
     4.2  to the Registrant's Form 8-K dated March 12, 1997,  which
     exhibit is incorporated herein by reference.
  (e) Officers'  Certificate and Company Order dated as of  February
     23,  1998,  establishing  the terms of  the  Company's  Senior
     Subordinated Notes, Series 1998-A due 2005, filed  as  exhibit
     4(e)  to  Registrant's  Form 10K for  the  fiscal  year  ended
     December 31, 1997, which is incorporated herein by reference.
  (f) Rights  Agreement, dated as of May 28, 1997,  by  and  between
     the  Registrant  and  The Bank of New York,  as  Rights  Agent
     filed on Exhibit 4 to Registrants Form 8-K dated May 27,  1997
     and incorporated herein by reference.
  (g) Amendment  No.  1 to Rights Agreement, dated as  of  March  2,
     1999,  executed by and between AMRESCO, INC. and The  Bank  of
     New  York,  as  Rights Agent (attached as Exhibit  1a  to  the
     Registrants Form 8-A [Amendment No. 1] filed as of  March  24,
     1999, which is incorporated herein by reference.
10.(a Promissory  Note  dated October 31, 1990 issued  by  James  P.
    ) Cotton, Jr. to the Registrant, filed as Exhibit 10(s)  to  the
     Registrant's  Annual Report on Form 10-K for  the  year  ended
     October  31,  1990,  which exhibit is incorporated  herein  by
     reference.
  (b) Indemnification  Agreement,  dated  March  30,  1993,  between
     AMRESCO  Holdings,  Inc.  and  Richard  L.  Cravey,  filed  as
     Exhibit 10(ab) to the Registrant's Annual Report on Form  10-K
     for  the  year  ended  December 31,  1993,  which  exhibit  is
     incorporated herein by reference.
  (c) The  Registrant's Retirement Savings and Profit  Sharing  Plan
     and  Trust filed as Exhibit 10(ag) to the Registrant's  Annual
     Report  on  Form  10-K for the year ended December  31,  1993,
     which exhibit is incorporated herein by reference.(2)
  (d) The  Registrant's Severance Pay Plan filed as  Exhibit  10(ai)
     to  the  Registrant's Annual Report on Form 10-K for the  year
     ended  December 31, 1993, which exhibit is incorporated herein
     by reference.(2)
  (e) Office Lease, dated as of February 9, 1996, between K-P  Plaza
     Limited  Partnership  and  the  Registrant  filed  as  Exhibit
     10(ao)  to  the  Registrant's Form 10-K for  the  fiscal  year
     ended  December 31, 1995, which exhibit is incorporated herein
     by reference.
  (f) First Amendment to Office Lease dated July 17, 1996, filed  as
     exhibit  10(r)  to Registrant's Form 10K for the  fiscal  year
     ended  December  31,  1997, which is  incorporated  herein  by
     reference.
  (g) Second Amendment to Lease Agreement dated May 27, 1997,  filed
     as  exhibit 10(s) to Registrant's Form 10K for the fiscal year
     ended  December  31,  1997, which is  incorporated  herein  by
     reference.
  (h) Third  Amendment to Lease Agreement dated September 22,  1997,
     filed  as  exhibit  10(t) to Registrant's  Form  10K  for  the
     fiscal  year  ended December 31, 1997, which  is  incorporated
     herein by reference.
  (i) Lease  Expansion and Fourth Amendment to Lease Agreement dated
     January  6, 1998, filed as exhibit 10(u) to Registrant's  Form
     10K  for  the  fiscal year ended December 31, 1997,  which  is
     incorporated herein by reference.
  (j) Lease  Expansion and Fifth Amendment to Lease Agreement, dated
     as  of  March 25, 1998, between KAB Plaza Partners,  L.P.  and
     the Registrant.(1)
  (k) Lease  Expansion and Sixth Amendment to Lease Agreement, dated
     July  6,  1998,  between  KAB Plaza  Partners,  L.P.  and  the
     Registrant.(1)
  (l) Seventh  Amendment  of  Office  Lease,  dated  June  7,  1999,
     between  Stevens  Creek Associates d/b/a TrizecHahn  Plaza  of
     the Americas Management and the Registrant.(1)
  (m) Lease   Termination  Agreement,  dated  September  15,   1999,
     between  Stevens  Creek Associates d/b/a TrizecHahn  Plaza  of
     the Americas Management and the Registrant.(1)
  (n) Eight  Amendment  to  Office  Lease,  dated  March  17,  2000,
     between  Stevens  Creek Associates d/b/a TrizecHahn  Plaza  of
     the Americas Management and the Registrant.(1)
  (o) Registrant's  1993 Key Individual Stock Option Plan  filed  as
     Exhibit  10(z) to the Registration Statement of Registrant  on
     Form  S-4  under  the  Securities Act of 1993  (File  No.  33-
     72732), which exhibit is incorporated herein by reference.(2)
  (p) AMRESCO,  INC.  1995 Stock Option and Award Plan,  as  amended
     and restated.(2)
  (q) AMRESCO,  INC. 1997 Stock Option Plan filed as exhibit  19(ac)
     to  the  Registrants  Form  10-K for  the  fiscal  year  ended
     December   31,   1996,   which  is  incorporated   herein   by
     reference.(2)
  (r) AMRESCO,  INC.  1998  Stock Option and  Award  Plan  filed  as
     Exhibit  10  to  the  Registrants' Form 10-Q  for  the  fiscal
     quarter  ended June 30, 1998, which is incorporated herein  by
     reference.(2)
  (s) Asset  Purchase  Agreement, dated December  8,  1999,  by  and
     among,  AMRESCO,  INC.  and certain of  its  subsidiaries,  as
     Sellers  and  Lend  Lease (US) Services, Inc.,  as  Purchaser,
     filed  as  Exhibit  2.1  to the Registrant's  Form  8-K  dated
     December  8,  1999  which  exhibit is incorporated  herein  by
     reference.
  (t) Form  of  Severance Agreement, dated as of May 29, 1996,  with
     L.  Keith  Blackwell and Ronald B. Kirkland filed  as  exhibit
     10(x)  to the registrants Form 10-K for the fiscal year  ended
     December   31,   1996,   which  is  incorporated   herein   by
     reference.(2)
  (u) Form  of Incentive Bonus Agreement, dated as of April 24, 2000
     with L. Keith Blackwell and Ronald B. Kirkland.(1) (2)
  (v) Employment  Agreement, entered into as of  December  4,  2000,
     between the Registrant and Randolph E. Brown.(1) (2)
  (w) Retention  Bonus  Agreement, dated as of  February  14,  2000,
     between the Registrant and Matthew T. Moore.(1) (2)
  (x) Retention  Bonus Agreement, dated as of May 11, 2000,  between
     the Registrant and Matthew T. Moore.(1) (2)
  (y) Retention  Bonus  Agreement, dated as of  February  14,  2000,
     between the Registrant and Bernard Russell Smith.(1) (2)
  (z) Employment Term Sheet, dated as of April 1, 2000, between  the
     Registrant and Bernard Russell Smith.(1) (2)
 (aa) Retention  Bonus  Agreement,  dated  as  of  April  24,  2000,
     between the Registrant and Jonathan S. Pettee.(1) (2)
 (ab) Retention  Bonus  Agreement,  dated  as  of  April  24,  2000,
     between the Registrant and Randolph E. Brown.(1) (2)
 11.  Statement re: Computation of Per Share Earnings. (1)
 21.  Subsidiaries of the Registrant. (1)
 23.  Consent of Independent Auditors-Deloitte & Touche LLP. (1)
 27.(a)Financial Data Schedule- Fiscal year end 2000. (1)
    (b) Financial  Data  Schedule- Fiscal year  ends  1998,  1999  and
       Quarters 1, 2 and 3 of 1999. (1)
    (c) Financial Data Schedule- Quarters 1, 2 and 3 of 2000. (1)
___________

(1)  Filed herewith.

(2)   Management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to Item 14(c) of this Report.


Reports on Form 8-K

     The Registrant did not file a Current Report on Form 8-K during
the quarter ended December 31, 2000.




                                SIGNATURES

      Pursuant  to  the requirements of Section 13  or  15(d)  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 on the 30th day of March, 2001.

                            AMRESCO, INC.

                            By: /s/  RANDOLPH E. BROWN
                                Randolph E. Brown
                                Chairman of the Board and Chief
                                   Executive Officer

              Pursuant to the requirements of the Securities  Exchange
Act  of  1934,  this  report has been signed below  by  the  following
persons on behalf of the Registrant and in the capacities and  on  the
30th day of March, 2001:

              Signature                       Title

        /s/ RANDOLPH E. BROWN    Chairman of the Board and
          Randolph E. Brown      Chief Executive Officer

        /s/ JONATHAN S. PETTEE   Executive Vice President and
          Jonathan S. Pettee     Chief Financial Officer
                                 (Principal Financial Officer)

       /s/ JAMES P. COTTON, JR.  Director
         James P. Cotton, Jr.

      __________________________ Director

          Richard L. Cravey

         /s/ AMY J. JORGENSEN    Director
           Amy J. Jorgensen

        /s/ BRUCE W. SCHNITZER   Director
          Bruce W. Schnitzer

         /s/ RON B. KIRKLAND     Senior Vice President and
           Ron B. Kirkland       Chief Accounting Officer
                                 (Principal Accounting Officer)




                     INDEX TO FINANCIAL STATEMENTS


                                                                 Page
 I. Financial Statements of AMRESCO, INC. and Subsidiaries

 Consolidated Balance Sheets, December 31, 2000 and 1999         F-2
 Consolidated Statements of Operations for the Years Ended       F-3
  December 31, 2000, 1999 and 1998
 Consolidated Statements of Shareholders' Equity for the Years   F-4
  Ended December 31, 2000, 1999 and 1998
 Consolidated Statements of Cash Flows for the Years Ended       F-5
  December 31, 2000, 1999 and 1998
 Notes to Consolidated Financial Statements                      F-6
 Independent Auditors' Report                                    F-26


<TABLE>
CAPTION


                    AMRESCO, INC.  AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                      December 31, 2000 and 1999
               (In thousands, except for share amounts)

                                                                     2000      1999
                        ASSETS
<S>                                                               <C>       <C>
Cash and cash equivalents                                          $ 46,046    $ 36,709
Loans held for sale, net                                             97,981     295,041
Loans and asset portfolios, net                                     117,314     705,353
Retained interests in securitizations - trading (at fair value)     182,348     299,311
Asset-backed securities - available for sale (at fair value)         54,142     107,005
Notes receivable                                                     57,187
Accounts receivable, net of reserves of $758 and $605                 4,084      15,394
Income taxes receivable                                                           2,480
Deferred income taxes                                                            73,983
Premises and equipment, net of accumulated
  depreciation of $9,768 and $15,680                                  2,996      10,408
Intangible assets, net of accumulated amortization of
  $23,497 and $30,216                                               122,105     138,762
Mortgage servicing rights, net of accumulated
  amortization of $2,106 and $939                                    13,046      13,438
Other assets                                                         18,688      68,967
Net assets (liabilities) of discontinued operations                    (902)    173,115

TOTAL ASSETS                                                       $715,035  $1,939,966

         LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
 Accounts payable                                                 $  12,260  $    9,068
 Accrued employee compensation and benefits                           7,717      14,830
 Notes payable                                                       57,111     708,611
 Warehouse loans payable                                             78,159     101,894
 Senior subordinated notes                                          362,491     580,033
 Income taxes payable                                                 1,237
 Other liabilities                                                   30,424      65,811

   TOTAL LIABILITIES                                                549,399   1,480,247

COMMITMENTS AND CONTINGENCIES (Note 14)

SHAREHOLDERS' EQUITY:
  Common stock, $0.25 par value, authorized 30,000,000
  shares; 10,826,438 and 9,958,558 shares issued                      2,707       2,490
 Capital in excess of par                                           548,110     546,762
 Common stock to be issued for earnouts                                          87,548
 Unamortized stock compensation                                      (1,400)     (4,096)
 Treasury stock, $0.25 par value, 204,868 shares                    (17,363)    (17,363)
 Accumulated other comprehensive loss                                (1,703)     (8,848)
 Accumulated deficit                                               (364,715)   (146,774)

   TOTAL SHAREHOLDERS' EQUITY                                       165,636     459,719

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                        $ 715,035  $1,939,966
</TABLE>

            See notes to consolidated financial statements.
<TABLE>
CAPTION

                    AMRESCO, INC.  AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
         For the Years Ended December 31, 2000, 1999 and 1998
                 (In thousands, except per share data)



                                                    2000        1999      1998
REVENUES:
<S>                                                          <C>       <C>          <C>
 Interest and other investment income                          $ 123,891   $ 244,709   $339,833
 Gain on sale of loans and investments, net                       27,654      80,951     25,461
 Mortgage banking and servicing fees                               9,330      14,603      9,987
 Asset management and resolution fees                              6,282      19,799     17,714
 Other revenues                                                    3,500       3,195      4,264

 Total revenues                                                  170,657     363,257    397,259

EXPENSES:
 Personnel                                                        51,346      124,140   113,797
 Interest                                                        100,320      154,578   189,618
 Loss on retained interests in securitizations                   147,866      146,398    16,100
 Loss on disposal and impairment of assets                        98,543       10,151
 Other general and administrative                                 38,609       69,750    62,574
 Provisions for loan and asset portfolio losses                   21,468       (1,087)   29,634
 Depreciation and amortization                                    17,282       23,122    15,924

 Total expenses                                                  475,434      527,052   427,647

 Loss from continuing operations before income taxes            (304,777)    (163,795)  (30,388)
 Income tax expense (benefit)                                     10,176      (14,417)   (8,644)
 Loss from continuing operations                                (314,953)   (149,378)   (21,744)
 Income (loss) from discontinued operations, net of income taxes  43,023     (71,471)   (47,427)
 Loss before extraordinary gain                                 (271,930)   (220,849)   (69,171)
 Extraordinary gain on early retirement of debt,
   net of income taxes                                            53,989

 NET LOSS                                                      $(217,941)  $(220,849)  $(69,171)

 Weighted average earnings (loss) per common share - basic
   and diluted:
  Loss from continuing operations                                $(32.35)    $(15.60)    $(2.54)
  Income (loss) from discontinued operations,
     net of income taxes                                            4.42       (7.46)     (5.53)
 Extraordinary gain on early retirement of debt,
    net of income taxes                                             5.54
 Net loss                                                        $(22.39)    $(23.06)    $(8.07)
</TABLE>


            See notes to consolidated financial statements.
<TABLE>
CAPTION

                                          AMRESCO, INC.  AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                          For the Years Ended December 31, 2000, 1999 and 1998
                                                (In thousands)
                                                       Capital in                  Accum Other   Retained    Compr.
                                         Common Stock   Excess of         Treasury Compr.       Earnings    Income
                                         Shares Amount    Par      Other    Stock  Income(Loss)  (Deficit)   (Loss)   Total
<S>                                     <C>    <C>    <C>      <C>      <C>       <C>       <C>          <C>        <C>
JANUARY 1, 1998                           7,309 $1,827 $257,941 $ (2,713) $  (160) $  8,359    $ 143,246             $408,500
Comprehensive loss:
Net loss                                                                                         (69,171)  $(69,171)
Other comprehensive loss:
Unrealized loss on securities                                                       (32,369)                (32,369)
Reclassification of gains
included in net loss                                                                 (1,261)                 (1,261)
Foreign currency translation adjustments                                               (813)                   (813)
Tax effects of other comprehensive income                                            13,433                  13,433
Other comprehensive loss                                                                                    (21,010)
Comprehensive loss                                                                                         $(90,181)  (90,181)
Common stock offering,
 net of offering costs                   1,035    259  147,113                                                        147,372
Issuance of common stock for purchase
 of subsidiaries                           712    177   98,142                                                         98,319
Issuance of common stock for earnout       672    168   29,914                                                         30,082
Exercise of stock options
 (including tax Benefit)                    61     17    5,957                                                          5,974
Issuance of common stock for
 unearned stock compensation                44     11    6,515    (6,526)
Amortization of unearned stock compensation                        2,544                                                2,544
Acquisition of treasury stock                                              (17,203)                                   (17,203)
Other                                      (13)    (3)  (1,711)    1,714

DECEMBER 31, 1998                        9,820  2,456  543,871    (4,981)  (17,363) (12,651)   74,075                 585,407
Comprehensive loss:
Net loss                                                                                     (220,849)   $(220,849)
Other comprehensive income:
Unrealized loss on securities                                                          (579)                  (579)
Reclassification of losses included
 in net loss                                                                          2,730                  2,730
Foreign currency translation adjustments                                              3,525                  3,525
Tax effects of other comprehensive income                                            (1,873)                (1,873)
Other comprehensive income                                                                                   3,803
Comprehensive loss                                                                                       $(217,046)  (217,046)
Common stock to be issued for earnouts                            87,548                                               87,548
Amortization of unearned stock compensation                        6,940                                                6,940
Purchase of subsidiaries - adjustment
 related to stock price change                          (4,049)                                                        (4,049)
Issuance of common stock for earnout         5      1      194                                                            195
Issuance of common stock for unearned
 stock compensation                        142     36    6,598    (6,634)
Other                                       (8)    (3)     148       579                                                  724

DECEMBER 31, 1999                        9,959  2,490  546,762    83,452   (17,363)  (8,848)  (146,774)               459,719
Comprehensive loss:
Net loss                                                                                      (217,941)  $(217,941)
Other comprehensive income:
Unrealized loss on securities                                                          (615)                  (615)
Reclassification of losses included
 in net loss                                                                         16,113                 16,113
Foreign currency translation adjustments                                             (4,834)                (4,834)
Tax effects of other comprehensive income                                            (3,519)                (3,519)
Other comprehensive income                                                                                   7,145
Comprehensive loss                                                                                       $(210,796)  (210,796)
Cancellation of common stock to be issued
 for earnouts                                                    (87,548)                                             (87,548)
Amortization of unearned stock compensation                        4,148                                                4,148
Issuance of common stock for unearned
 stock compensation                        874    219   1,740     (1,959)
Other                                       (7)    (2)   (392)       507                                                  113

DECEMBER 31, 2000                       10,826 $2,707 $548,110  $ (1,400) $(17,363) $(1,703) $(364,715)              $165,636
</TABLE>

            See notes to consolidated financial statements.


<TABLE>
CAPTION
                           AMRESCO, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
            For the Years Ended December 31, 2000, 1999 and 1998
                               (In thousands)

                                                                   2000           1999         1998
OPERATING ACTIVITIES:
<S>                                                           <C>           <C>          <C>
 Net Loss                                                        $ (217,941)  $ (220,849)  $  (69,171)
 Adjustments to reconcile net loss to net cash
provided by (used in) operating activities of
continuing operations:
  (Income) loss from discontinued operation, net of income taxes    (43,023)     71,471      47,427
  Gain on sale of loans and investments                             (27,654)    (80,951)    (25,461)
  Extraordinary gain on retirement of debt, net of income taxes     (53,989)
  Loss on retained interests                                        147,866     146,398      16,100
  Depreciation and amortization                                      17,282      23,122      15,924
  Loss on disposal and impairment of assets                          98,543      10,151
  Accretion of interest income                                      (16,459)    (19,328)    (18,874)
  Provisions for loan and asset portfolio losses                     21,468      (1,087)     29,634
  Deferred tax expense (benefit)                                     73,983     (44,496)     (1,638)
  Other                                                              10,324      13,792       9,199
  Changes in assets and liabilities (exclusive
   of such acquired in business combinations):
   Loans held for sale, net                                         191,970     233,161     728,808
   Retained interests in securitizations                             19,596     149,299    (165,213)
   Other assets                                                      26,854      (2,288)    (11,590)
   Accounts payable                                                   3,192     (20,760)     15,477
   Warehouse loans payable                                          (23,735)   (174,390)   (682,465)
   Income taxes payable/receivable                                  (29,726)     30,894     (63,083)
   Other liabilities and accrued compensation and benefits          (45,739)     (7,673)     17,347
     Net cash provided by (used in) operating activities of
      continuing operations                                         152,812     106,466    (157,579)

INVESTING ACTIVITIES:
 Origination of loans and purchase of asset portfolios             (394,980)   (645,734)   (875,758)
 Collections on loans and asset portfolios                          492,697     601,394     575,722
 Proceeds from sales of loans and asset portfolios                  383,388     131,163
 Purchase of asset-backed securities available for sale                                    (116,623)
 Proceeds from sale of and collections on asset-backed
  securities available for sale                                      39,690      22,871      46,583
 Origination and purchase of mortgage servicing rights               (1,299)     (8,245)
 Proceeds from sale and transfer of mortgage servicing rights         4,610       6,139
 Cash used for purchase of subsidiaries including earnout payments  (37,500)     (4,049)    (68,951)
 Other                                                               17,487       1,991     (37,705)
    Net cash provided by (used in) investing activities of
      continuing operations                                         504,093     105,530    (476,732)

FINANCING ACTIVITIES:
 Net proceeds from notes payable and other debt                     278,221     914,254   1,723,807
 Repayment of notes payable and other debt                       (1,055,281) (1,220,259) (1,421,109)
 Proceeds from issuance of senior subordinated notes,
   net of issuance costs                                                                    320,828
 Proceeds from common stock offerings                                                       147,372
 Other                                                                               52     (11,229)
     Net cash provided by (used in) financing activities
       of continuing operations                                    (777,060)   (305,953)    759,669

Net cash provided by (used in) discontinued operation               129,492      98,661    (118,902)

Net increase in cash and cash equivalents                             9,337       4,704       6,456
Cash and cash equivalents, beginning of year                         36,709      32,005      25,549

Cash and cash equivalents, end of year                            $  46,046   $  36,709   $  32,005

SUPPLEMENTAL DISCLOSURES:
 Interest paid                                                    $ 111,836   $ 156,357   $ 181,329
 Common stock issued for purchase of subsidiaries and earn-outs                     195     128,401
 Income taxes paid                                                      621       5,571      27,505
 Common stock issued for unearned stock compensation, net             1,452       6,100       4,812
 Equity accrued for earn-out                                        (87,548)     87,548
 Transfer of loans held to maturity to loans held for sale                      162,361
</TABLE>
            See notes to consolidated financial statements.


                    AMRESCO, INC.  AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Summary of Significant Accounting Policies

      AMRESCO,  INC.  (the  "Company") is  engaged  primarily  in  the
business  of lending to small and middle market business owners.   The
Company's  business  may be affected by many factors,  including  real
estate  and  other  asset  values, the level of  and  fluctuations  in
interest  rates,  changes  in the small business  and  franchise  loan
securitization  market  and competition.  In addition,  the  Company's
operations   require  continued  access  to  short  term  sources   of
financing.    As  further  described  in  Note  3,  the  Company   has
discontinued its commercial mortgage banking and residential  mortgage
banking lines of business.

       Principles   of  Consolidation.   The  consolidated   financial
statements include the accounts of the Company and its majority  owned
subsidiaries.  Significant intercompany accounts and transactions have
been eliminated in consolidation.

      Interest  and  Other Investment Income.  The Company's  interest
income consists of interest earned on loans (the period prior to their
securitization)   and  asset  portfolios  and  accrued   earnings   on
securities purchased or retained from securitization trusts.  Interest
income  on loans and retained interests in securitizations is recorded
as  earned.  Interest and other investment income is recognized  using
the  effective  yield method and includes accretion of  discounts  and
amortization of premiums.

      Gain  (Loss)  on  Sale  of Loans and Investments.   The  Company
computes a gain or loss on the sale and/or securitization of loans and
investments  based  on the fair value of proceeds  received  over  the
allocated  basis (between the assets sold and any retained  interests)
based  upon their relative fair values at the date of sale.   Retained
interests  in  assets sold are initially recorded at  their  allocated
basis  and  are classified as trading securities which are carried  at
estimated fair value.

      Mortgage  Banking  and  Servicing Fees.   Loan  placement  fees,
commitment  fees,  loan  servicing  fees  and  real  estate  brokerage
commissions  are  recognized  as  earned.   Placement  and   servicing
expenses are charged to expense as incurred.

      Asset  Management  and Resolution Fees.   Asset  management  and
resolution fees from management contracts are based on the  amount  of
assets  under  management and the net proceeds from the resolution  of
such  assets,  respectively, and are recognized as  earned.   Expenses
incurred   in  managing  and  administering  the  assets  subject   to
management contracts are charged to expense as incurred.

     Cash and Cash Equivalents.  Cash and cash equivalents include all
highly liquid investments with a maturity of three months or less when
purchased.

      Accounts  Receivable.  Accounts receivable  primarily  represent
receivables related to certain contracts.  Receivables are recorded as
the related revenues are earned according to the respective contracts.
The Company's exposure to credit loss in the event that payment is not
received  for  revenue  recognized  equals  the  balance  of  accounts
receivable on the balance sheet.

      Loans  Held  for Sale.  Loans held for sale are carried  at  the
lower  of  cost or market, net of deferred loan origination  fees  and
associated  direct  costs  and  an  allowance  for  loan  loss.   Loan
origination  fees  and  associated  direct  costs  are  deferred   and
recognized  upon  sale.   Market value is determined  based  upon  the
estimated  fair  value  of similar loans for  the  month  of  expected
delivery.

      Loans and Asset Portfolios.  Loans are stated at face value, net
of  deferred loan origination fees and associated direct costs and net
of   an  allowance  for  loan  losses.   Loan  origination  fees   and
incremental  direct costs have been deferred and recognized  over  the
life of the loan as an adjustment to yield, using the interest method.
Asset portfolios consist of pools of loans or real estate acquired  at
significant discounts to face value.  The Company classifies its asset
portfolios  as  loan portfolios, partnerships and joint  ventures  and
real estate.  The original cost of an asset portfolio is allocated  to
individual  assets within that portfolio based on their relative  fair
value  to  the  total  purchase price.  The difference  between  gross
estimated  cash  flows from loans and its cost is  accrued  using  the
level  yield  method.   The Company accounts for  its  investments  in
partnerships  and  joint  ventures  using  the  equity  method   which
generally results in the pass-through of the Company's pro rata  share
of  earnings  as  if  the  Company had  a  direct  investment  in  the
underlying assets.  Loan portfolios, partnerships and joint  ventures,
and  real estate are carried at the lower of cost, adjusted for equity
earnings, or estimated fair value.

      Allowances  for  Loan and Asset Portfolio Losses.   The  Company
provides for estimated loan and asset portfolio losses by establishing
allowances  for  losses through a charge to earnings.   Actual  losses
reduce,   and   subsequent   recoveries  increase,   each   allowance.
Management's  periodic  evaluation of  each  allowance  for  estimated
losses  is  based  upon an analysis of the portfolio, historical  loss
experience,  economic  conditions and trends,  collateral  values  and
other relevant factors.

      Asset-Backed  Securities.  The Company's investments  in  asset-
backed securities are classified as available for sale and are carried
at  estimated  fair  value  determined by  quoted  market  rates  when
available,  otherwise by discounting estimated cash flows  at  current
market   rates.   Any  unrealized  gains  or  losses  on  asset-backed
securities  are  excluded  from earnings and included  in  accumulated
other  comprehensive  loss,  a  separate  component  of  shareholders'
equity.  Any realized gains or losses are included in earnings and are
calculated  based  upon  the  specific  identification  method.    Any
impairment,  other  than  temporary, in the value  of  a  security  is
included in earnings.

      Retained  Interests in Securitizations.  Retained  interests  in
securitizations are classified as trading and are carried at estimated
fair  value.   The  carrying  value  of  the  retained  interests   in
securitizations is analyzed by the Company on a disaggregated basis to
determine whether historical prepayment and loss experience,  economic
conditions  and  trends, collateral values and other relevant  factors
have had an impact on the carrying value.  Changes in market value are
included   in   earnings.   Cash  flows  for  retained  interests   in
securitizations  are generally subordinated to other security  holders
in  a securitization trust.  The retained interests in securitizations
are  valued  at the discounted present value of the cash  flows  based
upon  the expected timing of the release of cash by the securitization
trust ("cash-out method") over the anticipated life of the assets sold
after estimated future credit losses, estimated prepayments and normal
servicing  and  other related fees.  The discounted present  value  of
such retained interests is computed using management's assumptions  of
market  discount rates, prepayment rates, default rates, credit losses
and other costs.

      Premises  and  Equipment.   Premises  and  equipment,  primarily
furniture,  equipment  and  improvements,  are  stated  at  cost  less
accumulated  depreciation.  The related assets are  depreciated  using
the  straight-line  method over their estimated service  lives,  which
range from one to fifteen years.  Improvements to leased property  are
amortized  over the life of the lease or the life of the  improvement,
whichever is shorter.

      Intangible  Assets.  Intangible assets represent the  excess  of
purchase price over the fair value of tangible net assets acquired  in
connection  with the purchases of other businesses.  These  intangible
assets,  principally goodwill, are amortized using  the  straight-line
method over fifteen years.

      Long-Lived  Assets.  The Company reviews the carrying  value  of
long-lived  assets, such as intangibles and furniture  and  equipment,
used  in  operations when changes in events or circumstances  indicate
that the assets might have become impaired.  The Company evaluates any
possible   impairment  of  long-lived  assets   using   estimates   of
undiscounted   cash  flows.  In  addition,  the  Company  periodically
assesses  the  recoverability of intangible assets and  estimates  the
remaining  useful  life  by reviewing projected  results  of  acquired
operations,  servicing  rights  and  contracts.   If  this  evaluation
indicates  that an asset is impaired, the Company records a charge  to
operations  to  reduce the asset's carrying value to fair  value  (see
Note 2).

      Mortgage  Servicing Rights.  The Company recognizes as  separate
assets  the  rights to service mortgage loans for others, whether  the
servicing  rights are purchased or obtained through loan  originations
and  contractually  separated from the underlying  loans  by  sale  or
securitization,  by allocating total costs incurred between  the  loan
sold  and the servicing rights retained based upon their relative fair
values.   Amortization of mortgage servicing rights ("MSRs") is  based
upon  the ratio of net servicing income received in the current period
to  total net servicing income projected to be realized from the MSRs.
Projected net servicing income is in turn determined on the  basis  of
the   estimated  future  balance  of  the  underlying  mortgage   loan
portfolio,  which  declines over time from prepayments  and  scheduled
loan  amortization.   The  Company estimates future  prepayment  rates
based upon current interest rate levels, other economic conditions and
market forecasts, as well as relevant characteristics of the servicing
portfolio, such as loan types, interest rate stratification and recent
prepayment  experience.  MSRs are periodically assessed for impairment
which would be recognized in the consolidated statement of operations.
The  Company evaluates impairment through stratification of  its  loan
portfolio based upon certain risk characteristics including loan  type
and contractual interest rate (fixed or adjustable).

     Investment in AMRESCO Capital Trust.  During the third quarter of
2000,  the  Company  sold  its investment  in  AMRESCO  Capital  Trust
("ACT"),  a real estate investment trust, which was approximately  1.5
million  common shares, or 15%, of the outstanding common  stock,  for
approximately $12.5 million.  The Company acts as manager of  ACT  for
which  it  receives  a  management fee from ACT for  performing  asset
management  and operational services.  Fees and reimbursable  expenses
recognized by the Company for such services totaled $2.0 million, $2.3
million  and  $1.0 million for 2000, 1999 and 1998, respectively.   At
December  31,  1999,  the Company's recorded  investment  in  ACT  was
approximately $20.0 million, which is included in Other Assets and  is
accounted  for  under  the equity method of accounting.   The  Company
concluded  that  a  loss  in  value, other  than  temporary,  occurred
regarding  its investment in ACT as the Company would not be  able  to
recover  its  recorded investment.  Therefore, in 2000 and  1999,  the
Company  recorded  impairments  of  $3.3  million  and  $1.5  million,
respectively,  in its investment in ACT.  At December  31,  2000,  the
Company's investment in ACT was approximately $3.8 million,  which  is
the amount of additional consideration from the sale of the ACT common
shares the Company expects to receive in 2001.

     Income Taxes.  The Company and its subsidiaries file consolidated
tax  returns.   Deferred  income taxes  were  recorded  for  temporary
differences between the bases of assets and liabilities as  recognized
by  tax  laws  and their carrying value as reported in  the  financial
statements.

      Earnings  per Share.  Basic earnings per share is calculated  by
dividing  income  available to common shareholders  by  the  weighted-
average  number  of  common  shares  outstanding  during  the  period.
Diluted  earnings per share is calculated by dividing income available
to  common  shareholders plus the number of additional  common  shares
that  would  have  been outstanding if any dilutive  potential  common
shares had been issued during the period.

      Foreign Currency Translation.  Assets and liabilities of foreign
subsidiaries  are  translated  into  United  States  dollars  at   the
prevailing  exchange  rate on the balance  sheet  date.   Revenue  and
expense  accounts  for  these subsidiaries are  translated  using  the
weighted-average exchange rate during the period.  Equity accounts are
translated at the historical exchange rate.  These translation methods
give  rise  to  cumulative  foreign currency translation  adjustments,
which  are  reported as a component of accumulated other comprehensive
income.

     New Accounting Standards.  In June 2000, the Financial Accounting
Standards  Board  ("FASB") issued Statement  of  Financial  Accounting
Standards  No.  138  ("SFAS 138") Accounting  for  Certain  Derivative
Instruments  and  Certain Hedging Activities. This  statement  amended
SFAS  No.  133 ("SFAS 133") Accounting for Derivative Instruments  and
Hedging  Activities,  as  amended. These  two  statements,  which  are
required  to  be adopted for annual periods beginning after  June  15,
2000,   establish  standards  for  recognition  and   measurement   of
derivative and hedging activities. The Company will adopt SFAS 133 and
SFAS 138 on January 1, 2001, as required. The Company does not believe
the  adoption of these statements will have  a material impact on  the
consolidated financial statements.

      In  September 2000, the FASB issued SFAS No. 140,  ("SFAS  140")
Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
Extinguishments of Liabilities. SFAS 140 replaces SFAS 125  Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities.   It   revises   the   standards   for   accounting   for
securitizations and other transfers of financial assets and collateral
and  requires  certain disclosures, but it carries over most  of  SFAS
125's  provisions without reconsideration. The statement is  effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001.  The Company has made  the
required  disclosures  relating  to  securitization  transactions  and
collateral  for  the year ended December 31, 2000.  The  Company  will
adopt  the  remaining requirements of SFAS 140 on April  1,  2001,  as
required;  however, management of the Company has not  yet  determined
the  impact  of the other requirements of SFAS 140 on the consolidated
financial statements.

      Common  Stock Split.  On August 25, 2000, a one-for-five reverse
stock  split  was  approved at a special shareholders'  meeting.   The
authorized  shares  of  the Company's common  stock  were  reduced  to
30,000,000  with  a  par value of $0.25.  All  per  share  and  shares
outstanding  data  have  been retroactively restated  to  reflect  the
reverse stock split.

      Use  of  Estimates.  The preparation of financial statements  in
conformity with accounting principles generally accepted in the United
States   of   America  requires  management  to  make  estimates   and
assumptions   that   affect  reported  amounts  of   certain   assets,
liabilities,  revenues  and  expenses and  disclosures  of  contingent
assets  and liabilities.  Significant estimates include the  valuation
of  retained interests in securitizations, asset-backed securities and
the  allowances  for loan and asset portfolio losses.  Actual  results
could differ significantly from such estimates.

      Reclassifications.   Certain  reclassifications  of  prior  year
amounts  have  been  made to conform to the current year  presentation
(see Note 3).


2.   Sales and Acquisitions

      All  of  the Company's acquisitions have been accounted  for  as
purchases.   Operations of acquired companies are included with  those
of the Company after the acquisition date.  Stock issued in connection
with acquisitions was valued at the price of the stock at the time  of
the agreements.

       On   October   25,  2000,  through  a  series  of  simultaneous
transactions the Company (i) repurchased approximately $130.6  million
in loans from the homebuilders securitization resulting in a payoff of
$111.4  million in non-recourse debt and (ii) sold such loans at  par.
The  Company  received net proceeds of $26.1 million  (including  $3.4
million  in holdbacks), after the repayment of non-recourse  debt  and
recovery of servicing advances.  The purchase agreement provided  that
up  to  $3.0 million in the loans that were sold could be put back  to
the  Company within 120 days of the sale.  On January 20,  2001,  loan
and  accrued interest receivable of $2.4 million were put back to  the
Company.

                On  September 22, 2000 the Company sold certain of the
assets  and operations of its homebuilders division (the "Homebuilders
Transaction") for $132.6 million. The Company received $126.0  million
of  cash  and  is  scheduled to receive $6.6 million  in  cash  within
eighteen months from a holdback note. Interest accrues on the holdback
note  at  the  prime rate. A loss of $5.8 million  on  both  of  these
transactions was recorded on the disposal of assets.

      On  March  22,  2000, the Company sold its United Kingdom  asset
management  assets  and  operations for $160.0  million.  The  Company
received  net cash proceeds of $47.0 million and notes receivable  for
$25.0  million.  Cash proceeds from the sale were used to reduce  non-
recourse  and  bank debt.  A loss of $4.9 million on this  transaction
was recorded on the disposal of assets.

      On  March  17,  2000,  the Company completed  its  sale  of  the
commercial   mortgage  banking,  asset  management  and  real   estate
structured  finance  platforms to Lend Lease (US) Services,  Inc.  for
cash  of $224.0 million and a $25.0 million promissory note.  The note
accrues  interest at 7.5%.  The cash proceeds from the sale were  used
to  reduce  bank  debt.  In  conjunction  with  this  transaction,   a
substantial  number of leases were assigned or assumed by Lend  Lease.
A  net gain was recorded from this transaction of $60.5 million but  a
loss  of  $23.3  million  from disposal  of  assets  was  recorded  in
continuing operations due to the allocation of purchase price  between
the businesses sold.

      In  March  2000,  the  Company and the  former  shareholders  of
Commercial  Lending  Corporation ("CLC") agreed  to  amend  the  Asset
Purchase  Agreement pursuant to which the Company acquired CLC.   This
amendment  provided that the amount of the final earn-out payment  due
on  June 30, 2000 was fixed at $37.5 million and the Company issued to
such  former  CLC  shareholders  promissory  notes  in  the  aggregate
principal  amount of $37.5 million in lieu of issuing  shares  of  the
Company's  common  stock having a value of $37.5 million.  Such  notes
bore  interest at the rate of 8.0% per annum and were repaid  in  full
during the second and third quarters of 2000.

     During the first quarter 2000, the Company transferred net assets
of $6.2 million of home equity lending business to Finance America,  a
joint  venture with Lehman Brothers in exchange for a 36.0%  interest.
During the fourth quarter of 2000, the Company determined that certain
receivable  amounts from Finance America were not be recoverable  and,
therefore, recorded an impairment charge for $25.9 million,  including
$23.0  million of intangible assets and $2.9 million in the investment
in joint venture account.

      On January 18, 2000, the Company sold $182.4 million of its real
estate  structured finance portfolio for $170.2 million  in  cash  and
recognized a loss in the accompanying financial statement line item  -
Gain  on  Sale of Loans and Investments, net. Proceeds from  the  sale
were used to reduce bank debt.

      On  August 11, 1998, the Company acquired MIC, a privately  held
producer  of  Veteran's  Administration ("VA") streamlined  refinanced
loans,  by merging a wholly-owned subsidiary of the Company with  MIC.
The initial Agreement and Plan of Merger (the "Original Agreement") to
purchase  MIC  provided  for  an acquisition  price  of  approximately
360,000 shares of the Company's common stock and $2.6 million in cash.
Also, the former owners were to receive an earn-out payment of between
$70.0  million  and $105.0 million over a three-year period  with  the
payments  structured to be paid 82% in the Company's common stock  and
18%  in  cash.   Effective April 12, 1999, the Original Agreement  was
amended (the "Amended Agreement") to provide the Company an option  to
effect substitution of the stock portion of the earn-out for cash, and
to  fix  the  earn-out payment at $105.0 million.   During  1999,  the
Company  made an earn-out payment of $9.7 million in cash and advanced
$9.2  million, the balance of the cash portion of the earn-out.  Also,
the  Company loaned $17.0 million to the previous owners of MIC to  be
repaid  upon  issuance  of the stock portion  of  the  earn-out.   The
Company  did  not  exercise its option to effect substitution  of  the
stock  portion  of  the  earn-out prior to  December  31,  1999.   The
issuance  of the stock portion of the earn-out was extended  until  at
least  March  31, 2000, but no later than June 30, 2000.  At  December
31,  1999, $86.1 million was recorded as common stock to be issued for
the portion of the earn-out related to the Amended Agreement

      During  January 2000, the Company obtained an option  to  return
Mortgage  Investors Corporation and an affiliated entity  ("MIC")  and
its  related assets and liabilities to its previous owners for a  cash
payment  of $25.0 million and forgiveness of a $17.0 million  note  in
lieu  of the issuance of $86.1 million shares of the Company's  common
stock. The Company recorded an impairment charge of $103.3 million  on
the  intangible assets in the 1999 financial statements related to MIC
and the anticipated exercising of this option.  On April 20, 2000, the
option  was  exercised  and  the  $86.1  million  stock  payment   was
cancelled.

       On  July  16,  1998,  the  Company  purchased  the  assets   of
Independence  Funding  Company  L.L.P. ("IFC")  and  TeleCapital  L.P.
("TeleCapital")  for  approximately 260,000 shares  of  the  Company's
common  stock  and  cash  of $44.0 million.   IFC's  primary  line  of
business  is  providing long term financing to  small  businesses  and
TeleCapital's primary line of business was providing financing to  the
pay  phone  industry. The Company ceased new business for  TeleCapital
during the year and, therefore, recorded an impairment charge of $11.8
million  on the remaining intangible assets during the fourth  quarter
of 2000.

     On January 29, 1998, the Company acquired the home equity lending
business  and operations of City Federal Funding & Mortgage Corp.  and
its   affiliate,  Finance  America  Corporation  (collectively   "City
Federal")  for  approximately 57,000 shares of  the  Company's  common
stock.  In addition to the common stock, the Company paid $2.0 million
in  cash in connection with such acquisition and was to pay up  to  an
additional $8.5 million in cash and stock over the next three years in
the  event  certain performance goals were met or exceeded during  the
fiscal years 1998, 1999 and 2000.  At December 31, 1999 and 1998, such
performance  goals were not attained requiring no performance  accrual
by  the  Company.   During 1999, the Company  closed  all  the  retail
branches  included  in  the City Federal operations  and  recorded  an
impairment charge of $8.7 million on the intangible assets related  to
the City Federal acquisition.


3.   Discontinued Operations

      In  December 1999, the Company announced that it had reached  an
agreement to sell its Commercial Mortgage Banking ("CMB") business and
asset management and real estate structured finance platforms to  Lend
Lease.   The  Company completed the sale of its CMB business  and  its
asset management and real estate structured finance platforms to  Lend
Lease  on  March  17,  2000.  Accordingly, the results  from  the  CMB
business  are  shown as discontinued operations with all  prior  years
restated.   The sale resulted in a pre-tax loss on disposal of  assets
of  $23.3  million  in continuing operations and  a  pre-tax  gain  on
disposal of assets of $83.8 million in discontinued operations.

      The  Company  exercised the option to return MIC to  its  former
owners   on  April  20,  2000  and  accordingly,  the  operations   of
residential  mortgage banking ("RMB") business have been  discontinued
and all prior years restated.  The Company recorded a pre-tax loss  of
$3.1 million on the disposal of the assets in 2000.

      Components  of amounts reflected in the statement of  operations
and balance sheets of the discontinued operations are presented in the
following table (in thousands):
<TABLE>
CAPTION
                                     2000                    1999                        1998
                              CMB      RMB    Total     CMB       RMB    Total      CMB       RMB     Total
Operations
Statement Data:
<S>                        <C>      <C>     <C>      <C>      <C>        <C>      <C>       <C>       <C>
Revenues                     $28,042 $ 2,189  $30,231  $150,050  $ 66,612  $216,662  $ 71,018  $74,702   $145,720
Gain (loss) on sale of loans
 and investments               3,642   1,921    5,563     6,069    63,887    69,956  (101,042)  72,135    (28,907)
Gain (loss) on disposal
 of assets                    83,782  (3,098)  80,684
Interest expense               1,836     559    2,395     6,304     3,130     9,434    40,619    2,260     42,879
Depreciation and amortization  3,122     280    3,402    15,282    14,328    29,610     7,540    2,391      9,931
Operating income (loss)       84,432 (15,040)  69,392    11,428  (127,256) (115,828) (104,371)  32,926    (71,445)
Income tax (benefit)          32,084  (5,715)  26,369     4,000   (48,357)  (44,357)  (36,530)  12,512    (24,018)
Income (loss) from
 discontinued operations      52,348  (9,325)  43,023     7,428   (78,899)  (71,471)  (67,841)  20,414    (47,427)
Balance Sheet Data:
Cash and equivalents                 $    -            $ 11,898  $  5,643  $ 17,541
Loans held for sale, net                                 11,513              11,513
Loans and asset portfolios,
  net                                                     9,771               9,771
Income tax receivable       $   364          $   364        248       923     1,171
Intangibles                                              57,771    41,377    99,148
Mortgage servicing rights                                69,708              69,708
Other assets                      2                2     10,704     9,034    19,738
Accounts and other payables  (1,268)          (1,268)   (12,416)  (11,615)  (24,031)
Warehouse loans                                         (12,675)            (12,675)
Other liabilities                                       (18,769)            (18,769)
Net assets (liabilities) of
 discontinued operations    $  (902) $    -  $  (902)  $127,753  $ 45,362  $173,115
</TABLE>

4.   Loans Held for Sale

      Loans  held for sale were originated or acquired by the  Company
and  are held for future sale or securitization.  Such loans typically
have  mortgages on the underlying real estate or first  liens  on  the
related  furniture,  fixtures and equipment.  The small  business  and
middle  market business loans held for sale are pledged as  collateral
under the Company's warehouse debt facilities.  The maximum accounting
loss  if  the  borrower  fails  to pay is  the  carrying  value.   The
Company's lending operations are diversified across the United States.
Loans  held  for sale at December 31, 2000 and 1999 consisted  of  the
following (in thousands):

                                                 2000         1999
         Real estate structured finance loans             $162,361
         Small business loans                  $101,804    131,749
         Single family home equity loans          1,643      2,864
                                                103,447    296,974
         Allowance for loan losses               (5,466)    (1,933)
         Balance, end of year                  $ 97,981   $295,041

      At  December  31,  1999,  the  Company  had  committed  to  sell
approximately  $25.0 million of small business  loans  as  part  of  a
December 1999 securitization.

      The activity in the allowance for loan losses on loans held  for
sale  for the years ended December 31, 2000 and 1999 is summarized  as
follows (in thousands):

                                          2000     1999
Balance, beginning of year             $ 1,933   $ 2,128
Provision for loan losses                7,087     4,539
Charge-offs                             (3,554)   (4,734)
Balance, end of year                   $ 5,466   $ 1,933


5.   Loans and Asset Portfolios

      The  Company's  loans consist primarily of high yield  loans  to
businesses and projects that were unable to access traditional lending
sources  and loans for single family residential construction.   Asset
portfolios  consist of loans purchased at a substantial discount  from
their  principal  amount, real estate and investments in  partnerships
and  joint ventures that invest in such assets.  Substantially all  of
the  Company's  loan  and asset portfolios are  backed  by  commercial
mortgage  real estate.  Certain real estate assets are collateral  for
$1.7   million  of  the  Company's  non-recourse  debt.   The  maximum
accounting  loss  if the borrower fails to pay is the carrying  value.
Loans and asset portfolios at December 31, 2000 and 1999 consisted  of
the following (in thousands):

                                                    2000         1999
Loans:
 Commercial loans                                $  47,995    $  90,433
 Residential construction loans                      2,442      218,859
  Total loans                                       50,437      309,292
Asset portfolios:
 Commercial real estate mortgages                   38,643      140,381
 Real estate                                        30,614      191,400
 Partnerships, joint ventures and other             20,363       73,421
 Total asset portfolios                             89,620      405,202
Allowance for loan and asset portfolio losses      (22,743)      (9,141)
 Balance, end of year                             $117,314     $705,353



     The activity in the allowance for loan and asset portfolio losses
for  the  years  ended  December 31, 2000 and 1999  is  summarized  as
follows (in thousands):

                                        2000       1999
Balance, beginning of year            $ 9,141     $16,417
Provision (credit) for loan
 and asset portfolio losses            13,111      (5,626)
Recoveries (charge-offs)                  491      (1,650)
Balance, end of year                  $22,743     $ 9,141

      During  1999, there was a negative provision for loan and  asset
portfolio losses as a result of management's regular assessment of the
estimated losses in the portfolio.  Such estimate of losses is  based,
in  part,  on individual assets and their related cash flow forecasts,
sales  values,  independent appraisals and the volatility  of  certain
real estate markets.


6.   Retained Interests in Securitizations

     The  Company's  retained  interests  in  securitizations  consist
primarily  of  interest only certificates retained  in  the  Company's
securitizations  of small and middle market business and  home  equity
loans, which are generally subordinated to other security holders in a
securitization  trust.   The  retained  interests  are  classified  as
trading securities and are carried on the Company's balance sheets  at
fair  value,  with  the change in fair value during the  period  being
included in earnings.

     The    Company   completed   one   conventional   business   loan
securitization  in  2000  and  two in  1999  that  generated  retained
interests.  Pretax gains on sale from securitization  of  conventional
business loans of $23.6 million in 2000 and $51.6 million in 1999 were
recorded.  The  Company also completed one SBA loan securitization  in
2000 and one in 1999. Pretax gains on sale from securitization of  SBA
loans   were  $3.8  million  and  $4.3  million  in  2000  and   1999,
respectively. The Company did not securitize any home equity loans  in
2000  or  1999  that  generated retained  interests.  In  addition  to
retaining a subordinated interest in its conventional business and SBA
loan  securitizations,  the Company retains the  servicing  rights  to
these   loans  following  securitization.  In  all  of  the  Company's
securitization  transactions completed in 2000 and 1999,  the  Company
did   not  retained  any  recourse  obligation,  other  than  retained
interests,  with  respect  to  the assets  sold  other  than  standard
representations and warranties.

     The Company's retained interests in securitizations are initially
measured by allocating the previous carrying amount between the assets
sold  and the interests retained (including mortgage servicing rights,
if  any)  based on their relative fair values at the date of transfer.
The  Company has utilized, for initial valuation purposes in  2000,  a
discount rate of 15% for its conventional business loan securitization
and  an  18% discount rate on its SBA loan securitization. The Company
structures   its  conventional  business  loans  with  limited   cross
guarantees between borrowers such that the borrowers within a  defined
pool of loans absorb the first 5% - 10% of net losses.  At the present
time,  the Company considers it unlikely that net losses on such  loan
portfolios  will exceed the 5% - 10% range.  Accordingly, for  initial
valuation  purposes, losses are assumed to be zero.  The  Company  has
assumed   no   prepayments   on   its   conventional   business   loan
securitizations   based   on  the  significant   prepayment   premiums
applicable to the loans and historical prepayment experience.

      The  following table summarizes the significant assumptions used
by  the Company during 2000 in measuring the value at inception of its
retained interests in securitizations:

                                           Conventional
                                             Business       SBA
 Discount rate                                15.0%        18.0%
  Prepayment rate                              0.0%        15.0%
  Expected credit losses (annual rate)         0.0%         1.0%
Weighted average life (months)               164          272

      Retained interests in securitizations at December 31,  2000  and
1999 consisted of the following (dollars in thousands):

                                        2000        1999
 Conventional business               $146,030     $127,746
 SBA interests                         25,675       16,315
 Home equity loan interests            10,643      155,250
  Total                              $182,348     $299,311

     The  carrying  value of the retained interests in securitizations
at  December 31, 2000 was determined by the Company on a disaggregated
basis  by  discounting  future cash flows  using  a  weighted  average
discount rate of approximately 15.6%. The discount rate used to  value
the  retained interests is influenced primarily by the underlying loan
rate  and  the  volatility and predictability of the  underlying  cash
flows  which  generally becomes more certain as the securities  season
and prepayments and credit losses are more known.

     For   conventional  business  loan  securitizations,  the  actual
weighted  average annual prepayment rate for the period from inception
of  each  security through December 31, 2000 is 2.6%. Since  the  vast
majority  of  these  loans have significant prepayment  premiums,  any
prepayment  activity  in  a securitization most  likely  will  have  a
positive  impact on the valuation of retained interests. As a  result,
for  conservatism,  prepayment speeds are not  considered  in  valuing
these  retained  interests, either at inception or in future  periods.
Moreover,  through December 31, 2000, the weighted average annual  net
loss rate on these securitized portfolios has been less than 0.50%. As
a  result, the Company projects that the weighted average loss rate to
be  less  than  0.50% for all future periods.  With  annual  net  loss
levels  at or below these rates, management believes the valuation  of
retained interests would not be negatively impacted because the credit
enhancement payments from other borrowers in the pool will cover these
deficiencies.

     The  actual  weighted  average  annual  prepayment  rate  on  the
Company's  SBA  loan  securitizations was 10.8% for  the  period  from
inception  of  each securitization through December 31, 2000,  and  is
projected  to  be  15%  in all  future periods.  The  actual  weighted
average   annual   loss  rate  was  0.41%  from  inception   of   each
securitization through December 31, 2000, and is projected to be  1.0%
for all future periods.

     The  actual  weighted  average  annual  prepayment  rate  on  the
Company's  home equity securitizations was 26.2% for the  period  from
inception of each securitization through December 31, 2000,  which  is
higher  than originally projected, and is modeled to be 26.5% for  the
next twelve months.  The actual weighted average constant default rate
on  the  Company's home equity securitizations was 1.9% from inception
of  each securitization through December 31, 2000 and is modeled to be
7.9%  for  the  next twelve months.  The actual weighted average  loss
severity  from inception of each securitization through  December  31,
2000  is 42.6% and is modeled to be 43.8% over the next twelve months.
During  2000, changes were made in the projected prepayments,  default
rates and loss severity assumptions which resulted in increased losses
on  home  equity retained interests.  Revised assumptions  were  based
upon the then interest rate environment, industry trends and portfolio
history.   During the years ended December 31, 2000 and  December  31,
1999,  the Company's retained interests in home equity securitizations
were  marked-to-market,  resulting in decreases  in  value  of  $143.0
million and $146.4 million, respectively.

     Net  proceeds  from  sale of retained interests  in  home  equity
securitizations  were $13.3 million and $174.6  million  in  2000  and
1999, respectively.

      The  following  table  summarizes the key  assumptions  used  in
valuing the Company's retained interests at December 31, 2000, and the
potential  impact  on  those valuations of adverse  changes  in  these
assumptions ($'s in millions):

                                                         Home Equity
                                         SBA Loans          Loans
Weighted average life (in months)           254              300
Prepayment speed assumption (annual rate)    15.0%            26.5%
Impact on value of 10% increase             $(0.6)            $0.0
Impact on value of 20% increase              (1.2)             0.1
Expected credit losses (annual rate)          1.0%             3.5%
Impact on value of 10% increase             $(0.3)           $(0.8)
Impact on value of 20% increase              (0.6)            (1.7)
Weighted average discount rate               18.0%            18.1%
Impact on value of 10% increase             $(1.1)           $(0.8)
Impact on value of 20% increase              (2.1)            (1.7)



                                          Conventional
                                            Business
                                              Loans
Weighted average life (in months)              128
Expected credit losses (annual rate)             0%
Impact on value of 0.75% annual loss rate      $(6.9)
Impact on value of 1.50% annual loss rate      (27.3)
Weighted average discount rate                  15%
Impact on value of increasing discount rate
 to 17.5%                                     $(11.5)
Impact on value of increasing discount
 rate to 20%                                   (22.5)

     These sensitivities present hypothetical changes in value based
on adverse changes in each key assumption, holding all other
assumptions constant. In reality, changes in value are typically the
result of changes in a combination of factors, therefore these assumed
values may not accurately represent expected results.

     The following table summarizes cumulative actual and projected
credit losses, which are calculated by summing the actual and
projected future credit losses, and dividing them by the original
balance of each type of asset. Amounts shown are a weighted average of
all securitizations of each type during the applicable period.

Actual and projected
cumulative credit losses       Conventional business
before any benefit from        loans securitized in:
borrower credit enhancement
payments, as of:
                              2000      1999     1998
December 31, 2000
Actual to date               0.00%      0.05%   0.32%
Projected                    5.25       6.25    5.18
  Totals                     5.25       6.30    5.50
December 31, 1999
Actual to date                 N/A      0.00    0.07
Projected                      N/A      6.30    5.43
  Totals                       N/A      6.30    5.50
December 31, 1998
Actual to date                 N/A       N/A    0.00
Projected                      N/A       N/A    5.50
  Totals                       N/A       N/A    5.50


                                            Home Equity
Actual and projected       SBA loans          loans
cumulative credit losses  securitized in:   securitized in:
(%) as of (1):
                         2000    1999(1)     1998(2)
December 31, 2000
Actual to date           0.00%    0.30%       2.32%
Projected                3.78     4.34        3.93
  Totals                 3.78     4.64        6.25
December 31, 1999
Actual to date           N/A      0.00        0.68
Projected                N/A      5.14        1.70
  Totals                 N/A      5.14        2.38
December 31, 1998
Actual to date           N/A      N/A         0.00
Projected                N/A      N/A         1.70
  Totals                 N/A      N/A         1.70

(1) Company had no SBA loan securitizations in 1998.
(2) Company had no Home Equity loan securitizations in 2000 or 1999.

The following table summarizes cash flows received (paid) from
securitization trusts during 2000 and 1999 (dollars in thousands):

   Conventional business loans:                      2000        1999
     Proceeds from new securitizations            $209,475     $535,383
     Cash flows on retained interests               22,746       17,232
     Servicing fees received                         3,615        2,625
     Servicing advances                                234          272
     Repayments of servicing advances                 (269)        (136)

   SBA loans:
     Proceeds from new securitizations              62,456       67,682
     Cash flows on retained interests                2,318        2,606
     Servicing fees received                         1,454          729

   Home Equity loans:
     Cash flows on retained interests                4,425       18,864
     Repurchases of delinquent or foreclosed loans    (679)     (12,031)

      The  following  table provides historical loss  and  delinquency
information  for the total managed portfolio of loans at December  31,
2000, which includes loans that have been securitized as well as loans
held for sale or securitization (dollars in thousands).

                        At December 31, 2000       Year Ended
                        Total                     December 31,
                       Principal                     2000
                       Amount of      90+ Days    Credit Losses,
                        Loans        Delinquent  net of Recoveries
Loan Type:
 Conventional business $1,465,675   $ 66,648       $  10,247 (1)
 SBA                      193,147      4,368             471
 Home Equity            2,091,938    312,716         176,074
  Total loans managed  $3,750,760   $383,732        $186,792
Composition:
 Loans securitized     $3,657,705   $380,254        $186,017
 Loans held for sale
 or securitizaiton         93,055      3,478             775
  Total loans managed  $3,750,760   $383,732        $186,792

(1) Before any benefit from borrower credit enhancement payments.


7.   Asset-backed Securities

      Asset-backed securities available for sale, carried at estimated
fair  value,  at  December  31, 2000 and 1999,  were  as  follows  (in
thousands):

                                      Gross       Gross
                         Amortized  Unrealized  Unrealized  Estimated
                            Cost       Gain        Loss     Fair Value
   2000                  $ 54,142                           $ 54,142
   1999                   124,079    $30,842    $(47,916)    107,005

      Net  proceeds  from sales of asset-backed securities  aggregated
$24.0  million,  $20.7 million and $18.5 million for the  years  ended
December  31,  2000, 1999 and 1998, respectively,  which  resulted  in
gross realized gains of $8.0 million in 1998 and gross realized losses
of  $7.6  million, $10.6 million and $6.7 million in  2000,  1999  and
1998,  respectively.  Additionally, impairments of $23.3 million  were
realized  in 2000 due to decreases in estimated fair values that  were
other than temporary.  Maturities of securities available for sale are
not presented because the loans underlying such securities are subject
to prepayment.  All of the Company's residential mortgage asset-backed
securities of $46.5 million are collateral for non-recourse debt of  a
similar amount.


8.   Mortgage Servicing Rights

      The  activity in mortgage servicing rights for the  years  ended
December 31, 2000 and 1999 was as follows (in thousands):

                                       2000      1999
Balance at beginning of year         $13,438    $13,669
Purchased                                           254
Originated                             5,385     11,149
Sales and transfers                   (4,610)    (6,139)
Amortization                          (1,167)    (5,495)
 Balance at end of year              $13,046    $13,438

     Mortgage servicing rights arising  from the conventional business
lending  segment comprise $7.3 million and $7.2 million of the balance
at  year  end 2000 and 1999, respectively.  Fair values are calculated
utilizing  a 12.5% discount rate, remaining average lives of  158  and
166  months,  respectively.  Prepayments are considered negligible  in
the  calculation  due to high prepayment penalties in  the  underlying
loan portfolio.

      Mortgage  servicing rights arising from the SBA lending  segment
comprise  $5.7  million  and $6.2 million (prior  year  included  $2.2
million  in mortgage servicing rights for home equity) of the  balance
at  year  end 2000 and 1999, respectively.  Fair values are calculated
utilizing a 15% discount rate, remaining average lives of 252 and  245
months, respectively, and an annual prepayment rate of 14%.


9.   Notes Payable and Other Debt

      The  Company's notes payable and other debt at December 31, 2000
and 1999 consisted of the following (in thousands):

                                                       2000       1999
Notes payable:
 Revolving loan agreements                                       $384,716
 Non-recourse debt                                    $48,199     173,870
 Commercial paper conduit and builder note payable                142,457
 Retained interest financing                            8,912       7,568
  Total notes payable                                 $57,111    $708,611

Warehouse loans payable:
 Home equity lending facilities                                  $  1,373
 Commercial finance facilities                        $78,159     100,521
  Total warehouse loans payable                       $78,159    $101,894

Senior subordinated notes:
 10.0% notes due January 15, 2003                    $ 49,406    $ 57,383
 10.0% notes due March 15, 2004                       127,313     192,500
 9.875% notes due March 15, 2005                      185,772     330,150
  Total senior subordinated notes                    $362,491    $580,033

      Notes  Payable.  During 2000 the Company paid off  its  Revolver
debt and non-recourse debt related to its home builder group.

      Non-recourse  Debt,  Retained Interest Financing  and  Warehouse
Loans  Payable.   Non-recourse debt has been used  primarily  to  fund
purchases  of real estate mortgage backed securities and  real  estate
assets  and is secured by the specific assets with such debt  totaling
$48.2  million at December 31, 2000.  Retained interest financing  has
been used primarily to finance certain retained interests purchased or
created during the Company's securitization process and is secured  by
the  specific  assets funded with such debt totaling $8.9  million  at
December  31,  2000 which was repaid January 26, 2001.  The  Warehouse
debt  is  used  primarily to fund originations of  commercial  finance
loans  and  is  secured by the specific assets funded with  such  debt
totaling  $78.2  million at December 31, 2000.   The  following  table
summarizes   the   Company's  non-recourse  debt,  retained   interest
financing  and  warehouse  loans payable  at  December  31,  2000  (in
thousands of dollars):
<TABLE>
CAPTION
                                Maximum   Outstanding  Maturity                                       12/31/2000
       Lender                  Available   Balance       Date          Base Interest Rate           Interest Rate
Non-recourse:
<S>                           <C>       <C>         <C>           <C>                               <C>
 Lehman Brothers (1)           $46,523     $46,523
 Freemont Investment & Loan      1,676       1,676    June 2001      6-mo LIBOR + 3.0%                9.83%
 Total non-recourse            $48,199     $48,199
Retained Interest Financing:
 Farallon Franchise Finance I   $9,000      $8,912    January 2001   90-day LIBOR + 5.0%             11.66%
Commercial finance:
 Transamerica                  $75,000     $39,104    December 2001  30-day LIBOR + 2.25% to 2.50%    9.15%
 Prudential (business
   loans) (2)                  200,000      37,496    March 2001     30-day LIBOR + 0.75%             7.38
 Prudential (franchise
   loans) (2)                  150,000       1,559    March 2001     30-day LIBOR + 0.75%             7.38
 Total commercial finance     $425,000     $78,159
</TABLE>

(1)   There  is  no  stated maturity date for this obligation  as  the
      underlying securities, which provide the cash flows to service the
      debt, have the ability to prepay.
(2)   The  maximum  aggregate amount outstanding under the  Prudential
      warehouse facility may not exceed $250.0 million.


       10%  Senior  Subordinated  Notes  Due  January  15,  2003.   On
January 30, 1996, the Company issued $57.5 million principal amount of
senior  subordinated  notes with net proceeds of  approximately  $54.9
million.  There is no sinking fund or amortization of principal  prior
to  maturity  and these notes are not redeemable prior to January  15,
2001.   The debt offering costs are included in other assets  and  are
amortized  over  the  life of the debt using  the  effective  interest
method,  adjusted for repurchases.  These notes are unsecured  general
obligations of the Company and subordinated to all existing and future
senior indebtedness (as defined in the Indenture) of the Company.   As
of  December  31,  2000, the Company had repurchased $8.1  million  of
these  notes  resulting in an outstanding principal balance  of  $49.4
million.

      10% Senior Subordinated Notes Due March 15, 2004.  On March  12,
1997, the Company issued $192.5 million aggregate principal amount  of
senior  subordinated  notes with net proceeds of approximately  $186.6
million.  These notes are unsecured obligations of the Company and are
subordinated to prior payment of all existing and future  senior  debt
and   to   indebtedness  and  other  liabilities  of   the   Company's
subsidiaries.   The debt offering costs are included in  other  assets
and  are  amortized  over  the life of the debt  using  the  effective
interest  method,  adjusted  for  repurchases.   The  notes  are   not
redeemable  prior to maturity.  As of December 31, 2000,  the  Company
had  repurchased  $65.2  million  of  these  notes  resulting  in   an
outstanding principal balance of $127.3 million.

     9.875% Senior Subordinated Notes Due March 15, 2005.  On February
24,  1998  and March 10, 1998, the Company issued $290.0  million  and
$40.2  million,  respectively, aggregate principal  amount  of  senior
subordinated  notes  with total net proceeds of  approximately  $320.7
million.  These notes are unsecured obligations of the Company and are
subordinated  to  all  existing  and  future  senior   debt   and   to
indebtedness and other liabilities of the Company's subsidiaries.  The
debt  offering  costs are included in other assets and  are  amortized
over  the  life  of  the  debt  using the effective  interest  method,
adjusted  for repurchases.  The notes are redeemable prior to maturity
at 104.938% of their principal amount, plus accrued interest, any time
after  March  15,  2002, declining ratably to 100% of their  principal
amount,  plus  accrued interest, on or after March 15,  2004.   As  of
December 31, 2000, the Company had repurchased $144.1 million of these
notes resulting in an outstanding principal balance of $185.8 million.

      Covenants.   Each of the Company's notes payable and other  debt
agreements  has  certain  covenants  which  include  financial  tests,
including   minimum   consolidated   tangible   net   worth,   maximum
consolidated funded debt to consolidated capitalization ratio, minimum
fixed payment ratio, minimum interest coverage ratio, maximum debt  to
net worth ratio and minimum asset coverage ratio.  The agreements also
contain covenants that, among other things, limit incurring additional
indebtedness,   investments,  asset  sales,  loans  to   shareholders,
dividends,  transactions  with affiliates, acquisitions,  mergers  and
consolidations,  liens and encumbrances and other matters  customarily
restricted.   At December 31, 2000, the Company is not  in  compliance
with  certain  financial  covenants which prohibit  the  Company  from
incurring  additional  debt with a term in excess  of  360  days,  the
payment of dividends and repurchasing of its common stock.

Aggregate  amounts of notes payable and other debt that mature  during
the next five years are as follows (in thousands):

                              For the Year Ended December 31,
                             2001    2002   2003    2004     2005
Notes payable             $ 57,111 $
Warehouse loans payable     78,159
Senior subordinated notes                 $49,406 $127,313  $185,772
Total                     $135,270 $      $49,406 $127,313  $185,772


10.  Income Taxes

      Income tax expense (benefit) consisted of the following for  the
years ended December 31, 2000, 1999, and 1998 (in thousands):

                                             2000       1999       1998
Current:
 Federal                                  $(54,888)   $ 23,505   $ (3,716)
 State                                      (5,196)      6,451     (3,371)
  Total current tax expense (benefit)      (60,084)     29,956     (7,087)
Deferred tax expense (benefit):
 Federal                                    68,852     (44,057)    (1,757)
 State                                       1,408        (316)       200
  Total deferred tax expense (benefit)      70,260     (44,373)    (1,557)
  Income tax expense (benefit) from
   continuing operations                    10,176     (14,417)    (8,644)
Income tax expense (benefit) from
   discontinued operations                  26,369     (44,357)   (24,018)
Income tax expense from extraordinary gain  33,443
  Total income tax expense (benefit)      $ 69,988    $(58,774)  $(32,662)

     A reconciliation of income taxes on reported pretax income at
statutory rates to actual income tax expense for the years ended
December 31, 2000, 1999, and 1998 is as follows (dollars in
thousands):
<TABLE>
CAPTION
                                                2000           1999            1998
                                           Dollars  Rate   Dollars  Rate    Dollars   Rate
<S>                                      <C>        <C>   <C>        <C>   <C>      <C>
Income tax (benefit) at statutory rates   $(106,672)  35%  $(57,328)  35%   $(10,636)  35%
Non-deductible goodwill and other             5,926   (2)    45,087  (27)      2,555   (9)
Valuation allowance                         112,931  (37)
State income taxes, net of
  Federal tax benefit                        (2,009)   1     (2,176)   1        (563)   2
 Total income tax expense (benefit)      $   10,176   (3)% $(14,417)   9%    $(8,644)  28%

      The  net  deferred  tax assets at December 31,  2000  and  1999,
consisted of the tax effects of temporary differences related  to  the
following (in thousands):

                                                 2000        1999
Reserves for loan and asset portfolio losses   $ 23,832    $25,439
Net operating loss carryforwards                 58,555     22,990
Accrued employee compensation                     2,248     3,221
Foreign tax credit carryforward                             6,351
Intangible assets                                 6,200     5,877
AMT credit carryforwards                          2,123     2,123
Investment in subsidiaries                          426       426
Securitized loans and investments                19,597     1,989
Other                                             2,450     7,863
 Deferred tax asset before valuation allowance  115,431    76,279
Valuation allowance                            (115,431)   (2,500)
 Net deferred tax assets                      $     -     $73,779
</TABLE>
      Realization  of deferred tax assets is dependent  on  generating
sufficient   taxable   income  prior  to  expiration   of   the   loss
carryforwards.  Management believes it is more likely  than  not  that
the  deferred  tax  asset  will  not be  utilized  and,  therefore,  a
valuation  reserve  has  been increased to  the  full  amount  of  the
deferred  tax asset.  As a result of acquisitions and operations,  the
Company  has net operating loss carryforwards available for  its  use.
The   Company  is  subject  to  certain  annual  limitations  on   the
utilization  of such losses.  The following were the expiration  dates
and  the approximate net operating loss carryforwards at December  31,
2000 (in thousands):

Expiration Date                 Amount
2002                          $  874
2003                           1,459
2006                             372
2007                           2,867
2008                           3,838
2011                           9,283
2018                          10,284
2019                          91,108
2020                          45,091
 Total                      $165,176


11.  Employee Stock Compensation

      The Company has stock option and award plans for the benefit  of
key  individuals, including its directors, officers and key employees.
The plans are administered by a committee of the Board of Directors.

      On October 20, 1998, the Board of Directors adopted a resolution
to   exchange  approximately  1.1  million  options  to  purchase  the
Company's  common  stock  at exercise prices ranging  from  $37.50  to
$172.80  per  share  for approximately 0.8 million options  having  an
exercise price of $37.20 per share, representing fair value at date of
grant,  which  had  no  impact on the Company's financial  statements.
Stock option activity under the plans for the years ended December 31,
2000, 1999 and 1998 was as follows:
<TABLE>
CAPTION

                                                                                   Weighted
                                                  Number of  Option Price Per    Average Option
                                                   Shares     Share Range        Price Per Share
<S>                                              <C>       <C>                 <C>
Options outstanding at January 1, 1998             763,376   $  3.00 - $172.80       $  79.35
 Granted                                           643,062     37.65 -  172.20         147.85
 Exercised                                         (61,480)    17.50 -  108.75          63.20
 Forfeited                                        (407,545)    17.50 -  172.80         124.10

Options outstanding at December 31,1998            937,413      3.00 -   99.40          36.35
 Granted                                            85,676     13.15 -   49.05          23.45
 Exercised                                            (852)    17.50 -   37.20          34.90
 Forfeited                                        (105,804)    13.15 -   99.40          41.25

Options outstanding at December 31, 1999           916,433      3.00 -   47.20          34.61
 Granted                                            22,000     13.75 -   13.75          13.75
 Exercised                                              -
 Forfeited                                        (488,144)    13.75 -   37.66          35.56

Options outstanding at December 31, 2000           450,289     3.00 -    47.19          32.55

Options exercisable at December 31, 2000           403,715     3.00 -    47.19          32.07
Options exercisable at December 31, 1999           440,989
Options exercisable at December 31, 1998           341,932

Options available for grant at December 31, 2000   557,525
</TABLE>

The   following  table  summarizes  information  about  stock  options
outstanding at December 31, 2000:
<TABLE>
CAPTION
                                Weighted      Weighted                    Weighted
                                 Average       Average                    Average
                                Remaining   Exercise Price                Price of
   Range of        Options     Contractual of Outstanding    Options    Exercisable
Exercise Prices  Outstanding       Life       Options      Exercisable    Options
<S>               <C>          <C>         <C>         <C>          <C>
        $ 3.00      3,009           1         $  3.00         3,009        $  3.00
13.16  - 13.75     68,878           4           13.35        68,578          13.35
         17.50    17,060            2           17.50        17,060          17.50
         32.50     6,000            8           32.50         2,400          32.50
         34.38    12,853            3           34.38        12,853          34.38
         37.20   328,269            3           37.20       285,995          37.20
36.88  - 47.19    14,220            1           40.83        13,820          40.92
 Totals          450,289                        32.55       403,715          32.07
</TABLE>
     At December 31, 2000, the Company has reserved a total of 450,289
shares of common stock for exercise of outstanding stock options.

      The Company applies Accounting Principles Board Opinion No.  25,
"Accounting  for  Stock Issued to Employees," in  accounting  for  its
stock  option  and  award plans.  Under the terms of  the  plans,  the
exercise  price  of each option is equal to the market  price  of  the
Company's  stock  on the date of grant.  Accordingly, no  compensation
expense  has  been recognized under these plans.  Loss  and  loss  per
share  from  continuing  operations on a pro forma  basis  as  if  the
Company had utilized fair value accounting methodology would have been
as follows (in thousands, except per share data):

                                       For the Years Ended December 31,
                                        2000        1999        1998
Loss from continuing operations:
 As reported                         $(314,953)   $(149,378)  $(21,744)
 Pro forma                           (316,842)    (152,556)    (28,003)

Basic and diluted loss per share
from continuing operations:
 As reported                          $(32.25)     $(15.60)     $(2.54)
 Pro forma                             (32.55)      (15.93)      (3.27)

     The estimated fair value of options granted during 2000, 1999 and
1998 was $1.12, $2.90 and $4.21 per share, respectively.  For purposes
of  determining fair value of each option, the Company used the Black-
Scholes model with the following assumptions:

                                   2000           1999           1998
 Risk-free interest rate          6.50%      4.80% - 6.45%   4.19% - 4.50%
 Expected life                    7 years       7 years        5 years
 Expected volatility                64%        55% - 60%         54%
 Expected dividends                  -             -              -

      During  2000,  the Company issued 874,036 shares  of  restricted
stock at prices ranging from $1.75 per share to $2.97 per share,  with
a  weighted  average  price  of $2.24 per  share,  under  two  of  the
Company's  stock  option and award plans. The shares granted  in  2000
vest over periods of eight months, twelve months, three years and five
years,  the 1999 grants vest over periods of two and three  years  and
the  1998  grants vest over five years and in a lump sum in the  years
2000 and 2001.  During 2000, 1999 and 1998, $4.1 million, $6.9 million
and  $2.5  million  in unearned stock compensation  was  amortized  as
compensation  expense, respectively.  At December 31,  2000  and  1999
shareholders'  equity  includes unearned stock  compensation  of  $1.3
million and $4.0 million, respectively.


12.  Common Stock

      On June 14, June 27, October 25 and December 4, 2000 the Company
issued  approximately 259,000, 32,000, 333,000 and 250,000  restricted
shares,  respectively,  of the Company's common stock to  certain  key
employees.

     During  July  and  August 1998, the Company  repurchased  200,000
shares  of the Company's outstanding common stock at an average  price
of $86.01 per common share.

      On  February 24, March 4, May 18, and July 28, 1998, the Company
issued  options  to purchase approximately 66,000, 3,000,  30,000  and
526,000  shares, respectively, of common stock.  On February 24,  July
17,  and July 22, 1998, the Company issued approximately 33,000, 7,000
and  4,000  restricted shares, respectively, of the  Company's  common
stock to certain key employees.

      On  February 23, 1998, the Company completed a registered public
offering  of  1.0  million  shares  of  common  stock,  including  the
underwriters'  over-allotment option.   The  net  proceeds  from  such
offering,   after   underwriter's  discount  and  offering   expenses,
aggregated approximately $147.4 million.  The price to the public  was
$150.00  per  share and the proceeds to the Company were  $142.80  per
share, after underwriting discounts.

      A  reconciliation of the numerators and denominators used in the
basic  and  diluted  loss per share computations  is  as  follows  (in
thousands):

                                         2000       1999        1998
Loss from continuing operations -
 basic and diluted                    $(314,953)   $(149,378)   $(21,744)

Weighted average shares outstanding
 (basic)                                  9,735        9,576       8,569
Dilutive stock options
Contingently issuable shares
Weighted average shares outstanding
 (diluted)                                9,735        9,576       8,569

     As the Company posted a net loss for the years ended December 31,
2000,  1999  and  1998,  the  effects of dilutive  stock  options  and
contingently  issuable shares for these years are  anti-dilutive  and,
therefore, not included in the computation of diluted loss per  share.
As  of  December  31, 2000, 1999 and 1998, the Company had  4,228,000,
3,916,000 and 232,000 anti-dilutive options and contingently  issuable
shares, respectively.

      At  December  31, 2000, the Company had 3,000 stock appreciation
rights outstanding related to the market value of the Company's common
stock which were granted to certain non-employees of the Company.  The
stock  appreciation  rights have an award  value  of  $65.625  and  an
automatic conversion into cash on February 20, 2006.


13.  Employee Compensation and Benefits

      Accrued employee compensation and benefits at December 31,  2000
and  1999 included amounts for incentive compensation,  severance  and
benefits.  Certain employees are eligible to receive a bonus  from  an
incentive compensation pool.

      The  AMRESCO Retirement Savings and Profit Sharing Plan ("Plan")
qualifies  under  Section  401(k) of the  Internal  Revenue  Code  and
incorporates  both a savings component and a profit sharing  component
for  eligible  employees.  As determined each year  by  the  Board  of
Directors, the Company may match the employee contribution up to 6% of
their base pay based on the Company's performance.  For 2000, 1999 and
1998,  the  matching  contribution was set at  $0.50  for  each  $1.00
contributed  by the employees with Company expenses of  $0.7  million,
$2.1  million  and  $2.4 million, respectively.  In  addition  to  the
matching  savings, the Company may provide an annual  contribution  to
the  profit sharing retirement component of the Plan on behalf of  all
eligible employees. No such contributions were made in 2000,  1999  or
1998 due to the Company's net losses.


14.   Commitments  and Contingencies

      The  Company  has  entered into non-cancelable operating  leases
covering office facilities which expire at various dates through 2006.
Certain  of  the  lease agreements provide for minimum annual  rentals
with  provisions  to  increase the rents to cover  increases  in  real
estate  taxes and other expenses of the lessor.  The Company also  has
leases on equipment, some of which are non-cancelable, which expire on
various  dates  through 2002.  The total rent expense  for  the  years
ended  December  31,  2000,  1999 and  1998,  was  approximately  $7.5
million,  $13.9 million and $13.1 million, respectively.   The  future
minimum annual rental commitments under non-cancelable operating lease
agreements  having  a  remaining  term  in  excess  of  one  year   at
December 31, 2000 were as follows (in thousands):

      Year Ending December 31,
      2001                                          $5,112
      2002                                           3,626
      2003                                           2,680
      2004                                           1,800
      2005                                           1,731
      Thereafter                                     1,460

      Minimum lease payments have not been reduced by minimum sublease
rentals of $1.1 million, $0.7 million and $0.3 million for 2001,  2002
and thereafter, respectively, due under noncancelable subleases.

      The  Company  is a defendant in various legal actions.   In  the
opinion  of  management, such actions will not materially  affect  the
financial  position,  results  of operations  or  cash  flows  of  the
Company.


15.  Segment and Related Information

      The  Company  has three reportable segments which have  separate
management   teams  and  infrastructures  that  engage  in   different
investments  and offer different services: commercial  finance,  asset
management  and  home  equity  lending.  In  its  commercial   finance
business,  the  Company  focuses  on  (i)  loans  to  franchisees   of
nationally    recognized   restaurant,   hospitality    and    service
organizations  and  (ii)  loans to small and  middle  market  business
owners.  The asset management segment is in the process of liquidating
the  Company's owned asset portfolios which are managed by Lend Lease.
The  home  equity lending segment consists of a minority  interest  in
Finance  America,  which originates, sells and services  nonconforming
first  mortgage loans, and the management of a portfolio  of  retained
interests from previous securitizations.

      The  accounting policies are the same as those described in  the
summary  of  significant accounting policies  with  the  exception  of
interest  expense  incurred  by the Company  being  allocated  to  the
subsidiaries based upon the subsidiaries' combined balance  of  common
stock,   paid  in  capital  and  intercompany  accounts.  The  Company
evaluates  performance based upon operating income which is determined
by  adjusting  operating  profit  to include  intangible  amortization
expense.

       The  following  represents  the  Company's  reportable  segment
position  as  of and for the years ended December 31, 2000,  1999  and
1998 (in thousands):
<TABLE>
CAPTIONS
     2000
                                                       Home
                               Commercial   Asset      Equity
                                 Finance   Management  Lending All Other Eliminations  Total
<S>                            <C>       <C>      <C>        <C>        <C>           <C>
Revenues from external sources  $111,087  $ 33,615   $ 14,553  $ 11,402               $170,657
Gain (loss) on sale of loans
and investments, net              35,244    (7,220)        47      (417)                27,654
Interest expense                  41,069    11,567     32,380    15,304                100,320
Depreciation and amortization     12,386       188      2,256     2,452                 17,282
Income (loss) from continuing
 operations before income taxes  (16,933)  (33,824)  (196,755)  (57,265)              (304,777)
Segment assets                   366,348   114,972   (203,598)  742,221   $(304,908)   715,035

     1999
                                                        Home
                               Commercial     Asset    Equity
                                 Finance   Management  Lending All Other  Eliminations   Total

Revenues from external sources  $176,202  $106,461   $ 85,150   $ (4,556)               $363,257
Gain (loss) on sale of loans
 and investments, net             52,815    18,726     18,038     (8,628)                 80,951
Interest expense                  62,259    29,989     40,331     21,999                 154,578
Depreciation and amortization      9,324       807      9,261      3,730                  23,122
Income (loss) from continuing
 operations before income taxes   66,732    36,166   (208,642)   (58,051)               (163,795)
Segment assets                   494,012   349,004     23,961  1,674,157   $(601,168)  1,939,966


     1998
                                                        Home
                                Commercial    Asset    Equity
                                 Finance   Management  Lending All Other  Eliminations   Total
Revenues from external sources  $122,047   $111,890   $161,169  $   2,153               $397,259
Gain (loss) on sale of loans
 and investments, net             38,639     12,230    (16,605)    (8,803)                25,461
Interest expense                  38,674     33,184     99,194     18,566                189,618
Depreciation and amortization      5,504        841      6,391      3,188                 15,924
Income (loss) from continuing
 operations before income taxes   46,591     46,635    (74,719)   (48,895)               (30,388)
Segment assets                   453,635    318,665    359,439  1,960,188  $(512,964)  2,578,963
</TABLE>

16.  Financial Instruments and Risk Management

      In the normal course of business, the Company may be a party  to
financial  instruments  with  off-balance  sheet  interest  rate   and
currency  exchange rate risk.  The Company may reduce its exposure  to
fluctuations in interest rates and currency exchange rates by creating
offsetting   positions   through  the  use  of  derivative   financial
instruments.   Derivatives are used to lower funding costs,  diversify
sources of funding, or alter interest rate and currency exchange  rate
exposures arising from mismatches between assets and liabilities.  The
Company  does not use derivative financial instruments for trading  or
speculative  purposes, nor is the Company party  to  highly  leveraged
derivatives.   These financial instruments include interest  rate  cap
agreements,  put  options  and forward  and  futures  contracts.   The
instruments involve, to varying degrees, elements of risk in excess of
the  amount  recognized  in the consolidated statements  of  financial
condition.   The Company controls the risk of its hedging  agreements,
interest rate cap agreements and forward and futures contracts through
approvals, limits and monitoring procedures.

      Futures and forward contracts are commitments to either purchase
or  sell  designated  financial instruments at a  future  date  for  a
specified  price  and  may  be settled in cash  or  through  delivery.
Initial  margin  requirements are met in cash  or  other  instruments.
Futures  contracts  have little credit risk because futures  exchanges
are  the  counterparties.  Forward agreements and interest rate  swaps
and  caps  are  subject to the creditworthiness of the counterparties,
which are principally large financial institutions.

      The  notional  amounts of derivatives do not  represent  amounts
exchanged by the parties and, thus, are not a measure of the  exposure
of  the Company through its use of derivatives.  The amounts exchanged
are  calculated  on the basis of the notional amounts  and  the  other
terms  of  the  derivatives, which relate to interest rates,  exchange
rates,  securities  prices, or financial  or  other  indices.   Market
values  of  derivative transactions fluctuate based upon movements  in
underlying  financial indices such as interest rates.   Market  values
are monitored on a continual basis through external pricing mechanisms
and internal calculations.  The Company's objective measurement system
together  with  risk limits and timely reporting to senior  management
help  to  mitigate the risks associated with market fluctuations.   In
the  event  that  a  derivative product was terminated  prior  to  its
contractual  maturity,  it is the Company's policy  to  recognize  the
resulting gain or loss over the shorter of the remaining original life
of  the  derivative financial instrument or the life of the underlying
hedged  asset or liability.  If the item being hedged is sold, settled
or terminated, the derivative financial instrument is marked-to-market
and  any  gain (loss) is recognized in earnings.  No such terminations
of  derivative  transactions  prior to contractual  maturity  occurred
during  2000 or 1999.  If the derivative fails to effectively  perform
as  a hedge and/or does not qualify as a hedge, it is marked-to-market
and any gain (loss) is recognized in earnings.

     From time to time the Company may use  forward, option or futures
contracts  to  hedge  interest rate and currency  exchange  risk.   At
December  31,  2000 and 1999, the Company had no forward,  options  or
futures contracts outstanding.

     The Company may purchase interest rate swap and cap agreements to
reduce  the  impact of changes in interest rates on its floating  rate
debt.   The  Company  may enter into these agreements  to  change  the
fixed/variable interest rate mix of the debt portfolio to  reduce  the
Company's aggregate risk to movements in interest rates.  Accordingly,
the Company may enter into agreements to effectively convert variable-
rate debt to fixed-rate debt to reduce the Company's risk of incurring
higher  interest  costs  due  to  rising  interest  rates.   The   cap
agreements   would   entitle  the  Company   to   receive   from   the
counterparties  the amounts, if any, by which an interest  rate  index
exceeds  agreed-upon thresholds.  As of December 31, 2000, the Company
had no interest rate swap or cap agreements in place.

      As  of December 31, 1999, the Company had two interest rate  cap
agreements  outstanding with a total notional amount of $10.6  million
and a carrying value of zero in its accounting records.  The contracts
had  cap  rates  ranging from 6.375% to 6.4375% based upon  one  month
LIBOR and had expiration dates between February and April 2000.

      Credit  risk  represents  the  accounting  loss  that  would  be
recognized  at the reporting date if counterparties failed  completely
to  perform  as contracted.  Concentrations of credit risk that  arise
from  financial  instruments exist for counterparties when  they  have
similar  economic  characteristics that would cause their  ability  to
meet  contractual obligations to be similarly affected by  changes  in
economic  or  other  conditions. The Company  uses  commercial  rating
agencies to evaluate the credit quality of the counterparties, all  of
whom are major international financial institutions.  The Company does
not  have  a  significant exposure to any individual counterparty  and
does  not  anticipate a loss resulting from any credit risk  of  these
institutions.

     The following disclosure of the estimated fair value of financial
instruments  is made in accordance with the requirements of  SFAS  No.
107,  Disclosures  About  Fair Value of  Financial  Instruments.   The
estimated fair value amounts have been determined by the Company using
available  market information and appropriate valuation methodologies.
However,  considerable judgment is necessarily required  to  interpret
market data to develop the estimates of fair value.  Accordingly,  the
estimates  presented  herein  are not necessarily  indicative  of  the
amounts  the Company could realize in a current market exchange.   The
use  of  different market assumptions and/or estimation  methodologies
may have a material effect on the estimated fair value amounts.
<TABLE>
CAPTION
                                                     December 31, 2000     December 31, 1999
                                                   Carrying   Estimated   Carrying  Estimated
                                                    Amount    Fair value   Amount   Fair Value
                                                         (Dollars in thousands)
Assets:
<S>                                               <C>       <C>       <C>         <C>
 Cash and cash equivalents                           $46,046  $46,046    $ 42,352     $ 42,352
 Loans held for sale, net                             97,981   99,995     295,041      297,996
 Loans and asset portfolios, net                     118,293  118,293     705,353      722,109
 Retained interests in securitizaitons - trading     182,348  182,348     299,311      299,311
 Asset-backed securities - available for sale         54,142   54,142     107,005      107,005
 Accounts, notes and taxes receivable, net            61,271   61,271      21,088       21,088
 Mortgage servicing rights, net                       13,046   13,046       6,283        6,283
Liabilities:
 Accounts payable                                     13,528   13,528      20,098       20,098
 Notes payable and warehouse loans payable           135,270  135,270     810,505      810,505
 Senior subordinated notes                           362,491  205,661     580,033      362,249
Derivative Financial Instruments:
 Forward contracts                                                                        (408)
</TABLE>

      The  fair  value  of  loans, asset-backed  securities,  retained
interests  in  securitizations, notes payable and other  debt,  senior
notes  and  senior subordinated notes were estimated based  on  quoted
market  prices when available, otherwise, they were based  on  present
values  of  estimated  cash flows using current  entry-value  interest
rates applicable to each category of such financial instruments (which
notes   reflect  the  credit  risk  applicable  to  the  instruments).
Mortgage  loans  held for sale were valued at their  contracted  sales
prices.    The   carrying  amount  of  cash  and   cash   equivalents,
receivables,  net of reserves, and accounts payable approximated  fair
value.   The  Company has reviewed its exposure on standby letters  of
credit and has determined that the fair value of such exposure is  not
material.   The  fair values of the interest rate cap  agreements  and
forward contracts were estimated using market quotes.  The fair  value
estimates   presented  herein  were  based  on  pertinent  information
available  to  management as of December 31, 2000 and 1999.   Although
management is not aware of any factors that would significantly affect
the   estimated  fair  value  amounts,  such  amounts  have  not  been
comprehensively  revalued for purposes of these  financial  statements
since  the  date presented, and therefore, current estimates  of  fair
value may differ significantly from the amounts presented herein.


17.  Subsequent Events

      On  March  28, 2001, Prudential agreed to extend the  Prudential
warehouse facilities (as described in Note 9)  through  May  31,  2001;
however,  they  will  not   fund thereunder any new conventional loans
after March 28, 2001.   The  new facilities  bear  an  interest rate of
3.00%  over  the  30-day  LIBOR through April 30, 2001 and 4.00% over
the 30-day LIBOR through May 31, 2001.   The  Company is currently
negotiating with lenders to  provide warehouse  financing  for
conventional  loans.   The Company anticipates that prior to May 31,
2001, it will obtain warehouse  financing necessary to finance its
existing portfolio of conventional loans and fund additional loans;
however, no assurances can be given that such warehouse financing can
be obtained. Until any such new warehouse financing is obtained, the
Company's ability to fund additional loans will be substantially
limited, which will have an adverse effect upon its operations and
prospects. In the event that the Company cannot obtain new warehouse
financing or obtain an additional extension of the Prudential warehouse
facilities prior to May 31, 2001, it would be required to change its
operations, which would have a material and adverse effect upon the
operations and financial condition of the Company.

18.  Quarterly Financial Data (Unaudited)

      The  following  is a summary of unaudited quarterly  results  of
operations  for  the  years  ended December  31,  2000  and  1999  (in
thousands, except per share amounts):
<TABLE>
CAPTION
                                                                           Year Ended December 31, 2000
                                                                     First   Second    Third     Fourth
                                                                    Quarter  Quarter   Quarter   Quarter
<S>                                                              <C>       <C>       <C>       <C>
Revenues                                                           $ 43,031  $ 46,079  $ 60,303  $ 21,244
Loss from continuing operations                                     (45,345)  (92,452)  (21,847) (155,309)
Income (loss) from discontinued operations, net of income taxes      47,346    (1,116)      (46)   (3,161)
Extraordinary gain on early retirement of debt, net of income taxes                       3,470    50,519
Net income (loss)                                                     2,001   (93,568)  (18,423) (107,951)

Weighted average earnings (loss) per common share - basic and
 diluted:
 Loss from continuing operations                                     $(4.70)   $(9.52)   $(2.25)  $(15.75)
 Income (loss) from discontinued operations, net of income taxes       4.91     (0.11)    (0.01)    (0.32)
 Extraordinary gain on early retirement of debt, net of income taxes                       0.36      5.12
 Net income (loss)                                                   $ 0.21    $(9.63)   $(1.90)  $(10.95)

                                                                             Year Ended December 31, 1999
                                                                      First     Second    Third    Fourth
                                                                     Quarter    Quarter  Quarter   Quarter
Revenues                                                           $102,822  $120,054  $ 69,244  $ 71,137
Income (loss) from continuing operations                              4,048    14,208   (76,479)  (91,155)
Income (loss) from discontinued operations, net of income taxes       6,190    (2,104)   (5,530)  (70,027)
Net income (loss)                                                    10,238    12,104   (82,009) (161,182)

Weighted average earnings (loss) per common share - basic:
 Income (loss) from continuing operations                             $0.42    $ 1.48    $(7.98)  $ (9.48)
 Income (loss) from discontinued operations, net of income taxes       0.65     (0.22)    (0.57)    (7.29)
 Net income (loss)                                                    $1.07    $ 1.26    $(8.55)  $(16.77)

Weighted average earnings per common share - diluted:
 Income (loss) from continuing operations                             $0.41    $ 1.16    $(7.98)  $ (9.48)
 Income (loss) from discontinued operations, net of income taxes       0.63     (0.17)    (0.57)    (7.29)
 Net income (loss)                                                    $1.04    $ 0.99    $(8.55)  $(16.77)
</TABLE>
      Earnings  (loss) per common share calculations for each  of  the
quarters  were based on the basic and diluted weighted average  number
of  shares outstanding for each quarter.  As a result, the sum of  the
quarters may not necessarily be equal to the full year earnings (loss)
per common share amount.




                     INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Shareholders of AMRESCO, INC.:



      We have audited the accompanying consolidated balance sheets  of
AMRESCO, INC.  and subsidiaries as of December 31, 2000 and 1999,  and
the  related  consolidated  statements  of  operations,  shareholders'
equity and cash flows for each of the three years in the period  ended
December  31, 2000.  These financial statements are the responsibility
of  AMRESCO, INC.'s management.  Our responsibility is to  express  an
opinion on these financial statements based on our audits.

      We  conducted  our audits in accordance with auditing  standards
generally  accepted in the United States of America.  Those  standards
require  that  we  plan  and perform the audit  to  obtain  reasonable
assurance about whether the financial statements are free of  material
misstatement.  An audit includes examining, on a test basis,  evidence
supporting  the  amounts and disclosures in the financial  statements.
An  audit  also includes assessing the accounting principles used  and
significant  estimates made by management, as well as  evaluating  the
overall financial statement presentation.  We believe that our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, such consolidated financial statements present
fairly,  in all material respects, the financial position of  AMRESCO,
INC.  and  subsidiaries  as of December 31, 2000  and  1999,  and  the
results of their operations and their cash flows for each of the three
years  in  the  period  ended December 31, 2000,  in  conformity  with
accounting  principles  generally accepted in  the  United  States  of
America.


/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
March 2, 2001 (except as to Note 17
   for which the date is March 28, 2001)