SECOND MODIFICATION OF CREDIT AGREEMENT


     THIS SECOND MODIFICATION OF CREDIT AGREEMENT (this
"Modification Agreement") is entered into as of November 30,
1998, by and between AMRESCO, INC., a Delaware corporation
("Borrower"), and NationsBank, N.A., a national banking
association, as Administrative Agent ("Administrative Agent"),
for and on behalf of the Lenders (defined below).

                      W I T N E S S E T H:

     WHEREAS, reference is made to the credit facilities made
pursuant to and governed by that certain Credit Agreement (as
amended, the "Credit Agreement") dated as of August 12, 1998,
executed by and among Borrower, Administrative Agent, Credit
Suisse First Boston, as Syndication Agent, and the financial
institutions, funds and other entities listed as "Lenders"
therein (the "Lenders"), as amended by First Modification of
Credit Agreement (the "First Modification") dated as of
September 17, 1998 (the "First Amendment") (each capitalized term
used but not otherwise defined herein shall be defined as set
forth in the Credit Agreement); and

     WHEREAS, Borrower has requested certain consents and
modifications to the Credit Agreement; and

     WHEREAS, the Lenders, acting through Administrative Agent
pursuant to the Credit Agreement, have agreed to the requested
modifications, subject to and upon the terms and conditions
contained herein.

     NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, That for and
in consideration of the terms and conditions contained herein and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Administrative
Agent, for and on behalf of the Lenders, and Borrower hereby
agree as follows:

     1.   Covenant Amendments.  Borrower has requested the
following amendments to the referenced covenants contained in the
Credit Agreement:

          (a)  Minimum Consolidated Net Worth: The dollar amount
set forth in clause (a) of Section 8.1 of the Credit Agreement
will be reduced to $275,000,000 for the period commencing
December 1, 1998 through and including February 28, 1999;
accordingly, Section 8.1 is hereby amended to read in its
entirety as follows:

          "Section 8.1.  Minimum Consolidated Tangible Net
     Worth .  Borrower shall not permit Consolidated
     Tangible Net Worth to be less than the sum of (a) Three
     Hundred Thirty-Five Million and No/100 Dollars
     ($335,000,000) from the Closing Date through and
     including November 29, 1998, and at any time from and
     after March 1, 1999, or $275,000,000 for the period
     commencing November 30, 1998 through and  including
     February 28, 1999, plus (b) seventy-five percent (75%)
     of the cumulative Consolidated Net Income for each
     calendar quarter commencing on July 1, 1998, through
     the quarter ending immediately prior to, or on, the
     date as of which compliance with this covenant is being
     measured, plus (c) seventy-five percent (75%) of the
     amount of any proceeds (less reasonable and customary
     transaction costs) received by Borrower from the
     issuance of any additional shares of stock or other
     equity instruments."

          (b)  Asset Coverage Requirement: The amendment to
Section 8.4 of the Credit Agreement set forth in the First
Modification will be extended through February 28, 1999 at the
reduced ratio of 1.15 to 1.0; accordingly, Section 8.4 of the
Credit Agreement is hereby amended to read in its entirety as
follows:

          "Section 8.4.  Capital Adequacy; Asset Coverage.
     Borrower shall not permit an amount equal to Total
     Consolidated Debt less fifty percent (50%) of the face
     value of all Approved Subordinated Debt as of the last
     day of any fiscal quarter of Borrower to exceed the
     Adjusted Asset Amount at such time.  In addition,
     Borrower shall not permit the ratio of the Asset
     Coverage Values to the aggregate outstanding balance of
     the Revolving Credit Facility (including Swingline
     Advances and Competitive Bid Loans), the Term Facility
     and the Letter of Credit Exposure to be less than (i)
     1.4 to 1.0 from the Closing Date through and including
     September 1, 1998, and at any time from and after
     March 1, 1999, or (ii) 1.2 to 1.0 during the period
     commencing on September 2, 1998 through and including
     November 30, 1998, or (iii) 1.15 to 1.0 during the
     period commencing December 1, 1998 through and
     including February 28, 1999 (the "Asset Coverage
     Requirement"), for any two consecutive Business Days."

          (c)  Advance Percentage for Cash.  The advance
percentage for "Cash and Equivalents" as noted under the column
designated "Advance %" on both Schedule III and Schedule IV of
the Credit Agreement is increased from 100% to 115%; accordingly
Schedule III and Schedule IV of the Credit Agreement are hereby
amended to reflect 115% as the Advance % for Cash and
Equivalents.

     2.   Pricing Increase.  (a) From and after the effective
date hereof, the LIBOR Margins and the Letter of Credit Fee
percentages shall increase from those originally set forth in
Schedule II to the Credit Agreement to those set forth in the new
Schedule II attached as Exhibit A to this Modification Agreement,
and the Schedule II attached to the Credit Agreement shall be
modified, restated and replaced in its entirety by the Schedule
II attached hereto as Exhibit A.

               (b)  From and after the effective date hereof, the
Variable Rate shall increase from that set forth in the Credit
Agreement; accordingly, the definition of Variable Rate in the
Credit Agreement is hereby amended to read in its entirety as
follows:

          "Variable Rate" means a fluctuating rate of
          interest equal to the sum of the Base Rate
          plus .625%; provided, however, that at any
          time that the ratio of the Asset Coverage
          Values to the aggregate outstanding balance
          of the Revolving Credit Facility (including
          Swingline Advances and Competitive Bid
          Loans), the Term Facility and the Letter of
          Credit Exposure is less than 1.4 to 1.0, as
          indicated in a monthly report calculating the
          Asset Coverage Requirement delivered to
          Administrative Agent pursuant to
          Section 7.1(f) , the Variable Rate shall be
          increased by 37.5 basis points (such that it
          equals the sum of the Base Rate plus 1.00%)
          upon Administrative Agent's receipt of such
          report until such time as Borrower delivers
          to Administrative Agent a subsequent monthly
          report calculating the Asset Coverage
          Requirement, as required under
          Section 7.1(f),  showing that such ratio is
          equal to or greater than 1.4 to 1.0.

     3.   SBA Loans.  Notwithstanding anything to the contrary
contained in the Credit Agreement or any of the Security
Documents (including without limitation the Collateral Assignment
and the Security Agreement), the Collateral shall not include
loans ("SBA Guaranteed Loans") that are originated or held by
AMRESCO Independence Funding, Inc. (or another Subsidiary of
Borrower licensed to originate or hold SBA guaranteed loans,
subject to Administrative Agent's prior written approval of any
such other Subsidiary) for which the Small Business
Administration (the "SBA") has issued or is to issue a guaranty
for a portion of any such loan pursuant to an agreement between
AMRESCO Independence Funding, Inc. (or such other Subsidiary
licensed to originate or hold SBA guaranteed loans and so
approved by Administrative Agent) and the SBA (an "SBA Lender
Agreement"), the SBA loan customer lists, the servicing rights
and other general intangibles related to such SBA Guaranteed
Loans or the collection or servicing thereof (excluding deposit
accounts not containing any payments on account of or other
proceeds of SBA Guaranteed Loans or the collection or servicing
thereof), and computer hardware and software related to and
utilized in the servicing solely of such SBA Guaranteed Loans and
other SBA Lender Agreement Assets (as hereinafter defined), or
any proceeds or products of such SBA Guaranteed Loans or other
items for which the applicable SBA Lender Agreement prohibits
assignment thereof, including without limitation retained
interests in SBA Guaranteed Loans or securitizations thereof,
collection accounts and other cash deposit accounts related to
such SBA Guaranteed Loans, and real property acquired by
foreclosure of such SBA Guaranteed Loans (collectively "SBA
Lender Agreement Assets"), and such SBA Guaranteed Loans and
related SBA Lender Agreement Assets shall not be included in the
definitions of Collateral or Assigned Loans.  Administrative
Agent and Lenders agree that all such SBA Guaranteed Loans and
related SBA Lender Agreement Assets are and shall be deemed
excluded as Collateral under the Loan Documents and shall not be
covered by or subject to the Security Agreement or the Collateral
Assignment or the financing statements executed by AMRESCO
Independence Funding, Inc. or any such other Subsidiary that
originates or holds SBA Guaranteed Loans as approved by
Administrative Agent.

     4.   Treasury Stock Purchase.  Borrower agrees that,
notwithstanding anything to the contrary in the Credit Agreement
(including without limitation the provisions of Section 8.19
thereof), Borrower shall not purchase any of its stock or other
equity securities whatsoever at any time during the period
commencing on December 1, 1998 through and including February 28,
1999.  Any such purchase from and after March 1, 1999 shall
remain subject in all respects to the terms and conditions of the
Credit Agreement, including without limitation Section 8.19
thereof.

     5.   Definition of Loan Documents.  The definition of "Loan
Documents", as defined in the Credit Agreement and as used in the
Credit Agreement, the other Loan Documents and herein, shall be,
and is hereby, modified to include this Modification Agreement
and any and all documents executed in connection herewith.

     6.   Conditions Precedent to this Modification Agreement.
As conditions precedent to this Modification Agreement and the
modifications to the Credit Agreement pursuant hereto, all of the
following shall have been satisfied:

          (a)  Borrower and the Guarantors shall have executed
and delivered to Administrative Agent this Modification
Agreement;

          (b)  Borrower shall have delivered to Administrative
Agent all corporate resolutions, consents, powers of attorney,
certificates or documents as Administrative Agent may request
relating to (i) the existence of Borrower, and (ii) the corporate
and partnership authority for the execution and validity of this
Modification Agreement, together with all other documents,
instruments and agreements and any other matters relevant hereto
or thereto, all in form and content satisfactory to
Administrative Agent;

          (c)  Borrower shall have paid all applicable amendment
and other fees as agreed in connection with this Modification
Agreement.

     7.   Reaffirmation of Debt and Liens.  Borrower acknowledges
and agrees that it is well and truly indebted to Lenders pursuant
to the terms of the Notes, the Credit Agreement and the other
Loan Documents, as modified hereby, and that all liens and
security interests securing the Obligations are and remain in
full force and effect.

     8.   Ratification.  Except as otherwise expressly modified
by this Modification Agreement, all terms and provisions of the
Credit Agreement (as previously modified), the Notes, and the
other Loan Documents shall remain unchanged and hereby are
ratified and confirmed and shall be and shall remain in full
force and effect, enforceable in accordance with their terms.

     9.   Payment of Expenses.  Borrower shall pay to
Administrative Agent, on behalf of the Lenders, upon demand, the
reasonable attorneys' fees and expenses of Administrative Agent's
counsel and all filing and recording fees and other reasonable
expenses incurred by Administrative Agent in connection with this
Modification Agreement.

     10.  Further Assurances.  Borrower shall execute and deliver
to Administrative Agent such other documents as may be necessary
or as may be required, in the opinion of counsel to
Administrative Agent, to effect the transactions contemplated
hereby and to protect the Lenders' liens and security interests.

     11.  Binding Agreement.  This Modification Agreement shall
be binding upon, and shall inure to the benefit of, the parties
and their respective heirs, representatives, successors and
assigns.

     12.  Enforceability.  In the event the enforceability or
validity of any portion of this Modification Agreement, the
Credit Agreement, the Notes, or any of the other Loan Documents
is challenged or questioned, such provision shall be construed in
accordance with, and shall be governed by, whichever applicable
federal or New York law would uphold or would enforce such
challenged or questioned provision.

     13.  Choice of Law.  THIS MODIFICATION AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT FEDERAL LAWS PREEMPT THE LAWS OF THE STATE OF NEW YORK.

     14.  Counterparts.  This Modification Agreement may be
executed in multiple counterparts, all of which are identical,
each of which shall be deemed an original, and all of which
counterparts together shall constitute one and the same
instrument.

     15.  Entire Agreement.  This Modification Agreement, the
Credit Agreement and the Notes, together with the other Loan
Documents, contain the entire agreements between the parties
relating to the subject matter hereof and thereof and all prior
agreements relative thereto which are not contained herein or
therein are terminated.

     THIS MODIFICATION AGREEMENT AND THE OTHER WRITTEN
INSTRUMENTS, AGREEMENTS AND DOCUMENTS EXECUTED IN CONNECTION WITH
THIS MODIFICATION AGREEMENT, AND THE CREDIT AGREEMENT, THE NOTES,
AND THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.


     IN WITNESS WHEREOF, this Agreement is executed effective as
of the date first written above.

                         BORROWER:

                         AMRESCO, INC., a Delaware corporation


                         By:
                              Thomas J. Andrus,
                              Vice President and Treasurer


                         ADMINISTRATIVE AGENT:

                         NATIONSBANK, N.A.,
                         a national banking association, as Administrative
                         Agent for the Lenders


                         By:
                              Elizabeth Kurilecz,
                              Senior Vice President



                         ACKNOWLEDGED AND AGREED TO as of the
                         30th day of November, 1998, by:
               
GUARANTORS:

AFC EQUITIES, INC.
AFC EQUITIES MANAGEMENT, INC.
ALPINE, INC.
AMREIT HOLDINGS, INC.
AMREIT MANAGERS GP, INC.
AMRESCO ATLANTA INDUSTRIAL, INC.
AMRESCO BUILDERS GROUP, INC.
AMRESCO CAPITAL CONDUIT CORPORATION
AMRESCO CAPITAL LIMITED, INC.
AMRESCO CAPITAL, L.P.
AMRESCO CMF, INC.
AMRESCO COMMERCIAL FINANCE, INC.
AMRESCO CONSOLIDATION CORP.
AMRESCO EQUITY INVESTMENTS, INC.
AMRESCO EQUITY INVESTMENTS II, INC.
AMRESCO FINANCE AMERICA CORPORATION
AMRESCO FINANCIAL I, INC.
AMRESCO FINANCIAL I, L.P.
AMRESCO FUNDING CORPORATION
AMRESCO FUNDING OF GEORGIA, L.P.
AMRESCO FUNDING INVESTORS, INC.
AMRESCO FUNDING MANAGEMENT, INC.
AMRESCO FUNDING MID-ATLANTIC, INC.
AMRESCO FUNDING PACIFIC, INC.
AMRESCO INDEPENDENCE FUNDING, INC.
AMRESCO INSTITUTIONAL, INC.
AMRESCO INVESTMENTS, INC.
AMRESCO MANAGEMENT, INC.
AMRESCO MBS II, INC.
AMRESCO MORTGAGE CAPITAL LIMITED-I, INC.
AMRESCO MORTGAGE SERVICES LIMITED, INC.
AMRESCO NEW ENGLAND, L.P.
AMRESCO NEW ENGLAND II, L.P.
AMRESCO NEW ENGLAND, INC.
AMRESCO NEW ENGLAND II, INC.
AMRESCO NEW HAMPSHIRE, INC.
AMRESCO NEW HAMPSHIRE, L.P.
AMRESCO OVERSEAS, INC.
AMRESCO PORTFOLIO INVESTMENTS, INC.
AMRESCO PRINCIPAL MANAGERS I, INC.
AMRESCO PRINCIPAL MANAGERS II, INC.
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
AMRESCO RESIDENTIAL CREDIT CORPORATION
AMRESCO RESIDENTIAL MORTGAGE CORPORATION
AMRESCO RESIDENTIAL PROPERTIES, INC.
AMRESCO RHODE ISLAND, INC.
AMRESCO SERVICES, L.P.
AMRESCO VENTURES, INC.
AMRESCO 1994-N2, INC.
AMRESCO TEXAS, INC.
ASSET MANAGEMENT RESOLUTION COMPANY
BEI 1992 - N1, INC.
BEI 1993 - N3, INC.
BEI 1994 - N1, INC.
BEI MULTI-POOL, INC.
BEI PORTFOLIO INVESTMENTS, INC.
BEI PORTFOLIO MANAGERS, INC.
BEI REAL ESTATE SERVICES, INC.
BEI SANJAC, INC.
COMMONWEALTH TRUST DEED SERVICES, INC.
ENT MIDWEST, INC.
ENT NEW JERSEY, INC.
ENT SOUTHERN CALIFORNIA, INC.
EXPRESS FUNDING, INC.
FINANCE AMERICA CORPORATION
GRANITE EQUITIES, INC.
HOLLIDAY FENOGLIO FOWLER, L.P.
LIFETIME HOMES, INC.
MARKETING SOLUTION PUBLICATIONS, INC.
MORTGAGE INVESTORS CORPORATION
OAK CLIFF FINANCIAL, INC.
PRESTON HOLLOW ASSET HOLDINGS, INC.
QUALITY FUNDING, INC.
SAVE-MORE INSURANCE SERVICES INC.
WHITEROCK INVESTMENTS, INC.

By:  AMRESCO, INC., a Delaware corporation, as
           agent and attorney-in-fact

                              
     By:
          Thomas J. Andrus,
          Vice President and Treasurer


                            EXHIBIT A

                           SCHEDULE II

 COMMITMENT FEE PERCENTAGE; LIBOR MARGIN; LETTER OF CREDIT FEES

           Ratio of Total                                 
          Consolidated Debt                               
          Less Outstanding                    Commitment     Letter of
        Balance of Warehouse     LIBOR                       Credit Fee
 TIERS   Lines to Borrower's    Margin**         Fee         Percentages**
          Consolidated Net                               
              Worth*                          Percentages
   I       Greater than or    (a) 237.5 b.p.  (c) 37.5 b.p.   237.5 b.p
           equal to 2.50X     (b) 337.5 b.p.  (d) 35.0 b.p.      
  II       Greater than or    (a) 212.5 b.p.  (c) 25.0 b.p.   212.5 b.p
         equal to 1.50X but   (b) 312.5 b.p.  (d) 22.5 b.p.
           less than 2.50X    
 III      Greater than or     (a) 200.0 b.p.  (c) 25.0 b.p.   200.0 b.p
         equal to 1.00X but   (b) 300.0 b.p.  (d) 22.5 b.p.
           less than 1.50X    
  IV      Less than 1.00X     (a) 187.5 b.p.  (c) 25.0 b.p.   187.5 b.p
                              (b) 287.5 b.p.  (d) 22.5 b.p.


(a) - The LIBOR Margin for the Revolving Credit Facility.
(b) - The LIBOR Margin for the Term Facility.
(c) - The Commitment Fee for the Long Term Revolving Facility
(d) - The Commitment Fee for the Short Term Revolving Facility
*   -     The calculation of the applicable ratio of Total
          Consolidated Debt less outstanding balance of Warehouse
          Lines to Borrower's Consolidated Net Worth shall be
          made and effective on the first day of the calendar
          month in which Administrative Agent receives the
          quarterly financial statements and related officer's
          certificate required to be delivered by Borrower
          pursuant to Section 7.2 (b) and (c) showing that such
          adjustment is appropriate (except that with respect to
          any Adjusted LIBOR Rate or Competitive Bid Loan then in
          effect, such change shall occur at the end of the
          applicable Interest Period or maturity as to the
          related Advance, LIBOR Rate Portion or Competitive Bid
          Loan),
** -      Should Borrower receive an Investment Grade rating on
          its senior unsecured long term debt from both Standard
          & Poor's Ratings Group (a Division of McGraw - Hill,
          Inc.) and Moody's Investors Service, Inc., the LIBOR
          Margin and Letter of Credit Fee Percentages shall be
          reduced by 25 basis points
    -     At any time that the ratio of the Asset Coverage Values
          to the aggregate outstanding balance of the Revolving
          Credit Facility (including Swingline Advances and
          Competitive Bid Loans), the Term Facility and the
          Letter of Credit Exposure is less than 1.4 to 1.0, as
          indicated in a monthly report calculating the Asset
          Coverage Requirement delivered to Administrative Agent
          pursuant to Section 7.1(f) of the Credit Agreement,
          each LIBOR Margin shall be increased by 37.5 basis
          points upon Administrative Agent's receipt of such
          report until such time as Borrower delivers to
          Administrative Agent a subsequent monthly report
          calculating the Asset Coverage Requirement, as required
          under Section 7.1(f) of the Credit Agreement, showing
          that such ratio is equal to or greater than 1.4 to 1.0.