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, 1997
                                    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 2400 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:

                                                 Name of Each Exchange
            Title of Each Class                  on which Registered
        10% Senior Subordinated Notes due 2003   New York Stock Exchange
        8.75% Senior Notes due 1999              New York Stock Exchange
        10% Senior Subordinated Notes due 2004   New York Stock Exchange

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

        Shares of common stock, par value $0.05 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, 1998, 42,781,510 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,
1998, was approximately $1,321,000,000.

               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 18,  1998,  are
incorporated by reference in Part III hereof.

                             PART I

Item 1.   Business

General

  AMRESCO,   INC.  (the  "Company")  is  a  leading   diversified
financial  services company specializing in real estate  lending,
commercial finance and the acquisition, resolution and  servicing
of  nonperforming  and  underperforming  commercial  loans.   The
Company  began operations in 1987 providing asset management  and
resolution   services   to   governmental   agencies,   financial
institutions   and   others   relating   to   nonperforming   and
underperforming  loans.   In early 1994,  the  Company  made  the
decision  to  diversify its business lines and build  "franchise"
business  units  that could use the Company's  core  real  estate
management and lending expertise to pursue growth in markets that
were  being underserved by traditional lenders.  Since that time,
the   Company  has  entered  the  residential  mortgage  banking,
commercial   mortgage  banking,  commercial  finance   and   loan
servicing businesses and oriented its asset management activities
towards  direct investments in asset portfolios and  the  special
servicing of large portfolios of asset-backed securities.   As  a
result  of  the  Company's diversification efforts,  the  Company
currently operates in four different business lines with revenues
for   the  year  ended  December  31,  1997  as  follows:   asset
management   -  $109.1  million  (26%  of  revenues);  commercial
mortgage  banking - $97.5 million (23% of revenues);  residential
mortgage   banking  -  $166.4  million  (39%  of  revenues)   and
commercial finance - $51.2 million (12% of revenues).

  The  Company  has experienced significant growth  since  making
the  strategic  decision to diversify its  business  lines.   The
Company's  total  assets have increased from  $172.3  million  at
December  31,  1994 to $2.6 billion at December  31,  1997.   The
Company's  revenues have increased from $129.8  million  for  the
year  ended  December 31, 1994 to $423.8  million  for  the  year
ended December 31, 1997.

  The  Company's  revenues principally consist  of  interest  and
other  investment income (including interest on  loans  held  for
sale  and from retained interests in securitizations), fees  from
asset   management   activities   and   from   the   origination,
underwriting and servicing of loans and revenues derived from the
gain on sale of loans and investments.  The Company's residential
mortgage  banking,  commercial mortgage  banking  and  commercial
finance activities resulted in loan fundings and acquisitions  of
$5.9  billion  and $2.6 billion for the years ended December  31,
1997  and 1996, respectively.  The Company funds these operations
with  its credit lines (including warehouse lines of credit)  and
with  the proceeds received from securitizations.  For the  years
ended  December  31, 1997 and 1996, the Company  securitized  and
sold  $3.0 billion and $1.7 billion of loans, respectively.   For
the  years  ended  December  31,  1997  and  1996,  the  non-cash
component of gain on sale represented 20.0% and 8.5% of revenues,
respectively.  At December 31, 1997, the Company's loan servicing
portfolio  was  $25.9  billion as compared to  $13.5  billion  at
December 31, 1995.  The Company's investments in loans and  asset
portfolios has increased from $69.2 million at December 31,  1994
to  $648.7 million at December 31, 1997, while total assets being
managed  and resolved for third parties have decreased reflecting
a   changing  market  for  asset  portfolio  management  and  the
Company's  strategic  shift towards direct investments  in  asset
portfolios.

Business Strategy

  The  Company's  business  strategy focuses  on  continuing  its
diversification efforts while building on its core  strengths  in
order  to  support continued growth in earnings and assets.   The
following  principles  are significant to the  execution  of  the
Company's business strategy in the future:

    Maintain a leadership position in, and enhance profitability
  of, its business units.

    Continue  to diversify its sources of earnings through  the
  balanced  development of its existing business  lines  and  the
  development of additional business lines that leverage existing
  capabilities and complement the Company's core franchises.

    Maintain  an emphasis on growth in cash flows and  earnings
  per share.

    Allocate capital to, and pursue growth in, markets that are
  fragmented,   underserved  or  otherwise  have  prospects   for
  sustainable growth and favorable risk-adjusted returns.

   Enhance liquidity by maintaining access to multiple funding
  sources  and seeking lower cost of funds through improved  debt
  ratings.

    Focus on improvements in operating margins by managing  the
  growth of operating expenses relative to revenue growth.

Recent Developments

      On  February  23, 1998, the Company completed a  registered
public  offering of 5.2 million shares of common stock.  The  net
proceeds  from  such  offering, after underwriters  discount  and
offering  expenses, aggregated approximately $147.6  million  and
were used to repay borrowings under the Revolving Loan Agreement.
The price to the public was $30.00 per share and the proceeds  to
the Company per share were $28.56, after underwriting discounts.

      On February 24, 1998 and March 10, 1998, the Company issued
$290.0   million  and  $40.0  million,  respectively,   aggregate
principal  amount of senior subordinated notes.  The  notes  bear
interest  at 9.875% per annum and mature on March 15, 2005.   The
net  proceeds  from  the  February 24, 1998  offering  aggregated
approximately  $281.7 million and were used to  repay  borrowings
under  the  Revolving Loan Agreement and certain warehouse  lines
and  the net proceeds from the March 10, 1998 offering aggregated
approximately  $39.0 million and were used for general  corporate
purposes.  The 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.

  Effective  as  of  January 1, 1998, the  Company  acquired  the
commercial mortgage banking business of Fowler, Goedecke, Ellis &
O'Connor  Incorporated for $16.0 million in cash and stock,  plus
up  to  an  additional $8.0 million in cash and stock over  three
years  in the event certain performance goals are met or exceeded
during  the fiscal years 1998, 1999 and 2000.  Fowler,  Goedecke,
Ellis  &  O'Connor  Incorporated has  offices  in  Massachusetts,
Connecticut,  New  York and New Jersey and employed  17  mortgage
bankers at December 31, 1997.

  On  January  28, 1998, the Company consummated the  acquisition
of the business and operations of City Federal Funding & Mortgage
Corp.   ("City  Federal")  and  its  affiliate,  Finance  America
Corporation, for $10.0 million in cash and stock, plus up  to  an
additional $8.5 million in cash and stock over three years in the
event certain performance goals are met or exceeded during fiscal
years  1998,  1999  and  2000.  City  Federal  is  a  residential
mortgage  banker focusing on originations through  its  six  East
Coast-based retail branch offices.

  The Company recently announced the formation of a joint venture
with  Banco Bilbao Vizcaya, Spain's largest bank, for the purpose
of asset acquisitions and loan management in Mexico.

Business Activities

  The  Company's  primary  businesses  are  organized  along  the
following lines:  asset management, commercial mortgage  banking,
residential mortgage banking and commercial finance.

Asset Management Business

  General.   The  Company  manages  and  resolves  portfolios  of
performing, underperforming and nonperforming loans and  provides
special  servicing for nonperforming or underperforming loans  in
commercial  mortgage-backed bond trusts and  similar  securitized
commercial  asset-backed loan portfolios.   The  Company  is  the
product  of the December 1993 merger of two asset management  and
resolution  companies, BEI Holdings, Inc. and  the  former  asset
management and resolution unit of NationsBank of Texas, N.A.  The
1993  merger  created  one of the leading  asset  management  and
resolution companies in the United States.  The Company  and  its
predecessors  have  managed over $35.0 billion  (Face  Value)  of
asset portfolios since 1987.

  Asset  Portfolio Management.  The Company manages and  resolves
asset  portfolios  acquired at a discount to Face  Value  by  the
Company  alone and by the Company with co-investors.  The Company
also  manages  and  resolves  asset  portfolios  owned  by  third
parties.

  Management of asset portfolios includes managing and  resolving
loans  and  providing  routine  accounting  servicing  functions.
Asset  portfolios  generally include  secured  loans  of  varying
qualities  and collateral types.  The majority of  the  loans  in
which  the Company invests are in payment default at the time  of
acquisition.   Asset  portfolios purchased  by  the  Company  are
comprised  of secured loans and real estate loans, the resolution
of  which  may be based either on cash flow of a business  or  on
real  estate and other collateral securing the loan.  The Company
does  not  invest in loans with known environmental  liabilities,
unless  the  environmental risks can be quantified and discounted
appropriately.

  The  Company obtains information on available asset  portfolios
from many sources, including banks, insurance companies and other
lenders.   Repeat  business and referrals  from  asset  portfolio
sellers  with whom the Company previously has transacted business
are  an  important and frequent source of business.  The  Company
has  developed relationships in which it is a preferred purchaser
of  asset  portfolios from certain sellers.  The Company believes
that  it receives many asset portfolio solicitations that  result
primarily  from  the Company's reputation as an active  portfolio
purchaser.  Other important sources of business include referrals
from  co-investors who seek the Company's participation in  asset
portfolio   purchases,  focused  contacts  initiated  by   senior
management, public advertising of asset portfolios for  sale  and
the Company's nationwide presence.

  The  Company believes that an active market for asset portfolio
acquisition, management and resolution services exists within the
private  sector.   Many financial institutions  now  use  outside
contractors to manage and resolve asset portfolios for a  variety
of   reasons,  including  a  desire  to  reduce  overhead  costs,
inadequate staffing to handle large volumes of nonperforming  and
underperforming loans or a need to avoid management and personnel
distractions  with  the  intensive  and  time-consuming  job   of
resolving loans.  These financial institutions include  banks  in
the  United  States,  Canada and Europe,  as  well  as  insurance
companies in the United States.  Moreover, financial institutions
have   embraced  the  concept  of  packaging  and  selling  asset
portfolios  to investors as a means of disposing of nonperforming
and   underperforming   loans   and   improving   the   financial
institution's balance sheet.  Consolidations within  the  banking
industry have reinforced this trend.  Insurance companies,  which
historically have avoided outsourcing asset portfolio  management
or  selling  asset portfolios, also are emerging  as  sellers  of
asset  portfolios due in part to the implementation of risk-based
capital rules for insurance companies.

  The  Company  believes that opportunities for the  acquisition,
management  and  resolution  of  asset  portfolios  are  becoming
increasingly  evident in certain international markets  and  that
lenders in these markets are adopting many of the asset portfolio
management   and  resolution  outsourcing  techniques   currently
utilized  in  the  United States.  Accordingly, the  Company  has
opened  offices in Toronto (August 1994), employing  14  persons,
and London (October 1995), employing 10 persons, each at December
31,  1997,  in  order  to take advantage of both  investment  and
servicing opportunities in Canada, the United Kingdom and certain
other  Western European nations.  During 1997, the Company and  a
major  Wall  Street bank acquired an asset portfolio  in  Mexico.
The  Company recently announced the formation of a joint  venture
with  Banco Bilbao Vizcaya, Spain's largest bank, for the purpose
of asset acquisitions and loan management in Mexico.  The Company
believes that the international markets are less competitive and,
as  a  result,  provide more attractive investments  and  greater
profit  margins.   The Company may open other  offices  and  seek
strategic alliances in other international markets.  The  Company
had  $173.0 million (Face Value) in Canadian asset portfolios,
$309.3  million  (Face Value) in United Kingdom asset  portfolios
and  $8.3 million (Face Value) in Mexican asset portfolios  under
management as of December 31, 1997.

  The   Company  believes  that  direct  investment  permits  the
Company  to take advantage of the profit opportunities  of  asset
portfolio  investing.   The Company believes  that  it  can  gain
market  share in the asset portfolio acquisition, management  and
resolution business due to its financial strength, experience  in
managing and resolving asset portfolios, national reputation  and
strategic  relationships  with sellers and  purchasers  of  asset
portfolios,  including  financial institutions,  large  corporate
buyers,   investment  banking  firms  and  sophisticated  private
investors.

  Asset  Portfolio  Investment.  Prior  to  making  an  offer  to
purchase  an  asset portfolio, the Company conducts an  extensive
investigation  and evaluation of the individual  loans  generally
comprising  100%  of the aggregate Face Value of  all  the  loans
therein, except in rare instances where an unusually large number
of   smaller   assets  are  being  purchased.   This  examination
typically consists of analyzing the information made available by
the seller (generally, the respective credit and collateral files
for  the  loans), reviewing other relevant material that  may  be
available (including tax and judgment records), and analyzing the
underlying  collateral  (including conducting  site  inspections,
obtaining  value opinions from third parties and consulting  with
any  of the Company's asset managers who have experience with the
local   market  for  such  assets).   The  Company  also  reviews
information on the local economy and real estate markets  in  the
area  in  which the loan collateral is located.  Because  of  its
broad,  nationwide  experience in managing  assets,  the  Company
often  is able to draw on its asset management experience in  the
specific  market  in  which  an asset  is  located.   Unlike  the
original  lender, the Company values loans based on  the  present
value  of  estimated  total cash flow from resolution,  with  the
expectation  that the loans will be resolved prior  to  scheduled
maturity.   Generally, the Company does not  refinance  or  renew
purchased loans or grant new credit.

  Asset  portfolio  evaluations are conducted almost  exclusively
by   the  Company's  employees  who  specialize  in  analysis  of
nonperforming  and  underperforming  loans,  often  with  further
specialization   based   on  geographic  or   collateral-specific
factors.   Most  of  these employees have previously  served  the
Company  (and  some  continue to serve) as  asset  managers  with
responsibility for resolving such loans.  Their asset  management
experience aids these individuals, working together in teams,  in
making  informed judgments about the status of each loan and  the
underlying collateral, the probable cash flows from the loan, the
likely  resolution of the loan and the time and expense  required
for such resolution.

  Loan   resolutions  are  typically  accomplished  through   (i)
negotiating  a  discounted  payoff with  debtors,  which  may  be
accomplished through a refinancing by the obligor with  a  lender
other  than  the  Company, or (ii) foreclosure and  sale  of  the
collateral.  The Company generally seeks consensual resolution of
each  loan,  having  found that a negotiated  resolution  usually
maximizes   the   Company's  or  investor's   rate   of   return.
Historically, the Company has resolved the majority of the assets
in  an asset portfolio within 18 months of acquisition.  The goal
of  the  Company's loan resolution process is to  maximize  in  a
timely  manner  the  cash  recovery on  each  loan  in  an  asset
portfolio.

  The  Company  invests in collateralized business loans  and  in
real estate collateralized loans.  At December 31, 1997, the Face
Value  of  the Company's wholly-owned asset portfolios aggregated
approximately $593.4 million, which was composed of approximately
$431.1   million   (72.6%)  of  collateralized  business   loans,
approximately  $77.5  million (13.1%) of asset-backed  securities
and approximately $84.8 million (14.3%) of real estate.

  For  the  years ended December 31, 1997 and 1996, $17.2 million
(4.1%)  and $29.8 million (14.9%), respectively, of the Company's
revenues  were  attributable  to its asset  portfolio  management
business.  The following table reflects the ownership composition
of  the  asset  portfolios  (based on  their  Face  Value)  under
management by the Company as of December 31, 1997, 1996, 1995 and
1994  and further reflects the decline in the management of asset
portfolios  for  governmental agencies and the  increase  in  the
Company's  wholly-owned  investment  in  asset  portfolios  since
December  31,  1994.  Certain reclassifications of  prior  period
amounts have been conformed to the current year presentation.

<TABLE>
<CAPTION>

                                     1997              1996              1995           1994
                                          % of              % of               % of             % of
                                  Amount  Total     Amount  Total    Amount   Total    Amount  Total
                                                  (dollars in millions)
<S>                              <C>       <C>     <C>     <C>     <C>       <C>   <C>         <C>
Wholly-owned by the Company (1)   $593.4.   30.6%   $572.2  20.7%   $  354.3   9.6   $  140.4   4.6%
Owned by the Company with          422.9    21.8     836.0  30.1     1,558.1  42.2    1,675.9  55.3
  co-investors (2)
Owned by third parties:
  Securitized mortgage pools       459.2    23.7     618.0  22.3       738.3  20.0      315.0  10.4
  Government and other owners      462.1    23.8     744.4  26.9     1,043.2  28.2      900.5  29.7
    Total under management      $1,937.6   100.0% $2,770.6 100.0%   $3,693.9 100.0%  $3,031.8 100.0%
</TABLE>

(1)     Includes $77.5 million, $122.8 million, $66.8 million and
  $13.9  million  of asset-backed securities, and $84.8  million,
  $18.3 million, $1.7 million and $0.6 million of real estate  as
  of December 31, 1997, 1996, 1995 and 1994, respectively.

(2)   Includes  the securitized asset portfolios managed  by  the
  Company  in  which  the Company has invested, which  aggregated
  $174.9 million, $472.2 million, $775.3 million and $973.8 million
  as of December 31, 1997, 1996, 1995 and 1994, respectively.

The  following table reflects the Company's investment  in  asset
portfolios as of December 31, 1997, 1996, 1995 and 1994:

                                                  As of December 31,
                                             1997    1996    1995   1994
                                                (dollars in millions)
Wholly-owned by the Company(1)              $494.9  $274.9  $172.6  $34.4
Owned by the Company with co-investors(2)     22.8    27.7    34.3   33.7
Total                                       $517.7  $302.6  $206.9  $68.1

(1)     Includes $104.1 million, $55.6 million, $33.9 million and
  $3.5  million  of asset-backed securities, and  $97.1  million,
  $20.4  million, $5.7 million and $14.1 million of  real  estate
  as of December 31, 1997, 1996, 1995 and 1994, respectively.

(2)     Includes the securitized asset portfolios managed by  the
  Company  in  which  the Company has invested, which  aggregated
  $4.7  million, $7.6 million, $8.9 million and $7.9  million  as
  of December 31, 1997, 1996, 1995 and 1994, respectively.

  Special   Servicing.    As  part  of  its   third-party   asset
management  and  resolution business,  the  Company  aggressively
pursues contracts to serve as the designated special servicer for
pools of securitized commercial mortgages.  After a loan within a
securitized  pool  of  performing  loans  becomes  delinquent  or
nonperforming,  the master servicer or primary  servicer  of  the
pool will contractually transfer responsibility for resolution of
that  loan  to  the pool's designated special servicer.   Special
servicers  earn an annual fee (typically approximately  50  basis
points of the Face Value of the delinquent or nonperforming loans
subject  to  special servicing), plus a 50 to  200  basis  points
resolution  fee based on the total cash flow from  resolution  of
each  such loan as it is received.  As of December 31, 1997,  the
Company was the designated special servicer for securitized pools
holding  approximately  $13.5  billion  (Face  Value)  of  loans,
$459.2  million  (Face Value) of which had been assigned  to  the
Company for resolution in its capacity as special servicer.   The
Company  believes that its willingness to purchase  participating
interests  in  the  delinquent  or  nonperforming  portion  of  a
securitized   portfolio  provides  the  Company   a   significant
competitive   advantage  in  pursuing  master/full  and   special
servicer contracts.

Commercial Mortgage Banking Business

  General.   The  Company  performs a wide  range  of  commercial
mortgage  banking services, including originating,  underwriting,
placing,  selling,  securitizing and  servicing  commercial  real
estate  loans  through Holliday Fenoglio Fowler, AMRESCO  Capital
and AMRESCO Services.

  Industry  Trends.   The Company believes  that  the  commercial
real  estate mortgage banking business offers significant  growth
opportunities.    There  are  an  estimated  $1.0   trillion   of
commercial  real estate mortgages outstanding within  the  United
States  and the Company estimates that $125.0 billion  to  $150.0
billion  in commercial real estate mortgages are refinanced  each
year  in  addition  to  mortgage financing of  new  construction.
Originations of loans for new construction projects are  cyclical
and  are influenced by various factors including interest  rates,
general  economic  conditions and demand patterns  in  individual
real  estate  markets.   The Company anticipates  that  expensive
technological  demands,  increasingly  standardized  underwriting
requirements, more demanding borrowers and lenders and the growth
of a market for securitized commercial real estate mortgage pools
will  likely push the commercial mortgage banking industry toward
greater   consolidation.   The  Company   believes   that   well-
capitalized,  full  service, nationwide  mortgage  banking  firms
offering  a  variety  of  mortgage banking  and  loan  management
services  will  emerge  from this consolidation.   The  Company's
objective  is to improve its position as a major nationwide  full
service  mortgage banker to the commercial real estate  industry.
The  Company  intends to achieve this goal through  the  internal
development of its commercial mortgage banking group and  through
strategic  acquisitions  of  commercial  mortgage  bankers  which
either  serve  key  real estate markets in the United  States  or
provide  niche or specialized services that enhance the Company's
product line.

  Real  Estate  Capital  Markets.  The Company  provides  a  wide
range of real estate capital markets services to lenders on,  and
owners and developers of, commercial real estate properties.  The
typical  consumers  of  commercial real estate  mortgage  banking
services   are  both  real  estate  developers  and  owners   (as
borrowers) and investor/lenders (as funding sources).  Due to the
specialized nature of commercial mortgage lending, borrowers rely
on  commercial mortgage bankers to find competitive lenders,  and
these  lenders  (particularly  insurance  companies  and  pension
plans, which do not generally have origination staffs located  in
multiple branches) rely on commercial mortgage bankers to  source
potential  borrowers.  Lenders generally include  banks,  pension
funds  and insurance companies.  In arranging loans, the  Company
works  closely with both the borrower and potential lenders  from
the  time  a  loan  prospect  is  first  contacted,  through  the
application and proposal process and throughout the documentation
of the loan to final funding.

  Holliday  Fenoglio  Fowler was one of  the  largest  commercial
mortgage  bankers  in  the  United  States  in  1997  (based   on
origination  volume) and primarily serves commercial real  estate
developers  and owners by arranging commercial real estate  loans
and  providing  brokerage and other real estate  capital  markets
services  for  commercial  real  estate  transactions.   Holliday
Fenoglio  Fowler  arranged approximately $4.7  billion  and  $2.5
billion  of  commercial real estate loans during 1997  and  1996,
respectively.   Holliday  Fenoglio  Fowler  principally   targets
developers  and owners of commercial and multifamily real  estate
properties.    Holliday  Fenoglio  Fowler  services   prospective
borrowers  through its own commission-based mortgage  bankers  in
its  offices  located  in Atlanta, Boca Raton,  Boston,  Buffalo,
Dallas,   Houston,   Miami,   New  York   City,   Orange   County
(California),  Orlando, Portland (Oregon)  and  San  Diego.   The
loans  arranged by Holliday Fenoglio Fowler generally are  funded
by  institutional lenders, primarily insurance companies, and  by
Conduit Purchasers.  The Company estimates that Holliday Fenoglio
Fowler has retained the servicing rights on approximately 41%  of
such  loans over the last three years.  The Company believes that
Holliday Fenoglio Fowler's relationship and credibility with  its
institutional  lender network provide the Company  a  competitive
advantage in the commercial mortgage banking industry.

  The  Company  provided brokerage and other real estate  capital
markets  services on commercial real estate sales and other  real
estate  transactions, including joint ventures and  participating
mortgages  of approximately $6.1 billion and $3.1 billion  during
1997  and  1996, respectively.  For the year ended  December  31,
1997 and 1996, Holliday Fenoglio Fowler earned $46.9 million  and
$26.6 million, respectively, for brokerage services.

  Holliday  Fenoglio Fowler generally earns a fee of  between  50
and  100  basis  points  of  the loan amount  for  originated  or
underwritten  loans,  plus  certain additional  processing  fees.
From  time  to  time,  Holliday Fenoglio Fowler  also  originates
nontraditional financing involving hybrid forms of  debt,  equity
participation's  and other creative financing  structures.   Fees
for equity or joint venture structures are typically higher.

  Holliday  Fenoglio  Fowler has established  relationships  with
over  210 institutional lenders that include insurance companies,
pension plans and Conduit Purchasers.  In 1997 and 1996, Holliday
Fenoglio  Fowler placed 709 and 410 loans with approximately  409
and    107   different   lenders,   respectively.    Thirty-seven
institutional lenders have retained Holliday Fenoglio  Fowler  as
their  respective exclusive or semi-exclusive loan originator  in
selected cities and regions.

  Holliday  Fenoglio Fowler has significantly expanded  its  East
Coast  business with the recent acquisition of the  business  and
operations of Fowler, Goedecke, Ellis & O'Connor Incorporated.

  Commercial   Real  Estate  Lending.   AMRESCO  Capital,   which
originated  and  underwrote approximately  $1,726.7  million  and
$632.7  million of commercial real estate mortgages  during  1997
and  1996,  respectively, is a commercial  mortgage  banker  that
originates,  underwrites, accumulates and securitizes  commercial
real  estate  loans.   As a securitized lender,  AMRESCO  Capital
makes certain representations and warranties concerning the loans
it   originates.   These  representations  cover  title  to   the
property, lien priority, environmental reviews and certain  other
matters.   AMRESCO Capital targets mortgage loans for  commercial
real  estate properties suitable for securitization transactions.
AMRESCO  Capital  serves  its  market  directly  through  AMRESCO
Capital's  offices located in Atlanta, Buffalo, Chicago,  Dallas,
Denver,    Irvine,    Louisville,   Miami,   Phoenix,    Seattle,
Washington D.C. and Winston-Salem, as well as through  a  network
of   approximately  40  independent  mortgage   brokers   located
throughout the United States.  These independent mortgage brokers
serve  AMRESCO Capital on a nonexclusive basis and  receive  fees
and  a  commission based on loan size and other pertinent factors
in  respect  of  each loan closed.  For year ended  December  31,
1997,  approximately  39%  of the loans underwritten  by  AMRESCO
Capital were originated by Holliday Fenoglio Fowler.

     Since inception, the  commercial  real  estate  loans
originated  by the Company have consisted of fixed rate  mortgage
loans secured by first liens on fee simple or leasehold interests
in  multifamily, retail, office, hotel, industrial, health  care-
related  and  self-storage properties.  The  commercial  mortgage
loans  originated during the year ended December  31,  1997,  had
mortgage   loan   balances   ranging   from   $0.6   million   to
$38.1  million, coupon rates ranging from 6.8% to 10.3%, original
terms  to maturity ranging from 60 months to 360 months and loan-
to-value ratios ranging from 33% to 90%.  At December 31, 1997, a
substantial  portion  of  the mortgage loans  originated  by  the
Company   have  been  "balloon"  mortgage  loans  that  have   an
amortization  schedule  longer, and in some  cases  significantly
longer,  than the remaining term of the loan, thereby  leaving  a
substantial outstanding principal amount due and payable  on  its
maturity date unless earlier prepaid.  Substantially all  of  the
commercial   mortgage  loans  originated  by  the  Company   have
substantial prepayment penalties if the borrower prepays the loan
within a specified time period from the date of origination.

  The  Company  is broadening its commercial real estate  lending
program  to  include variable rate loans, as well as  loans  with
balances  exceeding $50.0 million.  The Company anticipates  that
variable  rate  loans and large balance loans will constitute  an
increasing proportion of total originations in the future.

  The  commercial  real estate loans originated  or  acquired  by
AMRESCO  Capital  are  underwritten in  general  accordance  with
guidelines designed to evaluate the borrowers ability to  satisfy
the   repayment  conditions  of  the  loan.   These  underwriting
procedures   require   a   property  analysis   (including   site
inspection),  an analysis of the borrowers cash  flows  and  debt
service  coverage, a property appraisal and analysis of  loan-to-
value,  an  environmental site assessment, a physical  assessment
report  and an in-depth review of the borrower and its principals
with  respect to credit history and prior experience as an  owner
and  operator of commercial real estate properties.  In addition,
each  borrower  is  required to have obtained a  title  insurance
policy  and property insurance with specified coverages.  AMRESCO
Capital  also  reviews  industry data regarding  the  local  real
estate market in which the mortgaged property is located.

  AMRESCO  Capital  is approved by Fannie Mae to  participate  in
its  DUS  program.   An  approved DUS  lender  is  delegated  the
authority  to  approve,  commit and close loans  for  multifamily
mortgages on a national basis with the assurance that Fannie  Mae
will  purchase  the  loans.  In contrast to  a  "prior  approval"
lender, DUS lenders do not need to obtain the approval of  Fannie
Mae  prior  to  making  the loan.  In return  for  the  delegated
authority to make loans and the subsequent purchase of such loans
by  Fannie Mae, DUS lenders must maintain a minimum capital base,
and retain a certain level of credit risk on the loans they make.
The DUS lender takes first loss risk up to 5% of the loan amount,
and  above 5% Fannie Mae and the DUS lender share the loss,  with
the  DUS  lender's maximum loss capped at 20% of the loan amount.
AMRESCO  Capital, as a DUS lender, had experienced no  losses  on
its portfolio of sold DUS loans as of December 31, 1997.

  AMRESCO  Capital  is  one  of only 28  currently  approved  DUS
lenders.  While all DUS lenders operate on a national basis,  the
Company believes that 10 such lenders account for the majority of
DUS volume.  The Company believes that AMRESCO Capital, as one of
the  few DUS lenders, has certain competitive advantages  in  the
multifamily  mortgage  origination  business.   These  advantages
include the competitive pricing afforded by Fannie Mae's position
as  the  largest  purchaser of housing related mortgages  in  the
nation and the ability to commit and close mortgages without  the
delay  and  the accompanying market risks of such  delay  for  an
approval  process by the mortgage purchaser.  For these  reasons,
the  Company  expects Fannie Mae loan originations  to  become  a
significant  part of its commercial mortgage banking  activities.
Holliday  Fenoglio  Fowler has been  and  is  expected  to  be  a
significant source of such loan originations.

  AMRESCO  Capital  is also a member of the Freddie  Mac  Program
Plusr  multifamily seller/servicer program in Florida, New  York,
North  Carolina  and South Carolina and intends  to  expand  into
other states.  Through this program, the Company sells to Freddie
Mac and services multifamily apartment mortgages in these states.

  In  1997,  AMRESCO  Capital originated commercial  real  estate
loans    primarily    through   AMRESCO    Commercial    Mortgage
Funding, L.P., a limited partnership in which AMRESCO Capital and
an  affiliate of Goldman Sachs & Co. have shared equally  in  the
accumulation  and  securitization profits and  risks.   Effective
December  19, 1997, the partnership between AMRESCO  Capital  and
the  Goldman Sachs & Co. affiliate was revised.  Any accumulation
and  securitization  profit or loss from commercial  real  estate
loans  for  which loan applications were received  on  or  before
November   13,  1997  (except  for  specified  loans  aggregating
approximately $120.3 million) will be shared equally  by  AMRESCO
Capital and the Goldman, Sachs & Co. affiliate.  All profits  and
risks  associated  with commercial real estate  loans  originated
after  November  13,  1997,  as well as  the  profits  and  risks
relating    to    specified   loans   aggregating   approximately
$120.3 million for which loan applications were received prior to
November  13,  1997,  will  be for the sole  account  of  AMRESCO
Capital.  Goldman Sachs & Co. or its affiliates will continue  to
provide  funding,  distribution and related services  to  AMRESCO
Capital pursuant to a separate agreement.

  Commercial Loan Servicing.  AMRESCO Services is a servicer  for
securitized pools of commercial mortgages and whole  loans.   The
average  life  of  these  securitized pools  is  expected  to  be
approximately  eight  years.   At  December  31,  1997,   AMRESCO
Services   acted  as  servicer  with  respect  to   approximately
$20.2  billion  of loans.  The dominant users of commercial  loan
servicers  are commercial mortgage-backed bond trusts  and  other
owners   of  commercial  real  estate  loans,  including  lenders
accumulating  loans for securitization or sale that contract  for
servicing on an interim basis.  Historically, the revenue  stream
from   servicing  contracts  on  commercial  mortgages  has  been
relatively  predictable  as prepayment  penalties  in  commercial
mortgages tend to discourage early loan payoffs.

  Primary  servicing  of whole loans involves collecting  monthly
mortgage payments, maintaining escrow accounts for the payment of
ad  valorem  taxes and insurance premiums on behalf of borrowers,
remitting   payments  of  principal  and  interest  promptly   to
investors  in  the  underlying  mortgages,  reporting  to   those
investors on financial transactions related to such mortgages and
generally  administering the loans.  The servicer of whole  loans
also   must   cause  properties  to  be  inspected  periodically,
determine the adequacy of insurance coverage on each property and
monitor  delinquent  accounts for payment.   Servicer  rates  are
determined  by  a  bidding  and  negotiating  process.    AMRESCO
Services  is rated "strong" as a primary servicer by  Standard  &
Poor's,  which is the highest rating given by that rating  agency
to  primary servicers as of December 31, 1997.  AMRESCO  Services
has also received an "acceptable" rating from Fitch.

  Master   servicing   involves  providing   administrative   and
reporting   services  to  securitized  pools  of  mortgage-backed
securities.    Typically,  mortgages  underlying  mortgage-backed
securities are serviced by a number of primary servicers.   Under
most  master servicing arrangements, the primary servicers retain
principal responsibility for administering the mortgage loans and
the  master  servicer acts as an intermediary in  overseeing  the
work  of the primary servicers, monitoring their compliance  with
the   issuer's  standards  and  consolidating  their   respective
periodic   accounting   reports   for   transmission    to    the
securitization trustee in respect of the related securities.  The
Company frequently is designated as the full servicer for a  pool
of  mortgages, in which case the Company acts as master, primary,
and,  in  some cases, special servicer for the pool.  Master/full
servicers  are  typically paid fees based on the  Face  Value  of
loans under management, and the compensation is determined  by  a
bidding  and  negotiating process.  In October 1996, the  Company
received  the  first  public  "above average"  commercial  master
servicer  rating ever awarded by Standard & Poor's.   The  "above
average" rating is the highest rating given by Standard &  Poor's
to  master servicers.  The Company is also rated "acceptable"  by
Fitch as a master servicer.

Residential Mortgage Banking Business

  General.   Through AMRESCO Residential, the Company originates,
acquires, warehouses and securitizes residential mortgage  loans.
AMRESCO   Residential's   loan  production   has   increased   to
$3.6  billion from $1.9 billion for the years ended December  31,
1997 and 1996, respectively.

  Industry Trends.  Although studies and reports on the  size  of
the    market   for   conventional,   nonconforming
residential mortgage loans vary significantly, these studies  and
reports do generally confirm that the market has experienced, and
continues  to  experience,  significant  growth.   One   industry
publication,  Inside  B&C Lending, reported originations  of  "B"
credit and "C" credit loans of $124.5 billion for the year  ended
December  31, 1997, which represents an increase of 28% over  the
same period in 1996.  The Company believes that the growth in the
market  has  been attributable to, among other  factors:   (i)  a
large  number of borrowers seeking to consolidate their revolving
credit  debt  and  auto  loans for  a  lower  rate  and  payment;
(ii)  slow growth in real estate appreciation causing an increase
in  the  number  of borrowers seeking to make home  improvements;
(iii)  increased  entry  into  the home  loan  market  by
commercial banks as well as the growth in the number and size  of
mortgage  brokers  making  home loan   financing  more  readily
available; and (iv) growth in overall consumer awareness  of  the
availability of home loan financing.  In addition,  the  asset-
backed securitization market has provided an important source  of
financing for originators of home equity loans.

  Borrower   Profile  and  Underwriting.   The  Company   targets
borrowers  that  have credit profiles that preclude  their  loans
from being sold in the government agency secondary markets.  Such
credit   profiles   may  include  consumer   or   mortgage   loan
delinquencies, high debt-to-income ratios, previous bankruptcy or
inability  to  provide income documentation.   Borrowers  in  the
Company's  targeted market typically have significant  equity  in
their  homes and may be charged higher interest rates  for  loans
than more creditworthy borrowers.  The Company believes that  the
higher  interest  rates  and  the  more  favorable  loan-to-value
characteristics of this market mitigate the greater  credit  risk
associated with such borrowers and make this an attractive market
for the Company.

  The  residential mortgage loans originated or acquired  by  the
Company   are  underwritten  in  accordance  with  the  Company's
guidelines or the guidelines of the third party originator  which
have  been submitted to and approved by the Company.  The Company
performs due diligence on all residential mortgage loans which it
acquires to assure compliance with underwriting standards.  Under
the guidelines used or approved by the Company, various risks are
used to grade the likelihood that the mortgagor will satisfy  the
repayment conditions of the mortgage loan.  These risk categories
establish  the  maximum permitted loan-to-value  ratio  and  loan
amount, given the occupancy status of the mortgaged property  and
the  mortgagor's  credit  history and debt  ratio.   In  general,
higher credit risk mortgage loans are graded in categories  which
permit  higher  debt  ratios  and more  (or  more  recent)  major
derogatory  credit items such as outstanding judgments  or  prior
bankruptcies.   The  underwriting guidelines generally  establish
lower  loan-to-value ratios and loan amounts  for  higher  credit
risk mortgage loans.

  Loan  Products.  The residential mortgage loans originated  and
acquired  by  the  Company consist of fixed and  adjustable  rate
conventional,  nonconforming mortgage loans with remaining  terms
to  maturity of not more than 360 months and secured by deeds  of
trust, security deeds or mortgages.  The properties securing  the
residential  mortgage loans consist primarily  of  single  family
residences  (which may be attached, detached, part of  a  two-to-
four-family dwelling, a condominium unit or a unit in  a  planned
unit  development).   The  properties  securing  the  residential
mortgage  loans  may  be  owner occupied  or  non-owner  occupied
investment  properties.  The Company's residential mortgage  loan
products  include  fixed rate loans that bear  a  fixed  rate  of
interest  for  the life of the loan, adjustable rate  loans  that
bear  interest  at rates that adjust, along with related  monthly
payments,  periodically  (generally  semiannually)  based  on   a
specified  financial index or quoted rate and loans that  bear  a
fixed   rate  of  interest  for  a  specified  period   following
origination  (generally  2,  3 or 5  years)  with  periodic  rate
adjustments  thereafter based on a specified financial  index  or
quoted  rate.   In a majority of cases, the residential  mortgage
loans can be prepaid by the mortgagor in whole or in part at  any
time,  although the mortgagor may be required to  pay  a  fee  in
connection  with  certain prepayments.  For residential  mortgage
loans included in securitizations consummated between January  1,
1996  and  December  31, 1997, the pools of residential  mortgage
loans  have  exhibited  the following characteristics:   weighted
average  loan-to-value ratios, based upon the lower of the  sales
prices and the appraised values of the related properties at  the
time  the  time of origination, ranging from 66% to 75%, weighted
average remaining term to maturity ranging from 318 months to 357
months,  average loan balances ranging from $66,000  to  $106,000
and weighted average coupon rates ranging from 9.8% to 11.3%.

  Loan  Sources.  The Company obtains residential mortgage  loans
through  portfolio acquisitions, correspondent lending, wholesale
broker   operations   and  various  retail  channels,   including
telemarketing,  direct  mail  and  retail  branches.    Portfolio
acquisitions  involve the purchase of pools  of  closed  mortgage
loans with aggregate principal balances in excess of $2.0 million
from  mortgage banks and other financial institutions  throughout
the   United   States.    Correspondent  lending   involves   the
acquisition  of  closed loans one at a time (i.e.,  on  a  "flow"
basis) through a network of correspondent financial institutions.
Wholesale operations involve the origination of loans through the
Company's  network of branch offices and through its  centralized
wholesale   operations.   The  acquisition  of  the  assets   and
operations  of Quality Mortgage USA in October 1996 provided  the
Company  with  a  nationwide network of 53  branch  offices  that
originate  loans through relationships with over  3,000  mortgage
brokers.   In  its centralized wholesale operations, the  Company
serves  mortgage  brokers  who do not come  within  the  area  of
service   of  one  of  the  Company's  branch  offices.    Retail
operations  involve  consumer direct mail and  telemarketing,  as
well  as retail branch operations.  In its retail operations  the
Company  works  directly with consumers to originate,  underwrite
and close mortgage loans.  Although retail originations currently
represent  only  a  small percentage of total loan  volumes,  the
Company  anticipates  that  an  increasing  proportion   of   its
residential  mortgage loans will be sourced  through  the  retail
channel.   On January 28, 1998, the Company acquired the business
and  operations  of  City Federal Funding  &  Mortgage  Corp.,  a
residential  mortgage  banker with  six  East  Cost-based  retail
offices.

  The   diversification  of  the  Company's   sources   of   loan
production  has  resulted  in  the correspondent,  wholesale  and
retail  channels of distribution becoming increasingly  important
contributors to total residential mortgage loan production.   The
following table sets forth aggregate dollar amounts (in millions)
and percentage of all loans originated or acquired by the Company
by each product channel for the years ended December 31, 1997 and
1996:

                                 1997          1996
                              $       %        $      %
Portfolio acquisitions    $2,583.8   71.0  $1,817.5  93.5
Correspondent lending        160.3    4.4       9.3   0.5
Wholesale                    854.8   23.5     106.6   5.5
Retail                        41.4    1.1      10.6   0.5
Total                     $3,640.3  100.0% $1,944.0 100.0%

  Securitization  and  Sale.  The Company pools  the  residential
mortgage loans it originates and purchases to create asset-backed
securities which it typically sells on a quarterly basis.  During
the  year  ended  December  31,  1997,  the  Company  securitized
approximately $2.8 billion in residential mortgages in public and
private  offerings of asset-backed securities.  Once the  Company
accumulates loans of an aggregate principal amount sufficient  to
permit  efficient securitization of the loan pool (generally,  in
excess  of  $500.0 million), the loans are conveyed to a  special
purpose  trust  that  sells  into the  secondary  market  various
tranches   of   rated   collateralized  asset-backed   securities
representing undivided interests in the revenue streams generated
by  the loans.  Each month, collections of principal and interest
on  the  residential  mortgages are used by the  trustee  of  the
securitization  trusts to pay the holders of the  related  asset-
backed  securities,  to  build  over-collateralization  by  using
excess  interest to pay down principal on such securities and  to
pay  expenses, with any remaining cash flows paid to the  holders
of  the  unrated  securities.  The holders of unrated  securities
absorb   losses   and   the  negative  impact   of   prepayments,
delinquencies  and  losses before holders of  other  asset-backed
securities  issued in the securitization.  The unrated securities
issued by the trust are purchased by the Company and are included
in  "Retained  Interests in Securitizations  -  Trading"  in  the
Company's  Consolidated Balance Sheet.  From time  to  time,  the
Company  acquires  rated and unrated securities  from  sub-prime,
jumbo   and  non-standard  residential  mortgage  securitizations
organized  by  third parties if such securities are considered by
management  to  be suitable investments.

  The  asset-backed  securities publicly  sold  to  date  by  the
Company  have received investment grade ratings from a recognized
statistical  rating  organization,  such  as  Standard  &  Poor's
Ratings  Service or Moody's Investors Service, Inc.   To  achieve
these  ratings  the  Company has used various credit  enhancement
techniques,  including subordination among classes of securities,
over-collateralization techniques, financial  guaranty  insurance
or a combination of the foregoing.

  The  Company utilizes the net proceeds from securitizations  to
pay  down  outstanding warehouse facilities and to originate  and
purchase  additional  residential mortgages and  commercial  real
estate  loans.   The  Company has also pooled and  re-securitized
securities retained from its securitizations, with the  resulting
certificates ("Net Interest Margin Certificates") being  sold  in
private sales to institutional investors.  In September 1997, the
Company   completed  a  private  sale  of  Net  Interest   Margin
Certificates  for net proceeds of approximately  $102.9  million.
The   Company  intends,  from  time  to  time,  to  re-securitize
securities  retained  from  its  securitizations  and  sell   the
resulting   Net  Interest  Margin  Certificates  to  reduce   the
Company's capital exposure with respect to retained interests  in
securitizations  and  to generate additional  borrowing  capacity
under the Revolving Loan Agreement.  However, no assurance can be
given  that  such opportunities will be available in the  future.
The   Company,   through  AMRESCO  Residential,  uses   warehouse
facilities with financial institutions to finance its origination
and   purchase   of   loans   on  a  short-term   basis   pending
securitization.  At December 31, 1997, AMRESCO Residential had an
aggregate   borrowing  capacity  of  $1.6  billion  under   three
warehouse facilities of which $703.7 million was available.

  Residential  Loan  Servicing.  Since  the  acquisition  of  the
assets and business of Quality Mortgage USA in October 1996,  the
Company   has   performed  delinquency  management  and   related
servicing  functions  for  the  asset  portfolios  acquired  from
Quality  Mortgage  USA and for loans originated  by  the  Company
after  October 1, 1997 or acquired by it on a servicing  released
basis.   As  of  December 31, 1997, the Company was  the  special
servicer  for $314.6 million of residential mortgage  loans.   In
addition,  the  Company  is  in the  process  of  developing  the
appropriate infrastructure and systems to support a broader array
of  customer-intensive  servicing  functions,  including  general
customer relations.  The Company believes that customer intensive
servicing  functions, such as collections, delinquency management
and  general customer relations provide the opportunity to manage
and  improve  the  performance of its residential  mortgage  loan
portfolios  by  mitigating  credit  losses  and  prepayment  risk
through  direct  involvement with borrowers.   The  Company  will
continue   to  utilize  recognized  third  party  providers   for
portfolios of residential mortgage loans currently being serviced
by such providers, as well as for standardized, systems intensive
servicing  functions,  such  as  payment  processing   and   tax,
insurance and investor reporting.

  Portfolio   Performance.    The   following   table    provides
information  with respect to prepayments, delinquencies  and  net
losses  for each of the Company's securitizations as of  November
30, 1997, prior to any potential recoveries:

                Original Current   CPR %      Delinquencies(2)    % Net
Security  Date   Balance Balance Actual(1)  30-59   60-89   90+  Losses(3)
                       (dollars in millions)
1996-1  01/25/96  $275    $145    29.49%    1.40%   0.71% 10.13%  0.58%
1996-2  04/25/96   257     111    41.21     2.17    1.83   9.60   0.18
1996-3  06/20/96   267     197    19.51     1.13    0.88   6.35   0.08
1996-4  08/28/96   311     182    34.97     2.06    1.22   10.76  0.04
1996-5  12/18/96   700     531    25.96     2.94    1.75   8.79   0.02
1997-1  03/26/97   605     536    16.50     2.72    1.57   5.62   0.00
1997-2  06/12/97   740     695    13.99     2.38    1.17   4.06   0.00
1997-3  09/16/97   950     935     9.50     2.24    1.20   1.09   0.00

Weighted average (4)              18.09%    2.34%   1.32%  5.17%  0.06%

(1)     The Constant Prepayment Rate ("CPR") represents the  rate
  of  prepayment  experienced by the referenced securitized  pool
  of  mortgage  loans, expressed as an annual rate,  relative  to
  the  outstanding  principal balance over the life  of  mortgage
  loans.

(2)     The period of delinquency is based on the number of  days
  payments   are   contractually  past  due.    The   delinquency
  statistics   for   the  90+  days  data   includes   loans   in
  foreclosure.

(3)   Net Losses represents the aggregate amount, expressed as  a
  percentage of the original balance, which has been determined to
  be uncollectible relating to mortgage loans, less recoveries from
  liquidation proceeds and deficiency judgments.

(4)  Based on the current balance at November 30, 1997.

Commercial Finance Business

  General.    In  1996,  the  Company  organized  the  Commercial
Finance  Group  to provide financing to commercial  borrowers  in
various  targeted  lending  markets.   The  Company  focuses   on
(i)  loans  to  franchisees of nationally recognized  restaurant,
hospitality and automotive organizations, (ii) structured finance
activities,   with   an   emphasis  on  the   real   estate   and
communications  industries, and (iii) single  family  residential
construction lending.  Loans originated by the franchise  lending
operation   are  sold  to  third  parties,  principally   through
securitization, while the real estate, communications and  single
family  residential  construction  loans  are  retained  for  the
Company's own portfolio.  Other ancillary products, services  and
investments  provided  by the Commercial  Finance  Group  include
equipment leasing, small business lending and loan servicing.

  Franchise  Lending.   ACLC's primary line of  business  is  the
origination,  securitization  and  servicing  of  loans  made  to
franchisees  of  nationally recognized fast food  chains,  family
dining  establishments, hotels and motels, automotive aftermarket
servicers  and  truck stops.  These borrower profiles  emphasize,
among other things, the borrower's experience with the particular
operating  concept (i.e., fast food, quick oil change, etc.)  and
the  cash  flow  of  the respective operating units.   Management
believes that this product can be expanded to include other small
business loans made to operators with similar borrowing profiles.
According  to the International Franchise Association, franchises
comprise  one  out of every 12 businesses in the  United  States.
The  Franchise Trade Association has estimated that by  the  year
2000 over 50% of retail sales, or approximately $1 trillion, will
be generated by franchises.

  The  table  set forth below provides information regarding  the
distribution  of  loans  serviced by  franchise  category  as  of
December 31, 1997 (dollars in thousands):

                                                       Percentage
                                            Total        of Total
                                         Outstanding   Outstanding
                                  Number     Loan          Loan
  Franchise Group                of Loans   Amount        Amount
Quick service restaurants          788      $346,948       61.6%
Casual dining                      125        85,380       15.1
Automotive after market services   161        58,391       10.4
Truck stop                          14        29,529        5.2
Hospitality services                 8        27,032        4.8
Other                               19        16,438        2.9
Total                            1,115      $563,718      100.0%

  ACLC  provides loans primarily for the refinancing,  remodeling
or   purchase   of   existing  facilities.   ACLC   also   offers
construction  lending  to  franchisee borrowers  to  finance  the
construction  of new facilities.  The loans are funded  primarily
by  a dedicated warehouse facility until they are securitized and
sold.   During  the  nine months since the  acquisition  of  ACLC
(ending  December  31, 1997), the franchise loans  originated  by
ACLC   had   loan   balances  ranging  from  $0.03   million   to
$10.5  million,  a  coupon rate ranging from 8.3%  to  10.7%,  an
original  term to maturity ranging from 60 months to  180  months
and  a  remaining  term to maturity ranging  from  54  months  to
180 months.

    The  franchise loans are generally originated  in  accordance
with  ACLC's underwriting guidelines, which focus on, among other
things, the borrowers ability to repay the loan, the adequacy  of
the  cash  flow at the franchise unit(s), the real  and  tangible
personal property that may serve as collateral for the loan,  the
experience of the borrower, the sales and demographic  trends  at
the  franchise units being financed and the credit history of the
borrower   and  its  principal  shareholders.   The  underwriting
process  involves  background checks of, and personal  interviews
with,   prospective   borrowers  designed   to   further   ACLC's
understanding  of  the  borrowers' business,  the  character  and
managerial qualities of the borrowers' management and the  future
direction, growth and financing needs of the borrowers' business.
At  December 31, 1997, ACLC had experienced no losses on loans in
its servicing portfolio.

  ACLC  generates  loan volume using a combination  of  marketing
efforts that include direct solicitation, direct mail, convention
attendance  and  referrals from previous borrowers.   During  the
nine  months  since the acquisition of ACLC (ending December  31,
1997), ACLC had originated loans to borrowers in 35 states,  with
the  greatest  concentration of borrowers (by original  principal
amount  of  loans)  being  in  Florida  ($20.5)  million,   Texas
($19.3 million) and Oregon ($18.4 million).

  In  the  second  and  fourth quarters of 1997,  ACLC  completed
securitizations  of  approximately  $132.5  million  and   $165.9
million  of loans, respectively.  The investment grade securities
in  such  securitizations  were sold  in  private  placements  to
investors  and the residual interest securities were retained  by
ACLC.   The  investment grade certificates were  rated  "Aaa"  by
Moody's  Investors Service, Inc., "AAA" by Standard & Poor's  and
"AAA"  by  Duff  & Phelps Credit Rating Co.  The ratings  on  the
securities  offered  to investors were achieved  by  (i)  limited
cross-guarantee loan provisions for the various borrowers  within
the   securitization  and  (ii)  financial  guarantee   insurance
provided by Capital Markets Assurance Corporation.

     ACLC   retains  the  servicing  rights  to  loans  following
securitization.   ACLC  has  developed  a  proprietary  servicing
system   due  to  the  accounting  requirements  for  the  credit
enhancement  and  the other features of ACLC's franchise  lending
program.   At  December  31,  1997,  ACLC  was  servicing   1,115
franchise    related   loans   with   aggregate    balances    of
$563.7  million.  The table set forth below provides  information
regarding ACLC's underlying borrower delinquency experience for all
franchise related loans  originated by ACLC as of December 31, 1997
and  March  31, 1997 (dollars in thousands):

                                             December      March
                                             31, 1997    31, 1997
Total loan balances at end of period (1)     $563,718    $341,395

Delinquencies (2):
  31-60 Days
  61-90 Days                                              $   961
  91+ Days                                     $5,729       5,911
Total delinquencies                            $5,729      $6,872

Total delinquencies as a percentage of          1.02%       2.01%
 total loan balances (3)

(1)     The  Company  acquired the business and  assets  of  ACLC
  effective March 31, 1997.

(2)     The period of delinquency is based on the number of  days
  payments are contractually past due.

(3)     Reflects  contractual  delinquencies.   At  December  31,
  1997,  all borower delinquencies in respect of franchise loans were
  paid   by   borrower   cross  guarantees.   See   "Management's
  Discussion  and Analysis of Financial Condition and Results  of
  Operations  -  Securitization Practices" for  a  discussion  of
  borrower cross guarantees.

    ACLC  also originates, underwrites and closes loans that  are
funded by a third party conduit lender but only for credits  that
do  not  fit the profile for ACLC's securitizable loan  products.
The   conduit   lender  then  includes  these  loans   in   their
securitization  and  ACLC records a gain from  the  sale  to  the
conduit  lender.  ACLC also provides lease financing for business
equipment, primarily restaurant equipment based on referrals from
franchise borrowers.

  Special  Situation Lending.  In 1995, the Company began  making
commercial  loans  through  AMRESCO  Funding.   AMRESCO   Funding
provides  mid-  to high-yield financing to borrowers  in  special
situations  that  have  been  unable  to  obtain  financing  from
traditional funding sources.  In these transactions, the  Company
funds senior and subordinated indebtedness generally ranging from
$2.0  million to $10.0 million for terms of one to four years  to
borrowers  with  an  established  management  record.   Borrowers
targeted   by  AMRESCO  Funding  usually  have  reputations   for
enhancing  value, but may lack the financial capacity to  qualify
for  bank financing beyond a certain level.  Loan structures vary
as  they  are  usually customized to fit the characteristics  and
purpose  of  the  loans.   Income  is  generally  derived  by   a
combination  of interest, fees and (in some cases) a  net  profit
interest.

  AMRESCO  Funding lending activity for the years ended  December
31, 1997, 1996 and 1995 was as follows (dollars in thousands):


                                      Year Ended
                                      December 31,
                                  1997     1996    1995
Beginning Principal Balance    $ 33,597  $ 1,712  $    0
Principal Advances              156,818   36,415   1,720
Principal Payments              (41,521)  (4,530)     (8)
Ending Principal Balance       $148,894  $33,597  $1,712

  AMRESCO  Funding lends primarily to the commercial real  estate
and  communications industries (radio and television)  from  loan
production  offices in Texas, California, Oregon,  Massachusetts,
Virginia  and  Canada.  Commercial real estate  loans,  loans  to
borrowers  in  the  communications industry and  venture  capital
loans accounted for $107.6 million (72%), $38.3 million (26%) and
$3.0  million  (2%),  respectively,  of  AMRESCO  Fundings  total
principal balance at December 31, 1997.

  AMRESCO Funding tailors its underwriting processes to suit  the
industries,   borrower   types  and   various   loan   structures
encountered in its business.  The underwriting process for  loans
takes  into  account  special risks associated  with  mid-to-high
yield lending, including an in-depth assessment of the character,
experience  (including operating history) and financial  capacity
of  the  borrower  or  the  borrowers' principal(s),  a  detailed
analysis of the business, property or project being financed  and
an  analysis  of  the  market  in which  the  borrower  operates,
including   competition   and  market  share   data,   comparable
properties  or  businesses, as well as more  general  information
such  as  population, job growth, median income  and  demographic
data.

  The   loans  originated  in  AMRESCO  Funding's  business   are
serviced  by AMRESCO Services.  As of December 31, 1997,  AMRESCO
Services  was  servicing  38  loans with  aggregate  balances  of
$142.0  million  for AMRESCO Funding.  As of December  31,  1997,
AMRESCO Funding had experienced no delinquencies or losses on its
portfolio  of  outstanding loans and had  established  loan  loss
reserves of $5.2 million or 3.4% of aggregate loan balances.

  Single  Family  Residential Construction Lending.   In  January
1997,  the Company established AMRESCO Builders Group to  provide
construction  financing to builders of homes for first  time  and
first  move-up  buyers.  To facilitate this effort,  the  Company
hired   an   experienced  lending  and  servicing  team  formerly
associated with a Texas financial institution.  AMRESCO  Builders
Group targets experienced homebuilders that are starting from 100
to  1,500  units  per  year.  These homes generally  are  in  the
$90,000 to $200,000 price range.  Prospective borrowers must also
have  a minimum of three years proven experience in building  and
selling  homes,  satisfactory financial condition and  acceptable
credit  history.  AMRESCO Builders Group also provides a  limited
amount  of  acquisition and development lending  for  residential
lots  which will serve as feeder stock for the construction  loan
program.   AMRESCO Builders Group funds loans through a dedicated
warehouse debt facility.

  As  of  December  31, 1997, the residential construction  loans
originated by AMRESCO Builders Group have consisted of adjustable
rate loans secured by first liens on homes under construction  or
lots.   As  of  December 31, 1997, the loans have  evidenced  the
following  characteristics: maturities from six months (loans  on
developed  lots) to eighteen months (acquisition and  development
loans),  interest  rates ranging from 9.5% to  12.0%  for  single
family construction loans and acquisition and development loans.

  AMRESCO  Builders  Group currently has loan production  offices
in  California,  Arizona, Nevada, Georgia and  Florida.   AMRESCO
Builders  Group  producers  target markets  that  its  management
believes  have  large  or  growing  populations  with  qualifying
incomes  of  home buying age.  As of December 31,  1997,  AMRESCO
Builders  Group loan balances outstanding were $65.5  million  on
commitments of $114.1 million.  As of December 31, 1997,  AMRESCO
Builders Group had experienced no delinquencies or losses on  its
portfolio  of  outstanding loans and had  established  loan  loss
reserves of $0.5 million or 0.7% of aggregate loan balances.

  All  loan processing, administration and servicing is performed
in  Houston,  Texas.   This  process maximizes  the  benefits  of
current  technology by electronically storing and  tracking  loan
documents  and information and allows AMRESCO Builders  Group  to
provide  a  high  level  of service to borrower  customers.   For
example, builder home completion records in the servicing  system
can  be  electronically  updated  by  a  computer  download  from
inspectors  in  the  field  thereby  speeding  payment  of   draw
requests.   AMRESCO Builders Group believes that  this  level  of
service  provides  added value to the borrower  while  minimizing
administrative cost.

Competition

  General.   The  Company's competition varies by  business  line
and geographic market.  Generally, competition within each of the
business lines in which the Company competes is fragmented,  with
national, local and regional competitors, none of which dominates
a particular business line.  Certain of the Company's competitors
within  each  of its business lines are larger and  have  greater
financial resources than the Company.

  Asset   Management.   The  Asset  Management  business   is   a
nationwide   (and  increasingly  international)   business   with
numerous  financially  strong and experienced  competitors.   The
Company believes that its ability to acquire asset portfolios for
its   own  account  will  be  important  to  its  future  growth.
Recently,  the  Company has encountered increased competition  in
the market for asset portfolios which could cause the Company  to
experience  decreasing profit margins in this  business  line  in
order  to  remain a competitive bidder for asset portfolios.   In
addition,  declining profit margins presented by current  bidding
opportunities has caused the Company to re-deploy its capital  in
more profitable product lines.  Asset portfolio acquisitions also
require  significant capital.  The Company's competitors  in  the
Asset  Management  business  include  Lennar  Corp.,  Archon  (an
affiliate  of Goldman Sachs & Co.), J.E. Roberts Companies,  GMAC
and First City Financial Corp.

  Commercial   Mortgage   Banking.   The   Company's   commercial
mortgage  banking  business  consists  of  real  estate   capital
markets,  commercial  real  estate lending  and  commercial  loan
servicing  business lines.  In each of these business lines,  the
Company  competes on a nationwide basis.  The real estate capital
markets  and  commercial  real  estate  lending  businesses   are
fragmented, composed primarily of small local or regional  firms.
The   Company  believes  that  the  commercial  mortgage  banking
industry  is  moving toward greater consolidation and  that  well
capitalized, full service, nationwide mortgage banking firms will
emerge  from this consolidation.  The Company's objective  is  to
improve  its position as a major nationwide full service mortgage
banker  to  the  commercial real estate industry.  The  Company's
competitors  in the commercial mortgage banking business  include
Nomura  Asset Capital Corporation, GMAC (commercial  real  estate
finance), L.J. Melody & Co. and Washington Mortgage Corporation.

  The  commercial loan servicing business is highly  competitive.
Distinct  markets have developed for the servicing of  performing
loan  pools, under-performing loan pools and non-performing  loan
pools.   The  Company has focused its commercial  loan  servicing
business  on the market for performing loan pools, the  servicing
market  that  management believes has the greatest potential  for
growth.   The  Company's  competitors  in  the  commercial   loan
servicing  business include GMAC Commercial Mortgage Corporation,
Midland  Loan  Services, L.P., G.E. Capital Asset Management  and
First Union Bank.

  Residential   Mortgage  Banking.   The  Company  recently   has
encountered increased competition in the market for conventional,
nonconforming residential mortgage loans as more originators  and
Conduit   Purchasers  enter  this  market.   This  could   impact
origination  and acquisition volume and profit margins.   Certain
of  the  Company's larger, national competitors  have  access  to
greater  financial  resources and lower costs  of  capital.   The
Company's   competitors  in  the  residential  mortgage   banking
business  include  the  Associates, United  Companies  Financial,
Money Store and Conti Mortgage Corp.

  Commercial  Finance.   The  markets  in  which  the  Commercial
Finance   Group   operates  are  highly   competitive   and   are
characterized by competitive factors that vary based upon product
and   geographic   region.    The  Commercial   Finance   Group'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 Commercial
Finance  Group are large companies that have substantial capital,
technological  and  marketing  resources,  and  some   of   these
companies  may have lower costs of capital than is  available  to
the Commercial Finance Group.

Employees

  At   December  31,  1997,  the  Company  and  its  subsidiaries
employed 1,650 persons.  Of that total, 208 were employed in  the
asset  management  group, 516 in the commercial mortgage  banking
group, 600 persons in the residential mortgage banking group, 112
in  the  commercial finance business and 214 in general corporate
administration.  The Company believes that its employee relations
are generally good. The Company has no collective bargaining
arrangements.

Certain Definitions

     The following are certain defined terms used herein:

      "ACLC"  means  AMRESCO  Commercial Lending  Corporation,  a
subsidiary of the Company.

      "AMRESCO Builders Group" means AMRESCO Builders Group, Inc.
a subsidiary of the Company.

      "AMRESCO  Capital" means AMRESCO Capital  L.P.,  a  limited
partnership.

      "AMRESCO  Funding"  means AMRESCO  Funding  Corporation,  a
subsidiary of the Company.

      "AMRESCO Residential" means, collectively, ARCMI, ARMC  and
AMRESCO  Residential  Credit  Corporation,  subsidiaries  of  the
Company.

      "AMRESCO Services"  means a division of AMRESCO Management,
Inc., a subsidiary of the Company.

      "ARCMI" means, AMRESCO Residential Capital Markets, Inc., a
subsidiary of the Company.

      "ARMC" means, AMRESCO Residential Mortgage Corporation,  an
indirect  subsidiary  of the Company through  which  the  Company
acquired substantially all the operating assets of Quality.

     "BEI" means BEI Holdings, Ltd.

      "Company" means, unless otherwise stated herein  or  unless
the  context  otherwise requires, the Company  and  each  of  its
subsidiaries.

      "Conduit  Purchasers" means investment  bankers  and  other
financial  intermediaries who purchase  or  otherwise  accumulate
pools  or portfolios of loans having common features (e.g.,  real
estate  mortgages,  etc.), with the intent of  securitizing  such
loan assets and selling them to a trust that secures its funds by
selling  ownership  interests in the trust to public  or  private
investors.

      "DUS"   means  the  Delegated  Underwriting  and  Servicing
program  established by Fannie Mae that permits  a  DUS  approved
lender  to  commit and close loans for multifamily mortgages  for
resale to Fannie Mae without Fannie Mae's prior approval of  such
loans.

      "EQS" means, collectively, EQ Services, Inc.  and Equitable
Real Estate Investment Management, Inc.

      "Face  Value"  means, with respect to  any  loan  or  Asset
Portfolio, the aggregate unpaid principal balance of  a  loan  or
loans.

       "Fannie   Mae"   means  the  Federal   National   Mortgage
Association.

     "FDIC" means the Federal Deposit Insurance Corporation.

       "Freddie  Mac"  means  the  Federal  Home  Loan   Mortgage
Corporation.

     "Holdings" means AMRESCO Holdings, Inc.

      "Holliday Fenoglio Fowler" means Holliday Fenoglio  Fowler,
L.P., a limited partnership.

       "Master   Servicer"   means  an   entity   that   provides
administrative  services to securitized pools of  mortgage-backed
securities.

      "Net  Interest  Margin Certificates" means  the  securities
created  by  the  Company from re-securitization of  asset-backed
securities   retained   by   the  Company   from   its   original
securitizations.   The Company seeks to sell  such  Net  Interest
Margin Certificates to institutional investors in private sales.

     "Quality Mortgage USA"  means Quality Mortgage USA, Inc., a
California corporation.

      "Revolving  Loan  Agreement"  means the Third  Amended  and
Restated Revolving Loan Agreement dated as of September 30,  1997
and  as  subsequently amended, among the Company, NationsBank  of
Texas,  N.A.,  as  Agent, Bank One, Texas N.A., as  Co-Agent  and
NationsBank of Texas N.A. and certain other designated  entities,
as lenders.

     "RTC" means the Resolution Trust Corporation.

      "securitization" and "securitized" mean  a  transaction  in
which  loans  originated or purchased by an entity  are  sold  to
special  purpose  entities organized for the purpose  of  issuing
asset-backed securities.

Item 2.   Properties

      The Company leases approximately 162,745 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.   This lease has an initial termination date of  October
31,  2006  and  has an initial annual base rent of  approximately
$2.0  million.  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 and that additional or substitute  space  is
available, if needed, to accommodate expansion.

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,
1997.

                             PART II

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

      The Company's common stock (Symbol: AMMB) is listed on  the
Nasdaq Stock Market.  At March 23, 1998, there were approximately
2,699  stockholders  of  record of the  Company's  common  stock.
Presented  below are the high and low last sale prices per  share
for   1997  and  1996,  as  reported  by  NASDAQ.   The   Company
discontinued  declaring  dividends  beginning  with  the   fourth
quarter  of  1995  and  the Company does not  expect  to  declare
dividends on its common stock in the foreseeable future.

                                   High      Low
1996
 First Quarter                    $14.625  $11.875
 Second Quarter                    19.313   15.000
 Third Quarter                     24.375   17.250
 Fourth Quarter                    27.250   20.625
1997
 First Quarter                    $25.500  $15.125
 Second Quarter                    21.500   13.875
 Third Quarter                     37.125   21.750
 Fourth Quarter                    37.125   24.000

Item 6.   Selected Financial Data

      The  selected financial data set forth below for  the  five
years ended December 31, 1997 has been derived from the Company's
audited  consolidated  financial  statements  (in  thousands   of
dollars,  except per share amounts).  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."

                                        AMRESCO, INC. (1)

                           Year      Year     Year      Year      Year
                           Ended     Ended   Ended     Ended     Ended
                         December  December December  December  December
                            31,       31,     31,       31,       31,
                           1997      1996     1995      1994      1993
                               (in thousands, except per share data)
  Operating Results:
  Revenues              $423,755   $200,067  $110,486  $129,791  $122,401
  Income from
  continuing operations   56,224     31,332    18,665    20,933    26,306
    Net Income            56,224     31,332    21,090    18,748    24,218
  Earnings per share for
  income from continuing
   operations:
       Basic                1.58       1.15      0.77      0.91      2.37
       Diluted              1.53       1.06      0.75      0.88      2.33
  Earnings per share:
       Basic                1.58       1.15      0.87      0.82      2.18
       Diluted              1.53       1.06      0.85      0.79      2.15
  Dividends per share (2)                        0.15      0.20      0.35
Balance Sheet Data:
 Total assets          2,633,848  1,075,941   521,713   172,340   163,653
 Long-term obligations   695,845    293,956   112,500               6,000
   Total liabilities   2,225,348    774,426   360,919    58,754    71,954
   Total shareholders'   408,500    301,515   160,794   113,586    91,699
      equity

(1)   On  December 31, 1993, AMRESCO, INC., formerly BEI,  merged
with  Holdings.   The  merger was accounted  for  as  a  "reverse
acquisition" whereby Holdings was deemed to have acquired BEI for
financial  reporting  purposes.  However, BEI,  renamed  AMRESCO,
INC.,  remains  the  continuing legal entity and  registrant  for
Securities  and Exchange Commission filing purposes.   Consistent
with the reverse acquisition accounting treatment, the historical
financial  statements of AMRESCO, INC.  presented  for  the  year
ended December 31, 1993 are the consolidated financial statements
of Holdings and differ from the consolidated financial statements
of  BEI as previously reported.  The results of operations of BEI
have been included in the Company's financial statements from the
date of acquisition.

(2)   In  1993 dividends of $0.35 per share were paid by Holdings
to its shareholders prior to the merger with BEI.

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

Overview

     The  Company  is  a  leading diversified financial  services
company  with four principal lines of business: asset management,
commercial  mortgage  banking, residential mortgage  banking  and
commercial  finance.   The  asset  management  business  involves
acquiring  asset  portfolios at a substantial  discount  to  face
value  and  managing  and  resolving  such  asset  portfolios  to
maximize  cash recoveries.  In addition, in its asset  management
business,   the   Company   provides   special   servicing    for
nonperforming  and underperforming loans in commercial  mortgage-
backed  bond  trusts  and similar securitized  commercial  asset-
backed loan portfolios.  The commercial mortgage banking business
involves the full range of real estate capital markets functions,
including     the    origination,    underwriting,     placement,
securitization and servicing of commercial real estate  mortgages
and  commercial real estate brokerage.  The residential  mortgage
banking  business  involves originating, acquiring,  warehousing,
securitizing   and  servicing  nonconforming   loans.    In   its
commercial finance business, the Company focuses on (i) loans  to
franchisees of nationally recognized restaurant, hospitality  and
service  organizations, (ii) structured finance and (iii)  single
family   residential   construction   lending.    The   Company's
businesses   may   be   affected  by  many   factors,   including
fluctuations  in  real  estate  and  other  asset   values,   the
availability and price of assets and residential mortgages to  be
purchased,  the level of and fluctuations in interest rates,  the
level  of and fluctuations in prepayment, default and loss  rates
with  respect  to  loans owned or serviced  by  the  Company  and
certain   of   its  securitized  loan  pools,  changes   in   the
securitization   market  and  competition.   In   addition,   the
Company's operations require continued access to short  and  long
term sources of financing.

      In  1994,  the Company concluded substantially all  of  its
asset  management  relationships  with  government  agencies  and
financial  institutions and also began to shift its focus  toward
direct investment in asset portfolios and the development of  new
lines  of financial service businesses.  The Company has extended
its  business  lines  to offer a full range of  mortgage  banking
services,  increased the amount it invests in  asset  portfolios,
began  its  commercial finance business and disposed  of  certain
non-core  business  lines.   These  significant  changes  in  the
composition  of  the  Company's business  are  reflected  in  the
Company's  results of operations and may limit the  comparability
of the Company's results from period to period.

      Revenues  from  the  Company's asset management  activities
primarily  consist of earnings on asset portfolios, fees  charged
for  the  management of asset portfolios and for  the  successful
resolution of the assets within such asset portfolios  and  gains
on   sale  of  investments.   The  Company's  revenues  from  its
commercial mortgage banking activities are primarily earned  from
fees  generated by the origination and underwriting of commercial
real  estate  mortgage loans, the placement of  such  loans  with
permanent  investors and the servicing of loans, interest  earned
on  commercial  loans held for sale and gains  on  the  sale  and
securitization of commercial mortgage loans held for sale  earned
either  through  a  joint venture, as was the case  in  1997,  or
through  the  Company's  own  expected  securitization  activity.
Revenues   from   the  Company's  residential  mortgage   banking
activities primarily consist of interest earned on originated and
purchased   residential  mortgage  loans,  accrued  earnings   on
retained   interests  in  securitizations  and   gains   on   the
securitization and sale of residential mortgage loans  and  other
related  securities.   Revenues  from  the  Company's  commercial
finance  business are primarily earned from interest and fees  on
structured finance activities, loans to franchisees of nationally
recognized  restaurant,  hospitality and  service  organizations,
loans  to single family residential contractors, accrued earnings
on  retained  interests  in  securitizations  and  gains  on  the
securitization  and  sale of franchise loans  and  other  related
securities.   Corporate and other revenues primarily  consist  of
interest  earned on investments, other miscellaneous  income  and
intercompany   eliminations.   Corporate   and   other   expenses
primarily  include corporate personnel and overhead  and  certain
incentive   compensation,  unallocated   interest   expense   and
amortization of intangibles.

  The   Company  computes  a  gain  or  loss  on  the  sale   and
securitization of loans and other related securities based on the
fair  value of proceeds received over the allocated basis of  the
assets  sold.   Retained interests in assets sold  are  initially
recorded   at  their  allocated  basis;  however,  the  Company's
retained interests are classified as trading securities  and  are
carried  at  fair  market  value.   The  retained  interests   in
securitizations are valued at the discounted present value of the
cash  flows expected to be realized over the anticipated  average
life  of  the  assets sold after future estimated credit  losses,
estimated prepayments and normal servicing and other fees related
to  assets  sold.  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 Company typically retains an interest  in
its  securitizations of residential mortgage loans and  franchise
finance  receivables in the form of interest  only  and  residual
securities.   The  Company has not retained an  interest  in  its
securitization of commercial mortgage-backed loans.

Results of Operations

       The   following  discussion  and  analysis  presents   the
significant  changes  in  financial  condition  and  results   of
continuing operations of the Company by primary business line for
the years ended December 31, 1997, 1996 and 1995.  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   the
consolidated   financial  statements  and   notes   thereto   (in
thousands, except per share data).

                                              1997     1996     1995
Revenues:
 Asset management                           $109,063  $88,755   $81,596
 Commercial mortgage banking                  97,533   54,625    26,573
 Residential mortgage banking                166,407   56,864     2,307
 Commercial finance                           51,212    2,947
 Corporate, other and intercompany
 eliminations                                   (460)  (3,124)       10
     Total revenues                          423,755  200,067   110,486

Operating expenses:
 Asset management                             61,944   45,756    38,135
 Commercial mortgage banking                  67,045   40,131    20,550
 Residential mortgage banking                118,223   29,052     1,694
 Commercial finance                           30,321    2,252
 Corporate, other and intercompany            54,125   32,410    19,849
   eliminations

     Total operating expenses                331,658  149,601    80,228

Operating profit:
 Asset management                             47,119   42,999    43,461
 Commercial mortgage banking                  30,488   14,494     6,023
 Residential mortgage banking                 48,184   27,812       613
 Commercial finance                           20,891      695
 Corporate, other and intercompany           (54,585) (35,534)  (19,839)
   eliminations
     Total operating profit                   92,097   50,466    30,258
Income tax expense                            35,873   19,134    11,593
Income from continuing operations             56,224   31,332    18,665
Gain from discontinued operations                                 2,425

Net income                                   $56,224  $31,332   $21,090

Earnings per share from
continuing operations (1):
 Basic                                         $1.58    $1.15     $0.77
 Diluted                                        1.53     1.06      0.75

Earnings per share (1):
 Basic                                         $1.58    $1.15     $0.87
 Diluted                                        1.53     1.06      0.85

Weighted average number of
common shares outstanding - basic             35,610   27,232    24,173

(1)  Prior periods restated for the adoption of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share."

Year Ended December 31, 1997 Compared to Year Ended December 31,
1996

     The Company reported a 112% increase in revenues from $200.1
million  to  $423.8 million, an 82% increase in operating  profit
from  $50.5  million to $92.1 million and a 79% increase  in  net
income from $31.3 million to $56.2 million compared to the  prior
year  period.   The  increases were due primarily  to  additional
contributions by residential mortgage banking, commercial finance
and  commercial  mortgage banking operations.   Weighted  average
common shares outstanding increased 31% due primarily to the late
1996   conversion  of  the  Company's  convertible   subordinated
debentures, the late 1996 public offering of the Company's common
stock  and the March 1997 purchase of AMRESCO Commercial  Lending
Corporation  ("ACLC") with the Company's common  stock.   Diluted
earnings per share increased 44% from $1.06 to $1.53.

     Asset Management.  Revenues for the year ended December  31,
1997  primarily consisted of $64.6 million in interest and  other
investment   income,  $24.9  million  in  asset  management   and
resolution fees and $18.0 million of gains on sales of loans  and
investments.  The $20.3 million increase in revenues  from  $88.8
million  for  1996 to $109.1 million for the year ended  December
31,  1997 was primarily comprised of a $16.7 million increase  in
gain  on  sale  of  loans and investments  and  a  $13.8  million
increase in interest and other investment income offset, in part,
by  a  $9.3  million decrease in management and resolution  fees.
Gain on sale of loans and investments increased due primarily  to
the sales of asset-backed securities and sales of foreclosed real
estate.   Interest  and  other investment  income  increased  due
primarily to a significant increase in aggregate investments  for
the Company's own account since early 1996.  Asset management and
resolution fees decreased as a result of a shift in business away
from  primarily managing and investing in partnerships and  joint
ventures to investing in wholly-owned portfolios.

     Operating  expenses  for the year ended  December  31,  1997
primarily  consisted of $22.6 million in interest expense,  $17.4
million  in  personnel cost, $16.7 million in other  general  and
administrative  expenses  and  a  $4.5  million   provision   for
investment  and  loan  losses.  The  $16.1  million  increase  in
expenses  from $45.8 million for the prior year to $61.9  million
for the year ended December 31, 1997 was due primarily to an $8.0
million  increase  in  other general and administrative  expenses
primarily related to increased foreclosed real estate expenses, a
$7.3  million  increase  in  interest  expense  related  to   the
financing of increased levels of investments from early 1996, and
a   $4.5  million  provision  on  owned  portfolios  and  special
servicing  receivables,  offset,  in  part,  by  a  $3.5  million
decrease  in personnel expenses resulting from a lower  level  of
assets being managed.

     Commercial  Mortgage Banking.  Revenues for the  year  ended
December  31,  1997  primarily  consisted  of  $64.5  million  in
origination,  underwriting and servicing revenues, $19.2  million
in  interest  and  other investment income and $13.9  million  in
income  from  equity  affiliate.  The $42.9 million  increase  in
revenues  from $54.6 million for the prior year period  to  $97.5
million  for  the  year ended December 31,  1997  relates  to  an
increase  of  $24.4  million in mortgage  banking  and  servicing
revenues  due  primarily to transaction volume  of  $7.8  billion
during  1997  compared  to $3.8 billion for  1996.   Income  from
equity affiliate of $13.9 million for 1997 was due to income from
AMRESCO  Capital's 50% share in a joint venture which  originated
and  securitized  loans.   Interest and other  investment  income
increased $4.9 million due primarily to interest earned on  loans
held  for  sale and escrow deposits, both of which have increased
significantly since early 1996.

     In 1997, the Company originated commercial real estate loans
primarily  through  a joint venture in which the  Company  and  a
large  investment-banking firm shared equally in the accumulation
and  securitization  profits and risks.  Effective  December  19,
1997,  the  partnership between the Company and  the  investment-
banking  firm  was revised.  Any accumulation and  securitization
profit  or loss from commercial real estate loans for which  loan
applications were received on or before November 13, 1997 (except
for  specified  loans aggregating approximately  $120.3  million)
will  be shared equally by the Company and the investment-banking
firm.   All  profits  and risks associated with  commercial  real
estate  loans originated after November 13, 1997, as well as  the
profits   and  risks  relating  to  specified  loans  aggregating
approximately  $120.3  million for which loan  applications  were
received prior to November 13, 1997, will be for the sole account
of  the  Company.  The investment-banking firm will  continue  to
provide funding, distribution and related services to the Company
pursuant to a separate agreement.

     Operating  expenses  for the year ended  December  31,  1997
primarily consisted of $49.3 million in personnel expense,  $12.4
million  in  other  general and administrative expense  and  $3.2
million  in  interest  expense.  The $26.9  million  increase  in
expenses  from $40.1 million for the prior year to $67.0  million
for  the  year  ended December 31, 1997 was due primarily  to  an
increase of $19.9 million in personnel expenses primarily related
to  commissions on increased originations and an increase of $4.5
million  in  other  general  and administrative  expense  due  to
expanded operations.

      Residential Mortgage Banking.  Revenues for the year  ended
December  31,  1997  primarily  consisted  of  $90.1  million  in
interest  and other investment income and $69.6 million of  gains
on  securitization  and sale of residential  mortgage  loans  and
related securities.  The $109.5 million increase in revenues from
$56.9 million for the prior year period to $166.4 million for the
year  ended  December  31, 1997 primarily  related  to  increased
levels of loan originations, acquisitions and securitizations and
the  acquisition  by  AMRESCO  Residential  Mortgage  Corporation
("ARMC")  of  the  assets and business of  Quality  Mortgage  USA
("Quality").  The increase in revenues was primarily comprised of
a  $52.7 million increase in gain on the securitization and  sale
of  residential  mortgage loans and a $50.3 million  increase  in
interest and other investment income.

     The  increased  gain  on  the  securitization  and  sale  of
residential   mortgage   loans   was   due   primarily   to   the
securitization  and  sale  of  approximately  $3.0   billion   of
residential  mortgage loans during the year  ended  December  31,
1997,  including  approximately  $142.0  million  of  residential
mortgage loans securitized on a pre-fund basis in December  1996,
as  compared  to  gains on approximately $1.7  billion  of  loans
securitized  and  sold  in  1996.  In addition  to  greater  loan
volumes,  the  increase in gain on securitization  and  sale  was
attributable  in  part  to the inclusion of  loans  in  the  1997
securitizations originated by ARMC, which had a lower basis  than
loans  purchased from third parties and thus resulted  in  larger
gains.   Gains  for  1997  were reduced by  losses  from  futures
contracts used for hedging activities.

     Interest and other investment income primarily consisted  of
interest  earned  on  loans held for sale, which  have  increased
significantly  since  early  1996,  and  retained  interests   in
securitizations  (including  related hedging  and  mark-to-market
activities).  During 1997, the Company recognized a loss of  $4.9
million  from  futures  contracts  used  for  hedging  activities
associated with its retained interests in securitizations offset,
in  part, by mark-to-market gains of $2.5 million on its retained
interests in securitizations.

     Operating  expenses  for the year ended  December  31,  1997
primarily  consisted of $53.9 million in interest expense,  $37.9
million in personnel expense, $17.3 million in other general  and
administrative  expense  and  $7.6  million  of  provisions   for
investment  and  loan  losses.  Operating expenses  increased  by
$89.2  million  from $29.1 million for the prior year  period  to
$118.2  million  for  the  year ended December  31,  1997.   This
increase   primarily  consisted  of  $35.4  million  in  interest
expense,  $31.5  million in personnel expense, $13.5  million  in
other  general  and administrative expenses and $7.6  million  in
provisions  for  investment and loan  losses.   Interest  expense
primarily  related  to borrowings under warehouse  loans  payable
which  funded  the  origination, acquisition and  warehousing  of
mortgage  loans held for sale.  Personnel and other  general  and
administrative costs increased significantly from the prior  year
period   due  primarily  to  the  increased  operations  of   the
residential business through ARMC.  The provision for loan losses
related  primarily  to delinquent loans the  Company  elected  to
repurchase  from  the securitization trustee in  certain  of  the
Company's securitizations.

     Commercial  Finance.  Revenues for the year  ended  December
31,  1997  primarily consisted of $30.4 million of  interest  and
other   investment   income  and  $15.8  million   of   gain   on
securitization  and  sale of loans and  investments.   The  $48.3
million increase in revenues from $2.9 million for the prior year
period  to  $51.2  million for the year ended December  31,  1997
relates  primarily to the acquisition of ACLC in March  1997  and
increased lending activity.  Interest and other investment income
increased  $27.6  million due primarily  to  interest  earned  on
loans,   securities  retained  in  securitizations   and   escrow
deposits,  all of which have increased significantly since  early
1996.   The  $15.8  million gain primarily  relates  to  gain  on
securitization  and  sale  of  approximately  $266.0  million  of
franchise loans in 1997 by ACLC.

     Operating  expenses  for the year ended  December  31,  1997
primarily  consisted of $13.2 million in interest  expense,  $8.2
million  in  personnel cost, $4.6 million of provision  for  loan
losses  and  $4.2  million  in other general  and  administrative
expenses.   The  $28.1  million increase in  expenses  from  $2.3
million  for the prior year to $30.3 million for the  year  ended
December  31,  1997  was due primarily to an  increase  of  $12.3
million  in  interest  expense  related  to  the  financing   for
increased  levels  of  investments from  1996,  $7.9  million  in
personnel expense related to expanded operations, $4.6 million of
additional  provision for loan losses and $3.1 million  in  other
general and administrative expenses primarily related to expanded
operations.

     Corporate,  Other and Intercompany Eliminations.   Operating
losses  for  the  year  ended December 31, 1997  increased  $19.1
million  due primarily to increases in personnel costs and  other
overhead related to expanded operations.  The rapid growth of the
residential  mortgage  banking, commercial mortgage  banking  and
commercial  finance operations have necessitated  the  hiring  of
additional  personnel  and the related development  of  corporate
infrastructure.    The  Company  anticipates   that   the   costs
associated with the corporate function will continue to  decrease
as  a  percentage of revenues over time as the corporate  support
systems and infrastructure are able to support a greater base  of
revenue generating operations.

      Income Taxes.  The Company must have future taxable  income
to  realize  recorded  deferred tax  assets.   Certain  of  these
benefits  expire  beginning in 2001 and  are  subject  to  annual
utilization  limitations.  Management believes that recorded  net
deferred  tax  assets will be realized in the  normal  course  of
business.  The increase in the 1997 effective tax rate  to  39.0%
from  37.9% in 1996 was due primarily to the amortization of  the
intangible asset recorded related to the ACLC acquisition,  which
is not deductible for tax purposes.

Year Ended December 31, 1996 Compared to Year Ended December  31,
1995

     The Company reported an 81% increase in revenues from $110.5
million  to  $200.1 million, a 67% increase in  operating  profit
from  $30.3 million to $50.5 million and a 68% increase in income
from  continuing operations from $18.7 million to  $31.3  million
compared  to  the  prior  year period.  The  increases  were  due
primarily  to  growth in the residential and commercial  mortgage
banking  operations.  Weighted average common shares  outstanding
increased 13% due primarily to the issuance of 2.3 million shares
of  common  stock in late 1995 and the issuance  of  3.0  million
shares of common stock in late 1996.  Diluted earnings per  share
from continuing operations increased 41% over 1995 primarily  due
to  a 68% increase in income from continuing operations offset by
the   increase   in  weighted  average  shares  outstanding   and
equivalents used to compute diluted per share amounts.

      Asset Management.  Revenues for the year ended December 31,
1996  primarily consisted of $50.8 million in interest and  other
investment  income and $34.2 million in management and resolution
fees.   The $7.2 million increase from $81.6 million for 1995  to
$88.8  million  for 1996 primarily consisted of  an  increase  of
$13.9 million in interest and other investment income offset,  in
part,  by  a  decrease  of $6.3 million in asset  management  and
resolution  fees.  The increase in interest and other  investment
income  and the decrease in asset management and resolution  fees
relate  to  a  shift  from primarily managing  and  investing  in
partnerships  and  joint  ventures to investing  in  wholly-owned
portfolios.

      Operating  expenses for the year ended  December  31,  1996
consisted  of $20.9 million in personnel expenses, $15.3  million
in  interest  expense  and  $8.8 million  in  other  general  and
administrative  expenses.  The $7.7 million increase  from  $38.1
million for the year ended December 31, 1995 to $45.8 million for
the  year  ended  December 31, 1996 was  primarily  comprised  of
increases of $3.7 million in interest expense and $3.1 million in
other  general  and  administrative expenses.   Interest  expense
increased  due  primarily to the financing incurred  on  a  $99.6
million  increase in aggregate investments and other general  and
administrative  costs  increased  due  primarily   to   increased
foreclosed real estate expenses.

      Commercial Mortgage Banking.  Revenues for the  year  ended
December  31,  1996  primarily  consisted  of  $40.0  million  in
mortgage banking and servicing fees and $14.3 million in interest
and  other  investment  income.  The $28.1  million  increase  in
revenues from $26.6 million for the year ended December 31,  1995
to  $54.6  million for the year ended December 31,  1996  relates
primarily  to increases of $15.6 million in mortgage banking  and
servicing fees and $12.2 million of interest and other investment
income  due primarily to the inclusion of the operations  of  the
commercial loan servicing business acquired in October  1995  and
to increases in the loan origination and servicing volumes of the
Company's mortgage banking operations.

      Operating  expenses for the year ended  December  31,  1996
primarily consisted of $29.3 million in personnel expenses,  $7.9
million  in  other general and administrative expenses  and  $2.3
million  in  interest  expense.  The $19.6  million  increase  in
operating  expenses from $20.6 million for 1995 to $40.1  million
for  the  year ended December 31, 1996, was due primarily  to  an
increase  of  $13.2  million in personnel  expenses  and  a  $4.2
million  increase  in other general and administrative  expenses.
The  increase  in expenses was primarily due to the inclusion  of
operations of the commercial loan servicing business acquired  in
October  1995  and  the  growth  in commercial  mortgage  banking
operations which were initiated in late 1994.

      Residential  Mortgage Banking.  The Company  initiated  the
operation  of  the  residential  mortgage  banking  business   in
September  1995.  Revenues for the year ended December  31,  1996
primarily  consisted  of  $39.8 million  of  interest  and  other
investment  income and $16.9 million of gains on sales  of  loans
and  investments.  The $16.9 million gain on sale  of  loans  and
investments   resulted   from  securitizations   and   sales   of
approximately $1.7 billion of residential mortgage  loans,  which
excludes  $142.0 million which was pre-funded but the loans  were
not  sold until 1997.  Revenues for 1996 include $2.8 million  in
interest and other investment income and $2.4 million of gains on
sales  of  loans  and investments related to the  acquisition  of
substantially  all of the assets of Quality which were  purchased
by the Company effective October 25, 1996.

      Operating  expenses  for  the  year  ended  1996  primarily
consisted  of $18.5 million in interest expense, $6.4 million  in
personnel  expenses  and  $3.8  million  in  other  general   and
administrative expenses.  Interest expense primarily  relates  to
borrowings  under  warehouse  loans  payable,  which  funded  the
origination, acquisition and holding of mortgage loans  held  for
sale.  Expenses for 1996 include $4.6 million in personnel costs,
$2.8  million  in other general and administrative  expenses  and
$1.1  million  in  interest  expense related  to  the  operations
acquired from Quality on October 25, 1996.

      Commercial  Finance.  The Company began operations  of  its
commercial finance business in 1996.  Revenues for the year ended
December 31, 1996 primarily consisted of $2.8 million in interest
and other investment income earned from providing high yield debt
financing for businesses and projects that were unable to  access
traditional  lending  sources.  Expenses primarily  consisted  of
$1.0  million  of other general and administrative  expenses  and
$1.0 million of interest expense.

      Corporate, Other and Intercompany Eliminations.   Operating
loss  increased  $15.7 million from $19.8 million  for  the  year
ended  December  31,  1995 to $35.5 million for  the  year  ended
December  31,  1996  due  primarily  to  increases  in  personnel
expenses  and  other  overhead and interest  expense  related  to
expanded operations.

      Discontinued  Operations.  On June 16,  1995,  the  Company
disposed  of  the  operations of its data  processing  and  home-
banking  subsidiary for a net gain of $2.4 million, or $0.10  per
share.

Liquidity and Funding

     Liquidity  is  a  measure  of a company's  ability  to  meet
potential  cash  requirements, including ongoing  commitments  to
repay borrowings, fund investment and lending activities and  for
general  business purposes.  Cash for investing, originating  and
underwriting  loans, acquiring loans for securitization,  general
operating   expenses  and  business  acquisitions  is   primarily
obtained through cash flow from operations and credit facilities,
including  advances on the corporate and portfolio credit  lines,
mortgage warehouse lines, s,s,
mortgage warehouse lines, s,
mortgage warehouse lines, nonrecourse debt and other financings.

     The  Company  has  significant ongoing  liquidity  needs  to
support   its  existing  business  and  continued  growth.    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 tmillion and  $29.0
million at December 31, 1997 and 1996, respectively.  Cash  flows
from  operating  activities plus principal  cash  collections  on
loans,  asset  portfolios  and  asset-backed  securities  totaled
$196.9  million for the year ended December 31, 1997 compared  to
$56.6  million for 1996.  The increase in cash flows  from  these
activities   resulted   primarily  from  collections   on   asset
portfolios  and  asset-backed securities.   The  following  is  a
summary of certain cash flow data (dollars in thousands):

                                                           Year Ended
                                                          December 31,
                                                         1997      1996
Net cash used in operating activities                $(103,952) $ (50,376)
Net cash used in investing activities                 (347,170)  (223,804)
Net cash provided by financing activities              447,942    287,087
Other financial measures:
Cash flow from operations and collections on
loans, asset portfolios and asset-backed securities    196,904     56,646
  Cash provided by new capital and borrowings,
  net (excluding warehouse loans payable)              441,994    283,574
Cash used for purchase of asset portfolios and
asset-backed securities andoriginations of loans      (675,618)  (240,756)
Ratio of total debt to equity (1)                        5.2:1      2.3:1
Ratio of core debt to equity (2)                         2.1:1      1.1:1
EBITDA (3)                                             208,608     96,105
Interest coverage ratio (4)                                2.0x       2.6x

(1)  Excludes an investment line of credit for 1996.

(2)   Excludes indebtedness under warehouse lines of credit  and,
  for 1996, the investment line of credit.

(3)   EBITDA  is calculated as operating income before  interest,
  income  taxes, depreciation and amortization.  The Company  has
  included  information concerning EBITDA because EBITDA  is  one
  measure  of  an  issuer's  historical ability  to  service  its
  indebtedness.    EBITDA  should  not  be   considered   as   an
  alternative  to,  or more meaningful than,  net  income  as  an
  indicator  of the Company's operating performance  or  to  cash
  flows as a measure of liquidity.

(4)   Interest coverage ratio means the ratio of earnings  before
  interest,   taxes,  depreciation  and  amortization   to   cash
  interest expense.

     The  following table shows the components of  the  Company's
capital  structure,  including certain  short-term  debt,  as  of
December 31, 1997 and 1996 (dollars in millions):


                                    1997            1996
                                          % of            % of
                                Dollars   Total  Dollars Total
Shareholders' equity          $  408.5    16%    $301.5   30%
Senior notes                      57.5     2       57.5    6
Senior subordinated notes        250.0    10       57.5    6
Mortgage warehouse loans       1,268.6    51      354.6   36
Notes payable (excluding         531.6    21      225.9   22
Total                         $2,516.2   100%    $997.0  100%

     Total  assets  increased $1.6 billion  to  $2.6  billion  at
December  31, 1997 from $1.1 billion at December 31, 1996.   This
increase was due primarily to an increase in loans held for sale,
retained  interests in securitizations and an increase  in  loans
and asset portfolios.

     On  March  12,  1997,  the  Company  issued  $192.5  million
aggregate  principal  amount of senior subordinated  notes.   The
notes  bear  interest at 10% per annum and mature  on  March  15,
2004.  The 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 notes are not redeemable prior to maturity.

     On May 30, 1997, the Revolving Loan Agreement was amended to
provide  a  $350.0 million commitment under the revolving  credit
facility with a maturity date of May 31, 1999 and a $60.0 million
commitment under the term facility, which matures May  31,  2001.
Effective  as  of  September 30, 1997, the  Company  amended  the
Revolving  Loan  Agreement to, among other things,  increase  the
borrowing  limits  provided for therein from  $350.0  million  to
$550.0  million,  of  which up to $455.0  million  was  available
pursuant to lender commitments at December 31, 1997.  As of March
20,  1998,  lender commitments under the Revolving Loan Agreement
were $540.0 million.  Assuming commitments were received for  the
full $550.0 million, the Revolving Loan Agreement would permit up
to  $490.0 million to be incurred pursuant to a revolving  credit
facility  and $100.0 million to be incurred pursuant  to  a  term
facility,  subject  to  a  combined  borrowing  limit  of  $550.0
million.   At December 31, 1997, the outstanding balance  of  the
Revolving  Loan  Agreement  was  approximately  $388.3   million,
resulting  in  a borrowing capacity at that time of approximately
$66.7 million.

      In February 1998, the Company completed a registered public
offering  of  approximately 5.2 million shares  of  common  stock
including  the  underwriters'  over-allotment  option.   The  net
proceeds  from  such  offering  aggregated  approximately  $147.8
million  and  were used to repay borrowings under  the  Company's
Revolving Loan Agreement.  The price to the public was $30.00 per
share  and  the  proceeds to the Company were $28.56  per  share,
after  underwriting  discounts.  Additionally,  in  February  and
March  1998, the Company issued $290.0 million and $40.0 million,
respectively,  aggregate principal amount of senior  subordinated
notes.    The  net  proceeds  from  the  February  1998  offering
aggregated  approximately $281.7 million and were used  to  repay
borrowings under the Company's Revolving Loan Agreement and other
indebtedness  and the net proceeds from the March  1998  offering
aggregated approximately $39.0 million and were used for  general
corporate   purposes.   The  February  and  March   1998   senior
subordinated notes bear interest at 9.875% per annum  and  mature
on  March 15, 2005.  The 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 and its subsidiaries.  The following table sets forth
the  components  of  the Company's capital  structure,  including
certain  short  term  debt,  as of  December  31,  1997  and  the
unaudited  pro  forma  capital structure of  the  Company  as  of
December 31, 1997 adjusted to give effect to the common stock and
notes offerings, and the use of proceeds therefrom, completed  in
February and March 1998 (dollars in millions):

                                   Actual         Pro forma
                                         % of           % of
                                Dollars Total  Dollars Total
Shareholders' equity          $  408.5   16%  $  556.3  21%
Senior notes                      57.5    2       57.5   2
Senior subordinated notes        250.0   10      580.2  22
Mortgage warehouse loans       1,268.6   51    1,216.7  46
Notes payable                    531.6   21      253.9   9
Total                         $2,516.2  100%  $2,664.6 100%

  Following  the  consummation of these common  stock  and  notes
offerings,  management anticipates that the  Company's  borrowing
capacity  under  the  Revolving  Loan  Agreement,  other   credit
facilities and funds from operations will be sufficient  to  fund
the Company's operations through mid-1999.

Securitization Practices

     The  Company  has  utilized warehouse lines  of  credit  and
securitizations  to  fund the growth of its residential  mortgage
banking,  commercial  real estate lending and  franchise  finance
operations.  The Company believes that the ability to  accumulate
loans under warehouse lines of credit and to repay the loans with
the  proceeds  of a subsequent securitization of  the  loans  has
permitted  the Company to deploy its capital resources  across  a
broader  revenue  generating base than would have  been  possible
using  traditional  corporate  debt  financing  techniques.    In
addition, the gain recognized on the securitization of loans  and
the  interest  income  derived from securities  retained  by  the
Company  from  securitizations provide  an  important  source  of
revenue.   In  determining  the  amount  of  gain  on  sale  from
securitizations and the value of retained securities, the Company
employs  discount rates and assumes prepayment rates and  a  loss
experience  that  it believes are reasonable  and  prudent.   The
Company periodically evaluates the assumptions used and makes any
adjustments  to  assumed  prepayment  rates,  default  rates  and
discount  rates  that may be necessary or appropriate  given  the
market conditions at that time or other appropriate factors.

     The  Company  views  prepayment  rates  in  the  residential
markets  as less predictable than in other markets, such  as  the
commercial  real  estate  lending and franchise  finance  markets
where  prepayment penalties tend to discourage  prepayments.   It
has   been   the   Company's  practice  to  employ   conservative
assumptions  with respect to prepayment and loss  rates  for  its
residential  mortgage loan securitizations.  For its  residential
mortgage  loan securitizations for the years ended  December  31,
1997  and  1996,  the Company has initially valued  its  retained
interest  using a discount rate of 20% and has assumed prepayment
methodologies  which  reflect over the life  constant  prepayment
rates  ranging from 19% to 30% and blended annualized loss  rates
ranging  from 0.50% to 0.625% with variations within  the  ranges
primarily depending upon mix of loan types.

     The  Company  has  also  used a 20%  discount  rate  in  its
franchise loan securitizations in 1997.  However, the Company has
assumed  no prepayments or losses with respect to loans in  these
securitized portfolios.  ACLC structures its franchise loans with
limited   cross  guarantees  between  borrowers  such  that   the
borrowers within a defined pool of loans absorb the first  5%  of
net  losses.   At  the  present time, the  Company  considers  it
unlikely that net losses on franchise loan portfolios will exceed
5%.   ACLC  and  its predecessors have experienced no  losses  on
franchise  loans  since  their inception in  1993.   Accordingly,
losses  are  assumed to be zero.  The "no prepayments" assumption
is  based  on  ACLC's  historical prepayment experience  and  the
significant  prepayment  penalties applicable  to  the  franchise
loans  which compensate the Company for much of any lost earnings
from prepayments.

Other Matters

     On  March  31,  1997,  the Company purchased  the  stock  of
Commercial  Lending Corporation and the operations  and  specific
assets  of  certain affiliates and renamed the  business  AMRESCO
Commercial Lending Corporation.  ACLC's primary line of  business
is  originating,  securitizing, selling and  servicing  franchise
loans.   The  purchase price consisted of (i)  approximately  2.1
million  shares  of the Company's Common Stock  valued  at  $34.3
million  (including 0.2 million additional shares issued in  July
1997  valued at $3.3 million pursuant to the original acquisition
terms),  (ii)  the  assumption of certain liabilities  and  (iii)
contingent earnout payments of additional shares of the Company's
Common Stock based upon the operating performance of the acquired
entities  through March 31, 2000.  The acquisition  of  ACLC  was
recorded as a purchase acquisition.

     On  January  1,  1997,  the Company adopted  SFAS  No.  125,
"Accounting for Transfers and Servicing of Financial  Assets  and
Extinguishment  of  Liabilities," which  requires  an  entity  to
recognize the financial and servicing assets it controls and  the
liabilities  it has incurred and to derecognize financial  assets
when  control has been surrendered.  Retained interests in assets
sold  are  measured  by allocating the previous  carrying  amount
between  the  assets sold and retained interests based  on  their
relative  fair values at the date of transfer.  The  adoption  of
SFAS  No.  125  did not have a material impact on  the  Company's
financial position or results of operations.

     On  December  31, 1997, the Company adopted  SFAS  No.  128,
"Earnings  Per  Share,"  which  establishes  new  standards   for
computing and presenting earnings per share ("EPS").  Prior  year
amounts  have  been  restated for the new EPS  presentation.   On
December  31,  1997,  the  Company also  adopted  SFAS  No.  129,
"Disclosure  of  Information  about  Capital  Structure,"   which
establishes  standards  for  disclosing  information   about   an
entity's capital structure.

      In  June  1997,  SFAS  No.  130,  "Reporting  Comprehensive
Income," was issued which establishes standards for reporting and
display  of  comprehensive  income  and  its  components  in  the
financial statements.  SFAS No. 130 is effective for fiscal years
beginning  after  December 15, 1997.  SFAS No. 131,  "Disclosures
about  Segments of an Enterprise and Related Information,"  which
was  also issued in June 1997, establishes standards for the  way
public  companies disclose information about operating  segments,
products  and  services, geographic areas  and  major  customers.
SFAS  No.  131 is effective for financial statements for  periods
beginning after December 15, 1997.  The Company anticipates  that
its  segments  to be disclosed in 1998 will be asset  management,
commercial   mortgage  banking,  residential  mortgage   banking,
commercial  finance and corporate.  In February  1998,  SFAS  No.
132,   "Employers'   Disclosures   about   Pensions   and   Other
Postretirement  Benefits,"  was issued  which  is  effective  for
fiscal  years  beginning after December 31,  1997.   The  Company
adopted these standards for disclosure effective January 1, 1998.

Year 2000

     Substantially  all of the systems used by  the  Company,  as
well  as vendor and business partner systems, are expected to  be
year  2000  compliant by January 1, 1999.  Although  the  Company
expects  all of its systems to be year 2000 compliant by  January
1,  1999,  there can be no assurance that all vendor and business
partner systems will be year 2000 compliant.  The Company's  cost
to  comply  with the year 2000 initiative is not expected  to  be
significant.

Private Litigation Securities Reform Act of 1995

     This  report  contains forward-looking statements  based  on
current   expectations  that  involve  a  number  of  risks   and
uncertainties.  The forward-looking statements are made  pursuant
to  safe  harbor provisions of the Private Securities  Litigation
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

        Not applicable.

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 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.

Exhibit
Number  Description of Exhibit

  3.(a) Restated Certificate of Incorporation. (1)
    (b) Amended  and Restated Bylaws effective as of February  25,
        1997 filed as exhibit 3 (b) to Registrant's Form 10-K  for
        the  fiscal  year  ended  December  31,  1996,  which   is
        incorporated herein by reference.
  4.(a) See Exhibits 3(a) and (b).
    (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. (1)
    (f) Specimen  Common Stock Certificate, filed as  Exhibit  4.4
        to  the Company's Registration Statement on Form S-3  (No.
        33-63683),  which  exhibit  is  incorporated   herein   by
        reference.
 10.(a) Form of Indemnification Agreement together with a list  of
        all   officers   and  directors  who  have   signed   such
        agreement,  filed  as  Exhibit 10(g) to  the  Registrant's
        Annual Report on Form 10-K for the year ended October  31,
        1987, which exhibit is incorporated herein by reference.
    (b) Form  of Indemnification Agreement dated as of August  24,
        1993,  together with a list of all officers and  directors
        who have signed such agreement, filed as Exhibit 10(g)  to
        the  Registrant's Quarterly Report on Form  10-Q  for  the
        quarter  ended  September  31,  1993,  which  exhibit   is
        incorporated herein by reference.
    (c) Fifth  Amended  and Restated Incentive Stock  Option  Plan
        dated  as of November 20, 1990, filed as Exhibit 10(h)  to
        the  Registrant's Annual Report on Form 10-K for the  year
        ended  December  31, 1991, which exhibit  is  incorporated
        herein by references.(2)
    (d) Fourth Amended and Restated Stock Option Plan dated as  of
        November  20,  1991,  filed  as  Exhibit  10(i)   to   the
        Registrants Annual Report on Form 10-K for the year  ended
        December  31,  1991, which exhibit is incorporated  herein
        by reference.(2)
    (e) Stock  Option  Agreement, dated  as  of  April  17,  1990,
        between  the  Registrant  and  Bruce  W.   Schnitzer,  and
        Termination  of  Warrant between Mr.   Schnitzer  and  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.(2)
    (f) 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.
    (g) Promissory   Note  dated  October  31,  1990   issued   by
        Gerald   E.    Eickhoff  to  the  Registrant,   filed   as
        Exhibit 10(w) to the Registrant's Annual Report Form  10-K
        for  the  year  ended October 31, 1990, which  exhibit  is
        incorporated herein by reference.
    (h) 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)
    (i) 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.
    (j) Indemnification Agreement, dated March 30,  1993,  between
        AMRESCO   Holdings,  and  William  S.   Green,  filed   as
        Exhibit  10(ac)  to  the  Registrant's  Annual  Report  on
        Form  10-K  for  the year ended December 31,  1993,  which
        exhibit is incorporated herein by reference.
    (k) 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)
    (l) The  Registrant's Retention Bonus Plan, as amended,  filed
        as  Exhibit  10(ah) to the Registrant's Annual  Report  on
        Form  10-K  for the year ended December 31,  1993  and  as
        Exhibit  10(y)  to  the  Registration  Statement  of   the
        Registrant  on Form S-4 under the Securities Act  of  1993
        (File  No.   33-72321),  which exhibits  are  incorporated
        herein by reference.(2)
    (m) 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)
    (n) The   Registrant's  Thrift  Restoration  Plan   filed   as
        Exhibit  10(ak)  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)
    (o) Employment  Agreement, dated as of May 31,  1994,  between
        Registrant   and   Robert  H.    Lutz,   Jr.,   filed   as
        Exhibit  10(y)  to  the Registrant's  Form  10-K  for  the
        fiscal  year  ended December 31, 1994,  which  exhibit  is
        incorporated herein by reference.(2)
    (p) Amendment to Stock Option Agreement, dated as of April  1,
        1995,  between  the  Registrant and  Bruce  W.   Schnitzer
        filed as Exhibit 10(an) to the Registrant's Form 10-K  for
        the fiscal year ended December 31, 1995, which exhibit  is
        incorporated herein by reference. (2)
    (q) 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.
    (r) First Amendment to Office Lease dated July 17, 1996. (1)
    (s) Second  Amendment to Lease Agreement dated May  27,  1997.
        (1)
    (t) Third  Amendment  to Lease Agreement dated  September  22,
        1997. (1)
    (u) Lease  Expansion  and Fourth Amendment to Lease  Agreement
        dated January 6, 1998.  (1)
    (v) Third  Amended  and Restated Loan Agreement  dated  as  of
        September 30, 1997 by and among AMRESCO, INC. and  certain
        of  its  subsidiaries and NationsBank of Texas,  N.A.,  as
        Agent,  Bank  One, Texas N.A., as Co-Agent and NationsBank
        of  Texas  N.A. and certain other designated entities,  as
        lenders.  (1)
    (w) Form  of  Severance Agreement, dated as of May  29,  1996,
        with  Robert  H  Lutz,  Jr., Robert  L.  Adair,  Barry  L.
        Edwards,  L.  Keith  Blackwell,  Ronald  B.  Kirkland  and
        Ronald   Castleman  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)
    (x) Form  of  Letter  Agreement, dated as of March  20,  1997,
        with  Harold  E. Holliday, Jr. and Scott J. Reading  filed
        as  exhibit  10.(y) to the registrants Form 10-K  for  the
        fiscal   year   ended   December  31,   1996,   which   is
        incorporated herein by reference. (2)
    (y) Incentive  Compensation Program, dated  August  15,  1996,
        for   certain  employees  of  AMRESCO  Residential  Credit
        Corporation  filed  as exhibit 10.(z) to  the  registrants
        Form  10-K  for the fiscal year ended December  31,  1996,
        which is incorporated herein by reference. (2)
    (z) AMRESCO  Deferred  Compensation  Program,  dated   as   of
        January   1,  1996  filed  as  exhibit  10.(aa)   to   the
        registrants  Form 10-K for the fiscal year ended  December
        31, 1996, which is incorporated herein by reference. (2)
   (aa) Amendment No. 1 to AMRESCO Deferred Compensation  Program,
        dated  December 31, 1996 filed as exhibit 10.(ab)  to  the
        Registrant's Form 10-K for the fiscal year ended  December
        31, 1996, which is incorporated herein by reference. (2)
   (ab) AMRESCO,  INC.  1997 Stock Option Plan  filed  as  exhibit
        10.(ac)  to the registrants Form 10-K for the fiscal  year
        ended  December 31, 1996, which is incorporated herein  by
        reference. (2)
   (ac) AMRESCO,  INC.  1995  Stock  Option  and  Award  Plan,  as
        amended and restated. (1) (2)
    11. Statement re: Computation of Per Share Earnings. (1)
    21. Subsidiaries of the Registrant. (1)
    23. Consent   of  Independent  Auditors-Deloitte  and   Touche
        LLP (1)
 27.(a) Financial Data Schedule- Fiscal year end 1997. (1)
    (b) Financial  Data  Schedule - Fiscal year ends  1995,  1996,
        and Quarters 1, 2 and 3 of 1996. (1)
    (c) Financial  Data Schedule - Quarters 1, 2, and 3  of  1997.
        (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

     No reports on Form 8-K were filed during the last quarter of
fiscal year 1997.

                                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 27th day of March, 1998.

                              AMRESCO, INC.

                              By:  /s/ L.  Keith Blackwell
                                       L.  Keith Blackwell
                               Vice President, General Counsel
                                       and Secretary

      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 27th day of March, 1998:

           Signature                     Title
      ROBERT H. LUTZ, JR.     Chairman of the Board and
      Robert H. Lutz, Jr.     Chief Executive Officer
      ROBERT L. ADAIR III     Director, President and
      Robert L. Adair III     Chief Operating Officer
       BARRY L. EDWARDS       Executive Vice President and Chief Financial
        Barry L Edwards       Officer (Principle Financial Officer)
      JAMES P. COTTON, JR     Director
      James P. Cotton, Jr.
       RICHARD L. CRAVEY      Director
       Richard L. Cravey
      GERALD E. EICKHOFF      Director
       Gerald E. Eickhoff
      EDWIN A. WAHLEN, JR     Director
      Edwin A. Wahlen, Jr.
       AMY J. JORGENSEN       Director
        Amy J. Jorgensen
      BRUCE W. SCHNITZER      Director
       Bruce W. Schnitzer
       SIDNEY E. HARRIS       Director
        Sidney E. Harris
        RON B. KIRKLAND       Vice President and Chief Accounting Officer
        Ron B. Kirkland       (Principle Accounting Officer)


                  INDEX TO FINANCIAL STATEMENTS


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

 Consolidated Balance Sheets, December 31, 1997 and 1996          F-2
 Consolidated Statements of Income for the Years Ended December   F-3
 31, 1997, 1996 and 1995
 Consolidated Statements of Shareholder's Equity for the Years    F-4
 Ended December 31, 1997, 1996 and 1995
 Consolidated Statements of Cash Flows for the Years Ended        F-5
 December 31, 1997, 1996 and 1995
 Notes to Consolidated Financial Statements                       F-6
 Independent Auditor's Report                                     F-24

                 AMRESCO, INC.  AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
                   December 31, 1997 and 1996
            (In thousands, except for share amounts)

                                                         1997    1996
                        ASSETS
Cash and cash equivalents                               $  25,866  $  29,046
Temporary investments                                                 34,190
Loans held for sale, net                                1,330,337    376,029
Loans and asset portfolios, net                           648,694    293,248
Retained interests in securitizations - trading (at       294,062    130,328
fair value)
Asset-backed securities - available for sale (at fair     107,677     55,678
value)
Accounts receivable, net of reserves of $455 and           19,183     12,243
$1,611, respectively
Deferred income taxes                                      28,324     13,285
Premises and equipment, net of accumulated                 10,147     18,228
depreciation of $10,641 and $5,285, respectively
Intangible assets, net of accumulated amortization of     113,841     87,219
$20,038 and $11,110, respectively
Other assets                                               55,717     26,447

TOTAL ASSETS                                           $2,633,848 $1,075,941

         LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
 Accounts payable                                       $   22,821 $  15,988
 Accrued employee compensation and benefits                 33,609    14,521
 Notes payable                                             531,573   260,092
 Warehouse loans payable                                 1,268,665   354,562
 Senior notes                                               57,500    57,500
 Senior subordinated notes                                 250,000    57,500
 Income taxes payable                                       19,185     3,742
 Other liabilities                                          41,995    10,521

   TOTAL LIABILITIES                                     2,225,348   774,426

COMMITMENTS AND CONTINGENCIES (Note 12)

SHAREHOLDERS' EQUITY:
  Common stock, $0.05 par value, authorized 150,000,000
shares; 36,543,210 and 33,796,145 shares issued,            1,827      1,690
respectively
 Capital in excess of par                                 257,941    213,843
 Reductions for employee stock                             (2,713)    (1,129)
 Treasury stock, $0.05 par value, 24,339 shares in           (160)      (160)
1997 and 1996
 Net unrealized gains (losses)                              8,359        249
 Retained earnings                                        143,246     87,022

   TOTAL SHAREHOLDERS' EQUITY                             408,500    301,515

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $2,633,848 $1,075,941

         See notes to consolidated financial statements.

                 AMRESCO, INC.  AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF INCOME
      For the Years Ended December 31, 1997, 1996 and 1995
              (In thousands, except per share data)



                                                1997     1996    1995
REVENUES:
 Interest and other investment income         $203,647  $103,639 $ 40,105
 Gain on sale of loans and investments, net    103,385    18,394    1,382
 Mortgage banking and servicing fees            75,250    40,697   24,382
 Asset management and resolution fees           24,948    34,300   41,295
 Income from equity affiliate                   13,930
 Other revenues                                  2,595     3,037    3,322

   Total revenues                              423,755   200,067  110,486

EXPENSES:
 Personnel                                     146,018    78,864   52,852
 Interest                                      102,063    36,763    6,921
 Other general and administrative               51,365    21,903   16,121
 Provisions for loan and asset portfolio        17,764     3,195
   losses
 Depreciation and amortization                  14,448     8,876    4,334

   Total expenses                              331,658   149,601   80,228

Income from continuing operations before        92,097    50,466   30,258
Income tax expense                              35,873    19,134   11,593

INCOME FROM CONTINUING OPERATIONS               56,224    31,332   18,665
Gain from discontinued operations, net of                           2,425
income taxes (Note 14)

NET INCOME                                    $ 56,224  $ 31,332 $ 21,090

Earnings per share from continuing
operations:
 Basic                                           $1.58     $1.15    $0.77
 Diluted                                          1.53      1.06     0.75
Earnings per share:
 Basic                                           $1.58     $1.15    $0.87
 Diluted                                          1.53      1.06     0.85

Weighted average number of common shares        35,610    27,232   24,173
outstanding - basic

         See notes to consolidated financial statements.

                 AMRESCO, INC.  AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
      For the Years Ended December 31, 1997, 1996 and 1995
                (In thousands, except share data)

<TABLE>
<CAPTION>
                      Common Stock
                      $0.05 par value
                                                    Reduction              Net
                        Number          Capital in    for               Unrealized             Total
                         of             Excess of   Employee   Treasury   Gains    Retained  Shareholders
                        Shares    Amount    Par        Stock     Stock   (Losses)  Earnings    Equity
<S>                  <C>         <C>     <C>        <C>         <C>     <C>      <C>         <C>
JANUARY 1, 1995       23,592,647  $1,180  $ 74,691   $  (429)            $  (62)  $ 38,206   $113,586

Common stock offering  2,300,000     115    24,995                                             25,110
Exercise of stock
options (including       434,480      22     3,211                                              3,233
tax benefit)
Issuance of common
stock for unearned
stock compensation       250,202      12    2,385   (2,397)
Issuance of common       112,002       5      772                                                 777
stock for earnout
Dividends paid ($0.15                                                               (3,606)    (3,606)
per share)
Other                                                  588     $(160)       176                   604
Net income                                                                           21,090    21,090

DECEMBER 31, 1995     26,689,331   1,334  106,054   (2,238)     (160)       114      55,690   160,794

Common stock offering  2,992,148     150   60,740                                              60,890
Debt conversion to     3,600,000     180   42,879                                              43,059
common stock
Exercise of stock
options (including      466,760       23    3,475                                               3,498
tax benefit)
Issuance of common       57,186        3      774                                                 777
stock for earnout
Amortization of                                      1,015                                      1,015
unearned stock
compensation
Other                   (9,280)               (79)      94                  135                   150
Net income                                                                           31,332    31,332

DECEMBER 31, 1996   33,796,145     1,690  213,843   (1,129)     (160)       249      87,022   301,515

Issuance of common   2,094,944       105   34,203                                              34,308
stock for acquisition
Exercise of stock
options (including     441,915        21    5,927                                               5,948
tax benefit)
Issuance of common
stock for unearned     169,084         9    3,335  (3,344)
stock compensation
Issuance of common      43,622         2      775                                                 777
stock for earnout
Amortization of                                     1,718                                       1,718
unearned stock
compensation
Unrealized gain on
investments available                                                        8,145              8,145
for sale, net
Other                  (2,500)               (142)     42                      (35)              (135)
Net income                                                                            56,224   56,224

DECEMBER 31, 1997  36,543,210    $1,827  $257,941 $(2,713)   $(160)         $8,359  $143,246 $408,500
</TABLE>

             See notes to consolidated financial statements.
                   AMRESCO, INC.  AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the Years Ended December 31, 1997, 1996 and 1995
                            (In thousands)
<TABLE>
<CAPTION>

                                                     1997      1996    1995
OPERATING ACTIVITIES:
<S>                                              <C>       <C>       <C>
 Net income                                       $ 56,224  $ 31,332 $ 21,090
 Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
  Gain on sale of loans and investments           (103,385)  (18,394)  (1,382)
  Depreciation and amortization                     14,448     8,876    4,334
  Accretion of interest income                     (35,233)  (13,063)
  Gain on sale of discontinued operations                              (2,425)
  Provisions for loan and asset portfolio losses    17,764     3,195
  Deferred tax provision (benefit)                 (15,039)   (1,101)   5,023
  Other                                               (548)    1,015      346
   Increase (decrease) in cash for changes in
(exclusive of assets and liabilities acquired in
business combinations):
   Accounts receivable, net                         (6,833)    6,369    4,757
   Loans held for sale, net                     (1,026,535) (234,325)(160,843)
   Retained interests in securitizations           105,607    46,739
   Other assets                                    (11,298)   (6,441)  (2,608)
   Accounts payable and accrued compensation and    10,595     1,393   (2,272)
      benefits
   Warehouse loans payable                         826,812   116,962  153,158
   Income taxes payable                             15,443       845       61
   Other liabilities                                48,026     6,222  (11,577)

    Net cash provided by (used in) operating      (103,952)  (50,376)   7,662
        activities

INVESTING ACTIVITIES:
 Sale (purchase) of temporary investments, net      34,190   (12,248) (21,942)
 Origination of loans and purchase of asset       (599,937) (218,879)(166,180)
 Collections on loans and asset portfolios         240,552   106,785   57,208
 Purchase of asset-backed securities available     (75,681)  (21,877) (43,516)
for sale
 Proceeds from sale of and collections on asset-    60,304       237   13,067
backed securities available for sale
 Purchase of interests in securitizations                             (12,149)
 Cash used for purchase of subsidiaries             (2,176)  (57,437) (22,323)
 Investment in and advances to joint venture       (25,065)  (13,905)
 Distribution from joint venture                    17,789
 Proceeds from sales of subsidiaries                                    6,250
 Proceeds from sale of premises                     15,813

 Purchase of premises and equipment                (12,959)   (6,480)  (2,384)

     Net cash used in investing activities        (347,170) (223,804)(191,969)

FINANCING ACTIVITIES:
 Net proceeds from notes payable and other debt  1,083,291 1,108,720  565,311
 Repayment of notes payable and other debt        (827,443) (886,036)(408,974)
 Payment of dividends                                                  (4,785)
 Proceeds from issuance of senior subordinated     186,146
notes
 Proceeds from common stock offerings                         60,890   25,110
 Stock options exercised and tax benefits from       5,948     3,498    3,233
employee stock compensation
 Other                                                            15      105

  Net cash provided by financing activities        447,942   287,087  180,000

Net increase (decrease) in cash and cash            (3,180)   12,907   (4,307)
equivalents
Cash and cash equivalents, beginning of year        29,046    16,139   20,446

Cash and cash equivalents, end of year            $ 25,866  $ 29,046 $ 16,139

SUPPLEMENTAL DISCLOSURES:
 Interest paid                                    $ 92,965  $ 35,667   $5,494
 Income taxes paid                                  35,826    18,289    4,813
 Exchange of loans held for sale for retained      149,706   105,612
interests in securitizations
 Common stock issued for purchase of                35,085       777      777
subsidiaries and earnouts
 Common stock issued for unearned stock              3,344              2,397
compensation
 Conversion of convertible debt to common stock               45,000

 Accrued earnout payment for purchase of                       3,883    3,883
   mortgage banking subsidiary
</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  real  estate lending, commercial  finance  and  the
acquisition,  resolution  and  servicing  of  nonperforming   and
underperforming commercial loans.  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 securitization market and competition.  In addition,  the
Company's operations require continued access to short  and  long
term sources of financing.

      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 Income.  The Company's interest income consists of
interest  earned  on  loans  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   income
represents   the  interest  earned  on  the  loans   during   the
warehousing period (the period prior to their securitization), as
well as loans held on the balance sheet on a long-term basis, and
the  recognition  of  interest income on the securities  retained
after  securitization.  Interest income is recognized  using  the
effective  yield method and includes accretion of  discounts  and
amortization of premiums.

     Gain on Sale of Loans and Investments.  The Company computes
a  gain  or  loss  on the sale and securitization  of  loans  and
investments based on the fair value of proceeds received over the
allocated basis of the assets sold 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 market 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.   The Company provides asset management and  resolution
services   primarily  for  private  investors.   Generally,   the
contracts provide for the payment of a fixed management fee which
is   reduced  proportionately  as  managed  assets  decrease,   a
resolution fee using specified percentage rates based on net cash
collections  and  an  incentive fee  for  resolution  of  certain
assets.   Asset  management and resolution  contracts  are  of  a
finite  duration,  typically three to  five  years.   Unless  new
assets  are  added  to these contracts during  their  terms,  the
amount of total assets under management decreases over the  terms
of  these  contracts.  In December 1995, the Company  received  a
$4.0   million   final  settlement  from  the  Resolution   Trust
Corporation for certain contracts, all of which expired in 1994.

      Income from Equity Affiliate.  Income from equity affiliate
represents  the  Company's proportionate share of  the  operating
results  of the Company's investment in a joint venture accounted
for on the equity method.

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

      Temporary  Investments.  Temporary investments  consist  of
short-term  investments such as Treasury  bills,  federal  agency
securities  and commercial paper with a maturity of three  months
or  less when purchased and are carried at amortized cost,  which
approximates fair value.  All temporary investments were  pledged
as collateral under an investment loan agreement (see Note 7).

      Accounts  Receivable.   Receivables  are  recorded  as  the
related   revenues  are  earned  according  to   the   respective
management 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, net.  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, net.  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 are  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  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 reported  as  a
separate  component of shareholders' equity, net of tax  effects.
Any  impairment, other than temporary, in the value of a security
will be included in earnings.

      Retained  Interests in Securitizations.  Retained interests
in  securitizations are classified as trading and are carried  at
estimated fair market 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
expected to be realized over the anticipated average 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
(see Note 5).

      Premises  and Equipment.  Premises and equipment, primarily
building  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 market value  of  tangible  net
assets  acquired  in  connection  with  the  purchases  of  other
businesses.   These  intangible  assets,  principally   goodwill,
servicing rights and contracts acquired, are amortized using  the
straight-line method over periods ranging from one to  twenty-two
years.   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.

      Income  Taxes.   The  Company  and  its  subsidiaries  file
consolidated tax returns.  Deferred income taxes are 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 after tax amount
of   interest  recognized  in  the  period  associated  with  any
convertible debt by the weighted-average number of common  shares
outstanding including 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.   These
translation  methods  give  rise to cumulative  foreign  currency
translation  adjustments, which are reported as  a  component  of
shareholders' equity.

      Derivative  Financial  Instruments.   Derivative  financial
instruments  are utilized by the Company to reduce interest  rate
risk.   Derivative  financial instruments include  interest  rate
swaps  and  caps and futures and forward contracts.  The  Company
does  not  hold  or  issue derivative financial  instruments  for
speculative or trading purposes.  Gains and losses resulting from
the   termination   of  derivative  financial   instruments   are
recognized  over  the shorter of the remaining original  contract
lives of the derivative financial instruments or the lives of the
related  hedged positions or, if the hedged positions  are  sold,
are recognized in the current period as gain or loss on sale (see
Note 13).

     New  Accounting  Standards.  In 1997,  the  Company  adopted
Statement  of  Financial Accounting Standards ("SFAS")  No.  125,
"Accounting for Transfers and Servicing of Financial  Assets  and
Extinguishment  of  Liabilities," which  requires  an  entity  to
recognize the financial and servicing assets it controls and  the
liabilities  it has incurred and to derecognize financial  assets
when  control has been surrendered.  Retained interests in assets
sold  are  measured  by allocating the previous  carrying  amount
between  the  assets sold and retained interests based  on  their
relative  fair values at the date of transfer.  The  adoption  of
SFAS No. 125 did not have a significant impact upon the Company's
financial condition or results of operations.

      On  December  31, 1997, the Company adopted SFAS  No.  128,
"Earnings  Per  Share,"  which  established  new  standards   for
computing  and presenting earnings per share ("EPS") by replacing
the presentation of primary EPS with a presentation of basic EPS.
Primary  EPS  included common stock equivalents while  basic  EPS
excludes them.  This change simplifies the computation of EPS and
requires  the dual presentation of basic and diluted EPS  on  the
face  of  the  income  statement for all  entities  with  complex
capital  structures.  Prior year amounts have  been  restated  to
reflect the new method of calculation.

      In  June  1997,  SFAS  No.  130,  "Reporting  Comprehensive
Income," was issued which establishes standards for reporting and
display  of  comprehensive  income  and  its  components  in  the
financial statements.  SFAS No. 130 is effective for fiscal years
beginning  after  December 15, 1997.  SFAS No. 131,  "Disclosures
about  Segments of an Enterprise and Related Information,"  which
was  also issued in June 1997, establishes standards for the  way
public  companies disclose information about operating  segments,
products  and  services, geographic areas  and  major  customers.
SFAS  No.  131 is effective for financial statements for  periods
beginning after December 15, 1997.  The Company anticipates  that
its  segments  to be disclosed in 1998 will be asset  management,
commercial   mortgage  banking,  residential  mortgage   banking,
commercial  finance and corporate.  In February  1998,  SFAS  No.
132,   "Employers'   Disclosures   about   Pensions   and   Other
Postretirement  Benefits,"  was issued  which  is  effective  for
fiscal  years  beginning after December 31,  1997.   The  Company
adopted these standards for disclosure effective January 1, 1998.

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

      Reclassifications.  Certain reclassifications of prior year
amounts   have   been  made  to  conform  to  the  current   year
presentation.

2.   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.   Goodwill
related  to  the  following acquisitions is amortized  using  the
straight line method over 15 years.

      On  March  31,  1997, the Company purchased  the  stock  of
Commercial  Lending Corporation and the operations  and  specific
assets of certain of its affiliates ("CLC").  CLC's primary  line
of  business is originating, securitizing, selling and  servicing
franchise  loans.  The purchase price consisted of  approximately
2.1  million shares of the Company's common stock valued at $34.3
million,  the  assumption of certain liabilities  and  contingent
earnout  payments  of additional shares of the  Company's  common
stock  based  upon  a percentage of adjusted net  income  of  the
acquired  entities through March 31, 2000. Approximately 300,000
shares of the Company's common stock are issuable in 1998 based
on 1997 results. The  purchase  price, which  was  based upon
preliminary estimates and  is  subject  to adjustment, was allocated
as follows (in thousands):

              Cash and cash equivalents      $  930
              Accounts receivable             1,345
              Loans held for sale            86,600
              Retained interests in           7,848
              securitizations
              Deferred income taxes             705
              Intangible assets - goodwill   41,023
              Other assets                    1,403
              Accounts payable and accrued     (296)
              liabilities
              Warehouse loans payable       (87,291)
              Notes payable                 (15,633)
              Other liabilities              (2,326)
               Net assets acquired          $34,308

     The following pro forma financial information for the twelve
months  ended December 31, 1997 and 1996 is presented as  if  the
CLC   acquisition  occurred  at  the  beginning  of  the  periods
presented  and  is not necessarily indicative of the  results  of
operations  that  would  have occurred if  CLC  would  have  been
purchased  on  these dates or of results that may  occur  in  the
future (in thousands, except per share data):

                                           Year Ended
                                          December 31,
                                         1997        1996
              Total revenues           $425,913    $205,621
              Net income                 55,513      30,561

              Earnings per share:
              Basic                       $1.54       $1.04
              Diluted                      1.49        0.97

     On October 25, 1996, the Company purchased substantially all
of   the   operating  assets  of  Quality  Mortgage   USA,   Inc.
("Quality")  for  $65.0  million in cash and  the  assumption  of
warehouse  indebtedness and certain other  liabilities.   Quality
was  an originator of non-conforming residential mortgages.   The
purchase price was allocated as follows (in thousands):

        Cash and cash equivalents                      $10,667
        Retained interests in securitizations           29,628
        Loans held for sale                             86,371
        Intangible assets - goodwill                    38,651
        Premises and equipment                           9,028
        Accounts payable and accrued liabilities        (4,591)
        Warehouse loans payable                        (84,442)
        Notes payable                                  (20,312)
           Net assets acquired                         $65,000

      On  October 27, 1995, the Company completed the acquisition
of  the  third-party securitized, commercial mortgage loan Master
Servicer  and  Special Servicer operating assets of EQ  Services,
Inc.  and  Equitable Real Estate Investment Management, Inc.  for
cash   of   $16.9  million,  primarily  consisting  of  servicing
contracts and other intangibles.

     Effective August 1, 1994, the Company acquired substantially
all  of  the assets of Holliday Fenoglio Dockerty & Gibson,  Inc.
and  certain of its affiliates ("Holliday Fenoglio"), which  were
originators   and   servicers   of  commercial   mortgages,   for
approximately  $33.0 million, based upon an  initial  payment  of
$17.3  million  in  cash and $4.3 million  in  stock,  and  three
additional annual earnout payments if targeted earnings  are  met
or  exceeded  in  1994, 1995 and 1996.  For each of  the  periods
ended  December 31, 1996, 1995 and 1994, $3.9 million was accrued
for  the respective year's earnout payment.  The purchase  price,
determined based on the cash paid, the fair market value  of  the
Company  stock issued and direct acquisition costs, was allocated
to the Holliday Fenoglio assets acquired based on the fair market
value at the date of acquisition.

3.   Loans Held for Sale

      Loans  held  for  sale were originated or acquired  by  the
Company  and  are held for future securitization or  sale.   Such
loans have mortgages on the underlying real estate or first liens
on   franchise  related  property  and  equipment.   All  of  the
Company's loans held for sale are pledged as collateral under the
Company's  various debt facilities.  The maximum accounting  loss
if  the borrower fails to pay is the carrying value.  The Company
does  not  believe it has significant concentration risk  in  any
geographic  area  that could have a detrimental effect  upon  the
Company.   Loans  held for sale at December  31,  1997  and  1996
consisted of the following (in thousands):

                                                  1997       1996
     Single family residential mortgage loans    $995,038  $310,635
     Commercial and multifamily mortgage loans    286,657    66,784
     Franchise loans                               57,026
                                                1,338,721   377,419
     Allowance for loan losses                     (8,384)   (1,390)
       Balance, end of year, net               $1,330,337  $376,029

      At December 31, 1997, the Company was committed to sell  as
part  of  a  December  1997  securitization  approximately  $32.0
million of franchise loans.

      The  Company participates in the Federal National  Mortgage
Association ("FNMA") Delegated Underwriting and Servicing ("DUS")
program.   As  a  DUS lender, a subsidiary of the  Company  takes
first loss risk up to 5% of the loan amount and above 5% FNMA and
the subsidiary of the Company share the loss, with the subsidiary
of  the  Company's maximum loss capped at 20% of the loan amount.
The  Company  has  experienced no losses in  its  $400.8  million
portfolio of sold DUS loans at December 31, 1997.

     The activity in the allowance for loan losses for loans held
for  sale  for  the  years ended December 31, 1997  and  1996  is
summarized as follows (in thousands):

                                            1997    1996
    Balance, beginning of year             $1,390
    Provision for loan losses               8,083   $1,390
    Charge-offs                            (1,089)
    Balance, end of year                   $8,384   $1,390

4.   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.   Included in loans at December 31, 1997  and  1996
were   net  deferred  loan  origination  fees  and  costs   which
aggregated   approximately  $5.6  million   and   $0.9   million,
respectively.  Substantially all of the Company's loan and  asset
portfolios are backed by commercial mortgage real estate.  All of
the Company's loans and asset portfolios are collateral under the
Company's  notes  payable and other debt.  The Company  does  not
believe  it  has significant concentration risk in any geographic
area that could have a detrimental effect upon the Company.   The
maximum  accounting  loss if the borrower fails  to  pay  is  the
carrying value.  Loans and asset portfolios at December 31,  1997
and 1996 consisted of the following (in thousands):

                                                   1997       1996
Loans:
 Commercial loans                                $168,347    $43,028
 Residential construction loans                    65,931
  Total loans                                     234,278     43,028
Asset portfolios:
 Commercial real estate mortgages                 296,591    199,540
 Real estate                                      100,315     23,862
 Partnerships and joint ventures                   26,012     27,723
 Total asset portfolios                           422,918    251,125
Allowance for loan and asset portfolio losses      (8,502)      (905)
 Balance, end of year, net                       $648,694   $293,248

      The  activity in the allowance for loan and asset portfolio
losses  for  the  years  ended December  31,  1997  and  1996  is
summarized as follows (in thousands):

                                                       1997   1996
Balance, beginning of year                            $ 905  $    8
Provision for loan and asset portfolio losses         9,136     897
Charge-offs                                          (1,539)
Balance, end of year                                 $8,502    $905

5.     Investments  in  Asset-backed  Securities   and   Retained
Interests in Securitizations

      Asset-backed  securities available  for  sale,  carried  at
estimated  fair  value, at December 31, 1997 and  1996,  were  as
follows (in thousands):

                                          Gross       Gross
                             Amortized  Unrealized  Unrealized  Estimated
                              Cost        Gain         Loss       Fair
                                                       Value
     1997                    $98,490     $10,174    $(987)      $107,677
     1996                     54,902       1,580     (804)        55,678

       Net   proceeds  from  sales  of  asset-backed   securities
aggregated  $52.3 million and $14.2 million for the  years  ended
December 31, 1997 and 1995, respectively, which resulted in gross
realized  gains  of $15.2 million and $0.4 million  in  1997  and
1995,  respectively.   Net proceeds from  sales  of  asset-backed
securities  and  the resulting gain were insignificant  in  1996.
Maturities  of  securities available for sale are  not  presented
because  the  loans  underlying such securities  are  subject  to
prepayment.   All  of the Company's asset-backed  securities  are
collateral under the Company's notes payable and other debt.

  For  its  residential  mortgage loan  securitizations  for  the
years ended December 31, 1997 and 1996, the Company has initially
valued  its retained interests using a discount rate of  20%  and
assumed prepayment methodologies which contemplated over the life
constant  prepayment rates ranging from 19% to  30%  and  blended
annualized   loss  rates  ranging  from  0.50%  to  0.625%   with
variations within the ranges primarily depending upon mix of loan
types.

     The  Company has also employed a 20% discount  rate  in  its
franchise loan securitizations in 1997.  However, the Company has
assumed  no  prepayments or losses with respect to loans  in  the
securitized   franchise  loan  portfolios.    The   "no   losses"
assumption  is  based  on  the fact  that  the  Company  and  its
predecessors have experienced no losses on franchise loans  since
the  inception  of lending in 1993.  The Company  structures  its
franchise  loans with limited cross guarantees between  borrowers
such that the borrowers within a defined pool of loans absorb the
first  5%  of  net  losses.   At the present  time,  the  Company
considers   it  unlikely  that  net  losses  on  franchise   loan
portfolios will exceed 5%.  Accordingly, losses are assumed to be
zero.    The  "no  prepayments"  assumption  is  based   on   the
significant  prepayment  penalties applicable  to  the  franchise
loans and historical prepayment experience.

       Net   proceeds   from  sale  of  retained   interests   in
securitizations  in 1997 and 1996 were $102.2 million  and  $44.0
million, respectively.

      During  1997,  the Company completed seven transactions  in
which   asset-backed   securities  and  retained   interests   in
securitizations were measured by allocating the previous carrying
amount  between the assets sold and the interests retained  based
on  their  relative  fair values at the date  of  transfer.   The
interests  retained  were  subsequently  marked-to-market   which
resulted in a $13.4 million increase in the value of asset-backed
securities,   which   is  reflected  net  of   tax   effects   in
shareholders'  equity, and a $5.7 million  increase  in  retained
interests  in  securitizations, which is reflected as  additional
gain  on  sale of loans and investments.  In all of the Company's
securitization  transactions completed  in  1997  and  1996,  the
Company  has  not  retained any recourse obligation,  other  than
retained  interests, with respect to the assets sold  other  than
standard representations and warranties.

6.   Investment in Commercial Mortgage Banking Joint Venture

      In  November 1996, the Company entered into a joint venture
partnership  agreement with a large investment  banking  firm  to
fund  and securitize commercial mortgage loans.  The Company owns
a 50% interest in AMRESCO Commercial Mortgage Funding L.P. ("ACLI
Joint  Venture") and accounts for its investment using the equity
method.   The  Company's investment and advances at December  31,
1997 and 1996 were $23.2 million and $13.6 million, respectively,
and  were included in other assets.  Effective December 19, 1997,
the  partnership  agreement was revised.   Any  accumulation  and
securitization profit or loss from commercial real  estate  loans
for   which   loan  applications  were  received  on  or   before
November   13,  1997  (except  for  specified  loans  aggregating
approximately  $120.3  million) will be  shared  equally  by  the
Company  and the joint venture affiliate.  All profits and  risks
associated  with  commercial real estate loans  originated  after
November  13, 1997, as well as the profits and risks relating  to
specified  loans  aggregating approximately  $120.3  million  for
which loan applications were received prior to November 13, 1997,
will  be  for the sole account of the Company.  The joint venture
partner  or  its  affiliates will continue  to  provide  funding,
distribution  and related services to the Company pursuant  to  a
separate  agreement.  The following is a summary of the financial
position  and results of operations of the ACLI Joint Venture  at
December  31,  1997 and 1996 and for the year ended December  31,
1997 and from inception through December 31, 1996 (in thousands):

                                             1997       1996
       Loans held for sale                 $482,184   $256,727
       Total assets                         512,010    277,209
       Warehouse loans payable              441,757    237,706
       Partner equity                        41,519     31,900

       Revenues                             $58,774     $6,307
       Operating expenses                    30,915        813
       Net income                           $27,859     $5,494

7.   Notes Payable and Other Debt:

      The Company's notes payable and other debt at December  31,
1997 and 1996, consisted of the following (in thousands):

                                               1997      1996
Notes payable:
 Revolving loan agreements                    $388,345  $178,956
 Revolving investment loan agreements                     34,190
 Non-recourse debt                             143,228    46,823
 Other                                                       123
  Total notes payable                         $531,573  $260,092

Warehouse loans payable:
 Residential mortgage banking facilities      $916,006  $289,136
 Commercial mortgage banking facilities        258,046    65,426
 Commercial finance facilities                  94,613
  Total warehouse loans payable             $1,268,665  $354,562

8.75% senior notes due July 1, 1999            $57,500   $57,500

Senior subordinated notes:
 10.0% notes due January 15, 2003              $57,500   $57,500
 10.0% notes due March 15, 2004                192,500
  Total senior subordinated notes             $250,000   $57,500

      Revolving Loan Agreements.  Effective February 7, 1997, the
Company  and  certain  of  its  subsidiaries  entered  into   the
Revolving  Loan  Agreement (the "Revolving Loan Agreement")  with
NationsBank of Texas, N.A. ("NationsBank" and, in its capacity as
agent,  the  "Agent"),  and  other  lending  institutions   party
thereto,  as lenders (collectively, the "Banks"), which  replaced
the  Company's previous revolving line of credit with NationsBank
as   agent  bank.   The  Revolving  Loan  Agreement  was  amended
effective  as of September 30, 1997 to increase borrowing  limits
thereunder, among other things.

      The  Revolving Loan Agreement constitutes senior  debt  and
provides  for a $550.0 million credit facility, of  which  up  to
$455.0  million  was available pursuant to lender commitments  at
December  31, 1997.  Assuming commitments were received  for  the
full $550.0 million, the Revolving Loan Agreement would permit up
to  $490.0 million of indebtedness to be incurred pursuant  to  a
revolving  credit  facility and $100.0  million  to  be  incurred
pursuant  to  a  term  facility, subject to a combined  borrowing
limit  of $550.0 million.  Interest is payable quarterly  and  at
the end of each advance period.  The Revolving Loan Agreement  is
secured  by  substantially all of the assets of the  Company  not
pledged  under  other  credit facilities, including  stock  of  a
majority  of the Company's subsidiaries.  Indebtedness under  the
Revolving Loan Agreement generally bears interest at a rate based
(at the Company's option) upon (i) the variable rate (defined  as
the greater of the Agent's prime rate, as announced from time  to
time)  and  the  federal funds rate (as defined in the  Revolving
Loan  Agreement plus 0.50%) or (ii) the adjusted London Interbank
Offered  Rate  ("LIBOR") rate (as defined in the  Revolving  Loan
Agreement).   All  advances  funded in  foreign  currencies  bear
interest  at  the  alternate currency rate  (as  defined  in  the
Revolving Loan Agreement).  The revolving credit facility portion
of  the Revolving Loan Agreement will mature on May 31, 1999  and
the  term  facility portion of the Revolving Loan Agreement  will
mature on May 31, 2001.  At December, 31, 1997, a total of $388.3
million  was outstanding under this facility bearing interest  at
7.7%  with  availability under the Revolving  Loan  Agreement  of
$66.7  million.  At December 31 1997, the Company had outstanding
$8.5 million in face amount of letters of credit pursuant to such
facility.

      On  January  30,  1998, the Revolving  Loan  Agreement  was
amended  to  provide total availability of up to  $490.0  million
pursuant to lender commitments.

      Revolving Investment Loan Agreement.  On January 20,  1995,
the  Company  entered  into a $35.0 million revolving  investment
loan  agreement  with a bank, amended as of  March  5,  1996  and
increased  to $80.0 million.  Proceeds of the loan were  used  to
acquire  short-term investments which secure the loan.   Interest
was  computed  based on market rates adjusted for  the  Company's
credited  funds  at  a  bank.   In  January  1997,  the   Company
discontinued its revolving investment loan agreement and  related
temporary investment activities.

     Non-recourse Debt and Warehouse Loans Payable.  Non-recourse
debt  is  used  primarily to fund purchases  of  mortgage  backed
securities and real estate and is secured by the specific  assets
purchased   totaling  $190.4  million  at  December   31,   1997.
Warehouse   debt  is  used  primarily  to  fund   purchases   and
originations of residential and commercial loans and  is  secured
by  the  specific  assets  funded with such  debt  totaling  $1.4
billion at December 31, 1997.  The following table summarizes the
Company's  non-recourse  debt  and  warehouse  loans  payable  at
December 31, 1997 (in thousands of dollars):
<TABLE>
<CAPTION>

                      Maximum  Outstanding    Maturity                              December 31, 1997
       Lender        Available  Balance         Date        Base Interest Rate        Interest Rate
Non-recourse:
<S>                 <C>        <C>       <C>              <C>                            <C>
 Master Repurchase    $51,667   $51,667   30-day renewals  As determined by contract      6.65%
 Merrill Lynch         43,539    41,500   November 2000    As determined by contract      7.95
 Bayerische            28,394    25,026   March 2000       90-day LIBOR + 1.25%           8.53
 Master Repurchase     21,581    21,581   30-day renewals  30-day LIBOR + 1.40%           6.72
 Global Master          3,454     3,454   July 1998        30-day LIBOR + 1.40%           7.36
 Repurchase Agreement
 Total non-recourse  $148,635  $143,228

Warehouse debt:
Residential mortgage banking:

 Morgan Stanley      $619,656  $619,656   October 1998     Eurodollar + 0.45% to 0.90%    6.33%
 Prudential  (1)      500,000   284,516   February 1998    LIBOR + 0.70% to 2.00%         6.34
 First Boston         500,000    11,834   Various          LIBOR + 0.60% to 1.40%         6.59
 Total residential $1,619,656   $916,006
mortgage banking

Commercial mortgage banking:

 Goldman             $500,000  $147,631   December 1998    LIBOR + 0.90%                  6.86%
 RFC                  110,415   110,415   60 to 80 days    LIBOR + 1.25% to 3.0%          7.07
 Total commercial    $610,415  $258,046
mortgage banking

Commercial finance:
 Bank United         $ 55,000  $ 51,869  September 1999    LIBOR + 1.85% to 2.75%         7.57%
 Prudential  (1)      150,000    42,744  March 1998        LIBOR + 0.95% to 2.0%          6.84
 Total commercial    $205,000  $ 94,613
   finance
</TABLE>

(1)   The  $150.0 million credit facility is subject to a  $500.0
  million combined facility limit with the Prudential residential
  warehouse   facility  for  the  purpose  of  facilitating   the
  origination and warehousing of franchise and construction loans.

      8.75% Senior Notes Due July 1, 1999.  On July 1, 1996,  the
Company  issued  $57.5 million principal amount of  senior  notes
with  net proceeds of approximately $55.8 million.  There  is  no
sinking  fund or amortization of principal prior to maturity  and
the  senior notes are not redeemable prior to maturity.  The debt
offering  costs  have  been included  in  other  assets  and  are
amortized over the life of the debt using the effective  interest
method.  The senior notes are unsecured senior obligations of the
Company  and  subordinated to the rights of  holders  of  secured
unsubordinated indebtedness of the Company to the extent  of  the
value of the collateral securing such indebtedness.

      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  the  senior
subordinated notes are not redeemable prior to January 15,  2001.
The  debt  offering costs were included in other assets  and  are
amortized over the life of the debt using the effective  interest
method.   The  senior  subordinated 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.

      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.  The senior subordinated 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 notes are not redeemable prior to maturity.

      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  charge coverage ratio, minimum interest  coverage
ratio,  maximum consolidated funded debt to consolidated earnings
before  interest, taxes, depreciation and amortization ("EBITDA")
ratio  and maximum corporate facility outstanding to consolidated
EBITDA ratio.  The agreements also contain covenants that,  among
other  things,  limit the incurrence of additional  indebtedness,
investments,  asset  sales,  loans  to  shareholders,  dividends,
transactions   with   affiliates,   acquisitions,   mergers   and
consolidations,   liens  and  encumbrances  and   other   matters
customarily restricted.

     On December 24, 1997, the Company entered into a futures
agreement to hedge the interest rate on the anticipated February
1998 issuance of subordinated debt (see Notes 13 and 15).  The
agreement matures on March 15, 1998.

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

                                  For the Year Ended December 31,
                             1998      1999     2000    2001 2002  Thereafter

Notes payable             $  482,033  $ 8,040  $41,500
Warehouse loans payable    1,216,796   51,869
8.75% senior notes due                 57,500
July 1, 1999
Senior subordinated notes                                            $250,000
Total                     $1,698,829  $117,409 $41,500               $250,000

8.    Income Taxes

      Income tax expense (benefit) consisted of the following for
the years ended December 31, 1997, 1996 and 1995 (in thousands):

                                         1997    1996    1995
Current:
 Federal                               $47,794 $18,456  $ 6,040
 State                                   3,118   1,779    2,147
  Total current tax expense             50,912  20,235    8,187
Deferred tax expense (benefit):
 Federal                               (14,118) (1,004)   3,706
 State                                    (921)    (97)   1,317
  Total deferred tax expense (benefit) (15,039)  (1,101)  5,023
     Total income tax expense          $35,873  $19,134 $13,210

Income tax expense attributable to:
 Continuing operations                 $35,873  $19,134  $11,593
 Discontinued operations                                   1,617
  Total income tax expense             $35,873  $19,134  $13,210

     A reconciliation of income taxes on reported pretax income
at statutory rates to actual income tax expense for the years
ended December 31, 1997, 1996 and 1995, is as follows (dollars in
thousands):

                                    1997          1996           1995
                               Dollars  Rate  Dollars  Rate  Dollars  Rate
Income tax at statutory rates  $32,234   35%  $17,663   35%  $12,005   35%
State income taxes, net of       3,639    4     1,471    3     1,205    4
Federal tax benefit
 Total income tax expense      $35,873   39%  $19,134   38%  $13,210   39%


      The  net deferred tax assets at December 31, 1997 and 1996,
consisted of the tax effects of temporary differences related  to
the following (in thousands):

                                                              1997     1996
Securitized loans and investments                          $ 9,222   $ 1,176
Reserves for loan and asset portfolio losses                 7,556     2,917
Net operating loss carryforwards of acquired companies       7,327     3,848
Accrued employee compensation                                2,782     1,414
Intangible assets                                            2,721     2,128
AMT credit carryforwards                                       602       602
Investment in subsidiaries                                     426       477
Allowance for uncollectible accounts receivable                246       275
Other                                                        1,717     1,123
 Deferred tax asset before valuation allowance              32,599    13,960
Valuation allowance                                         (4,275)     (675)
 Net deferred tax asset                                    $28,324   $13,285

       Realization  of  deferred  tax  assets  is  dependent   on
generating sufficient taxable income prior to expiration  of  the
loss   carryforwards.   Although  realization  is  not   assured,
management  believes it is more likely than not that all  of  the
deferred  tax asset, net of applicable valuation allowance,  will
be  realized.   The valuation allowance for deferred  tax  assets
increased by $3.6 million in 1997 due to the acquisition  of  net
operating  losses from CLC.  To the extent that the acquired  net
operating  losses  are utilized, the resulting  decrease  in  the
valuation allowance will be credited to goodwill.  The amount  of
the deferred tax asset considered realizable could be reduced  or
increased  if  estimates  of  future taxable  income  during  the
carryforward  period are reduced or increased.  As  a  result  of
acquisitions, the Company has available for its use the  acquired
net  operating  loss  carryforwards existing at  the  acquisition
dates.   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, 1997 (in thousands):

         Expiration Date                 Amount
         2001                            $2,705
         2002                             2,071
         2003                             1,459
         2006                               372
         2007                             2,867
         2010                               150
         2011                            10,114
         Total                          $19,738

9.   Employee Stock Compensation

      The  Company  has  a stock option and award  plan  for  the
benefit of key individuals, including its directors, officers and
key  employees.  The plan is administered by a committee  of  the
Board of Directors.  Stock option activity under the plan for the
years ended December 31, 1997, 1996 and 1995 was as follows:

                                                                   Weighted
                                                       Option       Average
                                          Number      Price Per     Option
                                            of          Share      Price Per
                                          Shares        Range        Share
Options outstanding at January 1, 1995   1,872,450  $0.60 - $ 4.50   $  4.41
 Granted                                   872,160   6.88 -  11.38      9.78
 Exercised                                (434,480)  0.60 -   6.88      2.99
 Forfeited                                  (8,337)  2.75 -   3.75      3.15

Options outstanding at December 31, 1995 2,301,793   0.60 -  11.38      6.77
 Granted                                    45,500  13.13 -  21.75     17.39
 Exercised                                (466,760)  3.50 -  11.38      4.28
 Forfeited                                 (68,181)  4.50 -  11.38      6.98

Options outstanding at December 31, 1996 1,812,352   0.60 -  21.75      7.67
 Granted                                 2,458,239  17.63 -  34.56     20.16
 Exercised                                (441,915)  0.60 -  21.75      6.33
 Forfeited                                 (11,796)  6.88 -  11.38      9.34

Options outstanding at December 31, 1997 3,816,880   0.60 -  34.56     15.87

Options exercisable at December 31, 1997 1,464,591   0.60 -  34.56     11.25

Options available for grant at 31, 1997  2,928,559

      The  following  table  summarizes information  about  stock
options outstanding at December 31, 1997:

                            Weighted        Weighted                 Weighted
                             Average        Average                  Average
                            Remaining    Exercise Price              Price of
   Range of       Option   Contractual  of Outstanding  Options   Exercisable
Exercise Prices Outstanding   Life         Options     Exercisable  Options
$ 0.60 - $ 2.75   125,045      3          $  2.49        125,045      $  2.49
           3.50   136,490      6             3.50        136,490         3.50
  6.88 -   7.00   361,546      7             6.93        260,788         6.95
  7.50 -   9.38   228,100      6             8.25        221,700         8.21
          11.38   486,740      8            11.38        281,900        11.38
 13.13 -  18.63   177,000      9            17.83         15,000        15.07
          19.88 2,200,959      9            19.88        399,968        19.88
 20.25 -  35.56   101,000      9            29.43         23,700        28.33
 Total          3,816,880                   15.87      1,464,591        11.25

      At  December 31, 1997, the Company has reserved a total  of
3,816,880 shares of common stock for exercise of 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.   Net
income  and  earnings per share 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,
                              1997       1996     1995
Net income:
 As reported                 $56,224    $31,332  $21,090
 Pro forma                    43,264     30,015   19,102

Basic earnings per share:
 As reported                   $1.58      $1.15    $0.87
 Pro forma                      1.21       1.10     0.79

Diluted earnings per share:
 As reported                   $1.53      $1.06    $0.85
 Pro forma                      1.18       1.01     0.77

      The estimated fair value of options granted during 1997 and
1996  was $11.08 and $9.61 per share, respectively.  For purposes
of  determining fair value of each option, the Company  used  the
Black-Scholes model with the following assumptions:

                                          1997            1996
           Risk-free interest rate    5.82% - 6.26%   5.98% - 7.21%
           Expected life                 7 years       7 - 8 years
           Expected volatility          43% - 46%       43% - 45%
           Expected dividends               -               -

      A  stock  subscription agreement and related  shareholders'
agreement were entered into by the Company with various  officers
and  other  parties on December 9, 1992.  The purchase price  was
based  on  $0.60 per share.  Certain executive officers purchased
common  stock  with cash and promissory notes.  The notes  accrue
interest at 6% per annum and are due and payable in December 2002
or  within one year of termination of employment.  The shares are
subject to certain restrictions and repurchase rights pursuant to
the  shareholder  agreements.  In the  event  of  termination  of
employment  prior  to  December 2002, the  Company  could  cancel
unvested  shares by canceling related indebtedness based  on  the
original  issue  price.   The notes  are  secured  by  the  stock
acquired and are non-recourse to the subscribers.  The notes  are
classified  as a reduction of shareholders' equity for  financial
reporting  purposes.  At December 31, 1997 and  1996,  reductions
or employee stock included notes receivable for officers' sharesof
$0.1 million.

      During  1996,  the Company instituted a stock  compensation
plan  that  covers certain senior managers of the  Company.   The
awards are contingent on certain earnings levels being reached by
the  Company in 1998 and will award participants two times  their
1996  annual salary in restricted common stock of the Company  of
which 20% would vest immediately and the remainder would vest  at
the  rate  of 20% per year.  No compensation expense was recorded
in 1997 or 1996 related to this plan.

     During 1997, the Company issued 166,584 shares of restricted
common  stock at prices ranging from $16.63 per share  to  $35.50
per  share,  with a weighted average price of $19.77  per  share,
under  the  Company's stock option and award plan.  The Company's
restricted stock typically vests over a period of five years with
certain 1997 grants vesting in lump sum in the year 2000.  During
1997, 1996 and 1995, $1.7 million, $1.0 million and $0.3 million,
in  unearned  stock  compensation was amortized  as  compensation
expense,  respectively.  At December 31,  1997,  1996  and  1995,
reductions   for   employee   stock   included   unearned   stock
compensation  of  $2.6 million, $1.0 million  and  $2.1  million,
respectively.  The Company did not issue any shares of restricted
common  stock  during 1996 under the Company's stock  option  and
award plan.

10.  Common Stock

      In  November  and  December 1996, the Company  completed  a
registered public offering of 3.0 million shares of common  stock
including  the  underwriters'  over-allotment  option.   The  net
proceeds  from  such  offering  aggregated  approximately   $60.4
million.   The price to the public was $21.25 per share  and  the
proceeds to the Company were $20.35 per share, after underwriting
discounts.

      On  December 27, 1996, the Company redeemed its outstanding
8% convertible subordinated debentures due 2005 (the "Convertible
Debentures").  The Convertible Debentures, with an aggregate face
amount  of $45.0 million, were converted into 3.6 million  shares
of the Company's common stock at a conversion price of $12.50 per
share.   All  unamortized  debt-offering  costs  related  to  the
Convertible Debentures and included in other assets were recorded
as a reduction to capital in excess of par.

      In December 1995, the Company completed a registered public
offering  of  2.3  million shares of common stock  including  the
underwriters' over-allotment option.  The net proceeds from  such
offering  aggregated approximately $25.1 million.  The  price  to
the  public was $11.75 per share and the proceeds to the  Company
were $11.10 per share, after underwriting discounts.

      On  May 28, 1997, the Company adopted a Stockholders Rights
Plan pursuant to which rights were distributed to stockholders of
record  as  of  June  9,  1997.   The  Stockholders  Rights  Plan
provides,  among  other things, that if a  person  (or  group  of
affiliated or associated persons) acquires (or ten days after the
commencement of a tender offer to acquire) "beneficial ownership"
of  15%  or  more of the outstanding shares of Common Stock,  the
rights  previously distributed to stockholders, other than  those
owned by such acquiring person or group, will become exercisable.
Under  the  Stockholders Rights Plan, the acquisition of  15%  or
more  of  the outstanding Common Stock or the completion  of  the
tender offer will entitle the holder to purchase shares of Common
Stock having a market value equal to twice the purchase price  of
the right.
     A reconciliation of the numerators and denominators of the
basic and diluted EPS computations for income from continuing
operations is as follows (in thousands):

                                                 1997      1996      1995
  Income from continuing operations
   (basic earnings)                            $56,224   $31,332   $18,665
  Effect of convertible debt,
   net of taxes                                            2,196       183
  Income from continuing operations
   (diluted earnings)                          $56,224   $33,528   $18,848

  Weighted average shares outstanding (basic)   35,610    27,232    24,173
  Assuming conversion of convertible debt                  3,600       300
  Dilutive stock options                         1,053       942       555
  Weighted average shares outstanding (diluted) 36,663    31,774    25,028

11.   Employee Compensation and Benefits

      Accrued employee compensation and benefits at December  31,
1997  and  1996,  included  amounts for  incentive  compensation,
severance  and  benefits.   Certain  employees  are  eligible  to
receive  a  bonus  from  a pool computed on  pretax  income  over
predetermined minimum earning levels.

      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  1997  and  1996,   the   matching
contribution  was set at $.50 for each $1.00 contributed  by  the
employees.  In addition to the matching savings contribution, the
Company  provided  an annual contribution to the  profit  sharing
retirement  component  of  the Plan on  behalf  of  all  eligible
employees.  This portion of the Plan has been amended  to  assure
that  the  Company  is not required to make  an  employer  profit
sharing  contribution to the Plan.  However,  it  is  anticipated
that  some level of profit sharing contribution will continue  in
future periods.  For the years ended December 31, 1997, 1996  and
1995,  the Company accrued profit sharing contributions  of  $3.1
million, $1.5 million and $1.2 million, respectively.  Allocation
of the Company's contribution will be based on a percentage of an
employee's  weighted  total pay.  Weighted  total  pay  places  a
stronger  emphasis  on the age of the employee  and  provides  an
increasingly  larger profit sharing contribution as  an  employee
nears retirement.

12.   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 1999.   The
total  rent  expense for the years ended December 31, 1997,  1996
and  1995, was approximately $9.9 million, $5.3 million and  $3.7
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,
1997 were as follows (in thousands):

      Year Ended December 31,
      1998                                           $8,314
      1999                                            7,869
      2000                                            6,697
      2001                                            5,151
      2002                                            4,251
      Thereafter                                     13,977

      Certain  pending or threatened legal actions  have  alleged
that  the  Company may be liable with respect to certain  actions
which allege that Quality violated certain provisions of the Real
Estate  Settlement Procedures Act ("RESPA") when it made  certain
payments  to  brokers  in  transactions that  occurred  prior  to
October 25, 1996.  The Company did not assume any liabilities for
litigation  arising  out of the operations of  Quality  prior  to
October  25,  1996, the date the Company purchased  substantially
all  of  the assets of Quality.  In addition to not assuming  any
liabilities relating to such litigation, the Company obtained  an
indemnification  aggregating  $10.0  million  from  Quality,  its
shareholders and certain individuals which would be applicable to
such litigation.  Therefore, the Company does not believe that it
has  any  liability  with  respect  to  such  litigation  against
Quality.   Even  though  the Company has  continued,  in  certain
instances,  to  make  these  types of payments  to  brokers,  the
Company does not believe that it has significant exposure to loss
for any alleged violation of RESPA since it believes the payments
it  has made are not a violation of RESPA and such payments  have
been  made  on  only a small portion of the residential  mortgage
loans which it has originated.

      The  Company is a defendant in other 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.

13.   Financial Instruments and Risk Management

      The  Company is a party to financial instruments with  off-
balance  sheet  risk in the normal course of  business  to  hedge
against  changes in interest rates.  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 currently
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  swap  and  cap agreements,  commitments  to  sell
certain  mortgage loans and forward and futures  contracts.   The
instruments  involve,  to varying degrees, elements  of  interest
rate  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 swap and 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 amount 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  indexes.   Market  values of derivatives  transactions
fluctuate  based  upon  movements  in  the  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  were
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.   In  1997
and   1996,   the  Company  did  not  terminate  any  derivatives
transactions prior to contractual maturity.

     At  December 31, 1997, the Company had two forward contracts
to  sell  ten-year U.S. Treasury securities at contracted forward
prices.   One  contract for $31.5 million matured on January  13,
1998  and  hedged $35.6 million in carrying value  of  the  fixed
portion   of   the  Company's  asset-backed  security  investment
portfolio.  The remaining contract in the amount of $16.7 million
matures  on  June 1, 1998 and hedges a portion of  the  value  of
$57.0 million of franchise loans held for sale.  The Company also
had  four  forward  contracts to sell Fannie Mae  mortgage-backed
securities totaling $101.5 million maturing in January 1998  that
hedge  loans held for sale.  Any gain (loss) on forward contracts
is deferred and recognized when the loans being hedged are sold.

     At  December  31, 1997, the company had sold  U.S.  Treasury
futures  contracts  with  a  notional amount  of  $445.2  million
outstanding  to hedge residential mortgage loans  held  for  sale
with  a  carrying  value of approximately  $1.1  billion.   These
contracts  expire on various dates through March 27,  1998.   The
futures  contracts are marked-to-market and any  gain  (loss)  is
deferred until the related loans are sold.

     At  December  31,  1997, the Company had Eurodollar  futures
contracts  with  a  notional amount  of  $6.0  billion  to  hedge
retained  interests  in securitizations.  The Company's  retained
interests  in  securitizations bear the  interest  rate  risk  of
senior   securities  that  re-price  monthly  while  the  related
underlying  loans re-price from six months to five years.   Total
variable  rate  certificates underlying  the  Company's  retained
interest  total approximately $2.1 billion at December 31,  1997.
In  addition,  the  Company  purchased  Eurodollar  futures  call
options  and  put options which expire on various  dates  through
June  1998  to  hedge  the retained interests and/or  effectively
close  the  open  futures positions.  The  Company  also  had  an
amortizing interest rate cap with a beginning notional amount  of
$1.9 billion hedging retained interests in securitizations.   The
cap  becomes  effective February 25, 1998  and  requires  monthly
payments  from  the  counterparty when one  month  LIBOR  exceeds
5.9375%.  The notional amount amortizes monthly based upon levels
agreed  to  with the counterparty through the expiration  of  the
agreement on July 26, 1999.  The Company paid an initial  premium
of  approximately  $3.2 million for the cap.  All  such  futures,
options on futures contracts and caps are marked-to-market as are
the  retained  interests  in securitization.   All  realized  and
unrealized gains (losses) are recognized in earnings.

     At December 31, 1997, the Company sold U.S. Treasury futures
with a notional amount of $250.0 million to hedge the anticipated
issuance  of  an equal amount of long-term debt in February  1998
(see  Note 15).  The contract matures on March 20, 1998  and  any
gains or losses realized on the sale will be recognized over  the
term of the debt.

     The  Company purchases interest rate swap and 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  enters  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 entitle the Company
to  receive from the counterparties the amounts, if any, by which
an  interest  rate  index  exceeds  agreed-upon  thresholds.   At
December   31,  1997,  the  Company  had  three  such  agreements
outstanding  with a total notional amount of $64.6 million  which
hedge  floating rate debt with a carrying value of $62.6 million.
The  agreements  have cap rates ranging from 6.19% to 6.69% based
upon one month LIBOR and expire on various dates between May  22,
1998  and November 17, 1999.  The Company had another cap with  a
notional  amount of $14.1 million which does not become effective
until May 22, 1998.  This cap has a LIBOR rate threshold of 6.68%
and  expires  November 17, 1999.  The premiums paid for  interest
rate cap agreements purchased are included in other assets in the
consolidated statements of financial condition and are  amortized
to  interest  expense  over  the terms  of  the  agreements.   At
December 31, 1997, unamortized premiums amounted to $3.1 million.
Amounts  received  under cap agreements are recognized  as  yield
adjustments  to  the  related debt.  At  December  31,  1996  the
Company  had  one  swap with a notional amount of  $25.0  million
outstanding which allowed the company to establish fixed interest
rates on a portion of its outstanding debt.  This swap matured in
September  1997  and the Company had no swaps outstanding  as  of
December 31, 1997.

     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 affect 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.

                                 December 31, 1997    December 31, 1996
                               Carrying     Estimated     Carrying  Estimated
                                Amount      Fair Value     Amount  Fair Value
                                            (Dollars in thousands)
Assets:
 Cash and cash equivalents     $   25,866  $   25,866  $   29,046  $  29,046
 Temporary investments                                     34,190     34,190
 Accounts receivable, net          19,183      19,183      12,243     12,243
 Loans held for sale, net       1,330,337   1,330,337     376,029    375,729
 Loans and asset portfolios, net  648,694     674,081     293,248    309,583
 Asset-backed securities -        107,677     107,677      55,678     55,678
   available for sale
 Retained interests in            294,062     294,062     130,328    130,328
securitizations - trading
Liabilities:
 Accounts payable                  22,821      22,821      15,988     15,988
 Notes payable and warehouse    1,800,238   1,800,238     614,654    614,654
   loans payable
 Senior notes                      57,500      58,147      57,500     58,988
 Senior subordinated notes        250,000     257,356      57,500     58,844
Derivative Financial
Instruments:
 Interest rate swaps                                                     (41)
 Interest rate caps                             2,498
 Forward contracts                                (88)                    77
 Futures contracts                             (6,682)                   256
 Call options                                   8,979
 Put options                                      135

     The  fair  value  of  loans, asset portfolios,  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,   temporary
investments,  accounts receivable, 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 swap and cap agreements, forward  and  futures
contracts  and call and put options were estimated  using  market
quotes.  The fair value estimates presented herein were based  on
pertinent information available to management as of December  31,
1997  and 1996.  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.

14.  Discontinued Operations

       The  Company  adopted  a  plan  on  December  1,  1994  to
discontinue  its data processing operations for the  banking  and
asset  management industry and to sell substantially all  of  the
assets  of the related subsidiary by June 30, 1995.  On June  16,
1995,  the  Company sold substantially all of the assets  of  its
data  processing operations for the banking and asset  management
industry  for  $6.3 million in cash and recorded a gain  of  $2.4
million, or $0.10 per share, net of certain transaction costs and
a $1.6 million provision for income taxes.

15.  Subsequent Events

     On February 24, 1998, the Company issued options to purchase
approximately  331,000 shares of common stock  and  approximately
166,000 restricted shares to certain key employees and directors.

      On  February  23, 1998, the Company completed a  registered
public  offering of 5.2 million shares of common stock  including
the  underwriters' over-allotment option.  The net proceeds  from
such offering, after underwriters discount and offering expenses,
aggregated  approximately $147.6 million and were used  to  repay
borrowings under the Revolving Loan Agreement.  The price to  the
public was $30.00 per share and the proceeds to the Company  were
$28.56 per share, after underwriting discounts.

      On February 24, 1998 and March 10, 1998, the Company issued
$290.0   million  and  $40.0  million,  respectively,   aggregate
principal  amount of senior subordinated notes.  The  notes  bear
interest  at 9.875% per annum and mature on March 15, 2005.   The
net  proceeds  from  the  February 24, 1998  offering  aggregated
approximately  $281.7 million and were used to  repay  borrowings
under  the  Revolving Loan Agreement and certain warehouse  lines
and  the net proceeds from the March 10, 1998 offering aggregated
approximately  $39.0 million and were used for general  corporate
purposes.  The 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.

16.   Quarterly Financial Data (Unaudited)

     The following is a summary of unaudited quarterly results of
operations  for the years ended December 31, 1997  and  1996  (in
thousands, except per share amounts):

                                   Year Ended December 31, 1997
                                 First    Second     Third    Fourth
                                 Quarter  Quarter   Quarter   Quarter
Revenues                         $74,840  $103,881  $112,786  $132,248
Income before income taxes        13,606    20,686    25,552    32,253
Net income                         8,561    12,486    15,336    19,841
Earnings per share:
 Basic                              0.25      0.35      0.42      0.55
 Diluted                            0.25      0.34      0.41      0.53

                                   Year Ended December 31, 1996
                                 First    Second     Third    Fourth
                                 Quarter  Quarter   Quarter   Quarter
Revenues                         $36,896  $46,813   $45,486   $70,872
Income before income taxes         8,095   11,851    13,721    16,799
Net income                         4,795    7,348     8,556    10,633
Earnings per share:
 Basic                              0.18     0.27      0.32      0.37
 Diluted                            0.17     0.25      0.29      0.34


                  INDEPENDENT AUDITORS' REPORT



To the Board of Directors of AMRESCO, INC.:



     We have audited the accompanying consolidated balance sheets
of  AMRESCO, INC.  and subsidiaries as of December 31,  1997  and
1996,   and  the  related  consolidated  statements  of   income,
shareholders' equity and cash flows for each of the  three  years
in   the   period  ended  December  31,  1997.   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  generally
accepted  auditing standards.  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,  1997  and
1996,  and  the results of their operations and their cash  flows
for  each  of  the three years in the period ended  December  31,
1997,   in   conformity   with  generally   accepted   accounting
principles.


\s\ Deloitte & Touche LLP
Dallas, Texas
February 2, 1998 (except Note 15, which is as of March 11, 1998)