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, 1998
                                    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
   8.75% Senior Notes due 1999              New York Stock Exchange
   10% Senior subordinated Notes due 2003   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  22,  1999, 48,069,335 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 22, 1999, was
approximately $398,500,000.

                  DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Registrant's Proxy Statement to be filed for the
Annual  Meeting  of  Shareholders to be held  on  May  19,  1999,  are
incorporated by reference in Part III hereof.

                                PART I

Item 1.   Business

General

     AMRESCO, INC. (the "Company") is a diversified financial services
company  specializing in real estate lending, commercial  finance  and
the    acquisition,   resolution   and   servicing   of    performing,
underperforming and nonperforming 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 commercial and real estate 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  commercial  mortgage
banking,  commercial finance, residential mortgage  lending  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.

Business Activities

       The  Company's  primary  businesses  are  organized  along  the
following lines:  asset management, commercial mortgage banking,  home
equity  lending, commercial finance and residential mortgage  banking.
Financial  information regarding the Company's operating  segments  is
presented in Note 13 of the Notes to Consolidated Financial Statements
included  in  "Item  8. Financial Statements and Supplementary  Data."
Additional  financial  information regarding the  Company's  operating
segments  is  presented  in  "Item  7.   Management's  Discussion  and
Analysis of Financial Conditions and Results of Operations".

Asset Management Business

       General.   The  Company  manages  and  resolves  portfolios  of
performing,   underperforming   and   nonperforming   loans    ("asset
portfolios")  and  provides  special servicing  for  nonperforming  or
underperforming  loans in commercial mortgage-backed bond  trusts  and
similar securitized commercial asset-backed loan portfolios.

      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,  contacts  initiated  by
senior management, public advertising of asset portfolios for sale and
the Company's nationwide presence.

      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  13 persons,  and  London  (October  1995),
employing  11  persons, each at December 31, 1998, in  order  to  take
advantage  of both investment and servicing opportunities  in  Canada,
the United Kingdom and certain other Western European nations.  During
1998,  the Company began providing asset management services in Mexico
and  Asia  employing 49 persons in Mexico and 3 persons in Asia.   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
$102.8   million   (Face   Value)  in   Canadian   asset   portfolios,
$441.5  million  (Face Value) in United Kingdom asset  portfolios  and
$241.8  million  (Face  Value)  in  Mexican  asset  portfolios   under
management as of December 31, 1998.

      The  Company believes that it can gain market share in the asset
portfolio acquisition, management and resolution business due  to  its
experience in managing and resolving asset portfolios and its 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 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 the cash recovery in a timely manner on each loan in an asset
portfolio.

      The  Company's  investment in asset portfolios is  comprised  of
collateralized business loans and in real estate collateralized loans.
At  December  31,  1998, the Face Value of the Company's  wholly-owned
asset portfolios aggregated approximately $1,048.0 million, which  was
composed  of  approximately $685.9 million (65.4%)  of  collateralized
business  loans, approximately $141.2 million (13.5%) of  asset-backed
securities and approximately $220.9 million (21.1%) of real estate.

      For  the  years ended December 31, 1998, 1997 and  1996,  $112.7
million  (21.4%), $103.6 million (24.8%), and  $88.8  million  (44.4%)
respectively, of the Company's revenues were attributable to its asset
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, 1998, 1997,  1996,  1995
and 1994.  Certain reclassifications of prior period amounts have been
made to conform to the current year presentation.
<TABLE>
<CAPTION>
  
                                            1998          1997             1996           1995            1994
                                                % of            % of           % of           % of             % of
                                        Amount  Total  Amount   Total   Amount  Total  Amount  Total   Amount   Total
                                                                         (dollars in millions)
<S>                                  <C>        <C>     <C>     <C>    <C>      <C>    <C>       <C>    <C>        <C> 
Wholly-owned by the Company            $1,048.0  33.6%   $593.4  30.7%  $ 572.2  20.7%  $  354.3   9.6%   $  140.4   4.6%
Owned by the Company with co-investors    182.5   5.9     422.9  21.8     836.0  30.1    1,558.1  42.2     1,675.9  55.3
Owned by third parties:
    Securitized mortgage pools            574.0  18.4     459.2  23.7     618.0  22.3      738.3  20.0       315.0  10.4
    Government and other owners         1,313.1  42.1     462.1  23.8     744.4  26.9    1,043.2  28.2       900.5  29.7
      Total under management           $3,117.6 100.0% $1,937.6 100.0% $2,770.6 100.0%  $3,693.9 100.0%   $3,031.8 100.0%

      The  following table reflects the Company's investment in  asset
portfolios as of December 31, 1998, 1997, 1996, 1995 and 1994:

                                        1998    1997     1996     1995   1994
                                                 (dollars in millions)
Wholly-owned by the Company            $573.0   $494.9   $274.9  $172.6  $34.4
Owned by the Company with co-investors   17.1     22.8     27.7    34.3   33.7
Total                                  $590.1   $517.7   $302.6  $206.9  $68.1
</TABLE>
      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.   The  competitive  bidding  process  generally
requires  that the Company agree to purchase an interest (a "servicing
strip")  in the securitized portfolio in order to secure the servicing
contract.  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, 1998, the Company was
the   designated  special  servicer  for  securitized  pools   holding
approximately  $20.2  billion (Face Value) of  loans,  $574.0  million
(Face  Value) of which had been assigned to the Company for resolution
in its capacity as special servicer.

Commercial Mortgage Banking Business

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

      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 1998 (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 $7.3 billion, $4.7 billion and $2.5 billion  of
commercial real estate loans during 1998, 1997 and 1996, respectively.
Holliday Fenoglio Fowler principally targets developers and owners  of
commercial and multifamily real estate properties.  Holliday  Fenoglio
Fowler  serves  prospective borrowers through its own commission-based
mortgage  bankers  in 24 nationwide offices.  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 19% 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 $9.8 billion, $6.1 billion and $3.1 billion during 1998,
1997  and  1996, respectively.  For the year ended December 31,  1998,
1997  and  1996, Holliday Fenoglio Fowler earned gross fees  of  $69.8
million,  $44.0 million and $24.0 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
200  institutional  lenders that include insurance companies,  pension
plans  and  Conduit  Purchasers.  In 1998,  1997  and  1996,  Holliday
Fenoglio  Fowler  placed 1,109, 709 and 410 loans  with  approximately
198,   128  and  107  different  lenders,  respectively.   Forty-eight
institutional lenders have retained Holliday Fenoglio Fowler as  their
exclusive  or  semi-exclusive loan originator in selected  cities  and
regions.

      Holliday  Fenoglio Fowler has significantly  expanded  its  East
Coast business with the 1998 acquisitions of Fowler, Goedecke, Ellis &
O'Connor Incorporated and PNS Realty Partners, L.P.

      Commercial Real Estate Lending.  AMRESCO Capital is a commercial
real estate lender, which originates, underwrites and closes long term
fixed rate commercial mortgages for sale to various investors.  During
1998,  1997  and  1996,  AMRESCO  Capital  closed  approximately  $2.4
billion,  $1.7  billion and $0.6 billion, respectively, of  commercial
real  estate  mortgages.  AMRESCO Capital serves its  market  directly
through  13 offices located in 12 states 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 commissions based
on  transaction  size, type and complexity.  For years ended  December
31,   1998  and  1997,  approximately  45%  and  39%  of  the   loans,
respectively,  underwritten  by AMRESCO  Capital  were  originated  by
Holliday Fenoglio Fowler.

      During  the  fourth  quarter of 1998, AMRESCO  Capital  suffered
significant   losses  related  to  its  commercial  mortgage   conduit
operation.   As a result, AMRESCO Capital made the strategic  decision
to  exit the commercial mortgage conduit business as a principal so as
to  avoid  the  significant capital markets risk associated  with  the
accumulation and securitization of commercial mortgage loans.  AMRESCO
Capital's  business  is  now  focused on commercial  mortgage  lending
through  agency  programs  such as the  Fannie  Mae  DUS  program.  In
addition,  as  described below, AMRESCO Capital  recently  implemented
conduit  programs with major financial institutions that will  provide
fee  income and a profit participation to AMRESCO Capital without  the
requirement to place significant capital at risk.

      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  with  the  lender retaining the servicing.  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%  of the loan amount 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, 1998, but, had a
reserve  of  $6.1  million as of December 31, 1998 included  in  other
liabilities.  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 (including  AMRESCO  Capital)
account for the majority of DUS volume.

     AMRESCO Capital is also a member of the Freddie Mac Program Plusr
multifamily  seller/servicer  program.   Through  this  program,   the
Company  is authorized to originate multi-family mortgages for Freddie
Mac in the states of Florida, New York, North Carolina, South Carolina
and  Pennsylvania.  Freddie Mac recently has announced changes to  its
program  that  will  have  the effect of significantly  expanding  the
number  of  areas  in  which the Company is  authorized  to  originate
mortgages.

      The  Company  believes that AMRESCO Capital,  as  an  authorized
Fannie  Mae  DUS  and  Freddie Mac Program Plusr lender,  has  certain
competitive   advantages  in  the  multifamily  mortgage   origination
business.   These advantages include the competitive pricing  afforded
by  Fannie Mae's and Freddie Mac's positions as the largest purchasers
of  housing  related  mortgages in the nation  and  AMRESCO  Capital's
affiliation with Holliday Fenoglio Fowler, one of the largest mortgage
banking  company's  in  the nation.  For these  reasons,  the  Company
expects  Fannie  Mae  and Freddie Mac loan originations  to  become  a
larger   portion  of  its  commercial  mortgage  banking   activities.
Holliday  Fenoglio Fowler has been and is expected to be a significant
source of such loan originations.

     During February 1999, AMRESCO Capital announced that formation of
a  strategic  alliance with LaSalle National Bank in which  commercial
mortgage loans originated by AMRESCO Capital will be funded by LaSalle
National  Bank  and  securitized  by  LaSalle's  affiliate,  ABN  AMRO
Incorporated.   Also  in February 1999, AMRESCO  Capital  announced  a
strategic alliance with Morgan Stanley Dean Witter to originate  fixed
rate  commercial mortgage loans to be purchased by Morgan Stanley Dean
Witter  and  included in commercial mortgage-backed securities  to  be
lead  managed  by  Morgan Stanley Dean Witter.  The arrangements  with
LaSalle National Bank and Morgan Stanley Dean Witter both provide  for
AMRESCO  Capital to earn fees for its origination and related services
and  to  participate  in the profits associated  with  the  subsequent
securitization of the commercial mortgage loans.  AMRESCO Capital does
not  assume any significant funding risk associated with these conduit
programs.

      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, 1998, 1997, 1996, 1995 and
1994, AMRESCO Services acted as servicer with respect to approximately
$31.0  billion,  $25.9  billion,  $16.7  billion,  $13.5  billion  and
$5.6   billion,  of  loans,  respectively.   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 approved as a primary servicer by all four  rating
agencies.

      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.  In fact, AMRESCO Services
is  a  primary servicer for many of the loans for which it is  also  a
master  servicer.   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.   AMRESCO Services is approved as a master  servicer  by  all
four rating agencies.

Home Equity Lending Business

      General.   Through home equity lending, the Company  originates,
acquires,  warehouses,  services and sells home  equity  loans.   Home
equity lending's loan production was $3.5 billion as compared to  $3.6
billion  for the years ended December 31, 1998 and 1997, respectively.
In  late 1998, the Company suffered significant losses related to home
equity loans accumulated and held for subsequent securitization.  As a
result,  the  Company discontinued its "bulk" purchase of home  equity
loans  and  origination  of  home equity loans  through  correspondent
channels, which collectively accounted for approximately $2.4  billion
and  $2.7 billion of loan volumes for the year ended December 31, 1998
and  1997,  respectively.   Currently, all  loans  originated  by  the
Company  are sold in "whole loan" sale transactions.  The Company  has
re-focused  its  home equity lending business toward  its  retail  and
wholesale  operations,  the area of the home  equity  lending  segment
considered to hold the greatest potential for profitable growth.

     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 home equity 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.  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 home equity 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 home  equity  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
home  equity  loans  may  be  owner  occupied  or  non-owner  occupied
investment  properties.   The  Company's  home  equity  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  home
equity  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.

      Loan  Sources.   Since restructuring its operations  in  October
1998, the Company has obtained home equity loans through its wholesale
broker  operations  and  through various  retail  channels,  including
telemarketing, direct mail and retail branches.  Wholesale  operations
involve  the  origination of loans through the  Company's  network  of
branch  offices.  Retail operations involve consumer  direct  mail,  a
retail  sales  center  and retail branch operations.   In  its  retail
operations  the  Company works directly with consumers  to  originate,
underwrite and close mortgage loans.

  Portfolio  Performance.   The following table  provides  information
with respect to prepayments, delinquencies and net losses for each  of
the  Company's securitizations as of December 31, 1998  prior  to  any
potential recoveries:
<TABLE>
<CAPTION>
          Issuance  Original    Balance      CPR %      Delinquencies (2)    % Net
Security   Date     Balance   Outstanding  Actual(1)  30-59   60-89    90+  Losses(3)
                               (dollars in millions)
<S>     <C>         <C>        <C>        <C>        <C>      <C>      <C>    <C>  
 1996-1    01/25/96  $  275     $  72       34.86%     2.10%    2.10%   5.19%  0.89%
 1996-2    04/25/96     257        48       43.69      1.25     1.73    5.84   0.64
 1996-3    06/20/96     267       114       26.27      1.29     1.02    6.75   0.57
 1996-4    08/28/96     311        81       40.02      2.67     1.80   15.16   0.57
 1996-5    12/18/96     700       247       35.98      3.04     1.79   15.29   0.52
 1997-1    03/26/97     605       329       27.02      2.39     1.29   12.81   0.43
 1997-2    06/12/97     740       440       26.67      2.29     1.16   11.24   0.33
 1997-3    09/16/97     950       640       24.03      2.11     1.64    8.61   0.20
 1998-1    02/12/98   1,000       773       22.43      3.08     1.76    9.16   0.03
 1998-2    06/12/98   1,000       805       29.26      2.52     1.48    5.07   0.00
 1998-3    09/29/98   1,000       939       14.55      2.46     1.10    1.92   0.00
                                                               
Weighted average (4)                        24.57%     2.49%    1.45%   7.59%  0.17%
</TABLE>
(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.   CPR
  is  equal  to Pure Prepayment ("PPR") (5) - Liquidation  Proceeds  +
  Realized Losses + Buyouts + Scheduled Principal Payments.

(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 balance outstanding at December 31, 1998.

(5)  "PPR" is equal to voluntary borrower payoffs plus curtailments.

      Home Equity 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, 1998, the  Company  was
the  special  servicer  for $3.0 billion of  home  equity  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
home equity 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
home  equity 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.

Commercial Finance Business

      General.  In 1996, the Company formally organized the commercial
finance  group  which  has  grown through a combination  of  corporate
acquisitions   and  business  development  to  provide  financing   to
commercial  borrowers  in  various  targeted  lending  markets.    The
commercial  finance  group  is  divided  into  four  operating  units:
business  lending,  real  estate  structured  finance,  communications
lending and builder finance.

      Business Lending.  The business lending group, which essentially
began  operations  through the 1997 acquisition of Commercial  Lending
Corporation   ("ACLC"),   focuses  on   three   lending   sub-markets;
conventional  small  business loans, government guaranteed  SBA  loans
("Program 7A") and, telephone and equipment financing.

       Conventional  small  business  lending  concentrates   on   the
origination,  securitization and servicing  of  loans  made  to  small
business  owners  or  franchisees of nationally recognized  fast  food
chains,  family  dining establishments, hotels and motels,  automotive
after-market  service  providers and truck stops.   Borrower  profiles
emphasize,  among  other things, the borrower's  experience  with  the
particular operating concept (i.e. fast food, quick oil change,  etc.)
and cash flow of the respective operating units.  Typically, loans are
for  refinance,  construction,  remodeling  or  purchase  of  existing
facilities.   The loans are funded primarily by a dedicated  warehouse
facility until they are securitized and sold.

      The SBA lending group was formed by the July 1998 acquisition of
Independence Funding Company, LLC ("IFC").  As one of only 14 non-bank
SBA  lenders  in the United States, the SBA lending group makes  loans
under  SBA Program 7A to qualifying small business owners.  A portion,
typically 75%, of the principal balance is guaranteed by the  SBA  and
sold   at  a  premium  to  individual  investors  via  a  bid  process
approximately  two  to  three weeks after the  loan  is  closed.   The
remaining  non-guaranteed portion of the loan is retained  for  future
securitization along with the interest spread between the  contractual
rate  and  the  investor pass-through rate on the guaranteed  portion.
The SBA loans are funded primarily by a warehouse debt facility.

     The telephone equipment finance group was formed by the July 1998
acquisition of TeleCapital, L.P. ("TeleCapital").  The group's primary
focus   is   the  origination  and  servicing  of  loans   which   are
collateralized  by  privately owned and operated payphone  routes  and
related  equipment.   The  loans  are primarily  accumulated  for  the
purpose of securitization and sale and they are funded largely through
a warehouse debt facility.

      The  equipment finance group also provides lease  financing  for
business equipment, primarily restaurant equipment, based on referrals
from  business lending borrowers.  Typically this group will fund  the
individual equipment purchases during installation and then  sell  the
lease  to  a third party once fully funded and installed.   The  total
leasing  advances in 1998 and 1997 were $5.8 million and $3.3 million,
respectively, and sales of completed leases were $5.6 million and $3.3
million, respectively.

       The  business  lending  group  processes,  underwrites,  sells,
securitizes and services loans originated from producers  in  over  20
offices.   The  producers  solicit business  using  a  combination  of
marketing   efforts  that  include  direct  solicitation,   convention
attendance and referrals from previous borrowers.  The following table
summarizes  loan origination volumes for the years ended December  31,
1998 and 1997, respectively (dollars in thousands):

                                        % of                % of
                            12/31/98    Total    12/31/97    Total
Conventional lending (1)    $392,303    82.2%    $247,104    100.0%
SBA lending (2)               59,228    12.4                
Telephone equipment                            
lending (2)                   25,920     5.4
Total                       $477,541   100.0%    $247,104    100.0%

    (1)  The Company acquired the business and assets of ACLC effective
          March 31, 1997.
    (2)  Acquired July 16, 1998.

      Since the acquisition of ACLC in 1997, the Company has completed
five  securitizations aggregating $686.9 million.  The loans  included
in  each  securitization are grouped according  to  type  of  borrower
consisting of either (i) loans to franchisees of nationally recognized
concepts (i.e. Taco Bell, Pizza Hut, etc.) or (ii) loans to owners  of
other  independent  small  businesses.  The  securitization  structure
consists of (i) multiple classes of investment grade certificates that
are  sold  via  private  placement to investors  and  (ii)  an  equity
interest and subordinated certificate retained by the Company.

      Investment grade ratings for the securities are achieved by  (i)
limited  cross-guarantee  loan provisions for  the  various  borrowers
within the securitization and (ii) financial guarantee insurance.   In
the  limited cross-guarantee arrangement, each borrower signs  a  Note
for  an amount greater than their net loan proceeds and makes payments
based  on  the  higher  Note amount.  This increment  above  the  loan
amount,  known  as the credit enhancement amount, is  rebated  to  the
borrower  after they make their monthly payment assuming no deficiency
exists  in the securitization pool.  Should a deficiency occur  within
the  pool,  the rebates of the performing loans have been  pledged  to
cure  such deficiency and are applied in an amount to bring  the  loan
pool  to  a non-delinquent status.  Once the deficiency is cured,  the
recovered rebates are returned to the appropriate borrowers.

     As noted above, the business lending group retains a subordinated
interest in the securitization.  The certificate's value at any  point
in  time is based on the projected future cash flow spread between the
interest  collected  from borrowers and interest paid  to  certificate
holders, discounted to present value.  The following table depicts the
business   lending  group's  retained  interests  in   securitizations
balances  and related portfolio delinquency percentages (including  an
SBA  residual  acquired  as a result of the purchase  of  IFC)  as  of
December 31, 1998 and 1997 (dollars in thousands):
<TABLE>
<CAPTION> 
                                      1998                          1997         
                             Retained         Delinquency  Retained         Delinquency 
                             Interest  % of   Percentage   Interest   % of  Percentage 
                             Balance  Total    90+ days    Balance   Total   90+ days
<S>                         <C>        <C>      <C>         <C>       <C>       <C>
Franchise                     $39,412   50.9%     1.2%       $28,732   100.0%     1.0%
Conventional small business    31,259   40.3      0.0                                 
SBA Loans                       6,831    8.8      3.1                                
Total                         $77,502  100.0%    1.0%        $28,732   100.0%     1.0%     
</TABLE>
      The business lending group retains the servicing rights to loans
following  sale  or  securitization.   Due  primarily  to  the  cross-
guarantee  credit  enhancement feature  of  the  securities  described
above,  the Company has developed a specialized servicing process  for
these  loans.   In  addition, loan servicing utilizes  a  third  party
software  system  customized  for the servicing  of  SBA  loans.   The
following  table summarizes the loan servicing portfolio  and  related
delinquency  profile  as of December 31, 1998 and  1997,  respectively
(dollars in thousands):

                                              % of               % of
                                  12/31/98    Total   12/31/97   Total
Conventional lending (1)        $  898,505    74.4%   $563,718   100.0%
SBA lending (2)                    267,830    22.2               
Telephone equipment lending(2)      41,054     3.4                
Total                           $1,207,389   100.0%   $563,718   100.0%
                                                        
Delinquencies (3):                                      
31-60 Days                        $  6,616                       
61-90 Days                           1,145                          
90+ Days                            11,870              $5,729    
Total                              $19,631              $5,729    
                                                        
Total delinquencies as a                                  
percentage of total      
loan balances (4):                    1.63%               1.02%

     (1)  The Company acquired the business and assets of ACLC effective
          March 31, 1997.
     (2)  Acquired July 16, 1998.
     (3)  The period of delinquency is based on the number of days payments
          are contractually past due.
     (4)  Reflects contractual delinquencies.  At December 31, 1998 and
          1997, all borrower delinquencies related to business lending loans
          were paid by borrower cross guarantees.  See Note 6 of the Notes to
          Consolidated Financial Statements included in "Item 8. Financial
          Statements and Supplementary Data" for a discussion of borrower
          cross guarantees.

      Real  Estate  Lending.  In 1995, the Company began making  loans
through  AMRESCO Funding which was subsequently divided into the  real
estate  lending  and  communication finance divisions.   In  the  real
estate  lending  operation,  the Company  provides  mid-to-high  yield
financing  to borrowers in special situations that generally  preclude
financing  from  traditional funding sources.  In these  transactions,
the  Company  funds  senior  and subordinated  indebtedness  generally
ranging  from  $2 to $15 million for terms of 1-4 years  to  borrowers
with  an  established management record.  Borrowers  targeted  by  the
Company  usually have a reputation for enhancing value, but  may  lack
the  financial capacity to qualify for bank financing beyond a certain
level.   Typically  these loans have a defined exit strategy  such  as
bridge  loans,  mezzanine debt or construction  loans  and  are  often
extended for the purpose of turning around or repositioning assets  to
maximize  their  value.   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 tied to the performance  of  the
collateral  at  loan payoff.  Also, the Company makes  limited  equity
investments in ventures where they are also a lender.  The Company had
loan  balances  outstanding of $195.1 million, $109.7  million,  $21.9
million and $0.7 million as of December 31, 1998, 1997, 1996 and 1995,
respectively.  The following table shows the combined real estate loan
and joint venture equity balances as of December 31, 1998 and 1997  by
collateral type (dollars in thousands):

                          1998                      1997           
                                  Delinquency                    Delinquency 
                           % of   Percentage              % of   Percentage 
                Balance  Total    90+ days    Balance   Total     90+ days
Multi-family    $ 57,474  29.5%    0.0%      $32,521    29.6%     0.0%    
Office            52,371  26.8     0.0        38,054    34.7      0.0     
Industrial        26,911  13.8     0.0                            0.0     
Hospitality       19,584  10.0     0.0         3,518     3.2      0.0     
Retail            19,356   9.9     0.0        17,760    16.2      0.0     
Mixed Use         13,040   6.7     0.0         1,664     1.5      0.0     
Other              6,396   3.3     0.0        16,203    14.8      0.0     
Total           $195,132 100.0%    0.0%     $109,720   100.0%     0.0%    

      Communications Lending. The Company also specializes in  mid-to-
high  yield  lending in the communications industry to operators  that
cannot  obtain traditional bank financing. Loan amounts range from  $3
million  to $40 million, though loans in the upper half of this  range
typically are participated to other lenders.  Borrowers generally  use
proceeds  to  acquire radio and television stations,  provide  working
capital and refinance existing third party debt.  The Company had loan
balances  outstanding of $144.8 million, $38.7 million, $11.7  million
and  $1.0  million  as  of December 31, 1998,  1997,  1996  and  1995,
respectively.  The following table depicts the collateral distribution
of  the  communications portfolio as of December  31,  1998  and  1997
(dollars in thousands):

                          1998                      1997           
                                 Delinquency                 Delinquency  
                          % of   Percentage          % of    Percentage 
                 Balance  Total  90+ days   Balance  Total    90+ days
Radio            $112,940  78.0%  0.0%      $36,302   93.7%    0.0%     
Television         31,872  22.0   0.0         2,430    6.3     0.0      
Total            $144,812 100.0%  0.0%      $38,732  100.0%    0.0%     

      Builder Finance Group.  In January 1997, the Company established
the  builder  finance  group  to  provide  construction  financing  to
builders  of  first time and first move-up homes.  To facilitate  this
effort,  the  Company hired an experienced lending and servicing  team
formerly  associated  with  a  Texas financial  institution.   Builder
finance  targets  experienced homebuilders that are starting  anywhere
from  100  to  1500  units per year 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.   Builder  finance
also  provides a limited amount of acquisition and development lending
for residential lots that are ready for home building which will serve
as  feeder stock for the construction loan program.  Funding for these
loans is provided by a warehouse debt facility.

      Based  in  Houston, Texas with a state of the art loan servicing
facility,  the builder finance group currently has 10 loan  production
offices  in  the  United  States  and  plans  to  further  expand  the
production  office  network  in 1999.  Producers  are  (and  will  be)
located  in  markets  that have large or growing populations  of  home
buying  age with qualifying incomes.  These markets must also  have  a
good  balance of housing inventory as well as acceptable lot and  home
absorption patterns.  General economic and employment conditions  must
be positive as well.

      As of December 31, 1998 and 1997, loan balances outstanding were
$128.4  million and $65.5 million on year-to-date advances  of  $268.9
million and $124.3 million, respectively.

Residential Mortgage Banking

      General.   Through the August 12, 1998 acquisition of  MIC,  the
Company   refinances   and  sells  Veteran's   Administration   ("VA")
residential  mortgage  loans under the VA's  interest  rate  reduction
refinance  loan  ("IRRRL") program.  All loans  refinanced  under  the
IRRRL  program are guaranteed or insured, usually within  61  days  of
funding.   MIC's  loan refinancings aggregated $1.6  billion  for  the
August 12, 1998 through December 31, 1998 period.

      Loan Product.   The residential mortgage loans refinanced by MIC
consist  solely of 30-year fixed rate loans.  No other  loan  products
were  offered in 1998.  Typically, the refinanced loans have  a  well-
seasoned  pay  history  and are refinanced at  below  market  interest
rates.   Management  believes  that  these  loans  are  attractive  to
investors and servicers because of the historically low prepayment and
default rates and the below market interest rates offered.  Prepayment
and  default  rates on these loans tend to be low  due  to  the  lower
monthly  payment  as  a  result of the refinance  and  the  underlying
guarantee  which  limits exposure to losses.  The Company  anticipates
diversifying into additional products in 1999 potentially in the  form
of FHA adjustable rate product, second mortgages and/or insurance.

      Loan  Sources.  The Company obtains its refinanced loans through
its  own focused telemarketing database and related loan officers,  of
which the primary operating expense of MIC is commissions to the  loan
officers which vary with production.  The loan officers are located in
41  offices throughout the United States.  The telemarketing and  loan
processing functions are centralized in St. Petersburg, Florida,  thus
allowing the loan officers to focus solely on selling.

      Sales  of  Loans and Servicing.  Throughout 1998, MIC  sold  all
loans  on  a  servicing released basis.  The Company typically  enters
into forward sale agreements in the 30-year fixed rate GNMA market for
all production.  The production is typically sold at a discount due to
the  below  market interest rates on the refinanced loans.  MIC  sells
the  loans  to  the entity that will be the ultimate servicer  of  the
loans and the servicer assumes the Company's obligation to deliver  on
the  GNMA  forward sale commitment.  The servicer pools the loans  and
creates  a  30-year fixed rate GNMA security, delivers on the  forward
sale commitment, and retains the servicing.

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  continues   to
encounter  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.

      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  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.

      Home  Equity  Lending.   The Company has  encountered  increased
competition in the market for conventional, nonconforming home  equity
loans  as  more  originators  enter this  market  which  could  impact
origination  volume and profit margins.  In addition, certain  of  the
Company's   larger,  national  competitors  have  access  to   greater
financial resources and lower costs of capital.

      Commercial Finance.  The markets in which the Commercial Finance
business  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 business.

       Residential  Mortgage  Banking.   The  market  in   which   the
Residential Mortgage Banking business operates is characterized by few
originators of streamlined VA refinanced loans.  The Company  believes
that it is an effective competitor in this market.

Employees

      At  December 31, 1998, the Company and its subsidiaries employed
3,693  persons.   Of  that  total, 189  were  employed  in  the  asset
management  group, 718 in the commercial mortgage banking  group,  698
persons  in  the  home  equity lending group, 262  in  the  commercial
finance group, 1,554 in the residential mortgage banking group and 272
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  Capital"  means  AMRESCO  Capital  L.P.,  a   limited
partnership.

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

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

      "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.

      "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.

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

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

      "MIC"  means  Mortgage  Investors Corporation  a  Florida  based
corporation.

     "Quality Mortgage USA"  means Quality Mortgage USA, Inc., a
California 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 199,087 square feet in the North
Tower  of  the  Plaza  of  the  Americas  in  Dallas,  Texas  for  its
centralized   corporate   functions  including   executive,   business
development  and  marketing, accounting, legal,  human  resources  and
support and also certain line of business operations.  This lease  has
an  initial  termination date of October 31, 2006 and has  an  initial
annual  base  rent  of approximately $2.2 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, 1998.

                                PART II

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

     The Company's common stock (Symbol: AMMB) is listed on the Nasdaq
Stock  Market.   At  March  22, 1999, there were  approximately  2,600
stockholders of record of the Company's common stock.  Presented below
are the high and low last sale prices per share for 1998 and 1997,  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
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
1998                                         
 First Quarter                    $33.750    $23.250
 Second Quarter                    38.750     29.125
 Third Quarter                     30.125      7.250
 Fourth Quarter                     8.938      2.031


Item 6.   Selected Financial Data

      The  selected financial data set forth below for the five  years
ended  December  31, 1998 has been derived from the Company's  audited
consolidated financial statements.  This information should be read in
conjunction   with  "Item  1.  Business"  and  "Item  7.  Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results   of
Operations," as well as the audited consolidated financial  statements
and  notes  thereto  included  in "Item 8.  Financial  Statements  and
Supplementary Data."
<TABLE>
<CAPTION>
                                                       Year Ended and as of          
                                        December 31, December 31, December 31, December 31, December 31, 
                                            1998        1997         1996          1995          1994
                                                         (in thousands, except per share data)
Operating Results:                                                     
<S>                                      <C>        <C>        <C>           <C>              <C>        
 Revenues                                  $526,804  $ 418,273   $ 200,067     $110,486       $129,791 
 Income (loss) from continuing operations   (69,171)    56,224      31,332       18,665         20,933 
 Net income (loss)                          (69,171)    56,224      31,332       21,090         18,748 
 Earnings (loss) per shre from continuing                                              
  operations:
     Basic                                    (1.61)      1.59        1.16         0.77           0.91 
     Diluted                                  (1.61)      1.53        1.06         0.75           0.88 
   Earnings per share:                                             
     Basic                                    (1.61)      1.59        1.16         0.87           0.82 
     Diluted                                  (1.61)      1.53        1.06         0.85           0.79 
   Dividends per share                            -          -           -         0.15           0.20 
  Balance Sheet Data:                                              
   Total assets                           2,918,710  2,633,848   1,075,941      521,713        172,340 
   Long-term obligations (1)              1,052,877    695,845     293,956      112,500          
   Total liabilities                      2,333,303  2,225,348     774,426      360,919         58,754 
   Total shareholders' equity               585,407    408,500     301,515      160,794        113,586 
</TABLE>
(1)   The December 31, 1998 balance does not include $167.5 million of
  indebtedness under the Company's $737.5 million Credit Agreement which
  is  due August 11, 1999 and $57.5 million of indebtedness under  the
  Company's  Senior Notes due July 1, 1999.  As of December 31,  1998,
  $640.2 million was outstanding under the Company's Credit Agreement.

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

Overview

     The Company is a diversified financial services company with five
principal  lines  of  business: asset management, commercial  mortgage
banking,  home  equity  lending, commercial  finance  and  residential
mortgage  banking.   The asset management business involves  acquiring
asset  portfolios  at  a  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  fee based origination  and  servicing  of
commercial real estate mortgages and commercial real estate brokerage.
The  home  equity lending business involves originating,  selling  and
servicing  nonconforming  first mortgage  loans.   In  its  commercial
finance  business, the Company focuses on (i) loans to franchisees  of
nationally    recognized   restaurant,   hospitality    and    service
organizations, (ii) loans to small business owners, (iii) real  estate
structured finance, (iv) communications finance and (v) single  family
residential  construction lending.  The residential  mortgage  banking
line  of business (which consists of the newly acquired operations  of
Mortgage  Investors Corporation ("MIC")) originates and sells Veterans
Administration ("VA") streamlined re-financed loans.

      During  the latter part of 1998, the capital markets experienced
rapid  and  extreme changes evidenced by a decline of investor  demand
for  corporate  fixed  income investments,  including  mortgage-backed
securities  ("MBS"), and a widening of spreads between interest  rates
on  treasury  securities and interest rates on MBS.  The  widening  of
spreads  between treasury securities and MBS resulted  in  securitized
lenders, such as the Company, having to meet significant margin  calls
from  the lenders who had financed the accumulation of mortgage  loans
intended for securitization and margin calls caused by the decline  in
the  value of related hedge positions.  At this time the Company  held
approximately  $2.4  billion of commercial mortgage  and  home  equity
loans on its balance sheet.

     The Company made the decision to re-focus its commercial mortgage
banking  business to emphasize its operations which have  historically
provided strong and predictable earnings growth:  (i) core real estate
investment  banking  and  mortgage banking through  Holliday  Fenoglio
Fowler,  (ii)  commercial mortgage loan originations and  sales  under
agency  multifamily lending programs with quasi-governmental agencies,
such  as  Fannie  Mae  and  Freddie Mac, and "private  label"  conduit
programs with institutional participants and (iii) commercial mortgage
loan  servicing  through AMRESCO Services.  In  connection  with  this
decision,  and in response to the Company's rapidly changing liquidity
needs,  the  Company sold its portfolio of commercial  mortgage  loans
aggregating  approximately $1.0 billion.  Based  upon  current  market
conditions,  the Company is currently not operating as a principal  in
the  commercial  mortgage  loan conduit business.   Additionally,  the
Company made the decision to focus its home equity lending business on
its  retail and wholesale operations which possess the most  potential
for  growth.  In connection with this decision, and in response to the
Company's  rapidly  changing liquidity needs, the Company  decided  to
sell  its  portfolio  of  performing  home  equity  loans  aggregating
approximately  $1.4  billion.   The Company  discontinued  the  "bulk"
purchase of home equity loans and the origination of home equity loans
through its correspondent channel.  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.  In connection with the sales of  these
loans  and related matters in the third and fourth quarters  of  1998,
the Company incurred significant losses.  See further discussion under
"Results of Operations."

     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 (i)
origination and underwriting of commercial real estate mortgage loans,
(ii) placement of such loans with permanent investors, (iii) servicing
of  loans and (iv) interest earned on commercial loans held for  sale.
Revenues  from the Company's home equity lending activities  primarily
consist  of  interest earned on originated and purchased  home  equity
loans,  accrued  earnings  on retained interests  in  securitizations,
gains  on  the securitization and sale of home equity loans and  other
related securities and fees generated by the origination, underwriting
and  servicing  of  home equity loans.  Revenues  from  the  Company's
commercial finance business are primarily earned from (i) interest and
fees  on real estate structured and communications lending activities,
loans to franchisees of nationally recognized restaurant, hospitality,
service  organizations and other small business owners  and  loans  to
single  family  residential  contractors,  (ii)  accrued  earnings  on
retained  interests  in  securitizations  and  (iii)  gains   on   the
securitization  and  sale  of  loans.   Revenues  from  the  Company's
residential  mortgage  banking activities consist  primarily  of  cash
gains from sales of VA streamlined re-financed loans.

      Retained interests in securitizations are classified as  trading
and  are  carried  at estimated fair market value.   Changes  in  such
market  value  are  included in earnings.   Cash  flows  for  retained
interests  in  securitizations  are generally  subordinated  to  other
security holders in a securitization trust.  The retained interests in
securitizations are valued at the discounted present value of the cash
flows based upon the expected timing of the release of the cash by the
securitization trust ("cash-out method") over the anticipated life  of
the  assets  sold  after  estimated future  credit  losses,  estimated
prepayments  and  normal  servicing  and  other  related  fees.    The
discounted present value of such retained interests is computed  using
management's  assumptions of market discount rates, prepayment  rates,
default  rates, credit losses and other costs.  The carrying value  of
the retained interests in securitizations is determined by the Company
on  a disaggregated basis and considers historical prepayment and loss
experience,  economic  conditions and trends,  collateral  values  and
other relevant factors.  The actual weighted average annual prepayment
rate  on  the Company's home equity securitizations was 24.6% for  the
period  from  inception of each security through  December  31,  1998,
which  is  slightly higher than originally projected, and is estimated
to  be  29.4%  for the next twelve months.  Prepayment  rates  on  the
Company's franchise and small business loan securitizations have  been
consistent with original expectations.  Current valuations  take  into
account  the  change  in  prepayment  assumptions  as  well  as  other
assumptions influenced by market conditions.  The discount  rate  used
to  value  the  retained  interests is  influenced  primarily  by  the
underlying  loan  rate  and the volatility and predictability  of  the
underlying  cash  flows which generally become  more  certain  as  the
securities season.  The weighted average discount rate used  to  value
the  Company's retained interests at December 31, 1998 was 18.0%.  The
Company  has utilized, for initial valuation purposes in 1998,  a  20%
discount  rate  on  its  home equity securitizations,  discount  rates
ranging  from  18%  -  20% for its commercial finance  franchise  loan
securitizations  and  a  15% discount rate on its  commercial  finance
small  business  loan  securitizations.  As discussed,  the  estimated
market  rate  changes  over time to reflect management's  estimate  of
market  rates.   The  lower discount rate on  the  commercial  finance
securitizations  were due to the reduced risk related  to  a  borrower
cross-collateralization   feature  in  these   securitizations.    For
additional  information regarding the Company's retained interests  in
securitizations see "Item 1. Business" and notes 1 and 6 to the  Notes
to  Consolidated Financial Statements included in "Item  8.  Financial
Statements and Supplementary Data."

Results of Operations

      The  following discussion and analysis presents the  significant
changes  in  financial  condition and results  of  operations  of  the
Company  by  primary  business line for the years ended  December  31,
1998, 1997 and 1996.  The results of operations of acquired businesses
are included in the consolidated financial statements from the date of
acquisition.  This discussion should be read in conjunction with "Item
1.   Business"  and  "Item 8.  Financial Statements and  Supplementary
Data" (in thousands, except per share data).

                                                 1998       1997      1996
Revenues:                                                     
 Asset management                             $ 112,687  $103,581   $88,755
 Commercial mortgage banking                     71,018    97,533    54,625
 Home equity lending                            145,069   166,407    56,864
 Commercial finance                             122,047    51,212     2,947
 Residential mortgage banking                    74,702              
 Corporate, other and intercompany eliminations   1,281      (460)   (3,124)
     Total revenues                             526,804   418,273   200,067
                                                     
Operating expenses:                                  
 Asset management                                72,849    57,711    47,469
 Commercial mortgage banking                    175,389    70,334    43,163
 Home equity lending                            219,788   120,244    29,543
 Commercial finance                              75,456    32,137     2,252
 Residential mortgage banking                    41,776              
 Corporate, other and intercompany eliminations  43,379    45,750    27,174
                                                     
     Total operating expenses                   628,637   326,176   149,601
                                                     
Operating income (loss):                             
 Asset management                                39,838    45,870    41,286
 Commercial mortgage banking                   (104,371)   27,199    11,462
 Home equity lending                            (74,719)   46,163    27,321
 Commercial finance                              46,591    19,075       695
 Residential mortgage banking                    32,926              
 Corporate, other and intercompany eliminations (42,098)  (46,210)  (30,298)
     Total operating income(loss)              (101,833)   92,097    50,466
Income tax expense (benefit)                    (32,662)   35,873    19,134
Net income (loss)                             $ (69,171) $ 56,224  $ 31,332
                                                              
Earnings (loss) per share:                                    
 Basic                                           $(1.61)    $1.59     $1.16
 Diluted                                          (1.61)     1.53      1.06
                                                              
Weighted average number of common                              
shares outstanding - diluted                     42,846    36,663    31,774

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     The Company reported revenues of $526.8 million, an increase from
$418.3  million,  or 26%, from the year ended December  31,  1997,  an
operating loss of $101.8 million as compared to 1997 operating  income
of  $92.1 million and a net loss of $69.2 million as compared to  1997
net  income  of $56.2 million.  The losses were due primarily  to  the
sale  of  $1.4  billion and $936 million of home  equity  lending  and
commercial  mortgage banking loans held for sale, respectively,  which
occurred  in response to unprecedented capital market conditions  that
caused  spreads  on  MBS and related instruments  to  widen.   Diluted
weighted average common shares outstanding increased 17% due primarily
to  the  early  1998 offering of 5.2 million of the  Company's  common
shares and new shares issued in business acquisitions.

      Asset Management.  Revenues for the year ended December 31, 1998
primarily  consisted of $89.6 million in interest and other investment
income, $17.7 million in asset management and resolution fees and $3.4
million  of gains on sales of loans and investments.  The $9.1 million
increase  in  revenues from $103.6 million for 1997 to $112.7  million
for  the  year  ended December 31, 1998 was primarily comprised  of  a
$30.4 million increase in interest and other investment income offset,
in  part,  by  a $14.5 million decrease in gain on sale of  loans  and
investments  and a $7.2 million decrease in management and  resolution
fees.  Interest and other investment income increased due primarily to
a  significant increase in aggregate investments for the Company's own
account.   Gain  on  sale  of  loans  and  investments  decreased  due
primarily  to impairment and hedging losses on MBS in 1998 as  opposed
to MBS sale gains in 1997.

     Operating expenses for the year ended December 31, 1998 primarily
consisted of $38.0 million in interest expense, $16.4 million in other
general  and  administrative expenses and $15.3 million  in  personnel
expenses.   The $15.1 million increase in expenses from $57.7  million
for  the  prior year to $72.8 million for the year ended December  31,
1998 was due primarily to a $15.4 million increase in interest expense
related to the financing of increased levels of investments and a $5.2
million  increase in other general and administrative expenses offset,
in  part,  by a $2.2 million decrease in personnel expenses  resulting
from fewer assets being managed.

      Commercial  Mortgage  Banking.   Revenues  for  the  year  ended
December 31, 1998 were $71.0 million, a decrease of $26.5 million from
the  prior year period.  Revenues for the year ended December 31, 1998
primarily consisted of $103.7 million in origination, underwriting and
servicing  revenues and $71.6 million in interest and other investment
income  and reflect an increase of $52.4 million increase in  interest
earned on a higher balances of loans held for sale and escrow deposits
from  increased  servicing  volumes and a $39.2  million  increase  in
mortgage  banking and servicing revenues due primarily to  transaction
volume  of  $12.6  billion for the year ended  December  31,  1998  as
compared  to  $7.8  billion for 1997.  The  decrease  in  revenues  is
primarily  attributable  to losses of $117.6 million  related  to  the
commercial  mortgage conduit loans sale and related matters  described
below.

      In October of 1998, in response to the market turmoil caused  by
the unprecedented widening of interest rate spreads on MBS and due  to
the Company's rapidly changing liquidity needs, the Company decided to
sell  its  portfolio of commercial mortgage conduit loans  aggregating
approximately  $936.0  million  and to  negotiate  with  borrowers  to
release  the  Company  from commitments to fund  approximately  $400.0
million  of  commercial  mortgage loans in the  conduit  program.   In
connection with the commercial mortgage conduit loan sale, the Company
retained  an interest in the loans sold which entitles the Company  to
receive  a  portion of the proceeds of a subsequent securitization  or
sale  of  the  loans sold in excess of the purchase price,  investment
banking  fees  and transaction costs.  As of December  31,  1998,  the
retained interest balance was approximately $23.2 million, related  to
approximately  $500.0  million  of commercial  mortgage  loans,  which
represents  the Company's remaining maximum exposure related  to  this
loan sale.

     Operating expenses for the year ended December 31, 1998 primarily
consisted  of  $82.9 million in personnel expense,  $44.3  million  in
other general and administrative expense and $40.6 million in interest
expense.   The $105.1 million increase in expenses from $70.3  million
for  the prior year to $175.4 million for the year ended December  31,
1998  was  due primarily to an increase of $37.4 million  in  interest
expense  related  to  warehouse debt for loans held  for  sale,  $33.6
million  in  personnel expenses primarily related  to  commissions  on
increased originations and expansion and an increase of $31.9  million
in   other   general  and  administrative  expense  due  to   expanded
operations.

      Home  Equity Lending.  Revenues for the year ended December  31,
1998  were $145.1 million, a decrease of $21.3 million from the  prior
year  period.  Revenues for the year ended December 31, 1998 primarily
consisted  of  $152.8 million in interest and other investment  income
and  reflect  a  $62.6 million increase in interest income,  which  is
after    mark-to-market   reductions   on   retained   interests    in
securitizations of $16.1 million, generated by higher average balances
of  mortgage loans held for sale during 1998 offset, in part, by $16.6
million  of  loss  on sale of loans held for sale.   The  decrease  in
revenues  and the $16.6 million loss on sale is primarily attributable
to  a  $101.6 million loss on sale of loans held for sale as described
below.

      In  October  of 1998, due to the market turmoil  caused  by  the
widening of spreads in the MBS market and in response to the Company's
rapidly  changing  liquidity needs, the Company decided  to  sell  its
portfolio  of  performing home equity loans aggregating  approximately
$1.4  billion.  The Company also decided to negotiate the  termination
of  a  commitment  to purchase approximately $260.0  million  of  home
equity  loans.   As  of  December 31, 1998, a $19.4  million  retained
interest  (of which $15.0 million was collected subsequent to December
31,  1998) was carried on the Company's balance sheet representing the
Company's interest in a subsequent securitization or sale of the  home
equity  loans sold and also represents the Company's remaining maximum
exposure related to the home equity loan sale.

     Operating expenses for the year ended December 31, 1998 primarily
consisted  of  $99.2  million in interest expense,  $55.0  million  in
personnel  expense, $37.4 million in other general and  administrative
expense  and  $21.7 million in provisions for loan losses.   Operating
expenses increased by $99.6 million from $120.2 million for the  prior
year  period to $219.8 million for the year ended December  31,  1998.
This increase primarily consisted of $45.3 million in interest expense
related to higher average balances of warehouse debt supporting higher
average  balances  of  loans held for sale,  $20.1  million  in  other
general   and  administrative  expenses  due  primarily   to   AMRESCO
Residential Mortgage Corporation ("ARMC") expansion, $17.2 million  in
personnel  expense and $14.1 million in provisions for investment  and
loan losses primarily related to delinquent loans.

      Commercial  Finance.  Revenues for the year ended  December  31,
1998  primarily  consisted  of $80.5 million  of  interest  and  other
investment income and $38.6 million of gain on securitization and sale
of loans and investments.  The $70.8 million increase in revenues from
$51.2 million for the prior year period to $122.0 million for the year
ended  December 31, 1998 relates primarily to a $50.1 million increase
in  interest  and other investment income generated by higher  average
balances  of  small business and franchise loans held  for  sale  held
during  1998  and increased balances of retained interests.   Gain  on
sale  increased $22.8 million due primarily to the securitization  and
sale  of  approximately $375.8 million of small business and franchise
loans  by  business  lending  (formerly known  as  commercial  lending
corporation)   during   1998  as  compared  to   $265.4   million   of
securitization and sales in 1997.

     Operating expenses for the year ended December 31, 1998 primarily
consisted  of  $38.7  million in interest expense,  $17.6  million  in
personnel  cost,  $7.9  million in other  general  and  administrative
expenses  and  $5.8 million of provision for loan losses.   The  $43.4
million increase in expenses from $32.1 million for the prior year  to
$75.5  million for the year ended December 31, 1998 was due  primarily
to  an  increase of $25.4 million in interest expense related  to  the
financing for increased levels of investments and loans held for  sale
from  1997,  $9.4  million in personnel expense  related  to  expanded
operations  and  $3.8  million  in other  general  and  administrative
expenses primarily related to expanded operations.

      Residential Mortgage Banking.  The residential mortgage  banking
line of business is comprised of the newly acquired operations of MIC.
Revenues  for  the  period from inception (August  11,  1998)  through
December 31, 1998 primarily consisted of $72.1 million of gain on sale
of  VA  streamlined  re-financed loans.  Operating expenses  of  $41.8
million  primarily  consisted of $30.4 million  in  personnel  expense
(primarily  commissions)  and  $6.7  million  in  other  general   and
administrative expense.

      Corporate, Other and Intercompany Eliminations.  Operating  loss
for  the  year  ended  December 31, 1998  improved  $4.1  million  due
primarily  to  a  $7.4  million decrease in  personnel  costs  related
primarily  to  reduced  incentive compensation accruals  due  to  1998
losses offset, in part, by a $3.5 million increase in interest expense
related  to  the  $330.2 million subordinated debt issuance  in  early
1998.

      Income  Taxes.  As of December 31, 1998, the Company had  a  net
federal income tax receivable due primarily from the 1998 net loss  of
which $34.8 million was received in January 1999 and $44.5 million was
received  in  March 1999.  In addition, as of December 31,  1998,  the
Company  had  a  deferred tax asset for which the  Company  must  have
future taxable income to realize.  Certain of these benefits begin  to
expire  in  2002  and  are subject to annual utilization  limitations.
Management  believes that recorded net deferred  tax  assets  will  be
realized  in the normal course of business.  The decrease in the  1998
effective  tax rate to 32% from 39% in 1997 was due primarily  to  the
1998 losses primarily occurring in subsidiary entities which have more
efficient tax structures.

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

      The  Company  reported a 109% increase in revenues  from  $200.1
million  to  $418.3 million, an 82% increase in operating income  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  home
equity  lending,  commercial finance and commercial  mortgage  banking
operations.    Diluted  weighted  average  common  shares  outstanding
increased  15%  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 $59.2 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  $14.8
million  increase in revenues from $88.8 million for  1996  to  $103.6
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  an  $8.4 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,  $11.2  million in other general  and  administrative
expenses and a $4.5 million provision for investment and loan  losses.
The  $10.2  million increase in expenses from $47.5  million  for  the
prior  year to $57.7 million for the year ended December 31, 1997  was
due  primarily to a $7.3 million increase in interest expense  related
to the financing of increased levels of investments from early 1996, a
$4.5  million  provision  on owned portfolios  and  special  servicing
receivables  and  a  $2.5  million  increase  in  other  general   and
administrative  expenses, 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 other revenue.  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.  The other revenues primarily
relate  to income from an equity affiliate of $13.9 million  for  1997
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.

     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, $3.2 million  in  interest
expense  and  $3.2  million  in intangible  amortization.   The  $27.1
million increase in expenses from $43.2 million for the prior year  to
$70.3  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.

      Home  Equity Lending.  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 home equity 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  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 home equity mortgage loans  and
a $50.3 million increase in interest and other investment income.

      The increased gain on the securitization and sale of home equity
mortgage  loans was due primarily to the securitization  and  sale  of
approximately  $3.0 billion of home equity mortgage loans  during  the
year  ended December 31, 1997, including approximately $142.0  million
of  home  equity  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.
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.

     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 $90.7 million from $29.5 million  for
the  prior  year period to $120.2 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 home equity origination 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 and securities retained in securitizations  both  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  $29.8
million  increase in expenses from $2.3 million for the prior year  to
$32.1  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  loss
for  the  year  ended December 31, 1997 increased  $15.9  million  due
primarily  to increases in personnel costs and other overhead  related
to  expanded operations.  The rapid growth of the home equity lending,
commercial  mortgage  banking and commercial finance  operations  have
necessitated  the  hiring  of additional  personnel  and  the  related
development of corporate infrastructure.

     Income Taxes.  The increase in the 1997 effective tax rate to 39%
from  38%  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.

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,
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,  non-recourse  debt  and  other  financing
sources.

      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 the Company.

     Cash and cash equivalents totaled $66.4 million and $25.9 million
at  December  31,  1998  and  1997,  respectively.   Cash  flows  from
operating  activities plus principal cash collections on loans,  asset
portfolios and asset-backed securities totaled $388.8 million for  the
year ended December 31, 1998 compared to $196.9 million for 1997.  The
increase  in cash flows from these activities resulted primarily  from
collections on loans and asset portfolios.  The following is a summary
of certain cash flow data (dollars in thousands):

                                                  Year Ended December 31,
                                                     1998           1997
Net cash used in operating activities             $ (284,566)  $ (103,952)
Net cash used in investing activities               (432,381)    (347,170)
Net cash provided by financing activities            757,503      447,942
Other financial measures:                               
Cash flow from operations and collections on loans,            
asset portfolios and asset-backed securities.        388,832      196,904
 Cash provided by new capital and borrowings, net                     
 (excluding warehouse loans payable)                 768,732      441,994
Cash used for purchase of asset portfolios and              
asset-backed securities and originations of loans (1,020,439)    (675,618)
Ratio of total debt to equity                          3.7:1        5.2:1
Ratio of core debt to equity (1)                       2.7:1        2.2:1
EBITDA (2)                                           156,519      208,608
Interest coverage ratio (3)                             0.7x         2.0x

_______________

(1)  Excludes indebtedness under warehouse lines of credit.
(2)   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.
(3)   Interest coverage ratio means the rolling twelve month ratio  of
  earnings  before  interest, taxes, depreciation and amortization  to
  interest expense.

     The following table shows the components of the Company's capital
structure, including certain short-term debt, as of December 31,  1998
and 1997 (dollars in millions):

                                                        
                                  1998              1997
                                        % of              % of
                              Dollars  Total    Dollars  Total
Shareholders' equity         $  585.4  21%     $  408.5  16%
Senior notes                     57.5   2          57.5   2
Senior subordinated notes       580.2  21         250.0  10
Mortgage warehouse loans        587.4  21       1,216.8  49
Notes payable                   957.9  35         583.4  23
Total                        $2,768.4 100%     $2,516.2 100%

      Total  assets increased $0.3 billion to $2.9 billion at December
31,  1998  from $2.6 billion at December 31, 1997.  This increase  was
due  primarily  to  increased  loans and  asset  portfolios,  retained
interests  primarily created in securitization, and intangible  assets
related  to 1998 acquisitions offset, in part, by reduced balances  of
loans  held  for  sale due primarily to the sales of home  equity  and
commercial conduit loans.

Senior Credit Facility

      Effective  August  12, 1998 the Company entered  into  a  Credit
Agreement (the "Credit Agreement") with a syndicate of lenders led  by
NationsBank,  N.A.,  as administrative agent and Credit  Suisse  First
Boston, as syndication agent, replacing the Third Amended and Restated
Loan  Agreement  (as modified and amended) dated as of  September  30,
1997.   The  Credit Agreement provides for a revolving loan commitment
with  short  and  long term commitments of $167.5 million  and  $502.5
million,  respectively, and a term commitment of $67.5  million.   The
short and long term revolving facilities terminate August 11, 1999 and
August 12, 2001, respectively, and the term loan commitment terminates
August  12,  2003.   As  of  December 31,  1998,  $640.2  million  was
outstanding  under  the  Credit  Agreement.   The  Company   currently
anticipates  it will have sufficient funds to repay the entire  $167.5
million  revolving  loan  commitment that  matures  August  11,  1999,
however,  some  portion of the banks that are parties  to  the  Credit
Agreement may not call for repayment of the entire amount as  of  that
date.   On  February  28, 1999, the Credit Agreement  was  amended  to
replace  a  waiver which, among other things, adjusted the  ratios  to
allow for the loss incurred in 1998.

Commercial Mortgage Banking Facilities

     During the year ended December 31, 1998, the Company financed its
commercial mortgage lending operations with warehouse lines of  credit
with  aggregate  credit limits of $1.6 billion.  As a  result  of  the
restructuring of the commercial mortgage banking operations  discussed
above, the Company's financing requirements and financing sources have
been significantly reduced.

      As  of December 31, 1998, $21.9 million was outstanding under  a
Master  Loan  and  Security  Agreement with  Morgan  Stanley  Mortgage
Capital  Inc.  which was subsequently paid off.  The Master  Loan  and
Security Agreement was terminated on January 29, 1999.

      The  First  Amended  and Restated Promissory  Note  ("Promissory
Note")  dated  October 16, 1998, between a wholly-owned subsidiary  of
the Company and Residential Funding Corporation provides financing  in
an  amount  not to exceed $325.0 million for the purpose of  financing
the   origination  and  acquisition  of  commercial  mortgage   loans,
principally   loans  originated  in  the  Fannie  Mae  program.    The
Promissory   Note   replaced  a  prior  financing   arrangement   with
Residential Funding Corporation.  At December 31, 1998, $289.2 million
was outstanding under such financing arrangement.

Home Equity Lending Facilities

     During the year ended December 31, 1998, the Company financed its
home  equity  lending operations with warehouse lines of  credit  with
aggregate  credit  limits  of  $2.9  billion.   As  a  result  of  the
restructuring of the home equity lending business described above, the
Company's  financing  requirements and  financing  sources  have  been
significantly reduced.

      The  Interim  Warehouse  and Security Agreement  (the  "Security
Agreement") dated February 27, 1998, between a wholly-owned subsidiary
of  the Company and Prudential provides financing in an amount not  to
exceed $250.0 million for the origination and purchase of certain home
equity  loans  and  financing for certain retained interests.   As  of
December  31, 1998, $128.0 million was outstanding under the  Security
Agreement.

     In October 1998, a wholly-owned subsidiary of the Company entered
into  an  agreement with Lehman Brothers ("Lehman") to finance certain
delinquent  home equity loans.  As of December 31, 1998, $8.1  million
was outstanding under the agreement.

Commercial Finance Facilities

      The  Interim  Warehouse and Security Agreement (the  "Commercial
Concepts  Agreement") dated February 26, 1998, between a  wholly-owned
subsidiary of the Company and Prudential Securities Credit Corporation
("Prudential")  provides financing in an amount not to  exceed  $200.0
million for the origination and purchase of small business loans.   At
December  31, 1998, $32.2 million was outstanding under the Commercial
Concepts Agreement.

      The  Interim  Warehouse and Security Agreement  (the  "Franchise
Agreement") dated March 17, 1998, between a wholly-owned subsidiary of
the  Company  and Prudential provides financing in an  amount  not  to
exceed  $150.0  million for the origination and  purchase  of  certain
franchise and construction loans.  At December 31, 1998, $29.1 million
was outstanding under the Franchise Agreement.

      The  Loan  Agreement ("Loan Agreement") dated August  31,  1998,
between  a wholly-owned subsidiary of the Company and Salomon Brothers
Realty  Corporation  provides financing in an  amount  not  to  exceed
$200.0  million to provide financing for the origination of commercial
mortgage loans secured by certain real estate properties originated or
acquired.   At December 31, 1998, $23.2 million was outstanding  under
the Loan Agreement.

       The  Loan  Agreement  ("Transamerica  Loan  Agreement"),  dated
December 18, 1998 between a wholly-owned subsidiary of the Company and
Transamerica  Business Credit Corporation provides a  working  capital
facility  in  the maximum aggregate principal amount of  up  to  $75.0
million  for  the purpose of funding new Small Business Administration
("SBA")  loans.   At December 31, 1998, $55.7 million was  outstanding
under the Transamerica Loan Agreement.

General

       Current  liquidity,  unused  revolver  availability  and   cash
available,  as  of March 22, 1999, was approximately  $114.4  million.
The   primary  sources  of  liquidity  currently  include  the  Credit
Agreement   and,  to  the  extent  described  above,   the   Warehouse
Facilities, and internally generated funds.  In addition to  the  loan
sales and other matters described above, the Company expects to manage
its  liquidity from cash flows generated from its existing  operations
(primarily  residential mortgage banking cash flows), and  returns  of
and  on  investments in the ordinary course of business.  The  Company
received  $34.8 million in tax refunds in January 1999  for  1998  tax
deposits  and $44.5 million in March 1999 for 1997 and 1996 taxes  due
to  1998 losses.  In addition, the Company is seeking to obtain  third
party  financing for certain assets which, if successful, would result
in   additional  capacity  under  the  Credit  Agreement,  subject  to
borrowing  base  limitations  which  may  impact  additional  capacity
created  by  such  transactions.  The Company  believes  that  it  has
sufficient liquidity to meet its obligations, including the  potential
repayment  of the entire $167.5 million short term facility under  the
Credit Agreement due in August 1999, the $57.5 million of senior notes
due July 1999 and to fund its operations at current levels.

     The Credit Agreement, the Warehouse Facilities and the indentures
under  which the senior notes and senior subordinated notes are issued
contain  certain financial covenants relating to among  other  things,
interest  coverage, leverage and tangible net worth.  If  the  Company
experiences additional losses it may be in default under the financial
covenants.   Any  such default could materially impact  the  Company's
financial  condition and prospects.  The Company does  not  anticipate
that  it  will  be in default under any of its credit  agreements  and
facilities  in  the foreseeable future.  Although the  Company  is  in
compliance  with  all  its  respective  debt  agreements,  these  debt
agreements contain restrictions on the incurrence of additional  debt.
These  restrictions  currently preclude the incurrence  of  additional
debt,  other  than under the Credit Agreement (or any  replacement  or
successor  thereto)  and  pursuant  to  warehouse  lines  of   credit,
asset-based  financings  and other similar  arrangements  designed  to
support its various lines of business.

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

Other Matters

       On  July  16,  1998,  the  Company  purchased  the  assets   of
Independence   Funding  Co.  L.L.P.  ("IFC")  and   TeleCapital   L.P.
("TeleCapital") for approximately 1.3 million shares of the  Company's
common  stock  and  cash  of $44.0 million.   IFC's  primary  line  of
business  is  providing long term financing to  small  businesses  and
TeleCapital's primary line of business is providing financing  to  the
pay phone industry.

      On  August 11, 1998, the Company acquired MIC, a privately  held
specialized producer of VA streamlined re-financed loans, by merging a
wholly-owned subsidiary of the Company with MIC.  The merger agreement
provided for an acquisition price of approximately 1.8 million  shares
of the Company's common stock and $2.6 million in cash.  Additionally,
the  Company will pay an annual earnout over a three-year period,  the
total   of  which  will  not  exceed  $105.0  million,  comprised   of
approximately 82% in the Company's common stock and 18% cash.

      In  June  1998, the Financial Accounting Standards Board  issued
Statement  of  Financial  Accounting  Standards  ("SFAS")   No.   133,
"Accounting for Derivative Instruments and Hedging Activities,"  which
establishes   accounting  and  reporting  standards   for   derivative
instruments embedded in other contracts, (collectively referred to  as
derivatives)  and for hedging activities.  It requires  an  entity  to
recognize  all  derivatives as either assets  or  liabilities  in  the
statement of financial position and measure those instruments at  fair
value.    If  certain  conditions  are  met,  a  derivative   may   be
specifically designated as (a) a hedge of the exposure to  changes  in
the  fair  value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows of
a  forecasted  transaction, or (c) a hedge  of  the  foreign  currency
exposure  of  a net investment in a foreign operation, an unrecognized
firm commitment, an available-for-sale security, or a foreign-currency-
denominated  forecasted transaction.  This statement is effective  for
all  fiscal quarters for fiscal years beginning after June  15,  1999.
The  Company  has  not yet determined the impact on  the  Consolidated
Financial Statements upon adoption of this standard.

      In October 1998, the Financial Accounting Standards Board issued
SFAS  No.  134,  "Accounting for Mortgage-Backed  Securities  Retained
after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking   Enterprise,"  which  establishes  accounting  and  reporting
standards  for certain activities of mortgage banking enterprises  and
other  enterprises  that  conduct operations  that  are  substantially
similar  to  the primary operations of a mortgage banking  enterprise.
SFAS  No. 134 requires that after the securitization of mortgage loans
held  for  sale,  an  entity  engaged in mortgage  banking  activities
classify  the  resulting  mortgage-backed securities  based  upon  its
ability  and intent to sell or hold those investments.  This statement
is effective for the first fiscal quarter beginning after December 31,
1998  with early adoption permitted.  The Company will apply  the  new
rules of SFAS 134 for its fiscal year beginning January 1, 1999.   The
Company  believes the adoption of SFAS 134 will not  have  a  material
impact on the Company's results of operations or financial position.

Year 2000

General

      Many  of  the  world's computers, software  programs  and  other
equipment using microprocessors or embedded chips currently have  date
fields  that  use  two digits rather than four digits  to  define  the
applicable year.  These computers, programs and chips may be unable to
properly  interpret dates beyond the year 1999; for example,  computer
software that has date sensitive programming using a two-digit  format
may  recognize a date using "00" as the year 1900 rather than the year
2000.   Such  errors could potentially result in a system  failure  or
miscalculation  causing  disruptions of operations,  including,  among
other  things, a temporary inability to process transactions or engage
in  similar normal business activities, which, in turn, could lead  to
disruptions in the Company's operations or performance.

       The  Company's  assessments  of  the  cost  and  timeliness  of
completion  of Year 2000 modifications set forth below  are  based  on
management's  best  estimates,  which  were  derived  using   numerous
assumptions  relating to future events, including, without limitation,
the  continued availability of certain internal and external resources
and  third  party readiness plans. Furthermore, as the Company's  Year
2000 initiative (described below) progresses, the Company continues to
revise its estimates of the likely problems and costs associated  with
the  Year  2000  problem and to adapt its contingency  plan.  However,
there  can be no assurance that any estimate or assumption will  prove
to be accurate.

The Company's Year 2000 Initiative

      The  Company is conducting a comprehensive Year 2000  initiative
with   respect  to  its  internal  business-critical  systems.    This
initiative  encompasses  information  technology  ("IT")  systems  and
applications,  as well as non-IT systems and equipment  with  embedded
technology, such as fax machines and telephone systems, which  may  be
impacted   by  the  Year  2000  problem.   Business-critical   systems
encompass  internal  accounting  systems,  including  general  ledger,
accounts payable and financial reporting applications; cash management
systems; loan servicing systems; and decision support systems; as well
as  the  underlying technology required to support the software.   The
initiative  includes assessing, remediating or replacing, testing  and
upgrading  the  Company's  business-critical  IT  systems   with   the
assistance  of  a  consulting  firm  that  specializes  in  Year  2000
readiness.  Based upon a review of the completed and planned stages of
the  initiative,  and the testing done to date, the Company  does  not
anticipate any material difficulties in achieving Year 2000  readiness
with  respect  to  its  internal business-critical  systems,  and  the
Company anticipates that Year 2000 readiness with respect to virtually
all  its internal business-critical systems will be achieved by  March
31, 1999.

      In  addition to its own internal IT systems and non-IT  systems,
the  Company  may  be  at risk from Year 2000 failures  caused  by  or
occurring  to  third parties.  These third parties can  be  classified
into  two  groups.   The  first group includes borrowers,  significant
business  partners, lenders, vendors and other service providers  with
whom  the  Company has a direct contractual relationship.  The  second
group,  while  encompassing certain members of  the  first  group,  is
comprised  of third parties providing services or functions  to  large
segments  of  society, both domestically and internationally  such  as
airlines, utilities and national stock exchanges.

     As is the case with most other companies, the actions the Company
can  take  to avoid any adverse effects from the failure of companies,
particularly those in the second group, to become Year 2000  ready  is
extremely  limited.  However,  the  Company  is  in  the  process   of
communicating  with  those  companies that have  significant  business
relationships with the Company, particularly those in the first group,
to  determine their Year 2000 readiness status and the extent to which
the  Company  could  be affected by any of their Year  2000  readiness
issues.   In  connection with this process, the Company is seeking  to
obtain written representations and other independent confirmations  of
Year  2000 readiness from the third parties with whom the Company  has
material  contracts.  Responses from all third parties having material
contracts  with  the Company have not been received.  In  addition  to
contacting  these  third parties, where there  are  direct  interfaces
between  the Company's systems and the systems of these third  parties
in the first group, the Company plans to conduct testing in the second
quarter  of  1999 in conformance with the guidelines  of  the  Federal
Financial   Institutions  Examination  Council.   Based  on  responses
received and testing to date, it is not currently anticipated that the
Company  will  be  materially affected by any third  party  Year  2000
readiness issues.

      For  all  business-critical  systems  interfaces,  readiness  is
scheduled  to be achieved by March 31, 1999.  Significant third  party
service  providers that have not completed their Year 2000 initiatives
by  March 31, 1999 are scheduled to be replaced with comparable  firms
that  are believed to be compliant.  The Company anticipates that this
portion  of  its  Year  2000 initiative will be completed  within  the
scheduled time periods.

      There  can  be no assurance that the systems of the  Company  or
those  of  third parties will be timely converted. Furthermore,  there
can be no assurance that a failure to convert by another company, or a
conversion that is not compatible with the Company's systems or  those
of other companies on which the Company's systems rely, would not have
a material adverse effect on the Company.

      The  Company  does  not anticipate that it will  incur  material
expenditures in connection with any modifications necessary to achieve
Year  2000  readiness.   The Company estimates that  it  has  incurred
approximately  $750,000 of costs related to its Year  2000  initiative
through  December 31, 1998, and the Company anticipates that  it  will
incur  approximately $500,000 of costs in the future with  respect  to
the  initiative.  These cost estimates do not include costs associated
with internal resources assigned to the initiative.

Potential Risks

     In addition to the Company's internal systems and the systems and
embedded  technology  of  third parties with  whom  the  Company  does
business, there is a general uncertainty regarding the overall success
of  global  remediation  efforts relating to the  Year  2000  problem,
including those efforts of providers of services to large segments  of
society,  as  described  above  in  the  second  group.  Due  to   the
interrelationships on a global scale that may be impacted by the  Year
2000 problem, there could be short-term disruptions in the capital  or
real  estate markets or longer-term disruptions that would affect  the
overall economy.

      Due  to  the general uncertainty with respect to how this  issue
will affect businesses and governments, it is not possible to list all
potential  problems  or risks associated with the Year  2000  problem.
However, some examples of problems or risks to the Company that  could
result  from the failure by third parties to adequately deal with  the
Year 2000 problem include:

         in the case of lenders, the potential for liquidity stress due to
       disruptions in funding flows;

         in the case of exchanges and clearing agents, the potential for
       funding disruptions and settlement failures; and

          in  the  case of vendors or providers, service failures  or
       interruptions, such as failures of power, telecommunications and the
       embedded technology of building systems (such as HVAC, sprinkler and
       fire suppression, elevators, alarm monitoring and security, and
       building and parking garage access).

      With respect to the Company's loan portfolios, risks due to  the
potential failure of third parties to be ready to deal with  the  Year
2000 problem include:

         potential borrower defaults resulting from computer failures of
       retail systems of major tenants in retail commercial real estate
       properties such as shopping malls and strip shopping centers;

         potential borrower defaults resulting from increased expenses or
       legal claims related to failures of embedded technology in building
       systems, such as HVAC, sprinkler and fire suppression, elevators,
       alarm monitoring and security, and building and parking garage access;
       and

         delays in reaching projected occupancy levels due to construction
       delays, interruptions in service or other market factors.

      These  risks are also applicable to the Company's portfolios  of
MBS, as these securities are dependent upon the pool of mortgage loans
underlying them.  If the investors in these types of securities demand
higher  returns  in recognition of these potential risks,  the  market
value  of  any  future  MBS portfolios of the Company  also  could  be
adversely affected.

      Other problems that could result from the failure of the Company
or  third parties to achieve Year 2000 readiness include impairment of
the  Company's ability to report to investors and owners with  respect
to  portfolio  performance and collect and remit  payments,  including
those  with  respect  to return on investments, taxes  and  insurance.
Furthermore, the Company's loan servicing operations rely on computers
to  process and manage loans.  These operations are of such  a  volume
and  nature  that  manual  processing  would  be  time  consuming  and
expensive.  Therefore, a failure of the Company's own systems  or  the
systems provided by third parties and used by the Company to be timely
compliant  could have a material adverse effect on the Company's  loan
servicing operations.

      The  Company believes that the risks most likely to  affect  the
Company  adversely  relate to the failure of third parties,  including
its  borrowers and sources of capital, to achieve Year 2000 readiness.
If  its borrowers' systems fail, the result could be a delay in making
payments  to  the  Company or the complete business  failure  of  such
borrowers.   The  failure, although believed to be  unlikely,  of  the
Company's  sources  of  capital to achieve Year 2000  readiness  could
result  in  the Company being unable to obtain the funds necessary  to
continue its normal business operations.

      Some  of the risks associated with the Year 2000 problem may  be
mitigated  through insurance maintained or purchased by  the  Company,
its  business partners, borrowers and vendors.  However, the scope  of
insurance coverage in addressing these potential issues under existing
policies has yet to be tested, and the economic impact on the solvency
of  the insurers has not been explored. Therefore, no assurance can be
given  that  insurance  coverage  will  be  available  or,  if  it  is
available, that it will be available on a cost-effective basis or that
it will cover all or a significant portion of any potential loss.

Business Continuity/Disaster Recovery Plan

     The Company currently has a business continuity/disaster recovery
plan  that includes business resumption processes that do not rely  on
computer  systems  and  the  maintenance of  hard  copy  files,  where
appropriate.   The  business  continuity/disaster  recovery  plan   is
monitored and updated as potential Year 2000 readiness issues  of  the
Company  and third parties are specifically identified.   Due  to  the
inability to predict all of the potential problems that may  arise  in
connection with the Year 2000 problem, there can be no assurance  that
all contingencies will be adequately addressed by such plan.

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

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

      The  following  is a discussion of the Company's primary  market
risk exposures as of December 31, 1998, including a discussion of  how
those exposures are managed.

Interest Rate Risk

     The Company is subject to interest rate risk due to the Company's
balance  sheet being primarily comprised of loans and interest bearing
investments  primarily  financed by  LIBOR  based  notes  payable  and
warehouse loans payable.  The Company manages this risk by striving to
balance its origination and mortgage banking activities with its asset
management  and  servicing  operations  which  are  generally  counter
cyclical  in nature.  In addition, 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
does   not  use  derivative  financial  instruments  for  trading   or
speculative  purposes, nor is the Company party  to  highly  leveraged
derivatives.   These financial instruments include interest  rate  cap
agreements,  put  options  and forward  and  futures  contracts.   The
instruments  involve, to varying degrees, elements  of  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 cap agreements  and  forward  and  futures
contracts through approvals, limits and monitoring procedures.

      The Company purchases interest rate cap agreements to reduce the
impact  of  changes in interest rates on its floating rate debt.   The
Company  enters  into  these agreements to change  the  fixed/variable
interest  rate  mix  of  the debt portfolio to  reduce  the  Company's
aggregate  risk  to  movements in interest  rates.   Accordingly,  the
Company  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.   The  potential loss in fair value related  to  such  cap
agreements  resulting from a 10% adverse change in interest  rates  is
not material.

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

      Interest  rate  sensitivity analyses are  used  to  measure  the
Company's  interest rate risk related to its trading  and  other  than
trading portfolios by computing hypothetical changes in fair values of
interest  rate  sensitive assets, liabilities and  off  balance  sheet
items  in the event of a hypothetical changes in interest rates.   The
following are the Company's interest rate sensitivity analyses  as  of
December 31, 1998 (dollars in millions):

     Retained Interests in Securitization (trading):

   Change in                 Hypothetical    Hypothetical 
 Interest Rates  Fair Value   Change ($)      Change (%)
    10%           $557.3         $18.3         3.4%         
     0             539.0             -           -            
   (10)%           530.5          (8.5)       (1.6)        

      A  hypothetical  increase  in interest  rates  is  projected  to
decrease  loan pre-payments increasing the fair value of the  retained
interests.  This increase is projected to more than offset a  decrease
in  fair  value  of  the retained interests caused  by  higher  market
interest rates.
     Other than Trading:

  Change in                   Hypothetical  Hypothetical 
Interest Rates    Fair Value      Change     Change
   10%             $707.2         $1.3        0.2%       
    0               705.9            -          -          
  (10)%             702.3         (3.6)       0.5        

      The  other than trading category includes loans held  for  sale,
loans  and  asset  portfolios,  asset  backed  securities,  derivative
positions,  senior  notes, senior subordinated notes  and  the  amount
outstanding  under the Company's Credit Agreement to  the  extent  the
fair  value  could  be  affected by a  widening  of  spreads.   In  an
increasing  interest rate environment, the Company projects  the  fair
value  of its debt obligations to decrease offset, in part, by a  fair
value reduction in its asset and derivative portfolio.

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

Foreign Exchange Risk

     Foreign exchange risk arises from the possibility that changes in
foreign exchange rates will impact the value of financial instruments.
The  Company  is  subject to foreign exchange risk to the  extent  its
income  bearing  assets exceeds its related foreign denominated  debt.
At December 31, 1998, the Company had no derivative contracts in place
to  hedge against foreign exchange rate exposure.  The following table
summarizes the hypothetical impact to the Company's financial position
due  to  changes  in  foreign  currency  exchange  rates  (dollars  in
millions):

   Change in                                         
    Foreign                                    
  Exchange Rates                Hypothetical  Hypothetical
  per Dollar      Fair Value       Change       Change
     10%           $70.9         $ (5.1)       (6.7)%       
      0             76.0              -           -            
    (10)%           86.6           10.6        13.9%        

Other Market Risks

      As  with any entity's investment or asset portfolio, the Company
is subject to the risk that certain unpredictable conditions can exist
which combine to have the effect of limiting the Company's ability  to
liquidate its assets through sale or securitization.  As was the  case
in late 1998 when unprecedented market conditions caused a widening of
interest  rate  spreads  resulting  in  losses  to  the  Company   and
substantial requirements on the Company's liquidity position,  certain
events,  however  remote a possibility, can again exist  reducing  the
Company's  ability to liquidate certain assets.  The Company  believes
its exposure to this liquidity risk is remote and would not be present
under a scenario of a 10% change in interest rates.

Item 8.   Financial Statements and Supplementary Data

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

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

     None.

                               PART III

Item 10.  Directors and Executive Officers of the Registrant

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

Item 11.  Executive Compensation

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

Item  12.   Security  Ownership  of  Certain  Beneficial  Owners   and
Management

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

Item 13.  Certain Relationships and Related Transactions

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

                                PART IV

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

(1)  Financial Statements

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

(2)  Financial Statement Schedules

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

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

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.
  (s) Second Amendment to Lease Agreement dated May 27, 1997.
  (t) Third Amendment to Lease Agreement dated September 22, 1997.
  (u) Lease  Expansion and Fourth Amendment to Lease Agreement dated
     January 6, 1998.
  (v) 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)
  (w) 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)
  (x) 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)
  (y) 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)
  (z) AMRESCO,  INC.  1995 Stock Option and Award Plan,  as  amended
     and restated. (2)
 (aa) AMRESCO,  INC.  1998  Stock Option and  Award  Plan  filed  as
     Exhibit  10  to  the  registrants' Form 10-Q  for  the  fiscal
     quarter  ended June 30, 1998, which is incorporated herein  by
     reference. (2)
 (ab) Credit  Agreement  entered into as of August  12,  1998  among
     AMRESCO,   INC.,   as   borrower,   NationsBank,    N.A.    as
     administrative  agent  and  Credit  Suisse  First  Boston   as
     syndication  agent for the "Lenders" filed as  Exhibit  10  to
     the  registrant's  Form  10-Q for  the  fiscal  quarter  ended
     September   30,   1998,  which  is  incorporated   herein   by
     reference.
 (ac) The First Modification of Credit Agreement entered into as  of
     September  17,  1998  among AMRESCO, INC.,  as  borrower,  and
     NationsBank,  N.A. as administrative agent for the  "Lenders."
     (1)
 (ad) The  Second Modification of Credit Agreement entered  into  as
     of  November  30, 1998, among AMRESCO, INC., as borrower,  and
     NationsBank,  N.A. as administrative agent for the  "Lenders."
     (1)
 (ae) The   Third  Modification  of  Credit  Agreement  and  Consent
     entered  into as of February 28, 1999 among AMRESCO, INC.,  as
     borrower,  and NationsBank, N.A. as administrative  agent  for
     the "Lenders." (1)
 (af) Amendment  No.1  to Rights Agreement, dated  as  of  March  2,
     1999,  executed by and between AMRESCO, INC. and The  Bank  of
     New  York,  as  Rights Agent (attached as Exhibit  1a  to  the
     Registrants  Form 8-A [Amendment No.1] filed as of  March  24,
     1999.
  11. Statement re: Computation of Per Share Earnings. (1)
  21. Subsidiaries of the Registrant. (1)
  23. Consent of Independent Auditors-Deloitte & Touche LLP (1)
27.(a) Financial Data Schedule- Fiscal year end 1998. (1)
  (b) Financial  Data  Schedule- Fiscal year  ends  1996,  1997  and
     Quarters 1, 2 and 3 of 1997. (1)
  (c) Financial Data Schedule- Quarters 1, 2 and 3 of 1998. (1)


(1)  Filed herewith.

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

Reports on Form 8-K

      The Registrant filed a Current Report on Form 8-K, dated October
12,  1998,  reporting  pursuant to Items 5 and  7  of  such  Form  the
completed  sale  of approximately $936 million of commercial  mortgage
loans, the completed sale of $1.0 billion of home equity loans and the
entering  into  an  agreement to sell approximately  $400  million  of
additional home equity loans.

                                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 25th day of March, 1999.

                              AMRESCO, INC.

                              By:  /s/ L.  Keith Blackwell
                                   L. Keith Blackwell

                              Senior 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 25th day  of
March, 1999:

            Signature                        Title
       ROBERT H. LUTZ, JR.    Chairman of the Board and Chief
       Robert H. Lutz, Jr.    Executive Officer
       ROBERT L. ADAIR III    Director, President and Chief
       Robert L. Adair III    Operating Officer
         BARRY L. EDWARDS     Executive Vice President and Chief
         Barry L Edwards      Financial Officer (Principal 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
         AMY J. JORGENSEN     Director
         Amy J. Jorgensen
       __________________     Director
        Bruce W. Schnitzer
         SIDNEY E. HARRIS     Director
         Sidney E. Harris
         RON B. KIRKLAND      Senior Vice President and Chief 
          Ron B. Kirkland       Accounting Officer
                              (Principal Accounting Officer)

                     INDEX TO FINANCIAL STATEMENTS
                                   

                                                                  Page
 I.                                                              Financial   
 Statements of AMRESCO, INC. and Subsidiaries
                                                                     
 Consolidated Balance Sheets, December 31, 1998 and 1997          F-2
 Consolidated Statements of Operations for the Years Ended        F-3
 December 31, 1998, 1997 and 1996                                 
 Consolidated Statements of Shareholders' Equity for the Years    F-4
 Ended December 31, 1998, 1997 and 1996                           
 Consolidated Statements of Cash Flows for the Years Ended        F-5
 December 31, 1998, 1997 and 1996                                 
 Notes to Consolidated Financial Statements                       F-6
 Independent Auditors' Report                                     F-27
                                                                 
                                                                     
                    AMRESCO, INC.  AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                      December 31, 1998 and 1997
               (In thousands, except for share amounts)
                                   
                                                          1998      1997
                        ASSETS                                              
Cash and cash equivalents                               $  66,422  $   25,866
Loans held for sale, net                                  694,397   1,330,337
Loans and asset portfolios, net                           943,119     648,694
Retained interests in securitizations - trading (at     
fair value)                                               538,977     294,062
Asset-backed securities - available for sale (at fair   
value)                                                    141,181     107,677
Accounts receivable, net of reserves of $696 and $455      20,683      19,183
Income taxes receivable                                    65,937      
Deferred income taxes                                      30,755      28,324
Premises and equipment, net of accumulated             
depreciation of $16,769 and $10,641                        23,223      10,147
Intangible assets, net of accumulated amortization of   
$34,470 and $20,038                                       262,815     113,841 
Mortgage servicing rights, net of accumulated          
amortization of $3,872 and $191                            49,387       3,394
Other assets                                               81,814      52,323
                                                                    
TOTAL ASSETS                                           $2,918,710  $2,633,848
                                                                    
         LIABILITIES AND SHAREHOLDERS' EQUITY                       
LIABILITIES:                                                        
 Accounts payable                                       $  43,280  $   22,821
 Accrued employee compensation and benefits                28,420      33,609
 Notes payable                                            957,871     583,442
 Warehouse loans payable                                  587,426   1,216,796
 Senior notes                                              57,500      57,500
 Senior subordinated notes                                580,179     250,000
 Income taxes payable                                                  19,185
 Other liabilities                                         78,627      41,995
                                                                    
   TOTAL LIABILITIES                                    2,333,303   2,225,348
                                                                    
COMMITMENTS AND CONTINGENCIES (Note 12)                             
                                                                    
SHAREHOLDERS' EQUITY:                                               
  Common stock, $0.05 par value, authorized 150,000,000               
shares; 49,099,135 and 36,543,210 shares issued            2,456       1,827
 Capital in excess of par                                543,871     257,941
 Unamortized stock compensation                           (4,981)     (2,713)
 Treasury stock, $0.05 par value, 1,057,953 and 24,339  
shares                                                   (17,363)       (160)
 Accumulated other comprehensive income (loss)           (12,651)      8,359
 Retained earnings                                        74,075     143,246
                                                                    
   TOTAL SHAREHOLDERS' EQUITY                            585,407     408,500
                                                                    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $2,918,710  $2,633,848
                                   
            See notes to consolidated financial statements.

                    AMRESCO, INC.  AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
         For the Years Ended December 31, 1998, 1997 and 1996
                 (In thousands, except per share data)



                                                1998      1997     1996
REVENUES:                                                          
 Interest and other investment income         $ 397,817 $198,165 $103,639
 Gain (loss) on sale of loans and              
investments, net                                 (7,230) 103,385   18,394
 Mortgage banking and servicing fees            113,634   75,250   40,697
 Asset management and resolution fees            17,714   24,948   34,300
 Other revenues                                   4,869   16,525    3,037
                                                                   
   Total revenues                               526,804  418,273  200,067
                                                                   
EXPENSES:                                                          
 Personnel                                      227,117  146,018   78,864
 Interest                                       232,497  102,063   36,763
 Other general and administrative               113,534   45,883   21,903
 Provisions for loan and asset portfolio       
   losses                                        29,634   17,764    3,195    
 Depreciation and amortization                   25,855   14,448    8,876
                                                                   
   Total expenses                               628,637  326,176  149,601
                                                                   
Income (loss) before income taxes             (101,833)   92,097   50,466
Income tax expense (benefit)                   (32,662)   35,873   19,134
                                                                   
NET INCOME (LOSS)                            $ (69,171) $ 56,224 $ 31,332
                                                                   
Earnings (loss) per share:                                         
 Basic                                          $(1.61)    $1.59    $1.16
 Diluted                                         (1.61)     1.53     1.06
                                                                   
Weighted average number of common shares      
outstanding - diluted                           42,846    36,663   31,774

            See notes to consolidated financial statements.

                    AMRESCO, INC.  AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
         For the Years Ended December 31, 1998, 1997 and 1996
                            (In thousands)
<TABLE>
<CAPTION>
                            Common Stock
                          $0.05 par value
                             Number         Capital in Unamort.            Other                Compr.      Total
                              of            excess of   Stock  Treasury  Comprehen.   Retained  Income   Shareholders'
                             Shares  Amount    Par      Comp.   Stock   Income(Loss)  Earnings  (Loss)      Equity
<S>                       <C>       <C>      <C>       <C>      <C>     <C>         <C>         <C>      <C>      
JANUARY 1, 1996              26,689  $1,334   $106,054  $(2,238) $(160)   $  114     $ 55,690              160,794
                                                                                 
Comprehensive income:                                                            
Net income                                                                             31,332   $31,332   
Other comprehensive income,                                                              
 net of tax:
Unrealized gains on securities                                               479                    479    
Foreign currency translation                                         
adjustments                                                                 (344)                  (344) 
Other comprehensive income                                                                          135    
Comprehensive income                                                                            $31,467      31,467
Common stock offering         2,992      150     60,740                                                      60,890
Debt conversion to                                            
common stock                  3,600      180     42,879                                                      43,059  
Exercise of stock options                                          
(including tax benefit)         467       23      3,475                                                       3,498   
Issuance of common stock                                         
 for earnout                     57        3        774                                                         777
Amortization of unearned stock                       
compensation                                             1,015                                                1,015
Other                            (9)                (79)    94                                                   15
                                                                                 
DECEMBER 31, 1996            33,796    1,690    213,843 (1,129)    (160)       249     87,022               301,515
                                                                                 
Comprehensive income:                                                            
Net income                                                                                      56,224      $56,224   
Other comprehensive income,                                                              
 net of tax
Unrealized gains on securities                                             9,489                 9,489   
Reclassification of gains included                                                              
 in net income                                                            (1,344)               (1,344)
Foreign currency translation                        
adjustments                                                                  (35)                  (35)
Other comprehensive income                                                                       8,110   
Comprehensive income                                                                           $64,334       64,334
Issuance of common    
stock for acquisition         2,095       105      34,203                                                    34,308
Exercise of stock options       
 (including tax benefit)        442        21       5,927                                                     5,948
Issuance of common stock for                                                                
unearned stock compensation     169         9       3,335   (3,344)                                             
Issuance of common stock                
 for earnout                     44         2         775                                                       777
Amortization of unearned                           
stock compensation                                           1,718                                             1,718 
Other                            (3)                 (142)      42                                              (100)
                                                                                 
DECEMBER 31, 1997            36,543     1,827     257,941   (2,713)  (160)   8,359   143,246                 408,500
                                                                                 
Comprehensive loss:                                                              
Net loss                                                                             (69,171)  $(69,171)   
Other comprehensive loss,                                                              
 net of tax
Unrealized loss on securities                                              (19,745)             (19,745)   
Reclassification of gaines                    
included in net loss                                                          (769)                (769)  
Foreign currency translation        
adjustments                                                                   (496)                (496)     
Other comprehensive loss                                                                        (21,010)   
Comprehensive loss                                                                             $(90,181)      (90,181)
Common stock offering, 
net of offering costs        5,175      259       147,113                                                     147,372
Issuance of common stock                                                                
for purchase of subsidiaries 3,562      177        98,142                                                      98,319
Issuance of common stock for 
 earnout                     3,359      168        29,914                                                      30,082
Exercise of stock options   
(including tax benefit)        307       17         5,957                                                       5,974
Issuance of common stock for                                                                
unearned stock compensation    220       11         6,515   (6,526)
Amortization of unearned                             
 stock compensation                                          2,544                                              2,544       
Acquisition of treasury stock                                        (17,203)                                 (17,203)
Other                          (67)      (3)    (1,711)      1,714                                
                                                                                 
DECEMBER 31, 1998           49,099   $2,456   $543,871     $(4,981) $(17,363)    $(12,651)  $74,075          $585,407
</TABLE>
<TABLE>
<CAPTION>
                                   
             See notes to consolidated financial statements.
                       AMRESCO, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
            For the Years Ended December 31, 1998, 1997 and 1996
                               (In thousands)
<S>                                               <C>           <C>         <C>
                                                      1998         1997        1996
OPERATING ACTIVITIES:                                                
 Net income (loss)                                 $  (69,171)    $ 56,224   $ 31,332
 Adjustments to reconcile net income (loss) to                       
net cash used in operating activities
  Loss (gain) on sale of loans and investments          7,230     (103,385)   (18,394)
  Depreciation and amortization                        25,855       14,448      8,876
  Accretion of interest income                        (11,266)     (35,233)   (13,063)
  Provisions for loan and asset portfolio losses       29,634       17,764      3,195
  Deferred tax benefit                                 (2,431)     (15,039)    (1,101)
  Other                                                 9,863        2,438      1,015
   Decrease in cash for changes in (exclusive                        
of assets and liabilities acquired in business
combinations):
   Accounts receivable, net                             1,433      (6,833)      6,369
   Loans held for sale, net                           668,901    (876,829)   (128,713)
   Retained interests in securitizations             (208,125)    (44,099)    (58,873)
   Other assets                                       (62,538)    (14,284)     (6,441)
   Accounts payable and accrued compensation      
    and benefits                                       15,378      10,595       1,393
   Warehouse loans payable                           (629,370)    826,812     116,962
   Income taxes payable/receivable                    (87,411)     15,443         845
   Other liabilities                                   27,452      48,026       6,222
     Net cash used in operating activities           (284,566)   (103,952)    (50,376)
                                                                     
INVESTING ACTIVITIES:                                                
 Sale (purchase) of temporary investments, net                     34,190     (12,248)
 Origination of loans and purchase of asset     
  portfolios                                         (903,816)   (599,937)   (218,879)
 Collections on loans and asset portfolios            613,755     240,552     106,785
 Purchase of asset-backed securities available  
  for sale                                           (116,623)    (75,681)    (21,877)
 Proceeds from sale of and collections on 
asset-backed securities available for sale             59,643      60,304         237
Cash used for purchase of subsidiaries                (68,951)     (2,176)    (57,437)
Investment in and advances to joint venture           (28,995)    (25,065)    (13,905)
 Distribution from joint venture                       26,802      17,789      
 Proceeds from sale of premises                                    15,813      
 Purchase of premises and equipment                   (14,196)    (12,959)     (6,480)
     Net cash used in investing activities           (432,381)   (347,170)   (223,804)
                                                                      
FINANCING ACTIVITIES:                                                
 Net proceeds from notes payable and other debt     1,723,696   1,083,291   1,108,720
 Repayment of notes payable and other debt         (1,423,164)   (827,443)   (886,036)
 Proceeds from issuance of senior subordinated  
   notes, net of issuance costs                       320,828     186,146
 Proceeds from common stock offerings                 147,372                  60,890
 Acquisition of treasury stock                        (17,203)             
 Stock options exercised and tax benefits from  
   employee stock compensation                          5,974       5,948       3,513 
     Net cash provided by financing activities        757,503     447,942     287,087
                                                                     
Net increase (decrease) in cash and cash equivalents   40,556      (3,180)     12,907
Cash and cash equivalents, beginning of year           25,866      29,046      16,139
                                                                     
Cash and cash equivalents, end of year             $   66,422   $  25,866    $ 29,046 
                                                                     
SUPPLEMENTAL DISCLOSURES:                                            
 Interest paid                                       $224,067     $92,965     $35,667
 Common stock issued for purchase of           
   subsidiaries and earnouts                          128,401      35,085         777
Income taxes paid                                      27,505      35,826      18,289
Common stock issued for unearned stock compensation     6,526       3,344     
Conversion of convertible debt to common stock                                 45,000
Accrued earnout payment for purchase of                             
 mortgage banking subsidiary                                                    3,883  
</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 (the Company is still active in  the  small
business  and  franchise loan securitization markets) 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  and  Other Investment 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, amortization of premiums and  market
valuation adjustments for securities classified as trading.

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

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

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

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

      Loans and Asset Portfolios.  Loans are stated at face value, net
of  deferred loan origination fees and associated direct costs and net
of   an  allowance  for  loan  losses.   Loan  origination  fees   and
incremental direct costs 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, adjusted for equity
earnings, or estimated fair value.

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

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

      Retained  Interests in Securitizations.  Retained  interests  in
securitizations are classified as trading and are carried at estimated
fair  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  based
upon  the expected timing of the release of cash by the securitization
trust ("cash-out method") over the anticipated life of the assets sold
after estimated future credit losses, estimated prepayments and normal
servicing  and  other related fees.  The discounted present  value  of
such retained interests is computed using management's assumptions  of
market  discount rates, prepayment rates, default rates, credit losses
and other costs.

      Premises  and  Equipment.   Premises  and  equipment,  primarily
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,  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.

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

      Investment in AMRESCO Capital Trust.  The Company currently owns
approximately  1.5 million common shares, or 15%, of  the  outstanding
common  stock of AMRESCO Capital Trust ("ACT"), which is a real estate
investment trust, and acts as manager of ACT.  At December  31,  1998,
the Company's investment in ACT was approximately $22.9 million, which
is  included  in other assets, and is accounted for under  the  equity
method  of  accounting.   Subject to certain limited  exceptions,  the
Company  has granted to ACT a right of first refusal with  respect  to
the first $100 million of targeted mortgage loan investments which are
identified  by or to the Company during any calendar quarter  and  all
mortgage-backed  securities  (other  than  mortgage-backed  securities
issued  in  securitizations sponsored in  whole  or  in  part  by  the
Company).

     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.  Equity accounts are
translated at the historical exchange rate.  These translation methods
give  rise  to  cumulative  foreign currency translation  adjustments,
which  are  reported as a component of accumulated other comprehensive
income with the exception of translation adjustments arising from  the
Company's investment in its Mexican subsidiary which is deemed by  the
Company  to  operate  in a highly inflationary economy.   Accordingly,
such  translation  adjustments are included the  current  consolidated
statement of operations.

       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 14).

     New Accounting Standards.  In June 1998, the Financial Accounting
Standards  Board  issued Statement of Financial  Accounting  Standards
("SFAS")  No. 133, "Accounting for Derivative Instruments and  Hedging
Activities," which establishes accounting and reporting standards  for
stand-alone  derivative  instruments and  for  derivative  instruments
embedded in other contracts, (collectively referred to as derivatives)
and  for  hedging activities.  It requires an entity to recognize  all
derivatives  as  either  assets or liabilities  in  the  statement  of
financial  position and measure those instruments at fair  value.   If
certain   conditions  are  met,  a  derivative  may  be   specifically
designated as (a) a hedge of the exposure to changes in the fair value
of a recognized asset or liability or an unrecognized firm commitment,
(b)  a  hedge  of the exposure to variable cash flows of a  forecasted
transaction, or (c) a hedge of the foreign currency exposure of a  net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale   security,   or   a   foreign-currency-denominated
forecasted  transaction.  This statement is effective for  all  fiscal
quarters for fiscal years beginning after June 15, 1999.  The  Company
has  not  yet  determined  the  impact on the  Consolidated  Financial
Statements upon adoption of this standard.

      In October 1998, the Financial Accounting Standards Board issued
SFAS  No.  134,  "Accounting for Mortgage-Backed  Securities  Retained
after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking   Enterprise,"  which  establishes  accounting  and  reporting
standards  for certain activities of mortgage banking enterprises  and
other  enterprises  that  conduct operations  that  are  substantially
similar  to  the primary operations of a mortgage banking  enterprise.
SFAS  No. 134 requires that after the securitization of mortgage loans
held  for  sale,  an  entity  engaged in mortgage  banking  activities
classify  the  resulting  mortgage-backed securities  based  upon  its
ability  and intent to sell or hold those investments.  This statement
is effective for the first fiscal quarter beginning after December 15,
1998  with early adoption permitted.  The Company will apply  the  new
rules of SFAS 134 for its fiscal year beginning January 1, 1999.   The
Company  believes the adoption of SFAS 134 will not  have  a  material
impact on the Company's results of operations or financial position.

      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 10 to 15 years.  Stock issued in connection with acquisitions was
valued at the price of the stock at the time of the agreements.

      On  August  11,  1998, the Company acquired  Mortgage  Investors
Corporation  and  an  affiliated  entity  ("MIC"),  a  privately  held
producer  of  Veteran's Administration ("VA") streamlined  re-financed
loans,  by merging a wholly-owned subsidiary of the Company with  MIC.
The   merger   agreement   provided  for  an  acquisition   price   of
approximately  1.8 million shares of the Company's  common  stock  and
$2.6  million in cash.  Additionally, the Company will pay  an  annual
earnout  over a three-year period, the total of which will not  exceed
$105.0 million, comprised of approximately 82% in the Company's common
stock and 18% cash.

      On  July  22, 1998, the Company acquired the commercial mortgage
banking  business  of Vanguard Commercial Mortgage, Inc.  ("Vanguard")
for  20,915 shares of the Company's common stock.  In addition to  the
common stock, the Company paid $1.0 million in cash in connection with
such acquisition.

       On  July  16,  1998,  the  Company  purchased  the  assets   of
Independence  Funding  Company  L.L.P. ("IFC")  and  TeleCapital  L.P.
("TeleCapital") for approximately 1.3 million shares of the  Company's
common  stock  and  cash  of $44.0 million.   IFC's  primary  line  of
business  is  providing long term financing to  small  businesses  and
TeleCapital's primary line of business is providing financing  to  the
pay phone industry.

      On  April 30, 1998, the Company acquired the commercial mortgage
banking   business   of  PNS  Realty  Partners,   L.P.,   PNS   Realty
Partners/Kentucky  L.L.C., PNS Realty Partners/Indiana  L.P.  and  PNS
Realty Partners Multifamily (collectively "PNS") for 30,930 shares  of
common  stock.   In  addition to the common stock,  the  Company  paid
approximately $7.3 million in cash in connection with such acquisition
and will pay up to an additional $5.7 million in cash and stock over a
three-year  period in the event certain performance goals are  met  or
exceeded during the fiscal years 1998, 1999 and 2000.  At December 31,
1998,  such performance goal was not attained requiring no performance
accrual by the Company.
     
      On  February  23,  1998,  the Company  acquired  the  commercial
mortgage  banking  business  of Fowler,  Goedecke,  Ellis  &  O'Connor
Incorporated ("Fowler") for 124,714 shares of Company's common  stock.
In  addition  to the common stock, the Company paid $12.8  million  in
cash  in  connection  with such acquisition and  will  pay  up  to  an
additional  $8.0 in cash and stock over the next three  years  in  the
event  certain performance goals are met or exceeded during the fiscal
years  1998,  1999  and 2000.  At December 31, 1998, such  performance
goal was not attained requiring no performance accrual by the Company.

     On January 28, 1998, the Company acquired the home equity lending
business  and operations of City Federal Funding & Mortgage Corp.  and
its   affiliate,  Finance  America  Corporation  (collectively   "City
Federal")  for  286,996  shares of the  Company's  common  stock.   In
addition to the Common Stock, the Company paid $2.0 million in cash in
connection  with such acquisition and was to pay up to  an  additional
$8.5  million in cash and stock over the next three years in the event
certain performance goals are met or exceeded during the fiscal  years
1998, 1999 and 2000.  At December 31, 1998, such performance goal  was
not attained requiring no performance accrual by the Company.

      The purchase prices for the 1998 acquisitions were allocated  as
follows (in thousands):
<TABLE>
<CAPTION>
                                                                                     City  
                                 MIC    Vanguard   IFC   TeleCapital  PNS   Fowler  Federal
<S>                           <C>      <C>        <C>    <C>         <C>    <C>     <C>
Cash and cash equivalents                                 $   263       
Accounts receivable            $ 2,085           $   639      209 
Loans held for sale                               49,008   36,116                        
Loans                                              1,390                                 
Retained interests in                                                    
securitizations                                    7,630
Premises and equipment           4,034               250       25                      $1,205  
Intangible assets - goodwill    54,154  $1,600    40,843   13,956    $8,335  13,700     9,889  
Other assets                       113             4,517                      2,300        34    
Accounts payable and       
accrued liabilities             (4,526)           (1,560)                                 (94)  
Income taxes payable            (2,289)                                        (118)         
Notes payable                   (2,927)          (39,659) (31,193)                        
Other liabilities                                   (877)  (1,519)                        
 Net assets acquired           $50,644  $1,600  $ 62,181 $ 17,857    $8,335 $15,882   $11,034  
</TABLE>
      The  following  pro forma financial information for  the  twelve
months  ended December 31, 1998 and 1997 is presented as if  the  MIC,
IFC  and  TeleCapital acquisitions occurred at the  beginning  of  the
periods presented and is not necessarily indicative of the results  of
operations that would have occurred if MIC, IFC and TeleCapital  would
have been purchased on these dates or of results that may occur in the
future.   Pro-forma  financial information related to  Vanguard,  PNS,
Fowler  and  City  Federal was not included as  the  amounts  are  not
material (in thousands, except per share data):

                                              Year Ended
                                             December 31,
                                             1998       1997
Total revenues                             $611,236   $481,650
Net income                                  (65,275)    63,256
                                                            
Earnings per share:                                         
 Basic                                       $(1.47)     $1.63
 Diluted                                      (1.47)      1.59

      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  was
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  3.4 million shares of the Company's common  stock  were
issued  in  1998  based  on  1998 and 1997 performance  targets.   The
purchase price was allocated as follows (in thousands):

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

3.   Loans Held for Sale

      Loans  held for sale were originated or acquired by the  Company
and  are  held  for future sale or securitization.   Such  loans  have
mortgages on the underlying real estate or first liens on the  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, 1998 and 1997 consisted of the following (in thousands):

                                                  1998        1997
    Commercial and multifamily mortgage loans   $349,681    $  286,657
    Franchise and small business loans           176,700        57,026
    Single family home equity loans              175,928       995,038
                                                 702,309     1,338,721
    Allowance for loan losses                     (7,912)       (8,384)
    Balance, end of year, net                   $694,397    $1,330,337

      At  December 31, 1998, the Company was committed to sell as part
of a December 1998 securitization approximately $45.4 million of small
business loans.

      The  Company  participates  in  the  Federal  National  Mortgage
Association  ("Fannie  Mae")  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% Fannie  Mae
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  total  $991.6  million
portfolio  of  sold DUS loans through December 31, 1998, however,  the
reserve  for  such loans stands at $6.1 million through  December  31,
1998, and is included in other liabilities.

      The activity in the allowance for loan losses for loans held for
sale  for the years ended December 31, 1998 and 1997 is summarized  as
follows (in thousands):

                                          1998      1997   
Balance, beginning of year             $   8,384   $ 1,390  
Provision for loan losses                 15,467     8,083    
Charge-offs                              (15,939)   (1,089)  
Balance, end of year                   $   7,912   $ 8,384  

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.  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 various  debt  facilities.   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, 1998  and
1997 consisted of the following (in thousands):

                                              1998       1997
Loans:                                                   
 Commercial loans                                $359,145       $168,347
 Residential construction loans                   129,613         65,931
  Total loans                                     488,758        234,278
Asset portfolios:                                        
 Commercial real estate mortgages                 216,276        296,591
 Real estate                                      223,126        100,315
 Partnerships and joint ventures                   31,376         26,012
 Total asset portfolios                           470,778        422,918
Allowance for loan and asset portfolio losses     (16,417)        (8,502)
 Balance, end of year, net                       $943,119       $648,694

     The activity in the allowance for loan and asset portfolio losses
for  the  years  ended  December 31, 1998 and 1997  is  summarized  as
follows (in thousands):

                                                      1998      1997   
Balance, beginning of year                         $  8,502    $  905       
Provision for loan and asset portfolio losses         7,971     9,136   
Charge-offs                                             (56)   (1,539) 
Balance, end of year                                $16,417   $ 8,502 

5.   Asset-backed Securities

      Asset-backed securities available for sale, carried at estimated
fair  value,  at  December  31, 1998 and 1997,  were  as  follows  (in
thousands):

                                     Gross      Gross      
                          Amortized Unrealized  Unrealized Estimated
                             Cost     Gain        Loss     Fair Value
     1998                 $160,351   $18,173   $(37,343)   $141,181
     1997                   93,272    21,601     (7,196)    107,677

      Net  proceeds  from sales of asset-backed securities  aggregated
$18.5 million and $52.3 million for the years ended December 31,  1998
and 1997, respectively, which resulted in gross realized gains of $8.0
million  and $2.1 million in 1998 and 1997, respectively, and a  gross
realized  loss  of $6.7 million in 1998.  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 various debt facilities.

6.   Retained Interests in Securitizations

      The  Company's  retained  interests in  securitizations  consist
primarily  of  interest only certificates retained  in  the  Company's
securitizations of home equity, franchise and small business loans and
are   generally   subordinated  to  other  security   holders   in   a
securitization  trust.   The  retained  interests  are  classified  as
trading  securities and are carried on the Company's balance sheet  at
fair  value,  with  the change in fair value during the  period  being
included  in earnings.  The timing and amount of cash flows  on  these
securities  are  significantly  influenced  by  prepayments   on   the
underlying  loans,  estimated foreclosure losses  to  the  extent  the
Company has retained the risk of such losses and normal servicing  and
other  related fees.  The carrying value of the retained interests  in
securitizations at December 31, 1998 was determined by the Company  on
a  disaggregated  basis  by  discounting future  cash  flows  using  a
weighted average discount rate of approximately 18%.

     The Company has utilized, for initial valuation purposes in 1998,
a 20% discount rate on its home equity securitizations, discount rates
ranging  from  18%  -  20% for its commercial finance  franchise  loan
securitizations  and  a  15% discount rate on its  commercial  finance
small  business  loan  securitizations.  The actual  weighted  average
annual  prepayment  rate on the Company's home equity  securitizations
was  24.57%  for  the period from inception of each  security  through
December 31, 1998, which is higher than originally projected,  and  is
modeled to be 28.34% for the next twelve months.  Prepayment rates  on
the Company's franchise and small business loan securitizations are in
line  with  expectations.  Current valuations take  into  account  the
change   in  prepayment  assumptions  as  well  as  other  assumptions
influenced by market conditions.  The discount rate used to value  the
retained interests is influenced primarily by the underlying loan rate
and  the  volatility and predictability of the underlying  cash  flows
which  generally  become  more certain as the  securities  season  and
prepayments and credit losses are more predictable.

      The  Company  structures its franchise and small business  loans
with  limited  cross  guarantees  between  borrowers  such  that   the
borrowers within a defined pool of loans absorb the first 5% - 10%  of
net  losses.   At the present time, the Company considers it  unlikely
that  net  losses on such loan portfolios will exceed  the  5%  -  10%
range.   Accordingly, losses are assumed to be zero.  The Company  has
assumed  no  prepayments  on its franchise  and  small  business  loan
securitizations   based  on  the  significant   prepayment   penalties
applicable to the loans and historical prepayment experience.

      Net  proceeds from sale of retained interests in securitizations
were $102.2 million in 1997 with no such sale occurring in 1998.

     The Company's retained interests in securitizations were measured
by allocating the previous carrying amount between the assets sold and
the  interests retained (including mortgage servicing rights, if  any)
based  on their relative fair values at the date of transfer.   During
1998,  the interests retained were subsequently marked-to-market which
resulted  in  a  $16.1  million decrease  in  the  value  of  retained
interests  in  securitizations, which is reflected as a  reduction  of
interest  and  other  investment income.   In  all  of  the  Company's
securitization  transactions completed in 1998 and 1997,  the  Company
has   not  retained  any  recourse  obligation,  other  than  retained
interests,  with  respect  to  the assets  sold  other  than  standard
representations and warranties. As of December 31, 1998,  the  Company
had  $23.2 million and $19.4 million of retained interests related  to
the  Company's  remaining interest from sales of  commercial  mortgage
conduit  and home equity loans in October 1998, respectively, and  are
expected  to  be  collected  in  the first  half  of  1999.   Retained
interests  in securitizations at December 31, 1998 and 1997  consisted
of the following (dollars in thousands):

                                                          1998      1997    
 Home equity loan interests                            $413,412   $265,330  
 Conventional small business and franchise interests     69,892     28,732    
 Commercial mortgage whole loan sale interest            23,203               
 Home equity whole loan sale interest                    19,441               
 SBA interests                                            7,612                
 Other                                                    5,417                
  Total                                                $538,977   $294,062  

7.   Mortgage Servicing Rights:

      The  activity in mortgage servicing rights for the  years  ended
December 31, 1998 and 1997 was as follows (in thousands):

                                       1998     1997  
Balance at beginning of period     $  3,394   $    -
Purchased                            33,638             
Originated                           16,227    3,585    
Amortization                         (3,872)    (191)    
 Balance at end of period           $49,387   $3,394   

8.   Notes Payable and Other Debt:

      The  Company's notes payable and other debt at December 31, 1998
and 1997, consisted of the following (in thousands):

                                                     1998        1997
Notes payable:                                             
 Revolving loan agreements                          $640,198     $388,345
 Non-recourse debt                                   176,960      121,647
 Commercial paper conduit and builder note payable    85,434       51,869
 Retained interest financing                          54,411       21,581
 Other                                                   868          
  Total notes payable                               $957,871     $583,442
                                                           
Warehouse loans payable:                                   
 Commercial mortgage banking facilities             $311,142     $258,046
 Home equity lending facilities                      136,051      916,006
 Commercial finance facilities                       140,233       42,744
  Total warehouse loans payable                     $587,426   $1,216,796
                                                           
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      192,500
 9.875% notes due March 15, 2005                     330,179      
  Total senior subordinated notes                   $580,179     $250,000

      Revolving  Loan  Agreements.  Effective  August  12,  1998,  the
Company entered into a Credit Agreement (the "Credit Agreement")  with
a  syndicate  of  lenders led by NationsBank, N.A., as  administrative
agent  and  Credit  Suisse First Boston, as syndication  agent,  which
replaced  the  Third Amended and Restated Loan Agreement (as  modified
and amended) dated as of September 30, 1997.  The Credit Agreement was
entered  into  in  order to increase the Company's  borrowing  limits,
among other things.

      The Credit Agreement constitutes senior debt and provides for  a
revolving  loan  commitment with short and long  term  commitments  of
$167.5 million and $502.5 million, respectively, and a term commitment
of  $67.5  million.  Interest is payable quarterly and at the  end  of
each advance period.  The Credit 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 Credit Agreement generally bears
interest  at a rate based on the lower of (i) the applicable rate  (as
defined  in the Credit Agreement) selected by the borrower  between  a
variable  rate  (as  defined  in the Credit  Agreement)  or  a  London
Interbank Offered Rate ("LIBOR") based rate (as defined in the  Credit
Agreement)  or (ii) the maximum lawful rate (as defined in the  Credit
Agreement).   The  short and long term revolving facilities  terminate
August  11, 1999 and August 12, 2001, respectively, and the term  loan
commitment  terminates August 12, 2003.  The debt offering costs  were
included  in other assets and are amortized over the life of the  debt
using the effective interest method.  On November 30, 1998, the Credit
Agreement  was  amended to, among other things, adjust  interest  rate
margins based upon certain net worth calculations.  As of December 31,
1998,  a  total  of  $640.2 million was outstanding under  the  Credit
Agreement bearing interest at 8.3% with availability under the  Credit
Agreement  of approximately $88.2 million.  At December 31, 1998,  the
Company  had  outstanding $9.1 million in face amount  of  letters  of
credit pursuant to such facility.  (See Note 16.)

      Non-recourse  Debt, Commercial Paper Conduit  and  Builder  Note
Payable, Retained Interest Financing and Warehouse Loans Payable.  Non-
recourse  debt  is  used primarily to fund purchases  of  real  estate
mortgage backed securities and under-performing loan portfolios and is
secured  by  the specific assets purchased totaling $210.5 million  at
December  31,  1998.  The commercial paper conduit  and  builder  note
payable is used primarily to provide construction financing to various
home  builders and is secured by the specific assets funded with  such
debt  totaling $87.6 million at December 31, 1998.  Retained  interest
financing  is  used  primarily to finance certain  retained  interests
purchased  or created during the Company's securitization process  and
is secured by the specific assets funded with such debt totaling $99.5
million at December 31, 1998.  The Warehouse debt is used primarily to
fund purchases and originations of commercial mortgage and home equity
loans  and  is  secured by the specific assets funded with  such  debt
totaling  $694.4  million at December 31, 1998.  The  following  table
summarizes  the Company's non-recourse debt, commercial paper  conduit
and  builder  note payable, retained interest financing and  warehouse
loans payable at December 31, 1998 (in thousands of dollars):
<TABLE>
<CAPTION>
                               Maximum   Outstanding    Maturity                                  12/31/98
       Lender                 Available    Balance        Date       Base Interest Rate        Interest Rate
Non-recourse:                                                            
<S>                           <C>      <C>          <C>           <C>                             <C>  
 Nationwide Building Society   $ 82,895  $ 57,437   October 2005    LIBOR + 0.95% to 1.25%          8.30%
 Merrill Lynch                   43,539    14,744   November 2000   90-day LIBOR + 2.20% to 3.20%   7.83 
 Bayerische Hypotheken           22,123    22,123   March 2000      90-day LIBOR + 1.25%            7.90
 Morgan Stanley                  21,528    21,528   30-day renewals 90-day LIBOR + 0.50% to 1.15%   8.81
 Nomura                          13,985    13,985   30-day renewals 90-day LIBOR + 1.00% to 1.50%   6.70
 Prudential                      10,791    10,791   30-day renewals 90-day LIBOR + 0.375%           5.44
 Bayerische Handelsbank          10,044    10,044   March 2003      4.40%                           4.40
 Greenwich                        7,838     7,838   30-day renewals 90-day LIBOR + 1.00%            6.07
 First Union                      6,008     6,008   30-day renewals 90-day LIBOR + 1.00% to 1.50%   6.21
 Residential Funding Corporation  4,317     4,317   30-day renewals 90-day LIBOR + 1.25% to 1.50%   6.32
 Donaldson Lufkin & Jenrette      3,609     3,609   30-day renewals 90-day LIBOR + 1.00%            6.07
 Lehman Brothers                  2,026     2,026   30-day renewals 90-day LIBOR + 1.50%            6.57
 First American Bank Texas        1,029     1,029   June 2000       Prime Rate + 1.00%              8.34
 NationsBank                        841       841   30-day renewals 90-day LIBOR + 1.00% to 1.50%   6.26
 Freemont Investment & Loan         640       640   June 2000       180 Day LIBOR + 3.50%           8.47
 Total non-recourse            $231,213  $176,960                               
Commercial Paper Conduit:                                                  
Kitty Hawk Funding             $100,000   $85,434   June 1999       LIBOR + 1.40%                   5.50%
Total commercial paper conduit $100,000   $85,434                               

Retained Interest Financing:                                                 
 Prudential  (1)                $40,000   $40,000   January 1999    LIBOR + 2.00%                   7.10%
 Donaldson Lufkin & Jenrette     14,411    14,411   30-day renewals LIBOR + 0.75% to 0.88%          6.10
 Total retained                         
   interest financing           $54,411   $54,411
                                                                  
Warehouse debt:                                                   
Commercial mortgage banking:
 RFC                          $325,000   $289,229   August 1999     LIBOR + 0.75%  to 1.50%         6.42%
 Morgan Stanley                 21,913     21,913   January 1999    Eurodollar +0.70% to 1.25%      6.31
 Total commercial mortgage                             
    banking                   $346,913   $311,142

Home equity lending:                                              
 Prudential  (1)              $250,000   $127,957   30-day renewals LIBOR + 1.00%                   5.60%
 Lehman Brothers                 8,094      8,094   30-day renewals LIBOR + 1.50%                   6.57
 Total home equity lending    $258,094   $136,051                               

Commercial finance:                                               
 Prudential (small business    
  loans) (1)                 $200,000    $ 32,189   March 1999      LIBOR + 0.75%                   5.85%
 Prudential(franchise  
  loans) (1)                  150,000      29,160   May 1999        LIBOR + 0.75%                   6.06
 Salomon Brothers             200,000      23,202   March 2000      LIBOR + 0.95%                   6.50
 Transamerica                  75,000      55,682   December 2001   LIBOR + 2.00% to 2.25%          7.76
 Total commercial finance    $625,000    $140,233                                       
</TABLE>
__________
(1)   The  Prudential  warehouse facility is  subject  to  a  combined
  maximum  facility limit of $550.0 million.  The home equity  lending
  maximum available facility was $250.0 million as of December 31, 1998,
  of  which  a  maximum  of $40.0 million was available  for  residual
  financing.   A  maximum  of $200.0 million  and  $150.0  million  is
  available  for  the  purpose  of facilitating  the  origination  and
  warehousing of small business loans and franchise loans, respectively,
  with a combined commercial finance maximum facility of $250.0 million.

      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 debt offering  costs  were  included  in
other  assets  and are amortized over the life of the debt  using  the
effective  interest  method.  The notes are not  redeemable  prior  to
maturity.

     9.875% Senior Subordinated Notes Due March 15, 2005.  On February
24,  1998  and March 10, 1998, the Company issued $290.0  million  and
$40.2  million,  respectively, aggregate principal  amount  of  senior
subordinated notes with net proceeds of approximately $320.7  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 debt offering costs were included in  other  assets
and  are  amortized  over  the life of the debt  using  the  effective
interest  method.   The  notes are redeemable  prior  to  maturity  at
104.938%  of their principal amount, plus accrued interest,  any  time
after  March  15,  2002, declining ratably to 100% of their  principal
amount, plus accrued interest, on or after March 15, 2004.

      Covenants -- Each of the Company's notes payable and other  debt
agreements  has  certain  covenants  which  include  financial  tests,
including   minimum   consolidated   tangible   net   worth,   maximum
consolidated funded debt to consolidated capitalization ratio, minimum
fixed payment ratio, minimum interest coverage ratio, maximum debt  to
net worth ratio and minimum asset coverage ratio.  The agreements also
contain  covenants that, among other things, limit 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.  (See Note 16.)

      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,
                          1999     2000     2001    2002    2003  Thereafter
                                                                    
Notes payable            $281,855 $38,535  $502,500       $ 77,544  $ 57,437
Warehouse loans payable   508,542  23,202    55,682                        
8.75% senior notes due                                      
July 1, 1999               57,500
Senior subordinated notes                                   57,500   522,679
Total                    $847,897 $61,737  $558,182       $135,044  $580,116

9.   Income Taxes

      Income tax expense (benefit) consisted of the following for  the
years ended December 31, 1998, 1997 and 1996 (in thousands):

                                          1998       1997     1996
Current:                                                 
 Federal                                $(32,850) $ 47,794  $18,456
 State                                     2,619     3,118    1,779
  Total current tax expense (benefit)    (30,231)   50,912   20,235
Deferred tax expense (benefit):                          
 Federal                                  (2,642)  (14,118)  (1,004)
 State                                       211      (921)     (97)
  Total deferred tax benefit              (2,431)  (15,039)  (1,101)
   Total income tax expense (benefit)   $(32,662) $ 35,873  $19,134

     A reconciliation of income taxes on reported pretax income at
statutory rates to actual income tax expense for the years ended
December 31, 1998, 1997 and 1996, is as follows (dollars in
thousands):

                                       1998          1997         1996
                                 Dollars   Rate  Dollars   Rate  Dollars  Rate
Income tax at statutory rates    $(35,642)  35%   $32,234   35%  $17,663   35%
Non-deductible goodwill and other   2,289   (2)       851    1       234    1
State income taxes, net of    
Federal tax benefit                   691   (1)     2,788    3     1,237    2
 Total income tax expense        $(32,662)  32%   $35,873   39%  $19,134   38%

      The  net  deferred  tax assets at December 31,  1998  and  1997,
consisted of the tax effects of temporary differences related  to  the
following (in thousands):

                                                         1998       1997
Reserves for loan and asset portfolio losses          $14,225     $ 7,556
Net operating loss carryforwards of acquired companies  6,976       7,327
Accrued employee compensation                           4,486       2,782
Foreign tax credit carryforward                         3,592       
Intangible assets                                       2,433       2,721
AMT credit carryforwards                                  602         602
Investment in subsidiaries                                426         426
Securitized loans and investments                      (5,293)      9,222
Other                                                   4,483       1,963
Deferred tax asset before valuation allowance          31,930      32,599
Valuation allowance                                    (1,175)     (4,275)
 Net deferred tax asset                               $30,755     $28,324

      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
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, 1998  (in
thousands):

         Expiration Date               Amount
         2002                          $   874
         2003                            1,459
         2006                              372
         2007                            2,867
         2008                            3,838
         2011                            9,283
         Total                         $18,693

10.  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.

      On October 20, 1998, the Board of Directors adopted a resolution
to   exchange  approximately  5.7  million  options  to  purchase  the
Company's  common  shares at exercise prices  ranging  from  $7.50  to
$34.56  per common share for approximately 4.0 million options  having
an  exercise price of $7.44 per common share, representing fair market
value at date of grant, which had no impact on the Company's financial
statements.  Stock option activity under the plan for the years  ended
December 31, 1998, 1997 and 1996 was as follows:

                                                                   Weighted
                                                   Option Price     Average
                                          Number       Per           Option
                                            of     Share Range     Price Per
                                          Shares                     Share
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
 Granted                                 3,215,312     7.53 -  34.44    29.57
 Exercised                                (307,399)    3.50 -  21.75    12.64
 Forfeited                              (2,037,725)    3.50 -  34.56    24.82
                                                           
Options outstanding at December 31, 1998 4,687,068     0.60 -  19.88     7.27
                                                           
Options exercisable at December 31, 1998 1,709,659     0.60 -  19.88     6.85
                                                           
Options available for grant at           
December 31, 1998                        4,575,423

      The  following table summarizes information about stock  options
outstanding at December 31, 1998:

                              Weighted    Weighted                  Weighted
                              Average     Average                   Average
                             Remaining    Exercise Price            Price of
 Range of        Options     Contractual  of Outstanding  Options  Exercisable
Exercise Prices  Outstanding    Life       Options       Exercisable Options
$  0.60 - $2.75   125,045        2        $  2.49        125,045    $  2.49
           3.50    85,300        5           3.50         85,300       3.50
   6.88 -  7.00   336,928        6           6.93        289,146       6.94
           7.44 4,015,795        9           7.44      1,182,168       7.44
           7.53    92,000       10           7.53         18,400       7.53
  11.38 - 19.88    32,000        8          18.18          9,600      17.04
 Total          4,687,068                    7.27      1,709,659       6.85

      At  December  31,  1998, the Company has  reserved  a  total  of
4,687,068 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 (loss)  and
earnings  (loss) 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,
                                    1998      1997      1996
Net income (loss):                               
 As reported                     $(69,171)   $56,224   $31,332
 Pro forma                        (75,430)    48,318    30,516
                                                       
Basic earnings (loss) per                              
share:
 As reported                       $(1.61)     $1.59     $1.16
 Pro forma                          (1.76)      1.36      1.13
                                                       
Diluted earnings (loss) per share:                           
 As reported                       $(1.61)     $1.53     $1.06
 Pro forma                          (1.76)      1.32      0.96

     The estimated fair value of options granted during 1998, 1997 and
1996  was  $4.21,  $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:

                                    1998         1997        1996
       Risk-free interest    4.19% - 4.50%   5.82% - 6.26%  5.98% - 7.21%
       Expected life            5 years         7 years       7-8 years
       Expected volatility       54%           43% - 46%      43% - 45%
       Expected dividends         -                -              -

      During  1998,  the Company issued 186,471 shares  of  restricted
common  stock  at prices ranging from $28.69 per share to  $30.19  per
share,  with a weighted average price of $30.02 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 1998  grants
vesting  in  lump sum in the year 2001.  During 1998, 1997  and  1996,
$2.5  million,  $1.7  million  and  $1.0  million  in  unearned  stock
compensation was amortized as compensation expense, respectively.   At
December  31,  1998  and 1997 reductions for employee  stock  included
unearned   stock  compensation  of  $4.9  million  and  $2.6  million,
respectively.

11.  Common Stock

     During July and August 1998, the Company repurchased 1.0 million
shares of the Company's outstanding common stock at an average price
of $17.20 per common share.

      On  July 16, 1998, the Company purchased the assets of  IFC  and
TeleCapital  for  approximately 1.3 million shares  of  the  Company's
common  stock  and  cash  of $44.0 million.   IFC's  primary  line  of
business  is  providing long term financing to  small  businesses  and
TeleCapital's primary line of business is providing financing  to  the
pay  phone  industry.   On August 11, 1998, the Company  acquired  the
operations  of  MIC,  a  privately held  specialized  producer  of  VA
streamlined re-financed loans, by merging a wholly-owned subsidiary of
the   Company  with  MIC.   The  merger  agreement  provided  for   an
acquisition price of approximately 1.8 million shares of the Company's
common stock and $2.6 million in cash.  Additionally, the Company will
pay  an  annual earnout over a three-year period, the total  of  which
will not exceed $105.0 million, comprised of approximately 82% in  the
Company's common stock and 18% cash.

      On  February 24, 1998, March, 4, 1998, May 18, 1998 and July 28,
1998  the  Company  issued options to purchase approximately  331,000,
15,000,  152,000 and 2,629,000 shares, respectively, of common  stock.
On  February  24,  1998, July 17, 1998 and July 22, 1998  the  Company
issued  approximately  166,000, 34,000 and 21,000  restricted  shares,
respectively, of the Company's common stock to certain key employees.

      On  February 23, 1998, the Company completed a registered public
offering  of  5.2  million  shares  of  common  stock,  including  the
underwriters'  over-allotment option.   The  net  proceeds  from  such
offering,   after   underwriter's  discount  and  offering   expenses,
aggregated approximately $147.2 million.  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  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.

      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.

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

                                                1998      1997     1996
Net income (loss) - basic                     $(69,171)  $56,224  $31,332
Effect of convertible debt, net of taxes                            2,196
Net income (loss) - diluted                   $(69,171)  $56,224  $33,528
                                                            
Weighted average shares outstanding (basic)     42,846    35,412   27,043
Assuming conversion of convertible debt                             3,600
Dilutive stock options                                       958      905
Contingently issuable shares                                 293      226
Weighted average shares outstanding (diluted)   42,846    36,663   31,774

      As the Company posted a net loss for the year ended December 31,
1998,  the effects of dilutive stock options and contingently issuable
shares for the year ended December 31, 1998 are anti-dilutive and  not
included  in the computation of diluted loss per share.  Diluted  loss
per share including such anti-dilutive effects would have resulted  in
diluted loss per share of $(1.57).  A reconciliation of the numerators
and  denominators  used  in  the basic  and  diluted  loss  per  share
computation  including such anti-dilutive effects for the  year  ended
December 31, 1998 is as follows (in thousands):

                                                1998   
Net loss (diluted)                           $(69,171) 
                                               
Weighted average shares outstanding (basic)    42,846  
Dilutive stock options                            789     
Contingently issuable shares                      370     
Weighted average shares outstanding (diluted)  44,005  

      At  December 31, 1998, the Company had 20,000 stock appreciation
rights outstanding related to the market value of the Company's common
stock which were granted to certain non-employees of the Company.  The
stock  appreciation  rights have an award  value  of  $13.125  and  an
automatic conversion into cash on February 20, 2006.

12.  Employee Compensation and Benefits

      Accrued employee compensation and benefits at December 31,  1998
and  1997  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 1998 and 1997,
the  matching contribution was set at $.50 for each $1.00  contributed
by the employees.  In addition to the matching savings contribution in
1997,  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.  No such contributions were made in 1998 due
to  the Company's net loss, however, it is anticipated that some level
of  profit  sharing contribution will resume in future  periods.   For
the years ended December 31, 1997 and 1996, the Company accrued profit
sharing  contributions of $3.1 million and $1.5 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.

13.   Commitments and Contingencies

      The  Company  has  entered into non-cancelable operating  leases
covering office facilities which expire at various dates through 2007.
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 2005.  The total rent expense  for  the  years
ended  December  31,  1998,  1997 and 1996,  was  approximately  $17.7
million,  $9.9  million  and $5.3 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, 1998 were as follows (in thousands):

      Year Ended December 31,                     
      1999                                        $11,615
      2000                                         10,553
      2001                                          8,669
      2002                                          7,831
      2003                                          6,499
      Thereafter                                   10,913

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

14.  Segment and Related Information

      The  Company  has five reportable segments which  have  separate
management   teams  and  infrastructures  that  engage  in   different
investments and offer different services: asset management, commercial
mortgage   banking,  home  equity  lending,  commercial  finance   and
residential mortgage banking.  The asset management business  involves
acquiring  asset portfolios at a 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 origination, warehousing, placement  and
servicing  of  commercial real estate mortgages  and  commercial  real
estate   brokerage.    The  home  equity  lending  business   involves
originating, selling and servicing nonconforming residential  mortgage
loans.  In its commercial finance business, the Company focuses on (i)
loans  to franchisees of nationally recognized restaurant, hospitality
and  service organizations, (ii) loans to small business owners, (iii)
real  estate structured finance, (iv) communications finance  and  (v)
single  family  residential  construction  lending.   The  residential
mortgage  banking  line  of  business (which  consists  of  the  newly
acquired  operations of MIC) originates and sells VA  streamlined  re-
financed loans.

      The  accounting policies are the same as those described in  the
summary  of  significant accounting policies  with  the  exception  of
interest  expense  incurred  by the Company  being  allocated  to  the
subsidiaries  in  1998 and 1997 based upon the subsidiaries'  combined
balance  of  common stock, paid in capital and intercompany  accounts.
During  1996, interest income and expense was recorded by the  Company
and the subsidiaries based upon the subsidiaries' intercompany balance
multiplied  by  an  interest rate pre-determined by  management.   The
Company  evaluates performance based upon operating  income  which  is
determined   by  adjusting  operating  profit  to  include  intangible
amortization expense.

       The  following  represents  the  Company's  reportable  segment
position  as  of and for the years ended December 31, 1998,  1997  and
1996 (in thousands):
<TABLE>
<CAPTION>
     1998                                                                 
                                          Commercial  Home               Residential                    
                                   Asset   Mortgage   Equity  Commercial  Mortgage
                                Management  Banking   Lending    Finance  Banking(1) All Other Eliminations Total
<S>                           <C>        <C>        <C>       <C>       <C>          <C>       <C>         <C>  
Revenues from external sources  $112,387   $ 71,018   $145,069  $122,047  $74,702     $  1,281  $           $ 526,804
Interest expense                  37,973     40,617     99,194    38,674    2,260       13,779                232,497
Depreciation and amortization      1,075      7,541      6,391     5,504    2,391        2,953                 25,855
Operating income (loss)           39,838   (104,371)   (74,719)   46,591   32,926      (42,098)              (101,833)
Other significant non-cash items:                                                                     
Gain on sale of loans and                                                            
 investments                                            61,679    34,250                                       95,929
Segment assets                   347,355    313,961    359,439   453,635   99,070    1,913,857   (568,607)  2,918,710

(1)  Began operations August 11, 1998.

      1997                                                            
                                           Commercial   Home     
                                 Asset     Mortgage     Equity   Commercial  
                               Management   Banking     Lending    Finance  All Other  Eliminations   Total
Revenues from external sources $ 103,581    $ 97,533    $165,294   $ 51,212  $   653   $        -    $ 418,273
Intersegment revenue                                       1,113                          (1,113)   
  Total revenues                 103,581      97,533     166,407     51,212      653      (1,113)      418,273
                                                                      
Interest expense                  22,590       3,193      53,939     13,224   10,230      (1,113)      102,063
Depreciation and amortization      1,957       4,491       3,511      1,940    2,549                    14,448
Operating income (loss)           45,870      27,199      46,163     19,075  (46,210)                   92,097
Other significant non-cash items:
Gain on sale of loans and                                                        
 investments                                              69,615     15,453                             85,068
Segment assets                   298,311   1,131,317     337,807    174,079   966,982    (274,648)   2,633,848

      1996                                                          
                                             Commercial   Home
                                  Asset      Mortgage     Equity    Commercial
                                Management    Banking     Lending     Finance All Other  Eliminations   Total
Revenues from external sources $  87,337 $    54,438  $   54,195     $2,976   $ 1,121    $            $  200,067
Intersegment revenus               1,418         187       2,669        (29)   13,002     (17,247)   
  Total revenues                  88,755      54,625      56,864      2,947    14,123     (17,247)       200,067
                                                                    
Interest expense                  15,151       2,269      18,541        959    17,090     (17,247)        36,763
Depreciation and amortization      2,468       3,683         810                1,915                      8,876
Operating income (loss)           41,286      11,462      27,321        695   (30,298)                    50,466
Other significant non-cash items:        
Gain on sale of loans and                                                       
 investments                                              16,933                                          16,933
Segment assets                   123,978     121,328     390,612      2,467   595,578    (158,022)     1,075,941
</TABLE>
15.  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  does not  use  derivative  financial
instruments  for trading or speculative purposes, nor is  the  Company
party  to  highly leveraged derivatives.  These financial  instruments
include  interest  rate cap agreements, put options  and  forward  and
futures  contracts.   The  instruments involve,  to  varying  degrees,
elements  of 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  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 index.  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.  No such terminations
of  derivative  transactions  prior to contractual  maturity  occurred
during  1998 or 1997.  If the derivative fails to effectively  perform
as  a hedge and/or does not qualify as a hedge, it is marked-to-market
and any gain (loss) is recognized in earnings.

     At December 31, 1998, the Company had sold five forward contracts
with  a  total notional amount of $162.3 million to hedge the interest
rate risk associated with balances of loans held for sale, commitments
to  sell loans held for sale and balances of residential MBS which had
carrying  values  of approximately $82.9 million,  $65.0  million  and
$35.3  million, respectively, as of December 31, 1998.  As of December
31,  1998, the Company had (i) two (U.S. Treasury and Federal National
Mortgage Association ("Fannie Mae")) security contracts with  a  total
notional  amount of $63.8 million related to hedging $82.9 million  of
loans  held  for  sale with settlement dates of January  and  February
1999,  (ii)  two Government National Mortgage Association  thirty-year
6.0%  contracts  to  sell approximately $65.0 million  of  residential
mortgage banking loans to be delivered in February 1999 and (iii)  one
U.S.  Treasury contract with a notional amount of $33.5 million  which
hedges   approximately  $35.3  million  of  residential  MBS  with   a
settlement  date  of  January 1999.  Any gain or  loss  on  a  forward
contract is deferred and recognized when the related assets are  sold.
As of December 31, 1997, the Company had two forward contracts to sell
ten-year  U.S.  Treasury  securities which hedged  a  portion  of  the
Company's MBS portfolio with a total notional amount of $48.2 million.
In  addition,  four  forward  contracts were  outstanding  in  with  a
notional  amount of $101.5 million to sell Fannie Mae mortgage  backed
securities.

     At December 31, 1998, the Company had one option contract to sell
(put  option) ten-year U.S. Treasury securities at contracted  forward
prices.   The contract matures in March 1999 and hedges two commercial
MBS with a carrying value of $25.6 million.

      At December 31, 1998, the Company had one ten-year treasury note
Fannie  Mae  futures contract with a notional amount of $21.4  million
related  to  hedging  approximately $18.9 million  of  loans.   As  of
December  31,  1997, the Company had futures contracts  with  notional
amounts  of  $445.2  million and $6.0 billion  to  hedge  home  equity
lending loans held for sale and retained interests in securitizations,
respectively.

     At December 31, 1998, the Company had an amortizing interest rate
cap  with  a  notional  amount of $1.0 billion  hedging  approximately
$384.9  million  of  retained interests in securitizations.   The  cap
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.

      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,  1998,  the  Company  had  four   such
agreements  outstanding with a total notional amount of $31.7  million
which  hedge  floating rate debt related to the Company's balances  of
residential MBS with a carrying value of $37.5 million.  The contracts
have  cap  rates  ranging from 6.375% to 6.875% based upon  one  month
LIBOR  and  expire on various dates between November  1999  and  April
2000.   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.  Amounts received under cap agreements  are
recognized as yield adjustments to the related debt.  At December  31,
1997,  the Company had three cap agreements outstanding with  notional
amounts  of  $64.6  million which hedged floating  rate  debt  with  a
carrying value of $62.6 million.

      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, 1998    December 31, 1997
                                 Carrying  Estimated  Carrying  Estimated
                                  Amount   Fair Value  Amount   Fair Value
                                          (Dollars in thousands)
Assets:                                                       
 Cash and cash equivalents       $ 66,422  $ 66,422  $  25,866  $    25,866
 Loans held for sale, net         694,397   694,397   1,330,337   1,330,337
 Loans and asset portfolios, net  943,119   983,988     648,694     674,081
 Retained interests in        
securitizations - trading         538,977   538,977     294,062     294,062
 Asset-backed securities -    
available for sale                141,181   141,181     107,677    107,677
 Accounts receivable, net          86,620    86,620      19,183     19,183
 Mortgage servicing right, net     49,387    49,387       3,394      3,394
Liabilities:                                                  
 Accounts payable                  43,280    43,280      22,821     22,821
 Notes payable and warehouse    
loans payable                   1,545,297 1,545,297   1,800,238  1,800,238
 Senior notes                      57,500    56,063      57,500     58,147
 Senior subordinated notes        580,179   416,606     250,000    257,356
Derivative Financial Instruments:                                          
 Interest rate caps                          (3,267)                 2,498
 Forward contracts                             (828)                   (88)
 Futures contracts                              164                 (6,682)
 Call options                                                        8,979
 Put options                                   (148)                   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,  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 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, 1998 and 1997.   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.

16.  Subsequent Events (Unaudited)

     On February 28, 1999, the Credit Agreement was amended to replace
a  waiver which, among other things, adjusted the ratios to allow  for
the loss incurred in 1998.  The interest rate remained consistent with
the November 1998 amendment.

17.  Quarterly Financial Data (Unaudited)

      The  following  is a summary of unaudited quarterly  results  of
operations  for  the  years  ended December  31,  1998  and  1997  (in
thousands, except per share amounts):

                                     Year Ended December 31, 1998
                                     First     Second  Third   Fourth
                                    Quarter   Quarter Quarter  Quarter
Revenues                            $140,798  $175,167 $180,040  $30,799
Income (loss) before income taxes     22,907    32,229    1,335 (158,304)
Net income (loss)                     14,049    19,660      758 (103,638)
Earnings (loss) per share:                                      
 Basic                                  0.36      0.46     0.02    (2.27)
 Diluted                                0.35      0.45     0.02    (2.27)
                                                             
                                 Year Ended December 31, 1997
                               First     Second  Third   Fourth
                              Quarter   Quarter Quarter  Quarter
Revenues                       $74,133  $103,083 $111,535 $129,522
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     0.43     0.55
 Diluted                          0.25      0.34     0.41     0.53


                     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, 1998 and 1997,  and
the  related  consolidated  statements  of  operations,  shareholders'
equity and cash flows for each of the three years in the period  ended
December  31, 1998.  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, 1998  and  1997,  and  the
results of their operations and their cash flows for each of the three
years  in  the  period  ended December 31, 1998,  in  conformity  with
generally accepted accounting principles.


\s\ Deloitte & Touche LLP
Dallas, Texas
February 9, 1999