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                  U.S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, DC 20549
                                     
                             ----------------
                                     
                               FORM 10-QSB/A
                                     
           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                                     
              For the quarterly period ended October 31, 1998
                                     
                         ------------------------
                                     
                      Commission File Number: 0-18108
                                     
                         ------------------------
                                     
                        FINET HOLDINGS CORPORATION
          (Exact name of registrant as specified in its charter)
                                     
                                 DELAWARE
                         (State or jurisdiction of
                      incorporation or organization)
                                     
                         505 Sansome Street, #1420
                         SAN FRANCSICSO, CA 94111
                  (Address of principal executive office)
                                     
                                94-3115180
                   (IRS Employer Identification Number)
                                     
                              (415) 263-5400
           (Registrant's telephone number, including area code)
                                     
                                     
Indicate  by  check mark whether the registrant has (1) filed  all  reports
required to be filed by Section 13 or 15(d) of the Securities 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
filing requirements within the past 90 days.

                               Yes _X_ No __
                                     
The  number of shares outstanding of each of the issuer's classes of common
stock  was 59,062,844 shares of common stock, par value $.01, as of January
8, 1999.
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<PAGE> 1
                        FINET HOLDINGS CORPORATION
                                     
                                   INDEX


Item  Description
Page
----  -------------------------------------------------------------------
----
                      PART I - FINANCIAL INFORMATION

1.    Financial Statements

      Unaudited Balance Sheet
        October 31, 1998 ................................................
2

      Unaudited Statements of Operations
        Three Months Ended October 31, 1998 and 1997.....................
3
        Six Months Ended October 31, 1998 and 1997.......................
4

      Unaudited Statements of Cash Flow
        Six Months Ended October 31, 1998 and 1997.......................
5

      Notes to Unaudited Financial Statements............................
6

2.    Management's Discussion and Analysis of Financial Condition
        and Results of Operations........................................
12


                        PART II - OTHER INFORMATION

1.    Legal Proceedings..................................................
19

2.    Changes in Securities..............................................
19

4.    Submission of Matters to a Vote of Security Holders................
19

5.    Other Information..................................................
19

6.    Exhibits and Reports on Form 8-K...................................
20

      Signatures.........................................................
20
<PAGE> 2
                       PART I. FINANCIAL INFORMATION

                       ITEM 1. FINANCIAL STATEMENTS

                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED)
        (Dollars in thousands, except shares and per share amounts)
                                                          October 31,
                                                        1998
                                                        -------
                                  ASSETS
Cash and cash equivalents                          $      137
Mortgage loan servicing advances and other receivables   3,303
Mortgages held for sale, net of allowances of $1,132   119,593
Mortgage servicing rights (Note 3)                       4,460
Furniture, fixtures and equipment, net of accumulated depreciation 2,323
   of $3,361
Goodwill, net of amortization of $97                   4,593
Other assets                                             2,808
                                                             -------
Total assets                                        $  137,217
                                                             =======
                                     
                   LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Warehouse lines of credit (Note 4)                   115,156
  Notes payable and capitalized leases (Note 4)          3,904
  3% Convertible subordinated debentures (Note 4 and Note 8)7,000
  Accounts payable, accrued expenses and other liabilities10,713
                                                             -------
Total liabilities                                      136,773
                                                             -------
Commitments and contingencies (Note 5)

Stockholders' equity: (Note 6)
  Preferred stock, $.01 par value, (100,000 shares authorized, 250 issued
and outstanding)                                             -
  Common stock, $.01 par value, (150,000,000 shares authorized, 33,485,000
     shares outstanding)                                   335
  Preferred Stock Discount                              (586)
  Paid-in capital                                       18,711
  Accumulated deficit                                 (18,016)
                                                           ----------
Total stockholders' equity                                 444
                                                           ----------
Total liabilities and stockholders' equity            $137,217
                                                           ==========

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




<PAGE> 3

                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                (UNAUDITED)
       (Dollars and amounts in thousands - except per share amounts)
                                                Three months ended
                                                    October 31,
                                                      ---------------------
--
                                    1998                        1997
                                                      ---------     -------
--
REVENUE
  Warehouse interest income                        $2,154          882
  Warehouse interest expense                      (2,228)        (678)
                                                  ---------     ---------
   Net warehouse interest income (expense)           (74)          204
  Gain on sale of  mortgage loans and servicing rights, net of
      loan origination costs                        2,747        1,413
  Loan servicing fees                                 209          125
  Retail broker fees                                  907           45
  Other                                               102           58
                                                      ---------     -------
--
    Total revenue                                  3,891         1,845
                                                      ---------     -------
--

EXPENSES
  Compensation and related expenses                 4,071        1,475
  Occupancy and other office expenses               1,887        1,261
  Other interest expense                            1,245            -
  Marketing expenses                                  511          236
  Depreciation and amortization                       359          163
  Other operating expenses                            649          521
                                                      ---------     -------
--
    Total expenses                                  8,722        3,656
                                                      ---------     -------
--
Loss before income taxes                          (4,831)      (1,811)
  Income tax expense                                    -         (42)
                                                      ---------     -------
--
NET LOSS                                     $    (4,831)  $   (1,853)
                                                      =========
=========

Basic and diluted net loss per common share (Note 1)$        (.15)$
(.06)
                                                      =========
=========
Shares used in computing basic and diluted share data32,913     28,812
                                                      =========
=========

 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE> 4

                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                (UNAUDITED)
       (Dollars and amounts in thousands - except per share amounts)
                                                  Six months ended
                                                      October 31,
                                                      ---------------------
--
                                    1998                        1997
                                                      ---------     -------
--
REVENUE
 Warehouse interest income                         $3,957        1,756
 Warehouse interest expense                       (3,886)      (1,420)
                                                  ---------     ---------
  Net warehouse interest income (expense)              71          336
  Gain on sale of mortgage loans and servicing rights, net of
      loan origination costs                        6,817        4,011
  Loan servicing fees                                 751          253
  Retail broker fees                                1,430           75
  Other                                               196          163
                                                      ---------     -------
--
    Total revenue                                  9,265         4,838
                                                      ---------     -------
--

EXPENSES
  Compensation and related expenses                 7,990        4,115
  Occupancy and other office expenses               3,718        2,194
  Other interest expense                            2,243            -
  Marketing expenses                                1,011          501
  Depreciation and amortization                       679          296
  Other operating expenses                          1,003          643
                                                      ---------     -------
--
    Total expenses                                 16,644        7,749
                                                      ---------     -------
--
Loss before income taxes
  Income taxes and extraordinary gain, net of tax (7,379)      (2,911)
Income tax expense                                      -         (45)
Extraordinary gain, net of tax                          -            3
                                                      ---------     -------
--
NET LOSS                                     $    (7,379)  $   (2,953)
                                                      =========
=========

Basic and diluted net loss per common share (Note 1)$        (.23)$
(.10)
                                                      =========
=========
Shares used in computing basic and diluted share data32,693     28,642
                                                      =========
=========

 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE> 5
                FINET HOLDINGS CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (Unaudited, Dollars in thousands)
                                                          Six months ended
October 31,
                                           1998                 1997
                                                          --------   ------
--
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                         $ (7,379) $ (2,953)
  Adjustments to reconcile net loss to net cash used in operating
activities:
    Depreciation and amortization                        650       296
    Amortization of mortgage servicing rights            919        -
    Amortization of imputed interest on convertible debt and issuance costs
1,959                                                      -
    Write down of other assets and provision for losses(126)       261
    Gain on sale of mortgage servicing rights          (420)      (47)
    Deferred tax benefit                               (83)      (113)
  Changes in operating assets and liabilities:
     (Increase) decrease in mortgage loans held for sale9,244 (17,119)
     (Increase) decrease in originated mortgage servicing rights, net(312)
277
     (Increase) decrease in mortgage loan servicing advances and other
receivables                                                4      (78)
     (Increase) decrease in other assets                 529       235
     Increase (decrease) in accounts payable and accrued expenses(2,133)
456
     Repossession of real estate                       (558)         -
                                                           -------    -----
--
     Net cash provided (used) by operating activities  2,294  (18,786)
                                                           -------    -----
--
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of mortgage servicing rights                   -      (165)
  Proceeds from sale of mortgage servicing rights      1,509        75
  Purchase of furniture, fixtures and equipment        (248)    (189)
  Acquisition of purchased technology and intangibles  (481)        -
  Pre-acquisition advances to affiliates                  -      (271)
  Cash acquired in acquisition                           185         -
  Other                                                   12        48
                                                           -------    -----
--
    Net cash provided (used) by investing activities     977     (502)
                                                           -------    -----
--
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                  -      3,862
  Proceeds from issuance of convertible debt           1,384        -
  Proceeds from issuance of preferred stock            2,286         -
  Proceeds from warrant exercise                         197
23
  Net increase (decrease) in warehouse borrowings    (9,820)    16,472
  Proceeds from advances on note payable and line of credit1,400  250
  Repayment of note payable, capitalized leases and line of credit
                                                       (309)     (295)
 Other equity                                          (450)         -
                                                       -------   -------
    Net cash provided (used) by financing activities (5,312)    20,311
                                                           -------    -----
--
Net increase (decrease) in cash                      (2,041)     1,023
Cash at beginning of period                            2,178     1,148
                                                           -------    -----
--
Cash at end of period                                $   137  $  2,171
                                                           =======
=======
Supplemental cash flow information (Note 7)
 The accompanying notes are an integral part of the consolidated financial
                                statements.
<PAGE> 6

                        FINET HOLDINGS CORPORATION
           NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS
Finet  Holdings  Corporation ("Finet" or the "Company")  is  an  electronic
commerce  firm  operating in one business segment, homeownership  services.
Finet  is  engaged  in wholesale and retail mortgage  lending  (as  both  a
mortgage  banker  and a mortgage broker) and the delivery of  related  real
estate sales and financing transaction settlement services.

The  operations  of  the Company's principal lending  subsidiaries  include
Monument  Mortgage, Inc. ("MMI"), a California mortgage banker specializing
in conforming prime loans, Coastal Federal Mortgage Company ("Coastal"),  a
New Jersey sub-prime mortgage banker, and Mical Mortgage, Inc. ("Mical"), a
California mortgage banker specializing in FHA and VA loans. The  Company's
operates  throughout  the  40  states in which  the  Company  is  currently
licensed.  (See Note 8.)

The acquisition of Coastal on April 30, 1998 was accounted for as a pooling
of  interests. Accordingly, the Company's results for the quarter  and  the
six  months ended October 31, 1997 have been restated to include  Coastal's
results of operations for that period.

BASIS OF PRESENTATION
The  accompanying  unaudited consolidated financial  statements  have  been
prepared  in  accordance with generally accepted accounting principles  for
interim financial information and with the instructions to Form 10-QSB  and
Regulation  S-B.  Accordingly, they do not include all the information  and
footnotes required by generally accepted accounting principles for complete
financial  statement  presentation.  In  the  opinion  of  management,  all
adjustments, consisting of normal recurring accruals, considered  necessary
for  a  fair presentation of the results for the interim period  have  been
included.  Operating results for the six months ended October 31, 1998  are
not  necessarily  indicative of the results that may be  expected  for  the
fiscal  year  ending  April  30,  1999.  This  report  should  be  read  in
conjunction  with  the  consolidated  financial  statements  and  footnotes
included  in  the  annual report on Form 10-KSB for the fiscal  year  ended
April 30, 1998 of Finet Holdings Corporation.

The  consolidated financial statements of the Company include the  accounts
of  all  wholly owned subsidiaries. All significant inter-company  balances
and   transactions   have   been  eliminated  in  consolidation.    Certain
reclassifications  of the 1997 amounts were made to  conform  to  the  1998
presentation.

PER SHARE AMOUNTS

Basic EPS is determined by dividing net loss by the weighted average shares
outstanding during the period.  Since the fully diluted loss per share  for
the  quarters  ended  October 31, 1998 and 1997,  respectively,  was  anti-
dilutive, basic and diluted earnings per share are the same. The effects of
common  stock  equivalents have not been included because they  would  have
been anti-dilutive during the periods reported.

NOTE 2. ACQUISITIONS

On  May 19, 1998 the Company acquired all the issued and outstanding shares
of Mical, a non-public mortgage banker with principal offices in San Diego,
California,  in exchange for 432,000 shares of the Company's  common  stock
valued  at  $400,000.  Upon resolution of specified contingencies,  120,000
additional  common  shares may be issued. As a result of  the  acquisition,
33,000  common shares were issued as a finders fee and 73,000  shares  were
issued under a keep-well agreement with an existing shareholder.

Due  to  the  financial  requirements of Mical,  certain  transactions  and
advances were made in anticipation of the acquisition. The acquisition  has
been  accounted  for  as  a purchase, and Mical's  financial  position  and
results of operations have been

<PAGE 7>

included in the Company's financial statements since that date. The  excess
of the purchase price over the fair market value of the acquired net assets
($4.6  million at October 31, 1998) was recorded as goodwill and  is  being
amortized on a straight
line  basis  over 10 years.  (See Footnote 8). The following condensed  pro
forma statements of operations of the Company
for  the  six  months ended October 31, 1998 and 1997 give  effect  to  the
acquisition  of  Mical  as  though  the transaction  had  occurred  at  the
beginning of the periods.  (See Footnote 8).

(In thousands)         PRO FORMA
               6 Months Ending October 31,
                   1998          1997
                -----------  -----------
Revenue           $ 13,866      $ 16,861

Expenses            22,264        17,789
                -----------  -----------
Net loss          $ (8,398)     $  (928)
                ===========  ===========
Loss per share    $  (.26)      (.03)
                ===========  ===========
     
On  June 23, 1998 the Company acquired, from an individual, certain  assets
which  include an internet site, "interloan.com" ("Interloan") in  exchange
for 100,000 shares of the Company's common stock.  The Company also entered
into  a  binding  term  sheet agreement that will result  in  a  three-year
employment agreement with that individual.

NOTE 3.  MORTGAGE SERVICING RIGHTS

During the six months ended October 31, 1998, the activity in mortgage loan
servicing rights was as follows:

                                 October 31,
(Dollar amounts in thousands)      1998
------------------------------   ---------
Mortgage Servicing Rights
  Beginning balance              $  5,478
    Additions                       1,231
    Sales                          (1,330)
    Amortization/Payoff              (919)
                                 ---------
  Ending balance                 $  4,460
                                 =========

Servicing  rights  to  mortgage loans with an unpaid principal  balance  of
approximately  $515 million were pledged as collateral  to  lenders  as  of
October 31, 1998.

<PAGE 8>

NOTE 4.  DEBT

The  following table and comments present summary information regarding the
Company's debt as of October 31, 1998:

(In thousands)
                                                                   Interest
Expires or
Facility                            Balance         Rate              Due
----------------------------------  --------------  --------------   ------
-------------
REVOLVING
Warehouse lines of credit:
  $35 million committed             $  44,085       LIBOR +
                                             variable spread  December  31,
1998
     $24    million                             8,362         Libor   +2.5%
December 31, 1998

  $60 million                          62,709       NY Prime         May 1,
1999
                              ---------
                                      115,156

OTHER DEBT AND CAPITAL LEASES:
Revolving line of credit:
    $  1  million  committed                  1,000        Prime  +  0.625%
Requires payment to
                                                                     zero 5
days per qtr
Servicing acquisition loan
    $1,870   committed                       1,800        Prime  +   0.625%
November 15, 1998
Various notes                             901       Various          Due in
2000
Capitalized leases                        203       3.5% to 11.5%    Varies
to 2002
                                    ---------
                                   $   3,904

SUBORDINATED  CONVERTIBLE DEBT:     $   7,000     3%             Due  March
18, 2001

The  Company  issued  the third tranche of its 3% Subordinated  Convertible
Debentures  in  May  1998 in the amount of $1,500,000, bringing  the  total
issue  of  3%  Subordinated  Convertible  Debentures  to  $7,000,000.   The
debentures  and accrued interest are convertible into the Company's  common
stock  at  the  lesser of $5.00 per share or 78% of the  determined  market
price  prior  to  conversion. In connection with  this  issue  the  Company
recorded additional paid-in capital of $1,551,000 for the discount  related
to  imputed interest represented by the market discount conversion  factor.
This  discount is being amortized to interest expense over the period  from
the  date  of  issue  to the date the debentures first become  convertible.
Through October 31, 1998, the Company has amortized the entire discount  to
interest  expense.   In addition, the company recorded $563,000 of  expense
related to debt issuance costs.  (See Note 8.)

COLLATERAL
Collateral for the debt obligations is a combination of mortgage loans held
for sale, receivables from sales of mortgage loans, servicing assets, other
assets of the Company, and Finet's corporate guarantee.

The  collateral  for  the  capitalized  leases  is  the  equipment  thereby
financed.

DEBT COVENANTS
The  Borrowing Agreements (Agreements) for the warehouse lines  of  credit,
the revolving line of credit and the note payable contain various financial
covenants  including  net  worth  computed  in  accordance  with  generally
accepted  accounting  principles, current ratio,  and  tangible  net  worth
leverage  ratio requirements. Should an event of default occur, as  defined
in  the  Agreements, outstanding principal and interest  on  the  Company's
credit facilities are due on demand.

On August 25, 1998, Residential Funding Corporation ("RFC") notified the
Company that it was in default of its lending agreements.  The Company did
not satisfy its July interest payment of $119,254, and the Company did not
meet its debt
service obligation on August 31, 1998 on its long-term note of $1.8
million.  The Company was also in violation of certain financial covenants.
RFC is entitled to exercise certain rights and remedies under the loan
agreement, including the right to
<PAGE 9>

cease making advances to the Company, to accelerate obligations and to sue
on the notes and guarantees.  RFC has not granted a waiver of these events
of default.  However, RFC agreed to forbear from enforcing its remedies in
anticipation of additional equity investments the Company expected to
receive.  All unpaid interest, fees and principal balances are
currently due.   In the third quarter, the Company received additional
equity contributions, net of expenses, of $14.3 million.  $2.0 million was
paid to RFC.  The Company is continuing discussions with RFC to cure its
defaults.  (See Note 8).

In October RFC increased the interest rates on the Company's borrowings to
4% in excess of the rates otherwise applicable.   RFC also reduced the
total committed lines from $79 million to $59 million.

Notwithstanding  its  rights to remedies, RFC at its  sole  discretion  has
continued  to  make advances to the Company, uninterrupted.  RFC  has  also
allowed  the  warehouse line advances to exceed the committed amount.   The
Company  anticipates  that it will cure its defaults with  respect  to  its
borrowings  with the additional equity investments received  in  the  third
quarter. (See Note 8.)

There can be no assurance that the Company will cure its default under its
lending agreements.  The Company is seeking additional borrowing
facilities.  The inability to cure such default or obtain alternative
warehouse financing sources and working capital arrangements could result
in a major disruption to the Company's business, and the Company's business
relationships with its brokers, investors and borrowers could be seriously
damaged.  There could be a material adverse impact on results of operations
and financial condition if the Company is unable to maintain its credit
facilities or obtain additional credit facilities.

NOTE 5. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS
On January 14, 1998, prior to the acquisition of Mical, a lawsuit was filed
against  Mical in the United States District Court for the Middle  District
of  Georgia (the "Action"). The complaint alleges, among other things, that
in  connection with residential mortgage loan closings, Mical made  certain
payments  to  mortgage brokers in violation of the Real  Estate  Settlement
Procedures  Act  and  induced  mortgage brokers  to  breach  their  alleged
fiduciary  duties  to  their  customers. The  plaintiffs  seek  unspecified
compensatory and punitive damages as to certain claims.

Management  believes  that its compensation programs  to  mortgage  brokers
comply with applicable laws and with long standing industry practices,  and
that it has meritorious defenses to the Action. Management has been advised
by  counsel that the facts of the underlying transaction are not supportive
of  a  court  order  granting class certification. The Company  intends  to
defend  vigorously  against  the  Action and  believes  that  the  ultimate
resolution will not have a material adverse effect on the Company's results
of operations or consolidated financial position.

The  Company  and  certain  subsidiaries are defendants  in  various  legal
proceedings  involving  matters  generally incidental  to  their  business.
Although  it  is  difficult to predict the outcome  of  such  cases,  after
reviewing with counsel all such proceedings, management does not expect the
aggregate  liability  or  loss, if any, resulting  therefrom  will  have  a
material  adverse effect on the consolidated financial position or  results
of operations of the Company and its subsidiaries.

MORTGAGE LOAN APPLICATIONS IN PROCESS
The   Company  has  open  short-term  commitments  to  fund  mortgage  loan
applications in process subject to credit approval.   Commitments  to  fund
loans are agreements to lend to a customer as long as there is no violation
of  any  condition  established in the contract.   Interest  rate  risk  is
mitigated by the use of forward contracts to sell loans to investors.

LOAN SALE COMMITMENTS
The Company has entered into optional and mandatory forward commitments  to
deliver mortgage loans of $61 million as of October 31, 1998.



<PAGE 10>

NOTE 6. STOCKHOLDERS' EQUITY

In  May 1998, the Company issued 432,000 shares of common stock, valued  at
$1,400,000,  as consideration for the acquisition of Mical  (See  Note  2).
Upon  resolution  of  specified contingencies,  120,000  additional  common
shares  may be issued. As a result of the acquisition, 33,000 common shares
were  issued as a finders fee and 73,000 shares were issued under  a  keep-
well agreement with an existing shareholder.

In June 1998, the Company issued 25,000 common shares with the execution of
a  binding term sheet agreement for the acquisition of Interloan (See  Note
2).  An  additional  75,000 common shares remain to  be  issued  under  the
provisions of the term sheet.

In September 1998, the Company issued 250 shares of its $2.5 million Series
A  Convertible  Preferred  Stock  in a private  placement  generating  $2.3
million  of proceeds, net of expenses.  The preferred shareholders are  not
entitled   to   vote  or  to  receive  dividends.   Upon  any  liquidation,
dissolution  or winding up, the holders of the Preferred A are entitled  to
receive  a  cash liquidated value (representing $10,000 per share  plus  6%
interest),  to the extent there are funds sufficient to pay, in  preference
to all Common shareholders.

In connection with the Series A  Preferred Share placement, the Company
issued Warrants to investors to purchase 250,000 shares of the Company`s
Common Stock at $1.00 per share. In November, an agreement was reached to
redeem all of the outstanding $2.5 million of Series A Convertible
Preferred Stock.  (See Note 8)

In  October 1998, the Company received $196,711 from an exercise of 262,281
warrants  at  seventy-five cents per share.   The Company had  reduced  the
warrant  exercise  price  from $1.50 per share to  seventy-five  cents  per
share.

In October 1998, the Company entered into an agreement with a private
investor to issue 2.5 million shares of common stock at eighty cents per
share for proceeds of $2.0 million.  In connection with the issuance, the
Company agreed to reduce the exercise price of 1.0 million Common Stock
Purchase Warrants owned by the investor from $5.00 to $1.00 per share.
(See Note 8).


NOTE  7.  SUPPLEMENTAL CASH FLOW INFORMATION

The   following   table  presents  supplemental  investing  and   financing
activities for the six month periods ended October 31, 1998 and 1997:

(Dollars in thousands)                                   1998          1997
                                                        ------        -----
-
Cash paid during the period for:
   Interest on line of credit and other borrowings      $  3,779    $ 1,341
   Income taxes                                                2         76

Non-cash investing and financing activities
   Foreclosure of mortgage loans held for sale              149        374
   Common stock issued for:
      Expenses                                              155        123
      Settlement of liabilities subject to compromise    -         23
      Settlement of accrued liabilities                  -        150
      Purchase of intangible assets                         481        808
   Acquisition:
      Cash acquired                                    185           -
Furniture and fixtures                                 506           -
      Other assets                                     417           -
      Accounts payable and accrued expenses           8,061           -
      Debt                                           82,081           -
<PAGE 11>

NOTE 8.  SUBSEQUENT EVENTS

Subsequent to October 31, the Company completed the transaction  agreed  to
in  the  second quarter to issue 2.5 million common shares at eighty  cents
per  share.    In  addition, per the agreement, an additional  1.0  million
shares  were issued, bringing the total issuance to 3.5 million shares  and
the price per share to fifty seven cents per share, as adjusted.

Also  subsequent  to October 31, the Company received  $12.3  million  cash
proceeds,  net  of  expenses, from additional private placements  of   21.9
million  shares of common stock at sixty cents per share. The Company  will
use  $4.0  million  of  these proceeds to retire $1.5  million  of  its  3%
Convertible  subordinated debentures and to redeem all of its $2.5  million
Series A Convertible Preferred Stock.

In November 1998, the Company reached agreement with its debenture holders
to convert $1.1 million of its total of $7.0 million, 3% Convertible
Subordinated Debentures into 2.2 million common shares at a conversion
price of fifty cents per share, to convert an additional $4.4 million of
debentures into 7,333,333 common shares at a conversion price of sixty
cents per share and to redeem, effective with the closing of the private
placement described below, the remaining $1.5 million of debentures at 100
percent of face value.  The agreement also establishes that the Company
will redeem all of the outstanding $2.5 million of Series A Convertible
Preferred Stock at 100 percent of face value.  The Company expects to
complete this redemption by the end of the current year.  The Company also
agreed to issue 840,000, 5-year warrants, exercisable at $1.50 per share to
the Series A Convertible Preferred shareholders.

The  Company is reviewing operations and quality and compliance  procedures
of  Mical  Mortgage, Inc., acquired in May, 1998 to determine how  best  to
maximize  shareholder  value.  The  Company  is  consulting  with  lenders,
governmental  regulatory  agencies and loan  investors,  and  has  retained
outside  consultants  to assist in this review.  In  connection  with  this
review,  the Company is assessing the future economic value of the goodwill
recorded in the purchase transaction along with the other assets of  Mical.
On  December  15,  1998,  the  Company's  Board  of  Directors  approved  a
preliminary  plan  to  restructure the operations  of  Mical.  The  Company
anticipates  that the net charges to be incurred in implementing  the  plan
will be approximately $7 to $8 million.  Substantially all of these charges
will  be  recognized  in the third and fourth quarters  when  the  plan  is
implemented.

<PAGE> 12

   ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

The following information should be read in conjunction with the condensed
consolidated financial statements and notes included in Item 1 of this
Quarterly Report, the financial statements and the notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's Annual Report on Form
10-KSB for the fiscal year ended April 30, 1998.

The  Private  Securities Litigation Reform Act of  1995  provides  a  "safe
harbor"  for certain forward-looking statements. This Quarterly  Report  on
Form  10-QSB/A  may  contain forward-looking statements which  reflect  the
Company's  current  views  with  respect to  future  events  and  financial
performance. These forward-looking statements are subject to certain  risks
and  uncertainties,  including those identified below,  which  could  cause
actual  results  to  differ  materially from historical  results  or  those
anticipated.   The  words  "believe,"  "expect,"  "anticipate,"   "intend,"
"estimate," "should" and other expressions which indicate future events and
trends  identify forward-looking statements. Readers are cautioned  not  to
place undue reliance on these forward-looking statements, which speak  only
as  of their dates. The Company undertakes no obligation to publicly update
or  revise  any  forward-looking statements, whether as  a  result  of  new
information, future events or otherwise. The following factors could  cause
actual  results  to  differ  materially from historical  results  or  those
anticipated: (1) the level of demand for homeownership services,  including
mortgage credit, which is affected by such external factors as the level of
interest  rates,  the strength of the various segments of the  economy  and
demographics of the Company's markets; (2) the direction of interest rates;
(3) the relationship between mortgage interest rates and the cost of funds;
(4)

federal  and state regulation of the Company's operations; (5) the rate  of
acceptance and growth of demand for on-line
homeownership   transactions  compared  to  traditional   manual   business
processes; and (6) competition within the residential real estate  services
industry.

RESULTS OF OPERATIONS

The  Company has a growing base of electronic commerce revenues, including:
(a)  from  mortgage financing and settlement services provided directly  to
consumers  by the Company's retail activities (including both loans  funded
by  the  Company's lending unit as well as loans funded by other  lenders);
(b)  from  loans  funded  for mortgage brokers by the  Company's  wholesale
lending  activities;  (c) from the sale of customer  leads  to  other  real
estate  service  providers; and (d) from providing  Internet  products  and
services to realtors, loan brokers and consumers.

COMPARISON OF QUARTERS ENDED OCTOBER 31, 1998 AND 1997

The  Company  is  currently expanding the scope of its electronic  commerce
mortgage  financing transaction services.  The 1998 period  includes  costs
related to this plan. Revenues for the three months ended October 31,  1998
include the operations of Mical and Interloan, which were both acquired  in
purchase  accounting  transactions in the  first  quarter  of  1998.   Both
periods  include  the  results of the Company's Coastal  unit,  as  it  was
acquired in the prior fiscal year in a pooling transaction.

Revenues  for  the quarter ended October 31, 1998 increased  $2.0  million,
from  $1.9  million to $3.9 million over the 1997 quarter. $1.8 million  of
the  increase was attributable to the incremental revenues of the Company's
Mical  unit.  Excluding the incremental effect of Mical, revenues increased
$0.2  million  or 12%.  Increased retail broker fee income of $0.9  million
also contributed to the total increase of $2.0 million over the prior year.
However,  revenue  increases  were  offset  by  significant  increases   in
operating  expenses,  including  compensation,  occupancy,  interest,   and
certain  non-recurring expenses related to the acquisitions of Coastal  and
Mical.   The  Company incurred a net loss for the quarter of  $4.8  million
compared  to  a $1.9 million loss for the quarter ended October  31,  1997.
Mical accounts for $0.8 million of this increased loss.


<PAGE> 13

Gain  on  sale  of  mortgage  loans  and  servicing  rights,  net  of  loan
origination costs, increased primarily due to the gains recorded by  Mical.
Gain  on  sale of mortgage loans also includes loan origination fee income.
In  general,  these  fees are affected by numerous  factors  including  the
volume and mix of loans produced and sold, loan pricing decisions, interest
rate volatility and the direction of interest rates.

Net  warehouse  interest income decreased $0.3 million. Warehouse  interest
expense  increased  $1.6 million primarily due to the increase  in  average
warehouse  borrowings  related  to  the Company's  increased  loan  volume.
Additionally, in October, the Company began paying a default interest  rate
equal to 4% above otherwise applicable interest rates on a large portion of
its  warehouse lines of credit.  The Company expects net warehouse interest
income  to be negative in the quarter ending January 31, 1999.  The Company
expects to cure its default conditions and return to normal interest  rates
during the fourth quarter of this fiscal year.

Loan  servicing fee income increased $0.2 million over the prior  year,  as
the  Company's loan servicing portfolio has a higher balance for  the  1998
period  as a result of assets purchased in December of 1997.  However,  the
Company's  loan  servicing  portfolio balance  is  decreasing  (the  second
quarter  of  1998  as compared to the first quarter of 1998)  as  borrowers
refinance  to  take advantage of decreasing borrowing rates.   The  Company
expects  loan servicing fee income to continue to decrease for the  balance
of the fiscal year.

Total loan volume in the Company's production units is summarized below.

(Dollar amounts in thousands)          Three Months Ended October 31,
---------------------------------- ---------------------------
                                      1998           1997
                                   -----------    ------------
    Retail                          $ 87,287       $    922
    Wholesale Prime                  308,350         71,467
    Wholesale Sub-Prime               22,231         51,575
                                    ---------      ---------
    Total Loan Volume               $417,868       $123,964
                                    ========       =========

The  factors  which  affect the relative volume  of  production  among  the
Company's  units include the price competitiveness of each  unit's  product
offerings,  the  level of mortgage lending activity in each unit's  market,
the  success of each unit's sales and marketing efforts and the operational
level of loan processing efficiency achieved. The incremental volume of the
Company's  Mical  unit  since its acquisition in the  current  fiscal  year
contributed a $132 million increase over the 1997 quarter.   The balance of
the  increase, $162 million resulted primarily from increases in retail and
wholesale prime volume offset by a decline in wholesale sub-prime  volumes.
The  Company intends to increase its loan production volumes except in  its
government (VA/FHA) offerings (included in wholesale prime).  With  respect
to  sub-prime offerings, the Company intends to decrease those  volumes  in
the short term while reviewing its sub-prime operations, then increase them
as  improvements  in  operations and profitability of  those  products  are
achieved.

In   connection  with  mortgage  loan  servicing  activities,  the  Company
segregates  escrow  and  custodial funds in a separate  trust  account  and
excludes  this  balance  of $12.1 million at October  31,  1998  and  $16.0
million  at  April  30, 1998 from the Company's assets on the  accompanying
balance sheet.

Retail  broker  fee revenue increased significantly, from  $45,000  in  the
second  quarter of 1997 to $907,000 for the second quarter of 1998 quarter,
reflecting  the  Company's efforts to expand its  presence  in  the  retail
market.

Of  the  total  $5.1  million increase in expenses in 1998  over  the  1997
corresponding quarter, other interest expense increase accounted  for  $1.3
million  due to interest associated with the Company's 3% convertible  debt
and the amortization of debenture discount and debt issuance expenses.  The
debt discount is now fully amortized.


<PAGE> 14

Compensation  and related employee expenses increased $2.6  million.   $1.6
million  was incremental expense incurred at Mical and the balance reflects
the Company's strategy of expanding and enhancing its revenue base.

Occupancy  and other office expenses increased $0.6 million as a result  of
the  incremental expenses incurred by Mical and efforts of the  company  to
expand its distribution network.

COMPARISON OF SIX MONTHS ENDED OCTOBER 31, 1998 AND 1997

Revenues for the six months ended October 31 increased from $4.8 million in
1997  to  $9.3  million  in  1998.   Of this  $4.5  million  increase,  the
incremental  effect of Mical (acquired in May of 1998) accounted  for  $3.4
million.   Excluding Mical, revenue attributable to the  remainder  of  the
businesses increased $1.1 million or 23%.  The Company incurred a net  loss
for  the period of $7.4 million compared to $3.0 million for the comparable
prior  year  period.   Of the $4.4 million change,  $1.5  million  was  the
incremental loss at Mical and the balance of the businesses incurred a $2.9
million  or  100% increase in net loss.  This increased loss resulted  from
$4.0  million of increased expenses, excluding the effect of Mical.   Other
interest   expense  increased  $2.2  million,  occupancy  and  compensation
increased $1.4 million and marketing expenses increased $.4 million.

Finet's  business  units, excluding Mical, recorded  an  increase  of  $1.1
million  in  overall  revenues.  This increase  was  due  primarily  to  an
increase  in  retail broker fee income of $1.3 million and an  increase  in
loan servicing fee income of $.7 million, partially offset by a decrease of
$.6  million in gain on sale of mortgage loans and servicing rights  and  a
decrease  in  net warehouse interest income of $.3 million.  Retail  broker
fee income increased as a result of the company's start-up unit Interloan.

Net  warehouse  interest income decreased $0.2 million for  the  six  month
period.  Warehouse interest expense increased primarily  due  to  increased
borrowings on the warehouse line necessary to support the increase in  loan
volumes.   Also, overall interest rates increased slightly year over  year.
In  October,  the  Company began incurring higher, default  interest  rates
equal  to  4%  above rates otherwise applicable on a large portion  of  its
warehouse  lines of credit.  As a result, the Company's year  to  date  net
warehouse  interest  income will be negative for  the  nine  months  ending
January  31, 1999.  The Company expects to cure its default conditions  and
return  to  normal interest rates during the fourth quarter of this  fiscal
year.

Total loan volume in the Company's production units is summarized below.

 (Dollar amounts in thousands)         Six Months Ended October 31,
---------------------------------- ---------------------------
                                      1998           1997
                                   -----------    ------------
    Retail                          $145,791       $  5,618
    Wholesale Prime                  618,810        144,605
    Wholesale Sub-Prime               54,390         85,260
                                    ---------      ---------
    Total Loan Volume               $818,991       $235,483
                                    ========       =========

The  loan volume increase over the prior year period was due equally to the
added production of Mical and the Company's other units.  Production in the
Company's retail and wholesale prime products increased significantly while
sub-prime loan volumes were down moderately.

Other  interest  expense,  excluding the impact of  Mical,  increased  $2.2
million over the comparable 1997 period due to the non-cash effect  of  the
amortization  of  the  Company's  debt  discount  associated  with  its  3%
Convertible Subordinated Debentures.


<PAGE> 15

Occupancy  and other office expenses (excluding Mical) are up $1.4  million
for  the  current  six-month  period due to  an  increase  in  professional
services  related and other expenses reflecting the Company's  strategy  of
expanding and enhancing its revenue base.

BUSINESS DEVELOPMENT ACTIVITIES

The  Company's business development activities are focused on becoming  the
leading   electronic  mortgage  banker.   This  includes   increasing   the
electronic  origination  and  fulfillment of  prime  conforming  loans  and
increasing other electronic commerce revenues from: (a) offering  sub-prime
and  government  subsidized loans (b) selling additional homeowner  related
products  and  services; (c) selling business leads to real estate  service
providers; and (d) originating loans through Interloan.

Over  the past several years, the Company has expanded its mortgage banking
operations  through  acquisitions and internal growth, but,  believing  the
growth  of market acceptance and demand for on-line homeownership  services
represents  the greatest near term market opportunity, is now concentrating
on  expanding  its e-commerce origination and fulfillment  capabilities  in
these areas.

The  Company is currently spending cash resources to support these business
development  activities,  as  the  revenues  they  are  generating,  though
increasing,  are  currently insufficient to cover  start-up  and  operating
costs.   All business units, except Mical, are expected to generate monthly
revenues sufficient to cover their respective operating expenses by the end
of the current fiscal year.  During the second quarter and subsequently the
Company  has received several equity contributions from private  investors.
(See Note 6 and Note 8 to the consolidated financial statements.)

FINANCIAL CONDITION

Although  Finet's revenue is growing, during its limited operating  history
it has experienced operating losses and cash flow deficits. The Company has
relied on external sources of debt and equity financing to fund operations,
to  service debt and to complete acquisitions and capital investments.  The
Company's  operating  losses, net of capital  contributions,  have  had  an
adverse  affect on the Company's financial position, causing  stockholders'
equity  to decrease from $3.4 million at April 30, 1998 to $0.4 million  at
October 31, 1998.

In  response to these operating trends, Finet has installed new leadership,
including a new chairman and chief executive officer.  Management's charter
is to improve operations and to take full advantage of Finet's acquisitions
and  technology capabilities, ultimately improving results from  operations
and  financial position.  Improvement in the Company's financial  condition
is  dependent on its ability to successfully integrate and consolidate  its
recent acquisitions, to improve operating processes and procedures, to cure
its warehouse lending defaults, and to manage interest expense by returning
to  more  favorable borrowing terms.  The Company's financial condition  is
further dependent on economic conditions such as the general health of  the
economy  and  demand  for homeownership related services.    Management  is
committed  to  the  Company's future success;  however,  there  can  be  no
assurance that the Company will attain future profitability.

Total  assets  increased from $101.4 million at April 30,  1998  to  $137.2
million  at  October  31,  1998.  This increase is  due  primarily  to  the
purchase accounting acquisition of Mical, partially offset by a decrease in
accounts  receivable from sales of mortgage loans and servicing rights  due
to  increased  efforts  to sell loans.  Warehouse borrowings  decreased  as
proceeds from loan sales were used to reduce the warehouses line of credit.
Liabilities increased from $98.1 million to $136.8 million, as the Company,
including Mical, increased its warehouse borrowings in support of increased
loan volumes.


LIQUIDITY AND CAPITAL RESOURCES

The nature of the mortgage lending business requires the Company to advance
cash  on  a  daily  basis to fund newly originated loans to  its  borrowing
customers.  The  majority of these funds are provided through  conventional
mortgage  warehouse  lines of credit from Residential  Funding  Corporation
("RFC") and from other warehouse lenders. The Company
<PAGE> 16

uses  cash from its operating activities to satisfy its obligations to RFC,
to  fund ongoing expenses such as administration, to invest in product line
and geographic expansion, and to satisfy debt and other obligations as they
come due.

Although new operating revenue sources were developed during 1997 and 1998,
cash generated by operations has been insufficient to meet the Company's on
going  requirements.  Therefore, the Company has employed servicing-secured
credit  facilities,  private  placements  of  debentures  and  common   and
preferred  stock  issuances as additional resources to meet  operating  and
investing cash needs.

The Company was unable to make an interest payment of $119,255 in July, and
was  unable to make a principal payment of $1.9 million due August 31, 1998
on  a  term  loan.   The lender has agreed to forbear from  exercising  its
rights  and  remedies  of default in anticipation of the  completion  of  a
private  placement of common stock that has been agreed but has not closed.
See  discussion under "Warehousing Facility with RFC".   (See Notes  6  and
8.)

Operating Activities
---------------
In  the  six  months  ended  October  31,  1998,  the  Company's  operating
activities  generated  cash  of  $2.3 million  compared  to  cash  used  by
operations of $18.8 million during the comparable 1997 period.  The Company
increased its efforts to accelerate selling its loans, increasing operating
cashflow by $9.2 million.

If the Company remains in default under the warehouse credit arrangement
with RFC, warehouse interest expense will be significantly higher than
warehouse interest income earned on mortgage loans pending their sale and
will reduce cash resources.

Subsequent to October 31, 1998, the Company ceased originating loans at
Mical and will be selling the remaining loans during the coming quarters.
The cash generated from such sales will be used to repay the warehouse
borrowings secured by these loans.  Therefore, these sales will not
increase cash resources.  Use of cash for operating expenses at Mical are
expected to significantly exceed all other operating cash sources at Mical
as the Company winds down Mical's operations over the balance of the
current year.

The Company expects a decline in net revenues from the sale of mortgage
loans in the third quarter due to reduced loan production beginning at the
end of the second quarter which will continue through the third quarter.
Loan production was curtailed to reduce the balance of loans held for sale,
which would reduce warehouse line borrowings to the reduced warehouse line
commitments resulting from its default on its warehouse line of credit.
The Company has subsequently accelerated its sale of loans, reduced its
warehouse borrowings below the committed amounts and expects to increase
loan production during the fourth quarter.

Financing Activities
---------------
Cash used by financing activities was $5.1 million for the first six months
of 1997.  The Company used the increased proceeds from loan sales to reduce
its warehouse balance.  This decrease in cash was partially offset by an
increase in borrowings on the Company's servicing acquisition facility.

The Company received $1.4 million, the final tranche of its 3% Convertible
Debt private placement issue initiated in the prior year.   In September
1998, the Company issued 250 shares of its $2.5 million Series A
Convertible Preferred Stock in a private placement generating $2.3 million
of proceeds, net of expenses.  (See Note 6) In October 1998, the Company
received $196,711 resulting from an exercise of 262,281 warrants at seventy-
five cents per share.  The Company had reduced the exercise price from
$1.50 per share to seventy-five cents per share.

In  October  1998,  the Company entered into an agreement  with  a  private
investor  to issue 2.5 million shares of common stock at eighty  cents  per
share  for proceeds of $2.0 million.  In connection with the issuance,  the
Company  agreed  to reduce the exercise price of 1.0 million  common  stock
purchase  warrants  owned by the investor from $5.00 to  $1.00  per  share.
Subsequent  to  October  31, the Company completed this  transaction,  and,
pursuant  to  certain  anti-dilution rights granted to  the  investor,  the
Company  issued  an  additional  1.0 million  shares,  bringing  the  total
issuance to 3.5 million shares and the
<PAGE> 17

adjusted  price per share to fifty seven cents per share.  Also  subsequent
to October 31, 1998, the Company received  $12.3 million cash proceeds, net
of  expenses,  from  additional private placements  of  approximately  21.9
million  shares of common stock at sixty cents per share. The Company  will
use  $4.0  million  of  these proceeds to retire $1.5  million  of  its  3%
Convertible  subordinated debentures and to redeem all of its $2.5  million
Series A Convertible Preferred Stock.  (See Note 8).

The  Company expects that the proceeds from the sale of mortgage  loans  at
Mical  will be less than the warehouse lines they are securing, creating  a
net use of cash for the Company.

During  the  third quarter, the Company paid RFC $2.0 million of  the  $5.0
million RFC had requested to repay borrowings under a working capital  line
of  credit  and  a  line of credit secured by servicing contracts.  If  RFC
continues  to  forbear on such amounts due, the Company believes  that  its
cash  resources will be sufficient to finance the Company's minimum working
capital requirements through April 30, 1999.  The Company is continuing  to
pursue  additional equity investments to cure its defaults on its warehouse
line with RFC, to fund capital expenditures, and to make investments in its
infrastructure.  Failure to secure additional equity investments would have
a material, adverse effect on the Company's financial condition and results
of operations.

Investing Activities
---------------
Investing activities, consisting primarily of a reduction in the balance of
mortgage servicing rights through sales, provided cash of $1.5 million  for
the  six  months ended October 31, 1998.  The Company does  not  intend  to
purchase additional mortgage servicing rights and is evaluating the sale of
its servicing rights portfolio. A sale, if consummated, would generate cash
for  servicing  debt  and  other  obligations  and  for  general  operating
purposes.

The  Company's  capital expenditures totaled $248,000 for  the  six  months
ended  October 31, 1998. The Company expects its level of capital  spending
for  the  rest of the fiscal year to increase somewhat to make  information
systems investments in preparation of Y2K compliance.


SUBSEQUENT EVENTS

See Note 8 to the Consolidated Financial Statements.

POTENTIAL FOR NASDAQ DELISTING

There are several requirements for continued listing on the NASDAQ SmallCap
Market  ("NASDAQ"), including a minimum stock price of $1.00 per share.  If
the  Company's  common  share price closes below $1.00  per  share  for  30
consecutive days, the Company may receive notification from NASDAQ that its
common stock will be delisted from the NASDAQ unless the stock closes at or
above  $1.00 per share for at least 10 consecutive days during the  90  day
period following such notification.

Delisting  from  the  NASDAQ Market and inclusion of the  Company's  common
stock on the OTC Bulletin Board or similar quotation medium could adversely
affect the liquidity and price of the stock and make it more difficult  for
investors to obtain quotations or trade the stock.

The  Company  has received notice from NASDAQ that it has not met  required
financial  ratio criteria for continued listing on the NASDAQ.  NASDAQ  has
requesting  that  the Company complete and submit for its  review,  certain
periodic financial reporting. NASDAQ could initiate delisting procedures if
the  Company  fails to comply.  Finet intends to comply  with  all  special
financial reporting requests and ratio criteria as agreed with NASDAQ.
<PAGE> 18

YEAR 2000 COMPLIANCE

The  Company  has made and will continue to make investments  to  identify,
modify  or  replace  any computer systems which are  not  Year  2000  (Y2K)
compliant  and  to address other issues associated with the change  of  the
millennium.  These costs are expensed by the Company during the  period  in
which   they  are  incurred.  The  financial  impact  to  the  Company   of
implementing the systems changes necessary to become Y2K compliant  is  not
anticipated  to  be  material  to  its financial  position  or  results  of
operations  in  any  given year. However, the Company's expectations  about
future  costs  associated with the Y2K are subject  to  uncertainties  that
could  cause  the  actual results to differ materially from  the  Company's
expectations. Factors that could influence the amount and timing of  future
costs  include  the  success  of the Company  in  identifying  systems  and
programs  that are not Y2K compliant, the nature and amount of  programming
required  to  upgrade  or  replace  each  of  the  affected  programs,  the
availability, rate and magnitude of related labor and consulting costs  and
the  success  of  the Company's business partners, vendors and  clients  in
addressing the Y2K issue.

Company's state of readiness:

The Company, together with outside consultants it has engaged, has
formulated its overall plan to address the Y2K issue.  The Company plans to
be substantially Y2K compliant by March 31, 1999, with the remaining effort
to be completed by June 30, 1999.

Steps taken to assure readiness by business partner, vendors, clients:

The Company, together with outside consultants it has engaged, has
          formulated its overall plan to address the Y2K issue.
The Company:

(a) Has established a senior management steering committee.
          (b) Is taking inventory of internally used hardware and software
          as well as software developed for customers and peripheral
          devices and equipment.
          (c) Is identifying outside parties with whom the Company
          interfaces electronically or operationally, such as business
          partners, loan providers, customers, vendors and any others, to
          1) confirm that their state of readiness will reduce any
          financial or operational risk to the Company, and 2) understand
          Finet's responsibility to its business partners.
          (d) Is developing an external assessment process in order to
          adequately assess the readiness of outside parties.
          (e) Has determined the additional human resources necessary to
          implement its overall plan.
          (f) Has estimated the cost of compliance and determined it to be
          reasonable but not material to the financial condition of the
          Company or its results of operations.
          (g) Is ensuring that new applications are Y2K compliant.
          
  Risks of the company's Y2K issues:
               
The Company believes that given the hardware and software
replacement/modifications that it foresees, the risk of material financial
loss or operational disruption that might lead to financial loss is low to
medium.  However, due to the nature of the mortgage banking industry there
is a significant number of outside third party interfaces that the Company
relies on for conducting business effectively. Their level of compliance
significantly influences the Company's level of risk of disruption to
operations which ultimately impacts the Company's results of operations
and financial condition.

 The Company's contingency plans:
 
Finet is considering various contingency actions including alternative
vendors.  The Y2K project planning calls for a fall back to manual
procedures if absolutely necessary, but the Company considers Y2K to be a
critical project and is addressing it as such.

<PAGE> 19

                        PART II - OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

The  Company  and  certain  subsidiaries are defendants  in  various  legal
proceedings.   After  reviewing with counsel all such  proceedings  pending
against or involving the Company and its subsidiaries, management does  not
expect  the  aggregate liability or loss, if any, resulting therefrom  will
have  a  material adverse effect on the Company's results of operations  or
consolidated financial position.

On  May  19,  1998, the Company acquired 100% of the issued and outstanding
stock of Mical from its shareholders. Prior to said acquisition, on January
14,  1998, a lawsuit was filed against Mical in the United States  District
Court  for  the  Middle District of Georgia (the "Action").  The  complaint
alleges,  among other things, that in connection with residential  mortgage
loan closings, Mical made certain payments to mortgage brokers in violation
of  the  Real Estate Settlement Procedures Act and induced mortgage brokers
to breach their alleged fiduciary duties to their customers. The plaintiffs
seek unspecified compensatory and punitive damages as to certain claims.

Mical's  management  believes that its compensation  programs  to  mortgage
brokers  comply  with  applicable  laws and  with  long  standing  industry
practices,  and that it has meritorious defenses to the Action.  Management
has  been  advised by counsel that the facts of the underlying  transaction
are not supportive of a court order granting class certification. The
Company  intends to defend vigorously against the Action and believes  that
the  ultimate  resolution will not have a material adverse  effect  on  the
Company's results of operations or consolidated financial position.

Item 2. CHANGES IN SECURITIES

During the six months ended October 31, 1998, the Company issued a total of
1,480,000  shares  of  common stock, as follows:  432,000  shares  for  the
acquisition  of  Mical and 33,000 shares as a finders  fee,  73,000  shares
under  a  keep well agreement, and 25,000 shares toward the acquisition  of
Interloan.   In  addition, 263,000 common shares were issued in  connection
with  warrant  exercises and 654,000 shares were issued in connection  with
option exercises, employment-related issuances and other.

250  shares  of  Convertible  Preferred Stock  were  issued  in  a  private
placement.  (See Note 6.)


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

Item 5.  OTHER INFORMATION

On November 24, 1998, the Company's annual meeting of shareholders was held
in  San Francisco, California. Including proxies and one shareholder voting
in person, a quorum of 57% of the 33,033,105 shares eligible to vote on the
October  15, 1998 record date were represented at the meeting. All  current
Directors were re-elected for an additional one-year term and the following
measures  detailed and recommended by the Company's Board of  Directors  in
the  proxy  statement were approved by the indicated percentage  of  shares
voted:

     Increase in authorized common shares to 150,000,000  99.3%
     Ratification of issuance of Common Stock, Debentures, Preferred  Stock
     and Warrants:                                        77.0%
     Ratification of the 1998 Stock Option Plan           99.4%
     Ratification of the 1998 Stock Bonus Plan            99.5%
     Ratification of the 1998 Non-Employee Director Stock Option Plan 99.5%


<PAGE> 20

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

     EX-10.1   Warehouse security and credit agreement
     EX-10.2   First amendment to warehousing credit and security agreement
     EX-10.3   Second amendment to warehousing credit and security
     agreement
     EX-10.4   Third amendment to warehousing credit and security agreement
     EX-10.5   Fourth amendment to warehousing credit and security
     agreement
     EX-10.6   Fifth amendment to warehousing credit and security agreement
     EX-10.7   Sixth amendment to warehousing credit and security agreement
     EX-10.8   Seventh amendment to warehousing credit and security
     agreement
     EX-10.9   Eighth amendment to warehousing credit and security
     agreement
     EX-10.10  Ninth amendment to warehousing credit and security agreement
     EX-10.11  Tenth amendment to warehousing credit and security agreement
     EX-10.12  Servicing acquisition promissory note
     EX-10.13  Fannie Mae Approval
     EX-10.14  Seller and servicer Approval
     EX-10.15  Acknowledgement Agreement
     EX-10.16  Gestation Agreement
     EX-10.17  Series A Convertible Preferred Stock
     EX-27          Financial Data Schedule

REPORTS ON FORM 8-K

                            REPORTS ON FORM 8-K
Date  Item     Description
--------  ----  -----------------------------------------------------

12/7/98  2     Amendment of an 8-K previously filed, providing the required
financial statements and proforma
               information related to the Company's acquisition of 100% of
the issued and outstanding stock of
               Mical Mortgage, Inc.
01/05/99 5     Announcement of private placement of common shares and
results of operations for the period
               ending October 31, 1998.

                                SIGNATURES

In accordance with the requirements of the Securities and Exchange Act, the
Registrant  caused  this  report  to  be  signed  on  its  behalf  by   the
undersigned, thereunto duly authorized.

                                        FINET HOLDINGS CORPORATION

Date: January 14, 1998                  /s/    Mark L. Korell
                                        Mark L. Korell
                                          (CEO   and   Principal  Executive
Officer)

Date: January 14, 1998                  /s/    Gary A. Palmer
                                        Gary A. Palmer
                                        (Principal Financial Officer)