U.S. SECURITIES AND EXHANGE COMMISSION
                          Washington, D. C. 20549
                                FORM 10-KSB
   (Mark One)
                U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D. C. 20549
                                FORM 10-KSB
   [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended April 30, 1999
                                    OR
   [ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                       For the transition period from              to
                          Commission File No. 333-27037
                        UNITED FINANCIAL MORTGAGE CORP.
                 (Name of small business Issuer in its charter)

             Illinois                                36-3440533
        (State or other jurisdiction of              (I.R.S. Employer
        incorporation or organization)               Identification No.)

        600 Enterprise Drive, Suite 206              60523
        Oak Brook, Illinois                          (Zip Code)
        (Address of principal executive offices)
                       Issuer's telephone number: (630) 571-7222
        Securities to be registered under Section 12(b) of the Act:

             Title of each class       Name of each exchange on which registered
                Common Stock                   The Chicago Stock Exchange

        Securities to be registered under Section 12(g) of the Act:
                                   None
                             (Title of Class)

        Check whether the issuer (1) filed all reports required to be filed by
   Section 13 or 15(d) of the Securities Exchange Act during the past 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.  Yes [X]  No [  ]

        Check if there is no disclosure of delinquent filers in response
   to Item 405 of Regulation S-B is not contained in this form, and no
   disclosure will 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-KSB or any amendment to this
   Form 10-KSB. [  ]

   State Issuer's revenues for its most recent fiscal year_________$10,045,228

   The aggregate market value of the voting and non-voting common equity
           held by non-affiliates was $3,868,870 on July 15, 1999.
<PAGE>
        (Issuers involved in bankruptcy proceedings during the past five years)
   Check whether the Issuer has filed all documents and reports required to be
   filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
   of securities under a plan confirmed by a court. Yes [  ]  No [  ]

        (Applicable only to corporate registrants) State the number of shares
   outstanding of each of the Issuer's classes of common equity, as of the
   latest practicable date. 3,900,029.

        Documents incorporated by reference. If the following documents are
   incorporated by reference, briefly describe them and identify the part of
   the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is
   incorporated: (1) any annual report to security holders; (2) any proxy or
   information statement; and (3) any prospectus filed pursuant to Rule 424(b)
   or (c) of the Securities Act of 1933("Securities Act").  The listed documents
   should be clearly described for identification purposes (. e.g., annual
   report to security holders for fiscal year ended December 24, 1990).

   Transitional Small Business Disclosure Form (Check one): Yes [ ]  No [X]

<PAGE>

                                  PART I

   Item 1. Description of Business

        The Company was formed as an Illinois corporation in April of 1986 to
   engage in the business of mortgage banking.  The Company is licensed as a
   mortgage banker in the states of Arkansas, California, Colorado, Delaware,
   Florida, Illinois, Indiana, Kentucky, Maryland, Missouri, New Mexico,
   Oregon, South Carolina, Utah, Washington, Wisconsin and Texas.  The Company
   also does business in other states that do not have mortgage banking
   licensure statues, including, Idaho, Kansas, Montana, Ohio, Oklahoma, West
   Virginia and Wyoming.  The Company's mortgage banking business principally
   has focused on retail and wholesale residential mortgage origination
   activities. The Company is expanding its mortgage servicing activities by
   retaining servicing on selected loans that it produces.  The Company's
   principal lines of business are conducted through the Retail Origination
   Division, the Wholesale Origination Division and the Servicing Division.
   The Company's Retail and Wholesale Origination business is principally
   conducted in the states of Illinois, California, Nevada, Missouri and
   Florida.

        The loans that the Company originates and expects to service primarily
   are first mortgages secured by single (one to four units) family residences,
   although the Company also may originate, sell and service loans secured by
   first mortgages on multi-family residential properties (more than four
   units) and to a lesser extent, other mortgage assets.

        The Company's loan production activities generate revenue through (i)
   origination fees and gains on the sale of loans to broker-dealers and
   institutional investors, and (ii) interest on mortgage loans held, or
   "warehoused" from their origination or purchase until their sale to
   broker-dealers and institutional investors. The Company's expanded loan
   servicing division is expected to produce income from loan servicing fees.

        The Company also engages in the brokerage or origination of loans on
   commercial real estate, including shopping centers, office properties and
   other commercial loans. The Company either brokers(e.g. arranges for loan
   funding from third-party lenders) or funds and services these commercial
   loans.  Commercial loans may be brokered to other financial institutions,
   in which case, the Company receives a negotiated fee.  If the Company
   originates and services a commercial loan, then revenues are earned based
   upon the difference between the interest rate paid to the issuer of the
   credit line and the interest rate paid by the borrower.
 <PAGE>
        At this time, the Company's primary sources of loan originations
   are its Wholesale and Retail Divisions.  On April 30, 1999, the
   Company's Retail Division operated three (5) full service retail
   origination offices.  At such date, the retail offices were located
   in three (4) states and were staffed by approximately 50 employees,
   including commission-based loan officers.  The retail offices are
   currently located as follows: Oak Brook, Illinois; Creve Coeur,
   Missouri; Clearwater , Florida; Tampa, Florida and Las Vegas, Nevada.
   Wholesale origination principally is conducted from the Company's
   offices in Oak Brook, Illinois and Irvine, California.

        The Company's mortgage banking activities principally focused on
   retail loan origination for the period from inception through 1993.
   During the period from 1994 through 1995, the Company emphasized the
   wholesale origination.  This emphasis resulted from a general
   decrease in loan origination volume for this period.  The application
   of additional resources to "wholesale" loan origination during this
   period served to increase the Company's loan volume.  During the
   period from 1996 to date, the Company has focused on retail loan
   origination because it is management's experience that profit margins
   in retail origination generally are greater than profits relating to
   wholesale activities.

   The Wholesale Origination Division

        Wholesale loan origination involves the funding by the Company
   of loans submitted by non-affiliated mortgage brokers.  The Company
   realizes revenues from the sale of such loans to investors for a
   price greater than the amount paid to the mortgage broker. The timing
   of the sale of loans to investors and failure to comply with investor
   underwriting guidelines could result in losses on loan sales.
   Management believes that substantially all underwriting and related
   issues generally are resolved with the investor prior to closing.  It
   is management's experience that wholesale loan origination tends to
   be less profitable on a per loan basis than retail origination, but
   expansion into the wholesale sector is less costly than retail
   origination because wholesale origination does not require the
   establishment of costly office space and the related overhead
   expense.  It is management's experience that wholesale account
   executives generally work from their homes or in shared office
   suites.  This operating structure enables the Company to quickly
   enter new markets.

        It is management's experience that wholesale loan origination
   tends to be less profitable on a per loan basis than retail
   origination because wholesale loans are subject to two levels of
   costs, namely independent broker compensation, and Company sales
   commissions paid to its personnel for the production of the wholesale
   loan.
        The Company's Wholesale Division, which was established in June,
   1994, operates from its corporate headquarters in Oak Brook, Illinois
   and Irvine, California. The Wholesale Division of the Company
   acquires loans from a network of mortgage brokers and other financial
   intermediaries, including banks, who are screened by the Company.
 <PAGE>
        In addition to loan processing performed by the correspondent,
   the Wholesale Division performs its own underwriting prior to
   committing to acquire such loans.  Correspondents qualify to
   participate in the Wholesale Division's loan acquisition program
   after a review of their reputation, mortgage lending experience and
   financial condition, including a review of references and financial
   statements. No single correspondent accounts for a significant
   portion of the Wholesale Division's mortgage loan production.


   The Retail Origination Division

        Retail loan origination involves the direct solicitation of
   realtors, builders and prospective borrowers for the origination of
   mortgage loans.  The Company derives revenues from the premium that
   is received from the purchaser of the loan.  Generally, that premium
   is shared on a negotiated basis with loan officers and others who
   procure the loan and assist in the loan origination process.

        The Company's Retail Origination Division solicits loans
   directly from consumers and through real estate brokers, builders and
   other real estate professionals.  In developing its retail network,
   the Company has followed a strategy of establishing offices in areas
   where its experience indicates strong loan demand.  This gives the
   Company added flexibility to open and close offices as dictated by
   mortgage demand.

        Establishing a reputation for prompt and responsive customer
   service is another integral component of the Company's marketing
   strategies. The Company believes that the ability to process loan
   applications quickly provides a distinct advantage over its
   competitors.  It is management's experience that the average period
   between receipt of a loan application and the Company's lending
   commitment is generally less than 10 days.  The Company endeavors to
   process loans quickly, while maintaining comprehensive underwriting
   controls through its automated techniques for loan origination,
   processing, underwriting and closing. The Company's computer system
   integrates the Company's loan origination activities to expedite loan
   processing, and enhances its ability to respond to market
   opportunities.

   Quality Control of Mortgage Origination

        In order to ensure that the Company originates high quality
   mortgage loans, it has retained the services of a quality control
   company with an industry wide reputation to conduct audits of the
   Company's loan origination activities on a monthly basis.  The
   Quality Control company audits pursuant to contractual specifications
   approximately ten (10%) percent of the aggregate retail and wholesale
   loans originated by the Company on a monthly basis.  The audit
   process includes verification of mortgage information, including:
   employment status, wages/salaries; credit standing; property
   appraisal; confirmation of the borrower's savings and other assets;
   and compliance with other applicable underwriting guidelines.  The
   Quality Control company selects loan files on a random basis.  The
   Company receives a quality control management report from the Quality
   Control company at the conclusion of each monthly audit.
 <PAGE>
   Loan Processing and Underwriting

        Loan applications generally are prepared by Company loan
   officers and verified by personnel in the Company's Retail
   Origination Division.  Verification procedures, include, among other
   things, obtaining: (i) written confirmations of the applicant's
   income and bank deposits, (ii) a formal credit report on the
   applicant from an unaffiliated credit reporting agency, (iii) a
   preliminary title report, and (iv) a real estate appraisal.
   Appraisals for conventional and FHA loans are prepared by third
   party, unaffiliated appraisers who are pre-approved based upon their
   experience, education and reputation. Completed loan applications are
   then transmitted to the Company's Underwriting Department or to
   underwriting sub-contracting companies who provide underwriting
   services to the Company.  The Underwriting Department of the Company
   or its sub-contractors contain experienced staff who verify the
   completeness and accuracy of application information, and determine
   its compliance with the Company's underwriting criteria and those of
   applicable government agencies or other investors.

        Underwriting criteria include loan-to-value ratios, borrower
   income qualifications, investor requirements, insurance and property
   appraisal requirements.  The Company's underwriting guidelines for
   FHA, VA, FNMA and FHLMC loans comply with the written underwriting
   guidelines of the relevant agency.

        The Company's underwriting guidelines for "non-conforming" loans
   are based upon the underwriting standards required by investors to
   whom such loans are sold.  "Non-Conforming" loans generally include
   loan products that do not comply with the underwriting guidelines of
   Freddie Mac, Fannie Mae, FHA or VA. Non-conforming loans generally
   are underwritten by the Company in accordance with the underwriting
   guidelines of the applicable investor who purchases the loans.

        Most of the Company's underwriting personnel function
   independently of the Company's loan origination personnel and do not
   report to any individual directly involved in the loan origination
   process.

        The Company's internal Quality Control Department reviews the
   Company's origination activities including approximately one hundred
   percent (100%) of all closed loans in order to enhance the ongoing
   evaluation of the loan processing function, including employees,
   credit reporting agencies and independent appraisers.  In conducting
   such reviews, the Quality Control Department reviews the loan
   applications for compliance with federal and state lending standards,
   which involves a second verification of employment prior to loan
   closing, reconfirmation of  banking information, and obtaining
   separate credit reports and property appraisals.  The Quality Control
   Department submits all review results directly to the president of
   the Company.
 <PAGE>
   Loan Commitments

        Subsequent to underwriting approval, prior to loan funding, the
   Company issues loan commitments to qualified applicants.  Commitments
   indicate loan amount, fees, funding conditions, approval expiration
   dates and interest rates. Commitments providing for "fixed" interest
   rates beyond sixty (60) days generally are not issued, unless the
   Company receives an appropriate fee based upon the assessment of the
   risk associated with a longer commitment period.  Servicing
   compensation (based upon FNMA guidelines) generally ranges from .25%
   to .50% per annum on the outstanding principal balances of the loans.
   Servicing fees are collected from monthly mortgage payments.  Other
   sources of loan servicing revenues include late charges and use of
   funds benefits.

        As a servicer of mortgage loans underlying mortgage backed
   securities issued by FNMA, FHLMC or other investors, the Company is
   obligated to make timely payments of principal and interest to
   security holders, whether or not such payments have been made by
   borrowers on the underlying mortgage loans.  In accordance with
   applicable FHA and VA guidelines, the Company is insured by FHA
   against foreclosure loss on FHA loans, and the VA guarantees against
   foreclosure loss on VA loans, subject to certain limitations.
   Although FNMA and FHLMC are obligated to reimburse the Company for
   principal and interest payments advanced by the Company as a
   servicer, the funding of delinquent payments or the exercise of
   foreclosure rights involves prospective costs to the Company.

        The Company believes that an important source for its loan-
   servicing portfolio is loans produced by the Company.  The servicing
   rights for selected loans are retained by the Company after such
   loans are sold to investors. In addition, the Company may supplement
   its servicing portfolio by purchasing mortgage servicing rights
   relating to loans originated by other lenders.  Such purchases will
   be made only after the Company has conducted a due diligence analysis
   of the loan portfolio.

        The Company intends to provide low cost and flexible servicing
   that is responsive to the needs and requirements of its customers and
   investors.

   Seasonality

        It is management's experience that the mortgage loan origination
   business is generally subject to seasonal trends.  These trends
   reflect the general pattern of sale and resale of homes.  It is
   management's experience that loan origination typically peaks during
   the spring and summer seasons, and declines to lower levels from mid-
   November through January.  The mortgage servicing business is
   generally not subject to seasonal trends.
 <PAGE>
   Competition

        The mortgage banking industry is highly competitive.  The
   Company competes with other financial institutions, such as mortgage
   banks, state and national banks, savings and loan associations,
   savings banks, credit unions and insurance companies, mortgage
   bankers and mortgage brokers. Some of the Company's competitors have
   financial resources that are substantially greater than those of the
   Company, including some competitors which have a significant number
   of offices in areas where the Company conducts its business.  The
   Company competes principally by offering loans with competitive
   features, by emphasizing the quality of its service and by pricing
   its range of products at competitive rates.

        Information published by the Mortgage Bankers Association of
   America ("MBA") indicates that although the mortgage business is
   competitive, it also is fragmented in that no single lender has a
   significant market share of total origination volume.  MBA data
   indicates that overall mortgage origination volume is shared in
   varying percentages among commercial banks, savings and loan and
   mortgage banking companies. MBA data also indicates that
   historically, mortgage banks have had an estimated twenty-thirty
   percent (20-30%) share of total origination volume. Commercial banks,
   savings banks, savings and loan associations and mortgage banking
   companies service the bulk of residential mortgages. It is
   management's belief that market share among competitors generally
   shifts more slowly in servicing than in origination.  Management of
   the Company does not anticipate any significant changes in the market
   share described above in the near term.

        The Company's mortgage loan production activities are subject to
   the Truth-in-Lending Act and Regulation Z promulgated thereunder.
   The Truth-in-Lending Act contains disclosure requirements designed to
   provide consumers with uniform, understandable information with
   respect to the terms and conditions of loans and credit transactions
   in order to give them the ability to compare credit terms.  The
   Truth-in-Lending Act also guarantees consumers a three day right to
   cancel credit transactions, including any refinance mortgage or
   junior mortgage loan on a consumer's primary residence.  The Company
   believes that it is in substantial compliance in all material
   respects with the Truth-in-Lending Act.

        The Company also is required to comply with the Equal Credit
   Opportunity act of 1974, as amended ("ECOA"), which prohibits
   creditors from discriminating against applicants on the basis of
   race, color, sex, age or marital status.  Regulation B promulgated
   under ECOA restricts creditors from obtaining certain types of
   information from loan applicants.  It also requires certain
   disclosures by lenders regarding consumer rights and requires lenders
   to advise applicants of the reasons for any credit denial.  In
   instances where the applicant is denied credit or the rate or charge
   for loans increases as a result of information obtained from a
   consumer credit agency, another statute, the Fair Credit Reporting
   Act of 1970, as amended, requires lenders to supply the applicant
   with a name and address of the reporting agency.
 <PAGE>
        The Federal Real Estate Settlement Procedure Act ("RESPA")
   imposes, among other things, limits on the amount of funds a borrower
   is required to deposit with the Company in an escrow account for the
   payment of taxes, insurance premiums or other charges.  The Company
   has policies, procedures and systems in place to ensure compliance
   with RESPA.

        The Company believes it is in possession of all licenses in
   those states in which it does business that require such licenses,
   except where the absence of such licenses is not material to the
   business and operations of the Company as a whole.  Conventional
   mortgage operations also may be subject to state usury statutes. FHA
   and VA loans are exempt from the effect of such statutes.

   Item 2. Description of Property

        The Company's corporate and administrative headquarters are
   located in leased facilities in Oak Brook, Illinois.  These
   facilities comprise approximately 4,800 square feet of space in a
   building leased by the Company for a ten year term at annual rate of
   approximately $9.50 to $15.63 per square foot, triple net, which
   lease expires in 2003.  In addition, at April 30, 1999, the Company
   leased an aggregate of approximately 1,146 square feet in Las Vegas,
   Nevada; 1,475 square feet in Irvine, California; and 900 square feet
   in St. Louis, Missouri.  The leases for Las Vegas, Nevada and Irvine,
   California are on a month to month basis.  The Company has no
   liability with respect to the lease at Creve Coeur, Missouri.  The
   aggregate annual lease payments on properties leased by the Company
   as of April 30, 1999 was $332,000.  The Company believes that its
   present facilities are adequate for its current level of operations.
   None of the Company's leased facilities are leased from affiliates of
   the Company.

        Lease commitments for the five (5) years following April 30,
   1999 are as follows:

             April 30, 2000___________________________$321,967
             April 30, 2001___________________________$276,870
             April 30, 2002___________________________$186,662
             April 30, 2003 ________________________  $ 84,449
             April 30, 2004 ___________________________$     0

        The Company's corporate headquarters are located at 600
   Enterprise Drive Suite #206, Oak Brook, Illinois 60523 and its
   telephone number is (630) 571-7222.

<PAGE>
   Item 3. Legal Proceedings.

        In June 1995, Lawyers Title initiated a non-wage garnishment
   proceeding against the Company and its bank.  Lawyers Title claimed
   entitlement to monies purportedly held by the Company on the grounds
   that the money was tendered to the Company by Dearborn Title in the
   mistaken belief that this money was owed to the Company as a
   replacement for a funding check relating to a particular real estate
   refinancing transaction which had previously been returned  to
   Dearborn for insufficient funds.

        On March 13, 1999 the matter was settled.  The settlement does
   not require any further payments by the Company.

        The Company is a defendant in a series of complaints relating to
   its business activities.  The aggregate amount of these claims is
   approximately $300,000. The Company has aggressively defended its
   position in these matters and has filed counter-claims in certain of
   the cases. The Company does not believe the outcome of these lawsuits
   will have a material impact on its financial statements.

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

        On August 25, 1998, the Company conducted its Annual Meeting of
   Shareholders and shareholders approved management's recommendation
   regarding the election of directors and the appointment of
   independent auditors.

   Item 5. Market for Common Equity and Related Stockholder Matters.

        Market Information

        The Company's registration statement regarding 800,000 shares of
   Common Stock became effective with the United States Securities and
   Exchange Commission on May 26, 1998.  The Company's Common Stock
   began trading on May 27, 1998 at a price of $6.50 per share.
        The Company's Common Stock is traded on The Chicago Stock
   Exchange ("CSX") under the symbol UFM.

        The range of high and low sale prices of the Company's Common
   Stock, as reported by the CSX from May 27, 1998 through July 15, 1999
   were $2.00 and $10.00, respectively.

        Holders.  As of July 15, 1999, there were approximately 525
   holders of record of the shares.

        Dividends. The Company has never declared or paid a dividend on
   its Common Stock, and management expects that a substantial portion
   of the Company's earnings, if any, for the foreseeable future will be
   used to expand loan origination and servicing capabilities. The
   decision to pay dividends, if any, in the future is within the
   discretion of the Board of Directors and will depend upon the
   Company's earnings, its capital requirements, financial condition and
   other relevant factors such as loan covenants or other contractual
   obligations.
  <PAGE>

   Item 6. Management Discussion and Analysis of Operations.

                    MANAGEMENT DISCUSSION AND ANALYSIS
             OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

   This  Management Discussion and Analysis of Financial Condition and
   Results of Operations includes forward-looking statements which
   involve risks and uncertainties.  Actual events or results may differ
   materially from those discussed in the forward-looking statements as
   a result of certain factors.

         The Company, founded in 1986, operates as a full-service
   mortgage banking company engaged in the origination and sale of first
   mortgage loans secured by residential real estate.  On a limited
   scale, the Company also originates commercial loans; and services
   residential mortgage loans.

      Results of Operations
           Two Years Ended April 30, 1999

         The fiscal year ended April 30, 1999 was a period of
   significant accomplishment for the Company.  Interest rates were
   favorable, loan volume and revenues were at an all time high, the
   Company entered into several strategic alliances and the Company
   completed its first asset acquisition.

         Commission and fee revenue increased from $6,730,416 for the
   twelve months ended April 30, 1998 to $8,571,594 for the twelve
   months ended April 30, 1999.  This percentage increase of
   approximately 27% is primarily the result of an increase in the
   number of loan originations.  The increase in loan originations was
   the result of lower interest rates and an increase in loan
   origination efforts.

          Interest income increased from $665,646 for the twelve months
   ended April 30, 1998 to $1,457,953 for the twelve months ended  April
   30, 1999.  This increase was attributable to the increase in loan
   originations and higher interest income on invested capital.

         Salary and commissions expenses increased from $4,008,346 for
   the twelve months ended April 30, 1998 to $4,539,018 for the twelve
   months ended April 30, 1999.  The increase was attributed to two main
   factors: the increased number of loan originations in the comparable
   time periods and continued investment in the expansion of
   the Company's sales organization.

         Selling and administrative expenses increased from $1,990,349
   for the twelve months ended April 30, 1998 to $3,460,977 for the
   twelve months ended April 30, 1999.  This percentage increase of
   approximately 74% reflected the increase in loan volume and
   incremental expenses associated with this increase.  In addition, the
   continued efforts in infrastructure and technology advancements have
   added to the increase.
<PAGE>
        Depreciation expense increased from $45,805 for the twelve
   months ended April 30, 1999 to $80,704 for the twelve months ended
   April 30, 1999.  This principally resulted from technology
   investments made during fiscal year 1999.  This investment is in line
   with the Company's strategy of technological advancement and
   infrastructure improvements.

        Interest expense increased from $975,953 for the twelve months
   ended April 30, 1998 to $1,054,921 for the twelve months ended April
   30, 1999.  This increase was the result of increased use of warehouse
   lines of credit to fund the increased loan originations.

         As a consequence of the accounting treatment afforded to
   certain equity transactions entered into by the Company regarding
   warrants and other financings, the Company's results of operations
   include non-cash charges against income in the twelve months ending
   April 30,1998 and April 30, 1999, respectfully.  This consists of
   $156,000 recorded as advisory fees in fiscal years 1998 and 1999.
   Without this non-cash charge, net income available to common
   shareholders would have been $397,429 in fiscal year 1998 and
   $508,715 in fiscal year 1999.

        In addition, in fiscal year 1999 there was an extraordinary
   litigation settlement of $150,000.  Net income available to common
   shareholders for fiscal year 1999 also reflects a non-cash deferred
   tax provision of $271,000.  Without these two events, and the advisor
   fee impact net income for fiscal year 1999 would have been $929,715.

   Liquidity and Capital Resources
         During the twelve months ended April 30, 1998 and April 30,
   1999, net cash generated(used) by operating activities was $397,010
   and $435,221, respectively.  Net cash generated by operating
   activities increased from the first twelve months of 1998 to the
   first twelve months of 1999.  This, despite increased expenses
   associated with being a public company and infrastructure growth.

         Net cash generated(used) by investing activities decreased from
   ($411,537) for the fiscal year ended April 30, 1998 to ($243,907) for
   the fiscal year ended April 30, 1999.  The increase in cash from 1998
   to 1999 was largely attributable to the sale of two foreclosed
   properties.  This was partially offset by investments in fixed assets
   and the increase in retaining servicing rights on certain closed
   loans during the period in 1999.
         Cash flow from financing activities for the fiscal year 1998
   and fiscal year 1999 was ($29,673) and 2,179,612, respectively.  This
   change resulted largely from the net proceeds of the public offering
   which occurred in early fiscal year 1999.  Net proceeds from the
   public offering totaled $4,146,437.  A portion of these proceeds were
   used to redeem certain preferred shares for $750,000 and the
   redemption of certain 1996 debentures.

         Therefore, the net cash flow from operating, financing, and
   investing activities was ($44,200) for the fiscal year ended April
   30, 1998 and $2,370,926 for the first the fiscal year ended April 30,
   1999.

         Capital expenditures for the period ended April 30, 1999 were
   approximately $300,000, principally in technology and to a lesser
   extent for the expansion of sales organization facilities.  These
   capital expenditures include a new loan tracking system, a new
   underwriting system, a new accounting system, and several computers.
   All of these items are Year 2000 compliant and move the company
   forward in using technology as a competitive advantage.  The Company
   believes it will continue to make investments in technology in the
   near future to enhance and maintain its product and service
   offerings.
<PAGE>
         Cash flow requirements depend on the level and timing of the
   Company's activities in loan origination in relation to the timing of
   the sale of such loans.  In addition, the Company requires cash flow
   for the payment of operating expenses, interest expense, and capital
   expenditures.  Currently, the Company's primary sources of funding
   are borrowings under warehouse lines of credit, proceeds from the
   sale of loans in the secondary market and internally generated funds.

         During the past twelve months, the Company has pursued its
   strategy of servicing mortgage loans.  In order to engage in this
   business, the Company has retained the servicing rights on the loans
   that the Company originates.  Such retention has resulted in some
   reduction in short term cash flow available to the Company.  The
   Company has employed capital to finance the retention of servicing
   rights.  This capital principally would have been expended to pay the
   costs associated with loan origination, such as loan officer
   compensation and miscellaneous overhead expenses.  However, the
   retention of servicing rights is expected to create an asset on the
   Company's balance sheet and create future cash flow streams.

         During the fiscal year 1999, the Company obtained two new
   credit lines and an increase to an existing credit line.  These
   transactions brought an additional $41 million in loan funding
   capacity to the Company.  The Company is continually in discussions
   with various lenders for additional lines of credit.

    Acquisition
         On October 9, 1998 the Company completed its first acquisition
   by acquiring certain assets of Mortgage Service America, Inc., a
   Lombard, Illinois mortgage Company.   Management thinks that the
   transaction will serve to fulfill its growth strategies in the
   wholesale business segment.  The acquisition is expected to assist
   the Company in the development of its servicing portfolio.  In
   addition, the acquisition is expected to facilitate the Company's
   growth strategy into other areas.

    Alliances
        During the fiscal year 1999 the Company entered into a strategic
   alliance to exclusively provide mortgage products and services to the
   customers of one of Chicago's oldest and most highly regarded
   financial institutions, the Austin Bank of Chicago.  Austin Bank
   meets the financial services needs of retail and commercial customers
   on Chicago's West Side and nearby suburbs.

        Also, during fiscal year 1999, the company signed an agreement
   with Bank Rate Monitor to provide mortgage rates and financing to the
   Bank Rate Monitor Infobank.  The agreement calls for United
   Financial's information to be available at all sites that Bank Rate
   Monitor supplies information.  This includes Yahoo!, Excite,
   Realtor.com, Microsoft's Money Insider, Quicken, Kiplinger, Motley
   Fool and America Online.

         In addition, the Company signed an agreement with Microsoft
   Corp. to team with MSN Sidewalk to provide to World Wide Web visitors
   with the opportunity to get information on the many different types
   of mortgage loans offered by the Compqny, calculated mortgage
   payments, and apply on-line for a mortgage at
   www.Chicago.Sidewalk.com.
 <PAGE>
   Industry Trends
         The growth in volume that the mortgage industry has seen over
   the past few years has resulted from a general downward trend in
   interest rates.  The Company believes that mortgage volume may tend
   to decrease on a relative basis in higher interest environments.
   Higher interest rates generally result in smaller mortgage companies
   leaving the market resulting in potentially larger market shares for
   continuing mortgage bankers.  This trend is beginning to occur now as
   interest rates have begun to increase.

         The Company also believes that the industry will continue to
   offer broader and more diversified product offerings and that
   technology will play an increasing part in real estate transactions.
   This includes expanded use of Internet capabilities which the Company
   will continue to aggressively pursue.

        The Company's business base is concentrated principally in the
   Midwest and West.  As such, the Company may be subject to the effects
   of economic conditions and real estate markets specific to such
   locales.

      Inflation and Seasonality
          The Company believes the effect of inflation, other than its
   potential effect on market interest rates, has been insignificant.
   Historically, seasonal fluctuations in mortgage originations
   generally do not have a material effect on the financial condition or
   operations of the Company.  Due to the technological and
   infrastructure advancements, such as increasing the servicing
   portfolio, the Company hopes to continue to minimize seasonality
   fluctuations.
   <PAGE>

   Item 7. Financial Statements

                      UNITED FINANCIAL MORTGAGE CORP.

                           FINANCIAL STATEMENTS

                             TABLE OF CONTENTS



        Page

   Table of Contents_________________________________________________________10

   Report of Independent Certified Public Accountants________________________11

   Balance Sheet at April 30, 1998 and 1999_______________________________12-13

   Statement of Income for the years
   ended April 30, 1998 and 1999_____________________________________________14

   Statement of Stockholders' Equity for the years
   ended April 30, 1998 and 1999_____________________________________________15

   Statement of Cash Flows for the years
   ended April 30, 1998 and 1999_____________________________________________16

   Notes to Financial Statements__________________________________________17-23
<PAGE>

                       INDEPENDENT AUDITOR'S REPORT


                      UNITED FINANCIAL MORTGAGE CORP.

        Financial Statements as of April 30, 1998 and April 30, 1999
        together with the Independent Auditors' Report

   To the Board of Directors and Stockholders of
   United  Financial Mortgage Corp.

        We have audited the accompanying balance sheets of United
   Financial Mortgage Corp. as of April 30, 1998 and April 30, 1999, and
   the related statements of income, stockholders' equity and cash flows
   for the years ended April 30, 1998 and April 30, 1999.  These
   financial statements are the responsibility of the Corporation'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 audits 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, the financial statements referred to above
   present fairly, in all material respects, the financial position of
   United Financial Mortgage Corp. as of April 30, 1998 and April 30,
   1999 and the results of its operations and its cash flows for the
   years then ended in conformity with generally accepted accounting
   principals.


                                 CRAIG SHAFFER AND ASSOCIATES, LTD., C.P.A.

   Des Plaines, Illinois
   July 11, 1999

   Respectfully submitted,

   By: /S/ Craig Shaffer
   Craig Shaffer and Associates, Ltd.
   Certified Public Accountants
   July 11, 1999
 <PAGE>
 <TABLE>
                        United Financial Mortgage Corp.
                               Balance Sheet

                                                Year Ended       Year Ended
                                              April 30, 1998    April 30, 1999
   <S>                                       <C>                <C>
                   A S S E T S
   Current Assets:
         Cash                                $    1,974,011     $    4,344,937
         Loans held for sale                     13,261,136         32,073,320
         Mortgage Loan Investments                1,331,287          1,906,234
         Accounts Receivable                         83,494            315,860
         Due From Employees                          13,511             14,700
         Due From Officers                           64,873              2,439
         Deferred Tax Asset                           5,636                  0
         U.S. Savings Bond                            2,000              2,000
         Note Receivable                            140,878            110,000
         Prepaid Expense                              8,882            177,098
               Total current assets          $   16,885,708     $   38,946,588

       Furniture, Fixtures & Equipment
         Cost                                       342,771            645,519
         Accumulated Depreciation                  (200,484)          (276,512)
                Total Furniture, Fixtures,
                & Equipment                         142,287            369,007

   Other Assets:
        Servicing Rights                             74,286            185,980
        Land Investments                            303,250                  0
        Escrow Deposits                               8,076             60,793
        Deferred Organization Costs                 143,425                  0
        Security Deposits                            11,302             16,403
        Deferred Advisor Fees                       234,000             78,000
        Investments                                   5,750              5,750
        Goodwill Net                                      0            132,715
                Total Other Assets                  780,089            479,641

           Total Assets                      $   17,808,084     $   39,795,236

       The accompanying notes are an integral part of this statement
 </TABLE>
 <PAGE>
 <TABLE>
                       United Financial Mortgage Corp.
                               Balance Sheet

                        LIABILITIES AND STOCKHOLDERS' EQUITY

                                                Year Ended       Year Ended
                                              April 30, 1998   April 30, 1999
   <S>                                       <C>                <C>
   Current Liabilities:
        Accounts Payable                     $      207,462     $      235,952
        Leases Payable                                    0             12,295
        Accrued Expenses                            171,773            177,675
        Taxes Payable                                     0             62,959
        Deferred Income Taxes                             0            270,599
        Escrow Payable                                8,076             32,892

        Notes Payable - Current                  14,149,244         32,375,632
                Total current liabilities    $   14,536,555     $   33,168,004
        Non-Current Notes Payable                   425,000                  0
        Leases Payable                                    0             31,551
                Total liabilities            $   14,961,555      $  33,199,555

        Stockholders Equity
           Common Shares, 20,000,000 Authorized,
             No Par Value, Shares Issued and
             Outstanding; 3,100,029 at
             April 30, 1998 and 3,898,219
             at April 30, 1999.              $    2,382,895      $   6,529,332
           Preferred Shares, 5,000,000 Authorized,
             No Par Value, 213 Series A Redeemable
             Shares Issued And Outstanding;
             value $1,065,000 at April 30, 1998
             and 63 shares issued and
             Outstanding April 30, 1999.     $    1,065,000      $     315,000
           Retained Earnings                       (601,366)          (248,651)
                Total Stockholders' Equity   $    2,846,529      $   6,595,681

                Total liabilities and
                stockholders' equity             17,808,084         39,795,236



       The accompanying notes are an integral part of this statement
</TABLE>
<PAGE>
<TABLE>
                       United Financial Mortgage Corp.
                            Statement of Income

                                                Year Ended       Year Ended
                                              April 30, 1998   April 30, 1999
   <S>                                       <C>                 <C>
   Revenues:
        Commissions and Fees                 $    6,730,416      $   8,571,594
        Interest Income                             665,646          1,457,953
        Other Income and Expense                    (13,466)            15,681
                                                  7,382,596         10,045,228
   Expenses:
        Salaries & Commissions                $   4,008,346       $  4,539,018
        Selling & Administrative                  1,990,349          3,460,977
        Depreciation                                 45,805             80,704
        Interest Expense                            975,953          1,054,921
        Cost and Expense of Litigation               80,587            150,000
                                              $   7,101,040       $  9,285,620

        Income (loss) Before Income Taxes     $     281,556       $    759,608
        Income Tax Provision                         40,127            339,228
        Net Income (loss)                           241,429            420,380
        Less Dividends Paid on Preferred Stock            0             67,665
        Net Income (loss) Applicable to
         Common Shareholders                        241,429            352,715

        Basic Net Income(loss) Per Share               0.08               0.09
        Diluted Net Income Per Share                   0.07               0.09

        Shares used in computation of basic
         net income per share                     3,100,029          3,828,918
        Shares used in computation of diluted
         net income per share                     3,342,029          4,070,918

       The accompanying notes are an integral part of this statement
 </TABLE>
 <PAGE>
 <TABLE>
                      United Financial Mortgage Corp.
                     Statement of Stockholders Equity
                    Twelve Months Ended April 30, 1999


                                       Common        Retained
                                        Stock        Earnings          Total
   <S>                                <C>           <C>              <C>
   Balance, April 30, 1997            2,382,895     (842,795)        1,540,100

   Net Income for the year ended
       April 30, 1998                                241,429

   Balance, April 30, 1998            2,382,895     (601,366)        1,781,529

   Net Proceeds From Public Offering
       of 800,000 shares              4,153,508

   Retirement of 1,810 Shares            (7,071)

   Net Income for the period
       ended April 30, 1999                          420,380

   Dividend Paid on Preferred Stock                  (67,665)

   Balance, April 30, 1999            6,529,332     (248,651)        6,280,681

       The accompanying notes are an integral part of this statement
</TABLE>
<PAGE>
<TABLE>
                       United Financial Mortgage Corp.
                          Statement of Cash Flows
   <S>                                           <C>            <C>
                                                   Year Ended    Year Ended
                                                 April 30, 1998 April 30, 1999

   CASH FLOWS FROM OPERATING ACTIVITIES
      Net Income or (Loss)                       $     241,429  $     420,380
      Adjustments to Reconcile Net Inco
     To Net Cash Provided by Operating Activities
         Depreciation                                   45,805         76,028
         Changes In:
           Prepaids & Other Current Assets              69,216       (448,852)
           Accrued Expenses & Other Current Liabilities 18,240        364,276
           Accounts Payable                             27,479         28,490
           Deposits
                                                        (5,159)        (5,101)
    NET CASH PROVIDED BY OPERATING ACTIVITIES    $     397,010  $     435,221

    CASH FLOWS FROM INVESTING ACTIVITIES
           Land Sales                                 (303,250)       303,250
           Purchase of Fixed Assets                    (34,001)      (302,748)
           Goodwill net of 4,076 amortization                0       (132,715)
           Servicing Rights                            (74,286)      (111,694)

    NET CASH PROVIDED FROM INVESTING ACTIVITIES       (411,537)      (243,907)

    CASH FLOWS FROM FINANCING ACTIVITIES
           Notes Receivable                      $     (29,115)        30,878
           Changes in Short Term Debt                        0         12,295
           Changes in Long Term Debt                   126,968       (393,449)
           Officers Loans                              (29,846)        62,434
           Deferred Advisor Fees                       156,000        156,000
           Deferred Offering Expenses                  (49,192)       143,425
           Preferred Stock Redeemed                          0       (750,000)
           Common Stock Proceeds - Net                       0      4,146,437
           Mortgage Loans Made                        (935,810)   (19,387,131)
           Changes in Bank Line of Credit              731,322     18,226,388
           Preferred Stock Dividend                          0        (67,665)

    CASH PROVIDED (USED) BY FINANCING ACTIVITIES       (29,673)     2,179,612

    INCREASE (DECREASE) IN CASH                        (44,200)     2,370,926
    Cash at Beginning of Period                      2,018,211      1,974,011

    Cash at End of Period                            1,974,011      4,344,937

       The accompanying notes are an integral part of this statement
  </TABLE>
  <PAGE>
                      UNITED FINANCIAL MORTGAGE CORP.
                   Notes to Audited Financial Statements

   Organization and Business of the Company
        United Financial Mortgage Corp. is an Illinois corporation
   organized on April 30, 1986 to engage in the residential mortgage
   banking business.  The Company is a licensed mortgage banker in the
   states of Illinois, Wisconsin, Missouri, Arkansas, California,
   Colorado, Connecticut, Delaware, Florida, Kentucky, Maryland, Nevada,
   North Carolina, Oregon, South Carolina, Texas, Utah, Virginia,
   Washington and Indiana.  The Company is an approved mortgagee by the
   Department of Housing and Urban Development and is qualified to
   originate mortgage loans insured by the Federal Housing
   Administration as well as service loans for the Federal National
   Mortgage Association and the Federal Home Loan Mortgage Corporation.

   Summary of Significant Accounting Policies
   Net Income(Loss) Per Share
        In February 1997, the Financial Accounting Standards Board
   issued Statement of Financial Accounting Standards (SFAS) No. 128,
   "Earnings Per Share."  SFAS No. 128 replaced the calculation of
   primary and fully diluted earnings per share with basic and diluted
   earnings per share.  Unlike primary earnings per share, basic
   earnings per share excludes any dilutive effects of options,
   warrants, and convertible securities.  Earnings per share amounts for
   all periods have been presented and, where appropriate, restated to
   conform to SFAS No. 128 requirements.

   Use of Estimates
        The preparation of the financial statements in conformity with
   generally accepted accounting principles requires management to make
   estimates and assumptions that affect the amounts reported in the
   financial statements and accompanying notes.  Actual results could
   differ from those estimates.

   Revenue Recognition
        Revenue is recognized when loans are sold after closings.
   Interest income from mortgages held by the Company and from short
   term cash investments is recognized as earned.

   Commissions and Fees
        Commissions and fees principally consist of premiums received
   from purchasers of mortgage loans originated by the Company.  Gains
   (losses) from purchasing, selling, investing in or otherwise trading
   in closed mortgage loans are an immaterial portion of the Company's
   revenues and are included in the Statement of Income under the item
   entitled Revenues: Commissions and Fees.

   Cash and Cash Equivalents
        Cash and cash equivalents consist of cash and short-term
   investments with maturity of three months or less.

   Accounts Receivable
        Accounts receivable consist of advances made in connection with
   loan origination activities.
 <PAGE>
   Concentration of Credit Risk
        Credit risk with respect to mortgage loan receivables and
   accounts receivable is generally diversified due to the large number
   of customers and the timely sale of the loans to investors, generally
   within one (1) month.  The Company performs extensive credit
   investigation and verification procedures on loan applicants before
   loans are approved and funds disbursed.  In addition, each loan is
   secured by the underlying real estate property.  As a result, the
   Company has not deemed it necessary to provide reserves for the
   ultimate realization of the mortgage loan receivables.

   Fixed Assets
        Fixed assets consist of furniture, fixtures, equipment and
   leasehold improvements and are recorded at cost and are depreciated
   using the straight line method over their estimated useful lives.
   Furniture, fixtures and equipment are depreciated over 5-7 years and
   leasehold improvements over the shorter of the lease term or the
   estimated useful life of the asset.  Upon asset retirement or other
   disposition, cost and the related allowance for depreciation are
   removed from the accounts, and gain or loss is included in the
   statement of income.  Amounts expended as repairs and maintenance are
   charged to operations.

   Fair Value of Financial Instruments
        The carrying value of the Company's financial instruments,
   including cash and cash equivalents, mortgage receivables, accounts
   receivables, accounts payable and notes payable, as reported in the
   accompanying balance sheet, approximates fair value.

   Income Taxes
        The Company accounts for income taxes using the liability method
   in accordance with SFAS No. 109., _Accounting for Income Taxes._  The
   liability method provides that deferred tax assets and liabilities
   are determined based on differences between financial reporting and
   tax basis of assets and liabilities and are measured using the
   enacted tax rates and laws that will be in effect when the
   differences are expected to reverse.

   Earnings (Loss) per Common Share
        Earnings (loss) per common share is calculated on net income
   (loss) after deduction for dividends paid on the Series A Preferred
   Shares.  The number of common shares used in the computation is based
   upon the number of shares outstanding at the end of the period.

   Certain Relationships and Related Transactions
        On November 20, 1998, the Company completed a second mortgage
   loan on the principal residence of Mr. Rocco Cappiello, a director of
   the Company, in the amount of $130,000.  The loan was made on terms
   generally more favorable to the Company than would otherwise be
   available in the competitive marketplace.  Further, the Company
   secured its loan position with collateral, both real and personal
   property, substantially in excess of its underwriting guidelines for
   other similar loans in the ordinary course of its business.  The loan
   was made from funds other than the net proceeds from the Company's
   recently completed public offering.
<PAGE>
   Transfers and Servicing of Financial Assets and Extinguishments of
   Liabilities

          In June 1997, the Financial Accounting Standards Board
   ("FASB") issued Statement of Financial Accounting Standards No. 130,
   "Reporting Comprehensive Income." ("SFAS 130").  SFAS 130,
   establishes the standards for reporting and displaying comprehensive
   income and its components (revenues, expenses, gains, and losses) as
   part of a full set of financial statements.  This statement requires
   that all elements of comprehensive income be reported in a financial
   statement that is displayed with the same prominence as other
   financial statements.  The statement is effective for fiscal years
   beginning after December 15, 1997.  Since the standard applies only
   to the presentation of comprehensive income, it should not have any
   impact on the Company's results of operations, financial position or
   cash flows.  Comprehensive income and regular income are one and the
   same for the current period.

            In June 1997, the Financial Accounting Standards Board
   ("FASB") issued Statement of Financial Accounting Standards No. 131,
   "Disclosures about segments of an Enterprise and Related
   Information."  ("SFAS 131").  SFAS 131 is effective for years
   beginning after December 15, 1997.  SFAS No. 131 establishes
   standards for the way that public business enterprises report information
   about operating segments in annual financial statements and financial
   reports.  It also establishes standards for related disclosures about
   products and services, geographic areas and major customers.  SFAS No. 131
   is effective for financial statements for fiscal years beginning after
   December 15, 1997, and therefore the Company has adopted the new
   requirements.

   Year 2000 Impact
        The year 2000 issue is the result of computer programs being
   written using two digits rather than four to define the applicable
   year.  Certain computer programs that have time-sensitive software
   may recognize a date using "00" as the year 1900 rather than the year
   2000.  This could result in a system failure or miscalculations
   causing disruptions of operations, including, among other things, a
   temporary inability to process transactions, or engage in similar
   business activities.

        The Company has reviewed its computer systems and applications
   to determine if these programs are Year 2000 compliant and if not,
   the efforts that will be necessary to bring the programs into
   compliance.  The Company has not identified any computer system or
   application that, upon failure to be year 2000 compliant, would have
   a material adverse impact on its business activities or results of
   operations.
<PAGE>
        The Company is participating in Year 2000 readiness testing
   sponsored by the Mortgage Bankers Association.  If any issues arise
   from this test the Company will react in a timely manner to address
   these issues.

   Notes Payable
        The Company has mortgage warehouse credit facilities aggregating
   $62 million with several commercial banks and other financial
   institutions.   These credit facilities are used to fund approved
   mortgage loans and are collateralized by mortgage loans.  The Company
   is not required to maintain compensating balances.

        Amounts outstanding under the various credit facilities consist
   of the following:

                                                               April 30, 1999
      $20 million mortgage warehouse credit facility at a
              commercial bank; interest at LIBOR;
              plus 160 basis points; expires 10/28/99           $   20,108,902


      $25 million mortgage warehouse credit facility at a
              commercial bank; interest at LIBOR;
              plus 185 basis points; expires 09/99                  10,481,425



      $15 million mortgage warehouse credit facility at a
             commercial bank; interest at Libor;
             plus 150 basis point; expires 2/2000                      635,944


      $2 million mortgage warehouse credit facility at a
             commercial bank; interest at LIBOR;
             plus 160 basis points; expires 10/28/99                 1,149,361


                  Total                                         $   32,375,632


   Retirement Plan
        The Company has a 401K plan that all eligible employees may
   participate in.  Company contributions to the plan are discretionary.

<PAGE>

   Lease Commitments
        The Company conducts its operations from leased premises and has
   several equipment leases as part of standard business practice.  The
   following table reveals the estimated minimum rental payments under
   the Company's operating leases.  Total rent expense under these
   leases was approximately $332,000 for the twelve months ended April
   30, 1999.

        Future minimum rental payments for the next five years at April
   30, 1999 are as follows:

                       Period Ending April 30,           Operating Leases
                            2000                              321,967
                            2001                              276,870
                            2002                              186,662
                            2003                               84,449
                            2004                                    0
                            Total Commitment                $ 869,948
   Income Taxes
        The income tax provision consists of the following for the
   period ended April 30:

                                        1998                1999

             Current:
                  Federal          $  30,096           $   48,635
                  State               10,031               14,324
                  SubTotal            40,127               62,959

             Deferred:
                  Federal          $       0              311,221
                  State                    0               46,200
                  SubTotal                 0              357,421

             Total                 $  40,127           $  420,380


        The components of the deferred tax asset (liability) are as
        follows for the periods ending April 30:

                                        1998                1999
        Loss Carry-Forward         $  (5,636)          $        0
        Accelerated Depreciation      72,798               24,415
        Deferred Receivables           3,659             (295,014)

        Deferred Tax Asset (Liability)70,821             (270,599)
        Valuation Allowance          (76,457)                   0

        Net Deferred Tax Asset
             (Liability)           $   5,636$            (270,599)

        The effective tax rate for the three month periods ended April
        30, 1998 and April 30, 1999: the statutory Federal tax of 34%;
        and state tax rate of 7%.
<PAGE>
   Series A Preferred Stock
        The Series A Preferred Stock is non-voting, nonparticipating and
   has a liquidation preference upon dissolution of the Company of
   $5,000 per share.  The holders of the Preferred Stock are entitled to
   a variable dividend only at the discretion of and determination by
   the Board of Directors.  No dividend was declared for the year ended
   April 30, 1998 and $67,665 was declared for 1999.

   Stockholders' Equity
      Warrants
        At April 30, 1999, the Company had total warrants outstanding to
   purchase 242,000 shares of the Company's Common Stock.  The exercise
   price of the warrants range between $0.50 and $4.505 per share.
   Warrants for 47,000 shares expire on the fifth anniversary of their
   issuance.  Warrants for 195,000 shares expire on November 15, 1999.
   In certain circumstances, the warrants have certain "piggy back" or
   other registration rights.

        As of November 15, 1995, an advisor to the Company was issued
   warrants to purchase 195,000 shares of the Company's Common Stock at
   an exercise price of $0.50 per share.  The warrants are exercisable
   until November 15, 1999  and contain certain registration rights.

        The Company has reserved 242,000 common shares for issuance upon
   exercise of all warrants.

        On May 26, 1998, the Company commenced an initial public
   offering of 800,000 shares of its common stock at a price of $6.50
   per share.  Gross offering proceeds totaled $5,200,000.

   Gross offering proceeds have been applied as follows:

        Underwriting Commission                           $520,000

        Non-Accountable Expenes Allowance                 $156,000

        Redemption of Series A Preferred Stock            $750,000

        Offering Expenese                                 $375,493

        Repayment of 1996 Debentures, and accrued
        interest                                          $489,000


        In March of 1999, the Company started a stock repurchase
   program.  As of April 30, 1999, the Company has purchased 1,810
   shares and has returned to `authorized but not issued' shares.

   Servicing
        During the recent year ended April 30, 1999, the Company has
   continued to build a servicing portfolio.  As of the balance sheet
   date, the servicing portfolio was nine million, seven hundred eighty-
   eight thousand, four hundred thirteen dollars (9,788,413) in
   residential loans.
<PAGE>
   Stock Option Plan
        In December, 1993 the Company adopted the Non-Qualified and
   Incentive Stock Option Plan and established the number of common
   shares issuable under the plan at 500,000 shares.  The exercise price
   for shares under the plan is the fair market value of the Common
   Stock on the date on which the option is granted.  The option price
   is payable either in cash, by the surrender of common shares in the
   Company, or a combination of both.  The aggregate number of options
   granted in any one year cannot exceed 10% of the total shares
   reserved for issuance under the plan.  Options will be exercisable
   immediately, after a period of time or in installments, and expire on
   the tenth anniversary of the grant.  The plan will terminate in
   December, 2003.

        During the period ending April 30, 1999, the Company granted
   options for a total of 74,500 shares of stock at $6.50 per share.
   Mr. Steve Khoshabe, the Executive Vice President of the Company was
   awarded 50,000 of these options.

        At April 30, 1998, the Company had not granted any options under
   the Plan.

        At April 30, 1998, the Company has reserved 500,000 common
        shares for issuance upon exercise of all options.

   Contingencies
        In June 1995, Lawyers Title initiated a non-wage garnishment
   proceeding against the Company and its bank.  Lawyers Title claimed
   entitlement to monies purportedly held by the Company on the grounds
   that the money was tendered to the Company by Dearborn Title in the
   mistaken belief that this money was owed to the Company as a
   replacement for a funding check relating to a particular real estate
   refinancing transaction which had previously been returned  to
   Dearborn for insufficient funds.

        On March 13, 1999 the matter was settled.  The settlement does
   not require any further payments by the Company.

        The Company is a defendant in a series of complaints relating to
   its business activities.  The aggregate amount of these claims is
   approximately $300,000. The Company has aggressively defended its
   position in these matters and has filed counter-claims in certain of
   the cases. The Company does not believe the outcome of these lawsuits
   will have a material impact on its financial statements.

   Expansion
        On October 9, 1998, the Company purchased certain assets of
   Mortgage Service of America, Inc. for $187,291 under the purchase
   method of accounting.  MSA was is in the mortgage loan origination
   business and originated primarily first mortgages.  The purchase
   price was paid in cash.  Assets in the amount of $50,000 are being
   depreciated over their useful lives and goodwill of $137,291 will be
   amortized over 15 years.  Due to the method of accounting used by
   MSA, it is not possible to present a pro forma combined financial
   statement.  If included, management does not believe it would present
   a material change to the Company's financial statements.
<PAGE>
                       United Financial Mortgage Corp.
                   Notes to Audited Financial Statements

   Basis of Presentation
        Earnings per share is presented in accordance with the provision
   of the Statement of Financial Accounting Standards No. 128, "Earnings
   Per Share" (SFAS 128), which requires the presentation of "basic" and
   "diluted" earnings per share.  Basic earnings per share is based on
   the weighted average shares outstanding without regard for common
   stock equivalents such as stock options and warrants.  Diluted
   earnings per share includes the effect of common stock equivalents.

   The following reconciles basic earnings per share to diluted earnings
   per share under the provisions of SFAS 128:

                                      Period ended April 30, 1998
                                          Income        Shares      Per Share
                                       (Numerator)  (Denominator)    Amount

          Basic Earnings Per Share
          Income Available to Common
               Shareholders             241,429       3,100,029       0.0778
          Effect of Dilutive Securities
                 Options and Warrants                   242,000

          Diluted Earnings Per Share
          Income Available to Common
                 Shareholders           241,429       3,342,029       0.0722


                                      Period ended April 30, 1999
                                          Income        Shares    Per Share
                                        (Numerator) (Denominator)    Amount

          Basic Earnings Per Share
          Income Available to Common
               Shareholders             352,715       3,828,917       0.0921

          Effect of Dilutive Securities
               Options and Warrants                     242,000


          Diluted Earnings Per Share
          Income Available to Common
               Shareholders             352,715       4,070,917       0.0866
<PAGE>
   Item 8. Changes in and Disagreements With Accountants on Accounting
   and Financial Disclosure.

        Not Applicable

                                 PART III

   Item 9. Directors, Executive Officers, Promoters and Control Persons;
   Compliance with Section 16(a) of the Exchange Act.

        (a)  Recent Sales of Unregistered Securities.

             The Company has never declared or paid a dividend on its
        Common Stock, and management expects that a substantial portion
        of the Company's earnings, if any, for the foreseeable future
        will be used to expand loan origination and servicing
        capabilities.  The decision to pay dividends, if any, in the
        future is within the discretion of the Board of Directors and
        will depend upon the Company's earnings, its capital
        requirements, financial condition and other relevant factors
        such as loan covenants or other contractual obligations.
        (b)  Use of Proceeds

          (1)     On May 26, 1998, the Company's Registration Statement
             (No. 333-27037) on Form SB-2 became effective with the
             United States
        Securities and Exchange Commission.

          (2)     The offering commenced on May 27, 1998.

          (3)     Not Applicable.

          (4)     (i)The offering terminated on June 4, 1998 after the
        sale of 800,000 shares of the Company's common stock.  An over-
        allotment option  for an additional 120,000 shares which were
        registered were not sold.

             (ii) The managing underwriter was Mills Financial Services,
                  Inc.

             (iii) The title of each class of securities registered
                   is as follows:

                                                           Amount
                       Class                             Registered

                       Common Stock _______________________920,000
                       Underwriter's Warrants_______________80,000
                       Common Stock Within Underwriter's
                            Warrant_________________________80,000
 <PAGE>
             (iv) No shares were sold by any selling security holders.

                  920,000 shares were registered for the account of
              the Company with an aggregate offering price of
              $5,980,000.  800,000 shares were sold for an aggregate
              offering price of $5,200,000.

              (v) The amount of the expenses incurred for the
              Company's account in connection with the issuance and
              distribution of the shares registered is as follows:

               Underwriting Discounts and Commissions_______520,000
               Finder's Fees________________________________   None
               Non-Accountable Expense Allowance Paid to the
                   Underwriter______________________________156,000
               Other Expenses_______________________________375,493
               Total Expenses___________________________ $1,051,493

             (V)(A) $750,000 of the offering proceeds were paid to the
               Joseph Khoshabe Trust, dated September 22, 1995 as the
               redemption price for 150 shares of Series A Preferred
               Stock.  The Company also paid $489,000 to repay the
               principal and accrued interest on certain 1996
               Debentures.  These applications of offering proceeds
               were disclosed in the registration statement.

             (VI) The net proceeds to the Company after deducting total
               expenses and the other uses described above was:  $2,909,507.

             (VII) The net offering proceeds to the Company have been
               invested in temporary investments, and for the other uses set
               forth in the prospectus.

             (VIII) Not Applicable.
 <PAGE>
   Item 10. Executive Compensation

                        SUMMARY COMPENSATION TABLE

                            Annual Compensation

                                                                   Other Annual
                                                                   Compensation
   Name and Principal Position         Year      Salary    Bonus (1)(2)(3)(4)(6)
   Joseph Khoshabe, President          1999     $244,166   $47,561      $11,565
                                       1998     $180,000      -0-       $ 3,161
                                       1997     $180,000      -0-       $ 3,161
                                       1996     $170,000(4)   -0-       $ 3,161
                                       1995     $160,000      -0-       $ 3,161


   Steve Y. Khoshabe,                  1999     $ 86,500      -0-       $ 3,495
   Executive Vice President (5)        1998     $ 50,063      -0-       $ 2,210
                                       1997     $ 46,093      -0-       $ 2,210
                                       1996     $ 40,393      -0-       $ 2,210
   _____________________
   (1)  Includes: $1,980 for annual disability premiums; and $9,505 for
        annual health insurance premiums for Mr. Khoshabe and his
        dependents.
   (2)  Does not include a $25,000 annual car allowance payable to Mr.
        Joseph Khoshabe.
   (3)  Does not include a $12,000 annual car allowance payable to Steve
        Khoshabe.
   (4)  This salary amount was not paid to Mr. Khoshabe.  This salary
        amount is included to satisfy applicable accounting
        requirements.
   (5)  Effective as of June 15, 1998, Mr. Steve Khoshabe's annual base
        salary was increased to $90,000.  Mr. Khoshabe's annual car
        allowance also was increased effective as of May 1, 1998 from
        $7,200 to $12,000.  These increases are attributable to the
        increase in Mr. Khoshabe's responsibilities as a consequence of
        the public offering by the Company.
   (6)  Effective as of June 15, 1998, Mr. Joseph Khoshabe's annual base
        salary was increased from $180,000 to $250,000 in accordance
        with the terms of his employment agreement.
<PAGE>

   Items 11. Security Ownership of Certain Beneficial Owners and
   Management

        The following table sets forth certain information known to the
   Company regarding beneficial ownership of the Company's Common Stock
   at the date of this Proxy Statement, by (1) each person known by the
   Company to beneficially own more than 5% of the Company's Common
   Stock, and (ii) the officers and directors of the Company
   beneficially owning such Common Stock. The Company believes that Mr.
   Joseph Khoshabe as trustee of the Joseph Khoshabe Trust, under trust
   agreement dated September 22, 1995 (the "J.K. Trust"), has sole
   investment and voting power with respect to the shares beneficially
   owned by the J.K. Trust.

                                                   Number of
        Name and Address of Beneficial Owner         Shares  Percent Owned (1)
        J.K. Trust                                 2,531,842        61.8%
        c/o United Financial Mortgage Corp.
        600 Enterprise Drive
        Suite 206
        Oak Brook, Illinois 60521

        Rocco M. Cappiello                           210,455(2)      5.1%
        30 S. Wacker
        Suite 1310
        Chicago, Illinois 60606
   ______________________
   (1)  The computations include the issuance of 322,000 shares of
        Common Stock upon exercise of various outstanding warrants.

   (2)  Mr. Rocco M. Capiello has the right to acquire 195,000 of such
        shares within sixty (60) days of the effective date (May 26,
        1998) of the Company's registration statement, upon exercise of
        a certain Advisor Warrant.

        The J.K. Trust is the principal shareholder of the Company.  Mr.
   Joseph Khoshabe originally purchased the shares and then had them
   reregistered in the name of the J.K. Trust for estate planning
   purposes.  Mr. Khoshabe as the trustee of the J.K. Trust is the
   beneficial owner of 2,531,842 shares of the Common Stock of the
   Company.  In connection with the organization of the Company and its
   initial capitalization, the J.K. Trust paid a total of $130,070 for
   100% of the Company's common stock.  Therefore, the J.K. Trust
   purchased its ownership interest in the Company for $.051 per share.

        The J.K. Trust has agreed with the Underwriter and the Company,
   with the exception of 100,000 shares which may be sold six (6) months
   after the effective date of the registration statement described
   above that it will not sell the remainder of the shares held by it
   for a period of twelve (12) months after such effective date.
 <PAGE>
   Item 12. Certain Relationships and Related Transactions.

        The Company's Board of Directors authorized the issuance of 213
   shares of Series A Non-Voting Preferred Stock ("Preferred Stock").
   The outstanding shares of Preferred Stock were purchased from the
   Company for total cash consideration of $1,065,000 or $5,000 per
   share.  The 213 shares of Preferred Stock includes 113 shares
   purchased by the J.K. Trust on June 10, 1996 for a cash payment to
   the Company of $565,000.  The J.K. Trust purchased these shares of
   Preferred stock as a capital infusion to compensate for the $565,000
   judgment that was paid in connection with certain terminated
   litigation matters.

        On June 5, 1998, 150 shares of the Preferred Stock were redeemed
   by the Company for a redemption price of $750,000 and no longer are
   outstanding.

        The redemption price for the Preferred Stock represents the
   original purchase price for such shares.  The decision to redeem the
   shares by the Company was made solely by the holder of such shares,
   namely Mr. Joseph Khoshabe, the President and then sole director of
   the Company.

        The J.K. Trust for which Mr. Joseph Khoshabe is the trustee will
   continue to h old sixty-three (63) shares of Preferred Stock after
   the redemption described above.

        The Company may pay variable dividends with respect to the
   Preferred Stock as determined by the Board of Directors of the
   Company on an annual basis.

        As an affiliate of the Company within the meaning of Rule 144(a)
   (1), the J.K. Trust will be subject to the volume limitations of Rule
   144(e) with respect to any sales by it. Generally, the maximum amount
   of securities which can be sold by a control affiliate during a
   three-month period pursuant to Rule 144 is limited to the greater of
   one percent of the outstanding securities of the Company or the
   average weekly volume traded for the four week period prior to the
   date of filing the required notification of sale.
 <PAGE>

                                      SIGNATURES

        In accordance with the Exchange Act, this report has been signed
   below on July 30, 1999 by the following persons on behalf of the
   registrant and in the capacities indicated.

   Registrant:    United Financial Mortgage Corp.


                                           By:  /S/ Joseph Khoshabe
                                                Joseph Khoshabe, President,
                                                Principal Executive Officer
                                                and a Director

                                           By:  /S/Steve Y. Khoshabe
                                                Steve Y. Khoshabe, Executive VP
                                                And Principal Accounting Officer

                                           By:  /S/ John A. Clark
                                                John A., Clark, Director

                                           By:  /S/ David B. Mirza
                                                David B. Mirza, Director

                                           By:  /S/ Rocco M. Cappiello
                                                Rocco M. Cappiello, Director

                                           By:  /S/ Robert S. Luce
                                                Robert S. Luce,
                                                Secretary and a Director
<PAGE>
                                  PART IV

   Item 13. Exhibits, Financial Statement Schedules, and Reports of Form
   8-K.
         (a)      (1)  Financial Statements.

                  The following financial statements and notes thereto,
                  and the related Independent Auditor's Report, are
                  filed as part of this Form 10-K on Pages 11 to 21
                  hereof:

                  Independent Auditors' Report
                  Balance Sheets at April 30, 1998 and 1999
                  Statements of Operations for the years ended April 30,
                  1998 and 1999
                  Statements of Stockholders' Equity for the years ended
                  April 30, 1998 and 1999
                  Statements of Cash Flows for the years ended April 30,
                  1998 and 1999
                  Notes to Financial Statements
            (2)   Financial Statement Schedules.
                  All financial statement schedules have been omitted
                  because such schedules are not required or the
                  information required has been included in the
                  financial statements and notes thereto.
            (3)   Exhibits
                  The following exhibits are filed with this report or
                  incorporated by reference as set forth       below.
            3.1   Certificate of Incorporation of the Registrant.*
            3.1.1 Certificate of Amendment of Certificate of
                  Incorporation.*
            3.2   By-laws of the Registrant.*
            4.1   Description of specimen stock certificate representing
                  Common Stock.*
           10.1.1 Employment Agreement between the Registrant and
                  Joseph Khoshabe.*
           10.4   Non-Qualified and Incentive Stock Option Plan*
          ___________
          *Incorporated by reference from registrant's Registration
          Statement on Form SB-2 (No. 333/27037), which was declared
          effective by the Securities Exchange Commission on May 26,
          1998.
             (b)  Reports on Form 8-K
          The following reports on Form 8-K have been filed by the
        Company during the period covered by this report:

                                 Form 8-K dated 04/29/99
                                 Form 8-K dated 04/15/99
                                 Form 8-K dated 03/29/99
                                 Form 8-K dated 03/19/99
                                 Form 8-K dated 02/05/99
                                 Form 8-K dated 01/28/99
                                 Form 8-K dated 10/22/98
                                 Form 8-K dated 10/13/98
                                 Form 8-K dated 10/02/98
                                 Form 8-K dated 09/23/98
                                 Form 8-K dated 09/03/98
                                 Form 8-K dated 07/24/98
                                 Form 8-K dated 07/10/98