**Exhibit
      31.2**




**CERTIFICATION
      PURSUANT TO SECTION 302**


**OF
      THE SARBANES-OXLEY ACT OF 2002**




I,
      James
      E. Parker, certify that:




1.  I
      have
      reviewed this Annual Report on Form 10-QSB of KH Funding Company for the three
      months ended June 30, 2006;




2.  Based
      on
      my knowledge, this quarterly report does not contain any untrue statement of
      a
      material fact or omit to state a material fact necessary to make the statements
      made, in light of the circumstances under which such statements were made,
      not
      misleading with respect to the period covered by this quarterly
      report;




3.  Based
      on
      my knowledge, the financial statements, and other financial information included
      in this quarterly report, fairly present in all material respects the financial
      condition, results of operations and cash flows of the registrant as of, and
      for, the periods presented in this quarterly report;




4.  The
      small
      business issuer’s other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as defined
      in
      Exchange Act Rules 13a-14 and 15d -14) for the registrant and we
      have:




(a)
      designed such disclosure controls and procedures to ensure that material
      information relating to the registrant, including its consolidated subsidiaries,
      is made known to us by others within those entities, particularly during the
      period in which this quarterly report is being prepared;




(b)
      evaluated the effectiveness of the small business issuer’s disclosure controls
      and procedures and presented in this report our conclusions about the
      effectiveness of the disclosure controls and procedures as of the end of the
      period covered by this report based on such evaluation;




(c)
      disclosed in this report any change in the small business issuer's internal
      control over financial reporting that occurred during the small business
      issuer's most recent fiscal quarter (the small business issuer's fourth fiscal
      quarter in the case of an annual report) that has materially affected, or is
      reasonably likely to materially affect, the small business issuer's internal
      control over financial reporting; and




5.  The
      small
      business issuer’s other certifying officer and I have disclosed, based on our
      most recent evaluation, to the small business issuer’s auditors and the audit
      committee of small business issuer’s board of directors (or persons performing
      the equivalent functions):




(a)
      all
      significant deficiencies and material weaknesses in the design or operation
      of
      internal controls over financial reporting which are reasonably likely to
      adversely affect the small business issuer’s ability to record, process,
      summarize and report financial information; and




(b)
      any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the small business issuer's internal
      controls.





Dated:
                August 14, 2006
            /s/
                James E. ParkerJames
                E. ParkerChief
                Financial Officer and Treasurer