UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-K
  
  [X]  Annual report pursuant to section 13 or 15(d) of the Securities
  Exchange Act of 1934 for the fiscal year ended December 31, 1998, or
  
  [  ] Transition report pursuant to section 13 or 15(d) of the Securities
  Exchange Act of 1934 for the transition period from _______________ to
  _______________
  
  Commission File No.:  33-73748
  
                     FUND AMERICA INVESTORS CORPORATION II
            (Exact name of registrant as specified in its charter)
  
                 Delaware                             84-1218906
     (State or other jurisdiction of               (I.R.S. Employer
      incorporation or organization)             Identification number
  
                 6400 S. Fiddler's Green Circle, Suite 1200B,
                          Englewood, Colorado  80111
                  (Address of principal executive offices)
  
  Registrant's telephone number including area code:  (303) 290-6025
  
  Securities registered pursuant to Section 12(b) of the Act: None
  Securities registered pursuant to Section 12(g) of the Act: None
  
  
  Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period
  that the registrant was required to file such reports) and (2) has been
  subject to such filing requirements for the past 90 days. [X] Yes  [ ] No
  
  Indicate by check mark if disclosure of delinquent filers pursuant to
  Item 405 of Regulation S-K is not contained, to the best of registrants
  knowledge, in definitive proxy or information statements incorporated by
  reference in Part III of this Form 10-K or any amendment to this Form
  10-K.  [X]
  
  State the aggregate market value of the voting stock held by
  non-affiliates of the registrant:  As of December 31, 1998:  $0.00.
  
  The number of shares outstanding of the Registrant's $0.01 par value
  common stock, as of March 30, 1999 was 349,000 shares.
  
                       DOCUMENTS INCORPORATED BY REFERENCE
                                     None.
  

</PAGE>
<PAGE>

                                    PART I
  
  ITEM 1.        BUSINESS
  ------         --------

       Fund America Investors Corporation II (the "Company") was incorporated
  in the State of Delaware on December 14, 1992 as a limited purpose finance
  corporation.  The Company was established to engage in the issuance and
  administration of Collateralized Mortgage Obligations (the "Bonds") and
  Asset-Backed Certificates (the "Certificates", and together with the Bonds,
  the "Securities").  The Securities are issued in one or more series, from
  time to time, by the Company as described in the prospectus and series-rela-
  ted prospectus supplement of the Company's latest effective registration
  statement. 
  
       The Securities of each series can be issued by the Company, but
  typically the Company forms a separate trust to act as the issuer solely
  for the purpose of issuing a series.  A series of Securities that include
  Bonds will be issued pursuant to an indenture and will represent indebtedness
  of the trust or issuer.  A series of Securities that include Certificates
  will represent beneficial ownership in the related trust or issuer.  The sole
  source of payments to Bondholders or Certificateholders within each series
  of Securities is produced from the related trust property.  The property or
  assets within each trust are comprised of mortgage-related assets as defined
  in each of the series related prospectus supplements, and represent the colla-
  teral for either the Bonds or the Certificates.
   
       The Company may not, either directly or indirectly through a benef-
  icially owned trust, engage in any business or investment activity other
  than to; (1) issue and sell Bonds; (2) purchase, own, hold, pledge or sell
  collateral or other mortgage-related assets; (3) invest and maintain cash
  balances on an interim basis in high quality short-term securities; and (4)
  engage in other activities which are necessary or convenient to accomplish
  the foregoing and are incidental thereto.
        
       At January 1, 1998, the Company had a total of $912 million registered
  and unissued securities on its Registration Statement No. 333-33823, the
  Company's current effective Registration Statement.  The Company issued
  $348 million of Securities in three series from its Registration Statement
  No. 333-33823 during 1998.  Each series of Securities was issued pursuant
  to a separate prospectus supplement, listed below.  At December 31, 1998,
  $564 million of Securities remained unissued on Registration Statement No.
  333-33823.
    
  Prospectus Supplement Information:
                                                     Amount          Type of  
    Date         Issuer/Series                    of Offering      Securities 
  --------       --------------------------       -----------      ----------
  04-28-98       Fund America Investors
                 Corporation II/Pass-Through 
                 Certificates, Series 1998-A      $ 60,373,853     Certificates
  
  06-24-98       Fund America Investors
                 Trust 1998-NMC1/Collater-
                 alized Mortgage Obligations,
                 Series 1998-NMC1                 $236,526,000     Bonds
  
  06-28-98       Fund America Investors
                 Corporation II/Pass-Through
                 Certificates, Series 1998-B      $ 50,703,106     Certificates
  
  
     The Certificates in Series 1998-A and Series 1998-B represent the entire
  beneficial ownership in trusts specifically formed for each series. Each 
  trust holds underlying securities which are the sole source of distribution
  payments to the certificateholders.  These Certificates do not represent an
  interest in or obligation of the Issuer or the Company.
 



</PAGE>
<PAGE>
   
  ITEM 1.        CONTINUED
  ------         ---------
  
       The Bonds in Series 1998-NMC1 represent non-recourse obligations of the
  Issuer, Fund America Investors Trust 1998-NMC1 (the "Trust'), and do not
  represent interests in or obligations of the Company.  The assets that were
  pledged to the Trust are the sole source of payments on the Bonds.  The
  pledged assets consist of adjustable rate, fully amortized mortgage loans
  that are secured by residential properties.
  
       The mortgage loans in Series 1998-NMC1 were originated or acquired by
  National Mortgage Corporation ("NMC"), an affiliate of the Company through
  common control.  In addition to NMC's participation as the  seller of these
  mortgage loans, NMC is servicing the mortgage loans and is the holder of the
  residual interest that represents all of the beneficial ownership interest
  in Fund America Investors Trust 1998-NMC1.
   
       To date, the Company has issued eighteen series of Securities aggre-
  gating initial principal amount of $2.4 billion.  In 1996 and prior years,
  the Company issued a total of $2 billion in initial principal amount. During
  1997, one Bond series was issued for $122 million.  In 1998, the Company
  issued three series of Securities aggregating $348 million in initial princ-
  ipal.  The Company does not have any further obligations in connection with
  the issuance of these Securities.  Under generally accepted accounting princ-
  iples, such issuances are considered to be a direct sale of the collateral.
  
       On September 30, 1998, the Company filed its fifth Registration Statement
  on Form S-3 with the Securities and Exchange Commission.  The purpose of this
  Registration Statement is to register an additional amount of Securities and
  to merge the Company's Effective Registration Statement No. 333-33823, thereby
  increasing the total amount of Securities that can be issued by the Company.
  As of December 31, 1998, this Registration Statement was not effective and was
  subject to completion or amendment.  The Company intends to file one or more
  further amendments to complete this Registration Statement and to bring it
  effective.    
  
  ITEM 2.        PROPERTIES 
  ------         ----------

                 The Company has no material physical properties.
  
  
  ITEM 3.        LEGAL PROCEEDINGS  
  ------         -----------------
           
                 None.
  
  
  ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  ------         ---------------------------------------------------  

       No matters were submitted to the security holders during the fourth
  quarter of the fiscal year ended December 31, 1998.
  
  PART II
  
  ITEM 5.     MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED
  ------      ----------------------------------------------------
              STOCKHOLDER MATTERS
              -------------------  
 
      There is no established public trading market for the Company's common
  stock and no dividends have been declared or paid.  All of the Company's
  common stock is owned by a sole shareholder.
  
  

</PAGE>
<PAGE>
<TABLE>


ITEM 6.        SELECTED FINANCIAL DATA
------         -----------------------  
  
<CAPTION>


                                       Year Ended December 31,
                         ----------------------------------------------------
                          1998        1997       1996        1995       1994
                         ------      ------     ------      ------     ------   

<S>                     <C>         <C>        <C>         <C>        <C>
  Income Statement 
     Data:
  
  Revenue                $370,890    $132,196   $199,448    $ 26,538   $788,133 
  Net income(loss)        196,084      24,035     42,165     (94,766)   102,519 
  Net income(loss) per
  share of common stock        (1)         (1)        (1)         (1)        (1)
  
  Balance Sheet Data:
  Total assets            475,180     475,280    442,444     440,373  1,871,994 
  Shareholder's equity    474,965     466,479    442,444     440,279  1,722,245 
  
  
  
  
  (1)       Not presented, as all shares of common stock are held by a
            sole shareholder.
  


</TABLE>
</PAGE>
<PAGE>


  ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  ------         -------------------------------------------------
                 CONDITION AND RESULTS OF OPERATIONS
                 -----------------------------------


  1.   General
       -------  

       To date, the Company has issued eighteen series of registered Pass-
  Through Securities aggregating $2,436,596,829 in initial amount for all the
  issuances.  As of December 31, 1998, thirteen series of Bonds remain out-
  standing.  The following list consists of only those outstanding series
  shown with initial issuance amounts.
  
  Series    Amount            Collateral
  ------    ------------      -------------------------------------------------
  1993-A    $262,435,000      Trust consisting primarily of adjustable rate
                              one- to four-family, first lien mortgage loans
  
  1993-B    $ 77,409,000      Trust consisting primarily of adjustable rate
                              one- to four-family, first lien mortgage loans
  
  1993-C    $319,000,000      Trust consisting primarily of Federal National
                              Mortgage Association and Federal Home Loan
                              Mortgage Corporation Securities; private
                              mortgage backed securities including certain
                              residual interest securities; principal
                              component of bonds issued by the Resolution
                              Funding Corporation
  
  1993-E    $190,145,165      Trust consisting primarily of adjustable rate
                              one- to four-family, first lien mortgage loans
  
  1993-F    $ 50,845,601      Trust consisting primarily of Fixed-rate,
                              closed-end, simple interest, residential first
                              and second mortgage loans and deed of trust
                              loans
  
  1993-H    $ 45,634,831      Trust consisting primarily of adjustable rate
                              one- to four-family, first lien mortgage loans
  
  1993-J    $150,069,158      Trust consisting primarily of adjustable rate
                              one- to four-family, first lien mortgage loans
  
  1994-A    $ 44,599,100      Trust consisting primarily of adjustable rate
                              one- to four-family, first lien mortgage loans
  
  1996-A    $295,315,915      Trust consisting primarily of adjustable rate,
                              conventional first lien mortgage loans and
                              fixed rate, second lien mortgage loans 
  
  1997-NMC1 $121,765,000      Trust assets consisting primarily of adjustable
                              rate mortgage loans that are secured by first
                              lien mortgages on one- to four-family
                              residential property 
  
  1998-A    $ 60,373,853      Trust consisting primarily of one Pooled Fannie
                              Mae Certificate, two Pooled Freddie Mac
                              Certificates and one Pooled Non-Agency
                              Certificate
  
  1998-B    $ 50,703,106      Trust consisting primarily of three Pooled
                              Fannie Mae Certificates, one Pooled Ginnie Mae 
                              Certificate, two Pooled Freddie Mac
                              Certificates and one Pooled Non-Agency
                              Certificate
  
  

</PAGE>
<PAGE>


  1998-NMC1 $236,526,000      Trust assets consisting primarily of adjustable
                              rate mortgage loans that are secured by first
                              lien mortgages on one- to four-family
                              residential properties
  

  
  2.   The Year 2000 Issue
       ------------------- 
  
       With the year 2000 approaching, potential computer failures and errors
  may occur due to problems with the computerized recognition of date codes.
  The Year 2000 ("Y2K") issue addresses potential problems that may be encoun-
  tered with date-related transactions on systems that have historically recog-
  nized years using two digits versus four digits. For example, these systems
  may recognize "00" as the year 1900 instead of 2000.  This could potentially
  affect computerized operations that rely on date calculations or are date
  sensitive.     
  
       All operations of the Company are essentially driven by the issuance of
  Securities. In order to assess and determine potential Y2K issues within the
  operations, the Company has separated operations into three sections, the
  registration of Securities, the issuance of Securities, and the administrative
  operations.     
  
       The preparation, filing, and follow-up of the registration and issuance
  processes are typically out-sourced to third-party service providers that
  specialize in these services. The Company is requesting confirmation from
  its third-party service providers that their systems are Y2K compliant. The ]
  Company has received assurance of Y2K compliance from some of its third-party
  service providers.  In addition, the Company is still continuing its efforts
  to receive assurance from its other third-party service providers.    
  
       The Company, in conjunction with its facilities provider, The Chotin
  Group Corporation ("TCG"), a related party, has assessed the third area of
  the Company's operations, administrative systems.  TCG provides the Company
  with office facilities and administrative functions.  TCG has assessed its
  internal systems and has developed a Y2K Compliance Plan.  Currently, TCG is
  in the process of implementing the plan, which involves updating and upgrading
  all of TCG's internal systems that were determined to not be Y2K compliant.
  The Company will closely monitor TCG's progress.    
  
       Due to the fact that all operational systems are hired out, the Company
  does not expect to incur any direct costs for Y2K compliance or remediation
  that would materially affect its financial condition.  The potential risk
  to the Company, however, would be a delay in its operations of registering
  Securities and issuing Securities.  Delays may be caused by the Company's
  reliance on third-party service providers who handle out-sourced operations
  and who are not Y2K compliant.  To resolve this issue, the Company will con-
  sider out-sourcing operations to other third-party service providers who
  confirm their Y2K compliance.        
  
       If the necessary updates to TCG's systems are not made on a timely
  basis, or if third party service providers are not Y2K ready, Y2K problems
  could have a material adverse effect on the Company's operations.
  
       Without a reasonably complete upgrade and testing of systems that may be
  vulnerable to problems, the Company does not have a reasonable basis to con-
  clude that the Year 2000 compliance issue will not likely have an operational
  impact on the Company.  In addition, without a reasonable conclusive basis,
  reported financial information will not necessarily be indicative of future
  operating results or future financial condition.
 
 
  3.   Liquidity and Capital Resources
       -------------------------------
  
       In 1998, management anticipated that a significant portion of the
  Company's registered and unissued Securities would be utilized by NMC, an
  affiliated mortgage company.  Market conditions, however, for mortgage
  products changed which favored holding mortgage loan portfolios to selling
  the portfolios for securitization.  As a result, the volume of Securities
  issued was lower than originally expected.  Going forward in 1999 and there-
  after, the Company continues its expectations that the issuance volume will
  increase to accommodate increasing loan production from NMC as well as other
  third party issuers. 
 
</PAGE>
<PAGE>

 
       The Company expects to fund ongoing operations from working capital and
  revenues derived from the issuance of Securities.  Over the next 12 months,
  the Company's current cash position will adequately fund overhead and capital
  costs related to the registration of additional securities without additional
  revenues from anticipated issuances. 

  
  4.   Results of Operations
       --------------------- 
 
       The Company does not have any significant assets other than cash held
  for operations and capitalized deferred offering costs.  Major operating
  activity is initiated from the issuance of Securities or the preparation
  in registering Securities to be issued.  Costs incurred with registering
  Securities are capitalized until such time the Securities are issued in an
  offering. 
  
       Net income may fluctuate from period to period based on the use of the
  Company's registered and unissued Securities. The Company generally charges
  the issuer of a series of Securities a flat fee and a proportionate share of
  deferred costs associated with its registration statement.
  
       Typically, periods reporting net income are the result of issuance fees
  earned by the Company for the use of its shelf registration.  Conversely, in
  periods reflecting net losses, no issuance fees were earned and the loss is
  the result of fixed general and administrative expenses.
  
       An evaluation of long-lived assets at December 31, 1998 and December 31, 
  1997 resulted in impairment of the Company's deferred offering costs.  It was
  determined that costs in excess of the currently accepted market pass-through
  costs should be charged to net income.  The net impairment charged to opera-
  tions in 1998 and 1997 was $1,127 and $18,503, respectively.
     
       The Company reported net income for the year ended December 31, 1998 of
  $196,084 compared to net income of $24,035 for the year ended December 31,
  1997 and net income of $42,165 for the year ended December 31, 1996.  In all
  three years issuance fees were earned, however, in 1998 three bond series
  were issued versus one in each of the years of 1997 and 1996.  In comparing
  1997 to 1996, years in which one series of Securities was issued, 1997 results
  were $42,538 without the reduction by the impairment of $18,503.  Variables
  affecting comparable results of operations are typically the number of secur-
  itizations completed and/or impairments of assets.
    
  
  5.   Forward Looking Statements
       --------------------------
  
       The statements contained in this Item 7 and Item 7A that are not
  historical facts, including, but not limited to, statements that can be
  identified by the use of forward-looking terminology such as "may," "will,"
  "expect," "anticipate," "estimate" or "continue" or the negative thereof or
  other variations thereon or comparable terminology, are forward-looking state-
  ments within the meaning of the Private Securities Litigation Reform Act of
  1995, and involve a number of risks and uncertainties.  The actual results of
  the future events described in such forward-looking statements could differ
  materially from those stated in such forward-looking statements.  Among the
  factors that could cause actual results to differ materially are: the Y2K
  preparedness of the Company's third-party service providers, the market for
  mortgage-backed securities, competition, government regulation and possible
  future litigation.
 
 
  ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  -------   ----------------------------------------------------------   
            
       Securities issued by the Company are either debt securities or securities
  which evidence beneficial ownership interest in designated trusts established
  to facilitate the transfer of trust asset payments to the Bondholders who hold
  such debt securities or to the Certificateholders who hold such beneficial
  ownership interests.  Assets securing payments to Bondholders or Certificate-
 
</PAGE>
<PAGE>



  holders are pledged or sold to designated trusts and are not assets of the
  Company.  Additionally, Bonds and Certificates that are issued either by the
  Company or a trust formed by the Company do not represent an ownership inter-
  est in or an obligation of the Company.   
  
       Disclosures required in this Item 7A are intended to clarify a regis-
  trant's exposures to market risk associated with activities in derivative
  financial instruments, other financial instruments, and derivative commodity
  instruments. The purpose of this section is to disclose the material effects
  on earnings, fair values, and cash flows that are inherent to potential market
  risk exposure.  Potential market risk associated with Securities issued under
  the Company's registration statement will not have a material effect on the
  Company's earnings or cash flow since the Securities do not represent an
  interest in or an obligation of the Company.  In addition, the Company has
  no public common equity; all common stock in the Company is held by one
  shareholder.  Therefore, material effects of potential market risk exposure
  on Securities issued from the Company will not have any significant impact
  on the Company.   

  
</PAGE>
<PAGE>


  ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  ------         ------------------------------------------  
  
  
  INDEPENDENT AUDITORS' REPORT
  ----------------------------  
  
  Board of Directors and Shareholders
  Fund America Investors Corporation II
  Englewood, Colorado  80111
  
  
  We have audited the accompanying balance sheets of Fund America
  Investors Corporation II as of December 31, 1998 and 1997, and the
  related statements of operations, shareholder's equity, and cash flows
  for each of the three years in the period ended December 31, 1998. These
  financial statements are the responsibility of the Company's management. 
  Our responsibility is to express an opinion on these financial
  statements based on our audits.
  
  We conducted our audits in accordance with generally accepted auditing
  standards.  Those standards require that we plan and perform the audit
  to obtain reasonable assurance about whether the financial statements
  are free of material misstatement.  An audit includes examining, on a
  test basis,evidence supporting the amounts and disclosures in the
  financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as
  evaluating the overall financial statement presentation.  We believe
  that our audits provide a reasonable basis for our opinion.
  
  In our opinion, such financial statements present fairly, in all
  material respects, the financial position of the Company as of December
  31, 1998 and 1997, and the results of its operations and its cash flows
  for each of the three years in the period ended December 31, 1998 in
  conformity with generally accepted accounting principles.
  
  
  
  DELOITTE & TOUCHE LLP
  
  Denver, Colorado
  March 15, 1999
  

</PAGE>
<PAGE>
<TABLE>


                       FUND AMERICA INVESTORS CORPORATION II
                                  Balance Sheets
  
   
<CAPTION>    
                                                      December 31,
                                                  -------------------
                                                  1998           1997
                                                 ------         ------
<S>                                             <C>            <C>
 Assets
  Cash and cash equivalents (Note 2)             $226,446       $110,311 
  Deferred offering costs, net (Note 2)           248,555        364,797 
  Prepaid expenses                                    179            172 
                                                 --------       -------- 

 Total assets                                    $475,180       $475,280 
                                                 ========       ======== 

  Liabilities - Accounts payable                 $    215       $  8,801 
                                                 --------       -------- 

 Shareholder's equity
  Common stock, par value $.01 per share;
    1,000,000 shares authorized; 349,000
    shares issued and outstanding                   3,490         3,490 
  Retained earnings                               471,475       462,989 
                                                 --------      --------
 Total shareholder's equity, net                  474,965       466,479 
                                                 --------      --------
 Total liabilities and shareholder's
  equity                                         $475,180      $475,280 
                                                 ========      ========
  
  See notes to financial statements
  
</TABLE>
</PAGE>
<PAGE>
<TABLE>


                        FUND AMERICA INVESTORS CORPORATION II
                              Statements of Operations
  
  
<CAPTION>
                                              Year Ended December 31,
                                        -----------------------------------
                                         1998           1997          1996
                                        ------         ------        ------
<S>                                    <C>            <C>           <C>
  Revenue
    Issuance fees                       $360,418       $125,995      $193,335 
    Interest                              10,472          6,201         6,113 
                                        --------       --------      --------
  Total revenue                          370,890        132,196       199,448 
                                        --------       --------      -------- 

  Expenses
    Amortization of deferred
      offering costs                     135,418         50,995       119,900 
    General and administrative            14,261         14,663        13,383 
    Management fees (Note 4)              24,000         24,000        24,000 
    Impairment of long-lived
      assets (Note 2)                      1,127         18,503             - 
                                        --------       --------      --------
  Total expenses                         174,806        108,161       157,283 
                                        --------       --------      --------

  Net income                            $196,084       $ 24,035      $ 42,165 
                                        ========       ========      ========
  See notes to financial statements
  
</TABLE>
</PAGE>
<PAGE>
<TABLE>  
  
  
                       FUND AMERICA INVESTORS CORPORATION II
                         Statements of Shareholder's Equity
                    Years ended December 31, 1998, 1997 and 1996
  

<CAPTION>

                              Common Stock      
                           Number of     Par       Retained     Shareholder's
                            Shares      Value      Earnings       Equity-Net
                          ----------  --------    ----------    -------------

<S>                      <C>          <C>         <C>            <C>
  Balance at
    January 1, 1996       349,000      $3,490      $436,789       $440,279 
  Shareholder
    distributions               -           -       (40,000)       (40,000)
  Net income                    -           -        42,165         42,165 
                          -------     -------      --------       --------

  Balance at
    December 31, 1996     349,000       3,490       438,954        442,444 
  Net income                    -           -        24,035         24,035 
                          -------     -------      --------       --------

  Balance at
    December 31, 1997     349,000       3,490       462,989        466,479 
  Shareholder
    distributions               -           -      (187,598)      (187,598)
  Net income                    -           -       196,084        196,084 
                          -------     -------      --------       --------
 
  Balance at
    December 31, 1998     349,000      $3,490      $471,475       $474,965 
                          =======     =======      ========       ========   



  See notes to financial statements
  

</TABLE>
</PAGE>
<PAGE>
<TABLE>


  
                      FUND AMERICA INVESTORS CORPORATION II
                            Statements of Cash Flows
  


<CAPTION>
                                           Year ended December 31,
                                      ---------------------------------
                                       1998          1997         1996
                                      ------        ------       ------    
<S>                                  <C>           <C>          <C>
 Net cash flows from operating
    activities:
  Net income                          $196,084      $ 24,035     $ 42,165 
   Adjustments to reconcile
    net income to net cash from
    operating activities:
    Amortization of deferred
      offering costs                   135,418        50,995      119,900 
    Amortization of organization
      costs                                  -           583          635 
    Impairment of deferred
      offering costs                     1,127        18,503            - 
   Changes in operating assets
    and liabilities:
    Accounts payable                    (8,586)        8,801          (94)
    Prepaid expenses                        (7)           (9)        (163)
                                      --------      --------     --------
  Net cash provided by
    operating activities:              324,036       102,908      162,443 


  Cash flows provided by (used in)
      investing activities:
    Additions to deferred
      offering costs                   (20,303)     (183,171)     (14,185)
    Recovery of deferred
      offering costs from issuer             -             -       41,866 
                                      --------      --------     --------
  Net cash provided by (used in)
      investing activities             (20,303)     (183,171)      27,681 
  

  Cash flows used in financing
      activities-
    Shareholder distributions         (187,598)            -      (40,000)
                                      --------      --------     --------

  Net increase (decrease) in cash
      and cash equivalents             116,135       (80,263)     150,124 

  Cash and cash equivalents at
      beginning of year                110,311       190,574       40,450 
                                      --------      --------     -------- 
  Cash and cash equivalents
  at end of year                      $226,446      $110,311     $190,574 
                                      ========      ========     ======== 

 
  See notes to financial statements
  

</TABLE>
</PAGE>
<PAGE>

  
                      FUND AMERICA INVESTORS CORPORATION II
                          Notes to Financial Statements
  
  
  Note 1.        The Company
  
       Fund America Investors Corporation II (the "Company") was incorporated
  in the State of Delaware on December 14, 1992 as a limited purpose finance
  corporation.  The Company was established to engage in the issuance and
  administration of Collateralized Mortgage Obligations (the "Bonds") and
  Asset-Backed Certificates (the "Certificates", and together with the Bonds,
  the "Securities").  The Securities are issued in one or more series, from
  time to time, by the Company in accordance with the provisions in the prospec-
  tus and series-related prospectus supplement of the Company's latest effective
  registration statement. 
  
       The Securities of each series can be issued by the Company, but
  typically the Company forms a separate trust to act as the issuer solely
  for the purpose of issuing a series.  A series of Securities that include
  Bonds will be issued pursuant to an indenture and will represent indebtedness
  of the trust or issuer.  A series of Securities that include Certificates
  will represent beneficial ownership in the related trust or issuer.  The sole
  source of payments to Bondholders or Certificateholders within each series
  of Securities is produced from the related trust property.  The property or
  assets within each trust are comprised of mortgage-related assets as defined
  in each of the series' related prospectus supplements.
   
       The Company will not, either directly or indirectly through a benefici-
  ally owned trust engage in any business or investment activity other than to;
  (1) issue and sell Bonds; (2) invest cash balances on an interim basis in
  high quality short-term securities; (3) purchase, own, hold, pledge or sell
  Collateral or other mortgage-related assets; (4) engage in other activities
  which are necessary or convenient to accomplish the foregoing and are incid-
  ental thereto.
  
  Note 2.        Summary of Significant Accounting Policies
  
       In connection with the issuance of Securities, the Company generally
  will enter into a purchase agreement ("Purchase Agreement") with the seller
  of the Mortgage Assets or the Collateral. Simultaneously, the Collateral is
  conveyed, by the Company, to the trust who issues the Securities, pursuant 
  to a pooling and servicing agreement ("Pooling Agreement"). Correspondingly,
  the purchase price for the Collateral payable to the seller is netted out from
  the proceeds realized from the sale of the Securities.  Therefore, the Com-
  pany's financial statements reflect the net result of the issuance and not
  the gross amounts attributable to the purchase price of the Collateral and
  the sales proceeds from the issuance of the Securities. 
  
       Costs of registering securities are deferred.  As the Securities are
  issued from the registered securities, costs are charged to operations.  The
  charge is based on the ratio of bonds issued to securities registered but
  previously unissued.
  
       Fees from the Security issuance transactions are recognized as revenue
  when the transactions close.  All expenses of the transaction, including
  a portion of deferred offering costs, are charged to operations.
  
       For purposes of reporting cash flows, cash and cash equivalents include
  demand deposit accounts. 
  
       Certain organizational costs incurred by the Company have been deferred
  and have been charged to operations over a  five-year period.
  
       Net income per share is not presented, as all shares of common stock are
  held by a sole shareholder.


</PAGE>
<PAGE>

  
       The preparation of financial statements in conformity with generally
  accepted accounting principles requires management to make estimates and
  assumptions that affect the reported amounts of assets and liabilities at
  the date of the financial statements, and the reported amount of revenues
  and expenses during the reporting period.  Actual results could differ from
  those estimates.
  
       SFAS No. 107 "Disclosure about Fair Value of Financial Instruments,"
  requires disclosure of fair value information about financial instruments,
  whether or not recognized in the balance sheet. The Company's financial
  instruments include: cash and cash equivalents, and accounts payable.  The
  carrying amount of these assets and liabilities approximates their fair value.
  
       SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
  Long-Lived Assets to be Disposed Of" requires companies to evaluate long-lived
  assets for impairment whenever events or changes in circumstances indicate
  that the carrying amount of an asset may not be recoverable. If a long-lived
  asset is identified as impaired, the value of the asset must be reduced to its
  fair value.  The Company's deferred offering costs are considered long-lived
  assets under this pronouncement.  An evaluation of long-lived assets resulted
  in impairment of the Company's deferred offering costs at December 31, 1997
  and December 31, 1998.  It was determined that costs in excess of the cur-
  rently accepted market pass-through costs should be charged to net income.
  The net impairment charged to operations was $18,503 in 1997 and $1,127 in
  1998.
  
       SFAS No. 125, "Accounting for Transfers and Servicing of Financial
  Assets and Extinguishments of Liabilities", requires certain accounting
  and reporting for securitizations of mortgage loans, mortgage backed
  securities and other mortgage collateral.  There was no effect on the
  financial position or results of operations of the Company as a result
  of SFAS No. 125.  The Company does not expect SFAS No. 125 to change the
  accounting of issuances for future securitizations, to the extent such
  issuances are structured similarly to past transactions.
  
  Note 3.        Income Taxes 
  
       Under S Corporation guidelines of the Internal Revenue Code, the Comp-
  any has elected to be treated substantially as a partnership for income tax
  purposes.  As a result, the sole shareholder reports any taxable income
  or loss of the Company on his individual tax return.  Accordingly, no
  provision for federal income taxes has been recorded in the financial
  statements.
  
  Note 4.        Related Party Transactions
  
       The Company has engaged in various related party transactions as
  discussed below.  Accordingly, the accompanying financial statements are
  not necessarily indicative of the financial position that would exist or
  the results of operations that would have occurred if the transactions
  had been with unaffiliated entities.
  
       The sole shareholder of the Company is also the sole shareholder,
  President and Director of The Chotin Group Corporation and Fund America
  Management Corporation ("FAMC").  On January 1, 1993, the Company
  entered into a Management Agreement with The Chotin Group Corporation
  (the "Facilities Manager").  This agreement remains in force until
  written termination of the agreement is presented by either party.  As
  of December 31, 1998, no such notice of termination has been given or
  received by the Company.  Under the terms of the agreement, the
  Facilities Manager is required to provide facilities use and other
  services necessary for the Company to manage its business affairs. The
  management fees paid during each of the three years ended December 31,
  1998 were $24,000.
  
  
       The mortgage loans in Series 1998-NMC1, issued in 1998, were originated
  or acquired by National Mortgage Corporation ("NMC") an affiliate of the
  Company through common control.  In addition to NMC's participation as
  the seller of the mortgage loans in this series, NMC is servicing the
  mortgage loans and is the holder, through a wholly-owned subsidiary, of
  the residual interest that represents all of the beneficial ownership
  interest in Fund America Investors Trust 1998-NMC1.
  
</PAGE>
<PAGE>  


  Note  5.  CMO Information
  
       At December 31, 1998 and 1997, the outstanding principal balance of the
  issued Securities and the amount of publicly and privately issued securities
  were as follows:
  
  
  1998
  --------------------------------------------------------------------------- 
                        Total            Publicly        Privately
  Series            Certificates          Issued           Issued
  ------           --------------     -------------     ------------
  
  1993-A           $ 95,272,301       $ 91,805,109      $ 3,467,192 
  1993-B             18,127,195         14,504,919        3,622,276 
  1993-C            183,230,771        183,230,771                - 
  1993-E             37,005,049         32,546,951        4,458,098 
  1993-F              6,862,610          6,862,610                - 
  1993-H              8,578,280          8,578,280                - 
  1993-J             24,714,688         23,562,771        1,151,917 
  1994-A              6,320,685          5,421,786          898,899 
  1996-A             79,139,451         79,139,451                - 
  1997-NMC1          72,903,391         72,903,391                - 
  1998-A             40,704,057         40,704,057                - 
  1998-B             42,849,600         42,849,600                - 
  1998-NMC1         208,756,942        208,756,942                - 
                   ------------       ------------      -----------
  Total            $824,465,020       $810,866,638      $13,598,382 
                   ============       ============      ===========


  
  1997
  -------------------------------------------------------------------  
                        Total            Publicly        Privately
  Series            Certificates          Issued           Issued
  ------           -------------      -------------     -----------  

  1993-A           $120,745,478       $115,889,343      $ 4,856,135 
  1993-B             25,768,640         21,813,103        3,955,537 
  1993-C            215,317,630        215,317,630                - 
  1993-E             65,943,839         59,705,590        6,238,249 
  1993-F             11,181,845         11,181,845                - 
  1993-H             11,653,426         11,596,528           56,898 
  1993-J             40,643,162         38,738,284        1,904,878 
  1993-K                 10,000                  -           10,000 
  1994-A             10,284,418          9,045,889        1,238,529 
  1996-A            151,877,854        151,877,854                - 
  1997-NMC1         114,983,630        114,983,630                - 
                   ------------       ------------      -----------
  Total            $768,409,922       $750,149,696      $18,260,226 
                   ============       ============      ===========  


  ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
  ------         ------------------------------------------------
                 ACCOUNTING AND FINANCIAL DISCLOSURE        None.
                 -----------------------------------
  

</PAGE>
<PAGE>

                                PART III
  
  ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  -------        --------------------------------------------------
  Name                 Position                                     Age
  
  Steven B. Chotin     Director, Chairman, Chief Executive
                       Officer and President                         51
  Howard J. Glicksman  Director, Vice President and Assistant
                       Secretary                                     53
  M. Garrett Smith     Director                                      37
  Helen M. Dickens     Director, Vice President, and Secretary       45
  Kenneth S. Birnbaum  Vice President                                54
  Annel Henderson      Principal Accounting Officer, and Controller 37
  
       
  Steven B. Chotin, 51, has been a Director and the Chairman, Chief
  Executive Officer and President of the Company since its inception.  Mr.
  Chotin has been President of The Chotin Group Corporation, a financial
  service firm, since July 1984. Mr. Chotin was a director of American
  Southwest Financial Corporation and of American Southwest Finance Co.,
  Inc. from 1982 to 1994.  Mr. Chotin may be deemed to be a "promoter"
  within the meaning of Rule 405 under the Securities Act of 1933,as
  amended (the "Act").
  
  Howard J. Glicksman, 53, has been a Director of the Company since 1995,
  Vice President since 1993 and Assistant Secretary since 1989.  Mr.
  Glicksman has been Vice President since 1993, Assistant Secretary and
  General Counsel since 1989 of The Chotin Group Corporation.  Prior to
  joining The Chotin Group Corporation, Mr. Glicksman was a partner in the
  Denver, Colorado law firm of Glicksman,  Woodrow & Shaner.  He currently
  holds bar and association memberships in Colorado and New York. 
  
  M. Garrett Smith, 37, is currently Executive Vice President and Chief
  Financial Officer of Pioneer Natural Resources Company, a Dallas-based
  company.  Mr. Smith has been associated with Pioneer's top financial
  group for eight years, most recently serving as Senior Vice President -
  Corporate Acquisitions.  Previously Mr. Smith was a partner with BTC
  Partners, a financial consultant to MESA, Inc.
  
  Helen M. Dickens, 45, has been a Director of the Company since 1995,
  Vice President and Secretary of the Company since 1989.  Ms. Dickens is
  also Vice President and Chief Operations Officer of The Chotin Group
  Corporation, positions she has held since 1989.  Prior to joining The
  Chotin Group Corporation, Ms. Dickens served as Assistant Corporate
  Secretary and Assistant to the Chairman of the Board and President of
  Uniwest Financial Corp., a non-diversified savings and loan holding
  company.  
  
  Kenneth S. Birnbaum, 54, has been Vice President of the Company since
  1993.  Mr. Birnbaum is Vice President of The Chotin Group Corporation, a
  position he has held since 1990.  He is also the Manager of The Chotin
  Group Corporation's Washington, D.C., office.  Prior to joining The
  Chotin Group Corporation, Mr. Birnbaum was General Counsel of Bracy
  Williams & Company, a government affairs firm specializing in advising
  corporations on federal, financial, energy and transportation-related
  legislative and administrative matters.   He is currently a member of
  the bar of the District of Columbia.
  
  Annel Henderson, 37, has been the Controller of the Company since 1992
  and the Principal Accounting Officer since 1995.  Mrs. Henderson has
  been the Controller of The Chotin Group Corporation since 1992.  Prior
  to 1992, she was Accounting Manager of Community Holdings Corporation.
  
  Directors and Executive Officers are elected annually for a one-year
  term.
  

</PAGE>
<PAGE>


  
  ITEM 11.      EXECUTIVE COMPENSATION
  -------       ----------------------

       As of December 31, 1998, no executive officer had received any compen-
  sation exceeding $100,000.
  
       The Company has not paid any compensation pursuant to plans or any other
  compensation arrangement.  The Company pays its outside director a monthly
  fee of $150.00.  No other officers or directors receive any compensation for
  their services.
 
 
  ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  -------        --------------------------------------------------------------
  
                                                   Amount and
                                                   Nature Of              
                                                   Beneficial       Percent of
  Title        Name and Address                    Ownership (1)      Class
  of Class     of Beneficial Owner   
  --------     ------------------------------      -------------    ----------
  Common       Steven B. Chotin                       349,000          100%
               6400 S. Fiddler's Green Circle
               Suite 1200
               Englewood, CO  80111
  
  
  (1)  Amount of such shares with respect to which persons indicated have
  the right to acquire beneficial ownership as specified in Rule 13d-3(d)(1)
  under the Securities Exchange Act of 1934:  Zero.
  


  ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  -------        ----------------------------------------------

  The information relating to this Item is incorporated herein by reference
  to Item 8, "Financial Statements and Supplementary Data" under Note 4
  "Related Party Transactions."   
   
  
</PAGE>
<PAGE>

  
                                    PART IV
  
  ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
  -------       ---------------------------------------------------------------

  ( a )(1)  Financial Statements
            -  Independent Auditors' Report
            -  Balance Sheets at December 31, 1998 and 1997
            -  Statements of Operations for the Years Ended December 31,
               1998, 1997 and 1996
            -  Statements of Shareholder's Equity for the Years Ended
               December 31, 1998, 1997 and 1996
            -  Statements of Cash Flows for the Years Ended December 31,
               1998, 1997 and 1996
            -  Notes to Financial Statements for the Years Ended December
               31, 1998, 1997 and 1996
  
  ( a )(2)  Financial Statement Schedules
  
            The financial statement schedules have been omitted because
            they are inapplicable.
  
  ( b )     Reports on Form 8-K
            None
  
  ( c )     Exhibits
  
            Exhibit 27. Financial Data Schedule
  
  



</PAGE>
<PAGE>




                                   SIGNATURES
  
  
  
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
  Exchange Act of 1934, the Registrant has duly caused this report to be
  signed on its behalf by the undersigned, thereunto duly authorized.
  
                                       FUND AMERICA INVESTORS CORPORATION  II
                                       (Registrant)
  
  
  Date: March 30, 1999                 By: /s/ Helen M. Dickens
        --------------                     -------------------------
                                           Helen M. Dickens
                                           Vice President
  
       Pursuant to the requirements of the Securities Exchange Act of 1934, 
  this report has been signed below by the following persons on behalf of the
  Registrant and in the capacities and on the dates indicated.
  
  
  
  /s/ Steven B. Chotin     Director, Chairman,
  Steven B. Chotin         Chief Executive          March 30, 1999
                           Officer and President
                          (Principal Executive Officer)
          
  /s/ Helen M. Dickens     Director, Vice President and
  Helen M. Dickens         Treasurer (Principal
                           Financial Officer)       March 30, 1999
            
  /s/ Howard J. Glicksman  Director, Vice President
  Howard J. Glicksman      And Assistant Secretary  March 30, 1999
  
  /s/ Garrett Smith        Director                 March 30, 1999
  Garrett Smith
  
  /s/ Kenneth S. Birnbaum  Vice President           March 30, 1999
  Kenneth S. Birnbaum
  
  /s/ Annel Henderson      Principal Accounting
  Annel Henderson          Officer                  March 30,1999



</PAGE>
<PAGE>
  
  
  SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
  PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
  REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
  
  
  Since the Company has a sole shareholder, the Company has not sent and 
  will not send an annual report or proxy material to its shareholder.