SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                    FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) of THE SECURITIES EXCHANGE ACT
                                     OF 1934

                 For the fiscal year ended December 31, 1997

                       Commission File Number 333-14041-01

                TRUST CREATED BY BLOCK MORTGAGE FINANCE, INC.

                (under a Pooling and Servicing Agreement dated
              as of December 31, 1996, which Trust is the issuer
                     of Block Mortgage Finance Asset Backed
                          Certificates, Series 1997-1)

                            ---------------------

            (Exact name of Registrant as specified in its Charter)

      New York                                 33-0745168
State or other jurisdiction of                      (I.R.S. Employer of
incorporation or organization                       Identification No.)

Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, California
Attention: Block Mortgage Finance Asset Backed
           Certificates, Series 1997-1    92614
(Address of principal executive offices)  (Zip Code)

Registrant's telephone number, including area code:  (714) 253-7575

Securities registered pursuant to Section 12(b) of the Act: Not applicable.

Securities registered pursuant to Section 12(q) of the Act: Not applicable.

      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. Yes X No __

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of  Regulation  S-K  (section  229,  405 of this  chapter) is not  contained
herein,  and will not be contained,  to the best of registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
[X]

      Aggregate market value of the voting stock held by  non-affiliates  of the
registrant as of December 31, 1997: Not applicable.

      Number of shares of common stock as of December 31, 1997: Not applicable.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE


<PAGE>


                                     PART I

ITEM 1.    BUSINESS.

      The  Registrant  issued  Asset  Backed  Certificates,  Series  1997-1 (the
"Securities") pursuant to a Pooling and Servicing Agreement dated as of December
31, 1996 (the "Cut-off Date") among Block Mortgage Finance,  Inc., as Depositor,
Block Financial  Corporation,  as Seller and Master Servicer,  and Bankers Trust
Company  of  California,  N.A.,  as  Trustee.  The  assets of the Trust  consist
primarily  of a pool of fixed  rate and  adjustable  rate  mortgage  loans  (the
"Mortgage  Loans") having an aggregate  principal balance as of the Cut-off Date
of  approximately  $101,855,911.51.  The  Mortgage  Loans are secured by one- to
four-family    residential    properties   (each,   a   "Mortgaged   Property").
Certificateholders  receive monthly Statements to  Certificateholders  regarding
distributions.

      Further  information  with  respect  to the  performance  of the  Trust is
summarized in the monthly Statements to  Certificateholders,  which are filed on
Form 8-K.

ITEM 2.    PROPERTIES.

      Information regarding the Mortgaged Properties securing the Mortgage Loans
is set  forth  in the  Prospectus  Supplement  and  the  monthly  Statements  to
Certificateholders, which are filed on Form 8-K. The Trust will acquire title to
real estate only upon default of the mortgagors under the Mortgage Loans.

      All real estate  acquired and held by the Trust as of February 25, 1998 is
improved with single family dwellings. The following table describes real estate
acquired and held by the Trust as of February 25, 1998:
<TABLE>
<CAPTION>
     --------------------                  ---------------- ----------------- ---------------- ----------------- ----------------
     REO LOAN INFORMATION                     1-30 DAYS        31-60 DAYS       60-90 DAYS         91+ DAYS           TOTAL
     --------------------                  ---------------- ----------------- ---------------- ----------------- ----------------
     <S>                                        <C>            <C>              <C>                <C>               <C>


      FIXED RATE MORTGAGE LOANS
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------
      PRINCIPAL BALANCE                         $40,024.16     $        0.00    $        0.00      $344,387.35       $384,411.51
      PERCENTAGE OF POOL BALANCE                   0.0852%           0.0000%          0.0000%          0.7335%           0.8188%
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------
      NUMBER OF LOANS                                    1                 0                0                6                 7
      PERCENTAGE OF LOANS IN POOL                  0.0767%           0.0000%          0.0000%          0.4601%           0.5368%
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------

      ADJUSTABLE RATE MORTGAGE LOANS
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------
      PRINCIPAL BALANCE                      $        0.00     $        0.00    $        0.00      $341,078.33       $341,078.33
      PERCENTAGE OF POOL BALANCE                   0.0000%           0.0000%          0.0000%          1.4176%           1.4176%
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------
      NUMBER OF LOANS                                    0                 0                0                4                 4
      PERCENTAGE OF LOANS IN POOL                  0.0000%           0.0000%          0.0000%          1.8519%           1.8519%
      ------------------------------------ ---------------- ----------------- ---------------- ---------------- -----------------
</TABLE>


ITEM 3.    LEGAL PROCEEDINGS.

      There are no material  pending legal  proceedings  involving the Trust or,
with  respect  to the Trust or the  Mortgage  Loans,  the  Trustee,  the  Master
Servicer or the Depositor,  other than ordinary routine litigation incidental to
the Trustee's,  the Servicer's or the  Depositor's  duties under the Pooling and
Servicing Agreement.

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

      No  matters  were  submitted  to a vote of  Certificateholders  during the
fiscal year covered by this report.


<PAGE>



                                     PART II

ITEM 5.    MARKET  FOR  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
           MATTERS.

      The  Registrant's  Asset  Backed  Certificates,  Series  1997-1  represent
non-recourse obligations of the Trust, such Trust having assets which consist of
the Mortgage Loans.  Strictly  speaking,  Registrant has no "common equity," but
for purposes of this Item only,  Registrant's Asset Backed Certificates,  Series
1997-1 are treated as "common equity."

      (a)  Market   Information.   There  is  no  established  public  trading
           market for Registrant's Securities.

      (b)  Certificateholders.  The approximate  number of registered holders of
           each class of Certificates as of January 31, 1998 is set forth below:

           Class                    Certificateholders
           -----                    ------------------
           A-1                            3
           A-2                            5
           A-3                           13
           A-4                            3
           X-1                            1
           X-2                            1
           R                              1

      (c)  Dividends.  Not  applicable.   The  information  regarding  dividends
           required  by  sub-paragraph  (c) of  Item  201 of  Regulation  S-K is
           inapplicable  because  the  Trust  does not pay  dividends.  However,
           information as to distributions to  Certificateholders is provided in
           the monthly  Statements to  Certificateholders  for each month of the
           fiscal year in which a distribution to Certificateholders was made.

ITEM 6.    SELECTED FINANCIAL DATA.

      Not  Applicable.   Because  of  the  limited   activities  of  the  Trust,
information  with respect to the  performance  of the Trust is summarized in the
monthly Statements to Certificateholders,  which are filed on a monthly basis on
Form 8-K. However,  certain selected  aggregate  information with respect to the
Trust for 1997 is filed as an exhibit to this report.

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

      Not Applicable.  The information required by Item 303 of Regulation S-K is
not meaningful in light of the nature of the Trust.  Information  concerning the
Mortgage Loans and distributions to the  Certificateholders  is contained in the
monthly Statements to Certificateholders which are filed on Form 8-K.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

      Not  applicable.  The Trust does not  engage in the types of  transactions
required to be disclosed under this Item.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      Not  Applicable.  Information  with respect to the Trust is contained in
the  monthly  Statements  to  Certificateholders  filed on a monthly  basis on
Form 8-K.

ITEM 9.    CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
           FINANCIAL DISCLOSURE.

      None.


<PAGE>



                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.

      Not Applicable.  The Trust does not have officers or directors.

ITEM 11.   EXECUTIVE COMPENSATION.

      Not  Applicable.  The Trust does not have  officers or directors to whom
compensation needs to be paid.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      (a)  Security  ownership of certain  beneficial  owners.  Not  Applicable.
           Under the Pooling and Servicing  Agreement  governing the Trust,  the
           holders of the  Certificates  generally do not have the right to vote
           and are prohibited from taking part in management of the Trust.

      (b)  Security ownership of management.  Not Applicable. The Trust does not
           have any officers or directors.

      (c)  Changes in  control.  Not  Applicable.  Because  Certificateholders
           do not  possess,  directly  or  indirectly,  the power to direct or
           cause the  direction of the  management  and policies of the Trust,
           other  than  with   respect  to  certain   required   consents   to
           amendments to the Pooling and  Servicing  Agreement and the ability
           to act as a  group  in the  event  of  the  occurrence  of  certain
           events  which if  continuing  would  constitute  events of  default
           under  the  Pooling  and  Servicing   Agreement,   the  information
           requested  with  respect  to  Item  403(c)  of  Regulation  S-K  is
           inapplicable.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Not  Applicable.  The Trust does not have  officers or directors and under
the Pooling and  Servicing  Agreement  governing  the Trust.  In  addition,  the
Registrant does not have knowledge of any  transaction  required to be disclosed
by Items 404(a)(3) or (a)(4) of Regulation S-K.

                                     PART IV

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

      (a) The following is a list of documents filed as part of this report:


           EXHIBITS

      4.1  Pooling and Servicing Agreement dated as of December 31, 1996 (hereby
           incorporated  herein by reference as Exhibit 4 to Depositor's Current
           Report on Form 8-K dated January 29, 1997).

      99.1 Master Servicer Annual Officer's Certificate dated March 31, 1998.

      99.2 Report of Independent Accountants pertaining to NF Investments, Inc.,
           dated February 16, 1998.

      99.3 Report of Independent Accountants  pertaining to  Companion Servicing
           Company, L.L.C., dated February 13, 1998.

      99.4 Aggregate Information from Statements to Certificateholders  Relating
           to 1997  Distributors  to Holders  of Block  Mortgage  Finance  Asset
           Backed Certificates, Series 1997-1.

      99.5 Consolidated  financial statements of MBIA Insurance  Corporation and
           its  subsidiaries  as of December 31, 1997 and 1996 and for the three
           years  ended  December  31,  1997  (hereby   incorporated  herein  by
           reference to the Annual  Report on Form 10-K of MBIA Inc.for the year
           ended  December  31, 1997 under  Commission  file number  001-09583).


<PAGE>



      (b)  Reports on Form 8-K

           Current  Report on Form 8-K dated  October 27, 1997  (filing  monthly
Statements to Certificateholders)
           Current  Report on Form 8-K dated  November 25, 1997 (filing  monthly
Statements to Certificateholders)
           Current  Report on Form 8-K dated  December 26, 1997 (filing  monthly
Statements to Certificateholders)

      c)   The exhibits required to be filed by Registrant  pursuant to Item 601
           of  Regulation  S-K are listed  above and in the  Exhibit  Index that
           immediately follows the signature page hereof.

      (d)  Not  Applicable.   The  Trust  does  not  have  any  subsidiaries  or
           affiliates. Therefore, no financial statements are filed with respect
           to subsidiaries or affiliates.

                   SUPPLEMENTAL INFORMATION TO BE FURNISHED
                 WITH REPORTS FILED PURSUANT TO SECTION 15(D)
                   BY REGISTRANTS WHICH HAVE NOT REGISTERED
                 SECURITIES PURSUANT TO SECTION 12 OF THE ACT

      No  Annual  report,  proxy  statement,  form of proxy or other  soliciting
material  has  been  sent to  Security  Holders,  and the  Registrant  does  not
contemplate sending any such materials subsequent to the filing of this report.

                                    SIGNATURE

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

           Block  Financial  Corporation,  not in its  individual  capacity  but
           solely  as a duly  authorized  agent of the  Registrant  pursuant  to
           Section  8.17 of the  Pooling  and  Servicing  Agreement  dated as of
           December 31, 1996.


                By: Frank L. Salizzoni
                    -----------------------------------------
                Name: Frank L. Salizzoni
                      ---------------------------------------
                Title: President
                       --------------------------------------

Date: March 31, 1998




<PAGE>



                                  EXHIBIT INDEX

EXHIBIT         DOCUMENT



      4.1  Pooling and Servicing Agreement dated as of December 31, 1996 (hereby
           incorporated  herein by reference as Exhibit 4 to Depositor's Current
           Report on Form 8-K dated January 29, 1997).

      99.1 Master Servicer Annual Officer's Certificate dated March 31, 1998.

      99.2 Report of Independent Accountants pertaining to NF Investments, Inc.,
           dated February 16, 1998.

      99.3 Report of Independent Accountants  pertaining to  Companion Servicing
           Company, L.L.C., dated February 13, 1998.

      99.4 Aggregate Information from Statements to Certificateholders  Relating
           to 1997  Distributions  to Holders of Block  Mortgage  Finance  Asset
           Backed Certificates, Series 1997-1.

      99.5 Consolidated  financial statements of MBIA Insurance  Corporation and
           its  subsidiaries  as of December 31, 1997 and 1996 and for the three
           years  ended  December  31,  1997  (hereby   incorporated  herein  by
           reference to the Annual  Report on Form 10-K of MBIA Inc.
           for the year ended  December  31, 1997 under  Commission  file number
           001-09583).